A recent ruling by the Pennsylvania Supreme Court puts limits on a state law meant to ensure that contractors and subcontractors receive prompt payment for their work.
The court ruled that the state’s Contractor and Subcontractor Payment Act (CASPA) does not apply to construction projects where the owner is a governmental entity. The case, Clipper Pipe & Service, Inc. v. Ohio Casualty Insurance Co., pertained to the construction of an addition and renovations to the Navy/Marine Corps Reserve Training Center in the Lehigh Valley.
The contractor, Contracting Systems, Inc., failed to pay a subcontractor, Clipper Pipe & Service for performance of mechanical and HVAC work, according to JD Supra Business Advisor. Clipper sued CSI and its surety, asserting claims for breach of contract and violation of CASPA. The claim likely would have allowed it to recover its attorneys’ fees and possibly a statutory penalty if the court had ruled in the subcontractor’s favor.
On public projects, contractors working in Pennsylvania must rely on the Prompt Pay Act (“PPA”), which governs the payment obligations and rights of contractors and subcontractors on public projects. That statute, however, differs from CASPA with different timing provisions for payment, a different rate of interest, and a different burden of proof associated with penalty and attorneys’ fees provisions. Notably, it is also more difficult for a party to recover attorneys’ fees and penalties under the PPA than under CASPA.
Related Stories
| Oct 18, 2012
Utah contracting firm challenges state immigration law
Universal Contracting LLC of American Fork, Utah, has filed suit challenging the constitutionality of Utah’s 2011 immigration law.
| Oct 18, 2012
More than 65,000 construction, design jobs may be cut if sequestration takes place
About $2 billion worth of construction and design projects would be eliminated if scheduled federal budget cuts, referred to as sequestration, take effect on Jan. 2, 2013.
| Oct 11, 2012
Bill promotes investment in commercial, multifamily retrofits
The Commercial Building Modernization Act recently introduced in the Senate would extend and streamline a current tax deduction to encourage commercial and multifamily residential building owners to perform comprehensive energy-efficient retrofits.
| Sep 26, 2012
Automatic budget cuts in January would slash federal agencies' construction budgets
Sequestration, or the implementation of automatic budget cuts as of January 2013, would slash government agencies' already reduced construction budgets further, and require agencies to shelve some repair and maintenance projects.
| Sep 7, 2012
Lorain, Ohio considers halting downtown construction while it works out development plan
Construction would stop downtown for six months while Lorain, Ohio officials consider a development plan for the city, according to new legislation.
| Sep 7, 2012
Business, labor groups push for easing of California’s Environmental Quality Act
Business and labor groups have combined forces to push for a change to California's Environmental Quality Act, specifically its complex review process for building and construction projects.
| Aug 30, 2012
Federal government cancels defense contracts worth $2.15 billion
This action may foreshadow federal spending cuts scheduled for year's end if Congress takes no action on the federal budget.
| Aug 30, 2012
Georgia drops LEED wood source standard on state projects
Currently, LEED green building standards only accept timber products certified by the Forest Stewardship Council (FSC).
| Aug 21, 2012
Federal Safe Building Code Incentive Act’s bipartisan support, no notable objection, bodes well for passage
The Safe Building Code Incentive Act would give states a little extra post-disaster federal funding if they enacted and enforced nationally recognized building codes for businesses and residences before disaster strikes.
| Jul 12, 2012
Federal budget chief to explain impact of pending defense cuts before Congress
Office of Management and Budget Director Jeffrey Zients is scheduled to testify before the House Armed Services Committee Aug. 1 to explain the possible effects of $500 billion in defense cuts on U.S. companies, including those in the design and construction industry.
