CLOSE X
RSS Feed LinkedIn Instagram Twitter Facebook
Search:
FMG Law Blog Line

Posts Tagged ‘contractor’

Amendments To Pennsylvania’s CASPA Will Change The Landscape Of Payment Disputes

Posted on: August 3rd, 2018

By: Jonathan Romvary

Anyone who has ever done any amount of work as a contractor or who has represented them in collections cases has learned from hard experience that it can be all but impossible to get paid for one’s work. In Pennsylvania, the Contractor and Subcontractor Act (CASPA) was introduced in 1994 as a complement to the Pennsylvania Mechanic’s Lien Law and was intended to provide contractors (and subcontractors) with additional remedies against those owners/contractors withholding payment for their services. However, the landscape of these payment disputes is likely to significantly change as a result of recent legislation.

Last year, a Pennsylvania state representative introduced a bill, which sought to substantially amend the act and for the first time since 1994, provide further protections for contractors against those withholding funds for the work. That bill has languished in the House Commerce Committee since last year. Nonetheless, a similar bill amending CASPA was referred to the state senate and in June 2018, Governor Tom Wolf signed the bill into law as Act 27. Amongst the numerous amendments to CASPA, Act 27 now provides:

  • If an owner fails to adhere to the terms or withholds payment, contractors and subcontractors may stop performance of the work (subject to contractual limits);
  • There is no permissible waiver of any provision of CASPA;
  • Failure to provide the contractor with a 14 day written notice of a deficiency results in a waiver of the right to withhold payment for the deficiency and requires full payment of the invoice;
  • If a party alleges an invoice contains an error, that party must pay the correct amount on the date payment would otherwise be due otherwise it will be an improper withholding; and,
  • Withholding retention for longer than 30 days after final acceptance of the work generally qualifies as improper withholding.

These new changes are scheduled to take effect on October 10.

Without question, these changes increase the negotiation power of contractors and subcontractors, however, more importantly, the changes reinforce the need for owners and contractors to maintain clear payment records as only clear payment records will provide owners and contractors a sufficient defense in any payment dispute. Owners, contractors and subcontractors involved in payment disputes need to be aware of their respective obligations and rights.

Anyone in the construction industry that has questions about these amendments and how they may affect their business or current projects, please contact Jonathan Romvary at [email protected].

Little Miller, Big Implications

Posted on: June 20th, 2018

By: Samantha Skolnick

In Georgia, when an individual performs work on a state construction project, they can file a lien for non-payment.  The lien is against the project through Georgia’s Little Miller Act. The claim itself is not against the state or county’s actual property. The claim is against a posted bond, and is a “Bond Claim” or “Little Miller Act Claim.”

In a recent decision by the Eleventh Circuit, the Court affirmed summary judgment for the surety based on Georgia’s one-year statute of limitations for little miller act claims. Strickland v. Arch Ins. Co., No. 17-106102018 WL 327443 (11th Cir. Jan. 9, 2018) (rehearing denied Apr. 4, 2018).

Strickland was tasked with providing sand to a paving company (“Douglas”) for the Georgia Department of Transportation (“GDOT”) as they worked on a road improvement project (the “Project”).  Arch Insurance Company (“Arch”) was the surety who issued payment and performance bonds for Douglas.  In 2007, GDOT declared Douglas in default and they were removed from the Project.  The surety brought in another company to complete the work on the Project. Strickland did not supply any sand after Douglas was removed from the Project.

GDOT determined that the Project was substantially complete in August of 2010 and in September 2010 made its punch list. The new contractor brought on by the surety finished the punch list in September 2011.  In March 2012, GDOT accepted Project maintenance responsibilities and made semi-final payment to Arch in July 2012.

In September 2012, Strickland directed a demand for payment on Arch’s payment bond.  Arch acknowledged the claim but requested additional documentation, which was not provided by Strickland.  In 2014, Strickland filed a lawsuit against Arch. The trial court concluded that there was no dispute that the project was completed and accepted in September 2011.  With that ruling, Georgia’s one-year statute of limitations on payment bond claims barred Strickland’s action and consequently Strickland appealed.

The Appellate Court rejected Strickland’s arguments, holding that “completion” and “acceptance” used in the statute relate to the actual work on the project and are not dependent on the ending of future contractual duties or on the public owner’s internal policies and procedures.

The main takeaway: under Georgia law, the date a public owner states that the project is “completed” or “accepted” does not dictate whether the statute of limitation is running.  Georgia’s one-year statute of limitations under Georgia’s Little Miller Act begins when the actual work is substantially completed. Punch list items do not need to be finished.

If you have any questions, please contact Samantha Skolnick at [email protected].