Prompt Pay Act Provides Exclusive Remedy to Construction Contractor Seeking Penalties and Attorney Fees against School District

A contractor seeking penalties and attorney fees against a government agency that has breached a construction contract must proceed under the Prompt Pay Act, the Commonwealth Court held in East Coast Paving & Sealcoating, Inc. v. North Allegheny School District, __ A.3d __ (No. 751 C.D. 2014, filed March 6, 2015). North Allegheny School District refused to pay East Coast Paving & Sealcoating, Inc. for certain repair work East Coast did during a paving project. East Coast filed a complaint seeking damages plus interest and attorney fees under the Contractor and Subcontractor Payment Act (CASPA), 73 P.S. §§501-516. East Coast moved to amend its complaint to add claims under the Prompt Pay Act, 62 Pa. C.S. §§3931-3939, which the School District argued, successfully, were barred by a two-year statute of limitations. Following a non-jury trial, the trial court awarded East Coast $365,694, including interest and attorney fees under CASPA.

On appeal, the School District argued, inter alia, that the trial court erred in holding that CASPA applies to a contractor’s contract claim against a school district. The Commonwealth Court agreed and reversed that part of the award. Writing for a unanimous three-judge panel, Judge Leavitt observed that both CASPA and the Prompt Pay Act protect contractors and subcontractors against not being paid promptly for work and materials they provide on a construction project. Notably, CASPA is broader in scope because it applies to any “owner” of real property, whereas the Prompt Pay Act applies only where the owner is a government agency. The penalty and attorney fee provisions of the statutes also have different triggers. The Court concluded that “

[i]t cannot be that a school district’s conduct towards its contractor is governed by both statutes at the option of the contractor,” because the contractor “would always invoke CASPA, which sets a lower threshold for the imposition of a penalty and attorney fees.” Accordingly, the Court held that the Prompt Pay Act, not CASPA, governs construction contracts between a government agency and a contractor.

The Court further held that, because the penalty and attorney fee provisions of the Prompt Pay Act are remedial and compensatory, not purely punitive, the residual six-year statute of limitations in 42 Pa. C.S. §5527(b) applies. Thus, because East Coast’s claims under the Prompt Pay Act were not untimely, the Court remanded to the trial court to determine whether any remedies are available to East Coast under the Prompt Pay Act.

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By | 2017-05-19T22:51:30+00:00 March 25th, 2015|Categories: Government Law, Municipal Law|Tags: , , , , , |Comments Off on Prompt Pay Act Provides Exclusive Remedy to Construction Contractor Seeking Penalties and Attorney Fees against School District

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