United Riggers & Erectors, Inc. v. Coast Iron & Steel Co., 2018 Cal. Lexis 3510 (May 14, 2018)
This post was published in the August 16, 2018 issue of eNews published by National Association of Credit Management (NACM).
In 2010, Universal City (“Universal”) hired Coast Iron & Steel Co. (“Coast Iron”) to build a new ride at the Universal Studios Hollywood. Coast Iron subcontracted the installation of the metalwork to United Riggers & Erectors, Inc. (“United Riggers”). The initial subcontract between Coast Iron and United Riggers was for $722,742 but was increased by change orders to approximately $1.5 million. United Riggers completed its work to Coast Iron’s satisfaction. In August 2012, Universal made its final retention payment to Coast Iron. However, Coast Iron refused to pay any retention to United Riggers due to disputes over change order requests from United Riggers to increase the subcontract price by approximately $350,000. United Riggers then filed suit to collect these sums, including prompt payment penalties under California Civil Code Section 8814 for failure to timely pay retention. Coast Iron ultimately paid all of the $149,602.52 in retention owed to United Riggers during the litigation. After a bench trial, the trial court entered judgment in favor of Coast Iron. The Court of Appeal reversed the trial court’s ruling on the statutory claim for failure to make timely retention payments. The California Supreme Court affirmed.
Continue Reading Under California’s Prompt Payment Statute, a Direct Contractor May Not Withhold Retention From a Subcontractor Simply Because a Dispute Exists Between the Parties. To Allow Withholding, the Dispute Must Relate Directly to the Specific Retention Amount Due.