Recently, in Phase 1 of a bifurcated bench trial, partner, Mark Collinsworth, obtained a verdict finding that the firm’s client, an asphalt manufacturer, qualified as a “subcontractor” under California’s prompt payment statute (Public Contracts Code 10262.5). Given the amounts at issue in this case, the additional interest (over and above the contractual interest of 1.5% per month) and attorneys’ fees constituted a substantial amount of money toward our client’s claims.
Our client contracted with the prime contractor on a Cal Trans highway project to supply asphalt. The asphalt manufactured had to comply with detailed Cal Trans specifications. The general contractor argued that our client was a material supplier and not a subcontractor, and therefore, not entitled to the benefits of the prompt payment statutes which allow for the recovery of 2% interest per month on undisputed amounts due, plus attorneys’ fees and costs. Given the amounts at issue in this case, the additional interest (over and above the contractual interest of 1.5% per month) and attorneys’ fees adds approximately $350,000 to our client’s claims.
The court, following the two leading California decisions, found by combining the raw materials necessary to make asphalt (aggregate, sand, oil, and additives) and delivering a product that was ready to be placed once delivered to the site, our client was a subcontractor. This is a big win for our client not only on this case, but hopefully on future cases.