United Riggers & Erectors, Inc. v. Coast Iron & Steel Co.Annotate this Case
A direct contractor’s timely payment to its subcontractors may be excused under Cal. Civ. Code 8814(c) only when the direct contractor has a good faith basis for contesting the subcontractor’s right to receive the specific monies that are withheld.
United Riggers & Erectors, Inc. (United Riggers) sued Coast Iron & Steel Co. (Coast Iron) alleging failure to make prompt payment of monies owed United Riggers for its work on a project. See Cal. Civ. Code 8814, 8818. Coast Iron paid United Riggers, but the payments did not moot United Riggers’s statutory claim because the statutory scheme imposes a penalty for delay. The trial court entered judgment for Coast Iron. The court of appeal reversed on the statutory claim for failure to make timely retention payments, holding that Coast Iron could not use the parties’ dispute over project mismanagement to justify withholding United Riggers’s pay. The Supreme Court affirmed, holding that Coast Iron did not present a good faith argument for why the withheld monies were no longer due to United Riggers.