Orange County Branch Newsletter
Law and Civil Engineering
"More" on Prompt Payment for Design Professionals on Public Works Projects
By Eugene Bass, Esq
In my last article, the topic of prompt payment laws for design professionals on public works projects was discussed. There are also prompt payment laws that benefit subconsultant design professionals on public works projects. A "subconsultant design professional" is defined as a design professional having a written contract with a "prime design professional." A "prime design professional" is a design professional having a written contract directly with the public agency.
In a contract for public works of improvement, a prime design professional must pay to each subconsultant design professional the amount due him or her from the payment received, not later than 15 days after receipt of each progress payment or final retention payment. If the prime design professional disputes in good faith any portion of the amount due, he or she may withhold from the payment an amount not to exceed 150 percent of the disputed amount.
If any amount is wrongfully withheld or is not timely paid, the subconsultant design professional shall be entitled to a penalty of 1 1/2 percent of the improperly withheld amount, in lieu of any interest otherwise due, per month, for each month that payment is not made. In any action for the collection of amounts withheld, the prevailing party shall be entitled to his or her reasonable attorney's fees and costs.
As a general rule, one party cannot legally collect attorney fees from the other in a lawsuit unless the agreement between the parties provides for the payment of attorney fees. The law pertaining to prompt payment of subconsultants includes the right to attorney fees whether or not the contract between the parties contains an “attorney fee provision,”
The imposition of monthly penalty amounts and the provision for payment of attorney's fees can be very strong inducements for prompt payment Special care should be taken, however, that the subconsultant agreement be in writing as a written contract is required for the law to apply.