Public Prompt Payment Statute Allows For Recovery Of Fees By Prevailing Party.
Public Contract Code section 7107 allows the prevailing party to recover attorney’s fees and costs in a suit alleging that a public entity or contractor wrongfully withheld retention payments required to be distributed in a timely manner. This fee statute is bilateral in nature.
In Waters Contracting, Inc. v. Point Arena Joint Union High School Dist., Case Nos. A138573/A139717 (1st Dist., Div. 3 Jan. 29, 2018) (unpublished), contractor sued school district for damages, among other things including a section 7107 cause of action. School District was granted summary adjudication based on the argument that the underlying construction contract was void based on the parties’ failure to comply with competitive bidding requirements. Later, the trial court awarded school district $113,216 in attorney’s fees under section 7107, prompting an appeal by contractor.
Contractor lost both its merits and fee award challenges.
First, contractor argued that school district had to apportion between the fee and non-fee causes of action, but the problem was that this general rule ignored the applicable exception that the section 7107 and breach of contract claims were interrelated. Next, contractor argued that school district was estopped from obtaining a fee award because it was an active participant in the “illegal” conduct, but estoppel is not a defense to a fees award under the statute. (East West Bank v. Rio School Dist. (2015) 235 Cal.App.4th 742, 752.) Finally, with regard to the contention that the fee award was excessive, the trial judge did reduce for some post-summary adjudication work and the school district did face penalties beyond the withheld retention amount such that it was not unfair to have a fee award which was close in range to the amount of the withheld funds.