Court Further Confines CASPA

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After more than 20 years since its passage, the Pennsylvania courts are still being presented with novel case scenarios implicating the breadth of the applicability of the Pennsylvania Contractor and Subcontractor Payment Act (73 P.S. §501, et seq.), commonly referred to as CASPA, and are still defining the borders and periphery of the coverage of the Act. 

In the recent case of Clipper Pipe and Service, Inc. v. Ohio Casualty Insurance Co., involving a claim by a subcontractor against a general contractor and its surety that the subcontractor was entitled to protections and remedies of CASPA for the general contractor’s failure to pay it approximately $150,000, the applicability of the Act with respect to publicly owned projects was front and center.  The project from which the subcontractor’s claims arose was owned by the Department of the Navy, an entity of the Federal government.  Initially, the case was brought in the Federal District Court for the Eastern District of Pennsylvania.  The District Court ruled in favor of the subcontractor, awarding it damages and CASPA authorized statutory remedies of interest and attorneys fees.  The general contractor and its surety had previously sought summary judgment, arguing that the Federal government was not an “owner” as that term is defined in the Act arguing further that, therefore, CASPA was inapplicable to the Project, and its remedies were therefore unavailable to the complaining subcontractor. 

Under CASPA, the term “owner” is defined as “a person who has an interest in the real property that is improved and who ordered the improvement to be made.”  The term “person” is further defined in the Act as a “corporation, partnership, business trust, and other association, estate, trust foundation or a natural individual.”  The general contractor and its surety appealed the District Court’s decision to the Third Circuit Court of Appeals which subsequently certified the question of whether CASPA was applicable to a project which is owned by a government entity, specifically in this case the United States government. 

The Pennsylvania Supreme Court concluded that government entities are not included under the Act’s definition of “owner” and, therefore, the Act and its remedies were not available to Clipper Pipe. 

The case of Clipper Pipe makes clear that contractors or subcontractors who have claims for non-payment on projects owned by governmental entities may not seek redress through CASPA. 

All contractors and subcontractors are reminded that they must assert claims promptly and that they should seek advice of experienced counsel to review and preserve each and every potential contractual and statutory remedy available and should do so without delay. 

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