PaintSquare.com
      | Connect Follow us on Twitter Like us on Facebook
About | Subscribe | Advertise
  

 

Download the FREE Equipment and Rental Resource Guide

Paint and Coatings Industry News

Main News Page


Public Entity Must Pay Sub, Court Says

Tuesday, May 24, 2011

More items for Program/Project Management

Comment | More

Government entities cannot duck a subcontractor’s payment claim by pleading either lack of funds or sovereign immunity, the Maryland Court of Appeals has ruled.

The court rejected a claim by a public school board that it did not pay a subcontractor because it lacked funds and, as a government entity, had “sovereign immunity” from the subcontractor.

The April 27 ruling orders a new trial in Board of Education of Worcester County v. BEKA Industries, Inc.

At Stake: $1.1M

The case arises from a written contract dispute between BEKA Industries Inc., of Baltimore, and the Worcester County Board of Education. Between 2004 and 2006, BEKA was one of 20 trade contractors awarded a lump-sum contract to contribute to the construction of a new public school. 

 ASA President Timmy McLaughlin
ASA president Timmy McLaughlin said the ruling would avert chaos in the Maryland public works market.

Due to circumstances acknowledged by the board as beyond the contractor’s control, BEKA’s work was delayed for almost six months. Later, disputes arose over the amounts owed to the contractor. Owed more than $1.1 million in outstanding debts, BEKA sued the school board to recover damages.

At trial, the school board argued that:

  • School boards are “state agencies,” entitled to sovereign immunity under Maryland state law and exempt from judgments in excess of $100,000; and
  • The $1.1 million BEKA was seeking qualified as unrecoverable delay damages.

Business ‘Disincentive’ Cited

On Feb. 26, 2010, the Court of Special Appeals rejected the sovereign-immunity defense, citing in part a “friend of the court” brief filed by the American Subcontractors Association’s Baltimore Chapter and the D.C. Metropolitan Subcontractors Association.

The associations argued that “the disincentive created by the government’s ability to invoke the doctrine of sovereign immunity to avoid its contractual obligations would harm private industry … and would significantly impact a public entity’s ability to efficiently conduct the business of government, to the ultimate detriment of the taxpayers.”

The brief cited a state law waiving claims of sovereign immunity, and the Court of Special Appeals agreed that “there has been a legislative waiver of a county board of education’s defense of sovereign immunity in contract actions."

The court held, however, that the subcontractor had to prove that the school board had, or could raise, the “funds available to satisfy the judgment” in order to collect the payment for its work.

The case then went to the Maryland Court of Appeals, which rejected the argument that the school board couldn’t be obligated to pay the subcontractor’s claim. The court noted that the board was a local entity whose budget was determined at the county—not state—level.

Statutory Funding Noted

The associations noted in their brief that state law “provides a funding mechanism to satisfy a judgment entered against counties, their agencies or boards.” The Court of Appeals agreed and ruled that the subcontractor could not be denied payment “because funding is provided by statute.”

ASA’s Subcontractors Legal Defense Fund paid the fees associated with its filings in this case.

ASA President Timmy McLaughlin cheered the ruling.

“Sovereign immunity should not be cited as a reason not to pay subcontractors,” said McLaughlin. “Imagine if a public entity could sign a contract promising to pay for work, but then backtrack and not pay on the grounds of ‘sovereign immunity.’ The Maryland Court of Appeals’ decision was correct and averted creating chaos in the Maryland public works market.”

   

Tagged categories: Contracts; Laws and litigation; Lawsuits; Subcontractors

Comment Join the Conversation:

Sign in to our community to add your comments.

Armakleen Company, The
ARMEX when nondestructive cleaning is critical

The gentle physical propriety of baking soda but yet aggressive cleaning ability is what makes ARMEX the only choice for nondestructive abrasive blasting.


SAFE Systems, Inc.
Custom blast rooms
by SAFE Systems

Don't waste time and money "making do" with a "standard" design. Let us work with you to design and build the
system that best fits
your requirements.
Call 1-800-634-7278


Clemco Industries Corp.
Powerful Protection in a Small Package

Mounts inside blast helmet, alerts operator to dangerous breathing-air condition by audible, visual, and vibratory alarms. Easily calibrated, battery operated.


Fischer Technology Inc.
MP0R with rotating display screen

View your coating thickness readings from any angle with rotating display screen. New graphic display with easy menu navigation. Click for Video
Call 800-243-8417


DRYCO
The one way to control
a tank: DRYCO

Temporary climate control equipment. Dehumidifiers,
Heaters, A/C, Power, More…
Toll Free: 866-379-2600


Minerals Research & Recovery

HIGH PERFORMANCE ABRASIVES


“Made in the USA!”

Why recycle waste from other countries? Go FASTER, CLEANER, at 1/3 THE COST with MR&R “All-American” Sharpshot®HP!!

WATCH THE VIDEO


PreTox Products - NexTec, Inc.
GOT LEAD? Specify Pretox System products

The ONLY Lead Stabilizer Compatible with All Paint Removal Methods. Works with all Blast Media: Grits | Recyclable Abrasives | CO2 | Water | Power Tools | Etc. Call Dave Steffen at 800.338.8296.


Polyval Coatings
Polyflex® Polyurea Linings

Polyflex ™ new Polyurea Geotextile Membrane System has been specifically engineered to protect the environment in containment applications.
www.polyflexlinings.com


Novatek Corporation
Dustless Coatings Removal

Strip it, clean it, and profile it,
all dust free! High production
rates and Blast like finishes.
Comply with new lead
standards.

 
 
 
Technology Publishing

The Technology Publishing Network

The Journal of Protective Coatings & Linings (JPCL) PaintSquare
Durability + Design Paint BidTracker

 
EXPLORE:      JPCL   |   PaintSquare News   |   Interact   |   Buying Guides   |   Webinars   |   Resources   |   Classifieds
REGISTER AND SUBSCRIBE:      Free PaintSquare Registration   |   Subscribe to JPCL   |   Subscribe to PaintSquare News
MORE:      About PaintSquare.com   |   Privacy policy   |   Terms & conditions   |   Site Map   |   Search   |   Contact Us
 

© Copyright 2000-2015, Technology Publishing / PaintSquare, All rights reserved
2100 Wharton Street, Suite 310, Pittsburgh PA 15203-1951; Tel 1-412-431-8300; Fax 1-412-431-5428; E-mail webmaster@paintsquare.com