PaintSquare.com


The First Word in Protective & Marine Coatings

A Product of Technology Publishing / PaintSquare
JPCL | PaintSquare News | Durability + Design | Paint BidTracker

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.

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


SAFE Systems, Inc.
Portable Blast &
Recovery Equipment

Trailer or skid mounted blast and recovery equipment. Systems designed for maximum versatility, environmental compliance
and overall cost savings.
Call 1-800-634-7278


Van Air Systems
Get Dry Compressed Air Today!

Blasting contractors know that dry compressed air is key to superior surface preparation. Get dry air with Van Air Systems Portable Compressed Air Dryers.


Polygon
POLYGON - Temporary Humidity Control

We specialize in innovative climate control solutions for industrial painting, utilizing alternative energy sources and combining desiccants with heating or cooling.


GMA Garnet USA
GMA Garnet™
Natural Abrasives

- Superior cleaning
  performance
- Even Profile
- Low Dust
- Cost-Effective
- Environmentally friendly
- Recyclable up to 5 times
Tel : +1 832 243 9300


Elcometer, Inc.
Durability & Design meet
Performance & Reliability

Elcometer 319 Dewpoint Meter
View the technical data on the Elcometer Dewpoint meter.


ABKaelin, LLC
Quality is our bottom line

Services include:
• Environmental, Health &
  Safety
• Contractor QP Certification
• Quality Assurance Programs
  and Auditing
• SSPC C3/C5 and other
  Training
• Coatings
• Design/Construction
See our website at abkaelin.com or contact us today abkaelin@comcast.com

 
 
 
Technology Publishing

The Technology Publishing Network

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

 
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 2000-2014, 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