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Should I pursue a mechanics lien, bond claim or legal action? OR ALL THREE?

CaliforniaRecovery Options

I am writing on behalf of our company Earthtek Grading & Paving, Inc. that has not been paid ($55,018.61) for the services provided from 8/2017-10/2017 to Integra Construction Services, Inc. on the project Yerba Buena High School YB Concession/Restroom Bid. I would like to make a claim and pursue getting paid for this work we completed and your help would be appreciated. I have made a stop payment notice with the awarding body: East Side Union High School District. Integra has offered to settle at a much lower amount ($38K), we countered them with a slightly higher amount (meeting in the middle at $46K) and they have not replied in the past 60 days. We also intend to make a claim with the Contractor's State License Board. From the original work performed, the only thing paid was materials ($11K) on 6/5/2018; we have not been paid for balance of the labor/equipment which is $55,018.61. The work agreement was verbal between Alex Giammona (owner of Integra) and Victor Ramirez (owner of Earthtek) for time/materials. We've reached an amount owed but they keep asking for more documentation. Originally, we replaced another contractor on the project for them, so we rushed in for an urgent situation. They are stating this was a prevailing wage job, although that was never disclosed to us. To appease them and encourage payment, we did hire a third party company to do some certified payroll documentation for us and submit it to the state DIR, but they are still refusing to pay us. We are a small subcontractor that does not specialize in public works projects and they are a large general contractor that primarily does these type of projects. We have done all that we can in good faith of getting paid for the work done. Please help!

1 reply

Mar 22, 2019
I'm sorry to hear about your payment troubles on this job - no one should have to jump through hoops just to be paid the amounts they've already earned. There may be a few potential options for a public works subcontractor to recover payment from their general contractor - but it's worth noting that, as time elapses, the options for payment recovery tend to diminish. Still, when a California stop payment notice is made and remains unpaid, it may come time to enforce the stop payment notice (via lawsuit). An action to enforce a stop payment notice must be filed more than 10 days after the claim was made, but also within 90 days after the time in which the stop notice could have been filed (making the deadline either 120 days after a notice of completion is filed, or within 180 days of the completion of the work of improvement if no notice of completion is filed). If the deadline to file an action enforcing a stop payment notice passes, and no action to enforce the claim is made, recovery based upon the stop payment notice might not be possible. Still, there are other options that could be effective to recover payment. For one, there's a chance a bond claim might be made. California has an interesting bond claim deadline, and the time for making a claim could extend for quite some period of time. For California bond claims, the deadline to make a claim on the bond is within 15 days after a Notice of Completion is filed, or, if a Notice of Completion isn't filed, 75 days from the overall completion of the improvement. So, even when a claimant's work ceased a long time ago, if the overall project is ongoing or has only recently been completed, then a claimant might be able to make a bond claim. Yet another option for recovery might be to threaten specific legal action via demand letter from an attorney. By sending a letter threatening specific legal actions that will be taken if payment doesn't come (such as an action based on breach of contract or unjust enrichment, potentially), a claimant can show their customer that they're serious about getting paid and that they're not afraid to get their hands dirty in doing so. Another option might be to threaten action under California prompt payment laws. In California, if payments aren't made in accordance with those prompt payment laws, a nonpaying party might be liable for extensive interest penalties on unpaid amounts. For more on those laws, this resource should help: California Prompt Payment Claims. Finally, actually proceeding with legal claims in court is always an option. While litigation is expensive and can pose a lot of risk, when large amounts are on the line, litigating the matter might be necessary. What's more, prevailing parties are commonly entitled to recover their filing fees and attorney fees. Lastly, as mentioned in your question, threating to make a complaint to the California Contractors State License Board can help incentivize a nonpaying customer into paying what's due under the agreement. And, if necessary, actually making a claim could hit them where it hurts. I hope this information was helpful! If you have further questions, don't hesitate to return to the Construction Legal Center.
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