Blois Construction, Inc. v. FCI/Fluor/Parsons
245 Cal. App. 4th 1091
| Cal. Ct. App. | 2016Background
- Expo (public entity) contracted with FFP as general contractor; FFP subcontracted underground work to Blois. Both contracts allowed 10% retentions from progress payments.
- The general contract allowed Expo, after 50% completion, to stop withholding future retentions; in December 2009 Expo stopped withholding retentions on future progress payments to FFP (but reserved right to resume).
- Expo did not release previously withheld retention funds to FFP until May 30, 2014 or later.
- FFP continued to withhold previously accumulated retentions from Blois; by project completion Blois claimed over $500,000 in withheld retentions.
- Blois sought penalties under Public Contract Code § 7107 after FFP eventually paid Blois the retention amount in 2013; trial court denied penalties, and the Court of Appeal affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an owner’s decision to stop withholding future retentions (and make full progress payments) constitutes "retention proceeds" received by the original contractor under Pub. Contract Code § 7107(d) | Blois: stopping future withholding meant FFP "received" retention proceeds, triggering a 7‑day pay obligation to subcontractors and penalty exposure | FFP: § 7107 applies only when retention proceeds actually withheld are paid out; paying full progress payments (without having previously withheld those amounts) is not payment of retained funds | Court: No — § 7107 covers funds actually withheld and later released; full progress payments that do not release previously withheld retentions do not trigger § 7107 penalties |
Key Cases Cited
- Morton Engineering & Construction, Inc. v. Patscheck, 87 Cal.App.4th 712 (court recognizes prompt payment statutes’ purpose to ensure timely payments)
- S&S Cummins Corp. v. West Bay Builders, Inc., 159 Cal.App.4th 765 (de novo review for statutory interpretation)
- Yassin v. Solis, 184 Cal.App.4th 524 (final payment not a retention payment when not previously withheld)
- McAndrew v. Hazegh, 128 Cal.App.4th 1563 (penalties under prompt payment statutes require proof owner actually withheld retention proceeds)
- Murray’s Iron Works, Inc. v. Boyce, 158 Cal.App.4th 1279 (definition of "progress payment" in prompt payment context)