Clipper Pipe & Service, Inc. v. Ohio Casualty Insurance
115 A.3d 1278
Pa.2015Background
- The Department of the Navy contracted with Contracting Systems, Inc. II (CSI) for construction at a federal Reserve Training Center; CSI subcontracted mechanical/HVAC work to Clipper Pipe & Service, Inc. (Clipper).
- Clipper sued CSI and its surety (Ohio Casualty) in federal court for unpaid subcontractor charges and invoked the Contractor and Subcontractor Payment Act (CASPA), seeking interest, penalties, and fees available under CASPA.
- Defendants argued CASPA does not cover public works because a governmental owner (here, the federal government) is not a "person" or "other association" under CASPA, and that the Commonwealth Prompt Pay Act governs public projects; they also raised Supremacy Clause concerns for federal projects.
- Federal district courts had split: some predicted Pennsylvania courts would include governmental entities as "owners" under CASPA; state common pleas and Commonwealth Court decisions often treated the Prompt Pay Act as governing public projects instead of CASPA.
- The Third Circuit certified the question to the Pennsylvania Supreme Court: whether CASPA applies when the owner is a governmental entity (the federal government here).
Issues
| Issue | Plaintiff's Argument (Clipper) | Defendant's Argument (CSI/Ohio Casualty) | Held |
|---|---|---|---|
| Whether a governmental entity is an "owner" under CASPA | CASPA is remedial and should be liberally construed; federal government qualifies as a "person" or "other association" | "Person"/"other association" list excludes government; ejusdem generis limits catchall to private entities | Held: Governmental entities are not "owners" under CASPA; CASPA does not apply to public works |
| Whether the Prompt Pay Act, not CASPA, governs public projects | CASPA protections should extend to subcontractors on public projects; federal Prompt Pay Act addresses only federal contracts and does not preclude CASPA | The Commonwealth Prompt Pay Act specifically governs government contracts and is the more specific statute for public works | Held: Pennsylvania CASPA does not apply to projects where owner is governmental; statutory scheme favors Prompt Pay-type regimes for public projects |
| Application of ejusdem generis to "other association" in CASPA | "Association" can be read broadly to include government | "Other association" follows "corporation, partnership, business trust," so excludes government under ejusdem generis | Held: ejusdem generis supports excluding governmental entities from "other association" and thus from "person"/"owner" definitions |
| Supremacy and sovereign-immunity concerns for applying CASPA to federal projects | Any federal-preemption issues are mitigated because federal Prompt Pay Act could govern federal contracts | Applying state statute to federal owner risks conflicting with federal supremacy and should be avoided absent clear legislative intent | Held: State statute should not be construed to reach the sovereign absent clear intent; strict construction applies and avoids conflict with federal supremacy |
Key Cases Cited
- Scandale Associated Builders & Eng’rs, Ltd. v. Bell Justice Facilities Corp., 455 F. Supp. 2d 271 (M.D. Pa. 2006) (district court predicted Pennsylvania would treat a governmental entity as an "owner" under CASPA)
- Imperial Excavating & Paving, LLC v. Rizzetto Constr. Mgmt., Inc., 935 A.2d 557 (Pa. Super. 2007) (applied CASPA concepts in a public-project subcontract context)
- Vt. Agency of Natural Res. v. U.S. ex rel. Stevens, 529 U.S. 765 (2000) (presumption that statutory term "person" does not include the sovereign)
- E. Coast Paving & Sealcoating, Inc. v. N. Allegheny Sch. Dist., 111 A.3d 220 (Pa. Cmwlth. 2015) (concluded Prompt Pay Act, not CASPA, governs government agency contracts)
- Meyer v. Community Coll. of Beaver Cnty., 93 A.3d 806 (Pa. 2014) (statutes in derogation of sovereign immunity construed narrowly)