Zumar v. Caymus
418 P.3d 936
| Ariz. Ct. App. | 2017Background
- NPS (a federal agency) contracted with Caymus to supply/install road signs at Grand Canyon NP for $292,300; NPS treated the prime contract as a service contract and did not require a construction bond.
- Caymus subcontracted sign panels to Zumar for roughly $92,794; Zumar delivered panels in March 2014 but NPS identified defects/missing items.
- Caymus certified 100% completion to NPS and received $98,800 for the sign-panel line; Caymus paid Zumar about $59,278 but withheld ~$35,632 for performance issues.
- Zumar sued Caymus in 2014 for breach of contract and pursued arbitration; Zumar moved for summary judgment in superior court claiming Caymus violated Arizona Prompt Pay Act and the Federal Prompt Pay Act; the superior court granted summary judgment for Zumar and denied Caymus leave to add counterclaims.
- On appeal, the Arizona Court of Appeals reviewed statutory applicability (Arizona Prompt Pay Act and Federal Prompt Pay Act) and whether the superior court abused discretion in denying leave to add counterclaims.
Issues
| Issue | Plaintiff's Argument (Zumar) | Defendant's Argument (Caymus) | Held |
|---|---|---|---|
| Whether Arizona Prompt Pay Act (APPA) applies to a subcontractor on a federal project | APPA governs contractor–subcontractor payment obligations regardless of identity of owner; §32-1129.02 applies "notwithstanding other provisions" | APPA is premised on an "owner" as defined; federal agencies are not included and Act presumes state/private owners and owner–contractor payment flow | Court held APPA inapplicable to federal work projects because the Act’s defined "owner" excludes government agencies and the statutory scheme centers on owner-to-contractor payment flow; reversed summary judgment on that basis |
| Whether the Federal Prompt Pay Act (FPPA) creates a private right or alters subcontract rights here | Zumar argued FPPA’s prompt-payment requirements read into subcontracts entitle it to relief | Caymus argued (1) the NPS–Caymus contract was not a "construction contract" subject to FPPA and (2) FPPA does not provide a private cause of action for subcontractors to base recovery upon | Court held Zumar failed to show the prime contract was a FPPA-covered "construction contract," and reiterated FPPA does not create an independent private right to recover against a contractor based solely on FPPA provisions; summary judgment improper on FPPA grounds |
| Whether a prompt-pay violation excuses Zumar's further performance so Caymus' counterclaims are futile | Zumar contended Caymus’ alleged prompt-pay violations were a material breach that excused Zumar from further performance | Caymus sought leave to add counterclaims (breach, breach of warranty, unjust enrichment) alleging Zumar’s deficient performance | Because the court’s statutory rulings were reversed, the lower court’s futility finding (denying amendment) was reversible; remanded for further proceedings allowing counterclaims consideration |
| Whether summary judgment on breach of contract (Net 30 invoices) was appropriate | Zumar later argued there were no material fact disputes on unpaid Net-30 invoices | Caymus noted factual disputes and defense; trial court did not rule on this theory | Appellate court declined to consider this new argument raised for first time on appeal and did not affirm on this ground |
Key Cases Cited
- Stonecreek Bldg. Co., Inc. v. Shure, 216 Ariz. 36 (App. 2007) (describing APPA’s purpose to ensure owner-to-contractor and down-the-line timely payments)
- Elec. Constr. Co. v. Flickinger, 107 Ariz. 222 (1971) (Arizona statutes regulating contractors do not apply to subcontractors performing for the United States)
- W & W Steel, LLC v. BSC Steel, Inc., 944 F. Supp. 2d 1066 (D. Kan. 2013) (discussing FPPA requirement that prime-contractors include subcontract prompt-pay clause and rejecting FPPA as creating an independent private cause of action)
- Nat’l Bank of Ariz. v. Thruston, 218 Ariz. 112 (App. 2008) (movant must support summary-judgment claims with relevant evidentiary materials; conclusory assertions insufficient)
- Schwab v. Ames Constr., 207 Ariz. 56 (App. 2004) (appellate review of summary judgment is de novo on legal correctness)