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Suit For Retention Backfires But Finds No Jurisdiction On Subs Switch

Sunday, November 04, 2007 12:57 pm

 
Suit For Retention Backfires But Finds No Jurisdiction On Subs Switch

The California Court of Appeal ruled that a statute a contractor used to recover withheld funds automatically exposed it to comparatively substantial legal fines when it lost its case. The court also struck down a fine on the contractor imposed under the California's Subletting and Subcontracting Fair Practices Act, ruling that courts lack the jurisdiction to impose penalties under the act.

In the spring of 2002, the City of Sunnyvale (City) contracted with Thompson Pacific Construction, Inc. (Thompson) to build the Sunnyvale Senior Center. Completion was delayed, and disputes arose about the delays and payment owed. Thompson unilaterally ceased work, so the City completed the project itself and withheld $279,428 for work it claimed was incomplete, improperly done or delayed.

Thompson sued the City to recover this unpaid retention and charged that it was due about a quarter of [...]

 
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