Bill Text: CA AB2021 | 2011-2012 | Regular Session | Amended
Bill Title: Works of improvement: disputed amounts.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Engrossed - Dead) 2012-08-30 - Read second time. Ordered to third reading. [AB2021 Detail]
Download: California-2011-AB2021-Amended.html
BILL NUMBER: AB 2021 AMENDED
BILL TEXT
AMENDED IN SENATE AUGUST 29, 2012
AMENDED IN SENATE AUGUST 23, 2012
AMENDED IN SENATE AUGUST 7, 2012
AMENDED IN SENATE JUNE 7, 2012
AMENDED IN ASSEMBLY MARCH 29, 2012
INTRODUCED BY Assembly Member Wagner
FEBRUARY 23, 2012
An act to amend Section 7108.5 of the Business and Professions
Code, and to amend Sections 8800, 8812, and 8814 of the Civil Code,
relating to works of improvement.
LEGISLATIVE COUNSEL'S DIGEST
AB 2021, as amended, Wagner. Works of improvement: disputed
amounts.
Existing law contains various provisions relating to contracts for
the performance of private works of improvement, including
provisions for the withholding and disbursement of retention
proceeds. Existing law provides that, with respect to those contracts
for works of improvement, the retention proceeds withheld from any
payment may not exceed 150% of the disputed amount.
This bill would increase the amount that may be withheld from
progress payments or final payments, depending on the circumstances,
to a sum of various amounts and percentages, as specified.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 7108.5 of the Business and Professions Code is
amended to read:
7108.5. (a) A prime contractor or subcontractor shall pay to any
subcontractor, not later than seven days after receipt of each
progress payment, unless otherwise agreed to in writing,
the respective amounts allowed the contractor on account of the work
performed by the subcontractors, to the extent of each subcontractor'
s interest therein , unless otherwise agreed to in writing
. In the event that there is a good faith dispute over the
amount due on a progress payment, the prime contractor or
subcontractor may withhold from the progress payment an amount not to
exceed the sum of the following:
(1) The delay damages for which the subcontractor may be liable.
(2) One hundred fifty percent of the estimated cost of repair or
replacement of subcontract work that was not performed according to
the subcontract.
(3) The amount of any written claim against the prime contractor
for a violation of the Labor Code or a collective bargaining
agreement by the subcontractor or any other person performing work
required by the subcontract.
(4) That portion of any mechanics lien or stop payment notice
claim by the subcontractor or any other person performing work
required by the subcontract for which the subcontractor has already
been paid.
(5) The amount that would have been withheld by the owner pursuant
to Section 8470 or 8522 of the Civil Code, but for a bond provided
by the prime contractor pursuant to Section 8424 or 8510 of the Civil
Code.
(b) Any violation of this section shall constitute a cause for
disciplinary action and shall subject the licensee to a penalty,
payable to the subcontractor, of 2 percent of the amount due per
month for every month that payment is not made. In any action for the
collection of funds wrongfully withheld, the prevailing party shall
be entitled to his or her attorney's fees and costs.
(c) The sanctions authorized under this section shall be separate
from, and in addition to, all other remedies, either civil,
administrative, or criminal.
(d) This section applies to all private works of improvement and
to all public works of improvement, except where Section 10262 of the
Public Contract Code applies.
SEC. 2. Section 8800 of the Civil Code is amended to read:
8800. (a) Except as otherwise agreed in writing by the owner and
direct contractor, the owner shall pay the direct contractor, within
30 days after notice demanding payment pursuant to the contract is
given, any progress payment due as to which there is no good faith
dispute between them. The notice given shall comply with the
requirements of Chapter 2 (commencing with Section 8100) of Title 1.
(b) If there is a good faith dispute between the owner and direct
contractor as to a progress payment due, the owner may withhold from
the progress payment an amount not in excess of the sum of both of
the following:
(1) The liquidated damages assessed against the contractor.
(2) One hundred fifty percent of the estimated cost of repair or
replacement of contract work that was not performed according to the
contract.
(3) The amount of any written claim against the owner for a
violation of the Labor Code or a collective bargaining agreement by
any contractor.
(4) That portion of any mechanics lien or stop payment notice
claim by any contractor for which the direct contractor has already
been paid.
(c) An owner that violates this section is liable to the direct
contractor for a penalty of 2 percent per month on the amount
wrongfully withheld, in place of any interest otherwise due. In an
action for collection of the amount wrongfully withheld, the
prevailing party is entitled to costs and a reasonable attorney's
fee.
(d) This section does not supersede any requirement of Article 2
(commencing with Section 8810) relating to the withholding of a
retention.
SEC. 3. Section 8812 of the Civil Code is amended to read:
8812. (a) If an owner withholds a retention from a direct
contractor, the owner shall, within 45 days after completion of the
work of improvement, pay the retention to the contractor.
(b) If part of a work of improvement ultimately will become the
property of a public entity, the owner may condition payment of a
retention allocable to that part on acceptance of the part by the
public entity.
(c) If there is a good faith dispute between the owner and direct
contractor as to a retention payment due, the owner may withhold from
final payment, unless already withheld from a progress payment, an
amount not in excess of the sum of all of the following:
(1) The liquidated damages assessed against the contractor.
(2) The amounts withheld pursuant to Sections 8470 and 8522.
(3) One hundred fifty percent of the estimated cost of uncompleted
contract work, except for those costs that are withheld under any
paragraph of any subdivision of this section.
(4) One hundred fifty percent of the estimated cost to repair or
replace contract work that was not performed according to the
contract, except for those costs that are withheld under any other
paragraph of any subdivision of this section.
(5) The amount of any written claim against the owner for a
violation of the Labor Code or a collective bargaining agreement by
any contractor.
(6) That portion of any mechanics lien or stop payment notice
claim by any contractor for which the direct contractor has already
been paid.
SEC. 4. Section 8814 of the Civil Code is amended to read:
8814. (a) If a direct contractor has withheld a retention from
one or more subcontractors, the direct contractor shall, within 10
days after receiving all or part of a retention payment, pay to each
subcontractor from whom retention has been withheld that
subcontractor's share of the payment.
(b) If a retention received by the direct contractor is
specifically designated for a particular subcontractor, the direct
contractor shall pay the retention payment to the designated
subcontractor, if consistent with the terms of the subcontract.
(c) If a good faith dispute exists between the direct contractor
and a subcontractor, the direct contractor may withhold from the
retention to the subcontractor an amount not in excess of the sum of
all of the following:
(1) The delay damages for which the subcontractor may be liable.
(2) That portion of any mechanics lien or stop payment notice
claim by the subcontractor or any other person performing work
required by the subcontract for which the subcontractor has already
been paid.
(3) The amount that would have been withheld by the owner pursuant
to Section 8470 or 8522, but for a bond provided by the direct
contractor pursuant to Section 8424 or 8510.
(4) One hundred fifty percent of the estimated cost of uncompleted
subcontract work, except for those costs that are withheld under any
other paragraph of any subdivision of this section.
(5) One hundred fifty percent of the estimated cost to repair or
replace subcontract work that was not performed according to the
subcontract, except for those costs that are withheld under any other
paragraph of any subdivision of this section.
(6) The amount of any written claim against the direct contractor
for a violation of the Labor Code or a collective bargaining
agreement by the subcontractor or any other person performing work
required by the subcontract.
