{"id":898226,"date":"2020-11-18T11:43:35","date_gmt":"2020-11-18T18:43:35","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=898226"},"modified":"2020-11-18T11:43:41","modified_gmt":"2020-11-18T18:43:41","slug":"federal-prompt-pay-act","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/federal-prompt-pay-act\/","title":{"rendered":"Federal Prompt Pay Act Does Not Afford Subcontractors Right to Sue General Contractor"},"content":{"rendered":"\n

Douglas L. Patin and Amandeep S. Kahlon | Buildsmart<\/a><\/p>\n\n\n\n

On October 15, 2020, in\u00a0EMTA Insaat Taahhut ve Ticaret A.S. v. Cosmopolitan Incorporated<\/em>, a federal district court held that the federal Prompt Pay Act<\/a> (PPA) (31 U.S.C. \u00a7\u00a7 3901, et al.) does not create a private right of action for a subcontractor against a general contractor.\u00a0 The dispute arose from a project for the installation of hardened trailer systems at the U.S. consulate in Turkey. The subcontractor alleged that the general contractor failed to make payments, including interest penalties required by the PPA, under the parties\u2019 subcontract.<\/p>\n\n\n\n

The subcontractor sued the general contractor for breach of contract and breach of the PPA.  The general contractor moved to dismiss the breach of the PPA claim arguing that the PPA did not provide the subcontractor with a private right of action. Opposing the motion, the subcontractor contended that, because the subcontract incorporated the terms of the prime contract and the prime contract was governed by the PPA, the subcontract was also governed by the PPA. The subcontractor, therefore, alleged that the right to collect interest was a matter of contract \u2014 not statute. The federal district court rejected the subcontractor\u2019s argument and granted the motion to dismiss. The court found that \u201ccourts have repeatedly rejected the argument that the PPA contains either an explicit or implied private cause of action in favor of subcontractors\u201d and that neither the statutory text nor the legislative history supported the subcontractor\u2019s argument.<\/p>\n\n\n\n

The result in EMTA <\/em>underscores the importance of understanding the rights and remedies available for contractors and subcontractors on federal projects. Here, if the subcontractor had rested solely on the PPA to support is lawsuit, it may have been left with no recourse against the general contractor for nonpayment. In other contexts, understanding federal law may be even more important for preserving a subcontractor\u2019s rights. For example, subcontractors must comply with Miller Act requirements to preserve bond rights on federal projects. If a subcontractor encounters an insolvent general contractor, those bond rights may be the only security the subcontractor has available for nonpayment or other claims.<\/p>\n","protected":false},"excerpt":{"rendered":"

Douglas L. Patin and Amandeep S. Kahlon | Buildsmart On October 15, 2020, in\u00a0EMTA Insaat Taahhut ve Ticaret A.S. v. Cosmopolitan Incorporated, a federal district court held that the federal Prompt Pay Act (PPA) (31 U.S.C. \u00a7\u00a7 3901, et al.) does not create a private right of action for a subcontractor against a general contractor.\u00a0… Continue reading Federal Prompt Pay Act Does Not Afford Subcontractors Right to Sue General Contractor<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[9],"tags":[9895,224,520],"class_list":["post-898226","post","type-post","status-publish","format-standard","hentry","category-construction-contracts","tag-advise-consult","tag-construction-contract","tag-prompt-pay-act","entry"],"jetpack_publicize_connections":[],"yoast_head":"\nFederal Prompt Pay Act Does Not Afford Subcontractors Right to Sue General Contractor - 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