The Pennsylvania Contractor and Subcontractor Payment Act, as well as the Pennsylvania Prompt Payment Act, are subject to the six-year statute of limitations set forth in Section 5527(b) of the Judicial Code.
In East Coast Paving & Sealcoating, Inc. v. North Allegheny School Dist., No. 751 C.D. 2014 (Pa.Cmwlth. March 6, 2015), East Coast filed a complaint against the School District seeking, among other things, damages under the Contractor and Subcontractor Payment Act, 73 P.S. §§ 501-516 (“CASPA”). During trial, East Coast moved to amend its complaint to add claims under a portion of the Procurement Code (referred to by the Court as the “Prompt Pay Act”), 62 Pa.C.S. §§ 3931-3939, as an alternative to the complaint’s CASPA claim. The School District opposed the motion on the grounds that it was barred by the two-year statute of limitations for an action upon a statute for a civil penalty. The trial court denied East Coast’s motion to amend. Nevertheless, the trial court entered a verdict in favor of East Coast and awarded East Coast statutory interest and attorneys’ fees pursuant to CASPA.
On appeal, the School District argued that the trial court erred in holding that CASPA applied to East Coast’s claim against a school district. Instead, asserted the School District, East Coast’s claim is governed by the Prompt Pay Act, 62 Pa.C.S. §§ 3931-3939. The School District also argued that the trial court erred by not applying the two-year statute of limitations to East Coast’s CASPA claim.
In a question of first impression, the court was tasked with the statutory construction questions of whether a school district can be held accountable to its contractor under either CASPA or the Prompt Pay Act or both. The court held that Prompt Pay Act, not CASPA, governs construction contracts between a governmental agency, such a school district, and a contractor. Accordingly, the trial court erred in applying the remedies set forth in CASPA. Note that the Court did not address the issue of whether a subcontractor on a public project is limited to remedies under the Prompt Pay Act.
Next, the court addressed the statute of limitation argument, noting that the issue was important because the trial court denied East Coast’s motion to add a count to the complaint under the Prompt Pay Act, because it accepted the School District’s position that the motion was untimely under the two-year statute of limitations for civil penalties and forfeitures in Section 5524(5) of the Judicial Code. Under Section 5524(5), an action upon a statute for a civil penalty must be commenced within two years.
The court held that Section 5524(5) does not apply to either CASPA or the Prompt Pay Act. In support of its holding, the court reasoned that “a two-year statute of limitations would be illogical for a statute intended to reimburse a contractor for attorneys’ fees incurred in litigation that itself was subject to a four-year statute of limitations, i.e., a breach of contract claim. The court further explained that, unlike civil penalties imposed by a governmental agency for violation of a statute, regulation or permit, the penalty and attorney fees provisions of the Prompt Pay Act, are remedial and compensatory, not purely punitive.
Finally, since neither statute has established its own statute of limitations, the court held that the residual six-year statute of limitations set forth in Section 5527(b) of the Judicial Code applies to both CASPA and the Prompt Payment Act. As such, the court held that the trial court erroneously denied East Coast’s motion to amend its complaint to include a Prompt Pay Act count. This case creates an interesting scenario in which a contractor may no longer have a breach of contract claim (which has a four-year statute of limitations), but it may have a valid claim under the Prompt Payment Act portion of the Procurement Code (which the Court interpreted as having a six-year statute of limitations).