Interest; No Penalty; Attorneys’ Fees to be Determined

By: Jason M. Yarbrough, Esquire jmy@muslaw.com

In Ruthrauff, Inc. v. Ravin Inc. et al., the Pennsylvania Superior Court found a heating subcontractor was not required to employ its own design engineering experience in installing a heating system where the subcontractor was hired to install the system pursuant to the general contractor’s plans and the manufacturer’s recommendations. The subcontractor brought a Pennsylvania Contractor Subcontractor Payment Act (“PCSPA”) claim against the general contractor, seeking damages, interest on the retainage withheld, penalties and attorneys’ fees. The award of interest, penalties and attorneys’ fees are assessed by different standards under the PCSPA.

The subcontractor was entitled to interest because the general contractor “unreasonably withheld” paying retainage given the subcontractor’s performance of its duties. The Court did not impose a penalty on the general contractor given the trial court’s findings that the retainage was not “wrongfully withheld” because the general contractor withheld payment in good faith (believing the subcontractor was required to use its HVAC experience) and the amount withheld was customary in the industry (10%). Finally, the Court found the trial court needed to evaluate whether the net judgment in favor of the subcontractor made it a “substantially prevailing party” entitled to attorneys’ fees.

For more information on this case or the Pennsylvania Contractor Subcontractor Payment Act, please contact Jason M. Yarbrough at jmy@muslaw.com or call 412-456-2592.