Prompt Pay Act
January 2006

There was a recent case decided by the Pennsylvania Superior Court, American Rock Mechanics, Inc. v. N. Abbonizio Contractors, Inc. and Fidelity and Deposit Company of Maryland which restated a principal that I am sure that you are aware of, but just as a reminder:

• The Court ruled that your contract with a Subcontractor/Supplier controls the payment terms and that the Pennsylvania Prompt Pay Act does not give a defense to the Owner or Contractor to withhold payment. In the Prompt Pay Act, it provides that the Contractor must pay the Subcontractor within 14 days of receipt of the money from the owner. The Court granted a Judgment on the pleadings to the Supplier/Subcontractor with interest and penalty, etc., as permitted by the Prompt Pay Act. The significance of the case is to restate that your contract will prevail if an earlier payment is required, that you will not be able to use as a defense the provision that a Subcontractor must be paid within 14 days after receipt of the money from the owner. (In this case, the contract required payment in 30 days, whereas the owner did not pay the General Contractor long after the 30 days.)
  
  
• The case also states that when answering a Complaint and alleging a counterclaim/setoff, the defendant must be very specific in their pleading, otherwise, the counterclaim/setoff will be ignored by the Court. A defendant must give chapter and verse and specific claims for the counterclaim/setoff to be recognized by the Court.
  
  
• The Court also reminded Contractors that the Prompt Pay Act requires the General Contractor to give to the Subcontractor information on payment terms under the contract between the Contractor and Owner.