In Clipper Pipe & Service, Inc. v. The Ohio Casualty Ins. Co.; Contracting Systems, Inc. II, the Pennsylvania Supreme Court held that the Pennsylvania Contractor and Subcontractor Payment Act, 73 P.S. §501 et seq. (“CASPA”) does not apply to any dispute between contractors public works projects. Specifically, the project at issue in the Clipper case was owned by the United States Department of the Navy. The general contractor was Contracting Systems, Inc. II who hired Clipper Pipe & Service, Inc. (“Clipper”) as a subcontractor. A dispute arose between Clipper and Contracting Systems, and Clipper brought suit in the United States District Court for the Eastern District of Pennsylvania. After a jury trial, Clipper prevailed and was awarded CASPA remedies. Contracting Systems appealed to the Third Circuit and the federal appeals court applied for certification of a question of law to the Pennsylvania Supreme Court. The Supreme Court found that CASPA does not apply to governmental projects because a governmental entity is not an “owner” as defined in CASPA because governmental entities do not fall within the definition of a “person” and an “owner” must be a “person.”
It is noteworthy that in Scandale Associated Builders & Eng’rs, Ltd v. Bell Justice Facilities Corp., 455 F.Supp.2d 271, 281 (M.D. Pa. 2006) a federal district court had predicted that Pennsylvania courts would find that a governmental entity may be an owner for purposes of CASPA.
The question of the applicability of CASPA to disputes between contractors on government projects has been the subject of argument for many years, and the Clipper case finally resolves this question — we now know that contractors statutory payment rights on government projects will be determined by Chapter 39 of the Commonwealth Procurement Code and not CASPA.
In State v. Perini Corp., et. al. (2015 N.J. LEXIS 388)(N.J. April 30, 2015), the New Jersey Supreme Court interpreted the state’s ten year statute of repose (N.J.S.A. 2A:14-1.1(a)) with respect to a multi-phase prison construction project involving twenty-six buildings which were to be constructed in three uninterrupted phases. At issue was a high temperature, hot water system (“System”) which would provide heat and hot water to all of the buildings. The pertinent question was whether the statute of repose began to run on the System after each phase was complete, thus creating multiple dates, or after all buildings were complete and hooked up to the System.
The State of New Jersey (“State”) hired Perini Corporation (“Perini”) for construction and design of the South Woods State Prison (the “Project”). Perini hired Robert Kimball & Associates (“Kimball”) to perform engineering and consulting services, including design of the System. Perini also hired Natkin & Company (“Natkin”) as the HVAC contractor responsible for installation of the System and Jacobs Facilities, Inc. (“Jacobs”) to provide construction oversight services.
Phase I of the Project was completed on May 16, 1997, with the parties executing certificates of substantial completion. Inmates moved into the facility shortly thereafter. Phase IIA was completed between July 15, 1997 and October 27, 1998, with certificates of substantial completion executed. Phase II was completed on May 1, 1998. The buildings were all hooked up to the System as they were completed, and there was no separate certificate of substantial completion for the System. The State claimed the System first failed in March of 2000 and several times thereafter.
A Complaint was filed by the State on April 28, 2008 against all contractors for breach of contract and negligence. The defendants moved for summary judgment under the statute of repose, claiming that inmates occupied the prison on or before April 28, 1998, and that the System was substantially complete before that date. The trial court granted the defendants’ motion. The State appealed. The New Jersey Appellate Division reversed the trial court, holding that the statute of repose was triggered when the defendants substantially completed all of their work, which was no later than May 1, 1998. The defendants appealed.
The New Jersey Supreme Court noted the statute of repose only applied to “improvements to real property,” and that the System was in fact an improvement. The Court found itself in a unique position since it typically determined the statute of repose trigger date by the issuance of the certificate of substantial completion, and one was not issued for different phases. This in fact turned out to be a vital consideration for the Court. Although the Project was broken into three phases, the State argued it should be considered one Project for purposes of the statute of repose because the construction was uninterrupted and the defendants were involved in all aspects from the beginning until the end. The defendants argued the statute of repose should be triggered from the completion date of each phase.
The Supreme Court agreed with the State. Ultimately, the Court noted it would not apply the statute of repose in a fashion which would create separate trigger dates as phases were completed. The Court also found the fact that no separate certificate of substantial completion existed for each of the phases supported the position that neither party believed the System should be considered complete in a piecemeal fashion. The ten year statute of repose therefore began to run the day after the parties executed certificates of substantial completion for the final buildings served by the System- May 1, 1998, thus making the State’s claim timely.
Representative Dan Truitt, a Republican serving part of Chester County, Pennsylvania, recently proposed as House Bill 430 legislation that seeks to amend the Pennsylvania’s Mechanics’ Lien Law of 1963 (i.e. the current and applicable mechanics’ lien law, hereinafter referred to as the “Lien Law”) to add “architect, engineer, or other licensed design professional” to the definitions of “contractor” and “subcontractor” that have mechanics’ lien rights.
Under the Lien Law, a mechanics’ lien may only be maintained for payment of debts due by the owner to a “contractor” or by a “contractor” to any of his “subcontractors”. 49 P.S. § 1301. As of the date of this blog post, the definitions section of the Lien Law defines “contractor” to include “an architect or engineer who, by contract with the owner, express or implied, in addition to the preparation of drawings, specifications and contract documents also superintends or supervises any such erection, construction, alteration or repair.” 49 P.S. § 1201. The definitions section also states that the term “subcontractor” does not include “an architect or engineer who contracts with a contractor or subcontractor….” Id.
Thus, under the current law, architects only have mechanics’ lien rights if they supervise or “superintend” onsite work for the construction project. By amending the definitions of “contractor” and “subcontractor” to expressly include architects, engineers and other design professionals, House Bill 430 stands to remove the requirement that design professionals must perform onsite work to have mechanics’ lien rights, thereby significantly expanding what were previously very limited mechanics’ lien rights for design professionals.
House Bill 430 is currently before the House’s Labor and Industry committee. Babst Calland will continue to monitor the Bill’s status and will post updates on this blog when applicable, so check back often.
In exclusive April 14, 2015, article, the Pittsburgh Business Times reported that Skanska, a Swedish construction company that ranks as the world’s seventh largest, is opening a new office in Pittsburgh. The construction giant will occupy approximately 8,000 square feet of commercial space at 11 Stanwix Street in Downtown Pittsburgh. It remains to be seen what types of projects the company will pursue.
In construction industry news, the Pittsburgh Business Times is also reporting that O’Hara Township based Massaro Corp. is opening an office for its construction management business in Bellefonte, Centre County, Pennsylvania. The office will be located near the Centre County Courthouse and is intended to allow the company to serve its customer base in central Pennsylvania.
The post Prevailing Wage Update for West Virginia Contractors appeared first on this Construction Law Blog. In that post, the West Virginia Supreme Court of Appeals examined the burden upon contractors in determining whether West Virginia’s Prevailing Wage Act applied to public works projects. On March 12, 2015, Governor Tomblin signed Senate Bill 361 which adjusted West Virginia’s calculation of prevailing wages. The Bill went into effect on April 13, 2015. A new calculation of the prevailing wage formula is now required, and WorkForce West Virginia, along with economists from Marshall University and West Virginia University will assist in determining prevailing wage rates. The goal of the bill is to establish a figure more reflective of actual earnings in regions across the state. Senate Bill 361 states that any West Virginia public project under $500,000.00 will be exempt from paying prevailing wages. However, for public projects over $500,000.00, the public entity must obtain from WorkForce West Virginia the minimum rate of wages to be paid to laborers before the public entity can even advertise for bids. The calculation for the new 2015 prevailing wages is expected to be provided by WorkForce West Virginia no later than July 1, 2015.
House Bill 726 (the “Bill” or “HB 726”) seeks to make several amendments to the Pennsylvania Contractor and Subcontractor Payment Act, 73 P.S. § 501 et seq. (the “Act”) to benefit applicants for payment on a construction project. The Bill was introduced and referred to the Commerce Committee on March 6, 2015, and a public hearing on the Bill is scheduled to occur on May 15, 2015 at 10:00 a.m. at Union Station, 1 Progress Circle, Pottsville, Pennsylvania.
The Bill in its current form adds an express prohibition against the waiver of any provision of the Act. Any contractual provision purporting to waive rights or obligations under the Act is deemed void. While attorneys and other construction industry professional long presumed rights and obligations under the Act were not waivable, this provision would foreclose the issue. Nevertheless, this prohibition would not affect the rights or obligations that the Act expressly contemplates may be contractually modified.
Another proposed amendment is that the notice of a deficiency item and the good faith reason for withholding money must be provided in writing. As the Act currently stands, no such written requirement exists. Often, the party withholding payment asserts during litigation that it orally provided timely notice of the reason for withholding money to the claimant, while the claimant contends that it never received any notice of the reason for withholding or did not receive notice in a timely manner. This proposed amendment will help claimants avoid this factual dispute, and should promote dialogue between the parties as soon as the withholding occurs since the explanation of withholding must be articulated in writing.
The proposed amendments bolster this notice requirement further by expressly providing that the failure to provide timely, written notice of the reason for withholding will result in the “waiver of the basis to withhold payment” and require payment in full on the invoice. This proposed amendment clearly justifies the claimant’s right to penalties for bad faith withholding if timely, written notice is not provided the and party owing payment continues to withhold money.
The Bill also proposes to change the period in which a party receiving an invoice must inform the payment applicant of an error or defect in the invoice. The current period is 10 days after receipt of the invoice, which would be changed to 7 days under the Bill.
HB 726 also adds a provision that permits a contractor or subcontractor to post a maintenance bond for 120% of the amount of the retainage being withheld on its contract in order to have the retainage released after reaching substantial completion. This right is subject to the “approval of the party owed the retainage.”
If a party intends to withhold retainage for more than 30 days after final acceptance of the work, HB 726 requires that the party comply with the written notice requirements for providing an explanation of the good faith reason for the continued withholding.
Lastly, the Bill slightly modifies the penalties provisions of Section 12 of the Act by increasing the monthly penalty amount to 1.5%, and adding language that makes it clear that the party withholding payment must comply with the written notice requirements concerning good faith withholding of payment.
We will continue to update the progress of this Bill if it moves out of the Commerce Committee, or if any news of the likelihood of its passage is reported.
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).
At noon on Wednesday, April 22, the Pittsburgh Builders Exchange (PBX) is hosting its first “Lunch and Learn” webinar which is free to PBX members. This will be the first in a series of PBX webinars covering relevant construction law issues facing the industry. The webinar will cover indemnity provisions, payment terms (including “pay-if-paid” clauses) and liquidated/consequential damages – three of the most important considerations for contractors in their project contracts. The discussion will include practical considerations on how best to address these issues in construction contracts from the contractors’ perspective and will include the opportunity for questions. This webinar will be conducted by Kurt F. Fernsler, Esq. a partner in the Construction Services Group of Babst Calland. If you are a PBX member, click to REGISTER.
In United States ex rel. Marenalley Constr., LLC v. Zurich American Ins. Co., et al, Civil Action No. 14-4581 (E.D. Pa. March 13, 2015), a subcontractor filed suit under the Miller Act to recover against the prime contractor’s payment bond for additional work performed at the VA Medical Center in Philadelphia, PA. The Miller Act provides a subcontractor the right to bring suit against the surety that issued the prime contractor’s payment bond if the subcontractor is not paid within ninety days of the completion of its work.
Prior to the commencement of the action, the prime contractor sought additional compensation from the VA in an administrative proceeding, which included the additional compensation sought by the Subcontractor. The VA had not approved payment for the additional work at the time the subcontractor filed suit. The prime contractor and its surety moved to dismiss, or in the alternative, to stay the action pending the outcome of the prime contractor’s claim against the VA.
The court denied the motion to dismiss, and held that the administrative procedure between the prime contractor and VA provides no direct remedy to a subcontractor for any claim it has against the prime contractor. The Court explained, “When a subcontractor and prime contractor have a dispute about the amount due the subcontractor, that dispute is not resolved in the [administrative] proceeding.”
Finally, the Court refused to grant a stay. Citing to non-Miller Act cases, the prime contractor and surety argued that the surety’s liability is “derivative” of the prime contractors and the prime contractor’s liability is being determined in the administrative proceeding. The Court disagreed, and explained that the surety’s “liability on a Miller Act bond must be at least coextensive with the obligations imposed by the Miller Act if the bond is to have its intended effect.” As such, “a subcontract term that conflicts with the Miller Act is ineffective in a suit against the surety on the payment bond.” The practical takeaway from this case is the reminder the Miller Act permits a subcontractor to seek payment against the payment bond once the requisite ninety-day period has elapsed regardless of other administrative procedures that may be contractually required. Those Miller Act rights, however, may be waived, if: (1) the waiver is in writing; (2) signed by the person whose right is waived; and (3) executed after the person whose rights are waived has furnished labor or materials for use in the performance of the contract.
Due to the weather for Thursday, March 5, 2015, Babst Calland’s Construction Law 2014: The Year in Review seminar has been rescheduled and will now be held on Wednesday, March 25, 2015. We apologize for any inconvenience this may cause you, and we hope that you will be able to join us on this new date. We hold this annual seminar as a service to our clients and prospective clients. This complimentary seminar starts with a continental breakfast at 7:30 a.m., followed by the seminar from 8:00 a.m. to 10:00 a.m. which will cover an overview of 2014′s significant construction law developments (both statutory and case-law). This year’s topics include: mechanics’ liens (including the recently enacted amendments to the Lien Law), CASPA, payment bonds, construction law impacts on the energy sector, the new AAA Supplementary Rules for Fixed Time and Cost Construction Arbitration, and Public-Private Partnerships (P3). The seminar will be held on Thursday, March 5, 2015 at the Doubletree Hotel in Greentree, beginning with a Speakers will include Kurt Fernsler, Matt Jameson, Rick Kalson, Rich Saxe and John McCreary. This seminar qualifies for two (2) PA CLE credits.
For more information or to RSVP, please email Matt Jameson.
The Pennsylvania Supreme Court recently issued its opinion in Bruno v. Erie Insurance Company holding that the Pennsylvania Rule of Civil Procedure requiring a certificate of merit to pursue a negligence claim against a licensed professional in their professional capacity only applies to clients or patients of the licensed professional. Although certificates of merit are most common in medical malpractice cases, prior to the Bruno decision, many construction attorneys believed that the Pennsylvania Rules of Civil Procedure required a contractor seeking to pursue a Bilt-Rite claim against a design professional (essentially a claim that the plans issued by the design professional (either an architect or an engineer) constituted a negligent misrepresentation upon which the contractor reasonably relied) to obtain a certificate of merit in support of its claim. However, following Bruno, it is now clear that contractors need not obtain a certificate of merit in support of a Bilt-Rite claim because the contractor is not the design professional’s client.
It is not uncommon for contractors and subcontractors to be verbally directed to perform extra work on construction projects without written change orders. Construction attorneys frequently deal with payment claims for such work if payment for that extra work is not made voluntarily. The individual directing the change, however, generally does not think that they will be held individually liable for directing a contractor/subcontractor to perform extra work. Nevertheless, that issue was recently addressed in Scungio Borst & Associates v. 410 Shurs Lane Developers, LLC, No. 2493 EDA 2012 (Pa.Super. November 20, 2014).
In Scungio, 410 Shurs Lane Developers, LLC (“410 SLD”) hired Scungio Borst & Associates (“SBA”) as the general contractor to construct SLD’s condominium project in Philadelphia, Pennsylvania (the “Project”). SBA performed the work under the contract, as well as $2.6 million in extra work at the direction of 410 SLD and its President and fifty percent shareholder, Robert DeBolt. When SBA was not paid approximately $1.5 million incurred due to the extra work, it filed suit against 410 SLD (the company) and DeBolt (the individual). DeBolt subsequently filed a motion for summary judgment as to all claims pending against him individually, which included a claim for the alleged violation of the Contractor and Subcontractor Payment Act, 73 P.S. §§ 501-516 (“CASPA”). The trial court granted DeBolt’s motion.
SBA appealed, challenging the grant of summary judgment in favor of DeBolt on the CASPA claim. The issue before the Superior Court of Pennsylvania was whether SBA can maintain a CASPA claim against DeBolt, individually, based upon 410 SLD’s failure to pay SBA. SBA’s theory of liability was that DeBolt, as an authorized agent of 410 SLD who authorized the extra work, is an “owner” as that term is defined under CASPA. Alternatively, SBA argued that DeBolt was individually liable under CASPA for failure to pay pursuant to all written and verbal change orders. The Court rejected both arguments.
Under CASPA, “Owner” means a “person who has an interest in real property that is improved and who ordered the improvement to be made. The term includes successors in interest of the owner and agents of the owner acting with their authority.” 73 P.S. § 502 (emphasis added). “Person” means a “corporation, partnership, business trust, other association, estate, trust, trust foundation or a natural individual.” Id. The term “Agent,” however, is not defined under CASPA.
After a detailed analysis of selected sections of CASPA and statutory construction principles, the Court held CASPA liability lies against “contracting parties” only. The Court recognized, “Performances by a contractor or a subcontractor …shall entitle the contractor or subcontractor to payment from the party with whom the contractor or subcontractor has contracted.” Id. § 504 (emphasis added). Since 410 SLD contracted with SBA, not DeBolt, DeBolt was not liable to 410 SLD under CASPA. The Court added, “The reference to authorized agents in the definition of owner merely reinforces that their conduct is imputed to and binding upon the owner. Since the term ‘agent’ is not defined in the statute, conceivably that term could include architects, project managers, and designated representatives who are acting on behalf of the owner in dealing with the contractor.”
Additionally, the Court held that DeBolt was not individually liable under CASPA because there were no allegations that his dealings with SBA created a new contract with him personally. The Court reasoned that DeBolt’s verbal authorizations were part of the construction contract between SBA and 410 SLD. Accordingly, the Court found no basis to subject DeBolt to personal liability based on his verbal authorizations and change orders.
Judge Bender filed a Dissenting Opinion, which Judges Mundy and Wecht joined. Judge Bender’s characterization of the facts is as follows: The parties entered into a construction contract on September 2, 2005, in which SBA was to receive $3.8 million for the labor and materials it supplied to the Project. SBA claimed it was directed to submit all bills to 410 SLD and DeBolt. However, at the end of June 2006, SBA stopped receiving payments, but was assured by DeBolt that payment would be forthcoming. Based upon these assurances, SBA continued its performance until November 8, 2006, when SBA was informed that the contract was terminated. At that time, SBA was owed $1,544,161, plus interest and costs, which related to change orders authorized by DeBolt. Finally, 410 SLD’s position was that oral change orders were not valid. Nevertheless, SBA asserted that it was often the practice that DeBolt would verbally authorize change orders and would not sign them. SBA argued that that because DeBolt had an active role in decision making and authorizing change orders, he should be considered an agent of the owner and subject to liability pursuant to CASPA. Judge Bender agreed. As such, Judge Bender concluded that genuine issues of material fact existed and that granting summary judgment in DeBolt’s favor was improper.
The take-away from this case is that this “agent of owner” argument could be used again if, for example, a corporate constituent or member of a limited liability company, representing an owner, makes first-person and informal statements to a contractor regarding payment from the owner. In fact, the Superior Court held that there was sufficient evidence to establish that a managing member of a limited liability company which constructed new homes assumed personal responsibility when the managing member assured the purchasers of one of the homes that he would take care of their concerns regarding problems that arose during construction and that he personally guaranteed the final quality of the home. See Bennett v. A.T. Masterpiece Homes at Broadsprings, LLC, 40 A.3d 145, 150 (Pa.Super. 2012) (“person acting as an agent may assume personal liability on a corporate contract where he executes a contract in his own name or voluntarily undertakes a personal responsibility”) (emphasis added).
As a service to its clients and prospective clients, the law firm of Babst Calland will provide a complimentary “year in review” breakfast seminar which will cover an overview of 2014′s significant construction law developments (both statutory and case-law). This year’s topics include: mechanics’ liens (including the recently enacted amendments to the Lien Law), CASPA, payment bonds, construction law impacts on the energy sector, the new AAA Supplementary Rules for Fixed Time and Cost Construction Arbitration, and Public-Private Partnerships (P3). The seminar will be held on Thursday, March 5, 2015 at the Doubletree Hotel in Greentree, beginning with a continental breakfast at 7:30 a.m., followed by the seminar from 8:00 a.m. to 10:00 a.m. Speakers will include Kurt Fernsler, Matt Jameson, Rick Kalson, Rich Saxe and Dave White. This seminar qualifies for two (2) PA CLE credits.
For more information or to RSVP, please email Matt Jameson.
Beginning January 1, 2015, there was a change to what covered employers are required to report to the Occupational Safety and Health Administration (“OSHA”). Employers will now be required to report within 24 hours: (1) all in-patient hospitalizations (even for just one employee, as opposed to the current 3-employee hospitalization rule); (2) amputations, and (iii) losses of an eye. The 24 hour notice begins when the employer first learned of the work related incident.
In-patient hospitalization is defined as “formal admission to the impatient service of a hospital or clinic for care or treatment.” Employers do not have to report an inpatient hospitalization if it was for diagnostic testing or observation only. Additionally, employers do not have to report the events listed above if the event resulted from a motor vehicle accident on a public street or highway. Employers must only report the event if it occurred in a construction work zone. Read more about the new changes and reporting requirements here.
In Grim v. Eastern Electric, LLC, No. 13-1133 (W.Va. Nov. 3, 2014), the West Virginia Supreme Court of Appeals rendered an opinion imposing a high burden upon contractors to determine whether West Virginia’s Prevailing Wage Act (“PWA”) applies to public works projects. In Grim, a contractor responding to a Request for Quotation from the West Virginia Department of Administration asked two senior officials within that Administration whether prevailing wages had to be paid. Both answered in the negative. In addition, the contract documents did not include the standard prevailing wage language typically found. Based on these facts, the contractor performed without paying prevailing wages. Some of the contractors’ employees filed suit and ultimately the Supreme Court of Appeals found that prevailing wage were due, and while it was the statutory duty of the state agency to determine whether prevailing wages had to be paid, the contractor should have determined whether the state agency complied with that duty, i.e., just relying upon direction by a state official with apparent authority was not enough for the contractor to prevail under the statutory affirmative defense of “honest mistake or error.” Based on this decision, it appears that to ensure protection, a contractor must contact the Division of Labor to ascertain for itself whether prevailing wages must be paid.