Attorney Fee Recovery Under the Contractor and Subcontractor Payment Act

The Contractor and Subcontractor Payment Act (the “CSPA,” at 73 P.S.A. 501-516) applies to any construction project in Pennsylvania, excepting residential projects involving six or fewer units. It is intended to assure contractors prompt payment from owners, and subcontractors prompt payment from contractors and other subcontractors. It leaves substantial room for owners and contractors to reach their own payment arrangements, but lends additional enforcement teeth to those arrangements. When the prompt payment provisions (which allow for good faith disputes) are not met, and the matter goes to litigation, the substantially prevailing party is entitled to attorney fees.

Notwithstanding any agreement to the contrary, the substantially prevailing party in a proceeding to recover payment under this act shall be awarded a reasonable attorney fee in an amount to be determined by the court or arbitrator, together with expenses.

(73 P.S.A. 512(b), emphasis added.) As plainly set forth in the Act, the availability of this remedy cannot be contracted away.

It is, of course, possible for neither party to be “substantially prevailing.” This could happen, for example, where the plaintiff alleges that the defendant withheld $4 million in bad faith, and the court holds that only $1 million was withheld in bad faith. The plaintiff could be said to not have substantially prevailed because the majority of the disputed amount was found to have been withheld in good faith; and, the defendant could be said to not have substantially prevailed because it withheld $1 million in bad faith.

However, where the court does find that one of the parties substantially prevailed, reasonable attorney fees will be recoverable not only for the CSPA claim itself, but for any efforts reasonably expended to collect on the judgment, which in the case of a defendant’s victory could be the attorney fees required to collect attorney fees under the CSPA.

In that regard, note the “any proceeding to recover any payment” language in the Act, as contrasted with language that might read “any proceeding arising under the statute.” Although one might argue that either provision requires an award of attorney fees in the post judgment collection phase, the Pennsylvania courts have expressly held that the former language has that effect. Therefore, it pays to look for distinctions of this kind generally when evaluating attorney fee recovery provisions, and to be conscious of the distinction when writing your own provisions into contracts.

The information contained in this blog is not legal advice and should not be relied on as such. For legal advice or for answers to specific questions, please contact the blog's author.