As a subcontractor, it’s important to have someone watching out for you at local, state, and federal level. That is one of the main focuses of the American Subcontractor’s Association of Arizona. Recognized as the “voice of the Arizona subcontractor” , ASA of AZ tackles issues such as prompt pay, fair procurement policies, harmful indemnity clauses, retention practices, egregious and abusive contract terms, OSHA rules and economic and tax rules, just to name a few. ASA watches over new legislation being drafted, and makes sure subcontractors best interests are represented and lobbied for. Additionally, ASA provides legal defense to protect subcontractors. For example, consider this recent case in Minnesota:
“Safety Signs subcontracted with Nile-Wiese Construction to perform traffic control and pavement marking work on an airport project owned by the City of Owatonna. Safety Signs properly performed its scope of work, but was not paid after the city paid the contractor. Safety Signs sent its notice to the surety company, Westfield Insurance, and the contractor, but sent the notice to the contractor’s principal place of business listed in the subcontract and on the contractor’s Web site, not the address listed on the payment bond.
The surety and contractor acknowledged receipt of the claim and the contractor paid the requested amount. Safety Signs commenced with the second phase of the project work, but again, was not paid for its work. In January 2010, Safety Signs served the contractor and the surety with a second payment bond claim, and again, sent it to the contractor’s principal place of business. Nile-Wiese and Westfield refused to pay, based on the technicality that the notice of claim was not sent to the contractor’s address listed on the bond as required under Minnesota’s bond statute.
Safety Signs sued. The trial court found substantial compliance with the statute and awarded Safety Signs 100 percent of its claim. The surety appealed, and the appeals court reversed the trial court decision, stating that strict compliance with the notice requirements of the bond statute was a condition precedent to a payment bond claim.
ASA reminded the Minnesota Supreme Court that the primary purpose of the bond statute is to protect those who perform labor or furnish material to public projects.
“Imposing a ‘strict construction’ standard relating to notice requirements for a subcontractor entering into a public works construction project puts form over substance and in the process undermines the vital protections the Act was meant to provide,” ASA wrote. “Ensuring construction contractors have adequate payment security for their work is therefore a recognized public policy interest because among other things it both … reduces default of general contractors and … protects the greater public of Minnesota by keeping prices to the public low.”
“If the Appeals Court decision is affirmed,” ASA continued, “it will give free rein to general contractors and sureties to play games with the notice addresses on their bond, to refuse service of certified mail letters, and to deny deserving claimants the protections the Minnesota legislature required to promote a healthy business climate while keeping construction prices down and protecting the state treasury.”
ASA’s Subcontractors Legal Defense Fund (www.sldf.net) financed the brief in this case.
Imagine if this company did not have the ASA to help. All the costs would have been shouldered by the company and they would not have the backing of a national association. So, if you are a member, encourage non-members to join so they too can enjoy the benefits of ASA advocacy!