Virginia Federal Court Examines the Incorporation of the Virginia Public Procurement Act Into a Masonry Subcontract
April 11th, 2013
In South End Construction, Inc. v. Tom Brunton Masonry, Inc., 2013 WL 792779 (W.D.Va. Feb. 25, 2013) (Civil Action No. 7:12-cv-390), the U.S. District Court for the Western District of Virginia examined whether a subcontractor could bring a separate cause of action against the prime contractor for violating the Virginia Public Procurement Act (“VPPA”), as a result of the prime contractor’s withholding ten percent of all progress payments owed to the subcontractor as retainage, rather than the five percent proscribed by the VPPA.
The short answer is “no,” the VPPA does not provide a private cause of action, however, violation of the Act by a general contractor can serve as the basis for a breach of contract action.
The Virginia Public Procurement Act, which can be found at Virginia Code Sec. 2.2-4300, et seq., applies to public contracting in Virginia, and where relevant, is incorporated into every public procurement contract. Within the VPPA is a provision allowing for five (5) percent of an installment progress payment to be withheld as retainage. See Virginia Code Sec. 2.2-4333(b).
This case involves a contractual dispute between the prime contractor, South End Construction (“South End”), and it masonry subcontractor, Tom Brunton Masonry (“Brunton Masonry”), arising out of the construction of an addition to county offices in Wythe County in southwestern Virginia. In its amended counterclaim, Brunton Masonry brought a cause of action against South End for violation of the VPPA, specifically alleging that South End unlawfully retained ten (10) percent of Brunton Masonry’s progress payments, rather than the five (5) percent permitted by the VPPA.
Although the Court dismissed Brunton Masonry’s amended complaint because “there is no express private right of action in the statute, nor has any Virginia court implied a private right of action to remedy a § 2.2-4333 violation,” the Court advised Brunton Masonry that because the five (5) percent retainage limitation was incorporated into the subcontract, Brunton Masonry could bring a second amended counterclaim for breach of that subcontract term. While this case is still in the initial pleadings stage, contractors should be optimistic by the Court’s discussion of the VPPA encouraging the use of the VPPA as a means of recovery.
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