Case Law Alerts
A contract for construction with an owner is a prerequisite under Pennsylvania’s Contractor and Subcontractor Payment Act, and design professionals may qualify as “contractors” under certain circumstances.
An architectural firm entered into an oral contract for services to help determine the feasibility of a project. The architectural firm entered into a second oral contract for behind-the-scenes assistance to the owner for planning and zoning. The services were performed before there were any construction contracts for the project. Section 515 of the Contractor and Subcontractor Payment Act, 73 P.S.A. § 501 et seq. ("CASPA") applies to a “construction contract,, which is "an agreement, whether written or oral to perform work on any real property …" Real property is "Real estate that is improved …” "Improve" is "to design, effect, alter, provide professional or skilled services, repair or demolish any improvements upon … real property, …” The court held that the second contract was not for construction as the architectural firm had no intention of entering into a construction contract, the architectural firm did not want to be the architect of record, and the architectural firm was not hired to do detailed work needed for actual construction, rather, his drawings were only for business planning purposes. The architectural firm has appealed this decision. For now, it is an open question whether a design professional may be considered a subcontractor under CASPA such that, if a design professional could prove under the CASPA definitions that it was a subcontractor who entered into a construction contract with an owner or a person who is authorized or engaged by an owner to improve real property, then CASPA remedies may apply to non-payment.
Case Law Alert, 1st Qtr 2012