Second District, Division 5 Also Rules that Fee Recovery Does Not Have to be Pled and that Civil Code Section 3260.1 Does Not Authorize a Fee Award.
We have done some past posts on California’s construction prompt payment statutes, designed to insure that retention payments are not wrongfully withheld by owners or other construction professionals. The next case primarily focuses on the difference
between a contractual installment payment versus a retention under one of the prompt payment statutes allowing for fee shifting.
In Yassin v. Solis, Case No. 215201 (2d Dist., Div. 5 May 6, 2010) (certified for partial publication—fee discussion published), the Second District, Division 5 reversed a $36,205.14 fee award to residential homeowners in a payment dispute action brought by the contractor. The basis for the award was Civil Code section 3260(g), which allows fee recovery to a prevailing party in a wrongfully withheld retention payment dispute between owner and contractor. Photo above: dam under construction.
The problem was that the trial court erroneously determined that the dispute was over a retention. It was not. The dispute was over the last contractual installment payment owed, much different than a retention. (This case is must reading on defining the nature of a construction retention payment.) This key distinction required reversal of the fee award under section 3260(g).
Two other issues of interest were also addressed.
First, the appellate panel confirmed that there are no requirements under California law that a party plead that it is seeking attorney’s fees or that it specify the ground for a fee award in the pleadings. (Pearl, Cal. Attorney Fee Awards (2d ed. CEB 2008) § 3.1, p. 68; 7 Witkin, Cal. Procedure (5th ed. 2008) Judgment, § 295, p. 895.)
Second, Civil Code section 3260.1—imposing a penalty where an owner wrongfully withholds a progress payment to a contractor—does not authorize an award of attorney’s fees. (See Slip Opn., at pp. 9-10, citing dicta in several cases to support its conclusion.)