Plaintiff subcontractor filed suit against defendants, a city, a general contractor, and a company that issued a surety bond, alleging several causes of actions, including enforcement of a stop notice and a recovery on a surety bond. The Superior Court of Sacramento County, California, granted judgment in favor of the subcontractor on its claim for breach of a joint check agreement and also awarded statutory penalties.
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The subcontractor sought to recover money owed it on a contract under which it supplied electrical equipment for a public works project. The instant court concluded that the subcontractor, by executing a lien release dated March 15, 1999, waived its mechanic's lien rights, bond rights, and stop notice rights for services rendered and materials supplied up to January 31, 1999. The lien release did not work an accord and satisfaction and did not foreclose the subcontractor's ability to exercise lien rights on sums that became due after the release date. The trial court erred by concluding the subcontractor's waiver was effective only as to the money it had received in payment. Substantial evidence supported the trial court's determination the general contractor breached the joint check agreement. Because the subcontractor worked pursuant to an oral contract, it should have been paid directly by the general contractor within the times required by the prompt payment statutes. Although there was a dispute as to the amount owed the subcontractor, the general contractor wrongfully withheld more than 150 percent of the disputed amount.
Except to reverse and remand the award of statutory penalties, the instant court affirmed the judgment in all respects, but did so on different grounds than those relied upon by the trial court.
