In a recent California Supreme Court case, the Court resolved a split between Appellate Courts about whether a contractor can withhold payments to a subcontractor based on the “good faith dispute “ exception to the State’s prepayment laws if the dispute concerns any dispute between the parties or if the dispute must be directly relevant to the specific payment that would otherwise be due. In United Riggers & Erectors Inc. v. Coast Iron & Steel Co. 2018 DJDAR 4487 (May 14, 2018) the Court considered the issue in respect to one of the State’s prompt payment Statues, Civil Code Section 8814, and held that the good faith withholding exception only applies if there is a “good faith dispute” as to the specific payment being withheld.
