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Court De-Certifies Opinion on Payment Bond Statute of Limitations

In September, a California Appeals Court sent shockwaves through the construction community when it ruled that a subcontractor’s claim on a public works payment bond was untimely because the subcontractor had prematurely served their stop notice, but untimely asserted their payment bond claim. In Golden State Boring v. Eastern Municipal Water District, (E054618 Cal. Ct. 2014), the Fourth Appellate District Appeals Court ruled that Golden State Boring’s claim against First National Insurance Company was time-barred because Golden State served its stop notice before the notice of completion, but after a 30 day cessation of labor. The odd ruling essentially gave Golden State only a very small window in which to assert a timely payment bond claim for amounts it had not been paid.

Contractors protested this draconian interpretation of California’s statutory payment bond law. Golden State Boring appealed the matter to the Supreme Court, which declined to hear the case. However, the Court did intervene. They ordered that the Fourth District Court of Appeals decision be de-certified. This means that the case cannot be cited in court and cannot be used as legal precedent. However, the case is a good reminder to timely protect your job rights by serving your stop notice and making a payment bond claim.