Recently, the Arizona Court of Appeals made clear that Arizona’s Prompt Payment Act does not extend to architects, engineers and other (non-contractor) professionals who may be involved in a construction project. RSP Architects, Ltd. v. Five Star Development Resort Communities, LLC, 306 P.3d 93 (2013).
RSP Architects sued Five Star Development under the Prompt Payment Act (A.R.S. §32-1129 et seq.) for failure to pay outstanding invoices for architectural and construction administration services provided on a development project. The Superior Court rejected RSP’s claims finding that the Prompt Payment Act does not apply to architects and other non-contractor professionals. The Appellate Court affirmed the lower court’s ruling and made clear that the Prompt Payment Act does not apply to architectural services.
According to the Prompt Payment Act, a contractor’s invoice is deemed certified and approved unless the owner objects to it in writing within 14 days of submission. §32-1129.01(D) The owner must then make payment within 7 days thereafter or risk being in violation of the Act. §32-1129.01(A) The Act expressly provides that it applies only to “contractors” and “construction contracts.” A “contractor” is defined as any person, corporation, etc. “that has a direct contract with the owner to perform work under construction contract.” §32-1129(A) A “construction contract” is defined as an oral or written agreement “relating to the construction, alteration, repair, maintenance, moving or demolition of any building, structure or improvement…to land.” Id.
RSP argued that its contract fell under the Act because the services RSP provided “related to” the development of land. The Appellate Court disagreed with RSP that the language of the Act could be so broadly interpreted. Ultimately, the Appellate Court found that design and other non-contractor professional contracts are distinguishable and do not “relate to” contracts for construction.
In essence, what this means is that for those non-contractor professionals providing services on a construction project, if they want protections similar to those specified in the Prompt Payment Act they must expressly include provisions for such in their services contract.