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Pennsylvania Superior Court finds that Oral Contract Supports Claim under Contractor Subcontractor Payment Act and that "curbs" Constitute "structures" and "improvements to Real Property"

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By opinion dated September 10, 2014, a three judge panel of the Pennsylvania Superior Court continued the trend of applying the Contractor and Subcontractor Payment Act in a broad fashion. In Prieto Corp. v. Gambone Constr. Co., No. 1538 EDA 2013 (Pa. Superior 2014), the Superior Court affirmed the Court of Common Pleas of Montgomery County and held that a subcontractor who was orally engaged to install curbs at construction sites had a valid claim under CASPA.

Prieto Corp. sued Gambone Construction for non-payment and under CASPA to recover the value of installing curbs at four separate projects. Although Prieto had no formal written contracts for the work, there was a long history of dealing between the parties which established a practice by Gambone of issuing a purchase order to Prieto, Prieto completing the work and invoicing Gambone upon completion.

The Superior Court focused on two primary issues: 1. Do "curbs" constitute the type of "structure" or "improvement" contemplated by CASPA; and 2. Were there valid and enforceable oral contracts between the parties? The Court answered both questions in the affirmative.

Initially the Court examined Appellant Gambone's argument that "curbs" did not constitute an "improvement" as defined in 73 P.S. section 502 to include (1) all or any part of a building or structure. (2) The erection, alteration, demolition, excavation, clearing, grading or filling of real property. (3) Landscaping, including the planting of trees and shrubbery, and construction driveways and private roadways on real property.

The court held that under existing case law and based on a plain reading of the word, a "curb" "is a raised edging serving as a roadway border . . . "and therefore constitutes both "a structure - a raised edging - and an alteration or real property" as those terms are used in CAPSA.

With respect to the issue of whether valid oral contracts existed, the court held that the practice of issuing a purchase order by Appellant, and Appellee's completion of the work and submission of invoices, coupled with an over 10 year course of dealing and partial payment by Appellant was sufficient to demonstrate valid and enforceable oral contracts.

The court stated that CAPSA is intended to apply to "construction contracts" which are defined as agreements, whether written or oral, to perform work on any real property located within the Commonwealth. Based on its findings that an oral contract existed to perform work that constituted "improvements" as that term is used in CASPA, the Court entered judgment in favor of Appellee.

The Superior Court focused on two primary issues: 1. Do "curbs" constitute the type of "structure" or "improvement" contemplated by CASPA; and 2. Were there valid and enforceable oral contracts between the parties? The Court answered both questions in the affirmative.

Initially the Court examined Appellant Gambone's argument that "curbs" did not constitute an "improvement" as defined in 73 P.S. section 502 to include (1) all or any part of a building or structure. (2) The erection, alteration, demolition, excavation, clearing, grading or filling of real property. (3) Landscaping, including the planting of trees and shrubbery, and construction driveways and private roadways on real property.

The court held that under existing case law and based on a plain reading of the word, a "curb" "is a raised edging serving as a roadway border . . . "and therefore constitutes both "a structure - a raised edging - and an alteration or real property" as those terms are used in CAPSA.

With respect to the issue of whether valid oral contracts existed, the court held that the practice of issuing a purchase order by Appellant, and Appellee's completion of the work and submission of invoices, coupled with an over 10 year course of dealing and partial payment by Appellant was sufficient to demonstrate valid and enforceable oral contracts.

The court stated that CAPSA is intended to apply to "construction contracts" which are defined as agreements, whether written or oral, to perform work on any real property located within the Commonwealth. Based on its findings that an oral contract existed to perform work that constituted "improvements" as that term is used in CASPA, the Court entered judgment in favor of Appellee.

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