Federal Court in Delaware Rejects Road Signage Supplier’s Claim Under Delaware Construction Prompt Payment Act, Holding that Act Applies Only to Construction of Buildings

VSI Sales, LLC v. Griffin Sign, Inc., 2014 U.S. Dist. LEXIS 57620 (D. Del. Apr. 25, 2014).
The Delaware Department of Transportation awarded a contract for a highway construction project. Defendant Griffin Sign, Inc. (“Griffin”) was hired as the subcontractor responsible for installation of road signage on the project. Griffin then subcontracted with Plaintiff VSI Sales, LLC (“VSI”) for the supply of overhead highway sign structures, accompanying hardware, and installation materials.

A dispute arose regarding VSI’s right to payment for work performed on the project. Griffin disputed that it owed VSI payment and contended that VSI’s performance was untimely and deficient. In its seven count complaint against Griffin and its payment bond surety, VSI asserted a claim for violation of the Delaware Construction Prompt Payment Act, Del. C. §§ 3501-3509. The defendants sought to dismiss the Payment Act claim on the basis that the work performed by Griffin and VSI—the supply and installation of highway signs—was outside the scope of the Act.

Specifically, the defendants argued that the Act’s language is limited to the construction of buildings and that VSI’s scope of work was limited to the supply of signage materials, which are not materials used in the construction of a building. In response, VSI argued that the Act should apply because the structural steel that it supplied was no different in application or fabrication from the type of structural steel that is commonly incorporated into buildings. Alternatively, VSI asked the court to construe the Act more broadly, as a corollary to Delaware’s mechanics’ lien statute, which applies to a broader range of improvements than merely buildings.

The court reviewed the language of the Act and, finding it unambiguous, applied its plain meaning. The court cited numerous sections of the Act, each of which contained identical language limiting the Act’s application to the erection, construction, completion, alteration, or repair of any building or additions to a building. The court thus found no doubt concerning the legislature’s intent and ruled that the Act only applies to building construction work—a definition which necessarily excludes the supply of road signs.

The court also rejected VSI’s argument that the Act should be read as a corollary to the Delaware mechanics’ lien statute, which applies more broadly to construction of “structures,” including buildings or houses, and allows liens to be obtained against paving, bridge building, and certain other “improvements to land.” Because the legislature chose to use more narrow language in enacting the Payment Act than it did in enacting the lien law, the court refused to read the Act as expansively as the lien law.

Having thus reviewed the relevant statutory language, the court found that the Act did not govern Griffin’s payment obligations because the signage materials supplied by VSI did not “fall within the common and approved usage of the word ‘building.’”

To view the full text of this decision, courtesy of Lexis ®, click here.

Stephen W. Kiefer

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