Under CC 8814, a prime contractor must pay subcontractors their retention amounts within 10 days after the owner has paid the prime contractor its retention unless there is a good faith dispute between prime and subcontractor.  This decision holds that only a good faith dispute about the sub’s entitlement to the retention amount can excuse the prime from its duty of prompt payment.  A dispute, as here, in which the sub-claims added sums such as extras for change orders or damages allegedly caused by the prime’s mismanagement does not excuse prompt payment.  If the prime improperly withholds the retention sums, it is liable for 2% per month interest on the withheld sum, plus attorney fees and costs.  CC 8818.

California Supreme Court (Cuéllar, J.); May 14, 2018; 2018 Cal. LEXIS 3510