from the Superior Court in Maricopa County No. CV2014-012421
The Honorable James T. Blomo, Judge
& Wilmer, LLP, Tucson By Jason Ebe, Andrew M. Jacobs, W.
Danny Green Counsel for Plaintiff/Appellee.
Miranda Law Firm, Gilbert By Daniel L. Miranda Counsel for
Maria Elena Cruz delivered the opinion of the Court, in which
Acting Presiding Judge Peter B. Swann and Judge Michael J.
Caymus Corporation ("Caymus") appeals the superior
court's (1) grant of summary judgment in favor of Zumar
Industries, Inc. ("Zumar") and (2) denial of its
motion to add counterclaims. Because we hold the court
incorrectly applied the Arizona Prompt Pay Act
("Act") to a contractor-subcontractor dispute on a
federal work project, we reverse and remand for proceedings
consistent with this decision.
AND PROCEDURAL HISTORY
The National Park Service ("NPS") is a bureau of
the U.S. Department of the Interior, a federal agency. In
2013, NPS hired Caymus to provide and install road signs at
Grand Canyon National Park. The contract price was $292, 300.
Caymus was prepared to bond the project, but NPS's
representative told Caymus a bond was not required because
the contract was a service contract, not a construction
contract. Caymus hired Zumar, a supplier of traffic signs and
related highway safety products with offices in Arizona,
California, and Washington, to supply the sign panels. Zumar
quoted $92, 793.60 for the job; Caymus accepted the quote and
agreed to Zumar's credit application, which provided that
Caymus would pay according to the terms of sale stated on
In March 2014, Zumar delivered sign panels to the job site;
NPS raised immediate concerns about defective and missing
panels. Thereafter, the parties and NPS had ongoing
discussions regarding completion of the sign panels work. On
June 30, though, Caymus submitted a pay application to NPS,
certifying the sign panels line item was 100% completed. In
total, Caymus requested and received $98, 800 from NPS for
the sign panels scope of work.
Zumar invoiced Caymus in full for the sign panels. Caymus
paid Zumar $59, 278.10, but withheld $35, 632.33 pending
Zumar's satisfactory performance. To resolve the parties'
dispute, in October 2014, Zumar's counsel proposed the
Although Caymus has not facilitated a discussion with NPS to
attempt to resolve this matter, NPS has contacted Zumar, and
proposed to release payment through Caymus to Zumar of the
principal amount of $30, 632.33 now, with the final principal
amount of $5, 000.00 to be paid by NPS through Caymus to
Zumar upon Zumar's completion of the items on the
enclosed punch list. This proposed resolution is acceptable
to Zumar, and we understand NPS has or will contact you to
seek your consent. Of course, both payments need to be by
joint check, executed first by Caymus, to ensure that Zumar
actually receives payment as intended by NPS.
end, Bryan Gregory, a contracting officer with NPS, asked
Randy Ringleb, Caymus' president:
Can you provide the status of payments to Zumar? Zumar has
expressed a desire to perform needed repairs, but had
concerns about payment. Understandably, there may be some
amount that is withheld until completion. However, I would
encourage you to continue to work with Zumar to get things
wrapped up, particularly since we are so near. If you have
not already made plans for an interim payment, you may
consider doing so to keep things moving in a positive
direction. The Government has withheld less than 10% of the
contract value. Perhaps you could take a similar approach?
would not agree to the proposal absent agreement by Zumar to
warranty the sign panels or assurance from NPS that it would
accept them in as-is condition.
In December 2014, NPS submitted to Zumar and Caymus a punch
list of items required to complete the sign panels work.
Several months later, NPS sent a Cure Notice, alleging that
twenty-two sign panels needed repair and three were missing.
Caymus completed the work at a cost of $15, 000. NPS withheld
final payment to Caymus of $35, 367.96 pending resolution of
a dispute based in part on the sign panels.
In the meantime, in September 2014, Zumar brought this breach
of contract action against Caymus, seeking damages of $35,
632.33. The matter proceeded to compulsory arbitration. Zumar
prevailed, and Caymus appealed. Zumar moved for summary
judgment, arguing Caymus violated state and federal prompt
pay laws, which constituted a material breach of the
subcontract. The superior court agreed and granted the
motion. While the motion was pending, Caymus moved to add
counterclaims for breach of contract, breach of warranty, and
(in the alternative) unjust enrichment. The court denied that
motion and Caymus' subsequent motion for reconsideration.
The court entered a final judgment and Caymus timely
appealed. We have jurisdiction pursuant to Arizona Revised
Statutes ("A.R.S.") section 12-2101(A)(1).
Motion for ...