Unclean Hands Bars Suit Between Construction Contractors Where Subcontractor Failed to Pay Labor Code Prevailing Wages

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Plaintiff construction subcontractor appealed from a trial court ruling that its suit against the construction contractor was barred by the doctrine of unclean hands.  B & K Custom Cabinets, Inc. v. B.K. Ball, Inc., No. C060766, 2010 WL 3508321 (Cal. Ct. App. 3d Dist. Sept. 9, 2010).  The subcontractor B & K sued contractor Ball seeking to enforce a stop notice and asserting causes of action for breach of contract and violation of the prompt payment laws, all designed to recover $155,534 allegedly due under the subcontract. Id. *6.  Ball claimed it owed no more than $87,987, but because it had knowledge of B & K’s prevailing wage violation, Ball could not pay even that amount without exposing itself to liability under Labor Code section 1775 unless B & K provided “an affidavit signed under penalty of perjury” attesting that B & K employees had been paid the prevailing wages.” Id. (citing Lab. Code § 1775(b)).

The Third District held that because the subcontractor refused to pay its employees the prevailing wages required by the Labor Code, the trial court did not err in applying the doctrine of unclean hands to deny B & K all relief in its lawsuit against Ball. Id. *7.

Having refused to pay prevailing wages, B & K could not provide the required affidavit. Thus, B & K’s inequitable conduct prevented the payment it now seeks to recover from Ball through this lawsuit, i.e., the inequitable conduct directly relates to the matter now in controversy.

Id. *6.

Judges and Attorneys

Presiding Justice Arthur G. Scotland wrote the opinion for the court.  Justice Rick Sims concurred; Justice Vance W. Raye concurred in the result.

Brian DeAmicis, Law Offices of Brian DeAmicis, Sacramento, CA, for Plaintiff, Cross-defendant and Appellant.

Gary M. Funamura, Trainor Fairbrook, Sacramento, CA, for Defendant, Cross-complainant and Respondent.

By CHARLES JUNG

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