Breda Costruzioni Ferroviarie S.P.A. v. Los Angeles County Metropolitan Transportation Authority
Opinion
Opinion
Neal, J.
Summary
In this case we hold that the takings clause of the Fifth Amendment of the United States Constitution, applied to the states through the Fourteenth Amendment, and California common law as well, bar a public entity from retaining for its own account interest earned by funds the entity withheld from a prime contractor pursuant to a subcontractor’s stop notice. We affirm the trial court’s order requiring the entity to pay the interest to the contractor.
Factual and Procedural Background
Plaintiff, respondent and cross-appellant Breda Costruzioni Ferroviarie S.P.A. (Breda) had a prime contract to provide rail cars to defendant, appellant and cross-respondent Los Angeles County Metropolitan Transit Authority (MTA). ABB Traction, Inc. (ABB), the subcontractor providing Breda with car motors, filed a stop notice requiring MTA to withhold payments owed to Breda. The stop notice procedure is similar to a mechanic’s lien, and it enables a subcontractor or material supplier to force a project owner to withhold monies the owner owes to a prime contractor, for the purpose of paying sums allegedly due the subcontractor or material supplier.