Capitol Steel Fabricators, Inc. v. Mega Constr. Co.

I. Introduction

Plaintiff, Capitol Steel Fabricators, Inc. (Capitol), a subcontractor, appeals from a judgment entered against it in favor of defendants Mega Construction Co., Inc. (Mega), the general contractor, and Fidelity and Deposit Company of Maryland (Fidelity), the surety, on a complaint arising out of a public works contract. The primary issue presented by this appeal is whether the trial court properly determined a “pay when paid” clause was enforceable against Capitol, the subcontractor. On June 3, 1997, this court filed an unpublished opinion affirming the judgment. On June 30, 1997, on our own motion, we granted a rehearing to allow the parties to brief the effect, if any, of the Supreme Court’s June 26, 1997, decision in Wm. R. Clarke Corp. v. Safeco Ins. Co. (1997) 15 Cal.4th 882, 888-897 [ 64 Cal.Rptr.2d 578 , 938 P.2d 372 ], on this case. On rehearing, contrary to the arguments posited by the general contractor, Mega, we conclude the June 26,1997, Wm. R. Clarke Corp. decision applies to a public works project where there is no pending action against the governmental entity. Hence, we reverse.

H. Background

The complaint was filed on June 23, 1992, and…