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RSP Architects, Ltd. v. Five Star Develop. Resort Cmtys., et al. - 7/16/2013

Arizona Court of Appeals Division One Holds That The Arizona Prompt Payment Act – Arizona Revised Statutes §§ 32-1129 et seq. – Does Not Apply To a Contract For Architectural Services.

Five Star Development Resort Communities (“Five Star”) hired RSP Architects (“RSP”) to provide a variety of architectural services.  RSP was tasked with several different duties, including “construction administration,” “overall coordination,” and “conceptual design.”  After some time, RSP ceased working on the project and sued Five Star for unpaid payments under A.R.S. §§ 32-1129, the Prompt Payment Act.  The Act provides that a contractor’s bill for progress payments is deemed certified and approved unless objected to in writing.  On cross-motions for summary judgment, the Superior Court held that the Prompt Payment Act does not include an architectural agreement. 

RSP argued that the definition of a “construction contract” in A.R.S. § 32-1129(A)(1) includes an architectural agreement because the section applies to “a written or oral agreement relating to the construction” of a building or development.  The Court of Appeals rejected RSP’s argument, holding that such a broad reading would include any agreement touching on construction.  But the Court noted that it could not determine the full extent of the statute from the plain language, and therefore turned to traditional methods of statutory interpretation.

Construing the statute in the context of related provisions and its place in the statutory scheme, the Court upheld the trial court’s ruling that architectural agreements are not included under the Act.  The Act is found in Chapter 10 of Title 32, while Chapter 1 of Title 32 governs architects, and A.R.S. § 32-1121(A)(7) specifically states that Chapter 10 “shall not be construed to apply to” an architectural agreement.  The Court then looked to A.R.S. § 32-1159, passed several years before, for further guidance.  Section 32-1159 is an indemnification statute that requires contractors or architects to indemnify the other party from one’s negligence.  Section 32-1159(D)(2) defines a “construction contract” with language almost identical to Section 32-1129(A)(1), while Section 32-1159(D)(1) has an entirely different definition for architectural agreements.  The Court noted that it presumes that the legislature is aware of existing statutes when it enacts a new one, and so it enacted Section 32-1129(A)(1) with a knowledge of Section 32-1159(D).

The Court also rejected RSP’s argument that the legislative history indicated an intent to include architectural agreements.  While there was some discussion in the legislative minutes that supported RSP’s position, that particular draft of the statute was never enacted, and the subsequent enacted draft omitted any reference to architectural agreements.  Finally, the Court rejected RSP’s argument that RSP was tasked with more than architectural responsibilities, and therefore the contract fell under the Act’s protection.  The Court examined the language of the contract and noted that, particularly when compared with the definition of an architectural agreement in Section 32-1159(D), RSP’s duties were not beyond those normally performed by architects. 

Judge Johnsen authored the opinion; Presiding Judge Thumma and Judge Brown concurred.

Posted by: Joshua Ernst

Posted On: 7/23/2013