Back in April of this year, I authored this post concerning the Arizona Court of Appeals’ recent decision in SK Builders, Inc. v. Smith. In SK Builders, the court held that Arizona’s Prompt Pay Act (the “PPA”) did not apply to billings containing work furnished outside the preceding 30 days because the PPA stated that “billing[s] or estimate[s]” must be based on “work performed and…materials supplied during the preceding thirty day billing cycle.” In other words, the court found that payment applications submitted at the end of a billing cycle were limited to work performed or materials furnished within the preceding 30 days. But, as I briefly noted in a July update to my earlier post, the sun set on SK Builders rather quickly. The decision was legislatively overruled by an amendment to the PPA and is no longer good law.
The court filed its opinion in SK Builders on January 29, 2019. But on April 29, 2019—a mere three months later—Governor Ducey signed SB 1397 into law, which, among other things, changed the operative provisions of the PPA to abrogate the holding in SK Builders. Specifically, SB 1397 amended the PPA section covering progress payments by the owner as follows:
Because these changes removed the requirement that progress payments be made on billings or estimates of work performed and materials supplied “during the preceding thirty day billing cycle,” they rendered the basis for the court’s holding in SK Builders invalid. Indeed, these changes brought the language of the PPA into conformance with the common understanding and practice of those in the construction industry—i.e., that payment applications submitted at the end of a billing cycle are not limited to work performed or materials furnished in the preceding 30 days. Thus, when SB 1397 became effective on August 27, 2019, SK Builders ceased being good law.