Payment Claims on Colorado Public Projects: Key Takeaways for Contractors and Suppliers
Introduction
When contractors or material suppliers are not paid for their work or materials on private projects in Colorado, mechanic’s liens provide a useful tool for recovery. However, on state or municipal projects, such liens are not an option. Instead, unpaid parties have two alternative methods for pursuing payment:
Filing a Verified Statement of Claim
Making a Claim on a Payment Bond
Both options offer valuable avenues for recovery but come with strict requirements. Failing to follow the necessary steps can result in losing your rights to payment. Below, we will explain these processes in detail, with a critical update from a recent Colorado Court of Appeals case that underscores the importance of accuracy when filing a Verified Statement of Claim.
Understanding Verified Statements of Claim
A Verified Statement of Claim is a sworn statement affirming, under oath, that the claim is accurate. Under Colorado law (C.R.S. §38-26-107(1)), subcontractors or material suppliers may file such claims with a public entity for unpaid amounts related to:
Furnished labor, materials, sustenance, or other supplies used or consumed in a project.
Rental machinery, tools, or equipment utilized in the work.
Laborers' wages.
However, the recent case of Ralph L. Wadsworth Construction Company, LLC v. Regional Rail Partners (2024) serves as a cautionary tale.
Lessons from the Wadsworth Case
The Colorado Court of Appeals ruled that the statute strictly limits Verified Statements of Claim to amounts actually due for labor, materials, or supplies provided. This does not include:
Anticipated profits,
Non-liquidated damages, or
Other amounts not presently due.
In the Wadsworth case, the claimant overstated its claim by including such items. The court determined this violated the statutory requirements, leading to the entire claim being forfeited.
Key Takeaway: Be precise. Overstating a claim—even unintentionally—can result in losing your entire right to recovery.
Payment Bond Claims
In addition to Verified Statements of Claim, contractors and suppliers may also pursue payment via a claim on a payment bond. Payment bonds are typically required for public works projects to ensure contractors and suppliers are paid for their contributions.
Like Verified Statements of Claim, payment bond claims have strict procedural requirements and deadlines. Acting promptly and providing accurate information is essential.
Protect Your Rights: Best Practices for Contractors and Suppliers
To avoid jeopardizing your claim, follow these steps:
Act Promptly: Both Verified Statements of Claim and payment bond claims have tight deadlines.
Be Accurate: Ensure your claim includes only amounts currently due under Colorado law.
Consult Legal Experts: The claims process can be complex. An experienced attorney can help navigate the requirements and avoid costly mistakes.
How We Can Help
At Miller & Law, P.C., we understand the challenges contractors and suppliers face when pursuing payment for public projects. Whether you need assistance filing a Verified Statement of Claim or have questions about payment bonds, we are here to assist.
Contact us today to discuss your situation and ensure your rights are protected. *This article is intended for informational purposes only and should not be construed as legal advice. Individuals involved should consult with legal professionals for specific guidance tailored to their circumstances.
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