AI Generated Opinion Summaries

This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.

Facts

• In 2015, the City of Las Cruces entered into a contract with White Sands Construction, Inc. for the construction of a Public Safety Complex. The contract stipulated payment terms and conditions, including a clause for liquidated damages in case of delayed completion. The project encountered delays, and the City made late payments on most of White Sands' payment applications, causing further delays as White Sands struggled to pay subcontractors. Negotiations between the parties led to a settlement agreement and a final change order, which did not explicitly address a claim under the Prompt Payment Act (PPA) for interest on late payments. White Sands later filed a complaint alleging a violation of the PPA to recover accrued interest on the late payments.

Procedural History

• [Not applicable or not found]

Parties' Submissions

• Plaintiff-Appellee (White Sands Construction, Inc.): Argued that the City's late payments caused significant project delays and that the City directed extra-contractual work without adjusting payments. Claimed the City owed interest under the PPA for late payments.
• Defendant-Appellant (City of Las Cruces): Contended that White Sands waived its right to interest under the PPA during negotiations and that the district court miscalculated the interest owed. Argued that the method of calculating interest and the start date for interest accrual were incorrect.

Legal Issues

• Whether White Sands waived its right to pursue PPA interest by entering into Change Order No. 2 and the settlement agreement.
• How to apply the PPA’s direction that interest accrued “per month or fraction of a month until the payment is issued” and when the interest started to accrue.
• Whether the district court incorrectly decided the City’s motion for clarification related to the calculation of the date the interest terminated.

Disposition

• The district court’s decision that the City owed White Sands interest under the PPA was affirmed in part and reversed in part.
• The court remanded for recalculation of the interest owed, specifically regarding the rate at which that interest accrued.

Reasons

• WRAY, Judge (Medina and Ives, JJ., concurring): Concluded that White Sands did not waive its right to PPA interest either generally or as a term of Change Order No. 2, as the City had rejected White Sands' offers to waive the interest and the final agreement did not include a waiver of PPA claims. The court found the district court's interpretation of the PPA, which allowed for a full month's interest on any part of a month a payment was late, overly punitive and not in line with the PPA's intent to encourage prompt payment. The court determined that interest should accrue daily at a rate proportionate to the monthly rate for the actual period of delinquency. The court also affirmed the district court's findings regarding when interest began and stopped accruing but reversed the method of calculating the interest rate, directing a recalculation based on a daily accrual rate.