779.13 History
History: 1979 c. 32 s.
57;
1979 c. 176; Stats. 1979 s. 779.13;
1995 a. 224;
2005 a. 204.
779.135
779.135
Construction contracts, form of contract. The following provisions in contracts for the improvement of land in this state are void:
779.135(1)
(1) Provisions requiring any person entitled to a construction lien to waive his or her right to a construction lien or to a claim against a payment bond before he or she has been paid for the labor, services, materials, plans, or specifications that he or she performed, furnished, or procured.
779.135(2)
(2) Provisions making the contract subject to the laws of another state or requiring that any litigation, arbitration or other dispute resolution process on the contract occur in another state.
779.135(3)
(3) Provisions making a payment to a prime contractor from any person who does not have a contractual agreement with the subcontractor, supplier, or service provider a condition precedent to a prime contractor's payment to a subcontractor , supplier, or service provider. This subsection does not prohibit contract provisions that may delay a payment to a subcontractor until the prime contractor receives payment from any person who does not have a contractual agreement with the subcontractor, supplier, or service provider.
779.135 History
History: 1993 a. 213 ss.
164,
165; Stats. 1993 s. 779.135;
2005 a. 204.
779.135 Annotation
Section 779.135 (1) voids a contract provision that requires a subcontractor to waive its right to a construction lien before it can get paid. Section 779.05 (1) specifically allows a subcontractor who has signed a contract containing a lien waiver provision to refuse to furnish the waiver unless paid in full for the work or material to which the waiver relates. Thus a subcontractor facing a void construction lien waiver contract provision with a choice: it can either tender a lien waiver prior to being paid or refuse to do so until it is paid. Tri-State Mechanical, Inc. v. Northland College, 2004 WI App 100,
273 Wis. 2d 471,
681 N.W.2d 302,
03-2182.
779.135 Annotation
A contractual forum selection clause requiring litigation in another state contravened sub. (2) and was void. McCloud Construction, Inc. v. Home Depot USA, Inc.
149 F. Supp. 2d 695 (2001).
779.14
779.14
Public works, form of contract, bond, remedy. 779.14(1)(1)
Definition. In this section, "subcontractor, supplier, or service provider" means the following:
779.14(1)(a)
(a) Any person who has a direct contractual relationship, expressed or implied, with the prime contractor or with any subcontractor of the prime contractor to perform, furnish, or procure labor, services, materials, plans, or specifications, except as provided in
par. (b).
779.14(1)(b)
(b) With respect to contracts entered into under
s. 84.06 (2) for highway improvements, any person who has a direct contractual relationship, expressed or implied, with the prime contractor to perform, furnish, or procure labor, services, materials, plans, or specifications.
779.14(1e)
(1e) Contract requirements regarding duties of prime contractor. 779.14(1e)(a)(a) All contracts involving $10,000 or more for performing, furnishing, or procuring labor, services, materials, plans, or specifications, when the same pertains to any public improvement or public work shall contain a provision for the payment by the prime contractor of all claims for labor, services, materials, plans, or specifications performed, furnished, procured, used, or consumed that pertain to the public improvement or public work.
779.14(1e)(b)
(b) All contracts that are in excess of $30,000, as indexed under
sub. (1s), and that are for performing, furnishing, or procuring labor, services, materials, plans, or specifications for a public improvement or public work shall contain a provision under which the prime contractor agrees, to the extent practicable, to maintain a list of all subcontractors, suppliers, and service providers performing, furnishing, or procuring labor, services, materials, plans, or specifications under the contract.
779.14(1m)
(1m) Payment and performance assurance requirements. 779.14(1m)(c)(c)
State contracts. The following requirements apply to contracts with the state for performing, furnishing, or procuring labor, services, materials, plans, or specifications for a public improvement or public work:
779.14(1m)(c)1.
1. In the case of a contract with a contract price exceeding $10,000, as indexed under
sub. (1s), but not exceeding $100,000, as indexed under
sub. (1s):
779.14(1m)(c)1.a.
a. The contract shall include a provision which allows the state to make direct payment to subcontractors or to pay the prime contractor with checks that are made payable to the prime contractor and to one or more subcontractors. This
subd. 1. a. does not apply to any contract entered into by the state under authority granted under
chs. 84,
85 and
86. This
subd. 1. a. also does not apply to any contract with a town, city, village, county or school district for the construction, improvement, extension, repair, replacement or removal of a transportation facility, as defined under
s. 84.185 (1) (d); bikeway, as defined under
s. 84.60 (1) (a); bridge; parking lot or airport facility.
779.14(1m)(c)1.b.
b. The contract shall comply with written standards established by the department of administration. Written standards established under this
subd. 1. b. shall include criteria for determining whether the contract requires payment or performance assurances and, if so, what payment or performance assurances are required.
779.14(1m)(c)2.
2. In the case of a contract with a contract price exceeding $100,000, as indexed under
sub. (1s), but not exceeding $250,000, as indexed under
sub. (1s):
779.14(1m)(c)2.a.
a. The contract shall include a provision which allows the state to make direct payment to subcontractors or to pay the prime contractor with checks that are made payable to the prime contractor and to one or more subcontractors. This
subd. 2. a. does not apply to any contract entered into by the state under authority granted under
chs. 84,
85 and
86. This
subd. 2. a. also does not apply to any contract with a town, city, village, county or school district for the construction, improvement, extension, repair, replacement or removal of a transportation facility, as defined under
s. 84.185 (1) (d); bikeway, as defined under
s. 84.60 (1) (a); bridge; parking lot or airport facility.
779.14(1m)(c)2.b.
b. The contract shall require the prime contractor to provide a payment and performance bond meeting the requirements of
par. (e), unless the department of administration allows the prime contractor to substitute a different payment assurance for the payment and performance bond. The department of administration may allow a prime contractor to substitute a different payment and performance assurance for the payment and performance bond only after the contract has been awarded and only if the substituted payment and performance assurance is for an amount at least equal to the contract price and is in the form of a bond, an irrevocable letter of credit or an escrow account acceptable to the department of administration. The department of administration shall establish written standards under this
subd. 2. b. governing when a different payment and performance assurance may be substituted for a payment and performance bond under
par. (e).
779.14(1m)(c)3.
3. In the case of a contract with a contract price exceeding $250,000, as indexed under
sub. (1s), the contract shall require the prime contractor to obtain a payment and performance bond meeting the requirements under
par. (e).
779.14(1m)(d)
(d)
Local government contracts. The following requirements apply to contracts, other than contracts with the state, for performing, furnishing, or procuring labor, services, materials, plans, or specifications for a public improvement or public work:
779.14(1m)(d)1.
1. In the case of a contract with a contract price exceeding $10,000, as indexed under
sub. (1s), but not exceeding $50,000, as indexed under
sub. (1s):
779.14(1m)(d)1.a.
a. The contract shall include a provision which allows the governmental body that is authorized to enter into the contract to make direct payment to subcontractors or to pay the prime contractor with checks that are made payable to the prime contractor and to one or more subcontractors. This
subd. 1. a. does not apply to any contract with a town, city, village, county or school district for the construction, improvement, extension, repair, replacement or removal of a transportation facility, as defined under
s. 84.185 (1) (d); bikeway, as defined under
s. 84.60 (1) (a); bridge; parking lot or airport facility.
779.14(1m)(d)1.b.
b. The contract shall comply with written standards established by the public body authorized to enter into the contract. Written standards established under this
subd. 1. b. shall include criteria for determining whether the contract requires payment or performance assurances and, if so, what payment or performance assurances are required.
779.14(1m)(d)2.
2. In the case of a contract with a contract price exceeding $50,000, as indexed under
sub. (1s), but not exceeding $100,000, as indexed under
sub. (1s):
779.14(1m)(d)2.a.
a. The contract shall include a provision which allows the governmental body that is authorized to enter into the contract to make direct payment to subcontractors or to pay the prime contractor with checks that are made payable to the prime contractor and to one or more subcontractors. This
subd. 2. a. does not apply to any contract with a town, city, village, county or school district for the construction, improvement, extension, repair, replacement or removal of a transportation facility, as defined under
s. 84.185 (1) (d); bikeway, as defined under
s. 84.60 (1) (a); bridge; parking lot or airport facility.
779.14(1m)(d)2.b.
b. Except as provided in
sub. (4), the contract shall require the prime contractor to provide a payment and performance bond meeting the requirements of
par. (e), unless the public body authorized to enter into the contract allows the prime contractor to substitute a different payment assurance for the payment and performance bond. The public body may allow a prime contractor to substitute a different payment and performance assurance for the payment and performance bond only if the substituted payment and performance assurance is for an amount at least equal to the contract price and is in the form of a bond, an irrevocable letter of credit or an escrow account acceptable to the public body. The public body shall establish written standards under this
subd. 2. b. governing when a different payment and performance assurance may be substituted for a payment and performance bond under
par. (e).
779.14(1m)(d)3.
3. Except as provided in
sub. (4), in the case of a contract with a contract price exceeding $100,000, as indexed under
sub. (1s), the contract shall require the prime contractor to obtain a payment and performance bond meeting the requirements under
par. (e).
779.14(1m)(e)2.2. A bond required under
par. (c) or
(d) shall carry a penalty of not less than the contract price, and shall be conditioned for all of the following:
779.14(1m)(e)2.b.
b. The payment to every person, including every subcontractor, supplier, or service provider, of all claims that are entitled to payment for labor, services, materials, plans, or specifications performed, furnished, or procured for the purpose of making the public improvement or performing the public work as provided in the contract and
sub. (1e) (a).
779.14(1m)(e)3.
3. A bond required under
par. (c) shall be approved for the state by the state official authorized to enter the contract. A bond required under
par. (d) shall be approved for a county by its corporation counsel, for a city by its mayor, for a village by its president, for a town by its chairperson, for a school district by its president and for any other public board or body by the presiding officer thereof.
779.14(1m)(e)4.
4. No assignment, modification or change of the contract, change in the work covered thereby or extension of time for the completion of the contract may release the sureties on a bond required under
par. (c) or
(d).
779.14(1m)(e)5.
5. Neither the invitation for bids nor the person having power to approve the prime contractor's bond may require that a bond required under
par. (c) or
(d) be furnished by a specified surety company or through a specified agent or broker.
779.14(1m)(f)
(f)
Direct purchase contracts. Paragraphs (c) and
(d) do not apply to a contract for the direct purchase of materials by the state or by a local unit of government.
779.14(1s)
(1s) Indexing of contract thresholds. If a dollar amount is to be indexed under this subsection, the department of workforce development shall adjust the dollar amount biennially, the first adjustment to be made not sooner than December 1, 1998. The adjustment shall be in proportion to any change in construction costs since the effective date of this subsection under this subsection, or the last adjustment whichever is later. No adjustment shall be made for a biennium, if the adjustment to be made would be less than 5%.
779.14(2)
(2) Actions on a performance and payment bond. 779.14(2)(a)(a) Except as provided in
par. (am), no later than one year after the completion of work under the contract, any party in interest, including any subcontractor, supplier, or service provider, may maintain an action in that party's name against the prime contractor and the sureties upon the bond for the recovery of any damages sustained by reason of any of the following:
779.14(2)(a)1.
1. Failure of the prime contractor to comply with the contract.
779.14(2)(a)2.
2. Except as provided in
subd. 3., failure of the prime contractor or a subcontractor of the prime contractor to comply with a contract, whether express or implied, with a subcontractor, supplier, or service provider for performing, furnishing, or procuring labor, services, materials, plans, or specifications for the purpose of making the public improvement or performing the public work that is the subject of the contract with the governmental entity.
779.14(2)(a)3.
3. With respect to contracts entered into under
s. 84.06 (2) for highway improvements, failure of the prime contractor to comply with a contract, whether express or implied, with a subcontractor, supplier, or service provider of the prime contractor for performing, furnishing, or procuring labor, services, materials, plans, or specifications for the purpose of making the highway improvement that is the subject of the contract with the governmental entity.
779.14(2)(am)1.1. Except as provided in
subd. 2., a subcontractor, supplier, or service provider may maintain an action under
par. (a) only if the subcontractor, supplier, or service provider has served a written notice on the prime contractor that the subcontractor, supplier, or service provider has performed, furnished, or procured, or will perform, furnish, or procure labor, services, materials, plans, or specifications to the public work or improvement. The notice must be served no later than 60 days after the date on which the subcontractor, supplier, or service provider first performed, furnished, or procured the labor, services, materials, plans, or specifications.
779.14(2)(am)2.
2. A notice under
subd. 1. is not required if any of the following applies:
779.14(2)(am)2.a.
a. The contract for performing, furnishing, or procuring the labor, services, materials, plans, or specifications does not exceed $5,000.
779.14(2)(am)2.b.
b. The action is brought by an employee of the prime contractor, subcontractor, supplier, or service provider.
779.14(2)(am)2.c.
c. The subcontractor, supplier, or service provider is listed in the list required to be maintained under
sub. (1e) (b) or in a written contract, or in a document appended to a written contract, between a subcontractor, supplier, or service provider and the prime contractor.
779.14(2)(b)
(b) If the amount realized on the bond is insufficient to satisfy all claims of the parties in full, it shall be distributed among the parties proportionally.
779.14(3)
(3) Actions by a county. In an action by a county upon the bond all persons for whose protection it was given and who make claim thereunder may be joined in the action. The county highway commissioner may take assignments of all demands and claims for labor, services, materials, plans, or specifications and enforce the same in the action for the benefit of the assignors, and the judgment may provide the manner in which the assignors shall be paid.
779.14(4)
(4) Bonding exemption. A contract with a local professional football stadium district under
subch. IV of ch. 229 is not required under
sub. (1m) (d) 2. b. or
3. to include a provision requiring the prime contractor to provide or obtain a payment and performance bond or other payment assurance.
779.14 Cross-reference
Cross Reference: See also ch.
DWD 293, Wis. adm. code.
779.14 Annotation
A subcontractor can maintain an action against the prime contractor and the prime contractor's surety if the claim is brought within one year after completion of work on the principal contract. Honeywell, Inc. v. Aetna Casualty & Surety Co.
52 Wis. 2d 425,
190 N.W.2d 499 (1971).
779.14 Annotation
In a complaint seeking to foreclose a construction lien on a municipal arena, an allegation that the lessee of the arena was acting as the city's agent in contracting for improvements to the arena was sufficient to withstand a demurrer. James W. Thomas Const. Co., Inc. v. Madison,
79 Wis. 2d 345,
255 N.W.2d 551 (1977).
779.14 Annotation
The liability of a prime contractor for damages to employees of a subcontractor under s. 779.14 (2) did not include wage penalties under s. 66.293 (3) [now 66.0903 (3).] Consent to be a named party under s. 66.293 (3) may occur after one year when the action is for damages under s. 66.293 in the name of the plaintiffs and other similarly situated employees and was filed within the one-year time period. Strong v. C.I.R., Inc.
184 Wis. 2d 619,
516 N.W.2d 719 (1994).
779.14 Annotation
A prime contractor is responsible for and must provide a bond in the amount of its own contract, not in the amount of the total of all prime contractors together. Golden Valley Supply Company v. American Insurance Company,
195 Wis. 2d 866,
537 N.W.2d 58 (Ct. App. 1995),
95-0357.
779.14 Annotation
Completion of work under a contract under sub. (2) occurs when a contractor has completed the work, not when the work is accepted. Arbor Vitae-Woodruff Joint School District No. 1 v. Gulf Insurance Co. 2002 WI App 24,
250 Wis. 2d 637,
639 N.W.2d 788,
01-0993.
779.14 Annotation
The deletion of sub. (1m) (b) 1., 1995 stats., which specifically required a municipality to require a prime contractor to furnish a bond did not eliminate municipal liability in the event the municipality fails to ensure the existence of a contractor's bond. Holmen Concrete Products v. Hardy Construction Co. 2004 WI App 165,
276 Wis. 2d 126,
686 N.W.2d 705,
03-3335.
779.15
779.15
Public improvements; lien on money, bonds, or warrants due the prime contractor; duty of officials. 779.15(1)(1) Any person who performs, furnishes, procures, manages, supervises, or administers any labor, services, materials, plans, or specifications used or consumed in making public improvements or performing public work, to any prime contractor, except in cities of the 1st class, shall have a lien on the money or bonds or warrants due or to become due the prime contractor therefor, if the lienor, before payment is made to the prime contractor, serves a written notice of the claim on the debtor state, county, town, or municipality. The debtor shall withhold a sufficient amount to pay the claim and, when it is admitted by the prime contractor or established under
sub. (3), shall pay the claim and charge it to the prime contractor. Any officer violating the duty hereby imposed shall be liable on his or her official bond to the claimant for the damages resulting from the violation. There shall be no preference between the lienors serving the notices.
779.15(2)
(2) Service of the notice under
sub. (1) shall be made upon the clerk of the municipality or in the clerk's absence upon the treasurer. If any of the money due the prime contractor is payable by the state, service of the notice under
sub. (1) shall be served upon the state department, board, or commission having jurisdiction over the work. A copy of the notice shall be served concurrently upon the prime contractor.
779.15(3)
(3) If a valid lien exists under
sub. (1) and the prime contractor does not dispute the claim within 30 days after service on the prime contractor of the notice provided in
sub. (2), by serving written notice on the debtor state, county, town, or municipality and the lien claimant, the amount claimed shall be paid over to the claimant on demand and charged to the prime contractor pursuant to
sub. (1). If the prime contractor disputes the claim, the right to a lien and to the moneys in question shall be determined in an action brought by the claimant or the prime contractor. If the action is not brought within 3 months from the time the notice required by
sub. (1) is served, and notice of bringing the action filed with the officer with whom the claim is filed, the lien rights are barred.
779.15(4)(a)(a) When the total of the lien claims exceeds the sum due the prime contractor and where the prime contractor has not disputed the amounts of the claims filed, the debtor state, county, town or municipality, through the officer, board, department or commission with whom the claims are filed, shall determine on a proportional basis who is entitled to the money and shall notify all claimants and the prime contractor in writing of the determination. Unless an action is commenced by a claimant or by the prime contractor within 20 days after the mailing of the notice, the money shall be paid out in accordance with the determination and the liability of the state, county, town or municipality to any lien claimant shall cease.
779.15(4)(b)
(b) If an action is commenced, all claimants shall be made parties and the action shall be commenced within 3 months after acceptance of the work by the proper public authority except as otherwise herein provided.
779.15(4)(c)
(c) Within 10 days after the filing of a certified copy of judgment in any such action with the officers with whom the notice authorized by
sub. (1) is filed, the money due the prime contractor shall be paid to the clerk of court to be distributed in accordance with the judgment.
779.15 Annotation
A public improvement lien under this section is subject to the waiver provision of s. 289.05 (1) [now s. 779.05 (1)]. Since waiver of a public improvement lien disposes of the lien itself, the refiling of a claim for a lien after a waiver was a nullity and the fact that the claim was not disputed following the refiling did not revive the lien. Druml Co., Inc. v. New Berlin,
78 Wis. 2d 305,
254 N.W.2d 265 (1977).
779.15 Annotation
In a complaint seeking to foreclose a construction lien on a municipal arena, an allegation that the lessee of the arena was acting as the city's agent in contracting for improvements to the arena was sufficient to withstand a demurrer. James W. Thomas Const. Co., Inc. v. Madison,
79 Wis. 2d 345,
255 N.W.2d 551 (1977).
779.155
779.155
Judgment creditors, attachment of funds due to public contractors. 779.155(1)
(1)
Limitations. This section does not apply to cases covered by
s. 812.42. Demands covered by
s. 779.15 have priority over judgments filed under this section. The remedies afforded by
s. 779.15 and by this section are complementary.
779.155(2)
(2) Certified copies of judgments filed. In this section, "municipality" includes city, village, county, town, school district, technical college district and any quasi municipal corporation. When the state or any municipality is indebted to any prime contractor, the owner of a judgment against the prime contractor may attach the debt by filing a certified copy of his or her judgment in the manner and subject to the conditions and limitations of this section. If the debt is owed by the state upon a contract for public improvements, the certified copy shall be filed with the officer, board, department or commission having jurisdiction over the work. Otherwise, the copy shall be filed with the department of administration. If the debt is owed by a municipality, the copy shall be filed with the municipal clerk or corresponding officer. The judgment creditor shall promptly notify the judgment debtor of the filing, within the time and as provided by
s. 812.07 for service upon the defendant.
779.155(3)
(3) Payment to judgment creditor; exception. Except as to prime contractors on public works, the proper officers of the state or municipality shall pay the judgment out of moneys due the prime contractor or which become due the prime contractor, but no payment shall be made until 30 days after the creditor has filed with such officers proof that the contractor had been notified of the filing of a copy of the judgment against the contractor.
779.155(4)
(4) Same; funds due public prime contractors. When the state or a municipality is indebted to a prime contractor for public improvements, payment shall not be made to the judgment creditor until 3 months after final completion and acceptance of the public work and then only out of moneys due the prime contractor in excess of unpaid lienable claims having priority under
s. 779.15.
779.155(5)(a)(a) For the purpose of administering this section, sworn statements of the prime contractor setting forth the unpaid lien claims that have been or may be filed under
s. 779.15 may be accepted by the proper officer, board, department, or commission, unless the judgment creditor or other interested person gives written notice that an action is pending to determine whether specified lien claims were incurred in performing the public work and the amount thereof, or to determine priorities in which event payments shall await the result of the action.
779.155(5)(b)
(b) Within 10 days after filing the certified copy of the judgment under
sub. (2), the prime contractor shall file the sworn statement in duplicate, with the proper officer, board, department or commission, who shall immediately furnish the judgment creditor with one of the statements. The judgment creditor shall have 10 days from the receipt thereof in which to serve the notice of pendency of the court action.
779.155(6)
(6) Payments to judgment creditor. After the expiration of the 3-month period, the moneys due the prime contractor in excess of unpaid lienable expenses and claims incurred in performing the public work shall be paid to the judgment creditor, but not exceeding the amount due on the judgment.
779.155(7)
(7) Priority of judgments over assignments. Any judgment filed under this section has priority over an assignment made by the prime contractor after the commencement of the action in which the judgment was obtained.
779.16
779.16
Theft by contractors. All moneys, bonds or warrants paid or to become due to any prime contractor or subcontractor for public improvements are a trust fund only in the hands of the prime contractor or subcontractor to the amount of all claims due or to become due or owing from the prime contractor or subcontractor for labor, services, materials, plans, and specifications performed, furnished, or procured for the improvements, until all the claims have been paid, and shall not be a trust fund in the hands of any other person. The use of any such moneys by any prime contractor or subcontractor for any other purpose until all claims, except those which are the subject of a bona fide dispute and then only to the extent of the amount actually in dispute, have been paid in full or proportionally in cases of a deficiency, is theft by the prime contractor or subcontractor of moneys so misappropriated and is punishable under
s. 943.20. If the prime contractor or subcontractor is a corporation, limited liability company, or other legal entity other than a sole proprietorship, such misappropriation also shall be deemed theft by any officers, directors, members, partners, or agents responsible for the misappropriation. Any of such misappropriated moneys which have been received as salary, dividend, loan repayment, capital distribution or otherwise by any shareholder, member, or partner not responsible for the misappropriation shall be a civil liability of that person and may be recovered and restored to the trust fund specified in this subsection by action brought by any interested party for that purpose. Except as provided in this subsection, this section shall not create a civil cause of action against any person other than the prime contractor or subcontractor to whom such moneys are paid or become due. Until all claims are paid in full, have matured by notice and filing or have expired, such money, bonds and warrants shall not be subject to garnishment, execution, levy or attachment.
779.16 History
History: 1973 c. 231;
1975 c. 409;
1979 c. 32 s.
57; Stats. 1979 s. 779.16;
2005 a. 204.
779.16 Annotation
A fiduciary relationship exists between a prime contractor and subcontractor when the prime contractor has received payment for a public improvement. Loehrke v. Wanta Builders,
151 Wis. 2d 695,
445 N.W.2d 717 (Ct. App. 1989).
779.16 Annotation
Misappropriation of funds under this section was a nondischargeable debt in bankruptcy. Matter of Thomas,
729 F.2d 502 (1984).
