Legal Question in Construction Law in California

Well, first of all, and you may already know this, a contractor has a statutory right to stop work when a progress payment is not made. Civil Code section 3260.2.

When and whether the contractor should resume work is the next question, and here the answer becomes complicated and fact-dependent.

If the contractor is never paid the progress payment, and there is no sufficient justification for the non-payment, I think the contractor is justified in staying off the job and that he cannot be said to have abandoned the job.

I note that you ask "........before the Owner states that the contractor abandoned the job?" In a literal sense, the Owner can state this any time. I'm sure what you mean is "How soon after an event of nonpayment followed by a stoppage of work must elapse before the contractor can be held to have abandoned the job?"

There is an important side issue here, too; whether the nonpayment of the progress payment is a sufficient breach to warrant cessation of work, or rescission of the contract itself to be followed by work on a "quantum meruit" basis, or an immediate suit by the contractor for damages including lost profits.

After some research, I note quite a lot of recent court decisions in 2008 and thereabouts. My overall impression is that the legal rights and relationship between a contractor and an owner after an unjustifiable failure to make a required progress payment and the continuing failure of the owner to make the payment will resultin the contractor having an immediate right, if he chooses, to rescind the contract, and probably to refuse to resume work on any basis; if he does, he may be entitled to payment on a quantum meruit basis or to sue for damages.

If the Owner pays the delinquent progress payment before the contractor pulls out of the job, the contract may not have been breached sufficiently to allow rescission or damages, but I do not know of any hard-and-fact rules for differentiating between a terminating breach and a minor breach that can be cured.

If I have been answering the wrong question, please contact me with clarifying facts.