American Home Assur. v. PLAZA MATERIALS

• Decision Date: 07 July 2005
• Docket Number: No. SC02-1257.,SC02-1257.
• Citation: 908 So. 2d 360
• Court: Florida Supreme Court
• Parties: AMERICAN HOME ASSURANCE COMPANY, Petitioner, v. PLAZA MATERIALS CORPORATION, Respondent.

908 So.2d 360

AMERICAN HOME ASSURANCE COMPANY, Petitioner, v.PLAZA MATERIALS CORPORATION, Respondent.

No. SC02-1257.

Supreme Court of Florida.

July 7, 2005.

Robert E. Morris of The Morris Law Firm, Tampa, FL and Hala A. Sandridge of Fowler, White, Boggs and Banker, P.A., Tampa, FL, for Petitioner.

Jamie Billotte Moses of Fisher, Rushmer, Werrenrath, Dickson, Talley and Dunlap, P.A., Orlando, FL, for Respondent.

Brett D. Divers and E.A. "Seth" Mills, Jr. of Mills, Paskert, and Divers, P.A., Tampa, FL, on behalf of The Surety Association of America as Amicus Curiae.

Dana G. Toole of Dunlap and Toole, P.A., Tallahassee, FL, on behalf of The Florida Transportation Builders Association and APAC-Florida, Inc. as Amici Curiae.

Pamela S. Leslie, General Counsel and Marianne A. Trussell, Deputy General Counsel, Tallahassee, FL, on behalf of Department of Transportation as Amicus Curiae.

PER CURIAM.

We have for review a decision of a district court of appeal on the following question, which the court certified to be of great public importance:

IF A STATUTORY PAYMENT BOND DOES NOT CONTAIN REFERENCE TO THE NOTICE AND TIME LIMITATION PROVISIONS OF SECTION255.05(6), ARE THOSE NOTICE AND TIME LIMITATIONS NEVERTHELESS ENFORCEABLE BY THE

SURETY, OR IS THE CLAIMANT ENTITLED TO RELY UPON THE NOTICE AND TIME LIMITATIONS APPLICABLE UNDER THE COMMON LAW?

Am. Home Assurance Co. v. Plaza Materials Corp.,826 So.2d 358, 361(Fla. 2d DCA2002).We have jurisdiction.Seeart. V, § 3(b)(4), Fla. Const.

Facts and Procedural History

As outlined by the Second District in its opinion below, the following facts are pertinent for our consideration of the present action:

This case arises out of the public construction of the Polk Parkway by the DOT.The Polk Parkway was built in sections, and each section apparently had its own contract documents.This case concerns the bonds issued for sections 3A,3B, and6A.For all relevant sections of the Polk Parkway, the DOT was the owner, who contracted with Cone Constructors, Inc.("Cone"), as the general contractor.Cone subcontracted certain work to Fulton Construction ("Fulton"), and Fulton obtained materials from Plaza.The DOT paid Cone for certain work.Allegedly, Cone paid Fulton in full and received a general release in favor of itself and American Home, as surety.However, Fulton did not pay Plaza.Thereafter, both Fulton and Cone filed for bankruptcy protection.As a result, Plaza sought payment from the bond[s].Plaza, however, did not comply with all of the notice and time requirements contained in section 255.05(2) when perfecting these claims.

American Home,826 So.2d at 359.

The trial court permitted Plaza to enforce its claims upon the bonds, despite the company's lack of compliance with the notice requirements of section 255.05(2).Seeid. at 358.The court held "that the bonds in this case were common law bonds rather than statutory bonds and that therefore American Home could not enforce the restrictions contained in section 255.05(2)."Id. at 360.On appeal, the Second District affirmed, stating:

There can be no dispute that the DOT bond does not "contain reference to the notice and time limitation provisions of [section 255.05]."This is a mandatory requirement of subsection (6).

Section 255.05(4) requires that the "payment provisions" be deemed statutory and subject to all the requirements of subsection (2).Even if this statutory language subjects the additional, broader coverage of a common law bond to the requirements of subsection (2), as was suggested by the Fifth District in Martin Paving [v. United Pacific Insurance Co., 646 So.2d 268, 270(Fla. 5th DCA1994)], this language does not permit American Home to issue a bond in violation of subsection (6).If anything, the justification for "deeming" a bond subject to the subsection (2) requirements rests in the fact that the bond informs the claimant of these requirements.Accordingly, we conclude that a surety that issues a bond that does not contain notice of the restrictions as required by subsection (6) is simply not entitled to enforce those restrictions.To this extent, the violation of subsection (6) transforms the statutory bond into a common law bond, or at least renders the time restrictions in subsection (2) unenforceable.

We recognize that our opinion does not require Plaza to prove that it was misled or confused by the failure of American Home to comply with subsection (6) in order to receive a longer claims period.We conclude that the legislature added the notice requirement in subsection (6) to eliminate the cost and necessity of litigating complex issues of waiver or estoppel.American Home had the opportunity to demand that DOT utilize a bond form that complied with subsection (6).It chose not to do so.Under these circumstances, we conclude that the better rule is to permit the longer claims period without requiring claimants to prove that they were misled by the statutory violation.

Id. at 360-61(footnote omitted).

Based upon its conclusion that "[t]he DOT standard contract bond form is the subject of ongoing litigation throughout the state[and t]rial courts have reached various outcomes concerning the issues addressed in this opinion,"id. at 361, the district court certified the above-quoted question to this Court as a matter of great public importance, and this action followed.¹Unfortunately, we must resolve application of statutory provisions that are conflicting.We attempt to respect the provisions by affording each provision a field of operation rather than elevating any provision over another.

Analysis

The section 255.05 legislative scheme is designed to afford protection for those providing work and materials on public projects, because these persons and entities cannot perfect a mechanics' lien on public property.SeeCoastal Caisson Drill Co. v. Am. Cas. Co. of Reading, Pa.,523 So.2d 791, 793(Fla. 2d DCA1988), approved,542 So.2d 957(Fla.1989);William H. Gulsby, Inc. v. Miller Const. Inc., of Leesburg,351 So.2d 396, 397(Fla. 2d DCA1977).Additionally, however, the statute at issue was also designed to afford protection to both the surety on the project and the public.The bond itself protects the public, as "owner" of the project, from "two particular defaults by a builder.The payment portion of the bond contains the insurer's undertaking to guarantee that all subcontractors and materialmen will be paid and the performance part of the bond guarantees that the contract ... will be fully performed."Coastal Caisson,523 So.2d at 793.Finally, section 255.05(2) affords protection to contractors and the contractors' sureties from being compelled to account to unknown suppliers and subcontractors by placing a burden on claimants to advise the contractor and surety of their participation on the project and to advise if they are not promptly paid.SeeSch. Bd. of Palm Beach County v. Vincent J. Fasano, Inc.,417 So.2d 1063, 1065(Fla. 4th DCA1982).

In accordance with the intent to protect various interests, including subcontractors, contractors, sureties, and the public, the straightforward language of the statute attempts to create a clear and simple method of bonding payment for, and performance of, public construction projects.Section 255.05(1) mandates the delivery and filing of a bond which guarantees the payment of subcontractors and performance of the underlying contract with the governmental unit prior to commencement of any public works project.Additionally, this subsection details the minimum required information to be contained on the face of the bond.²While subsection (1) operates to guarantee payment to subcontractors, subsection (2) provides certain "condition[s] precedent to maintenance of an action" for payment under a bond delivered and filed pursuant to section 255.05(1).W.G. Mills, Inc. v. M & MA Corp.,465 So.2d 1388, 1390(Fla. 2d DCA1985);see alsoFasano,417 So.2d at 1065.Specifically, a subcontractor claimant must notify the contractor within forty-five days of commencement of work or delivery of materials of its intent to look to the bond for protection, and must also notify the contractor within ninety days of completion of the work of any nonpayment and an intent to make a claim upon the bond.³Indeed, the statute specifically provides that "[n]o action ... may be instituted against the contractor or the surety unless both notices have been given."§ 255.05(2), Fla. Stat.(1995).Finally, subsection (2) provides that "[n]o action shall be instituted against the contractor or the surety on the payment bond ... after 1 year from the performance of labor."§ 255.05(2), Fla. Stat.(1995).

In 1980, the Legislature added subsections (4) and (6) to section 255.05.Subsection (4) specifically mandates that "[t]he payment provisions of all bonds furnished for public work contracts described in subsection (1) shall, regardless of form, be construed and deemed statutory bond provisions, subject to all requirements of subsection (2)."§ 255.05(4), Fla. Stat.(1995)(emphasis supplied).Subsection (6), on the other hand, specifically requires that all bonds executed under section 255.05 contain explicit reference to section 255.05 and the notice and time limitations of subsection (2).⁴It is the intersection of these two subsections which provides the subject of the instant action.⁵

Under the facts of the instant case, unavoidable internal conflict between subsections (4) and (6) of section 255.05 exists.Plaza, seeking protection under the payment portion of the bonds in question, failed to comply with the notice and time requirements contained in section 255.05(2) when perfecting its claims.SeeAmerican Home,826 So.2d at 359.In accordance with subsection (4), the payment provisions of American Home's bonds should be construed as statutory and, therefore, Plaza's failure to comply with 255.05(2) would preclude its claims upon the...