Coast to Coast Mfg. v. Carnes Const., Inc.

• Citation: 145 Ariz. 112,700 P.2d 499
• Decision Date: 18 March 1985
• Docket Number: CA-CIV,No. 2,2
• Parties: , 25 Ed. Law Rep. 632 COAST TO COAST MANUFACTURING, a California limited partnership, Plaintiff/Appellee, v. CARNES CONSTRUCTION, INC., an Arizona corporation, and United Pacific Insurance Company, a Washington corporation, Defendants/Appellants. 5209.
• Court: Court of Appeals of Arizona

Page 499

700 P.2d 499

145 Ariz. 112, 25 Ed. Law Rep. 632

COAST TO COAST MANUFACTURING, a California limited partnership, Plaintiff/Appellee, v. CARNES CONSTRUCTION, INC., an Arizona corporation, and United Pacific Insurance Company, a Washington corporation, Defendants/Appellants.

No. 2 CA-CIV 5209.

Court of Appeals of Arizona,

Division 2, Department B.

March 18, 1985.

Molloy, Jones, Donahue, Trachta, Childers & Mallamo, P.C. by Mary O. Ameln, Tucson, for plaintiff/appellee.

Shimmel, Bishop & Gruender, P.C. by Kenneth C. Sundlof, Jr., Phoenix, for defendants/appellants.

OPINION

LIVERMORE, Judge.

This is an appeal by the defendants, Carnes Construction, Inc. (Carnes) and its surety, United Pacific Insurance Company (United Pacific), from summary judgment granted in favor of the plaintiff, Coast to Coast Manufacturing (Coast). We have jurisdiction. A.R.S. § 12-2101.

This case involves an interpretation of Arizona's "Little Miller Act" (A.R.S. § 34-221 et seq.). The issue is whether a party contracting directly with a subcontractor to the general or prime contractor (under contract to a public entity) to provide specially designed materials is excused from the notice provisions of the statute because it had an implied contractual relationship with the general contractor. On December 23, 1982, Carnes entered into a contract with Sunnyside Unified School District # 12 (Sunnyside) for a project involving additions and alterations to three elementary schools in the district. Carnes was bonded by United Pacific for $810,000. Carnes subcontracted with Sunset Glass and Mirror (Sunset) to provide the window materials for the project. Sunset, in turn, contracted with Coast to manufacture customized window materials for the project. In an affidavit, Coast's president, William U. Almand, stated that he wrote to Sunset requesting that Sunset, the architect and the general contractor approve drawings prior to manufacture. He further stated that approval was confirmed by correspondence received on March 24, 1983. Coast began manufacturing the items on the following day. On April 22, 1983, window materials were shipped and Coast sent an invoice for $9,402 to Sunset. The last date on which Coast supplied materials to the project was June 15, 1983. In September 1983 Sunset filed a Chapter 11 bankruptcy petition. On October 18, 1983, Coast filed suit against Carnes (as general contractor and principal) and United Pacific, Carnes' surety under the payment bond.

In order "to protect those who furnish labor or materials in the construction setting," the Little Miller Act, like its federal counterpart, is to be "liberally construed." Western Asbestos Co. v. TGK Construction Co., 121 Ariz. 388, 391, 590 P.2d 927, 930 (1979). But liberal construction cannot disregard limitations imposed by the legislature. Greaig v. Parkwest Construction Co., 130 Ariz. 576, 580, 637 P.2d 1079, 1083 (App.1981). A.R.S. § 34-223(A) is designed to relieve a prime contractor of liability to sub-subcontractors or materialmen (who have no contractual relation to the prime contractor) after ninety days so that the prime contractor may safely pay his subcontractor without the fear of being subject to "double payments" to sub-subcontractors. The statute states:

"Every claimant who has furnished labor or material in the prosecution of the work provided for in such contract in respect of which a payment bond is furnished under the provisions of § 34-222, and who has not been paid in full therefor before the expiration of a period of ninety days after the day on which the last of the labor was done or performed by him or material was furnished or supplied by him for which such claim is made, shall have the right to sue on such payment bond ... provided however that any such claimant having a direct contractual relationship with a subcontractor of the contractor furnishing such payment bond but no contractual relationship express or implied with such contractor shall have a right of action upon such payment bond upon giving written notice to such contractor within ninety days from the date on which such claimant performed the last of the labor or furnished or supplied the last of the material for which such claim is made ..."

It is uncontroverted that Carnes had no written notice of a claim by Coast until more than ninety days after Coast had last furnished material to the project. Coast had a direct contractual relationship with Carnes' subcontractor, Sunset. Coast, therefore, can only recover if it had some contractual relationship, express or implied, with Carnes. A.R.S. § 34-223(A); see also Interform Co. v. Mitchell, 575 F.2d 1270 (9th Cir.1978); Fidelity and Deposit Co. v. Harris, 360 F.2d 402, 409-10 (9th Cir.1966) (interpreting the parallel provision of the federal Miller Act).

It is conceded that there was no express contract between Coast and Carnes. Although most contracts are formed by an express written exchange of mutual promises, such "promises need not be express in order to create an enforceable contract." Cook v. Cook, 142 Ariz. 573, 691 P.2d 664 (1984). As put by Cook:

"Thus, two parties may by their course of conduct express their agreement, though no words are ever spoken. From their conduct alone the finder of fact can determine the existence of an agreement. Restatement (Sec...