Gen. Insulation Co. v. Eckman Constr.

• Decision Date: 28 January 2010
• Docket Number: Nos. 2009–102,2009–103.,s. 2009–102
• Citation: 992 A.2d 613,159 N.H. 601
• Court: New Hampshire Supreme Court
• Parties: GENERAL INSULATION COMPANY v. ECKMAN CONSTRUCTION and another.

159 N.H. 601

992 A.2d 613

GENERAL INSULATION COMPANY

v.ECKMAN CONSTRUCTION and another.

Nos. 2009–102

2009–103.

Supreme Court of New Hampshire.

Argued: Oct. 15, 2009.

Opinion Issued: Jan. 28, 2010.

Sherman Law, PLLC, of Portsmouth (John P. Sherman on the brief and orally), for the petitioner.

McLane, Graf, Raulerson & Middleton, P.A., of Manchester (Thomas J. Donovan and Michael J. Kenison on the brief, and Mr. Kenison orally), for respondents Eckman Construction, Northern Peabody, LLC and North American Specialty Insurance Company.

Devine, Millimet & Branch, P.A., of Andover, Massachusetts (George R. Moore and Anthony S. Augeri on the brief, and Mr. Moore orally), for respondents Youngblood Co., Inc. and International Fidelity Insurance Company.

DUGGAN, J.

The petitioner, General Insulation Company, appeals from an order of the Superior Court (Abramson, J.) granting the motions to dismiss filed by respondents Eckman Construction (Eckman), Northern Peabody LLC (Northern Peabody), North American Specialty Insurance Company (North American), Youngblood Co., Inc. (Youngblood) and International Fidelity Insurance Company (International Fidelity) (collectively, the moving respondents). The trial court dismissed the petitioner's petitions to enforce statutory performance bonds because the petitioner failed to provide the respondents with copies of the petitions within one year of filing its claims as required by RSA 447:18 (2002). See RSA 447:16, :17 (Supp.2009). The court also dismissed the petitioner's alternative claims for unjust enrichment/restitution and quantum meruit because the petitions failed to allege sufficient facts to support them. We affirm and remand.

I. Background

The record evidences the following facts. The petitioner claims that the respondents did not pay for insulation and related materials it supplied to respondent R & H Enterprises d/b/a Advanced Insulation (Advanced Insulation) for a bonded project known as "Bedford Middle/High School Project" in Bedford. Eckman was the general contractor on the project. Northern Peabody and Youngblood were subcontractors to Eckman; Advanced Insulation was a subcontractor to Northern Peabody and Youngblood. According to the petitioner, North American was the surety on the statutory performance bond issued to Northern Peabody, and International Fidelity was the surety on the statutory performance bond issued to Youngblood. See RSA 447:16.

On March 15, 2007, the petitioner filed a notice of claim in superior court pursuant to RSA 447:17. It amended this notice of claim on May 3, 2007. On March 6, 2008, the petitioner filed petitions in superior court to enforce the statutory bonds and to assert common law claims for unjust enrichment/restitution and quantum meruit. See RSA 447:18. The petitioner did not provide the respondents with copies of its petitions, however, until August 2008, after the court issued orders of notice to the respondents. See id.; see also Super. Ct. R. 124. The moving respondents moved to dismiss the petitions, which the trial court granted, and this appeal followed. Advanced Insulation did not join the motions to dismiss filed by the other respondents and did not separately file a motion to dismiss. Accordingly, the petitioner's petitions against Advanced Insulation remain pending and we express no opinion as to their validity.

II. Discussion

A. Compliance with RSA 447:18

1. Standard of Review

The petitioner first argues that the trial court erroneously interpreted RSA 447:18 to require it to send copies of its petitions to the moving respondents within one year of filing its claim under RSA 447:17. We review the trial court's statutory interpretation de novo. Chesley v. Harvey Indus., 157 N.H. 211, 213, 949 A.2d 728 (2008).

We are the final arbiters of the legislature's intent as expressed in the words of the statute considered as a whole. Appeal of Parkland Med. Ctr., 158 N.H. 67, 72, 960 A.2d 352 (2008). We first examine the language of the statute, and, where possible, ascribe the plain and ordinary meaning to the words used. Id. When a statute's language is plain and unambiguous, we need not look beyond it for further indication of legislative intent, and we will not consider what the legislature might have said or add language that the legislature did not see fit to include. Id. We also interpret a statute in the context of the overall statutory scheme and not in isolation. Liam Hooksett, LLC v. Boynton, 157 N.H. 625, 628, 956 A.2d 304 (2008). Additionally, we do not consider words and phrases in isolation, but within the context of the statute as a whole. Franklin Lodge of Elks v. Marcoux, 149 N.H. 581, 585, 825 A.2d 480 (2003). This enables us to better discern the legislature's intent and to interpret statutory language in light of the policy or purpose sought to be advanced by the statutory scheme. Id.

2. Overview

We begin with a brief general discussion regarding bonds issued for public works projects and the statutory scheme that governs such bonds. "A bond is a three-party instrument by which one party (the surety) guarantees or promises a second party (the owner or general contractor) the successful performance of contract obligations owed to the second party by its principal (the contractor or subcontractor)." 3 S. Stein, Construction Law Appendix 9J, at App. 9–27 (Sept.2006). Three kinds of bonds are common in construction: bid bonds, performance bonds, and payment bonds. Id. A bid bond guarantees that the bidder will enter into the contract for the bid amount. Id. "A performance bond guarantees to the owner that a prime contractor will perform according to the contract referenced in the bond." Id.; see Wolfeboro Neck Prop. Owners Assoc. v. Town of Wolfeboro, 146 N.H. 449, 453, 773 A.2d 633 (2001). "A payment bond assures the owner that the prime contractor will pay its subcontractors and suppliers, who might otherwise file liens against the owner's property." 3 Stein, supra at App. 9–27. "A performance bond is one exacted for the protection of the public body to guarantee completion of a project," while "[a] payment bond is exacted for the protection of materialmen, suppliers, and laborers who otherwise might be without recourse for payment of their claims against the municipality." 14 P. Loughlin, New Hampshire Practice, Local Government Law § 789, at 45 (1995). In New Hampshire, "[a]ny municipal contracts, especially capital building contracts, must have provisions requiring the posting of performance and/or payment bonds." Id. "Performance and payment bonds can be separate documents or may be combined." 3 Stein, supra at App. 9–27.

RSA 447:16 to :18 govern bonding for public works projects. Although it appears that these statutes only apply to payment bonds, see Loughlin, supra § 789, at 46, no party argues that they do not govern the bonds at issue even though the petitioner characterizes them as performance bonds. We, therefore, assume for the purposes of this appeal that RSA 447:16 to :18 govern the bonds at issue.

RSA 447:16 provides:

Officers, public boards, agents or other persons who contract in behalf of the state or any political subdivision thereof for the construction, repair or rebuilding of public buildings, public highways, bridges or other public works shall if said contract involves an expenditure of $25,000, and may if it involves an expenditure of less amount, obtain as a condition precedent to the execution of the contract, sufficient security, by bond or otherwise, in an amount equal to at least 100 percent of the contract price, or of the estimated cost of the work if no aggregate price is agreed upon, conditioned upon the payment by the contractors and subcontractors for all labor performed or furnished, for all equipment hired, including trucks, for all material used and for fuels, lubricants, power, tools, hardware and supplies purchased by said principal and used in carrying out said contract, and for labor and parts furnished upon the order of said contractor for the repair of equipment used in carrying out said contract.

The purpose of this provision, which was first enacted in 1927, is "to furnish an alternative security to lienors, in general more practically adapted to protect them and at the same time to save the state or municipality from annoyance." Petition of Keyser, 97 N.H. 404, 407, 89 A.2d 917 (1952) (quotation omitted); Guard Rail Erectors Inc. v. Company, 86 N.H. 349, 350, 168 A. 903 (1933).

To obtain the benefit of bonds issued pursuant to RSA 447:16, a claimant must "within 90 days after the completion and acceptance of the project by the contracting party" file with the proper public entity "a statement of the claim." RSA 447:17. A copy of the statement of claim is then "sent by mail by the office where it is filed to the principal and surety." Id. We have held that the failure to comply with the statutory requirement that a statement of claim be filed with the designated party "is usually held fatal." American Fidelity Co. v. Cray, 105 N.H. 132, 136, 194 A.2d 763 (1963) ; see Fastrack Crushing Servs. v. Abatement Int'l/Advatex Assocs., 149 N.H. 661, 666, 827 A.2d 1019 (2003) (Fastrack I ). We have also held that giving notice within the ninety-day period required by RSA 447:17 is a condition precedent to any claim against a statutory bond. See Fastrack Crushing Servs. v. Abatement Int'l/Advatex Assocs., 153 N.H. 284, 287, 893 A.2d 674 (2006) ( Fastrack II ).

"[T]he main purpose of [this] notice requirement is to provide parties with an opportunity to settle the claim without resorting to litigation."

Mountain Envtl. v. Abatement Int'l/Advatex Assocs., 149 N.H. 671, 674, 826 A.2d 556 (2003). Another purpose is to allow the prime contractor to pay his subcontractors "without fear of additional liability to sub-subcontractors or materialmen." Fastrack II, 153 N.H. at 287, 893 A.2d 674 (quotation omitted). The notice required by RSA 447:17 "thus prevents both double payments by...