Hartford Fire. Ins. Co. v. Trustees of Const. Indus.
| Decision Date | 28 May 2009 |
| Docket Number | No. 49059.,49059. |
| Citation | 208 P.3d 884 |
| Parties | HARTFORD FIRE INSURANCE COMPANY; Hartford Accident and Indemnity Company; and Richardson Construction, Inc., Appellants, v. TRUSTEES OF the CONSTRUCTION INDUSTRY and Laborers Health and Welfare Trust; Trustees of the Construction Industry and Laborers Joint Pension Trust; and Trustees of the Construction Industry and Laborers Vacation Trust, Respondents. |
| Court | Nevada Supreme Court |
Parker, Nelson & Arin, Chtd., and Theodore Parker, III, Las Vegas, for Appellant Richardson Construction.
Watt, Tieder, Hoffar & Fitzgerald, LLP, and David R. Johnson, Las Vegas, for Appellants Hartford Fire Insurance Company & Hartford Accident and Indemnity Company.
Brownstein Hyatt Farber Schreck, P.C., and Adam P. Segal and Kirk M. Reynolds, Las Vegas, for Respondents.
Daniel M. Shanley, Las Vegas; DeCarlo, Connor & Shanley and Desmond C. Lee, Los Angeles, California, for Amici Curiae, Southwest Carpenters Health and Welfare Trust, Southwest Carpenters Pension Trust, Southwest Carpenters Vacation Trust, and Southwest Carpenters Training Fund.
Kevin B. Christensen, Chtd., and Evan L. James and Kevin B. Christensen, Las Vegas, for Amici Curiae, Trustees of the Southern Nevada Glaziers and Fabricators Pension Trust Fund, Glazing Health and Welfare Fund, and the Glaziers Joint Apprenticeship Training Trust.
Kolesar & Leatham, Chtd., and Alan J. Lefebvre and Matthew J. Christian, Las Vegas, for Amicus Curiae, Surety & Fidelity Association of America.
Laquer, Urban, Clifford & Hodge LLP and Michael A. Urban and Gia A. McGillivray, Las Vegas, for Amici Curiae, Trustees of the Operating Engineers Pension Trust, Trustees of the Operating Engineers Health and Welfare Fund, Trustees of the Operating Engineers Vacation-Holiday Fund, Trustees of the Operating Engineers Journeyman Apprentice Training Trust, Bricklayers & Allied Craftworkers Local 13 Health Benefits Fund, and Bricklayers & Allied Craftworkers Local 13 Defined Contribution Pension Trust.
BEFORE THE COURT EN BANC.1
The Ninth Circuit Court of Appeals has certified two questions of law to this court concerning various trustees' attempts to collect unpaid contributions owed to employee-benefit trust funds. This matter arose when a public works subcontractor failed to contribute to employee-benefit trust funds, which were created as part of a collective bargaining agreement between the subcontractor and its employees' union. After the subcontractor failed to pay employee-benefit contributions owed to the trusts, the trusts' trustees sued, in federal court, the general contractor and its surety to recover the unpaid contributions. The trustees sued the general contractor under NRS 608.150, which makes general contractors liable for their subcontractors' employees' unpaid wages, including fringe-benefit trust-fund contributions. They sued the surety under NRS 339.035(1), which allows "any claimant who has performed labor or furnished material" under a bonded, public works construction contract and who has not been paid in full, to bring an action on the payment bond to recover the amount due.
Just before trial, however, the surety moved for summary judgment, contending that the trustees had failed to meet a condition precedent to recovery: providing the general contractor with the notice required by NRS 339.035(2), which provides that "[a]ny claimant who has a direct contractual relationship with any subcontractor," but no such direct relationship with the general contractor, "express or implied," may bring an action on a payment bond only if the claimant provided written notice of the claim to the general contractor. In response, the trustees also moved for summary judgment against the surety and the general contractor. The federal district court apparently disagreed that notice was required and granted summary judgment to the trustees. The surety and the general contractor then appealed to the Ninth Circuit Court of Appeals, which subsequently certified to this court two questions under NRAP 5. The certified questions ask us to determine whether the trustees must comply with NRS 339.035(2)'s notice requirement to recover (1) on the payment bond against the surety, and (2) against the general contractor under NRS 608.150.
The first question's answer is informed by the nature of the trustees' standing to recover against the payment bond under NRS 339.035, which is loosely based on their status as third-party beneficiaries to the labor agreement. That is, because the trustees are third-party beneficiaries, we conclude that they should be able to represent the employees who have claims against the surety. The trustees consequently stand in the employees' shoes for purposes of recovering on the payment bond under NRS 339.035.
The answer to the first question, then, is yes, notice is required to proceed with claims against the bond. Because the employees would be required to provide notice of their claims to the general contractor before recovering on the payment bond under NRS 339.035's clear terms, the trustees, standing in their shoes, likewise are required to do so.
The answer to the second question is no, the trustees are not required to provide notice to proceed with NRS 608.150 claims against the contractor. NRS 608.150 is in a statutory chapter completely separate from NRS 339.035, and NRS 608.150 plainly does not require that the trustees provide the contractor with notice of their claims before seeking to recover from the contractor under that statute.
Appellant Richardson Construction, Inc., was a general contractor on various southern Nevada public works projects. To secure payment for any subcontracted labor and materials provided to the public works construction projects, as NRS 339.035 requires, Richardson entered into bond agreements with appellant Hartford Fire Insurance Company and its related entity, appellant Hartford Accident and Indemnity Company (collectively, Hartford). Under the bond agreements, Hartford and Richardson were jointly and severally liable for labor, materials, and equipment contributed to the projects. Hartford asserts, moreover, that as part of the bond agreements, Richardson agreed to indemnify Hartford for any recovery on the payment bond.
Richardson then subcontracted some of its work to Desert Valley Landscape & Maintenance, Inc. Desert Valley was party to a "memorandum labor agreement" with the local chapter of a laborers' union, Laborers' International Union of North America, Local 872. Under the labor agreement, Desert Valley was required to render payments, i.e., fringe-benefit contributions, to certain employee-benefit trust funds administered on behalf of its employees, including those who worked on the Richardson public works project. The trust funds were created under an agreement between Local 872 and various southern Nevada contractor associations, pursuant to the federal Labor Management Relations Act, 29 U.S.C. § 186(c)(5) (2006) (), and the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1002 (2006) (). They provided pension, health coverage, and vacation benefits to employees of companies that were parties to labor agreements with Local 872.
Although Desert Valley was required to render payments to the trusts for Richardson projects' employees, it never did so. Consequently, in September 1998, respondents, the trusts' trustees, instituted an action against Desert Valley in federal district court, asserting a cause of action under ERISA, which generally provides that an employer must comply with its obligation arising under a labor agreement to make employee-benefit contributions. See 29 U.S.C. § 1145 (2006). According to Hartford and Richardson, Desert Valley answered the complaint but later filed for bankruptcy, and as a result, the trustees' ERISA action against Desert Valley remained inactive for several years, until the trustees amended the complaint to include state-law-based claims against Hartford and Richardson. The claims against Hartford were based on NRS 339.035, which allows any claimant who has performed labor or furnished material to bring an action on the contractor's payment bond for any unpaid amount. The claims against Richardson were based on NRS 608.150, which makes a general contractor liable for a subcontractor's failure to pay for labor and materials.
Although the federal district court ultimately entered a default judgment against Desert Valley, the action proceeded with respect to Hartford and Richardson, and shortly before trial, Hartford moved for summary judgment. In its motion, Hartford argued that the trustees had failed to meet a condition precedent to recovering on the payment bond: providing Richardson with the notice required by NRS 339.035(2), which provides that claimants who have direct contractual relationships with the subcontractor, but not with the general contractor, must give written notice to the general contractor before making a claim on the bond.
The trustees opposed Hartford's motion and moved for summary judgment against Hartford and Richardson. With respect to Hartford, the trustees argued that, because they did not have a direct contractual relationship with the subcontractor, which NRS 339.035(2) ties to the notice requirement, they were not obligated to provide Richardson with notice of the claims before bringing an action on the payment bond. As regards Richardson, the trustees asserted that no issues of fact remained with respect to Desert Valley's failure to pay its workers for their labor and materials, given the default judgment entered against Desert Valley, and thus, Richardson was liable for that failure under NRS 608.150's clear terms. The federal district court granted summary judgment to the trustees. Hartford and Richardson then appealed to the Ninth...
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