Maricopa Turf, Inc. v. Sunmaster, Inc., 1

Citation842 P.2d 1370,173 Ariz. 357
Decision Date03 December 1992
Docket NumberNo. 1,CA-CV,1
Parties, 79 Ed. Law Rep. 670 MARICOPA TURF, INC., an Arizona corporation, dba Western Sod, Plaintiff-Appellee, v. SUNMASTER, INC., dba Sun General Construction, an Arizona corporation; the Hartford Accident and Indemnity Company, a foreign corporation, Defendants-Appellants. 91-0061.
CourtCourt of Appeals of Arizona
OPINION

TOCI, Judge.

A general contractor and its surety appeal from the grant of summary judgment enforcing a materialman's claim against the general contractor's payment bond. The general contractor posted the payment bond in connection with a school district construction project. The principal issue is whether a reference in the payment bond to the Little Miller Act incorporates the notice provisions of that Act and supersedes the otherwise applicable notice provisions of the State Board of Education Procurement Rules. A related issue is whether a materialman's notice of claim against a payment bond, mailed within the ninety-day claim period but received by the contractor after the expiration of such period, substantially complies with the State Board of Education Procurement Rules.

The trial court granted summary judgment for the materialman after finding the notice of claim given by the materialman, Maricopa Turf, Inc., dba Western Sod ("Turf"), complied with the Little Miller Act. Appellants Sunmaster, Inc. dba Sun General Construction ("Sunmaster") and The Hartford Accident and Indemnity Company ("Hartford") argue that the trial court erred in applying the notice provisions of the Little Miller Act to Sunmaster's payment bond. They argue that the payment bond is governed by the Arizona Procurement Code ("the Procurement Code") 1 and not the Little Miller Act. Appellants also assert that the trial court erred in denying their motion for summary judgment and in awarding attorney's fees to Turf.

We hold that: (1) the bond reference to the Little Miller Act is not controlling; instead, the State Board of Education Procurement Rule applies, and (2) Turf did not substantially comply with the notice provisions of the Procurement Rule because the general contractor did not receive either the twenty-day or the ninety-day notice within the applicable time periods. Therefore, Turf's claim against Sunmaster's payment bond is not valid. Accordingly, we reverse the summary judgment for Turf and remand for entry of summary judgment for Sunmaster and Hartford.

I.

Sunmaster was the general contractor on a construction project for the Deer Valley Unified School District. Sunmaster posted a payment bond through its surety, Hartford, to insure payment to materialmen who supplied labor and materials for the project.

Turf provided materials to a subcontractor, Dewitt General Contracting, Inc. ("Dewitt"), for use in landscaping the construction project. Dewitt performed the landscaping and installed all of these materials on the project on June 20, 1988. Dewitt failed to pay Turf, and Turf looked to Sunmaster's payment bond for satisfaction of the debt. Turf had sent both a twenty-day and a ninety-day notice of its claim rights to Sunmaster by certified mail.

For reasons unexplained by the parties to this action, the payment bond provided by Hartford referred to Title 34, Chapter 2, Article 2 of the Arizona Revised Statutes which contains Arizona's Little Miller Act bond provisions. Ariz.Rev.Stat.Ann. ("A.R.S.") §§ 34-222 and 34-223. 2 The Little Miller Act applies to construction projects of "any county, city or town, or officer, board or commission thereof, and irrigation, power, electrical, drainage and flood control districts, tax levying public improvements districts, and county or city improvement districts...." A.R.S. § 34-222(A). The Act requires a general contractor to post a payment bond. A.R.S. § 34-222(A)(1).

Sunmaster's construction contract, however, was with a school district, and school districts are political subdivisions of the state. See A.R.S. § 15-101(14). Although the Little Miller Act originally applied to state construction projects, when the legislature enacted the Arizona Procurement Code, the Procurement Code replaced the Little Miller Act for these state projects. See 1984 Ariz.Sess.Laws, Ch. 251, § 2 at 942 and § 17 at 964.

The Procurement Code in A.R.S. section 41-2501(B) provides in part, "[t]his chapter applies to every expenditure of public monies ... by this state, acting through a state governmental unit ... under any contract." The Procurement Code requires payment bonds "for the protection of all persons supplying labor and material to the contractor or its subcontractors for the performance of the work provided for in the [construction] contract." A.R.S. § 41-2574(A)(2). 3 Section 41-2574(D) of the Code provides for both a twenty-day and a ninety-day notice of claim in order for a materialman to recover against the general contractor's payment bond.

Section 41-2501(C) of the Procurement Code provides that political subdivisions of the state, including school districts, may adopt all or any part of the Procurement Code provisions. Another statute directs the State Board of Education to adopt rules governing procurement practices for school districts that are consistent with the practices set out in the Procurement Code, Title 42, Chapter 23. A.R.S. § 15-213(A)(1). 4

The Arizona Board of Education has followed this mandate and adopted rules and regulations requiring general contractors to supply payment bonds on construction projects for school districts. A.C.R.R. R7-2-1111. More specifically, Rule 7-2-1112(D) (the "Procurement Rule") describes the payment bond notice requirements in language identical to that found in A.R.S. section 41-2574(D) of the Procurement Code. Subsection D of the Rule states:

[A]ny person who has a contract with a subcontractor of the contractor, but no express or implied contract with the contractor furnishing the payment bond, has a right of action on the payment bond on giving the contractor, only, a written preliminary twenty-day notice as provided for in A.R.S. § 33-992.01, Subsection (C), ... and upon giving written notice to the contractor within ninety days from the date on which the last of the labor was performed or material was supplied by the person for whom the claim is made....

Thus, although the Procurement Code and the Procurement Rule are identical, Rule 7-2-1111 clearly applies here and required Sunmaster, as a contractor for a public school construction project, to provide a payment bond. The Procurement Rule also provides that in order for Turf to claim against the payment bond, it must give "written notice to the contractor within 90 days from the date on which the last of the labor was performed or material was supplied." The notices must "be personally served or sent by registered mail." A.C.C.R. R7-2-1112(D).

Sunmaster objects to Turf's notices on two grounds. Sunmaster argues that it did not receive the notices within the time periods prescribed by either the Procurement Rule or the Little Miller Act. Turf's preliminary twenty-day notice apparently did not arrive until 103 days had passed from the date Turf supplied the materials. Turf cannot refute this argument because it failed to request a return receipt which could have established by independent evidence the date of Sunmaster's receipt of the twenty-day notice. Furthermore, the date on the return receipt for the ninety-day notice reveals that Sunmaster received that notice on the ninety-first day after Turf supplied the landscaping materials to the construction site.

Sunmaster's second objection to the notices is that Turf failed to serve the notices by the proper method. Sunmaster argues that the Procurement Rule, which provides that notice of a claim shall be given by personal service or registered mail, properly governs the payment bond. Thus, Sunmaster and Hartford contend that the trial court erred when it found Turf complied with the notice provisions of the Little Miller Act and found Turf's notice by certified mail sufficient.

In its minute entry, the trial court stated:

Even though Hartford's bond may have been required by the Arizona Procurement Code, the bond that Hartford provided stated that all rights and remedies on the bond shall be determined in accordance with the provisions, conditions and limitations of Arizona's Little Miller Act. After so stating, it would be inappropriate to allow Defendants Hartford and [Sunmaster] to now require some technically different form of mailing.

In reviewing the denial of Sunmaster and Hartford's motions for summary judgment, no disputed issues of material fact exist. Therefore, we determine only whether the trial court correctly applied the law to the facts. Long v. Buckley, 129 Ariz. 141, 142, 629 P.2d 557, 558 (App.1981).

II.

Sunmaster argues that the bond's reference to the Little Miller Act is simply conditional; that is, if the Little Miller Act required the bond, the parties' rights and remedies would be controlled by that statute. Thus, Sunmaster argues, because the Little Miller Act no longer requires the bond on school district construction projects, no conflict exists between the language of the bond and the applicable law. We find, however, no conditional language in the bond. The bond clearly recites that Sunmaster required the bond in order to comply with the Little Miller Act and that all rights and remedies on the bond would be determined in accordance with the Little Miller Act. Thus, the issue is squarely presented whether the Little Miller Act applies in this case.

We hold that because the construction project was for a school district, neither the Little Miller Act nor the Procurement Code applies. Rather, the...

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