National Fire Ins. Co. of Hartford v. L.J. Clark Const. Co., Inc., 90-1875

• Decision Date: 03 April 1991
• Docket Number: No. 90-1875,90-1875
• Citation: 579 So.2d 743,16 Fla. L. Weekly 868
• Court: Florida District Court of Appeals
• Parties: 16 Fla. L. Weekly 868 NATIONAL FIRE INSURANCE COMPANY OF HARTFORD, a foreign corporation, Appellant, v. L.J. CLARK CONSTRUCTION COMPANY, INC., Appellee.

Page 743

579 So.2d 743

16 Fla. L. Weekly 868

NATIONAL FIRE INSURANCE COMPANY OF HARTFORD, a foreign corporation, Appellant, v. L.J. CLARK CONSTRUCTION COMPANY, INC., Appellee.

No. 90-1875.

District Court of Appeal of Florida Fourth District.

April 3, 1991.

Rehearing Denied June 19, 1991.

Judith Kazer Lamet of David L. Swimmer, P.A., Miami, for appellant.

Alexander J. Williams, Jr., and Alan C. (Peter) Brandt, Jr., of Chappell & Brandt, P.A., Fort Lauderdale, for appellee.

HERSEY, Chief Judge.

This was an action by a subcontractor against appellant, the surety on a payment and performance bond. The issue below was whether the statute of limitations had run on the claim. Resolution of this issue depended upon which of two statutory time limitations applied. If the bond was a "statutory" bond, then the statute of limitations was one year and the claim was barred. If the bond was a "common law" bond, the claim period was longer and the claim was not barred under the circumstances of this case. The trial court so found. Thus, the issue on appeal is whether the trial court correctly interpreted the bond as a common law bond. Our role is to ascertain whether the interpretation placed on this contract (the bond) by the trial court is reasonable, or whether it is "clearly incorrect and unsupported by the evidence in the cause," General Ins. Co. of America v. Sentry Indem. Co., 384 So.2d 1305, 1306 (Fla. 5th DCA), rev. dismissed, 389 So.2d 1110 (Fla.1980).

Florida law is clear that a payment bond is a common law bond rather than a statutory bond if it provides more expansive coverage than that provided for in section 713.23, Florida Statutes (1990 Supp.). For example, in Standard Heating Service, Inc. v. Guymann Constr., Inc., 459 So.2d 1103, 1105 (Fla. 2d DCA 1984), the second district stated:

A payment bond is a common law bond if it provides more expansive coverage than that provided for in the statute. The bond here was no more expansive than a statutory bond provided for in section 713.23, Florida Statutes (1981). The fact that the bond here specifically applied to the furnishing of water, gas, power, light, heat, oil, gasoline, telephone service or rental equipment, whereas, the statute applies to the furnishing of "materials" (which includes fuel ...) is of no moment. The bond provided no more expanded coverage than a statutory bond. Furthermore, the bond's definition of a claimant appears no more expansive than the requirement of section 713.23 that a statutory bond cover lienors. See Sec. 713.01(10), Fla.Stat. (1981).

Id. at 1105 (citations omitted, emphasis added).

Section 713.23 provides in part:

(1)(a) The payment bond required to exempt an owner under this part shall be furnished by the contractor in at least the amount of the original contract price before commencing the construction of the improvement under the direct contract, and a copy of the bond shall be attached to the notice of commencement when the notice of commencement is recorded. The bond shall be executed as surety by a surety insurer authorized to do business in this state and shall be conditioned that the contractor shall promptly make payments for labor, services, and material to all lienors under the contractor's direct contract. Any form of bond given by a contractor conditioned to pay for labor, services, and material used to improve real property shall be deemed to include the condition of this subsection.

* * * * * *

(e) No action for the labor or materials or supplies may be instituted or prosecuted against the contractor or surety unless both [the notice to contractor and the notice of nonpayment] have been given. No action shall be instituted or prosecuted against the contractor or against the surety on the bond under this section after 1 year from the performance of the labor or completion of delivery of the materials and supplies.

(f) Any lienor has a direct right of action on the bond against the surety. A bond must not contain any provisions restricting the classes of persons protected thereby or the venue of any proceeding....

Appellee claimed and the trial court agreed that the present bond actually expanded coverage beyond that required by the above statute by (1) providing that no action shall be commenced by any claimant "[a]fter the expiration of one (1) year following the date on which Principal ceased Work on said Contract;" and (2) requiring only a notice of nonpayment and not a notice to contractor. Generally, any ambiguity as to the nature of a bond should be construed against the surety and in favor of granting the broadest possible coverage to those intended to be benefited by protection of the bond. General Ins. Co., 384 So.2d at 1306. Nonetheless, it cannot reasonably be said that these bond provisions actually expand coverage thus creating a common law bond.

We address first the question of whether a bond which requires only a notice of nonpayment is an actual expansion of coverage from...