Sam Finley, Inc. v. Pilcher, Livingston & Wallace, Inc.

• Decision Date: 10 July 1970
• Docket Number: No. 1461.,1461.
• Citation: 314 F. Supp. 654
• Parties: SAM FINLEY, INC., Plaintiff, v. PILCHER, LIVINGSTON & WALLACE, INC. and Fidelity and Deposit Company of Maryland, Defendants.
• Court: U.S. District Court — Southern District of Georgia

314 F. Supp. 654

SAM FINLEY, INC., Plaintiff, v. PILCHER, LIVINGSTON & WALLACE, INC. and Fidelity and Deposit Company of Maryland, Defendants.

No. 1461.

United States District Court, S. D. Georgia, Augusta Division.

July 10, 1970.

Richard B. Russell, IV, Paul Webb, Jr., Bertram S. Boley, Atlanta, Ga., for plaintiff.

Edward E. Dorsey, James H. Keaten, Atlanta, Ga., for Fidelity and Deposit Co. of Maryland.

ORDER

LAWRENCE, Chief Judge.

Under the terms of the Miller Act no suit "shall be commenced after the expiration of one year after the day on which the last of the labor was performed or material was supplied." 40 U.S.C. § 270b. The complaint in this case alleges that all labor and materials were furnished by Sam Finley, Inc. prior to April 1, 1968. The suit was filed on May 28, 1969 — some two months too late. Fidelity and Deposit Company of Maryland which is surety on the bond of the general contractor has moved to dismiss the action on that ground.

In the original complaint Sam Finley, Inc. made no effort to plead avoidance of the bar of the one year period in which to bring suit. At the time of the oral argument two affidavits were filed by plaintiff in support of its contention that Fidelity is estopped to rely on the statute of limitations.¹ One of the affidavits was given by the general counsel for Sam Finley, Inc. and the other by an officer in charge of its collections. Apparently the claim against the surety and general contractor was referred to counsel on or about March 22, 1969. Negotiations for settlement had been going on for nine months. They had been conducted between the Treasurer of the Company and an officer of Fidelity. On March 26, 1969, plaintiff's general counsel entered a hospital and did not return to his office until April 7th. Shortly thereafter he called a lawyer who handles some of the litigation for plaintiff and requested that he hold up filing of a suit in view of the possibility of settlement.² The general counsel then continued to attempt to negotiate a settlement with Fidelity. He believed that its representative was acting in good faith with every intention of settling the matter. Apparently no one gave thought to the litigatory deadline. When the differences were found to be irreconcilable the present suit was brought.

Fidelity relies strongly on Humble Oil & Refining Company v. Fidelity and Casualty Company of New York, supra. In that case the Fourth Circuit Court of Appeals found a sufficient basis in the evidence for application of the rule of equitable estoppel. It held that fraud was not a necessary element and that if one party is misled to his prejudice by statements or comments of the other, the doctrine may be applied. While the Court found no deception it ruled that the surety had represented that it would pay the bills of the principal; that plaintiff consequently withheld filing an action and that this was sufficient to estop the general contractor from pleading the Miller Act limitation.

We do not have such a case here, at least in its present posture. The two affidavits, in my opinion, fall short of showing fraud, deception or bad faith by the surety. The fact that negotiations were in progress is without more, an insufficient basis for waiver or estoppel. Continental Ins. Co. of City of New York v. Fire Ass'n. of Philadelphia, 6 Cir., 152 F.2d 239. The Fifth Circuit decision in General Insurance Company of America v. Audley Moore & Son, 5 Cir., 406 F.2d 442 seems in point. There the plaintiff claimed an estoppel on the part of surety because of a letter received by the subcontractor four days before the statute ran. The communication acknowledged receipt of notice of the claim. Assurance was given plaintiff that the matter would be investigated. "As soon as we have heard from them we will contact you further." The Court of Appeals held that as a matter of law the latter was insufficient to create estoppel since it contained no representations, promises or deception which caused the subcontractor to act to its detriment.³

Subsequent to the oral argument in this case plaintiff filed an amendment to its complaint in which the theory of equitable estoppel has been set up. The amendment alleges that there were numerous and extensive negotiations with the surety, conducted in good faith by the plaintiff, and that the latter was induced to carry on same both before and after the statute had run. It is averred that "Because of representations of the defendant Fidelity the plaintiff was induced to refrain from filing suit." The amendment states that plaintiff relied on such representations and was "led to believe that said matter would be settled and would not have otherwise refrained from bringing suit at an earlier date."

As so...