United States v. Pensacola Construction Co.
| Decision Date | 26 August 1966 |
| Docket Number | No. 1985.,1985. |
| Parties | The UNITED STATES of America for the Use and Benefit of Mason PEEVY, d/b/a Peevy's D-X Service Station, Plaintiff, v. PENSACOLA CONSTRUCTION COMPANY, a Corporation, Missouri Valley Dredging Co., a Corporation, and Commercial Union Insurance Company, a Corporation, Defendants. |
| Court | U.S. District Court — Western District of Arkansas |
Bethell & Pearce, Ft. Smith, Ark., for plaintiff.
Shaw & Kimbrough, Ft. Smith, Ark., for defendants.
The motion of plaintiff filed herein August 11, 1966, for summary judgment and the response filed August 17, 1966, of defendants are before the court.
This suit was instituted under the Miller Act, and jurisdiction is granted by Sec. 270b of the Act, 40 U.S.C. 270b, (1965 Supp.). The pleadings, exhibits thereto, interrogatories and answers thereto, the affidavit and exhibits in support of the motion for summary judgment, and the affidavits in support of the response to the motion show that there is no genuine issue as to any material fact. Rule 56(c), Fed.R.Civ.P., provides:
"The judgment sought shall be renderdered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law."
Because of the many delays in the formation of the issues now before the court, it seems necessary to refer rather fully to the pleadings. The complaint was filed April 11, 1966. In paragraphs VI, VII and VIII, it is alleged that the defendant Pensacola Construction Company (hereinafter referred to as Pensacola) was awarded a contract by the United States Government in the sum of $884,080.00 for bank stabilization revetments and dikes in Flat Rock Bend Pilot Channel Area of the Arkansas River in the Western District of Arkansas. The defendant Missouri Valley Dredging Company (hereinafter referred to as Missouri Valley) was awarded a portion of the work by the prime contractor, Pensacola.
A payment bond was executed by Pensacola and the defendant Commercial Union Insurance Company (hereinafter referred to as Insurance Company) as required by the Miller Act, 40 U.S.C. § 270a et seq., in the penal amount of the contract, which bond was conditioned for the payment of all claims for material or labor furnished or performed in connection with said contract. In the performance of the contract, Missouri Valley, for itself and Pensacola, purchased from the use plaintiff, Peevy's D-X Service Station (Peevy's) gasoline, oil, parts, materials and supplies in the principal amount of $1,174.49 between September 1, 1965, and December 27, 1965.
In paragraph IX of the complaint the use plaintiff alleged that it is entitled to recover jointly from the defendants the said sum of $1,174.49, "together with interest thereon at a lawful rate from the due date thereof, and a reasonable attorney's fee for the plaintiff's attorney herein, any penalties allowed by law, and the plaintiff's costs herein expended."
The three defendants were and are represented by the same firm of attorneys. The complaint was filed April 11, 1966. On May 2 Missouri Valley filed its motion for an extension of time in which to plead, and on May 3 Pensacola and the Insurance Company filed a motion for extension of time to answer. On May 3 an order was entered allowing defendants 20 days from the date of the order in which to answer or otherwise plead. On May 23 Missouri Valley was given 10 days additional time.
On May 23 Pensacola and the Insurance Company filed their answer, in which they prayed that the complaint of plaintiff be dismissed, or in the alternative that they be given judgment against Missouri Valley for such amounts as defendants may be held liable to plaintiff.
On June 2 Missouri Valley was granted a third extension until June 10 in which to answer or otherwise plead. On the same day Pensacola and the Insurance Company filed a cross claim against Missouri Valley. On June 10 Missouri Valley filed its answer, in which it admitted it owed the claim of plaintiff in the principal sum of $1,174.49. It further pleaded that it had tendered the said sum to the plaintiff and had offered to pay the costs of the action, which tender was declined by plaintiff. It paid into the registry of the court the said sum of $1,174.49, the principal sum, but made no offer or tender of interest on said sum. It also tendered to the Clerk a check in the amount of $15.00 for costs, and further offered to pay the charges of the United States Marshal for service of process when apprised of the amount of such charges. It was further alleged: "This defendant specifically denies that in law or fact plaintiff is entitled to penalty or attorney's fees."
On July 7 Missouri Valley served five interrogatories upon the use plaintiff. At that time the attorney for the plaintiff was engaged in a political campaign, and the court, upon the request of the attorney, granted the use plaintiff until August 15 to submit answers to the interrogatories. The interrogatories were fully answered on August 11, and on the same date the motion for summary judgment was filed by the use plaintiff. On August 17 the defendants filed their response to the plaintiff's motion for summary judgment, and on August 22 filed affidavits in support of the response.
In the response the defendants stated:
In paragraph 4 of the response Missouri Valley alleged that the plaintiff had not stated in dollars and cents the amount of interest demanded and it is impossible for defendants, on the basis of available information, to determine the amount of such interest. It proceeded then to figure interest in the sum of $25.45, representing the interest on the principal account from February 1, 1966, through June 10, 1966. The date of June 10, 1966, was selected because that was the date that the principal sum was deposited in the registry of the court.
Prior to plaintiff's filing motion for summary judgment and answering defendants' interrogatories on August 11, 1966, none of the defendants offered to pay the interest on the principal amount nor offered any legal excuse for not confessing judgment for the interest as well as the principal. The statute herein involved is Ark.Stat.Ann., Sec. 66-3238,2 (1966 Repl.), and provides:
"In all cases where loss occurs and the * * * company liable therefor shall fail to pay the same within the time specified in the policy, after demand made therefor, such person, firm, corporation, and/or association shall be liable to pay the holder of such policy or his assigns, in addition to the amount of such loss twelve percent (12%) damages upon the amount of such loss, together with all reasonable attorneys' fees for the prosecution and collection of said loss * * *."
To entitle a creditor or plaintiff to recover the statutory penalty and attorneys' fee, he must recover the amount demanded of the defendants and their surety. The Supreme Court of Arkansas has many times held that the statute has no application where an excessive demand is made and that there can be no recovery for damages and attorneys' fees where the judgment is for less than the demand. National Fire Insurance Co. v. Kight, (1932) 185 Ark. 386, 47 S.W.2d 576, and cases therein cited. On the other hand, the Supreme Court of Arkansas has in many cases held that if the surety desires to avoid the penalty and attorneys' fees provided for in the statute, it should have offered to confess judgment for the amount sued for, and thus have ended the lawsuit. If it does not do so but elects to proceed and contest the claim of the creditor on any other ground, the surety thereby becomes liable for the penalty and attorneys' fees provided for in the statute when the plaintiff recovers the amount sued for. Queen of Arkansas Insurance Co. v. Milham, (1912) 102 Ark. 675, 145 S.W. 540.
In Broadaway v. Home Insurance Co., (1941) 203 Ark. 126, at page 129, 155 S.W.2d 889, at page 891, the court said:
"It is our opinion that before the provisions of this statute with reference to attorney's fees and penalty are available to an insured, he must file suit for and recover at least as much as the minimum demand which he has theretofore made upon the insurance company."
The Broadaway case further held that if the surety company offers to confess judgment or tenders to the court "the amount sued for, plus interest and costs to the date of tender," that the statutory penalty and attorneys' fees are not allowable.
In Armco Steel Corp. v. Ford Construction Co., (1963) 237 Ark. 272, 372 S.W.2d 630, the court reviewed several decisions in which the application of the statute was considered and quoted at page 275 of 237 Ark., at page 632 of 372 S.W.2d with approval a statement from Great Southern Fire Insurance Co. v. Burns & Billington, (1915) 118 Ark. 22, 31, 175 S.W. 1161, L.R.A.1916B, 1252, as follows:
"`If the insurance company had desired to avoid the penalty and attorneys' fee provided for by the statute, it should have offered to confess judgment for the amount sued for in the amended complaint.'"
Following the above quotation, the court said:
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