W.T. Andrew Co., Inc. v. Mid-State Sur. Corp.

• Decision Date: 10 March 1995
• Docket Number: Docket No. 159064,MID-STATE
• Parties: , 98 Ed. Law Rep. 1004 W.T. ANDREW COMPANY, INC., Plaintiff-Appellee, v.SURETY CORPORATION, Defendant-Appellant, and Marino Mechanical Contractor Company, Defendant.
• Court: Court of Appeal of Michigan — District of US

Page 658

529 N.W.2d 658

209 Mich.App. 308, 98 Ed. Law Rep. 1004

W.T. ANDREW COMPANY, INC., Plaintiff-Appellee, v. MID-STATE SURETY CORPORATION, Defendant-Appellant, and Marino Mechanical Contractor Company, Defendant.

Docket No. 159064.

Court of Appeals of Michigan.

Submitted May 12, 1994, at Detroit.

Decided Oct. 20, 1994.

Approved for Publication March 10, 1995, at 9:00 a.m.

Released for Publication April 17, 1995.

Frank & Stefani by Sidney L. Frank, Troy, for plaintiff.

Wegner & Associates, P.C. by Wayne G. Wegner and Shane F. Diehl, Grosse Pointe Woods, for defendant.

Before MARILYN J. KELLY, P.J., and SHEPHERD and BORRELLO, ^* JJ.

PER CURIAM.

Defendant Mid-State Surety Corporation appeals as of right from a November 12, 1992, judgment for plaintiff, W.T. Andrew Company, Inc. ¹ We reverse.

This is a dispute between a materials supplier, plaintiff, and a surety company, Mid-State, concerning plaintiff's claim under a labor and material payment bond issued by Mid-State ² to the general contractor, A.Z. Shmina & Sons. The University of Michigan had contracted with Shmina to perform renovations on its Dearborn campus. Marino Mechanical Contractor Company was one of the subcontractors on the project that obtained supplies from plaintiff. When Marino failed to pay plaintiff the full balance due for the construction materials, plaintiff filed suit claiming approximately $70,000 under the labor and material payment bond.

In the trial court, plaintiff moved for summary disposition with respect to the issue of Mid-State's liability under the payment bond. Mid-State filed a cross motion for summary disposition, arguing that plaintiff had failed to provide proper notice to perfect its claim. In an order entered on September 29, 1992, the trial court granted partial summary disposition for plaintiff with regard to the issue of liability, and denied Mid-State's motion. In a subsequent order entered on November 12, 1992, the trial court awarded judgment for plaintiff against Mid-State in the amount of $78,645.63. Herein, Mid-State appeals from these orders as of right.

The dispositive issue raised in this appeal concerns whether plaintiff is a proper claimant under the relevant public works construction bond statute, M.C.L. § 129.201 et seq.; M.S.A. § 5.2321(1) et seq. It is undisputed that plaintiff is not a proper claimant under the language of the bond itself, because plaintiff had no "direct contract" with the general contractor. On appeal, Mid-State argues that plaintiff's claim can not arise under the public works bond statute, because the statute does not apply to public universities such as the University of Michigan. In other words, if the public works bond statute does not apply to the construction contract at issue, then plaintiff should not be afforded the protections guaranteed under the public works bond statute. In response, plaintiff argues that Mid-State should not be allowed to raise for the first time on appeal the issue whether the statute should apply in this case.

Our review of the record reveals that although Mid-State did not argue specifically that the public works bond statute does not apply in this case, the statute was discussed in the hearings below, and the trial court appears to have based its decision upon an interpretation of the public works bond statute. Because the trial court considered the issue below, it is ripe for appeal. Adam v. Sylvan Glynn Golf Course, 197 Mich.App. 95, 98, 494 N.W.2d 791 (1992). In the alternative, because this is an issue of law and the necessary facts have been presented, this Court will review the matter de novo. Id.; Spruytte v. Owens, 190 Mich.App. 127, 132, 475 N.W.2d 382 (1991).

Citing Royalite Co. v. Federal Ins. Co., 184 Mich.App. 69, 457 N.W.2d 96 (1990), the trial court concluded that plaintiff had given sufficient notice to the surety within ninety days of furnishing materials and granted summary disposition for plaintiff with respect to the issue of liability under the bond. We question whether plaintiff gave sufficient notice under the language of either the bond or the public bond statute. M.C.L. § 129.207; M.S.A. § 5.2321(7). However, regardless of any questions concerning proper notice, there remains the more fundamental question whether plaintiff was a proper claimant under the public works bond statute. It is implicit in the trial court's ruling that plaintiff was a proper claimant under the bond statute, because the parties agreed that plaintiff could not be considered a claimant under the definition contained in the bond itself. Although Royalite, supra at 74-75, 457 N.W.2d 96, may stand for the proposition that a surety may not contract for less liability than that required by the bonding statute, Royalite does not provide any guidance concerning the question whether the public works bond statute provides plaintiff any remedy in this case.

The relevant portion of the public works bond statute, M.C.L. § 129.201; M.S.A. § 5.2321(1), provides:

Before any contract, exceeding $50,000.00 for the construction, alteration, or repair of any public building or public work or improvement of the state or a county, city, village, township, school district, public educational institution, other political subdivision, public authority, or public agency hereinafter referred to as the "governmental unit", is awarded, the proposed contractor, hereinafter referred to as the "principal contractor", shall furnish at his or her own cost to the governmental unit a performance bond and a payment bond which shall become binding upon the award of the contract to the principal contractor.

Further, M.C.L. § 129.206; M.S.A. § 5.2321(6) defines a claimant as "a person having furnished labor, material, or both, used or reasonably required for use in the performance of the contract."

We agree that plaintiff might be considered a "claimant" under the language of M.C.L. § 129.206; M.S.A. § 5.2321(6) in an appropriate case. However, this is not such a case. This Court has held previously that the public works bond statute, M.C.L. § 129.201 et seq.; M.S.A. § 5.2321...