Western Asbestos Co. v. TGK Const. Co., Inc.

• Decision Date: 08 February 1979
• Docket Number: No. 13929,13929
• Citation: 121 Ariz. 388,590 P.2d 927
• Parties: WESTERN ASBESTOS COMPANY, a corporation, Appellant, v. TGK CONSTRUCTION CO., INC., a corporation, Fireman's Fund Insurance Company, an insurance company, Appellees.
• Court: Arizona Supreme Court

Page 927

590 P.2d 927

121 Ariz. 388

WESTERN ASBESTOS COMPANY, a corporation, Appellant, v. TGK CONSTRUCTION CO., INC., a corporation, Fireman's Fund Insurance Company, an insurance company, Appellees.

No. 13929.

Supreme Court of Arizona, In Division.

Feb. 8, 1979.

Bosco, Goldman & Kaplan, Ltd. by David S. Rosenthal, Phoenix, for appellant.

Carl W. Divelbiss, Phoenix, for appellees.

CAMERON, Chief Justice.

This is an appeal by the plaintiff Western Asbestos Company from an order granting a motion for summary judgment made by defendants T. G. K. Construction Company Inc., and its surety Fireman's Fund Insurance Company. We have jurisdiction of this appeal pursuant to Rule 19(e), Rules of Civil Appellate Procedure, 17A A.R.S.

We must answer only one question on appeal: Within the context of A.R.S. § 34-223(A), did appellant's letter of 5 August 1976, with the attached invoices, constitute sufficient statutory notice to the prime contractor?

The facts considered in a light most favorable to the party against whom the motion was granted are as follows. Hall v. Motorists Ins. Corp., 109 Ariz. 334, 509 P.2d 604 (1973). Western Asbestos was a supplier of certain material used in the construction of the Tolleson Union High School near Phoenix, Arizona. T. G. K. was the general contractor on the project and Cal-Zona Glass and Metal Fabricators, Inc. (Cal-Zona) was the glass subcontractor. Cal-Zona ordered from Western Asbestos and there is no dispute that the material ordered and delivered was used in the construction of the high school.

Sometime in June of 1976, Cal-Zona ceased work on its subcontract and abandoned the project. T. G. K. assumed the role previously occupied by Cal-Zona by hiring the necessary workmen to complete the work Cal-Zona had subcontracted to perform. Although not conclusive, it appears that appellant's last shipment of materials to the job site was in late June of 1976 after T. G. K. had assumed responsibility for completing the work Cal-Zona had abandoned.

Pursuant to its contractual obligation to make progress payments, T. G. K., in mid-June 1976, paid to Cal-Zona the sum of $4,205.70. Although the record before this court does not indicate it, apparently there is still due and owing from T. G. K. to Cal-Zona a sum in excess of $2,000.00.

In early August of 1976, Western Asbestos mailed a letter to T. G. K. which stated in relevant part:

"Dear Sir.

"Per your telecon with our representative Michael Buell, we have enclosed copies of invoices for material supplied to Cal-Zona Glass for use on the Tolleson High School job on which you are the general contractor. If there is some way in which you can help us get payment for the material furnished, we would be very grateful. * * * "

Attached to this letter were copies of two invoices submitted by Western Asbestos to Cal-Zona, the first dated 19 May 1976, in the amount of $1,682.00. The second invoice was dated 30 June 1976 in the amount of $315.28 and showed shipment to Cal-Zona at the project site. This letter was followed by several telephone calls from Western Asbestos to T. G. K. relating to the payments owed appellant.

Western Asbestos' requests for payment were ignored, and on 8 February 1977, Western Asbestos filed suit in the Superior Court of Maricopa County against the subcontractor (Cal-Zona), the prime contractor (T. G. K.), and T. G. K.'s surety under A.R.S. § 32-1152 (Fireman's Fund Insurance Company).

Following cross motions for summary judgment by Western Asbestos and defendants T. G. K. and Fireman's Fund Insurance Company, the trial court entered an order dated 9 May 1977 finding the following:

"1. That the letter of August 5, 1976 from Western Asbestos Company to T. G. K. Construction, and the invoices thereto attached * * * do not constitute notice as required by A.R.S. § 34-223;

and

"2. That there was not, and is not, any contractual relationship existing between the Plaintiff (Western Asbestos Co.) and the defendants T. G. K. Construction Co., Inc., and Fireman's Fund Insurance Co."

The court then granted defendants' motion for summary judgment and this appeal followed.

Western Asbestos bases its theory for recovery on A.R.S. § 34-223(A) which reads as follows:

"Payment bond provisions

"A. Every claimant who has furnished labor or material in the prosecution of the work provided for in such contract in respect of which a payment bond is furnished under the provisions of § 34-222, and who has not been paid in full therefor before the expiration of a period of ninety days after the day on which the last of the labor was done or performed by him or material was furnished or supplied by him for which such claim is made, shall have the right to sue on such payment bond for the amount, or the balance thereof, unpaid at the time of institution of such suit and to prosecute such action to final judgment for the sum or sums justly due him, and have execution thereon, provided however that any such claimant having a direct contractual relationship with a subcontractor of the contractor furnishing such payment bond but no contractual relationship express or implied with such contractor shall have a right of action upon such payment bond upon giving written notice to such contractor within ninety days from the date on which such claimant performed the last of the labor or furnished or supplied the last of the material for which such claim is made, stating with substantial accuracy the amount claimed and the name of the party to whom the material was furnished or supplied for whom the labor was done or performed. Such notice shall be served by registered or certified mail, postage prepaid, in an envelope addressed to the contractor at any place he maintains an office or conducts his business, or at his residence."

Assuming that no contractual relationship existed between Western Asbestos, the materialman, and T. G. K., the prime contractor, as the trial court found, our inquiry must therefore focus upon whether the 5 August 1976 letter was adequate notice under the statute set forth above. In doing so, we note that our statute is modeled after the federal statute, the Miller Act, 40 U.S.C. § 270a, et seq., and decisions concerning notice under the federal statute are persuasive in interpreting our so-called "Little Miller Act."

The 5 August 1976 letter was not sent by registered or certified mail as directed by the statute, although there is no question that it was in fact received by T. G. K. The United States Supreme Court considered a similar question in Fleisher Engineering & Constr. Co. v. United States, 311 U.S. 15, 61 S.Ct. 81, 85 L.Ed. 12 (1940). The receipt of notice was not questioned in that case, but the contractors argued that even though notice had been received, it was not legally sufficient because of its failure to be sent by registered mail. The Supreme Court stated that the statutory registered mail provision

"was to assure receipt of the notice, not to make the described method mandatory so as to deny right of suit when the...