Shirley's Iron Works, Inc. v. City of Union
403 S.C. 560
| S.C. | 2013Background
- The SPPA and TCA interplay are at issue after subcontractors Shirley’s Iron Works and Tindall were unpaid on a City project where Gilbert Group was the general contractor and no payment bond was secured.
- The City did not require a payment bond and offered a $25,000 settlement to each Respondent; they refused and funds were reallocated to other unpaid subcontractors.
- Respondents sued in 2003 alleging SPPA violations and later asserted third-party beneficiary, tort, breach-of-contract, quantum meruit, and fees claims; the City answered and Gilbert was joined as a third-party defendant.
- Lower courts: summary judgment for the City; court of appeals reversed, holding SPPA created a tort remedy and the law-of-the-case theory could support third-party beneficiary breach claims.
- Sloan I held SPPA applies to subcontractors and implies liability for breach of contract, but not a private tort action; it later clarified the extent of liability under SPPA, leading to questions on law-of-the-case and third-party beneficiary theories.
- This Court grants certiorari and affirms in part, reverses in part, and remands to address only the surviving third-party beneficiary breach of contract claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does SPPA create a private tort action against a government entity? | Respondents rely on Sloan I to allow tort recovery for SPPA breach. | TCA provides the exclusive remedy for torts against government; SPPA creates contract-based protection, not a tort. | SPPA does not provide a private tort action against a government entity. |
| Is the SPPA claim actionable as a contract-based, third-party beneficiary breach of contract? | Subcontractors are direct third-party beneficiaries to the City–Gilbert contract because SPPA bonding was mandated and incorporated. | No valid third-party beneficiary breach theory under SPPA as a tort or independent cause of action; claim should fail. | SPPA supports a third-party beneficiary breach of contract claim against the government. |
| Did the law-of-the-case doctrine bar Respondents' third-party beneficiary claim? | Judges Short and John implicitly resolved the third-party beneficiary issue as part of the City’s liability framework. | Previous orders did not resolve the third-party beneficiary issue; law-of-the-case does not foreclose it. | Law-of-the-case does not foreclose the third-party beneficiary breach of contract claim. |
| Whether quantum meruit recovery was proper given an express contract exists? | Respondents may recover under quantum meruit for partial performance when the contract remains in force. | Quantum meruit is improper where an express contract governs the dispute. | Reversed as to quantum meruit; reinstated summary judgment for the City on that claim. |
| Should the case be remanded or resolved on the remaining issues? | Liability under the surviving SPPA-based third-party beneficiary claim should be determined. | Issues can be resolved on remand with proper focus on SPPA-based liability. | Remand to resolve liability and damages limited to the surviving third-party beneficiary contract claim. |
Key Cases Cited
- Sloan Constr. Co. v. Southco Grassing, Inc., 377 S.C. 108 (2008) (SPPA compatibility; private tort action not required; government liable for breach of contract only)
- Sloan Constr. Co. v. Southco Grassing, Inc. (Sloan II), 395 S.C. 164 (2011) (governmental duty to maintain payment bond not continuing; remand guidance limited)
- A.E.I. Music Network, Inc. v. Bus. Computers, Inc., 290 F.3d 952 (7th Cir. 2002) (bonding requirements create contract-based protections and third-party beneficiary rights)
- Hawkins v. City of Greenville, 358 S.C. 280 (Ct. App. 2004) (TCA limitations; no private tort remedy for SPPA enforcement)
- Proctor v. Dep’t of Health & Envtl. Control, 368 S.C. 279 (Ct. App. 2006) (TCA exclusive civil remedy; no tort claims against government for SPPA duties)
- State v. McKnight, 352 S.C. 635 (2003) (presumption of knowledge of prior legislation; legislative intent considerations)