SLOAN CONSTRUCTION COMPANY, INC., Respondent, v. SOUTHCO GRASSING, INC., Wanda Surrett and South Carolina Department of Public Transportation, Defendants, Of Whom South Carolina Department of Public Transportation is the Appellant.
No. 27061
Supreme Court of South Carolina
Decided Oct. 31, 2011
717 S.E.2d 603
Heard May 4, 2011.
Mrs. Spence did retain counsel, who advised the representatives of “The Estate of Congressman Floyd David Spence” that their firm was asking the federal government for a review of the payments that were made pursuant to the policy and that they “[did] not expect this [will] have any impact on the estate.” Accordingly, I would affirm the Circuit Court.
KITTREDGE, J., concurs.
T.S. Stern, Jr. and V. Elizabeth Wright, of Covington Patrick Hagins Stern & Lewis, of Greenville, for Respondent.
Justice HEARN.
This is the second appeal involving a highway construction project and the payment bond for it required by the Subcontractors and Suppliers Payment Protection Act (SPPA). After examining Sloan Construction Co. v. Southco Grassing, Inc., 377 S.C. 108, 659 S.E.2d 158 (2008) (Sloan I), we find a
FACTUAL/PROCEDURAL BACKGROUND
Southco Grassing, Inc. (Southco) and SCDOT were parties to a contract in January 2000 for the performance of highway maintenance in Greenville, South Carolina. In connection with the contract and the
On July 28, 2001, SCDOT wrote Southco, advising it of the need to obtain a replacement surety company for the payment bond. Southco did not respond or replace the bond. Sloan Construction submitted to Southco its final billing on October 31, 2001; however, Southco never paid any amount of money to Sloan Construction. A few months later, on January 15, 2002, Sloan Construction notified SCDOT of its demand for payment from SCDOT by reason of Southco‘s failure to pay. Shortly thereafter, on February 6, 2002, Sloan Construction‘s lawyer advised SCDOT that SCDOT was liable for its failure to require Southco to obtain a bond in substitution for the cancelled Amwest payment bond. The following day, SCDOT
Thereafter, Sloan Construction commenced this action against Southco, Surrett, SCDOT, and Greer State Bank, but it made no claim against Amwest. Sloan Construction alleged negligence against SCDOT pursuant to the
ISSUES PRESENTED
SCDOT raises two issues on appeal:
- Did the circuit court err in ruling SCDOT had a duty to maintain a payment bond under the
SPPA ? - Did the circuit court err in ruling SCDOT failed to meet its burden of proof regarding mitigation?
I. DUTY TO MAINTAIN BOND
In Sloan I, we granted certiorari on the following issue: “Did the court of appeals err in holding that statutory bond requirements applicable to public projects do not create an enforceable duty giving rise to a private right of action by a subcontractor against a government entity?” 377 S.C. at 112, 659 S.E.2d at 161. In answering that question, we held that “the duty created under the
We stated in Sloan I that “a government agency‘s failure to secure and maintain statutory bonding as required by the
Under the law of the case doctrine, “a party is precluded from relitigating, after an appeal, matters that were either not raised on appeal, but should have been, or raised on appeal, but expressly rejected by the appellate court.” Judy v. Martin, 381 S.C. 455, 458-59, 674 S.E.2d 151, 153 (2009) (citing Bakala v. Bakala, 352 S.C. 612, 632, 576 S.E.2d 156, 166 (2003)). “The law of the case applies both to those issues explicitly decided and to those issues which were necessarily decided in the former case.” Nelson v. Charleston & Western Carolina Railway Co., 231 S.C. 351, 357, 98 S.E.2d 798, 800 (1957). While Sloan I did not specifically raise the issue of maintenance of the payment bond, this Court‘s holding resolved that issue in this matter. However, although Sloan I requires us to affirm the circuit court‘s ruling that SCDOT had a duty to maintain the bond in this case, we take this opportunity to address whether a governmental entity otherwise has a duty to continuously monitor and maintain a bond on a construction project.
The cardinal rule of statutory construction is to ascertain and give effect to the intent of the legislature. Kiriakides v. United Artists Commc‘ns, Inc., 312 S.C. 271, 275, 440 S.E.2d 364, 366 (1994) (“All rules of statutory construction are subservient to the one that the legislative intent must prevail if it can be reasonably discovered in the language used....“). If a statute‘s language is plain, unambiguous, and conveys a clear meaning, “the rules of statutory interpretation are not needed and the court has no right to impose another meaning.” Hodges v. Rainey, 341 S.C. 79, 85, 533 S.E.2d 578, 582 (2000). “In construing statutory language, the statute must be read as a whole, and sections which are part of the same general statutory law must be construed together and each one given effect.” TNS Mills, Inc. v. S.C. Dep‘t of Revenue, 331 S.C. 611, 620, 503 S.E.2d 471, 476 (1998).
As recognized in Sloan I, the
(1) When a governmental body is a party to a contract to improve real property, and the contract is for a sum in excess of fifty thousand dollars, the owner of the property shall require the contractor to provide a labor and material payment bond in the full amount of the contract....
....
(3) For the purposes of any contract covered by the provisions of this section, it is the duty of the entity contracting
for the improvement to take reasonable steps to assure that the appropriate payment bond is issued and is in proper form.
Some jurisdictions have determined whether a bonding statute places an affirmative duty on government entities to require contractors to provide a payment bond for public works projects. Compare Med. Clinic Bd. of the City of Birmingham-Crestwood v. E.E. Smelley, 408 So.2d 1203, 1204 (Ala. 1981) (finding liability against a municipality for failing to require a bond based on statute), with O & G Indus., Inc. v. Town of New Milford, 229 Conn. 303, 640 A.2d 110, 111 (1994) (finding no liability for failing to require a bond). In addition, courts have also considered whether such statutes place a duty on government entities to ensure that a contractor‘s bond is valid. See, e.g., DeKalb County v. J & A Pipeline Co., 263 Ga. 645, 437 S.E.2d 327, 330 (1993) (holding there is a duty on the government entity to take the bond and the surety‘s affidavit in “specified manner and form“). However, the jurisdictions that have considered the precise issue here—whether a bonding statute places on a government entity a continuing duty to ensure a valid bond is maintained by a contractor throughout the course of the construction process—have answered that question in the negative.
In one of the first cases to address this issue, the Michigan Court of Appeals determined that Michigan‘s bonding statute imposed no such duty on a governmental body. Barnes & Sweeney Enters., Inc. v. City of Hazel Park, 169 Mich. App. 422, 425 N.W.2d 572, 573 (1988). In Barnes & Sweeney, the City of Hazel Park contracted with Conco Midwest to repair the city‘s streets. Id. Barnes & Sweeney was subcontracted to supply materials for the project. Id. After Conco defaulted on payments, Barnes & Sweeney discovered the payment bond obtained for the project had expired prior to the beginning of its work. Id. In its suit against the city and other parties, the subcontractor claimed the city had breached its statutory duty to ensure that Conco‘s payment bond was still valid throughout the time the subcontractor supplied materials for the project. Id. The trial court granted summary judgment to Hazel Park and the other defendants, and the court of appeals affirmed the finding that the city owed no duty to inform the
The Arizona Supreme Court addressed a similar issue in Flori Corp. v. Yellow Rose Development & Construction, Inc., 184 Ariz. 540, 911 P.2d 546 (Ariz. App. 1995). In Flori, Yellow Rose and the City of Tucson contracted for certain improvements, and Yellow Rose posted payment and performance bonds obtained from Pacific States Casualty. See 911 P.2d at 547. One of Yellow Rose‘s subcontractors notified Tucson that it had not been paid, and shortly thereafter, Tucson learned Pacific States was in a court-ordered conservatorship in California. Id. Tucson eventually terminated its contract with Yellow Rose, and various subcontractors of Yellow Rose who did not receive payment brought suit against Tucson. Id. at 547-48. The subcontractors argued that Tucson owed a duty to subcontractors to ensure that a payment bond was always in effect from a financially secure surety. Id. The court in Flori rejected that claim, noting that it “joined most other courts” in so holding. Id.
We believe the reasoning behind these courts’ rejection of a continuous duty on a government entity to ensure a viable bond is in place is sound and persuasive.
[I]t would be a herculean task for those governmental units which are engaged in a number of public works projects at any given time to continually check to ensure that a payment bond is still in force for each project and to determine the identity of the various subcontractors and suppliers and to advise them of the status of the payment bond.
Barnes & Sweeney, 425 N.W.2d at 575. While an unhappy situation for all parties involved in these situations, “the legislature [ ] did not provide that a public entity would guarantee the debts of the general contractor nor the financial stability of bonding companies.” Flori Corp., 911 P.2d at 548.
Like the statutes examined in Barnes & Sweeney and Flori,
II. MITIGATION
SCDOT additionally argues the circuit court erred in rejecting its argument that Sloan Construction failed to mitigate its damages, thereby entitling SCDOT to offset the amounts Sloan Construction could have recovered from the Amwest liquidator had it filed a claim. The defendant has the burden of establishing the plaintiff‘s lack of due diligence in mitigating damages. Adams v. Orr, 260 S.C. 92, 98, 194 S.E.2d 232, 235 (1973). After a thorough review of the record, we find there is evidence to support the circuit court‘s finding that SCDOT failed to meet its burden to establish a lack of due diligence in this case. Therefore, we affirm.
CONCLUSION
Therefore, we affirm the circuit court‘s ruling that SCDOT is liable to Sloan Construction for its failure to maintain a valid bond and that SCDOT did not meet its burden in proving Sloan Construction failed to mitigate its damages. However, pursuant to the clear language of the statute, governmental entities otherwise have no duty to continuously maintain a bond throughout the life of a construction project.
AFFIRMED.
BEATTY and KITTREDGE, JJ., concur.
TOAL, C.J., concurring in result only in a separate opinion.
PLEICONES, J., dissenting in a separate opinion.
I concur in the result reached by the majority that SCDOT is liable to Sloan Construction under our holding in Sloan I, and that SCDOT did not meet its burden in proving Sloan Construction failed to mitigate its damages. However, I strongly disagree with the majority‘s suggestion that Sloan I is no longer binding precedent.
The Court already squarely addressed the issue of the SCDOT‘s continuing duty to secure and maintain a bond under the
Furthermore, it is my opinion that we correctly interpreted the
Therefore, I would affirm the order of the circuit court because SCDOT had a continuing duty to maintain the construction bond under our holding in Sloan I. For this reason, I concur in result only.
I respectfully dissent because, as I stated the first time this case came before the Court, it is my opinion that the
I would reverse.