Credit General Insurance v. Atlas Asphalt, Inc.

Steele Hays, Justice. By this appeal we are asked to decide whether a supplier of construction materials is barred under Ark. Code Ann. § 18-44-508 (1987) from bringing suit under a performance bond where the suit is not filed within six months from the date an interim payment is made on the contract. The City of Harrisburg contracted with KLW, Inc., the prime contractor, for street and sewer improvements. Asphalt paving was performed by Fields Curbco, Inc., under a subcontract with KLW dated October 22,1986. The amount to be paid Fields Curbco under the subcontract was $87,910. Fields Curbco’s performance was assured, and its suppliers protected, under a surety bond issued by Credit General Insurance Company. Fields Curbco ordered its materials — “hot mix,” oil and other products — from Atlas Asphalt, Inc. On June 4,1987, Atlas delivered the last materials to the job and on the following day KLW made a partial payment of $10,000 to Fields Curbco, no part of which was paid to Atlas. That proved to be the final advance made to Fields Curbco, leaving a balance of $55,595.27 due under the subcontract. In October 1987, Harrisburg paid the final payment to KLW under the prime contract. On February 9,1989, Atlas filed suit against Fields Curbco, KLW and Credit General for $45,663.55 for some 1,660 tons of asphalt delivered by Atlas on the Harrisburg project for which it had not been paid. Fields Curbco admitted owing Atlas $49,071.65 and filed a cross complaint against KLW for $55,595.27. Credit General admitted the suretyship, denied that Atlas had delivered 1,660 tons of asphalt and affirmatively pled the statute of limitations as a defense. The trial court denied Credit General’s motion for summary judgment on the statute of limitations defense, and after a bench trial found that unbeknownst to Atlas, a portion of the asphalt delivered by it to Fields Curbco, 78 tons, had been used on a different project and was not chargeable to the Harrisburg job. On that basis the trial court awarded a judgment to Atlas against Fields Curbco in the amount of $45,663.50 and against Credit General in the amount of $43,752.50, plus a twelve percent penalty and an attorney’s fee of $10,701. On appeal Credit General assigns error to three rulings by the trial court: the trial court erred in refusing to grant summary judgment on the statute of limitations defense, it was error to award statutory penalties and attorney’s fees since Atlas failed to recover the full amount sought from Credit General, and the trial court erred as a matter of law in failing to find on the evidence that Atlas was barred by the statute of limitations, Ark. Code Ann. § 18-44-508 (1987). We sustain the argument with respect to the penalty and attorney’s fee and otherwise affirm the judgment appealed from. Credit General supported its motion for summary judgment with the deposition of Hal Fields of Fields Curbco, admitting that the last delivery of materials by Atlas was on June 4,1987, and that the last payment received by his company from KLW was the $10,000 partial payment on June 5, 1987. Credit General argues that since Fields Curbco received no further payments from KLW, the last payment, hence, the “final payment,” occurred on June 5, triggering the six months provided by § 18-44-508. That statute reads in part: All persons, firms, associations and corporations who have valid claims against the bond may bring an action thereon against the corporate surety. No action shall be brought on the bond after six (6) months from the date final payment is made on the contract. . . Appellant Credit General relies on a single authority — the case of Tucker Paving Corporation v. Armco Steel Corporation, 242 Ark. 49, 411 S.W.2d 888 (1967). But Tucker in fact refutes the appellant’s theory. There, the supplier, Armco, filed its suit on August 25, 1965, within six months of the payment of the five percent retainage which the owner had withheld (June 7, 1965), but not within six months of the date of payment of an amount which, with previous payments, amounted to ninety-five percent of. the contract price (February 9, 1965). Tucker, arguing that Armco was barred, contended that it was the custom in the construction industry to regard the last payment prior to the retainage as the “final payment.” Tucker claimed the practice among architects and engineers in the industry was to regard “final payment” as the date a job is accepted by the owner and the final estimate is paid — that the retainage is merely a safeguard. This court rejected that argument, saying that to call the February 9 payment “final” would be to say “black is white.” The opinion states: In the generally accepted use of the word, “final,” the meaning is simply “last” — “nothing remains to be done.” — The matter is concluded.” We think that the adoption of appellants’ argument would do violence to our statute, and that such a holding would create uncertainty as to the beginning of the period of limitations where it presently appears to be quite clear. Citing 16A Words & Phrases, Final Payment at 690, the Tucker court held that “A final payment is the last payment.” While the statute may be clear in the context of the Tucker case, whether it is clear per se is debatable. It provides no clue as to whether the legislature, by using the words “the contract,” intended to refer only to the prime contract and not to subcontracts as well. In the absence of some clearer indication that such was the intent, we are unwilling to impose so stringent a limitation as six months on subcontractors and material suppliers and anchor it, as appellant would have us do, not to the final páyment on the contract, but to an interim payment which unfortuitously proved to be the last payment made. With that in mind, we limit our holding to the rejection of the specific point argued both here and below, that is, that the June 5 payment was the final payment within the meaning of the statute and, therefore, Atlas had six months from that date to file its suit. As to the allowance of a penalty and attorney’s fee under Ark. Code Ann. § 23-79-208 (1987), we have held in several cases that a plaintiff must recover the amount claimed to be entitled to these statutory add-ons. Southwestern Insurance Company v. Camp, 253 Ark. 886, 489 S.W.2d 498 (1973). The proof in this case made it clear beyond doubt that seventy-eight tons of asphalt, which Atlas had consistently claimed, was not chargeable to the Harrisburg project and so not to Credit General. Atlas compares the facts to USAA Life Insurance Co. v. Boyce, 294 Ark. 575, 745 S.W.2d 136 (1988), where we declined to apply the rule categorically where it was within the ability of the insurer to determine the correct amount and impractical for the plaintiff to make such determination. But we cannot agree that the Boyce case governs. Here it is evident that Atlas knew (or is chargeable with such knowledge) as early as May 9,1989, that Mr. Hal Fields would confirm that seventy-eight tons of asphalt went to a private owner rather than to the Harrisburg project. It would have been a simple matter to make the necessary alteration in the amount claimed. Appellant’s final point is an adaptation of its first argument, i.e., that even after a trial no facts were introduced that would toll the period of limitations beyond six months from June 5, 1987. We agree with that characterization of the proof, but for reasons already stated, we draw a different conclusion from those facts. Affirmed as modified. Holt, C.J., and Brown, J., concur in part and dissent in part. Newbern, J., not participating.