Fidelity & Deposit Co. v. Stromberg Sheet Metal Works, Inc.

34 Cont. Cas. Fed. 75,383, 532 A.2d 676, 1987 D.C. App. LEXIS 474

• Court: District of Columbia Court of Appeals
• Decided: October 28, 1987
• Docket: 85-249
• Status: Published

Opinions

STEADMAN, Associate Judge:

This is an appeal from an order of the Superior Court of the District of Columbia granting recovery to plaintiff Stromberg Sheet Metal Works under a payment bond issued by defendant Fidelity & Deposit Company of Maryland. Appellant challenges the jurisdiction of the Superior Court to entertain the action, and also claims error in the application of the law of the case doctrine and the award of attorneys’ fees. We hold that plaintiff’s complaint must be dismissed for want of jurisdiction, but sustain the award of attorneys’ fees.

I

On July 10, 1978, the United States Postal Service entered into a contract with Cur-tin & Johnson, Inc., under which Curtin & Johnson was to perform certain work at the City Post Office in the District of Columbia. Shortly thereafter, Curtin & Johnson (as principal) and Fidelity & Deposit Company of Maryland (as surety) executed a payment bond to the postal service, binding themselves to be jointly and severally liable for payment for work performed under the contract between Curtin & Johnson and the postal service.

On November 13, 1979, Stromberg Sheet Metal Works contracted with Curtin & Johnson to perform work pursuant to the prime contract between Curtin & Johnson and the postal service. By June 10, 1980, Stromberg had fully performed under the contract. In spite of acceptance of the work by both Curtin & Johnson and the postal service, Stromberg was never paid for any of the work performed.

Stromberg filed suit in Superior Court against Curtin & Johnson¹ on December 15, 1981. Fidelity & Deposit answered the complaint and then filed a motion to dismiss, alleging that Superior Court lacked jurisdiction because the bond was “required and governed by the Miller Act [40 U.S.C. § 270a-d (1982)],” which provides that suit for payment under such bonds be brought in a United States District Court. 40 U.S.C. § 270b. Stromberg filed an opposition to the motion, claiming that under the Postal Reorganization Act, 39 U.S.C. § 401 et seq. (1982), the provisions of the Miller Act applied only to performance bonds, not to payment bonds. Following a hearing, the motion was denied, “it appearing to the Court that the provisions of the Miller Act (40 U.S.C. § 270(a) [sic] et seq.) are not applicable herein pursuant to the provision of the Postal Reorganization Act (39 U.S.C. § 410(b)(4)(B)).”

Fidelity & Deposit filed a second motion to dismiss, arguing that the suit was barred by the one-year statute of limitations of the Miller Act because “the payment bond specifically incorporates the Miller Act ... [and] the Postal Contracting Manual specifically states the payment bond involved herein is to be issued pursuant to the Miller Act.” Stromberg filed an opposition. Fidelity & Deposit then moved for summary judgment, making the same contentions as it had in the second motion to dismiss.

This motion to dismiss was denied under the doctrine of the law of the case, and Stromberg was awarded $250 in attorneys’ fees “since the motion seeks to reargue what was previously decided.” The summary judgment motion was also denied by the same order. Fidelity & Deposit moved for reconsideration, but that motion was also denied.

After a trial on facts stipulated by the parties, the trial judge applied the law of the case doctrine, and ordered that judgment be entered for Stromberg. This appeal followed.

II

If, as appellant contends, the Miller Act, 40 U.S.C. §§ 270a-270d applies to this case, courts of the District of Columbia have no jurisdiction over this matter. 40 U.S.C. § 270b.

By its terms, the Miller Act requires generally that before a contract for construction, alteration, or repair of a federal building is awarded, the contractor must furnish to the United States a performance bond, id. at § 270a(a)(l), and a payment bond, id. at § 270a(a)(2). The performance bond protects the United States because it embodies promises by both the contractor and his surety to the United States that the contractor will perform his contract. On the other hand, the payment bond protects all persons supplying labor or materials to the prime contractor because it embodies promises by the contractor and the surety that debts incurred by the prime contractor for labor and materials will be paid.²

Under the Postal Reorganization Act, 39 U.S.C. §§ 101, et seq., the United States Postal Service was established to succeed to the interests of the former Post Office Department. Its status is “an independent establishment of the executive branch of the Government of the United States.” 39 (1982). It is operated “as a basic and fundamental service provided to the people by the Government of the United States.” 39 U.S.C. § 101. It is undisputed that the Miller Act applied to contracts let by the Post Office Department. Under these circumstances, we would expect that a change from preexisting law as significant as that argued by appellant would be fairly discernible from the text of the Postal Reorganization Act and its background.

That Act in many respects sets the Postal Service free from the constraints of federal law generally applicable to federal governmental components, including the bulk of laws dealing with “public or Federal contracts, property, [and] works.” 39 U.S.C. § 410(a). However, the Act does provide that a number of federal laws applicable to government contracts shall apply to the Postal Service. In general, these are provisions intended to further broaden economic and social policies and to provide protection to those involved in government contracts, such as the Davis-Bacon, Contract Work Hours Standards, Walsh-Hea-ley and Service Contract Acts, all dealing with wages and other labor standards, and portions of the Civil Rights and Occupational Safety and Health Acts. 39 U.S.C. § 410.

The precise issue before us is whether the entire Miller Act is made applicable to the Postal Service or only that portion dealing with performance bonds.³ The ambiguity arises because of a phrase in parentheses:

“The following provisions shall apply to the Postal Service:

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(4) the following provisions of title 40:

* * # #

(B) sections 270a-270e (known as the Miller Act, relating to performance bonds)....”

39 U.S.C. § 410(b)(4)(B).

Standing alone, appellant’s argument that only those provisions of the Miller Act dealing with performance bonds have application might seem to have some force. However, when considered against the background of the Postal Reorganization Act as a whole as discussed above and against a detailed examination of the structure of that portion of the Act, we conclude that its argument lacks merit.

To begin with, the phrase under review is placed within parentheses. On its face, it appears to be intended as a helpful description of what otherwise might be an obscure statutory reference. Of necessity, the description is cryptic rather than inclusive. This can be readily seen in examining closely the precise language before us. The Miller Act is referred to as consisting of five sections,⁴ all of which are made applicable to the Postal Service. Yet sections 270b and 270c deal solely with payment bonds, and a reference to them would be pointless were the Act to be applicable only with respect to performance bonds.

An examination of the description in parentheses of other statutory references in section 410 reinforces the conclusion that the descriptive phrase was not intended to be all-inclusive. For example, further on in the recitation of applicable statutes, reference is made to “sections 35-45 [of title 41] (known as the Walsh-Healey Act, relating to wages and hours).” Yet those sections deal with several subjects relating to working conditions other than wages and hours, including minimum age requirements, prohibition of convict labor and maintenance of safe and sanitary working conditions, 41 U.S.C. § 35(d), (e). Parenthetical descriptions in other portions of section 410 lead to the same conclusion. The Federal Freedom of Information Act, with its extensive provisions, was referred to as “section 552 (public information)” and an entire chapter of title 5 was referred to simply as “chapter 71 (employee policies).” (This portion of the Act has been subsequently amended.)

The two bills originally introduced in the House and Senate, which led to the adoption of the Act, described the Miller Act, the Walsh-Healey Act and the Davis-Bacon Act only by their popular names, which were taken from their sponsors and thus had meaning only to government contract specialists. In the course of passage through the Congress, the further descriptive language giving some sense of the Acts’ content was added. Yet we are pointed to nothing in the House, Senate or conference committee reports giving any indication that a substantive change of the magnitude argued by appellant was intended in inserting the additional parenthetical language.⁵

In the face of this history and structure of the Postal Reorganization Act itself, we decline to strain the parenthetical reference in § 410(b)(4)(B) to limit the application of the Miller Act to performance bonds only. We think the entire Act was intended to apply to the Postal Service. Plaintiffs complaint must therefore be dismissed for want of jurisdiction. The order awarding $250 in attorneys’ fees to plaintiff is affirmed.⁶

So ordered.

1 . Curtin & Johnson was later dismissed from the suit at the request of the plaintiff.

2 . The protection afforded by a payment bond is particularly important to those working under a contract on federal property because although a supplier can usually secure a mechanic’s lien against improved property, such a lien cannot attach to federal property. F.D. Rich Co., Inc. v. Industrial Lumber Co., Inc., 417 U.S. 116, 121— 22, 94 S.Ct. 2157, 2161, 40 L.Ed.2d 703 (1974). The same doctrine applies to property owned by state and local governmental units. ”[T]he generally prevailing view is that a mechanic’s lien does not attach to and cannot be enforced against public property acquired and used by and for the benefit of the public, in the absence of express statutory provision to that effect.” 53 Am.Jur.2d Mechanics’ Liens § 29 (1970). Likewise, “[t]he general view has been taken that a mechanic’s lien cannot be acquired against a public service or quasi-public corporation whose purposes and objects are distinctively public.” Id. at § 34. Therefore, notwithstanding the expanded status of the Postal Service, see note 4, infra, it seems doubtful (although we need not decide) that a mechanic’s lien may be asserted against its construction projects.

3 . Two federal cases involving payment bonds and the Postal Service proceed on the assumption that the Miller Act’s provisions requiring payment bonds apply to the Postal Service. Active Fire Sprinkler Corp. v. U.S. Postal Service, 811 F.2d 747 (2d Cir.1987) (subcontractor may assert equitable lien against unpaid balance of contract notwithstanding posting of Miller Act payment bond); Kennedy Electric Co. v. U.S. Postal Service, 508 F.2d 954 (10th Cir.1975) (equitable remedy available where Postal Service fails to require Miller Act payment bond).

4 . In fact, section 270e is not part of the original Miller Act.

5 . The consent by Congress in the Postal Reorganization Act that the Postal Service may "sue and be sued," 39 U.S.C. § 401 (1982), has constituted a waiver of sovereign immunity that allows significant rights against the Postal Service not available against the United States as such. See Franchise Tax Board v. U.S. Postal Service, 467 U.S. 512, 104 S.Ct. 2549, 81 L.Ed.2d 446 (1984) (Postal Service subject to state order to withhold delinquent taxes from employee's wages); Active Fire Sprinkler Corp. v. U.S. Postal Service, supra. However, "we construe the incorporation of the Miller Act into the Postal Reorganization Act as an addition to any remedies made available by means of the waiver of immunity." Id. at 752. See also note 2, supra.

6 . Our holding effectively moots out appellant’s law of the case arguments except with respect to the award of attorneys’ fees for raising in two successive motions arguments relating to the applicability of the Miller Act. We think the second motions judge properly invoked the doctrine in awarding attorneys’ fees. P.P.P. Productions, Inc. v. W & L, Inc., 418 A.2d 151 (D.C.1980). Appellant’s argument that the award was improper because no hearing was held relies on our decision in Brady v. Fireman’s Fund Ins. Co., 484 A.2d 566 (D.C.1984). However, in this case (unlike the situation in Brady) appellant had notice in the form of a motion for attorneys’ fees filed by appellee before the award was made, and an opportunity to respond.