SCA Construction Supply v. Aetna Casualty & Surety Co.

746 P.2d 22, 155 Ariz. 281, 1987 Ariz. App. LEXIS 500
CourtCourt of Appeals of Arizona
DecidedAugust 27, 1987
DocketNo. 1 CA-CIV 9031
StatusPublished
Cited by1 cases

This text of 746 P.2d 22 (SCA Construction Supply v. Aetna Casualty & Surety Co.) is published on Counsel Stack Legal Research, covering Court of Appeals of Arizona primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
SCA Construction Supply v. Aetna Casualty & Surety Co., 746 P.2d 22, 155 Ariz. 281, 1987 Ariz. App. LEXIS 500 (Ark. Ct. App. 1987).

Opinion

OPINION

KLEINSCHMIDT, Judge.

This is an appeal from a judgment granting a motion to dismiss a claim for failure to join an indispensable party. The issue is whether a claimant on a payment bond furnished for a public construction project may bring an action on the bond without suing the general contractor. Because we hold that the claimant need not join the general contractor, we reverse and remand for further proceedings.

SCA Construction Supply (supplier) furnished materials and equipment to P & R Construction, Inc. (subcontractor), a subcontractor working on construction of the Mesa Municipal Courts Building. The general contractor was Steve Moorman Construction, Inc. (general contractor). The general contractor furnished a payment bond as the Little Miller Act, A.R.S. §§ 34-221 to -224 requires. Aetna Casualty and Surety Co. (surety) was the surety on the bond.

The supplier claimed that it had not been paid by the subcontractor and it sued the subcontractor and the surety on the bond. After the supplier’s time for bringing a claim expired, the surety moved to dismiss on the ground that the supplier had not joined the general contractor. Relying on Rule 17(f), Ariz.R.Civ.P., the trial court granted the motion. Rule 17(f) reads as follows:

Actions against surety, assignor or endorser.

The assignor, endorser, guarantor and surety upon a contract, and the drawer of a bill which has been accepted, may be sued without the maker, acceptor or other principal obligor when the latter resides beyond the limits of the state, or in such part of the state that he cannot be reached by ordinary process of law, or when his residence is unknown and cannot be ascertained by the use of reasonable diligence, or when he is dead, or insolvent.

The Little Miller Act provides that a general contractor working on the construction of a public building must furnish a payment bond for the protection of claimants supplying labor or material to the general contractor or to its subcontractors. A.R.S. § 34-222(A)(2). The mandatory bond is a substitute for lien rights because a lien will not attach to public property. Gen. Acrylics v. U.S. Fidelity & Guar. Co., 128 Ariz. 50, 52, 623 P.2d 839, 841 (App.1981). Anyone furnishing labor or materials who is not paid may sue on the bond. A.R.S. § 34-223(A).

The Arizona Little Miller Act is modeled after the federal Miller Act, 40 U.S.C. §§ 270a-270d. Western Asbestos Co. v. TGK Constr. Co., 121 Ariz. 388, 390, 590 P.2d 927, 929 (1979). Because Arizona's formulation of the Act closely follows that of the federal Act, decisions construing the federal Act are highly persuasive in interpreting Arizona’s Act. Honeywell, Inc. v. Arnold Constr. Co., 134 Ariz. 153, 156, 654 P.2d 301, 304 (App.1982).

The Sixth Circuit addressed the question whether a bond claimant must sue both the general contractor and the surety to recover under a bond in United States ex rel. Goodenow v. Aetna Casualty & Surety Co., 5 F.2d 412, 413 (6th Cir.1925). In Aetna, the plaintiff provided a contractor with labor and material for the construction of a coast guard dwelling. Upon completing the project, the plaintiff failed to receive payment from the contractor and he sued the surety for the value of his labor and materials. The district court dismissed the plaintiff’s suit for failure to name the contractor as a party defendant. On appeal, the Sixth Circuit construed the language of the Heard Act, the predecessor of the Miller Act, to mean that a claimant need not join the general contractor when suing a surety. In doing so, the court first looked to the Act’s purpose: the protection of those who furnish labor and material for the construction of public projects. Id. at 413. The court then stated that “[i]t is difficult to see how that purpose ... could [283]*283not be carried into effect in a suit against the bondsman alone.” Id. The court further reasoned that where a general contractor might interpose a defense that would be helpful to the surety, established rules of procedure were available for making the general contractor a defendant. Id. In subsequent federal cases addressing this issue, the courts have followed the holding of the Aetna court. See United States ex rel. Hudson v. Peerless Ins. Co., 374 F.2d 942, 945 (4th Cir.1967); United States ex rel. Statham Instruments, Inc. v. Western Casualty & Sur. Co., 359 F.2d 521, 524 (6th Cir.1966); Seaboard Sur. Co. v. United States ex rel. Marshall-Wells Co., 84 F.2d 348, 350 (9th Cir.1936).

The surety argues, however, that we should decline to adopt the federal courts’ construction of the Miller Act in construing our Little Miller Act because the federal rules do not contain a counterpart to Rule 17(f), Ariz.R.Civ.P. It asserts that “because Rule 17(f) specifically forbids bringing an action only against the surety (except in certain limited circumstances) the logic and policy arguments of these federal decisions are not helpful” (emphasis in original). We disagree.

First, Rule 17(f) does not “specifically forbid” bringing an action against a surety alone. It simply lists situations in which a claimant need not join a principal obligor. It does not state that the listed situations are the only instances in which a surety may be sued alone. While the rule does not specifically require the joinder of both the surety and the principal obligor, we acknowledge that it infers that all principal obligors must be sued unless one of the listed exceptions exists. This is in keeping with the principle that “if a statute specifies one exception to a general rule, other exceptions are excluded.” See, e.g., Bushnell v. Superior Court, 102 Ariz. 309, 311, 428 P.2d 987, 989 (1967).

The supplier argues, however, that a specific statutory provision governs over the provisions of a general rule. See Lemons v. Superior Court, 141 Ariz. 502, 505, 687 P.2d 1257, 1260 (1984). We find the supplier’s argument on this point to be persuasive. Rule 17(f) is a general provision dealing with a variety of situations in which the parties share a joint obligation.

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Related

SCA Construction Supply v. Aetna Casualty & Surety Co.
754 P.2d 1339 (Arizona Supreme Court, 1987)

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Bluebook (online)
746 P.2d 22, 155 Ariz. 281, 1987 Ariz. App. LEXIS 500, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sca-construction-supply-v-aetna-casualty-surety-co-arizctapp-1987.