Tacon Mechanical Contractors, Inc. v. Aetna Casualty & Surety Co.

65 F.3d 486, 1995 U.S. App. LEXIS 27783, 1995 WL 552948
CourtCourt of Appeals for the Fifth Circuit
DecidedOctober 4, 1995
Docket94-20734
StatusPublished
Cited by20 cases

This text of 65 F.3d 486 (Tacon Mechanical Contractors, Inc. v. Aetna Casualty & Surety Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Tacon Mechanical Contractors, Inc. v. Aetna Casualty & Surety Co., 65 F.3d 486, 1995 U.S. App. LEXIS 27783, 1995 WL 552948 (5th Cir. 1995).

Opinion

BENAVIDES, Circuit Judge:

The central issue of this appeal is whether a subcontractor has a cause of action against a contractor’s surety for alleged delays in payment under Texas state law. Because Texas does not recognize such a claim, we affirm.

FACTUAL AND PROCEDURAL BACKGROUND

This controversy has its genesis in a construction project at the Naval Reserve Readiness Center in Houston. Menendez, Donnell & Associates (“Menendez”) contracted with the United States to make certain improvements to the facility. Menendez subcontracted with appellant Tacón Mechanical Contractors, Inc. (“Tacón”) for labor and materials. In turn, Tacón subcontracted with appellant The Walsh & Albert Company (“Walsh”) for sheetmetal ductwork. In accordance with the Miller Act, Menendez obtained a payment bond from a surety, appel-lee Aetna Casualty and Surety Co. (“Aetna”). See 40 U.S.C. §§ 270a-270d (1993).

When Menendez failed to make prompt payment, Tacón and Walsh made a claim for payment with the surety Aetna. When Aet-na was tardy in making payment on the bond, Tacón and Walsh each filed suit in district court as provided under the Miller Act. 40 U.S.C. § 270b(b). These suits were later consolidated into this action. In addition to Miller Act claims for payment on the bond, Tacón and Walsh also sued Aetna for various state law causes of action arising from Aetna’s alleged bad faith in handling the dispute. Specifically, Tacón alleged breach of a common law duty of good faith and fair dealing, violation of article 21.21 of the Texas Insurance Code, 1 vexatious failure to pay the Miller Act claim, and tortious interference with business relations. Walsh also raised the good faith and fair dealing and Insurance Code violations.

Following a hearing on September 9, 1993, the district court ordered Aetna to pay the Miller Act claims; Aetna eventually complied. 2 Following the elimination of the Miller Act claims, Aetna moved for summary judgment on the state law claims on two independent grounds: (1) federal preemption of state law claims by the Miller Act; and (2) the absence of Texas state law causes of action for a surety’s “bad faith” handling of a claim. The district court granted partial summary judgment on all the state law claims on both grounds. 860 F.Supp. 385, 389 (S.D.Tex.1994). Following final judgment disposing of all remaining issues, Tacón & Walsh appeal asserting that the district court erred in dismissing their state law claims.

*488 STATE LAW BAD FAITH CLAIMS

Because the district court dismissed the state law bad faith claims by way of summary judgment, we review its decision de novo under well-established standards. See Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986); Sterling Property Management, Inc. v. Texas Commerce Bank, Nat’l Ass’n, 32 F.3d 964, 966 (5th Cir.1994).

The district court rendered a take nothing judgment for Aetna on each of the state law claims because Texas law does not recognize a cause of action for a surety’s failure to promptly pay a claim. Recent authority from the Texas Supreme Court makes clear the correctness of the district court’s decision. In Great American Insurance Co. v. North Austin Municipal Utility District No. 1, 908 S.W.2d 415, 416-17 (Tex.1995), the Texas Supreme Court specifically held that “there is no common law duty of good faith and fair dealing between [a] surety and [a] bond obligee.” Likewise, the court held that given the unique character of suretyship, a surety has no liability to an obligee under article 21.21 of the Texas Insurance Code. Id. at 423-24. These two explicit holdings dictate our conclusion that the district court was correct in concluding that appellants’ common law bad faith and Insurance Code claims are not available under Texas law. 3

Tacón maintains, however, that Great American does not dispose of its vexatious failure to pay or tortious interference claims. 4 It contends that these claims are separate and distinct from the common law and statutory bad faith claims. We disagree. There is no authority for the existence of a vexatious failure to pay cause of action in Texas. Any such allegation is clearly subsumed into the holding of Great American that no common law duty of good faith and fair dealing exists between a surety and obligee.

While Texas does recognize a tortious interference cause of action, see Holloway v. Skinner, 898 S.W.2d 793, 794-95 (Tex.1995), we agree with the district court that, in this case, Tacon’s claim is not distinct from its bad faith elaim. Tacón admitted in oral argument that there is no Texas authority applying a tortious interference claim in a surety context. Taeon’s tortious interference claim is based upon the same factual allegation that Aetna was slow to pay on the surety bond and due to this delay Tacon’s relationship with other subcontractors deteriorated. This is no more than a restatement of the bad faith claim. Under Texas law, an attempt such as this to fracture one cause of action into three or four by massaging the labels and language is impermissible. Ross v. Arkwright Mut. Ins. Co., 892 S.W.2d 119, 133 (Tex.App.—Houston [14th Dist.] 1994, no writ); cf. Sledge v. Alsup, 759 S.W.2d 1, 2 (Tex.App.—El Paso 1988, no writ). Likewise, our own federal summary judgment procedure requires us to pierce through the pleadings and their adroit craftsmanship to reach the substance of the claim. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986); Professional Managers, Inc. v. Fawer, Brian, Hardy & Zatzkis, 799 F.2d 218, 222-23 (5th Cir.1986); see also United Nat’l Ins. Co. v. Tunnel, Inc., 988 F.2d 351, 354 (2d Cir.1993). We conclude, as did the district court, that Tacon’s tortious interference claim, at its core, merely reiterates the bad faith elaim.

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Bluebook (online)
65 F.3d 486, 1995 U.S. App. LEXIS 27783, 1995 WL 552948, Counsel Stack Legal Research, https://law.counselstack.com/opinion/tacon-mechanical-contractors-inc-v-aetna-casualty-surety-co-ca5-1995.