P. THOMAS THORNBRUGH, JUDGE:
¶1 Vanguard Builders, Inc. (Vanguard), appeals a summary judgment in favor of
Granite Re, Inc. (Granite), decided on the grounds that Vanguard did not file
suit within the applicable limitations period to recover on a statutory bond
made pursuant to 61 O.S.2011 §§ 1
and 2. We vacate the summary judgment for the reasons set forth below, and
remand for further proceedings.
BACKGROUND
¶2 This appeal comes to us pursuant to 12 O.S.2011 § 994, from a summary
judgment made early in the underlying case. As a result, many of the facts which
are recited for background are disputed. For the purposes of this opinion, we
recite the disputed facts as alleged by Vanguard without commenting on any final
disposition of these facts.
¶3 Vanguard is a metal building, roofing, and siding contractor. In February
2011, Vanguard entered into a contract with the L. Wallace Construction Company,
Inc., and Trilogy Development Group, Inc. (LWCC/Trilogy),1 to perform part of the
construction of a gymnasium at Wilson Public Schools (School) in Wilson,
Oklahoma. Trilogy was the main contractor, and Vanguard was a subcontractor.
Pursuant to 61 O.S.2011 §§ 1 and
2 (Bonding Statute), Trilogy obtained the required statutory bond (Bond) from
Granite as surety, to cover any payments due to subcontractors if the main
contractor defaulted. Trilogy paid Vanguard regular progress payments, but
withheld a 10% "retainage." The total of the withheld payments was $37,600.
¶4 Vanguard completed its portion of the work on January 20, 2012, and
invoiced LWCC for the remaining $37,600 as final payment. LWCC replied that it
was not required to make a final payment to Vanguard until final payment by
School, which was due only on "substantial completion" of the project. LWCC told
Vanguard that School had not yet made this payment. Vanguard checked
periodically with LWCC in the following months, but received a similar
response.
¶5 On October 1, 2012, after LWCC had again asserted that School had not
paid, Vanguard inquired of School concerning the delay in payment. School
informed Vanguard that all sums due to Trilogy had been paid. Vanguard later
learned that Trilogy had received a final payment from School some four months
earlier, on May 31, 2012.
¶6 On October 3, 2012, Vanguard notified Granite that LWCC had defaulted, and
demanded payment of the $37,600 as a final payment pursuant to the Bond. Granite
contacted Trilogy regarding the default. Trilogy replied that it disputed the
claim for return of the $37,600 retainage because Vanguard had "gone over its
allotted time" during several phases of construction. Later, Trilogy apparently
informed Granite that it did not have to pay Vanguard because Vanguard was
liable for a "charge back" due to alleged damage to School's gymnasium
floor.
¶7 Eleven weeks after notification, the dispute as to whether Trilogy was
required to make the payment to Vanguard still had not been resolved. Vanguard
states that, during this period, Granite represented that it would eventually
pay, but that it could not do so until Trilogy determined the final amount owed
to Vanguard. However, on February 4, 2013, one year and fifteen days after
Vanguard last performed work at School, Granite denied the claim on the
Bond.
¶8 On March 21, 2013, Vanguard filed suit against the Defendants. Vanguard's
petition included a claim against Granite for payment of the $37,600, plus
interest. On July 12, 2013, Granite filed a motion for summary judgment,
alleging that Vanguard had failed to file suit to recover on the Bond within the
one-year statute of limitation provided by the Bonding Statute. The district
court granted Granite's motion. Vanguard appeals.
STANDARD OF REVIEW
¶9 "A moving party is entitled to summary judgment as a matter of law when
the pleadings, affidavits, depositions, admission or other evidentiary materials
establish that no genuine issue of material fact exists." Smith v. City of
Stillwater, 2014 OK 42, ¶
21, 328 P.3d 1192 (citing
Miller v. David Grace, Inc., 2009 OK 49, ¶ 10, 212 P.3d 1223; and Davis v.
Leitner, 1989 OK 146, ¶ 9, 782 P.2d 924). "In reviewing the
grant or denial of summary judgment, this Court views all inferences and
conclusions to be drawn from the evidentiary materials in a light most favorable
to the nonmoving party." Id. "Because a grant of summary judgment is
purely a legal issue, this Court's standard of review on appeal is de
novo." Id.
ANALYSIS
I. THE BONDING STATUTE
A. Statutory Text and Purpose
¶10 The statutory language in question is found in 61 O.S.2011 § 2(A),which states in
relevant part:
Any person to whom there is due any sum for labor, material or repair to
machinery or equipment, furnished as stated in Section 1 of this title, the
heirs or assigns of such person, may bring an action on the bond for the
recovery of the indebtedness, provided that no action shall be brought on the
bond after one (1) year from the day on which the last of the labor was
performed or material or parts furnished for which the claim is made.
This language originates in R.L.1910, §§ 3881 and 3882. At that time,
§ 3882 provided that:
. . . no action shall be brought on said bond after six months from the
completion of said public improvements or public
buildings.
In 1965, the Legislature amended the Bonding Statute, changing the
limitations period from six months to one year. In 1968, the Legislature again
amended the statute, changing the occurrence that triggered the running of the
limitation period from the "completion of the building" to "the day on which the
last of the labor was performed . . . for which such claim is made." 1968 Okla.
Sess. Laws. ch.77 § 2.
¶11 In Boren v. Thompson & Associates, 2000 OK 3, ¶ 16, 999 P.2d 438, the Oklahoma Supreme
Court identified two "fundamental objective[s]" of the Bonding Statute: the
first is "protecting laborers and materialmen on public construction projects
who have no lien rights against public land or improvements"; the second is
"saving the public from all liability for liens for material and labor furnished
on public improvements." Id.
B. Vanguard's Arguments and the Statutory Text
¶12 Vanguard brings two arguments. The first is that the right to call on the
Bond did not accrue until the amount due was finally decided, and the limitation
period thus did not begin to run until the right to payment was determined. The
second is that Vanguard's right to payment did not accrue until the project was
"substantially complete," i.e., at the time payment was made by School on May
31, 2012; hence, Vanguard had one year from that date to file suit.
¶13 Both of these arguments appear to fail, since neither the date the
payment was due, nor the date of substantial completion, trigger the running of
the limitation period. Although an accrued right to payment is a prerequisite
for suit pursuant to § 2 ("Any person to whom there is due any sum"), the
limitation period of § 2 is not triggered by the accrual of a right to payment
but by the expiration of the "day on which the last of the labor was performed
or material or parts furnished for which the claim is made." The language of the
statute, without further inquiry, appears to show a statute of repose. A
statute of repose "restricts potential liability by limiting the time during
which a cause of action can arise," and may bar a cause of action before it
accrues. Smith v. Westinghouse Elec. Corp., 1987 OK 3, n.11, 732 P.2d 466.2
C. Historical Supreme Court Interpretation of the Bonding
Statute
¶14 Further inquiry regarding the period in which a claim against the Bond
may be filed reveals that, in Phillips Petroleum Co. v. U. S. Fidelity &
Guaranty Co., 1968 OK 23, ¶
15, 442 P.2d 303, the Oklahoma
Supreme Court held:
[T]he limitation provision for bringing the action referred to in 61 O.S.1961,§§ 1 and 2, is
subject to waiver and estoppel where the necessary facts are established
as in other instances of the application of waiver and estoppel to a statute
of limitation. (Emphasis added.)
Phillips Petroleum was decided in February 1968, and was based on the
1961 version of the Bonding Statute. The Legislature amended § 2 in 1965 to
expand the limitation period to one year. Further, two months after Phillips
Petroleum was decided, yet another version of the statute became effective,
changing the triggering event from "completion of said public improvements or
public buildings" to "the day on which the last of the labor was performed" as
noted above.
¶15 In 1970, the Supreme Court again commented on the limitation period
of
§ 2, in Gasteam Radiator Co. v. U. S. Fidelity & Guaranty Co., 1970 OK 121, 471 P.2d 883, and appeared to
reaffirm that a claim of immunity from recovery pursuant to the limitation
period was subject to claims of waiver and estoppel. However, we note that,
similarly, Gasteam Radiator did not interpret the current statutory
language regarding the triggering occurrence.3 Like Phillips Petroleum, it did
not discuss the effects of the 1968 change from the limitation being triggered
by "completion of said . . . buildings" to "the day on which the last of the
labor was performed" for which the claim is made. The Supreme Court has not
cited Gasteam for this principle since that opinion was issued.
¶16 In 1987, the Supreme Court cited Phillips Petroleum in a footnote
to Whitley v. Oologah Independent School District No. I-4, 1987 OK 67, n.4, 741 P.2d 455 (Opala, J.,
concurring). It did so again in a footnote to Trent By & Through Trent v.
Board of County Commissioners, 1988 OK 15, n.9, 755 P.2d 615 (Opala, J., and Kauger,
J., dissenting), and in a footnote to Hart v. Bridges, 1979 OK 31, n.3, 591 P.2d 1172. These citations,
however, appear to raise the general principle of estoppel being applied to a
statute of limitations, rather than to a post-1968 affirmance of the Phillips
Petroleum interpretation of the limitation period of § 2. Overall, we find
the rule of Phillips Petroleum clear, but find no binding precedent
indicating that its interpretation of § 2 applies to the current version of the
Bonding Statute.
II. IS PHILLIPS PETROLEUM STILL GOOD LAW?
¶17 It is a general principle of statutory construction that "[w]hen amending
a statute the legislature is presumed familiar with the extant judicial
construction then in force." TXO Prod. Corp. v. Oklahoma Corp. Comm'n, 1992 OK 39, ¶ 10, 829 P.2d 964. See also
Huff v. State, 1988 OK
118, ¶ 4, 764 P.2d 183;
Lekan v. P & L Fire Protection Co., 1980 OK 56, ¶ 4, 609 P.2d 1289. Compared to the
current statute, the 1961 statute construed in Phillips Petroleum had
both a shortened limitation period (six months versus one year) and a different
trigger for the running of the limitation period ("completion of said . . .
buildings" versus "the day on which the last of the labor was performed . . .
for which the claim is made.") We find, however, no structural difference
between the 1961 statute and the current statute that would indicate any intent
of the Legislature to undo the holding of Phillips Petroleum. Further,
the Legislature has amended 61 O.S. §
2 three times since the Phillips Petroleum opinion was published. We
find no indication that the Legislature, although aware of the rule of
Phillips Petroleum, intended to overturn that rule by subsequent
statutory amendments. We therefore hold that Phillips Petroleum is still
good law, and its rule that "the limitation provision for bringing the action
referred to in 61 O.S.[] §§ 1 and
2, is subject to waiver and estoppel where the necessary facts are established
as in other instances of the application of waiver and estoppel to a statute of
limitation" controls in this case.
III. WAIVER AND ESTOPPEL
¶18 The factual record in this case is very limited, and many significant
questions remain unanswered. Vanguard's right to payment or any amount due is
not yet established, nor is LWCC's exact status as the main contractor. However,
Vanguard alleged that it attempted to call on the Bond well within the
limitation period; that it waited a substantial period before calling on the
Bond because of misrepresentation by LWCC; that it relied on assurances by
Granite that payment was merely delayed by questions as to the amount of a
chargeback or a delay penalty; and that Trilogy and Granite delayed decision by
eleven weeks before deciding, immediately after the limitation period expired,
that Vanguard was owed no money. We note that the bonding contract required this
decision be made "[w]ithin a reasonable period of time."4 These disputed facts alone
could support a waiver or estoppel argument.
¶19 We also return to the clear policy stated in Boren of "protecting
laborers and materialmen on public construction projects who have no lien rights
against public land or improvements." Modern construction contracts such as the
contract in this case may inherently involve both long delays before "final
payment," and complex disputes as to the final amount due. It is entirely
possible that "final payment" may not be determined and due for more than
a year after the last day of work. Allegedly, the main contractor in this case
concealed the fact of payment by School, and failed to inform Vanguard that it
disputed Vanguard's right to a final payment. It raised a defense to payment
only when demand was made on the Bond. The bonding company then failed to
admit or deny liability on the Bond for more than eleven weeks, until the
statute of limitations had run.5 If these allegations are true, the stated purpose of
the statute appears ill-served by denying recovery on the Bond.6
CONCLUSION
¶20 We find the grant of summary judgment in favor of Granite on the basis of
the statute of limitations was improvidently made at this time. We therefore
vacate it, and remand this matter to the district court.
¶21 VACATED AND REMANDED.
RAPP, J., concurs, and FISCHER, P.J., dissents.
FISCHER, P.J., dissenting:
¶1 In my view, the amendments to 61 O.S. § 2 discussed by the
Majority were made to conform the statute with other lien statutes. In my view,
section 2 is still "an ordinary statute of limitation, not an extinguishment
provision of the rights, liabilities and cause of action referred to in 61 O.S. 1961 §§ 1 and 2."
Phillips Petroleum Co. v. U.S. Fid. & Guar. Co., 1968 OK 23, ¶ 0, 442 P.2d 303, 304 (Syllabus 1).
Accepting as true Vanguard's argument that it was a direct subcontractor, it is
undisputed that Vanguard did not file suit against Granite within the one-year
limitation period required by section 2(A). Further, in its response to
Granite's motion for summary judgment, Vanguard only asserted that its delay in
filing this case resulted from its reliance on misleading statements by the
contractor and its employee. Any suit on the bond not filed within the one-year
limitation period is barred "unless the acts or conduct of the surety against
whom the judgment is sought operates to estop such surety from pleading the
limitation." Id. ¶ 0, 442 P.2d at 304 (Syllabus 2). No such "acts or
conduct" of Granite are asserted by Vanguard. I would affirm the judgment of the
district court and, therefore, respectfully dissent.