Garff v. JR Bradley Company ( 1968 )

OPINION

By the Court,

Thompson, C. J.:

This is an appeal from summary judgments in favor of suppliers of materials and labor (J. R. Bradley Company and Ray Heating Products, Inc.) to a subcontractor (Monroe Plumbing and Heating), and against the general contractors (Ryberg & Garff Construction Company and U.S. Enterprises of Reno, Inc.) and their surety (Federal Insurance Company). The contractors and surety also appeal from the refusal of the district court to enter summary judgments for them.

The cases arise out of the construction of the Carson City law enforcement facility. The subcontractor failed to fully pay the suppliers. Consequently, the suppliers each brought suit upon the payment bond given by the general contractors and their surety pursuant to NRS 339.025(b). The amount claimed due each supplier is not disputed. A direct contractual relationship existed between each supplier and the subcontractor, thus placing each case within the provisions of NRS 339.035(2) providing for suit upon a payment bond only when a claimant has given the notices provided for by sub-paragraphs (a) and (b) thereof.¹ Neither claimant gave the 30-day notice required by subparagraph (a). The general contractors, however, had actual knowledge of the matters specified in that subparagraph. Each claimant did give the 90-day notice required by subparagraph (b).

The general contractors and surety contend that compliance with the notice provisions is a precondition to a claim for relief on the bond. Since neither claimant gave the 30-day notice his claim for relief must fail. On the other hand, the claimants each argue that the coverage of the bond here given is broader than required by NRS 339.025(b),² and, upon the authority of Royal Indemnity Co. v. Special Service, 82 Nev. 148, 413 P.2d 500 (1966), recovery on the bond is allowable. Subordinately, the claimants suggest that actual knowledge on the part of the contractors of the matters specified in subparagraph (a) of NRS 339.035(2) worked an estoppel against, or a waiver by, the contractors of any right to rely upon the claimants’ failure to give the 30-day notice.

In ruling for the suppliers and against the general contractors and surety, the district court did not reach the notice issue. That court reasoned that the holding of the Royal Indemnity case controlled this litigation and permitted recovery on the payment bond.

It is our opinion that the Royal Indemnity case is inapposite. It is also our view that the general contractors did nothing to create an estoppel or to waive their rights with regard to the 30-day notice requirement, and that compliance by the suppliers with such requirement is a precondition to suit on the bond. Accordingly, we reverse the summary judgments entered below, and remand with direction to enter summary judgment for the general contractors and surety in each case.

1. In the Royal Indemnity case we held that the surety was liable on a bond where, by expressly denying liability for prior materials supplied, the surety, by implication, accepted liability for materials supplied to the contractor after the date of the bonding agreement. There, the bond afforded coverage for labor and material bills incurred by the contractor, even though the contractor’s licensing statute pursuant to which the bond was furnished did not specifically require such coverage.

Royal Indemnity is not on point with the instant matter. The statute with which we are concerned (NRS 339.025(b)) requires the contractor to furnish a payment bond “solely for the protection of claimants supplying labor or materials * * * to any of his subcontractors, in the prosecution of the work provided for in such contract.” The bond here in question was given pursuant to the statute and conformed with it. The condition of the bond is: “if said contractor * * * shall fail to pay, or cause to be paid, all just debts contracted by such contractor or any of his subcontractors, for labor performed upon or materials furnished for the contractor, * * * then said surety shall pay * * * .” The bond did not provide a broader coverage than contemplated by the statute, thus removing this case from the reach of the doctrine announced in Royal Indemnity Co. v. Special Service, supra.

2. The statutory preconditions to suit upon a payment bond are specified in NRS 339.035(2) (a) and (b). The claimant must, within 30 days after furnishing the “first of such materials or performing the first of such labor” serve on the contractor a written notice of the nature of the materials furnished or labor performed, identifying the person contracting for the labor or materials, and the site of performance. The claimant must also, within 90 days after performing the last of the labor or furnishing the last of the material, give the contractor written notice of the amount claimed, and the name of the person for whom the work was performed or the material supplied. As before stated, the 30-day notice was not given by the claimants in this case; the 90-day notice was. The statute allows suit on the bond “only” if each notice is given.³

The claimants assert that the general contractors and surety are estopped to rely upon the failure of the claimants to comply with the 30-day notice requirement, since the contractors had actual knowledge that the claimants had performed work and furnished materials. Such actual knowledge does not create an estoppel. The statute places a duty upon the suppliers to give the notices therein specified. The contractors did not represent to the claimants that they need not comply with the notice requirements. Mere knowledge on the part of the contractors that the claimants were on the job or supplied materials does not constitute a representation by the contractors that the claimants need not follow the statute in perfecting their claims for relief on the bond. Absent such a representation, and a reliance thereon, the doctrine of estoppel cannot apply. Woods v. Bromley, 69 Nev. 96, 241 P.2d 1103 (1952); Farmers & Merchants National Bank v. Eureka Land & Stock Co., 56 Nev. 218, 49 P.2d 354 (1935); State ex rel. Thatcher v. Court, 46 Nev. 133, 207 P. 1105 (1922). Neither did the contractors waive their rights to insist that the claimants comply with the preconditions to suit upon the bond. Nothing appears in the record to suggest that this occurred.

As we see it, contractors frequently are aware of the identity of the suppliers of materials to subcontractors; frequently know the identity of those performing labor for the subcontractor. However, such awareness or knowledge, standing alone, does not erase the duty which the legislature has placed upon claimants to give the 30- and 90-day notices before becoming eligible to file suit on a payment bond given pursuant to NRS 339.-025(b).

The legislative provision for suit on the bond creates a remedy in circumstances where none existed before. It is not unfair to demand compliance with the preconditions for suit. Fairness does not suggest that we force the general contractor to pay twice (the subcontractor had been given funds with which to pay the suppliers) when the suppliers have failed to take essential steps to perfect their claims against the bond.

For the reasons expressed we reverse the summary judgments entered below, and remand with direction to enter summary judgments for the general contractors and surety in each case.

Collins, Batjer, and Mowbray, IL, concur.

1 NRS 339.035(2) reads: “Any claimant who has a direct contractual relationship with any subcontractor of the contractor who gave such payment bond, but no contractual relationship, express or implied, with such contractor, may bring an action on the payment bond only: (a) If he has, within 30 days after furnishing the first of such materials or performing the first of such labor, served on the contractor a written notice which shall inform the latter of the nature of the materials being furnished or to be furnished, or the labor performed or to be performed, and identifying the person contracting for such labor or materials and the site for the performance of such labor or materials; and (b) After giving written notice to such contractor within 90 days from the date on which the claimant performed the last of the labor or furnished the last of the materials for which he claims payment. Each written notice shall state with substantial accuracy the amount claimed and the name of the person for whom the work was performed or the material supplied, and shall be served by being sent by registered mail, postage prepaid, in an envelope addressed to such contractor at any place in which he maintains an office or conducts business, or at his residence.”

2 NRS 339.025(b) provides: “A payment bond in an amount to be fixed by the contracting body, but not less than 50 percent of the contract amount. Such bond shall be solely for the protection of claimants supplying labor or materials to the contractor to whom the contract was awarded, or to any of his subcontractors, in the prosecution of the work provided for in such contract.”

3 We have not found other state statutes containing the “double notice” requirement. Such appears to be peculiar to Nevada. Consequently, case authority squarely on point is lacking.