Platt Electric Supply, Inc. v. JC Northwest, Inc.

LANDAU, P. J.

The principal issue in this case is the extent to which defendant Polk County Housing Authority (PCHA) is liable to subcontractors when the general contractor failed to pay for work performed on a public housing project. Plaintiff Platt Electric Supply, Inc. (Platt) and defendant - cross-claim-plaintiff JC Northwest, Inc., dba Adolfs Electric (Adolfs), both subcontractors, contend that PCHA is liable under various public contracting statutes because it failed to obtain a bond from the general contractor to ensure that they would be paid. The trial court agreed, entered judgment against PCHA and awarded Platt attorney fees. PCHA appeals. Platt cross-appeals the award of attorney fees, arguing that the trial court should have awarded a larger amount. We reverse and remand on the appeal, which disposition renders the cross-appeal moot.

The relevant facts are not in dispute. In October 1993, PCHA solicited bids for construction of a public housing project in Independence. To take advantage of certain tax credit available through the Farmworker Housing Tax Credit Program, PCHA needed to secure completion of the project by the end of 1995. The solicitation did not attract any bids from contractors who were financially able to furnish performance bonds ordinarily required for public improvement projects. ORS 279.029(4)(b). PCHA determined that it did not have time to rebid the project without putting at risk the availability of the desired tax credits. As permitted by statute, ORS 297.029(5), it declared an emergency for the express purpose of excusing performance of the bond requirement and then awarded the contract to Cole Chaney, Inc. (Chaney), without the requirement that Chaney post a performance bond.

Chaney subcontracted the electrical work on the project to Adolfs, which, in turn, contracted with Platt for certain equipment and supplies. After work on the project was partially performed, Chaney defaulted on its payments to its subcontractors, including Adolfs and Platt, and was unable to complete construction.

Platt initiated this action against Adolfs, Chaney and PCHA. Adolfs cross-claimed against Chaney and PCHA. Pertinent to the appeal are the claims against PCHA. Platt alleged two claims against PCHA. First, it alleged that PCHA is liable under ORS 279.542 for failing or neglecting to require Chaney to obtain a performance bond. Second, in the alternative, it alleged a right to recovery on a theory of unjust enrichment. Adolfs claim against PCHA also is predicated on ORS 279.542.

Platt moved for summary judgment on its statutory claim against PCHA. The trial court granted the motion. Adolfs then moved for summary judgment on its statutory claim, and the trial court granted that motion. The trial court entered a final judgment in favor of Platt “on all of [Platt’s] claims against all Defendants.” The court also entered judgment in favor of Adolfs against PCHA. Following the entry of judgment, Platt and Adolfs petitioned for an award of attorney fees. The trial court awarded Platt a portion of its fee request and awarded Adolfs the full amount requested. The court entered supplemental judgments on the fee awards.

On appeal, PCHA first challenges the trial court’s entry of summary judgment on the statutory claims asserted by Platt and Adolfs. PCHA argues that it is not liable under ORS 279.542, because that statute applies only to a “public contracting agency” that fails or neglects to obtain a performance bond when one is otherwise required. According to PCHA, it is not a “public contracting agency” within the meaning of the statute. Platt and Adolfs both argue that ORS 279.542 applies, because PCHA is a “public contracting agency” and because it did fail or neglect to obtain a bond that otherwise was required under ORS 279.029.

Resolution of the dispute depends on the proper interpretation of the relevant statutes, which we determine in accordance with the methodology described in PGE v. Bureau of Labor and Industries, 317 Or 606, 610-12, 859 P2d 1143 (1993). We begin with the text in context and, if necessary, also examine the legislative history and other aids to construction. Id.

ORS 279.029 describes the process by which a public contracting agency may award a contract for a public improvement. Among other things, the statute requires that, when the contract is for a public improvement, the successful bidder must

“execute and deliver to the public contracting agency a good and sufficient bond, to be approved by the public contracting agency, in a sum equal to the contract price for the faithful performance of the contract. In lieu of a surety bond, the public contracting agency may permit the successful bidder to submit a cashier’s check or certified check in an amount equal to 100 percent of the contract price.”

ORS 279.029(4)(b). The same statute also provides an exception from thé obligation to provide a performance bond:

“In cases of emergency, or where the interest or property of the public contracting agency probably would suffer material injury by delay or other cause, the requirement of furnishing a good and sufficient bond for the faithful performance of any public contract may be excused, if a declaration of such emergency is made and concurred in by all members of the governing board of the public contracting agency.”

ORS 279.029(5). ORS 279.542 then describes the consequences to the public contracting agency of failing or neglecting to require a bond when one is otherwise required:

“If the contract is one for which a bond, cashier’s check or certified check as provided for in ORS 279.029 is required and the contractor fails to pay for labor or materials * * * and the officers of the public body which let the contract fail or neglect to require the person entering into the contract to execute the bond, cashier’s check or certified check:

* * * *

“(2) The public body and the officers authorizing the contract shall be jointly liable for the labor and materials used in the prosecution of any work under the contract * * * ”

Platt and Adolfs base their claims on ORS 279.542. By its terms, the statute imposes liability on a public body and its officers only if (1) the contract was one for which a bond was required; (2) the contractor failed to pay for labor and materials; and (3) the public contracting agency failed or neglected to require the contractor to obtain a bond as provided in ORS 279.029. Platt and Adolfs contend that each of those requirements has been demonstrated in this case. According to PCHA, ORS 279.542 applies only when a bond is required under ORS 279.029, and ORS 279.029 applies only to “public contracting agencies.” PCHA contends that, because it is not a “public contracting agency” within the meaning of ORS 279.029, this is not a case in which a bond is required. The parties then set about briefing at length and in detail the question whether PCHA is indeed a “public contracting agency” within the meaning of ORS 279.029. Both parties appear to assume that, if PCHA is a public contracting agency within the meaning of the statute, its contract with Chaney is one for which a bond was required, and PCHA is liable under ORS 279.542.

We need not address the parties’ arguments on that point, however. Even if PCHA is a public contracting agency within the meaning of the statute, its contract with Chaney still was not one for which a bond was required under ORS 279.029 for a very simple reason: In accordance with ORS 279.029(5), PCHA declared an emergency, which the statute itself declares has the effect of excusing the public body from the bond requirement. In other words, bonds are not required for emergency contracts.

Other language in ORS 279.542 compels the same conclusion. The statute imposes liability on public bodies only if they “fail or neglect” to require a contractor to post a bond when one is required. The language evinces an intention to impose liability only when public bodies do not act when they otherwise have an obligation to act. In this case, PCHA affirmatively declared an emergency for the express purpose of excusing the performance bond requirements. In so doing, it did not “fail or neglect” to do anything that the law otherwise requires. To the contrary, it took action that the law explicitly allows.

We acknowledge that none of the parties made the foregoing arguments about the proper construction of ORS 279.542. The arguments that they do raise, however, require us to interpret and apply ORS 279.542 generally. Indeed, their arguments require us more particularly to interpret and apply the meaning of the phrase “[i]f the contract is one for which a bond * * * is required.” Merely because both parties propose incorrect interpretations of the statute does not mean that we are bound to choose between the incorrect proposals. We cannot be painted into an interpretive comer by the arguments of the parties. Miller v. Water Wonderland Improvement District, 326 Or 306, 309 n 3, 957 P2d 720 (1998) (“[pjarties may not prevent a court from noticing and invoking an applicable statute by relying only on other sources of law”); Stull v. Hoke, 326 Or 72, 77, 948 P2d 722 (1997) (“In construing a statute, this court is responsible for identifying the correct interpretation, whether or not asserted by the parties.”). We therefore conclude that Platt and Adolfs were not entitled to judgment under ORS 279.542 as a matter of law and that the trial court erred in entering summary judgment on the statutory claims against PCHA.

PCHA next argues that the trial court erred in entering judgment “on all of [Platt’s] claims against all Defendants.” PCHA contends that it was improper to enter summary judgment on all claims, because the parties’ motions were directed at the statutory claims only. The claim for unjust enrichment was not the subject of the motions. Platt contends that the issue is “insignificant or moot,” because the trial court correctly entered summary judgment on the statutory claims; Platt offers no argument that it was appropriate to enter judgment on a claim that was not the subject of the parties’ summary judgment motions. Adolfs does not respond to PCHA’s argument. In light of the fact that we conclude that the trial court erred in entering summary judgment on the statutory claims, the trial court’s entry of judgment on the unjust enrichment claim was neither insignificant nor moot but, rather, error.

Finally, Platt asserts on cross-appeal that the trial court erred in failing to award it the full amount of the attorney fees that it requested. Given our disposition of the appeal, Platt was entitled to no fees, and the supplemental judgment awarding fees must be vacated.

Reversed and remanded on appeal; remanded on cross-appeal with instructions to vacate the supplemental judgment awarding attorney fees.