APAC-Atlantic, Inc. v. General Insurance Co.

PRESENT: Hassell, C.J., Lacy, Keenan, Koontz, Lemons, and Agee,
JJ., and Russell, S.J.
APAC-ATLANTIC, INC.
OPINION BY
v. Record Number 061106 JUSTICE G. STEVEN AGEE
April 20, 2007
GENERAL INSURANCE COMPANY
OF AMERICA
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
Gaylord L. Finch, Jr., Judge
APAC-Atlantic, Inc. (“APAC-Atlantic”) appeals the judgment
of the Circuit Court of Fairfax County, which granted a motion
for summary judgment filed by defendant General Insurance
Company of America (“General Insurance”) and entered final
judgment in its favor. APAC-Atlantic contends the circuit court
erred in finding APAC-Atlantic’s motion for judgment was not
timely because it was filed after the expiration of the
limitations period found in Code § 2.2-4341(C). For the reasons
set forth below, we will affirm the judgment of the circuit
court.
I. BACKGROUND AND MATERIAL PROCEEDINGS BELOW
The parties stipulated to the following facts: General
Insurance is the surety on two payment bonds issued in
connection with two separate general construction contracts
awarded by the Virginia Department of Transportation (“VDOT”) to
New Construction, Inc. (“New Construction”). The payment bonds
cover obligations New Construction incurs during its performance
of the VDOT contracts. Both payment bonds state: “if [New
Construction] shall promptly pay all just claims . . . then this
obligation is to be void; otherwise; to be and remain in full
force and virtue in law.”
New Construction subcontracted some of the work on both
VDOT projects to APAC-Atlantic. APAC-Atlantic timely completed
work on one project on August 28, 2003 and on the second project
on October 9, 2003. These dates are the respective “day[s] on
which the person bringing such action last performed labor or
last furnished or supplied materials” under Code § 2.2-4341(C).
New Construction did not pay APAC-Atlantic the full amount owed
for that work, and it filed for bankruptcy protection in
February 2004, owing APAC-Atlantic $150,905.95 on one of the
projects and $217,008.48 on the other.
On December 3, 2004, APAC-Atlantic filed a motion for
judgment against General Insurance, alleging that under the
payment bonds General Insurance was liable in its capacity as
surety for the amounts still owed by New Construction. General
Insurance filed an answer and grounds of defense alleging, inter
alia, that the “[b]onds were issued pursuant to [Code] § 2.2-
4337, the Virginia Public Procurement Act [“VPPA”], and APAC[-
Atlantic]’s action is barred by the statute of limitations of
[Code] § 2.2-4341.” General Insurance contended that under the
Code § 2.2-4341(C) limitations period, APAC-Atlantic was
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required to have filed its motion for judgment on the respective
bonds by August 28, 2004 and October 9, 2004. The parties filed
cross motions for summary judgment, which were argued to the
circuit court under the stipulated facts. In its final order
dated March 4, 2006, the circuit court denied APAC-Atlantic’s
motion for summary judgment, granted General Insurance’s motion,
and entered judgment “in favor of General [Insurance] on all
Counts in this action.”
We awarded APAC-Atlantic this appeal.
II. ANALYSIS
APAC-Atlantic contends the trial court erred by failing to
find “that under the language of the payment bonds [APAC-
Atlantic’s motion for judgment] was timely filed.” Citing
Reliance Insurance Co. v. Trane Co., 212 Va. 394, 184 S.E.2d 817(1971), APAC-Atlantic contends the plain language of the payment
bonds can – and in this case does – provide a longer period of
time than the statutorily prescribed period for bringing suit.
Specifically, APAC-Atlantic asserts the limitations period in
Code § 2.2-4341(C) does not apply in the case at bar because the
plain language of the payment bonds states they are “to be and
remain in full force and virtue in law” unless New Construction
pays the “claims for labor and material.” APAC-Atlantic
contends this language extends a timely right of action on the
bonds beyond the statutorily prescribed period. Furthermore,
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APAC-Atlantic asserts Code § 2.2-4341(C) does not apply because
the payment bonds do not expressly refer to that statute. We
disagree.
The parties do not dispute that the underlying contracts
for which the payment bonds were issued fall under the VPPA,
Code § 2.2-4300 et seq. “The VPPA is a specific statute
relating to the acquisition of goods and services by public
bodies [and] the provisions of that Act . . . apply to disputes
arising from goods or services provided under the VPPA.” Mid-
Atlantic Business Communications, Inc. v. Virginia Dep’t of
Motor Vehicles, 269 Va. 51, 56, 606 S.E.2d 835, 838 (2005).
Code § 2.2-4341(C) of the VPPA states: “Any action on a payment
bond shall be brought within one year after the day on which the
person bringing such action last performed labor or last
furnished or supplied materials.” By its plain terms, this
limitation period is generally applicable to “[a]ny action on a
payment bond” issued under the VPPA.
The bonds at issue in Reliance Insurance Co., on which
APAC-Atlantic relies, were substantially different than those at
issue here. There, the parties’ contract expressly permitted a
subcontractor to sue the principal even though the applicable
statute only permitted such an action when certain conditions
were met and did not expressly include an action by a
subcontractor. Reliance Insurance Co., 212 Va. at 395, 184
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S.E.2d at 818. Because the parties specifically agreed to those
terms and the applicable statute did not prohibit them from
doing so, we held that the parties were free to include “broader
coverage than that required by the provisions” of the statute.
Id. In contrast, the payment bonds in the case at bar contain
no provision permitting a claimant to bring suit after the
expiration of the limitations period found in Code § 2.2-
4341(C).
APAC-Atlantic relies on the phrase “otherwise; to be and
remain in full force and virtue in law” to support its
contention. However, this language does not establish a new
period during which claimants can file an action, nor does it
incorporate a limitations period contained in a statute other
than Code § 2.2-4341(C). It simply establishes that General
Insurance’s obligation would only arise if New Construction did
not pay a claim.
Also without merit is APAC-Atlantic’s contention that the
limitations period in Code § 2.2-4341(C) does not apply because
the payment bonds failed to expressly incorporate this
provision. For example, the statute of limitations prescribed
by the Uniform Commercial Code for disputes arising from
contracts for the sale of goods (Code § 8.2-725) applies to UCC
contracts regardless of whether such contracts expressly
incorporate that limitations period. See Code § 8.01-246.
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Similarly, the statute of limitations for disputes arising from
goods or services provided under the VPPA applies to contracts
subject to the VPPA, regardless of whether they expressly
incorporate Code § 2.2-4341(C). Code § 2.2-4300(B) provides
that the VPPA “shall apply whether the consideration is monetary
or nonmonetary.” Because the payment bonds in the case at bar
were issued in accordance with the VPPA, disputes arising under
them are subject to the limitations period contained in the VPPA
– Code § 2.2-4341(C) – unless the parties specifically contract
for a different time limitation.∗ See Reliance Insurance Co.,
212 Va. at 395, 184 S.E.2d at 818. The VPPA provision does not
need to be incorporated by reference, but is applicable because
of the nature of the dispute.
∗
APAC-Atlantic contends the five-year limitations period
under Code § 8.01-246(2), which is applicable to written
agreements, would apply instead. Apart from the fact that the
parties made no agreement to use any limitations period other
than Code § 2.2-4341(C) under the VPPA, under settled principles
of statutory interpretation, where two statutes are potentially
applicable, “the two should be harmonized, if possible, and
where they conflict,” the more specific statute applies. See
Frederick County Sch. Bd. v. Hannah, 267 Va. 231, 236, 590
S.E.2d 567, 569 (2004) (quoting Virginia Nat’l Bank v. Harris,
220 Va. 336, 340, 257 S.E.2d 867, 870 (1979)). The five-year
general limitations period of Code § 8.01-246(2) would not apply
here, because under the VPPA, Code § 2.2-4341(C) is specifically
applicable to VPPA-derived actions. “Every action for which a
limitation period is prescribed by law must be commenced within
the period prescribed in this chapter unless otherwise
specifically provided in this Code.” Code § 8.01-228 (emphasis
added).
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III. CONCLUSION
Accordingly, actions on the payment bonds had to be brought
under the one-year limitations period contained in Code § 2.2-
4341(C). Because APAC-Atlantic finished work on each project in
August and October 2003, its motion for judgment filed in
December 2004 was not timely. The circuit court thus did not
err in granting General Insurance’s motion for summary judgment
and entering judgment on behalf of General Insurance. We will
therefore affirm the judgment of the circuit court.
Affirmed.
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