Summary
In Tempco Heating Cooling, Inc v A Rea Construction, Inc, 178 Mich. App. 181; 443 N.W.2d 486 (1989), this Court held that strict compliance with the notice requirements of the statute was necessary in a case where the bond was written in direct compliance with the statute.
Summary of this case from Royalite Co v. Federal Ins Co.Opinion
Docket No. 105479.
Decided July 6, 1989.
Snyder Handler, P.C. (by Stanley Weingarden and David S. Snyder), for plaintiff.
Allen C. Ingle, for defendants.
Before: BEASLEY, P.J., and WEAVER and CAVANAGH, JJ.
Defendants A. Rea Construction, Inc., and American Casualty Company appeal as of right from a circuit court order granting judgment for plaintiff and from an order denying defendants' motion for new trial. We reverse and remand.
I
Defendant A. Rea Construction, Inc., was a general contractor for the Walter P. Reuther Psychiatric Hospital construction project in Westland, Michigan. Williamson Mechanical, Inc., was a subcontractor to Rea Construction. Plaintiff was a subcontractor to Williamson. A payment bond was obtained pursuant to MCL 129.203; MSA 5.2321(3), naming Rea Construction as principal and defendant American Casualty Company as surety.
Plaintiff is attempting to recover on the payment bond for Williamson Mechanical's failure to pay plaintiff $16,900 for labor furnished and materials supplied in connection with the Reuther Psychiatric Hospital project. Plaintiff alleges that by certified mail dated March 28, 1983, it sent to both Rea Construction and the State of Michigan, Department of Management and Budget, a notice of furnishing materials or labor on a bonded project. This notice indicated a work commencement date of February 16, 1983. Plaintiff asserts August 28, 1983, as the last date labor was performed or materials supplied. Stating its reliance on the payment bond for payment, plaintiff notified the State of Michigan, by certified letter dated September 15, 1983, of the $16,900 outstanding from Williamson Mechanical. On September 16, 1983, plaintiff sent a similar notice to American Casualty.
Plaintiff filed suit in Oakland Circuit Court on October 26, 1983, alleging liability of Rea Construction and American Casualty pursuant to the payment bond. No other defendants were named in connection with the Reuther Psychiatric Hospital, project. However, plaintiff named in separate counts, in connection with an unrelated construction project involving Detroit Osteopathic Hospital, Williamson Mechanical and certain of Williamson's individual officers.
Before answering, Rea Construction and American Casualty moved to dismiss for lack of jurisdiction pursuant to MCL 129.209; MSA 5.2321(9). The court denied this motion, ruling that the statute was not jurisdictional and that the actions should remain joined in order to prevent multiplicity of litigation. Rea Construction and American Casualty later moved for summary disposition, arguing that plaintiff had failed to satisfy the statutory notice requirements of MCL 129.207; MSA 5.2321(7). After plaintiff responded with an affidavit indicating that the notice requirements had been satisfied, the trial court denied defendants' motion on the basis that there existed genuine issues of material fact.
When Williamson Mechanical filed for bankruptcy on March 7, 1985, an automatic stay was issued. As to Rea Construction and American Casualty, however, this stay was lifted and the matter reinstated on September 12, 1986, on the basis that plaintiff's count against Rea Construction and American Casualty did not involve Williamson.
On December 11, 1986, the trial court orally directed the parties to submit by February 1, 1987, a stipulation of facts plus proposed findings of fact and rulings of law so that the court could decide the matter on submission of briefs. When the parties failed to comply, the trial court by letter of April 17, 1987, set forth a briefing schedule and adjourned the "hearing" date to June 1, 1987. When the parties again failed to comply, the trial court on May 28, 1987, issued another letter adjourning the hearing date to July 1, 1987, and requesting the parties to file their own statements of facts with their briefs. The court indicated that no further adjournments would be granted.
Defendants assert that they never received the letter of May 28, 1987, and that it was not until July 1, 1987, when they received a copy of plaintiff's brief, that they were alerted to a problem. When defendants then contacted the trial judge's clerk, they were informed that it was too late to file a brief and that the matter had been submitted for decision.
On July 30, 1987, the trial court rendered judgment in favor of plaintiff on its payment bond claim. On November 6, 1987, the trial court denied defendants' motion for a new trial. Defendants appeal as of right.
II
On appeal, defendants argue that the trial court erred in determining that MCL 129.209; MSA 5.2321(9) was a venue statute and not jurisdictional. We disagree with this contention.
MCL 129.209; MSA 5.2321(9) provides:
An action instituted on the payment bond shall be brought only in the appropriate court in the political subdivision in which the contract was to be performed. No action shall be commenced after the expiration of 1 year from the date on which final payment was made to the principal contractor.
Although defendants' motion was one to dismiss, the trial court treated it as a motion, for change of venue. Such action was within the trial court's powers. See Whiting v Neuman, 11 Mich. App. 201, 208; 160 N.W.2d 795 (1968).
Defendants misplace reliance upon Peplinski v Employment Security Comm, 359 Mich. 665; 103 N.W.2d 454 (1960). In that case, the relevant statute was MCL 421.38; MSA 17.540, which gave the circuit court authority to review decisions of the Employment Security Commission Appeal Board, providing in pertinent part: "[t]he circuit court . . . shall have power to review questions of fact and law on the record made before the referee and the appeal board." Id. at 667. The Michigan Supreme Court ruled that this statute was jurisdictional and that therefore the general provisions of those statutes and rules relating to venue and jurisdiction were inapplicable. Id. at 668.
Contrary to the statute in Peplinski, which case appears to have been decided on the specific language of the statute there involved, the statute in this case empowers the circuit court to entertain actions pursuant to a payment bond. Unlike the language of the statute in Peplinski, the language of the instant statute is not directed towards the circuit court's authority to hear and review specific matters and does not limit the court's scope of review. Instead, the statute concerns itself with where the action "shall be brought."
Where, as here, a particular statute does not contain language of jurisdiction, we believe that the statute is not one of jurisdiction but of venue, governed by the Revised Judicature Act, MCL 600.1651; MSA 27A.1651, which was intended to allow the circuit court to act upon matters brought in an improper county unless venue was properly transferred in the manner provided by court rule. Accordingly, the trial court did not err in finding the statute to be one of venue.
The Revised Judicature Act, MCL 600.1651; MSA 27A.1651, provides:
An action brought in a county not designated as a proper county may nevertheless be tried therein, unless a defendant moves for a change of venue within the time and in the manner provided by court rule, in which case the court shall transfer the action to a proper county on such conditions relative to expense and costs as provided by court rule and section 1653. The court for the county to which the transfer is made shall have full jurisdiction of the action as though the action had been originally commenced therein.
Brown v LTV Aerospace Corp, 394 Mich. 702; 232 N.W.2d 656 (1975), reh den 395 Mich. 912 (1975), ruled that § 1651 would not have changed the result in Peplinski, supra. However, we note that this holding was predicated on the precise statutory language at issue in Peplinski, which was determined to be language of jurisdiction and not of venue. Brown, supra at 719.
Next we address the issue of whether the trial court erred by refusing to change venue on grounds of improper joinder. MCL 600.1641; MSA 27A.1641 authorizes venue to be had in any county in which one of the joined causes of action could be tried, subject to separation and change of venue as provided by court rule. At the time this proceeding took place, the court rule governing separation of actions was GCR 1963, 406. In cases of improper joinder, the rule provided that venue of the wrongly joined action was to be transferred to a proper county upon timely motion. In cases of proper joinder, the rule provided that venue could be retained or could be transferred in whole or in part at the discretion of the trial judge.
GCR 1963, 406 provided:
When causes of action are joined and when 1 or more of the causes of action, had separate actions been filed, would not have been proper in the county where venue for the joined action is laid, a defendant may move the court to separate the causes of action so joined and to transfer the cause or causes of action for which venue would not have been proper to a proper county.
(1) Improper Joinder. If such causes of action were improperly joined, the court must, on timely motion, order the cause or causes for which venue would not have been proper transferred to a proper county, at plaintiff's cost, which may include reasonable compensation for defendant's expense, including reasonable attorney's fees, in attending in the wrong county.
(2) Proper Joinder. If such causes of action were properly joined, the court in its discretion may order, upon timely motion, the transfer of all causes, the separation and transfer moved for, or it may retain the whole case for trial.
Here, Count I asserted a claim against Rea Construction and American Casualty under the payment bond on the Reuther Hospital construction project. Counts II and III asserted claims against Williamson Mechanical and certain of its officers in connection with an unrelated hospital construction project. The trial court specifically declined to separate the actions because, in the court's judgment, to do so would have resulted in multiplicity of litigation.
We find the actions to have been properly joined. Therefore venue was subject to change or retention in the trial court's discretion. Permissive joinder was allowed in order to "promote the convenient administration of justice" — i.e., where no prejudice to any party would result. GCR 1963 206.1(2); Gervais v Annapolis Homes, Inc, 377 Mich. 674, 679; 142 N.W.2d 7 (1966). No prejudice to any party was demonstrated in this case. The trial court did not abuse its discretion. Id. at 680.
III
We disagree with defendants' argument that they were denied due process of law when the trial court proceeded to decide the action on briefs and defendants were unable to file their briefs.
The trial court's letter to the parties dated May 28, 1987, satisfied the twenty-eight-day notice requirement of MCR 2.501(C). This notice was not misleading and was reasonably calculated, under all the circumstances, to apprise the parties of the pendency of the action and afford them an opportunity to present their objections. See Trussell v Decker, 147 Mich. App. 312, 324; 382 N.W.2d 778 (1985).
Even had defendants not received the notice of May 28, 1987, defendants were in default of the court's previous notice of April 17, 1987, setting forth May 22, 1987, as the date defendants' briefs were to be filed and June 1 as the date set for decision, which notice defendants clearly received. Under the facts of this case, therefore, it appears that defendants were derelict in their duty to obtain an extension of time, to inquire of the court as to further proceedings, or to request any other appropriate relief. Instead, defendants did nothing. Therefore their allegation of denial of due process rights is not credible.
Nor is there any merit in defendants' challenge to the trial court's procedure in this case, since defendants consented to the procedure. After the trial court set forth deadlines of February 1, 1987, and June 1, 1987, for submission of briefs, defendants never objected. Moreover, defendants' counsel wrote to plaintiff on April 27, 1987, suggesting that, since the parties could not agree on a stipulation of facts, they should set forth their various arguments in their briefs along with appropriate supporting attachments. This letter clearly refutes defendants' position that defendants would not have agreed to submitting the matter on briefs had they received the notice of May 28, 1987.
Accordingly, we find that the trial court's procedure did not deny defendants their rights to due process of law. See Boddie v Connecticut, 401 U.S. 371, 378-380; 91 S Ct 780; 28 L Ed 2d 113 (1971).
IV
We find merit in defendants' argument that the trial court erred in finding that plaintiff had strictly complied with the notice requirements of MCL 129.207; MSA 5.2321(7).
Plaintiff did not have a direct contractual relationship with the principal contractor, Rea Construction. Therefore, in order to recover on the payment bond, plaintiff was required by the statute to give the principal contractor written notice of materials and labor furnished, to whom and at which site, within thirty days after providing the first of such materials or labor. Within ninety days from the date on which the last materials or labor were provided, plaintiff was also required by statute to give the principal contractor, as well as the participating governmental unit, written notice of the amount claimed and the party to whom the materials or labor were provided. MCL 129.207; MSA 5.2321(7).
Strict compliance with these notice requirements was necessary. Pi-Con, Inc v A J Anderson Construction Co, 169 Mich. App. 389, 394; 425 N.W.2d 563 (1988); Square D Environmental Corp v Aero Mechanical, Inc, 119 Mich. App. 740, 744; 326 N.W.2d 629 (1982); John A Hall Construction Co v Boone Darr, Inc, 102 Mich. App. 786, 795-796; 302 N.W.2d 850 (1981), lv den 414 Mich. 874 (1982). Here, the trial court's finding that plaintiff had strictly complied was clearly erroneous. MCR 2.613(C); Birkenshaw v Detroit, 110 Mich. App. 500, 508; 313 N.W.2d 334 (1981); Sumpter v Kosinski, 165 Mich. App. 784, 807; 419 N.W.2d 463 (1988); Holland v Michigan National Bank-West, 166 Mich. App. 245, 261-262; 420 N.W.2d 173 (1988).
With respect to the thirty-day notice requirement, the date of first performance was in dispute by the parties. In order to comply with the thirty-day requirement plaintiff would have had to furnish the first material or labor by February 28, 1983, which is the date found by the trial court as the date of first performance. However, the only evidence establishing February 28, 1983, as the beginning date was plaintiff's affidavit submitted nearly 2 1/2 years later, in response to defendants' motion for summary disposition, which affidavit contradicted plaintiff's Notice of Furnishing prepared only a few weeks after the date of first performance and expressly listing February 16, 1983, as the beginning date. In light of the ambiguity resulting from these facts, we conclude that the trial court's finding of strict compliance with the thirty-day requirement was clearly erroneous. Birkenshaw, supra; Holland, supra.
With respect to the ninety-day notice requirement, the date of final performance was found by the trial court to be August 28, 1983. Therefore plaintiff needed to establish that notice was given within ninety days of this date. Although the court found that plaintiff had timely notified the Michigan Department of Management and Budget and Rea Construction's surety, American Casualty Company, the court made no finding that statutory notice was given to Rea Construction as the principal contractor. It may be surmised that the court agreed with plaintiff's argument that such notice was satisfied when plaintiff filed its complaint on October 26, 1983. Because the statute provides for the ninety-day notice as a prerequisite to a right of action, because plaintiff presented no proofs that the ninety-day notice requirement was satisfied as to the principal contractor, and because the trial court did not make a finding as to this issue, we conclude that the trial court's finding of strict compliance with the ninety-day requirement was clearly erroneous. Birkenshaw, supra; Holland, supra.
In light of the foregoing, the trial court's finding that the plaintiff had strictly complied with the requirements of MCL 129.207; MSA 5.2321(7) was against the great weight of the evidence. See Vargo v Denison, 140 Mich. App. 571, 574; 364 N.W.2d 376 (1985). Therefore the trial court abused its discretion in refusing defendants' request for a new trial pursuant to MCR 2.611(A)(e). Id. at 573.
Reversed and remanded for a new trial.