BERNSTEIN, J.
This case concerns several facets of the public works bond act (PWBA), MCL 129.201 et seq. First, it poses the question of whether actual notice is required for a sub-subcontractor to recover on a payment bond when that sub-subcontractor has complied with the notice requirements set
forth in MCL 129.207. Second, the case raises the question of whether a PWBA claimant may recover a time-price differential and attorney fees that were provided for by the claimant's contract with a subcontractor, but were unknown to the principal contractor holding the payment bond as well as the principal's surety. Finally, we consider what postjudgment interest is appropriate under the PWBA. We hold that the PWBA contains no actual notice requirement for claimants that comply with the statute, that the trial court properly awarded a time-price differential and attorney fees on past-due invoices to plaintiff Wyandotte Electric Supply Company (Wyandotte), and that the trial court erred in awarding postjudgment interest under MCL 600.6013(7). Accordingly, we affirm the judgment of the Court of Appeals with regard to the first two issues and reverse with regard to the third. We remand this case to the trial court for further proceedings consistent with this opinion.
In 2009 and 2010, the south wing of the Detroit Public Library was renovated. Defendant KEO & Associates, Inc. (KEO) was the principal contractor for this project.
ETS in turn subcontracted with Wyandotte for materials and supplies, making Wyandotte a sub-subcontractor from KEO's perspective. ETS and Wyandotte first formed a relationship in 2003, when they entered into an "open account" agreement that governed ETS's purchases from Wyandotte. Under this agreement, ETS was to pay a "[t]ime price differential" of 1.5% per month (18% per annum) on invoices unpaid after 30 days.
On March 3, 2010, when it began work on the library project, Wyandotte sent letters to KEO and Westfield asking for a copy of the payment bond related to the library renovation project. The letter, on Wyandotte's letterhead, referred to the "Detroit Public Library South Wing with [ETS.]" According to Wyandotte, KEO provided a copy of the payment bond the next day. One week later, on March 10, 2010, Wyandotte sent KEO a 30-day "Notice of Furnishing" in accordance with MCL 129.207, explaining that it was one of ETS's suppliers. Wyandotte also sent copies of the letter to Westfield, the library, and ETS. As specified by MCL 129.207, Wyandotte sent these notices by certified mail. Additionally, Wyandotte sent the notices with return receipts requested. The notices to Westfield, ETS, and the library were all received. It is unclear what happened to the notice sent to KEO — United States Postal Service tracking indicated that it was at the Detroit Post Office on March 13, 2010, but it apparently never reached its destination. KEO states that it never received the 30-day notice. Again in accordance with the requirements of MCL 129.207, Wyandotte provided a 90-day notice of furnishing on November 1, 2010, to KEO, Westfield, ETS, and the library, stating that its last
Throughout the renovation project, KEO made progress payments to ETS totaling more than $248,000,
On January 28, 2011, Wyandotte filed a claim directly with Westfield to recover on the payment bond. Westfield denied the claim, asserting a lack of liability. Consequently, on March 14, 2011, Wyandotte filed suit against ETS, KEO, and Westfield. KEO filed a cross-claim against ETS on March 29, 2011. ETS had apparently gone out of business and its president had declared personal bankruptcy, so it failed to appear and was defaulted. Wyandotte continued to pursue claims against KEO and Westfield on the basis of the surety bond.
On September 7, 2011, Wyandotte moved for summary disposition under MCR 2.116(C)(10), which tests the factual sufficiency of a complaint. The trial court heard oral argument on whether there was a valid bond claim when KEO had not received the 30-day notice of furnishing and whether Wyandotte could recover the 1.5% time-price differential and attorney fees on a bond claim. On November 4, 2011, the trial court granted Wyandotte's motion in part, concluding that there was a valid bond claim because Wyandotte had complied with the notice requirements, and that Wyandotte could recover the time-price differential as well as attorney fees. The only remaining issue was the amount of damages, and a bench trial was held on that narrow question. The trial court found that the unpaid balance owed to Wyandotte was $154,343.29, that Wyandotte was entitled to a total time-price differential of $76,403.44, and that Wyandotte was entitled to $30,000 in attorney fees.
Defendants first contend that Wyandotte did not have a cause of action against them because KEO did not receive Wyandotte's 30-day notice. We review a trial court's summary disposition order de novo. Debano-Griffin v. Lake Co., 493 Mich. 167, 175, 828 N.W.2d 634 (2013). Likewise, questions of statutory interpretation are subject to review de novo. Elba
Traditionally, public property cannot be the subject of a lien unless a statute specifically permits it. Knapp v. Swaney, 56 Mich. 345, 347, 23 N.W. 162 (1885). The Legislature enacted the PWBA to protect contractors and suppliers working on public projects who, unlike their private-works counterparts, have no recourse when other contractors default on their obligations. Adamo Equip. Rental Co. v. Mack Dev. Co., Inc., 122 Mich.App. 233, 236, 333 N.W.2d 40 (1982), citing Ford v. State Bd. of Ed., 166 Mich. 658, 132 N.W. 467 (1911). While contractors and suppliers can place mechanics' liens on private projects, the PWBA protects those workers on public projects by requiring the principal contractor on a public project valued at $50,000 or more to obtain a payment bond. MCL 129.201. Payment bonds serve to protect subcontractors in privity with a principal contractor, as well as remote sub-subcontractors like Wyandotte, who are not fully compensated for their contributions to a public project. MCL 129.203. The principal contractor who obtains the bond, as well as the principal's surety if applicable, is liable to compensate suppliers of labor or materials. Id.
MCL 129.207 provides for recovery under a principal contractor's payment bond, but prescribes a two-step notice procedure for a remote party from the principal contractor's perspective, that is, one lacking a direct contractual relationship with the principal contractor:
Defendants' argument is that there can be no liability under the PWBA because KEO never actually received the 30-day notice — i.e., there was a failure of service.
Furthermore, service of notice is mandatory under MCL 129.207, because the statute declares that a party "shall not have a right of action upon the payment bond unless" the two notices are provided and states that the two notices "shall inform" the specified parties of certain information. However, the Legislature did not specify that actual receipt of notice is a requirement of the PWBA, although it has done so in other statutes. Some statutes mandate that a party provide service by taking actions "reasonably calculated to give actual notice...." See, e.g., MCL 125.2335(3); MCL 445.1539; MCL 487.3224(1). Others expand upon delivery directions, requiring that mailed notice be sent return-receipt demanded or that some additional step be taken to prove that notice was given. See, e.g., MCL 168.711 (requiring service by "registered or certified mail, with a return receipt demanded"); MCL 213.181 (requiring service by "registered mail, and a return receipt demanded"); MCL 500.2034 (requiring "the return postcard receipt for" a statement served under the statute as proof of service); MCL 290.725(3) ("The verified return of service shall be proof of the service...."). The Legislature elected not to impose such a burden in MCL 129.207.
Defendants ask us to overlook the fact that Wyandotte sent its 30-day notice of furnishing via certified mail, return-receipt requested, and render a decision based on the fact that KEO did not receive that notice.
This Court previously considered the notice requirements of the PWBA in Pi-Con, Inc. v. A.J. Anderson Constr. Co., 435 Mich. 375, 458 N.W.2d 639 (1990). Defendants
Guided by the analysis in Fleisher, the Pi-Con Court concluded that service by first-class mail does not preclude recovery under the PWBA as long as the plaintiff can prove the defendant's actual receipt of the notice by a preponderance of the evidence. Pi-Con, 435 Mich. at 378, 458 N.W.2d 639.
Defendants refer to the following portion of Pi-Con to support their contention that the PWBA contains an actual notice requirement:
But the factual underpinnings of Pi-Con are dissimilar to those in this case, and those dissimilarities affect our approach to the PWBA's notice requirements. Pi-Con and the other Michigan cases that have previously addressed the notice requirement of MCL 129.207 all involved parties who failed to employ the statutorily prescribed delivery method — certified mail. See, e.g., Pi-Con, 435 Mich. at 380, 458 N.W.2d 639 (notice sent by ordinary first-class mail); Thomas Indus., Inc. v. C & L Electric, Inc., 216 Mich.App. 603, 605-608, 550 N.W.2d 558 (1996) (no notice mailed but all required information included on packing slips with shipments of materials). In this case, by contrast, the parties do not dispute that Wyandotte sent notice via certified mail, although KEO apparently did not receive it. In this situation, Wyandotte complied with the statute, which contains no actual notice requirement.
We reaffirm the continuing application of Pi-Con's rule in cases in which a would-be PWBA claimant fails to comply with the particular method of service specified in MCL 129.207. To deny a PWBA claim when a preponderance of the evidence
In prevailing on its PWBA claim, Wyandotte was awarded a judgment in the trial court that included a time-price differential and attorney fees, which had been provided for in its contract with ETS. To the extent that this issue is one of statutory interpretation of the PWBA, we review it de novo. Elba Twp., 493 Mich. at 278, 831 N.W.2d 204. To the extent that it involves interpreting the contract between Wyandotte and ETS, this is also a question subject to review de novo. Rory v. Continental Ins. Co., 473 Mich. 457, 464, 703 N.W.2d 23 (2005). Our goal in contract interpretation is to give effect to the intent of the parties, to be determined first and foremost by the plain and unambiguous language of the contract itself. Id. at 468, 703 N.W.2d 23.
The PWBA permits an unpaid supplier of materials or labor to "sue on the payment bond for the amount, or the balance thereof, unpaid at the time of institution of the civil action, prosecute such action to final judgment for the sum justly due him and have execution thereon." MCL 129.207. Wyandotte sought payment based on its prior contracts with ETS: the open-account agreement enacted in 2003, the bid Wyandotte made for the Detroit Public Library project in 2009, and the ensuing purchase orders. Wyandotte argued, and the lower courts agreed, that Wyandotte was entitled to the unpaid balance on the materials and supplies it had provided as well as further damages based on the following two provisions that appeared in the open-account agreement:
The time-price differential provision also appeared on the quote for the library project.
As an initial matter, defendants maintain that they cannot be liable for either type of fee because they were not in contractual privity with Wyandotte and never agreed to pay these fees. This privity argument is unpersuasive. Contractual
The dispositive question here is rather the meaning of "sum justly due" in MCL 129.207. The statute merely states that a complainant may sue "on the payment bond for the amount, or the balance thereof, unpaid" and that a final judgment may be rendered for the "sum justly due...." MCL 129.207. Neither of these phrases explicitly informs us whether the Legislature intended to encompass additional contractual provisions, such as time-price differential fees or attorney fees, as part of the sum justly due.
The Court of Appeals considered the scope of the phrase "sum justly due" under the PWBA in Price Bros. Co. v. Charles J. Rogers Constr. Co., 104 Mich.App. 369, 304 N.W.2d 584 (1981). The plaintiff in Price Bros. was retained by a contractor on a public works project to provide sewer pipe for installation. The two contracts at issue related to the sewer pipe project and contained the following clause:
The Court of Appeals considered whether the service charge constituted a separate extension of credit or a "flexible price factor
Wyandotte's position, and that adopted by the Court of Appeals, is that the sum justly due for PWBA purposes is the amount provided for in the claimant's contract, regardless of whether the principal contractor and its surety have agreed to that contract's terms. An alternative position is to use the value of the labor or materials. We conclude that the former approach is more consistent with the plain language of the PWBA, which refers to the "amount ... unpaid" at the time of institution of the action and does not expressly state (or limit) what kinds of damages are recoverable. This phrase implies a previous expectation of payment of a certain sum. In the absence of any further direction from the Legislature regarding how the amount unpaid ought to be determined, the most logical recourse is to the claimant's underlying contract, which best illustrates the intent and expectations of the parties to the contract. The Legislature does not differentiate the amount unpaid from the sum justly due, and we understand that sum to be determined based on the trial court's fact-finding as to the amount unpaid.
Because we use the contract to determine the sum justly due, we must ascertain what actually constituted the contract in this case. There were multiple written instruments evidencing the agreement between Wyandotte and ETS: the open-account agreement dating back to 2003, the quote for the library project, and the purchase orders related to the project. In our recent opinion in Beck v. Park West Galleries, Inc., 499 Mich. 40, 878 N.W.2d 804 (2016), we acknowledged the general rule that separate agreements are treated separately. However, when parties enter into multiple agreements relating to the same subject-matter, we must read those agreements together to determine the parties' intentions. Culver v. Castro, 126 Mich.App. 824, 826, 338 N.W.2d 232 (1983), citing Reber v. Pearson, 155 Mich. 593, 119 N.W. 897 (1909). Although the initial open-account agreement does not relate specifically to the library project, all of these agreements are directed to the same end — Wyandotte's provision of materials to ETS. Further, by its terms, the open-account agreement covered all "past, present and future unpaid accounts receivable balances" between Wyandotte and ETS. Together, these agreements demonstrate that Wyandotte and ETS intended to enter into an ongoing business relationship and they define the scope of that relationship. We therefore conclude that these agreements should be considered together.
The open-account agreement includes provisions regarding both a time-price differential and attorney fees. The later quote for the library project reiterated the time-price differential provision but was silent regarding attorney fees. But because the quote did not contradict the attorney fee clause present in the initial agreement, we conclude that the documents are not inconsistent and the later quote and purchase orders did not supersede the initial agreement. See Culver, 126 Mich.App. at 828, 338 N.W.2d 232. Accordingly, both the open-account agreement
We do not believe that a PWBA claimant's recovery is limited to the terms of a contract or contracts relating to the provision of labor and materials for a specific public works project when additional contracts also govern the parties' relationship with regard to that project. To the extent that the PWBA refers to public works project contracts, it refers to the primary contract between a principal contractor and a governmental unit. For example, MCL 129.201, which obliges a principal contractor to obtain a payment bond, only discusses this primary contract. Similarly, MCL 129.203 provides:
See also MCL 129.202. As with MCL 129.201, the phrase "the contract" in MCL 129.203 must refer to the primary contract between a principal contractor and a governmental unit. MCL 129.203 directs the principal contractor to obtain a payment bond; in stating that the payment bond shall be in an amount not less than 25% of the contract amount, the statute clearly indicates that the term "the contract" refers to the primary contract, because the principal contractor does not obtain separate payment bonds for each lesser contract with a subcontractor. Therefore, the discussion in MCL 129.207 of "[a] claimant who has furnished labor or material in the prosecution of the work provided for in such contract in respect of which payment bond is furnished under the provisions of [MCL 129.203]" refers to that primary contract yet again. It does not limit a PWBA claimant's reasonably expected recovery when the claimant is a sub-subcontractor.
A sub-subcontractor is, by definition, not a party to the primary contract. Given that the PWBA does not require a sub-subcontractor to be in privity of contract with the principal contractor in order to obtain relief, we hold that the PWBA allows a sub-subcontractor to rely on the terms of the agreement or agreements that govern its relationship with a subcontractor. There are, of course, scenarios in which a contract predating the specific public works project would properly be disregarded under the PWBA: namely, when the prior contract is limited in scope and has no bearing on either the public works project or any continuing contractual relationship between the involved parties. However, where, as here, the language of an earlier contract indicates that ETS and Wyandotte intended it to govern their ongoing business relationship, we consider it alongside the specific contracts relating to the public works project.
At the time Wyandotte commenced this action, ETS had already fallen behind on its payments to Wyandotte for the materials it had provided in connection with the library project. The time-price differential referred to in the contracts between Wyandotte and ETS was in play, reflecting the increased cost to Wyandotte as ETS's bills went underpaid or unpaid. Therefore, a time-price differential was part of the amount unpaid and due to Wyandotte when it instituted the instant action against defendants. The trial court properly included the time-price differential as part of the judgment in Wyandotte's favor.
Regarding attorney fees, defendants correctly argue that Michigan follows the American rule, which provides
We conclude that, because the underlying contract is the source by which we determine what relief a PWBA claimant may seek, Wyandotte is entitled to the time-price differential and attorney fees it would have received under its contracts with ETS.
The trial court awarded, and the Court of Appeals affirmed, postjudgment interest to Wyandotte under MCL 600.6013(7), which provides:
Defendants contend that this was not the proper section under which to calculate interest on the judgment. We review this question of statutory interpretation de novo and seek to effect the Legislature's intent, turning first to the plain language of the statute. See Elba Twp., 493 Mich. at 278, 831 N.W.2d 204.
MCL 600.6013(7) applies when certain criteria are met: the judgment must be "rendered on" a written instrument, the
The judgment here was not rendered on a written instrument. Regardless of whether the documents evidencing the contract between Wyandotte and ETS can even be said to constitute a written agreement for purposes of interest on the judgment, the judgment in this case was not rendered on them. Although the contract between Wyandotte and ETS defined the scope of the damages that Wyandotte was entitled to seek under the PWBA, the underlying claim was not a contract claim.
We conclude that MCL 129.207 did not require actual receipt of notice by the principal, that a time-price differential and attorney fees were part of the sum justly due to Wyandotte under its contracts, and that interest on the judgment should have been calculated under MCL 600.6013(8) rather than MCL 600.6013(7). Accordingly, we affirm in part and reverse in part the judgment of the Court of Appeals and remand to the trial court for entry of a judgment consistent with these holdings.
MARKMAN, McCORMACK, VIVIANO, and LARSEN, JJ., concurred with BERNSTEIN, J.
YOUNG, C.J. (concurring in part and dissenting in part).
This case addresses the issue of whether a claimant under the public works bond act (PWBA)
Defendant KEO & Associates, Inc. (KEO) was the principal contractor on a renovation project at the Detroit Public Library in 2009. As required under the PWBA, defendant Westfield Insurance Company (Westfield) supplied a payment bond and stood as surety on the bond.
KEO subcontracted with defendant ETS to provide labor and materials for electrical work on the renovation project. ETS then subcontracted with plaintiff Wyandotte for materials and supplies, making Wyandotte a sub-subcontractor in relation to KEO. ETS and Wyandotte had been in an open-account agreement since 2003, and this contract also governed ETS's purchases from Wyandotte during the library renovation. The contract specified that ETS would pay Wyandotte a time-price differential of 1.5% per month (18% per annum) on invoices unpaid after 30 days. This provision represented an interest rate for purchases ETS made on credit. The contract also specified that ETS would pay 33% of any unpaid balance as an attorney fee if Wyandotte had to pursue collection litigation after a default.
Wyandotte submitted a quote to ETS that included the time-price differential provision. ETS accepted this quote by issuing a purchase order to Wyandotte on February 19, 2010. Wyandotte began delivering materials to ETS on March 3, 2010, and made its last delivery on September 30, 2010. Over the course of the project, ETS became increasingly behind in its payments to Wyandotte. Eventually, ETS stopped payment altogether and went out of business. Though KEO claims it paid ETS all that was owed, Wyandotte never received full payment from ETS. As required by the PWBA, Wyandotte sent notice to KEO and Westfield on November 1, 2010, claiming it was owed $150,762.33 for electrical materials furnished to ETS and the time-price differential. Wyandotte filed a claim with Westfield on January 28, 2011, to recover on the payment bond. Westfield denied the claim.
Wyandotte filed a PWBA suit against ETS, KEO, and Westfield on March 14, 2011, and moved for summary disposition. The trial court granted the motion in part, holding that the bond claim was valid and that, under its contract with ETS, Wyandotte could recover both the time-price differential and attorney fees. A bench
MCL 129.207 of the PWBA reads as follows:
When contractors are not fully paid after providing labor or materials for a public project, this statute permits them to sue on the payment bond for the amount unpaid at the time the civil action is instituted. The extent of defendants' statutory liability is the "sum justly due."
I dissent from the majority opinion as to its further analysis of, and conclusion regarding, the attorney fee provision. The majority holds that, merely because the attorney fee provision was part of the open-account agreement with ETS, the trial court appropriately included the attorney fee in its judgment. This approach treats the PWBA as if it creates a statutory breach of contract claim. I respectfully disagree. The statute only makes compensable the unpaid costs of labor or materials furnished. Thus, the statute limits a claimant's recovery to the contractual terms that are related to the price of labor or materials furnished. While both the time-price differential and the attorney fee provision are listed in Wyandotte's agreement with ETS, only the former actually relates to the cost of furnishing the materials,
I would hold that MCL 129.207 requires us to consider whether a provision of an underlying contract used to determine the expectancy of the unpaid contractor is integrally related to the cost of labor or materials furnished for the project. MCL 129.207 allows a claimant to sue on the payment bond for the amount unpaid and recover the sum justly due him. The statute defines the amount unpaid in terms of the cost of labor and materials provided on the project, stating that "[a] claimant who has furnished labor or material ... and who has not been paid in full therefor... may sue on the payment bond for the amount, or the balance thereof, unpaid...."
Furthermore, the PWBA limits the claimant's recovery based on when certain price terms are triggered. MCL 129.207 states:
MCL 129.207 repeatedly refers to a 90-day period after supplying the last of the labor or material for which the claim is made. Based on this language, Wyandotte's "claim is made" for labor or materials furnished for which Wyandotte "has not been paid in full therefor before the expiration of a period of 90 days after the day on which the last of the ... material was furnished or supplied...."
Under this interpretation, Wyandotte's claim is for the cost of materials furnished, limited to the price terms under the contract that came due by the 90-day deadline. Notably, the statute required Wyandotte
The majority claims that the plain language of the statute does not support this interpretation. However, the majority only cites a portion of the statute for this contention rather than reading the provision as a whole. The majority fails to analyze the full portion of MCL 129.207 quoted in this opinion, namely that "[a] claimant who has furnished labor or material... and who has not been paid in full therefor ... may sue on the payment bond for the amount, or the balance thereof, unpaid...." Thus, the statute plainly states that the claimant may only sue for the amount unpaid for labor and materials the claimant supplied, thereby limiting the claimant's recovery to the cost of labor and materials supplied. The majority opinion is internally inconsistent because, although the majority acknowledges that Wyandotte's claim against defendants is not a contract claim and does not arise directly out of the contract, the majority uses the entirety of the contract as a measure of Wyandotte's damages. Instead, the PWBA instructs us to use the contract only to establish Wyandotte's expectancy regarding the cost of labor or materials Wyandotte furnished but was not paid for.
The time-price differential is inextricably related to the cost of materials furnished for the library project and the provision triggered before Wyandotte gave its 90-day notice: it is a part of the price term of the agreement with ETS and the provision applied to invoices that went unpaid after 30 days. In Wyandotte's contract with ETS, the time-price differential provision states, "Time price differential charges of 1-1/2% per month (18% per
Accordingly, the time-price differential is an integral part of the sum justly due for materials Wyandotte supplied on the renovation project because it establishes an interest rate that directly relates to the price of the materials Wyandotte furnished when ETS paid on credit.
In contrast, the attorney fee is not closely associated with the cost of materials furnished for the library project. The attorney fee provision in the contract states, "In the event your account is placed in the hands of an attorney for collection after default, the customer agrees to pay 33% of the unpaid balance for attorney's fees together with applicable costs." The language of this provision indicates that attorney fees are unrelated to the cost of materials because, unlike the time-price differential, they bear no relation to the cost of supplying labor or materials. The attorney fee provision creates a penalty for collection efforts rather than determining Wyandotte's expectancy — i.e., the price ETS owed for materials Wyandotte supplied. Indeed, it does not appear to be an attorney fee provision at all, because it does not define itself in terms of actual or reasonable attorney fees. It is, in fact, a liquidated damages clause that plaintiff could invoke if it placed an overdue debt into the hands of a collecting attorney.
Furthermore, the attorney fee provision did not trigger by the 90-day deadline. In
Therefore, while I agree with the majority that the time-price differential was properly included in Wyandotte's award, I would hold that Wyandotte is not entitled to the attorney fee award because it is not directly related to the cost of materials it supplied. The attorney fee provision also triggered after the 90-day deadline created by the statute.
There are two relevant statutes on postjudgment interest in this case. Defendants argue that postjudgment interest should have been calculated under the default formula given in MCL 600.6013(8).
MCL 600.6013(7) only applies when the judgment is rendered on a written instrument. According to the majority, this means MCL 600.6013(7) only applies if the written instrument is the actual basis of the judgment. However, I believe that the majority mistakenly concludes that the judgment was rendered on the PWBA rather than on a written instrument. As noted in the majority opinion and earlier in this opinion, although the PWBA creates Wyandotte's cause of action, the trial court must examine the underlying agreement between Wyandotte and ETS to determine what sum is justly due. The agreement here is as much the basis for the trial court's judgment as the statute itself, so the judgment is rendered on a written instrument. Therefore, I believe it is most accurate to say the trial court's judgment is rendered pursuant to the statute, but it is rendered on the underlying contract.
I do not believe Wyandotte is entitled to attorney fees. The so-called attorney fees specified in Wyandotte's agreement with ETS are not related to the price of the materials Wyandotte furnished nor did the provision trigger by the statute's 90-day deadline. Therefore, I would hold that attorney fees are not recoverable as a sum justly due and reverse the Court of Appeals on this issue. Furthermore, I do not agree with the majority's reasoning regarding the award of postjudgment interest. Nevertheless, I concur with the majority's conclusion that postjudgment interest should have been calculated under MCL 600.6013(8) rather than MCL 600.6013(7).
ZAHRA, J. (concurring in part and dissenting in part).
This case primarily addresses a single statute, MCL 129.207, under the public works bond act (PWBA).
My disagreement with the majority arises under the first sentence of MCL 129.207, which states:
The majority views the "sum justly due" under this statute as "the amount provided for in the claimant's contract, regardless of whether the principal contractor and its surety have agreed to that contract's terms."
The majority's analysis rests on a false premise. The principal contractor, KEO & Associates, Inc., was not a party to the claimant's underlying contract. The contract between subcontractor Electrical Technology Systems, Inc. (ETS) and remote subcontractor Wyandotte can only illustrate the intent and expectations of ETS and Wyandotte. Indeed, KEO did not contractually agree to pay any of its subcontractors, including ETS, a time-price differential or attorney fees, and there is no basis from which to conclude that KEO would have agreed to pay a time-price differential or attorney fees to a party with whom it had no contractual relationship.
Further, MCL 129.207 does not suggest that the principal contractor must wholly indemnify claimants under the PWBA. Rather, MCL 129.207 refers to the extent of a principal contractor's liability under the payment bond by identifying the claimant's "labor or material in the prosecution of the work," for which the claimant "has not been paid in full therefor before the expiration of a period of 90 days after the day on which the last of the labor was done or performed by him or material was furnished or supplied by him for which claim is made...." This provision identifies the labor and materials that form the basis of the "amount, or the balance thereof, unpaid at the time of institution of the civil action" that the claimant may bring such action for "the sum justly due him...." While a subcontractor has an actual contract with the principal contractor to determine the labor and materials it may seek to recoup under the payment bond, a remote contractor does not have a direct contractual relationship with the principal contractor. For this reason, MCL 129.207 provides, in regard to remote subcontractors, that the claimant must provide notice "within 90 days from the date on which the claimant performed the last of the labor or furnished or supplied the last of the material for which the claim is made, stating with substantial accuracy the amount claimed and the name of the party to whom the material was furnished or supplied or for whom the labor was done or performed." This notice, as in this case, identifies the labor and materials that the remote contractor has supplied. The "sum justly due" thus includes the labor and materials previously identified in the 90-day notice that the claimant has supplied but for which the claimant has not been paid. The only other statutory basis to impose liability on the payment bond is MCL 129.206, which provides that "`[l]abor and material' includes that part of water, gas, power, light, heat, oil, gasoline, telephone service or rental of equipment directly applicable to the contract." That the Legislature expressly provided for recovery of these incidental expenses, and these incidental expenses alone, strongly suggests that incidental expenses not expressly identified are not recoverable as "labor and material."
To the extent that attorney fees and a time-price differential may even be considered incidental damages, as opposed to remote damages, they are simply not recoverable.
Further, MCL 129.203 provides:
The principal contractor's liability to remote contractors under the PWBA is solely based on the payment bond. The amount of the payment bond is fixed by the governmental unit at no less than 25% of the contract. If a claimant successfully sues on the payment bond and exhausts the payment bond, which may represent as little as 25% of the contract, a remote contractor that later sues no longer has legal recourse to recover against the bond furnished by the principal contractor. Remote subcontractors only have a right to sue the principal contractor on the bond because the PWBA permits a suit despite the absence of a direct contractual relationship. Significantly, any awards received under the PWBA cannot cumulatively exceed the amount of the payment bond.
This limitation of the principal contractor's liability to remote subcontractors is precisely the reason that the PWBA does not provide for remote subcontractors to seek to enforce any and all collateral terms in the underlying contract. If a single claimant or several claimants exhaust the payment bond through an award of a time-price differential and attorney fees, another remote contractor may not be able to recoup the actual labor and materials it supplied for the public project. By green-lighting the recovery of remote damages found in the underlying contracts between subcontractors and remote subcontractors, the majority arbitrarily countenances the shortchanging of other remote contractors. In my view, this effectively thwarts the Legislature's intent that the payment bond be used "solely for the protection of claimants...." MCL 129.203. The majority has clearly departed from the statutory
The trial court awarded Wyandotte postjudgment interest under MCL 600.6013(7)
The majority holds that judgment was rendered on Wyandotte's statutory claim rather than on the contract itself. This holding misses the entire point of the PWBA. MCL 129.207 expressly provides that a claimant "may sue on the payment bond...."
The payment bond provides that KEO and Westfield Insurance Company
The payment bond expressly incorporates the contract between KEO and the library, and then provides:
The payment bond is clearly an "instrument" in that it is a "written legal document that defines rights, duties, entitlements, or liabilities...."
I agree with the majority that a claimant need not provide actual notice to the principal contractor under the PWBA. I disagree with the majority however that the PWBA entitles a claimant to the amount provided for in the claimant's contract, regardless of whether the principal contractor and its surety have agreed to that contract's terms. Rather, a claimant's recovery is limited to labor and materials under the PWBA, and does not include incidental expenses not provided for by the PWBA, such as time-price differentials and attorney fees. Finally, I agree with the majority's conclusion that interest on the judgment should be calculated based on MCL 600.6013(8). Under the PWBA, judgment is rendered on the payment bond, which is a written instrument evidencing indebtedness. But because this bond contained no specified interest rate, MCL 600.6013(7) does not apply. c
Moreover, we discern little reason for distinguishing between (1) the materials price itself; (2) the time-price differential provision, which is related to the materials price; and (3) the attorney fees provision, which also constitutes part of the contract bid. Wyandotte's decision to actually price materials at a particular level in the contract bid was presumably a function of all the other contract provisions, including those pertaining to the time-price differential and attorney fees. That is, Wyandotte presumably adjusted its materials price downward, at least to some degree, on the assumption that all contract provisions would be given effect, and it would likely have quoted a higher materials price in the bid if it did not have the reasonable assurance that it would be reimbursed at a certain rate for delinquent payments (time-price differential) or for litigation required to satisfy outstanding debt (attorney fees). Accordingly, the attorney fees provision is not detached from the materials price; rather, it and the materials price are interrelated, just as the time-price differential provision and the materials price are interrelated. Given that Wyandotte is entitled to recover the materials price and the time-price differential, we believe Wyandotte is entitled to recover attorney fees as well.
We also note that our conclusion is consistent with how several federal circuits have interpreted the Miller Act. See United States ex rel. Maddux Supply Co. v. St. Paul Fire & Marine Ins., 86 F.3d 332, 336 (C.A.4, 1996) ("The Miller Act does not, by its own terms, provide for attorney's fees or interest. Several circuits have held, however, that interest and attorney's fees are recoverable if they are part of the contract between the subcontractor and supplier.").
