date Visor was in effect discharged as the subcontractor and Tranter finished the job.
On September 4, 1975, Robert S. Dubin, Esq., counsel for Visor,
wrote the Surety and presented a formal claim on behalf of Visor for $ 23,000 plus interest from April 22, 1975. The Surety responded to this claim by letter dated October 13, 1975, set out in full infra. Apparently this letter was the last contact plaintiff had with the Surety until the institution of this action on December 1, 1976. Plaintiff, in its opposition brief to the Surety's motion, alleges that in reliance upon this letter its counsel continued to negotiate a settlement in an effort to resolve the matter of whether the work under the subcontract had been completed and whether plaintiff was, therefore, entitled to payment from the prime contractor. Plaintiff alleges that it was not until early 1976 that it became aware that Tranter was in severe financial difficulty and would not be in a position to settle the matter.
Meanwhile, on April 23, 1975, Attorney Dubin forwarded to the School District a "Preliminary Notice of Intention to File a Mechanics Claim" and a "formal Notice of Intention to File a Mechanics Claim". The threatened lien would be filed pursuant to the Mechanics' Lien Law of 1963, Pa.Stat.Ann. tit. 49, § 1101, et seq. (Purdon). According to the formal notice the lien would be in the amount of $ 11,500, would be for work done and material supplied by Visor for Tranter between December 18, 1974 and April 23, 1975, and the property subject to the lien would be the Kulpmont Elementary School. However, it appears that no lien was ever timely filed in order to perfect. See document number 30, Exhibit M in support of the School District's motion, letter from Mr. White, Esq., attorney for Tranter, to Mr. Stanley Zlocki, Esq., solicitor for the Mount Carmel Area School District. It also appears that a no claim agreement was timely filed pursuant to Pa.Stat.Ann. tit. 49, § 1402 (Purdon). See document 32, exhibit Q in support of the School District's motion, affidavit of Stanley Zlocki.
On July 25, 1975, Attorney Duben wrote to Mr. Zlocki and requested that "(he) exercise (his) authority under the mechanics' lien law and withhold from the prime contractor the sum of no less than $ 23,000." See document 30, exhibit F in support of the School District's motion.
On August 22, 1975 Mr. Zlocki wrote to Tranter, with a carbon copy to Mr. Dubin, stating that pursuant to the authority given to the School District under the mechanics' lien law it was withholding from Tranter $ 23,000 of the amount due under the prime contract.
After that August 22nd letter, Mr. White wrote two letters to Mr. Zlocki informing him that a lien in this situation was not possible under the law, see discussion infra, demanded payment, and threatened suit in the event payment was not forthcoming. On November 6, 1975 the School District released the withheld $ 23,000 to Tranter, See document 32, exhibit S, affidavit of Joseph Warner, Superintendent of the Mount Carmel Area School District, and on December 23, 1975, after receiving the necessary documents under the prime contract, see discussion infra, made the final payment to Tranter. See document 32, Exhibit S. Hence, the School District has paid the full amount due under the prime contract.
Mr. Dubin states that after August 22, 1975 he had several conversations with Mr. Zlocki wherein the latter related that the funds were being withheld. Mr. Dubin does not state when these representations were made. He alleges that he relied on this promise of the School District's solicitor and took no further action. He avers that it was not until early 1976 that he became aware that the funds were no longer being withheld. See document 38, exhibit 11, affidavit of Robert S. Dubin.
The motion of defendant Aetna Casualty and Surety Company.
As stated, the Surety has moved for judgment on the pleadings on the grounds that plaintiff is barred by the running of the statute of limitations. In ruling on this motion I will consider the information submitted by plaintiff in opposition to the motion and will construe the motion as one for summary judgment.
The relevant considerations here are: (1) What is the applicable statute of limitations? (2) When did this limitation period begin to run? (3) When was suit filed? and (4) Has anything occurred which would toll the running of the statute or which would estop defendant Surety from asserting it as a defense?
According to both the bond law and the bond itself no action may be instituted for payment under the bond " . . . after the expiration of one year from the day on which the last of the labor was performed and material was supplied for the payment of which such action is brought by the claimant." Pa.Stat.Ann. tit. 8, § 197(b) (Purdon); document 30, exhibit J, Payment Bond, page 3. It is uncontroverted that the last labor performed or material supplied by plaintiff to Tranter for which payment is now being sought under the bond occurred prior to April 23, 1975. However, plaintiff seems to be arguing that since there was a dispute between Visor and Tranter as to whether the second phase of the subcontract had been duly completed and, hence, as to whether Visor was entitled to the second payment, there is, therefore, a genuine issue of material fact as to when the limitation period began to run.
Plaintiff also states that it was not until early 1976 that it discovered that Tranter was in financial difficulty, see supra, and that since it filed within one year of this discovery the filing was timely. Both these contentions are without merit. The relevant consideration is when the last labor or material was supplied, not whether the second payment was in fact due nor when plaintiff became aware of Tranter's financial difficulty. I find that the statute began to run on or about April 22, 1975. Since this action was not filed until December 1, 1976, it is barred by the limitations period unless that period has been tolled or unless the Surety is estopped from asserting it as a defense.
Plaintiff's only argument is that the Surety, because of its actions, namely the letter of October 13, 1975, should be estopped from asserting the statute of limitations as a defense. In full the letter stated:
Dear Mr. Dubin: