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PETERS TOWNSHIP SCHOOL AUTHORITY AND PETERS TOWNSHIP SCHOOL DISTRICT v. UNITED STATES FIDELITY AND GUARANTY COMPANY ET AL. (11/15/83)

decided: November 15, 1983.

PETERS TOWNSHIP SCHOOL AUTHORITY AND PETERS TOWNSHIP SCHOOL DISTRICT, APPELLANTS
v.
UNITED STATES FIDELITY AND GUARANTY COMPANY ET AL., APPELLEES



Appeal from the Order of the Court of Common Pleas of Washington County in the case of Peters Township School Authority and Peters Township School District v. United States Fidelity and Guaranty Company, No. 187 June Term, 1978, A.D., and in the case of Peters Township School Authority and Peters Township School District v. United States Fidelity and Guaranty Company, Koppers Company, et al., No. 227 September Term, 1980, A.D., dated October 8, 1982.

COUNSEL

Reed B. Day, Peacock, Keller, Yohe, Day & Ecker, for appellants.

Larry A. Silverman, Dickie, McCamey & Chilcote, P.C., for appellees.

Judges Rogers, Craig and Doyle, sitting as a panel of three. Opinion by Judge Doyle.

Author: Doyle

[ 78 Pa. Commw. Page 366]

Before this Court is an appeal by the Peters Township School Authority and School District (Appellants) from a decision and order of the Court of Common Pleas of Washington County entering a summary judgment in favor of the United States Fidelity and Guaranty Company (Appellee).

[ 78 Pa. Commw. Page 367]

The factual matrix of this case dates back to 1966. At that time, Appellants entered into a contract with the Branna Construction Corporation for the construction of a high school building. Under Section 10 of the Municipality Authorities Act of 1945 (Act), Act of May 2, 1945, P.L. 382, as amended, 53 P.S. ยง 312,*fn1 Branna presented to Appellants a performance bond with Appellee as surety. Branna later defaulted and failed to complete the project. Appellee, in lieu of paying off the performance bond, elected to find another company willing to complete the work. Thus, in August, 1968, the Jendoco Construction Co. was hired to complete the job. The school building was occupied in 1968 and accepted in 1970. In March of 1977, defects were discovered in the roof which were alleged to constitute roof failure.

In January of 1980, the Authority filed a declaratory judgment action against Appellee and moved for summary judgment on the grounds that, by hiring Jendoco to complete the construction, Appellee's status changed from that of a surety to a general contractor. Appellee, in turn, also moved for summary judgment, averring that Section 10 A of the Act contained a one year statute of limitations which barred Appellants' claim. The court of common pleas rejected both motions on January 22, 1981. As to Appellants' request, the court held that Appellee had done nothing to alter its status as surety by obtaining the services of Jendoco. With respect to Appellee's motion, the court noted that paragraph 4 of the performance bond provided:

[ 78 Pa. Commw. Page 368]

In no event shall the Surety be liable for a greater sum than the Penalty of this Bond, or subject to any suit, action or proceeding thereon that is instituted later than .

As the blank in paragraph 4 was never filled in, the court held that there was an outstanding issue of material fact as to what the parties had agreed to, if anything, on the limitations period of the agreement, thus precluding the entry of a summary judgment.

In September of 1980, the Authority also initiated a complaint against Appellee in assumpsit and trespass which was consolidated with a suit instituted by summons on June 22, 1978.*fn2 Following the denial of their motion for summary judgment in the declaratory judgment action, Appellants requested and were granted leave to amend their complaint in assumpsit and trespass to include a ...


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