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CENTRE CONCRETE COMPANY v. AGI (05/31/89)

decided: May 31, 1989.

CENTRE CONCRETE COMPANY, A CORPORATION, APPELLANT,
v.
AGI, INC. AND INSURANCE COMPANY OF NORTH AMERICA, APPELLEES



Appeal from the Order of the Commonwealth Court Entered on July 13, 1987 at No. 195 Misc. Docket No. 4, Reversing the Order of the Court of Common Pleas of Cambria County, Civil Division, at No. 1983-3263 on July 5, 1985. Pa. Commonwealth Ct. , A.2d (19 ).

COUNSEL

Gilbert E. Caroff, David J. Kaltenbaugh, Johnstown, for appellant.

Louis C. Long, Meyer, Darragh, Buckler, Bebenek & Eck, Pittsburgh, for Ins. Co. of North America.

Nix, C.j., and Larsen, Flaherty, McDermott, Zappala and Papadakos, JJ. Flaherty, J. files a dissenting opinion in which Nix, C.j., joins.

Author: Papadakos

[ 522 Pa. Page 28]

OPINION OF THE COURT

This case concerns a statute of limitations defense. It raises the question of whether the limitations period is extended by a statute that bars suit on certain contracts during the first ninety days after payment is due thereon. The Commonwealth Court held that the limitations period is not extended in these circumstances, but that it runs from the date of breach. We think that this is unjust and contrary to the law in Pennsylvania and the law as applied across the country.

The germane facts in this case are as follows: Appellee, AGI, Inc. ("AGI") was awarded a road construction contract with the Commonwealth of Pennsylvania. AGI, the general contractor, then contracted with Appellant, Centre Concrete Company, to provide raw materials for use in the project. The final delivery date of the materials supplied by Appellant was October 21, 1982. The amount AGI owed for the materials was in excess of $26,000.00 and this debt was never paid. Appellee, Insurance Company of North America ("INA") was the surety for AGI, the general contractor. The Public Works Contractors' Bond Law of 1967, Act of December 20, 1967, P.L. 869, 8 P.S. §§ 191-202, specifically section 4(a) thereof (8 P.S. § 194(a)), provides:

(a) Subject to the provisions of subsection (b) hereof, any claimant who has performed labor or furnished material in the prosecution of the work provided for in any contract for which a payment bond has been given, pursuant to the provisions of subsection (a) of section 3 of this act, and who has not been paid in full therefor before the expiration of ninety days after the day on which such claimant performed the last of such labor or furnished

[ 522 Pa. Page 29]

    the last of such materials for which he claims payments, may bring an action on such payment bond in his own name, in assumpsit, to recover any amount due him for such labor or material, and may prosecute such action to final judgment and have execution on the judgment.

As a result of this section, Appellant was not permitted to bring an action against the surety, INA, until the general contractor, AGI, had failed to pay for ninety (90) days. The ninetieth day in this case would have been January 19, 1983, ninety days from the last date materials were supplied by Appellant. The next day, January 20, 1983, was the earliest day upon which they could have brought suit. On January 11, 1983, Appellant submitted this claim to INA, the surety. INA never responded to the claim until after they calculated that the statute of limitations had run.

Under date of December 2, 1983, INA wrote to Appellant and stated:

Under Pennsylvania law you were required to file suit within one year from the last day you performed work or supplied material on the project . . . [T]he last date you furnished labor, material or supplies and services in connection with the job was on October 21, 1982. Consequently, we are not in a position to honor your claim.

Appellant thereupon immediately commenced suit against AGI and INA on December 2, 1983, by the filing of a praecipe for a writ of summons. In new matter INA pleaded the statute of limitations defense and moved for judgment on the pleadings. This motion was denied by the trial court but that court certified the question to permit appellate review of their interlocutory order. The Commonwealth Court ...


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