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R. W. SIDLEY, INC. v. UNITES STATES FIDELITY & GUARANTY CO

United States District Court, W.D. Pennsylvania


January 13, 2004.

R.W.SIDLEY, INC., Plaintiff
v.
UNITES STATES FIDELITY & GUARANTY COMPANY, Defendants

The opinion of the court was delivered by: KIM GIBSON, District Judge

PRETRIAL ORDER (JURY TRIAL)

AND NOW, this 7th day of January, 2004, the Court HEREBY ORDERS as follows:

A. Final Pretrial Orders:
1. Jury Selection & Trial. Jury selection and trial are set for the 15th of March, 2004, at 9:00 a.m., 104 Penn Traffic Building, 319 Washington Street, Johnstown, PA 15901.
2. Exchange of Witness Lists and Exhibits.
a. Plaintiff shall serve and submit to the Court its list of trial witnesses, listing separately the witnesses it will call and the witnesses it may call if needed (other than purely for impeachment). For each witness listed, Plaintiff shall provide an offer of proof explaining the substance of the testimony of the witness. The offers of proof shall be no more than one (1) double-spaced page with twelve (12) point font. Plaintiff's witness list and offers of proof shall be due one (1) month before trial
b. Defendant shall serve and submit to the Court its list of trial witnesses, listing separately the witnesses it will call and the witnesses it may call if needed (other than purely for impeachment). For each witness listed Defendant shall provide an offer of proof explaining the substance of the testimony of the witness. The offers of proof shall be no more than one (1) double-spaced page with twelve (12) point font. Defendant's witness list and offers of proof shall be due three (3) weeks before trial.
c. All exhibits must be exchanged and marked in advance of trial. Copies are to be provided for the Court in binders properly labeled ("Plaintiff's Exhibits" and "Defendant's Exhibits") at least two (2) days in advance of trial, unless otherwise ordered by the Court. In addition, counsel shall be prepared to compile and agree to a single exhibit binder ("Joint Exhibit Binder") containing the most significant exhibits that will be submitted to the jury at the close of trial. Counsel shall plan to submit twelve (12) copies of the Joint Exhibit Binder (eight (8) for the jury and four (4) for the Court). Each Joint Exhibit Binder shall contain twenty (20) lined sheets of lined notebook paper provided for the jury to take notes.
d. Voluminous data shall be presented by summary exhibits pursuant to Fed.R.Evid. 1006, and voluminous exhibits shall be redacted to eliminate irrelevant material (which shall remain available for examination by opposing counsel). Where copies of documents are offered, the originals shall be available for examination, unless waived by stipulation.
3. Designation of Discovery Excerpts to be Offered at Trial. The parties shall submit designation of excerpts from depositions, interrogatory answers, and responses to requests for admission to be offered at trial (other than for impeachment) at least two (2) weeks before trial.
4. Motions. The parties shall file all motions in limine, including motions under Fed.R.Evid. 104(a) and motions to limit or sever issues, together with supporting briefs or memoranda of law at least two (2) weeks before trial. Responses shall be filed at least ten (10) days before trial. All briefs supporting or opposing such motions are limited to five (5) pages.
5. Proposed Jury Instructions & Verdict Slips. Counsel shall meet in an attempt to agree on a joint set of proposed jury instructions. After said meeting, and on or before 1st of March, 2004, counsel shall file a unified (meaning one) combined set of proposed instructions, along with computer disk/CD containing the instructions in WordPerfect format. The filed set of instructions shall include both the agreed upon instructions and the proposed instructions to which the parties have not agreed. Each agreed upon instruction shall include the following notation at the bottom: "This proposed instruction is agreed upon by the parties." Each instruction to which the parties have not agreed shall indicate at the bottom the name of the party proffering the instruction, Proposed instructions by different parties shall be grouped together.
A charging conference will be held, at which time a ruling will be made on each point for charge and a copy of the Court's proposed charge will be supplied to counsel. Counsel are required to state objections to the proposed charge at the charging conference and to supply the alternate language, together with case authority.
The Court generally will not accept separate proposed jury instructions from the parties.
6. Proposed Voir Dire. Counsel are permitted to supplement the standard questions provided that the proposed supplemental voir dire questions are submitted to the Court in writing at least ten (10) days before trial. Any supplemental voir dire questions approved by the Court will be asked by the Courtroom Deputy.
7. Joint Stipulations. The parties shall file joint stipulations at least ten (10) days before trial. All possible stipulations shall be made as to:
a. Facts;
b. Issues to be decided;
c. The authenticity and admissibility of exhibits;
d. Expert qualifications and reports;
e. Deposition testimony to be read into the record; and
f. A brief statement of the claims and defenses to be read to the jury to introduce the trial.
Counsel shall meet at a mutually convenient time and place to produce the joint stipulation in time for filing as ordered.
8. Final Pretrial Conference. A final pretrial conference shall be held at least one (1) week before trial at 104 Penn Traffic Building, 319 Washington Street, Johnstown, PA 15901.
9. Courtesy Copies. Courtesy copies of all items required to be filed and served pursuant to this order shall be delivered to chambers forthwith.
B. Trial Procedure
1. Hours. Court is in trial session, unless otherwise ordered by the Court, Monday through Friday, 9:30 a.m. to 4:30 p.m. with breaks where appropriate. All counsel are expected to be in their seats and ready to commence at the appointed times.
2. Exhibits. Because counsel will have previously marked and exchanged all exhibits and provided a copy to the Court, it will not be necessary during the trial to show exhibits to opposing counsel prior to using them.
3. Approaching the Witness. It will not be necessary for counsel to request permission to approach a witness.
4. Opening and Closing Statements. Up to one hour is permitted to each side for opening and closing statements, depending on the complexity of the case. Normally not more than one-half hour is required for each side. Counsel may use exhibits or charts in opening argument provided that the same have been provided to opposing counsel beforehand and either agreement was reached or the Court has ruled upon the matter.
5. Side Bar Conferences. The Court believes that counsel should be considerate of the jurors' time. Consequently side bar conferences are highly disfavored because they waste the jury's time and unduly extend the length of the trial Counsel will meet with the Court at 9:00 a. m. each day (or earlier if necessary to ensure that trial commences on time) to raise points of evidence or other issues that would otherwise necessitate a side bar conference. Failure to raise the issue at that time will generally result in a disposition of the in-court objection in the presence of the jury, If necessary, counsel and the Court may amplify their objections and rulings on the record after the jury has been excused for a break, for lunch or for the day.
In addition, it is expected that counsel will anticipate evidentiary issues requiring lengthy argument and will take up such matters out of the presence of the jury. The Court will be available at 9:00 a.m. each morning to address such issues. It is the responsibility of counsel to notify other counsel of the need for a conference at 9:00 a.m. and all other counsel will be expected to be there at the appointed time for argument. THE COURT WILL NOT DELAY THE PROCEEDINGS TO RESPOND TO LAST MINUTE REQUESTS FOR CONFERENCES TO DISCUSS MATTERS WHICH, IN THE EXERCISE OF REASONABLE DILIGENCE, COULD HAVE BEEN HEARD AT THE MORNING CONFERENCE.
6. Witness List. Prior to the commencement of the trial, counsel shall provide opposing counsel with a complete witness list, and shall provide opposing counsel throughout the trial with the actual list of the next day's witness by 5:30 p.m. in the order they are expected to be called. The same procedure will be employed by both sides at the end of each trial day. Counsel should be sure PGPage 7 that they have adequate witnesses to fill the time allotted each day.
7. Note Taking. The jury shall be permitted to take notes.
8. Juror Questions. Jurors are permitted to ask questions of witnesses during the trial. Jurors are instructed that if they have any questions they are to write them on a piece of paper, fold the paper so that the question cannot be read by any other juror, and pass the question to the Juror in seat number one. The Juror in seat number one is to raise his/her hand to alert the Court that a question exists, Once examination of a witness is complete, the Judge will hold a brief side bar meeting with counsel to review the question. Any objections are noted for the record. The Judge will either grant an objection and excuse the witness or ask the witness the question. The question is then filed and made part of the record. Followup questions by counsel will be permitted.
9. Jury Questions During Deliberations. During deliberations all written questions submitted by the jury are supplied to counsel. Counsel and the Court will meet to discuss and hopefully agree on a reply. The jury is then summoned to the Courtroom in most cases and the verbal reply is given to them. A written reply is provided where appropriate.
10. 10. Jury Instructions. A copy of the jury instructions shall be provided to the jury for use during its deliberations.
11. 11. Jury Access to Exhibits. Unless otherwise advised by counsel, it will be assumed that all admitted exhibits will be sent out with the jury. Page 1

  MEMORANDUM OPINION AND ORDER

  This case comes before the Court for consideration of Defendant's Motion for Partial Summary Judgment (Document No. 23) and Plaintiff's Reply in Opposition to Defendant's Motion for Partial Summary Judgment (Document No. 27). For the following reasons, Defendant's Motion for Partial Summary Judgment is granted.

  I. FACTUAL AND PROCEDURAL BACKGROUND

  Plaintiff, R.W. Sidley, Inc., filed this action against the Defendant, United States Fidelity & Guaranty Company("USF&G") on December 28, 2001. (Document No. 1). Plaintiff's claims arise out of a construction project undertaken in Allegheny Township, Altoona, Pennsylvania.

  In July of 2000, the general construction contractor, Lawruk Builders, Inc., a Pennsylvania corporation, entered into an agreement with Blair County Convention Center & Sports Facility Authority ("Authority") for the construction of a project known as the Blair County Convention Center Parking Garage ("Project"). (Document No. 5). Pursuant to the provisions of the agreement and the Public Works Contractors Bond Law of 1967 ("Act"), Lawruk was required to provide a payment bond. (Document No. 7). On July 26, 2000, Lawruk purchased a joint and several Payment Bond ("Bond") from Defendant, USF&G. (Document No. 7). USF&G acted Page 2 as a surety on the Project. Id.

  On September 12, 2000, Plaintiff entered into a Subcontract Agreement ("Subcontract") with Lawruk to supply materials and labor to Lawruk in the nature of precast concrete components and erection thereof in connection with the Project. (Document No. 5). The amount of the Subcontract Agreement between Plaintiff and Lawruk was the sum of $2,476,000.00. (Document No. 5).

  Plaintiff contends that the materials supplied for the Project were of good and merchantable quality, and Plaintiff further argues that the precast concrete components were erected in a timely, workmanlike manner. (Document No. 5). Conversely, Defendant alleges that Plaintiff supplied the materials in an untimely manner, and that the materials were not of good mercantile quality necessitating repairs and rework. (Document No. 7).

  At the time Plaintiff initiated this civil action, Plaintiff alleged that the remaining balance due Plaintiff from the general contractor, Lawruk, was $503,296.00. (Document No. 5). During the ongoing litigation of this civil action, however, Lawruk issued three separate payments to Plaintiff between May of 2002 and August of 2002. (Document No. 21). The total amount of these payments was $393,465.58. (Document No. 21). Plaintiff argues that Lawruk owes the remaining balance due on the Subcontract in the amount of $1 09, 830.62. (Document No. 21).

  On October of 2001, Plaintiff placed Defendant, USF&G, on notice that Lawruk failed to pay Plaintiff the requested amount alleged owed under the terms of the Subcontract. (Document No. 5). USF&G argues, however, that no sum is presently due Plaintiff because Lawruk incurred substantial backcharges as the result of Plaintiff's unsatisfactory job performance. (Document No. 7). Defendant has argued that no further payments are owing to Page 3 Plaintiff. (Document No. 22). To date, Lawruk made three subsequent payments to Plaintiff that were withheld as a result of backcharges allegedly incurred by Lawruk. Id. USF&G asserts that the payments not made to Plaintiff represent legitimate backcharges under the Subcontract. Id. Thereafter, Plaintiff initiated this civil action against USF&G.

  Plaintiff filed the following claims against USF&G pursuant to the Payment Bond: (1) Plaintiff is entitled to recover the full balance of its Subcontract with Lawruk totaling $109,830.62; (2) Plaintiff is entitled to recover damages for interest on the late payments at the rate of 1.5% per month and its unpaid Applications for Payment pursuant to the terms of the Subcontract between Lawruk and Plaintiff; (3) Plaintiff is entitled to recover a penalty amount at the rate of 1.0% per month on all outstanding amounts due pursuant to the Contractor and Subcontractor Payment Act, 73 P.S. § 501 et seq. ("Act") and/or the Commonwealth Procurement Code, 62 Pa.C.S.A. § 101, et seq. ("Code"); and (4) Plaintiff is entitled to recover attorneys' fees incurred in the course of this litigation pursuant to the Act and/or the Code. (Document No. 21).

  On July 15, 2003, Defendant filed a Motion for Partial Summary Judgment arguing that Partial Summary Judgment is proper for the following reasons:

First, under Pennsylvania law, [Plaintiff] may not recover from the surety under the payment bond "interest" or "finance charges" based on a provision of the subcontract between [Plaintiff] and the principal contractor, Lawruk. Second, a claim for attorneys' fees and interest penalties pursuant to the Pennsylvania Contractor and Subcontractor Payment Act is inapplicable to sureties, such as USF&G. Third, a claim for attorneys' fees and interest penalties pursuant to the Commonwealth Procurement Code is also inapplicable to sureties.
(Document No. 23). Page 4

  II. DISCUSSION

  Fed.R.Civ.P. 56(c) provides that summary judgment may be granted if, drawing all inferences in favor of the non-moving party, "the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law."

  The mere existence of some factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment. A dispute over those facts that might affect the outcome of the suit under the governing substantive law, i.e., the material facts, however, will preclude the entry of summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Similarly, summary judgment is improper so long as the dispute over the material facts is genuine. Id. In determining whether the dispute is genuine, the court's function is not to weigh the evidence or to determine the truth of the matter, but only to determine whether the evidence of record is such that a reasonable jury could return a verdict for the nonmoving party. Id. at 248-49. In summary, the inquiry under a Rule 56 motion is whether the evidence of record presents a genuine dispute over material facts so as to require submission of the matter to a jury for resolution of that factual dispute, or whether the evidence is so one-sided that the movant must prevail as a matter of law.

  To demonstrate entitlement to summary judgment, the defendant, as the moving party, is not required to refute the essential elements of the plaintiff's cause of action. The defendant needs only to point out the absence or insufficiency of the plaintiff's evidence offered in support of those essential elements. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Matsushita Page 5 Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986). Once that burden has been met, the plaintiff must identify affirmative evidence of record that supports each essential element of his cause of action.

  A non-moving party may not successfully oppose a summary judgment motion by resting upon mere allegations or denials contained in the pleadings, or by simply reiterating those allegations or denials in an affidavit. Lujan v. National Wildlife Fed'n, 497 U.S. 871, 888 (1990). Rather, the non-moving party must offer specific evidence found in the record that contradicts the evidence presented by the movant and indicates that there remain relevant factual disputes that must be resolved at trial. See id. If the non-moving party does not respond in this manner, the court, when appropriate, shall grant summary judgment. Fed.R.Civ.P. 56(e).

  It is on this standard that the Court has reviewed Defendant's motion.

  1. Interest Charges Set Forth in the Subcontract Agreement

  The issues raised by Defendant's Motion for Partial Summary Judgment require an examination of the Defendant's liability under the Public Works Contractors Bond Law of 1967, 8 P.S. § 191, et seq., and the Payment Bond, The Public Works Contractors Bond Law of 1967 provides in pertinent part:

  (a) Before any contract exceeding five thousand dollars ($5000) for the construction, reconstruction, alteration or repair of any public building or other public work or public improvement, including highway work, of any contracting body is awarded to any prime contractor, such contractor shall furnish to the contracting body the following bonds, which shall become binding upon the awarding of said contract to such contractor: Page 6

 

(1) A performance bond at one hundred percent of the contract amount, conditioned upon the faithful performance of the contract in accordance with the plans, specifications and conditions of the contract. Such bond shall be solely for the protection of the contracting body which awarded the contract.
(2) A payment bond at one hundred percent of the contract amount. Such bond shall be solely for the protection of claimants supplying labor or materials to the prime contractor to whom the contract was awarded, or to any of his subcontractors, in the prosecution of the work provided for in such contract and shall be conditioned for the prompt payment of all such material furnished or labor supplied or performed in the prosecution of the work. "Labor and materials" shall include public utility services and reasonable rentals of equipment, but only for period when the equipment rented is actually used at the site.
8 P.S. § 193(a)(1), (a)(2). The purpose of this statute is to protect contracting parties, including subcontractors, by assuring good faith performance of contracts. Visor Builders, Inc. v. Devon E. Tranter, Inc., 470 F. Supp. 911 (M.D.Pa. 1978).

  Having reviewed the statutory language, examining the Bond is the proper place next step for the Court to take since the Bond, which was an undertaking between Lawruk and USF&G, created an independent liability with respect to future subcontractors as defined in the bond. Knecht, Inc. v. United Pacific Ins. Co., 860 F.2d 74, 79 (3d Cir. 1988); see also Lite-Air Products, Inc. v. Fidelity & Deposit Co. of Maryland, 437 F. Supp. 801 (E.D. Pa. 1977); Monongahela Street Railway Co. v. Phila. Co., 350 Pa. 603, 39 A.2d 909 (1944).

  In the case sub judice, the Plaintiff relies on the following language in the Payment Bond as a basis for recovery of interest on the late payments at the rate of 1.5%. Page 7

 

The PRINCIPAL and SURETY hereby, jointly and severally, agree with the obligee herein that any individual, firm, partnership, association or corporation, which has performed labor or furnished material in the prosecution of the work as provided, and any public utility which has rendered services in, or in connection with, the prosecution of such work, and which has not been paid in full therefor, may sue in assumpsit on this Payment Bond in his, their, or its own name and may prosecute the same to final judgment for such sum or sums as may be justly due him, them, or it, and have execution thereon. Provided, however, that the Municipality shall not be liable for the payment of any costs or expense of such suit.
(Document No. 27, Exhibit A). (Emphasis added). Plaintiff's contention is that through this language, specifically "for such sum or sums as may be justly due him", USF&G is liable for all the monies due from the principal, Lawruk, to Plaintiff under the terms of the Subcontract. In other words, Plaintiff argues that the Bond allows for recovery of the interest charges as provided for in the Subcontract. (Document No. 27).

  Defendant contends that this civil action is predicated upon the terms of the Payment Bond and not upon Plaintiff's "breach of contract claims against Lawruk based on the terms of the [S]ubcontract." (Document No. 23). Furthermore, Defendant argues that the terms of the Bond in the case sub judice only covered costs of labor and materials allegedly owed to Plaintiff Id. Defendant also asserts that bonds, as interpreted by Pennsylvania courts, do not allow for recovery against sureties for the type of damages being claimed by Plaintiff. Id.

  The Plaintiff counters that the "breadth of the language . . . [that] serves to define `what' [Plaintiff] can recover does not stem from the `labor and materials' language of the bond, but from the `justly due' language." (Document No. 27).

  Defendant correctly points out that Pennsylvania courts have determined that bonds drafted to track the statutory language of the Public Works Contractors' Act do not permit Page 8 recovery against sureties for service or finance charges that were included in subcontract agreements between a general contractor and subcontractor. Lite-Air Products, Inc, v. Fidelity & Deposit Co. of Maryland, 437 F. Supp. 801 (E.D. Pa, 1977) (surety on bond covering "amount due the claimant for such labor or material" not liable for "finance charges" on late payments for materials because such charges are more akin to penalities or damages than they are related to the value of the materials); Reliance Universal, Inc. of Ohio v. Ernest Renda Contracting Co., 308 Pa.Super. 98, 454 A.2d 39 (1982) (surety on bond covering cost of "all labor and material used" not liable for a 1.5% "service charge" for late accounts provided for in contract between contractor and supplier because not part of the "cost" of labor and materials); Can-Tex Industries v, Safeco. Insurance Company of America, 460 F.supp. 1022 (W.D.Pa. 1978) (the surety bond could not be extended by the language in a subcontract under which the general contractor agreed to be liable for finance charges and attorney's fees upon default); J.C Snavely & Sons, Inc. v. Web M & E, Inc., 406 Pa.Super 271, 594 A.2d 333 (1991) (surety on bond covering "sums as may be justly due" not liable for attorney fees and finance charges accrued under agreement between claimant and contractor because not detailed in the payment bond); Ragan v. Tri-County Excavating, Inc., 62 F.3d 501 (3d Cir. 1995) (citations omitted, interpreting Pennsylvania law the "sums justly due" language utilized in the surety bond does not, as a matter of law, extend coverage under the bond to include attorney's fees or penalties).

  Clearly, Pennsylvania law limits a surety's liabilities to those outlined in the bond itself. The Payment Bond in the case sub judice is silent as to interest payments that were provided for in the Subcontract between Lawruk and Plaintiff, This Court cannot impute an intent to cover interest payments beyond the statutory requirements of the Public Works Contractors' Act if it Page 9 is not expressly included in the Payment Bond. No such language appears in the Payment Bond before this Court. Therefore, the Court determines that in the absence of an express provision in the Payment Bond, "finance charge" cannot be considered "sums justly due" and are not recoverable from a surety under Pennsylvania law. Accordingly, Defendant's Motion for Partial Summary Judgment with respect to Plaintiff's claims for interest under the Subcontract Agreement is granted.

  2. Penalty Payments and Attorneys' Fees Pursuant to the Procurement Code

  As an initial matter, the Public Contracts Act was repealed by the Pennsylvania Legislature effective November 15, 1998. See 73 Pa. Cons. Stat. §§ 1621-1631 (statute repealed on May 15, 1998, effective 180 days thereafter). The repealed provisions were recodified nearly verbatim in the Commonwealth Procurement Code, 62 Pa. Const. Stat. Ann. §§ 3931-3939 ("the Procurement Code"). Plaintiff's claims for penalty payments and attorneys' fees under the Procurement Code, however, fail.

  The statutory provisions identified by the Plaintiff, 62 Pa.C.S.A. §§ 3933, 3935, as bases for requesting penalties and attorneys' fees do not make any reference to the assessment of such costs against sureties. See also former provisions at 73 Pa.C.S. §§ 1626.2(c), 1626.5. To the contrary, these sections address the obligations of, and the assessment of said costs against, "the government agency, contractor or subcontractor," See 62 Pa.C.S.A. §§ 3935(a)-(b); see also id. at 3932(c) (addressing the "government[s]" payment of interest to "the contractor or design professional").

  Other provisions of the Procurement Code (and the former Public Contracts Act), moreover, make express reference to the scope of sureties' potential liability. See 62 Pa.C.S.A. Page 10 § 3939(b) ("Once a contractor" pays "the subcontractor according to the provisions" of the Code, "future claims for payment against the. . . . contractor's surety by parties owed payment from the subcontractor . . . shall be barred.") See also former provision at 73 Pa.C.S. § 1626.9(b) (same). If the Legislature intended the provisions cited by Plaintiff to apply to sureties, it would have expressed such intent, Thus, the plain language of the Procurement Code does not support the Plaintiff's claims.

  Nor does this Court find any reasoned basis to accept Plaintiff's interpretation that "the Code nowhere excludes sureties from its applicability". (Document No. 27). As the Defendant aptly points out "Pennsylvania law. . . . limits surety's obligations to those detailed in the bond". Ragan v. Tri-County Excavating, Inc., 62 F.3d 501, 513 (3d Cir. 1995). In the case sub judice, the Bond is silent regarding penalty interests or attorneys' fees. Moreover, the Court of Appeals for the Third Circuit has held that the "sums justly due" language utilized in the surety bond does not, as a matter of law, extend coverage under the bond to include attorneys' fees or penalties. See Ragan, 62 F.3d at 514-15 (citations omitted). Thus, the Court determines that Defendant's Motion for Partial Summary Judgment with respect to Plaintiff's claims for penalty interest and attorneys' fees under the Procurement Code is granted.

  3. Penalty Payments and Attorneys' Fees Pursuant to the Act

  Plaintiff seeks an award of penalty payments and attorneys' fees under Pennsylvania's Contractor and Subcontractor Payment Act, 73 Pa. Cons, Stat, § et seq. (the "Act"). The purpose of the Act is to provide protection to contractors and subcontractors. Net Const., Inc. v. C & C Rehab and Const., Inc., 256 F. Supp.2d 350, 356 (E.D.Pa. 2003); Nippes v. Lucas, 815 A.2d 648, 651 (Pa.Super. 2003). Page 11

  The Act provides that "performance by a . . . subcontractor in accordance with the provisions of a contract shall entitle the . . . subcontractor to payment from the party with whom the . . . subcontractor has contracted." 73 P.S. § 504. The Act also mandates that once the subcontractor has performed in accordance with the contract, the contractor must pay the subcontractor "the full or proportional amount received for [the] subcontractor's work and materials, based on work completed or services provided under the subcontract," either: (1) "14 days after receipt of each progress or final payment [from the owner]; or (2) "14 days after receipt of the subcontractor's invoice, whichever is later." 73 P.S. § 507(c). If a contractor violates the Act, a subcontractor may recover interest of one percent per month of the amount wrongfully withheld, and "the substantially prevailing party in any proceeding to recover any payment . . . shall be awarded a reasonable attorney fee." 73 P.S. § 512.*fn1

  Plaintiff argues that the Act applies to sureties for essentially two reasons: (1) there is no "Pennsylvania caselaw which precludes the application of this Act to a surety"; (2) nor does the Act "exclude sureties from i[t]s application." (Document No. 27). The Court notes that the Pennsylvania Supreme Court has not yet interpreted the application of the Act to sureties. Thus, the Court must predict how the Pennsylvania Supreme Court would interpret the applicable provisions of the Act with respect to the case sub judice.

  Under Pennsylvania's law of statutory construction, a statute's plain meaning prevails, In fact, the Court of Appeals has stated: Page 12

 

The interpretation of Pennsylvania statutes is governed by the state's Statutory Construction Act of 1972, 1 PA. CONS. STAT. ANN. §§ 1501-1991 (1995 Supp.). When interpreting statutory language, the Pennsylvania Supreme Court is guided by the `plain meaning' rule of construction. Commonwealth v. Stanley, 498 Pa. 326, 446 A.2d 583, 587 (1982) (citing 1 PA. CONS. STAT. ANN. § 1903(a)). *fn5 `When the words of a statute are clear and free of ambiguity, the letter of it is not to be disregarded under the pretext of pursuing its spirit.' 1 PA. CONS. STAT. ANN. § 1921(b) (1995 Supp.).
Hofkin v. Provident Life & Ace. Ins. Co., 81 F.3d 365 (C.A. 3d Cir. 1996).

  This Court determines that similar to the provisions cited by Plaintiff under the Procurement Code, the provisions identified by the Plaintiff, 73 P.S. §§ 503, 507, and 512,*fn2 as bases for requesting penalties and attorneys' fees do not make any reference to the assessment of such costs against sureties. In construing the plain meaning of the language in these sections, the Court is bound to give effect to the sections of the Act according to the rules of grammar and according to the common and approved usage. See Martin Media v. Commonweatlh, 661 A.2d 479, 481 n.22 (Pa.Commw. 1995). This Court finds that the plain meaning of the sections of the Act is that a subcontractor may seek penalty payments and attorneys' fees against a contractor according to the provisions of their subcontract agreement. However, this Court also finds that the plain meaning of the sections of the Act does not address, or provide for, the recovery of such damages against a surety, namely Defendant. Therefore, the Court determines that Plaintiff's claims for penalties, interest and attorneys' fees under the Act fail and Defendant's Motion for Partial Summary Judgment is granted with regard to those issues.

 ORDER

  AND NOW, this 13th day of January, 2004, in consideration of Defendant's Motion for Partial Summary Judgment and Plaintiff's Reply in Opposition to Defendant's Motion for Partial Summary Judgment, IT IS HEREBY ORDERED that the aforesaid Motion for Partial Summary Judgment is GRANTED with respect to Plaintiff's claims for interest payments, penalty payments, and attorneys1 fees.


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