Opinion ID: 1548799
Heading Depth: 2
Heading Rank: 1

Heading: Compliance with RSA 447:18

Text: The petitioner first argues that the trial court erroneously interpreted RSA 447:18 to require it to send copies of its petitions to the moving respondents within one year of filing its claim under RSA 447:17. We review the trial court's statutory interpretation de novo. Chesley v. Harvey Indus., 157 N.H. 211, 213, 949 A.2d 728 (2008). We are the final arbiters of the legislature's intent as expressed in the words of the statute considered as a whole. Appeal of Parkland Med. Ctr., 158 N.H. 67, 72, 960 A.2d 352 (2008). We first examine the language of the statute, and, where possible, ascribe the plain and ordinary meaning to the words used. Id. When a statute's language is plain and unambiguous, we need not look beyond it for further indication of legislative intent, and we will not consider what the legislature might have said or add language that the legislature did not see fit to include. Id. We also interpret a statute in the context of the overall statutory scheme and not in isolation. Liam Hooksett, LLC v. Boynton, 157 N.H. 625, 628, 956 A.2d 304 (2008). Additionally, we do not consider words and phrases in isolation, but within the context of the statute as a whole. Franklin Lodge of Elks v. Marcoux, 149 N.H. 581, 585, 825 A.2d 480 (2003). This enables us to better discern the legislature's intent and to interpret statutory language in light of the policy or purpose sought to be advanced by the statutory scheme. Id.
We begin with a brief general discussion regarding bonds issued for public works projects and the statutory scheme that governs such bonds. A bond is a three-party instrument by which one party (the surety) guarantees or promises a second party (the owner or general contractor) the successful performance of contract obligations owed to the second party by its principal (the contractor or subcontractor). 3 S. Stein, Construction Law Appendix 9J, at App. 9-27 (Sept.2006). Three kinds of bonds are common in construction: bid bonds, performance bonds, and payment bonds. Id. A bid bond guarantees that the bidder will enter into the contract for the bid amount. Id. A performance bond guarantees to the owner that a prime contractor will perform according to the contract referenced in the bond. Id.; see Wolfeboro Neck Prop. Owners Assoc. v. Town of Wolfeboro, 146 N.H. 449, 453, 773 A.2d 633 (2001). A payment bond assures the owner that the prime contractor will pay its subcontractors and suppliers, who might otherwise file liens against the owner's property. 3 Stein, supra at App. 9-27. A performance bond is one exacted for the protection of the public body to guarantee completion of a project, while [a] payment bond is exacted for the protection of materialmen, suppliers, and laborers who otherwise might be without recourse for payment of their claims against the municipality. 14 P. Loughlin, New Hampshire Practice, Local Government Law § 789, at 45 (1995). In New Hampshire, [a]ny municipal contracts, especially capital building contracts, must have provisions requiring the posting of performance and/or payment bonds. Id. Performance and payment bonds can be separate documents or may be combined. 3 Stein, supra at App. 9-27. RSA 447:16 to:18 govern bonding for public works projects. Although it appears that these statutes only apply to payment bonds, see Loughlin, supra § 789, at 46, no party argues that they do not govern the bonds at issue even though the petitioner characterizes them as performance bonds. We, therefore, assume for the purposes of this appeal that RSA 447:16 to:18 govern the bonds at issue. RSA 447:16 provides: Officers, public boards, agents or other persons who contract in behalf of the state or any political subdivision thereof for the construction, repair or rebuilding of public buildings, public highways, bridges or other public works shall if said contract involves an expenditure of $25,000, and may if it involves an expenditure of less amount, obtain as a condition precedent to the execution of the contract, sufficient security, by bond or otherwise, in an amount equal to at least 100 percent of the contract price, or of the estimated cost of the work if no aggregate price is agreed upon, conditioned upon the payment by the contractors and subcontractors for all labor performed or furnished, for all equipment hired, including trucks, for all material used and for fuels, lubricants, power, tools, hardware and supplies purchased by said principal and used in carrying out said contract, and for labor and parts furnished upon the order of said contractor for the repair of equipment used in carrying out said contract. The purpose of this provision, which was first enacted in 1927, is to furnish an alternative security to lienors, in general more practically adapted to protect them and at the same time to save the state or municipality from annoyance. Petition of Keyser, 97 N.H. 404, 407, 89 A.2d 917 (1952) (quotation omitted); Guard Rail Erectors Inc. v. Company, 86 N.H. 349, 350, 168 A. 903 (1933). To obtain the benefit of bonds issued pursuant to RSA 447:16, a claimant must within 90 days after the completion and acceptance of the project by the contracting party file with the proper public entity a statement of the claim. RSA 447:17. A copy of the statement of claim is then sent by mail by the office where it is filed to the principal and surety. Id. We have held that the failure to comply with the statutory requirement that a statement of claim be filed with the designated party is usually held fatal. American Fidelity Co. v. Cray, 105 N.H. 132, 136, 194 A.2d 763 (1963); see Fastrack Crushing Servs. v. Abatement Int'l/Advatex Assocs., 149 N.H. 661, 666, 827 A.2d 1019 (2003) ( Fastrack I ). We have also held that giving notice within the ninety-day period required by RSA 447:17 is a condition precedent to any claim against a statutory bond. See Fastrack Crushing Servs. v. Abatement Int'l/Advatex Assocs., 153 N.H. 284, 287, 893 A.2d 674 (2006) ( Fastrack II ). [T]he main purpose of [this] notice requirement is to provide parties with an opportunity to settle the claim without resorting to litigation. Mountain Envtl. v. Abatement Int'l/Advatex Assocs., 149 N.H. 671, 674, 826 A.2d 556 (2003). Another purpose is to allow the prime contractor to pay his subcontractors without fear of additional liability to sub-subcontractors or materialmen. Fastrack II, 153 N.H. at 287, 893 A.2d 674 (quotation omitted). The notice required by RSA 447:17 thus prevents both double payments by prime contractors and the alternative of interminable delay in settlements between contractors and subcontractors. Id. (quotation omitted). In the event that there is no settlement, a claimant may sue on a statutory bond provided that the claimant, within one year after filing [the notice of claim], files a petition in superior court to enforce the claim with copy to the principal and surety, and such further notice as the court may order. RSA 447:18. The court then shall examine all claims having been duly filed and hold a hearing, with notice to all creditors who have filed claims as herein provided, and to the principal and surety or sureties, and find the respective amounts due such party claimants. Id. The court may require the attendance of any official with whom claims have been filed, with such claims, or require such official to furnish a copy of such claims for the court's use. Id. As with the failure to comply with RSA 447:17, we have held that the failure to comply with RSA 447:18 is usually held fatal. Cray, 105 N.H. at 136, 194 A.2d 763. In addition to the remedy of seeking payment on the bond, RSA 447:15 (2002) allows for a mechanic's lien to attach to any money due or to become due from the state or from any political subdivision thereof by virtue of any contract for any public work or construct, alteration, or repair, in the performance of which contract the lienor participated by performing labor or furnishing materials or supplies. The purpose of this lien provision is to put those who supply materials [and labor] for the erection of state property on a parity, in respect to their liens, with those who perform a like service for private owners. American Bridge Co. v. Company, 87 N.H. 62, 63, 174 A. 57 (1934); see Lyle Signs, Inc. v. Evroks Corp., 132 N.H. 156, 158, 562 A.2d 785 (1989).
RSA 447:18 provides, in pertinent part: Said claimant shall, within one year after filing such claim, file a petition in the superior court ... to enforce his claim or intervene in a petition already filed, with copy to the principal and surety, and such further notice as the court may order. Pursuant to general rules of statutory construction, the word `shall' is a command, which requires mandatory enforcement. Fastrack I, 149 N.H. at 664-65, 827 A.2d 1019 (quotation omitted). Substantial compliance with this statute does not suffice. See id. at 666, 827 A.2d 1019. Our law is well settled that in giving statutory notice the requirements of the statute must be strictly observed. Id. (quotation omitted). The petitioner concedes that it did not provide copies of its petitions to the moving respondents until August 2008, more than one year after filing its March 2007 claim. The petitioner argues that, nonetheless, it complied with RSA 447:18 because [t]he one year statute of limitations contained in RSA 447:18 qualifies and relates only to the date of the filing for the Petition to Enforce and does not create a specific obligation to provide a Respondent a copy of such Petition within a specific timeframe (i.e., one year). Although the legislature is not compelled to follow technical rules of grammar and composition, a widely accepted method of statutory construction is to read and examine the text of the statute and draw inferences concerning its meaning from its composition and structure. In re Richard M., 127 N.H. 12, 17, 497 A.2d 1200 (1985) (quotation omitted). Here, we must determine to what subject the phrase within one year after filing such claim applies. Where a sentence contains several antecedents and several consequents they are to be read distributively. The words are to be applied to the subjects that seem most properly related by context and applicability. 2A N. Singer & J.D. Singer, Statutes and Statutory Construction § 47.26, at 438 (7th ed.2007). Thus, [w]here several words granting power, authority, and obligation are found at the beginning of a clause, it is not necessary that each of the words apply to the several branches of the clause. It may be construed reddendo singula singulis and the words giving power and authority limited to particular subjects and those of obligation applied to others. Id. at 441. In this case, the subjects most properly related to the phrase within one year after filing such claim are file a petition and with copy to principal and surety. It would not make sense to apply the phrase to such further notice as the court may order because a petitioner has no control over when a court will issue orders for further notice. As the petitioner contends: [I]t is impossible for a party filing a Petition to predict when a particular Court might be able to receive, process, and return an Order of Notice for service on a Respondent. We will not interpret a statute to require such an illogical result. State v. Yates, 152 N.H. 245, 255, 876 A.2d 176 (2005); see General Electric Co. v. Dole, 105 N.H. 477, 479, 202 A.2d 486 (1964). Further aiding our construction is the fact that the phrase with copy to principal and surety is separated from the phrase file a petition with a comma and that there is a conjunction separating such further notice as ordered by the court from the rest of the sentence. This indicates that the two phrases file a petition and with copy to principal and surety are to be read together, while the phrase such further notice as ordered by the court is to be read on its own. The petitioner argues that it is absurd to require a petitioner to provide a respondent with two (2) copies of the exact same pleading. We disagree. New Hampshire is not alone in requiring a petitioner to provide separate notice of the filing of a lawsuit under similar circumstances. See N.M. Stat. Ann. § 48-2A-9 (Michie 1995) (requiring that written notice of lawsuit to obtain satisfaction of stop notice be mailed to subject of lawsuit within five days after date suit was filed). Moreover, construing the statute to require a petitioner to provide the principal and surety with a copy of the petition to enforce the bond in addition to such further notice as the court may order is consistent with the last antecedent rule. See Mountain Valley Mall Assocs. v. Municipality of Conway, 144 N.H. 642, 652, 745 A.2d 481 (2000). The last antecedent rule, a subset of reddendo singula singulis, is the general rule of statutory as well as grammatical construction that a modifying clause is confined to the last antecedent unless there is something in the subject matter or dominant purpose which requires a different interpretation. Id. (quotation omitted); see L. Jellum, Mastering Statutory Interpretation 84 (2008); Singer & Singer, supra § 47.33, at 487-89. This rule has been adopted by statute. See RSA 21:14 (2000); Piper v. Railroad, 75 N.H. 435, 442, 75 A. 1041 (1910). RSA 21:14 provides: The words `said' and `such,' when used by way of reference to any person or thing, shall apply to the same person or thing last mentioned. See Piper, 75 N.H. at 442, 75 A. 1041. Applying this rule, such further notice means that the copy of the petition given to principal and surety when the petition is filed is in addition to any court-ordered notice. The copy of the petition given when the petition is first filed is the first notice and court-ordered notice given thereafter is such further notice. In other words, the statute requires that the petitioner provide the respondents with two copies of the same pleading, once when the petitioner first files the petition and again when the petitioner is ordered to serve the respondents by the trial court. In this case, because the petitioner did not provide the moving respondents with a copy of its petitions within one year after filing its notice of claim, the petitioner did not strictly comply with RSA 447:18, and the trial court did not err by dismissing its petitions. See Fastrack I, 149 N.H. at 666, 827 A.2d 1019.