Court Opinion

ID: 9726208
Source: CourtListenerOpinion
Date Created: 2023-08-26 12:37:27.754323+00
Date Added: 2024-06-11T18:25:24.255422
License: Public Domain

NAJAM, Judge,
concurring in result.
I concur in the result reached by the majority that summary judgment was properly entered against Dow-Par. However, I disagree with the majority's analysis in arriving at that result.
I am not convinced that "a lessor of equipment to a subcontractor does not fall within the class of laborers, materialmen, or suppliers covered by the statute." Op. at 155. The majority is correct that a person who supplies equipment to a subcontractor is protected by the statute, although the majority then states there is no indication in the statute that the term "supplier" includes a lessor. Op. at 154. This reasoning assumes, however, that there is a distinction within the statute between leasing and selling the same equipment to a subcontractor. The majority essentially contends that a lessor of equipment has no claim against a payment bond but that a seller of equipment does.
The authorities cited by the majority do not support this distinction under all cireum-stances. First, the absence of language in the payment bond statute concerning equipment rental, and its inclusion in Indiana Code § 36-1-12-8, is of no import. Indiana Code § 36-1-12-8(a) does not address those claimants protected under a payment bond. *158Rather, it concerns a board's discretion to perform a public works project, by use of its own work force and without awarding a contract, if the cost of the project is less than $75,000.00. The specific inclusion of rental costs for equipment in Indiana Code §$ 86-1-12-3(a) is obviously intended to ensure that all costs of a public works project are considered before a political subdivision can undertake such a project without a payment bond. See I.C. § 36-1-12-18.1(a) (Section 18.1 only applies to contracts for public works projects if cost is estimated at more than $75,000.00).
Second, the Montgomery and Southern Swrety decisions cited by the majority, in which claims against the payment bond were denied, both involved material or equipment that was sold to or owned by the contractor and used in the project. See Montgomery v. Southern Sur. Co. (1928), 96 Ind.App. at 477-78, 162 N.E. 31, 33 (parts and labor costs incurred by subcontractor for repair of its own equipment used on project not covered by bond because not consumed in project's completion); Southern Sur. Co. v. National Lumber Co. (1920), 73 Ind.App. 592, 602, 122 N.E. 686, 689 (lumber used at construction site by subcontractor to brace excavation survived project and could be used by subcontractor for other contracts). I agree that when equipment is sold rather than leased to the contractor (or subcontractor), it becomes part of the contractors's "capital," may be used on other projects not secured by the payment bond at issue and is not indebtedness secured by a payment bond. See Montgomery, 96 Ind.App. at 478, 162 N.E. at 33. However, when a contractor leases equipment for use on a public works project, the equipment contributes to its completion and rental costs associated with the project should be recoverable under the payment bond. Lease payments incurred while the equipment is used elsewhere are not recoverable under the bond.
Our courts have held that if there is evidence that equipment or material was used on a public works project and consumed in its completion, these "cireumstances might justify an inference" that a valid claim exists under the bond. See id. at 478-79, 162 N.E. at 33. The facts of the present case could support such an inference. There is evidence that while Dow-Par's equipment leases with CDI did not specify a particular project site for use of the equipment, CDI utilized that equipment at times on the Fishers Complex site. The costs of leasing Dow-Par's equipment were consumed, at least in part, at the Fishers Complex site. Thus, these costs were indebtedness for material, in the form of equipment rental, furnished for a public works project and secured by a payment bond under Indiana Code § 36-1-12-13.1. Cf. Metropolitan Casualty Ins. Co. v. Natural Rock Asphalt Corp. (1937), 103 Ind.App. 687, 689, 6 N.E.2d 739, 740 (asphalt company, which contracted with general contractor to purchase rock but which also paid costs to transport rock, had claim against payment bond for freight costs).
Accordingly, I would hold that a lessor of equipment to a subcontractor is protected under a payment bond issued pursuant to Indiana Code $ 36-1-12-18.1 for a public works project. Whether a lessor of equipment has a claim against the payment bond is determined by the extent to which the lessor can prove lease payments for equipment became "part of the project" when that equipment was furnished to and used to further its completion. See Montgomery, 96 Ind.App. at 478-79, 162 N.E. at 33-34. After reviewing the evidence in this case, I am not convinced that Dow-Par met its burden of proving its right to payment under the statutory payment bond requirements. I would affirm the judgment on that theory alone.1

. The majority's resolution of Issue Two is unnecessary. The bond in this case includes language that limits USF & G's liability "by and to the extent of any payment" by the surety or the principal, and it does not meet the statutory requirement that a bond secure "payment of all indebtedness" to the protected claimants. In other words, such a contractual limitation of liability is inapplicable to those claimants protected by statute and can only be applied to *159claimants that do not fall within the protection of Indiana Code § 36-1-12-13.1. Because Dow-Par is a protected claimant under the statutory payment bond requirements, it does not have an independent claim under the terms of USF & G's bond.