Court Opinion

ID: 9519548
Source: CourtListenerOpinion
Date Created: 2023-08-07 01:18:27.973842+00
Date Added: 2024-06-11T12:44:29.076315
License: Public Domain

DANIEL F. FOLEY, Judge,
dissenting.
I respectfully dissent.
It is my firmly held view that the claim of Green Electric, subcontractor in this case, should fail.
There was a total failure by Green Electric to comply with Minn.Stat. § 574.31 (1990). It is an undisputed fact that Green Electric’s work was completed and accepted on November 10,1988. However, Green Electric did not notify the MAC of AMM’s default or even inquire about a bond until February 1990. Minn.Stat. § 574.31 imposes two conditions on a subcontractor for it to maintain an action on a bond. First, the subcontractor must provide written notice to the appropriate government agency, and the notice must be provided within 90 days after completion and acceptance of the work. Strict compliance with this statute is required. See Alexander Constr. Co. v. C & H Contracting, Inc., 354 N.W.2d 535 (Minn.App.1984).
As noted, Green Electric not only failed to give proper notice, but did not even inquire about a bond until long after the 90 days had run.
Here, the majority opinion gives little, if any, consideration to the fact that the performance bond benefitted both the MAC and Green Electric. The performance bond entered into by AMM and the surety (A-179) acknowledged the regularity and validity of the Terminal Facilities Fixed Display Advertising Agreement and incorporated that agreement into the performance bond in words as follows:
NOW, THEREFORE, if the principal,
1. Shall faithfully fulfill and perform said Terminal Facilities Fixed Display Advertising Agreement and any amendments thereto, for the period from May .15, 1988 through May 31, 1989, it being understood that said surety hereby waives notice of any and all amendments to said Agreement, then this obligation shall be void, but otherwise it shall remain in full force and effect.
Among the terms of the lease agreement incorporated by reference into the performance bond, is an obligation of the concessionaire (AMM) to, among other things,
6. Be responsible for all “fixtures, equipment, supplies,” installation and ongoing maintenance costs related to the operation of the Advertising Concession.
(Appellant’s App. A. 122)
The performance bond, by incorporating the terms of the lease agreement, satisfied the provisions of Minn.Stat. § 574.26 and protected Green Electric against the contractor’s default. Crow & Crow, Inc. v. St. Paul-Mercury Indem. Co., 247 Minn. 426, *825431 n. 2, 77 N.W.2d 429, 432 n. 2 (1956). Because the performance bond, by its terms, protected Green Electric, it could have maintained an action against the performance bond surety. See id. at 429, 77 N.W.2d at 431.
Green Electric chose not to pursue an action against the performance bond surety, assuming that bond not to be viable, and ignored the opportunity to make a claim after the MAC preserved the performance bond for an additional six months after January 31, 1990, so that any unsecured creditor of AMM, including Green Electric, could assert a claim under the bond. Even with the extension of time of six months that the bond was held open, Green Electric made no claim, satisfied only to bring a direct suit against the MAC.
Green Electric contends, and the trial court held, that the contract between the MAC and AMM was a public works contract. However, public bidding was not required here any more than it was in Hubbard Broadcasting v. Metropolitan Sports, 381 N.W.2d 842 (Minn.1986), and the rule applied in Hubbard should be applied here.
It is my view that the work, and lease, as in Hubbard, was private, not public, and the MAC fully protected Green Electric by its performance bond incorporating the terms and conditions of the agreement.
Thus, AMM’s failure to pay Green Electric constituted a default of the concession agreement and Green Electric was protected from this default under the performance bond and should have pursued the surety.
The trial court granted Green Electric summary judgment against the MAC. While the matter was submitted on stipulated facts, neither the facts nor conclusions acknowledge that the performance bond incorporated the terms of the Terminal Facilities Display Agreement which fully protected Green Electric. The performance bond is a part of the record, without objection, and speaks for itself. (A-179)
Here, by applying ordinary contract law, Green Electric unreasonably delayed in asserting a claim — in asserting what is better called a known right — and should not be permitted to prevail against the MAC. See Klapmeier v. Town of Center, 346 N.W.2d 133, 137 (Minn.1984). As a result, the MAC has been prejudiced by being denied the protection of the performance bond, now expired, which was entered into to protect creditors, such as Green Electric. See Aronovitch v. Levy, 238 Minn. 237, 242, 56 N.W.2d 570, 574 (1953). Green Electric did not act in a diligent manner. Its claim is stale.
I contend that it is unnecessary to remand the case to determine if AMM was or is insolvent. The trial court should be reversed and summary judgment entered in favor of the MAC, dismissing the complaint.