Hinkle Metals & Supply Co. v. OH. CAS. INS.
Hinkle Metals & Supply Co. v. OH. CAS. INS.
Opinion
On March 28, 2003, Hinkle Metals Supply Company, Inc. ("Hinkle Metals"), sued Ohio Casualty Insurance Company ("the insurance company"), alleging that the insurance company was liable on a bond it had issued on behalf of Hubert D. Fendley. Additionally, Hinkle Metals alleged that it was an intended third-party beneficiary of the bond. At the March 10, 2004, trial, the parties entered a joint stipulation of undisputed facts. On March 29, 2004, the trial court issued the following order:
*Page 845"THIS MATTER came before the Court for non-jury trial on March 10, 2004. The Court, having considered the Joint Stipulation of Undisputed Facts submitted by the parties, as well as the provisions of Ala. Code §
34-31-19 et seq. (1975), is of the opinion that the bond issued by Ohio Casualty Insurance Company, being governed by Ala. Code §34-31-30 , is intended to provide protection to the public in the event that a licensed heating and air conditioning contractor fails to complete performance of any contract agreement into which he may enter. The claim asserted by Hinkle Metals Supply Company, Inc.[,] is for non-payment for materials supplied to a licensed contractor and is not within the intended scope of protection under the bond. It is hereby"ORDERED, ADJUDGED and DECREED that judgment is entered in favor of Ohio Casualty Insurance Company. Costs taxed as paid."
On May 6, 2004, Hinkle Metals timely appealed.
In May 2000, the insurance company issued a bond with a penal sum of $5,000 on behalf of Hubert D. Fendley d/b/a Fendley's Heating Cooling ("Fendley"). In July 2000, the penal sum of the bond was increased to $10,000. The bond was in favor of the State of Alabama pursuant to the provisions of Ala. Code 1975, §
Hinkle Metals supplied materials for Fendley, at his request. Hinkle Metals submitted invoices to Fendley in the amount of $37,695. Fendley did not pay the invoices. Hinkle Metals commenced a civil action against Fendley. During the pendency of that lawsuit, Fendley filed a petition for Chapter 7 bankruptcy. On July 16, 2002, Fendley received a discharge in bankruptcy pursuant to
On February 3 and 18, 2003, Hinkle Metals sent correspondence to the insurance company seeking recovery under the bond. The insurance company denied the claim on the ground that the bond did not provide coverage for the claim asserted by Hinkle Metals. Hinkle Metals then filed suit.
"[W]hen a trial court sits in judgment of facts that are undisputed, an appellate court will determine whether the trial court misapplied the law to those undisputed facts." Redden v.State,
Ala. Code 1975, §
"The purpose of this chapter is to certify qualified contractors on a statewide basis in order to protect the public by identifying those contractors who have the knowledge and ability to install or service and repair heating and air conditioning systems."
(Emphasis added.) To this end, §
"The board may, in its discretion, when needed to assure financial stability, and professional competence may, in its discretion, require applicants for certification to post bond for the purpose of insuring performance by the certified contractor of any contract agreement into which he may enter. There shall be no discrimination between contractors similarly situated, and each classification of regulated contractors for bonding purposes must be reasonable in light of the purpose of the bond."
An administrative agency, such as the Board of Heating and Air Conditioning Contractors, has only those powers conferred upon it by the legislature. Batey v. Jefferson County Bd. of Health,
On appeal, Hinkle Metals argues that the purpose enumerated in §
Section
Section
The face of the bond issued by the insurance company provides:
"NOW, THEREFORE, If [Fendley] shall Indemnify the [State of Alabama] against any loss directly arising by reasons of the failure of [Fendley] to comply with the laws or ordinances under which such license or permit is granted, or any lawful rules or regulations pertaining thereto, then this obligation shall be void; otherwise to remain in full force and effect."
A performance bond is, however, a prerequisite to certification by the Alabama Board of Heating and Air Conditioning Contractors pursuant to "the laws or ordinances under which such license or permit is granted, or any lawful rules or regulations pertaining thereto." See Ala. Code 1975, §
Ala. Code 1975, §
There are several listed functions: issuing licenses to identify qualified contractors (Ala. Code 1975, §
The purpose of §
In Bill White Roofing, Dusseau Construction Company, a principal contractor that had been required to furnish a bond to Cedric's, Inc., sued Cedric's, Inc., to enforce a mechanic's lien for labor done and materials furnished. Subcontractors intervened as plaintiffs in the action, and the surety on the bond was joined as a party defendant. The subcontractors were seeking a mechanic's lien for materials, among other things. The subcontractors were unable to prove that the bond was intended for their direct benefit. Bill White Roofing,
Bill White Roofing,"While it is unfortunate that the [subcontractors] are left only to seek recovery under a judgment against a bankrupt Dusseau, Alabama statutes on labor and materialmen's liens provide ways [subcontractors] could have been assured payment for their labor and materials. See Code 1975, §§
35-11-210 to — 234; Berkowitz, The Materialman's Lien in Alabama, 9 Cumberland L.Rev. 343 (1978)."
Because Hinkle Metals has failed to show that the bond was intended for its direct benefit, the judgment of the trial court is affirmed.
AFFIRMED.
THOMPSON, PITTMAN, MURDOCK, and BRYAN, JJ., concur.
Case-law data current through December 31, 2025. Source: CourtListener bulk data.