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February 06, 2015

MSC grants leave to appeal definition of notice within the Public Works Bond Act

In Wyandotte Electric Supply v. Electrical Technology Systems, Inc., No. 149989, the Michigan Supreme Court has granted leave to appeal the Court of Appeals decision holding that under the Public Works Bond Act, MCL 129.201 et seq., if the notice of supplying goods to the principal contractor is sent by certified mail as prescribed by the statute, the notice is sufficient even if it is never actually delivered.  In granting leave to appeal, the Supreme Court has specified that the issues briefed on appeal should include whether the plaintiff served on the principal contractor the 30-day notice within the meaning of MCL 129.207, whether the plaintiff is entitled to damages, if any, that include a time-price differential and attorney fees, and whether MCL 600.6013(7) is applicable to the judgment in this case.
Defendant KEO & Associates, Inc. KEO was hired by the Detroit Public Library to complete a renovation of the library’s main branch.  KEO, as general contractor, in turn hired Electrical Technology Systems (“ETS”) as its electrical subcontractor on the job.  ETS then entered into a sub-subcontract with Wyandotte Electric Supply Wyandotte for the supplies necessary to complete the project. 
In the agreement between ETS and Wyandotte, ETS promised to pay for materials within 30 days of delivery, with all late-paid invoices subject to a 1.5% time-price differential.  ETS further agreed to pay one-third of any attorney fees necessitated by Wyandotte’s collection efforts.  In August 2009, Wyandotte supplied a quote to ETS for the materials needed on the library subcontract.  This quotation expressly incorporated a 1.5% time-price differential.  Wyandotte sent notice by certified mail of its first supply of materials to ETS, however, it is undisputed that Wyandotte’s notice to KEO did not reach its destination.
ETS failed to pay its accumulated debt to Wyandotte for the library project materials and Wyandotte filed suit against ETS and against co-defendants KEO and Westfield Insurance Company for recovery from the surety bond.  The Court of Appeals held that Wyandotte complied with the 30-day notice provision of the Public Works Bond Act as the plain language of the statute makes no mention of actual receipt of this notice as a condition precedent to filing suit. If the claimant uses the method of service outlined in the statute, in this case certified mail, then proof of actual receipt is not required.  The Court further held that the attorney fees and time-price differential awarded to plaintiff represent sums “justly due” under the contract because they were an integral part of the contract between the parties and the surety was liable for that amount.  The Court of Appeals also awarded post-judgment interest under MCL 600.6013(7), finding that the contract between Wyandotte and ETS constituted a written instrument evidencing indebtedness with a specified interest rate.
The Michigan Supreme Court has granted leave to appeal this decision.

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