Allied Building Products Corporation v. United Pacific Insurance Company

77 Md. App. 220 (1988)

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Allied Building Products Corporation v. United Pacific Insurance Company

Maryland Court of Special Appeals
77 Md. App. 220 (1988)

  • Written by Liz Nakamura, JD

Facts

Triangle General Contractors, Inc. (Triangle) was the prime contractor on a government construction contract to build an elementary school in Baltimore. Sain & Sons Contractors, Inc. (S&S) was Triangle’s subcontractor. S&S purchased roofing and building materials from Allied Building Products Corporation (Allied) (plaintiff) to complete S&S’s work under the subcontract. Triangle, as required by Maryland’s Little Miller Act, executed a payment bond with United Pacific Insurance Company (United Pacific) (defendant) as surety. The payment bond protected all suppliers who provided construction materials for the contract work. During construction, because of S&S’s bad credit, Allied requested additional protection to ensure it would receive payment for building materials Allied supplied to S&S on credit. Accordingly, Triangle, Allied, and S&S entered into a joint-check agreement under which Triangle would pay S&S with checks jointly written out to S&S and Allied. Triangle’s liability under the joint-check agreement was limited to $100,000. By the time the contract work was complete, Triangle had paid Allied over $120,000 under the joint-check agreement. Allied then submitted a claim against Triangle’s payment bond, held by United Pacific, for an additional unpaid balance in the amount of approximately $75,000. The trial court granted summary judgment to United Pacific, holding that the joint-check agreement, which limited Triangle’s liability to Allied to $100,000, acted as a waiver of Allied’s right to collect against the payment bond under the Little Miller Act. Allied appealed.

Rule of Law

Issue

Holding and Reasoning (Bell, J.)

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