This case requires us to resolve several questions relating to a payment bond obtained and recorded by appellee T. D. Farrell Construction Company “Farrell” as part of the construction of a Wal-Mart Superstore in Decatur. We reverse the trial court’s declaration that appellant Sierra Craft, Inc. d/b/a Pacific Fire Protection “Sierra” was limited to claiming $20,000 under the payment bond, the specific amount listed in Sierra’s notice to contractor that was sent to Farrell. We also reverse the trial court’s declaration that the payment bond served as substituted collateral for the construction project and discharged the materialmen’s lien filed by Sierra, since we conclude that the payment bond did not meet the statutory requirements of a lien release bond. We affirm in all other respects. Appellee Farrell was the general contractor for the Wal-Mart construction project. Pursuant to its contractual obligations with Wal-Mart, Farrell obtained and recorded a payment bond for $7,603,103, which represented the full amount of Farrell’s contract price for the construction work. The surety on the payment bond was Travelers Casualty and Surety Company of America “Travelers”. The payment bond was for the benefit of all persons supplying labor, materials, supplies, services, utilities and equipment in the prosecution of the work provided under the construction contract. The payment bond explicitly stated that “any of such persons or entities may maintain independent actions upon this bond . . . .”
Farrell subcontracted with The VP Group for provision of a fire sprinkler for the construction project. In turn, The VP Group allegedly ordered and received fire sprinkler pipes, valves, and fittings for the project from appellant Sierra. Consequently, Sierra sent Farrell a notice to contractor in which it maintained that it was providing fire sprinkler materials for the project for a contract price of $20,000 in connection with improvements being made by The VP Group.
