Talbot Construction, Inc. v. Triad Drywall, LLC ( 2015 )

THIRD DIVISION
ELLINGTON, P. J.,
DILLARD and MCFADDEN, JJ.
NOTICE: Motions for reconsideration must be
physically received in our clerk’s office within ten
days of the date of decision to be deemed timely filed.
http://www.gaappeals.us/rules
September 16, 2015
In the Court of Appeals of Georgia
A15A1097. TALBOT CONSTRUCTION, INC. v. TRIAD
DRYWALL, LLC.
ELLINGTON, Presiding Judge.
This case concerns a construction subcontract between Appellee Triad Drywall,
LLC (“Triad”) and Appellant Talbot Construction, Inc. (“Talbot”). Alleging Talbot
never compensated Triad for services rendered, Triad filed suit in the Superior Court
of Forsyth County for breach of contract, unjust enrichment, and quantum meruit.
Talbot answered without asserting a related claim against Triad for breach of contract
and later sought leave to assert the omitted compulsory counterclaim by amendment.
After a hearing, the trial court denied Talbot’s motion for leave to add the
counterclaim. Pursuant to this Court’s grant of Talbot’s application for interlocutory
review, Talbot appeals, contending Triad made no showing that it would be
prejudiced by the addition of the counterclaim, and, therefore, the trial court abused
its discretion in denying Talbot leave to assert the omitted compulsory counterclaim
under the “when justice requires” provision of OCGA § 9-11-13 (f).1 For the reasons
explained below, we vacate the trial court’s ruling and remand this case for
reconsideration of Talbot’s motion for leave to set up its omitted counterclaim.
Talbot avers that on March 2, 2011, it entered into a contract with Wal-Mart
Stores, Inc. (“Wal-Mart”), whereby Talbot agreed to provide labor, equipment, and
materials for a remodeling project at a Wal-Mart store in Snellville. In consideration
for Talbot’s remodeling work on the project, Wal-Mart agreed to pay Talbot
$924,098. A key component of the project included the removal of old drywall and
the installation of new drywall. According to Wal-Mart’s schedule, Talbot had only
sixty days to complete all of the remodeling work, and it could only work during
specified times when the store was closed to the public. Additionally, Talbot was
required to proceed in a very specific sequence because Wal-Mart did not want the
remodeling project visible to its customers or for the construction to interfere with its
daily store operations.
1
“When a pleader fails to set up a counterclaim through oversight,
inadvertence, or excusable neglect, or when justice requires, he may by leave of court
set up the counterclaim by amendment.” OCGA § 9-11-13 (f).
2
The project was scheduled to commence on April 17, 2011. On that day or the
next, Talbot’s original drywall subcontractor notified Talbot it would not be able to
perform the drywall replacement as they had agreed. Talbot’s project manager
contacted Triad on April 19, 2011, to discuss having Triad take over the drywall
work. Talbot agreed to pay Triad $29,000 and, due to the time constraints, Triad
agreed to commence work that night. Talbot sent Triad a written subcontract for the
work, and Triad’s project manager executed the subcontract on April 20, 2011. Triad
did not return the subcontract to Talbot until after April 26, 2011, however, and did
not commence the project until that day. According to Talbot, other aspects of the
remodeling work, such as priming and painting, trim installation, and other interior
finish work, could only proceed efficiently and in accordance with the contract
requirements if Triad completed the drywall work in a timely manner, which it failed
to do. Triad’s failure to perform the drywall replacement on schedule prevented
Talbot from completing the overall remodeling project on time. Because the project
as a whole fell behind schedule, Wal-Mart defaulted Talbot, and terminated its
contract. Wal-Mart completed the unfinished work and back-charged Talbot
$73,763.80 for its costs and expenses.
3
On January 26, 2012, Triad commenced a suit against Talbot, claiming, inter
alia, that Talbot owed it $41,251 under the subcontract. Talbot answered without
asserting any counterclaim against Triad. Over two years after filing its answer and
defenses, Talbot filed an amended answer to Triad’s complaint and averred as an
additional affirmative defense that Triad had materially breached its subcontract by
failing to perform all conditions precedent to payment. In addition, Talbot contended
Triad’s claims were barred or had to be reduced by a setoff of Talbot’s damages that
were directly and proximately caused by Triad’s breach of its subcontract. Talbot then
filed a motion for leave to set up its omitted counterclaim pursuant to OCGA § 9-11-
13 (f). Talbot argued that Triad would not be prejudiced thereby and that justice
required that its amendment be allowed. Triad opposed Talbot’s motion, arguing
Talbot was not entitled to belatedly assert its counterclaim because it failed to
exercise due diligence in asserting the counterclaim in a timely manner and it (Triad)
would be prejudiced by the proposed amendment.
Under the Civil Practice Act, “[c]ompulsory counterclaims, as well as
affirmative defenses, must be asserted in a defendant’s answer or responsive
pleading.” (Citation omitted.) Riggio v. Lawson, 204 Ga. App. 774, 775 (1) (420
4
SE2d 613) (1992). See OCGA § 9-11-13 (a).2 Generally, “[t]he failure to plead a
compulsory counterclaim bars a party from asserting that claim in a subsequent
action.” Kitchens v. Lowe, 139 Ga. App. 526, 527 (1) (228 SE2d 923) (1976). OCGA
§ 9-11-13 (f), however, allows a pleader “by leave of court” to set up a counterclaim
that was omitted from its answer “through oversight, inadvertence, or excusable
neglect, or when justice requires[.]” As we explained in Blount,
[t]he courts should be very liberal in allowing amendments to include
compulsory counterclaims, . . . where the pleader has not been guilty of
inexcusable neglect, or has not by reprehensible conduct deprived
himself of any claim to special consideration by the court. The motion
2
Compulsory counterclaims. A pleading shall state as a
counterclaim any claim which at the time of serving the
pleading the pleader has against any opposing party, if it
arises out of the transaction or occurrence that is the
subject matter of the opposing party’s claim and does not
require for its adjudication the presence of third parties of
whom the court cannot acquire jurisdiction. But the pleader
need not state the claim if (1) at the time the action was
commenced the claim was the subject of another pending
action, or (2) the opposing party brought an action upon his
claim by attachment or other process by which the court
did not acquire jurisdiction to render a personal judgment
on that claim, and the pleader is not stating any
counterclaim under this Code section, or (3) the claim is
not within the jurisdiction of the court.
OCGA § 9-11-13 (a).
5
should be made promptly and may be denied for laches or lack of good
faith. . . . Before a delayed filing of a counterclaim is allowed, the court
should require the submission of evidence and make a finding therefrom
as to whether the delay was occasioned by oversight, inadvertence or
excusable neglect. . . . It should appear, too, that the filing of the
counterclaim when tendered works no prejudice against the plaintiff.
(Citations and punctuation omitted.) Blount v. Kicklighter, 125 Ga. App. 159, 161-
162 (3), (4) (186 SE2d 543) (1971). Because an omitted compulsory counterclaim
may be otherwise barred, “as a general rule leave to amend and set up a counterclaim
shall be given freely, but this does not dispense with the necessity of showing that
justice so requires.” Id. at 161 (4). “The determination of whether justice requires the
grant of leave to set up an omitted counterclaim is a matter which addresses itself to
the sound discretion of the trial court.” (Citation and punctuation omitted.) Boyd v.
JohnGalt Holdings, LLC, 294 Ga. 640, 642 (1) (755 SE2d 675) (2014). We review
the trial court’s ruling for abuse of discretion. Id.3
3
See also Clairmont Foods, Inc. v. Huddle House, Inc., 142 Ga. App. 171 (1)
(235 SE2d 635) (1977) (“As we have previously pointed out in construing [OCGA
§ 9-11-13 (f)], the trial judge is vested with discretion which will not be controlled
absent a legal abuse.”).
6
At the hearing on Talbot’s motion for leave to file its counterclaim, the trial
court stated the controlling legal principle as follows: “compulsory counterclaims
may not be added by amendment where the defendant has knowledge of the claims
at the time the defensive pleadings were prepared and filed.”4 The trial court found
that Talbot did have knowledge of its counterclaim at the time it filed its answer and
denied the motion for leave to amend.
Talbot contends, because the failure to plead a compulsory counterclaim can
result in the loss of that claim forever, justice requires a trial court to grant a
defendant leave to add a compulsory counterclaim if the plaintiff makes no showing
of prejudice from the proposed amendment, citing Boyd v. JohnGalt Holdings, LLC,
294 Ga. 640 (1) (755 SE2d 675) (2014). Talbot contends Triad made no such
showing of prejudice in this case and contends the trial court abused its discretion in
failing to allow the amendment without having first determined whether Triad would
actually be prejudiced by the belated addition of Talbot’s counterclaim. Without the
4
See Haire v. Suburban Auto Body, Inc., 204 Ga. App. 16, 17 (418 SE2d 163)
(1992) (“[T]his court has held that compulsory counterclaims may not be added by
amendment where the defendant has knowledge of the claims at the time the
defensive pleadings were prepared and filed in the first instance.”) (citation omitted).
7
addition of its counterclaim to this action, Talbot contends it “will lose its
counterclaim forever, and it will never have any legal remedy against Triad.”
In Boyd, the Supreme Court of Georgia emphasized that the “when justice
requires” provision of OCGA § 9-11-13 (f)
furnishes an independent ground for setting up an omitted counterclaim.
Thus, a trial court should grant leave to set up an omitted counterclaim
when justice requires even though the other grounds, oversight,
inadvertence, or excusable neglect[,] are not present.
(Citation and punctuation omitted.) 294 Ga. at 641 (1). “Moreover, because the
failure to plead a compulsory counterclaim can result in loss of that counterclaim
forever, the courts generally should be forgiving when leave is sought to add
compulsory counterclaims, at least so long as the plaintiff makes no showing of
prejudice.” (Citations omitted.) Id. at 642 (1).5
5
See also Kitchens v. Lowe, 139 Ga. App. 526 (228 SE2d 923) (1976) (The
trial court did not abuse its discretion in allowing the defendant to add its omitted
compulsory counterclaim to the plaintiff’s suit on account for fertilizer, where the
defendant’s claim for damages caused by allegedly defective fertilizer was a
compulsory counterclaim and was so interrelated as to properly be construed together
with the plaintiff’s claim and where the plaintiff was not surprised or prejudiced by
the belatedly asserted counterclaim.).
8
In Boyd, the plaintiffs filed an action for trespass and ejectment after the
defendant foreclosed their right of redemption with regard to a small parcel of
commercial property, based on the plaintiffs’ default on an agreement to make
specified payments to redeem the property. Boyd, 294 Ga. at 640-641 (1). Initially,
the defendant timely answered, but did not then assert a counterclaim to quiet title.
Id. at 641. Three years later, the defendant sought leave to add its counterclaim to
quiet title by amendment, and the trial court granted leave to do so. Id. Ultimately, the
trial court entered judgment that quieted title in favor of the defendant against the
plaintiffs. Id. In holding the trial court did not abuse its considerable discretion when
it granted the defendant leave to add its counterclaim, the Supreme Court concluded
title to the property had been a central issue since the beginning of the overall case,
such that the defendant’s claim to quiet title was inextricably intertwined with the
plaintiffs’ claims. Id. at 642 (1). Because a quiet title claim had been implicit
throughout the litigation, the plaintiffs were not surprised or unfairly prejudiced by
the defendant’s late assertion of the compulsory counterclaim to quiet title, and
inclusion of the claim in the pending case fostered judicial economy. Id.
Similarly, in this case, the record shows that Triad knew of the basis for
Talbot’s breach of contract counterclaim, as the issue presented involves the terms
9
and conditions of the subcontract that is the subject of Triad’s own claims and
involves the same facts, transactions, and circumstances concerning Triad’s
performance regarding the drywall replacement. Although Triad argues broadly it will
be prejudiced if Talbot is allowed to add its counterclaim in that it may be forced at
“great expense” to “depose additional witnesses and other subcontractors,”6 the
existing record is devoid of any evidence regarding the magnitude of the expense or
other hardship that Triad will face in defending against Talbot’s claim. More
importantly, the record is devoid of any evidence that late assertion of the claim will
cause significantly greater expense than timely assertion would have caused. Absent
such a particularized showing of prejudice on the record by Triad,7 we cannot
evaluate whether the trial court properly exercised its discretion in determining
whether to grant or deny Talbot’s motion for leave to set up its omitted counterclaim
or, conversely, whether the court considered the first three exceptions in OCGA § 9-
6
See Eudaly v. Valmet Automation, 201 Ga. App. 497, 498 (1) (411 SE2d 311)
(1991) (It was “neither fair nor expeditious” and was an abuse of discretion to allow
the defendant to file a late counterclaim after the time for discovery expired, while at
the same time denying the plaintiff’s motion to reopen discovery as to those late
counterclaims.).
7
See Boyd, 294 Ga. at 642 (1) (The courts generally should be forgiving when
leave is sought to add a compulsory counterclaim “at least so long as the plaintiff
makes no showing of prejudice.”) (citations omitted; emphasis supplied).
10
11-13 (f) that justify granting leave (that is, “oversight, inadvertence, or excusable
neglect”) to the exclusion of the fourth (that is, “when justice requires”). As an
appellate court, we afford great deference to a trial court’s decision in this regard,8 but
we cannot properly review a decision to deny leave to add a compulsory counterclaim
where, as in this case, it appears the trial court stopped short of considering all of the
provisions in OCGA § 9-11-13 (f).
For all of the foregoing reasons, the trial court’s ruling denying Talbot leave
to set up its omitted compulsory counterclaim is vacated, and we remand the case for
the trial court to reconsider Talbot’s motion.
Judgment vacated and case remanded. Dillard and McFadden, JJ., concur.
8
Boyd, 294 Ga. at 642 (1); McKesson HBOC v. Adler, 254 Ga. App. 500, 506
(4) (562 SE2d 809) (2002) (“Whether to allow such a filing even after the requisite
showing is made is within the discretion of the trial court and will not be disturbed
absent abuse.”) (citation and punctuation omitted; emphasis supplied).
11