Southern States Chemical, Inc. v. Tampa Tank & Welding, Inc. ( 2021 )

FOURTH DIVISION
HODGES AND MARKLE, JJ.,
and SENIOR APPELLATE JUDGE PHIPPS.
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
March 25, 2021
In the Court of Appeals of Georgia
A19A0960. SOUTHERN STATES CHEMICAL, INC. et al. v.
TAMPA TANK & WELDING, INC. et al.
PHIPPS, Senior Appellate Judge.
In this long-running dispute, Southern States Chemical, Inc. and Southern
States Phosphate and Fertilizer Co. (collectively, “Southern” or “Appellants”) appeal
from the trial court’s grant of summary judgment in favor of defendants Tampa Tank
& Welding, Inc. f/k/a Tampa Tank, Inc. (“Tampa Tank”) and Corrosion Control, Inc.
(“CCI”). Southern contends that the trial court erred in (1) applying the statute of
repose for improvements to real property, OCGA § 9-3-51, to bar its claims for
breach of contract; (2) ruling that its claims were barred by the statute of limitation;
and (3) dismissing its claim for breach of contract per se.
In Southern States Chemical, Inc. et al. v. Tampa Tank & Welding, Inc. et al.,
353 Ga. App. 286 (836 SE2d 617) (2019) (“Southern States III”),1 we affirmed the
trial court’s grant of summary judgment to Tampa Tank and CCI. In Division 2, we
held that the only warranty under which Southern could seek damages was the
express one-year warranty found in the contract between Southern and Tampa Tank.
Id. at 290-292 (2). In Division 3, we concluded that the statute of repose barred
Southern’s contract and express warranty claims against Tampa Tank and CCI. Id. at
292-295 (3). In Division 4, we affirmed the trial court’s ruling that Southern failed
to exercise due diligence in discovering any asserted fraud. Id. at 295 (4). Because we
concluded that Southern’s claims were barred by the statute of repose, we declined
to address any other arguments. Id. at 296 (5).
Southern filed a petition for writ of certiorari in the Georgia Supreme Court.
While the petition was pending, the legislature amended the statute of repose
applicable to improvements to real property to provide that it does not apply to
actions for breach of contract. OCGA § 9-3-51 (c) (effective July 1, 2020). The
1
This case has also appeared before this Court in two prior appeals. See
Southern States Chemical, Inc. v. Tampa Tank & Welding, Inc., 331 Ga. App. XXVI
(unpublished) (March 27, 2015) (“Southern States I”) ; Southern States Chemical,
Inc. v. Tampa Tank & Welding, Inc. f/k/a Tampa Tank, Inc., 338 Ga. App. XXVIII
(unpublished) (July 14, 2016) (“Southern States II”) .
2
Supreme Court granted Southern’s petition for certiorari, vacated our prior judgment,
and remanded the case for reconsideration in light of the amendment. See Case No.
S20C0690 (Aug. 10, 2020). Thus, we vacate Division 3 of our earlier opinion
addressing the statute of repose and remand the case to the trial court to reconsider
this ruling. The Supreme Court’s order did not consider or address Divisions 2 and
4 of our original opinion, and thus Divisions 2 and 4 of our original opinion in
Southern States III remain unchanged. We now address Southern’s claim that the trial
court erred in ruling that its contract claims were barred by the statute of limitation.
For the reasons that follow, we conclude that Southern’s claim for breach of the
express one-year warranty is not barred by the statute of limitation, but its claim for
breach of contract per se, if such a claim exists, is barred by the statute of limitation.
Accordingly, we affirm in part, reverse in part, and remand the case with direction.
The relevant facts have been set forth in this Court’s prior opinion:
The record shows that Appellants manufacture, buy, sell, and
store sulfuric acid in bulk at a facility in Savannah. In 2000, Appellants
contacted Tampa Tank about renovating a 24-foot tall, 130-foot wide
storage tank (the “[Duval] tank”) that had previously stored molten
sulfur, such that it would be suitable for storing up to 2.2 million gallons
of sulfuric acid. Appellants and Tampa Tank engaged in contract
negotiations for at least nine months. On August 21, 2000, a contract in
3
the form of a letter proposal drafted by Tampa Tank was signed and
executed by . . . Southern States. Prior to January 2002, the parties also
engaged in subsequent written change orders altering the contract. There
is no merger clause in any of these documents.
The initial letter proposal between Tampa Tank and Appellants
contained the following express one-year warranty provision: “All
material and workmanship are guaranteed for a period of twelve (12)
months from the date of completion of this work.” . . . .
The [Duval] tank renovation was completed in January 2002. The
renovation required Tampa Tank to install an impervious plastic
(“HDPE”) liner directly on top of the steel floor of the tank. Tampa
Tank then welded a new steel floor above the old floor of the tank, and
a layer of sand filled the gap between the old floor and the new floor. In
order to prevent corrosion of the new floor, Tampa Tank installed a
cathodic corrosion control system (“cathodic system”) in the sand layer.
Tampa Tank installed, but did not design, the cathodic system; it
contracted with CCI to provide the design, materials, on-site technical
assistance, and testing of the system.
During installation, Tampa Tank’s foreman consulted with CCI
over the phone regarding the installation of the magnesium strips of the
cathodic system, but CCI did not assist with the installation onsite.
CCI’s contract with Tampa Tank only required it to design the cathodic
system, procure the materials for its installation, and test the system
once installed. Appellants contend that Tampa Tank misplaced
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magnesium ribbons, which are a key component of the cathodic system,
drove a Bobcat bulldozer over the sand layer after the ribbons were
installed, which tampered with the integrity of the system, and failed to
properly seal the new floor, which left it open to corrosive rainwater.
Appellants contend that CCI failed to properly test, design and
commission the cathodic system. After the tank’s renovation was
substantially completed in January 2002, CCI performed a post-
installation commissioning inspection of the cathodic system. The report
resulting from that inspection indicated that the cathodic system was
working and properly installed. However, the cathodic system and the
sand layer it was installed upon had been covered up with steel plates by
the time CCI arrived onsite to perform its inspection. CCI inspected the
cathodic system when the tank was empty, and it was possible that a
portion of the steel plates was not in contact with the sand layer during
the testing because there was no liquid pressing the plates down into the
sand. Appellants contend that CCI failed to properly test the cathodic
system by neglecting to confirm that Tampa Tank kept the sand layer
dry, by failing to verify that Tampa Tank had not driven a Bobcat over
the floor, and by conducting an inspection when the tank was empty,
which only put the cathodic system to limited use. Appellants also fault
CCI for not having an engineer on-site to ensure that the corrosion
protection system was installed properly. CCI made no warranty to
Appellants about the tank. After inspection, CCI prepared a post-
installation report concluding that the Duval Tank’s cathodic system had
been properly installed and was fully functioning. CCI sent the report to
Tampa Tank, but not to Appellants.
5
On July 3, 2011, it was discovered that sulfuric acid was leaking
from the base of the Duval Tank.
See Southern States Chemical, Inc. v. Tampa Tank & Welding, Inc., 331 Ga. App.
XXVI, slip op. at 3-6 (unpublished) (March 27, 2015) (“Southern States I”) .
Southern first filed suit against Tampa Tank and CCI in January 2012, setting
forth claims for, inter alia, breach of contract, based on a promise that the tank would
last for 40 years, and negligence. The complaint was subsequently amended several
times. In February 2014, the trial court granted Tampa Tank and CCI’s motions for
summary judgment, finding that all of Southern’s claims were barred by the statute
of repose, OCGA § 9-3-51, and denied Southern’s motion for partial summary
judgment on negligence per se based on a violation of OCGA § 43-15-24, the
Professional Engineering Statute. In Southern States I, this Court reversed the trial
court’s grant of summary judgment in favor of Tampa Tank and CCI and remanded
the case to the trial court to determine if the defendants were estopped from raising
the statute of repose defense based on alleged fraud. Southern States I, slip op. at 11.
Specifically, we instructed the trial court to determine if a genuine issue of fact
existed as to whether Tampa Tank and CCI “fraudulently concealed any defects in the
renovation, installation or testing” of the Duval Tank and whether Southern exercised
6
due diligence. Southern States I, slip op. at 11. This Court also found that, given the
express one-year warranty in the contract between Tampa Tank and Southern, the
parol evidence rule barred any evidence regarding an oral promise of a forty-year
warranty. Southern States I, slip op. at 13-14. Finally, this Court reversed the trial
court’s denial of Southern’s motion for partial summary judgment on its claim for
negligence per se and remanded the case to the trial court with direction. Southern
States I, slip op. at 18.
After the case was remanded to the trial court following Southern States I,
Southern filed a fourth amended complaint which included numerous tort claims,
claims for negligence per se and breach of contract per se based on violations of the
Professional Engineering Statute, OCGA § 43-15-24, and, for the first time, a claim
for breach of contract based on Tampa Tank’s express one-year warranty.2 In July
2015, the trial court found that there were genuine issues of material fact as to
whether Tampa Tank and CCI made knowingly false statements to Southern and
whether they had an intent to deceive Southern. The trial court nevertheless granted
2
As part of its claim for breach of contract, Southern had previously asserted
that it was the intended beneficiary of the contract between Tampa Tank and CCI,
that CCI had promised, in its post-installation report, that the cathodic protection
system would last 43-45 years, and that this promise was intended for Southern’s
benefit.
7
summary judgment to Tampa Tank and CCI because it found that, as a matter of law,
Southern failed to exercise due diligence by never conducting annual testing of the
cathodic system, such that Southern’s claims of fraud failed. In short, the trial court
found that Tampa Tank and CCI were not equitably estopped from asserting the
statute of repose, all of Southern’s claims were barred by the statute of repose, and
Tampa Tank and CCI were entitled to summary judgment for this reason. In Southern
States Chemical, Inc. v. Tampa Tank & Welding, Inc., 338 Ga. App. XXVIII, slip op.
at 4 (unpublished) (July 14, 2016) (“Southern States II”) , this Court affirmed the trial
court’s grant of summary judgment, finding that there was no evidence that Tampa
Tank or CCI concealed information with an intent to deceive, as would be required
to equitably estop the defendants from asserting the statute of repose as a defense.
Southern States II, slip op. at 6-17.
Prior to the filing of the remittitur in the trial court, Southern filed a fifth
amended complaint. In the fifth amended complaint, Southern asserted only three
claims against the defendants: (1) a claim for breach of contract based on both the
express one-year warranty in the contract with Tampa Tank and on the promises
allegedly made by CCI in its post-installation report; (2) a claim for breach of
contract per se for failing to have a licensed professional engineer approve the Duval
8
Tank plans and approve the work itself, as required under the Professional
Engineering Statute, OCGA § 43-15-24; and (3) a claim for attorney fees and
expenses of litigation under OCGA § 13-6-11. Tampa Tank filed a motion to dismiss,
or, in the alternative, motion for summary judgment, and CCI filed a motion to strike,
or, in the alternative, to dismiss, for judgment on the pleadings, or for summary
judgment. Southern responded, and the matter proceeded to a hearing.
Assuming that the claims in the fifth amended complaint survived the trial
court’s July 2015 grant of summary judgment and this Court’s affirmance of that
order, the trial court found that the statute of repose barred all of Southern’s claims,
whether those claims sound in tort or in contract, including claims for breach of
contract and breach of contract per se. The trial court further found that Southern’s
contract claims were barred by the statute of limitation and that the statute of
limitation could not be tolled by fraud because there was no evidence of intent to
conceal and because Southern failed to exercise due diligence. As to Southern’s claim
for breach of contract per se, the trial court found that no such cause of action had
been recognized in Georgia, but even if breach of contract per se was a viable cause
of action, the statute of limitation had run. Because Tampa Tank and CCI were
entitled to summary judgment on Southern’s substantive claims, the trial court also
9
granted summary judgment on the ancillary claim for attorney fees.3 Once again,
Southern appealed.4 As set forth above, the case is now before us on remand from the
Georgia Supreme Court. See Case No. S20C0690 (Aug. 10, 2020).
1. Southern contends that the trial court erred in finding that its breach of
contract claims were barred by the statute of repose.
Effective July 1, 2020, while this case was pending on certiorari in the Georgia
Supreme Court, the legislature amended OCGA § 9-3-51, the statute of repose for
improvements to real property, to provide: “This Code section shall not apply to
actions for breach of contract, including, but not limited to, actions for breach of
express contractual warranties.” OCGA § 9-3-51 (c). In its order granting Southern’s
petition for certiorari, the Georgia Supreme Court vacated our judgment and
remanded the case
for reconsideration in light of the enactment of Act 380 (formerly S.B.
451), which amended OCGA § 9-3-51 to provide that the statute does
not apply to ‘actions for breach of contract, including, but not limited to,
actions for breach of express contractual warranties,’ and which further
3
Southern does not appeal this ruling.
4
Southern initially appealed to the Georgia Supreme Court, purporting to
invoke its jurisdiction over constitutional questions, but the Georgia Supreme Court
transferred the appeal to this Court. See Case No. S18A1256 (Nov. 15, 2018).
10
provides that the act applies to causes of action which have accrued after
January 1, 1968.
See Case No. S20C0690 (Aug. 10, 2020). Of course, we are bound by the Supreme
Court’s order. Accordingly, we vacate Division 3 of our opinion in Southern States
III with respect to the statute of repose. Because the trial court has not yet had an
opportunity to consider the amended version of OCGA § 9-3-51 and its impact, if
any, on the instant case, we hereby vacate the portion of the trial court’s order finding
that the statute of repose barred Southern’s contract claims against Tampa Tank and
CCI, and we remand for the trial court to reconsider its summary judgment ruling in
light of the recent amendment to OCGA § 9-3-51.5
2. Because we held in Southern States III that the statute of repose barred
Southern’s contract claims, we did not consider the trial court’s alternate holding that
these claims were also barred by the statute of limitation. We now address the statute
of limitation.
5
After the Supreme Court granted Southern’s petition for certiorari and
remanded the case to this Court, the parties filed motions for leave to file
supplemental briefs to address the amendment to the statute of repose and its
application, if any, to this case. Given our remand to the trial court, these motions for
leave to file supplemental briefs are denied as moot.
11
Summary judgment is proper when the record reveals no genuine issues of
material fact and the moving party is entitled to judgment as a matter of law.
OCGA § 9-11-56 (c). On appeal from the grant of summary judgment, we apply a de
novo standard of review and view the evidence, and all reasonable conclusions and
inferences drawn from it, in the light most favorable to the nonmovant. Benton v.
Benton, 280 Ga. 468, 470 (629 SE2d 204) (2006).
As relevant here, the undisputed facts show that Tampa Tank and Southern
entered into a contract in August 2000. The Duval Tank renovation was substantially
completed by January 2002, Southern States I, slip op. at 4, and put into service that
month. The leak was discovered in July 2011, and Southern informed Tampa Tank
of the leak by October 2011. Southern filed the instant action in January 2012.6
(a) Southern first argues that the trial court erred in ruling that the statute of
limitation bars its contract claims because, according to Southern, its claims that
Tampa Tank and CCI breached their express warranties did not accrue until 2011
when the tank ruptured and the defendants abandoned their warranty obligations.
6
See generally OCGA § 9-11-15 (c) (“Whenever the claim or defense asserted
in the amended pleading arises out of the conduct, transaction, or occurrence set forth
or attempted to be set forth in the original pleading, the amendment relates back to
the date of the original pleading.”).
12
As set forth above, the contract between Tampa Tank and Southern contained
the following express one-year warranty provision: “All material and workmanship
are guaranteed for a period of twelve (12) months from the date of completion of this
work.”7
As a general rule, contract claims are subject to a six-year statute of limitation.
See OCGA § 9-3-24; Feinour v. Ricker Co., 255 Ga. App. 651, 653 (1) (566 SE2d
396) (2002) (listing cases applying the six-year statute of limitation to contract claims
arising from construction contracts). The “six-year period begins to run on the date
the contract is breached and the wrongful acts occur, not the date the actual damage
results or is discovered.” Old Republic Nat. Ins. Co. v. Darryl J. Panella, LLC, 319
Ga. App. 274, 276 (734 SE2d 523) (2012).
“With regard to tort claims and claims for breach of implied warranty and
breach of the sale/construction contract, we have held that the applicable statutes of
7
To the extent that Southern relies on additional warranties allegedly made by
CCI in its post-installation report, this Court determined in Division 2 of Southern
States III that Southern could not rely on such warranties. See Southern States III,
353 Ga. App. at 290-292 (2). Because the Supreme Court neither addressed nor
considered Division 2 of Southern States III in its order granting Southern’s petition
for certiorari, and Division 2 is not inconsistent therewith, Division 2 of Southern
States III remains unchanged. See, e.g., Shadix v. Carroll County, 274 Ga. 560, 563-
564 (1) (554 SE2d 465) (2001); Pounds v. Brown, 312 Ga. App. 189, 189 (721 SE2d
905) (2011).
13
limitation begin to run on the date of substantial completion[.]” Feinour, 255 Ga.
App. at 653 (1); accord Wilks v. Overall Constr., Inc., 296 Ga. App. 410, 412 (1) (674
SE2d 320) (2009) (noting that “an action for breach of a written construction contract
must be filed within six years after the work has been substantially completed”).
However, we “treat the start date for the breach of express warranty claim
differently.” Feinour, 255 Ga. App. at 653 (1). For breach of an express warranty, the
six-year statute of limitation runs from the date that the defendant was notified of the
alleged defects. Danjor, Inc. v. Corp. Constr., Inc., 272 Ga. App. 695, 698 (2) (613
SE2d 218) (2005); accord Feinour, 255 Ga. App. at 653-654 (1); Clonts v. Scholle,
172 Ga. App. 721, 722 (1) (324 SE2d 496) (1984); see also Benning Constr. Co. v.
Lakeshore Plaza Enterprises, Inc., 240 Ga. 426, 429 (241 SE2d 184) (1977) (holding
that there can be no breach of a warranty until defendant is notified of alleged defects
in construction).
Under this rule, the statute of limitation on Southern’s claim for breach of the
express one-year warranty began to run in 2011 when Southern notified Tampa Tank
of the leak. See Danjor, 272 Ga. App. at 698 (2); Feinour, 255 Ga. App. at 653-654
14
(1); Clonts, 172 Ga. App. at 722 (1). Accordingly, the six-year statute of limitation
had not yet run when Southern filed its complaint in January 2012.
The trial court concluded that the statute of limitation began to run upon the
substantial completion of the tank, relying on Gropper v. STO Corp., 250 Ga. App.
820, 823 (1) (552 SE2d 118) (2001). But in Gropper, the plaintiffs did not rely on any
express warranty. See id at 823-824 (1), (2). Rather, Gropper “focused primarily on
the statute of limitation start date for breach of an implied warranty and did not
specifically analyze the start date for breach of an express warranty to repair and
replace.” Feinour, 255 Ga. App. at 654-655 (1) (emphasis in original).
We also note that although the express one-year warranty expired in January
2003, one year after the tank renovation was substantially completed in January 2002,
this does not necessarily bar Southern’s claims. In Nulite Indus. Co., LLC v. Horne,
252 Ga. App. 378 (556 SE2d 255) (2001), we held that the expiration of the warranty
period did not bar the filing of a claim for breach of warranty when it was undisputed
that the defects occurred during the warranty period. Id. at 380 (3). Here, the parties
dispute the cause of the leak. But Southern has presented evidence that CCI failed to
properly design and test the tank’s cathodic system and Tampa Tank failed to
properly install the tank. Viewing the evidence in the light most favorable to
15
Southern, a jury could find that the defects were present from the time the tank was
substantially completed, such that any defects occurred during the one-year warranty
period. See Nulite, 252 Ga. App. at 380 (3) (finding that when defects occurred
during the one-year warranty period, the expiration of the warranty period did not bar
plaintiff’s claim); see also Danjor, 272 Ga. App. at 698 (2) (holding that six-year
statute of limitation from OCGA § 9-3-24 is applicable to claim for breach of express
one-year warranty); Clonts, 172 Ga. App. at 722 (1) (same). Fort Oglethorpe Assoc.
II, Ltd. v. Hails Constr. Co. of Ga., 196 Ga. App. 663 (396 SE2d 585) (1990), relied
upon by the trial court, does not require a different result. In that case, the record
showed that the defect (a leaking roof) occurred after the expiration of the one-year
warranty period. Id. at 664 (2).
Accordingly, we reverse the portion of the trial court’s order holding that the
statute of limitation had run on Southern’s claim for breach of contract under the
express one-year warranty.
(b) Southern next argues that the trial court erred in applying a “heightened
standard” of fraud to rule that, as a matter of law, Tampa Tank and CCI had not
committed fraud sufficient to toll the statute of limitation.
16
Where “the gravamen of the underlying action is not a claim of fraud,” the
statute of limitation “is tolled only upon a showing of a separate independent actual
fraud involving moral turpitude which deters a plaintiff from filing suit.” Hamburger
v. PFM Capital Mgmt., Inc., 286 Ga. App. 382, 388 (4) (649 SE2d 779) (2007);
accord Hunter, Maclean, Exley & Dunn, P.C. v. Frame, 269 Ga. 844, 847 (1) (507
SE2d 411) (1998).
In such cases, before the running of the limitation period will toll, it
must be shown that the defendant concealed information by an
intentional act – something more than a mere failure, with fraudulent
intent, to disclose such conduct [–] unless there is on the party
committing such wrong a duty to make a disclosure thereof by reason of
facts and circumstances, or the existence between the parties of a
confidential relationship.
Hunter, Maclean, Exley & Dunn, 269 Ga. at 847 (1) (punctuation and footnote
omitted). Importantly, “where the plaintiff shows fraud sufficient to toll the statute
of limitation[,]” a defendant also can be equitably estopped from asserting the statute
of repose. Wilson v. Obstetrics & Gynecology of Atlanta, P.C., 304 Ga. App. 300, 305
(2) (696 SE2d 339) (2010).
In our prior opinion, we held that Tampa Tank and CCI could not be equitably
estopped from asserting the statute of repose because there was no evidence that
17
Tampa Tank or CCI made any statements with an intent to deceive or an intent to
conceal any injury or wrongdoing. Southern States II, slip op. at 6-17 (1). Under the
law-of-the-case rule, appellate rulings are binding in all subsequent proceedings,
unless the evidentiary posture of the case changes. Cohen v. Rogers, 338 Ga. App.
156, 163 (1) (789 SE2d 352) (2016); see OCGA § 9-11-60 (h). Thus, to the extent
that Southern’s claim of error is not rendered moot by our ruling in Division (2) (a),
we affirm the trial court’s ruling that there are no genuine issues of material fact
showing that Tampa Tank or CCI made any statements with the intent to conceal
wrongdoing or injury, as would be necessary to toll the statute of limitation.
(c) Southern also argues that the trial court erred in ruling, as a matter of law,
that it did not exercise due diligence to discover any alleged fraud. Once again, to the
extent that Southern’s claim of error is not rendered moot by our ruling in Division
(2) (a), we previously rejected this claim in Southern States III, 353 Ga. App. at 295
(4). Because the Supreme Court neither addressed nor considered Division 4 of
Southern States III in its order granting Southern’s petition for certiorari, and
Division 4 is not inconsistent with the Supreme Court’s order, Division 4 of Southern
States III remains unchanged. See, e.g., Shadix v. Carroll County, 274 Ga. 560, 563-
18
564 (1) (554 SE2d 465) (2001); Pounds v. Brown, 312 Ga. App. 189, 189 (721 SE2d
905) (2011).
3. Finally, Southern argues that the trial court erred in dismissing its claim for
breach of contract per se.
Pretermitting whether breach of contract per se is a valid claim under Georgia
law, we agree with the trial court that such a claim would be subject to the general
six-year statute of limitation applicable to contract claims. See OCGA § 9-3-24.
Whether we begin the running of the statute of limitation from the date of the contract
in 2000 or the date of substantial completion in 2002, the six-year statute of limitation
had run well before Southern filed the instant action in 2012. Accordingly, this
portion of the trial court’s order is affirmed.
In summary, we affirm the trial court’s rulings that there is no genuine issue of
material fact showing that Tampa Tank or CCI made any statements sufficient to toll
the statute of limitation; that, as a matter of law, Southern did not exercise due
diligence; and that the statute of limitation had run on Southern’s claim for breach of
contract per se, even if such a claim exists. We reverse the trial court’s ruling that the
statute of limitation had run on Southern’s claim for breach of contract based on the
express one-year warranty. We vacate the trial court’s ruling that the statute of repose
19
bars Southern’s contract claims, and we remand the case to the trial court to
reconsider this portion of its ruling in light of the amended statute.
Judgment affirmed in part; reversed in part; and case remanded with direction.
Markle and Hodges, JJ., concur.
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