Choate Construction Company v. Auto-Owners Insurance Company

WHOLE COURT
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
November 18, 2015
In the Court of Appeals of Georgia
A15A1629. CHOATE CONSTRUCTION COMPANY v. AUTO-
OWNERS INSURANCE COMPANY.
DILLARD, Judge.
In this suit to impose liability on payment and performance bonds, general
contractor Choate Construction Company (“Choate”) appeals the trial court’s denial
of partial summary judgment as to its claims for liability on the bonds against surety
Auto-Owners Insurance Company (“AOIC”) and its grant of partial summary
judgment to AOIC as to Choate’s claims for surety bad faith and attorney fees.1 On
appeal, Choate argues that the trial court misinterpreted the bonds’ principal and the
1
See Dierkes v. Crawford Orthodontic Care, P.C., 284 Ga. App. 96, 98 (1)
(643 SE2d 364) (2007) (“Ordinarily, a party appealing a denial of summary judgment
must first obtain a certificate of immediate review and then apply for review in this
Court. That rule does not apply, however, when an appeal from a denial of summary
judgment is tied to the appeal of an appealable order or judgment.” (footnote and
punctuation omitted)).
incorporated subcontract, misinterpreted the parties’ intentions (as reflected in the
bonds), erred in its application of the rules of contract construction, and erred in
finding that AOIC was entitled to summary judgment as to its claims for surety bad
faith and attorney fees. For the reasons set forth infra, we affirm.
We have previously reviewed this case on appeal from a summary-judgment
ruling, and our prior opinion sets forth many of the facts relevant to the instant
appeal.2 But by way of review (and viewing the evidence in the light most favorable
to Choate, the nonmoving party),3 the evidence shows that, in November 2008,
Choate entered into a contract with the Board of Regents of the University System of
Georgia for the construction of sorority and fraternity houses at the University of
Georgia.4 Thereafter, Choate hired Dedmon Electrical Services (“Dedmon”) to
perform the electrical work on the project, which was referred to as “Greek Park.”5
2
See Choate Const. Co. v. Auto-Owners Ins. Co., 318 Ga. App. 682 (736 SE2d
443) (2012) (physical precedent only).
3
See, e.g., Martin v. Herrington Mill, LP, 316 Ga. App. 696, 696 (730 SE2d
164) (2012).
4
Choate Const. Co., 318 Ga. App. at 683.
5
Id.
2
Choate and Dedmon entered into a subcontract, which required Dedmon to obtain
payment and performance bonds.6 Choate provided the bond forms to Thad Dedmon,
the sole proprietor of Dedmon, to complete and return to Choate.7 And prior to
beginning work on the project, Dedmon opened an account with, and purchased
materials from, Atlanta Electrical Distributors, Inc. (“AED”).8 Thad Dedmon
personally guaranteed payment on the account.9
In January 2009, Dedmon began work on the project before providing the
required bonds to Choate.10 But a month later, Choate received payment and
performance bonds that designated AOIC as the surety, D.E.S. Electrical Contractors
(“DES”) as the principal, and Choate as the obligee.11 The bonds provided that the
obligee had a contract with the “Bd. of Regents[,] Univ. System of Georgia for the
construction of Greek Park,”described the services to be provided by the principal as
6
Id.
7
Id.
8
Id.
9
Id.
10
Id.
11
Id.
3
“Electrical Installations,” listed the date and value of the subcontract, and
incorporated the subcontract by reference.12 Jacqueline Payne signed the bonds as the
owner of DES,13 and neither Dedmon nor Thad Dedmon were named on the bond.14
Nevertheless, a Choate employee wrote “Dedmon Electric” at the top of the
performance bond.15 Choate did not confirm that Dedmon and DES were the same
company, and it did not contact Thad Dedmon, Payne, DES, Dedmon, or AOIC to
inquire about the discrepancy between DES, the name of the principal on the bonds,
and Dedmon, the name of the company with which Choate had a subcontract.16
Instead, Choate allowed Dedmon to continue working on the project based on its
12
Id.
13
Payne, an 84-year-old retired florist and a relative of Thad Dedmon’s then
wife, testified that he asked “if [she would] sign for some insurance for him,” and she
signed the bonds solely for his benefit. However, she did not know whether she was
signing for health insurance, car insurance, or some other kind of insurance. Payne
denied any connection with DES and claimed that she had never heard of the Greek
Park project.
14
Choate Const. Co., 318 Ga. App. at 683.
15
Id.
16
Id.
4
assumption that the bonds covered Dedmon’s work.17 Eventually, Dedmon defaulted
on the subcontract with Choate and failed to pay its account with AED.18
In a letter dated June 9, 2009, Choate notified Dedmon that it had failed to
fulfill its commitments under the subcontract. In addition, Choate informed Dedmon
that it had 24 hours to provide sufficient supervision, skilled manpower, materials,
tools, and equipment, as well as a written statement of its intentions for completing
the work. Choate cautioned that if Dedmon failed to do so, it would be required to
reimburse Choate for the cost of completing the electrical work on the project.
Choate’s project manager forwarded a copy of the letter to AOIC.
In a letter dated June 25, 2009, AOIC responded to Choate and
“acknowledg[ed] receipt of a claim against payment and performance bonds issued
to [DES]” in conjunction with the Greek Park project. The letter further noted that
AOIC was “still investigating this claim,” and to assist in that investigation, AOIC
requested that Choate provide information regarding the relationship between DES
and Dedmon. AOIC’s attorney explained that this information was necessary because
AOIC had not issued any bonds that required it to respond to a default by Dedmon.
17
Id.
18
Id.
5
According to AOIC, Payne applied for the bonds as the owner of DES under
the company’s “Quick Bond Program,” which offers bonds to qualified individuals
or contractors for projects that are completed in less than a year and have a total value
of less than $250,000 for the work involved.19 Due to these limitations, AOIC does
not require a bond applicant to provide the underlying contract as part of the
application because it is “not relevant to the applicant’s bondability.”20 Nevertheless,
on Payne’s application for the bonds, she stated that the underlying contract was with
“Choate Construction Company,” that the contract was dated “01/17/2009,”21 and that
the contract price was $231,960.64.22 And under “Job Description,” the work was
described as “UN of GA/Greek Park/Athens, GA, Installation of electrical
components per drawings.”23 The foregoing information included in the application
19
Id. at 684.
20
Id.
21
The subcontract was fully executed on January 19, 2009. It appears that the
bonds merely contained a typographical error in referencing January 17, 2009,
because there is no subcontract related to the electrical work on the Greek Park
project that was executed on that date.
22
Choate Const. Co., 318 Ga. App. at 684.
23
Id.
6
is the same as the information provided in the subcontract between Choate and
Dedmon.24
In November 2009, AED filed suit against numerous defendants, including
Choate, Dedmon, DES, and AOIC, raising various claims related to Dedmon’s failure
to pay its account. And Choate asserted cross claims against AOIC, DES, and
Dedmon for breach of contract and contractual indemnity under the payment and
performance bonds. But ultimately, AED dismissed or settled some claims and
assigned its remaining claims to Choate.25 Thereafter, Choate and AOIC filed cross-
motions for summary judgment, and following a hearing, the trial court granted
summary judgment to AOIC, finding, inter alia, that the bonds unambiguously
identified the principal as DES, and that Choate failed to present evidence that DES
and Dedmon were the same entity or that Thad Dedmon and Payne were ever
involved with the same company.
On appeal, this Court disagreed and reversed the trial court’s grant of summary
judgment to AOIC.26 Specifically, we agreed with Choate that the evidence, when
24
Id.
25
Id.
26
See id. at 689 (2).
7
viewed in its favor, presented a jury question as to “whether Dedmon and DES were
the same company and/or whether Payne acted as an agent or ‘on behalf of’ Dedmon
when she procured the bonds.”27 We further held that jury questions existed as to
“whether Thad Dedmon and Payne worked together to defraud Choate; whether
AOIC’s agent had actual or constructive knowledge of, or participated in, such
fraud;[28] and whether AOIC intentionally or recklessly misrepresented to Choate one
or more material facts when it issued the bonds.”29 Finally, we concluded that
“questions of whether Choate exercised reasonable diligence to discover such fraud
27
Id. at 687 (1).
28
In Choate, we noted that during the first summary-judgment hearing, AOIC’s
attorney was asked how Payne became involved in this matter, and counsel
responded, “[t]o be absolutely candid with the Court, the agent [processing the bonds
for AOIC] apparently wrote the bonds fraudulently. I assume for the benefit of Thad
[ ] Dedmon, the agent had Jacqueline Payne, who was an elderly woman, sign the
contracts, pay the premium, and incur the debt. That agent is currently in jail.” Id. at
686 (1) (punctuation omitted). AOIC’s counsel also stated that the bonds were issued
based on Payne’s credit, that Thad Dedmon did not have any credit, and that AOIC
probably would not have issued the bonds if Thad Dedmon had been the applicant.
Id. As to these statements, we noted that “admissions of fact, made by a party’s
counsel during a hearing or trial, are regarded as admissions in judicio and are
binding on the party.” Id. (punctuation omitted). And due to these admissions by
AOIC’s counsel, we concluded, inter alia, that jury issues existed as to whether
AOIC was complicit in any effort to defraud Choate. Id. at 689 (2).
29
Choate Const. Co., 318 Ga. App. at 689 (2).
8
once it received the bonds, or whether Choate breached some duty to timely notify
AOIC of facts that suggested the commission of a fraudulent act, are issues for jury
determination.”30
After remittitur, the trial court granted the parties’ consent motion to realign
Choate as the plaintiff and restyle the case accordingly. In June 2013, Choate filed a
first amended complaint, asserting numerous claims against various defendants, but
in relevant part, it asserted claims against AOIC for liability on the performance and
payment bonds, surety bad faith, promissory estoppel, negligent misrepresentation,
and attorney fees. And thereafter, the parties engaged in extensive discovery,
including numerous depositions and affidavits and the exchange of documents.
On June 13, 2014, Choate and AOIC filed cross-motions for summary
judgment. Specifically, Choate sought partial summary judgment as to its claims for
liability under the payment and performances bonds and its surety bad-faith claim,31
while AOIC sought summary judgment as to all of Choate’s claims. Ultimately, the
trial court denied Choate’s motion for partial summary judgment and granted AOIC’s
30
Id.
31
As to its tort claims, Choate asserted that, if the trial court found that AOIC
was not liable under the bonds as a matter of law, those claims should be decided by
a jury.
9
motion, in part, as to Choate’s claims for surety bad faith and attorney fees. The court
denied AOIC’s motion as to all of Choate’s remaining claims. This appeal by Choate
follows.
At the outset, we note that a de novo standard of review applies to an appeal
from a grant or denial of summary judgment, and we “view the evidence, and all
reasonable conclusions and inferences drawn from it, in the light most favorable to
the nonmovant.”32 Further, summary judgment is appropriate when the moving party
shows that “there is no genuine issue of material fact and that the movant is entitled
to judgment as a matter of law.”33 And a defendant meets this burden when the court
is shown that “the documents, affidavits, depositions and other evidence in the record
reveal that there is no evidence sufficient to create a jury issue on at least one
essential element of the plaintiff’s case.”34 Finally, if the moving party satisfies this
burden, “the nonmoving party cannot rest on its pleadings, but must point to specific
32
Martin, 316 Ga. App. at 697 (punctuation omitted).
33
Garden City v. Herrera, 329 Ga. App. 756, 758 (766 SE2d 150) (2014).
(punctuation omitted).
34
Id. (punctuation omitted).
10
evidence giving rise to a triable issue.”35 With these guiding principles in mind, we
turn now to Choate’s specific claims of error.
1. In three separate enumerations of error, Choate argues that the trial court
erred in denying its motion for partial summary judgment as to its claims for liability
on the payment and performance bonds. Specifically, Choate contends that the trial
court misinterpreted the bonds, the incorporated subcontract, and the intentions of the
parties. Choate also argues that the court erred in its construction of the contract.
However, because this Court previously held that several genuine issues of material
fact existed regarding Choate’s bond-liability claims, we must first consider whether
a grant of summary judgment as to those claims is barred by the law-of-the-case
doctrine.36
In Georgia, the law-of-the-case rule has “formally been abolished except as it
applies to rulings by one of the appellate courts; they are binding in all subsequent
35
Id. (punctuation omitted).
36
On appeal, Choate does not address whether the law-of-the-case doctrine
applies to its bond-liability claims generally, but it asserts that our specific conclusion
that the bonds referenced and incorporated the subcontract is law of the case.
11
proceedings.”37 Indeed, OCGA § 9-11-60 (h) provides, in relevant part, that “any
ruling by the Supreme Court or the Court of Appeals in a case shall be binding in all
subsequent proceedings in that case in the lower court and in the Supreme Court or
the Court of Appeals as the case may be.” Nevertheless, there is an exception to the
rule where “the evidentiary posture of the case in the trial court changes subsequent
to the appellate decision.”38 And the evidentiary posture of a case “changes so as to
bar application of the law-of-the-case rule in two different situations.”39 First, the
evidentiary posture of a case changes when a new issue that the appellate court has
not addressed is raised by amended pleadings or otherwise.40 Second, the evidentiary
posture of a case changes when “the original evidence submitted is found to be
insufficient, and the deficient evidence is later supplemented.”41
37
Guthrie v. Wickes, 295 Ga. App. 892, 895 (3) (673 SE2d 523) (2009)
(punctuation omitted); accord Davis v. Silvers, 295 Ga. App. 103, 105 (670 SE2d
805) (2008).
38
Davis, 295 Ga. App. at 105; accord Guthrie, 295 Ga. App. at 895 (3).
39
Davis, 295 Ga. App. at 106 (punctuation omitted).
40
Id.
41
Id. (punctuation omitted); accord Guthrie, 295 Ga. App. at 895 (3).
12
As previously noted, in Choate, we reversed the trial court’s grant of summary
judgment to AOIC on Choate’s bond-liability claims, finding that there were several
genuine issues of material fact that precluded summary judgment.42 Specifically, as
to AOIC’s potential liability on the payment and performance bonds, we concluded
that there were jury questions as to whether (1) Dedmon and DES were the same
company, (2) Payne acted as an agent or “on behalf of” Dedmon when she procured
the bonds, (3) Thad Dedmon and Payne worked together to defraud Choate, (4)
AOIC’s agent had actual or constructive knowledge of, or participated in, such fraud,
(5) AOIC intentionally or recklessly misrepresented material facts to Choate when it
issued the bonds, (6) Choate exercised reasonable diligence to discover such fraud
once it received the bonds, and (7) Choate breached some duty to timely notify AOIC
of facts that suggested the commission of a fraudulent act.43
After remittitur, Choate was realigned as the plaintiff, filed its first amended
complaint, and later moved for partial summary judgment as to its bond-liability
claims. Nevertheless, as to those specific claims, Choate raised no new issues before
the trial court that this Court had not already addressed, either explicitly or implicitly.
42
See Choate, 318 Ga. App. at 689 (2).
43
See id. at 687 (1), 689 (2).
13
For example, Choate primarily argues that it is entitled to summary judgment because
DES and Dedmon are the same company and the bonds unambiguously provided that
AOIC intended to insure Dedmon’s work on the Greek Park project. However, this
Court has already considered this argument, reviewed the bonds and the subcontract
at issue, and determined that there were numerous material factual disputes regarding
whether AOIC is liable to Choate under the bonds. And in so holding, we necessarily
concluded that the bonds were ambiguous as to whether the parties intended for
AOIC to ensure Dedmon’s electrical work on the Greek Park project.44 Thus, because
Choate has not raised any new issues that have not already been addressed by this
Court, it cannot show that the evidentiary posture of the case has changed on that
basis.45
44
See Citrus Tower Boulevard Imaging Ctr., LLC v. Owens, 325 Ga. App. 1,
7-8 (2) (752 SE2d 74) (2013) (noting that if an ambiguity in a contract remains after
applying the rules of contract construction, “then the meaning of the ambiguous
language and the parties’ intentions are issues for a jury”).
45
See Davis, 295 Ga. App. at 106 (noting that one exception to the law-of-the-
case rule is when a new issue not previously addressed by an appellate court is raised
by amended pleadings or otherwise).
14
Further, although extensive additional discovery was conducted after our first
review of this case, Choate has not shown, or even argued, that “the original evidence
submitted [was] found to be insufficient, and the deficient evidence [was] later
supplemented.”46 Indeed, Choate cites to no new evidence that supplements the
original record in such a way that resolves any of the aforementioned material factual
disputes in its favor. If anything, the numerous depositions taken and other evidence
submitted after remittitur serve only to confirm that there are indeed genuine issues
of material factual that preclude summary judgment. For example, we previously
concluded that there is a genuine issue of material fact as to whether Dedmon and
DES are different entities.47 In his deposition, which was not before this Court in
46
Id. (punctuation omitted).
47
The dissent suggests that because our prior opinion addressed whether AOIC,
rather than Choate, was entitled to summary judgment, we are not barred from
reconsidering the same factual disputes that were at issue in the prior appeal.
Specifically, the dissent uses this rationale as a basis for determining that it is
undisputed that Dedmon and DES are the same company, and therefore, it is
irrelevant which company name was used to procure the bonds. However, we have
previously (and explicitly) held that “[w]e agree with Choate’s contention that the
evidence, when viewed in its favor, presents jury questions as to whether Dedmon
and DES were the same company and/or whether Payne acted as an agent or ‘on
behalf of’ Dedmon when she procured the bonds.” See Choate, 318 Ga. App. at 687
(1) (emphasis supplied). We fail to see how the fact that Choate, rather than AOIC,
is now seeking summary judgment somehow resolves that factual dispute in Choate’s
favor. Indeed, regardless of which party moves for summary judgment, there is either
15
Choate, Thad Dedmon testified that Dedmon and DES were two separate companies.
However, he was the sole proprietor of both companies, through which he performed
the same type of electrical work, and in one correspondence, he updated Choate with
the same new contact information for both DES and Dedmon, stating “[o]ur new
contact info. is located below.” Moreover, it was undisputed that Thad Dedmon used
the Dedmon trade name in the subcontract with Choate, which we previously held
was referenced and incorporated into the bonds, but the bonds bore the DES trade
name and purported to ensure electrical work for a project called “Greek Park.” Under
these particular circumstances, Choate simply cannot show that the evidence
regarding the relationship between DES and Dedmon has been supplemented in any
meaningful way.48
a material factual dispute between the parties or there is not. And the dissent has
pointed us to no new evidence that was not previously before this Court that changes
the evidentiary posture of this case. As a result, our previous decision in Choate bars
us from reconsidering whether there is a material factual dispute as to whether
Dedmon and DES are the same or different entities.
48
See IH Riverdale, LLC v. McChesney Capital Partners, LLC, 292 Ga. App.
841, 844 (666 SE2d 8) (2008) (“Given the similarity of the arguments and evidence
presented in the current and previous appeals, the evidentiary posture of the case has
not changed by the addition of the [new evidence].”); Davis, 295 Ga. App. at 105-06
(holding that the law-of-the-case rule barred the parties from re-litigating a particular
16
In addition, Choate identifies no evidence that resolves the jury questions of
whether Thad Dedmon and Payne worked together to defraud Choate, whether an
AOIC representative was complicit in any such fraud, or whether Payne signed the
bonds as an agent for Dedmon. Although Payne agreed to sign the bonds at Thad
Dedmon’s request, she testified that she had no idea what type of insurance he was
seeking, she had no connection to DES, and she had never heard of the Greek Park
project. And as we noted in Choate, AOIC’s own attorney admitted that the insurance
agent involved identified Payne as the principal of DES because Thad Dedmon, the
actual owner, lacked the credit to qualify for the bonds.49 But in his deposition, the
AOIC agent testified that he believed that Thad Dedmon and Payne were joint owners
of DES, that he received all of the information for the bond applications from Thad
Dedmon, and that Thad Dedmon provided him with misinformation. Nevertheless,
the bond application itself identified Payne as the 100 percent owner of DES. Jury
issues still exist, then, regarding who, if anyone, was involved in an effort to defraud
Choate.
claim when we previously held that there were no genuine issues of material fact
regarding that claim and the affidavits that they submitted after our decision did not
address the critical issue at hand).
49
See Choate, 318 Ga. App. at 686 (1).
17
In sum, Choate has not shown that the evidentiary posture has changed such
that the law-of-the-case doctrine does not apply. As a result, our prior holding in
Choate—that several genuine issues of material fact remain as to Choate’s claims for
liability on the payment and performance bonds—is law of the case, and the trial
court did not err in denying Choate’s motion for partial summary judgment on those
claims.50 Thus, we need not address each of Choate’s specific claims of error
regarding that ruling.
2. Choate also argues that the trial court erred in granting summary judgment
to AOIC as to its claim for surety bad faith when undisputed evidence shows that
AOIC denied liability on the bonds with full knowledge of Dedmon’s scheme to
obtain the bonds and when AOIC was responsible for any ambiguity in the bonds. We
disagree.
50
See Bruce v. Garges, 259 Ga. 268, 270 (2) (379 SE2d 783) (1989) (holding
that the law-of-the-case rule applied because “the same parties and issues are
involved and the evidentiary posture of the case remains the same”); IH Riverdale,
LLC, 292 Ga. App. at 844 (holding that the a prior ruling of this Court was law of the
case because, inter alia, the arguments and evidence presented in the current and
previous appeals were similar); Davis, 295 Ga. App. at 105-06 (holding that the law-
of-the-case rule applied to a summary-judgment ruling on a particular claim when we
previously held that there were no genuine issues of material fact regarding that claim
and the evidence that was submitted after our decision did not address the critical
issue at hand).
18
OCGA § 33-4-6 (a) provides:
In the event of a loss which is covered by a policy of insurance and the
refusal of the insurer to pay the same within 60 days after a demand has
been made by the holder of the policy and a finding has been made that
such refusal was in bad faith, the insurer shall be liable to pay such
holder, in addition to the loss, not more than 50 percent of the liability
of the insurer for the loss or $5,000.00, whichever is greater, and all
reasonable attorney[ ] fees for the prosecution of the action against the
insurer.
And to support a cause of action under OCGA § 33-4-6, “the insured bears the burden
of proving that the refusal to pay the claim was made in bad faith.”51 Moreover, a
defense going far enough to show reasonable and probable cause for making it would
“vindicate the good faith of the company as effectually as would a complete defense
to the action.”52 Indeed, penalties for bad faith are not authorized where “the
insurance company has any reasonable ground to contest the claim and where there
is a disputed question of fact.”53
51
Assurance Co. of Am. v. BBB Serv. Co., 259 Ga. App. 54, 58 (2) (576 SE2d
38) (2002) (punctuation omitted).
52
Id. (punctuation omitted).
53
Id. (punctuation omitted).
19
In its first amended complaint, Choate asserted a new claim against AOIC for
surety bad faith, arguing that AOIC “stubbornly refused to meet its obligations under
the [b]onds despite clear and undisputed evidence of its liability under the [b]onds.”
But as discussed in Division 1 supra, there are genuine issues of material fact as to
whether Choate is entitled to coverage under the payment and performance bonds.
Thus, because AOIC had reasonable grounds to contest Choate’s claims by asserting
that it issued bonds to DES and Payne, as opposed to Dedmon, bad-faith penalties are
not warranted.54
3. Finally, Choate argues that the trial court erred in granting summary
judgment to AOIC on its claim for attorney fees. This claim likewise lacks merit.
54
See Allstate Ins. Co. v. Smith, 266 Ga. App. 411, 413 (2) (597 SE2d 500)
(2004) (holding that the insurer’s grounds for refusing coverage were reasonable
when there was a genuine conflict over whether the insurance claim was legitimate);
Assurance Co. of Am., 259 Ga. App. at 58 (2) (holding that bad-faith penalties were
unauthorized when the insurance company had reasonable grounds to contest the
insured’s claims). Notably, in this case, it is not entirely clear that AOIC ever actually
denied Choate’s claim for coverage before this litigation ensued. After Choate
notified AOIC that Dedmon was facing default if it did not comply with certain
directives within 24 hours, AOIC merely responded that it was still “investigating the
claim,” and it requested information to aid in that investigation, which Choate failed
to provide.
20
Choate first asserts that it is entitled to seek attorney fees because AOIC acted
in bad faith when it denied liability on the bonds. But given our holding in Division
2 supra (i.e., that AOIC had a reasonable basis for contesting liability and did not do
so in bad faith), Choate is not entitled to attorney fees under the surety bad-faith
statute.55 Choate also argues that, in the context of its negligent-misrepresentation
claim, it is entitled to reasonable attorney fees under OCGA § 13-6-11 because AOIC
has been stubbornly litigious.56 But when a bona fide controversy clearly exists
between the parties, “the defendant is entitled to judgment as a matter of law on the
plaintiff’s claim for attorney fees and expenses of litigation based on stubborn
litigiousness or the causing of unnecessary trouble and expense.”57 Because, as
55
See OCGA § 33-4-6 (a) (providing that when a surety denies coverage for
a loss covered by an insurance policy in bad faith, the insured is entitled to, inter alia,
reasonable attorney fees).
56
See OCGA § 13-6-11 (“The expenses of litigation generally shall not be
allowed as a part of the damages; but where the plaintiff has specially pleaded and has
made prayer therefor and where the defendant has acted in bad faith, has been
stubbornly litigious, or has caused the plaintiff unnecessary trouble and expense, the
jury may allow them.”).
57
Horton v. Dennis, 325 Ga. App. 212, 217 (750 SE2d 493) (2013); see also
Brito v. Gomez Law Grp., LLC, 289 Ga. App. 625, 628 (2) (a) (658 SE2d 178) (2008)
(“As a matter of law, stubborn litigiousness cannot exist if there is a genuine dispute
21
discussed supra, there are genuine disputes between the parties that must be decided
by a jury, Choate is not entitled to attorney fees under OCGA § 13-6-11 as a matter
of law, and the trial court did not err in granting summary judgment to AOIC on that
claim.
For all of the foregoing reasons, we affirm the trial court’s denial of Choate’s
motion for partial summary judgment and its partial grant of summary judgment to
AOIC as to Choate’s claims for surety bad faith and attorney fees.
Judgment affirmed. Barnes, P. J., Ellington, P. J., Phipps, P. J., Ray and
McMillian, JJ., concur. McFadden, J., dissents.
between the parties. And when the evidence shows the existence of a genuine factual
dispute or legal dispute as to liability, the amount of damages, or any comparable
issue, then attorney fees are not authorized.” (footnote and punctuation omitted)).
22
A15A1629. CHOATE CONSTRUCTION COMPANY v. AUTO-
OWNERS INSURANCE COMPANY.
MCFADDEN, Judge, dissenting.
I respectfully dissent. This case concerns the enforceability of a one-page
subcontractor’s performance bond. The surety, appellee Auto-Owners Insurance
Company, has identified two purported deficiencies in the bond which, it argues,
excuses it from paying the obligee, appellant Choate Construction Company. Neither
argument has merit.
Because there has been an earlier appeal in this case, we must first consider the
application of the law of the case rule. See § 9-11-60 (h). But contrary to the majority,
I would hold that it is not applicable. “The ‘law of the case’ has been defined as a
controlling legal rule established by a previous decision between the same parties in
the same case.” Modern Roofing & Metal Works v. Owen, 174 Ga. App. 875, 876 (1)
(332 SE2d 14) (185) (citation & punctuation omitted). Accordingly, the law of the
case rule applies “only when the same issue has been actually litigated and decided.”
State v. Mizell, 288 Ga. 474, 478 (3) (705 SE2d 154) (2010) (citations omitted).
“Where [a] second motion for summary judgment is based on matters not involved
in the decision on the first motion, ‘the law of the case’ is not involved.” Suggs v.
Brotherhood of Locomotive Firemen & Enginemen, 106 Ga. App. 563, 564 (2) (127
SE2d 827) (1962) (citations and punctuation omitted).
Here, the first motion for summary judgment was filed by surety Auto-Owners;
the second was filed by obligee Choate. Our earlier opinion dealt with the first motion
and held that Auto-Owners was not entitled to summary judgment; it contained no
analysis of whether genuine issues of material fact existed that would preclude
summary judgment to Choate. I disagree with the majority’s assertion that “regardless
of which party moves for summary judgment, there is either a material factual dispute
between the parties or there is not.” Opposing parties’ arguments for summary
judgment are not necessarily mirror images, and a material fact sufficient to defeat
summary judgment for one party may have no bearing on another party’s entitlement
to summary judgment.
In this case, for example, the finding in our earlier opinion that a jury question
existed “as to whether Dedmon [Electric Services] and DES were the same company,”
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see Choate, 318 Ga. App. at 687 (1), precluded summary judgment for Auto-Owners
on one of its arguments. But the existence of that jury question does not preclude
summary judgment for Choate. As discussed below, there is no dispute that both
companies were sole proprietorships and that Thad Dedmon was the sole proprietor
of each. And, as discussed below, Thad Dedmon’s status as sole proprietor is the
issue material to Choate’s motion for summary judgment. Whether his two sole
proprietorships were the same company or different companies is immaterial.
Although this court’s first opinion does identify several factual questions, it
does not address whether any of those factual questions are material to the issue now
before us: whether Choate is entitled to summary judgment. Even if a ruling on the
existence of genuine issues of fact material to Choate’s entitlement to summary
judgment could be implied in the earlier opinion, our Supreme Court has “decline[d]
to expand the law of the case rule of OCGA § 9-11-60 (h) to encompass an ‘implied’
ruling[.]” Currid v. DeKalb State Court Probation Dept., 285 Ga. 184, 186 n. 5 (674
SE2d 894) (2009). Consequently, the law of the case rule does not apply, and there
is no need to parse out the post-remand evidence from the pre-remand evidence.
I therefore turn to the purported deficiencies in the performance bond. The
principal on the bond is subcontractor Thad Dedmon, a sole proprietor who operated
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under the trade names Dedmon Electric Services (the entity named in the contract
with Choate) and D. E. S. Electrical Contractors (the entity named in the bond with
Auto-Owners). The subcontractor defaulted, generating losses apparently greater than
the amount of the bond. Auto-Owners, has refused to pay on the basis two alleged
deficiencies: first that the bond identifies the principal by one of his two trade names
while the subcontract identifies him by the other; and second that the signature on the
bond on behalf of the principal/subcontractor is that of Jacqueline Payne, Thad
Dedmon’s elderly relative, who had no other involvement in the business.
Auto-Owners points first to the discrepancy between the trade names on the
subcontract and on the bond. But that discrepancy does not excuse its failure to pay.
An unincorporated sole proprietorship has no existence independent of the proprietor.
Brand v. Southern Employment Svc., 247 Ga. App. 638, 639 (545 SE2d 67) (2001).
“A trade name such as that which denominates the sole proprietorship is merely a
name assumed or used by a person recognized as a legal entity. . . . [A] trade name is
nothing more than the alter ego of the individual.” Miller v. Harco Nat. Ins. Co., 274
Ga. 387, 391 (3) (554 SE2d 848) (2001) (citations and punctuation omitted). The
evidence establishes without dispute that the subcontract and the bond refer to the
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same general contractor (Choate), the same subcontractor (Thad Dedmon), and the
same project.
Auto-Owners points next to the signature of the subcontractor’s elderly
relative, Payne, suggesting that it constituted fraud. It does appear that Thad Dedmon
lacked the credit rating necessary to secure a bond and that, in deciding to issue the
bond, Auto-Owners relied on Payne’s credit rating. But the bond does not reflect any
such reliance. The bond form has spaces for the name and title of the signatories, but
neither Payne nor Auto-Owners’s agent provided a title. Obligee Choate drafted the
bond form, and it contains no language that provides Auto-Owners a remedy for
frustration of its reliance interest.
Auto-Owners goes on to argue that Choate had a duty to investigate the use of
different trade names on the subcontract and the bond and to investigate the role of
the subcontractor’s elderly relative. But that argument is derivative of the arguments
rejected above.
For these reasons, we should reverse the denial of summary judgment to
Choate on its claim that Auto-Owners is liable under the bond. As to the issues of bad
faith and attorney fees, we should remand for further consideration in light of the
reversal.
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