Jefferson Mills, Inc. v. Gregson

Hall, Presiding Judge.

The issue on this appeal is whether, in the light of Code Ann. § 56-408.1, the general release of all claims against the plaintiff, given to his insurer and arising out of his performance on a particular project, bars the defendant from raising failure of performance as a defense to a suit for architectural fees or as the basis of a counterclaim relating to fees. In the absence of a release, of course, this would be a legitimate defense to plaintiff’s action. Collins v. Frazier, 23 Ga. App. 236 (98 SE 188); 5 Am Jur2d 678, Architects, § 16.

Code Ann. § 56-408.1 was enacted to change the Georgia common law rule that an insured was barred from asserting his own claims if his insurer effected a settlement, even without his consent. Aetna Cas. &c. Co. v. Brooks, 218 Ga. 593 (129 SE2d 798). This case, as well as those leading up to it, involved automobile collisions, and it seems likely the legislature had similar occurrences in mind when it enacted the statute.

The case here is surfacely confusing because while the release was given for tort liability, the plaintiff’s claim lies in contract or quasi-contract. All the contentions dealing with recoupment further obscure the matter. The real issue is whether a general release of all claims arising out of an occurrence precludes the releasor from defending a releasee’s subsequent action by raising his conduct relative to the occurrence.

In other states with a common law rule similar to Code §56-408.1, the issue has apparently never been considered. It has undoubtedly been assumed by all parties that defenses (such as contributory negligence) are as available to a releasor as anyone else. See Fikes v. Johnson, 220 Ark. 448 (248 SW2d 362); Birkholz v. Cheese Makers Mut. Cas. Co., 274 Wis. 190 (79 NW2d 665); Hurley v. McMillan, 268 S. W. 2d 229 (Tex. Civ. App.); U. S. A.C. Transport v. Corley, 202 F2d 8 (5th Circuit applying pre-Aetna Georgia law).

It might be helpful to consider a hypothetical situation here. If the architect had been injured when the building under construction collapsed, then under § 56-408.1, the settlement made with the mill without his consent would not have barred him from later bringing a personal injury action against the mill. But, would the release (which was given by the mill in settlement of its damages resulting from the collapse) preclude the mill from defending the personal injury action on the theory that the architect’s injuries were proximately caused by his own negligent or incompetent performance in causing a faulty structure to be built? To ask the question is to answer it. The legislature could not have intended to give one party the right to sue and simultaneously bar the other party from defending. The language of the statute which states that the release will bar further assertion of "such claims against all persons” can only refer to affirmative claims based on the occurrence. We will not construe it to include a waiver of all defenses. The result would be unconscionable.

For this reason, while the court did not err in striking defendant’s counterclaim (which was the effect of the pre-trial order), it did err in ordering that evidence of plaintiff’s professional competence would not be admitted in support of a defense to plaintiff’s claim.

Judgment reversed.

Eberhardt, J., concurs. Whitman, J., concurs specially.