DocketNumber: A13A2157
Citation Numbers: 326 Ga. App. 671, 757 S.E.2d 272
Judges: Phipps
Filed Date: 3/28/2014
Status: Precedential
Modified Date: 9/8/2022
In this construction contract dispute, Western Surety Company and Continental Casualty Company (the “Sureties”) appeal from the trial court’s grant of partial summary judgment to defendant State of Georgia Department of Transportation (the “DOT”) on the Sureties’ claims for breach of contract and violation of the Georgia Prompt Pay Act (the “PPA”).
Summary judgment is warranted 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.”
So viewed, the record shows that the DOT and Bruce Albea Contracting, Inc. (“BAC”) entered into a construction contract (the “Contract”) for work on roadway US 27 (the “Project”). The Sureties issued performance and payment bonds to the DOT, as obligee. The completion date for the Project was originally March 31, 2007, but was extended to January 18, 2008.
Rather than allow the Project to “grind to a halt,” the Sureties provided funds to BAC between April and July 2007. In exchange for their help with the Project, BAC provided the Sureties with a letter from BAC to the DOT, dated April 18, 2007, stating that BAC could not perform the work and was voluntarily abandoning the Contract. The letter was received by the DOT in late June 2007, and the DOT placed BAC in default and directed the Sureties to take over the work on the Project.
On September 11,2007, the Sureties sent two claim letters to the DOT. After a meeting, the DOT asked for additional information. The Sureties chose not to respond to the DOT’s request and subsequently sued the DOT, setting forth three counts of breach of contract
1. The Sureties acknowledge that neither BAC nor the Sureties strictly followed the claim notice requirements set forth under the
NOTICE OF POTENTIAL CLAIM: In any case in which the Contractor believes that it will be entitled to additional compensation, the Contractor shall notify the Engineer in writing of its intent to claim such additional compensation. Such notice shall be given in order that the Department can assess the situation, make an initial determination as to who is responsible, and institute appropriate changes or procedures to resolve the matter.
a. Claims for Delay — The Department shall have no liability for any delay which occurred more than one week prior to the filing of such written notice. Failure of the Contractor to give such written notice in a timely fashion will be grounds for denial of the claim.
b. All Other Claims Except Acceleration and Delay — If the Contractor does not file such written notice before beginning the work out of which such claim arises, then the Contractor hereby agrees that it shall have waived any additional compensation for that work and the Contractor shall have no claim thereto.9
In submitting a claim, the Contractor is also required to provide certain information, as set forth in Specification 105.13.C, and to certify the claim, as required by Specification 105.13.D.
Further, under Specification 105.13.B.6.b, recoverable damages under the Contract include “[documented additional costs for materials.” The parties also agreed under Specification 105.13.B.5, however, that “[cjompliance with the provisions of this Subsection will be an essential condition precedent to any recovery of damages by the Contractor.”
Parties to construction contracts are free to enter into claim notice requirements, and such provisions are “legal and binding on the parties in the absence of special circumstances,” which may include waiver or estoppel.
(a) The Sureties contend that the DOT waived strict compliance with the notice and claim procedures under the Contract by actively encouraging disputes to be handled informally and by punishing those who followed the strict claims procedures, by granting extensions of the contract time, and by negotiating with the Sureties. In that respect, we have “recognized that a party to a contract may waive contractual provisions for his benefit.”
To show that the DOT had encouraged disputes to be pursued outside the parameters of the Contract, the Sureties point to evidence that before 2006 or 2007 the DOT had a general practice of discouraging contractors from filing notice of claims but then retrospectively considering requests for additional compensation.
The Sureties also point to evidence that BAC’s principal, based on his experience with the DOT on other projects, was reluctant to file any claim against the DOT. BAC’s principal deposed that on another project, upon “issue[ ] [of] the word claim, [the DOT] immediately used my liquidated damages as leverage.” The DOT’s engineer on the Project also testified that as to another project he worked on with BAC’s principal, it was “not an out-of-question conversation” that he told BAC “we’re not going to give you time if you are asking for both time and money.” According to BAC’s principal, in this case BAC and its supplier wanted to “work out an escalation agreement” with the DOT, but wanted to “get the time extension first.”
While there is evidence that BAC was “afraid to ruffle the feathers” of the DOT by filing a claim, and that the DOT might react negatively if such a claim was made, the evidence tends to explain why the procedures for filing a claim under the Contract were intentionally not followed by BAC, not that the DOT waived any of the Contract provisions regarding the filing of claims.
The Sureties also point to the DOT’s alleged practice of “waiting until the end of projects to consider time extensions,” showing that in this instance the DOT considered and granted BAC’s requests for time extensions in 2007, notwithstanding that the delays occurred in 2004, 2005, and 2006. Therefore, the Sureties argue, because the
Last, the Sureties contend that the DOT waived strict compliance with the claim notice provisions by participating in settlement negotiations. However, the Sureties do not show that during any communications or discussions between the Sureties and the DOT, the DOT agreed or intimated that it would waive any of the Contract requirements. Even after the submission of the two September 11, 2007 claim letters, the DOT continued to request information and acts on the part of the Sureties which were consistent with an insistence of strict compliance with the terms of the Contract.
(b) The Sureties further contend that a jury could conclude that BAC and the Sureties reasonably complied with the notice and claim provision of the Contract. We disagree.
As a rule, “[a]ny notice requirement must be reasonably construed.”
Here, the two September 11, 2007 letters asserted claims by the Sureties against the DOT for compensation for price escalations and damages under the Contract. Nevertheless, the letters were on their face untimely as to the majority of the claims set forth therein. As we noted supra, the parties had agreed under Specification 105.13.B.9 that “[t]he [DOT] shall have no liability for any delay which occurred more than one week prior to the filing of” the written notice of potential claim and that, as to other claims, “[i]f the Contractor does not file such written notice before beginning the work out of which such claim arises, then the Contractor hereby agrees that it shall have waived any additional compensation for that work.”
(c) The Sureties further contend that a jury must decide whether the DOT had actual notice of BAC’s and the Sureties’ claims. They rely on APAC-Ga. v. Dept. of Transp.,
At issue in APAC- Ga. was whether the trial court erred in finding that the contractor failed as a matter of law to comply with a provision regarding the extension of contract time.
In this case, however, the DOT’s knowledge “that there were problems with [delays] is not tantamount to knowledge that [BAC or the Sureties were] incurring monetary damages or that [they] intended to file a claim.”
(d) Last, the Sureties argue that a jury should consider whether the DOT was prejudiced by BAC’s and the Sureties’ failure to strictly comply with the Contract’s claim notice provisions. They acknowledge that “[n]o Georgia appellate court has made a determination whether prejudice is a necessary element to prevent waiver of strict compliance.” Rather, they rely on decisions of the General Services Administration Board of Contract Appeals.
In light of the foregoing, we conclude that there remains no issue of material fact as to whether BAC’s and the Sureties’ failure to comply with the claim notice provisions of the Contract was waived by the DOT, whether BAC or the Sureties reasonably or substantially
2. In Count IV of their complaint, the Sureties requested attorney fees and interest arising out of the DOT’s alleged violation of the PPA. Specifically, the Sureties alleged that the DOT violated the PPA “by failing to pay the Sureties within 15 days of receipt of Voucher #58.”
It is undisputed that the DOT’s payment for Voucher 58 has been acceptedby the Sureties. AndOCGA § 13-11-7 provides that “[acceptance of progress payments or final payment shall release all claims for interest on said payments.” Accordingly, the Sureties do not show that they have a claim for interest under the PPA with respect to the failure to timely pay Voucher 58.
The Sureties argue that inasmuch as Voucher 58 was paid after the action to enforce a claim was instituted, the “Sureties are entitled to [attorney] fees incurred until the voucher was paid.”
Judgment affirmed.
OCGA § 13-11-1 et seq.
Bd. of Commrs. of Putnam County v. Barefoot, 313 Ga. App. 406, 408 (721 SE2d 612) (2011) (punctuation omitted).
Id. (punctuation omitted).
Id. (punctuation omitted).
Home Builders Assn. of Savannah v. Chatham County, 276 Ga. 243, 245 (1) (577 SE2d 564) (2003).
Although it does not appear that the Sureties were parties to the Contract, we have found that in a breach of contract action “a subrogee stepping into the shoes of [a government contractor], may rely upon the waiver of sovereign immunity that applied to the government contractor.” State of Ga. Dept. of Corrections v. Developers Surety & Indem. Co., 324 Ga. App. 371, 376 (1) (750 SE2d 697) (2013).
The DOT’s motion for summary judgment did not encompass Count I of the Sureties’ complaint, which set forth a claim for the alleged outstanding balance for work performed.
Although we do not reach these issues, the Sureties also contend that the trial court erred to the extent it determined that supplementary agreements to the Contract acted as accords and satisfactions, to the extent it found utility-related delays were not compensable, and to the extent it found that the breach of contract claims were disguised equity claims. They acknowledge, however, that “the argument relative to notice would theoretically apply to all of the Sureties’ claims.”
The damages which the Sureties claim appear to be primarily associated with delay. However, the Sureties’ representative acknowledged that it was not clear whether claims for material price increases before the Original Completion Date were a “delay” or “other” claim for purposes of the Contract, although it “seemed more like an ... [*]other[’] claim.” Neither party suggests that the issues on appeal turn on this distinction.
See, e.g., State Hwy. Dept. v. Hewitt Contractor Co., 113 Ga. App. 685, 692 (149 SE2d 499) (1966) (finding enforceable contract provision requiring contractor to give notice of its intention to claim extra compensation before beginning the work on which the claim was based, and that if such notice was not given, the contractor agreed to waive the claim for extra compensation).
AAF-McQuay, Inc. v. Willis, 308 Ga. App. 203, 217 (4) (a) (707 SE2d 508) (2011) (citation and punctuation omitted).
APAC-Ga. v. Dept. of Transp., 221 Ga. App. 604, 607 (2) (472 SE2d 97) (1996) (citation and punctuation omitted). Accord State Hwy. Dept. v. Hall Paving Co., 127 Ga. App. 625, 629 (3) (194 SE2d 493) (1972).
Hewitt Contractor Co., 113 Ga. App. at 693 (2) (a) (finding that “[t]he duty was on the plaintiff contractor under the contract to give the initial notice of a claim for compensation before embarking on what it considered extra work and was not on the defendant Highway Department to inform the contractor that it was about to do extra work for which it must give notice and execute a supplemental agreement”).
The Sureties rely on an affidavit of an expert who had “experience in dealing with contractors performing” for the DOT and who averred that “[f ] or many years” contractors were strongly discouraged by the DOT from filing a notice of claim. Rather, after the completion of a contract, the DOT “considered discussing requests for additional compensation in a retrospective manner.” The expert noted, however, that the DOT had begun insisting on strict
See generally Ramsey v. Langley, 86 Ga. App. 544, 549 (4) (71 SE2d 863) (1952) (“There cannot bean express and implied contract for the same thing existing at the same time between the same parties. It is only when the parties themselves do not expressly agree, that the law interposes and raises a promise.”).
Compare State Hwy. Dept. v. Wright Contracting Co., 107 Ga. App. 758, 764(1) (131 SE2d 808) (1963) (custom and practice of Highway Department to allow supplemental agreements upon completion of extra work, and its direction to contractor to complete work without first securing an agreement, contrary to what was required in the contract, led contractor to assume that provision had been waived).
Dept. of Transp. v. Fru-Con Constr. Corp., 206 Ga. App. 821, 824 (2) (426 SE2d 905) (1992) (citation and punctuation omitted) (finding that in absence of a request of extension, DOT was entitled to presume that delay in grading work was not considered by the contractor to be a ground for extension of the contract).
Specification 105.13.B.9.a, which appears to be the provision relied on by the Sureties, provides in applicable part that “[t]he Department shall have no liability for any delay which occurred more than one week prior to the filing of such written notice.” And “such written notice” refers to the required notice of a potential claim.
Rice v. Lost Mountain Homeowners Assn., 269 Ga. App. 351, 355 (4) (604 SE2d 215) (2004).
APAC-Ga., 221 Ga. App. at 606 (2). See OCGA § 13-4-20 (providing that “[p]erformance, to be effectual, . . . must be substantially in compliance with the spirit and the letter of the contract. . .”).
The DOT also responded to the reservation letter by pointing out that “any claims for additional compensation or other claims for adjustments need to be brought in accordance with the terms of the Contract,” and directing the Sureties to the Contract specifications related thereto.
The requirements of Specification 105.13.C are extensive, and include 12 categories of information and documentation.
Specification 105.13.C provides, however, that the information submitted thereunder may be used in resolving “any litigation which might arise from the claim.”
The Contractor had agreed under the Contract terms, however, that as to Specification 105.13, “[w]henever the Contractor believes that it is or will be entitled to additional compensation, whether due to delay, extra work, breach of contract, or other causes, the Contractor shall follow the procedures set forth in this Sub-Section.”
APAC-Ga., 221 Ga. App. 604.
Id. at 606 (2).
In Division 1 of APAC-Ga. we found that then “provision 105.13” did not apply to the contractor’s claim for delay damages. See APAC-Ga., 221 Ga. App. at 604-605 (1). In Division 2, we found that “provision 108.07” did apply to the contractor’s claim. APAC-Ga., 221 Ga. App. at 605 (2). Provision 108.07 provided in part that “[i]f the normal progress of The Work is delayed for reasons beyond his control, the Contractor shall, with [sic] fifteen days after the
See APAC-Ga., 221 Ga. App. at 606 (2).
Allgood Elec. Co. v. Martin K. Eby Constr. Co., 959 FSupp. 1573, 1581 (III) (B) (M.D. Ga. 1997) (finding that, under Georgia law, there was insufficient evidence of affirmative acts by the contractor for its sub-contractor to have believed that it was not necessary to provide the contractor with no tice of a claim for delay damages). Compare Dept. of Transp. v. Dalton Paving & Constr., 227 Ga. App. 207, 216 (3) (489 SE2d 329) (1997) (jury could conclude that DOT waived notice requirements where, among other things, “DOT expressly acknowledged that appellee’s . . . letter served as actual notice of appellee’s intent to file a claim”).
Fru-Con, 206 Ga. App. at 824 (2) (assessing contract provision requiring contractor give timely written request for extension of time against DOT’s knowledge that there was a delay in grading work on the project).
See, e.g., Max Blau & Sons, Inc., 91-1 B.C.A. (CCH) P23,626 (1990 GSBCALEXIS 748) (finding that formal notification will not bar a claim for equitable adjustment if the government is not prejudiced).
The Sureties’ other claims of error as to Count II and Count III are moot.
Under OCGA § 13-11-3, a contractor’s performance under a contract and satisfaction of the conditions precedent to payment “entitles such person to payment from the party with whom he or she contracts.” OCGA § 13-11-4 (a) provides: “When a contractor has performed in accordance with the provisions of a contract, the owner shall pay the contractor within 15 days of receipt by the owner or the owner’s representative of any payment request based upon work completed or service provided under the contract.”
This issue is effectively conceded by the Sureties in their appellate brief.
OCGA § 13-11-8 provides: “In any action to enforce a claim under this chapter, the prevailing party is entitled to recover a reasonable fee for the services of its attorney including hut not limited to trial and appeal and arbitration, in an amount to be determined by the court or the arbitrators, as the case may be.”
Id.