Turner v. Clark & Clark

Carley, Judge.

Appellant Turner leased unfinished space in a shopping center and in order to render the space suitable for retailing, Turner entered into a written contract with Clark & Clark (Clark) as general contractors to perform certain work. Clark, in turn, utilized the services of subcontractors where necessary, including Hawkins Plumbing Company, who was engaged to install a sprinkler fire extinguishing system. After the sprinkler system had been completely installed, it was tested and approved by city fire inspectors, and accepted by Clark and, apparently, by Turner also. When the construction project had been almost fully completed, Turner began to move merchandise into the store. Within a few days of the projected opening, a valve in the fire extinguishing system ruptured flooding the premises and damaging a large part of Turner’s stock. Turner was insured against the loss and his claim was paid by his insurer. It is not disputed that Turner’s insurer had been originally recommended by Clark during a conversation concerning insurance coverage which had occurred early in the construction stage.

The instant action was brought against Clark in two counts, one in tort and the other for breach of contract. Clark moved for summary judgment on the tort count. The trial court granted Clark’s motion and no appeal is taken from that order. Subsequently, Clark, relying on the holding in Tuxedo Plumbing &c. Co. v. Lie-Nielsen, 245 Ga. 27 (262 SE2d 794) (1980) moved for summary judgment on the breach of contract count urging that the evidence demonstrated without conflict a mutually exculpatory agreement. Clark’s motion for summary judgment was granted as to this count and Turner appeals.

1. “ ‘[W]here parties to a business transaction mutually agree that insurance will be provided as a part of the bargain, such agreement must be construed as providing mutual exculpation to the bargaining parties who must be deemed to have agreed to look solely to the insurance in the event of loss and not to liability on the part of the opposing party.’ [Cits.]” Tuxedo Plumbing, 245 Ga. 27, 28, supra. Turner first urges that Tuxedo Plumbing is distinguishable on its facts and has no application in the instant case. Noting that the exculpatory provision in Tuxedo Plumbing was part of the written contract between the parties, Turner argues that since the purported agreement relied upon by Clark to show that insurance was “part of the bargain” is oral and, therefore, under the parol evidence rule it cannot be asserted so as to contradict, alter, add to, or vary the written contract which otherwise exists between the parties in the instant case.

While we do not disagree with Turner’s statement of the parol evidence rule, we find unpersuasive his contention that it has application in the instant case and that the parol evidence rule militates against Clark’s reliance upon the holding in Tuxedo Plumbing. The written contract between Turner and Clark provides, in part, as follows: “In consideration of the performance of the Contract, the Owner [Turner] agrees to pay the Contractor [Clark] in current funds as compensation for his services a Contractor’s Fee as follows: [Turner] agrees to pay [Clark] cost plus $2,500.00, with guaranteed maximum of $30,500.00. [Clark] is to receive 33% of amount below $30,500.00 ... The term Cost of the Work shall mean costs necessarily incurred in the proper performance of the Work and paid by the Contractor. Such costs . . . shall include . . . Cost of premiums for all bonds and insurance which [Clark] is required by the Contract Documents to purchase and maintain.” While Turner asserts the above quoted provision controls on the question of insurance procurement and the contract is, therefore, insulated from variance by the parol evidence rule, it is clear that the provision “controls” on the question of insurance — making certain premiums and element of the cost of the work—only to the extent that the “Contract Documents” required Clark to purchase and maintain insurance and no other document or part of the contract “required” Clark to obtain and/or maintain insurance. Thus, the written contract is completely silent as to the intent of the parties as to who would procure the insurance in question and whether it would be “part of the bargain.” In such circumstances a party is not precluded from proving the existence of a separate oral agreement as to which the basic written document is silent and which is not inconsistent with its terms. See Forsyth Mfg. Co. v. Castlen, 112 Ga. 199 (37 SE 485) (1900); Kollen v. High Point Forest, 104 Ga. App. 713, 715 (123 SE2d 10) (1961). An oral contract is legal and equally as enforceable as a written contract in an action at law. Venable v. Block, 138 Ga. App. 215 (225 SE2d 755) (1976).

2. Having determined that Tuxedo Plumbing is not inapplicable on its facts, we turn to the question of whether the evidence demonstrates no genuine issue of material fact remains with regard to the existence of an agreement between the parties “that insurance will be provided as a part of the bargain.” When deposed, Turner was asked if he remembered having a conversation with Clark’s Secretary concerning insurance coverage. Turner answered: “To the best of my knowledge I can remember talking about insurance to cover, you know, I was going to have to have insurance to cover my merchandise and fixtures, and everything. I was going to have to have insurance, which is understandable and I really don’t remember how the conversation started or what, but then we were talking about insurance companies and recommendations, and then I began contacting them and getting quotes from different ones.” When further questioned as to whether this conversation with Clark’s agent might have been to the effect that “you could come out better by getting [insurance] yourself,” Turner stated: “If that’s so, like I say I do not remember that. I do not remember the beginning of the conversation about insurance. I can remember talking about insurance and I did take out insurance, but as far as [an] insurance conversation between me and Clark & Clark that’s the best or the most I can remember about it.” Subsequently, in support of the motion for summary judgment, Clark offered the affidavit of its Secretary which stated in effect that Turner had been encouraged to obtain insurance covering the store during the construction phase and limit his financial obligation under the terms of the cost-plus contract by not having the premiums included in the Cost of the Work, which would be the case if Clark obtained its own insurance and paid the premiums. Clark’s affidavit further stated that Turner agreed that he, not Clark, would purchase the insurance and that “[p]ursuant to this agreement which supplemented the written contract entered into between the parties” Turner purchased insurance from one of the agents suggested to him by Clark. Turner’s affidavit was submitted in opposition to the motion for summary judgment stating: “I recall a conversation with Dale Clark concerning recommended insurance agents in Gainesville, but I do not recall, nor was it my understanding that I was to obtain coverage in lieu of his builder’s risk insurance . . . [A]t no time was there any mutual agreement or understanding either written or oral that I was to provide the insurance protection under the contract.” Thus, when viewed solely in the context of the opposing affidavits, there remains a genuine issue of material fact concerning Turner’s procurement of the insurance. According to Clark’s affidavit, it was mutually agreed that Turner, not Clark, would secure insurance covering the risk of loss during construction so as to lessen the contract price and that this agreement was thus “part of the bargain.” Turner’s affidavit, on the other hand, states that there was no such “mutual agreement” and that, in effect, the insurance procured was solely for his benefit and not part of his bargain with Clark. However, the trial court in granting summary judgment concluded that Turner’s affidavit unequivocally denying the existence of a “mutual agreement” was contradictory of his prior deposition testimony in which he did not deny the existence of such an agreement but stated that he did not remember the entire conversation. Applying Chambers v. C. & S. Nat. Bank, 242 Ga. 498 (249 SE2d 214) (1978), the trial court concluded that only Turner’s “unfavorable” deposition testimony would be considered and granted Clark summary judgment.

We believe the trial court erred in applying Chambers and, consequently, in granting summary judgment. While in his deposition testimony Turner did not deny the existence of a specific agreement concerning the procurement of insurance, he did not at any time admit any contract or undertaking “to purchase the insurance covering the premises while under construction” as was unequivocally asserted by Clark in its subsequent affidavit; Turner’s deposition testimony was merely that he could not remember all the conversation. Turner’s affidavit was his first opportunity to contravene a direct and unequivocal assertion of the existence of such an agreement made for the first time by way of Clark’s supporting affidavit and he did so by unequivocally denying it. Clearly one may be unable to “remember” a portion of a conversation and fail to deny the existence of an as yet unasserted “mutual agreement” allegedly arising from that conversation and still, without being contradictory, be able to deny a subsequent unequivocal assertion of the existence of such “mutual agreement.” Turner’s deposition testimony shows only that he and Clark had a conversation—all of which he could not recall—concerning insurance and that he subsequently procured insurance. Clark’s affidavit asserts for the first time the contention that Turner’s procurement of the insurance was the result of a “mutual agreement” reached in the conversation. Turner’s affidavit denies that his procurement of insurance was the result of a “mutual agreement” reached in the conversation. Under this evidence a conversation concerning insurance indisputably took place but there is a conflict—which arose only in the affidavits—as to whether this conversation resulted in a “mutual agreement.” Thus, while Turner’s affidavit clearly conflicts with Clark’s, it cannot be said that Turner’s affidavit is in material conflict with any position asserted by him in his deposition. Therefore, Burnette Ford, Inc. v. Hayes, 227 Ga. 551 (181 SE2d 866) (1971) mandates that Turner receive the benefit of all favorable inferences and that the evidence be construed most favorably for him. Such a construction requires that the grant of summary judgment to Clark be reversed because of the existence of a genuine issue of material fact: Whether there was a mutual agreement reached in the conversation that Turner procure insurance as a “part of the bargain” between the parties.

Even assuming arguendo the existence of a material conflict between Turner’s deposition and affidavit testimony, Chambers nonetheless has no application in this case. In Combs v. Adair Mtg. Co., 245 Ga. 296, 297 (264 SE2d 226) (1980), the Supreme Court held: “The holding in Chambers does not lighten the burden upon the movant for a summary judgment nor does it add any additional weight to the burden upon the responding party. Chambers simply reiterates the long recognized and established rule that any party testifying in his own behalf is held to a strict standard of candor and responsibility for his own statements and has no right to be intentionally or deliberately self-contradictory. The effect of the Chambers holding is that if a party testifying in his own behalf intentionally or deliberately contradicts himself, the more favorable portion of the contradictory testimony shall be treated as though it did not exist ...[t]his court continues to adhere to the rule enunciated in Burnette Ford, Inc. v. Hayes, supra, and views the holding in Chambers v. Citizens & Southern National Bank, supra, as one which came about as a result of factual differences. ” (Emphasis supplied.)

Decided March 20, 1981. Harmon T. Smith, Jr., for appellant. Weymon H. Forrester, for appellees.

Any “conflict” in Turner’s testimony cannot be characterized as “deliberate or intentional.” Turner’s affidavit testimony was “deliberate and intentional” only in the sense that it was filed in opposition to a motion for summary judgment supported-by an affidavit which for the first time unequivocally asserted the moving party’s contention that there existed a “mutual agreement” for Turner to procure insurance which was a “part of the bargain” between the parties. It is obvious that an affidavit denying the assertions of an opposing party’s affidavits is “deliberate and intentional” testimony. However, there is no logical basis for saying that merely because an affiant’s subsequent testimony is “intentional or deliberate” he thereby creates an intentional and deliberate conñict with his prior testimony. This is especially true when, as here, the affidavit is merely supplemental and not truly contradictory of the deposition testimony. There is simply no basis in the record before us for holding that a conflict, if any, in Turner’s testimony was intentionally or deliberately created by him within the meaning of Combs, supra. See Combs v. Adair Mtg. Co., 155 Ga. App. 432 (270 SE2d 828) (1980).

A genuine issue of material fact remains as to whether or not the parties entered into a “mutual agreement” in their conversation whereby Turner was to procure insurance as a “part of the bargain” with Clark. It was, therefore, error to grant Clark summary judgment. Whether or not such an agreement if entered into would be a “waiver of subrogation clause” within the holding of Tuxedo Plumbing is, of course, a question which must be addressed if and when the existence of a “mutual agreement” between the parties and the terms of such agreement are established as matters of law.

Judgment reversed.

Quillian, C. J., Deen, P. J., McMurrayP. J., Shulman, P. J., and Banke, J., concur. Birdsong, Sognier and Pope, JJ, dissent.