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Posts Tagged ‘Georgia Court of Appeals’

Georgia’s Statute of Repose Bars Contractual Claims Involving Deficient Construction

Posted on: November 21st, 2019

By: Jake Carroll

Georgia’s statute of repose provides an eight (8) year deadline for actions seeking to recover damages for deficiencies in construction.[1] The period runs from the substantial completion of the work, and was enacted with the intent of establishing an outside time limit on actions arising out of the improvement of real property. While Georgia courts have consistent held that the statute of repose bars claims for negligent construction, and that common law claims for indemnity and contribution are also barred by this statute of repose,[2] Georgia state courts have never addressed whether the statute also bars related contractual claims (i.e. indemnity, contribution, and breach of warranty).[3]

In S. States Chem., Inc. v. Tampa Tank & Welding, Inc.,[4] the Georgia Court of Appeals clarified the reach and application of the statute, holding that since Georgia’s statute of repose makes “no distinction” among claims sounding in negligence and those sounding in contract, “the statute broadly precludes any action to recover damages brought outside the eight-year period of repose.”[5] “It is well settled that ‘a statute of ultimate repose frames the time period in which a right may accrue, if at all. Therefore, if an injury occurs outside this time period, the injury is not actionable[.]’”[6] While the opinion specifically addressed claims for breach of an express promise to renovate a storage tank, the court’s reasoning appears to apply to bar all untimely contractual claims alleging deficiency in construction—including indemnity, contribution, and breach of warranty.

The decision provides clarity as to which claims are subject to the statutory window of liability for completed projects. However, even with these changes, owners and contractors should still review their construction contracts for specific provisions regarding completion, statutes of limitations, and indemnity. Additionally, the Court’s decision in S. States does not extend the statute of repose to claims for contractual indemnification where the indemnitor does not allege deficient construction and the indemnification provision does not require a showing of negligence.[7] Those claims would still be governed by the applicable statute of limitations.

If you have questions regarding this decision, or any other construction questions, Jake Carroll practices construction and commercial law as a member of Freeman Mathis & Gary’s Construction Law, Commercial Litigation, and Tort and Catastrophic Loss practice groups. Mr. Carroll represents business and commercial entities in a wide range of disputes and corporate matters involving breach of contract and warranty claims, business torts, and products liability claims.

[1] O.C.G.A. § 9-3-51(a) (“No action to recover damages for any deficiency in the . . . construction of an improvement to real property . . . shall be brought against any person performing . . . construction of such an improvement more than eight years after substantial completion of such an improvement.”).
[2] See e.g., Std. Fire Ins. Co. v. Kent & Assoc., 232 Ga. App. 419, 420 (1998) (“[C]laims for indemnity and contribution are among those contemplated by the Legislature when it enacted [O.C.G.A. § 9-3-51].”); Gwinnett Place Assoc., L.P. v. Pharr Engineering, 215 Ga. App. 53, 55 (1994) (indemnity claim); Krasaeath v. Parker, 212 Ga. App. 525 (1994) (contribution claim).
[3] Notably, a federal court interpreting Georgia’s statute of repose held that contractual indemnity claims in cases involving allegations of deficient construction were barred. Facility Constr. Mgmt. v. Ahrens Concrete Floors, Inc., 2010 U.S. Dist. LEXIS 29242, 2010 WL 1265184 (N.D. Ga. Mar. 24, 2010). However, that opinion was only persuasive to Georgia state courts.
[4] No. A19A0960, 2019 Ga. App. LEXIS 657 (Oct. 31, 2019).
[5] Id. at 18 (emphasis added).
[6] Id. (quoting Rosenberg v. Falling Water, Inc., 289 Ga. 57 (Ga. 2011) (citation omitted)).
[7] See Nat’l Serv. Indus. v. Ga. Power Co., 294 Ga. App. 810, 813 (2008).

When is Enough Enough? A Claim of Legal Malpractice in the Course of Settlement Negotiations

Posted on: November 15th, 2019

By: Jake Loken

The Georgia Court of Appeals confirmed in Smiley v. Blasingame, Burch, Garrard & Ashley, P.C., decided on October 30, 2019, that when a claim of malpractice occurs regarding settlement negotiations, an alleged breach is immaterial if a plaintiff cannot prove that the breach resulted in damages to the plaintiff. Said another way, even if a breach can be proven, a plaintiff must still prove that the plaintiff could have received a greater settlement but for the breach.

The Smiley plaintiffs claimed their attorneys committed legal malpractice in the course of settling the plaintiffs’ underlying lawsuit which involved claims related to an implanted medical device. In negotiating potential settlements, the attorneys allegedly settled with the medical device manufacturer on terms different than those posed to plaintiffs.

At the trial court level, the court noted that although the plaintiffs “‘presented enough evidence for a question of fact as to whether the actions of [the attorneys], if taken as true, violated a legal standard of care,’ their claim still did not survive . . . because the plaintiffs have not shown any damages proximately caused by the breach.”

In discussing this point further, the Court of Appeals found that the plaintiffs had “not cited to any issue of fact indicating that they would have received a larger settlement if their attorneys had not breached their duty towards them. Further, the [plaintiffs’] assertions that they should have received additional compensation are merely speculative.” And, as we know, “[a] legal malpractice claim cannot be based upon speculation and conjecture.”

Notably, the Court of Appeals found that “damages cannot be proven by comparing the [plaintiffs] settlement with the settlement received by the other . . . plaintiffs [also allegedly injured by the same medical device].” In reaching this conclusion, the Court of Appeals used the words of the plaintiffs’ expert to state that in the case of multiple settlements regarding the same underlying medical device, “every case has its own facts . . . [and] that other considerations played into each plaintiff’s settlement, including venue, judgment collectability, and potential appeal rounds.”

If you have any questions or would like more information, please contact Jake Loken at [email protected].

Municipalities Continue Winning at Georgia Court of Appeals

Posted on: October 31st, 2019

By: Sun Choy and Wes Jackson

Last week the Georgia Court of Appeals issued a favorable ruling for the City of Statesboro that will benefit municipalities (and their insurers) across the state. The decision included two advantageous decisions for municipalities concerning “nuisance” claims against cities premised on third-party criminal conduct and the extent to which purchasing insurance will waive a city’s sovereign immunity.

In Gatto v. City of Statesboro (Ga. Ct. App. A19A1408, A191409, Oct. 21, 2019), the parents of an underage college student at Georgia Southern University sued the City of Statesboro after their son was killed by a bouncer at a bar. The parents claimed the City had maintained a nuisance by failing to shut down the bar where their son was killed, even though it was widely known by the City and University students as an establishment that will serve alcohol to underage patrons.

The City asserted multiple defenses to this claim, the two most important being (1) a City cannot be liable under a theory of “nuisance” for third-party crime; and (2) the City did not waive its sovereign immunity by purchasing liability insurance because a specific endorsement in its policy provided that the policy would not cover claims for which the City would otherwise be entitled to sovereign immunity.

As to the “nuisance” defense, Freeman Mathis and Gary attorneys Sun Choy, Jake Daly, and Wes Jackson had recently secured a reversal of a $10.6 million trial verdict against the City of Albany on strikingly similar facts. (City of Albany v. Stanford, 347 Ga. App. 95, 815 S.E.2d 322 (2018); see also prior blog posts here and here.) In Gatto, the Court of Appeals relied on Stanford to unanimously hold that cities cannot be liable for criminal conduct on private property under a “nuisance” theory because the “nuisance exception” to sovereign immunity only applies to “takings” claims of property, not to claims for personal injury or loss of life. The Court of Appeals’ decision in Gatto marks an important win for municipalities across the state, as it reinforces the Court’s decision in Stanford and, as a unanimous decision, creates binding precedent on this issue.

In a case of first impression, the Court also ruled favorably for the City on its sovereign immunity defense based on an interpretation of an insurance policy immunity endorsement. In Georgia, municipalities can waive their sovereign immunity on certain claims by purchasing liability insurance. To preserve cities’ sovereign immunity, some carriers have been issuing policies with an endorsement that effectively states the policy does not provide coverage for any claims for which the City would otherwise have sovereign or governmental immunity. Before Gatto, these endorsements and the extent to which they allow a city to retain its sovereign immunity had never been tested at the Georgia Court of Appeals or Supreme Court. However, the Court of Appeals held in Gatto that such endorsements are enforceable and, where the language of the policy expressly provides that it will not cover occurrences when sovereign immunity applies, the policy would not operate to waive sovereign immunity.

Gatto, then, marks two important and favorable developments for municipalities in Georgia. For additional questions about this case or sovereign immunity under Georgia law, please contact Sun Choy ([email protected]) or Wes Jackson ([email protected]).

Sovereign Immunity Finally Bars $10.6 Million Judgment Against City of Albany

Posted on: April 30th, 2019

By: Wes Jackson

Following up on our recent blog post highlighting the Georgia Court of Appeals’ decision to reverse a $10.6 million trial verdict against the City of Albany on sovereign immunity grounds, we are pleased to announce that the Georgia Supreme Court has declined to review the Court of Appeals’ decision. The Supreme Court’s decision marks an important win for local governments in Georgia. Freeman Mathis & Gary attorneys Sun Choy, Jake Daly, and Wes Jackson represented the City as appellate counsel.

The wrongful death case concerned the murder of a young man at an illegal night club in Albany, Georgia. The administrators of the man’s estate argued at a trial that the illegal club was essentially a “nuisance” the City of Albany had created or maintained by declining to shutter the club when it had prior opportunities to do so. After trial, a jury awarded the plaintiffs $15,200,000 in damages, apportioning 70% of the liability to the City. The jury only apportioned 10% of the liability to the owners and operators of Brick City, 13% to the actual murderer, and 1% each to seven participants in the brawl.

In reversing, the Court of Appeals concluded that plaintiffs cannot circumvent sovereign immunity by simply alleging that the City’s discretionary conduct amounted to the maintenance of a “nuisance.” The Court of Appeals’ decision is available at City of Albany v. Stanford, 347 Ga. App. 95, 815 S.E.2d 322 (2018). The Georgia Supreme Court’s decision to deny plaintiffs’ petition for certiorari makes the Court of Appeals’ decision final.

The case marks an important win for municipalities in Georgia by reinforcing the scope of their defense of sovereign immunity.

For additional questions about this matter or sovereign immunity under Georgia law, please contact Sun Choy ([email protected]), Jake Daly ([email protected]), or Wes Jackson ([email protected]).

Georgia Court of Appeals Provides Guideline for Drafting Enforceable Exculpatory Clauses in Georgia

Posted on: April 23rd, 2019

By: Bart Gary and Jake Carroll

Exculpatory clauses are terms in a contract that shift the risk of loss to the other party or a third-party, or attempt to limit one’s obligations under a contract. A typical exculpatory clause is a “limitation of liability” provision, which is commonly used in agreements for services—especially professional services, rendered by accountants, architect, engineers and consultants.

Attempts to limit one’s liability to agreed amounts are sometimes challenged in court on the ground that they violate “public policy,” but are nevertheless generally enforceable in Georgia, provided such clauses are “explicit, prominent, clear and unambiguous.”

While these requirements have been addressed in prior appellate decisions, in Warren Averett, LLC v. Landcastle Acquisition Corp.[1] the Georgia Court of Appeals discussed in detail the “prominence” requirement for limitation of liability clauses in a contract for accounting services. The Court observed that a number of factors are considered when evaluating the enforceability of an exculpatory clause or limitation of liability clause:

  • Font. The clause should not be in the same font size used throughout the contract. It should be “capitalized, italicized, or set in bold type for emphasis.”
  • Setoff. The clause should be set off in a separate section that specifically addressed liability or recoverable damages, with a bold, underlined, capitalized or italicized specific heading, such as “Limitation of Liability” or “DAMAGES.”
  • Location. The clause should be in a prominent place within the contract to emphasize the importance of the clause’s limitation on recoverable damages, such as being adjacent to another similarly significant provision or being next to the parties’ signature lines.[2]

These factors should be used as a guide for parties when drafting and negotiating contracts with exculpatory clauses. For example, in construction contracts, the parties should pay close attention to the font and location of indemnity and no-damage-for-delay clauses. In commercial and professional services contracts, common exculpatory clauses that merit close scrutiny address indemnity, limitation of lability, waivers of certain types of damages, and insurance terms.

Finally, while the opinion is helpful as concerns what is not prominent, it does not offer a clear statement of what is prominent. For example, does the font need to be bold, capitalized, and italicized, or will one choice work? In light of the Warrant Averett decision, it would seem that the more factors met, the less risk the clause is found unenforceable.

If you have questions regarding this decision, or any other contract drafting questions, please contact Bart Gary at [email protected] and Jake Carroll at [email protected]. Mr. Gary and Mr. Carroll practice construction and commercial law as members of Freeman Mathis & Gary’s Construction LawCommercial Litigation, and Tort and Catastrophic Loss practice groups as well as representing business and commercial entities in a wide range of disputes and corporate matters involving breach of contract, business torts, and products liability claims.

[1] Warren Averett, LLC v. Landcastle Acquisition Corp., 2019 Ga. App. LEXIS 178, Case no. A18A2117, March 13, 2019. (physical precedent only). Because one judge of the three-judge panel concurred in the judgment, the opinion is limited, physical precedent.
[2] 2019 Ga. App. LEXIS 178 at 9-10 (emphasis by the Court) (internal citations omitted).