Construction Law - Frank O. Brown, Jr.
| Publication year | 2010 |
Construction Law
by Frank O. Brown, Jr.*
I. Introduction
This Article focuses on noteworthy construction law decisions by appellate and federal district courts in Georgia between June 1, 2009 and May 31, 2010.1
II. NEGLIGENT CONSTRUCTION
In Cendant Mobility Financial Corp. v. Asuamah,2 Cendant Mobility Financial Corp. (Cendant) managed employee relocation benefits, including the sales of homes of relocated employees. Ms. Asuamah purchased a townhome from Cendant. After discovering water-related problems, she sued Cendant and others, asserting various claims.3 Among these claims was that prior to her purchase, "Cendant negligently repaired the townhome by accepting the [negligent] work done by an independent contractor."4 The trial court granted summary judgment to Cendant on all claims.5 The Georgia Court of Appeals affirmed except as to the negligent repair claim against Cendant.6
The Georgia Supreme Court then granted Cendant's petition for writ of certiorari.7 In its opinion, the supreme court stated that it had
* Shareholder in the firm of Weissman, Nowack, Curry & Wilco, P.C., Atlanta, Georgia. General Counsel: Greater Atlanta Home Builders Association, Inc., The Housing Institute, Inc., and HomeAid Atlanta, Inc. Rhodes College (B.A., 1976); Emory University School of Law (J.D., 1979). Member, State Bar of Georgia.
1. For an analysis of Georgia construction law during the prior survey period, see Frank O. Brown Jr., Construction Law, Annual Survey of Georgia Law, 61 MERCER L. REV. 65 (2009).
2. 285 Ga. 818, 684 S.E.2d 617 (2009).
3. Id. at 819, 684 S.E.2d at 618.
4. Id.
5. Id. at 819, 684 S.E.2d at 618-19.
6. Id.
7. Id. at 818-19, 684 S.E.2d at 618-19.
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granted the petition because it was "particularly concerned with the Court of Appeals's extension of the Worthey [v. Holmes] exception to caveat emptor to hold a non-builder/seller liable in negligence for latent construction/repair defects."8 In reversing the court of appeals on the negligent construction claim, the supreme court stated in unusually clear, strong, and broad language, that
[t]o dispel any doubt, we hold that the "negligent construction" exception to caveat emptor exempts from the defense of caveat emptor only a negligence claim by a homeowner seeking recovery against the builder/seller of the home for latent building construction defects about which the purchaser/homeowner did not know and in the exercise of ordinary care would not have discovered, which defects either were known to the builder/seller or in the exercise of ordinary care would have been discovered by the builder/seller. Inasmuch as Cendant is not a builder/seller of the dwelling purchased by Asuamah, the trial court did not err when it granted summary judgment to Cendant.9
Given the breadth of this language, negligent construction claims against other non-builder/sellers, such as developers of condominiums constructed by independent contractors, appear to be barred.
III. Georgia's Construction-Related Statute of Repose
A. Rosenberg v. Falling Water, Inc.
In Rosenberg v. Falling Water, Inc.,10 a deck on a home collapsed eleven years after a certificate of occupancy for the home was issued and the home was sold to its first buyers. A year later, the third buyer of the home sued the original builder of the home and deck for personal injuries resulting from the collapse. The plaintiff alleged that the deck had been negligently constructed.11 Pursuant to section 9-3-51 of the Official Code of Georgia Annotated (O.C.G.A.),12 the builder asserted that the claims were barred by the eight- to ten-year construction-related statute of repose.13 In response, the plaintiff argued that the builder
8. Id. at 819, 684 S.E.2d at 619 (citing Worthey v. Holmes, 249 Ga. 104, 287 S.E.2d 9 (1982)).
9. Id. at 822, 684 S.E.2d at 620-21 (citation omitted).
10. 302 Ga. App. 78, 690 S.E.2d 183 (2009).
11. Id. at 78-79, 690 S.E.2d at 184.
12. O.C.G.A. § 9-3-51 (2007).
13. Rosenberg, 302 Ga. App. at 79 & n.2, 690 S.E.2d at 184 & n.2. Pursuant to O.C.G.A. § 9-3-51,
(a) No action to recover damages:
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was equitably estopped from asserting the statute of repose because the builder had fraudulently concealed the negligent construction by using bolts that made the deck appear to be properly attached to the house.14 The Georgia Court of Appeals affirmed the trial court's grant of summary judgment to the builder based on the statute of repose.15 In explaining its decision, the court first stated that a statute of repose, unlike a statute of limitation, cannot be "tolled" by fraud.16 The court noted, however, that a defendant may be equitably estopped from asserting the statute ofrepose if(a) "the plaintiff's injury occurred before the statute of repose period expired," (b) "the defendant's fraud occurred after the injury," and (c) the "fraud delayed or prevented the plaintiff from filing suit until after the statute of repose period had expired."17 Because the plaintiff's injuries occurred after the statute of repose had expired, the court reasoned that equitable estoppel did not apply.18
(1) For any deficiency in the survey or plat, planning, design, specifications, supervision or observation of construction, or construction of an improvement to real property;
(2) For injury to property, real or personal, arising out of any such deficiency; or
(3) For injury to the person or for wrongful death arising out of any such deficiency
shall be brought against any person performing or furnishing the survey or plat, design, planning, supervision or observation of construction, or construction of such an improvement more than eight years after substantial completion of such an improvement.
(b) Notwithstanding subsection (a) of this Code section, in the case of such an injury to property or the person or such an injury causing wrongful death, which injury occurred during the seventh or eighth year after such substantial completion, an action in tort to recover damages for such an injury or wrongful death may be brought within two years after the date on which such injury occurred, irrespective of the date of death, but in no event may such an action be brought more than ten years after the substantial completion of construction of such an improvement.
14. Rosenberg, 302 Ga. App. at 79-80, 690 S.E.2d at 184-85. The plaintiff did not assert a cause of action for fraudulent concealment, but he argued that the alleged fraudulent concealment estopped the builder from relying on the statute of repose. Id. at 80 & n.4, 690 S.E.2d at 185 & n.4.
15. Id. at 81-82, 690 S.E.2d at 186.
16. Id. at 80, 690 S.E.2d at 185 (internal quotation marks omitted). Pursuant to O.C.G.A. § 9-3-96 (2007), which applies to statutes of limitation, "[i]f the defendant or those under whom he claims are guilty of a fraud by which the plaintiff has been debarred or deterred from bringing an action, the period of limitation shall run only from the time of the plaintiff's discovery of the fraud."
17. Rosenberg, 302 Ga. App. at 81, 690 S.E.2d at 186.
18. See id. at 81-82, 690 S.E.2d at 186.
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B. Facility Construction Management, Inc. v. Ahrens Concrete Floors, Inc.
In Facility Construction Management, Inc. v. Ahrens Concrete Floors, Inc.,19 Facility Construction Management, Inc. (Facility), a general contractor, contracted to construct a project in Pennsylvania. Facility retained Ahrens Concrete Floors, Inc. (Ahrens) to construct the project's concrete floor. The subcontract between the parties required Ahrens to indemnify Facility against claims arising from Ahrens's work and further required Ahrens to obtain insurance to cover its work and its indemnification obligation. Ahrens did obtain insurance, which named Facility as an additional insured. Ahrens substantially completed the floor in September 1999. In August 2002, the project's owner sued Facility for damages in Pennsylvania state court, alleging defective construction of the floor.20
Facility called upon Regent Insurance Company (Regent), the insurer from which Ahrens had obtained insurance, to defend the project owner's claim. Regent denied coverage and filed a declaratory judgment action against Facility in Iowa.21 Facility sued Ahrens in the Superior Court of Cobb County, Georgia in March 2008, while both the owner's Pennsylvania suit against Facility and Regent's Iowa declaratory judgment action were still pending.22 Facility alleged, inter alia, that Ahrens had breached its contractual obligation to indemnify and to obtain insurance and that Ahrens negligently represented that it had obtained insurance in compliance with its subcontract.23 Facility sought damages and a declaratory judgment relating to Ahrens's obligations to defend and indemnify.24
Ahrens filed a motion for summary judgment, which focused on its defense that all of Facility's claims were barred by Georgia's...
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