Construction Law Section Newsletter
 & Georgia Construction Law Update
Official Publication of the Atlanta Bar Association Construction Law Section
In This Issue
Upcoming Events
A Message From the Chair
Recent Developments in False Claims Act Litigation
Contractor's General Conditions Expenses Held to be Non-Lienable
Carrier Corp. v. Rollins
Brantley Land & Timber, LLC. v. W & D Investments, Inc
Camp Cherokee, Inc. v. Marina Lane, LLC
Department of Transportation Immune from Suit
Hoover v. Maxum Indem. Co.
Reininger v. O'Neill
Quick Links
 
 
Follow Us
Like us on Facebook  Follow us on Twitter  View our profile on LinkedIn
Fall 2012
Newsletter Editors: 
Frank L. Bigelis and Reginald A. Williamson

 

Construction Law Section Board of Directors

 

Chair T. Bart Gary
Vice Chair-Chair-Elect Philip E. Beck
Secretary/Treasurer Herbert H. Gray III
Immediate Past Chair Danielle J. Cole
 
Members at Large
Frank L. Bigelis
Deborah Cazan
R. Daniel Douglass
C. Damon Gunnels
Mark V. Hanrahan
W. Henry Parkman
Frank E. Riggs Jr.
Lynn C. Stewart

 

Upcoming Events
 
Next Breakfast Meeting
Wednesday, November 14, 2012 at the Buckhead Club

"Primer For The Civil Lawyer: What To Do When Your Client Is The Subject Of A Criminal Investigation"

Speakers: Randy S. Chartash, Esq.
Assistant United States Attorney and Chief,
Economic Crime Section, Atlanta, GA
 
Daniel P. Griffin, Esq.
Member, Miller & Martin PLLC, Atlanta, GA

--------------------------------------------------------- 
Annual Section Holiday Social
Tuesday, December 4, 2012 at RiRa Irish Pub

Come celebrate the holidays with members of the Construction Law Section

 

Register online and view more information
 

--------------------------------------------------------- 

Mark Your Calendars for these Upcoming Section Breakfast Meetings

- Wednesday, January 23, 2013
- Wednesday, February 27, 2013
- Wednesday, March 27, 2013
- Wednesday, April 24, 2013
 
More information to be posted online at www.atlantabar.org.
 
A Message From the Chair
by T. Bart Gary, Freeman Mathis & Gary, LLP

The section new year is off to a good start. We have had good attendance at the monthly meetings and the slate for the rest of the year includes an ethics/professionalism program in January by member George Sewell and our annual legislative up-date by Mark Woodall of the Georgia Chapter of the AGC in February. We plan to publish two more newsletters before the year ends in June 2013. We depend on your help with case notes and articles for the newsletter. Please share with Frank Bigelis and me any ideas for the newsletter or future programs. Remember to sign up for our Holiday party on December 4, 2012 at Ri Ra. See you there.

 

Can a Low Bid Really Be a False Claim? Recent Developments in False Claims
Act Litigation
by Heather L. Heindel and Damian Brychcy, Kilpatrick Townsend & Stockton

Gavel in scales for Family Law Judges Luncheon  A recent decision by the Ninth
  Circuit, following similar holdings
  in the First and Fourth Circuit
  Courts of Appeals (as well as
  the District Courts in other
  Circuits), ruled that false cost
  estimates, including those which
  are knowingly underbid, submitted in support of bids on federal government contracts may be a "false or fraudulent claim" under the Federal False Claims Act ("FCA").  31 U.S.C. 3729-3733 (2010).   General contractors and subcontractors need to be made aware of these possible FCA violations as these decisions may have a major effect on bidding on federal government projects.


In Hooper v. Lockheed Martin Corp., 688 F.3d 1037 (9th Cir. 2012), a decision from August 2012, involved a contract for the development and purchase of software and hardware used to support launch operations at Vandenberg Air Force Base and Cape Kennedy. Among other causes of action, a former employee of Lockheed alleged Lockheed intentionally lowered its initial estimate to do the work. The former employee was the relator (an individual permitted under the FCA to file suit on behalf of the United States seeking damages from those who file false claims for government funds) and alleged that Lockheed violated the FCA by knowingly underbidding the contract. Id. at 1041.

 

View entire article

Contractor's General Conditions Expenses Held to be Non-Lienable
by J. Dean Marshall, Sutherland
In 182 Tenth LLC v. Manhattan Construction Co., 730 S.E.2d
495 (Ga. Ct. App. 2012), the Georgia Court of Appeals held
that a contractor's "general conditions" costs were not
"labor, services, or materials"
for which a mechanic's lien
could be asserted under Georgia's lien statute, O.C.G.A. 44-14-360 to -369.

The contractor in 182 Tenth did not contract with the fee simple owner of the project.  It contracted instead with another entity, Mid-Atlanta Properties, Inc., to build condominiums.  Thus, although the Court describes Manhattan as the "general contractor," it was not in privity of contract with the owner of the property.  Id. at 497. The opinion does not describe the nature of the agreement between the fee simple owner, 182 Tenth, LLC, and Mid-Atlanta.  The contractor obtained a default judgment against Mid-Atlanta for $4,886,606, and this included the sum of $2,126,148 for amounts due under the contract with Mid-Atlanta.

Contract One-Year Limitation Defense Undermined by Lack of Specificity, Carrier Corp. v. Rollins, Inc., 316 Ga. 630, 730 S.E.2d 103 (2012)
by George Q. Sewell, Attorney at Law and former General Counsel of the Facility Group
contractIn, Carrier Corp. v. Rollins, Inc., 316 Ga. 630, 730 S.E.2d 103 (2012), Rollins, Inc. hired Carrier Corporation to install a $2,000,000 plus HVAC system at its headquarters building.  The system never functioned properly despite Carrier's attempts to correct the problems.  Eventually, Rollins refused to pay further invoices from Carrier, and in response, Carrier announced that it was leaving the job.  Rollins hired another contractor to complete the work at a cost of $702,000. Rollins then filed suit for breach of contract and Carrier counterclaimed for unpaid invoices.  The case went to trial and the jury awarded $305,000 to Rollins on its breach of contract claim and $88,000 to Carrier on its counterclaim for unpaid invoices.   Both parties appealed.  Carrier's appeal raised several issues that illustrate how what may appear to be a strong contractual position can be brushed aside by the judicial process. 

Brantley Land & Timber, LLC v. W & D Investments, Inc., 316 Ga. App. 277, 729 S.E.2d 458 (2012)
by Reginald A. Williamson, Kilpatrick Townsend &
Stockton LLP

Georgia courts interpreting statutes regulating occupational licensing have long distinguished statutes that require a license as a revenue measure from those statutes that seek to regulate business in the interest of the public.  If the licensing statute was intended to protect the public, and a business fails to procure a license before engaging in the regulated business, then Georgia law holds such contracts void and unenforceable. Accordingly, the status of a contractor's license can become a powerful tool for opposing parties in litigation.  Any owner, or fellow contractor, facing a lawsuit from a contractor should always check the license of the contractor seeking to enforce the contract.  If they lacked the appropriate license to perform the work, the Court can hold the contract void and unenforceable. 

 

View entire article

Camp Cherokee, Inc. v. Marina Lane, LLC, 316 Ga. App. 366, 729 S.E.2d 510 (2012)
by Neil L. Wilcove, Freeman Mathis & Gary, LLP
In Camp Cherokee, Inc. v. Marina Lane, LLC, 316 Ga. App. 366, 729 S.E.2d 510 (2012), a brazen attempt to circumvent the property rights of the owner of real property surrounding Lake Burton in Rabun County (including the land under the lake and shoreline surrounding Lake Burton) was stopped in its tracks when the Court of Appeals affirmed the trial court's decision to grant summary judgment to the property owner on the basis that the unauthorized construction of a dock was considered a nuisance and trespass.  The Court of Appeals left open the issue on how much in attorneys' fees and punitive damages, if any, to which the property owner was entitled. 

Department of Transportation Immune from Suit
by Daniel Puckett, Smith, Currie & Hancock LLP

Georgia Department of Transportation v. Crooms, addressed whether the Department of Transportation (DOT) was immune from its alleged failure to maintain a road. 316 Ga. App. 536, 729 S.E.2d 660 (2012).


The Georgia Tort Claims Act waives sovereign immunity of the State and its departments with certain exceptions. The exception in O.C.G.A. 50-21-24(10) preserves the DOT's sovereign immunity from negligent design claims, as long as the design met generally accepted standards in place when the design was made. This immunity does not include the DOT's failure to maintain the road, but it does provide immunity from claims that the DOT failed to upgrade the road to make it safer.

 

View entire article

Hoover v. Maxum Indem. Co., 291 Ga. 402, 730 S.E.2d 413 (2012) Case Note
by Goran Musinovic, Smith Currie & Hancock LLP

scales and bookUnder Georgia law, an insurer has three options when faced with a claim of coverage while a lawsuit is pending against the insured. First, an insurer can defend the claim, thereby waiving its policy defenses and claims of non-coverage. Hoover v. Maxim Indem. Co., 291 Ga. 402, 404, 730 S.E.2d 413, 416 (2012) (internal citations omitted). Second, an insurer can deny coverage and refuse to defend, leaving policy defenses open for future litigation. Id. Or third, an insurer can defend under a reservation of rights. Id. at 405, 730 S.E.2d at 416. A "reservation of rights" is a legal term of art in insurance law, and it allows an insurer to provide a defense to its insured while still preserving the option of litigating and ultimately denying coverage. Id. If an insurer chooses to defend its insured under a reservation of rights, at a minimum, the reservation of rights must fairly inform the insured that, notwithstanding the insurer's defense of the action, it disclaims liability and does not waive defenses available to it against the insured. Id. In addition, a reservation of rights is only available to an insurer who undertakes a defense of its insured while questions remain about the validity of coverage. Id. This means that under Georgia law, an insurer cannot both deny a claim outright and attempt to reserve the right to assert different or additional defenses in the future in support of its decision to deny coverage. Id.

 

View entire article

 

Reininger v. O'Neill, 316 Ga. App. 477, 729 S.E.2d 587 (2012)
by Claire Williamson, Foltz Martin Hudson & Knapp, LLC
In Reininger v. O'Neill, 316 Ga. App. 477, 729 S.E.2d 587 (2012), the purchasers of a home ("the Reiningers") filed suit against the previous owner-seller ("the O'Neills") after they discover a water leak in the basement of their home.   


The parties' Purchase Agreement contained an As-Is Clause which stated that the "Property is being sold 'as is,' with all faults..." Id. at 478, 729 S.E.2d at 589. The Purchase Agreement also contained a Merger Clause that stated, "No representation, promise or inducement not included in this Agreement shall be binding upon any party hereto."  Id. Prior to selling the home, Mr. O'Neill made repairs to the basement after he noticed that water was accumulating in the basement after heavy rainfalls. Within the Purchase Agreement, the O'Neills admitted that there had been water leakage and/or accumulation, and that repairs had been made to control water leakage in the basement, though did not reveal the specific details of that repair.  Mr. O'Neill also verbally told Mr. Reininger that there had been a leak in the basement. Id. at 479, 729 S.E.2d at 590. 

 

View entire article