April 2014
Construction Law Newsletter  
& Georgia Construction Law Update 
Official Publication of the Atlanta Bar Association Construction Law Section
Save the Date!  
Mark your calendars for the following Construction Law Section Events

Details are subject to change. Check your emails and the Atlanta Bar Association website for updates.

Construction Law Section Breakfast
Date: Wednesday, April 23, 2014  
Time: 7:30 a.m. - 9:00 a.m. 
Topic: "Effectively Dealing with Fatalities, Catastrophic Accidents and OSHA Inspections for Your Construction Clients" 
Speaker: Edwin G. Foulke, Jr., Partner, 
Fisher & Phillips LLP   
Section Member: $21 in advance, $25 at door  
Non-Section Member: $36 in advance, $40 at door  
Add $5 to receive 1 CLE hour

Construction Law Section Spring Social 
Date: Wednesday, May 14, 2014  
Time: 5:00 p.m. - 7:00 p.m. 
Section Members: FREE 
Guests of Section Members: $25
Open to Section Members and their guests only!  


Contractors Beware: Quantum Meruit is Not Available if the Government Contract is Not Authorized in Accordance with the Law
By Benjamin H. Sawyer and Nkoyo-Ene Effiong 
Sutherland Asbill & Brennan LLP

The Supreme Court of Georgia's recent ruling in City of Baldwin v. Woodward & Curran, Inc. is a stern reminder to contractors to ensure that all contracts with the government are properly authorized in accordance with applicable law. Failure to do so may foreclose a claim for equitable relief, such as quantum meruit, where a contractor performed pursuant to a contract if that contract is ultimately ultra vires. This case note highlights some of the major takeaways from this Georgia Supreme Court decision and cautions contractors who routinely work with local governments to remain mindful of all applicable procurement and/or contracting laws.


The State is not Liable for Employers that Contract Under Fake Payment Bonds
By Erica E. Harrison 
Associate at Alston & Bird LLP

LRL Ventures and Management ("LRL") entered into a contract with Georgia Southern University ("GSU") to perform janitorial and custodial services, starting late 2009 through 2010. The contract was secured after LRL submitted to GSU proof of a payment bond, which was supposedly issued by The Hartford Fire Insurance Company ("Hartford"). As part of the contract, LRL employees were to clean rooms and refurbish the floors of GSU facilities, and be paid an hourly wage. The employees began work soon after the contract was executed in November 2009. Several months later, however, the LRL employees had not received their proper hourly wage payments.


Termination of a Contract is a Risky Business
By Stephanie Stewart 
Freeman Mathis & Gary, LLP

In November of 2013, the Georgia Court of Appeals ruled that a jury, not a judge, should have decided whether a subcontractor had "repeatedly" failed or neglected to carry out its work in accordance with the contract and failed to cure those defects within 10 days after notice. The general contractor terminated the subcontract after four alleged violations of its terms by the subcontractor. The subcontract contained a relatively typical clause allowing for termination if "repeated" defaults were not timely cured.

Res Judicata Defense is for Arbitrator, Not Court, to Decide in Arbitration under the Federal Arbitration Act
By Frank O. Brown, Jr. 
Weissman, Nowack, Curry & Wilco, P.C.

Archer Western Contractors, LLC v. Holder Const. Co., 751 S.E.2d 908, 13 FCDR 3933 (2013), is another Georgia appellate opinion arising out of the now familiar tragic death of Mack Pitts, a subcontractor's employee on the Atlanta airport's International Terminal project. Mr. Pitts' estate received a large judgment against the sub-subcontractor and its employee, which exceeded the sub-subcontractor's automobile liability insurance coverage.

The estate then sued the City of Atlanta, the general construction manager, and the construction manager's subcontractor, alleging that they had failed to require the sub-subcontractor to maintain $10 million in automobile liability insurance as required by both the general contract and the subcontract. The construction manager was a joint venture composed of Holder Construction Company, Manhattan Construction Company, C.D. Moody Construction Company, and Hunt Construction Group. The subcontractor was a joint venture composed of Archer Western Contractors and Capital Contracting Company.

Estate of Pitts: Downstream OCIP Coverage
By Amy K. Weber 
Taylor English Duma LLP

Contractors who agree to abide by minimum coverage requirements on an Owner's Controlled Insurance Policy ("OCIP") may at the same time be unwittingly agreeing to provide insurance for all down-stream contractors and subcontractors on a project, according to some recent Georgia court decisions. A general contractor unsuccessfully appealed a judicial decision holding the general contractor liable to an injured worker of a subcontractor under the OCIP policy. Specifically, at the commencement of the project, the general contractor entered into an OCIP policy with the City of Atlanta, the purpose of which was to "provide one master insurance program that provides broad coverage with high limits that will benefit all participants involved in the project." After the worker was accidentally killed on the project by work being performed by another subcontractor, his estate sued the general contractor, seeking to recover the balance of the judgment because the responsible subcontractor could not pay the wrongful death judgment. 
CGL Contractual Liability Exclusion Unclear in Georgia Following Texas Supreme Court Decision in Ewing Construction
By Kent Collier 
Associate, Sutherland Asbill & Brennan LLP

In construction disputes, the availability of insurance coverage is a frequently litigated issue. A critical component of assessing coverage for claims under commercial general liability (CGL) insurance policies is to determine the extent a policy may cover damages under various theories of recovery-particularly tort and contract. Generally speaking, insurance coverage for construction defects works as follows: the plaintiff alleges the existence of damages in the form of "personal injury" or "property damage." Such allegations may take the form of a breach of construction contract (i.e., failing to install work in accordance with plans and specifications or installing work without the contractually-required level of workmanship) or tort (i.e., negligence). These allegations within the four corners of the complaint trigger the insurer's duty to indemnify the insured pursuant to the four corners of the insurance policy if the allegations constitute an "occurrence."

In This Issue
2013-2014 Section Board of Directors

Philip Edward Beck

Vice Chair-Chair-Elect
Herbert H. Gray III

C. Damon Gunnels

Immediate Past Chair
T. Bart Gary

Members at Large
Frank L. Bigelis
Deborah Cazan
R. Daniel Douglass
Mark V. Hanrahan
Frank E. Riggs Jr.
W. Henry Parkman
Christy Sanders
Lynn C. Stewart
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