PHIPPS, Chief Judge.
In this construction contract dispute, Western Surety Company and Continental Casualty Company (the "Sureties") appeal from the trial court's grant of partial summary judgment to defendant State of Georgia Department of Transportation (the "DOT") on the Sureties' claims for breach of contract and violation of the Georgia Prompt Payment Act (the "PPA").
Summary judgment is warranted when the moving party shows that there is "no genuine issue of material fact and that the movant is entitled to judgment as a matter of law."
So viewed, the record shows that the DOT and Bruce Albea Contracting, Inc. ("BAC") entered into a construction contract (the "Contract") for work on roadway U.S. 27 (the "Project"). The Sureties issued performance and payment bonds to the DOT, as obligee. The completion date for the Project was originally March 31, 2007, but was extended to January 18, 2008.
After BAC entered into the Contract, it experienced an increase in material costs for the Project. As a consequence of the increase in material prices, particularly for asphalt and other petroleum-related products, BAC suffered financial difficulties. In December 2006, BAC notified the Sureties of the problem.
Rather than allow the Project to "grind to a halt," the Sureties provided funds to BAC between April and July of 2007. In exchange for their help with the Project, BAC provided the Sureties with a letter from BAC to DOT, dated April 18, 2007, stating that BAC could not perform the work and was voluntarily abandoning the Contract. The letter was received by DOT in late June 2007, and DOT placed BAC in default and directed the Sureties to take over the work on the Project.
On September 11, 2007, the Sureties sent two claim letters to the DOT. After a meeting, the DOT asked for additional information. The Sureties chose not to respond to the DOT's request and subsequently sued the DOT, setting forth three counts of breach of contract
1. The Sureties acknowledge that neither BAC nor the Sureties strictly followed the claim notice requirements set forth under the Contract, particularly Specification 105.13. Specification 105.13.B.9 provides:
In submitting a claim, the Contractor is also required to provide certain information, as set forth in Specification 105.13.C, and to certify the claim, as required by Specification 105.13.D.
Further, under Specification 105.13.B.6.b, recoverable damages under the Contract include "[d]ocumented additional costs for materials." The parties also agreed under Specification 105.13.B.5, however, that "[c]ompliance with the provisions of this Subsection will be an essential condition precedent to any recovery of damages by the Contractor."
Parties to construction contracts are free to enter into claim notice requirements, and such provisions are "legal and binding on the parties in the absence of special circumstances," which may include waiver or estoppel.
(a) The Sureties contend that the DOT waived strict compliance with the notice and claims procedures under the Contract by actively encouraging disputes to be handled informally and by punishing those who followed the strict claims procedures, by granting extensions of the contract time, and by negotiating with the Sureties. In that respect, we have "recognized that a party to a contract may waive contractual provisions for his benefit."
The Sureties also point to evidence that BAC's principal, based on his experience with DOT on other projects, was reluctant to file any claim against the DOT. BAC's principal deposed that on another project, upon "issue[][of] the word claim, [the DOT] immediately used my liquidated damages as leverage." The DOT's engineer on the Project also testified that as to another project he worked on with BAC's principal, it was "not an-out-of-question conversation" that he told BAC "we're not going to give you time if you are asking for both time and money." According to BAC's principal, in this case BAC and its supplier wanted to "work out an escalation agreement" with DOT, but wanted to "get the time extension first."
While there is evidence that BAC was "afraid to ruffle the feathers" of the DOT by filing a claim, and that the DOT might react negatively if such a claim was made, the evidence tends to explain why the procedures for filing a claim under the Contract were intentionally not followed by BAC, not that the DOT waived any of the Contract provisions regarding the filing of claims.
The Sureties also point to the DOT's alleged practice of "waiting until the end of projects to consider time extensions," showing that in this instance the DOT considered and granted BAC's requests for time extensions in 2007, notwithstanding that the delays occurred in 2004, 2005, and 2006. Therefore, the Sureties argue, because the requests for extensions were sent more than one week after the delays and were not in strict compliance with the notice requirements, there was evidence of waiver. The DOT shows, however, that extensions of contract time were not granted under the provisions at issue here.
Last, the Sureties contend that the DOT waived strict compliance with the claim notice provisions by participating in settlement negotiations. However, the Sureties do not show that during any communications or discussions between the Sureties and the DOT, the DOT agreed or intimated that it would waive any of the Contract requirements. Even after the submission of the two September 11, 2007 claim letters, the DOT continued to request information and acts on the part of the Sureties which were consistent with an insistence of strict compliance with the terms of the Contract.
(b) The Sureties further contend that a jury could conclude that BAC and the Sureties reasonably complied with the notice and claims provision of the Contract. We disagree.
As a rule, "[a]ny notice requirement must be reasonably construed."
Here, the two September 11, 2007 letters asserted claims by the Sureties against DOT for compensation for price escalations and damages under the Contract. Nevertheless, the letters were on their face untimely as to the majority of the claims set forth therein. As we noted supra, the parties had agreed under Specification 105.13.B.9 that "[t]he [DOT] shall have no liability for any delay which occurred more than one week prior to the filing of the written notice of potential claim and that, as to other claims, "[i]f the Contractor does not file such written notice before beginning the work out of which such claim arises, then the Contractor hereby agrees that it shall have waived any additional compensation for that work."
After the DOT received the two claim letters, it asked the Sureties, consistent with the Specification 105.13.C for, among other things, "[a] copy of the `Notice of Potential Claim' filed for each delay event or issue associated with claim." The Sureties did not respond to this request, and the Sureties' representative maintained in his deposition that they did not do so because the DOT "had their own project files" and because the DOT had adequate notice of the claims. On appeal, the Sureties point to informal discussions between BAC and the DOT and letters sent from BAC and the Sureties to the DOT and contend that they are sufficient to create an issue of material fact as to "whether BAC and the Sureties' efforts were `in the spirit' of" the Contract's requirements. For example, the Sureties show that they sent the DOT a letter in July 2007 concerning price escalations, stating, "All rights and/or claims for increased compensation due to time extension(s) and/or escalation of oil and/or asphalt prices increases to [BAC] and/or [the Sureties] are reserved." But the Contract does not reasonably contemplate that a contractor may unilaterally "reserve" a claim.
The September 11, 2007 claim letters were perhaps sufficient to provide reasonable notice of a claim to the extent the notice was not untimely. However, in addition to notice, the parties agreed as to the required contents of a claim, including the information to be provided thereby.
(c) The Sureties further contend that a jury must decide whether the DOT had actual notice of BAC's and the Sureties' claims. They rely on APAC-Ga. v. DOT,
At issue in APAC-Ga. was whether the trial court erred in finding that the contractor failed as a matter of law to comply with a provision regarding the extension of contract time.
In this case, however, the DOT's knowledge "that there were problems with [delays]
(d) Last, the Sureties argue that a jury should consider whether the DOT was prejudiced by BAC's and the Sureties' failure to strictly comply with the Contract's claim notice provisions. They acknowledge that "[n]o Georgia appellate court has made a determination whether prejudice is a necessary element to prevent waiver of strict compliance." Rather, they rely on decisions of the General Services Administration Board of Contract Appeals.
In light of the foregoing, we conclude that there remains no issue of material fact as to whether BAC's and the Sureties' failure to comply with the claim notice provisions of the Contract was waived by the DOT, whether BAC or the Sureties reasonably or substantially complied with those provisions, or whether their compliance was excused by the DOT's actual knowledge of a claim. It follows that the trial court did not err in granting partial summary judgment to the DOT on Claim II and Claim III.
2. In Count IV of their complaint, the Sureties requested attorney fees and interest arising out of the DOT's alleged violation of the PPA. Specifically, the Sureties alleged that the DOT violated the PPA "by failing to pay the Sureties within 15 days of receipt of Voucher # 58."
It is undisputed that DOT's payment for Voucher 58 has been accepted by the Sureties. And OCGA § 13-11-7 provides that "[a]cceptance of progress payments or final payment shall release all claims for interest on said payments." Accordingly, the Sureties do not show that they have a claim for interest under the PPA with respect to the failure to timely pay Voucher 58.
The Sureties argue that inasmuch as Voucher 58 was paid after the action to enforce a claim was instituted, the "Sureties are entitled to [attorney] fees incurred until the
Judgment affirmed.
ELLINGTON, P.J., and BRANCH, J., concur.