Saks Mgmt. & Assocs., LLC. v. Sung Gen. Contracting, Inc.

• Decision Date: 21 August 2020
• Docket Number: A20A1085,A20A1086
• Citation: 849 S.E.2d 19,356 Ga.App. 568
• Parties: SAKS MANAGEMENT AND ASSOCIATES, LLC. v. SUNG GENERAL CONTRACTING, INC. et al.; and vice versa.
• Court: Georgia Court of Appeals

356 Ga.App. 568

849 S.E.2d 19

SAKS MANAGEMENT AND ASSOCIATES, LLC.

v.SUNG GENERAL CONTRACTING, INC. et al.; and vice versa.

A20A1085

A20A1086

Court of Appeals of Georgia.

August 21, 2020

Reconsideration Denied September 8, 2020

David Franklin Cooper, Atlanta, Christopher Joseph Hoffman, Taylor Kirkpatrick Owens, Atlanta, for Appellant in A20A1085.

David S. Walker Walker, Snellville, George L. Kimel, Norcross, for Appellee in A20A1085.

David S. Walker Walker, Snellville, George L. Kimel, Norcross, for Appellant in A20A1086.

David Franklin Cooper, Atlanta, Christopher Joseph Hoffman, Taylor Kirkpatrick Owens, Atlanta, for Appellee in A20A1086.

McFadden, Chief Judge.

These cases involve a dispute between the owner of an apartment complex and various individuals and companies involved in the work of renovating the complex. After the owner, Saks Management and Associates, LLC, terminated its contract with the general contractor, Sung General Contracting, Inc., this litigation followed.

In Case No. A20A1085, Saks appeals the denial of its motion for summary judgment on Sung General Contracting's counterclaims, arguing that they are barred because Sung General Contracting was not licensed when Sung General Contracting entered the contract with Saks. In Case No. A20A1086, Sung General Contracting cross-appeals the denial of its motion for summary judgment on all of Saks’ claims other than breach of contract.

We agree with Saks that Sung General Contracting's counterclaims are barred because Sung General Contracting did not have a state general contractor license when it entered the contract with Saks. So we reverse in Case No. A20A1085. We hold that Sung General Contracting was entitled to summary judgment on Saks’ claims for fraud, conversion, and piercing the corporate veil, but not on Saks’ other claims. So we affirm in part and reverse in part in Case No. A20A1086.

1. Procedural and factual background.

"Summary judgment is proper ‘if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.’ OCGA § 9-11-56 (c)." Cowart v. Widener , 287 Ga. 622, 623 (1) (a), 697 S.E.2d 779 (2010). "On appeal from the denial or grant of summary judgment, the appellate court must conduct a de novo review of the evidence to determine whether there exists a genuine issue of material fact, and whether the undisputed facts, viewed in the light most favorable to the nonmoving party, warrant judgment as a matter of law." Newstrom v. Auto-Owners Ins. Co. , 343 Ga. App. 576, 577 (1), 807 S.E.2d 501 (2017) (citation omitted).

So viewed, the record shows that in July 2016, Sung General Contracting and Saks entered a contract for work on Saks’ apartment complex on Sylvan Road in Atlanta. Chol Chung is the sole owner of Sung General Contracting. He has always referred to himself as Sung Chung and uses that name in his business. Chol Chung and Sung General Contracting have never been licensed contractors.

In August 2016, the city of Atlanta issued a stop work order on the project because required permits had not been issued. Sung General Contracting hired professional engineer and licensed general contractor Sung Chung to help obtain the permits. Although Chol Chung is known as Sung Chung and owns Sung General Contracting, he and professional engineer Sung Chung are different people. Sung Chung asked Chol Chung to get a letter from Saks to facilitate obtaining the permits, so Chol Chung requested a letter of acknowledgment from the owner of Saks and the general manager of the complex. Chol Chung told them what needed to be in the letter. The September 21, 2016 letter stated:

To Whom It May Concern:

In June 2016, Yorkminster Square Apartments PKA The New Park At Sylvan located at 2001 Sylvan Road SW, Atlanta, GA 30310, was purchased by Saks Management and Associates, LLC represented by Louis Beria. The property is currently undergoing renovations and upgrades contracted by Sung General Contracting Inc. Saks Management and Associates, LLC. acknowledges Sung Chung as lead contractor for purposes of permit acquisition and communication with the City of Atlanta.

Although Chol Chung goes by the name Sung Chung, he never informed the owner that he is not the Sung Chung referenced in the letter. Saks emailed the letter to Chol Chung, who forwarded it to professional engineer Sung Chung, who sent the letter to the city and got the permits.

The July 2016 contract anticipated that the work would be substantially complete by March 31, 2017. Saks timely made the first three of five contemplated payments. The fourth payment was due March 25, 2017. On February 1, 2017, Sung General Contracting demanded full payment by February 3, and threatened to stop work because it had expected a payment (outside the scheduled payments) but that payment was not made and Saks had brought in outside contractors. Saks paid $200,000 and the parties accelerated the date for completion of the first phase of the project to February 28, 2017. Sung General Contracting did not finish the work by February 28, 2017, but it continued working until March 24, 2017, when Saks terminated the contract.

Saks filed this complaint against multiple defendants, including Sung General Contracting, Chol Chung, and professional engineer Sung Chung, alleging multiple claims, including breach of contract, negligence, conversion, unjust enrichment, and fraud. The defendants answered and Sung General Contracting filed counterclaims for, among other things, breach of contract, quantum meruit, and unjust enrichment. Saks moved for summary judgement on Sung General Contracting's counterclaims. The defendants moved for summary judgment on most of Saks’ claims. The trial court denied the parties’ motions for summary judgment, and these appeals followed. (The notice of cross-appeal specified that the "defendants" appealed. But only defendant Sung General Contracting filed a brief in either A20A1085 or A20A1086, so the other defendants’ appeal is deemed abandoned, leaving Sung General Contracting as the sole cross-appellant. See City of Brookhaven v. City of Chamblee , 329 Ga. App. 346 n. 2, 765 S.E.2d 33 (2014).)

2. The denial of Saks’ motion for summary judgment on Sung General Contracting's counterclaims.

(a) OCGA § 43-41-17 (b) .

Saks argues that it is entitled to summary judgment on Sung General Contracting's counterclaims because OCGA § 43-41-17 (b), which concerns residential and general contractor licensing requirements, bars Sung General Contracting's claims. We agree.

"The statutes at issue in this case are included in Chapter 41 of Title 43 of the Georgia Code, which provides a broad statewide licensing system for residential and general contractors...." Restor-It v. Beck , 352 Ga. App. 613, 615, 835 S.E.2d 398 (2019). OCGA § 43-41-17 (a) provides, in pertinent part, that no person shall have the right to engage in the business of general contracting without a current, valid general contractor license issued by the State Licensing Board for Residential and General Contractors. OCGA § 43-41-17 (b) provides in pertinent part:

As a matter of public policy, any contract entered into on or after July 1, 2008, for the performance of work for which a residential contractor or general contractor license is required by this chapter and not otherwise exempted under this chapter and which is between an owner and a contractor who does not have a valid and current license required for such work in accordance with this chapter shall be unenforceable in law or in equity by the unlicensed contractor. For purposes of this subsection, a contractor shall be considered unlicensed only if the contractor was unlicensed on the effective date of the original contract for the work, if stated therein, or, if not stated, the date the last party to the contract executed such contract, if stated therein..... This subsection shall not affect the rights of parties other than the unlicensed contractor to enforce contract, lien, or bond remedies....

OCGA § 43-41-17 (b) (emphasis supplied.)

The parties do not dispute that Sung General Contracting and Chol Chung

did not have Georgia contractor's licenses when the construction contract was executed and when the work was performed pursuant to the contract. The construction contract clearly identifies [Sung General Contracting] as the "Contractor" and [Saks Management & Associates] as the "Owner" of the [real property] on which the construction was to be completed. Thus, under OCGA § 43-41-17 (b), the construction contract is not enforceable by [Sung General Contracting] in law or in equity unless an exemption applies.

Baja Properties, LLC v. Mattera , 345 Ga. App. 101, 103 (1), 812 S.E.2d 358 (2018).

Sung General Contracting argues that an exemption applies: the repair rule exemption of OCGA § 43-41-17 (g). Subsection (g) states:

Nothing in this chapter shall preclude a person from offering or contracting to perform or undertaking or performing for an owner repair work, provided that the person performing the repair work discloses to the owner that such person does not hold a license under this chapter and provided, further, that such work does not affect the structural integrity of the real property. The board shall by rule or regulation further define the term "repair" as used in this subsection and any other necessary terms as to the scope of this exemption.

OCGA § 43-41-17 (g). In accordance with the statute, the State Licensing Board for Residential and General Contractors has enacted a repair rule that defines "repair" "to mean fixing, mending, maintenance, replacement or restoring of a part or portions of real property to good condition." Ga. Comp. R. & Regs. r. 553-8-.01. The repair rule further provides:

Nothing in this [r]ule shall preclude a person or entity (including employees of said entity) from

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