Archer W. Contractors, Ltd. v. Estate of Pitts

• Decision Date: 27 November 2012
• Docket Number: Nos. S12G0517,S12G0526,S12G0527.,s. S12G0517
• Citation: 735 S.E.2d 772,292 Ga. 219
• Parties: ARCHER WESTERN CONTRACTORS, LTD. et al. v. ESTATE OF Mack PITTS et al. City of Atlanta v. Estate of Mack Pitts et al. Holder Construction Company et al. v. Estate of Mack Pitts et al.
• Court: Georgia Supreme Court

292 Ga. 219
735 S.E.2d 772

ARCHER WESTERN CONTRACTORS, LTD. et al.
v.
ESTATE OF Mack PITTS et al.
City of Atlanta
v.
Estate of Mack Pitts et al.
Holder Construction Company et al.
v.
Estate of Mack Pitts et al.

Nos. S12G0517, S12G0526, S12G0527.

Supreme Court of Georgia.

Nov. 27, 2012.

[735 S.E.2d 774]

Robert P. White, Casey Gilson P.C., Walter H. Bush, Jr., Christopher Bryan Freeman, Atlanta, Sylvia H. Walbolt, E. Kelly Bittick, Jr., Tampa, FL, Carlton Fields, P.A., Steven J. DeFrank, Stephen Michael Schatz, Bradley S. Wolff, Swift, Currie, McGhee & Hiers, Atlanta, William David Flatt, David J. Hendrick, Hendrick, Phillips, Salzman & Flatt, Atlanta, Philip Edward Beck, Kirk D. Johnson, Gerald Scott Walters, Smith, Currie & Hancock, LLP, Atlanta, for appellant.

James E. Butler, Jr., Kate Sievert Cook, Joel O. Wooten, Jr., Butler, Wooten & Fryhofer, LLP, Columbus, Matthew Evan Cook, McDonald, Cody & Cook, LLC, Cornelia, James Patrick M. Sneed, Davis, Pickren, Seydel & Sneed, LLP, Atlanta, for appellee.

BLACKWELL, Justice.

[292 Ga. 219]After Mack Pitts was killed in a construction accident at Hartsfield–Jackson Atlanta International Airport, his estate and minor children sued the City of Atlanta and several contractors for breaches of contracts concerning the construction project on which Pitts had been working.¹ ALTHOUGH PITTS WAS not a PArty to these contracts, his estate and children asserted that he was an intended beneficiary and that they, therefore, had standing to sue for breach of the contracts. On cross-motions for summary judgment, the trial court found that Pitts was not an intended beneficiary, denied summary judgment to the estate and children, and awarded summary judgment to the City and contractors. In Estate of Pitts v. City of Atlanta, 312 Ga.App. 599, 719 S.E.2d 7 (2011), the Court of Appeals reversed, concluding that the trial court should have awarded summary judgment on the claims for [292 Ga. 220]breach of contract to the estate and children, not to the City and contractors. The Court of Appeals determined that Pitts was, in fact, an intended beneficiary of the contracts, and it found that the evidence was undisputed that the City and contractors had breached the contracts. We granted certiorari, and we conclude that the Court of Appeals misapplied or failed to apply several fundamental principles of contract law in its consideration of these cases. Accordingly, we vacate the decision of the Court of Appeals, and we remand for reconsideration consistent with this opinion.

1. The record shows that a joint venture of Holder Construction Company, Manhattan Construction Company, C.D. Moody Construction Company, Inc., and Hunt Construction Group, Inc. (the “Holder–Manhattan” joint venture) contracted with the City to build an international terminal at the Airport. Holder–Manhattan subcontracted the construction work to a joint venture of Archer Western Contractors, Ltd. and Capital Contracting, Inc. (the “Archer Western–Capital” joint venture), and Archer Western–Capital subcontracted a portion of that work to A & G Trucking, Inc. In June 2007, a truck operated by A & G Trucking at the Airport struck and killed Pitts, who was employed by Archer Western Contractors to work on the construction of the international terminal. His estate and children sued A & G Trucking for wrongful death and eventually won a $5.47 million judgment, but A & G Trucking apparently could not pay the judgment.

From the inability of A & G Trucking to satisfy the judgment sprang this separate lawsuit, in which the estate and children allege that the City, Holder–Manhattan, and Archer Western–Capital owed contractual duties to ensure that A & G Trucking carried automobile liability insurance sufficient to satisfy claims up to $10 million.² As the source of these contractual duties, the estate and children point to the contract between the City and Holder–Manhattan, as well as the subcontract between Holder–Manhattan and Archer Western–Capital. The estate and children contend that Pitts was an intended

[735 S.E.2d 775]

beneficiary of these contracts, that they, therefore, have standing to sue for breach of the contracts, and that the City, Holder–Manhattan, and Archer Western–Capital breached the contracts by allowing A & G Trucking to work on the construction of the international terminal without having automobile liability insurance with limits of no less than $10 million.

[292 Ga. 221]From the beginning of the construction project, the City and Holder–Manhattan contemplated that Holder–Manhattan might subcontract some or all of the construction work to one or more subcontractors, and they contemplated that those subcontractors might, in turn, subcontract portions of the work to other subcontractors. To bind any subcontractors to the terms on which Holder–Manhattan had agreed to build the terminal, the City and Holder–Manhattan agreed in their contract that,

[b]y an appropriate written agreement, [Holder–Manhattan] shall require each Subcontractor, to the extent of the Work to be performed by the Subcontractor, to be bound to [Holder–Manhattan] by the terms of [the contract between the City and Holder–Manhattan], and to assume toward [Holder–Manhattan] all the obligations and responsibilities which [Holder–Manhattan] by [the contract between the City and Holder–Manhattan] assumes toward the [City].... Where appropriate, [Holder–Manhattan] shall require each Subcontractor to enter into similar agreements with its Sub–Subcontractor.³

Consistent with this agreement, when Holder–Manhattan subcontracted the construction work to Archer Western–Capital, the subcontract incorporated the entirety of the contract between the City and Holder–Manhattan, and Archer Western–Capital agreed to be bound by the terms of that contract and to “assume [ ] toward [Holder–Manhattan] all of the duties and obligations that [Holder–Manhattan] has by [that contract] assumed toward [the City].” Archer Western–Capital also agreed to “likewise bind all of its lower tier sub-subcontractors and vendors to the obligations set forth in [its subcontract with Holder–Manhattan] and [the contract between Holder–Manhattan and the City].”

About insurance, the City and Holder–Manhattan agreed in their contract that the City would be responsible for procuring and maintaining policies to insure against certain risks and liabilities that might arise in the course of the construction project, that Holder–Manhattan and any subcontractors would be responsible for procuring and maintaining policies to insure against certain other risks and liabilities, and that, all together, these policies would provide “all [292 Ga. 222]reasonably necessary insurance” for the project. To procure and maintain the policies for which the City was responsible, the City and Holder–Manhattan agreed to employ a preexisting program administered by the City and known as the “Owner's Controlled Insurance Program” or “OCIP.” ⁴ They contemplated that Holder–Manhattan and any subcontractor, other than a mere supplier, would be named as an insured on the policies provided by the City, so long as they complied with the requirements for enrolling in OCIP.

In an addendum to their contract, the City and Holder–Manhattan set out the specific policies that were to be procured and maintained by the City, as well as those that were to be procured and maintained by Holder–Manhattan and any subcontractors. Though its content is not limited to the policies to be

[735 S.E.2d 776]

provided by the City through OCIP, the addendum itself is, somewhat confusingly, entitled “Owner's Controlled Insurance Program” and is referenced in the contract as “OCIP.” ⁵ The parties seem to agree that the OCIP addendum requires a subcontractor,⁶

at its own expense, [to] purchase and maintain ... such insurance as will protect [the City, Holder–Manhattan, the subcontractor, and their employees, among others] from claims of the type set forth below:

1. Automobile, Bodily Injury and Property Damage Liability Insurance covering all automobiles, whether [292 Ga. 223]owned, non-owned, leased or hired, with not less than the following limits:

a. Bodily Injury— $10,000,000 per person and occurrence....

By its contract with the City, Holder–Manhattan agreed to “require each of its Subcontractors to procure and maintain during the life of any Subcontract, insurance of the type specified in [the OCIP addendum], except as otherwise agreed to by the [City].” In a somewhat redundant provision, Holder–Manhattan also agreed to “require each of its Subcontractors to procure and maintain, until the completion of the Subcontractor's work, insurance of the types and to the limits specified in [the OCIP addendum], unless such insurance requirements for the Subcontractor is expressly waived in writing by the [City] which waiver shall not be unreasonably withheld.” Holder–Manhattan promised in the contract that it would not commence work on the international terminal until it had both “fulfilled all its requirements under the OCIP” and “obtained all of the [insurance specified in the OCIP addendum for which it was responsible],” and it promised that it would not permit any subcontractor to commence work until the subcontractor had done these things.

2. The Court of Appeals concluded that Pitts was an intended beneficiary of the contracts among the City, Holder–Manhattan, and Archer Western–Capital, ⁷ and as a basis for its conclusion, the court pointed to a statement of purpose contained in the OCIP addendum. According to that statement, “[t]he purpose of the OCIP is to provide one master insurance program that provides broad coverages with high limits that will benefit all participants involved in the project.” ⁸ Relying upon the dictionary definition of “participant,” and noting that the contracts and OCIP addendum do not define “participant” [292 Ga. 224]otherwise, the court reasoned that Pitts was a “ participant” because he had a part in the...