Benning Const. Co. v. Dykes Paving & Const. Co., Inc.

• Decision Date: 03 April 1992
• Docket Number: No. A91A2124,A91A2124
• Citation: 418 S.E.2d 620,204 Ga.App. 73
• Court: Georgia Court of Appeals
• Parties: BENNING CONSTRUCTION COMPANY et al. v. DYKES PAVING & CONSTRUCTION COMPANY, INC.

Page 620

418 S.E.2d 620

204 Ga.App. 73

BENNING CONSTRUCTION COMPANY et al. v. DYKES PAVING & CONSTRUCTION COMPANY, INC.

No. A91A2124.

Court of Appeals of Georgia.

Decided April 3, 1992.

Reconsideration Denied April 28, 1992.

Certiorari Granted July 17, 1992.

Kilpatrick & Cody, H. Quigg Fletcher III, Douglas F. Kaleita, Atlanta, for appellants.

Thompson & Slagle, DeWitte Thompson, Jr., Richard E. Witterman, Jr., Jefferson B. Slagle, Norcross, for appellee.

BEASLEY, Judge.

Defendants Benning Construction Company and St. Paul Fire & Marine Insurance Company appeal a judgment entered in favor of plaintiff Dykes Paving & Construction Company, Inc., in an action on a bond which discharged a materialman's lien pursuant to OCGA § 44-14-364. St. Paul is the surety on the bond posted by Benning. The jury awarded plaintiff $10,747.72 in damages, $1,784 in prejudgment interest and attorney fees of $6,000.

General contractor Benning entered into an agreement with owner Shaheen & Company for the construction of an office/warehouse facility. Benning subcontracted with Scarboro Paving to furnish materials and labor necessary to install "asphalt paving and concrete curb and gutter work" according to certain specifications. Although the subcontract prohibited assignment or transfer without written consent of the contractor, Scarboro contracted with Lanier Paving Company to install the asphalt, without Benning's knowledge. Lanier ordered the asphalt material for the project from plaintiff pursuant to a joint payment agreement involving plaintiff, Scarboro and Lanier. Plaintiff delivered the asphalt and Lanier installed it. Scarboro's representative was on site as was Benning's superintendent, who knew that Lanier had supplied labor and equipment on the project and observed its employees' participation in the paving work.

The owner rejected the installation of the parking lot and demanded that it either be replaced or resurfaced. When Scarboro refused, Benning paid another subcontractor $8,200 to resurface the area. That contractor used the identical type of asphalt material, which plaintiff also supplied.

Plaintiff never received payment from Lanier for the material it had delivered to the project and thereafter sought payment from Benning. Benning refused for the stated reasons that the asphalt had not been supplied by plaintiff and in addition did not comport with contract specifications. Plaintiff provided Benning with documentation that it had supplied the material, along with engineering test results of the asphalt demonstrating substantial compliance with the grade specified in the general contract. When Benning continued to refuse payment, plaintiff notified the owner and then filed a materialman's lien for $10,747.72, the cost of the asphalt. Lanier subsequently declared bankruptcy, and in a separate action Benning obtained a default judgment against Scarboro for $31,695.70.

It was the opinion of the engineer who tested the material that although a "slight variation" existed between the grade specified in the contract and the material provided by plaintiff, "it came within industry standards to meeting the specified tolerances," and any variation would not affect the strength, longevity or appearance of the paved surface. Lanier's owner was "very familiar" with the type of asphalt specified in the contract. His opinion was that the grade of material supplied by plaintiff was as specified in the order.

1. Defendants contend that the trial court erred in denying their motion for a directed verdict made at the conclusion of the plaintiff's case and renewed at the close of the evidence. Their ground is that plaintiff was merely a supplier of materials to a supplier and was not entitled to a claim of lien as a matter of law because it neither supplied to a contractually authorized subcontractor nor had a contractual relationship with the owner.

OCGA § 44-14-361(a)(2) provides that all materialmen furnishing material to subcontractors shall have a special lien on the real estate for which they furnish labor, services or materials. Subsection (b) specifies that "[e]ach special lien ... may attach to the real estate for which the labor, services, or materials were furnished if they are furnished at instance of the owner, contractor, or some person acting for the owner or contractor."

By statutory definition, " 'Subcontractor' means, but is not limited to, subcontractors having privity of contract with the contractor." OCGA § 44-14-360(9). In Tonn & Blank v. D.M. Asphalt, 187 Ga.App. 272, 370 S.E.2d 30 (1988), "we construe[d] the word 'subcontractor' to mean one who, pursuant to a contract with the prime contractor or in a direct chain of contracts leading to the prime contractor, performed services or procured another to perform services in furtherance of the goals of the prime contractor."

Although Lanier was a second tier subcontractor having no privity of contract with Benning, it nevertheless was a "subcontractor" within the definition of the lien statute. As the supplier of material "used in making improvements to the real estate" for the benefit of the owner or a subcontractor, plaintiff was authorized by law to attach a lien on the property to the extent of the "reasonable value" of that material. OCGA § 44-14-360(3); Tonn & Blank, supra; Taverrite v. Lowe's of Franklin, 166 Ga.App. 346(1), 304 S.E.2d 78 (1983). Compare Associated Dist. v. De La Torre, 138 Ga.App. 71(1), 225 S.E.2d 462 (1976), overruled on other grounds in Adair Mtg. Co. v. Allied Concrete, etc., 144 Ga.App. 354, 359, 241 S.E.2d 267 (1977), and Porter Coatings v. Stein Steel, etc., Co., 157 Ga.App. 260, 277 S.E.2d 272 (1981) (a supplier to a supplier of materials is not entitled to claim of lien under the statute). Even if Scarboro breached its contract with Benning by subcontracting with Lanier without Benning's consent, this would not destroy the privity of...