Decatur North Associates, Ltd. v. Builders Glass, Inc., 72879

• Decision Date: 30 October 1986
• Docket Number: No. 72879,72879
• Citation: 180 Ga.App. 862,350 S.E.2d 795
• Parties: , 2 UCC Rep.Serv.2d 1512 DECATUR NORTH ASSOCIATES, LTD. v. BUILDERS GLASS, INC.
• Court: Georgia Court of Appeals

Page 795

350 S.E.2d 795

180 Ga.App. 862, 2 UCC Rep.Serv.2d 1512

DECATUR NORTH ASSOCIATES, LTD. v. BUILDERS GLASS, INC.

No. 72879.

Court of Appeals of Georgia.

Oct. 30, 1986.

Rehearing Denied Nov. 18, 1986.

Richard A. Gordon, Atlanta, for appellant.

David R. Hendrick, Nicholas S. Papleacos, Atlanta, for appellee.

CARLEY, Judge.

In March of 1981, the Decatur North Professional Building (Building) was owned by The Equitable Life Assurance Society of the United States (Equitable). In its capacity as the owner of the Building, Equitable entered into a contract with appellee-defendant Builders Glass, Inc. Under the contract, appellee was to recaulk the exterior of the Building for an agreed upon price. The contract also contained the specification that "[a]ll work done by [appellee] will hold a 10 year guarantee." Appellee completed the work and was paid the contract price.

In July of 1982, Equitable sold the Building to appellant-plaintiff Decatur North Associates, Ltd. After taking possession of the Building, appellant discovered leakage problems therein which it attributed to appellee's deficient recaulking job. In April of 1983, appellant and Equitable then entered into a written agreement whereby Equitable "transfer[red] and assign[ed] to [appellant] ... all the right, title and interest of [Equitable] in and to [appellee's March 1981 recaulking] Agreement ..., together with any choses in action arising out of or resulting from said agreement." In June of 1983, appellant initiated the instant action against appellee. Insofar as it is relevant to the instant appeal, appellant sought, as Equitable's assignee, to recover damages for breach of express warranty in that appellee had allegedly failed and refused "to cure said defects [in the Building] within a reasonable time...." Appellee answered, denying the material allegations of the complaint and raising numerous defenses. Appellee subsequently moved for summary judgment, basing its motion upon the lack of any contractual privity between itself and appellant. The trial court, after conducting a hearing, granted summary judgment in favor of appellee. It is from that order that appellant brings the instant appeal.

1. As a general rule, the existence of "privity" is required as between the parties in ex contractu actions and in ex delicto actions which arise out of a contract. See generally OCGA §§ 9-2-20(a), 51-1-11(a). "Privity of contract" is narrowly defined as "[t]hat connection or relationship which exists between two or more contracting parties." Black's Law Dictionary, 5th Ed. (1979). However, there are some recognized exceptions to the requirement that the parties in an action based upon an underlying contract be those same parties who actually contracted. See generally OCGA §§ 51-1-11(b) (products liability) and 9-2-20(b) (third-party beneficiary), neither of which, however, is applicable under the evidence of record in the instant case. Compare Buchanan v. Ga. Boy Pest Control, 161 Ga.App. 301, 287 S.E.2d 752 (1982) (third-party beneficiary). The general assignability of contractual rights is one of the exceptions to the requirement of immediate contractual privity between the parties to an action. See generally OCGA § 44-12-22; Fletcher v. Atlanta Board of Realtors, 250 Ga. 21, 23(2), 295 S.E.2d 737 (1982); Sorrento Italian Restaurant v. Franco, 107 Ga.App. 301, 129 S.E.2d 822 (1963). It is this assignability exception to the privity of contract requirement that appellant invokes.

In granting summary judgment in favor of appellee on its lack of privity defense, the trial court relied upon Stewart v. Gainesville Glass Co., 131 Ga.App. 747, 206 S.E.2d 857 (1974), aff'd 233 Ga. 578, 212 S.E.2d 377 (1975) and Tolar Constr. Co. v. GAF Corp., 154 Ga.App. 127, 267 S.E.2d 635 (1980), rev'd on other grounds 246 Ga. 411, 271 S.E.2d 811 (1980). Both of those cases involved warranties which were made in connection with the sale of goods. Such warranties are controlled by the statutory provisions of the Uniform Commercial Code (UCC), OCGA § 11-1-101 et seq. Although the UCC does provide for a limited exception to the privity of contract requirement in connection with an ex delicto action for breach of warranty, it does not purport to dispense with the privity requirement in its entirety. By statute, the UCC warranties can only be made by a seller of goods and those warranties can only be extended either to the buyer or to those who have a specified relationship with the buyer. See OCGA § 11-2-318. The Stewart opinion recognizes that, for purposes of imposing liability for a breach of the UCC warranties, it is the applicable specific statutory provisions of the UCC and not general legal principles that are controlling as to the privity requirement and any exceptions thereto. " 'In a sale of personal property the warranty is not negotiable or assignable, and does not run with the article sold.' [Cit.]" (Emphasis supplied.) Stewart v. Gainesville Glass Co., 131 Ga.App. supra at 752, 206 S.E.2d 857. See OCGA § 44-12-22 which provides that contracts "within the purview" of the UCC are an exception to the otherwise general assignability of all choses in action arising upon a contract. See also Irvin v. Lowe's of Gainesville, 165 Ga.App. 828, 829(2), 302 S.E.2d 734 (1983), holding that, under the provisions of the UCC, the assignment of an existing breach of a UCC warranty claim, as opposed to an assignment of the warranty itself, is specifically authorized.

The Stewart and the Tolar Constr. Co. cases are, however, factually distinguishable from the instant case. The subject of the instant underlying transaction was appellee's services and the express warranty at issue involves the performance of those services, not a warranty of appellee's goods made in connection with a sale thereof. See Dixie Lime & C. Co. v. Wiggins Scale Co., 144 Ga.App. 145(2), 240 S.E.2d 323 (1977). Accordingly, the provisions of the UCC and cases, such as Stewart and Tolar Constr. Co. which construe those provisions are inapplicable authority in the instant case. See generally Mingledorff's, Inc. v. Hicks, 133 Ga.App. 27(1), 209 S.E.2d 661 (1974). Appellee's warranty was, in essence, a covenant that it would stand behind the efficacy of its "work" for a ten-year period. This covenant was made to Equitable in its capacity as the owner of the Building wherein appellee's warranted services were performed. Appellee's contract with regard to its services did not specify that it would not be assignable by Equitable to any new owner of the Building. Compare Mingledorff's v. Hicks, supra. Appellant now occupies the capacity of owner of the Building and the status of the holder of the written assignment of Equitable's...