Insurance Co. of North America v. Allgood Elec. Co., Inc., s. A97A1386

• Decision Date: 05 December 1997
• Docket Number: A97A1387,Nos. A97A1386,s. A97A1386
• Citation: 494 S.E.2d 728,229 Ga.App. 715
• Parties: , 98 FCDR 10 INSURANCE COMPANY OF NORTH AMERICA v. ALLGOOD ELECTRIC COMPANY, INC. ALLGOOD ELECTRIC COMPANY, INC. v. INSURANCE COMPANY OF NORTH AMERICA.
• Court: Georgia Court of Appeals

Page 728

494 S.E.2d 728

229 Ga.App. 715, 98 FCDR 10

INSURANCE COMPANY OF NORTH AMERICA v. ALLGOOD ELECTRIC COMPANY, INC.

ALLGOOD ELECTRIC COMPANY, INC. v. INSURANCE COMPANY OF NORTH AMERICA.

Nos. A97A1386, A97A1387.

Court of Appeals of Georgia.

Dec. 5, 1997.

Goldner, Sommers, Scrudder & Bass, Carroll G. Jester, Jr., William W. Horlock, Jr., Atlanta, for appellant.

Walker, Hulbert, Gray & Bryd, Charles W. Byrd, Perry, John D. Christy, Alston & Bird, William H. Hughes, Jr., Robert L. Crewdson, Atlanta, for appellee.

BEASLEY, Judge.

These two appeals are from portions of the trial court's judgment on a motion for j.n.o.v.

Insurance Company of North America, the prime contractor's surety on a state-owned construction project, appeals from the denial of its j.n.o.v. motion awarding a second-tier electrical subcontractor, Allgood Electric Company, Inc., benefits under the prime contractor's statutory payment bond. See OCGA § 13-10-1(b)(2)(A). We affirm the judgment against the surety because there is proof authorizing the jury's finding that Allgood is entitled to benefits under the payment bond for the unpaid balance of its lump-sum subcontract with the prime contractor's security system contractor, Micro Management Associates, Inc.

Allgood cross-appeals from that part of the same judgment entered in favor of the surety notwithstanding a jury's verdict awarding Allgood attorney fees and expenses of litigation under OCGA § 13-6-11.

We reverse the ruling because Allgood's proof that the surety refused to negotiate its pre-suit claim under the payment bond authorized the jury's finding that the surety acted in bad faith in dealing with Allgood and because competent evidence supported the amount of the award.

The State of Georgia contracted with Ray Bell Construction Company ("Ray Bell") to build a prison in Wilcox County, Georgia, and Ray Bell contracted with Micro to install the prison's security system. Micro then subcontracted with Allgood to wire the security system. According to this subcontract's "FINAL PAYMENT" provision, Micro agreed to pay Allgood $350,500 when the wiring was complete, less any advances paid under the subcontract's "PROGRESS PAYMENTS" provision giving Allgood the right to apply for monthly progress payments for "the value of the Work completed" during performance.

After receiving two progress payments from Micro for work performed in June and July 1990, Allgood received three consecutive progress payments in August, September and October 1990. Allgood received these payments via checks from Ray Bell payable to Micro and Allgood for sums exceeding the amount of work performed by Allgood. Allgood endorsed the checks, but retained only proceeds reflecting payment for work it had performed. Allgood paid the residual to Micro.

Allgood submitted a $65,926.65 progress payment request, dated November 19, 1991, certifying anticipated payment advances, plus retainer, for about 99 percent of the work under its subcontract with Micro. This request was not honored. Allgood instead accepted a joint check from Ray Bell payable to Micro and Allgood for $34,208.60. Allgood endorsed this check, kept the proceeds and continued work. About a month later, Allgood executed a document entitled, "SUBCONTRACT/PURCHASE ORDER RECEIPT AFFIDAVIT AND PARTIAL LIEN WAIVER," certifying payment advances totaling $240,448.88 (about 69 percent of the $350,500 contract price) and releasing "all claims arising out of said subcontract and the project through December 1991 ..., including but [not] limited to claims representing mechanics liens."

Although Allgood submitted progress payment requests for December 1990 and January, February, March and April 1991, Allgood did not receive another payment until May 1991. Allgood thereafter continued work, but received only four more progress payments. Because these payments did not cover Allgood's outstanding payment requests, Allgood notified the surety of its claim in a letter dated April 30, 1992. The surety responded in a letter dated June 4, 1992, advising Allgood that the matter was under investigation. Allgood thereafter continued work and completed the job in July 1992.

Micro went out of business, and Ray Bell's attorney posted a letter to Allgood's president accusing Allgood of shoddy work. This attorney informed Allgood that "[i]t is Ray Bell's position that Allgood has been paid all monies which are due to it at this time." When the surety failed to respond to Allgood's claim for almost a year, Allgood filed an action against Micro, Ray Bell and the surety in Fulton County Superior Court on April 20, 1994, seeking recovery for the remaining $87,543.80 balance under its contract with Micro. Allgood also sought over $100,000 worth of extra work it allegedly performed for Ray Bell and requested attorney fees and expenses of litigation pursuant to OCGA § 13-6-11.

Allgood later abandoned its action against Micro and Ray Bell and proceeded solely against the surety. Ray Bell remained in the suit and pressed a counterclaim against Allgood for allegedly performing substandard work. After a trial, a jury awarded Allgood the entire unpaid balance of its contract with Micro, $87,543.80, and granted Allgood $48,276.21 in attorney fees and expenses of litigation under OCGA § 13-6-11. The jury did not accept Allgood's claim for extra work and rejected Ray Bell's claim against Allgood for substandard performance.

Case No. A97A1386

1. The surety contends the trial court erred in denying its motion for j.n.o.v. arguing that Allgood's November 19, 1991 progress payment request certifying completion of about ninety-nine percent of the job, along with Allgood's execution of the partial lien waiver a month later, demands a judgment for Allgood for no more than the subcontract's ten percent retainer plus one percent of the work which Allgood did not certify as complete in its November 1991 progress payment request, i.e., $37,013.50. The surety also contends the jury should have given it credit for the total balance of the three joint progress payment checks Ray Bell tendered to Micro and Allgood for work which Allgood and Micro completed in August, September and October 1990. These assertions are without merit.

Nothing in Allgood's November 1991 payment certification or the December 1991 partial lien waiver diminished Micro's promise to pay Allgood $350,500 when the wiring job was complete. Further, we find no authority authorizing a subcontractor to unilaterally retain proceeds of a joint check for work which the subcontractor has not performed. Saying so would sanction theft, which we refuse to do. Accordingly, since it is undisputed that Allgood kept only money from the joint checks that it had earned and then gave the rest to Micro, and since there is proof that Allgood competently completed its work in July 1992, the jury's verdict awarding Allgood the unpaid balance of its lump-sum contract with Micro was authorized. The trial court did not err in denying the surety's motion for j.n.o.v. with regard to Allgood's claim for payment under Ray Bell's payment bond. See Beasley v. Paul, 223 Ga.App. 706(1), 478 S.E.2d 899 (1996).

2. The surety's second enumeration of error challenging the admission of testimony regarding Allgood's reason for executing the partial lien waiver in December 1991 provides no basis for reversal. Any such testimony admitted is harmless since the partial lien waiver does not evidence an agreement relinquishing Allgood's right to recover the full benefit of its lump-sum performance contract with Micro.

Case No. A97A1387

3. We agree with Allgood that the trial court erred in granting a judgment in favor of the surety notwithstanding the jury's verdict awarding Allgood attorney fees and expenses of litigation under OCGA § 13-6-11.

" 'A judgment n.o.v. is properly granted only when there can be only one reasonable conclusion as to the proper judgment; if there is any evidentiary basis for the jury's verdict, viewing the evidence most favorably to the party who secured the verdict, it is no error to deny the motion. (Cits.)' Stone v. Cook, 190 Ga.App. 11, 12(1), 378 S.E.2d 142 (1989)." Ga. Ports Auth. v. Southeast Atlantic Cargo, etc., 202 Ga.App. 318, 324(3), 414 S.E.2d 232 (1991).

"A trial judge cannot grant motions for directed verdict or j.n.o.v. on any issue if 'any evidence' exists to support that issue. See Grubb v. Woodglenn Properties, 220 Ga.App. 902, 903, 470 S.E.2d 455 (1996)." Beasley v. Paul, 223 Ga.App. at 707(1), 478 S.E.2d 899, supra.

(a) OCGA § 13-6-11 Liability. The trial court granted the surety's motion for j.n.o.v. as to Allgood's claim under OCGA § 13-6-11 because Allgood's attorney could not testify and segregate, with any degree of certainty, time and expenses attributable to Allgood's successful breach of contract claim from time and expenses attributable to Allgood's unsuccessful extra-work claims. (Nor could this attorney say how much time was necessary to defend Ray Bell's counterclaim.) Quoting Arford v. Blalock, 199 Ga.App. 434, 439(10), 405 S.E.2d 698 (1991), the trial court specifically reasoned that such vague testimony defeated the jury's attorney fees and litigation expenses award because "[n]o evidence was presented from which the jury could determine what portion of the total amount of attorney time and litigation expenses incurred in this multi-count, multi-defendant litigation was attributable to the particular claim...."

We find this logic misplaced because, notwithstanding the success or validity of Allgood's unsuccessful claims or Ray Bell's counterclaim, Allgood tendered proof that the surety engaged in "wanton and excessive indulgence in litigation" by refusing, in bad faith, to investigate, negotiate or discuss any claim, set-off or defense with Allgood between the time Allgood posted its April 30, 1992 claim letter and the time Allgood initiated suit in Fulton County on April 20, 1994. ¹ Such...