Kennedy Dev. Co. v. Camp

• Citation: 290 Ga. 257,11 FCDR 3615,11 FCDR 4006,719 S.E.2d 442
• Decision Date: 08 December 2011
• Docket Number: No. S11G0274.,S11G0274.
• Parties: KENNEDY DEVELOPMENT COMPANY, INC. v. CAMP et al.
• Court: Supreme Court of Georgia

11 FCDR 3615

11 FCDR 4006

290 Ga. 257

719 S.E.2d 442

KENNEDY DEVELOPMENT COMPANY, INC.

v.CAMP et al.

No. S11G0274.

Supreme Court of Georgia.

Nov. 21, 2011.Reconsideration Denied Dec. 8, 2011.

Lisa K. Whitfield, Hicks, Casey & Foster, P.C., Marietta, for appellant.

Gregg P. Counts, Suwanee, Larry E. Stewart, Lawrenceville, Downey & Cleveland, LLP, Russell B. Davis, Marietta, Joshua S. Ruplin, Carlock, Copeland & Stair, LLP, David F. Root, Atlanta, Brian, Cave, Powell Goldstein, C. Scott Greene, for appellee.

HUNSTEIN, Chief Justice.

We granted certiorari to examine whether the “anti-indemnity” statute found at OCGA § 13–8–2(b) applies to invalidate an indemnification clause within an assignment and assumption agreement transferring responsibility for the management and operation of a newly developed subdivision to its homeowners' association. See Newton's Crest Homeowners' Assn. v. Camp, 306 Ga.App. 207, 702 S.E.2d 41 (2010). We now hold that OCGA § 13–8–2(b) does apply to the assignment and assumption agreement, and, therefore, we affirm.

The undisputed evidence establishes that appellees Donald, Brenda, and Donnie Camp own twelve acres of rural property in Gwinnett County located adjacent to Hunter's Pond, a subdivision named for the lake around which it is situated. Northwest and upstream of the Hunter's Pond subdivision is another subdivision, Newton's Crest, which was developed beginning in 2001 by appellant Kennedy Development Company, Inc. Prior to Kennedy's purchase of the land for Newton's Crest, the previous owner of the land, Tycor, Inc., had entered into various agreements with the Hunter's Pond Homeowners' Association whereby Hunter's Pond agreed to permit the future Newton's Crest subdivision to use its lake as its detention pond in exchange for Tycor's promise to make certain repairs and improvements to the pond and to maintain the pond on an ongoing basis. In connection with Kennedy's purchase of the land for Newton's Crest, Tycor assigned to Kennedy all its rights and responsibilities under the detention facility agreements.

According to the Camps, while excess stormwater from Hunter's Pond has historically drained into a creek on the Camps' property, the amount and velocity of the runoff has significantly increased since the development of Newton's Crest began, resulting in erosion, tree loss, and other damage to the Camps' property. In 2006, allegedly following various unsuccessful attempts to remedy the problems themselves and through the City of Snellville, the Camps sued Kennedy for negligence, nuisance, and continuing trespass in its development of Newton's Crest and its upgrading and maintenance of the detention pond.

Meanwhile, once development of Newton's Crest was completed, in April 2007 Kennedy entered into an Assignment and Assumption Agreement (“Assignment Agreement”) with appellee Newton's Crest Homeowners' Association (“NCHA”) whereby, inter alia, the NCHA assumed responsibility for the operation, maintenance, and repair of Newton's Crest. As part of the Assignment Agreement, the NCHA assumed Kennedy's rights and responsibilities under the detention facility agreements. Also included in the Assignment Agreement was an indemnification provision providing as follows:

In material consideration of Kennedy's other obligations as set forth herein, the [NCHA] agrees to indemnify, defend, and hold Kennedy harmless for and from any debts, claims, actions, damages, judgments or costs, including reasonable attorneys fees incurred in defending against any and all such debts, claims, actions, damages, judgments or costs incurred which arose prior to the date of this Agreement and are related to the construction, maintenance, repair, or operation of Newton's Crest Subdivision or are in any way related to the Declaration [of Covenants, Conditions, Restrictions and Easements for Newton's Crest Subdivision] or the Detention Facility Agreements. [NCHA] shall further indemnify, defend and hold Kennedy harmless for and from any debts, claims, actions, damages, judgments or costs, including reasonable attorneys fees incurred in defending against any and all such debts, claims, actions, damages, judgments or costs which arose or were incurred on or subsequent to the date of this Agreement.

Relying on this indemnification provision, Kennedy filed a third-party complaint against the NCHA, alleging that the NCHA was obligated to hold harmless and indemnify Kennedy with respect to the Camps' claims.¹

Both Kennedy and the NCHA moved for summary judgment, Kennedy as to the Camps' claims against it, and the NCHA as to the third-party complaint. The trial court denied both motions, but granted a certificate of immediate review. The Court of Appeals, while affirming the denial of summary judgment as to the Camps' claims against Kennedy, reversed as to the NCHA's motion, finding that the indemnification clause was invalid under OCGA § 13–8–2(b) and thus eliminating any basis for the NCHA's liability. We granted certiorari to review the enforceability of the indemnification clause. Our review of this question of statutory construction is de novo. City of Atlanta v. Hotels.com, 289 Ga. 323(1), 710 S.E.2d 766 (2011).

OCGA § 13–8–2(b), as it read at the time the Assignment Agreement was entered into,² provided as follows:

A covenant, promise, agreement, or understanding in or in connection with or collateral to a contract or agreement relative to the construction, alteration, repair, or maintenance of a building structure, appurtenances, and appliances, including moving, demolition, and excavating connected therewith, purporting to indemnify or hold harmless the promisee against liability for damages arising out of bodily injury to persons or damage to property caused by or resulting from the sole negligence of the promisee, his agents or employees, or indemnitee is against public policy and is void and unenforceable, provided that this subsection shall not affect the validity of any insurance contract, workers' compensation, or agreement issued by an admitted insurer.Id. Thus, in order to fall within the ambit of the statute, an indemnification provision must (1) relate in some way to a contract for “construction, alteration, repair, or maintenance” of certain property and (2) promise to indemnify a party for damages arising from that own party's sole negligence.

With respect to the first of these threshold conditions, Georgia courts have consistently construed this statute more broadly than courts in other jurisdictions have construed analogous statutes. See Philip L. Bruner & Patrick J. O'Connor, Jr., Bruner and O'Connor on Construction Law, § 10.81, n. 5 (June 2011) (citing Georgia as example of jurisdiction construing anti-indemnity statute broadly to include real property leases). Federal Paper Bd. Co. v. Harbert–Yeargin, Inc., 53 F.Supp.2d 1361, 1370 (N.D.Ga.1999) (noting Georgia courts' “expansive interpretation” of anti-indemnity statute). Indeed, in addition to its application to more traditional...