McDonough Const. Co. v. McLendon Elec. Co.

• Decision Date: 07 November 1978
• Docket Number: No. 33606,33606
• Citation: 250 S.E.2d 424,242 Ga. 510
• Parties: McDONOUGH CONSTRUCTION COMPANY et al. v. McLENDON ELECTRIC COMPANY.
• Court: Georgia Supreme Court

Page 424

250 S.E.2d 424

242 Ga. 510

McDONOUGH CONSTRUCTION COMPANY et al. v. McLENDON ELECTRIC COMPANY.

No. 33606.

Supreme Court of Georgia.

Argued June 12, 1978.

Decided Nov. 7, 1978.

Jones, Bird & Howell, G. Arthur Howell, III, Slutzky, Wolfe & Bailey, Stanley K. Slutzky, III, Danny C. Bailey, Atlanta, for appellants.

Stokes & Shapiro, J. Ben Shapiro, Jr., David R. Hendrick, Sally A. Blackmun, Atlanta, for appellee.

HILL, Justice.

This case involves a single procedural issue: the proper construction of § 9(c) of the Civil Practice Act, Code Ann. § 81A-109(c). Urban Medical Associates (the owner) contracted with McDonough Construction Company (the general contractor) for construction of two buildings on land of the owner. The general contractor subcontracted the electrical work to McLendon Electric Company (the subcontractor).

That subcontract contained a clause which the parties agree (for purposes of argument only) establishes as a condition precedent to payment by the general contractor to the subcontractor "written acceptance of (the work) by the Architect and Owner, or their authorized representatives, and full payment therefor by the Owner." When the owner refused to accept the electrical work or to fully pay the general contractor the subcontractor filed suit against the general contractor and the owner. ¹ The subcontractor sought a general judgment for the amount due on the contract from both defendants and a lien on the property.

The subcontractor alleged in its complaint that it had fully performed the subcontract and that all conditions precedent had been performed or had occurred. The general contractor denied this allegation without elaboration. At trial, after the subcontractor rested its case, the defendants moved to dismiss on the basis that the subcontractor had failed to prove compliance with conditions precedent. The motion to dismiss was denied on several grounds. Thereafter the trial court rendered judgment for the subcontractor against the general contractor, and for the owner against the subcontractor. Following Code Ann. § 81A-109(c) the trial court found, among other findings, that the general contractor's general denial of the subcontractor's allegation that all conditions precedent had been performed or had occurred amounted to an admission. The Court of Appeals affirmed that part of the trial court's order against the general contractor and reversed as to the owner, granting the subcontractor's prayer for a lien on the property. 145 Ga.App. 137, 243 S.E.2d 537. We granted certiorari to determine the proper interpretation of Code Ann. § 81A-109(c). ²

On certiorari the general contractor and the owner argue that the Court of Appeals erred in holding a general denial of allegations of performance of conditions precedent to be an admission. The owner also argues, correctly, that in the absence of a judgment against the general contractor, a lien cannot be foreclosed on the owner's property. Code Ann. § 67-2002(3).

Code Ann. § 81A-109(c) (§ 9(c) CPA; Ga.L.1966, pp. 619, 620) provides that "In pleading the performance or occurrence of conditions precedent, it is sufficient to aver generally that all conditions precedent have been performed or have occurred. A denial of performance or occurrence shall be made specifically and with particularity." The plaintiff-subcontractor's allegations complied with this provision; the defendant-general contractor's did not. The question thus becomes: What is the consequence of a general denial of general allegations as to conditions precedent?

In construing this provision, the Court of Appeals followed three federal decisions that stand for the principle that failure to specifically deny allegations of compliance with conditions precedent contrary to Code Ann. § 81A-109(c) is an admission. Ginsburg v. Ins. Co. of North America, 427 F.2d 1318, 1322 (6th Cir. 1970); Lumbermens Mutual Ins. Co. v. Bowman, 313 F.2d 381, 387 (10th Cir. 1963); Midland Eng'r. Co. v. John A. Hall Constr. Co., 398 F.Supp. 981, 991 (N.D.Ind.1975). We disagree with the rule applied in those cases, and we note that in none of them did the court express any rationale or consider the impact of the position taken in the context of modern pleading.

The purpose of modern pleading is to facilitate determination of the truth; construing a denial as an admission does not comport with this goal. See Cochran v. McCollum, supra; Bryant v. Bryant, 236 Ga. 265, 223 S.E.2d 662 (1976). Our CPA is patterned after the Federal Rules. In Conley v. Gibson, 355 U.S. 41, 48, 78 S.Ct. 99, 103, 2 L.Ed.2d 80 (1957), the United States Supreme Court stated "The Federal Rules reject the approach that pleading is a game of skill in which one misstep by counsel may be decisive to the outcome and accept the principle that the purpose of a pleading is to facilitate a proper decision on the merits."

In neither federal nor Georgia practice is Rule 9 (Code Ann. § 81A-109) immune from the command of Rule 8(f) (Code Ann. § 81A-108(f)): "All pleadings shall be so construed as to do substantial justice." Thus, one context in which a somewhat liberal approach to the granting of Rule 12(e) motions is appropriate is "when the request for a more definite statement is used to enforce the special pleading requirements of . . . Rule 9(c) . . . Rule 9 itself contains no mechanism for enforcing its terms, and the common practice has been to use Rule 12(e) for that purpose." 5 Wright & Miller, Federal Practice and Procedure: Civil § 1376, p. 742. The Georgia Court of Appeals has twice recognized that Rule 9 (Code Ann. § 81A-109) is not self-enforcing and that the common practice is to use Rule 12(e) to insure compliance. Tucker v. Chung Studio of Karate, supra, 142 Ga.App. at 821, 237 S.E.2d 223; DeWes Enterprises v. Town & Country Carpets, supra, 130 Ga.App. at 612, 203 S.E.2d 867 (cited with approval in Cochran v. McCollum, supra). In accordance with these authorities, we find that the appropriate remedy for the complainant in a situation such as this is a motion to strike ³ the defendant's general denial for failure to comply with Code Ann. § 81A-109(c), which motion would normally be granted with leave to amend. ⁴ Reynolds-Fitzgerald, Inc. v. Journal Pub. Co., 15 F.R.D. 403 (S.D.N.Y.1954); Temperato v. Rainbolt, 22 F.R.D. 57 (E.D.Ill.1958). See Cochran v. McCollum, supra.

Supporting this construction is the fact that under the Civil Practice Act a complainant can plead a claim for breach of contract without alleging performance or occurrence of conditions precedent. Management Search, Inc. v. Kinard, 231 Ga. 26, 199 S.E.2d 899 (1973); Phoenix Ins. Co. v. Aetna Cas. etc. Co., 120 Ga.App. 122(6), 169 S.E.2d 645 (1969). In such a case, in order to prevail at trial the complainant would be required to prove performance or occurrence of conditions precedent. See Management Search, Inc. v. Kinard, supra. Where a complainant alleges generally that all conditions precedent have been performed or have occurred and the defendant denies that allegation only generally and the complainant fails to insist upon the right to a specific and particular denial of complainant's general allegation, the general allegation stands denied by the general denial and the requirement of proof of performance of conditions precedent remains in effect just as it would if there had been no allegation in the complaint as to conditions precedent. It follows that the interpretation of Rule 9(c), FRCP, in the three federal decisions relied upon by the Court of Appeals is not a rule of necessity and we find that interpretation to be contrary to the intent of the Civil Practice Act.

Furthermore, the facts of this very case show that interpretation to be contrary to the intent of the Civil Practice Act as evidenced by Rule 15(b). Here the plaintiff alleged that all conditions precedent had been performed or had occurred. The general contractor generally denied that allegation. The insufficiency of the denial under Code Ann. § 81A-109(c) was not raised by the plaintiff. At trial specific evidence showing that all conditions precedent had not occurred was introduced by the defendant without objection. Under both Rule 15(b) of the Federal Rules of Civil Procedure and Code Ann. § 81A-115(b), this evidence received without objection amended the pleadings by operation of law.

Rule 15 is one of the most important of the rules that deal with pleadings. It re-emphasizes and assists in attaining the objective of the rules on pleadings: that pleadings are not an end in themselves, but are only a means to the proper presentation of a case; that at all times they are to assist, not deter, the disposition of litigation on the merits." 3 Moore's Federal Practice § 15.02(1), p. 15-13. "The first part of Rule 15(b) provides that if issues are tried with the express or implied consent of the parties, 'they shall be treated in all respects as if they had been raised in the pleadings.' . . . Rule 15(b), of course, is applicable to defenses as well as to claims, and to the extent to which it applies, Rule 15(b) operates as an exception to the rule that defenses not pleaded are waived. The fact that a defense, even an affirmative defense, has not been formally pleaded is immaterial if the issue was tried by express or implied consent . . . (T)he lack of an amendment does not affect the judgment in any way. In effect, therefore, the parties may, by express consent, or by the introduction of evidence without objection, amend the pleadings at will. . . . Implied consent usually is found where one party raises an issue material to the other party's case, or where evidence is introduced without objection . . . It should be noted that Rule 15(b) is not permissive in terms: it provides that issues tried by express or implied consent Shall be treated as if raised by the pleadings." 3 Moore's Federal Practice § 15.13(2), pp. 15-157, 15-165, 15-169, 15-170, 15-174,...