S. States Chem., Inc. v. Tampa Tank & Welding, Inc.

• Decision Date: 31 October 2019
• Docket Number: A19A0960
• Citation: 353 Ga.App. 286,836 S.E.2d 617
• Parties: SOUTHERN STATES CHEMICAL, INC. et al. v. TAMPA TANK & WELDING, INC. et al.
• Court: Georgia Court of Appeals

353 Ga.App. 286

836 S.E.2d 617

SOUTHERN STATES CHEMICAL, INC. et al.

v.TAMPA TANK & WELDING, INC. et al.

A19A0960

Court of Appeals of Georgia.

October 31, 2019

Reconsideration Denied November 18, 2019

Jonathan Tucker Barr, Edwin W. King Jr., Savannah, Jeffrey Young Lewis, Atlanta, George H. Carley, Decatur, Andrew Clay Stevens, Atlanta, for Appellant.

Cecily Joy McLeod, Kimberly Council Sheridan, Atlanta, Mike O'Neal Crawford, Clarkesville, Bradley S. Wolff, Atlanta, for Appellee.

Coomer, Judge.

This case comes to us for a third time on appeal.¹ Southern States Chemical, Inc., and Southern States Phosphate and Fertilizer Company (collectively, "Southern") appeal the trial court’s order granting Tampa Tank & Welding, Inc. f/k/a Tampa Tank, Inc. ("Tampa Tank") and Corrosion Control, Inc.’s ("CCI") (collectively "Appellees") motion for summary judgment. In its third appearance before this Court, Southern argues that the statute of repose, OCGA § 9-3-51 (a), is not applicable because the claims against Appellees was not for a construction deficiency but for breach of express written warranties. Southern further contends the trial court erred by concluding that the statute of limitation on simple written contracts bars its claims against Appellees, by ruling that Southern failed as a matter of law to exercise due diligence to discover Appellees’ alleged fraud, and by dismissing Southern’s breach of contact per se claim. The parties appeared before this Court on August 22, 2019, for oral argument, at which this Court directed the parties to supplement their briefs with arguments regarding two issues: (1) whether the statute of repose alleging deficiencies in improvements to real property under OCGA § 9-3-51 (a) applies in light of our Supreme Court’s holding in Turner v. Marable-Pirkle, Inc. , 238 Ga. 517, 518, 233 S.E.2d 773 (1977) ; and (2) whether there was any consideration given by Southern for the alleged 43 or 45-year warranty that Southern contends was made as part of a report prepared by CCI for Tampa Tank in 2002. For the reasons that follow, we affirm.

"Summary judgment is proper when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. A trial court’s grant of summary judgment is reviewed de novo on appeal, construing the evidence in the light most favorable to the nonmovant." Bruce v. Georgia-Pacific, LLC , 326 Ga. App. 595, 595, 757 S.E.2d 192 (2014) (citations and punctuation omitted).

1. Relevant Facts and Procedural History

The relevant facts and procedural history of this case are set forth in this Court’s prior opinions as well as the order giving rise to this appeal:

The record shows that [Southern] manufacture[s], buy[s], sell[s], and store[s] sulfuric acid in bulk at a facility in Savannah. In 2000, [Southern] contacted Tampa Tank about renovating a 24-foot tall, 130-foot wide storage tank (the "Duvall tank") that had previously stored molten sulfur, such that it would be suitable for storing up to 2.2 million gallons of sulfuric acid. ...

The initial letter proposal between Tampa Tank and [Southern] contained the following express one-year warranty provision: "All material and workmanship are guaranteed for a period of twelve (12) months from the date of completion of this work." ...

The Duvall tank renovation was completed in January 2002. The renovation required Tampa Tank to install an impervious plastic ("HDPE") liner directly on top of the steel floor of the tank. Tampa Tank then welded a new steel floor above the old floor of the tank, and a layer of sand filled the gap between the old floor and the new floor. In order to prevent corrosion of the new floor, Tampa Tank installed a cathodic corrosion control system ("cathodic system") in the sand layer. Tampa Tank installed, but did not design, the cathodic system; it contracted with CCI to provide the design, materials, on-site technical assistance, and testing of the system.

During installation, Tampa Tank’s foreman consulted with CCI over the phone regarding the installation of the magnesium strips of the cathodic system, but CCI did not assist with the installation onsite. CCI’s contract with Tampa Tank only required it to design the cathodic system, procure the materials for its installation, and test the system once installed. [Southern] contends that Tampa Tank misplaced magnesium ribbons, which are a key component of the cathodic system, drove a Bobcat bulldozer over the sand layer after the ribbons were installed, which tampered with the integrity of the system, and failed to properly seal the new floor, which left it open to corrosive rainwater.

[Southern] contends that CCI failed to properly test, design and commission the cathodic system. After the tank’s renovation was substantially completed in January 2002, CCI performed a post-installation commissioning inspection of the cathodic system. The report resulting from that inspection indicated that the cathodic system was working and properly installed. However, the cathodic system and the sand layer it was installed upon had been covered up with steel plates by the time CCI arrived onsite to perform its inspection. CCI inspected the cathodic system when the tank was empty, and it was possible that a portion of the steel plates was not in contact with the sand layer during the testing because there was no liquid pressing the plates down into the sand. [Southern] contends that CCI failed to properly test the cathodic system by neglecting to confirm that Tampa Tank kept the sand layer dry, by failing to verify that Tampa Tank had not driven a Bobcat over the floor, and by conducting an inspection when the tank was empty, which only put the cathodic system to limited use. [Southern] also fault[s] CCI for not having an engineer on-site to ensure that the corrosion protection system was installed properly. CCI made no warranty to [Southern] about the tank. After inspection, CCI prepared a post-installation report concluding that the Duvall Tank’s cathodic system had been properly installed and was fully functioning. CCI sent the report to Tampa Tank, but not to [Southern].

On July 3, 2011, it was discovered that sulfuric acid was leaking from the base of the Duvall Tank. The parties hotly dispute the cause of the leak. Southern contends the hole in the tank resulted from improper installation and "a defective or otherwise unsuitable cathodic corrosion protection system." The defendants, on the other hand, assert that inadequate maintenance caused sludge to form inside the tank which interacted with the sulfuric acid in a way that caused a hole to form on the inside of the tank. There is also evidence that Southern failed to preserve the portion of the particular plate where the hole formed.

In Southern States I , this Court reversed the trial court’s grant of summary judgment in favor of appellees Tampa Tank and CCI. We remanded the case to the trial court to determine if Appellees were estopped from raising the statute of repose defense based on alleged fraud. Specifically, we instructed the trial court to determine if a genuine issue of fact existed "as to whether Appellees fraudulently concealed any defects in the renovation, installation or testing of the Duvall Tank" and whether Southern exercised due diligence. This Court also reversed the trial court’s denial of Southern’s motion for partial summary judgment and remanded it to the trial court with direction. We instructed that if the trial court determined Appellees were estopped from raising the statute of repose defense due to fraud, it should then determine if a causal connection exists between any negligence per se by the Appellees and the injury suffered by Southern.

Following remand, the trial court issued a lengthy, 22-page order in which it meticulously examined each of the five allegedly fraudulent statements supporting Southern’s equitable estoppel claim. With regard to two of the statements, it concluded there was not sufficient evidence of a knowingly false representation.

The trial [court] also found that although genuine issues of fact existed with regard to one or both of the defendants on the remaining three representations in the report, Southern’s failure to exercise due diligence precluded the application of equitable estoppel. In support of this conclusion, the trial court relied upon the following recommendation in the Commission Report: "Resurvey the new cathodic protection system annually using the services of a NACE certified Cathodic Protection Specialist," as well as industry standards recommending annual surveys of the cathodic system. It is undisputed that Southern did not conduct any annual surveys by a corrosion engineer. In the trial court’s view, "Southern States cannot argue reliance on allegedly false representations in the Commission Report, but also ignore the recommendation on the same page of the Commission Report to resurvey the cathodic protection system annually."

Southern States II , 338 Ga. App. XXVIII at pg. 1-6 (citations and footnote omitted).

After the case was remanded to the trial court following Southern’s first appeal, Southern States I , Southern filed a fourth amended complaint which included for the first time, a claim for breach of contract based on the one-year express warranty and for breach of contract per se. In a July 2015 order, the trial court granted Appellees’ motion for summary judgment finding, on the issue of fraud and equitable estoppel, that fraud did not toll the statute of repose and that Southern did not exercise due diligence to discover any alleged fraud by Appellees because it never conducted annual testing of the cathodic protection system as recommended by the post-inspection report. The trial court determined that because an essential element of fraud was absent, Appellees were not estopped from successfully asserting a statute of repose defense under OCGA § 9-3-51 (a). The July 2015 order gave rise to...