Space Leasing Associates v. Atlantic Bldg. Systems, Inc.

Decision Date22 November 1977
Docket NumberNo. 3,No. 54765,54765,3
Citation144 Ga.App. 320,241 S.E.2d 438
Parties, 23 UCC Rep.Serv. 642 SPACE LEASING ASSOCIATES et al. v. ATLANTIC BUILDING SYSTEMS, INC., et al
CourtGeorgia Court of Appeals

I. Murchison Biggs, Lumberton, N. C., Trotter, Bondurant, Griffin, Miller & Hishon, Harry L. Griffin, Jr., James E. Stephenson, Robert D. Marshall, Atlanta, for appellants.

Hansell, Post, Brandon & Dorsey, Jefferson D. Kirby, III, Jones, Bird & Howell, Thomas J. Hughes, Jr., Michael D. Sabbath, Atlanta, for appellees.

WEBB, Judge.

This action was initiated by Space Leasing Associates and J. S. Singletary, d/b/a J. S. Singletary Company, against Atlantic Building Systems, Inc. Atlantic is the successor in interest to all rights and obligations of Dixisteel Building, Inc. and Space Leasing is the successor in interest to the rights and obligations of Singletary.

In May of 1968 Singletary contracted with Southeastern Land & Leasing Corporation to construct in Duluth a warehouse and office complex for the General Services Administration. Singletary subcontracted a portion of the construction to Dixisteel, now Atlantic, including the fabrication and installation of the metal roof called for by the plans and specifications. A written contract covering the work was executed which contained the following warranty provision:

"DBI (Dixisteel) warrants the workmanship and material on all products fabricated by DBI for a period of six (6) years from the date of completion of erection. DBI's obligation is to furnish to the building site replacement material for any such material or workmanship which so proves defective and about which DBI has written notice of within said six-year period, and, in no event is DBI to be liable for damages or injury to persons or property, or for damage, corrosion, rust, or deterioration caused by acids or other corrosive materials or Purchaser's unusual use of the building(s). The foregoing warranty is in lieu of all other warranties, expressed or implied, including an implied warranty of merchantability, and there are no warranties which extend beyond the description on the face hereof."

H. S. Williams Company, Inc. thereafter contracted with Atlantic to unload and erect materials on the jobsite and gave a one year warranty in this connection. Construction work on the project was completed in May, 1969.

After GSA had begun occupying the premises, proceedings under Chapter X of the Bankruptcy Act were brought against Southeastern, and a plan was approved under which ownership of the office and warehouse facility and the lease with GSA were transferred to Space Leasing. During the bankruptcy proceedings the roof on the facility began leaking and the trustee in bankruptcy and Space Leasing demanded that Dixisteel/Atlantic perform corrective work under the warranty provision of the contract. Atlantic did perform corrective work under the warranty provision and on September 1, 1971, the following communication was sent by counsel for Atlantic to Singletary's attorney:

"This letter confirms our telephone conversation of last night.

"I advised you that it was our understanding of the contract between Atlantic Building Systems, Inc. and J. S. Singletary that our obligation is to furnish replacement materials to the job site for any materials fabricated by Atlantic Building Systems, Inc. which prove defective during the warranty period. We agreed, however, that it was in our mutual best interest to do everything possible to keep the government from taking over any work on the roof of the building and that in an effort to forestall such taking over we would perform certain corrective work even though the same goes beyond our obligation to you with the understanding that we are in no way creating a precedent or admitting any liability.

"We further advised you that we had had engineering studies made of the problems on the GSA roof and that our work would be in accordance with the studies."

By subsequent letter dated June 2, 1972, Atlantic stated in material part as follows:

"Atlantic Building Systems, Inc., has now completed all the work which it agreed to undertake at the meeting with you and the GSA representatives at the GSA premises on September 7, 1971. We have far exceeded our contract commitment with respect to this building in an effort to cooperate with you and the GSA. However, we continue to receive calls requesting that we do additional work.

"We have not obligated ourselves to perform normal maintenance and the purpose of this letter is to advise you that we will not perform any maintenance-type work on the building. However, if you will like to have advisory assistance we will be happy to arrange this on some mutually satisfactory basis."

On November 17, 1975, Space Leasing filed a complaint for declaratory judgment in which it alleged that the roof installed was defective, not in accordance with the plans and specifications and contrary to the contract between Dixisteel and Singletary, and that it had expended substantial sums in performing the corrective work. Recovery was sought in an amount equal to the net difference between what was due and owing Atlantic under the bankruptcy plan and the cost of the corrective action on the roof. Atlantic filed an answer and counterclaim for the amount alleged due, and a third party complaint against Williams for full indemnity of workmanship performed and for contribution towards any recovery by Space Leasing. By amendment the defense of statute of limitation was added and Atlantic's motion for summary judgment was granted on this ground, resulting in this appeal.

The question presented for decision is which of three limitation statutes is applicable here: The four-year Uniform Commercial Code provision governing sales (Code Ann. § 109A-2-725); the six-year general contract statute of limitation (Code § 3-705); or Code Ann. § 3-1006(1) allowing actions for deficiencies in connection with improvements to real property to be brought within eight years after "substantial completion of such improvement."

1. At the outset we must eliminate the latter provision 1 without deciding whether we agree with Space Leasing's argument on appeal that it is applicable to this action. The warranty given by Dixisteel is part of a contract dated February 27, 1968, and Code Ann. § 3-1006 (Ga.L.1968, p. 127) was not approved until March 8, 1968. Thus it clearly was not effective as of the date of the original warranty and this court has previously held that this statute cannot be retroactively applied. Jaro, Inc. v. Shields, 123 Ga.App. 391, 181 S.E.2d 110 (1971). Furthermore, since this argument was raised for the first time on appeal it presents nothing for review. See, e. g., Gaskins v. Vickery, 234 Ga. 833, 834(1), 218 S.E.2d 617 (1975).

2. Space Leasing asserts that because the action was one for breach of contract for improper design and erection it was timely filed within the six-year limitation of Code § 3-705. 2 This contention must also fail.

"Under Georgia law, the statute of limitations runs from the time the contract is broken 'and not at the time the actual damages results or is ascertained.' Mobley v. Murray County, 178 Ga. 388, 173 S.E. 680; Gould v. Palmer and Reed, 96 Ga. 798, 22 S.E. 583; Houser v. Farmers Supply Company, 6 Ga.App. 102, 64 S.E. 293." National Hills Shopping Center v. Insurance Co. of North America, 320 F.Supp. 1146, 1147(1) (S.D.Ga.1970). See also Worrill v. Pitney-Bowes, 128 Ga.App. 741, 743(2), 197 S.E.2d 848 (1973). Thus it was held in Wellston Co. v. Sam N. Hodges, Jr. & Co., 114 Ga.App. 424, 151 S.E.2d 481 (1966) that a cause of action "arising out of the alleged negligent design and construction of a building by the defendants under contract with the plaintiff accrued and the statute of limitation started to run when the negligent acts were committed resulting in damage to plaintiff, and not when a portion of such building later collapsed as a result of the defendants' negligence in improperly designing and constructing it." See also Caroline Realty Investment v. Kuniansky, 127 Ga.App. 478, 482(4), 194 S.E.2d 291 (1972).

In the instant case, in its answers to interrogatories propounded by Atlantic, Space Leasing admitted that construction of the building in question was substantially completed in May, 1969, and that GSA began to move in that same month. The contract also became "due and payable" at that time. Therefore any breach of contract action based upon alleged design and installation defects accrued in May, 1969, and Space Leasing did not file its complaint until November 17, 1975, more than six years after the cause of action accrued.

3. The contract here is entitled a "Contract for Sale and Erection of Dixisteel Building(s)." Thus, whether or not Code Ann. § 109A-2-725 3 is applicable as urged by Atlantic under decisions such as Cleveland Lumber Co. v. Proctor & Schwartz, 397 F.Supp. 1088 (N.D.Ga.1975) and Lakeside Bridge & Steel Co. v. Mountain State Construction Co., 400 F.Supp. 273 (E.D.Wis.1975), presents a question of fact as to whether the subject...

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