Toys 'R' Us, Inc. v. Atlanta Economic Development Corp.

• Decision Date: 15 March 1990
• Docket Number: No. A89A2212,A89A2212
• Parties: TOYS 'R' US, INC. v. ATLANTA ECONOMIC DEVELOPMENT CORPORATION.
• Court: Georgia Court of Appeals

Page 44

393 S.E.2d 44

195 Ga.App. 195

TOYS 'R' US, INC. v. ATLANTA ECONOMIC DEVELOPMENT CORPORATION.

No. A89A2212.

Court of Appeals of Georgia.

March 15, 1990.

Rehearing Denied March 28, 1990.

Certiorari Denied May 16, 1990.

Hicks, Maloof & Campbell, Bruce M. Edenfield, Virginia B. Peterson, Atlanta, for appellant.

Alston & Bird, Oscar N. Persons, Robert P. Riordan, Lokey & Bowden, Wayne C. Wilson, Terrence Lee Croft, F. Carlton King, Jr., Atlanta, for appellee.

COOPER, Judge.

This is an appeal of the grant of summary judgment by the trial court to appellee on appellant's breach of contract and tort claims.

Appellee contracted to sell, and appellant contracted to purchase, real property in an industrial park upon which appellant intended to construct a regional warehouse. The contract specified that prior to the closing, appellee was to furnish a building pad built to certain grade and soil bearing specifications. Appellee, a non-profit corporation which encourages industrial and business development in underutilized areas of Atlanta through the planning and development of industrial parks, employs no construction personnel and does not perform the construction aspect of industrial park development. Consequently, appellee hired a separate construction company to construct the building pad and a separate engineering firm to design the building pad, manage and inspect the work of the construction company, and act as a liaison with a soils testing firm to perform the requisite soil density tests. The engineering firm subsequently subcontracted with a soils testing firm to test and inspect structural fill placement. Appellee approved the subcontract after the date that appellee had issued its "Notice to Proceed" to the construction company. Thus, grading work began on the site prior to the commencement of soils testing. During the course of construction, the engineering firm, which was supervising the site work, kept appellee apprised of the progress of the work. The building pad was completed and inspected by appellant; the sale closed and appellant began construction of its warehouse. During such construction, appellant became aware that the walls were cracking and a portion of the floor slab appeared to be sinking, which according to a report submitted by the soils testing firm, was caused by "consolidation of uncompacted fill soil at the lower elevations." Appellant filed suit against appellee and all contractors working on the project for the costs of repair. Summary judgment in favor of appellee was granted as to appellant's claims against appellee.

1. Appellant first contends that the grant of summary judgment by the trial court on its three tort claims constituted error.

A. Appellant's initial tort claim, that appellee is liable pursuant to a statutory exception to the general rule that an employer is not responsible for the torts of its independent contractors, is without merit. OCGA § 51-2-5(5) does not apply because there is no evidence to show that appellee "actually exercised control over the manner and means of doing the details of the work...." (emphasis deleted.) Bentley v. Jones, 48 Ga.App. 587, 592, 173 S.E. 737 (1934). It is undisputed that appellee was not involved in the daily progress of the construction. Appellant contends that appellee's right to approve the soils testing firm and to direct the contractor when to begin construction constituted such control as to render appellee liable. However, "[i]t is not enough that [the employer] has merely a general right to order the work stopped or resumed, to inspect its progress or to receive reports, to make suggestions or recommendations which need not necessarily be followed, or to prescribe alterations and deviations. Such a general right ... does not mean that the contractor is controlled as to his methods of work.... There must be such a retention of a right of supervision that the contractor is not entirely free to do the work in his own way. [Cits.]" Slater v. Canal Wood Corp., 178 Ga.App. 877, 880, 345 S.E.2d 71 (1986). The undisputed relationship between appellee and its independent contractors was such that, as a matter of law, OCGA § 51-2-5(5) is inapplicable.

We also determine that appellee is not responsible under OCGA § 51-2-5(3), which creates an exception to the general rule of non-responsibility "[i]f the wrongful act is the violation of a duty imposed by express contract upon the employer." This provision has been interpreted as requiring an express obligation by the employer to be responsible for the independent contractor's conduct. Fields v. B & B Pipeline Co., 147 Ga.App. 875, 250 S.E.2d 582 (1978). See Faubion v. Piedmont, etc., Corp., 178 Ga.App. 256, 342 S.E.2d 718 (1986) (although decided in contract, previous tort cases were used as precedent for the interpretation of the code section). Appellee in no way assumed or held itself out to assume responsibility for the conduct of its contractors, and therefore there is no question of fact on this issue. Appellant's argument that the inclusion of the specifications in the contractual description of the building pad created responsibility under this section, falls flat. The purpose of the specifications was to assure that appellant received the building pad it desired. "The agreement does not constitute substantial evidence of an intent ... to guarantee an independent contractor's strict day-to-day compliance with detailed construction procedures." Uniroyal, Inc. v. Hood, 588 F.2d 454, 464 (5th Cir.1979). The cases of Hudgins v. Bacon, 171 Ga.App. 856, 321 S.E.2d 359 (1984) and Brewer v. Williams 167 Ga.App. 151, 305 S.E.2d 891 (1983) cited by appellant are clearly distinguishable in that the builder/sellers therein (and also the investor in Hudgins ) held themselves out as having the ability and expertise to build the home. Appellee was never obligated as a builder, nor did it hold itself out as such.

Finally, appellee did not "ratif[y] the unauthorized wrong of the independent contractor" pursuant to OCGA § 51-2-5(6). There is no evidence to show that appellee, who performs no construction work and has no construction expertise, knew or should have known that uncompacted fill soil was being placed on the site. Merely giving the Notice to Proceed to the contractor, even if appellee was aware that a soils testing firm had not yet been retained, would not necessarily lead to such conclusion by one in the position of appellee. Wilmock, Inc. v. French, 185 Ga.App. 259, 363 S.E.2d 789 (1987).

B. The second tort claim is predicated on the breach by appellee of an implied duty to furnish the building pad in a skillful and workmanlike manner. As we discussed in Division 1, A., above, appellee cannot be held responsible for the torts of its independent contractors, so any asserted liability on this claim based upon the contractors' conduct is unfounded. Further, as to appellee's own actions, we find that there is no implied duty of appellee as claimed by appellant. The contract with appellee was not a construction contract, nor did appellee undertake any construction duties or skilled services with respect to the building pad. Appellee relied on its skilled contractors for such services. As such, the duty implied in every construction contract or in contracts for work or services does not exist in a situation such as the instant case. See Howell v. Ayers, 129 Ga.App. 899, 202 S.E.2d 189 (1973). The contract between appellant and appellee was not of that class of contract "that create[s] a relation from which the law implies duties a breach of which will constitute a tort.... [Cits.]" Bulmer v. Southern Bell Tel., etc., Co., 170 Ga.App. 659, 660, 317 S.E.2d 893 (1984).

C. Appellant's assertion that appellee is liable under the "passive concealment" doctrine has no merit. The cases creating and interpreting this doctrine have been clear to limit it to...