Vratsinas Construction Company v. Triad Drywall, LLC.

• Citation: 321 Ga.App. 451,739 S.E.2d 493
• Decision Date: 11 April 2013
• Docket Number: Nos. A12A2317,A12A2318.,s. A12A2317
• Parties: VRATSINAS CONSTRUCTION COMPANY v. TRIAD DRYWALL, LLC. Triad Drywall, LLC v. Vratsinas Construction Company.
• Court: United States Court of Appeals (Georgia)

321 Ga.App. 451
739 S.E.2d 493

VRATSINAS CONSTRUCTION COMPANY
v.
TRIAD DRYWALL, LLC.
Triad Drywall, LLC
v.
Vratsinas Construction Company.

Nos. A12A2317, A12A2318.

Court of Appeals of Georgia.

March 25, 2013.
Reconsideration Denied April 5, 2013 and April 11, 2013.

[739 S.E.2d 494]

Kent Paul Smith, Atlanta, Smith, Currie & Hancock, Stephen G. Joy, David Charles King, for Appellant.

David Jason Merbaum, Alpharetta, Andrew Jacob Becker, for Appellee.

DILLARD, Judge.

[321 Ga.App. 451]After the completion of a commercial construction project in which the project owner declared bankruptcy, Triad Drywall, LLC (“Triad”), a subcontractor, sued Vratsinas Construction Company (“VCC”), the general contractor, to recover money owed for its work on the project. VCC defended the lawsuit based upon a “pay-if-paid” provision contained in the parties' contract, which provided that Triad would not be paid unless and until VCC was first paid by the project owner. The trial court denied VCC's motions for summary judgment, directed verdict, and judgment notwithstanding the verdict, holding that the question of whether VCC waived the pay-if-paid provision presented an issue for jury resolution. The jury ultimately awarded damages to Triad, and the parties filed cross-appeals. In Case Number A12A2317, VCC argues, inter alia, that the trial court erred in submitting the issue of waiver to the jury. In Case Number A12A2318, Triad asserts certain legal errors contingent upon the grant of a new trial in VCC's appeal. Because we conclude that VCC was entitled to a judgment as a matter of law on the issue of waiver, we are constrained to reverse in Case Number A12A2317, rendering Triad's appeal in Case Number A12A2318 moot.

Construed in the light most favorable to Triad,¹ the facts show that VCC was the

[739 S.E.2d 495]

general contractor under an agreement with Thomas Enterprises/Fourth Quarter Properties (the “Owner”) to build the Ashley Park shopping center (the “Project”) in Newnan. In January 2007, VCC contracted with Triad to install drywall and drop ceilings, and to perform other work on the Project (the “Subcontract”). [321 Ga.App. 452]The Subcontract contained the following pay-if-paid provision:

Notwithstanding anything contained herein to the contrary, save and except when the failure to receive payment is the result of default by [VCC] in the performance of its obligations under the Contract Documents unrelated to [Triad's] performance of the Subcontract, all payments by [VCC] to [Triad] under the Subcontract, including without limitation, progress payments, full payment or partial release of retainage, payment for change orders and final payment, are expressly and unequivocally contingent upon and subject to Owner's acceptance of all Subcontract Work and [VCC's] receipt of payment from Owner for the Subcontract Work. Subcontractor expressly acknowledges that it relies on payment under the Subcontract on the creditworthiness of Owner, and not that of Contractor. It is expressly understood that any other basis for such non-payment by Owner, including the bankruptcy or insolvency of Owner, will not excuse this condition precedent to payment from [VCC] to [Triad]. [Triad] further agrees that Owner's acceptance of the Subcontract Work and Owner's payment to [VCC] for the Subcontract Work are express, independent conditions precedent to any obligation of [VCC] to make any payments to [Triad] and are not merely expressions of the time or manner of such payments.

It is undisputed that VCC paid Triad's first three payment applications ² for which the Owner paid VCC in full. But as rumors started swirling about the solvency of the Owner, Gadi Gal—a co-owner of Triad—requested a meeting with John Davenport, VCC's project manager. During that meeting (which took place in the fall of 2007), Gal—who was acutely aware of the contractual pay-if-paid provision—expressed concern about the Owner's ability to pay for the Project. According to Gal, Davenport told him not to worry about the Owner's finances and to keep working, stating that VCC would pay Triad from its “own pocket” if necessary.³

[321 Ga.App. 453]After this meeting, Triad continued work on the Project and submitted a fourth payment application to VCC, who paid Triad the entire outstanding balance (via two separate checks—one issued in November and one issued in February), despite not having been paid in full for that work by the Owner. ⁴ VCC refused to pay subsequent payment applications, however, and by the time Triad finished work on the Project in the spring of 2008, Triad had seven unpaid applications totaling approximately $465,888. The Owner did not pay any monies to VCC after September 2007, despite the continuing work and ultimate completion of the Project, and VCC tendered no payment to Triad after the February 2008 check.

In March 2009, Triad filed the instant lawsuit against VCC to recover the outstanding balance owed on the remaining payment applications. VCC argued, in accordance with the pay-if-paid provision, that it was not contractually obligated to pay Triad because it had not received payment from the Owner. Triad, on the other hand, maintained that VCC waived the pay-if-paid provision through its conduct when (1) Davenport assured Triad that VCC would pay Triad from its “own pocket,” and (2) VCC paid Triad's fourth payment application despite not having

[739 S.E.2d 496]

been paid in full by the Owner. The trial court denied VCC's motion for summary judgment after holding that the issue of whether VCC waived the pay-if-paid provision presented a genuine issue of material fact for jury resolution ⁵ and, at the conclusion of Triad's case, denied VCC's motion for a directed verdict. The jury returned a verdict in favor of Triad for $465,888 plus interest and the trial court entered judgment on the verdict. These cross-appeals follow the trial court's denial of VCC's motion for judgment notwithstanding the verdict.

1. In Case Number A12A2317, VCC argues that the trial court erred in denying its motions for directed verdict and judgment notwithstanding the verdict because Triad failed as a matter of law to present sufficient evidence to show waiver of the pay-if-paid provision.⁶ We agree.

To begin with, we note that a party to a contract may waive a contractual right, and that any such waiver may be accomplished [321 Ga.App. 454]expressly or implicitly through the party's conduct.⁷ But the law will not infer the waiver of an important contract right unless “the waiver is clear and unmistakable.” ⁸ And because waiver is not favored under the law, the evidence relied upon to prove a waiver “must be so clearly indicative of an intent to relinquish a then known particular right or benefit as to exclude any other reasonable explanation.” ⁹ Indeed, all the attendant facts, taken together, must amount to an “intentional relinquishment of a known right, in order that a waiver may exist.” ¹⁰ The burden of proof lies with the party asserting waiver ¹¹ and, although generally a jury question, when “the facts and circumstances essential to the waiver issue are clearly established, waiver becomes a question of law.” ¹²

The essential facts in the case sub judice fail to create a jury question as to...