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City of Atlanta v. Hogan Construction Group, LLC

Court of Appeals of Georgia, Third Division

June 7, 2017

THE CITY OF ATLANTA
v.
HOGAN CONSTRUCTION GROUP, LLC

          ELLINGTON, P. J., ANDREWS and RICKMAN, JJ.

          Rickman, Judge.

         Hogan Construction Group, LLC ("Hogan") sued the City of Atlanta (the "City") for breach of contract and violation of Georgia's Prompt Pay Act, alleging that the City failed to pay all amounts due for services provided on a construction project. The City sought summary judgment on both claims, and the trial court denied the motion. Following the grant of its application for interlocutory appeal, the City appeals, contending that the trial court erred by denying its motion for summary judgment on Hogan's breach of contract claim because the requirements of City of Atlanta Code of Ordinances § 2-1292 (b) were not met and on Hogan's Prompt Pay Act claim because the claim was waived. For reasons that follow, we affirm in part and reverse in part.

         Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." OCGA § 9-11-56 (c). "We review the grant or denial of a motion for summary judgment de novo, and we must view the evidence, and all reasonable inferences drawn therefrom, in the light most favorable to the nonmovant." (Citation and punctuation omitted.) Courtland Hotel, LLC v. Salzer, 330 Ga.App. 264 (767 S.E.2d 750) (2014).

         So viewed, the evidence showed that in June 2011, the Atlanta City Council (the "City Council") approved legislation authorizing the City of Atlanta Mayor (the "Mayor") to enter into a contractual agreement with Hogan for the construction of Fire Station 28 in an amount not to exceed $3, 017, 000. On November 15, 2011, the City and Hogan entered into a Contractor Agreement for the construction of Fire Station 28. The agreement documents included, inter alia, the agreement between the City and Hogan, General Conditions, Legislation, and any modifications, which collectively formed the Agreement. In September 2012, the City Council authorized the Mayor to execute an amendment to the Agreement for additional funding in an amount not to exceed $181, 525. The total "not to exceed amount" authorized for construction of Fire Station 28 was $3, 198, 525.

         Hogan began work on the fire station project in "winter 2011." A stop work order was issued when a state waterway was discovered on the project site, which resulted in delays at the project and required the relocation of the retention pond. Hogan submitted change order proposal 16 for general condition costs associated with the delay. The discovery of a Georgia Power transmission pole in the middle of the driveway where the fire trucks were to exit necessitated the relocation of the building, and the relocation resulted in a need for additional soil testing. Hogan submitted change order proposal 57 for additional third party soil testing resulting from "revisions to the civil site plan and the relocation of the building." Hogan submitted change order proposal 58 for work done to remediate unsuitable soils at the building site, which were discovered during the additional third party testing.

         The City paid $3, 506, 805.02 to Hogan for construction of Fire Station 28. In its complaint, Hogan sought payment of an additional $90, 063.66, which included $68, 397 for change orders 16, 57, and 58, as well as charges in the amount of $21, 666.66 for millwork, cabinet work, electrical work, and signage that Hogan asserts were included in the original scope of work. The City denied liability for the amounts sought by Hogan.

         In its motion for summary judgment, the City argued that it was not obligated to pay the amounts sought by Hogan because the City Council and the Mayor had not approved any contract modifications or change orders that exceeded the "not to exceed" amount authorized for the project by more than ten percent. To support this argument, the City relied upon City of Atlanta Code of Ordinances § 2-1292 (b), which provides:

Modifications exceeding ten percent. When the cumulative dollar amount for all contract modifications and change orders exceeds ten percent of the total "not to exceed" cost authorized for the contract, all subsequent contract modifications or change orders that involve additional cost to the city shall be approved by the city council and mayor.

         The City further argued that the parties waived the applicability of the Prompt Pay Act to the Agreement. The trial court denied the City's motion in its entirety, ruling that "the fact that the City Council and Mayor have not yet approved payments exceeding the 'not to exceed' amount does not excuse the City from payment as a matter of law." Although the trial court did not specifically mention the Prompt Pay Act claim, it ruled that the case "shall proceed to trial on all of the counts enumerated in Hogan's complaint."

         1. The City contends that the trial court erred by denying its motion for summary judgment on Hogan's breach of contract claim because the amounts sought were not approved as required by City of Atlanta Code of Ordinances § 2-1292 (b). The City argues that the failure to obtain the necessary approval entitles it to summary judgment on Hogan's breach of contract claim in its entirety "or at the very least, in part."

         Initially, the City focuses on the limitations imposed on a municipality's ability to enter contracts, specifically that "[w]here a city charter specifically provides how a municipal contract shall be made and executed, the city may only make a contract in the method prescribed" and "if a local government enters a contract in abrogation of its delegated power or in excess of its authority to enter contracts, then the contract is deemed ultra vires and void." H. G. Brown Family Ltd. Partnership v. City of Villa Rica, 278 Ga. 819, 820 (1) (607 S.E.2d 883) (2005); see also City of Baldwin v. Woodard & Curran, Inc., 293 Ga. 19, 27-28 (2) (c) (743 S.E.2d 381) (2013) (where proposal was not approved by the city council as required by the city charter, it was ultra vires and void). As the City acknowledges, however, this is not a case about the City's authority to enter the Agreement or the validity of the Agreement. The City of Atlanta Charter gives the City the authority to "contract and be contracted with, " Ga. L. 1996, p. 4471, § 1-102 (a), and provides that all "contracts shall be approved as to form by the city attorney" and signed by the mayor or someone designated by the mayor. Ga. L. 1996, p. 4543, § 6-401 (a). Here, the City Council authorized the Mayor to enter into a contractual agreement with Hogan for the construction of Fire Station 28 and an amendment to that agreement. The Agreement was approved as to form by the City Attorney, approved by the Chief Procurement Officer, and signed by the Mayor. Thus, the Agreement was not entered by the City "in abrogation of its delegated power or in excess of its authority to enter contracts." H. G. Brown Family Ltd. Partnership, 278 Ga. at 820 (1).

         Next, the City argues that the language and purpose of § 2-1292 (b) demonstrate that the City is not obligated to pay the amounts sought by Hogan.

The principles that guide our consideration of the meaning of statutes are settled ones, and we apply those same principles when we consider the meaning of an ordinance. As such, we look first to the text of the ordinance, and if the text is clear and unambiguous, we look no further, attributing to the ordinance its plain meaning. As we look to the words of the ordinance, we attribute to those words their ordinary, logical, and common meanings, unless a clear indication of some other meaning appears. And we read the ordinance as a whole according to the natural and most obvious ...

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