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Thomaston Acquisition, LLC v. Piedmont Construction Group, Inc.

Supreme Court of Georgia

June 3, 2019

THOMASTON ACQUISITION, LLC
v.
PIEDMONT CONSTRUCTION GROUP, INC. et al.

          NAHMIAS, PRESIDING JUSTICE.

         This case is before our Court on certified questions from the United States District Court for the Middle District of Georgia regarding the scope of the "acceptance doctrine" in negligent construction tort cases. At issue is whether and how the acceptance doctrine applies as a defense against a claim brought by a subsequent purchaser of allegedly negligently constructed buildings.

         1. In 2011, Thomaston Crossing, LLC (the "original owner") entered into a construction contract with appellee Piedmont Construction Group, Inc. to build an apartment complex in Macon. Piedmont then retained two subcontractors - appellees Alan Frank Roofing Company and Triad Mechanical Company, Inc. - to construct the roof and the HVAC system, respectively. In 2014, the complex was completed, turned over to, and accepted by the original owner. In 2016, the original owner sold the apartment complex to appellant Thomaston Acquisition, LLC ("Thomaston") pursuant to an "as is" agreement.

         Shortly after the sale, Thomaston allegedly discovered evidence that the roof and HVAC system had been negligently constructed. Thomaston filed suit against Piedmont, asserting a claim for negligent construction of the roof and HVAC system and a claim for breach of contract/implied warranty. Piedmont then filed a third-party complaint against Alan Frank Roofing and Triad Mechanical because both companies had allegedly agreed to indemnify Piedmont for loses arising out of their work.

         Each of the appellees later moved for summary judgment based in part on the defense that Thomaston's negligent construction claim is barred by the acceptance doctrine. On September 27, 2018, the district court certified the following two questions to our Court:

1.After construction of real property is completed, and the property is sold by the original owner to a subsequent bona fide purchaser, does the acceptance doctrine apply to a negligent construction claim brought by a subsequent purchaser who is the current owner-operator of the property at issue?
2.If the acceptance doctrine does apply, to whose inspection does the analysis of whether the defect(s) was "readily observable on reasonable inspection" relate: the original owner's inspection, or a subsequent owner's inspection?

         As explained below, we conclude that the acceptance doctrine does apply to Thomaston's claim and that "readily observable upon reasonable inspection" refers to the original owner's inspection. [1]

         2. (a) This Court long ago explained the acceptance doctrine as follows:

[A]n independent contractor is not liable for injuries to a third person, occurring after the contractor has completed the work and turned it over to the owner or employer and the same has been accepted by him, though the injury result from the contractor's failure to properly carry out his contract.

Young v. Smith & Kelly Co., 124 Ga. 475, 476 (52 S.E.2d 765) (1905).[2]

         The general rule in 19th century product-liability law was that a manufacturer's liability for injuries caused by a defective product was limited to the original purchaser or his privies in the purchase contract. See W. Page Keeton et al., Prosser and Keeton on the Law of Torts § 96, at 681 (5th ed. 1984). This rule was extended to building contractors performing original work and contractors performing repairs or installing parts. See id. § 104A, at 722.

         The acceptance doctrine shields contractors from liability for injuries to third parties resulting from their work at the moment the work is turned over to and accepted by the owner.

The owner-employer can reject work which does not comply with the agreement and which may be defective or create either a latent or patent hazard. The owner is best situated to foresee and to guard against dangers to users of the premises, because ...

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