Archer Western Contractors, Ltd. v. Estate of Pitts

HINES, Justice,

dissenting.

I respectfully dissent because contrary to the opinion of the majority, the analysis of the Court of Appeals is neither ill-reasoned nor incomplete. That Court’s reversal of the trial court’s grants of summary judgment to defendants — the City of Atlanta and companies associated with a construction project at the Atlanta Hartsfield-J ackson International Airport — on breach of contract claims brought by the estate of a worker killed at the construction site, was mandated by the relevant uncontroverted facts of the case and the applicable principles of Georgia contract law. See Estate of Pitts v. City of Atlanta, 312 Ga. App. 599 (719 SE2d 7) (2011).

The determinative issue in the litigation is whether the fatally injured worker, Pitts, was a third-party beneficiary to the contracts executed among the City, contractor, and tiers of subcontractors that outlined the rights, responsibilities, and duties of the parties involved in the construction project.

The Main Contract specified that the General Contractor, its subcontractors, and sub-subcontractors (excluding suppliers) were named insureds under the City’s “Owner’s Controlled Insurance Program” (“OCIP”), which was made part of the contract, and cited again in a contract addendum. Contrary to what is said by the majority, there are not two separate and distinct programs referred to as “OCIP”; it is plain that at most the reference in the addendum is in conjunction with and intended to be part and parcel of the OCIP protections in order to effect its clear purpose. The stated purpose of the OCIP was to “provide one master insurance program that provides broad coverage with high limits that will benefit all participants involved in the project.” The Main Contract required that the named insureds comply with all requirements of the OCIP, which explicitly and plainly provided in pertinent part:

Contractor shall, at its own expense, purchase and maintain . . . such insurance as will protect Contractor, Owner, Construction Manager, Design Consultant, and their Trustees, Directors, Officers, Partners, Agents, Representatives, and Employees from claims of the type set forth below: . . . Automobile, Bodily Injury and Property Damage Liability Insurance covering all automobiles, whether owned, non-owned, leased or hired, with not less than the following limits: . . . Bodily Injury - $10,000,000 per person and occurrence [.]

(Emphasis in original.)

*232Pursuant to the Subcontract, the Subcontractor agreed to be bound by the terms of the Main Contract, to assume toward the General Contractor all duties and obligations that the General Contractor owed the City under the Main Contract, and to bind all lower tier subcontractors to the obligations set forth in the Main Contract and the Subcontract. The Subcontract expressly required the Subcontractor to maintain automobile liability insurance coverage for “[o]wned, hired and non-owned vehicles with a $10,000,000 combined single limit for bodily injury and property damage.”

In order to have a viable breach of contract claim, there must be a breach of the contract at issue and resulting damages to a party who has the right to complain about the contract being violated. Canton Plaza v. Regions Bank, 315 Ga. App. 303 (1) (732 SE2d 449) (2012). Thus, the question of the estate’s standing to bring this breach of contract action is a threshold inquiry. Certainly, for a third party to have the requisite standing to enforce a contract, it must clearly appear from the contract that it was intended for the benefit of the third party. Satilla Community Svc. Bd. v. Satilla Health Svcs., 275 Ga. 805, 810 (2) (573 SE2d 31) (2002). Thus, the fact that the third party would benefit from performance of the agreement is not in and of itself sufficient. Id. However, for the third-party beneficiary to have standing, it is not necessary that the party be specifically named in the contract, but merely that facially the contract show the contracting parties’ intent to benefit the third party. Boller v. Robert W. Woodruff Arts Center, 311 Ga. App. 693, 698 (2) (716 SE2d 713) (2011). This focus on intent is in accord with the cardinal rule of contract construction, which is to ascertain the intention of the parties. OCGA § 13-2-3. There is no dispute that Pitts was not mentioned by name in the contracts at issue. So, the question becomes whether such intention to cover workers on the project, like Pitts, can be found on the face of the contracts. And, indeed it can.

As noted, the Main Contract’s provision that insureds comply with the requirements of the OCIP expressly mandated that the Contractor was to purchase and maintain insurance, specifically for bodily injury in the amount of $10,000,000 per person and occurrence, for the purpose of protecting various classes of persons involved in the project ranging from the Contractor itself to “Agents, Representatives, and Employees.” The fact that the provision uses the language “from claims” of the type set forth does not defeat or diminish the obvious intent to provide insurance protection for individuals who were deemed employees on the project.

In addition, as noted, the OCIP, which was part of the Main Contract and incorporated into the Subcontract, on its face explicitly *233and plainly stated that its purpose was to provide a “master” insurance program with “broad coverages with high limits” in order to “benefit all participants involved in the project.” (Emphasis supplied.) Thus, the Court of Appeals correctly examined the term “participant,” to determine whether such term also evidenced the intent to include individual workers on the construction site, like Pitts, as a beneficiary of the mandated insurance coverage.

The majority finds that the analysis of the Court of Appeals is incomplete in two respects, the first of which is its determination of the meaning of “participant” because it allegedly “appears to have failed to fully consider the context in which the word appears in the OCIP.” But, that is far from the case.

In the situation in which the term “participant” in an insurance policy has not been expressly defined in the policy and has been found to be ambiguous, the appellate court has construed it with the paramount consideration being to effect the intention of the parties. See Zurich American Ins. Co. of Illinois v. Bruce, 193 Ga. App. 804, 806 (2) (388 SE2d 923) (1989). In the present case, the intent of the parties is evident from, inter alia, the express statement of purpose to provide encompassing coverage for those involved in the project. Thus, in this case of an unambiguous statement of intent, the Court must look to the contract at issue alone for its meaning and it must be enforced according to its terms. American Empire Surplus Lines Ins. Co. v. Hathaway Dev. Co., 288 Ga. 749, 750 (707 SE2d 369) (2011). And, language which is unambiguous “must be afforded its literal meaning and plain ordinary words given their usual significance.” (Citations and punctuation omitted.) Perkins v. M & M Office Holdings, LLC, 303 Ga. App. 770, 773 (695 SE2d 82) (2010). Therefore, it was not unfounded for the Court of Appeals to resort to common usage in viewing the term “participant,” (“one that participates,” and “to participate” means “to take part” or “to have a part or share in something.” Webster’s New Collegiate Dictionary, p. 829 (1981)), thereby concluding that Pitts was a “participant” in the construction project under the usual significance of that word. The majority acknowledges that it was appropriate for the Court of Appeals to utilize the dictionary definition of “participant” in its analysis in order to obtain a meaning “ordinarily attributed” to that word, but then criticizes such usage on the basis that the dictionary does not “identify the ‘something’ in which a ‘participant’ has a part or shares,” that is, the context in which the term appears. The majority then states that the context not considered was the contract as a whole, and that the Court of Appeals fell short in this regard because it did not consider “participant” in the “two different senses” that “OCIP” was used in the parties’ contracts. The parties utilized the OCIP in *234only one relevant sense — to provide an all-encompassing insurance safeguard for participants in the project. Certainly, the argument has been made that the provision in the OCIP, stating that “[t]he [Owner’s Controlled Insurance Program] will be for the benefit of the [City] and Contractors and Subcontractors of all tiers,” (emphasis omitted), restricts the intended beneficiaries to only those entities. But, again the OCIP was used by the parties in the same and exclusive “sense, that is, to effectuate the parties’ purpose and intent that there be one master insurance plan to provide comprehensive coverage for those involved in the project. To construe the contracts’ references to “OCIP” differently and possibly at odds with each other violates the basic principle of contract construction expressly cited by the majority — that whenever possible, a contract should not be construed in a manner so as to render any portion of it meaningless. And, as the Court of Appeals observed, the wording at issue does not constitute an express restriction, and to construe the contracts so as to exclude those participants in the construction project who would benefit from insurance coverage would effectively eviscerate the expressed intent that this conceived “master” insurance program benefit all participants in the proj ect. A contract must be considered as a whole with its provisions to be given effect and interpreted so as to harmonize with each other, and any construction that renders portions of the contract language meaningless is to be avoided. Horwitz v. Weil, 275 Ga. 467 (569 SE2d 515) (2002).

What is more, even assuming arguendo, that the fact that the contracts do not provide an explicit definition or explanation of the critical term “participant,” results in ambiguity about the term, it should be construed in accord with the explicit statement in this case of comprehensive coverage and the general principle that limitations, exceptions, and exclusions in the context of insurance coverage should be narrowly construed because when coverage is affirmatively expressed in broad promises, any limitations on coverage should be defined in clear and explicit terms. Zurich American Ins. Co. of Illinois v. Bruce, supra at 806 (2).

The majority next finds fault with the analysis of the Court of Appeals on the basis that even if “ ‘all participants’ unambiguously includes Pitts, the Court of Appeals also appears to have drawn its conclusion about the extent to which he was an intended beneficiary of the contracts too broadly.” The majority does not rest with the determination that Pitts is indeed a third-party beneficiary of the contracts, but instead then concludes that the Court of Appeals failed to apply a principle settled under Georgia law that a third party is entitled to enforce only those specific provisions of a contract of which he is an intended beneficiary. It does so first based upon OCGA § 9-2-20 *235(b), which states merely the general concept that “[t]he beneficiary of a contract made between other parties for his benefit may maintain an action against the promisor on the contract.” While this is certainly the law, the majority takes this positive statement of the right to maintain an action, and completely turns it on its head to require that the contracts at issue be dissected in order to determine if Pitts was an intended beneficiary of every provision of the OCIP as referenced everywhere in the contracts including the addendum, as well as every provision of the contracts that relates in any way to the OCIP. And, the Georgia cases cited in support simply do not do so. Indeed, the only credence afforded the majority’s position is derived from scarce decisions of foreign jurisdictions. This unauthorized parsing of the contractual provisions at issue potentially renders them at odds so as to violate not only the fundamental precept of interpreting provisions in harmony with each other, but of defeating the protective intent of the insurance mandates. To require that the Court of Appeals, and indeed the original contracting parties themselves, should have examined each phrase in, and indeed, every word of the contracts at issue in isolation in the context of Pitts’s rights as a third-party beneficiary is not only unauthorized but is unworkable. The law should square with reason and the realities of the marketplace.

As to concerns of the majority about specificity, the contracts require the City and the defendant companies to take specific actions with regard to the intended insureds, i.e., participants in the construction project, including ensuring that subcontractors of any tier complied with the minimum insurance requirements of the OCIP. Thus, there was a contractual obligation to provide the specific benefit of broad insurance coverage to “a relatively small group of intended beneficiaries,” that is, those entities and individuals who were to be participants in the construction project. Plantation Pipe Line Co. v. 3-D Excavators, 160 Ga. App. 756, 758-759 (287 SE2d 102) (1981). Pitts was unquestionably a participant in the construction project, and thus, is an anticipated third-party beneficiary of the contracts. His beneficiary status is not altered by any language in the Subcontract expressly excluding as such beneficiaries subcontractors, sub-subcontractors or vendors because he fits none of these classifications. Nor is it diminished or defeated by the general precept that a liability claimant is not considered a third-party beneficiary of an insurance policy because the contracts at issue expressly mandate the contrary determination. City of Atlanta v. Atlantic Realty Co., 205 Ga. App. 1, 6 (3) (421 SE2d 113) (1992) (where construction contract specified that insurance was to benefit plaintiff, plaintiff was a *236third-party beneficiary entitled to judgment on breach of contract claim for failing to acquire and maintain insurance).

Throughout, the majority refers to parol evidence, and implicitly chastises the Court of Appeals for incompleteness on the basis that it did not address certain arguments of the parties dependent, at least in part, on consideration of parol evidence. But, this is a case of unambiguous contract provisions and the breach thereof, and a resort to parol evidence is unwarranted and unauthorized.

The majority also incorrectly refuses to address the propriety of the Court of Appeals’ determination that the exclusive remedy provision of the Workers’ Compensation Act (“the Act”) does not bar Pitts’s estate from seeking damages for breach of the contracts at issue. As explained such provision states that

[t]he rights and the remedies granted to an employee by [the Act] shall exclude all other rights and remedies of such employee, his personal representative, parents, dependents, or next of kin, at common law or otherwise, on account of such injury, loss of service, or death.

OCGA § 34-9-11 (a). But, this exclusive remedy does not prevent a party from pursuing an action for damages resulting from injuries which are not contemplated by the Act. Bright v. Nimmo, 253 Ga. 378, 379-380 (320 SE2d 365) (1984). In fact, OCGA § 34-9-11.1 (a) provides:

When the injury or death for which compensation is payable under [the Act] is caused under circumstances creating a legal liability against some person other than the employer, the injured employee or those to whom such employee’s right of action survives at law may pursue the remedy by proper action in a court of competent jurisdiction against such other persons, except as precluded by Code Section 34-9-11 or otherwise.

This is precisely such a situation. The estate seeks damages, not for a physical injury as is contemplated by the Act, but rather loss of access to insurance coverage because of the defendants’ alleged breach of contract. The estate is merely attempting to obtain a remedy for this injury which is distinct from the one for which it has obtained a judgment against A&G Trucking in a separate action for damages for Pitts’s death from the physical injuries he sustained. See *237Superb Carpet Mills v. Thomason, 183 Ga. App. 554 (359 SE2d 370) (1987). Simply, the Act is not applicable to the estate’s breach of contract action.

Decided November 27, 2012. Casey Gilson, Robert R White, for Archer Western Contractors, Ltd. et al. Carlton Fields, Walter H. Bush, Jr., Christopher B. Freeman, Sylvia H. Walbolt, E. Kelly Bittick, Jr., for Holder Construction Company et al. Swift, Currie, McGhee & Hiers, Steven J. DeFrank, Stephen M. Schatz, Bradley S. Wolff, for City of Atlanta. Butler, Wooten & Fryhofer, James E. Butler, Jr., Joel O. Wooten, Jr., Kate S. Cook, McDonald, Cody & Cook, Matthew E. Cook, Davis, Pickren, Seydel & Sneed, James Patrick M. Sneed, for Estate of Mack Pitts. Hendrick, Phillips, Salzman & Flatt, David R. Hendrick, William D. Flatt, Smith, Currie & Hancock, Philip E. Beck, Kirk D. Johnston, Gerald S. Walters, McKenna, Long & Aldridge, James R. Evans, John S. Berry, amici curiae.

In sum, the focus of the majority is the found need for the resolution of questions which are irrelevant, as matters of fact or law, to the determinations necessary to decide the appeals, and thus, it inexplicably strains to return these cases to the Court of Appeals. It then orders that Court to reconsider the litigation in a manner consistent with the majority’s opinion, which unfortunately, effectively directs the Court of Appeals to wander in the wilderness.

I am authorized to state that Chief Justice Hunstein and Presiding Justice Thompson join in this dissent.