United States Court of Appeals,
Eleventh Circuit.
No. 95-8572.
ALLGOOD ELECTRIC COMPANY, Plaintiff-Appellant,
v.
MARTIN K. EBY CONSTRUCTION COMPANY, INC., Federal Insurance
Company, Fidelity and Deposit Company of Maryland, Defendants-
Appellees.
June 25, 1996.
Appeal from the United States District Court for the Middle
District of Georgia. (No. 93-125-1MAC(WDO), Wilbur D. Owens, Jr.,
Judge.
Before ANDERSON and BLACK, Circuit Judges, and HENDERSON, Senior
Circuit Judge.
PER CURIAM:
This appeal arises out of a construction contract dispute
between Allgood Electric Company ("Allgood") and Martin K. Eby
Construction Company, Inc. ("Eby"). On March 12, 1993, Allgood, an
electrical subcontractor for a building project, filed suit in the
Superior Court of Dooly County, Georgia against Eby, the
contractor, and Eby's sureties, Federal Insurance Company ("FIC")
1
and Fidelity & Deposit Company of Maryland ("FDCM"). The
defendants subsequently removed the case to the United States
District Court for the Middle District of Georgia predicating
jurisdiction on diversity of citizenship. See 28 U.S.C. §§ 1332,
1441. Thereafter, on April 13, 1994, the district court granted
summary judgment in part in favor of the defendants. Allgood then
appealed. This court dismissed the appeal for lack of jurisdiction
1
Eby provided a payment bond for the construction project
which was underwritten by FIC and FDCM.
because the order granting partial summary judgment did not dispose
of all of the issues raised in the complaint and it had not been
certified for immediate review in accordance with Fed.R.Civ.P.
54(b).2 Later, the district court directed that a Rule 54(b)
judgment be entered and Allgood appealed again. For the reasons
that follow, we reverse the district court's grant of summary
judgment and remand for further proceedings.
I. BACKGROUND
On January 10, 1990, Eby entered into a contract with the
Georgia Building Authority (Penal) ("GBA") to build the Dooly
Correctional Institution in Unadilla, Georgia. Pursuant to a
subcontract dated January 29, 1990, Allgood then agreed to perform
certain electrical work for the project at a stipulated price.
After its work was completed, Allgood filed this action alleging,
inter alia, that Eby failed to properly coordinate the various
phases of the prison's construction and that Eby's mismanagement in
that respect caused delays which resulted in increased expense to
Allgood. Allgood sought to recover these alleged additional costs
from Eby and also claimed entitlement to certain sums of money
which had been retained in accordance with the prime and
2
Generally, appeals may be taken only from "final decisions
of the district courts" which end the litigation. 28 U.S.C. §
1291. When a district court grants judgment with respect to
fewer than all of the claims or parties involved in an action, an
immediate appeal is proper when the court directs that its
judgment be deemed final in accordance with Rule 54(b). Rule
54(b) permits "the entry of a final judgment as to one or more
but fewer than all of the claims or parties only upon an express
determination that there is no just reason for delay and upon an
express direction for the entry of judgment."
subcontracts3 pending the completion of construction.4
Eby subsequently moved for summary judgment. It contended
that, during the course of construction, Allgood executed certain
form documents that either waived or released all of its demands
against Eby. The forms included approximately twenty-four
applications for payment and a completion certificate. In support
of the motion, Eby submitted, in addition to other evidence, what
appears to be photocopies of these documents.
The payment applications identified the project and were
addressed to Eby. Each application specified that it was for work
performed by Allgood for a certain period of time and stated that,
in consideration of the payment received, and upon receipt of
the amount of this request, the undersigned does hereby waive,
release, and relinquish all claim or rights of lien which the
undersign [sic] may now have upon the premises above described
except for claims for right of lien for contract and/or change
order work performed to extent [sic] that payment is being
retained or will subsequently become due.
(R1-35, Deposition of Gloria A. Alday, Exhibit 6). The sworn,
notarized signatures of Allgood's President, Gloria A. Alday, or
3
By the prime contract, we mean the contract between Eby and
the GBA.
4
The original complaint contained eleven counts. Counts I
through X consisted of general allegations concerning the
mismanagement Allgood attributed to Eby. For example, Count II
complained in part that Eby altered the planned work schedule
upon which Allgood calculated its bid, which "resulted in
inefficiency costs including extra labor and material costs as
well as delays, unabsorbed overhead and ripple costs for which
Eby should be responsible." (R1-1, Complaint at ¶ 16). Count XI
described several items for which Allgood had previously sought
payment during the course of construction. Counts I through XI
will be referred to collectively as the "delay claims." The
amended complaint added Count XII, which alleged that Eby owed
Allgood approximately $136,000.00 of funds retained pending
completion of the project. This count will be designated the
"retainage claim."
its Vice-President and Project Manager, Timothy A. Morgan, appeared
on the applications.
The completion certificate made a part of the record by Eby
was addressed to the Georgia State Financing and Investment
Commission ("GSFIC"), which was responsible for discharging the
state's administrative duties with respect to the construction.
This form also identified the project and stated that it was a
"Certificate Regarding Subcontractor's Completed Work and Retainage
5
Release." (R1-33, Affidavit of Charles Schultz, Attachment). The
body of the document contained the following language:6
1. This is to certify that our work is one hundred
percent complete for our subcontract number S28328-21804 and
request that our retainage be released in accordance with the
contract documents. Our scope of work included the Division
16 Electrical material and installation. The total amount of
retainage due is $138,949.06.
2. The Subcontractor hereby certifies that all work
required under the above contract has been performed in
accordance with the terms thereof, that all materialmen,
subcontractors, mechanics, and laborers have been paid and
satisfied in full, and that there are no outstanding claims of
any character (including disputed claims or any claims to
which the subcontractor has or will assert any defense)
arising out of the performance of the contract which have not
been paid and satisfied in full except as listed hereinbelow:
[Enter "None" or List]
3. The Subcontractor further certifies that to the best
5
Eby submitted two different copies of the completion
certificate. One was attached as Exhibit 7 to Gloria A. Alday's
deposition. The other was attached to the affidavit of Charles
Schultz, Eby's Operations Manager for the Building Division.
(See R1-33). The text of both forms looks as if they were
photocopied, but the signatures affixed to the copy attached to
Schultz's affidavit appear to be original.
6
Both copies of the completion certificate made a part of
the record are of poor quality and portions of certain words are
illegible. We have supplied the missing letters where necessary
by deducing what they should be from the context.
of his knowledge and belief there are no unsatisfied claims
for damages resulting from injury or death to any employees,
subcontractors, or the public at large arising out of the
performance of the contract, or any suits or claims for any
other damage of any kind, nature, or description which might
constitute a lien upon the property of the Owner.
4. The Subcontractor makes this certificate for the
purpose of receiving final payment in full settlement of all
claims against the Owner arising under or by virtue the [sic]
contract, and acceptance of such payment is acknowledged as a
release of the Owner from any and all claims arising under or
by virtue of the contract.
5. Payments pursuant to this certificate shall in no way
diminish, change, alter or affect the rights of the Owner
under the contract documents.
7
(Id.) ("Enter "None' or List" in the original). The bottom of
the form contained spaces for the signatures of representatives of
Allgood, Eby and the architect for the project, Rosser Fabrap
International. A notice printed below the signature spaces stated
"GEORGIA STATE FINANCING AND INVESTMENT COMMISSION MUST RECEIVE A
COPY WITH ALL ORIGINAL SIGNATURES." ( Id.). The signatures of
Allgood's President, dated June 8, 1992, and Eby's Operations
Manager, dated June 16, 1992, were affixed to the certificate, but
the space for the architect was left blank.8 Attached to the copy
of the form was a photocopy of a letter dated June 10, 1992,
addressed to Eby and signed by Lynne Crutchfield, an Allgood
secretary. It stated, in pertinent part, "[e]nclosed please find
our signed release of retained funds, for work performed by our
company on the subject project." (Deposition of Gloria A. Alday,
Exhibit 7).
7
No outstanding claims were listed or attached to the
certificate.
8
The copy of the form submitted with Alday's deposition
shows only her signature.
It its brief in support of the motion for summary judgment,
Eby urged that the quoted language from the payment applications
waived and released all of Allgood's demands for further payment
except for contract and change order work to be performed in the
future. Eby also contended that all of Allgood's claims, except
for retainage, were barred by the completion certificate.
In response, Allgood argued, inter alia, that the waiver and
release language in the payment applications referred only to lien
rights against the premises and not to any indebtedness owed by Eby
under the subcontract which became due subsequent thereto. It
contended that its delay claims "matured" only after its
performance under the subcontract was finally completed. (R2-38,
Brief in Support of Plaintiff's Opposition to Defendant's Motion
for Summary Judgment at 7). In the alternative, Allgood maintained
that the waiver provision created an ambiguity which should be
construed against the drafter, Eby, or resolved by a jury. The
completion certificate, Allgood asserted, could not operate to bar
the delay claims because it was not a valid document relied upon by
Eby. In support of this contention, Allgood alleged that, at the
time the completion certificate was signed, its work on the project
was not in fact complete and it continued thereafter to render
services and be paid by Eby for performance under the subcontract.9
9
As evidence of this contention Allgood submitted certain
affidavits and post-certificate correspondence between the
parties which referred to amendments to the subcontract and
additional work to be performed by Allgood due to "condemnation
corrections" and "Change Order Proposals." (R2-38, Plaintiff's
Opposition To Defendant's Motion For Summary Judgment, Exhibits).
The payment applications contained in the record include a
request for payment for work performed through October 23, 1992.
(R1-35, Deposition of Gloria A. Alday, Exhibit 6). Eby conceded
It also relied on the deposition testimony of Allgood's President,
Alday, who stated that, although she apparently executed the
document, she did not remember doing so and would not have signed
it if she had been aware of its contents because Allgood's work was
not completed at that time. In addition, Allgood pointed out that
Eby never processed the completion certificate by obtaining all of
the necessary signatures and submitting it to the GSFIC for final
payment and that final payment was never made.
Before the district court ruled on the motion for summary
judgment, Eby submitted a second motion for summary judgment in
which it asserted that Allgood's delay claims were foreclosed
because it failed to provide timely notice of them as required by
the prime and subcontracts. Eby alleged also that certain of
Allgood's purported additional costs were traceable to decisions
made by the architect and were not actionable because Allgood
failed to protest those decisions in accordance with the provisions
of the contract documents. To these arguments, Allgood countered
that it did comply with the contractual notice requirements and
that the delay demands could not have been made until after the
projected completion date for the project expired because no delay
occurred until then. Finally, it disputed Eby's charge that
certain conflicts should have been taken up with the architect.
Thereafter, the district court took the first motion for
summary judgment under consideration. It found that the language
that it made three additional payments to Allgood after the
completion certificate was signed by Alday on June 8, 1992. (R1-
31, Brief In Support Of Defendants' Motion For Summary Judgment
at 4).
employed by the payment applications and the completion certificate
was unambiguous and conclusively barred the delay claims.10 The
court also noted, however, that the completion certificate
expressly recognized Allgood's demand for the outstanding
retainage. Consequently, the court granted Eby's motion for
summary judgment as to the delay claims and denied it with respect
to the retainage claim. In view of its decision on the first
motion, the court found that Eby's second motion for summary
judgment was moot. It is this order of the district court which is
now before us for review.
II. THE STANDARD OF REVIEW
We review the district court's grant of summary judgment de
novo. Jaques v. Kendrick, 43 F.3d 628, 630 (11th Cir.1995).
Because federal jurisdiction of this case was based upon diversity
of citizenship, the substantive law of Georgia governs its
resolution. Flintkote Co. v. Dravo Corp., 678 F.2d 942, 945 (11th
Cir.1982).
III. DISCUSSION
The only issue presented to us on appeal is whether the
provisions of the payment applications or the completion
certificate foreclosed Allgood's causes of action for delay.
Allgood advances the same arguments here that it raised in the
district court. It contends that the payment applications waived
10
Although the court cited certain waiver provisions
contained in the payment applications, it did not expressly
interpret their legal meaning. Instead, the court focused its
analysis on the completion certificate. In doing so, it rejected
Allgood's contention that the document had no legal force and
effect.
nothing more than its right of lien against the premises and did
not abandon its actionable claims against Eby arising under the
subcontract, which it says only became due upon the completion of
its work. It also asserts, for the first time on appeal, that the
completion certificate, if it should be accorded any effect at
all,11 operated only to release claims against the "Owner" of the
12
project, i.e., the state. It submits that the items of
compensation it seeks from Eby could not have been discharged by
this document because Eby was not named in it. As authority for
this contention, Allgood relies on Lackey v. McDowell, 262 Ga. 185,
415 S.E.2d 902 (1992).
We first deal with the effect of the completion certificate
as addressed in Lackey. Although an appellate court generally will
not consider an argument raised for the first time on appeal, we
have the discretion to decide a pure question of law not presented
to the district court in the appropriate circumstances. Narey v.
Dean, 32 F.3d 1521, 1526-27 (11th Cir.1994); United States v.
Southern Fabricating Co., Inc., 764 F.2d 780, 781 (11th Cir.1985).
Whether Lackey governs the effect of the completion certificate is
a question of law which should be addressed because the answer
conclusively resolves the issue of whether Eby may rely on it to
bar Allgood's delay claims. See Narey, 32 F.3d at 1527.
In Lackey, an emergency medical technician dispatched to the
11
Allgood continues to maintain that the completion
certificate was not a legally enforceable instrument because it
was not validly executed or processed and because Eby never
relied on it as a waiver of the claims brought in this action.
12
Allgood also pursues several additional subsidiary grounds
in its brief which do not merit discussion.
scene of an automobile accident was injured by a third party after
his arrival. He and his wife settled with the third party's
insurance company by executing a general release, which stated:
"We ... release and forever discharge [third party] and any
other person ... chargeable with responsibility or liability
... from all claims ... arising from any act or occurrence up
to the present time, and particularly ... an accident that
occurred on or about the 24th day of February, 1989, at or
near 5-16 south of Augusta Avenue."
Lackey, 262 Ga. at 185, 415 S.E.2d at 902 (quoting release)
(emphasis supplied by the court). Later, the technician brought
suit against the person to whom he had been sent to render
assistance, McDowell. The trial court subsequently denied
McDowell's motion for summary judgment and McDowell appealed. The
Court of Appeals of Georgia reversed, holding that the unambiguous
language of the agreement demonstrated that Lackey intended to
release his claims against "any other person," which included the
third party. McDowell v. Lackey, 200 Ga.App. 506, 408 S.E.2d 481
(1991) (subsequent history omitted). The Supreme Court of Georgia
granted certiorari and reversed the appellate court. Lackey, 262
Ga. at 185, 415 S.E.2d at 902. The court announced a bright-line
rule that "[o]nly those parties named in the release will be
discharged by that instrument." Id. at 186, 415 S.E.2d at 903
(emphasis in the original). The court stated also that "[t]his
should eliminate the need to inquire as to the intent of the
parties to releases executed after the date of this opinion." Id.,
415 S.E.2d at 903.13
We have found no cases in which the Georgia courts have
13
Lackey was decided on April 30, 1992. The completion
certificate in this case was executed in June 1992.
applied the Lackey rule in an action upon a contract rather than in
a tort suit, but we can think of no reason why the nature of the
underlying action should limit its scope. " "A release is a
contract itself, and principles of law applicable to contracts
generally are also applicable to releases.' " McDowell, 200
Ga.App. at 507, 408 S.E.2d at 482 (quoting 1 E.G.L. Accord &
Satisfaction, § 16 (1988 Rev.)). We conclude, therefore, that
Lackey applies to the release contained in the completion
certificate.
As noted above, the completion certificate was addressed to
14
the GSFIC. Even if it was an enforceable instrument, it
specifically released claims against the "Owner" of the property.
In Lackey, the Court explained that, by being "named" in a release,
"we mean being identified either by proper name or such other
description as leaves no question of the identity of the party
released." Lackey, 262 Ga. at 186 n. 3, 415 S.E.2d at 903 n. 3.
Eby was not identified by proper name or otherwise as a released
party in the certificate. Furthermore, Eby does not contend, and
we do not find, that it was encompassed by the term "Owner" as used
in the form. The fact that Allgood mailed the certificate to Eby
for further processing does not alter this analysis. We agree with
Allgood, therefore, that under Lackey, the certificate could not
have served the purpose of releasing its delay claims against Eby.
Accordingly, we hold that the district court erred by granting
14
We doubt that the release was binding in view of the fact
that Allgood apparently never received the consideration for it,
i.e., payment of the retained funds. Because we base our
decision on Lackey, however, we need not decide this issue.
summary judgment to Eby on the basis of the completion
certificate.15
Next, we consider the scope of the payment applications. As
with the completion certificate, Allgood reasons that the payment
applications did not discharge its claims against Eby because Eby
was not identified as a released party. It is true that the
particular clause contained in the applications upon which Eby
relied did not refer to Eby. This paragraph of the forms did not
name any party to the construction project. Rather, it waived "all
claim or rights of lien ... upon the premises ... except for claims
for right of lien for contract and/or change order work performed
to extent [sic] that payment is being retained or will subsequently
become due." (R1-35, Deposition of Gloria A. Alday, Exhibit 6).
Allgood urges us to hold that this language extended only to its
right of lien against the property and not to its delay claims
against Eby under the subcontract. On the other hand, Eby submits
that "all claim or rights of lien" referred not only to claims of
lien upon the premises, but also to any type of claim Allgood may
have had against Eby.
Neither party has cited any controlling Georgia authority
directly on point in support of their respective positions. The
releases at issue in the cases relied upon by both sides are
distinguishable from the language employed in the payment
applications.16 Of the Georgia cases called to our attention, the
15
The district court may have concluded differently on this
matter had the Lackey decision been brought to its attention.
16
For instance, Eby cites Warrior Constructors, Inc. v. E.C.
Ernst Co., Inc., 127 Ga.App. 839, 195 S.E.2d 261 (1973), in which
closest, however, is J.L. Williams & Co., Inc. v. West Concrete
Co., 139 Ga.App. 208, 228 S.E.2d 196 (1976). In that case, a
subcontractor released
"any and all lien or claim or right of lien under the Statutes
of the State of Georgia relating to Mechanic's liens on the
above described premises and improvements thereon, and on the
monies or other considerations due or to become due from the
owner, on account of labor or services, material, fixtures or
apparatus heretofore furnished to this date by the undersigned
for the above described premises."
Id. at 208-09, 228 S.E.2d at 197 (quoting release). The court held
that this language "waived plaintiff's lien rights vis-a-vis the
owner, not the general contractor." Id. at 210, 228 S.E.2d at 198.
In a similar fashion, the payment applications relinquished
"all claim or rights of lien ... upon the premises." Guided by
J.L. Williams & Co., Inc., we view this terminology as releasing
lien claims against the property, not causes of action against Eby
under the subcontract. Thus, the district court could not have
granted summary judgment to Eby on the basis of this particular
clause of the payment applications.
However, in addition to the language waiving "all claim or
rights of lien ... upon the premises," the payment applications
contained another provision which stated:
I hereby certify that the work performed and the
materials supplied to date, as shown on the above, represent
the release stated that the " "[Subcontractor] does hereby
release [General Contractor] from any and all claims of every
nature arising under or by virtue of said subcontract'." Id. at
840, 195 S.E.2d at 261-62 (alteration in the original). We
cannot tell from the opinion whether the General Contractor was
expressly named in the release. Putting that issue aside,
however, a release "from any and all claims of every nature
arising under or by virtue of said subcontract," is obviously
much broader in scope than a waiver of "all claim or rights of
lien ... upon the premises."
the actual value of accomplishment under the terms of the
contract (and all authorized changes thereto) between the
undersigned and Martin K. Eby Construction Co., Inc., relating
to the above referenced project.
(R1-35, Deposition of Gloria A. Alday, Exhibit 6). Unlike the
completion certificate and the clause of the payment applications
relied upon by Eby, this section of the payment applications
specifically identifies Eby.17 By this provision of the
applications, Allgood appears to have certified that the amount
billed represented the actual value of its performance for the
periods of time indicated by the dates of the applications. This
would seem to bar recovery for any additional costs allegedly
incurred by Allgood during the course of construction for the
periods of time represented by the invoices.
Although the parties have indicated that Allgood submitted
approximately twenty-four requests for payment, the record contains
only twenty-two.18 The first twenty are each for a period of about
one-month's duration, beginning on April 16, 1990 and ending on
March 20, 1992. The record does not include invoices for the
months of February 20 to March 20, 1991, or January 20 to February
20, 1992. The last two payment applications in the record were for
March 20, 1992 to May 25, 1992, and May 20, 1992 to October 23,
1992.
In the complaint and amended complaint, Allgood alleged that
17
By addressing the various clauses of the payment
applications separately, we do not mean to suggest that Georgia
law requires that a released party be named in the same paragraph
of the agreement that contains the release language.
18
There are actually twenty-three copies of invoices in the
record, but two are duplicates.
the project was scheduled for completion on September 23, 1991, but
that construction continued until March 1993. (R1-1, Complaint at
¶ 12, and R1-23, Amended Complaint at ¶ 12). It is not clear from
the record whether Allgood participated in any ongoing construction
after the date of its last invoice, October 23, 1992.
Allgood has maintained throughout these proceedings variously
that its delay claims could not have been lodged prior to the
expiration of the original completion date because no delay
occurred until then and that it could not have calculated its
additional costs until after it concluded its work on the project.
Eby countered in its second motion for summary judgment that, to
the contrary, the timing of Allgood's delay claims was governed by
certain notice requirements contained in the prime contract, which
it contended were expressly incorporated into the subcontract and
with which Allgood failed to comply. Eby argued that, when
considered together, these provisions required Allgood to provide
notice of damages caused by delay within fifteen days of each
responsible event. (R2-45, Brief in Support of Defendants' Second
Motion for Summary Judgment at 3-4).19 Eby asserted that the delays
here occurred from the very beginning of the project and that any
notice Allgood provided was both untimely and insufficient.
By way of answer, Allgood referred to a provision of the
subcontract concerning delays which states:
19
To support these contentions, Eby cited Allgood's answers
to certain requests for admissions. For reasons unknown, Eby
failed to make the prime contract a part of the record in the
case. A copy of the subcontract was included in the record as
Exhibit 4 to the deposition of Terry N. Peavy, a Superintendent
for Allgood. (See R2-43).
SECTION 11. DELAYS. Subcontractor shall not be entitled
to an adjustment in time or Subcontract price for delays or
damages caused by the Owner and/or Architect-Engineer,
inclement weather, strikes, or other delays or damages unless
such price change or time extension is approved in writing by
the Owner or its authorized representative. Any damages which
Subcontractor alleges that the Owner, Architect-Engineer,
Contractor, other Subcontractor, or any other party for whom
Contractor may be liable has caused him or is causing him must
be filed in writing with the Contractor within ten (10) days
from the commencement of the alleged damage and a full
accounting filed within ten (10) days after the extent of
damage is known or the cause for damage ceases, whichever is
the sooner; otherwise, any such claims will be considered
void.
(R2-43, Deposition of Terry N. Peavy, Exhibit 4) (emphasis added).
Allgood also introduced into evidence copies of letters it sent to
Eby throughout the course of construction in which it raised the
issue of increased costs due to delay and which it contended
complied with the notice requirements.20 (R2-49, Exhibits A through
D and F through H).
Whether the letters complied with the notice provisions of the
prime and subcontracts and whether Allgood was able to calculate
the value of any or all of its demands for relief prior to the
completion of construction are issues that were not developed in
the district court.21 These are disputed questions of fact that
20
The letters were dated September 25, 1990, November 18,
1990, February 21, 1991, October 11, 1991, February 21, 1992,
August 7, 1992 and January 20, 1993. The record also includes an
October 18, 1991 letter from Eby to Allgood in which Eby
responded to certain demands for delay damages. (R2-49, Exhibit
E).
21
It is not clear from the record whether there were
distinct periods of delay throughout the course of construction
for which Allgood could or should have calculated the specific
amounts of damages it seeks to recover.
cannot be resolved on the current record. 22 Nor did the district
court consider the effect of Allgood's certification to Eby that
the amounts sought by the periodic payment applications represented
the actual value of Allgood's performance for the specified periods
of time. These are the issues upon which Allgood's delay counts
turn. Accordingly, upon remand, the district court should focus on
these factors in deciding whether any or all of these counts are
viable.23
IV. CONCLUSION
In keeping with the foregoing analysis, we REVERSE the
district court's grant of summary judgment in favor of Eby on
Allgood's delay claims and REMAND the case to the district court
for further proceedings consistent with this opinion.
22
Allgood contends on appeal that whether Eby waived any
alleged failure of Allgood to comply with the technical notice
requirements is also a disputed fact. (Appellant's Initial Brief
at 5 n. 1).
23
The court will also have before it the resolution of
Allgood's retainage claim.