Summary
In Pickett, supra, decided a month later, we held that a dissolution bond given to discharge a lien against real property is analogous to an eventual condemnation money bond, so that the judgment against the principal is conclusive against the surety who may properly be made a party to the judgment although not a party to the action.
Summary of this case from Houston c. Ins. Co. v. Stein Steel c. Co.Opinion
46646, 46647.
ARGUED OCTOBER 5, 1971.
DECIDED OCTOBER 18, 1971. REHEARING DENIED NOVEMBER 3, 1971.
Action on contract. Fulton Superior Court. Before Judge Pye.
Edward S. Sams, Glenville Haldi, for Pickett.
Powell, Goldstein, Frazer Murphy, Robert W. Patrick, Jerry B. Blackstock, for Paine.
Alex McLennan, for appellee.
1. Where it is apparent that the relevant information sought by multitudinous interrogatories has been supplied by depositions or by documentary evidence, there is no abuse of discretion by the trial judge in striking or suppressing them.
2. Absent a contrary provision in a construction contract, there is no particular form required as to the architect's certificate of completion which it provides must be had before final payment of the contract price is due. There has been a substantial compliance when the architect certifies that the work has been completed, "except for obvious punch items" and that the contractor is entitled to receive 100% of the contract sum.
3. Interest at 7 percent per annum on balances due under a construction contract begins to run from the date the sum is certified by the architect to be due.
4. Where the owners have entered into a subcontract with the prime contractor for the accomplishment of a portion of the work, and the architect certifies that the work under the prime contract has been completed and the prime contractor entitled to full payment of the contract price, it necessarily follows that the subcontract has been fully completed and the subcontractor is likewise entitled to full payment; and where the owners and the subcontractors are one and the same, they are, as owners, entitled to set off the balance due under the subcontract as of the time the balance was certified to be due under the prime contract.
5. Allegations that fraudulent representations were made as to who may have been interested in the prime contractor (a corporation) at or prior to the time when the contract was entered into do not show any damage to have resulted or give rise to any claim for damages.
6. A counterclaim for malicious abuse of process will not lie, since the main action has not terminated.
7. There was no error in the striking of third-party actions seeking damages since the damages sought would not be recoverable against them, and since the alleged claims were not germane to the main action in any wise.
8. Where a discharge or dissolution bond has been posted by the owner to relieve his property of a claim of lien by one who improved it, a judgment against the principal in an action to foreclose the lien is conclusive against the surety and it is proper to include the surety on the bond in entering judgment.
9. The attorney's fees and expenses of litigation claimed by plaintiff are not recoverable under the facts here.
ARGUED OCTOBER 5, 1971 — DECIDED OCTOBER 18, 1971 — REHEARING DENIED NOVEMBER 3, 1971.
Roscoe Pickett, Ralph E. Marler and Leon Paine, Jr. contracted with Chamblee Construction Company for the erection of a building in Cobb County in accordance with the plans and specifications of named architects, the supervision of construction to be effected by other named architects. A subcontract was then entered into between Chamblee Construction Company, as the prime contractor, and Pickett, Marler and Paine, as the subcontractor, whereby the owners agreed to accomplish a part of the construction for a specified sum. By mutual agreement extras were added to the prime contract, increasing the contract sum. The work began as scheduled and progressed under the architectural supervision, with progress payments being made as provided in the prime contract, until the building was completed on or about June 1, 1970.
On May 6, 1970, the supervising architects certified to the owners that work and materials supplied by the contractor (not included in prior certifications) had been completed and on which there was a balance due of $174,043.79. The sum of $100,000 was paid on this certification May 21, 1970. On June 5, 1970, the supervising architect certified to the owners that the building had been completed with the exception of "obvious punch list items" (it is conceded that these were all completed) and it is uncontradicted that under the prime contract there was then due to the contractor the sum of $136,463.21, including the unpaid balance on prior certification. The certification showed 100% of the contract work to have been accomplished. The City of Marietta inspected the building and issued its Certificate of Occupancy, showing inspection and approval by its fire department, planning department, electrical inspector, plumbing and mechanical inspector, and building inspector, on June 4, 1970. The building was leased to Lockheed Aircraft Corporation, and it went into possession under the lease June 1, 1970, and paid the rental for the month of June.
It is uncontradicted that there was a balance owing by Chamblee Construction to Pickett, Marler Paine, as subcontractors, of $20,897.78, and, of course since the architect certified the building to have been completed, it must follow that the subcontract had been fully performed. As to this, the subcontract provided that "Final payment shall be made within 30 days after completion of the work included in this subcontract, written acceptance by the architect, and full payment therefor by the owner."
On June 15, 1970, Chamblee Construction filed its claim of lien against the property with the Clerk of Cobb Superior Court, and it was duly recorded. On June 19, 1970, Chamblee Construction filed in Fulton Superior Court a suit against Pickett, Marler and Paine, seeking to obtain judgment against them and to foreclose its claim of lien. Garnishments were issued and served upon banks where the owners carried accounts.
The owners posted a bond to dissolve the lien, or claim therefor, obtained a release of the garnishments, and filed defensive pleadings in which it was contended that the filing of the claim of lien and the filing of the suit had been premature because no final certificate of approval had ever been obtained from the architects, as was required by the construction contract. There was a counterclaim for damages because of alleged fraudulent representations claimed to have been made prior to entering into the contract as to whether Harold Ivey had been interested in Chamblee Construction. A claim of setoff of the $20,897.78 was added to defendants' answer by amendment.
Plaintiff and defendants served interrogatories, each on the other, and depositions were taken. After the depositions were filed, defendants' interrogatories were stricken because of duplicity, irrelevancy, etc. Plaintiff moved for summary judgment, and after hearings were held, a partial summary judgment was granted, awarding judgment to plaintiff for $115,565.43 ($136,463.21, less a setoff of $20,897.78) with interest at 7 percent per annum on $74,043.79 from May 10, 1970, and on $62,419.42 from June 10, 1970, but no interest to be allowed on the setoff of $20,897.78, and with interest on the net principal of $115,565.43 from June 10, 1971, the date of the judgment, and made the judgment effective against the surety on the dissolution bond, Interstate Fire Insurance Company.
From this judgment the defendants appeal, enumerating as errors (a) sustaining plaintiff's written objections to defendants' interrogatories, (b) awarding summary judgment to the plaintiff, (c) the awarding of interest on the sum of $136,463.21, (d) denial of interest on the setoff of $20,897.78, (e) sustaining of motions to dismiss the counterclaim for damages because of alleged fraudulent representations, and to dismiss third-party complaints, (f) holding the surety on the dissolution bond to be liable.
1. It appears that the relevant information sought by the interrogatories served upon the plaintiff was obtained in the taking of depositions of plaintiff's officers, and from documentary evidence supplied. Since the order striking the interrogatories was not made until after the depositions were obtained and filed, we can see no harmful error. While the discovery procedures are to be liberally applied and made available to parties to the end that the issues may be narrowed and the time consumed in the litigation may be shortened, the trial judge does have a broad discretion in the suppression or striking of multitudinous interrogatories which he deems to be irrelevant, seeking information merely cumulative to that already obtained, or oppressive in nature. American Oil Co. v. Manpower, Inc., 124 Ga. App. 79 ( 183 S.E.2d 95).
2. The contention that it was error to award summary judgment because of a failure to obtain an architect's certificate of final completion, which is made a condition precedent by terms of the contract, is without merit. The evidence authorized the finding made by the trial judge that there had been substantial compliance with this requirement. Albany Phosphate Co. v. Hugger Bros., 4 Ga. App. 771, 775 ( 62 S.E. 533).
3. We agree with the trial judge that plaintiff was entitled to interest at 7 percent per annum on $74,043.79, but from May 6, 1970, since this was the unpaid balance of an amount certified by the architect to be due on that date, up to June 5, 1970.
4. It is true that the subcontract, out of which the setoff of $20,897.78 arises, provides that the final payment is to be made 30 days after completion of the work, acceptance by the architect, and full payment therefor by the owner, and thus this sum would not be due and would not generally bear interest until the owners had made full settlement of the contract price. However, under the peculiar situation here, the owners and the subcontractors are one and the same and the principle of setoff is applicable. Code §§ 20-1301, 20-1302, 37-308. In its judgment the trial court has set off the balance owing by plaintiff to the defendants under the subcontract, thus holding that a full payment by defendants of the contract balance is not a condition precedent for doing so, and there is no cross appeal. If the defendants were entitled to set off the balance owing to them under the subcontract at the time the judgment was entered, as the trial judge found, it seems inescapable that they were entitled to do that when, on June 5, 1970, the architect certified the building to have been 100% completed — which necessarily included the work done by the subcontractors. If the balances due under both the prime contract and the subcontract were due and payable, as they were, and the owners-subcontractors were entitled to a setoff, as they were, it simply reduced their liability to $115,565.43 as of the time they were entitled to set off. We think that this occurred June 5, 1970, and that the interest should be applied only to the reduced or net amount from that date.
5. We agree with the trial judge that the counterclaim for alleged fraudulent representations claimed to have been made at the time of or prior to the making of the contract were not of a nature giving rise to a cause of action or of a claim for damages. The striking of this counterclaim was not error.
6. In the same counterclaim it is alleged that the issuance of the garnishments based on the present action and the filing of the claim of lien were a malicious use of process. Assuming, but not deciding, that a viable claim may arise from this conduct on the part of the plaintiff, it does not afford the basis for a permissible counterclaim because the present action has not terminated and the claim has not matured. Terry v. Wonder Seal Co., 120 Ga. App. 423 (2) ( 170 S.E.2d 745); Metro Chrysler-Plymouth, Inc. v. Pearce, 121 Ga. App. 835 (2) ( 175 S.E.2d 910).
7. We find no error in the dismissal of the third-party claims.
8. The surety on the dissolution bond is liable. The bond substitutes for the lien on the realty ( United Bonding Ins. Co. v. Good-Wynn Electrical Supply Co., 124 Ga. App. 545 (2) ( 184 S.E.2d 508)), and it was proper to make it a party to the judgment. We deem the situation to be analogous to that of an eventual condemnation money bond. Code Ann. § 67-2004. Cf. as to the surety on a replevy bond, Jackson v. Guilmartin Co., 61 Ga. 544; Holmes v. Langston, 110 Ga. 861 (3) ( 36 S.E. 251); Price v. Carlton, 121 Ga. 12 ( 48 S.E. 721); Morse v. Turner, 20 Ga. App. 108 ( 92 S.E. 767); Johnston v. Sheppard, 22 Ga. App. 206 ( 95 S.E. 743); Connally v. Morris, 29 Ga. App. 752 ( 116 S.E. 338); Taliaferro v. Farkas, 46 Ga. App. 9 ( 166 S.E. 426); Sargeant v. Starr, 102 Ga. App. 453 ( 116 S.E.2d 633); as to bond for dissolution of garnishment see Roberts v. Seanor, 46 Ga. App. 5 ( 166 S.E. 375), and as to claim bond in garnishment proceedings see Allen v. Atlanta Furniture Co., 49 Ga. App. 557, 558 ( 176 S.E. 663).
9. After defendants filed their defensive pleadings the plaintiff amended, charging the defendants with bad faith and stubborn litigiousness in defending the action and sought attorney's fees from them. In the judgment entered it was provided: "This judgment shall not dispose of the expenses of the litigation and attorney's fees as claimed by plaintiff, but all issues in regard thereto shall be submitted to the jury."
Under the judgment of the trial court a setoff was allowed and the recovery is substantially less than plaintiff sought, and under that which we direct to be entered the amount of interest recovered by the plaintiff will be substantially less than under the judgment entered, and thus the attorney's fees are not recoverable. Broyles v. Johnson, 103 Ga. App. 102 (5) ( 118 S.E.2d 734). Moreover, "the bad faith which would authorize a recovery of attorney's fees as expenses of litigation is the fraud or bad faith of the defendant in the transaction out of which the cause of action arose. Twin City Lumber Co. v. Daniels, 22 Ga. App. 578 ( 96 S.E. 437). In an action ex contractu expenses of litigation are recoverable under [ Code § 20-1404] where it appears that the contract was entered into in bad faith or was procured by fraud, or that the defendant has been stubbornly litigious. McKenzie v. Mitchell, 123 Ga. 72 ( 51 S.E. 34); Lovell v. Frankum, 145 Ga. 106 (4) ( 88 S.E. 569)." Bankers Health c. Ins. Co. v. Plumer, 67 Ga. App. 720, 725 ( 21 S.E.2d 515). "The constitutional right to be heard in the courts is granted defendants as well as plaintiffs; and a defendant will not be charged with expenses of litigation except in cases where he has acted in bad faith. This refers to `bad faith' in the transaction out of which the cause of action arose, rather than to the motive with which the defense is being made." Traders Ins. Co. v. Mann, 118 Ga. 381 (6, 7) ( 45 S.E. 426). Nor can attorney's fees be recovered if the plaintiff's claim is fairly open to controversy. Tift v. Towns, 63 Ga. 237. Since the suit was brought to recover the sum of $136,463.21, with interest thereon, and the recovery was reduced by the trial court to $115,565.43 because of a setoff claimed by defendants, and we have reduced the amount of interest to be recovered, it can hardly be said that there was no legitimate controversy.
The record discloses that plaintiff denied the existence of any fraud in the making of the contract, and the evidence in the record does not indicate it. We can see no basis for submitting the matter of attorney's fees to a jury.
Judgment affirmed with direction that it be amended so that it will be in accord with what we hold here. Jordan, P. J., and Hall, P. J., concur. Whitman, J., not participating because of illness.