State, Department of Transportation v. Douglas Asphalt Co.

Citations: 677 S.E.2d 699; 297 Ga. App. 470; 2009 Fulton County D. Rep. 1370; 2009 Ga. App. LEXIS 455Docket: A09A0552

Court: Court of Appeals of Georgia; April 10, 2009; Georgia; State Appellate Court

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Douglas Asphalt Company initiated a lawsuit against the Georgia Department of Transportation (DOT) for breach of contract related to an interstate construction project, claiming DOT wrongfully declared it in default and failed to compensate for project cost overruns. In response, DOT counterclaimed for breach of contract, asserting that Douglas Asphalt defaulted on its contractual obligations. The trial court partially granted Douglas Asphalt's motion in limine to exclude DOT's damage calculations, prompting DOT to appeal. The appellate court reversed this ruling, emphasizing that the trial court's discretion regarding the admissibility of evidence must be exercised with caution. DOT's contract with Douglas Asphalt mandated the inclusion of a specific amount of hydrated lime in asphalt mixes to ensure durability. Investigations revealed that Douglas Asphalt supplied significantly less hydrated lime than required, leading DOT to require replacement of nonconforming asphalt. Douglas Asphalt's lawsuit followed DOT's determination of default based on these deficiencies.

DOT filed an answer and counterclaim based on breach of contract and successfully transferred the case to the Superior Court of Turner County. On December 14, 2006, DOT designated a representative under OCGA 9-11-30 (b)(6) to provide deposition testimony regarding its breach of contract damages calculations. The representative revealed four theories for calculating damages: 1) benefit of the bargain (diminution in value of the asphalt mix), 2) benefit of the bargain (lime shortage applied to asphalt mix value), 3) annualized cost, and 4) cost to remove and replace non-conforming asphalt. DOT also presented a second representative to discuss liquidated damages due to delays by Douglas Asphalt in the highway improvement contract. Douglas Asphalt subsequently filed a motion in limine to exclude DOT's damage calculations, including attorney fees. The trial court partially granted this motion on June 12, 2008, allowing only evidence of DOT's liquidated damages related to delays.

The court's order was temporarily set aside for further consideration of DOT's request for immediate review and was re-issued on August 25, 2008, along with a certificate of immediate review. DOT contended the trial court erred in excluding its damage calculations, effectively granting summary judgment to Douglas Asphalt on damages. The court agreed, emphasizing that recoverable damages for breach of contract must arise naturally from the breach and be contemplated by the parties. The ruling clarified that uncertainty regarding the measure of damages does not preclude their allowance, provided they flow directly from the breach. Furthermore, a motion in limine is inappropriate for assessing evidence sufficiency, being suited instead for excluding irrelevant evidence. An audit revealed that Douglas Asphalt provided less than 58% of the required hydrated lime for the project, invalidating the asphalt mix's compliance with contract specifications. Douglas Asphalt did not contest the audit's accuracy, and its expert acknowledged that adding hydrated lime improves asphalt durability.

Douglas Asphalt contends that the damages calculations presented by DOT are too speculative, arguing that DOT cannot precisely identify the amount of hydrated lime in each lot of asphalt produced, thereby failing to establish that Douglas Asphalt's alleged failure to procure the required amount of hydrated lime caused any damages to DOT. Douglas Asphalt claims that DOT's evidence of damages is insufficient, a matter not properly resolved through a motion in limine.

Under Georgia law, cost of repair and diminution in value are recognized as alternative measures of damages in cases involving negligent construction and breach of contract. The trial court's decision to grant Douglas Asphalt's motion in limine was erroneous as it effectively ruled on the sufficiency of DOT's damages evidence without addressing genuine issues of material fact or determining that Douglas Asphalt was entitled to judgment as a matter of law.

Furthermore, DOT argues that the trial court improperly excluded evidence of attorney fees sought under OCGA 13-6-11. This statute allows for the recovery of attorney fees if the plaintiff has specifically pleaded for them and the defendant has acted in bad faith or caused unnecessary trouble. The jury determines the award of attorney fees, which necessitates an underlying award of damages.

Douglas Asphalt's assertion that DOT could not recover attorney fees related to excluded testing evidence is unfounded. While a party may only recover attorney fees for claims where they prevail, DOT claims a breach of a single contract with Douglas Asphalt. Thus, once the criteria for awarding litigation expenses due to the other party's unreasonable conduct are met, there is no requirement to prorate fees among different claims within a single cause of action.

Consequently, the trial court's exclusion of attorney fee evidence was erroneous. The judgment is reversed, and the remaining issues raised by DOT do not need to be addressed as a result of this ruling.

Mon Ami Intl. v. Gale and various other cases establish precedents relevant to the current legal discussion. Notably, Douglas Asphalt's motion in limine to exclude the Department of Transportation's (DOT) damages evidence was mentioned, focusing on its compliance with OCGA 24-9-67.1. The trial court did not find grounds to exclude the evidence based on the statute's requirements, thus the issue was not pursued further, citing Kroger Co. v. Mays. Additionally, the trial court previously granted Douglas Asphalt's motion to exclude DOT's atomic absorption testing evidence, related to testing asphalt for lime content, as per OCGA 24-9-67.1, referencing Dept. of Transp. v. Douglas Asphalt Co.