Hall v. Harris

Citations: 521 S.E.2d 638; 239 Ga. App. 812; 99 Fulton County D. Rep. 3187; 1999 Ga. App. LEXIS 1077Docket: A99A1652

Court: Court of Appeals of Georgia; August 11, 1999; Georgia; State Appellate Court

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In June 1989, Joe Richard Harris, the sole owner and manager of Harris Builders, Inc. and Multi-Pest Services, Inc., acted as the general contractor for a residential construction project in Carrollton, Georgia. Harris oversaw all aspects of the project, including the selection of materials and subcontractors. He chose to use synthetic stucco, known as EIFS, which was inappropriate for residential use due to the high number of penetrations and moisture risks presented by the structure’s 34 windows and 14 doors. Expert testimony indicated that the defendants exhibited negligence in material selection, construction practices, and inspection processes, breaching warranties and failing to replace rotten wood as stipulated in their contract.

The EIFS system, intended primarily for commercial applications, was misapplied, leading to moisture infiltration that caused damage to window and door frames. Harris possessed sufficient expertise to recognize installation defects, yet he neglected to ensure compliance with critical manufacturer specifications designed to prevent moisture retention and termite access. The improper installation of EIFS extended below ground level, which was contrary to the manufacturer's guidelines. Defendants failed to enforce construction standards and improperly accepted the defective work, despite observable issues during installation and inspection. Additionally, the design created flat surfaces that exacerbated water collection and moisture entry, contributing further to the deterioration of the structure.

EIFS cladding was improperly installed without adequate moisture protection, leading to observable defects that an expert like Harris should have detected during inspections. This negligence resulted in subsequent termite damage and wood rot, compounded by various design and construction flaws, including inadequate waterproofing of foundation walls and structural issues with the floor joists. The house lacked necessary roofing materials and had insufficient slope, contributing to further water-related problems. Despite being scheduled for inspection, Carroll County never issued a certificate of occupancy due to these issues, with prior complaints from renters about construction defects known to Harris before the sale to the plaintiffs. In a conflicting statement, Harris claimed a certificate had been issued in 1989, yet failed to clarify this inconsistency when asked. He misrepresented the house's quality and code compliance during the sale process, which influenced the plaintiffs' decision to purchase. Additionally, Harris signed a disclosure statement asserting compliance with building codes and structural integrity, despite evidence of unaddressed wood rot. He also requested the plaintiffs to use a pest inspection company he controlled, presenting a termite clearance letter that falsely claimed independence from the transaction.

Murphy's inspection uncovered both current and historical signs of termite and carpenter ant damage in the property. In 1993, prior to the home sale, Harris acknowledged to a Georgia Department of Agriculture representative the house's previous termite issues and wood rot. Multi-Pest Services, Inc. informed the plaintiffs that all damaged wood had been replaced. The plaintiffs submitted various forms of evidence, including expert and building inspector affidavits, as well as conflicting statements from Harris regarding his prior deposition.

The trial court granted summary judgment for the defendants on all liability theories. This decision was reversed due to the trial court’s failure to adhere to established procedures from Lau's Corp. v. Haskins, particularly concerning the burden of proof, favorable inferences for plaintiffs, and the evaluation of evidence against motions for summary judgment.

The plaintiffs argued that the court erred in dismissing their fraud claims, which were supported by material false statements made by the defendant regarding the house's code compliance and condition. Specific misrepresentations included claims of a valid occupancy certificate, quality construction, and the absence of significant prior damage. Additionally, the defendants provided misleading disclosure statements about water issues and pest damage. The court found that these allegations raised material factual issues suitable for jury consideration.

Similarly, the plaintiffs contested the summary judgment on their negligent misrepresentation claim, asserting that misleading statements were made directly to induce reliance, including the disclosure and purported occupancy certificate. The court agreed, identifying these issues as requiring factual determination by a jury.

Representations made regarding the condition of the house, including claims about water issues, compliance with building codes, the adequacy of synthetic stucco, and the replacement of rotten wood, could be deemed intentionally deceptive or negligently made. Evidence indicated that the plaintiffs relied on these statements, creating a material issue of fact for negligent misrepresentation. The court erred in granting summary judgment for negligent repairs, as an expert's affidavit revealed that certain original windows were not replaced, indicating a lack of reasonable care. The court also erred concerning breach of contract claims, as evidence suggested that the defendants failed to replace preexisting rotten wood, violating their contractual duty to perform construction in a workmanlike manner. However, the court correctly granted summary judgment on negligent construction and negligence per se claims, as the statute of limitations had expired before the plaintiffs acquired the property, barring liability under these theories according to Georgia law.

An action for construction defects under OCGA § 9-3-30 must be initiated within four years of substantial completion of the work, as the right of action arises at that time, triggering the statute of limitations. The relevant case law includes Corp. of Mercer Univ. v. Nat. Gypsum Co. and others. In this instance, the action was filed on April 9, 1997, which fell within the eight-year statute of repose but exceeded the four-year limit following the substantial completion of the house, which occurred in late May or June 1989. The defendants retained title to the house for four years until the statute of limitations for tortious damage expired. The house was transferred to the plaintiffs on May 12, 1993, precluding any action by them as successors in title since the limitations period had already run. Even if fraud temporarily delayed the statute of limitations, the plaintiffs’ suit in April 1997 was still filed too late. Additionally, if a prior owner had a cause of action against the defendants, that claim would have been barred by the statute of limitations before the title was transferred to the plaintiffs. Therefore, if the action is barred against a prior owner, it is likewise barred against a subsequent owner. The judgment was affirmed in part and reversed in part, and the case was remanded. Judges Blackburn and Barnes concurred.