Southern Patrician Associates v. INTERNATIONAL FIDELITY INSURANCE COMPANY
Docket: 77568
Court: Court of Appeals of Georgia; March 16, 1989; Georgia; State Appellate Court
Southern Patrician Associates (Southern) appealed the trial court's decision to grant International Fidelity Insurance Company (IFIC) a stay on arbitration related to a construction project at Roswell Mall. Southern had contracted C. M. Systems, Inc. (C. M.) as the general contractor, who subsequently subcontracted with Construction Concepts d/b/a R. M Mechanical, Inc. (R. M.). Both contracts required surety bonds for performance, with IFIC providing the bond for R. M. After C. M. declared bankruptcy, its surety company assigned its rights to Southern. Southern terminated R. M. for non-performance and sought to enforce the surety bond through arbitration after IFIC failed to respond. Southern's claim to arbitration was based on the arbitration provision in C. M.'s contract and the incorporation of this provision in the subcontract and the surety bond. IFIC contended it was not obliged to arbitrate due to two main points: (1) a right-of-action clause in the surety bond that limited claims to the obligee and specified parties, excluding Southern as an assignee; and (2) the absence of a written arbitration agreement between IFIC and Southern, with arbitration clauses referencing "contract documents" rather than the surety bond. The court affirmed the trial court's decision, interpreting the surety contract as unambiguous. It concluded that "successors" and "assigns" are distinct legal concepts, and the surety contract explicitly excluded Southern from having a right of action. Therefore, the court held that the imposition of arbitration obligations on IFIC could not be derived from the surety contract, leading to the upholding of the stay on arbitration. The judgment was affirmed with concurrence from judges McMurray and Benham.