No.

A09A2342
Court of Appeals of Georgia

Western Surety v. Apac-Southeast

302 Ga. App. 654 (Ga. Ct. App. 2010) • 691 S.E.2d 234
Decided Jan 14, 2010

No. A09A2342. trial court erred when it awarded pre-judgment

interest. We agree that APAC has no breach of
DECIDED JANUARY 14, 2010.
contract claim, but affirm because defendants are
RECONSIDERATION DENIED MARCH 8,
jointly and severally liable under the payment
2010.
bond and because the issue of interest was not
Contract. Fulton Superior Court. Before Judge disputed in the trial court.
Westmoreland.
To prevail at summary judgment under
Thompson, Slagle Hannan, Jefferson B. Slagle, OCGA § 9-11-56, the moving party must
McRae, Stegall, Peek, Harman, Smith Mannin, demonstrate that there is no genuine issue
Michael D. McRae, Robert T. Monroe, for of material fact and that the undisputed
appellants. facts, viewed in the light most favorable to
the nonmoving party, warrant judgment as
Toler Hanrahan, Timothy N. Toler, Mark V
a matter of law. . . . [T]he burden on the
661 Hanrahan, for appellee. *661
moving party may be discharged by
pointing out by reference to the affidavits,
ANDREWS, Presiding Judge.
depositions and other documents in the
This dispute arose when APAC-Southeast, Inc., a record that there is an absence of evidence
provider of asphalt, assigned its subcontract with to support the nonmoving party's case. If
Bruce Albea Contracting, Inc. to C. W. Matthews the moving party discharges this burden,
Contracting Company, Inc. before the completion the nonmoving party cannot rest on its
of a road project for the Georgia Department of pleadings, but rather must point to specific
Transportation. Although the subcontract specified evidence giving rise to a triable issue.
that it could not be assigned, and although
(Citations omitted.) Lau's Corp. v. Haskins, 261
Matthews did not finish the project, APAC sued
Ga. 491 ( 405 SE2d 474) (1991).
Albea and its sureties, Western Surety Company
and Continental Casualty Company, for breach of So viewed, the record shows that Albea was the
contract and under a payment bond. The trial court general contractor on a public works project to
granted APAC summary judgment against all 655 widen Highway 27 in Heard and *655 Troup
three defendants for over $1.2 million plus Counties when it entered into a subcontract dated
interest. On appeal, defendants argue that the trial February 2004 under which APAC would provide
court erred when it granted APAC summary the project with asphalt paving. The subcontract
judgment because APAC's breach by reason of provided that APAC could not assign the
assignment negates its claim against both Albea subcontract without Albea's written consent. That
and its sureties. Defendants also assert that the same month, Albea and its sureties executed a $24
million payment bond providing that they were

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 Western Surety v. Apac-Southeast 302 Ga. App. 654 (Ga. Ct. App. 2010)

jointly and severally liable for "all persons doing before the assignment. On March 19, APAC sued
work or furnishing skill, tools, machinery, or Albea for nonpayment under the subcontract. Both
materials under or for the purpose of" the parties later moved for summary judgment, which
Highway 27 project. the trial court granted to APAC against all three
defendants jointly and severally.
In the course of the parties' performance, prices
for asphalt, fuel, and oil increased dramatically. 1. The defendants first argue that APAC's
Albea withheld payments in a dispute over the assignment of the subcontract amounted to a
quantities of asphalt APAC had installed, and breach sufficient to abrogate any claim under that
APAC threatened to escalate the payments due to subcontract. We agree.
it.
(a) As a preliminary matter, we note that although
On September 18, 2006, APAC sold and assigned the subcontract at issue here involved both goods
most of its assets, including its asphalt plant and 656 and services, APAC itemized *656 its payment
its current subcontracts, to Matthews. The requests in terms of the quantities of asphalt and
assignment of the subcontract at issue here other materials supplied. As a result, we look to
included a provision that APAC would retain any the Uniform Commercial Code to determine the
payments for work performed before the consequences of APAC's assignment. See D. N.
assignment. Although the assignment was sent to Garner Co. v. Ga. Palm Beach Aluminum Window
Albea, it never acknowledged or signed the form. Corp., 233 Ga. App. 252 ( 504 SE2d 70) (1998)
According to Albea's own accountant, Albea owed (where contractor's bid did not segregate price of
APAC $1,202,745.98 for work already performed goods from price of services, the contract was
before the assignment. predominantly for the sale of goods and was thus
subject to the UCC).
For some months following the assignment,
Matthews performed work for Albea, and Albea (b) As APAC concedes, its assignment of the
paid Matthews for that work. According to its own subcontract was in violation of Georgia law.
president, Albea "acquiesced" to the delegation of OCGA § 11-2-210 provides in relevant part:
performance to Matthews because it could not find
(1) A party may perform his duty through
an alternative subcontractor and could not risk
a delegate unless otherwise agreed or
breaching its own contract with the DOT. In the
unless the other party has a substantial
spring of 2007, however, Matthews notified Albea
interest in having his original promisor
that it would not work further at the subcontract's
perform or control the acts required by the
rates for fuel and supplies. Having failed to find a
contract. No delegation of performance
third subcontractor, Albea agreed, but insisted that
relieves the party delegating of any duty to
this constituted a "new agreement" and reserved
perform or any liability for breach.
its right to pursue legal remedies regarding the
cost increases. As a result of this and other ...
circumstances, Albea's finances deteriorated. On
April 19, 2007, the sureties paid Matthews over
$360,000 for its work on the project, and
eventually paid more than $2.7 million in excess
of the costs agreed to in the original subcontract.

In March and again in April 2007, Albea

requested that its sureties pay APAC the
outstanding $1.2 million for the work performed

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 Western Surety v. Apac-Southeast 302 Ga. App. 654 (Ga. Ct. App. 2010)

(5) An assignment of "the contract" or of Forest Commodity Corp. v. Lone Star Indus., 255
"all my rights under the contract" . . . is an Ga. App. 244, 247-248 (2) ( 564 SE2d 755)
assignment of rights[,] and unless the (2002); see also Schoenbaum Ltd. Co. v. Lenox
language or the circumstances (as in an Pines, LLC, 262 Ga. App. 457, 464-465 ( 585
assignment for security) indicate the SE2d 643) (2003) (enforcing anti-assignment
contrary, it is a delegation of performance clause even when assignor had no further duties
of the duties of the assignor and its under the contract); Mingledorff's, Inc. v. Hicks,
acceptance by the assignee constitutes a 133 Ga. App. 27, 28 (2) ( 209 SE2d 661) (1974)
promise by the assignee to perform those (enforcing anti-assignment clause). And as Corbin
duties. This promise is enforceable by explains:
either the assignor or the other party to the
When a contract contains express words
original contract.
forbidding one party to assign the contract,
... usually more is intended than that he shall
not repudiate his duty by assigning it to
(Emphasis supplied.) Put more succinctly by the
another and escaping; it indicates that his
Supreme Court of Georgia, an anti-assignment
duty is one that he cannot perform
clause should be enforced "when that clause was
vicariously by delegating the performance
inserted to protect a party from a material
to another. Such a provision makes the
reduction in the value of the contract." Singer
party's reciprocal right to compensation
Asset Finance Co. v. CGU Life Ins. Co. of
dependent and conditional on his own
America, 275 Ga. 328, 329 (1) ( 567 SE2d 9)
personal performance of the agreed
(2002).
exchange. . . .
The subcontract at issue was part of APAC's sale
(Emphasis supplied.) Corbin on Contracts, Vol. 9,
of most of its assets, including its asphalt plant
Ch. 49, § 872, p. 429 (1951, repr. 2002).
and ongoing contracts, to Matthews. Given
Albea's testimony that it had a "substantial It follows that the trial court could not have
interest" in maintaining APAC as the performer of properly granted summary judgment against Albea
the subcontract, OCGA § 11-2-210 (1), and that it by reason of its apparent "acquiescence" in
looked for but was unable to retain any other APAC's breach of the subcontract.
asphalt provider besides Matthews, we cannot
2. The outcome is different as to APAC's claim
permit APAC to prevail on summary judgment
under the payment bond, however. As part of the
against Albea in the wake of APAC's repudiation
Little Miller Act, OCGA § 13-10-63 1 creates a
of that subcontract, including the provision not to
cause of action for claims arising under contracts
delegate performance. As we have held:
for public works projects:
[A] party's refusal to abide by a contract
1 See Ga. L. 2001, p. 820, § 1; see also
provision prohibiting assignment, or any
former OCGA § 36-82-104 as well as
657 other relinquishing of contractual *657
current OCGA § 36-91-93 (concerning
obligations, is properly considered a payment bonds in county and municipal
repudiation of the contract amounting to an projects); J. Kinson Cook, Inc. v. Weaver,
anticipatory breach. Such a repudiation of 252 Ga. App. 868, 870 ( 556 SE2d 831)
the agreement estops [the breaching party] (2001).
from seeking to enforce other provisions of
the agreement.

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 Western Surety v. Apac-Southeast 302 Ga. App. 654 (Ga. Ct. App. 2010)

(a) Every person entitled to the protection Nat. Fire Ins. Co. v. Cummins Diesel of Ga., 213
of [a] payment bond or security deposit Ga. 4, 7 (2) ( 96 SE2d 881) (1957) (materialman
required to be given who has not been paid may bring suit in its own name under bond made
in full for labor or materials furnished in by other parties). The sureties cannot be held to
the prosecution of the work referred to in any greater liability than Albea, however, unless
such bond or security deposit before the they consented to the assignment. See OCGA §
expiration of a period of 90 days after the 10-7-21 ("novation, without the consent of the
day on which the last of the labor was surety, discharges him"); Vickers v. Chrysler
done or performed by such person . . . shall Credit Corp., 158 Ga. App. 434, 436 (1) ( 280
have the right to bring an action on such SE2d 842) (1981) ("in the absence of waiver or
payment bond or security deposit for the estoppel[,] we see no reason why a guarantor may
amount, or the balance thereof, unpaid at not assert [a] `commercially reasonable' defense
the time of the commencement of such which would be available to his principal").
action. . . .
The payment bond is unambiguous as to the
658 *658 sureties' responsibility for paying anyone
providing labor or materials to the project. APAC
(Emphasis supplied.) Such a claim is essentially
retained the right to payment concerning all work
one for quantum meruit, or "as much as he
done before the assignment in September 2006, a
deserves,"
right which Matthews has never contested. Most
an equitable doctrine based on the concept important, the sureties themselves negotiated a
that no one who benefits from the labor new agreement with Matthews in April 2007. The
and materials of another should be new agreement referred to the original subcontract
unjustly enriched thereby. Where quantum and the payment bond and paid Matthews over
meruit is applicable, the provider may $360,000 for work performed in the fall of 2006.
recover the reasonable value of goods or
Because the sureties consented to the delegation of
services transferred, but value is defined in
APAC's duties under the subcontract to Matthews,
terms of value to the recipient.
they remain liable to APAC for the labor and
(Emphasis supplied.) Nelson Hill, P.A. v. Wood, materials expended before that assignment.
245 Ga. App. 60, 62-63 (1) ( 537 SE2d 670) Albea's own evidence establishes the amount due
(2000). "[T]he statutes governing payment bonds as that specified in the trial court's judgment, and
on public works projects were enacted for the 659 defendants agreed to be jointly and *659 severally
benefit of materialmen and sub-subcontractors and liable for such sums in their payment bond. Thus
therefore should be liberally construed to secure the trial court did not err when it granted summary
that object." (Citation and punctuation omitted.) J. judgment to APAC against all three defendants.
Kinson Cook, Inc. v. Weaver, supra, 252 Ga. App. See I. Perlis Sons v. Peacock Constr. Co., 222 Ga.
868, 870 ( 556 SE2d 831) (2001). 723, 726 ( 152 SE2d 390) (1966) (dismissing
plaintiff contractor's contract claim for balance
As the beneficiary of the bond, APAC has stated a
due where he failed to allege that certificate of
cause of action against the sureties. See Barton
satisfactory completion, a condition precedent to
Malow Co. v. Metro Mfg., 214 Ga. App. 56, 57 (
payment, had been issued, but sustaining quantum
446 SE2d 785) (1994) (all subcontractors
meruit claim).
providing goods and services on public works
projects, and not just those in privity, may bring
suit against contractors and their sureties); Pacific

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 Western Surety v. Apac-Southeast 302 Ga. App. 654 (Ga. Ct. App. 2010)

3. Defendants also challenge the trial court's As the name implies, the "anticipatory
award of prejudgment interest. The record shows repudiation" of a contract occurs when one
that APAC presented written argument on this party thereto repudiates his contractual
issue at summary judgment, with defendants obligation to perform prior to the time
disputing neither APAC's claim nor its method of such performance is required under the
calculating the amount of the award. Thus no terms of the contract. While technically
question has been presented for our review. See such a repudiation is not a breach of
OVIP, Inc. v. Blockbuster Textiles, 289 Ga. App. contract, the contractual time for
276, 278-279 ( 656 SE2d 907) (2008) (appellee's performance not having arrived, the law
failure to challenge the enforceability of a recognizes that under certain
liquidated damages provision meant that the issue circumstances the innocent party to the
was not presented for appellate review); compare contract may treat such an anticipatory
OCGA § 51-12-14 (a) (requiring written notice repudiation as a breach thereof. Thus when
concerning pre-judgment interest on unliquidated one party to a bilateral contract of mutual
damages in tort action). dependent promises absolutely refuses to
perform and repudiates the contract prior
Judgment affirmed. Miller, C. J., concurs. Barnes,
to the time of his performance, the
J., concurs specially.
innocent party is at liberty to consider
himself absolved from any future
ANDREWS, Presiding Judge.
performance on his part and has an
DECIDED JANUARY 14, 2010 — election of several possible remedies,
660 including the right to rescind the *660
RECONSIDERATION DENIED
contract altogether and recover the value
MARCH 8, 2010 — CERT.
of any performance he has already
APPLIED FOR. rendered.

BARNES, Judge, concurring specially. CCE Fed. Credit Union v. Chesser, 150 Ga. App.
328, 330 (1) ( 258 SE2d 2) (1979). This is true
Although I agree that APAC-Southeast is entitled whether the contract is wholly executory or has
to the judgment awarded by the trial court, I do been partially executed. Shell Petroleum Corp. v.
not agree2 with the majority's reasoning. Jackson, 47 Ga. App. 667, 670 ( 171 SE 171)
2 Because I do not agree with all that is said, (1933).
this opinion is physical precedent only.
A repudiation of the contract, however, is not self
Court of Appeals Rule 33 (a).
executing. The injured party must elect its
remedies. Here, Albea did nothing: It did not seek
rescission, did not sue for damages, and did not
demand that APAC perform. Instead, although not
formally giving its approval to the assignment, it
treated APAC's assignee, C.W. Matthews, as a
party to the contract by accepting the asphalt
provided by C.W. Matthews and by ultimately
reaching a new agreement with C.W. Matthews.
Moreover, Albea has never denied that it owes
APAC the amount APAC claims. Under the
circumstances, Albea waived its formal approval

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 Western Surety v. Apac-Southeast 302 Ga. App. 654 (Ga. Ct. App. 2010)

of the assignment and is estopped from denying

the assignment. Breus v. McGriff, 202 Ga. App.
216 ( 413 SE2d 538) (1991); Merchants Grocery
Co. v. Shawnee Milling Co., 86 Ga. App. 848, 852
( 72 SE2d 797) (1952). See Splish Splash
Waterslides v. Cherokee Ins. Co., 167 Ga. App.
589,593 (4) (c) ( 307 SE2d 107) (1983) ("`Where
a landlord treats a lease as assigned, even though
the original lessee had no right to assign it without
his consent, he is estopped from setting up (as a
defense) that the assignment of his contract is
made without his consent.' [Cit.]") (citation and
punctuation omitted).

Accordingly, even though I do not concur fully

with the majority opinion, I concur with its
judgment affirming the trial court.