Devin B. Strickland v. Arch Insurance Company

• Court: Court of Appeals for the Eleventh Circuit
• Decided: January 9, 2018
• Docket: 17-10610
• Status: Unpublished

Opinion

Case: 17-10610 Date Filed: 01/09/2018 Page: 1 of 10

[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT ________________________

No. 17-10610 Non-Argument Calendar ________________________

D.C. Docket No. 5:14-cv-00070-LGW-RSB

DEVIN B. STRICKLAND,

Plaintiff-Appellant,

versus

ARCH INSURANCE COMPANY,

Defendant-Appellee. ________________________

Appeal from the United States District Court for the Southern District of Georgia ________________________

(January 9, 2018)

Before TJOFLAT, MARCUS and WILLIAM PRYOR, Circuit Judges.

PER CURIAM:

Devin Strickland appeals the district court’s grant of summary judgment in

favor of Arch Insurance Company (“Arch”) on Strickland’s action to recover on a

payment bond issued by Arch. Specifically, the district court concluded that Case: 17-10610 Date Filed: 01/09/2018 Page: 2 of 10

Strickland’s claims on the bond were time-barred. On appeal, Strickland argues

that the district court erred in granting summary judgment on this basis. After

careful review, we affirm.

The relevant, undisputed facts are these. Strickland provided sand to

Douglas Asphalt Paving Company (“Douglas”) for a Georgia Department of

Transportation (“GDOT”) road improvement project. The GDOT’s 2001 Standard

Specifications for the Construction of Transportation Systems were incorporated

into Douglas’s contract with GDOT. According to the Standard Specifications, the

contractor was obligated to provide any repairs until GDOT issued written final

acceptance. The contractor also had to furnish documentary proof of payment to

material suppliers. Arch issued a payment bond on behalf of Douglas for the

project in 2003. Arch agreed to pay all entities that supplied materials to Douglas.

In 2007, Douglas was no longer authorized to work on the project because GDOT

declared that the company was in default. In accordance with its performance

bond obligations, Arch took over Douglas’s work and arranged for completion of

the project by a third-party contractor. Strickland did not supply sand after

Douglas was removed from the project.

In August 2010, GDOT determined that the work on the project was

substantially complete and ready for final inspection. In September 2010, the

third-party contractor requested final inspection, and it was performed. The punch

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list generated from the inspection -- listing work not yet conforming to the contract

specifications -- was complete by September 2011. In early 2012, Arch and its

contractor requested that GDOT accept the road improvement project for

maintenance. In its request, Arch told GDOT that the project had been open to

unrestricted traffic, all pay items were complete, and all punch-list work was

complete. In February 2012, a GDOT area engineer requested maintenance

acceptance because the project had been satisfactorily completed. In March 2012,

GDOT accepted project maintenance responsibilities retroactive to September

2011. Arch received semi-final payment in July 2012, which was subject to a

review by an auditor. GDOT did not pay any additional money on the project.

In September 2012, Strickland sent a demand letter on Arch’s payment

bond. Arch acknowledged the claim and asked for additional documentation and a

proof of claim. Strickland did not respond to Arch’s requests. In 2014, Strickland

learned that GDOT was preparing to close out the project. A GDOT employee told

Strickland that he needed to file any claims he had immediately, as GDOT would

not close out a project if there was a pending lawsuit. Strickland filed the instant

action in August 2014. Later that month, a GDOT employee stated in an

e-mail that the road improvement project at issue had not yet received final

acceptance and approval. In September 2014, GDOT sent a letter of “final

acceptance,” which stated that the project had “been accepted” by GDOT as of

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April 17, 2012. According to a GDOT representative, the paperwork and close out

of the project took two years to complete; since September 2011, “final

acceptance” of the project had been pending the acquisition of a materials

certificate, which is GDOT paperwork stating that all materials used had been

certified and approved.

On this undisputed record, the district court granted summary judgment in

favor of Arch. It concluded that the one-year statute of limitations had run on

Strickland’s action because no genuine dispute of fact existed about the project

being completed and accepted in September 2011. This timely appeal follows.

We review a district court’s grant of summary judgment de novo, applying

the same legal standard as the district court and construing the facts and drawing

all reasonable inferences therefrom in the light most favorable to the non-moving

party. Josendis v. Wall to Wall Residence Repairs, Inc., 662 F.3d 1292, 1314

(11th Cir. 2011). We will affirm a grant of summary judgment if the movant has

shown, based on our review of the entire record, “that there is no genuine dispute

as to any material fact and the movant is entitled to judgment as a matter of law.”

Fed. R. Civ. P. 56(a). A district court’s interpretation and application of a statute

of limitations presents a legal question that we review de novo. Mississippi Valley

Title Ins. Co. v. Thompson, 802 F.3d 1248, 1252 (11th Cir. 2015).

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We are unpersuaded by Strickland’s argument that the district court erred in

granting summary judgment on statute of limitations grounds. In diversity actions,

we apply the relevant state’s statutes of limitations. Cambridge Mut. Fire Ins. Co.

v. City of Claxton, Ga., 720 F.2d 1230, 1232 (11th Cir. 1983). Under Georgia law,

“[n]o action can be instituted on the payment bonds or security deposits after one

year from the completion of the contract and the acceptance of the public works

construction by the proper public authorities.” O.C.G.A. § 13-10-65. State law

also determines when a diversity action commences for statute of limitations

purposes. See Walker v. Armco Steel Corp., 446 U.S. 740, 752-53 (1980). When

the Supreme Court of Georgia construed the former statute governing bonds for

public contractors (which did not vary in any material way from the current statute)

it held that the one-year statute of limitations period for filing suit on a payment

bond “commences at the completion of the actual construction work and

acceptance thereof by the public authority.” U.S.F. & G. Co. v. Rome Concrete

Pipe Co., 353 S.E.2d 15, 16 (1987) (footnote omitted).

As applied here, Strickland’s argument that the project was not “completed”

until 2014 -- because the Standard Specifications provided that the contractor had

work obligations of maintenance and repair until the issuance of written final

acceptance -- lacks merit. The Supreme Court of Georgia has recognized that

“‘[c]ompletion’ . . . refers not only to total completion, but also to ‘substantial

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completion,’ with only punch-list items remaining to be done.” Id. at 16 n.1. In

Masonry Specialists of Ga., Inc. v. U.S. Fid. & Guar. Co., 616 S.E.2d 103, 105–06

(Ga. App. 2005), the Court of Appeals of Georgia noted that the project at issue

was completed in August 2002, when only punch-list items remained, and the

building was occupied and dedicated. Thus, under Georgia law, this type of

project is not considered incomplete simply because more work might be required.

Georgia courts focus on “completion of the actual construction work.” Rome

Concrete Pipe Co., 353 S.E.2d at 16. Strickland did not provide evidence to

contradict that the road project was substantially complete in August 2010, and the

punch-list items were completed in September 2011, both of which occurred well

over one year before this action was filed.

Nor are we convinced that a genuine dispute of material fact existed

regarding when GDOT “accepted” the work as complete. As we’ve said, the

statute of limitations under Georgia begins running at “the completion of the

contract and the acceptance of the public works construction by the proper public

authorities.” O.C.G.A. § 13-10-65 (emphasis added). Strickland argues that an e-

mail from a GDOT employee showed that the road improvement project had not

been accepted by the public authority in 2014. We disagree. In an October 2014

e-mail, a GDOT employee indicated that the project had “not received final

acceptance and approval.” (Emphasis added). However, this evidence only shows

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that GDOT had not sent written final acceptance at that point. GDOT’s written

final acceptance itself showed that the public authority “accepted” the project as of

April 2012. And a GDOT employee’s deposition testimony indicated that there

was a two-year gap between acceptance and written final acceptance because

GDOT had to complete paperwork and close out the project. Testing of the

materials used was also required. Thus, the undisputed evidence showed that

written final acceptance had not been issued based on GDOT’s internal policy and

procedure, and not because the actual construction work had not been accepted.

The case law is consistent with the language of the statute, which plainly

triggers the limitations period at acceptance, and not final acceptance. So, for

example, while Rome Concrete Pipe Co. only addresses “completion of the

contract,” its reasoning is instructive. 353 S.E.2d at 16. There, the plaintiff argued

that completion under the statute was completion of the contract as determined by

GDOT’s internal procedures. Id. The state high court rejected that argument:

The purpose of the statute in question is to limit the time during which the surety can be held liable for the obligor contractor’s performance of the work or payment of its subcontractors and suppliers. Under the construction urged by Rome, . . . no matter when the general contractor completed the work and when it was accepted by the public authority, the contract would not be complete for purposes of the statute of limitation until the public authority determined it was complete with reference to its own internal policy and procedure. This construction would make it impossible to sue on a public work bond as long as the public authority contended the contract was not complete under its policy and procedures even where the work had been completed as far as the general contractor is concerned, and had 7 Case: 17-10610 Date Filed: 01/09/2018 Page: 8 of 10

been accepted by the public authority. Such a construction is neither fair nor reasonable and is in conflict with the legislative intent underlying the statute.

Id. at 16–17. As with “completion,” if “acceptance” turned on a public authority’s

internal policy and procedure, it would frustrate the purpose of the statute.

Moreover, in Masonry Specialists of Ga., Inc., the Court of Appeals of

Georgia found that the statute of limitations began to run when the project was

accepted, the project was complete save for punch-list items, and the building was

occupied and dedicated, without reference to the public authority’s internal

procedure. 616 S.E.2d at 106. Here, the evidence presented by Strickland only

demonstrated that GDOT had not completed its internal procedure and did not

show that GDOT did not accept the actual construction work. Because the statute

of limitations concerns acceptance of the actual construction work, and not

GDOT’s internal procedure, the August 2014 e-mail did not create a genuine

factual dispute. Rather, the evidence showed that GDOT inspected, accepted for

maintenance, and paid for the actual construction work between 2010 and 2012,

more than one year before Strickland filed suit.

Strickland also claims that the project was not “accepted” more than one

year before he filed suit because the Standard Specifications required maintenance

and repair until GDOT issued written final acceptance, and final acceptance could

not be given until GDOT certified the materials used. This argument parallels

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Strickland’s argument regarding “completion” of the project. However, Georgia

courts have determined that projects were “complete” and “accepted” within the

meaning of the statute where additional work, through a punch-list, could be

required. Id. at 105–06. Further, this argument concerns GDOT’s internal

procedure and not acceptance of the actual construction work.

Finally, we are unpersuaded by Strickland’s argument that the statute of

limitations has not run because the bond at issue remains in “full force and effect”

until all suppliers are paid by the contractor, and Strickland has not been paid. As

Arch points out, this interpretation of the statute of limitations would render the

statute meaningless because the limitations period would never begin where a

supplier or subcontractor had not been paid. In addition, in Augusta Iron & Steel

Works, Inc. v. U.S. Fid. & Guar. Co., 790 F.2d 852, 853 (11th Cir. 1986), a case

cited with approval by the Georgia Supreme Court in Rome Concrete Pipe Co.,

353 S.E.2d at 16, we rejected the argument that “completion of the contract”

within the meaning of the former statute governing bonds for public contractors

should be construed to include final payment for construction work. As we’ve

noted, the statute of limitations begins to run “at the completion of the actual

construction work and acceptance thereof by the public authority,” Rome Concrete

Pipe Co., 353 S.E.2d at 16, and not when the bond is no longer in effect.

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In short, the district court did not err in determining that the statute of

limitations had run on Strickland’s bond claims.

AFFIRMED.