FIRST DIVISION BROWN, C. J., BARNES, P. J., and WATKINS, J.
NOTICE: Motions for reconsideration must be physically received in our clerk’s office within ten days of the date of decision to be deemed timely filed. https://www.gaappeals.us/rules
March 16, 2026
In the Court of Appeals of Georgia A25A1894. ICH 3 ATLANTA SUGARLOAF APARTMENTS, L. P. v. HART GAUGLER AND ASSOCIATES, INC. A25A1895. ICH 3 ATLANTA SUGARLOAF APARTMENTS, L. P. v. WAKEFIELD BEASLEY & ASSOCIATES, INC. et al.
BARNES, Presiding Judge.
These companion appeals arise from the construction of a mixed use apartment
complex purchased by ICH 3 Atlanta Sugarloaf Apartments, L. P. (“ICH”). In Case
No. A25A1894, ICH appeals the grant of summary judgment to Hart Gaugler and
Associates (“Hart Gaugler”) in its professional negligence claim against that
structural engineering firm,. In Case No. A25A1895, ICH appeals the trial court’s
grant of summary judgment to Wakefield Beasley & Associates (“WBA”) in ICH’s
defective design and construction claim against that architectural firm. For the reasons
that follow, we reverse the judgment in both cases. “On appeal from a trial court’s grant or denial of summary judgment, our
review of the record is de novo, and we construe the facts and all inferences drawn
from them in the light most favorable to the nonmoving party.” Centurion Indus. v.
Naville-Saeger, 352 Ga. App. 342, 343 (834 SE2d 875) (2019) (citation and
punctuation omitted).
So viewed, the record demonstrates that in 2017, Sugarloaf Walk Apartments,
L. P., a non-party, hired WBA to provide architectural services related to the
construction of Sugarloaf Walk Mixed Use Project (“the Project”), a five building
apartment complex. WBA subcontracted Hart Gaugler to perform structural
engineering services in connection with the project. The Project was completed in
2019, and in 2020, ICH purchased the finished Project from Sugarloaf Walk
Apartments. In August of 2021, there were reports of moisture intrusion at various
locations on the property. A subsequent “Exterior Condition Survey” identified
various issues with all five buildings, including water intrusion and moisture damage,
structural defects, and other issues. ICH filed the complaint against WBA, Hart
Gaugler, and multiple other parties involved in construction of the property. ICH
alleged that WBA and Hart Gaugler were negligent in “preparing designs, plans and
2 specifications for the construction” of the Project, and had a duty, as licensed design
professionals, to, among other things, perform work in accordance with industry
standards, and had breached that duty. ICH further alleged that the negligent design
work was responsible for safety issues and extensive property damage to the Project’s
buildings, including shrinkage of wood framing, deformities in the window sills and
flashing, and reverse sloping with water being directed to the exterior walls. ICH also
alleged that the defects and deficiencies in the plans and design documents of WBA
and Hart Gaugler “caused damage at various locations where contractors had installed
their work in compliance with the plans and design documents.” Other allegations
included that Hart Gaugler and WBA’s negligently prepared design plans and
documents were not clear and were subject to foreeseeable misinterpretation. ICH
also alleged that WBA negligently performed construction phase services during the
construction.
Regarding damages, ICH claimed that,
actual damages include, but are not limited to, (1) the costs of identifying the cause of the property damage in the Sugarloaf Project and designing proper remediation; (ii) the costs of removing and re-placing non- damaged property as needed to expose and repair damaged materials and the defective conditions causing such damage; (iii) the costs of repairing
3 damaged property; (iv) the costs associated with financing remedial work; (v) the loss of use of portions of the Sugarloaf Project; (vi) the loss of revenue resulting from the pervasive defects; (vii) the cost of reputational harm and any diminution in the value of the Sugarloaf Project resulting from the pervasive and serious defects and damage; and (viii) attorney fees and litigation expenses incurred in bringing these claims, all caused by acts of the Defendants.
ICH’s experts averred to numerous instances of professional negligence alleged
to have caused damage to the Property. Among the extensive findings listed in his
report, the engineering expert averred that WBA’s plans were “unclear, inconsistent,
incomplete and ambiguous to such an extent that they failed to guard against the
foreseeable possibility that a contractor could misinterpret or fail to follow [WBA’s]
intent.” The expert also averred that
[c]ritical portions of [WBA’s] plans and specifications for the roof, exterior walls, balconies, elevated walkways, below grade waterproofing, framing, and other portions of the exterior building envelope of the buildings in [the Project] were not clear and definitive, and were instead incomplete, inconsistent, ambiguous and or subject to foreseeable misinterpretation.
The expert noted that “multiple contractors performed careless work without seeking
clarifications from [WBA],” and opined “to a reasonable degree of certainty” that
4 “[WBA] delivered drawings that, when followed, resulted in a Project that violates the
building code because the plans fail to provide an adequate exterior wall envelope
design.”
ICH’s architecture expert averred that he “noted the same instances of
defective plans, that, when constructed lead to defective construction.” He further
averred that for the same reasons identified in the engineer’s affidavit, “the
architect’s contract administration services failed to meet the standard of care by
ignoring, failing to reject, and ultimately approving significant defective construction
in place.” He opined that “the deviations from the standard of care amount to
professional negligence by [WBA].”
The trial court granted Hart Gaugler and WBA’s subsequent motions for
summary judgment, and these appeals ensued.
Case No. A25A1894.
1. In its motion for summary judgment, Hart Gaugler asserted, among other
things, that ICH’s claims “are tort claims (negligence), and the alleged duties arise
only out of the Hart Gaugler agreement with WBA. The undisputed facts demonstrate
that [ICH] is not in privity of contract with Hart Gaugler. Therefore, [ICH’s] claims
5 are barred by OCGA § 51-1-11 (a).[1] Hart Gaugler owes [ICH] no duty with regard to
the Sugarloaf Walk Project[.]” In opposing summary judgment ICH argued, among
other things, that there remained material issues of fact that wood shrinkage was
responsible for damage to the property, and that Hart Gauger did not adequately
accommodate for the shrinkage in its engineering plans.
Following a hearing on the motion, the trial court granted summary judgment
to Hart Gaugler. The trial court found that,
[ICH] seeks to recover the costs to repair and remediate the Sugarloaf Walk Apartment Project, which costs are economic losses as a matter of law. [ICH’s] professional negligence claim is not subject to any recognized exception under Georgia law. Since [ICH] seeks to hold Hart Gaugler liable for violation of duties that arise from the contract between
1 Except as otherwise provided in this Code section, no privity is necessary to support a tort action; but, if the tort results from the violation of a duty which is itself the consequence of a contract, the right of action is confined to the parties and those in privity to that contract, except in cases where the party would have a right of action for the injury done independently of the contract and except as provided in Code Section 11-2-318.
OCGA § 51-1-11 (a). 6 Hart Gaugler and WBA, and has no privity with that contract and there is no exception, [ICH’s] negligence claim is barred by OCGA § 51-1-11 (a).
ICH contends that the trial court erred in finding that its claimed damages were
economic losses and that lack of privity barred the claims under OCGA § 51-1-11 (a).
ICH further contends that its claims fall within certain exceptions to the privity
requirement, including the property-damage exception and the independent
professional duty exception to the economic loss rule. Thus, ICH asserts, contrary to
the trial court’s order, privity has generally not been required to support negligence
claims against construction professionals involving damage to property. The
professional duties at issue arise independently of any contract, ICH contends, and
our laws recognize such breach as an exception to the privity requirement in
construction cases involving property. Relatedly, ICH argues that because the
professional duties at issue are independent of a contract, the trial court’s application
of the economic loss rule was inapplicable.
Here, the trial court simply found that per ICH’s purported “admissions in
judicio,” ICH is not in privity with the contract between Hart Gaugler and WBA to
perform structural engineering. It concluded that ICH’s losses were economic losses
7 as a matter of law, and that “[s]ince [ICH] seeks to hold Hart Gaugler liable for
violation of duties that arise from the contract between [Hart Gaugler] and WBA, and
has no privity with that contract and there is no exception, [ICH’s] negligence claim
is barred by OCGA § 51-1-11 (a).”
While privity of contract is generally not necessary to support an action in tort, if the tort results from the violation of a duty which is itself the consequence of a contract, the right of action is confined to the parties and those in privity to that contract, except in cases where the party would have a right of action for the injury done independently of the contract. Thus, where privity of contract between the parties does not exist, to constitute a tort, the duty must arise independent of the contract.
Dominic v. Eurocar Classics, 310 Ga. App. 825, 830 (2) (714 SE2d 388) (2011)
(citations and punctuation omitted). The general rule applied by the Georgia courts
is that one cannot be held liable for professional negligence to a party not in privity
with the professional. Howard v. Dun & Bradstreet, 136 Ga. App. 221 (220 SE2d 702)
(1975). However, Georgia “recogniz[es] that under certain circumstances,
professionals owe a duty of reasonable care to parties who are not their clients.”
Driebe v. Cox, 203 Ga. App. 8, 9 (1) (416 SE2d 314) (1992). Those circumstances have
8 included, but are not limited to personal injuries sustained on the subject property,
negligent misrepresentation, or damages to property other than the subject project.
OCGA § 51-1-11 (a) explicitly provides for an exception to the general rule in “cases
where the party would have a right of action for the injury done independently of the
contract”– which, in this case, ICH argues, is the performance of its professional
duties.
Where, as here, the moving party
will not bear the burden of proof at trial[, it] need not affirmatively disprove the nonmoving party’s case, but may point out by reference to the evidence in the record that there is an absence of evidence to support any essential element of the nonmoving party’s case. Where a defendant moving for summary judgment discharges this burden, the nonmoving party cannot rest on its pleadings, but rather must point to specific evidence giving rise to a triable issue.
Cowart v. Widener, 287 Ga. 622, 623-624 (1) (a) (697 SE2d 779) (2010) (citations and
Here, ICH presented evidence that Hart Gaugler’s professional duties arise
independently of any contract and the claims were an exception to the privity
requirement in construction cases involving property. The issue, thus, was not as the
9 trial court concluded – the acknowledged lack of privity between ICH and Hart
Gaugler – but whether Hart Gaugler was liable for professional negligence.
Thus, as there remained a genuine issue as to this material fact, the trial court
erred in granting summary judgment to Hart Gaugler.
Case No. A25A1895.
2. In the order granting summary judgment to WBA, the trial court’s findings
of fact included, relevantly, that while WBA’s motion for summary judgment was
pending, ICH filed its 8th amended complaint in which it alleged that WBA
“negligently performed construction phase services;” ICH’s pleading in paragraph
14 of the 8th amended complaint constituted “a judicial admission that ‘work was not
performed in accordance with the plans and design documents and/or ... was
improperly performed by contractors in violation of the building code and industry
standards’”; and, “ICH has not withdrawn the allegations that the construction was
not in accordance with the plans and documents.”
The court also included as factual findings the following reliance and release
provisions from ICH’s purchase and sale agreement:
(a) As a material part of the consideration for this Agreement, Purchaser agrees to accept the Property on an “As is” and “Where is” basis, with
10 all faults and any and all latent and patent defects, and without any representations or warranty, all of which Seller hereby disclaims, except for Seller’s Warranties. Except for Seller’s warranty, no warranty or representation is made ... by Seller as to (a) fitness for any particular purpose, (b) merchantability, (c) design, (d) quality, (e) condition, (f) operation or income, (g) compliance with drawings or or specifications , (h) absence of defects, (i) absence of hazardous or toxic substances, (j) absence of faults, (k) flooding, or (l) compliance with laws and regulations iincluding, without limitation, those relating to health, safety, and the environment. Purchaser acknowledges that Purchaser has entered into this Agreement with the intention of making and relying upon its own investigation of the physical, environmental, economic use, compliance, and legal condition of the Property and that Purchaser is not now relying, and will not later rely, upon any disclosures, representations, or warranties (whether express or implied) made by Seller or anyone acting or claiming to act, by, through or under or on Seller’s behalf concerning the Property, except for Seller’s warranties.
and,
(b) Consistent with the foregoing, and subject solely to the Seller’s Warranties, effective as of the Closing Date, Purchaser, for itself and its agents, affiliates, successors, and assigns, hereby releases and forever discharges, waives, and exonerates Seller, Seller’s Affiliates, and the agents, affiliates, members, partners, officers, subsidiaries, successors and assigns of each of them (collectively the “Released Parties”) from any and all liabilities, obligations, rights, claims, causes of actions, and
11 demands at law or in equity, whether known or unknown at the time of this Agreement, which Purchaser has or may have in the future, arising out of the physical, environmental, economic or legal condition of the Property, including without limitation, all claims in tort or contract... . Purchaser, upon Closing, shall be deemed to have waived, exonerated, relinquished and released Seller and all other Released Parties from and against any and all matters affecting the Property... [.]
The trial court’s subsequent conclusions of law included, relevantly, that
factual assertions in pleadings and pretrial orders are admissions in judicio, and may
be considered for summary judgment; the admission is binding upon the party and the
party is estopped from denying the admission or introducing evidence to controvert
the admission; one cannot be held liable for professional negligence to a party not in
privity with the professional; personal injury is an exception to this privity
requirement; economic losses are not excepted, and ICH’s losses are economic;
negligent representation is an exception to the economic loss rule, but the exception
is not applicable to ICH’s negligence claim; in the negligent design claim, failure to
plead that the construction was completed in accordance with the plans and
specifications is dispositive; the inquiry into the repair of the building envelope was
dispositive; and that the construction administration claim fails in light of the reliance
12 language in the purchase and sale agreement that ICH signed in release of the Seller
and its agents, and that WBA was an agent of the Seller.
3. ICH contends that the trial court erred in finding that WBA was shielded
form design defect liability based on ICH’s purported pleading that the work was not
completed according to the plans. It asserts that the pleading was misconstrued, and
that the trial court ignored the pleadings and evidence demonstrating that portions of
the damage occurred where the work was done in accordance with WBA’s plans and
ignored Georgia law that the contractor and design professional are both liable where
a contractor negligently fails to perform the work in conformity with plans due to its
lack of clarity and definiteness.
Withdrawal or amendment prevents the original admissions from serving as
solemn admissions in judicio. See Richmond County v. Sibert, 218 Ga. 209, 212 (1) (a)
(126 SE2d 761) (1962). However, “[w]here the pleading has been stricken, the
admission contained therein remains to be utilized as evidence of fact which the
admitting party can explain but may be unable to conclusively refute.” Strozier v.
Simmons U.S.A. Corp., 192 Ga. App. 601, 602–603 (385 SE2d 677) (1989). Thus, ICH
having made the admission in its original pleadings, “could not establish as a matter
13 of law that the admission was untrue, but only could raise an issue of fact for a jury to
determine.” Id. at 603. It is uncontroverted that ICH subsequently filed an amended
8th complaint alleging damage to the property in various places although the work was
done in conformity with WBA’s design plans and documents. Thus, ICH was not
prohibited from raising an issue of fact about whether the design plans were properly
followed in the construction. See Versico, Inc. v. Engineered Fabrics Corp., 238 Ga. App.
837, 839 (1) (520 SE2d 505) (1999) (noting that admissions may be considered
conclusive for purposes of summary judgment and, until withdrawn or amended, estop
the party from denying them or introducing any evidence to controvert them).
4. ICH also contends that the trial court erred in finding that failure to follow
plans cuts off any negligent design claim. In its order granting summary judgment and
referencing ICH’s pleading, the trial court concluded that even with evidence of
negligent design, the failure to plead that the construction was done in accordance
with the plans and specifications is dispositive. “When a case is based upon negligence
of an architect or engineer in preparing plans, it is essential that the plaintiff prove that
construction of the project designed was accomplished in compliance with the plans
and specifications furnished by the defendant, at least with respect to that portion of
14 the work claimed to be defective.” Covil v. Robert & Co. Associates, 112 Ga. App. 163,
168 (2) (144 SE2d 450) (1965). However, in a case alleging negligence of an engineer
or architect in preparing plans, the plaintiff bears the burden of demonstrating
compliance with those plans only “with respect to that portion of the work claimed
to be defective.”Id. at 168 (2). Thus, the trial court erred in concluding that failure to
plead that the construction was done in accordance with the plans and specifications
is dispositive. Moreover, when as here, the evidence creates a fact question as to this
issue, summary judgment is precluded.
3. ICH also asserts as error the trial court’s grant of summary judgment to WBA
on the issue of privity of contract between ICH and WBA. The trial court’s
conclusion that the lack of privity between ICH and WBA precluded ICH’s claims
and its subsequent grant of summary judgment to WBA was error. While Georgia
courts generally hold that one cannot be held liable for professional negligence to a
party not in privity with the professional, Howard, 136 Ga. App. at 221, “under certain
circumstances, professionals owe a duty of reasonable care to parties who are not their
clients.” Driebe, 203 Ga. App. at 9 (1). To that end, despite a lack of privity, the claims
are not necessarily precluded because they “arise not from a breach of contract claim
15 but from a breach of a duty implied by law to perform the work in accordance with
industry standards.” Jai Ganesh Lodging, Inc. v. David M. Smith, Inc., 328 Ga. App.
713, 719 (760 SE2d 718) (2014). ICH’s experts averred to numerous instances of
professional negligence alleged to have caused damage to the Property, thus
presenting a material issue of fact as to whether WBA breached a duty implied by law
to perform the work in accordance with industry standards.
Accordingly, the trial court erred in granting summary judgment to WBA upon
concluding that the lack of privity was dispositive.
5. Likewise, because material issues of facts remain regarding whether WBA
was an “agent” for purposes of the application of the release clause in the purchase
and sale agreement between ICH and the original owner the trial court also erred in
granting summary judgment upon that basis.2
Judgments reversed. Brown, C. J., concurs. Watkins, J., concurs in judgment only.
2 We have reviewed the trial court’s additional alternative grounds for granting summary judgment and find that there are material issues of facts precluding such judgment. 16