Sierra Craft, Inc. v. T. D. Farrell Construction, Inc.

638 S.E.2d 815, 282 Ga. App. 377, 2006 Fulton County D. Rep. 3485, 2006 Ga. App. LEXIS 1398
CourtCourt of Appeals of Georgia
DecidedNovember 14, 2006
DocketA06A1442
StatusPublished
Cited by10 cases

This text of 638 S.E.2d 815 (Sierra Craft, Inc. v. T. D. Farrell Construction, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Sierra Craft, Inc. v. T. D. Farrell Construction, Inc., 638 S.E.2d 815, 282 Ga. App. 377, 2006 Fulton County D. Rep. 3485, 2006 Ga. App. LEXIS 1398 (Ga. Ct. App. 2006).

Opinion

Bernes, Judge.

This case requires us to resolve several questions relating to a payment bond obtained and recorded by appellee T. D. Farrell Construction, Inc. (“Farrell”) as part of the construction of a Wal-Mart Superstore in Decatur. We reverse the trial court’s declaration that appellant Sierra Craft, Inc. d/b/a Pacific Fire Protection (“Sierra”) was limited to claiming $20,000 under the payment bond, the specific amount listed in Sierra’s notice to contractor that was sent to Farrell. We also reverse the trial court’s declaration that the payment bond served as substituted collateral for the construction project and discharged the materialmen’s lien filed by Sierra, since we conclude that the payment bond did not meet the statutory requirements of a lien release bond. We affirm in all other respects.

Appellee Farrell was the general contractor for the Wal-Mart construction project. Pursuant to its contractual obligations with Wal-Mart, Farrell obtained and recorded a payment bond for $7,603,103, which represented the full amount of Farrell’s contract price for the construction work. The surety on the payment bond was Travelers *378 Casualty and Surety Company of America (“Travelers”). The payment bond was for the benefit of all persons supplying labor, materials, supplies, services, utilities and equipment in the prosecution of the work provided under the construction contract. The payment bond explicitly stated that “any of such persons or entities may maintain independent actions upon this [b]ond. . . .”

Farrell subcontracted with The VP Group for provision of a fire sprinkler for the construction project. In turn, The VP Group allegedly ordered and received fire sprinkler pipes, valves, and fittings for the project from appellant Sierra. Consequently, Sierra sent Farrell a notice to contractor in which it maintained that it was providing fire sprinkler materials for the project for a contract price of $20,000 in connection with improvements being made by The VP Group.

Ultimately, The VP Group failed to complete construction of the fire sprinkler system or to fully compensate Sierra for the materials it received. 1 Sierra subsequently sent a letter to Farrell and Travelers asserting that Sierra had provided materials to The VP Group for use on the project, that Sierra was owed $79,692.10, and that Sierra was demanding payment by Farrell and Travelers under the payment bond. Sierra also filed a $79,692.10 claim of materialmen’s lien against the project property.

Thereafter, Farrell filed a complaint against Sierra for declaratory judgment. Among other things, Farrell sought a declaration that any claim or lien by Sierra against the project was limited to $20,000, the amount specified in Sierra’s notice to contractor. Farrell also sought a declaration that the payment bond served as substituted collateral for the real estate underlying the project, and that, as a result, Sierra’s lien claim was discharged by the bond.

Sierra answered and asserted a counterclaim for monies owed under the payment bond. Sierra also successfully moved to add Travelers as a counterclaim defendant, and Travelers then asserted its own counterclaim against Sierra for declaratory judgment. Finally, Sierra moved to dismiss Farrell’s and Travelers’ claims for declaratory judgment and moved for summary judgment on its counterclaim.

After conducting a hearing, the trial court entered an order denying Sierra’s motion to dismiss and motion for summary judgment. In its order, the trial court also declared that Sierra’s payment bond claim was limited to $20,000, that the bond served as substituted collateral for the construction project, and that the bond *379 discharged the materialmen’s lien filed by Sierra. It is from this order that Sierra now appeals. 2

1. Sierra claims that the trial court erred in denying its motion to dismiss the declaratory judgment action because Farrell did not face uncertainty or insecurity with respect to its rights. We disagree.

The purpose of the Declaratory Judgment Act is “to settle and afford relief from uncertainty and insecurity with respect to rights, status, and other legal relations.” (Citation and punctuation omitted.) Morgan v. Guaranty Nat. Cos., 268 Ga. 343, 344 (489 SE2d 803) (1997); OCGA § 9-4-1. A controversy is justiciable so as to entitle a plaintiff to declaratory relief if the interested parties assert adverse claims upon an accrued state of facts. See Lott Investment Corp. v. City ofWaycross, 218 Ga. 805, 807 (1) (130 SE2d 741) (1963); OCGA § 9-4-2 (a). Furthermore, superior courts are entitled to enter declaratory judgment

to determine and settle by declaration any justiciable controversy of a civil nature where it appears to the court that the ends of justice require that such should be made for the guidance and protection of the petitioner, and when such a declaration will relieve the petitioner from uncertainty and insecurity with respect to his rights, status, and legal relations.

(Citation, punctuation and footnote omitted.) East Beach Properties v. Taylor, 250 Ga. App. 798, 802 (3) (552 SE2d 103) (2001). In contrast, declaratory relief is not available

where the rights of the parties have already accrued and there are no circumstances showing any necessity for a determination of the dispute to guide and protect the plaintiff from uncertainty and insecurity with regard to the propriety of some future act or conduct, which is properly incident to his alleged rights and which if taken without direction might reasonably jeopardize his interest. . . .

Morgan v. Guaranty Nat. Cos., 268 Ga. at 344.

Here, the record reflects that Farrell faced uncertainty as to the legal effect of the payment bond, namely, whether it served as substitute collateral that discharged Sierra’s lien claim. Farrell also faced uncertainty as to whether Sierra’s claim was limited to the specific amount Sierra had set forth in its notice to contractor. *380 Farrell needed direction on these issues to determine whether it had to take additional steps to secure a different type of payment bond in order to properly discharge Sierra’s lien (see OCGA § 44-14-364, discussed infra), and also so that it could clarify its potential indemnification obligations and/or liability to Wal-Mart under the construction project contract. Accordingly, the trial court did not err in denying Sierra’s motion to dismiss the declaratory judgment action filed by Farrell. See, e.g., Adams v. City of Ila, 221 Ga. App. 372, 373 (2) (471 SE2d 310) (1996) (plaintiff needed the “lights turned on before stepping into darkness, and a declaratory judgment was the proper remedy”) (citation and punctuation omitted). Compare Drawdy v. Direct Gen. Ins. Co., 277 Ga.

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Bluebook (online)
638 S.E.2d 815, 282 Ga. App. 377, 2006 Fulton County D. Rep. 3485, 2006 Ga. App. LEXIS 1398, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sierra-craft-inc-v-t-d-farrell-construction-inc-gactapp-2006.