Atlanta Business Attorney Blog

The Georgia Court of Appeals recently upheld a trial court ruling in the case of Wilks v. Overall Constr. Inc. that the 6 year statute of limitations from O.C.G.A. §9-3-24 applies for lawsuits to be filed in simple construction contract cases. This case makes two extremely important points: (1) people must abide by the time limits contained in the Official Code of Georgia if they want to ensure that their disputes will be heard; and (2) if you suspect something was constructed incorrectly, do NOT wait until you notice problems to have it inspected.

In this case, a homeowner hired a contractor to perform some construction on his home. This work was governed by a written contract signed by the parties. The work was completed on or about July 23, 1999, at which time the homeowner paid the contractor. Within a year, the homeowner began noticing problems, and over the course of the next 5 years, the contractor returned to perform repair work. Even after all of the repairs, the homeowner still noticed construction problems, and finally hired an engineer to inspect the construction in June 2007. The inspection revealed that there were deficiencies in the construction and the materials used, which prompted the homeowner to file suit in July 2007 for breach of contract – almost 8 years after the work was initially completed! Unfortunately for the home owner, he had waited too long to bring suit under the applicable statute of limitations, which resulted in dismissal of his lawsuit.

The important lesson to take from this case is that if you file suit for breach of a simple construction contract, you MUST make sure to do so within 6 years after work was substantially completed. Do NOT simply allow a contractor to make repairs, as the statute of limitations will not be adjusted to run from the most recent repair date. If only the homeowner in the Wilks case had ordered the inspection earlier, he could have filed suit prior to July 2005, thus ensuring that his case was heard.

You go to the used car lot and fall in love with a specific car. You decide you absolutely have to have that car, but you only want it if it has never been in an accident. The salesman clearly tells you that the car is in perfect condition and has never been wrecked, so you happily sign the contract to purchase the car and drive it off the lot that day. Soon after purchasing the car, you take it to the mechanic for body and engine trouble, and you find out that the car had indeed been in an accident and that the salesman lied. What do you do?

This exact fact scenario occurred in the seminal case of City Dodge, Inc. v. Gardner, where the court stated the principle that the injured party gets to choose his remedy. The Georgia Court of Appeals stated in that case: “Where the purchaser of personal property has been injured by the false and fraudulent representations of the seller as to the subject matter thereof, he ordinarily has an election whether to rescind the contract, return the article, and sue in tort for fraud and deceit, or whether to affirm the contract, retain the article, and seek damages resulting from the fraudulent misrepresentation.”

The court in City Dodge, Inc. held that rescission was accomplished in the following scenario: When the buyer discovered the misrepresentation, “he notified defendant dealer that he was rescinding the purchase by reason of fraud simultaneously making an unconditional return of the automobile. When the dealer refused to accept such delivery the buyer made it a continuing tender by informing defendant he would place the car at his residence where it would remain and would not be used and where dealer was authorized to take possession thereof at any time.”

Continue reading "Fraudulent Representations involving Purchasing a Car - What should I do?" »

The Georgia Court of Appeals recently upheld a trial court ruling in the case of Wilks v. Overall Constr. Inc. that the 6 year statute of limitations from O.C.G.A. §9-3-24 applies for lawsuits to be filed in simple construction contract cases. This case makes two extremely important points: (1) people must abide by the time limits contained in the Official Code of Georgia if they want to ensure that their disputes will be heard; and (2) if you suspect something was constructed incorrectly, do NOT wait until you notice problems to have it inspected.

In this case, a homeowner hired a contractor to perform some construction on his home. This work was governed by a written contract signed by the parties. The work was completed on or about July 23, 1999, at which time the homeowner paid the contractor. Within a year, the homeowner began noticing problems, and over the course of the next 5 years, the contractor returned to perform repair work. Even after all of the repairs, the homeowner still noticed construction problems, and finally hired an engineer to inspect the construction in June 2007. The inspection revealed that there were deficiencies in the construction and the materials used, which prompted the homeowner to file suit in July 2007 for breach of contract – almost 8 years after the work was initially completed! Unfortunately for the home owner, he had waited too long to bring suit under the applicable statute of limitations, which resulted in dismissal of his lawsuit.

The important lesson to take from this case is that if you file suit for breach of a simple construction contract, you MUST make sure to do so within 6 years after work was substantially completed. Do NOT simply allow a contractor to make repairs, as the statute of limitations will not be adjusted to run from the most recent repair date. If only the homeowner in the Wilks case had ordered the inspection earlier, he could have filed suit prior to July 2005, thus ensuring that his case was heard.

In a case of first impression, the Georgia Court of Appeals decided that Georgia employees who participate in their Georgia company’s ESOP can qualify for certain shareholder rights in their company even though they do not hold actual shares in the company. In this case, the former part-owner of Kelley Manufacturing Co.’s ("KMC") had retired and two employees within the KMC stepped up to become the new Chairman of the Board of Directors (“Chairman”) and Chief Executive Officer (“CEO”). Over the course of a few months, the former owner became dissatisfied at how the new Chairman and CEO were running the business. Using proxies from the other employees, he had the Chairman and CEO removed from office. While the employees were fired from their positions within the company, they still held onto their interests in the ESOP.

OCGA § 14-2-140 (27) defines "shareholder" as "the person in whose name shares are registered in the records of a corporation or the beneficial owner of shares to the extent of the rights granted by a nominee certificate on file with a corporation." OCGA § 14-2-1602 (g) also provides that, for "purposes of this Code section, ‘shareholder’ includes a beneficial owner whose shares are held in a voting trust or by a nominee on his behalf." In this case, the fired employees did not technically fall under these definitions, because 100 % of the shares of KMC are owned by the ESOP, which is the registered owner in corporate documents. There was no nominee or voting trust on file with KMC regarding these shares. The statement of account issued yearly to each ESOP participant, however, reflects that the account is measured in "shares" vested in that participant. Also, the ESOP participants were referred to as shareholders.

The Georgia Court of Appeals was persuaded by case law from other states around the country that have found that ESOP participants are the beneficial owners of shares in a company and entitled to exercise shareholders’ rights, including inspection of the corporate records.

BUSINESS LAW: Corporate Documents, Shareholder’s Rights; CIVIL PRACTICE: Standing; GOVERNMENT: Pre-emption; EMPLOYMENT: ERISA
Kelley Mfg. Co. v. Martin
A08A1891 (civil case)
February 20, 2009
Smith, Presiding Judge.
09 FCDR 631 (03/13/09)