Court Opinion

ID: 2963133
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:06:55.326739+00
Date Added: 2024-06-11T12:46:20.734067
License: Public Domain

THIRD DIVISION
                             ELLINGTON, P. J.,
                        DILLARD and MCFADDEN, JJ.

                   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.
                               http://www.gaappeals.us/rules

                                                                 September 16, 2015

In the Court of Appeals of Georgia
 A15A1097. TALBOT CONSTRUCTION, INC. v. TRIAD
     DRYWALL, LLC.

      ELLINGTON, Presiding Judge.

      This case concerns a construction subcontract between Appellee Triad Drywall,

LLC (“Triad”) and Appellant Talbot Construction, Inc. (“Talbot”). Alleging Talbot

never compensated Triad for services rendered, Triad filed suit in the Superior Court

of Forsyth County for breach of contract, unjust enrichment, and quantum meruit.

Talbot answered without asserting a related claim against Triad for breach of contract

and later sought leave to assert the omitted compulsory counterclaim by amendment.

After a hearing, the trial court denied Talbot’s motion for leave to add the

counterclaim. Pursuant to this Court’s grant of Talbot’s application for interlocutory

review, Talbot appeals, contending Triad made no showing that it would be
prejudiced by the addition of the counterclaim, and, therefore, the trial court abused

its discretion in denying Talbot leave to assert the omitted compulsory counterclaim

under the “when justice requires” provision of OCGA § 9-11-13 (f).1 For the reasons

explained below, we vacate the trial court’s ruling and remand this case for

reconsideration of Talbot’s motion for leave to set up its omitted counterclaim.

      Talbot avers that on March 2, 2011, it entered into a contract with Wal-Mart

Stores, Inc. (“Wal-Mart”), whereby Talbot agreed to provide labor, equipment, and

materials for a remodeling project at a Wal-Mart store in Snellville. In consideration

for Talbot’s remodeling work on the project, Wal-Mart agreed to pay Talbot

$924,098. A key component of the project included the removal of old drywall and

the installation of new drywall. According to Wal-Mart’s schedule, Talbot had only

sixty days to complete all of the remodeling work, and it could only work during

specified times when the store was closed to the public. Additionally, Talbot was

required to proceed in a very specific sequence because Wal-Mart did not want the

remodeling project visible to its customers or for the construction to interfere with its

daily store operations.

      1
         “When a pleader fails to set up a counterclaim through oversight,
inadvertence, or excusable neglect, or when justice requires, he may by leave of court
set up the counterclaim by amendment.” OCGA § 9-11-13 (f).

                                           2
      The project was scheduled to commence on April 17, 2011. On that day or the

next, Talbot’s original drywall subcontractor notified Talbot it would not be able to

perform the drywall replacement as they had agreed. Talbot’s project manager

contacted Triad on April 19, 2011, to discuss having Triad take over the drywall

work. Talbot agreed to pay Triad $29,000 and, due to the time constraints, Triad

agreed to commence work that night. Talbot sent Triad a written subcontract for the

work, and Triad’s project manager executed the subcontract on April 20, 2011. Triad

did not return the subcontract to Talbot until after April 26, 2011, however, and did

not commence the project until that day. According to Talbot, other aspects of the

remodeling work, such as priming and painting, trim installation, and other interior

finish work, could only proceed efficiently and in accordance with the contract

requirements if Triad completed the drywall work in a timely manner, which it failed

to do. Triad’s failure to perform the drywall replacement on schedule prevented

Talbot from completing the overall remodeling project on time. Because the project

as a whole fell behind schedule, Wal-Mart defaulted Talbot, and terminated its

contract. Wal-Mart completed the unfinished work and back-charged Talbot

$73,763.80 for its costs and expenses.

                                         3
      On January 26, 2012, Triad commenced a suit against Talbot, claiming, inter

alia, that Talbot owed it $41,251 under the subcontract. Talbot answered without

asserting any counterclaim against Triad. Over two years after filing its answer and

defenses, Talbot filed an amended answer to Triad’s complaint and averred as an

additional affirmative defense that Triad had materially breached its subcontract by

failing to perform all conditions precedent to payment. In addition, Talbot contended

Triad’s claims were barred or had to be reduced by a setoff of Talbot’s damages that

were directly and proximately caused by Triad’s breach of its subcontract. Talbot then

filed a motion for leave to set up its omitted counterclaim pursuant to OCGA § 9-11-

13 (f). Talbot argued that Triad would not be prejudiced thereby and that justice

required that its amendment be allowed. Triad opposed Talbot’s motion, arguing

Talbot was not entitled to belatedly assert its counterclaim because it failed to

exercise due diligence in asserting the counterclaim in a timely manner and it (Triad)

would be prejudiced by the proposed amendment.

       Under the Civil Practice Act, “[c]ompulsory counterclaims, as well as

affirmative defenses, must be asserted in a defendant’s answer or responsive

pleading.” (Citation omitted.) Riggio v. Lawson, 204 Ga. App. 774, 775 (1) (420

                                          4
SE2d 613) (1992). See OCGA § 9-11-13 (a).2 Generally, “[t]he failure to plead a

compulsory counterclaim bars a party from asserting that claim in a subsequent

action.” Kitchens v. Lowe, 139 Ga. App. 526, 527 (1) (228 SE2d 923) (1976). OCGA

§ 9-11-13 (f), however, allows a pleader “by leave of court” to set up a counterclaim

that was omitted from its answer “through oversight, inadvertence, or excusable

neglect, or when justice requires[.]” As we explained in Blount,

      [t]he courts should be very liberal in allowing amendments to include
      compulsory counterclaims, . . . where the pleader has not been guilty of
      inexcusable neglect, or has not by reprehensible conduct deprived
      himself of any claim to special consideration by the court. The motion

      2
          Compulsory counterclaims. A pleading shall state as a
          counterclaim any claim which at the time of serving the
          pleading the pleader has against any opposing party, if it
          arises out of the transaction or occurrence that is the
          subject matter of the opposing party’s claim and does not
          require for its adjudication the presence of third parties of
          whom the court cannot acquire jurisdiction. But the pleader
          need not state the claim if (1) at the time the action was
          commenced the claim was the subject of another pending
          action, or (2) the opposing party brought an action upon his
          claim by attachment or other process by which the court
          did not acquire jurisdiction to render a personal judgment
          on that claim, and the pleader is not stating any
          counterclaim under this Code section, or (3) the claim is
          not within the jurisdiction of the court.
OCGA § 9-11-13 (a).

                                         5
      should be made promptly and may be denied for laches or lack of good
      faith. . . . Before a delayed filing of a counterclaim is allowed, the court
      should require the submission of evidence and make a finding therefrom
      as to whether the delay was occasioned by oversight, inadvertence or
      excusable neglect. . . . It should appear, too, that the filing of the
      counterclaim when tendered works no prejudice against the plaintiff.

(Citations and punctuation omitted.) Blount v. Kicklighter, 125 Ga. App. 159, 161-

162 (3), (4) (186 SE2d 543) (1971). Because an omitted compulsory counterclaim

may be otherwise barred, “as a general rule leave to amend and set up a counterclaim

shall be given freely, but this does not dispense with the necessity of showing that

justice so requires.” Id. at 161 (4). “The determination of whether justice requires the

grant of leave to set up an omitted counterclaim is a matter which addresses itself to

the sound discretion of the trial court.” (Citation and punctuation omitted.) Boyd v.

JohnGalt Holdings, LLC, 294 Ga. 640, 642 (1) (755 SE2d 675) (2014). We review

the trial court’s ruling for abuse of discretion. Id.3

      3
        See also Clairmont Foods, Inc. v. Huddle House, Inc., 142 Ga. App. 171 (1)
(235 SE2d 635) (1977) (“As we have previously pointed out in construing [OCGA
§ 9-11-13 (f)], the trial judge is vested with discretion which will not be controlled
absent a legal abuse.”).

                                            6
      At the hearing on Talbot’s motion for leave to file its counterclaim, the trial

court stated the controlling legal principle as follows: “compulsory counterclaims

may not be added by amendment where the defendant has knowledge of the claims

at the time the defensive pleadings were prepared and filed.”4 The trial court found

that Talbot did have knowledge of its counterclaim at the time it filed its answer and

denied the motion for leave to amend.

      Talbot contends, because the failure to plead a compulsory counterclaim can

result in the loss of that claim forever, justice requires a trial court to grant a

defendant leave to add a compulsory counterclaim if the plaintiff makes no showing

of prejudice from the proposed amendment, citing Boyd v. JohnGalt Holdings, LLC,

294 Ga. 640 (1) (755 SE2d 675) (2014). Talbot contends Triad made no such

showing of prejudice in this case and contends the trial court abused its discretion in

failing to allow the amendment without having first determined whether Triad would

actually be prejudiced by the belated addition of Talbot’s counterclaim. Without the

      4
       See Haire v. Suburban Auto Body, Inc., 204 Ga. App. 16, 17 (418 SE2d 163)
(1992) (“[T]his court has held that compulsory counterclaims may not be added by
amendment where the defendant has knowledge of the claims at the time the
defensive pleadings were prepared and filed in the first instance.”) (citation omitted).

                                           7
addition of its counterclaim to this action, Talbot contends it “will lose its

counterclaim forever, and it will never have any legal remedy against Triad.”

      In Boyd, the Supreme Court of Georgia emphasized that the “when justice

requires” provision of OCGA § 9-11-13 (f)

      furnishes an independent ground for setting up an omitted counterclaim.
      Thus, a trial court should grant leave to set up an omitted counterclaim
      when justice requires even though the other grounds, oversight,
      inadvertence, or excusable neglect[,] are not present.

(Citation and punctuation omitted.) 294 Ga. at 641 (1). “Moreover, because the

failure to plead a compulsory counterclaim can result in loss of that counterclaim

forever, the courts generally should be forgiving when leave is sought to add

compulsory counterclaims, at least so long as the plaintiff makes no showing of

prejudice.” (Citations omitted.) Id. at 642 (1).5

      5
         See also Kitchens v. Lowe, 139 Ga. App. 526 (228 SE2d 923) (1976) (The
trial court did not abuse its discretion in allowing the defendant to add its omitted
compulsory counterclaim to the plaintiff’s suit on account for fertilizer, where the
defendant’s claim for damages caused by allegedly defective fertilizer was a
compulsory counterclaim and was so interrelated as to properly be construed together
with the plaintiff’s claim and where the plaintiff was not surprised or prejudiced by
the belatedly asserted counterclaim.).

                                           8
      In Boyd, the plaintiffs filed an action for trespass and ejectment after the

defendant foreclosed their right of redemption with regard to a small parcel of

commercial property, based on the plaintiffs’ default on an agreement to make

specified payments to redeem the property. Boyd, 294 Ga. at 640-641 (1). Initially,

the defendant timely answered, but did not then assert a counterclaim to quiet title.

Id. at 641. Three years later, the defendant sought leave to add its counterclaim to

quiet title by amendment, and the trial court granted leave to do so. Id. Ultimately, the

trial court entered judgment that quieted title in favor of the defendant against the

plaintiffs. Id. In holding the trial court did not abuse its considerable discretion when

it granted the defendant leave to add its counterclaim, the Supreme Court concluded

title to the property had been a central issue since the beginning of the overall case,

such that the defendant’s claim to quiet title was inextricably intertwined with the

plaintiffs’ claims. Id. at 642 (1). Because a quiet title claim had been implicit

throughout the litigation, the plaintiffs were not surprised or unfairly prejudiced by

the defendant’s late assertion of the compulsory counterclaim to quiet title, and

inclusion of the claim in the pending case fostered judicial economy. Id.

      Similarly, in this case, the record shows that Triad knew of the basis for

Talbot’s breach of contract counterclaim, as the issue presented involves the terms

                                           9
and conditions of the subcontract that is the subject of Triad’s own claims and

involves the same facts, transactions, and circumstances concerning Triad’s

performance regarding the drywall replacement. Although Triad argues broadly it will

be prejudiced if Talbot is allowed to add its counterclaim in that it may be forced at

“great expense” to “depose additional witnesses and other subcontractors,”6 the

existing record is devoid of any evidence regarding the magnitude of the expense or

other hardship that Triad will face in defending against Talbot’s claim. More

importantly, the record is devoid of any evidence that late assertion of the claim will

cause significantly greater expense than timely assertion would have caused. Absent

such a particularized showing of prejudice on the record by Triad,7 we cannot

evaluate whether the trial court properly exercised its discretion in determining

whether to grant or deny Talbot’s motion for leave to set up its omitted counterclaim

or, conversely, whether the court considered the first three exceptions in OCGA § 9-

      6
        See Eudaly v. Valmet Automation, 201 Ga. App. 497, 498 (1) (411 SE2d 311)
(1991) (It was “neither fair nor expeditious” and was an abuse of discretion to allow
the defendant to file a late counterclaim after the time for discovery expired, while at
the same time denying the plaintiff’s motion to reopen discovery as to those late
counterclaims.).
      7
        See Boyd, 294 Ga. at 642 (1) (The courts generally should be forgiving when
leave is sought to add a compulsory counterclaim “at least so long as the plaintiff
makes no showing of prejudice.”) (citations omitted; emphasis supplied).

                                          10
11-13 (f) that justify granting leave (that is, “oversight, inadvertence, or excusable

neglect”) to the exclusion of the fourth (that is, “when justice requires”). As an

appellate court, we afford great deference to a trial court’s decision in this regard,8 but

we cannot properly review a decision to deny leave to add a compulsory counterclaim

where, as in this case, it appears the trial court stopped short of considering all of the

provisions in OCGA § 9-11-13 (f).

       For all of the foregoing reasons, the trial court’s ruling denying Talbot leave

to set up its omitted compulsory counterclaim is vacated, and we remand the case for

the trial court to reconsider Talbot’s motion.

       Judgment vacated and case remanded. Dillard and McFadden, JJ., concur.

       8
        Boyd, 294 Ga. at 642 (1); McKesson HBOC v. Adler, 254 Ga. App. 500, 506
(4) (562 SE2d 809) (2002) (“Whether to allow such a filing even after the requisite
showing is made is within the discretion of the trial court and will not be disturbed
absent abuse.”) (citation and punctuation omitted; emphasis supplied).

                                            11