Court Opinion

ID: 2687745
Source: CourtListenerOpinion
Date Created: 2014-07-31 21:43:22.003179+00
Date Added: 2024-06-11T13:17:02.810276
License: Public Domain

THIRD DIVISION
                               BARNES, P. J.,
                           BOGGS and BRANCH, 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/

                                                                      July 16, 2014

In the Court of Appeals of Georgia
 A14A0389. JAI GANESH LODGING, INC. et al. v. DAVID M.
     SMITH, INC. et al

      BOGGS, Judge.

      Jai Ganesh Lodging, Inc. and Laxesh, L.P. appeal from the trial court’s order

granting summary judgment in favor of David M. Smith, Inc. (“DMS”) and B & J

Reed Construction, LLC (“B & J Reed”), an order rescinding its previous order

allowing Baron and Jeremy Reed to be added as defendants, and an order excluding

the testimony of an expert witness. For the reasons explained below, we affirm the

trial court’s order excluding the appellants’ expert, reverse its order dismissing the

appellants’ complaint against Baron Reed and Jeremy Reed, affirm the grant of

summary judgment on the breach of contract claims, and reverse the grant of

summary judgment on the claims of negligent construction.
      This case arises from structural damage to a newly constructed Holiday Inn

Express resulting from settlement of the rear parking lot, pool areas, and one side of

the building itself. The record shows that Laxesh, L. P. owns the real property on

which the Holiday Inn Express is located and that Jai Ganesh Lodging, Inc. holds the

franchise rights to and operates the Holiday Inn Express. In April 2007, site plans for

the Holiday Inn Express were created by Rhodes Engineering Services, Inc., and the

site plans list Anil Patel (“Patel”) as the “owner/developer/24-hour emergency

contact” person.1

      In April 2007, DMS submitted an initial bid for grading work on the Holiday

Inn Express site. In May 2007, the principal of DMS, David Smith, suffered a stroke,

and told Patel that it would take him six to eight months to recover enough to

supervise the grading job for DMS. Part of the job had to be performed with grading

work under a separate contract between DMS and G. H. Riddle (“Riddle”) and Patel

did not want to delay the work until Smith recovered. When Riddle was unable to hire

      1
       Anil Patel is the husband of Anita Patel. Laxesh acquired the property on
March 22, 2007 from Anita Patel. Jai Ganesh acquired the franchise rights from Anita
Patel on September 14, 2007. Anita Patel had entered into an earlier agreement with
Holiday Inn Express on December 2, 2005.

                                          2
another grading contractor,2 he asked Smith to find someone and enter into a

subcontract for the work.

      On August 7, 2007, Patel entered into a contract with DMS to be the grading

contractor for the project. The contract states that it is between DMS, “the General

Contractor,” and Anil Patel, “the owner.” Two days later, DMS entered into a contract

with B & J Reed “to perform certain work as set forth on Proposal Nos. 259, and 260

. . . in connection with the construction of a road off of Highway 411, Rome Georgia

and a Holiday Inn Express, respectively.” Proposal 259 involved the work for Riddle

and Proposal 260 involved the work for Anil Patel. After B & J Reed completed the

grading work, Jai Ganesh Lodging, Inc. entered into a contract with Enterprise

Contractors to construct the hotel.3 Less than four months after the Holiday Inn

opened in July 2008, problems with settling began.

      In August 2010, Jai Ganesh Lodging, Inc. and Laxesh, LP (collectively

“appellants”)4 sued DMS, B & J Reed, Baron Reed, and Jeremy Reed and alleged

      2
         There is some evidence in the record suggesting that Riddle had a reputation
in the industry for not paying contactors.
      3
          This contract was signed by Anita Patel.
      4
       While Anita and Anil Patel were also named as plaintiffs in the initial
complaint, the trial court later entered an order dismissing them as plaintiffs based

                                          3
causes of action for breach of contract, negligent construction, and continuing

nuisance. All of the defendants moved for summary judgment in their favor on the

appellants’ breach of contract and negligence claims. After withdrawing its order

allowing the appellants to amend their complaint to add Baron Reed and Jeremy Reed

as defendants, the trial court granted summary judgment in favor of DMS and B &

J Reed on appellants’ claims for breach of contract, negligent construction, and

continuing nuisance.5

      1. Appellants assert that the trial court erred in excluding their proffered expert,

Steve Horridge, because Horridge had previously been retained by B & J Reed’s

liability insurance carrier, Auto-Owners Insurance Company (“Auto-Owners”) to

investigate the cause of soil settlement at issue in this case. According to appellants,

the trial court misapplied OCGA § 9-11-26 (b) (4) and this court’s decision in Heyde

v. Xtraman, Inc. 199 Ga. App. 303, 308 (404 SE2d 607) (1991). They urge this court

to adopt and apply a two-part test for disqualification of experts used in other

upon plaintiffs’ counsel representation in oral argument that he would dismiss them
from the case. The Patels did not appeal from this order.
      5
          Appellants’ continuing nuisance claim was asserted after the defendants
moved for summary judgment in their favor. Appellants do not contend on appeal that
the trial court erred by granting summary judgment in favor of the appellees on their
continuing nuisance claim.

                                           4
jurisdictions. See, e.g., Koch Refining Co. v. Boudreaux MV, 85 F3d 1178, 1181 (II)

(A) (5th Circ. 1996).

      The record shows that Todd Moore, a claims representative with Auto-Owners,

hired SEA Ltd., a forensic engineering firm, and Horridge “to investigate the claims

of [appellants]” before suit was filed. According to Foster,

      The investigation conducted by Steve Horridge and SEA was done
      specifically on behalf of Auto-Owners and its insured, B & J Reed, for
      the purpose of defense of any possible lawsuit and in anticipation of
      litigation, and discussions with them included our work product,
      thoughts, mental impressions, and theories of defense with respect to
      this matter, many of which were not contained in his written report. . .
      . Neither Auto-Owners or its insured consent to the Plaintiffs or their
      attorneys retaining Auto-Owners’ consulting expert as their own, to
      using his report or opinion or materials, or to calling him as a witness.

According to Moore, he advised Horridge in a telephone call before November 12,

2009, “that Auto-Owners preferred that he not have any contact with the claimant Mr.

Patel or his attorney.”

      Horridge submitted an affidavit to the court in which he averred that (1) he

never signed a confidentiality agreement precluding him from working for other

persons involving the same subject matter; (2) that he never spoke with or sent his

                                          5
report to an attorney representing B & J Reed while working for Auto-Owners on the

assignment; (3) that “Moore was [his] exclusive contact with Auto Owners . . . and

the only person with whom [he] communicated and who directed [his] work;” (4) that

he “communicated with Moore regarding the progress of [his] work, and the results

of [his] investigation;” (5) that while he spoke with the owners of B & J Reed about

facts necessary to his investigation, he never spoke with them about potential

strategies or defenses in the event of litigation; (6) that he did not discuss with B &

J Reed or Auto-Owners “the strengths or weakness of any side or B & J Reed’s

anticipated defenses to a lawsuit;” (7) that he was later retained by Mr. Patel “to

provide an engineering design and consulting services for structural remediation of

the Holiday Inn Express in order to stabilize the building;” (8) that he was later

retained by appellants’ counsel to serve as an expert witness in appellants’ lawsuit

against B&G Reed, but never gave appellants’ counsel a copy of the SEA Ltd.

investigative report and refused to discuss the content of the report “unless it was

voluntarily produced and disclosed during discovery in this litigation.”

      The record also includes an email from appellants’ counsel to insurers involved

with the claim, including the insurer who had retained Horridge, stating:

                                          6
      Suit has been filed. . . . If either Defendant is interested in resolving this
      matter early and/or pursuing mediation at the outset, please let me know.
      Our expert is Steve Horridge, which we believe will prove to be very
      problematic for, in particular, Auto-Owners as it relates to its bad-faith
      refusal to resolve and settle this matter, notwithstanding our previously
      tendered time-limited, policy-limits demands.

During discovery, B & J Reed voluntarily produced to all parties the SEA Ltd. report

prepared by Horridge for Auto-Owners.

      Two years after the lawsuit was filed, B & J Reed moved to disqualify Horridge

as an expert on behalf of appellants. After conducting a hearing, the trial court

granted the motion, but also concluded that “[t]o the extent he is a fact witness as to

remediation, the Court is now inclined to allow him to testify so long as he shall not

testify as to his opinions on any issue or of his having been first retained by any other

party.”

      OCGA § 9-11-26 (b) provides:

      Unless otherwise limited by order of the court in accordance with this
      chapter, the scope of discovery is as follows: . . .

      (4) (B) A party may discover facts known or opinions held by an expert
      who has been retained or specially employed by another party in
      anticipation of litigation or preparation for trial and who is not expected

                                            7
      to be called as a witness at trial . . . upon a showing of exceptional
      circumstances under which it is impracticable for the party seeking
      discovery to obtain facts or opinions on the same subject by other
      means.

“Trial courts have broad discretionary powers under the discovery provisions of the

Civil Practice Act and appellate courts have consistently refused to interfere with the

exercise of a trial court’s discretion except in cases of clear abuse.” (Citations and

punctuation omitted.) Heyde, supra, 199 Ga. App. at 308.

      In Heyde, this court affirmed the trial court’s decision to prohibit an expert

from testifying at trial for one party when that expert had originally been retained by

an attorney for an opposing party. Id. at 307-309. We concluded “that the exclusion

of [the expert]’s testimony was a proper sanction for the violation of the rules of

discovery set forth in OCGA § 9-11-26 (b) (4).” Id. at 308. This Code provision

“clearly sets forth the procedures a party must follow to obtain discovery from any

expert, both those that the opposing party expects to call at trial and those that are not

to be called as witnesses.” Id. One of the rationales for our decision was that the party

seeking to call the expert “did not attempt to follow these procedures and should not

now be allowed to circumvent them by engaging in ex parte communications with the

opposing party’s expert and then asserting that they are not seeking to engage in

                                            8
discovery but seeking to call a witness at trial.” Id. We also found that the privileged

relationships should be protected and that “[e]xclusion of expert testimony at trial

when the expert was retained by the opposing party or his attorney has been

recognized as proper in certain circumstances in two federal cases. . . . [Cits.]” 308-

309. Finally, we affirmed the trial court’s exclusion of the expert because the

appellants failed to meet their burden of showing harm, noting that “[w]e do not know

if []appellants were able to produce the testimony of other experts whose testimony

would render [the expert]’s statements merely cumulative.” Id. at 309.

      In this case, as in Heyde, appellants failed to follow the procedures set forth in

OCGA § 9-11-26 (b) before hiring an expert formerly retained by the insurer of an

opposing party. We therefore conclude that the trial court did not abuse its discretion

by precluding appellants from calling Horridge as an expert witness on their behalf,

particularly where the trial court expressly ruled that Horridge could testify “[t]o the

extent he is a fact witness as to remediation.” Additionally, we conclude that

appellants cannot demonstrate harm from the trial court’s decision because they were

able to hire another expert to provide opinions and findings consistent with those of

Horridge and the SEA Ltd. report. Heyde, supra.

                                           9
      Based upon the particular facts and circumstances of this case, we decline to

apply the two-part federal test advocated by appellants. As the Fifth Circuit noted in

a case cited by appellants,

      Initially, we point out that this is not a case in which the expert switched
      sides. If that were the case, no one would seriously contend that a court
      should permit a consultant to serve as one party’s expert where it is
      undisputed that the consultant was previously retained as an expert by
      an adverse party in the same litigation and had received confidential
      information from the adverse party pursuant to the earlier retention. This
      is a clear case for disqualification. In disqualification cases other than
      those in which the expert clearly switched sides, lower courts have
      rejected a “bright-line” rule and have adopted the following test:

             First was it objectively reasonable for the first party who claims
             to have retained the expert to conclude that a confidential
             relationship existed?

             Second was any confidential or privileged information disclosed
             by the first party to the expert?

(Emphasis supplied.) Koch Refining, supra, 85 F.3d at 1181 (II) (A). This is a case in

which the consulting expert clearly switched sides, and the two-part test in Koch

Refining should not be applied.

                                          10
      2. The appellants contend that the trial court erred by granting summary

judgment in appellees’ favor on their breach of contract claim based upon its

conclusion that they were not third party beneficiaries of the contract between B &

J Reed and DMS. We disagree.

      “The beneficiary of a contract made between other parties for his benefit
      may maintain an action against the promisor on the contract.” OCGA §
      9-2-20 (b). In order for a third party to have standing to enforce a
      contract under OCGA § 9-2-20 (b), it must clearly appear from the
      contract that it was intended for his benefit. The mere fact that he would
      benefit incidentally from performance of the agreement is not alone
      sufficient. There must be a promise by the promisor to the promisee to
      render some performance to a third person, and it must appear that both
      the promisor and the promisee intended that the third person should be
      the beneficiary.

(Citations and punctuation omitted.) Rowe v. Akin & Flanders, Inc., 240 Ga. App.

766, 768 (1) (525 SE2d 123) (1999). “Because a third-party beneficiary may be

created only by the express terms of the contract, a court does not generally consider

parol evidence in its analysis.” (Citations and footnote omitted.) Perry Golf Course

Dev. v. Housing Auth. of Atlanta, 294 Ga. App. 387, 388 (1) (670 SE2d 171) (2008).

      Here, the contracts at issue never refer to Jai Ganesh or Laxesh. While the

contracts state that a Holiday Inn Express would be constructed on the site, the site

                                         11
plan referenced in the contracts expressly states that Anil Patel is the owner/developer

and Anil Patel listed himself as the owner in his contract with DMS. Based upon

these express representations of ownership, we cannot find that DMS or B&G Reed

intended a benefit for undisclosed corporate entities that, unbeknownst to them, were

the actual owners of the property and the Holiday Inn franchise. See Dominic v.

Eurocar Classics, 310 Ga. App. 825, 828-830 (1) (714 SE2d 388) (2011) (owner of

car not third party beneficiary of contract between mechanic and dealership that

performed repair at mechanic’s request); Perry Golf, supra, 204 Ga. App. at 388-389

(1) (plaintiff not third-party beneficiary of contract because designation of owner in

contract inconsistent with finding that plaintiff was the owner); Danjor, Inc. v.

Corporate Constr. 272 Ga. App. 695, 697-698 (1) (613 SE2d 218) (2005) (corporate

franchisee and its owners not third-party beneficiaries of contract between franchisor

and contractor that constructed day care center).6 We therefore affirm the trial court’s

grant of summary on appellants’ breach of contract claim.

      6
        The cases cited in appellants’ brief do not require a different result as none
of them involved an affirmative representation in the contract and documents
referenced therein that someone other than the plaintiff was the owner of the property
at issue. See Dillon v. Reid, 312 Ga. App. 34 (717 SE2d 542) (2011); Rowe, supra,
240 Ga. App. at 766; Plantation Pipe Line Co. v. 3-D Excavators, 160 Ga. App. 756
(287 SE2d 102) (1981).

                                          12
      3. Appellants assert that the trial court erred by granting summary judgment on

their negligent construction claims based upon its conclusion that privity of contract

was required to assert a negligence claim, that the record contained no evidence of

negligence by the defendants, and that the acceptance doctrine precluded appellants’

negligent construction claim.

      (a) The trial court relied upon this court’s opinion in Dominic, supra, to

conclude that the defendants owed no duty of care to the appellants. In Dominic, a

case involving negligent car repair, we held:

      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.” OCGA § 51-1-11 (a). Thus, “[w]here privity of contract
      between the parties does not exist, to constitute a tort, the duty must
      arise independent of the contract.”

(Citations and punctuation omitted.) 310 Ga. App. at 830 (2). The rule applied in

Dominic, however, has no application in negligent construction cases, because “our

courts have concluded that these claims arise not from a breach of contract claim but

from breach of a duty implied by law to perform the work in accordance with industry

                                           13
standards. This cause of action arises in tort and exists independently of any claim for

breach of contract.” (Citations and punctuation omitted.) City of Atlanta v. Benator,

310 Ga. App. 597, 605 (5) (714 SE2d 109) (2011). See also Rowe, supra, 240 Ga.

App. at 769 (2). The trial court therefore erred by granting summary judgment on

appellants’ negligent construction claim based upon a lack of privity.

      (b) Appellants contend the trial court erred by concluding that they failed to

produce evidence of negligence by either defendant. We agree.

      The law imposes upon building contractors and others performing
      skilled services the obligation to exercise a reasonable degree of care,
      skill, and ability, which is generally taken and considered to be such a
      degree of care and skill as, under similar conditions and like surrounding
      circumstances, is ordinarily employed by others of the same profession.

(Citations, punctuation and footnote omitted.) Schofield Interior Contractors v.

Standard Bldg. Co., 293 Ga. App. 812, 814 (668 SE2d 316) (2008).

      In support of their negligence claim, appellants relied upon the affidavit of

James Ahlberg, a civil and geotechnical engineer who opined, based upon his review

of soil reports before and after the grading work was completed, that

      each of the failures, depressions, and settling or downward
      displacements and resulting damages found within the Holiday Inn

                                          14
      Express site were directly caused by the grading contractor’s failure to
      properly and sufficiently compact the fill material used by the grading
      contractor as was required by the subject grading plans and as is
      required to be performed by grading contractors, generally, in similar
      circumstances and in accordance with accepted industry standards.

      [E]ach of the defects resulting from the grading contractor’s failure to
      properly compact the fill material was concealed from view and below
      the surface, such that these defects would not have been observable or
      detectable by anyone observing the site immediately after the grading
      contractor had completed its work on site.

An engineer with Rhodes Engineering, the company that prepared the grading site

plans, averred in his affidavit that the plans specified “that the grading work was to

be compacted to achieve a density of 95% Proctor.” It is undisputed that a person

with specialized training must perform tests as the grading work progresses to

determine if soil is compacted to a density of 95% Proctor.

      B&G Reed and DMS contend that they cannot be held liable for negligent

grading because they were not contractually responsible for obtaining engineering

tests and did not have the expertise to perform the tests. The record shows that B &

J Reed performed the work pursuant to its contract with DMS. The contract between

DMS and Patel defined DMS as the “general contractor” and stated that DMS “agrees

                                         15
to furnish all material, labor and equipment to perform work to standard as described

on plans by Rhodes Engineering Services, Inc. dated April 27, 2007 and inspected by

the City of Rome.” This contract identified Patel as the “owner.” With regard to

“grading,” the itemized list identified in and attached to the contract stated, “Grade

site as shown in grading plan. All dirt must come from on site. Site must balance.”

      The contract between DMS and B & J Reed was drafted by B & J Reed; this

contract identified DMS as the “owner.” The construction contract obligated B & J

Reed “to perform certain work as set forth on Proposals Nos. 259, and 260. . . .” The

work description in Proposal 260 stated, in part: “Grade site as shown on grading

plan. Site must balance . . . Owner responsible for all testing.” The record contains

no evidence that Patel or any other representative of the appellants was provided with

a copy of Proposal 260 before construction of the hotel was completed.

      Jeremy Reed testified that the purpose of the contract provision stating, “Owner

responsible for all testing,” was to make someone else responsible for soil

compaction testing; he did not do any compaction testing. He denied that the purpose

of this provision was to make Smith or his company (DMS) responsible for

compaction testing; he knew that DMS did not own the property. He never asked

Smith to perform compaction testing and explained that the industry standard does

                                         16
not require grading contractors to perform compaction testing; it is a specialized trade

for those certified to perform it. Jeremy Reed denied knowing that the grading plan

for the Holiday Inn job required a compaction density of 95 percent Proctor, and

denied that Giles Engineering, DMS, or Patel ever told him that he was required to

reach this compaction density. He also testified that he did not work for Patel, but

instead looked to DMS for “supervisory-related questions.” He explained that any

direction regarding the scope of his work would have come from Smith and that he

expected Smith to alert him if he felt B & J Reed’s work was inadequate.

      Barron Reed testified that “[i]t is standard in the industry for the owner to hire

a compaction company to give us a yes or a no” on whether their work was meeting

compaction specifications. With regard to the contract between B & J Reed and DMS,

he stated that he knew that Smith was not the owner of the property.

      With regard to the provision in his contract with B & J Reed stating, “Owner

responsible for all testing,” Smith testified that he did not know what testing was

meant by this provision. He explained that testing usually done on similar jobs

included preliminary testing and compaction testing as the job progressed. He was not

aware of whether any soil compaction tests were performed during the Holiday Inn

grading work. He never had any discussions with Patel about the importance of

                                          17
performing soil compaction studies. At the time he entered into the contract with

Patel, Smith did not have any knowledge about Patel’s background or experience in

the construction industry or with site grading in particular.

      Smith testified that it is always the owner’s responsibility to obtain compaction

testing and that he had never obtained such testing. In other grading jobs, the owner

would share compaction test results with the grader as the job progressed and the

grader “would have to do what was necessary to make it pass.” He acknowledged that

95 percent Proctor is the industry standard for structure foundations. He did not recall

any conversations with B & J Reed about compaction on the site, but he believed that

B & J Reed would have been aware of the industry standard of 95 percent Proctor.

While he expected B & J Reed to grade the site to a density of 95 percent Proctor, he

testified that he did not know how B & J Reed would know whether the density

specification had been met. Smith performed no inspections on behalf of DMS after

B & J Reed completed the work.

      In his deposition, Patel admitted that he was aware that Smith and his company

could not perform the grading work and had hired B & J Reed to do the grading. He

testified that he told Smith that he was okay with this arrangement “[a]s long as you

supervise it ‘cause we - - I have contracted with you.” He never had any

                                          18
conversations with Smith about soil compaction. He relied upon the grading

contractors to compact the soil and testified that Jeremy Reed told him that the soil

would be okay for the construction of the hotel because he was a professional who

“kn[e]w the compaction.” He admitted that he did not have an agreement with Smith

or his company for them to perform compaction testing in connection with the

grading; he assumed that it was their responsibility because they were the grader.

      Patel retained Giles Engineering before grading began to “[t]o make sure the

soil under the building was okay,” and no one from Giles Engineering informed him

that there were subsurface problems on the lot before the grading work began. He

admitted that he did not read the report prepared by Giles Engineering, because it was

“scientific stuff that I don’t understand.” While Patel may have provided a copy of

this report to Enterprise Contractors, he did not believe he provided it to or discussed

it with DMS or B & J Reed.

      Based upon our review of evidence in the record, we conclude that genuine

issues of material fact exist with regard to whether DMS negligently supervised the

grading work and whether B & J Reed negligently failed to grade the property to the

specifications in the grading design plan. The record contains evidence that both of

these defendants understood the importance of testing to ensure that the grading work

                                          19
complied with the design specifications. Consequently, issues of fact exist as to

whether they allowed the grading work to be completed without tests confirming

sufficient compaction of the entire job site. While these defendants may not have

been responsible under the terms of the contract for personally performing or paying

for the tests, issues of fact exist as to whether they were negligent in failing to take

steps to request that such testing be performed as the job progressed, particularly

when the contract between the two grading companies specifying that the owner was

responsible for testing was never provided to the property owner. While DMS and B

& J Reed rely heavily upon the 2006 Giles Engineering report in support of their

claim that they are entitled to summary judgment, the expert witnesses disagree about

the meaning of the report. The report, as testified to by experts, raises genuine issues

of material fact as to whether the property did or did not have existing compaction

issues below the surface before it was graded by B & J Reed.

      Except in plain, palpable and undisputed cases where reasonable minds
      cannot differ as to the conclusions to be reached, questions of
      negligence, proximate cause, including the related issues of
      foreseeability, assumption of risk, lack of ordinary care for one’s own
      safety, lack of ordinary care in avoiding the consequences of another’s
      negligence, contributory and comparative negligence are for the jury.

                                          20
(Citations, punctuation and footnote omitted.) McCray v. FedEx Ground Package

System, 291 Ga. App. 317, 322 (1) (661 SE2d 691) (2008).

      (c) We also find merit in appellants’ contention that the trial court erred in

applying the acceptance doctrine to bar their negligent construction claims. Even if

we were to assume that the acceptance doctrine applies both to owners and to third

parties, the acceptance doctrine protects a negligent contractor only “if the defect is

not hidden but readily observable on reasonable inspection.” (Citations and

punctuation omitted.) Lumsden v. Williams, 307 Ga. App. 163, 171 (2) (f) (704 SE2d

458) (2010). In this case, appellants’ expert opined that “the grading contractor’s

failure to properly compact the fill material was concealed from view and below the

surface,” and thus not “observable or detectable,” and evidence in the record shows

that testing by a specialist was required to determine if the grading contractor had

sufficiently compacted the site. Issues of fact therefore exist as to whether the defect

was “readily observable on reasonable inspection.” Id.

      (d) We find no merit in DMS’ assertion that appellants’ negligent construction

claim is barred by a failure to give a notice of a claim under the law governing certain

construction defect claims, OCGA § 8-2-35 et seq. By its express terms, these Code

provisions apply only to a dwelling defined as “a single-family house, duplex, or

                                          21
multifamily unit designed for residential use in which title to each individual unit is

transferred to the owner under a condominium or cooperative system. . . .” OCGA §

8-2-36 (1) and (7); OCGA § 8-2-38 (a). As the hotel does not fall within this

definition, these Code sections do not apply.

      4. Appellants assert that the trial court erred by withdrawing its previous order

that allowed them to amend their complaint to add Baron Reed and Jeromy Reed as

defendants. We agree.

      The record shows that five months after filing their complaint, appellants

moved to add Jeremy Reed and Baron Reed as defendants for two reasons: (1) their

belief that the Reeds may have disregarded the separate legal status of B & J Reed,

Inc. and (2) the Reeds’ “personal involvement, misconduct, and active negligence.”

At the time of the motion, the statute of limitation had not run and no depositions had

been taken. The Reeds opposed the motion, in part, because appellants “offered no

excuse or justification for having failed to name and serve the new parties

previously.” The trial court promptly granted the motion, stating: “The Complaint in

this action is filed within the Statute of Limitations so that if the Motion for Leave to

Add Party Defendants were denied, Plaintiffs could merely dismiss and refile against

                                           22
all the proposed defendants. There is no discernable prejudice to Defendants by

granting this motion.”

      In September 2012, Baron Reed moved for summary judgment in his favor on

the grounds that he did not personally participate in the alleged negligent construction

and that privity was lacking for a breach of contract claim. A year later, while all of

the summary judgment motions were pending, the trial court entered the following

order sua sponte:

             Before ruling on Defendant’s Motion for Summary Judgment, it
      is necessary to enter an order with regard to those parties who interests
      remain for resolution in this case. Two problems in that regard need to
      be addressed. First, [the Patels are dismissed for the reasons previously
      stated in footnote 6 of this opinion.]

             The Second problem in regard to the parties in this case involves
      the presence of Baron Reed and Jeremy Reed as Defendants
      individually. As has become increasingly obvious to the Court, it has
      mistakenly allowed an amendment to the complaint which allowed
      Plaintiffs to add claims against each of them individually. It is now
      obvious that the sole reason Plaintiffs sought to add the Reeds,
      individually, as defendants was to try to pierce the corporate veil if
      damages were awarded. This has only obfuscated and wasted time and
      detracted attention from the real issues of liability. Any claims of
      Plaintiff against B & J Reed Construction, LLC would raise any alleged

                                          23
negligence of all of the LLC’s employees which would include the
alleged negligence of the two Reeds individually. The error in adding
these two individuals as Defendants became apparent as Plaintiff’s
discovery regarding the Reeds, individually, focused solely on issues in
an attempt to pierce the corporate veil of the LLC. The Court, on
September 27, 2011, verbally ordered that discovery was to be limited,
and the issue of piercing the corporate veil would be bifurcated. The
bifurcated second part of the trial as envisioned by the Court would have
occurred only if Plaintiff received a verdict against the LLC which was
never paid. By necessity the same Floyd County jury could not decide
this additional issue because whether a judgment against the LLC had
been paid could not be determined for some time. Couple this with the
fact that neither of the Reeds, nor their LLC are residents of this County
and the problem is apparent. Each of them is entitled to have that
separate issue, if it ever becomes an issue, litigated pursuant to the
Georgia Constitution in the County of their residence. The Court has
inadvertently created this result, which it now deems improper, by its
original Order allowing Plaintiffs to sue the Reeds individually. Their
absence as defendants in this case in no way hinders Plaintiffs from
presentation of their case; their presence adds nothing except an
extraneous issue over which this Court may not have personal
jurisdiction.

      Therefore, the Court’s order [allowing appellants to add parties]
is WITHDRAWN. The Plaintiffs’ Complaints, as Amended and Recast
against Baron Reed and Jeremy Reed are DISMISSED.

                                   24
       We conclude that the trial court abused its discretion by withdrawing its order

allowing the appellants to add the Reeds as individual defendants for several reasons.

The record shows that the appellants’ claims are not based solely upon an attempt to

pierce the corporate veil,7 that the trial court withdrew its order after the statute of

limitation had expired,8 and that it dismissed the appellants’ claims against the Reeds

based upon venue concerns instead of issuing a transfer order under OCGA § 9-10-

31.1 (a).9

       7
          The appellants’ fourth amended complaint alleged individual acts of
negligence, and the record shows that Jeremy Reed supervised the work on the job
site on a daily basis and also ran the bulldozer and compactor. Jeremy Reed testified
in his deposition that he thought it was unusual when he saw concrete, stumps, and
old building material on the site because he “thought it was virgin ground.” The
record also shows that Baron Reed was often on the job site and claimed to have
assisted a technician to take soil samples for compaction testing. Baron Reed
instructed a track hoe operator where to place debris removed from a ditch, informed
Patel about concrete and organic debris removed from a ditch, and performed grading
work while Jeremy Reed was on vacation.
       8
       Settlement problems were noticed in late 2008, and the trial court’s dismissal
order was entered in August of 2013. See OCGA § 9-3-30.
       9
        Because the trial court did not rule on the Reeds’ individual motions for
summary judgment, we decline to exercise our discretion to do so for the first time
on appeal. See City of Gainesville v. Dodd, 275 Ga. 834, 838-839 (573 SE2d 369)
(2002); Medical Center of Central Ga. v. City of Macon, 326 Ga. App. 603, 607 (2)
(757 SE2d 207) (2014).

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     Judgment affirmed in part and reversed in part. Barnes, P. J., and Branch, J.,

concur.

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