341 Ga. App. 81
Ga. Ct. App.2017Background
- Phoenix hired Atlantic to perform a Phase I environmental assessment of ~45 acres it planned to buy and develop; the written report described a small portion as a "soil/stone storage yard" and recommended no further testing.
- Relying on the report, Phoenix purchased the property (Feb. 2008) and began pre-development work; later formed SMIG, which agreed to buy the property from Phoenix (deed Oct. 1, 2009).
- In Sept. 2009 an adjacent landowner described the encroachment as a "landfill," Phoenix’s first notice of that characterization; SMIG later concluded the site was not economically developable and dissolved.
- The purchase loan was reassigned and foreclosure proceedings followed; Phoenix later transferred the property back from SMIG, filed bankruptcy, and ultimately the successor bank foreclosed.
- Phoenix sued Atlantic for professional negligence/ negligent misrepresentation, seeking pecuniary damages (not diminution in property value) including pre-development expenditures and amounts it claimed it would have received from SMIG.
- The trial court granted Atlantic summary judgment (economic loss rule and proximate causation); Phoenix appealed; Atlantic separately moved to dismiss Phoenix’s appeal due to delay in ordering transcripts.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the appeal should be dismissed for an unreasonable delay in ordering transcripts | Phoenix asked for transcripts and delay was excusable given court reporter’s health problems | Dismiss the appeal under OCGA § 5-6-48(c) for inexcusable, unreasonable delay | Trial court did not abuse discretion in denying dismissal; appellate court affirmed (delay excused by reporter’s health) |
| Whether Atlantic was entitled to summary judgment on Phoenix’s negligent-misrepresentation/professional negligence claim | Atlantic’s misrepresentation caused Phoenix to incur pre-development costs and other pecuniary losses in reasonable reliance | Economic loss rule bars recovery of purely economic losses; alternatively, Phoenix can’t prove proximate causation | Reversed summary judgment: economic loss rule did not bar §552 negligent-misrepresentation claim; evidence of pre-development expenditures created genuine proximate-causation fact issue, so Atlantic not entitled to summary judgment |
Key Cases Cited
- Propst v. Morgan, 288 Ga. 862 (trial court has broad discretion when dismissing appeals for delay)
- Postell v. Alfa Ins. Corp., 332 Ga. App. 22 (appeal dismissal for unreasonable transcript delay)
- Prophecy Corp. v. Charles Rossignol, Inc., 256 Ga. 27 (construing contradictory testimony against a party)
- Thompson v. Ezor, 272 Ga. 849 (limits Prophecy rule to party representatives)
- BDO Seidman v. Mindis Acquisition Corp., 276 Ga. 311 (Georgia adopts Restatement §552 for negligent-supply-of-information claims; out-of-pocket measure)
- Badische Corp. v. Caylor, 257 Ga. 131 (Restatement §552 applies to professional negligent misrepresentation)
- Gen. Elec. Co. v. Lowe’s Home Centers, 279 Ga. 77 (economic loss rule generally bars tort recovery for pure economic loss)
- Koules v. SP5 Atlantic Retail Ventures, 330 Ga. App. 282 (courts give nonmovant summary judgment submissions indulgent treatment)