Progressive Electrical Services, Inc. v. Task Force Construction, Inc.
327 Ga. App. 608
| Ga. Ct. App. | 2014Background
- Progressive Electrical Services, Inc. (Progressive) contracted with Task Force Construction, Inc. (TFC) to perform an electrical subcontract for a school project; Timmy L. Bush signed the subcontract as Progressive’s president.
- The subcontract contained a bolded “Signing Individual” provision stating any individual who signs for the subcontractor also signs personally and agrees to be bound by all subcontract obligations (including indemnity).
- Progressive paid a supplier, Hagemeyer, only partially; GAIC (the payment-bond surety) settled Hagemeyer’s suit for $116,000 and TFC reimbursed GAIC $118,463.69.
- TFC sued Progressive and Bush for breach of contract and indemnification for amounts TFC paid GAIC; TFC moved for summary judgment and the trial court granted it and awarded fees.
- Progressive and Bush appealed, arguing Bush was not personally bound, the signature provision violated the Statute of Frauds (i.e., was a guaranty), disputed damages/change orders, and that TFC’s payment was voluntary or otherwise barred.
Issues
| Issue | Plaintiff's Argument (TFC) | Defendant's Argument (Progressive/Bush) | Held |
|---|---|---|---|
| Whether Bush is personally bound by the subcontract | The Signing Individual clause makes Bush personally liable when he signed on behalf of Progressive. | Bush contends a signature in a representative capacity cannot bind him individually absent an express individual guaranty; his signature block showed only corporate signature. | Held: Clause is an unambiguous express agreement binding Bush individually; his signature bound him jointly and severally with Progressive. |
| Whether the Signature Provision is an unenforceable guaranty under the Statute of Frauds | TFC: provision creates direct obligation (indemnity) not a guaranty. | Progressive/Bush: provision functions as a guaranty not signed in an individual capacity, violating the Statute of Frauds. | Held: The provision is an original indemnity/principal undertaking, not a guaranty; Statute of Frauds does not bar enforcement. |
| Existence/amount of valid change orders and resulting damages | TFC: trial court correctly found only one valid change order and computed damages accordingly. | Progressive/Bush: dispute over amounts owed (billing statement showing larger sum) creates material factual issues. | Held: Appellants failed to include change-order exhibits in record; unsigned billing is not a valid change order; no genuine issue of material fact on amount for purposes of summary judgment. |
| Whether TFC’s payment to GAIC was voluntary (bar to indemnity) or legally compelled | TFC: payment was legally necessary because GAIC demanded payment/referenced rights and statutes supporting reimbursement. | Progressive/Bush: payment was voluntary and thus unrecoverable under OCGA §13-1-13. | Held: Although trial court’s reasoning had errors, appellate court affirmed summary judgment because TFC showed legal necessity (section 10-7-41 statutory right of surety to proceed against principal), so payment was not voluntary and indemnity recoverable. |
| Effect of Hagemeyer’s dismissal/release of Progressive in prior suit on TFC’s indemnity claim | TFC: dismissal of Progressive in prior suit does not extinguish TFC’s separate indemnity claim. | Progressive/Bush: prior release or GAIC settlement released them or bars recovery (res judicata, release). | Held: Prior dismissal/release in separate suit did not extinguish TFC’s independent indemnity claim; appellants failed to supply certified pleadings and legal doctrines (res judicata/release) do not bar indemnity here. |
Key Cases Cited
- Buckner v. Buckner, 294 Ga. 705 (party who signs is bound by terms unless emergency, fraud, or confidential relationship excuses failure to read)
- Primary Investments, LLC v. Wee Tender Care III, Inc., 323 Ga. App. 196 (agent signing for disclosed principal not personally bound absent express agreement)
- Gigandet v. Lighting Galleries, Inc., 191 Ga. App. 536 (single signature can bind both corporate entity and individual where contract so provides)
- Dabbs v. Key Equip. Finance, Inc., 303 Ga. App. 570 (Statute of Frauds requires guaranty identify parties and debt)
- Thomasson v. Pineco, Inc., 173 Ga. App. 794 (distinguishing indemnity from guaranty; indemnity is an original undertaking)
- Copeland v. Belville, 93 Ga. App. 442 (contracts of indemnity generally fall outside Statute of Frauds)
- GAF Corp. v. Tolar Constr. Co., 246 Ga. 411 (indemnity requires proof of legal compulsion to pay)
- Goodyear Tire & Rubber Co. v. New Amsterdam Cas. Co., 101 Ga. App. 577 (payment bond does not create liability between principal and surety)
- Fabian v. Dykes, 214 Ga. App. 792 (surety’s statutory rights and remedies against principal after payment)