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Georgia Appellate Court Reinforces Contractual Waiver Of Payment Clause

In ALA Construction Services, LLC v. Controlled Access, Inc., ALA Construction Services, LLC (“ALA Construction”) hired subcontractor Controlled Access, LLC (“Controlled Access”) to provide equipment and related services for the construction of townhomes. 2019 WL 4463305 (Ga. App. Ct. 2019). Pursuant to their written contract, Controlled Access signed two documents entitled “Interim Waiver and Release Upon Payment”, which required it to file an affidavit of nonpayment or a claim of lien within a 60 day period or else the amount due to it by ALA Construction would be considered paid in full. ALA Construction failed to pay the agreed upon amount, but Controlled Access did not file an affidavit within the required time period.

Controlled Access filed suit for breach of contract, and ALA Construction filed a motion for summary judgment based on OCGA § 44-14-366(f), upon which the Parties’ Waiver and Release was based, which states: “(1) When a waiver and release provided for in this Code section is executed by the claimant, it shall be binding against the claimant for all purposes, subject only to payment in full of the amount set forth in the waiver and release. (2) Such amounts shall conclusively be deemed paid in full upon the earliest to occur of: (A) Actual receipt of funds; (B) Execution by the claimant of a separate written acknowledgment of payment in full; or (C) Sixty days after the date of the execution of the waiver and release, unless prior to the expiration of said 60 day period the claimant files a claim of lien or files in the county in which the property is located an affidavit of nonpayment[.]”

The trial court held a hearing on ALA Construction’s motion, and ultimately entered a judgment against it in the amount of $17,666.78. ALA Construction appealed, arguing that the trial court’s interpretation of the Georgia statute was erroneous.

The Court of Appeals of Georgia reversed the trial court and concluded that OCGA § 44-16-366 is plain and unambiguous, and is binding against all parties for “all purposes” and the statute clearly and unambiguously provides that upon signing the Waivers, Controlled Access had a statutorily imposed responsibility to file either a claim of lien or an affidavit of nonpayment if it wished to keep the debt alive beyond 60 days. Controlled Access did neither, so the debt is extinguished.

This case shows a clear obligation of a subcontractor to comply with contractual requirements, even when it relates to a seemingly obvious expectation of payment by a general contractor. Had Controlled Access filed the affidavit of nonpayment within the 60-day period, but did not receive payment from ALA Construction, its lawsuit would have likely resulted in a judgment against ALA Construction.