In Optum Construction Group, LLC et al. v. City Electric
Supply Company, 2020 WL 5792581 (Ga. App. 2020), appellee City Electric
Supply Company (“City Electric”) furnished materials to Palmetto Power
Services, LLC (“Palmetto Services”), an entity that represented itself as a
subcontractor for a hotel construction project on which appellant Optum
Construction Group, LLC (“Optum”) was the general contractor. After Palmetto
Services failed to pay City Electric for the materials, City Electric sued
Palmetto Services and filed a materialman's lien on the hotel and real estate (“the
Property”) on which it was constructed. Optum and its surety, Fidelity and
Deposit Company of Maryland (“Fidelity”), discharged the lien by filing a bond.
City Electric settled with Palmetto Services, then filed
suit against Optum and Fidelity to recover on the lien. City Electric claimed
that, pursuant to a contract, it supplied materials to Palmetto Services for
improvements to the Property and was not paid for the materials. The trial
court granted City Electric’s motion for summary judgment and denied Optum and
Fidelity’s motions. Optum and Fidelity appealed, arguing that City Electric did
not satisfy the lien requirements set out in OCGA § 44-14-361.
Pursuant to OCGA § 44-14-361 et seq., a
materialman who furnishes supplies and materials for building, repairing, or
improving property may file a lien. OCGA § 44-14-361(b) provides that a lien
“may attach to the real estate of the owner for which the labor, services, or
materials are furnished if they are furnished at the instance of the owner,
contractor, or some other person acting for the owner or contractor[.]” However,
“[a]bsent proof of a contractual relationship, either directly or through a
chain of contracts, between the owner of the property and the person to whom
the materials are furnished, a lien created under OCGA § 44-14-361 et seq.
will not attach.”
Optum claimed that City Electric did not qualify as a lien
claimant because it was not in direct privity of contract with Optum. Optum’s
electrical subcontract was with “Palmetto Power Services Palmetto Power
Unlimited, [I]nc” (“Palmetto Unlimited”). But, the pay applications received
and paid by Optum were from “Palmetto Power Services.”
The appellate court held that there was a genuine issue of
material fact as to whether Optum had a contractual relationship with City
Electric through a chain of contracts with Palmetto Services. While the
subcontract listed “Palmetto Power Services Palmetto Power Unlimited [I]nc.” as
the subcontractor, not Palmetto Power Services, LLC, Optum conceded that “Palmetto
Power Unlimited was ultimately organized as an LLC instead of a corporation.”
This case demonstrates the importance of accuracy in identifying parties to a contract. Here, the contract is not clear as to the identity of the subcontractor, and the record contains conflicting evidence regarding whether City Electric was in a link of contracts to reach Optum.
