In Thomaston Acquisition, LLC v. Piedmont Construction Group, Inc., Georgia’s Supreme Court addressed the scope of the “acceptance doctrine” in negligent construction cases. 2019 WL 2332043 (Ga. 2019). Thomaston Acquisition, LLC (“Thomaston”) was the subsequent purchaser of an apartment complex and, after purchase, it discovered that the roof and HVAC system had been negligently constructed. Thomaston’s purchase contract with the seller included an “as is” clause. Thomaston filed suit against Piedmont Construction Group, Inc. (“Piedmont”), the original contractor who constructed the complex, alleging negligent construction and breach of contract/implied warranty.
The issue in the case is whether Thomaston’s negligent construction claims are barred by the acceptance doctrine since it was not the original purchaser of the complex. Georgia’s acceptance doctrine “shields contractors from liability for injuries to third parties resulting from their work at the moment the work is turned over to and accepted by the owner.” This law is based off of the rationale that, “by accepting completed work, presumably after a reasonably careful inspection to identify any defects, the owner adopts the work as his own, deprives the contractor of all opportunity to rectify his wrong, bears the immediate duty to make the premises safe, and is therefore accountable for future injuries.”
The acceptance doctrine does not bar a third party’s claim for injuries suffered as a result of a defect hidden from reasonable inspection. However, a requirement of the doctrine is that the party bringing suit has privity with the contractor. Piedmont argued that Thomaston does not have privity with it since it was not a party to the contract for the construction of the apartment complex. The Supreme Court of Georgia agreed.
Other exceptions to the doctrine exist where contractors perform work or repairs that are inherently or intrinsically dangerous, constitute nuisance per se, or are so negligently defective as to be imminently dangerous to third persons. The Court did not apply any of the exceptions to save Thomaston’s claims.
The Court stated that, upon the initial purchaser’s acceptance of the apartment complex, all liability for readily observable defects shifted from Piedmont to the purchaser. At that point, Piedmont had no authority to repair or maintain the complex. Upon the initial owner’s sale to Thomaston, the liability of the original owner did not shift back to Piedmont. Thomaston’s only remedy was to go after the original owner, but it was forbidden from doing so under the “as is” clause. The Court criticized Thomaston for not adequately inspecting the premises prior to purchase and for signing an “as is” provision.
This holding bodes well for contractors in Georgia. It means that, in the majority of cases, contractors will not have indefinite liability for their construction projects. The Court acknowledged that a contractor cannot be held responsible for completed work over which it no longer exercises any control.