Georgia’s Supreme Court Re-Affirms The Acceptance Doctrine

Troutman Pepper

Pepper Hamilton LLP

Thomaston Acquisition, LLC v. Piedmont Construction Group, Inc., No. S19Q0249, 2019 BL 202176 (Ga. June 03, 2019)

The acceptance doctrine represents the principle that an independent contractor is not liable for damages occurring after the contractor has completed its work and the work is turned over to and accepted by the owner, provided that the defect was readily observable on reasonable inspection and was not inherently dangerous.

Piedmont Construction Group, Inc. constructed the roof and HVAC system for an apartment complex located in Macon, Georgia.  The original owner accepted the work, and then sold the apartment complex to Thomaston Acquisition, LLC, pursuant to an “as is” agreement.  Shortly after the sale, Thomaston allegedly discovered evidence that the roof and HVAC system had been negligently constructed and filed suit against Piedmont and its subcontractors.

The builders moved for summary judgment under the acceptance doctrine.  Prior to issuing a decision, the District Court for the Middle District of Georgia certified two questions for Georgia’s Supreme Court:

(1) After construction is completed and the property is sold by the original owner, does the acceptance doctrine apply to a negligent construction claim by the subsequent purchaser?

(2) If the acceptance doctrine does apply, to whose inspection does the analysis of whether the defects were “readily observable on reasonable inspection” relate?

The Supreme Court first discussed the acceptance doctrine’s purpose, noting that a contractor may not even have the ability to correct its work or enter the property after turning its work over to the owner.  Yet unlike a contractor, the owner has the ability to reject work that does not comply with the agreement or creates a hazard.

But as the Supreme Court noted, the acceptance doctrine is not bulletproof, and Georgia courts have recognized a handful of exceptions.  Most significantly, the court explained that the doctrine does not bar claims for defects hidden from reasonable inspection.  And although a number of sister states have abandoned the acceptance doctrine, Georgia’s Supreme Court expressly declined to follow suit, holding that “under Georgia law, the acceptance doctrine continues to shield contractors from liability for negligent construction claims brought by a third party[.]”

The Court concluded that Thomaston, the new purchaser, qualified as a third party under the acceptance doctrine, and then addressed the second certified question—whose inspection counts?  The Court determined the original owner’s acceptance triggered the acceptance doctrine.  It explained that there is no “current owner-occupier” or “subsequent purchaser” exception to the acceptance doctrine, and the facts do not compel an expansion of the rule.  The Court also highlighted that subsequent purchasers are not without protection.  Owners can inspect the property and refuse to purchase it, and are under no obligation to purchase a property “as is.”

To view the full text of the court’s decision, courtesy of Bloomberg Law, click here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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