Read the opinion here: Case – ArcherWestern v Pitts
Construction owners occasionally use an Owner Controlled Insurance Program (OCIP) to insure personal and property damage on their projects. The Georgia Supreme Court recently interpreted the City of Atlanta’s OCIP for construction of the Hartsfield-Jackson Atlanta International Airport. After a sub-subcontractor’s employee was killed on the project, his estate sued the City of Atlanta and several contractors, alleging that they failed to ensure the subcontractor at fault maintained the level of insurance required by the OCIP program. Instead of the required $10,000,000 in bodily-injury coverage, the subcontractor at fault maintained only $1,000,000 in coverage.
The Court of Appeals held that the decedent employee was an intended beneficiary under the contracts and the OCIP program, and therefore, the defendants breached their contractual duty to ensure that the faulty subcontractor maintained the required coverage. The Supreme Court granted certiorari and vacated and remanded the case. It concluded that the Court of Appeals misapplied or failed to apply several fundamental principles of contract law.
In short, the Court of Appeals failed to adequately consider the context of the clauses at issue. And even if the decedent employee was considered an intended beneficiary, the Court of Appeals should have considered the intended scope of the benefit conferred (i.e., minimum insurance). Finally, instead of considering the parties’ fault collectively, it should consider which specific contract party was obligated to ensure the faulty subcontractor maintained adequate insurance.
The case is now remanded to the Court of Appeals for consideration. Read the opinion here: Case – ArcherWestern v Pitts
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The Court of Appeals of Georgia has issued an opinion based on direction from the Supreme Court opinion discussed above. It will be addressed in a forthcoming blog post.