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Unpaid Subcontractors Are Not Required to Give Ante Litem Notice Prior to Filing Actions Seeking Damages from Local Governments for Failure to Obtain Payment Bonds

This post was written by Chadd Reynolds and Mark Hanrahan.

In City of College Park v. Sekisui SPR Americas, LLC., 331 Ga.App. 404 (2015), the Georgia Court of Appeals held that an unpaid subcontractor who was seeking to recover from the City of College Park for failure to obtain a payment bond as required by Georgia’s Local Government Public Works Construction Law, was not required to give the City ante litem notice before bringing its action. This decision disapproves of Jacks v. City of Atlanta, 284 Ga.App. 2002 (2007), which applied the ante litem notice requirement in a similar context and barred a substantially similar claim.

O.C.G.A. § 36-91-1 et seq., known as the Georgia Local Government Public Works Construction Law, requires local governments to obtain payment bonds for all public works construction contracts with an estimated contract amount exceeding $100,000. O.C.G.A. § 35-91-90. If the local government fails to obtain a payment bond or other security as required by the statute, then “the corporation or body for which work is done under the contract shall be liable to all subcontractors . . . furnishing labor, skill, tools, machinery, or materials to the contractor . . . for any loss resulting to them from such failure.” O.C.G.A. § 39-91-91. Under Georgia’ anti litem notice requirements, a subcontractor’s claim for money damages against a municipal corporation for injuries to person or property is barred unless written notice is given within six months of the event giving rise to the claim. O.C.G.A. § 36-33-5(a). This ante litem notice provision was at issue in both the Jacks and Sekisui cases.

In Sekisui, a subcontractor sued the City of College Park, and its general contractor, Southern Products, for their failure to pay for the work performed by the subcontractor on a sewer project for the City. The trial court granted Sekisui’s motion for summary judgment, finding the City liable because it failed to obtain a payment bond as required under O.C.G.A. § 36-91-90. On appeal, the City relied on Jacks in arguing that the subcontractor’s claim was barred for failing to comply with the ante litem notice requirement. The court, however, disagreed, stating:

Jacks is disapproved to the extent it holds the ante litem notice requirements under O.C.G.A. § 36-33-5 applies to claims arising under O.C.G.A. § 36-91-91 because the plain text of O.C.G.A. § 36-33-5 is clear that it applies only to tort claims relating to personal injury and property damage.

Although Sekisui prevailed on its argument that it was not required to provide ante litem notice of its claims, because the project was undertaken to address an emergency, Sekisui was unsuccessful in its argument that the City was required to obtain a payment bond. Under O.C.G.A, § 36-91-90, an exception exists under which local governments are not required to obtain payment bonds (for contracts with an estimated amount exceeding $100,000) if the project is “necessitated by an emergency,” and the emergency is “described in the minutes of governing authority.” The court found that the City’s description of the emergency in its minutes was sufficient to meet the definition of an emergency as set forth in O.C.G.A. § 36-91-22(e). As a result, the court reversed the trial court’s refusal to grant the City’s summary judgment motion.