Court of Appeals of Georgia

Case no.: A25A1894 and 1895
Date filed: March 16, 2026

A Georgia appeals court has ruled that a property owner could sue an engineer that had been a subcontractor to the design architect. Although the owner never had a contractual relationship with the structural engineer, the engineer had professional duties independent of its contractual obligation to the architect.

Sugarloaf Walk Apartments L.P. was developing a five-building apartment complex and retained Wakefield Beasley and Associates Inc. (WBA) to provide architectural services for the project. The architect in turn retained Hart Gaugler and Associates Inc. to serve as the structural engineer. The project was designed and constructed, and the developer promptly sold it to ICH 3 Atlanta Sugarloaf Apartments L.P. (ICH).

The next year, the property experienced water intrusion at various locations. Engineers hired by ICH to assess the problem concluded that design deficiencies had contributed to the water intrusions. ICH sued both WBA and Hart Gaugler for professional negligence.

The Gwinnett County Superior Court granted summary judgment in favor of both design professionals. In the case of the structural engineer, the court said ICH’s claim was barred by a statute, OCGA section 51-1-11 (a):

“Except as otherwise provided in this Code section, no privity is necessary to support a tort action; but, if the tort results from the violation of a duty which is itself the consequence of a contract, the right of action is confined to the parties and those in privity to that contract, except in cases where the party would have a right of action for the injury done independently of the contract and except as provided in Code Section 11-2-318.”

The statutory exception is a provision of the Uniform Commercial Code pertaining to beneficiaries of warranties in the sale of goods.

The court applied Code section 51-1-11 (a) and ruled that when a tort such as negligence results from the violation of a contractual duty, only parties to that contract may sue for economic damages. ICH’s claim against Hart Gaugler arose out of the engineer’s contract with the architect WBA. ICH was not a party to that contract and had no contractual relationship with the engineer. Hence, it could not sue Hart Gaugler, and the engineer was entitled to summary judgment. ICH appealed.

The Court of Appeals of Georgia said the lower court had failed to apply the exception stated in the statute, an “injury done independently of the contract.” Design professionals can have duties that are independent of their contract and extend to individuals with whom they have no contract.

“The general rule applied by the Georgia courts is that one cannot be held liable for professional negligence to a party not in privity with the professional. However, Georgia ‘recogniz[es] that under certain circumstances, professionals owe a duty of reasonable care to parties who are not their clients.’”

“ICH presented evidence that Hart Gaugler’s professional duties arise independently of any contract and the claims were an exception to the privity requirement in construction cases involving property. The issue, thus, was not as the trial court concluded—the acknowledged lack of privity between ICH and Hart Gaugler—but whether Hart Gaugler was liable for professional negligence. Thus, as there remained a genuine issue as to this material fact, the trial court erred in granting summary judgment to Hart Gaugler.”

The architect, WBA, was granted summary judgment partly on the grounds the original developer, not ICH, had been in privity of contract with the architect. The court said, “The trial court erred in granting summary judgment to WBA upon concluding that the lack of privity was dispositive.”

The expanse of potential claimants leaves design professionals with little protection other than errors and omissions insurance.

Participants:
For ICH 3 Atlanta: Arthur Allen Ebbs, Atlanta, Georgia
For Hart Gaugler: Patrick Michael Phillips, Atlanta, Georgia
For Wakefield Beasley: Amber E. Tuggle, Atlanta, Georgia

Before: Judges Barnes, Brown, and Watkins

Opinion by: Judges Barnes

Outcome: Summary judgment in favor of design professionals reversed

Source: Please click here to read the complete opinion.