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Gulf Insurance Co. v. GFA Group9/13/2001
The issue in this appeal is whether a payroll services company, which pays the wages of the employees of a contractor of a public works project, is a qualified claimant under a payment bond furnished by the contractor under Georgia's "Little Miller Act."
The record shows that in April of 1996, QRC, Inc. (the "Contractor"), was engaged by the Washington County Board of Education to re-roof a number of schools. Pursuant to an earlier contract, GFA Group, Inc. had agreed to provide payroll service and workers' compensation insurance to the Contractor. Under their arrangement, GFA would issue payroll checks on its own account, remit the withheld taxes to the appropriate authorities, pay the workers' compensation premiums, and submit its invoice to the Contractor weekly for immediate repayment. GFA and the Contractor later modified their contract on the Washington County project to provide that GFA would be compensated through a third party disbursing agent. Evidence indicates that it was the practice of the disbursing agent to pay GFA's invoices monthly.
The Contractor arranged for a payment bond to be issued by Gulf Insurance Company in connection with the roofing project. An eligible claimant under the bond was defined "as one having a direct contract with the [Contractor] or with a Subcontractor of the [Contractor] for labor, material, or both, used or reasonably required for use in the performance of the Contract." The Contractor was subsequently removed from the roofing project, and GFA was not reimbursed for approximately $70,000 which the Contractor owed GFA under their payroll services arrangement. GFA sued the Contractor, its principal shareholder, and Gulf to recover the delinquent balance.
GFA and Gulf filed cross motions for summary judgment. The trial court granted GFA's motion on the issue of Gulf's liability to GFA under the payment bond. Gulf appeals. We reverse because GFA did not provide labor or material to the public works project and so was not an eligible claimant under Gulf's payment bond.
To prevail on a motion for summary judgment, the moving party must demonstrate that there is no genuine issue of material fact, and that the undisputed facts, viewed in a light most favorable to the party opposing the motion, warrant judgment as a matter of law.
Gulf issued its payment bond as required by OCGA ยง 13-10-1, the "Little Miller Act," which provides, in part:
(b) No contract with this state or any public board or body thereof, for the doing of any public work shall be valid for any purpose, unless the contractor shall give: . . . (2) (A) A payment bond with good and sufficient surety or sureties, payable to the state or public board or body thereof for which the work is to be done, and for the use and protection of all subcontractors and all persons supplying labor, materials, machinery, and equipment in the prosecution of the work provided for in the contract. The payment bond shall be in the amount of at least the total amount payable by the terms of the contract.
The statutory bond requirement is intended to protect subcontractors and materialmen because they cannot secure a mechanic's lien on a public building. However, a bond given under the statute may also extend protection beyond those who would have a lien if the project were private property. In interpreting Georgia's statutory bond requirement, we may look to decisions of the federal courts construing the bond requirements under the federal Miller Act.
The trial court held that GFA was a proper claimant under Gulf's payment bond because it provided labor to the project by paying the wages of the project laborers. Gulf claims the
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