Ich 3 Atlanta Sugarloaf Apartments, L.P. v. Hart Gaugler and Associates, Inc.

FIRST DIVISION
BROWN, C. J.,
BARNES, P. J., and WATKINS, J.

NOTICE: Motions for reconsideration must be
physically received in our clerk’s office within ten
days of the date of decision to be deemed timely filed.
https://www.gaappeals.us/rules

March 16, 2026

In the Court of Appeals of Georgia
A25A1894. ICH 3 ATLANTA SUGARLOAF APARTMENTS, L.
P. v. HART GAUGLER AND ASSOCIATES, INC.
A25A1895. ICH 3 ATLANTA SUGARLOAF APARTMENTS, L.
P. v. WAKEFIELD BEASLEY & ASSOCIATES, INC. et al.

BARNES, Presiding Judge.

These companion appeals arise from the construction of a mixed use apartment

complex purchased by ICH 3 Atlanta Sugarloaf Apartments, L. P. (“ICH”). In Case

No. A25A1894, ICH appeals the grant of summary judgment to Hart Gaugler and

Associates (“Hart Gaugler”) in its professional negligence claim against that

structural engineering firm,. In Case No. A25A1895, ICH appeals the trial court’s

grant of summary judgment to Wakefield Beasley & Associates (“WBA”) in ICH’s

defective design and construction claim against that architectural firm. For the reasons

that follow, we reverse the judgment in both cases.
“On appeal from a trial court’s grant or denial of summary judgment, our

review of the record is de novo, and we construe the facts and all inferences drawn

from them in the light most favorable to the nonmoving party.” Centurion Indus. v.

Naville-Saeger, 352 Ga. App. 342, 343 (834 SE2d 875) (2019) (citation and

punctuation omitted).

So viewed, the record demonstrates that in 2017, Sugarloaf Walk Apartments,

L. P., a non-party, hired WBA to provide architectural services related to the

construction of Sugarloaf Walk Mixed Use Project (“the Project”), a five building

apartment complex. WBA subcontracted Hart Gaugler to perform structural

engineering services in connection with the project. The Project was completed in

2019, and in 2020, ICH purchased the finished Project from Sugarloaf Walk

Apartments. In August of 2021, there were reports of moisture intrusion at various

locations on the property. A subsequent “Exterior Condition Survey” identified

various issues with all five buildings, including water intrusion and moisture damage,

structural defects, and other issues. ICH filed the complaint against WBA, Hart

Gaugler, and multiple other parties involved in construction of the property. ICH

alleged that WBA and Hart Gaugler were negligent in “preparing designs, plans and

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specifications for the construction” of the Project, and had a duty, as licensed design

professionals, to, among other things, perform work in accordance with industry

standards, and had breached that duty. ICH further alleged that the negligent design

work was responsible for safety issues and extensive property damage to the Project’s

buildings, including shrinkage of wood framing, deformities in the window sills and

flashing, and reverse sloping with water being directed to the exterior walls. ICH also

alleged that the defects and deficiencies in the plans and design documents of WBA

and Hart Gaugler “caused damage at various locations where contractors had installed

their work in compliance with the plans and design documents.” Other allegations

included that Hart Gaugler and WBA’s negligently prepared design plans and

documents were not clear and were subject to foreeseeable misinterpretation. ICH

also alleged that WBA negligently performed construction phase services during the

construction.

Regarding damages, ICH claimed that,

actual damages include, but are not limited to, (1) the costs of identifying
the cause of the property damage in the Sugarloaf Project and designing
proper remediation; (ii) the costs of removing and re-placing non-
damaged property as needed to expose and repair damaged materials and
the defective conditions causing such damage; (iii) the costs of repairing

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damaged property; (iv) the costs associated with financing remedial
work; (v) the loss of use of portions of the Sugarloaf Project; (vi) the loss
of revenue resulting from the pervasive defects; (vii) the cost of
reputational harm and any diminution in the value of the Sugarloaf
Project resulting from the pervasive and serious defects and damage; and
(viii) attorney fees and litigation expenses incurred in bringing these
claims, all caused by acts of the Defendants.

ICH’s experts averred to numerous instances of professional negligence alleged

to have caused damage to the Property. Among the extensive findings listed in his

report, the engineering expert averred that WBA’s plans were “unclear, inconsistent,

incomplete and ambiguous to such an extent that they failed to guard against the

foreseeable possibility that a contractor could misinterpret or fail to follow [WBA’s]

intent.” The expert also averred that

[c]ritical portions of [WBA’s] plans and specifications for the roof,
exterior walls, balconies, elevated walkways, below grade waterproofing,
framing, and other portions of the exterior building envelope of the
buildings in [the Project] were not clear and definitive, and were instead
incomplete, inconsistent, ambiguous and or subject to foreseeable
misinterpretation.

The expert noted that “multiple contractors performed careless work without seeking

clarifications from [WBA],” and opined “to a reasonable degree of certainty” that

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“[WBA] delivered drawings that, when followed, resulted in a Project that violates the

building code because the plans fail to provide an adequate exterior wall envelope

design.”

ICH’s architecture expert averred that he “noted the same instances of

defective plans, that, when constructed lead to defective construction.” He further

averred that for the same reasons identified in the engineer’s affidavit, “the

architect’s contract administration services failed to meet the standard of care by

ignoring, failing to reject, and ultimately approving significant defective construction

in place.” He opined that “the deviations from the standard of care amount to

professional negligence by [WBA].”

The trial court granted Hart Gaugler and WBA’s subsequent motions for

summary judgment, and these appeals ensued.

Case No. A25A1894.

1. In its motion for summary judgment, Hart Gaugler asserted, among other

things, that ICH’s claims “are tort claims (negligence), and the alleged duties arise

only out of the Hart Gaugler agreement with WBA. The undisputed facts demonstrate

that [ICH] is not in privity of contract with Hart Gaugler. Therefore, [ICH’s] claims

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are barred by OCGA § 51-1-11 (a).[1] Hart Gaugler owes [ICH] no duty with regard to

the Sugarloaf Walk Project[.]” In opposing summary judgment ICH argued, among

other things, that there remained material issues of fact that wood shrinkage was

responsible for damage to the property, and that Hart Gauger did not adequately

accommodate for the shrinkage in its engineering plans.

Following a hearing on the motion, the trial court granted summary judgment

to Hart Gaugler. The trial court found that,

[ICH] seeks to recover the costs to repair and remediate the Sugarloaf
Walk Apartment Project, which costs are economic losses as a matter of
law. [ICH’s] professional negligence claim is not subject to any
recognized exception under Georgia law. Since [ICH] seeks to hold Hart
Gaugler liable for violation of duties that arise from the contract between

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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.

OCGA § 51-1-11 (a).
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Hart Gaugler and WBA, and has no privity with that contract and there
is no exception, [ICH’s] negligence claim is barred by OCGA § 51-1-11
(a).

ICH contends that the trial court erred in finding that its claimed damages were

economic losses and that lack of privity barred the claims under OCGA § 51-1-11 (a).

ICH further contends that its claims fall within certain exceptions to the privity

requirement, including the property-damage exception and the independent

professional duty exception to the economic loss rule. Thus, ICH asserts, contrary to

the trial court’s order, privity has generally not been required to support negligence

claims against construction professionals involving damage to property. The

professional duties at issue arise independently of any contract, ICH contends, and

our laws recognize such breach as an exception to the privity requirement in

construction cases involving property. Relatedly, ICH argues that because the

professional duties at issue are independent of a contract, the trial court’s application

of the economic loss rule was inapplicable.

Here, the trial court simply found that per ICH’s purported “admissions in

judicio,” ICH is not in privity with the contract between Hart Gaugler and WBA to

perform structural engineering. It concluded that ICH’s losses were economic losses

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as a matter of law, and that “[s]ince [ICH] seeks to hold Hart Gaugler liable for

violation of duties that arise from the contract between [Hart Gaugler] and WBA, and

has no privity with that contract and there is no exception, [ICH’s] negligence claim

is barred by OCGA § 51-1-11 (a).”

While privity of contract is generally not necessary to support an
action in tort, 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. Thus, where privity of contract between the parties does
not exist, to constitute a tort, the duty must arise independent of the
contract.

Dominic v. Eurocar Classics, 310 Ga. App. 825, 830 (2) (714 SE2d 388) (2011)

(citations and punctuation omitted). 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. Howard v. Dun & Bradstreet, 136 Ga. App. 221 (220 SE2d 702)

(1975). However, Georgia “recogniz[es] that under certain circumstances,

professionals owe a duty of reasonable care to parties who are not their clients.”

Driebe v. Cox, 203 Ga. App. 8, 9 (1) (416 SE2d 314) (1992). Those circumstances have

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included, but are not limited to personal injuries sustained on the subject property,

negligent misrepresentation, or damages to property other than the subject project.

OCGA § 51-1-11 (a) explicitly provides for an exception to the general rule in “cases

where the party would have a right of action for the injury done independently of the

contract”– which, in this case, ICH argues, is the performance of its professional

duties.

Where, as here, the moving party

will not bear the burden of proof at trial[, it] need not affirmatively
disprove the nonmoving party’s case, but may point out by reference to
the evidence in the record that there is an absence of evidence to support
any essential element of the nonmoving party’s case. Where a defendant
moving for summary judgment discharges this burden, the nonmoving
party cannot rest on its pleadings, but rather must point to specific
evidence giving rise to a triable issue.

Cowart v. Widener, 287 Ga. 622, 623-624 (1) (a) (697 SE2d 779) (2010) (citations and

punctuation omitted).

Here, 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

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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.

Case No. A25A1895.

2. In the order granting summary judgment to WBA, the trial court’s findings

of fact included, relevantly, that while WBA’s motion for summary judgment was

pending, ICH filed its 8th amended complaint in which it alleged that WBA

“negligently performed construction phase services;” ICH’s pleading in paragraph

14 of the 8th amended complaint constituted “a judicial admission that ‘work was not

performed in accordance with the plans and design documents and/or ... was

improperly performed by contractors in violation of the building code and industry

standards’”; and, “ICH has not withdrawn the allegations that the construction was

not in accordance with the plans and documents.”

The court also included as factual findings the following reliance and release

provisions from ICH’s purchase and sale agreement:

(a) As a material part of the consideration for this Agreement, Purchaser
agrees to accept the Property on an “As is” and “Where is” basis, with

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all faults and any and all latent and patent defects, and without any
representations or warranty, all of which Seller hereby disclaims, except
for Seller’s Warranties. Except for Seller’s warranty, no warranty or
representation is made ... by Seller as to (a) fitness for any particular
purpose, (b) merchantability, (c) design, (d) quality, (e) condition, (f)
operation or income, (g) compliance with drawings or or specifications
, (h) absence of defects, (i) absence of hazardous or toxic substances, (j)
absence of faults, (k) flooding, or (l) compliance with laws and
regulations iincluding, without limitation, those relating to health, safety,
and the environment. Purchaser acknowledges that Purchaser has
entered into this Agreement with the intention of making and relying
upon its own investigation of the physical, environmental, economic use,
compliance, and legal condition of the Property and that Purchaser is not
now relying, and will not later rely, upon any disclosures,
representations, or warranties (whether express or implied) made by
Seller or anyone acting or claiming to act, by, through or under or on
Seller’s behalf concerning the Property, except for Seller’s warranties.

and,

(b) Consistent with the foregoing, and subject solely to the Seller’s
Warranties, effective as of the Closing Date, Purchaser, for itself and its
agents, affiliates, successors, and assigns, hereby releases and forever
discharges, waives, and exonerates Seller, Seller’s Affiliates, and the
agents, affiliates, members, partners, officers, subsidiaries, successors
and assigns of each of them (collectively the “Released Parties”) from
any and all liabilities, obligations, rights, claims, causes of actions, and

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demands at law or in equity, whether known or unknown at the time of
this Agreement, which Purchaser has or may have in the future, arising
out of the physical, environmental, economic or legal condition of the
Property, including without limitation, all claims in tort or contract... .
Purchaser, upon Closing, shall be deemed to have waived, exonerated,
relinquished and released Seller and all other Released Parties from and
against any and all matters affecting the Property... [.]

The trial court’s subsequent conclusions of law included, relevantly, that

factual assertions in pleadings and pretrial orders are admissions in judicio, and may

be considered for summary judgment; the admission is binding upon the party and the

party is estopped from denying the admission or introducing evidence to controvert

the admission; one cannot be held liable for professional negligence to a party not in

privity with the professional; personal injury is an exception to this privity

requirement; economic losses are not excepted, and ICH’s losses are economic;

negligent representation is an exception to the economic loss rule, but the exception

is not applicable to ICH’s negligence claim; in the negligent design claim, failure to

plead that the construction was completed in accordance with the plans and

specifications is dispositive; the inquiry into the repair of the building envelope was

dispositive; and that the construction administration claim fails in light of the reliance

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language in the purchase and sale agreement that ICH signed in release of the Seller

and its agents, and that WBA was an agent of the Seller.

3. ICH contends that the trial court erred in finding that WBA was shielded

form design defect liability based on ICH’s purported pleading that the work was not

completed according to the plans. It asserts that the pleading was misconstrued, and

that the trial court ignored the pleadings and evidence demonstrating that portions of

the damage occurred where the work was done in accordance with WBA’s plans and

ignored Georgia law that the contractor and design professional are both liable where

a contractor negligently fails to perform the work in conformity with plans due to its

lack of clarity and definiteness.

Withdrawal or amendment prevents the original admissions from serving as

solemn admissions in judicio. See Richmond County v. Sibert, 218 Ga. 209, 212 (1) (a)

(126 SE2d 761) (1962). However, “[w]here the pleading has been stricken, the

admission contained therein remains to be utilized as evidence of fact which the

admitting party can explain but may be unable to conclusively refute.” Strozier v.

Simmons U.S.A. Corp., 192 Ga. App. 601, 602–603 (385 SE2d 677) (1989). Thus, ICH

having made the admission in its original pleadings, “could not establish as a matter

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of law that the admission was untrue, but only could raise an issue of fact for a jury to

determine.” Id. at 603. It is uncontroverted that ICH subsequently filed an amended

8th complaint alleging damage to the property in various places although the work was

done in conformity with WBA’s design plans and documents. Thus, ICH was not

prohibited from raising an issue of fact about whether the design plans were properly

followed in the construction. See Versico, Inc. v. Engineered Fabrics Corp., 238 Ga. App.

837, 839 (1) (520 SE2d 505) (1999) (noting that admissions may be considered

conclusive for purposes of summary judgment and, until withdrawn or amended, estop

the party from denying them or introducing any evidence to controvert them).

4. ICH also contends that the trial court erred in finding that failure to follow

plans cuts off any negligent design claim. In its order granting summary judgment and

referencing ICH’s pleading, the trial court concluded that even with evidence of

negligent design, the failure to plead that the construction was done in accordance

with the plans and specifications is dispositive. “When a case is based upon negligence

of an architect or engineer in preparing plans, it is essential that the plaintiff prove that

construction of the project designed was accomplished in compliance with the plans

and specifications furnished by the defendant, at least with respect to that portion of

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the work claimed to be defective.” Covil v. Robert & Co. Associates, 112 Ga. App. 163,

168 (2) (144 SE2d 450) (1965). However, in a case alleging negligence of an engineer

or architect in preparing plans, the plaintiff bears the burden of demonstrating

compliance with those plans only “with respect to that portion of the work claimed

to be defective.”Id. at 168 (2). Thus, the trial court erred in concluding that failure to

plead that the construction was done in accordance with the plans and specifications

is dispositive. Moreover, when as here, the evidence creates a fact question as to this

issue, summary judgment is precluded.

3. ICH also asserts as error the trial court’s grant of summary judgment to WBA

on the issue of privity of contract between ICH and WBA. The trial court’s

conclusion that the lack of privity between ICH and WBA precluded ICH’s claims

and its subsequent grant of summary judgment to WBA was error. While Georgia

courts generally hold that one cannot be held liable for professional negligence to a

party not in privity with the professional, Howard, 136 Ga. App. at 221, “under certain

circumstances, professionals owe a duty of reasonable care to parties who are not their

clients.” Driebe, 203 Ga. App. at 9 (1). To that end, despite a lack of privity, the claims

are not necessarily precluded because they “arise not from a breach of contract claim

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but from a breach of a duty implied by law to perform the work in accordance with

industry standards.” Jai Ganesh Lodging, Inc. v. David M. Smith, Inc., 328 Ga. App.

713, 719 (760 SE2d 718) (2014). ICH’s experts averred to numerous instances of

professional negligence alleged to have caused damage to the Property, thus

presenting a material issue of fact as to whether WBA breached a duty implied by law

to perform the work in accordance with industry standards.

Accordingly, the trial court erred in granting summary judgment to WBA upon

concluding that the lack of privity was dispositive.

5. Likewise, because material issues of facts remain regarding whether WBA

was an “agent” for purposes of the application of the release clause in the purchase

and sale agreement between ICH and the original owner the trial court also erred in

granting summary judgment upon that basis.2

Judgments reversed. Brown, C. J., concurs. Watkins, J., concurs in judgment only.

2
We have reviewed the trial court’s additional alternative grounds for granting
summary judgment and find that there are material issues of facts precluding such
judgment.
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