Construction Law – Bad Faith Expansion

The attached case is a great victory for the general contractor, and it also shows the merits of pursuing even a small claim, if there are grounds to prove bad faith.  The highlights include the use of bad faith in the context of the ongoing contract, as opposed to the original contract formation, to award fees and the discussion of recovery outside of the contract, quantum merit.  The finding of bad faith in administration of the contract under OCGA sec 13-6-11 is a recent change in how courts are interpreting Georgia law. Previously, 13-6-11 limited bad faith to the inception of the contract. The change is likely to cause litigants to evaluate attorneys fees more seriously, since the potential exists for large attorneys fees being award on smaller claims.  Although the case also addresses quantum meruit as a basis to recover amounts not in the original contract and that are the subject of a change, there are other cases in a commercial context with a very specific change order procedure that hold that changes must be addressed within the contract, thus, there is not claim for quantum meruit.

Click here to review “Order and Judgment”