City of Atlanta v. Hogan Construction Group, LLC
Hogan contracted with the City of Atlanta for an amount not to exceed $3,198,525 to construct a fire station in the city. After Hogan began work on the project numerous delays occurred due to various discoveries on the property which cause necessary major changes to the planned project. Hogan submitted a number of change orders to accommodate the discoveries on the property and completed the project. The city paid Hogan $3,506.805 but Hogan claimed that the city still owed it nearly $200,000 for various costs associated with the change orders. The city, citing a city ordinance that required contract modifications that exceeded ten percent of the "not to exceed" amount on a contract to have the approval of the city council and mayor, argued that it was not obligated to pay the amounts sought by Hogan. The city also argued that the parties had waived applicability of the Prompt Pay Act because of a clause in the contract.
The trial court denied the city's motion for summary judgment and held that just because the city council and mayor had not yet approved the additional payments did not excuse them from payment altogether, as a matter of law. On appeal, the Georgia Court of Appeals held that the Atlanta "not to exceed" ordinance did not relieve the city of any obligation to pay a contractor simply because the change orders were not approved prior to the work being performed. The court, however, also held that the contract between the parties did control in superseding the Georgia Prompt Pay Act. Strangely, the court subsequently held that the agreement did not bar valid claims for attorneys fees under the Georgia Prompt Pay Act.