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Contractual statute of limitation struck down by Georgia Supreme Court

Posted by John Hadden | Oct 21, 2019 | 0 Comments

Last year, in Langley v. MP Spring Lake, LLC ("Langley I"), the Georgia Court of Appeals upheld a provision in an apartment lease agreement that limited any claims brought by a tenant - even for injuries that were not connected with duties under the contract - to a one-year statute of limitation per the lease agreement. Read more about the decision in our previous blog post here. Today, the Georgia Supreme Court, in Langley v. MP Spring Lake, LLC ("Langley II"), unanimously reversed the decision (with one justice concurring in judgment only and another recusing), holding that the contract did not unambiguously limit the time for a personal injury victim to file suit for damages arising from extracontractual duties, and therefore the claimant was entitled to file suit within the standard two-year limitation period under Georgia law for personal injury claims.

When the Supreme Court granted the writ of certiorari in Langley II, it directed the parties to address two issues:

(1) Does the “Limitations on Actions” provision of Langley's lease contract apply to her premises-liability tort action against MP Spring Lake, LLC?; and

(2) If so, is that provision enforceable?

The Supreme Court held that the answer to the first question was "No," and therefore did not address the second question. It noted, as did the Court of Appeals previously, that Georgia appellate courts had already held that contractual limitation periods were enforceable. But it noted that in those prior cases, the duties at issue arose from the contract itself. In particular, courts have long held that suits for breach of contract, which are typically subject to a four- or six-year statute of limitation depending on the circumstances of the contract, may be required to be brought within a shorter period if the contract calls for a shorter time.

In this case, however, the claim did not arise under the contract, but from separate tort duties set forth under Georgia law, particularly Official Code of Georgia, Annotated (OCGA) § 51-3-1 and prior decisions of the Georgia Court of Appeals and Supreme Court. That fact distinguished this claim from prior cases, and proved to be the factor that resulted in the Supreme Court's reversal of the Court of Appeals and the trial court, which had upheld the contractual language. 

The Supreme Court noted the basic principles involved in contract interpretation, based on earlier cases:

First, the trial court must decide whether the language is clear and unambiguous. If it is, the court simply enforces the contract according to its clear terms; the contract alone is looked to for its meaning. Next, if the contract is ambiguous in some respect, the court must apply the rules of contract construction to resolve the ambiguity. Finally, if the ambiguity remains after applying the rules of construction, the issue of what the ambiguous language means and what the parties intended must be resolved by a jury.

(Citation omitted.) City of Baldwin v. Woodard & Curran, Inc., 293 Ga. 19, 30 (3) (743 SE2d 381) (2013).

It then analyzed whether the provision in this contract. The Supreme Court noted that, although the provision appeared, standing alone, to be unambiguous, "“[T]he context in which a contractual term appears always must be considered in determining the meaning of the term.” Applying this principle, the Court concluded that when viewed in the context of the contract as a whole, which deal entirely with duties arising under the lease contract, it was not clear if the provision was intended to apply, as with the entirety of the rest of the contract, to the contract itself, or to issues independent of it. 

Ultimately, the Supreme Court explained its decision as follows:

Given the limited purpose of the lease contract and the legal relationship it created between Langley and Spring Lake, the ultimate question before us becomes apparent: Was the Limitation Provision intended to apply to the conceivable universe of legal claims that may arise between the parties, or is its applicability limited to claims arising from the lease agreement? Due to the nature of the contract, and because we construe the lease against Spring Lake and find that Langley's proposed construction is reasonable, we construe the Limitation Provision to apply only to claims arising from the contract, and not to Langley's free-standing tort claims.

The case is Langley v. MP Spring Lake, LLC ("Langley II"), Georgia Supreme Court Case No. S18G1326 (October 21, 2019). John Hadden co-authored, With Caleb Walker, a brief on behalf of the Georgia Trial Lawyers Association as amicus curiae ("friend of the court") in favor of the victim/claimant in the case.

About the Author

John Hadden

John D. Hadden is the owner and founder of the Hadden Law Firm. An experienced trial and appellate lawyer, he is author of three respected treatises on Georgia litigation practice: Greens Georgia Law of Evidence, Georgia Law of Torts - Trial Preparation and Practice, and Georgia Magistrate Court...

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