January 27, 2020 BY Alisha Dickie
LIMITING LITIGATION: THE GEORGIA SUPREME COURT'S REVIEW OF TIME-LIMITATION PROVISIONS
Contractual provisions controlling the venue and avenue through which a plaintiff can bring a claim against a defendant are powerful tools to control litigation should it arise. Selecting a favorable venue, or, even more important, avoiding an unfavorable venue can ensure a fair tribunal. Limiting the time in which a potential litigant can bring a claim known as the statute of limitations, can create another useful litigation advantage. Such provisions are called time-limitation provisions and are generally enforceable under Georgia law. However, the Georgia Supreme Court recently reviewed one such provision in a lease agreement to determine whether the time-limitation provision limited the statute of limitations for the plaintiff’s premises liability claims. Langley v. MP Spring Lake, LLC, 2019 WL 5301853 (Ga. 2019). Ultimately, the Court found that the broad language contained in the time-limitation provision did not apply to plaintiff’s premises liability claim and that summary judgment granted and upheld by the lower courts was improper. Id. Below is a review of the Langley case and a brief analysis of the implications of the Georgia Supreme Court’s opinion:
On May 3, 2014, Pamela Langley fell in the common area of her apartment complex when her foot allegedly caught and slid on a crumbling portion of curb. Two years later, on May 3, 2016, Pamela Langley filed suit against MP Spring Lake (“Spring Lake Apartments”) for injuries she sustained as a result of Spring Lake Apartment’s alleged negligence. Spring Lake Apartments moved for Summary Judgment, pointing to a time-limitation provision in Langley’s lease that limited the statute of limitations “for any legal action against management or owner” to one (1) year. Langley argued that (1) the provision in the lease limiting the statute of limitations from two years to one year was too ambiguous to be enforceable, (2) the provision only applied to actions arising from the lease agreement itself, (3) that Spring Lake Apartments was estopped from relying on the provision because of statements made by representatives, and (4) it was fundamentally unfair to enforce the provision because neither party knew it existed. Ultimately, the trial court granted Summary Judgment in favor of Spring Lake Apartments. Langley appealed.
The Georgia Court of Appeals upheld the trial court’s opinion on May 1, 2018. The Court analyzed the contract using the standard three-step procedure for contract construction under Georgia law. “The cardinal rule of contract construction is to ascertain the intention of the parties.” Langley, 2019 WL 5301853 at *3. When applying the three-step procedure for contract construction Georgia courts must first determine if the language of the provision is clear and unambiguous. If the language is clear and unambiguous, the court enforces the contract according to its terms. Id. If the court, however, determines that the contract terms are ambiguous, the court moves to the second step and applies the tools of contract construction available under Georgia law to resolve the ambiguity. Id. If the provision is still ambiguous after applying the tools of contract construction, the court utilizes the third and final step: allowing a jury to resolve the ambiguity. Id.
In reviewing the time-limitation provision in the lease before the Court, the Georgia Court of Appeals found that the language in the provision of the contract was unambiguous. Langley, 2019 WL 5301853 at *2. Though broad, the provision properly limited the statute of limitations for all claims between the parties. Id. Because Langley’s claim was a claim that arose between the parties and Langley failed to file suit within the contractually shortened one-year statute of limitations, the Georgia Court of Appeals affirmed the trial court’s grant of summary judgment. Id.
Thereafter, Langley moved the Georgia Court of Appeals to reconsider their ruling. Langley’s motion for reconsideration was denied on May 15, 2018. Thereafter, Langley appealed to the Georgia Supreme Court. The Georgia Supreme Court granted certiorari on December 10, 2018.
The Georgia Supreme Court ultimately reversed the Georgia Court of Appeals. The Georgia Supreme Court found that the phrase “any legal action” was actually ambiguous. Langley, 2019 WL 5301853 at *4. While contractual terms generally carry their ordinary meaning, “the context in which a contractual term appears always must be considered in determining the meaning of the term.” Id. The time-limitation provision in this case was placed near the end of the lease agreement between the parties. The Court found that this placement created the question of whether the “any legal action” should be given its literal meaning or whether the intent of the parties was to limit the provision’s application to lawsuits arising out of the lease agreement. Id. “The conflict between the broad literal meaning of the phrase and the limited nature of the contract creates uncertainty as to the scope of the Limitation Provision.” Id. Because the time-limitation provision was ambiguous on its face, the agreement, therefore, must be construed against the drafter, Spring Lake Apartments. Id.
The Court also found Langley’s limited interpretation of the contract to be reasonable. Id. at *5. Though the lease created a landlord-tenant relationship, and Spring Lake Apartments had a contractual duty to keep the premises in repair pursuant to O.C.G.A. § 44-7-13, Langley’s claims were independent of that relationship. Id. Instead, Langley’s claims were predicated on Spring Lake Apartments’ status as a property owner, irrespective of the landlord-tenant relationship. Id.
As a result, the Court determined that the Georgia Court of Appeals asked the wrong question. The question was not whether time-limitation provisions were enforceable law as “that question is clearly answered in the affirmative as to claims for breach of contract.” Langley, 2019 WL 5301853 at *2. Instead, the question was: “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 the claims arising from the lease agreement?” Id. at *5. The Georgia Supreme Court concluded that “the general language ‘any legal action,’ in the absence of language specifically encompassing tort claims, is limited to claims arising out of the lease agreement.” Id. Thus, given the nature of the contract, the fact that the contract must be construed against Spring Lake Apartments, and that Langley’s interpretation of the provision was reasonable, the Georgia Supreme Court decided that the time-limitation provision applied only to claims arising from the contract and not to free-standing tort claims. Id.
Importantly, however, the Georgia Supreme Court did not invalidate all time-limitation provisions. Specifically, the Court opined “We express no opinion as to whether a lease agreement ever could be worded and structured so as to provide limitations on the period in which the tenant could bring tort claims against the landlord, and we likewise express no opinion about the extent to which such limitations would be enforceable.” Langley, 2019 WL 5301853 at *6. While there is no statutory provision prohibiting the contractual shortening of the statute of limitations for tort claims, the Court warned that “the General Assembly has consistently expressed the public policy of this state as one in favor of imposing upon the landlord liability for damages to others from defective construction and failure to keep his premises in repair. The expressed public policy in favor of landlord liability is matched by an equally strong and important policy in favor of preventing unsafe residential housing.” Id. (citing Thompson v. Crownover, 259 Ga. 126, 128 (1989)).
The Langley decision provides a number of new considerations for contract drafters considering time-limitation provisions. While the Langley Court did not reach the ultimate issue of whether a contractual provision seeking to limit the statute of limitations for every conceivable action between the parties is enforceable, the Court’s reminder of the public policy behind premises liability indicates that time-limitation provisions must be reasonable in nature and should take into consideration such policies. Moreover, the Langley opinion emphasizes the need for carefully contract drafting and language that is sufficiently specific. As indicated by the Court, if the contract drafter seeks to limit the statute of limitations for tort claims in a lease agreement, the drafter should include more explicit language to indicate that the parties truly contemplated the provision covering all claims rather than simply using broad language, such as “all claims.” Finally, by revisiting time-limitation provisions already in effect, contract drafters can ensure that their interests are better protected in light of the Georgia Supreme Court’s ruling in Langley.
The Journal is a publication for the clients of Drew Eckl & Farnham, LLP. It is written in a general format and is not intended to be legal advice to any specific circumstance. Legal Opinions may vary when based upon subtle factual differences. All rights reserved.
H. Michael Bagley