{"id":888470,"date":"2016-05-03T13:53:04","date_gmt":"2016-05-03T19:53:04","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=888470"},"modified":"2016-05-03T13:53:04","modified_gmt":"2016-05-03T19:53:04","slug":"federal-court-in-georgia-holds-specific-contractual-intent-to-benefit-required-for-tenant-to-be-third-party-beneficiary-of-construction-contract","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/federal-court-in-georgia-holds-specific-contractual-intent-to-benefit-required-for-tenant-to-be-third-party-beneficiary-of-construction-contract\/","title":{"rendered":"Federal Court in Georgia Holds Specific Contractual Intent to Benefit Required for Tenant to Be Third-Party Beneficiary of Construction Contract"},"content":{"rendered":"<p>Kenneth A. Cushing | Pepper Hamilton LLP | April 21, 2016<\/p>\n<p><strong><em>J.C. Penney Props. v. Hiram LL, LLC<\/em>, 2016 U.S. Dist. LEXIS 8027 (N.D. Ga. Jan. 25, 2016)<\/strong><\/p>\n<p>In January 2008, Hiram LL, LLC (\u201cHiram\u201d) leased property to J.C. Penney Properties, Inc. (\u201cJ.C. Penney\u201d) for the construction and operation of a J.C. Penney retail store.\u00a0 Pursuant to the lease, Hiram was required \u201cto design and construct certain improvements on the property\u201d to prepare the site on which J.C. Penney planned to build its store.\u00a0 Based on plans and specifications prepared by an architect, Hiram entered into a contract (the \u201cContract\u201d) with Benning Construction Company (\u201cBenning\u201d) to construct the site.\u00a0 The Contract was based on two AIA forms: \u00a0the A101 standard agreement and the A201 general conditions.\u00a0 Benning completed its construction work and J.C. Penney eventually opened the store for business.<\/p>\n<p>After opening for business, in September 2009, J.C. Penney\u2019s store flooded.\u00a0 In September 2013, J.C. Penney filed a complaint against Hiram and the architect seeking damages and other relief in connection with the flood.\u00a0 In April 2015, J.C. Penney filed an amended complaint to include <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/how-to-protect-yourself-against-surprise-parties-to-contracts\/\" target=\"_blank\">third-party beneficiary<\/a> claims against Benning for breach of contract and attorneys\u2019 fees.\u00a0 J.C. Penney alleged that Benning failed to ensure that fabric inserts were removed from all of the stormwater drain inlets on the property in a timely manner.\u00a0 Benning moved to dismiss both claims.<\/p>\n<p>The United States District Court for the Northern District of Georgia granted Benning\u2019s motion and dismissed both claims with prejudice because J.C. Penney was unable to identify a specific contractual provision that demonstrated intent to benefit J.C. Penney as a third party.\u00a0 The court stated that to create a <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/unique-look-at-one-of-the-newest-aspects-of-construction-defect-coverage-and-a-broker-warning\/\" target=\"_blank\">third-party beneficiary<\/a>, the intention of the contracting parties to create such a beneficiary must be clear when analyzing the contract as a whole.<\/p>\n<p>To support dismissal, Benning pointed to a Contract provision that stated, \u201c[t]he Contract Documents shall not be construed to create a contractual relationship of any kind\u2026between any persons or entities other than [Hiram] and [Benning].\u201d\u00a0 In light of this provision, the court found that J.C. Penney needed to identify another specific Contract provision that demonstrated intent to benefit J.C. Penney as a third party.<\/p>\n<p>First, J.C. Penney argued that the Contract evidenced the requisite intent because the first page identified the project as the \u201cJCP Hiram Project.\u201d\u00a0 But, the court held that simply identifying J.C. Penney as a potential future occupant of the building fell short of expressing a clear intent to permit J.C. Penney the right to enforce the Contract as a <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/utah-court-appeals-limits-third-party-beneficiary-contract-claims-appraisers-recognizes-tort-based-third-party-claims\/\" target=\"_blank\">third party.<\/a><\/p>\n<p>Second, J.C. Penney pointed to two Contract provisions that required&#8230;<\/p>\n<p><a href=\"http:\/\/www.lexology.com\/library\/detail.aspx?g=116f2f08-e2b3-4b93-9be3-28e0bd69eea6&amp;utm_source=Lexology+Daily+Newsfeed&amp;utm_medium=HTML+email+-+Body+-+General+section&amp;utm_campaign=Lexology+subscriber+daily+feed&amp;utm_content=Lexology+Daily+Newsfeed+2016-04-25&amp;utm_term=\" target=\"_blank\">To finish reading this article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Kenneth A. Cushing | Pepper Hamilton LLP | April 21, 2016 J.C. Penney Props. v. Hiram LL, LLC, 2016 U.S. Dist. LEXIS 8027 (N.D. Ga. Jan. 25, 2016) In January 2008, Hiram LL, LLC (\u201cHiram\u201d) leased property to J.C. Penney Properties, Inc. (\u201cJ.C. Penney\u201d) for the construction and operation of a J.C. Penney retail store.\u00a0&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/federal-court-in-georgia-holds-specific-contractual-intent-to-benefit-required-for-tenant-to-be-third-party-beneficiary-of-construction-contract\/\">Continue reading <span class=\"screen-reader-text\">Federal Court in Georgia Holds Specific Contractual Intent to Benefit Required for Tenant to Be Third-Party Beneficiary of Construction Contract<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[9],"tags":[224,9199],"class_list":["post-888470","post","type-post","status-publish","format-standard","hentry","category-construction-contracts","tag-construction-contract","tag-third-party-beneficiary","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Federal Court in Georgia Holds Specific Contractual Intent to Benefit Required for Tenant to Be Third-Party Beneficiary of Construction Contract - Advise &amp; 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