Murray v. Ilg Techs., LLC

Majority - R. Stan Baker

No, bar exam applicants are not intended third-party beneficiaries of the contract between ILG and the OBA for grading software, and Georgia's economic loss rule bars recovery for purely economic damages under negligence-based tort theories. Nor can the software vendor be held liable for negligent misrepresentation or defamation based on these facts. The court granted Defendants' Motions for Summary Judgment on all claims. Breach of Contract: The court found that Plaintiffs were not in privity of contract with Defendants. While O.C.G.A. § 9-2-20(b) allows a third-party beneficiary to sue, the contract itself must clearly manifest an intent to benefit the third party. Examining Section 1.1 of the contract, which mentioned "applicants," the court determined that the language unambiguously provided for ILG to create software to assist the OBA in carrying out its duties of facilitating bar admission, including communication with applicants. This did not demonstrate a clear intent by both contracting parties (ILG and OBA) to confer a direct benefit upon individual applicants for purposes of accurate scoring. Plaintiffs were, at most, incidental beneficiaries of the provisions they sought to enforce, and Georgia law (citing Archer W. Contractors, Ltd. v. Estate of Pitts and City of Atlanta v. Benator) limits third-party beneficiaries to enforcing only specific provisions intended for their benefit. Thus, Plaintiffs lacked standing to sue for breach of contract. Ordinary Negligence, Strict Liability (Product Defect), and Negligent Design: The court applied Georgia's economic loss rule, which generally limits recovery for purely economic losses to contract actions. The rule applies even without contractual privity in tort actions seeking purely economic damages, unless an exception applies. No Duty Imposed by Law: The court determined that Defendants' duties regarding scoring and reporting exam results arose explicitly from their contract with the OBA, not from a duty imposed by law or a special relationship independent of the contract. The "general duty one owes to all the world not to subject them to an unreasonable risk of harm" does not exempt claims from the economic loss rule in this context, as such legal duties typically arise from statutory or common law in specific professional or public service relationships (e.g., attorney-client), which were absent here. No Damage to Person or Property: Plaintiffs' alleged reputational damage, while a personal injury, is recoverable only for intentional or wanton misconduct, which Plaintiffs did not allege. Headaches, nausea, and weight gain were deemed physical manifestations of emotional distress resulting from economic injury, not direct physical injuries caused by Defendants, and Plaintiffs did not seek damages for these specific ailments. The "right to employment in the legal profession" is considered a privilege, not a recognized property right under Georgia law (Attwell v. Nichols). No Accident Exception: The "accident exception" (from Vulcan Materials Co. v. Driltech, Inc.) applies primarily to products liability claims for a sudden and calamitous event posing an unreasonable risk of injury to persons or property, or for damage to the defective product itself. The court found that the incorrect scoring was not such an "accident," nor did Plaintiffs seek damages to the software product. Additionally, the contract was for a service, not a product, making the exception generally inapplicable. Negligent Misrepresentation: This tort requires an affirmative misrepresentation. The court found no evidence that Defendants (ILG or Mr. Misman) ever made any representations directly to Plaintiffs. Plaintiffs admitted all communications came from the OBA. Neither the contractual terms (of which Plaintiffs were unaware prior to receiving results) nor the software itself (as a platform for OBA messages) constituted an affirmative misrepresentation by Defendants to Plaintiffs. Therefore, Plaintiffs failed to establish an essential element of the claim. Regrading of Bar Exams: Plaintiffs withdrew this claim. The court noted that Georgia's Rules Governing Admission to the Practice of Law prohibit regrading any applicant's answers after the general release of grades (In re Goodman). Defamation: This claim requires a false and defamatory statement and an unprivileged communication (publication) to a third party. The court found no publication by Defendants because: (1) the OBA, not Defendants, disseminated the scores. (2) Even if the software's internal generation of scores were considered a statement, it constituted an "intracorporate communication" between ILG and the OBA (akin to a calculator communicating to its operator), which is not considered publication under Georgia law (Koly v. Enney; Saye v. Deloitte & Touche, LLP*). (3) Any such communication was privileged under O.C.G.A. § 51-5-7(2) as it was made in the good faith performance of Defendants' contractual duty to their client, the OBA. Attorney's Fees: Because Plaintiffs did not prevail on any underlying claims, they are not entitled to attorney's fees under O.C.G.A. § 13-6-11.