author: Johnson, Judge. Blackburn, Judge,

text:
    A93A1565.
    A93A1566.
    A93A1567.
    HOSPITAL AUTHORITY OF GWINNETT COUNTY v. STATE HEALTH PLANNING AGENCY et al. SAINT JOSEPH’S HOSPITAL OF ATLANTA, INC. v. COBB COUNTY/KENNESTONE HOSPITAL AUTHORITY et al. STATE HEALTH PLANNING AGENCY v. COBB COUNTY/KENNESTONE HOSPITAL AUTHORITY et al.
    (438 SE2d 912)
   Johnson, Judge.

The Hospital Authority of Gwinnett County and the Cobb County/Kennestone Hospital Authority applied to the State Health Planning Agency for certificates of need to provide open heart surgery services. The planning agency denied the applications. Both Gwinnett and Kennestone appealed to the State Health Planning Review Board, which consolidated the appeals and allowed St. Joseph’s Hospital of Atlanta, Inc., and Piedmont Hospital, Inc., to intervene as existing open heart surgery service providers. The review board affirmed the planning agency’s denial of both applications. Gwinnett and Kennestone then appealed to the superior courts of their respective counties. The Gwinnett County Superior Court affirmed the review board’s denial of the Gwinnett application, while the Cobb County Superior Court reversed the review board’s denial of Kennestone’s application. The Hospital Authority of Gwinnett County appeals from the decision of the Gwinnett County Superior Court; St. Joseph’s and the planning agency appeal from the decision of the Cobb County Superior Court. Because these appeals raise the same issues, they are consolidated for our review.

1. The general assembly has created a statewide health planning system to be administered by the planning agency and the review board. OCGA § 31-6-1 et seq. The public policy and purpose of this system “are to ensure that adequate health care services and facilities are developed in an orderly and economical manner and are made available to all citizens and that only those health care services found to be in the public interest shall be provided in this state. To achieve this public policy and purpose, it is essential that appropriate health planning activities be undertaken and implemented and that a system of mandatory review of new institutional health services be provided. Health care services and facilities should be provided in a manner that avoids unnecessary duplication of services, that is cost effective, and that is compatible with the health care needs of the various areas and populations of the state.” OCGA § 31-6-1.

In carrying out this policy and purpose, health care facilities are required to apply for and receive certificates of need from the planning agency before they are allowed to offer certain services, including open heart surgery. OCGA §§ 31-6-2 (4), (5); 31-6-40. OCGA § 31-6-42 (a) provides that the planning agency’s grant or denial of certificates of need “shall be based on the applicable considerations specified in this Code section and reasonable rules promulgated by the planning agency interpretive thereof.” In the instant cases, the applicable considerations are found in OCGA § 31-6-42, State Health Planning Agency (SHPA) Rule 272-2-.08 and SHPA Rule 272-2-.09 (13). The considerations set forth in SHPA Rule 272-2-.08 are essentially the same as those set forth in OCGA § 31-6-42 and apply to all health care services for which a certificate of need is required. The considerations contained in SHPA Rule 272-2-.09 (13) apply only to adult open heart surgery services.

2. Kennestone and Gwinnett argue that the review board improperly emphasized the general considerations of SHPA Rule 272-2-.08 and OCGA § 31-6-42 over the specific considerations of SHPA Rule 272-2-.09. There is no way for this court to determine whether the review board placed more emphasis on either the specific or general consideration, since the board cites numerous considerations in its written decision and does not indicate that any single consideration is more important than another. Even if we assume that the review board interpreted the applicable statute and the planning agency’s own rules in such a way to place more emphasis on certain considerations, that interpretation is entitled to deference by this court. The interpretation of a statute by an administrative agency which has the duty of enforcing or administering it is to be given great weight and deference. North Ga. E.M.C. v. City of Calhoun, 195 Ga. App. 382, 384 (393 SE2d 510) (1990); City of LaGrange v. Ga. Power Co., 185 Ga. App. 60, 63 (363 SE2d 286) (1987).

Moreover, the position of Kennestone and Gwinnett that the specific criteria should prevail over the general considerations is premised on a rule of law that is inapplicable to the instant cases. Kennestone and Gwinnett rely upon the rule of statutory construction that a specific statute will prevail over a general statute, absent any indication of a contrary legislative intent, to resolve any inconsistency between them. City of LaGrange v. Troup County E.M.C., 200 Ga. App. 418, 423-424 (2) (408 SE2d 708) (1991); First Nat. Bank of Atlanta v. Sinkler, 170 Ga. App. 668, 670 (1) (317 SE2d 897) (1984). The reliance of Kennestone and Gwinnett on this rule is misplaced because, as both hospital authorities note in their briefs, the general and specific rules at issue in these cases are not inconsistent. Rather, the specific criteria set forth in SHPA Rule 272-2-.09 are intended by both the legislature and the planning agency to supplement and interpret the more general concepts found in SHPA Rule. 272-2-.08 and OCGA § 31-6-42. See SHPA Rule 272-2-.08 (2); North Fulton Community Hosp. v. State Health &c. Agency, 168 Ga. App. 801, 804 (2) (310 SE2d 764) (1983). Because the general and specific criteria applicable to the instant cases are not in conflict, the hospital authorities’ position is without merit.

3. Kennestone and Gwinnett further claim that the review board not only emphasized the wrong criteria, but in fact failed to consider the specific criteria set forth in SHPA Rule 272-2-.09 (13). This claim is wholly without merit, as a review of the board’s written decision plainly shows that it cited and discussed the applicable specific criteria contained in SHPA Rule 272-2-.09 in addition to the general criteria. SHPA Rule 272-2-.09 (13) (b) (1) sets forth four conditions which must be met before a new adult open heart surgery service shall be approved. The review board did not refer to the first three conditions in its written decision, and therefore we presume for purposes of this appeal that Kennestone and Gwinnett met each of those three conditions. The board did, however, specifically address the fourth condition, which provides that “an applicant shall document that authorized adult open heart surgery services in the state are not predicted to be adversely impacted as a result of the establishment of the new service.” SHPA Rule 272-2-.09 (13) (b) (1) (iv). The rule then sets forth several methods for determining adverse impact. The method applicable to the instant cases provides that establishment of the new service will have an adverse impact if “an existing service which performed 350 or more procedures in the most recent year . . . would perform less than 350 procedures annually as a result of loss of open heart surgery referrals, unless the reduction in the existing service’s annual total volume would be ten percent or less.” SHPA Rule 272-2-.09 (13) (b) (1) (iv) (I). The review board expressly found that establishment of an open heart service at either Kennestone or Gwinnett would adversely impact the existing open heart service at Piedmont Hospital by reducing its procedures to fewer than 350 annually and by more than ten percent of its total annual volume. Since the face of the review board’s decision clearly shows that it was based on the applicable considerations set forth in SHPA Rule 272-2-.09, the claim of Kennestone and Gwinnett to the contrary is incorrect.

4. Kennestone and Gwinnett contend that the review board’s finding that establishment of an open heart surgery service at either hospital would adversely impact the existing service at Piedmont is not supported by sufficient evidence. A reviewing court may reverse this finding only if it is “[n]ot supported by substantial evidence, which shall mean that the record does not contain such relevant evidence as a reasonable mind might accept as adequate to support such findings, inferences, conclusions, or decisions, which such evidentiary standard shall be in excess of the ‘any evidence’ standard.” OCGA § 31-6-44 (i) (5). In the present cases, there is substantial evidence to support the board’s finding. An expert witness testified that establishment of the new service at Kennestone or Gwinnett would reduce the number of procedures performed annually at Piedmont to less than 350 and by more than ten percent of its total annual volume. The expert explained the basis for this testimony and was thoroughly cross-examined about this opinion.

Kennestone and Gwinnett challenge the basis of the expert’s opinion. Those challenges, however, go only to weight and not the admissibility of the expert’s opinion. Krause v. Vance, 207 Ga. App. 615, 616 (1) (428 SE2d 595) (1993). A reviewing court may not substitute its judgment as to the weight of evidence on questions of fact. Bd. of Nat. Resources v. Walker County, 200 Ga. App. 301, 308 (5) (407 SE2d 436) (1991). The expert’s relevant testimony is such that a reasonable mind might accept it as adequate to support the review board’s finding that establishment of an open heart service at either Kennestone or Gwinnett would adversely impact the existing service at Piedmont. The review board did not err in denying certificates of need to both Kennestone and Gwinnett on this basis. The Gwinnett County Superior Court thus properly deferred to the review board’s decision denying the Gwinnett Hospital Authority’s application for a certificate of need. The Cobb County Superior Court, however, exceeded its role as a reviewing court and erred in reversing the board’s decision denying Kennestone’s application. The ruling of the Gwinnett County Superior Court is therefore affirmed and the ruling of the Cobb County Superior Court is reversed.

5. The parties’ remaining arguments are either moot or without merit.

Judgment affirmed in Case No. A93A1565, and judgment reversed in Case Nos. A93A1566 and A93A1567.

Pope, C. J., McMurray, P. J., Birdsong, P. J., Beasley, P. J., Cooper, Andrews and Smith, JJ., concur. Blackburn, J., dissents.

Blackburn, Judge,

dissenting.

In approving the State Health Planning Agency Review Board’s denial of the applications for a certificate of need filed by the Cobb County/Kennestone Hospital Authority and the Hospital Authority of Gwinnett County, the majority opinion upholds a factual finding based upon mere conjecture rather than substantial evidence, and pays only “lip service” to the specific rule governing adult open heart surgery services promulgated by the state agency. I believe that both Kennestone and Gwinnett were entitled to a certificate of need for their proposed adult cardiac surgery programs, and therefore respectfully dissent.

Centralized governmental regulation of the health care industry is, to a significant degree, antithetical to our entire system of free enterprise. The notion that economic forces of supply and demand will control the quality and costs of goods and services is a concept of economic liberty that is just as basic to our system of government as the personal liberty we enjoy and so closely guard. A fundamental conflict exists between that notion of economic liberty and the notion, embraced by the majority opinion, that more governmental regulation can increase quality of health care at lower costs. It may be that governmental regulation is part of the problem and not the cure, and in reviewing the acts of the regulatory agency, courts should insist upon strict compliance with the statutory and regulatory delineations of the agency’s responsibilities. Consistent with that concern is the requirement that the agency’s findings must be supported by substantial evidence.

OCGA § 31-6-42 (a) provides that “[t]he written findings of fact and decision, with respect to the planning agency’s grant or denial of a certificate of need, shall be based on the applicable considerations specified in this Code section and reasonable rules promulgated by the planning agency interpretive thereof.” That Code section delineates 14 general criteria for determining whether to grant a certificate of need. Rule 272-2-.08 of the Rules of the SHPA reiterates the general criteria contained in OCGA § 31-6-42. Rule 272-2-.09 (13) provides specific requirements for approval of adult open heart surgery services.

In 1989, the State Health Policy Council convened a technical advisory committee to assess the State Health Plan for specialized cardiovascular services and the certificate of need rules. The committee’s recommendations were submitted to and accepted by the State Health Policy Council as the Component Plan for Specialized Cardiovascular Services. This Component Plan generally advances the concept of regionalization of open heart surgery services.

In its decision dated October 7, 1992, the Review Board held that the specific regulation governing open heart surgery services contained in Rule 272-2-.09 merely supplements the general criteria for issuing a certificate of need. The Review Board pointed out that fifteen open heart surgery programs currently operate in Georgia, seven of which are located in the Atlanta area. Although Kennestone and Gwinnett proposed to make adult open heart surgery services available, or more convenient, to a large geographic area outside the metropolitan Atlanta area, some of their projected service area overlapped the area serviced by St. Joseph’s Hospital and Piedmont Hospital. The focus of the Review Board’s evaluation of the projected impact of the proposed new programs thus pertained to the existing open heart surgery programs at the latter two hospitals.

The Review Board concluded that approval of new adult open heart surgery programs at either Kennestone or Gwinnett would negatively affect the existing programs operated by the other hospitals in the same service area, based upon several findings or considerations: the population bases that Kennestone and Gwinnett would serve already have geographic access to adult open heart surgery services; the number of expected open heart surgeries was expected to decline due to technological advances and new practice guidelines, and thus providers of adult open heart surgery services would be sharing fewer patients in the future; the existing providers were capable of performing additional open heart surgeries without incurring additional expenses; physicians who practiced near Kennestone and Gwinnett would likely refer patients to those facilities, and thus Piedmont Hospital, which has a relatively new program, particularly would lose referrals at an unacceptable level; specifically, Piedmont Hospital’s volume of procedures would fall below 350 and more than ten percent of its annual production, losing at least 40 surgeries per year if either Kennestone’s or Gwinnett’s applications were approved; Kennestone and Gwinnett proposed to utilize the same group of cardiac surgeons who already operated out of St. Joseph’s Hospital and Piedmont Hospital, which would likely impact those existing programs because of the shortage of cardiac surgeons and support staff in the service area; and approval of the new programs would decrease referrals to the existing programs and such a lowering of utilization would result in escalated charges, a negative effect on health care payors.

In reversing the Review Board’s decision in Kennestone’s appeal, the Cobb County Superior Court concluded that the Review Board erred in relying upon and applying the general criteria rather than following the specific adult open heart surgery services rule, as that rule provides substance and specificity to those general considerations. The superior court found unrefuted evidence that Kennestone’s application complied with the requirements of that specific rule, and that the Review Board’s findings regarding the adverse impact Kennestone’s proposed program would have on the existing operations were not supported by substantial evidence. Specifically, the court rejected the finding that the number of Piedmont Hospital’s procedures would decrease by more than ten percent and below 350 annually, and pointed out that no findings were made regarding how Kennestone’s program may adversely impact the existing program at St. Joseph’s Hospital.

In affirming the Review Board’s decision in Gwinnett’s appeal, the Gwinnett County Superior Court relied upon the general criteria for determining whether to grant a certificate of need contained in OCGA § 31-6-42, rather than the specific rule. Further, the superior court found that the Review Board’s decision was supported by substantial evidence, specifically noting that “in relation to the issue of referrals lost by Piedmont the decision of the Board refers to referrals made by primary care physicians, non-invasive cardiologists and other physicians who practice near Gwinnett and not only to referrals made from physicians on the staff at Gwinnett Medical Center.”

The general criteria for determining certificate of need applications contained in OCGA § 31-6-42 and SHPA Rule 272-2-.08 include, in part, the following: the proposed new health services must be consistent with the general goals and objectives of the state health plan; the population residing in the area to be served must have a need for the services; the new service must not have an unreasonable effect on health service payors; the proposed program will have a positive relationship to the existing health care delivery system in the service area; and the proposed new service will foster improvements or innovations in the financing or delivery of health services, promote health care quality assurance or cost effectiveness, or foster competition that results in lower patient costs without a loss of quality of care.

If those general criteria alone governed the determination of certificate of need applications regarding adult open heart surgery services, the voluminous record in these cases probably contains substantial evidence to support a decision either to grant or deny the applications filed by Kennestone and Gwinnett. For every thrust, there appears to be at least an equally persuasive parry. For example, the existing providers contend that reduction in the number of cardiac procedures performed at their facilities would tend to escalate the charges for those services in order to recover the expenses associated with providing such services. That contention, however, is balanced by general economic principles of supply and demand; if the supply of services increases, the charge for those services tends to become more competitive. The current providers emphasize that no real need exists for new adult open heart surgery programs because those services are already available in the same geographic area. However, that argument is somewhat disingenuous, as it ignores the considerable inconvenience for cardiac patients and their families residing in Cobb County and Gwinnett County and outlying regions forced to commute to the downtown Atlanta area in order to receive such services. Having a physician make a house call, of course, is a thing of the past; the instant cases demonstrate that in this modern day, even great obstacles now confront health care providers who merely seek to make health care services available in their patients’ communities. This is a development brought about not only by existing providers, whose economic interests motivate their resistance to new providers, but also by the State of Georgia through the SHPA.

The existing providers assert that the quality of available cardiac services will be diminished because Kennestone and Gwinnett propose to utilize the same cardiac surgical group currently operating out of their programs. However, this cynical view presumes that the cardiac surgeons involved would deliberately overextend themselves and provide inferior medical care. There is no basis in fact in the record for such an assumption. Considering the risks involved in this particular type of health care, an equally strong presumption arises that the cardiac surgeons would not agree to participate in the establishment of adult open heart surgery programs at Kennestone and Gwinnett if those physicians doubted their ability to provide quality care.

As discussed above, the Cobb County Superior Court found that the general criteria alone do not govern determinations of certificate of need applications. Rather, SHPA Rule 272-2-.09 narrows the focus of that determination, and provides specific and definite requirements that must be met before adult open heart surgery services may be approved. The Cobb County court properly applied that specific rule in deciding Kennestone’s appeal.

“Implicit in the interlocking parts of the statutory scheme is the legislative intent that the Review Board use the [general] considerations as a base, filling the interstices of the statutory considerations with the agency’s rules interpreting and implementing them. What was implicit in the statutory scheme has now been made explicit.” North Fulton Community Hosp. v. State Health &c. Agency, 168 Ga. App. 801, 804 (310 SE2d 764) (1983). For purposes of interpretation of statutes, “the specific statute will prevail over the general statute, absent any indication of a contrary legislative intent.” First Nat. Bank of Atlanta v. Sinkler, 170 Ga. App. 668, 670 (317 SE2d 897) (1984). The same principle should apply with regard to interpretation of regulations promulgated by an administrative agency. Where a specific rule, by its express terms, governs a particular situation, it must be applied. Cf. Dogwood Square Nursing &c. v. State Health Planning Agency, 255 Ga. 694 (341 SE2d 432) (1986).

The requirements of Rule 272-2-.09 (13) include: (1) the applicant must operate an existing adult cardiac catheterization service in an acute hospital setting which generated 180 or more open heart surgeries in the 12-month period preceding the application; (2) the applicant must project that the new open heart surgery service will be performing at least 200 open heart surgeries within three years of the initiation of the program; and (3) the applicant must document that the existing providers are not predicted to be adversely impacted by the establishment of the new service. With regard to existing programs that perform over 350 open heart surgeries annually, the rule defines adverse impact as decreasing the existing program’s number of such procedures to fewer than 350 annually, unless the reduction was less than ten percent of the total annual volume.

In the instant cases, it was uncontroverted that both Kennestone and Gwinnett operate adult cardiac catheterization services which generated 180 adult open heart surgeries within the pertinent 12-month period, and that each proposed program projected the performance of at least 200 open heart surgeries within three years of its initiation. The evidence showed that in 1989, Kennestone made 165 referrals to St. Joseph’s Hospital for open heart surgery, and Gwinnett made 203 such referrals to St. Joseph’s Hospital. There was no documentation of any definite open heart surgery referrals to Piedmont Hospital made by either Kennestone or Gwinnett. Considering the fact that in 1989, St. Joseph’s Hospital performed over 1,400 open heart surgeries (and in 1990, over 1,500), the resulting loss of referrals from Kennestone and Gwinnett would not reduce the annual number of procedures at St. Joseph’s Hospital and Piedmont Hospital below 350. Under Rule 272-2-.09, approval of the proposed new adult open heart surgery services at Kennestone and Gwinnett would not have an adverse impact on the existing programs operated by St. Joseph’s Hospital and Piedmont Hospital.

In determining what impact the proposed programs at Kennestone and Gwinnett would have on the existing programs at St. Joseph’s Hospital and Piedmont Hospital, the Review Board considered the possibility of existing providers’ loss of referrals from physicians who practice in the area of Kennestone and Gwinnett but who are not on the staffs of those two hospitals. However, the number of actual referrals currently made by Kennestone and Gwinnett staff physicians to existing open heart surgery providers is the appropriate measure of impact which would be suffered by those existing programs upon the approval of the proposed programs at Kennestone and Gwinnett. The Component Plan itself addresses this issue in stating that “[f]or operational services which have established sources and documented quantity of referrals, a major element of impact can be quantified to a reasonable degree. By assuming that the hospital proposing to establish a new service basically would stop making OHS referrals and would retain and serve these patients in its own OHS service, the number of referrals predicted to be lost can be deducted from the total volume of existing services to determine the anticipated extent of impact.” To consider potential loss of referrals from other sources than the staffs of Kennestone and Gwinnett substitutes speculation and conjecture for the objective and definite method of quantification adopted in the Component Plan.

In concluding that a certificate of need should not be issued to Kennestone or Gwinnett, the Review Board also relied upon the fact that the existing providers have the present capacity to increase the number of procedures they perform. However, in the 1989 Component Plan, the technical advisory committee indicated that “[a]fter evaluating a number of options for establishing a method of determining need for new adult open heart surgery services, including methods for projecting need in areas of the state, as well as the need method included in the 1986 Component Plan requiring achievement of a combined use rate of 80% of capacity of services in a Health Service Area,” it adopted instead a “facility specific” need methodology. The capacity of existing providers may remain an appropriate concern under the general criteria contained in OCGA § 31-6-42 and Rule 272-2-.08, but the specific rule governing adult open heart surgery services omits consideration of existing capacity.

Although great deference is afforded an agency’s administrative interpretation of a statute or rule, City of LaGrange v. Ga. Power Co., 185 Ga. App. 60 (363 SE2d 286) (1987), no such deference is due where the agency fails to apply the proper rule. See Dogwood Square Nursing &c. v. State Health Planning Agency, supra. In the instant cases, the Review Board’s evaluation concentrated on the general criteria delineated in OCGA § 31-6-42 and Rule 272-2-.08, and failed to place primary emphasis upon Rule 272-2-.09, the specific rule governing approval of an application for a certificate of need for adult open heart surgery services. The evidence is essentially uncontroverted that both Kennestone and Gwinnett met the clear and specific criteria of Rule 272-2-.09. For that reason, I would find that the Cobb County Superior Court properly ordered issuance of a certificate of need to Kennestone, and that the Gwinnett County Superior Court erred in failing to do likewise.

The majority opinion disagrees that primary emphasis must be placed upon the specific criteria regarding open heart surgery services contained in Rule 272-2-.09 rather than the general criteria regarding approval of certificates of need contained in Rule 272-2-.08, on the grounds that no inconsistency exists between the specific and the general criteria. However, inasmuch as the Review Board’s determinations on Kennestone’s and Gwinnett’s applications would be supported by substantial evidence under the general criteria, but are not supported by substantial evidence if the specific criteria are applied, it seems that the majority is mistaken in its conclusion regarding the absence of any inconsistency.

Further, in concluding that substantial evidence supports the Review Board’s findings concerning the adverse impact of the proposed programs at Kennestone and Gwinnett, the majority opinion perpetuates the same error made by the Review Board and the Gwinnett County Superior Court, i.e., considering the number of potential referrals from all physicians who practice in the service areas of Kennestone and Gwinnett as the measure of adverse impact, rather than the number of actual referrals from those two facilities to existing open heart surgery programs. The proper (and less speculative) measure of adverse impact is to consider the number of actual referrals from the facilities seeking the certificates of need.

The expert witness, upon whose testimony the majority relies, applied the incorrect measure of adverse impact by considering the potential referrals of all physicians operating in the service areas. However, the expert acknowledged that the number of actual referrals from Kennestone and Gwinnett would not establish an adverse impact upon the existing providers if consideration of such referrals constitutes the appropriate measure; for example, she did not dispute that in 1988 Kennestone made no open heart surgery referrals to Piedmont and only 165 to St. Joseph’s. She further conceded that under her analysis of adverse impact based upon all potential referrals, no new open heart surgery programs would ever be approved in the metropolitan Atlanta area.

Decided November 19, 1993

Reconsiderations denied December 10, 1993 and December 15, 1993

Powell, Goldstein, Frazer & Murphy, Randall L. Hughes, Adrienne E. Marting, Kim H. Roeder, W. Howard Fowler, for Gwinnett Medical Center.

Michael J. Bowers, Attorney General, Dennis R. Dunn, Senior Assistant Attorney General, for State Health Planning Agency.

Parker, Hudson, Rainer & Dobbs, John H. Parker, Jr., Thomas D. Watry, Cauthorn & Phillips, Thomas E. Cauthorn III, John Page, Oxendine & Associates, John W. Oxendine, for St. Joseph’s Hospital.

Glass, McCullough, Sherrill & Harrold, John A. Sherrill, Deborah L. Britt, Barnes, Browning, Tanksley & Casurella, Roy E. Barnes, Benny C. Priest, for Kennestone Hospital.

As discussed above, the Cobb County Superior Court applied the correct measure of adverse impact, unlike the Review Board and the Gwinnett County Superior Court. In applying that proper measure, the Cobb County court correctly concluded that the evidence demanded finding that no adverse impact would result from the approval of open heart surgery services at Kennestone. The evidence likewise demands such a finding with regard to approval of an open heart surgery program at Gwinnett. The judgment of the Cobb County Superior Court should be affirmed, and the judgment of the Gwinnett County Superior Court should be reversed. I dissent from the majority opinion’s contrary conclusions.


source: Caselaw Access Project

author: Smith, Judge.

license: Public Domain

text:
    A93A1619.
    CAULDWELL v. THE STATE.
    (439 SE2d 90)
   Smith, Judge.

On October 20, 1987, Anthony Cauldwell pled guilty to one count of burglary and one count of criminal attempt to commit burglary in Fulton County. Cauldwell was sentenced to five years — one to serve, with the balance probated. The court also imposed $1,800 restitution. Cauldwell was paroled on October 17, 1988. Based on a probation officer’s affidavit averring that Cauldwell had “[failed] to report and pay as directed,” an arrest warrant against Cauldwell was issued on February 6, 1991. A return of non est inventus was made on February 18, 1991.

Cauldwell was ultimately arrested on the probation warrant on November 25, 1992. On December 22, 1992, a probation revocation hearing was held. At the hearing, Cauldwell argued that his sentence had already expired, despite the tolling effect of the prior arrest warrant, because he had been sentenced on an unrelated charge in Floyd County, Georgia, some three weeks after the Fulton County warrant was issued in February 1991. The State conceded that the actual time Cauldwell spent in custody on the Floyd County charge after the arrest warrant was issued should be deducted from the time left to be served on the burglary convictions. The only question now before this court on discretionary appeal is whether tolling under OCGA § 42-8-36 (a) (1) ceased automatically when Cauldwell was taken into custody on the unrelated Floyd County charge.

Cauldwell relies upon the language in OCGA § 42-8-36 (a) (1) to the effect that such tolling continues “until the probationer shall personally report to the probation supervisor, is taken into custody in this state, or is otherwise available to the court. . . .” (Emphasis supplied.) Cauldwell essentially asserts that the phrase “is taken into custody in this state” should be construed literally and without limitation. We disagree.

OCGA § 42-8-34 (g) provides, in pertinent part, that “[t]he sentencing judge shall not lose jurisdiction over any person placed on probation during the term of his probated sentence.” Revocation of probation is an action of the court, and it may occur only after the probationer has been afforded notice and an opportunity to be heard regarding alleged violations of the terms of probation. Rainwater v. State, 127 Ga. App. 406, 407 (193 SE2d 889) (1972). See generally OCGA §§ 42-8-34.1; 42-8-38.

The tolling of a probated sentence following the return of a warrant showing non est inventus is intended to prevent the probationer from avoiding the potential adverse impact of revocation merely by avoiding the court. The General Assembly has determined that such a purpose is served under OCGA § 42-8-36 (a) (1) once the probationer “personally [reports] to the probation supervisor, is taken into custody in this state, or is otherwise available to the court.” (Emphasis supplied.)

“Otherwise” means “[i]n a different manner; in another way, or in other ways.” Black’s Law Dictionary 1101 (6th ed. 1990). The General Assembly has determined that taking a person into custody within the meaning of OCGA § 42-8-36 is one way of making that person “available to the court” for pending revocation proceedings. It is obvious, however, that a probationer can be taken into custody for reasons unrelated to his status as a probationer and that such custody may not always result in making the probationer “available” for revocation proceedings.

The phrase “taken into custody” in this statute must be construed in light of the phrase immediately following it, “or is otherwise available to the court.” The word “otherwise” indicates that the phrase “taken into custody” relates to, and is limited by, the phrase “available to the court.” See Williamson v. Southern Regional Council, 223 Ga. 179, 184 (3) (154 SE2d 21) (1967). Cauldwell was not taken into custody in Floyd County based upon the outstanding arrest warrant in Fulton County, nor for any other reason related to his status as a probationer under the jurisdiction of the Fulton County Superior Court. Cauldwell does not argue, nor does the record suggest, that he in fact became “available” to the court in Fulton County as a result of his incarceration in Floyd County, or even that his probation officer or any other Fulton County court official knew of it. Compare Dilas v. State, 159 Ga. App. 39 (282 SE2d 690) (1981). We therefore find that the tolling function initiated under OCGA § 42-8-36 (a) (1) did not automatically cease merely because Cauldwell was taken into custody in Floyd County.

We do not hold, however, as the trial court did, that the tolling function of OCGA § 42-8-36 (a) (1) temporarily ceased when Cauldwell was taken into custody on an unrelated charge, and then went “back into effect” when Cauldwell was subsequently released despite the outstanding warrant in Fulton County. If Cauldwell had been made available to the court having jurisdiction over his probation as a result of being taken into custody in Floyd County, the tolling pursuant to OCGA § 42-8-36 (a) (1) would have ceased as the statute expressly provides.

However, since Cauldwell does not in fact suggest that he was made available to the court as a result of his incarceration, the tolling pursuant to OCGA § 42-8-36 (a) (1) remained in effect as if his “custody” in Floyd County never took place. The trial court correctly ruled that Cauldwell’s sentence did not “run” after he was released from custody in Floyd County, and the judgment is therefore affirmed under the “right for any reason rule.” Ratliff v. State, 207 Ga. App. 112 (427 SE2d 85) (1993).

Judgment affirmed.

Beasley, P. J., and Cooper, J., concur.

Decided December 3, 1993

Reconsideration denied December 15, 1993

Steven E. Phillips, for appellant.

Lewis R. Slaton, District Attorney, Vivian D. Hoard, Assistant District Attorney, for appellee.


text:
    A93A1651.
    WILLIAMS v. KNIGHT et al.
    (439 SE2d 507)
   Smith, Judge.

Lawrence Williams brought an action against Jordan Knight and Steven Chandler seeking damages for personal injuries incurred when Chandler struck him during an altercation at a nightclub. A jury rendered a verdict in favor of Knight and Chandler, and Williams’s motion for new trial was denied.

The evidence at trial showed that Williams met a woman at an Atlanta nightclub and spoke with her for several minutes. Sometime later the woman tapped him on the shoulder and informed him that “some kid” had struck her and called her names. She asked for Williams’s advice. He offered to assist her in straightening out the “misunderstanding,” and asked her to point out the offender. The woman identified Knight, who is a performer with the group New Kids on the Block, and Williams approached him. An altercation ensued between Williams and Chandler, who is Knight’s bodyguard. It is undisputed that Chandler struck Williams several times and that Williams was injured. However, the evidence was in sharp conflict as to who instigated the fight and who took the first swing. Williams testified that he did not provoke Chandler at all, merely stating that he thought Chandler’s “friend” owed the lady an apology and that Chandler then hit him at Knight’s direction. Chandler testified that when he told Williams there would be no apology, Williams immediately attempted to strike him, and he struck back in self-defense.

1. In instructing the jury, the trial court charged on the principles of assumption of the risk and avoidance of consequences by the exercise of ordinary care for one’s own safety. Williams contends this was error, as these instructions are proper only in negligence cases and not in a case such as this, in which damages are sought for the intentional tort of battery. “It is well-settled that the defenses of . . . assumption of the risk . . . and [failure to avoid consequences by the exercise of ordinary care] are not valid defenses to intentional, wilful, or wanton and reckless torts, and it is inappropriate in such cases to instruct the jury thereon.” Hopkins v. First Union Bank, 193 Ga. App. 109, 111 (2) (a) (387 SE2d 144) (1989). See Hendricks v. Southern Bell Tel. &c. Co., 193 Ga. App. 264, 266 (2) (387 SE2d 593) (1989).

As pointed out by appellees, although Williams excepted to the charge, he did so on other grounds. OCGA § 5-5-24 (a) requires that objection, including the specific grounds therefor, be made before the verdict before a litigant may complain on appeal that a given instruction is erroneous. OCGA § 5-5-24 (c) requires this court, however, “[notwithstanding any other provision of this Code section, . . . [to] consider and review erroneous charges where there has been a substantial error in the charge which was harmful as a matter of law, regardless of whether objection was made hereunder or not.”

The question then becomes whether the erroneous charges constituted “a substantial error . . . which was harmful as a matter of law.” This language has been construed to mean that in order to result in reversible error, erroneous charges to which the complainer on appeal has made insufficient objection at trial must show error directly resulting in a gross injustice or error that is “ ‘blatantly apparent and prejudicial to the extent that it raises the question of whether the losing party has, to some extent at least, been deprived of a fair trial because of it.’ [Cit.]” Central of Ga. R. Co. v. Luther, 128 Ga. App. 178, 181 (196 SE2d 149) (1973). See Henderson v. Glen Oak, Inc., 179 Ga. App. 380, 382 (4) (346 SE2d 842) (1986), aff’d 256 Ga. 619 (351 SE2d 640) (1987). This Code subsection is properly invoked infrequently. However, our careful examination of the charge persuades us that the instructions given created a strong risk of misleading the jury to conclude that the principles charged constituted defenses to battery, resulting in a substantial, prejudicial error. This portion of the court’s charge therefore meets the requirements in OCGA § 5-5-24 (c). Accordingly, Williams is entitled to a new trial.

2. Because of our holding in Division 1 granting Williams a new trial, we need not fully address Williams’s contentions regarding the trial court’s failure to grant a mistrial or, alternatively, rebuke defense counsel and give the jury a curative instruction after improper remarks made by defense counsel during opening statement. The remarks in issue, indicating and emphasizing Williams’s failure to file income tax returns, were made after the trial court deferred ruling on Williams’s motion in limine to exclude any reference to this matter. The court had also cautioned defense counsel that any mention of the matter during opening statements would be “at their peril.”

The trial court’s eventual ruling on the admissibility of this matter during the evidence phase of the trial was correct and in accordance with this court’s holding in Robert &c. Assoc., v. Tigner, 180 Ga. App. 836, 843-844 (2) (351 SE2d 82) (1986). In Tigner, an action for personal injury resulting from an automobile collision on a parking lot ramp, the trial court allowed evidence that the plaintiff could present no proof of income in the form of tax returns but refused to allow the defendant contractor to show the plaintiff’s failure to file such returns, ruling that such a showing was unnecessary and would constitute evidence of a crime. On appeal by the contractor, this court affirmed, reasoning that “the prejudicial effect of the jury’s speculation [regarding tax evasion] would greatly outweigh any benefit to the jury’s understanding which conceivably might be generated by inferences derived from the evidence. [Cit.]” Id. at 843 (2). During the trial in this case, no evidence was presented regarding failure to file tax returns. However, defense counsel’s opening statement remarks remained with the jury. Although the facts in Tigner may be somewhat distinguishable from those in this case, see id. at 844 (2), we find the rationale therein both persuasive and applicable, and we cannot agree with appellees that these statements were harmless error.

3. Because it may recur at retrial, we also address Williams’s contention that the trial court erred in excluding the testimony of his witness Seamus McHugh.

Defendants moved in limine to exclude evidence that other members of the group had been involved in altercations and to limit the evidence at trial involving Knight and Chandler to this particular fight. The plaintiff agreed to the first limitation. The trial court denied the motion for a blanket exclusion of other incidents involving these defendants, but prohibited mention of such evidence in opening statements and deferred ruling on the admissibility of specific evidence until the time of presentation of such evidence during trial.

Williams called Knight during his case-in-chief for purposes of cross-examination. Knight testified that he had never ordered a bodyguard or anyone on his behalf to strike someone else. Williams then called McHugh for impeachment purposes, and the defendants objected. After hearing argument from both counsel, the trial court agreed with the defense objection and ruled McHugh’s testimony inadmissible. Williams was permitted to present an offer of proof, which shows that McHugh would have testified that in June 1991, in Boston, he was in a car when Knight, in the company of three other individuals including a bodyguard, passed by on the street; that as he sat in his car, Knight approached, pointed out McHugh, and then instructed his bodyguard to hit him, which the bodyguard did.

The defense offered several grounds for its objection to this evidence. We find that none of the stated grounds offers a sound reason for excluding the evidence for the limited purpose of impeaching Knight’s testimony. Contrary to appellees’ argument, this evidence had not previously been excluded by the ruling on the motion. Nor was impeachment of Knight on this issue undertaken by referring to his deposition testimony, rendering appellees’ argument that Knight could not have known about McHugh’s complaint against him at the time he gave the deposition utterly without merit. Moreover, because Knight denied not only that he had ordered a bodyguard to strike anyone but that he had ordered anyone to do so, appellees’ objection that no showing was made that the person who struck McHugh was Knight’s bodyguard was likewise insufficient.

Decided November 19, 1993

Reconsideration denied December 15, 1993

Evert & Weathersby, C. Michael Evert, Jr., Michael N. Weathersby, for appellant.

Goldner, Sommers, Scrudder & Bass, Glenn S. Bass, Ellis, Funk, Labovitz & Campbell, William C. Campbell, for appellees.

“The law provides that an adverse witness may be impeached by several different methods. One such method is to disprove the facts to which he has testified at trial. See OCGA § 24-9-82.” Pender v. Witcher, 194 Ga. App. 72 (2) (389 SE2d 560) (1989), rev’d on other grounds 260 Ga. 248 (392 SE2d 6) (1990). The witness was offered to impeach Knight’s statement of fact that he had never ordered his bodyguard or anyone else to strike another person. As McHugh’s testimony was in direct contradiction of this fact and not excludable for some other reason, it was admissible under OCGA § 24-9-82.

Judgment reversed and remanded.

Beasley, P. J., and Cooper, J., concur.


author: Smith, Judge. Beasley, Presiding Judge,

text:
    A93A1694.
    GEORGIA FARM BUREAU MUTUAL INSURANCE COMPANY v. KEPHART.
    (439 SE2d 682)
   Smith, Judge.

Georgia Farm Bureau Mutual Insurance Company denied June Kephart’s claim under a homeowners’ insurance policy when a house and garage in which she claimed a 50 percent interest were destroyed by fire. She filed suit, seeking to recover certain proceeds, a penalty for bad faith, and attorney fees and costs. The insurer answered, raising various defenses including lack of coverage because of Kephart’s misrepresentations, her lack of an insurable interest in the property, and her failure to comply with material conditions of the policy. A jury returned a verdict in favor of Kephart in the form of special interrogatories. Judgment was entered on the verdict, and the insurer appeals.

The evidence established that Kephart and her then-husband, Walter, bought the property in issue on John Smith Road in Union County at the beginning of 1989. It was titled in both their names. Kephart arranged for homeowners’ insurance, and the policy was issued by Georgia Farm Bureau to Kephart and Walter jointly. In December 1989, when it was apparent that her marriage was foundering, Kephart instructed the insurer, through its agent, to remove Walter’s name from the policy. The testimony of both Kephart and Walter indicated that this change was part of a larger agreement, never finalized or consummated, under which Kephart was to retain the house. Instead, in March 1990, Walter and his girl friend moved into the house to await the birth of their child. Kephart left and, with her son, went to stay in her mother’s mobile home in Andrews, North Carolina. She and her son took their clothing and personal papers and a few pieces of furniture from the house, but because she was unable to store them at her mother’s home, she left most of the furnishings and effects. Walter and his girl friend continued to occupy the house.

In September 1990, Kephart filed an action for divorce. The final decree, incorporating a settlement agreement, was entered on October 31, 1990. The house and garage were destroyed by fire on November 30, 1990. It is undisputed that during the applicable time period, only Kephart was named insured in the policy.

1. The insurer contends that because it is clear that Kephart did not reside in or, at the very least, did not reside exclusively in, the residence premises at the time of the loss, no coverage existed under the policy, because exclusive residence in the “residence premises” was required by the terms of the policy.

(a) The policy recites that it covers “the dwelling on the residence premises shown in the Declarations, including structures attached to the dwelling. . . .” “Residence premises” is defined in the policy as “a. the one family dwelling, other structures, and grounds; or b. that part of any other building; where you reside and which is shown as the ‘residence premises’ in the Declarations.” The premises shown in the declarations is the house on John Smith Road in Union County. Finally, in a paragraph captioned “special provisions” the policy requires, inter alia, that unless noted as an exception in the declarations, “the residence premises [must be] the only premises where the named insured or spouse maintains a residence other than business or farm properties.” No exceptions are noted on the declarations page.

No construction of an insurance contract is required or even permissible when the language is plain, unambiguous, and capable of only one reasonable interpretation. Like any other contract, an insurance policy must be construed according to its plain language and express terms. Giles v. Nationwide Mut. Fire Ins. Co., 199 Ga. App. 483, 484 (1) (405 SE2d 112) (1991). Giving the language of the policy in issue its plain and ordinary meaning, it requires that the named insured live in the residence listed on the declarations page and that the listed residence be the named insured’s only residence.

(b) The existence of those requirements was undoubtedly the reason for the first interrogatory in the special verdict form, requiring the jury to answer the question: “Did June Kephart reside in the premises described on the policy declarations page at the time of the fire loss?” The jury answered affirmatively. We agree with Georgia Farm Bureau that this answer was not authorized by the evidence.

The separation agreement incorporated into the Kepharts’ final decree of divorce provided that “the Husband is to keep the marital abode and its present furnishings.” Kephart testified unequivocally that she never lived at the marital home after she left in March 1990. She opened her testimony by giving her present address as Andrews, North Carolina, and stated that she had lived there since March 1990. On cross-examination, she was asked: “Isn’t it true that from March of 1990 up to and including the time that this house that’s in issue burned, that you did not reside at that house?” She replied: “That’s true.” Both Kephart and her ex-husband testified that despite the language in the agreement awarding him the “present furnishings,” it was their mutual understanding that Kephart was welcome to “come back and get whatever [household goods] she needed.” Regardless of the import of this language on any equitable interest Kephart might claim in the household furnishings, the understanding established by this testimony is completely consistent with, and supportive of, a finding that after March 1990, Kephart did not reside in the premises on John Smith Road. Moreover, Kephart has pointed to no evidence in the record supporting a finding that she lived at the premises described in the policy at the time of the fire.

(c) Because the evidence established that Kephart did not live at the house on John Smith Road at the time of the fire, and the policy unambiguously required her, as named insured, to live at the “residence premises” in order for coverage to be effective, no coverage existed for Kephart’s claim. See Epps v. Nicholson, 187 Ga. App. 246, 247 (1) (370 SE2d 13) (1988) (construing similar policy condition as resulting in no coverage because named insured did not live at residence premises); see also Schroeder v. Ga. Farm &c. Ins. Co., 211 Ga. App. 302 (439 SE2d 18) (1993).

Ga. Farm &c. Ins. Co. v. Brown, 260 Ga. 160 (390 SE2d 586) (1990), relied upon by appellee, does not require a different result. In Brown, the insurer contended that because the property insurance policy included a “change of interest” clause, no coverage existed because the property in issue had been conveyed by the named insured for a short time in an effort to conceal assets prior to an anticipated divorce. The relevant clause provided that the policy would be “null and void in case of any change in interest, title or possession.” At the time of the loss, however, the property had been reconveyed. The Supreme Court held that “because the property covered by [the] policy had been reconveyed to the insured prior to the loss, and there was no evidence that the conveyance had in any way contributed to the loss, coverage was not terminated by the change in interest clause of the policy. [Cit.]” Id. at 162. That, of course, is the crucial difference between Brown and this case. In Brown, no loss occurred while the insured was in violation of the terms of the policy. “Had a loss eventuated from or during the existence of the increased risk [created by the violation of the terms of the policy], however, then . . . the policy would have been voided.” Id.

In this case, the loss occurred during the time Kephart, the named insured, was not living in the “residence premises.” Since the policy covers only the property listed in the declarations and only when the insured resides in those premises exclusively, no coverage was afforded Kephart. This result, although harsh, is the result contracted for by the parties. “When the language of an insurance policy defining the extent of the insurer’s liability is unambiguous and capable of but one reasonable construction, the court must expound the contract as made by the parties. [Cit.] Courts have no more right by strained construction to make an insurance policy more beneficial by extending the coverage contracted for than they would have to increase the amount of coverage. [Cit.]” Burnette v. Ga. Life &c. Ins. Co., 190 Ga. App. 485 (1) (379 SE2d 188) (1989).

(d) Because no coverage existed, the entire judgment, awarding Kephart a sum representing the value of the destroyed real and personal property as the proceeds of the policy, plus interest, awarding Kephart attorney fees, and directing the insurer to satisfy and cancel the note and security deed, must be reversed.

2. Our holding in Division 1 renders unnecessary our consideration of Georgia Farm Bureau’s remaining enumerations of error.

Judgment reversed.

Beasley, P. J., and Cooper, J., concur specially.

Beasley, Presiding Judge,

concurring specially.

As in Schroeder v. Ga. Farm &c. Ins. Co., 211 Ga. App. 302 (439 SE2d 18) (1993), I concur specially. I do so because it is implied in the policy that the Special Conditions, which are the same and are identically placed in this policy, must be adhered to throughout the life of the policy.

The Special Conditions are articulated in the present tense verb form, indicating that they are the circumstances at that point in time at which the parties enter into the contract and .the policy is issued. The condition here subject was in fact complied with at that time. There was no express warning that coverage depended on the continued existence of the conditions, nor is there any specific direction to insured that insurer must be notified of any change in one of the conditions so that the policy could be changed. However, the common law does not require such, and the legislature has not imposed such.

Decided November 29, 1993

Reconsideration denied December 15, 1993

Carey, Jarrará & Walker, Christopher J. Walker III, for appellant.

Wesley Williams, for appellee.

Because insurer agreed, in the first sentence of the policy, only to furnish insurance “for the premium and compliance with all applicable provisions of this policy” and the condition of residency is an applicable provision, there was no coverage when the condition ceased to exist in fact. The policy imposes continuing obligations on both parties, for the life of the contract.

I am authorized to state that Judge Cooper joins in this special concurrence.


author: Beasley, Presiding Judge.

text:
    A93A1697.
    ROGERS v. CARMIKE CINEMAS, INC.
    (439 SE2d 663)
   Beasley, Presiding Judge.

Rogers appeals from a directed verdict granted at the conclusion of her case-in-chief. Rogers had filed the complaint against Carmike Cinemas seeking actual and punitive damages due to alleged sexual harassment by company officers and employees. She asserted in the complaint that while in the employ of Carmike, she had to endure on almost a daily basis harassing conversations involving sexual innuendo and sexual overtone, as well as direct confrontations regarding sexual favors from Carmike’s officers and employees. She further asserted that they would constantly touch, hug, fondle, and otherwise sexually harass her against her will. The complaint does not characterize or label the tort or torts which these actions constituted, that is, what theory of legal liability was being advanced against the corporation.

In its answer, Carmike asserted various defenses, including denial, preemption of Rogers’ claims by workers’ compensation laws, and commission of the acts, if any, by officers and employees outside the scope of their employment.

In the opening statement, Rogers focused on sexually harassing actions by three people: Patrick, the president and CEO of the company; Fields, a company vice-president who was plaintiff’s direct supervisor during most of the time she worked for Carmike; and Adams, another company vice-president.

Rogers testified that she was a lease administrator and had been hired by Fields, vice-president of real estate development, who was her primary supervisor, although for a period of time she had reported directly to Patrick; that Patrick sexually harassed her by offering her money to strip at a meeting attended by most of the company’s vice-presidents, including Fields and Adams; that after she refused, Fields paid off on a bet he had made that Rogers would accept the offer to strip for money; that Patrick also sexually harassed her verbally and physically while they were alone; that Fields and Adams had sexually harassed her; that at an office Christmas party, Adams exposed himself on the dance floor; that these were not isolated instances but went on from shortly after she began working for Carmike until she was terminated; and that these kinds of degrading things pervaded the work atmosphere. She gave like testimony in her deposition.

Rogers testified that she did not report these incidents because there was no one to report them to except the individuals who were engaging in the harassment. She did not quit because she needed the job.

Carmike fired Rogers approximately two years after she had been hired. Rogers testified that it was because of her refusal to accept her supervisors’ sexual advances. She was offered severance pay pursuant to a separation agreement requiring her to waive all claims against Carmike and its officers and employees and refrain from making defamatory or objectionable statements concerning Carmike. She rejected this offer, which she characterized as hush money. Patrick testified that it is standard company policy to provide discharged employees with severance pay pursuant to the agreement.

Defendant argued during the presentation of the plaintiff’s case that the only claim plaintiff was pursuing was intentional infliction of emotional distress based upon allegations of sexual harassment. Rogers’ attorney responded that this was not true, in that as shown in Favors v. Alco Mfg. Co., 186 Ga. App. 480, 483 (3) (367 SE2d 328) (1988) (physical precedent only), cited by Carmike, an employee may also have a cause of action for negligence against an employer if the employer in the exercise of reasonable care should have known of an employee’s reputation for sexual harassment of a fellow employee and it was foreseeable that the employee would engage in sexual harassment but was continued in employment. Observing that Rogers had alleged wilful injury, the court then stated, “This is not a negligence case, right?” Rogers’ attorney responded, “I contend it’s both.”

At the conclusion of Rogers’ evidence, defendant moved for a directed verdict. It argued that Rogers’ claims for intentional infliction of emotional distress were barred, either by the exclusive remedy provisions of the Workers’ Compensation Act, or because Carmike could not be held liable on a respondeat superior theory in that the individuals involved were acting outside the scope and course of employment. Carmike also argued that a negligent hiring and retention case requires knowledge on behalf of the employer or reason to know of a pre-existing propensity of the employee to engage in sexual harassment, and here there was no such evidence. It further argued that any claim for negligent hiring and retention was barred on grounds that it was never pled.

Noting that there had been no amendment to the pleadings, the court stated that Carmike’s position was correct and granted its motion for directed verdict on all grounds.

1. Rogers first contends that the court erred in granting defendant’s motion for directed verdict under the exclusive remedy provision of the Workers’ Compensation Act in that, as held in Murphy v. ARA Svcs., 164 Ga. App. 859 (298 SE2d 528) (1982), the Act excludes from coverage an injury caused by the wilful act of a third person directed against an employee for reasons personal to such employee. Under these circumstances, the court in Murphy held that the injuries do not arise out of employment, and the employee’s claim is thus neither covered nor barred by the Act. These principles apply in this case. Consequently, the court erred in granting Carmike’s motion for directed verdict on this ground.

2. Rogers acknowledges on appeal that Carmike cannot be held liable for sexual harassment of plaintiff under the doctrine of respondeat superior since the harassment was not committed in the furtherance of Carmike’s business and was thus committed outside the scope of employment. Compare Favors, supra at 482 (2) (Beasley, J., dissenting at 486 (1)); Murphy, supra at 863 (where the issue was not before this court).

The court did not err in granting Carmike’s motion for a directed verdict on Rogers’ claim insofar as she sought to hold the corporate employer vicariously liable for its officers’ and employees’ alleged wilful acts of sexual harassment.

3. Rogers next contends that the jury could have found Carmike liable in tort for negligent hiring and retention of the three employees. This theory of recovery was not expressly articulated in the complaint, which was never amended in writing.

Under the allegations of the complaint, as illuminated by discovery and the evidence, the question all along was whether Carmike officers and employees, that is, Patrick, Fields, and Adams, engaged in the sexually harassing conduct claimed by Rogers. Called for cross-examination, Patrick and Fields denied Rogers’ charges of sexual harassment. Fields testified that she was fired because she had misused a company credit card and falsely stated that he had authorized it. Adams was not called to testify. Carmike attributes Rogers’ emotional distress to sexual abuse inflicted upon her by others, as testified to by one of her witnesses.

But, as argued by Rogers, the evidence authorized the jury to find that the chief operating officer, Patrick, sexually harassed Rogers and continued to employ personnel whom he knew or should have known were sexually harassing her. It would also support a finding that the vice-presidents knew of the president’s and chief operating officer’s harassment and failed to take any action against their superior such as advising the board of directors or a member thereof. This constituted evidence that the corporation knew or should have known of the complaint of activities of all three, thus meeting this requisite for liability. If the jury found the facts to be as plaintiff testified, it would have been authorized to hold Carmike directly liable for the negligent retention of officer employees who engaged in sexual harassment without any sanction. See Harvey v. McLaughlin, 198 Ga. App. 105 (400 SE2d 635) (1990); Coleman v. Housing Auth. of Americas, 191 Ga. App. 166, 170 (2, 3) (381 SE2d 303) (1989); Newsome v. Cooper-Wiss, Inc., 179 Ga. App. 670 (347 SE2d 619) (1986). Under these cases, it was not necessary for Rogers to also prove negligent hiring, of which there was no evidence.

Although Rogers did not make a formal motion to amend her complaint to specify this legal theory, she did assert this theory of recovery at trial. Defendant, who did not object to the evidence as it unfolded so as to encompass this theory, has shown no prejudice from the absence of express articulation in the complaint.

As in Hirsch’s v. Adams, 117 Ga. App. 847, 848 (1) (162 SE2d 243) (1968), “[t]he complaint adequately stated a claim for relief. [OCGA § 9-11-8 (a) (2)] . . . The record shows that there were no pre-trial orders limiting the issues.

“Moreover, under the Georgia Civil Practice Act a plaintiff may sue on one theory and recover on another. ‘The fact that this involves a change in the nature of the cause of action, or the legal theory of the action, is immaterial so long as the opposite party has not been prejudiced in presenting his case ... in any way.’ [Cit.] [Citing OCGA § 9-11-15 (b), which allows amendment of pleadings at any time before entry of a pre-trial order.]”

In Gordon v. Gillespie, 135 Ga. App. 369, 375 (217 SE2d 628) (1975), we accepted for our Civil Practice Act the view espoused with respect to the Federal Rules of Civil Procedure, that they “have broadened the meaning of the concept of ‘cause of action,’ shifting the emphasis from a theory of law as to the cause of action, to the specified conduct of the defendant upon which the plaintiff relies to enforce his claim.” This was repeated in Dover Place Apts. v. A & M Plumbing &c. Co., 167 Ga. App. 732, 734 (307 SE2d 530) (1983).

Decided November 15, 1993

Reconsideration denied December 15, 1993

Slappey & Sadd, James N. Sadd, for appellant.

Troutman Sanders, Daniel S. Reinhardt, William ,N. Withrow, Jr., for appellee.

“The record does not show that the defendant made a motion that the court require the plaintiff to amend [her] complaint or a motion for a continuance to enable [it] to prepare additional evidence to meet the plaintiff’s evidence ... , or that the defendant made any motion before the trial to simplify the issues or aid in the disposition of the action (see Sec. 16 of the Civil Practice Act, [OCGA § 9-11-16]), and does not show that the defendant was actually prejudiced.” Hirsch’s, supra at 849.

Simply put, “a plaintiff may sue on one theory and recover on another [cit.],” if the evidence supports the theory advanced. Greene v. McIntyre, 119 Ga. App. 296, 297 (3) (167 SE2d 203) (1969). Plaintiff’s case qualifies, and defendant was not entitled to a directed verdict. OCGA § 9-11-50 (b).

4. The trial court also erred in granting Carmike’s motion for directed verdict on Rogers’ claim for punitive damages.

As stated by Carmike, this court has recently recognized that a claim for punitive damages for negligent hiring and/or retention will lie in a case involving sexual harassment if there is evidence of an entire want of care sufficient to raise a presumption of conscious indifference to consequences. Troutman v. B. C. B. Co., 209 Ga. App. 166, 168 (2) (433 SE2d 73) (1993). There was such evidence in this case.

Judgment reversed.

Cooper and Smith, JJ., concur.

       Defendant never urged that it did not, either by motion under OCGA § 9-11-12 (b) (6) or otherwise.


author: Birdsong, Presiding Judge.

text:
    A93A2230.
    HART v. MARION A. ALLEN, INC. OF GEORGIA.
    (440 SE2d 26)
   Birdsong, Presiding Judge.

Edgar Patterson Hart appealed the grant of interlocutory injunction to the Supreme Court of Georgia, which transferred the appeal to this court.

Decided December 2, 1993

Reconsideration denied December 15, 1993

Anderson, Walker & Reichert, Walter H. Bush, Jr., Walker, Hulbert, Gray & Byrd, Charles W. Byrd, for appellant.

Appellant Hart was employed by appellee Marion A. Allen, Inc. (Allen, Inc.) pursuant to a solicitor’s agreement, dated February 16, 1987. Allen, Inc., is a 100 percent owned family business. Appellant commenced employment as an account executive and, at the time of his resignation, had attained the title of executive vice-president. On June 28, 1993, appellant submitted his resignation under the authority of Article VIII of the agreement, and informed his employer he either would terminate employment immediately or work the requisite ten days if management desired. The following day, June 29, 1993, appellant failed to show up for work. This same day, appellee learned three insurance accounts serviced by appellant were due for renewal and that appellant allegedly had quoted those accounts for a different insurance agency with whom appellant was negotiating employment. The commission which Allen, Inc. should have obtained from these policies was approximately $40,000. On June 30, 1993, appellee filed suit seeking injunction against appellant for averred violation of the restrictive covenant and proprietary information provisions of the agreement. Following a hearing, the trial court granted interlocutory injunction on behalf of appellee.

The restrictive covenant provides: “IX. COVENANT NOT TO COMPETE — In consideration of the [appellee’s] agreement under Paragraph II and IV of this contract. . . [appellant] agrees that for a period of three (3) years, [appellant] will not solicit property, casualty, life, accident and health and bond insurance of customers of the [appellee], at the time of termination of employment, and will not provide property, casualty, life, accident and health, or bond insurance counseling or property, casualty, life, accident and health, and bond insurance coverage to customers of [appellee] at the time of termination of employment. [Appellant] recognizes the expirations and files [sic] the property of the [appellee] to remain with the [appellee] at all times.” Held:

Examining the solicitor’s agreement in its totality, we find W. R. Grace & Co. v. Mouyal, 262 Ga. 464, 465 (1) (422 SE2d 529) controlling. The terms of the agreement prohibit only certain conduct in regard to the customers of Allen, Inc., and there exists no need for a specific geographic limitation in order to provide appellant with adequate notice as to the scope thereof. Moreover, the three-year time limitation in the agreement was not unreasonable.

Judgment affirmed.

Pope, C. J., and Andrews, J., concur.

Hall, Bloch, Garland & Meyer, Benjamin M. Garland, Adams & Adams, Charles R. Adams III, for appellee.


text:
    A93A1323.
    MORRIS & MANNING INSURANCE AGENCY, INC. et al. v. MORRIS.
    (439 SE2d 660)
   Beasley, Presiding Judge.

Morris sued Morris & Manning Insurance Agency, Inc., its corporate officers Manning and Nozick individually, and their wives in a multi-count complaint alleging breach of a stock redemption agreement and consulting agreement, default on a promissory note by the corporation, and default on personal guarantees of the corporate obligation executed by the individual defendants. Plaintiff also sought punitive damages for fraud by the corporation and its officers, attorney fees and expenses of litigation under OCGA § 13-6-11, and injunctive relief to prevent depletion of corporate assets. Defendants counterclaimed for fraud and breach of fiduciary duty, seeking damages for unlawful corporate distribution, cancellation of the transactions, and expenses of litigation under OCGA § 13-6-11.

Partial summary judgment was awarded to plaintiff against the four individual defendants on the personal guarantees and against the corporation under the consulting agreement. The order was certified as final under OCGA § 9-11-54 (b), and judgment was entered accordingly. Error is enumerated only with respect to the grant of summary judgment on the personal guarantees.

Plaintiff Morris entered the insurance agency business in 1949; defendant Manning joined his company as a salesperson in 1965, and became a shareholder in 1970. In 1977, the two formed Morris & Manning Insurance Agency, with Morris owning 60 percent of the stock and Manning 40 percent. Defendant Nozick became a shareholder in 1985. Morris was the agency’s president, treasurer and director; Manning was its vice president, secretary and director; and Nozick was a director.

In 1988, Manning expressed dissatisfaction to Morris concerning his lack of productivity. In early 1989, it was agreed that Morris’ salary would be reduced. During the summer of 1989, Manning decided that he would either buy out Morris’ interests or leave the agency. He presented a buy-out proposal to Morris and discussions toward this end ensued.

Morris testified on deposition that he engaged attorney Robert Paller as his advisor. Paller had incorporated the agency in 1977 and had served on its board of directors until 1980, when he was replaced by Morris’ son. His firm continued thereafter to provide legal representation for the agency on an ad hoc basis. It was Manning’s understanding that Paller represented all “the participants in the transaction” in these discussions, but Paller stated on deposition that he and his firm represented only Morris in this matter. Initially the agreement was to be structured as a direct purchase of Morris’ stock by Manning, but Manning withdrew an offer of this type after being cautioned against it by independent financial advisors. It was subsequently decided that the transaction was to take the form of a redemption of Morris’ stock by the agency. According to Paller, this was done on the recommendation of Manning’s advisor.

Paller met with Morris and Manning on July 20, 1989. According to Paller, Manning was “insistent” at that meeting that the transaction had to be structured as a stock redemption. Paller explained to both Morris and Manning: “[I]f you do that you’ve got to be sure that you don’t render the corporation insolvent,” because if the corporation’s purchase of its own stock renders the corporation insolvent, the entire corporate obligation could be void. Paller stated that if the transaction was to be in the form of a stock redemption, then personal guarantees would be required to protect Morris. Manning denies any knowledge of the insolvency issue until after the transaction was closed.

Morris and Manning alone negotiated and agreed on a purchase price for Morris’ interest. Manning agreed that both he and his wife would personally guaranty the obligation. Paller thereafter informed the agency’s accountant about the potential problems with a stock redemption and that he should look into the insolvency question. Thereafter, the transaction was handled by Paller’s law partner, Meyer.

In an August 2 letter to Morris, attorney Meyer expressed concerns about the insolvency issue as follows: “[U]nder the new Georgia Business Corporation Code, the [stock] redemption will be a valid act of the corporation only if an equitable insolvency test (ability to pay debts as they become due) and a balance sheet insolvency test (net assets in excess of all senior claims upon dissolution) are met. This fact, coupled with the payout from the company under the note and the pledge of your stock, indicates that your primary risk is the ability of Mr. Manning to continue to operate the corporation profitably, notwithstanding the personal guaranties.” The parties are in disagreement as to whether Manning and Nozick and their wives saw the August 2 letter prior to the closing.

The transaction was closed on September 1, 1989. The documents provided that the agency would redeem Morris’ stock for $750,000 with $75,000 payable at closing and the balance in non-interest bearing monthly installments of $6,250 over nine years. As a re-suit, Manning and Nozick became the sole shareholders, respectively owning 75 percent and 25 percent. The three directors unanimously consented to and ratified the stock redemption transaction. The agency made monthly payments totalling $112,500, until March 1991 when payments ceased. Since that time Manning and Nozick have continued to draw salaries and benefits from the corporation jointly in excess of $200,000 annually, and the agency has continued to pay its other debts timely.

The question is whether the record requires judgment in favor of Morris on the personal guarantees.

“ ‘(O)n motion for summary judgment the burden was upon the plaintiff, as movant, to conclusively establish the absence or nonexistence of any defense. . . .’ [Cit.]” Scott v. Aetna Finance Co., 201 Ga. App. 81, 82 (410 SE2d 203) (1991). If the moving party discharges its burden, “the nonmoving party cannot rest on its pleadings, but rather must point to specific evidence giving rise to a triable issue. OCGA § 9-11-56 (e).” Lau’s Corp. v. Haskins, 261 Ga. 491 (405 SE2d 474) (1991).

1. Defendants contend that a factual question remains as to whether the stock redemption transaction rendered the company insolvent. If so, they contend that the entire transaction is void under OCGA § 14-2-640, including the guaranty.

OCGA § 14-2-640 (a) provides: “A board of directors may authorize and the corporation may make distributions to its shareholders subject to restriction by the articles of incorporation and the limitation in subsection (c) of this Code section.” Subsection (c) requires: “No distribution may be made if, after giving it effect: (1) The corporation would not be able to pay its debts as they become due in the usual course of business; or (2) The corporation’s total assets would be less than the sum of its total liabilities. . . .” Under subsection (d), “The board of directors may base a determination that a distribution is not prohibited under subsection (c) . . . either on financial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances or on a fair valuation or other method that is reasonable in the circumstances.”

Plaintiff contends that the stock redemption transaction passed the tests of subsections (c) and (d) as a matter of law, but that even if it did not, the guaranty is enforceable under Hullender v. Acts II, 153 Ga. App. 119 (264 SE2d 486) (1980).

Although Hullender arose in the context of a divorce proceeding, it is otherwise factually alike, and the controlling facts are identical. Mr. and Mrs. Hullender were the sole shareholders of a closely held corporation. As part of their divorce settlement, the corporation agreed to purchase all the common stock held by Mrs. Hullender, which she transferred to the corporation in exchange for a debenture note and guaranty from Mr. Hullender. When the corporation defaulted on the obligation, she sued to collect on the note and guaranty. Mr. Hullender asserted that the purchase agreement was void ab initio under a predecessor to OCGA § 14-2-640, which similarly prohibited a corporation from purchasing its shares at a time when the corporation is insolvent or the purchase would make it insolvent. Since it was conceded that the corporation was insolvent at the time the note issued (a concession not present here), we concluded that it was prohibited by law and the corporate obligation could not be enforced. However, in Division 2 we applied the reasoning that “ ‘[i]t would be false logic to hold that (Mr. Hullender) could avoid liability under the contract for the reason that the making of it (was) ... an illegal act to the detriment of third persons. If there is a wrong or if any harm has been committed, let those who have been injured complain, and not those who have made the wrong a possibility.’ [Cits.]” Id. at 121. We held that Mr. Hullender “is not entitled to invoke the illegality of the obligation underlying the debenture note and thereby avoid liability as a personal guarantor.” Id. at 122.

The analysis of Hullender is clearly applicable here. The undisputed evidence shows that on the recommendation of financial counsel Mr. Manning insisted on structuring the transaction as a purchase of stock by the corporation and that he personally guaranteed the obligation. He was knowledgeable about such guarantees: “I am not exactly a neophyte to giving a personal guaranty. Over the years when we go to the bank to borrow money corporately, the banker always has us sign personally. And I understood the significance and the reason behind that.” The individual defendants “unconditionally” guaranteed the “full and prompt payment when due” of “all amounts owing under [the] promissory note.” Defendants admit execution of the note and guaranty and default by the corporation. They participated in the transaction and benefited from it.

Plaintiff established a prima facie case under the note; the burden then shifted to defendants to interpose a viable defense. OCGA § 11-3-307. Hullender precludes their defense that the guaranty is void under OCGA § 14-2-640. Contrary to defendants’ assertion, it is a sound, well-reasoned decision which does not warrant overruling.

2. Defendants’ fraud defense is also without merit. First, the allegations of fraud were not the subject of the summary judgment motion nor ruled on by the trial court. Second, although the evidence is in dispute as to whether Manning was aware of the insolvency concerns, at the very least by the exercise of due diligence he should have known.

Decided November 12, 1993

Reconsideration denied December 16, 1993

Doffermyre, Shields, Canfield & Knowles, Everette L. Doffermyre, Jr., for appellants.

Rogers & Hardin, C. B. Rogers, Daniel McGinnis, for appellee.

3. As to defendants’ public policy argument, the policy considerations militate in favor of plaintiff. See Hullender, supra.

Judgment affirmed.

Cooper and Smith, JJ., concur.

       OCGA § 14-2-640 of the 1988 Georgia Business Corporation Code replaced former Code § 14-2-92 (e), which in turn replaced the provision under consideration in Hullender, Ga. Code § 22-513 (e).


author: Pope, Chief Judge.

text:
    A93A1545.
    GWINNETT COUNTY BOARD OF TAX ASSESSORS v. GEORGIA SCHOOL BOARD ASSOCIATION.
    (439 SE2d 666)
   Pope, Chief Judge.

The issue in this case is whether property located in Gwinnett County belonging to the Georgia School Board Association (GSBA) is entitled to exemption from ad valorem taxation under OCGA § 48-5-41 (a) (4) because the GSBA is a “purely public charity.” The trial court ruled that the GSBA is entitled to exemption from ad valorem taxation for that reason and granted GSBA’s motion for summary judgment. Plaintiff Gwinnett County Board of Tax Assessors appeals. We reverse.

Recently in York Rite &c. v. Bd. of Equalization, 261 Ga. 558 (408 SE2d 699) (1991), our Supreme Court clarified the factors which must be present for an organization to qualify as an institution of “purely public charity” as set forth in OCGA § 48-5-41 (a) (4). “First, the owner must be an institution devoted entirely to charitable pursuits; second, the charitable pursuits of the owner must be for the benefit of the public; and third, the use of the property must be exclusively devoted to those charitable pursuits.” Id. at 558. Applying those factors to the facts of this case, we find that the trial court erred in granting summary judgment in favor of GSBA.

The evidence does not support GSBA’s argument that it is an organization devoted entirely to charitable pursuits. While GSBA serves a laudable purpose of providing needed services to and representing local school districts and boards of education throughout Georgia, “ ‘no matter how high the ideals of an institution, nor how lofty its purposes, in order for it to qualify as a charitable institution for tax exemption under (OCGA § 48-5-41 (a) (4)), it must have the sole purpose and activity of dispensing public charity.’ ” Id. at 559 (quoting Camp v. Fulton County Med. Society, 219 Ga. 602, 605 (135 SE2d 277) (1964). The record reveals that GSBA uses the property in question for the following purposes: (1) it serves as the general offices of GSBA; (2) meetings of directors, committees and officers are held there; (3) publications and information for the member school boards are prepared there and dispensed to the member boards; (4) training sessions for persons associated with the member school boards are prepared and held there; (5) policies for members are developed there; (6) an insurance program for its members is serviced there; and (7) searches for superintendents are conducted there. Funding for the GSBA is derived from several sources: (1) dues are paid by each member school board; (2) superintendent searches are conducted for a fee of $3,000; (3) policy manuals are prepared for the member boards for a fee of $7,500 and updated annually at a cost of $850; (4) legal reference manuals are provided to members for a fee of $200 and updated annually at a cost of $65; (5) fees are charged for training programs; (6) certain funds are derived from the insurance program; and (7) certain funds are received from the State Board of Education.

Based on this evidence, we have no difficulty concluding that rather than providing purely public charitable services, the GSBA, in exchange for fees and dues, provides needed services to local school boards. Its status as a not for profit organization does not change the nature of its services to charitable. In so holding, we are mindful that the term “charity” has been broadly defined to include “ ‘substantially any scheme or effort to better the condition of society or any considerable part of it.’ ” Tharpe v. Central Ga. Council of Boy Scouts of America, 185 Ga. 810, 813 (196 SE 762) (1938). However, although school children may ultimately benefit from some of the services provided by GSBA, the only direct beneficiaries are the member boards and the small class of persons associated with those boards. Furthermore, it is difficult to imagine how any considerable part of society could benefit from certain of the services provided by the GSBA to its members, such as insurance coverage. See Bd. of Equalization v. York Rite &c., 209 Ga. App. 359 (433 SE2d 299) (1993), cert. denied.

We are also guided in reaching this decision by the Georgia Supreme Court’s decision in Ga. Congress of Parents & Teachers v. Boynton, 239 Ga. 472 (238 SE2d 113) (1977). In that case, the Georgia Supreme Court was persuaded that the Georgia Congress of Parents and Teachers was not a “purely public charity” because any local group wishing to be affiliated with the Georgia Congress of Parents and Teachers must pay dues and its headquarters are available for use only to those who pay dues. Id. at 473-474. The same is true of the GSBA.

Judgment reversed.

Birdsong, P. J., and Andrews, J., concur.

Decided November 17, 1993

Reconsideration denied December 16, 1993

Jonathan A. Weintraub, Caryl B. Sumner, William J. Linkous III, for appellant.

Heard, Leverett & Phelps, E. Freeman Leverett, for appellee.


text:
    A93A1981.
    PETTIT v. GRAY et al.
    (439 SE2d 673)
   Birdsong, Presiding Judge.

Mark Pettit appeals the grant of summary judgment to Susie Gray and Calhoun Outlet Center Limited Partnership in his suit seeking specific performance, injunctive relief and damages, arising out of Gray’s termination of Pettit’s ground lease of billboard property. Pettit contends that he and Gray entered a five-year ground lease, at a rent of $700 per year, payments to be made annually; that he was not in default under the lease and that he paid the rent as soon as he got Gray’s termination notice. He had declared bankruptcy three months prior to termination of the lease for nonpayment of rent, and listed the lease as an exempt property interest. He contends Gray terminated the lease because she intended to sell, and did sell, the property unencumbered to Calhoun Outlet Center.

Pettit contends that as there was no provision in the lease stating the date each annual payment was to be made, he was not in default, and that the equities of the parties should be considered by a jury. Appellees argue that as the bankruptcy trustee never assumed the lease, Pettit had no interest in the property after Gray terminated the lease and returned Pettit’s tardily-tendered payment. Held:

We find independent reasons sustaining the trial court’s grant of summary judgment to appellees. The lease agreement states no date for the yearly payment and is silent as to the lessor’s right to terminate upon nonpayment. It is unenforceable under the statute of frauds as to material terms which are not specifically stated in the contract, or which have not been performed in accordance with part performance as established by the parties. See OCGA §§ 13-5-30 (4); 13-5-31. To comply with the statute of frauds, a writing must be complete in itself, leaving nothing to rest in parol. F. C. Brooks & Sons v. Shell Oil Co., 226 Ga. 435 (175 SE2d 557). To be valid and to authorize specific performance, a contract conveying an interest in land, including a lease (Newton v. Allen, 220 Ga. 681 (141 SE2d 417)), must be certain enough to enable either party to enforce it according to its terms. See Powell v. Adderholdt, 230 Ga. 211 (196 SE2d 420); Morgan v. Hemphill, 214 Ga. 555 (105 SE2d 580); Pierce v. Rush, 210 Ga. 718 (82 SE2d 649); Peacock v. Horne, 159 Ga. 707 (126 SE 813). The failure of the parties to agree to specifics of payment is fatal to the contract where it is sought to be enforced on that issue. Zappa v. Basden, 188 Ga. App. 472 (373 SE2d 246).

The writing, executed December 12, 1989, provides that the lease was “for a term of five (5) years beginning December 15, 1989. . . . The consideration for the lease contract is the sum of Seven Hundred Dollars ($700) per year, rental, payable by Lessee annually.” Nothing in the lease contemplates that the lessee might fail to pay the rent “annually,” or what the lessor’s remedy might be if the lessee failed to pay the rent “annually.” Pettit contends he paid the first annual payment at the inception of the lease (December 15, 1989). If he was to comply with the terms of the contract and pay “annually,” he. must pay on December 15 of each year for the term of the lease. He contends he paid the second annual payment in late December of 1990; whatever day he paid it, he evidently paid it on December 15, for judging the evidence in Pettit’s favor as respondent on motion for summary judgment (Lau’s Corp. v. Haskins, 261 Ga. 491 (405 SE2d 474)), we must assume he paid the second payment “annually.” Nothing to the contrary appears.

If Pettit were to comply with the terms of the lease as far as they can be determined and as the parties had established by their conduct, he had to pay “annually,” that is, on December 15. Gray terminated the lease on December 17, 1991, for nonpayment of rent. The payment of $700 “annually” was an express consideration of the agreement. When Pettit failed to pay the rent “annually,” that is, by December 15, 1991, he was in default, and the consideration for the lease “agreement” (such as it was) failed. The agreement does not provide that he was entitled to retain a lease interest if he failed to pay “annually,” or that he was to be given a grace period or that he was entitled to notice of termination for failure to pay rent “annually.” No fault can be found with the lessor’s termination of the lease for Pettit’s failure to pay “annually,” i.e. by December 15, 1991. There is nothing in the contract which can be specifically enforced in Pettit’s favor.

As for the equities, Pettit contends Gray knew he had filed bankruptcy three months prior to the annual payment date. Even though Pettit listed this lease as “exempt,” Gray could hardly be expected to assume the rent would be paid “annually,” and indeed it was not. She had every right to terminate the lease when the rent was not paid according to the agreement as written, that is, “annually,” which was December 15, 1991. The fact that she planned to sell the property unencumbered to someone else does not in any way touch her right to terminate the lease for nonpayment and failure of consideration, according to its terms. Moreover, Gray asserts the trustee did not assume the lease, and Pettit does not contend the trustee did assume the lease. Pettit has no legal interest in the property, and we do not see that he has an equitable interest in it.

Decided November 22, 1993

Reconsideration denied December 16, 1993

Hiñe, Niedrach & McClellan, John F. McClellan, Jr., for appellant.

Mark J. Pettit, pro se.

Chance, Maddox & Smith, J. C. Maddox, Suzanne H. Hutchinson, for appellees.

Judgment affirmed.

Pope, C. J., and Andrews, J., concur.

On Motion for Reconsideration.

Appellant says we ignored Supreme Court cases which hold that under a lease agreement in which no due date is stated, the rent generally is due at the end of the rental year. Matlock v. Duncan, 220 Ga. 200, 202 (137 SE2d 661); F. & W. Grand &c. Stores v. Eiseman, 160 Ga. 321, 328 (127 SE 872); Parker v. Gortatowsky, 129 Ga. 623, 626 (59 SE 286). However, since the lease agreement was entered “for a term of five years beginning December 15, 1989,” the “end of the rental year” was December 14, which is one day sooner than we said the parties, at best, may have established by the making and acceptance of his second payment “in late December of 1990.” Appellant merely proves the weakness of his position by asserting that by accepting his payment in “late December of 1990,” appellee agreed he could make the annual payments “late.”

Motion for reconsideration denied.