author:
Beasley, Judge.
      Blackburn, Judge,

text:
    A96A1785.
    GENERAL MOTORS CORPORATION v. CONKLE et al.
    (486 SE2d 180)
   Beasley, Judge.

As a sanction for discovery abuse the court struck General Motors’ (“GM”) answer and granted default judgment as to liability. The order was certified for immediate review, and we granted GM’s application for interlocutory appeal.

The parents of Howell W. Conkle, Jr. and the administrator of his estate brought a wrongful death suit on September 18, 1992, against the owner and the operator of a 1987 Pontiac Grand Am. They alleged that Conkle was riding in the front passenger seat on August 3, 1991, when the car left the road and, on impact with the ground, Conkle was thrown out of an open door and was fatally injured. With leave of the court, the Conkles added the car’s manufacturer GM as a defendant on June 27, 1993. They asserted liability based on negligent design, testing, and manufacture of the door latch, plus product liability, fraudulent concealment of defects and wrongful refusal to recall its products, and violation of OCGA § 10-1-393 (a), the Georgia Fair Business Practices Act.

Along with the complaint served on GM on July 28, the plaintiffs served interrogatories and requests for certain documents covering GM’s design, testing and post-delivery experience with the type of door latch in 40 million vehicles over an 18-year period. The Conkles granted GM’s request for an extension to respond to discovery, stipulating a response date of September 14, 1993. GM responded on that date, stating what documents it would provide (e.g., documents relating to door openings and ejections in Pontiac Grand Ams although the request referred to “Type III door latches” in “any GM division”). GM also raised several objections, including that some requests asked for information protected by attorney-client privilege or the work-product doctrine, and stated that some documents requested would be made available in a reading room at GM’s headquarters in Michigan.

Two weeks later, on September 28, the Conkles moved for an order compelling GM to fully respond to their discovery requests, specifically objecting to the use of the out-of-state reading room and asserting that even the documents GM indicated it was willing to produce were not responsive to the requests.

The next day a discovery conference was held involving the parties and the court at which the Conkles objected to what they characterized as various GM discovery tactics including delay, nonresponsive answers to requests for production of documents, and insistence on a protective order that GM would not pursue. The court focused on discovery concerning the accident itself, and the parties agreed to try to complete discovery as to that aspect of the case in 90 days, with the recognition that resolution of accident issues might be dispositive of the case.

Approximately three weeks later (October 18), GM moved for a protective order under OCGA § 9-11-26 (c) (7) to ensure confidentiality of what it regarded as trade secret information. After serving supplemental responses on November 1, GM moved the next day for a protective order precluding the Conkles from pursuing discovery concerning the door latches until it was shown the door had actually opened during the accident. This latter motion included affidavits of witnesses who stated the doors of the car were not open after the accident and could not be opened.

On November 29, a hearing was held on the Conkles’ motion to compel. GM opposed it and sought the granting of its two motions for protective orders. The court did not rule until February 24, 1994, at which time it issued an order to control dissemination of documents reflecting information GM considered confidential, ruling they were to be produced in this case. “Confidential” was defined in accordance with the trade secrets provision of OCGA § 9-11-26 (c) (7), and the order specifically stated it was not a waiver of GM’s right to oppose discovery on other grounds. GM’s second motion for a protective order, challenging door latch involvement, was not addressed. The court also ruled on the Conkles’ motion to compel discovery, requiring production of all documents the Conkles had previously requested within 20 days. Neither order addressed GM’s privilege claims, but they had not been the subject of a motion for protection.

GM served written supplemental responses and 93 boxes containing approximately 300,000 pages of documents on March 15, within the 20 days, but these were not all that the court required it to produce. It did not seek an extension. On March 29, two weeks after the deadline for the court-compelled production, and nine months after the requests for discovery were served, the Conkles moved for the sanction of default and also sought a ruling that all of GM’s claims of privilege be deemed waived, all supplemental responses be stricken, and all costs of production be cast upon GM.

GM continued to produce documents past the court-ordered deadline, in March and April. It did not move for another protective order, but it did continue to claim that some documents were privileged, although it submitted no supporting evidence in the way of affidavits or otherwise. GM served on the Conkles a “privilege log” indexing the allegedly privileged 1,085 documents by “Bates numbers” on March 28.

On April 11, GM supplied the Conkles with a supplemental privilege log, superseding the first. GM deposited the material reflected in its privilege log with the court for in camera review on April 15.

Two weeks later, on April 27, the Conkles’ counsel wrote counsel for GM expressing dissatisfaction with its responses and urging it to respond to the March 29 motion for sanctions with, in part, a proper response to the requests to produce. GM responded to the motion for sanctions on May 2, contending it was complying with the court’s order to produce and complaining that the 20-day deadline was impossible to meet, given the number of documents requested. GM asserted that the court’s order did not rule on GM’s claims that some documents were privileged. It attached a 63-page appendix stating its position on the various unfulfilled requests to produce.

On June 3, the Conkles replied that GM’s claims of privilege were unsupported and untimely. A month went by, and on July 7, the Conkles moved that the “privilege log” documents be produced, noting that GM had supplied no evidence supporting its privilege claims. GM responded a month later, on August 8, restating the privilege claims, but still without evidence or motion for protective order.

Eleven months later, on July 12, 1995, nearly 17 months after the deadline, GM served supplemental responses and produced documents reflecting an additional 1,200 crash tests. This occurred a week after the Conkles filed a supplemental brief in support of their motion for sanctions (July 5) that made particular reference to a discovery ruling in a pending suit in Texas. In that case, which the Conkles contend involves the same type door latch as the one at issue here, a special master was appointed for in camera inspection of allegedly privileged materials, and the Conkles attached the master’s report to their brief. The brief recognized distinctions between Texas law on attorney-client privilege and the law of Georgia but suggested the report might be instructive nonetheless.

On August 11, while still holding the Conkles’ motion for sanctions and GM’s second motion for protective order in abeyance, the court granted the Conkles’ motion to produce documents specifically claimed as privileged, stating that the special master’s report in the Texas case was “carefully examined,” that the court was satisfied Texas law accurately reflected Georgia law as to privilege claims, and that the court’s decision was based “in large part” on the special master’s report in the Texas case. The court declared that 882 of 1,085 documents submitted for in camera inspection were not privileged and that 203 were privileged. It ordered the non-privileged documents to be produced to the Conkles no later than August 23.

The day before the deadline, GM moved for reconsideration or stay of the August 11 order to produce as it pertained to 14 of the 882 documents, stating it was producing the remainder. For the first time, affidavits supporting the privilege claims were submitted. GM argued that as the court based its ruling on that of the Texas court, its ruling should be the same as to 13 documents which were common to both cases. The fourteenth document was considered privileged by the Texas court but not by the court in this case. The next day the court stayed its order as to production of the 14 documents.

As to GM’s motion for reconsideration, the Conkles responded that it would be inappropriate because GM did not submit any evidence supporting the privilege claim previously. They also filed a supplemental brief in support of their original motion for sanctions, detailing what they contended was a pattern of discovery abuse by GM in this and other cases dealing with the same model door latch and claiming that 180 documents compelled by the court’s February 24, 1994 order were still being withheld by GM.

GM’s motion for reconsideration as to the 14 documents was denied on November 1, and its motion for a certificate of immediate review of that order was denied. GM then sought a writ of mandamus in superior court, to require the state court judge to reverse the decision as to the privilege claims. The superior court, finding no authority for such an action, denied the writ, and the Supreme Court refused review. The Conkles filed a motion for lesser sanctions on November 28, intending to supplement the original motion for the sanction of default, not supplant it. The motion requested a sanction that it be established as fact that the door at issue opened and Conkle was ejected. It also requested GM be barred from offering any evidence contrary to that fact or any evidence of alcohol consumption by any person involved in the accident.

On January 24, 1996, 22 months after the Conkles had first requested the sanction of default, while GM still held the 180 court-compelled documents, the court granted the Conkles’ original motion for sanctions, striking GM’s answer to the complaint, declaring default judgment, and setting a date for the trial of damages. This is the order containing rulings which GM enumerates as error.

1. GM contends in its first two enumerations that the trial court abused its discretion in striking its answer and defaulting GM as to liability, as a sanction for discovery abuse, given the particulars of this case. Although the court did not specify the statutory basis for its order, it is clear it granted the sanction because of failure to obey the court’s order to compel the production of documents, OCGA § 9-11-37 (b) (2) (C), rather than a general failure to provide discovery. See OCGA § 9-11-37 (d); Kemp v. Rouse-Atlanta, Inc., 207 Ga. App. 876, 882 (429 SE2d 264) (1993).

When a party wilfully fails to comply with a court order compelling discovery, the court can impose the “drastic sanctions of dismissal and default” under OCGA § 9-11-37. Joel v. Duet Holdings, 181 Ga. App. 705, 707 (353 SE2d 548) (1987). It is a consequence of disobedience and is authorized “ 'where the failure is wilful, in bad faith or in conscious disregard of an order.’ ” (Citation omitted.) Id. This is “distinguished from an accidental or involuntary non-compliance. A conscious or intentional failure to act is in fact wilful.” (Citations and punctuation omitted.) Bells Ferry Landing, Ltd. v. Wirtz, 188 Ga. App. 344, 345 (373 SE2d 50) (1988). See also Vining v. Kimoto USA, 209 Ga. App. 296, 297-298 (2) (433 SE2d 342) (1993): “[W]ilfulness, bad faith, or that behavior which at best reflects a conscious indifference to the consequences of failure to comply with the trial court’s order.”

When the shoe is on the other foot, the standard is the same: “ ‘(T)he dismissal of a lawsuit under Code Ann. § 81A-137 (OCGA § 9-11-37) for failure to comply with a discovery order is an extreme sanction which may only be employed for a wilful failure in bad faith or in total disregard of the court’s order.’ [Cit.] Such a sanction is generally warranted 'only where a clear record of delay or contumacious conduct by the plaintiff exists and a lesser sanction would not better serve the interest of justice. (Cit.)’ [Cits.]” Harwood v. Great American Mgmt. &c., 171 Ga. App. 488, 490 (320 SE2d 269) (1984).

The court’s discretion is broad, and “[historically it has been the policy of the Georgia appellate courts to refuse to interfere with a trial court’s exercise of its discretion in absence of abuse” under the discovery provisions of the Civil Practice Act as well as generally. (Citations and punctuation omitted.) Hernandez v. State of Ga., 200 Ga. App. 368, 369 (408 SE2d 160) (1991). But it is not unlimited, and the Court in Harwood reversed the dismissal of the lawsuit because “it [could not] reasonably be said that the appellants were guilty of such a wilful or flagrant disregard either of the court or of the discovery process as would justify the extreme sanction of dismissal.” Harwood, supra at 491.

Instances when the extreme sanction has been upheld are instructive. In Hernandez, supra, the trial court found that the defendant’s answers, which were only partial, were “ ‘wilfully inadequate’ ” and “ ‘evasive,’ ” interposed “in bad faith for the purpose of wilfully evading her discovery obligations.” Id. at 369-370. The court took into account defendant’s conduct and her failure to seek to justify or explain her initial failure to respond and the consequent waiver of her right to interpose objections.

The default upheld in Joel, supra, was based on the trial court’s finding that the actions of Joel and his counsel were wilful in that they showed no intention to comply with the court’s order. They had refused to produce required documents which Joel or his accountant had, after the court ruled that they were discoverable and ordered them produced.

The standard for imposition of default or dismissal as a discovery sanction has been variously stated. In addition to the above articulations, Schrembs v. Atlanta Classic Cars, 261 Ga. 182 (402 SE2d 723) (1991), speaks of wilfulness, id. at 182, and “ ‘ “conscious indifference to the consequences of failure to comply,” ’ ” (citations omitted) id. at 183, as does Didio v. Chess, 218 Ga. App. 550, 551 (462 SE2d 450) (1995). Despite a variety of articulations, it is clear the ultimate sanction requires more than merely wilful, as opposed to negligent, behavior. There must be some indication that failure to comply shows less than the full respect that must be accorded a court order.

Despite this standard, GM contends that striking the answer is an appropriate sanction only if there is a total failure to respond to an order to compel discovery. The case it cites does not pronounce such a rule and was specifically decided under the “procedural scenario” of OCGA § 9-11-37 (d), not subsection (b) (2) (C). Thornton v. Burson, 151 Ga. App. 456, 461 (2) (260 SE2d 388) (1979). In subsection (d) cases, “[t]he imposition of penalties ... is limited to an absolute failure to respond. [Cit.]” (Emphasis in original.) Orkin Exterminating Co. v. McIntosh, 215 Ga. App. 587, 589 (3) (452 SE2d 159) (1994). Failure to obey a court order need not be total in order to warrant the granting of a default. In Joel, for example, one of the required documents was produced, and it was explained that another did not exist. See also Lewis v. Evans, 212 Ga. App. 49 (441 SE2d 425) (1994) (physical precedent only).

When addressing the standard for the ultimate sanction, GM makes three basic arguments for reversal of the order striking its answer and declaring it to be in default, which establishes its liability as to all claims and relegates it to a trial on damages only. GM contends it was entitled to a hearing on the motion for sanctions (before the court could impose the most severe sanctions); that the order did not support the sanction because there was no finding of wilfulness, or bad faith, or a conscious indifference to the consequences of failure to comply; and that the evidence of what had transpired in the discovery process did not support the imposition of the sanction selected.

(a) As to GM’s contention that a hearing was necessary, “the trial court need not conduct a hearing on the issue of wilfulness in every case. Such a requirement serves no purpose where the trial court can otherwise determine wilfulness on the part of the party against whom the sanctions are sought.” (Footnote omitted.) Schrembs, supra at 182-183. The respondent must have an opportunity to present any explanation or justification for the failure to comply. Loftin v. Gulf Contracting Co., 224 Ga. App. 210, 215 (480 SE2d 604) (1997). In some instances, this requirement will be fulfilled when a prior opportunity to explain noncompliance had been afforded the nonmovant.

In Oliff v. Smith, 214 Ga. App. 358 (447 SE2d 707) (1994), the dismissed plaintiff argued before this Court that a hearing was required. Although this Court noted one is not always necessary under Schrembs, it is apparent in Oliff that the plaintiff was afforded the opportunity to assert an explanation, but the Court rejected her excuse that she was “out-of-pocket.” In Vining, supra, plaintiff totally failed to respond to discovery and, at the hearing on the motion for sanctions, failed “to ‘give any acceptable justification for its failure to make discovery or respond to (Kimoto’s) discovery requests.’ ” Id. at 296. At that hearing, the court put plaintiff on notice that failure to make discovery by a date certain would result in dismissal upon an affidavit from defendant’s counsel. In those circumstances, no second hearing was needed for the court to find wilfulness.

Nor was a hearing required in Johnson v. Lomas Mtg. USA, 201 Ga. App. 562 (411 SE2d 731) (1991). The defendant served plaintiff with simple discovery requests primarily concerned with his personal experience with the property at issue and his status as guardian. He answered with documents which were nonresponsive, as the court decided upon defendant’s motion to compel. The court ordered response by a date certain, but plaintiff made no further response other than to contend he had no other documents. Under those circumstances, no further hearing was necessary for the imposition of the sanction of dismissal. In Hernandez, supra, after hearing on a motion to compel, the trial court’s examination and rejection of defendant’s stated objections to ordered discovery prior to imposing the sanction of default was sufficient to satisfy the requirement that the court “make a determination, following notice and an opportunity for hearing, that the failure to comply with the order was wilful. [Cit.f Id. at 370.

In this case a variety of circumstances required a hearing. The court held the motion for sanctions in abeyance, thereby implicitly allowing a longer period to comply with its order. This forbearance was reinforced by holding the Conkles’ supplemental brief in support of their motion for sanctions for four months before the court ever acted upon the motion for sanctions.

During the 22 months between the filing of the motion and the order granting sanctions, the court tolerated a degree of noncompliance by reviewing documents held back by GM to ascertain whether they were privileged, despite no proper motion for protective order as to those 1,085 documents. The court ruled some to be privileged and nondiscoverable, a position inconsistent with insistence on strict compliance with its order to compel. That the court did so without comment was an indication of forbearance and willingness to assist in the achievement of full production of proper documents.

Nor is the situation here as simple as those in which a hearing has not been necessary. In Schrembs, supra, plaintiff failed to answer the single simple interrogatory which was compelled by the court and had no justification for it. She had already been heard on why she did not answer, at the hearing on the motion to compel. Further hearing would be superfluous. Similarly, in Oliff, supra, Vining, supra, Johnson, supra, and Hernandez, supra, there was in each case a simple, focused dispute, a relatively quick resolution, and nothing to be gained by further hearing.

Unlike those cases, there was here no warning that sanctions were imminent. Nothing had focused the court’s and the parties’ attention on the matter. The motion for sanctions had been filed 22 months before. GM had continued to provide discovery, which the Conkles accepted. Even without full compliance, GM’s production was voluminous. Approximately two months before the court’s order, the Conkles did file a motion for lesser sanctions, but they did not attempt to force resolution of their original motion for sanctions by rule nisi or other means.

The fact that production continued after the Conkles’ motion for sanctions, and all the circumstances around that serial production, meant that the discovery picture had changed considerably between the time the motion was made and it was ruled upon. It was no longer as it had been when the documents supporting the motion were filed. A hearing on the motion before the court granted it would have allowed the parties to argue how those changed circumstances should be considered.

A hearing would also have afforded the opportunity for the court to specifically consider a variety of factors before making its determination, and a record upon which this Court could ensure that relevant factors had been considered. Without suggesting a rigid test, relevant factors that a court should consider in determining whether to impose the ultimate sanction of default or dismissal are: (1) the size, volume, and amount of discovery requested; (2) the amount of time allowed for production; (3) the amount of delay between request and production; (4) the amount of delay between the court’s order and production; (5) the degree of reasonableness of the excuse for noncompliance; (6) the prejudice to movant’s case; (7) the degree of departure from our constitutional and statutory mandate for the just, speedy, efficient, and inexpensive resolution of disputes (Ga. Const. of 1983, Art. VI, Sec. IX, Par. I; OCGA § 9-11-1); (8) the relative amount of compliance or noncompliance with the court’s order; (9) the efforts made to comply or move for an extension; (10) the imposition placed on court resources by the failure to comply; (11) whether prior warning was given to the offending party of the effect of noncompliance; and (12) the efficacy of alternative sanctions against the party or counsel. See Wright, Miller & Marcus, Fed. Practice & Procedure, Civil 2d, pp. 625-627, § 2284 (1994 ed.); Hathcock v. Navistar Intl. Transp. Corp., 53 F3d 36, 40-41 (4th Cir. 1995); Ehrenhaus v. Reynolds, 965 F2d 916, 920-921 (10th Cir. 1992).

These factors reflect the three basic considerations involved in a case involving a discovery sanction such as this: the defendant’s right to have its day in court to contest liability; the plaintiff’s right to discovery without harassment, undue delay, or undue cost; and the necessity of obedience to the court’s orders.

Punishment should not be imposed on a party to a civil case for conduct which is ancillary to the merits of the case and which occurs during the life of the case without a consideration of the nonmovant’s defense of its conduct. The exception is when the record shows there is no justification or mitigation. In addition to allowing an explanation to be given, a hearing can help hone an appropriate sanction.

Considering all the circumstances, due process required a hearing in this case, even more so because the ultimate sanction was imposed.

(b) We cannot, however, simply reverse on this basis as GM raises another issue which is capable of repetition in this case.

With respect to a finding of wilfulness, or bad faith, or a conscious indifference to the consequences of failure to comply, the court must make an express finding as a precondition to sanctions. Schrembs, supra. “[T]he trial court must find wilfulness as a predicate to imposing the sanctions” of dismissal and default under OCGA § 9-11-37 (b) (2), which are recognized as the most harsh. Id. at 182. “It remains the rule that a prior finding of wilfulness, bad faith, or that behavior which at best reflects a conscious indifference to the consequences of failure to comply with the trial court’s order compelling discovery is a prerequisite to the imposition of the harsher sanctions authorized by OCGA § 9-11-37 (b) (2). [Cits.]” (Emphasis in original.) Vining, supra at 297-298 (2). See also Loftin, supra at 215.

The court’s order does not contain any finding that would support this ultimate sanction. The order states: “The Plaintiffs have moved for sanctions against GM for failure [to] obey a court order regarding the production of documents. This issue has been pending for over one year. This court has been remiss in not timely ruling thereon. It is evident from the record in this case that GM has abused the discovery process. It is true that the scope and volume of the discovery requested are immense. GM’s assertion of substantial compliance, misunderstanding and other explanations are inadequate in light of the magnitude of legal expertise and other resources it has applied to the discovery process in this case. In this context the court must determine what sanction or sanctions are appropriate.

“The application of a fine or taxing of other costs is not an adequate remedy for this situation. This court has no viable alternative save the entry of a default judgment against GM on the issue of liability. It is therefore ordered that the Answer of GM in this case is stricken and that GM is in default upon the issue of liability in this case.”

We cannot merely infer that the court considered GM’s actions concerning compliance with its order to be wilfully disobedient or in bad faith or consciously indifferent to the order. Schrembs, supra at 182, requires a prior finding of such. There must be no doubt that the court found as fact the prerequisite conduct and that it is demonstrated in the record before the court can impose liability on a party on the underlying dispute because of a discovery failure. The parties and the appellate courts should not be left to infer such a pivotal finding or the basis for it, particularly taking into account the high stakes which depend on it and the simplicity of'articulating it.

The Conkles argue that the record would support a finding of wilfulness, or bad faith, or a conscious indifference to the consequences of failure to comply, pointing to a variety of instances they claim show such. Regardless, there has been no finding of the required fact. Not only does none appear in the court’s order granting the sanction, there is no prior order containing any such finding. Compare Vining, supra. As such is a prerequisite to the imposition of the default sanction, the court erred in imposing that sanction.

(c) Additionally, there is the question whether the record could support a finding of wilfulness, or bad faith, or a conscious indifference to the consequences of failure to comply, so that depriving GM of its day in court as to fault did not constitute an abuse of discretion. GM, as appellant, must persuade that the record was such that the court did abuse its discretion. “As a general rule, the trial court should attempt to compel compliance with its orders through the imposition of lesser sanctions than dismissal [or default]. The drastic sanctions of dismissal and default cannot be invoked under OCGA § 9-11-37 except in the most flagrant cases. . . . Hernandez, supra at 369.” (Punctuation omitted.) Loftin, supra at 214 (3); Joel, supra at 707. As governed in this manner, and by a consideration of the relevant factors before the trial court, we conclude that the sanctions were too harsh.

First we compare the circumstances of this case with those of others of recent vintage in Georgia’s appellate courts in our effort to be uniform and treat like cases alike. Recent cases are the most relevant because they are decided in the context of today’s escalated discovery industry. Problems in the past, both prior to the Civil Practice Act and in the early years since its advent, were not magnified by the sophisticated strategies and powerful technologies of today’s information and communications age. A review of recent Georgia cases which uphold the default or dismissal sanction show that GM’s conduct was not of the same severity or extent. See Revels v. Wimberly, 223 Ga. App. 407 (477 SE2d 672) (1996); Didio, supra; Lewis v. Evans, 212 Ga. App. 49 (441 SE2d 425) (1994) (physical precedent only); Vining, supra; Sellers v. Nodvin, 207 Ga. App. 742 (429 SE2d 138) (1993); Johnson, supra; Huff v. E. L. Davis Contracting Co., 195 Ga. App. 691 (394 SE2d 615) (1990); Roderiquez v. Saylor, 190 Ga. App. 742 (380 SE2d 339) (1989); Peoples v. Yu, 184 Ga. App. 252 (361 SE2d 244) (1987); Carey Canada, Inc. v. Hinely, 181 Ga. App. 364 (352 SE2d 398) (1986), rev’d on other grounds, 257 Ga. 150 (356 SE2d 202) (1987).

The record in this case shows as follows:

(1) The size and breadth of discovery was great. Sanctions are usually applied when the failure to properly participate in discovery concerns a more focused issue than incomplete or inadequate responses over a range of requests. Such a breadth and volume makes a finding of wilful noncompliance more difficult.

(2) The time allowed for production of documents was 20 days. Despite the volume involved, GM produced approximately 300,000 pages of documents in that time.

(3) GM responded timely to the request to produce, indicating that the voluminous request would be met. While production took longer, it was ongoing.

(4) GM’s response to the court’s order was timely. While not all documents were produced in 20 days, a significant portion of those requested were.

(5) Given the volume of documents requested, GM’s explanation for late production was marginally reasonable.

(6) The only prejudice to the merits of the Conkles’ case is an impact on the resources they have available to pursue it, not on their ability to present the facts.

(7) GM’s failure to fully and timely respond to the requests to produce has delayed the resolution of this case.

(8) In terms of documents produced, GM has largely complied with the order substantively, retaining only a handful of documents (see Division 2). Nevertheless, the vigor of the fight over them hints at their importance.

(9) While GM has obviously made considerable effort to produce documents, it did not request any extension, leaving a deadline it considered impossible.

(10) The failure to comply, and the efforts made to force compliance, have resulted in a significant imposition on the resources of the court below and this Court.

(11) There was no prior warning that failure to fully comply would result in default. None was given in the months or weeks immediately prior to the imposition of the sanction, and the order compelling discovery did not warn that the ultimate sanction would be imposed on failure to fully comply within 20 days.

(12) No lesser sanction was first employed. Although the court recited in its order that alternative sanctions would not be sufficient, without a hearing it is a premature conclusion.

Unlike the plaintiff in Vining, supra, the Conkles have not been prejudiced in their ability to assert the merits of their suit. They have received voluminous discovery responding to their requests. That the nature of the responses may necessitate expenses to separate germane information from the nongermane does not suggest a sanction of default but rather one reflective of the costs and punishment to deter such activity further.

In no prior case we have examined has a respondent been able to show the degree of production of documents in an effort to comply such as GM does. By the time sanctions were imposed, GM had responded with approximately 500,000 pages of documents and the court had ruled on claims of privilege. Although GM’s responses were partial and incomplete, they are not partial and evasive in the sense that they were a simple denial of the existence of any documents that answered the requests. Compare Lewis, supra.

The record does not support a finding of that degree of wilfulness and contumacious conduct which would warrant depriving GM of its day in court and contradict the spirit of the Civil Practice Act favoring resolution of cases on their merits. Ambler v. Archer, 230 Ga. 281, 288 (1) (196 SE2d 858) (1973); Jordan v. Santa Fe Engineering, 198 Ga. App. 600, 602 (1) (402 SE2d 304) (1991). The trial court was obliged to take into account the entire period from the time the discovery requests were served in July 1993, and the time of the court’s imposition of dismissal and default. Swindell v. Swindell, 233 Ga. 854, 857 (3) (213 SE2d 697) (1975); Didio, supra. In that period the defendant produced hundreds of thousands of pages of documents, although it has still not produced 180 documents.

Balancing the policies of preventing discovery delays and deciding cases on the merits, default was too severe a sanction. When the plaintiffs moved for default judgment, they had just received over 300,000 pages of requested documents two weeks before. They have not contended they had reviewed them and were hampered in their case preparation by not having the remainder during that period. Given the delays and the failure to fully comply, the record clearly would support the imposition of lesser sanctions. In order for the court to determine what is appropriate within the wide range of possibilities, a hearing must be had.

We do not condone GM’s failure to meet its discovery obligations, but we conclude that the sanction chosen by the court was too severe for the facts presented. The case is remanded for a hearing on appropriate sanctions which adequately compensate the Conkles for delays and costs, punish GM so as to deter any future noncompliant conduct, and generally assures respect for the court’s orders. See Ins. Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456 U. S. 694, 707-709 (102 SC 2099, 72 LE2d 492) (1982); Nat. Hockey League v. Metropolitan Hockey Club, 427 U. S. 639, 643 (49 LE2d 747, 96 SC 2778) (1976).

2. GM also disputes the court’s rulings as to the 14 documents which were the subject of the November 1, 1995 order denying reconsideration of GM’s privilege claims. It contends the court incorrectly analyzed the privilege claims by accepting Texas law and the special master’s report from litigation pending there, instead of applying Georgia law, arguing that under Georgia law the attorney-client privilege or the work-product doctrine applies to each document. See OCGA §§ 9-11-26 (b) (3); 24-9-21 (2); 24-9-24; 24-9-25; and 24-9-27 (c).

We need not address the substantive issues because of a problem of timing. “The burden is upon the [party contesting production] to establish that counsel’s advice was privileged legal advice and thus not subject to discovery. [Cits.]” Southern Guaranty Ins. Co. &c. v. Ash, 192 Ga. App. 24, 29 (383 SE2d 579) (1989). As to the work-product doctrine, the party wishing to claim the protection of OCGA § 9-11-26 (b) (3) has the burden of showing the document or other item was prepared in anticipation of litigation. Dept. of Transp. v. Hardaway Co., 216 Ga. App. 262, 265 (2) (454 SE2d 167) (1995).

GM argues the affidavits it submitted with its motion for reconsideration of the privilege ruling as to these 14 documents met its burden of establishing its privilege claims. The Conkles argue that GM’s failure to submit evidence in support of the privilege claims until the motion for reconsideration waived any claims of privilege. The matter is not actually one of waiver but of timeliness and appellate consideration of the court’s action.

In its brief in opposition to the Conkles’ motion to produce the documents submitted for in camera review, GM argued that its obligation to support its privilege claims had “not matured” and would not mature until the court had concluded its in camera review. This is incorrect. An unsupported claim of privilege does not meet the proponent’s burden of showing the privilege applies. The procedure followed by GM — claiming that a privilege applies even when the court has entered an order compelling discovery but submitting evidence supporting the claim only after the court has ruled privilege does not apply as to specific documents — is not a proper assertion of the privilege. Although there had been previous motions to compel, GM’s obligation to support its privilege claim with evidence under Uniform Superior Court Rule 6.2 “matured” at least when the Conkles moved on July 7, 1994, for the production of the specific documents GM believed were privileged and had already submitted to the court. Although the Conkles had previously moved to compel production of all documents they requested, GM did not respond to any earlier motion with evidence showing the claimed privileges.

GM contends it asserted its privilege claims in its first response to the Conkles’ requests to produce on September 14,1993, and again when it submitted a privilege log to the Conkles and submitted the documents to the court. Stating a privilege claim and meeting the burden of showing by evidence that privilege applies are not the same. GM did not submit any evidence to support its privilege claim until its motion for reconsideration, despite the fact that the Conkles’ July 7, 1994 motion prominently noted GM’s failure to support its claims. Any early statement by GM that privilege existed does not cure GM’s late filing of the affidavits.

It was not an abuse of the court’s discretion to deny the privilege claims as to these 14 documents when GM did not supply evidentiary support for the claims until the motion for reconsideration, over one year after the need arose. Citadel Corp. v. Sun Chemical Corp., 212 Ga. App. 875, 877-878 (3) (443 SE2d 489) (1994).

Judgment affirmed in part, reversed in part and case remanded.

Birdsong, P. J., concurs. Blackburn, J., concurs specially.

Blackburn, Judge,

concurring specially.

Under the particular facts of this case a hearing was required before the imposition of the extreme sanction of default, there being no definitive sanction order outlining the basis for the court’s action. I therefore agree with the majority that such sanction must be reversed and this case remanded for a hearing. However, I believe it is possible that the evidence in the record could authorize the trial court, following a proper hearing, to determine that GM’s conduct was wilful and that default sanctions are appropriate. To the extent that the majority suggests otherwise, I must respectfully disagree. I concur fully in Division 2, upholding the trial court’s ruling that the 14 documents at issue are not subject to a claim of privilege.

“[A] very broad discretion is granted judges in applying sanctions against disobedient parties in order to assure compliance with the orders of the courts. By OCGA § 9-11-37 (b) (2) (C), the courts are specifically granted the discretion to dismiss complaints or render default judgments against disobedient parties. This applies to the disobeying of an order to produce. Historically, it has been the policy of the Georgia appellate courts to refuse to interfere with a trial court’s exercise of its discretion in absence of abuse. This policy is applicable to a trial judge’s exercise of the broad discretionary powers authorized under the discovery provisions of the Civil Practice Act.” (Citations and punctuation omitted.) Hernandez v. State of Ga., 200 Ga. App. 368, 369 (408 SE2d 160) (1991).

Trial judges, through their direct involvement with the case, the parties, and the attorneys, and their familiarity with the actions of the parties in the conduct of discovery in similar cases that are properly brought to their attention, are in the best position to evaluate the parties’ conduct and to determine the appropriate level of sanctions.

This Court is not authorized to substitute its judgment for that of the trial court and may interfere with such exercise only where the trial court has abused its discretion in controlling the conduct of discovery or the enforcement of its orders. “The standard for review of an order dismissing a[n] [answer] for [defendant’s] failure to respond to discovery is abuse of discretion.” Fisher v. Bd. of Commrs. &c., 200 Ga. App. 353, 354 (2) (c) (408 SE2d 120) (1991). The issue here is, did the trial court abuse its discretion in striking defendant’s answer as a discovery sanction under the facts of this case?

In its order sanctioning GM, the trial court did not make express findings of fact regarding GM’s wilfulness, and did not discuss what facts it relied upon in imposing its sanctions. We do not know, therefore, on what facts the trial court relied in sanctioning GM. The requirement that wilfulness be shown before the imposition of the drastic sanction of dismissal and default is well established. See Joel v. Duet Holdings, 181 Ga. App. 705, 707 (353 SE2d 548) (1987). Here, however, a finding of wilfulness by the trial court is implicit in its order. “[T]his court will not presume the trial court committed error where that fact does not affirmatively appear. The judge is presumed to know the law, not the opposite.” Whiteley v. State, 188 Ga. App. 129, 130-131 (1) (372 SE2d 296) (1988). See Windom v. State, 187 Ga. App. 18 (369 SE2d 311) (1988) (“implicit in any ruling by a trial court is that [the judge] has made the necessary finding of admissibility before admitting such evidence”). Id. at 19 (2). While the trial court should include a specific finding of wilfulness in its sanction, its failure to do so does not necessarily require reversal.

Generally, the trial court should hold a hearing upon a motion to impose default sanctions for discovery abuses, thereby giving the parties the opportunity to be heard and to present evidence concerning such motion. Such hearing provides an opportunity to create a record of the evidence considered by the trial court. The trial court can thereafter issue its ruling with appropriate findings. Loftin v. Gulf Contracting Co., 224 Ga. App, 210, 215 (480 SE2d 604) (1997) (vacating sanctions because appellant was not allowed a meaningful opportunity to explain his actions at a hearing).

We have, however, recognized that this general rule is subject to exceptions. The requirement of a hearing “serves no purpose where the trial court can otherwise determine wilfulness on the part of the party against whom the sanctions are sought.” (Footnote omitted.) Schrembs v. Atlanta Classic Cars, 261 Ga. 182, 183 (402 SE2d 723) (1991). Under such circumstance, the trial court has the option of determining wilfulness and sanctioning a party without a hearing. See Oliff v. Smith, 214 Ga. App. 358 (447 SE2d 707) (1994); Johnson v. Lomas Mtg. USA, 201 Ga. App. 562 (411 SE2d 731) (1991).

However, where the trial court makes a determination of wilfulness and sanctions a party without conducting a hearing, it is essential that the order imposing sanctions outline the basis for the court’s action, as there is otherwise no way of determining whether or not the trial court abused its discretion in so ruling.

Here, the trial court has not included in its order the facts upon which it relies. Absent such information in the sanction order or a transcript of a hearing on the motion, this Court is unable to apply the applicable standard of review in this matter. The credibility and weighing of evidence are matters which are peculiarly within the province of the factfinder, the trial judge in this matter. On appeal, the appellate tribunal does not determine the credibility or preponderance of evidence. See Guye v. Home Indem. Co., 241 Ga. 213, 215 (244 SE2d 864) (1978). “The finder of fact, in this case the [state] court judge, is the final arbiter of the weight of the evidence and the credibility of witnesses. The judge’s findings of fact will not be disturbed on appeal as long as there is any evidence to support those findings” Hughes v. Cobb County, 264 Ga. 128, 130 (1) (441 SE2d 406) (1994). “[T]he [trial] court hears the evidence and is the finder of fact. An appellate court does not find the facts, but reviews the facts found by others” (Emphasis supplied.) Ga. Public Svc. Comm. v. Southern Bell, 254 Ga. 244, 247 (327 SE2d 726) (1985). The question is, does an appellate court have the authority to make a finding of fact, where the finder of fact has failed to do so? The answer is clearly no under the above authority. The appellate court cannot make a finding of fact for the same reason that it cannot substitute its judgment thereon for that of the trial judge; that being, that such right is reserved to the trial judge.

Decided March 14, 1997

Reconsideration denied April 4, 1997

Before Judge Prather.

King & Spalding, Griffin B. Bell, Chilton D. Varner, Robert D. Hays, Jr., Sara E. Barton, Barnes, Browning, Tanksley & Casurella, Roy E. Barnes, for appellant.

Butler, Wooten, Overby, Pearson, Fryhofer & Daughtery, James E. Butler, Jr., Albert M. Pearson III, Peter J. Daughtery, Hatcher, Stubbs, Land, Hollis & Rothschild, James E. Humes II, for appellees.

Nelson, Mullins, Riley & Scarborough, Richard B. North, Jr., Cook, Noell, Tolley & Wiggins, J. Vincent Cook, Flournoy & Gentry, Matthew C. Flournoy, Franklin, Taulbee, Rushing, Bunce & Brogdon, W. M. Brogdon, Jr., amici curiae.

The majority engages in the making of findings of fact here, as the trial court did not do so, and the holding of the majority necessarily rests upon a factual finding as to the evidence in the case. If it did not do so, the majority could not have concluded that the evidence authorized the imposition of sanctions by the trial court, but not those imposed.

Unlike the majority, I would not limit the authority of the trial court to act upon this matter on remand.

       GM contends the court’s February 24, 1994 order to compel did not rule on the privilege claims, leaving it free to assert those claims, but the order shows no exception for allegedly privileged documents. It does not appear that GM made any formal motion for a protective order on the basis of privilege, only the motions based on trade secrets and the inapplicability of door latch issues.


source: Caselaw Access Project

author: Beasley, Judge. Birdsong, Presiding Judge,

license: Public Domain

text:
    A96A1948.
    ATWOOD et al. v. SOUTHEAST BEDDING COMPANY, INC.
    (485 SE2d 217)
   Beasley, Judge.

Southeast Bedding, d/b/a Loving Care, manufactures mattresses and box springs. It sued retailers Atwood and Pennington, d/b/a The Mattress Store, on open account. As both a defense and a counterclaim, Atwood and Pennington asserted breach of contract and breach of warranty on the ground that some of the merchandise Southeast shipped to them was defective. On Southeast’s motion for summary judgment, the court ruled that Atwood and Pennington were barred from any remedy due to their failure to give notice of defects that complies with OCGA § 11-2-607 (3) (a).

In one enumeration, appellants argue that the court erred in granting Southeast summary judgment as to appellants’ counterclaim. Their other enumeration is that the court erred in granting Southeast summary judgment on its complaint. Both enumerations depend upon appellants’ ability to show there is a genuine issue of material fact that they gave the statutory notice.

1. Appellants argue that notification was given in primarily two forms: verbal, during the course of performance, with some complaints sent by facsimile transmission; and written, after termination of the account.

On December 7, 1992, appellants placed their first bedding order on the account. They placed many more orders over the next several months, but in September 1993 Southeast became concerned because the unpaid balance on the account was over $42,000. On October 13, the parties agreed that future orders would be paid on delivery, with appellants making additional payments toward the account balance. Southeast was dissatisfied with the debt payments and terminated the account on November 5, retrieved the unsold merchandise from appellants’ stores and credited appellants’ account. This resulted in the balance of $20,427.55 for which it eventually sued.

On November 11, appellants through counsel delivered a letter to Southeast informing it they would assert claims for breach of contract and warranty in the event Southeast sued on the account. The letter specifically stated it was to serve as proper notice under OCGA § 11-2-607 (3) (a) that goods appellants had received were unacceptable. The letter asserted there were defects beginning with the very first delivery in December 1992.

In letter briefs to this Court, the parties address the appellants’ decision that no depositions be included in the record on appeal. Despite appellants’ contention that the trial court’s order does not mention any deposition, the court specifically relied on Atwood’s deposition for evidence that any goods rejected had been either replaced or returned for credit and that in November all goods were either reclaimed by Southeast Bedding or had been sold previously or otherwise disposed of by appellants. As the court correctly noted, this established acceptance of the goods. Contract Sales &c. v. American Express &c., 216 Ga. App. 61, 62 (453 SE2d 62) (1994).

Southeast contends the decision to omit a deposition which was relied on by the trial court requires that we presume the grant of summary judgment is proper, citing Peacock v. Campbell, 223 Ga. App. 620 (478 SE2d 410) (1996). Although Peacock is physical precedent only, see Court of Appeals Rule 33 (a), the rule that appellants’ omission of evidence necessary for determination of issues on appeal will result in an affirmance has been established. See Bennett v. Executive Benefits, 210 Ga. App. 429 (436 SE2d 544) (1993). However, the deposition evidence the court cited is not such as to determine all appellate issues. Rather, the issue that relates to both counterclaims and defenses based on breach of warranty and breach of contract is whether there is any evidence to support the appellants’ contention that they gave notice of defective merchandise and breach of warranty “within a reasonable time” under OCGA § 11-2-607 (3) (a). In accordance with Bennett, supra, we presume the court’s ruling is correct, based on Atwood’s deposition, that it is undisputed all rejected bedding was properly credited and the bedding upon which appellants based their defenses and counterclaims was accepted.

Because of that ruling, appellants can only pursue remedies that apply to the goods they accepted. OCGA § 11-2-607 (2) provides that “acceptance does not of itself impair any other remedy provided by this article [Article 2: Sales] for nonconformity.” The buyers contend they had to repair some goods and sell them at a discount. OCGA § 11-2-714 provides that a buyer can recover damages for breach of warranty or breach of contract even though the buyer accepted the defective goods. See Fiat Auto USA v. Hollums, 185 Ga. App. 113, 115-116 (4) (363 SE2d 312) (1987); Wolfes v. Terrell, 173 Ga. App. 835, 836 (2) (328 SE2d 569) (1985); see also OCGA § 11-2-715. To recover for such, appellants must show they notified Southeast of defects in accepted goods as required by OCGA § 11-2-607 (3) (a).

In its motion for summary judgment, Southeast argued that evidence of notification of any defects was insufficient, and that the only evidence of any notice was the letter of November 11 after the parties had closed their account. Southeast admitted it had received complaints about its products throughout the course of the parties’ dealings. In response, appellants filed Atwood’s affidavit in which he stated that during the course of the contract’s performance he verbally informed Southeast that various goods were defective.

As to the November 11 letter, the court ruled as a matter of law it did not serve as notice of defect “within a reasonable time” under OCGA § 11-2-607 (3) (a). “ ‘The purpose of the rule [requiring notice within a reasonable time], as stated in the comment to the UCC, is to defeat commercial bad faith. If the seller is notified of a breach within a reasonable time he has opportunity to ascertain for himself the nature and extent of the breach by taking advantage of UCC § 2-515 which gives either party upon reasonable notification to the other, the right to inspect, test and sample the goods . . .for the purpose of ascertaining the facts and preserving evidence.’ [Cit.]” Intl. Multifoods Corp. v. Nat. Egg Products &c., 202 Ga. App. 263, 266 (4) (414 SE2d 253) (1991). Appellants’ claims are for defective goods that they had to repair and sell at a discount. Written notice sent only after the relationship has been terminated and all goods either sold or retrieved by the seller does not and cannot serve the purposes of OCGA § 11-2-607 (3) (a). Notice on November 11 did not permit Southeast to inspect or cure the already sold merchandise. The timing of the notice was unreasonable as a matter of law.

As to evidence of oral notification, the court concluded that “[a]ny oral complaints made by Defendants pertaining to the merchandise received from Southeast Bedding and prior to Defendants requesting and receiving a credit from Southeast Bedding on October 13, 1993, were not reasonable as a matter of law under OCGA § 11-2-607.” The Code requires that the buyer “within a reasonable time after he discovers or should have discovered any breach notify the seller of breach or be barred from any remedy.” OCGA § 11-2-607 (3) (a). “The content of the notification needed merely to have been sufficient to have informed [the seller] that the transaction was ‘ “still troublesome and must be watched.” ’ [Cit.] Such notification did not need to have been in writing. [Cit.]” Oden & Sims Used Cars v. Thurman, 165 Ga. App. 500, 501 (1) (301 SE2d 673) (1983). To the extent the court ruled that oral notification was unreasonable because unwritten, it erred.

Atwood averred he had complained “over and over” and “on a regular basis” to Southeast about the quality of merchandise received and had to effect repairs before selling merchandise to customers at a discount. He also specified ten instances between January and November 1, in which he told various Southeast personnel that goods were defective, often immediately after inspecting the goods. This evidence presents a genuine issue of material fact as to whether there was oral notification of defective accepted merchandise. It rebutted Southeast’s claim that there was no evidence of compliance with OCGA § 11-2-607 (3) (a). There is no requirement in OCGA § 11-2-607 (3) (a) that the notice specifically declare that the defective goods breach the contract, nor does OCGA § 11-2-714 impose any additional requirement as to the notice content. The notice here was sufficient to inform Southeast “that the transaction was ‘ “still troublesome and must be watched.” ’ [Cit.]” Oden & Sims Used Cars, supra at 500-501. See also Great Western Press v. Atlanta Film Converting Co., 223 Ga. App. 861, 862-863 (1) (479 SE2d 143) (1996); Jones v. Cranman’s Sporting Goods, 142 Ga. App. 838, 840 (1) (a) (237 SE2d 402) (1977).

As nonmovants, Atwood and Pennington are entitled to “the benefit of all reasonable doubt, and the court should construe the evidence and all inferences and conclusions arising therefrom most favorably toward [them]. [Cit.]” Garmon v. Warehouse Groceries &c., 207 Ga. App. 89, 91 (1) (427 SE2d 308) (1993).

OCGA § 11-2-603 does not apply as it pertains only to rejected goods. It is established that appellants have no claim for such, only for accepted but defective goods. Nor does OCGA § 11-2-602 (1) apply, as there is no issue of timely notification of rejection but only timely notification of defects under OCGA § 11-2-607 (3) (a). A buyer may accept some commercial units, even defective ones, and reject others. OCGA § 11-2-601 (c).

2. Appellants also argue that the court erred in granting summary judgment to Southeast on their counterclaim for breach of warranty and breach of contract under the authority of Intl. Computer Group v. Data Gen. Corp. &c., 159 Ga. App. 169, 174-175 (4) (283 SE2d 12) (1981). The court ruled that having raised the breach as a defense to Southeast’s suit, asserting a counterclaim based on the same breach constituted an impermissible attempt to gain a double recovery. Intl. Computer is physical precedent only and is not binding. Court of Appeals Rule 33 (a). Neither does the logic the court used apply. Appellants asserted in their counterclaim that they have been damaged by Southeast’s breach to a greater extent than remains on the balance of the account. Should they be able to prove this at trial they would be entitled to a recovery from Southeast, with proper calculation for any sum owed on the account. Southeast argues that appellants’ strategy in deciding to both withhold payments and pursue a counterclaim should, as a matter of policy, bar the assertion of the counterclaim. We “are confident that the trial court, if it comes to the issue of recovery for [appellants], will recognize that the counterclaim and the affirmative defense are alternative statements of the same issue and will not permit double recovery.” Bingham, Ltd. v. Tool Technology, 166 Ga. App. 220, 222 (1) (303 SE2d 761) (1983). Alternative statements in pleadings are explicitly approved. OCGA § 9-11-8 (e) (2).

Judgment reversed.

McMurray, P. J, Pope, P. J., Johnson, Smith, Ruffin, JJ, and Senior Appellate Judge Harold R. Banke concur. Andrews, C. J., and Birdsong, P. J., dissent.

Birdsong, Presiding Judge,

dissenting.

1. Although I agree that the written notice in appellants’ letter of November 11 was unreasonable as a matter of law and that the grant of summary judgment on the counterclaim was unwarranted for the reasons stated by the majority, I must respectfully dissent because I also believe that summary judgment was granted properly to Southeast Bedding because appellants failed to show they gave oral notice sufficient to invoke OCGA § 11-2-607 (3) (a).

This opinion allows appellants to retain mattresses, allegedly knowing them to be defective, sell them for their own profit, and yet refuse to pay for them. Such a result is inconsistent with the Commercial Code of this state and contrary to accepted business practices. The majority opinion, even if arguably correct, is morally wrong.

2. Both the letter from appellants’ attorney on November 11 and Atwood’s affidavit state that when they notified Southeast of the defective merchandise, Southeast took action to rectify the problems either through accepting return of the items and adjusting Atwood’s account or replacing the item with other merchandise. The letter states that Southeast agreed to issue credit for all returned merchandise and to issue an additional credit of five percent on all purchases from July 1, 1993 to October 13, 1993; it also states that Southeast agreed to give credit for all returned defective goods. Therefore, appellants’ complaints about the quality of the bedding were directed toward defects that have already been adjusted to appellants’ satisfaction, and appellants have not shown that any other complaints were made that were sufficient to constitute notice of defective goods.

3. More importantly, however, neither the letter from appellants’ attorney nor Atwood’s affidavit states that Southeast was notified that some items, though accepted, were so defective that Southeast was in breach. In fact, the letter acknowledges that appellants never attempted to bill Southeast for the losses they incurred because of the promises to get quality under control; it also states that it was a business decision to return only the most defective goods, and appellants admit they were given credit for these returns. All of these statements and the tone of the letter generally are inconsistent with any idea that notice was ever given to Southeast that appellants had deemed Southeast to be in breach and gave notice of that under OCGA § 11-2-607 (3) (a). Further, the first paragraph of the letter shows that this letter was intended to be the notice under OCGA § 11-2-607 (3) (a). Atwood’s affidavit states: “I told them over and over again that the received goods did not conform to the original specifications and that the acceptance of these non-conforming goods was based upon the reasonable assumption that the non-conformities would be seasonably cured in the normal course of doing business.” And, although Atwood describes the number of items returned, nowhere does he indicate the number of items on which notice was given under OCGA § 11-2-607 (3) (a) and that the items would be subject to sale under OCGA § 11-2-714. Appellants’ intent in selling this merchandise is shown in Atwood’s affidavit where he said the merchandise was sold at a “discount so that we could pay what we could.” That statement is inconsistent with giving notice under OCGA § 11-2-607 (3) (a) or a sale under OCGA § 11-2-714. Consequently, I cannot agree that OCGA § 11-2-714 is of any benefit to appellants. To be entitled to the benefits of this Code section, appellants must have given proper notice to Southeast of the defects in the goods under OCGA § 11-2-607 (3) (a) that would have allowed Southeast the opportunity to cure the defect. The evidence of appellants’ conduct as shown in the attorney’s letter and Atwood’s affidavit is inconsistent with any such notice having been given which would have given Southeast this opportunity.

4. Although I agree the evidence shows that appellants complained to Southeast about its workmanship, merely complaining “over and over again” even “on a regular basis,” as Atwood says, does not necessarily equal notice under OCGA § 11-2-607 (3) (a). The notice must be such to inform “ ‘ “the seller that the transaction is claimed to involve a breach.” ’ ” (Citation omitted.) Oden & Sims Used Cars v. Thurman, 165 Ga. App. 500, 501 (301 SE2d 673). “The purpose of the rule, as stated in the comment to the UCC, is to defeat commercial bad faith. If the seller is notified of a breach within a reasonable time he has [the] opportunity to ascertain for himself the nature and extent of the breach by taking advantage of [OCGA § 11-2-515] which gives either party upon reasonable notification to the other, the right to inspect, test, and sample the goods ... for the purpose of ascertaining facts and preserving evidence.” (Citation and punctuation omitted.) Intl. Multifoods Corp. v. Nat. Egg Products &c., 202 Ga. App. 263, 266 (4) (414 SE2d 253). This record does not remotely suggest that Southeast was given notice that appellants claimed a breach on the items they retained. Appellants did not point to even one time in which an adequate notice was given. If the type of complaints to which Atwood testified are allowed to constitute the required notice, any disparaging comments about the condition of the goods will leave open the possibility of a subsequent action like this. That is not the law. Although it is true that as the non-moving party appellants are entitled to the benefit of all reasonable doubt, and the court should construe the evidence and all inferences and conclusions therefrom in their favor (Moore v. Goldome Credit Corp., 187 Ga. App. 594, 595-596 (370 SE2d 843)), it is also true that this is an issue on which they would have the burden of proof at trial. Therefore, Southeast was not required to disprove affirmatively or negate this aspect of appellants’ case. Lau’s Corp. v. Haskins, 261 Ga. 491 (405 SE2d 474). Consequently, appellants failed to show that the proper notice was given. All appellants showed was that they complained a lot about the quality of the merchandise, but nevertheless retained and sold the merchandise to their customers. The notice that appellants gave together with their conduct showed that the transaction was completed, not that the transaction bore watching. Appellants never attempted to reconcile any of these transactions until after Southeast attempted to collect the amounts appellants owed. This was too little and too late.

Decided March 14, 1997

Reconsideration denied April 4, 1997.

Robert P. McFarland, for appellants.

Banks, Stubbs & Neville, John R. Neville, for appellee.

5. Moreover, OCGA § 11-2-601 does not authorize a buyer to use the procedures appellants rely on in this case. Appellants’ efforts to reject the goods were untimely as a matter of law (OCGA § 11-2-602 (1)), and the affidavit and the letter show that appellants sold the goods and kept the proceeds for themselves. These actions negate any rejection of the goods, because OCGA § 11-2-603 (1) allows sale of rejected goods, but requires the proceeds, less some charges, to be held for the seller’s account.

6. Accordingly, I believe that the trial court correctly granted summary judgment to Southeast and, although I agree that summary judgment on appellants’ counterclaim was not appropriate under the reasons stated by the trial court, summary judgment was properly granted on the counterclaim because appellants failed to give proper notice.

I respectfully dissent. I am authorized to state that Chief Judge Andrews joins in this dissent.


author: Blackburn, Judge. Smith, Judge, Beasley, Judge,

text:
    A96A1961.
    CNL INSURANCE AMERICA v. MORELAND.
    (485 SE2d 515)
   Blackburn, Judge.

CNL Insurance America appeals the trial court’s denial of its post-judgment motion for offset. The issue in this appeal is whether the non-duplication of benefits provision in CNL’s insurance policy is enforceable and allows CNL the right in this uninsured motorist claim to reduce the jury’s verdict by the amount of payments previously made to the plaintiff. CNL’s insurance policy was not made a part of the record at the trial court and is not in the record before us. There was no appropriate substitution for the policy’s submission made to the trial court.

It is well settled that the burden on appeal is on the appellant to show error by the record. When a portion of the evidence bearing upon the issues before the trial court was not filed in the trial court and not made a part of the record on appeal, this Court may not consider such material. See Burks v. First Union Mtg. Corp., 209 Ga. App. 41, 42 (432 SE2d 822) (1993).

CNL’s attempt to supplement the record by attaching a copy of one and one-half pages of the purported policy in issue to its appellate brief is not sufficient. “[T]he burden is on him who asserts error to show it affirmatively by the record. A brief cannot be used in lieu of the record for adding evidence.” (Citation and punctuation omitted.) Id. See also Graham v. Ault, 266 Ga. 367 (2) (466 SE2d 213) (1996) (appellate court cannot consider facts which do not appear in the record sent from the trial court); Bertone v. Wilkinson, 213 Ga. App. 255, 257 (444 SE2d 576) (1994) (court cannot consider pleading attached to brief); Stolle v. State Farm Mut. Auto. Ins. Co., 206 Ga. App. 235, 236 (2) (424 SE2d 807) (1992) (“ £[a] brief or an attachment thereto cannot be used as a procedural vehicle for adding evidence to the record. We must take our evidence from the record and not from the brief of either party’ ”). Factual assertions in briefs are not evidence and may not support a ruling by this Court. See Bates v. Guaranty Nat. Ins. Co., 223 Ga. App. 11, 15 (476 SE2d 797) (1996) (“ £[t]he appellate courts simply cannot, and are not authorized by law, to infer from statements of counsel in their briefs, facts which never managed an introduction into or even a nodding acquaintance with the record’ ”).

The dissent’s reliance on Bentley-Kessinger, Inc. v. Jones, 186 Ga. App. 466 (367 SE2d 317) (1988) is misplaced as that case is distinguishable. In Bentley-Kessinger, the Court interpreted a provision in a lease document that was not in the record; however, therein the parties agreed as to the wording of the provision in issue and the trial court made specific findings regarding what was authorized by the leasé agreement. In the present case, the trial court made no such findings and, neither its order denying CNL’s motion for set-off nor the policy in question is part of the appellate record.

As the record contains no evidence of the provisions in CNL’s policy, we must affirm the trial court.

Judgment affirmed.

Andrews, C. J., McMurray, P. J., Birdsong, P. J., Pope, P. J., Johnson and Ruffin, JJ., concur. Smith, J., concurs specially. Beasley, J., dissents.

Smith, Judge,

concurring specially.

I concur fully in the majority, but write to note a distinction overlooked by the dissent between this decision and such cases as City of Buchanan v. Pope, 222 Ga. App. 716, 722, n. 4 (476 SE2d 53) (1996). While in Pope the appellant assented by silence to the City’s factual assertions that no disparate treatment or purposeful discrimination had occurred, the parties cannot assent to an issue of law such as the interpretation of an insurance contract which is not included in the record. See generally Thogerson v. State, 224 Ga. App. 76, n. 1 (479 SE2d 463) (1996) (mere statement of opinion as to legal effect of document not binding admission).

Beasley, Judge,

dissenting.

The record shows that Moreland was injured in a collision with a car driven by Ford, for which a jury awarded $6,143.40 in medical expenses, $4,400 for lost earnings, and $3,750 for pain and suffering. Ford was uninsured, so the trial court ordered CNL to pay the full amount of the judgment. CNL had been served as Moreland’s uninsured motorist carrier and answered in its own name. Moreland was a named insured in his father’s policy, which has uninsured motorist limits of $15,000.

Moreland’s employer and group insurance carrier, Southwire, paid medical expenses and reimbursed him for lost wages. CNL urges that it is entitled to set off these amounts in accordance with the subrogation provisions in its policy: “The limit of liability shall be reduced by all sums: 1. Paid because of the ‘bodily injury’ or ‘property damage’ by or on behalf of persons or organizations who may be legally responsible . . .; and 2. Paid or payable because of the‘bodily injury’ under any of the following or similar law: (a) Workers’ compensation law; or (b) Disability benefits law. . . . No one will be entitled to receive duplicate payments for the same elements of loss.”

Although the policy itself is not in the record, CNL quoted this portion of the policy in its motion to set off the verdict. In his response, Moreland accepted the quotation as the policy clause at issue. Moreland does not dispute this language is in the CNL policy but instead argues that “the insurer cannot restrict this coverage with an ‘other insurance’ clause such as the one in appellant’s policy.” By this statement, as well as by the substance of his argument, Moreland affirmatively acknowledges the content of the clause. Consequently, appellee Moreland “consentís] to a decision based on the appellant’s statement [of facts].” Court of Appeals Rule 27 (b) (1).

That rule, or its predecessor Court of Appeals Rule 15 (b), has been applied to establish the underlying facts and reach the merits in the following cases, among others: City of Buchanan v. Pope, 222 Ga. App. 716, 722, n. 4 (476 SE2d 53) (1996); Biven Software v. Newman, 222 Ga. App. 112, 115 (1) (473 SE2d 527) (1996); Ward v. Pembroke State Bank, 212 Ga. App. 322, n. 1 (441 SE2d 691) (1994); Patterson v. Lauderback, 211 Ga. App. 891, 895 (3) (440 SE2d 673) (1994), overruled on unrelated grounds, Warren v. Ballard, 266 Ga. 408, 410 (2) (467 SE2d 891) (1996); Bentley-Kessinger, Inc. v. Jones, 186 Ga. App. 466 (367 SE2d 317) (1988); Riley v. State, 180 Ga. App. 409, 410 (349 SE2d 274) (1986); Whisnant v. State, 178 Ga. App. 742, 743 (1) (344 SE2d 536) (1986); Hiley v. McGoogan, 177 Ga. App. 809, 811, n. 1 (341 SE2d 461) (1986); and Ron Eason Enterprises v. McColgan, 151 Ga. App. 106 (1) (258 SE2d 761) (1979).

In City of Buchanan, we said, “By failing to respond to the [appellant’s] factual assertions in this regard, [appellee] has consented to their accuracy.” Id. at 722, n. 4. In Ward, we said, “Although the security deed is not contained in the record, defendant states that the security deed contained an 'open-end’ clause and plaintiff has not disputed that statement. Accordingly, we may accept this statement as being prima facie true.” Id. at 322, n. 1. I have not found a case where the rule was construed to mean, as it is now, that not only must appellant’s statement of facts not be controverted but also the trial court must have made those specific findings. We must reach the merits whenever we can, OCGA § 5-6-30, and here we have the necessary facts to do so.

Moreland contends that the subrogation provisions violate the statutory requirement that uninsured motor vehicle insurers “pay the insured all sums which he shall be legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle, within limits [not less than specified amounts].” OCGA § 33-7-11 (a) (1). He points out that if Ford had paid the judgment himself, Ford’s obligation would not be reduced by what Moreland might collect from other sources. Accordingly, he concludes, if he is entitled to the entire $14,293.40 from the tortfeasor, then the uninsured motorist carrier should not be permitted to contractually limit coverage to less than that amount. These arguments were rejected by this Court in Johnson v. State Farm Mut. Auto. Ins. Co., 216 Ga. App. 541, 544 (455 SE2d 91) (1995) (medical insurance benefits set-off), and Northbrook Property &c. Ins. Co. v. Merchant, 215 Ga. App. 273 (450 SE2d 425) (1994) (workers’ compensation benefits set-off).

Moreland distinguishes Johnson by arguing that Johnson’s recovery would have exceeded the amount of his damages, since the uninsured motorist carrier and the medical insurer were the same company. Thus, Moreland concludes Johnson holds that a plaintiff cannot recover twice from one insurance company under a single contract of insurance. But Moreland reads Johnson too narrowly. Numerous case scenarios are discussed, the common thread being adherence to “the principle that the insured should not receive more under his insurance policies than his actual damages and . . . that such a recovery was contrary to the public policy behind the Uninsured Motorist Act.” Id. at 543.

If the policy does not preclude a total recovery but does reject duplicative recovery, it is enforceable because it does not contravene public policy. “ ‘ “An insurance company may fix the terms of its policies as it wishes, provided they are not contrary to law, and it may insure against certain risks and exclude others.” ’ Georgia Farm Bureau Mut. Ins. Co. v. Musgrove, 153 Ga. App. 690, 692 (266 SE2d 228) [(1980)].” Wilson v. Cotton States Mut. Ins. Co., 183 Ga. App. 353, 354 (1) (358 SE2d 874), overruled on issues concerning Yost v. Torok, 256 Ga. 92 (344 SE2d 414) (1986), in Vogtle v. Coleman, 259 Ga. 115, 119 (376 SE2d 861) (1989). “The statute is designed to protect the insured as to his actual loss.” State Farm Mut. Auto. Ins. Co. v. Murphy, 226 Ga. 710, 714 (177 SE2d 257) (1970). Moreland would have a recovery greater than his damages should he prevail. The rule is that “a non-duplication of benefits clause providing for setoff of medical benefits paid is enforceable when damages are equal to or below the uninsured motor vehicle policy limits because in such circumstances the clause only reduces the uninsured motorist payment by the amount of the prior medical payment without reducing recovery of all damages.” (Emphasis in original.) Johnson, supra at 544. In this case, as in Johnson, “the non-duplication clause operates to preclude double recovery, not to reduce the recovery of all sums for which the tortfeasor is liable.” Id. Ford was liable for $14,293.40. Moreland received some of this from Southwire. The balance, when paid by CNL, will make him whole.

Cases cited by Moreland as support, many of which were discussed in Johnson, are distinguishable on this basis, since the insureds in those cases had actual damages greater than their uninsured motorist coverage. See, e.g., Phillips v. State Farm Mut. Auto. Ins. Co., 437 F2d 365 (5th Cir. 1971); Woods v. State Farm Mut. Auto. Ins. Co., 234 Ga. 782 (218 SE2d 65) (1975); and State Farm Mut. Auto. Ins. Co. v. Johnson, 126 Ga. App. 45 (190 SE2d 113) (1972). Travelers Indem. Co. v. Liberty Loan Corp. &c., 140 Ga. App. 458 (231 SE2d 399) (1976), involved the doctrine of respondeat superior and is inapplicable here. Woods, supra, and Travelers Indem. Co. v. Williams, 119 Ga. App. 414 (167 SE2d 174) (1969), also differ because the language of the uninsured motorist provisions at issue attempted to circumvent the statute.

Moreland denies that he will receive a double recovery if CNL is denied set-off, in that Southwire has the right to pursue all amounts received by Moreland through its policy’s purported subrogation provisions: “If a Covered Person receives any . . . compensation from a third party . . . because of an injury . . . for which he makes a claim, the Plan would be entitled to reimbursement from the Covered Person for expenses paid by the Plan. An exception would apply to insurers on policies of insurance issued to and in the name of the Covered Person.”

Decided March 19, 1997

Reconsideration denied April 4, 1997

Before Judge Weeks.

Webb, Carlock, Copeland, Semler & Stair, Edward A. Miller, for appellant.

By the latter sentence, Southwire specifically limits its right of subrogation so that it does not extend to any recovery Moreland obtains under his insurance policies, such as the CNL uninsured motorist policy. Any claim Southwire might have against Ford based on its contract with Moreland has no bearing on claims for which CNL is obligated under its contract with its insured. The issue here is not Southwire’s rights but rather Moreland’s. Moreland does not represent Southwire, and its subrogation interests are irrelevant to CNL’s statutory and contractual obligations to him. Moreover, under the purported Southwire plan, Moreland is not being denied 100 percent recovery of the amount of the judgment because he would be required to reimburse Southwire only “if” he recovered from a third party. Moreland’s non-entitlement from CNL of amounts paid by Southwire’s plan requires him to reimburse Southwire for nothing.

CNL also contends that since it is not the tortfeasor, it is not a “third party” from whom Moreland is receiving compensation as contemplated by the Southwire subrogation provision. The point is rendered moot by our holding.

Moreland argues that his Southwire group insurance policy is part of a plan governed by the Federal Employment Retirement Income Security Act (ERISA), 29 USC § 1001 et seq., and is entitled to mandatory subrogation pursuant to that law, which he asserts supersedes CNL’s contract limitation. The record is devoid of any evidence of ERISA’s applicability to Southwire’s or CNL’s policy, and of any raising of this ground in the trial court.

CNL also raises the inapplicability of the collateral source rule, but the point was not raised in its motion for set-off or in Moreland’s response or in the trial court’s order, so we do not address it. Ellison v. State, 216 Ga. App. 639, 641 (3) (455 SE2d 361) (1995).

The judgment should be reversed and the trial court directed to determine the amount Moreland has been paid by the sources named in the CNL policy, by which amount the judgment against CNL should be reduced.

Jack F. Witcher, for appellee.

       Appellant raises this very point as the basis of its motion for reconsideration, and appellee has not responded that he contests the facts.

       The Southwire policy is not in the record as evidence but the relevant portion is attached to CNL’s motion to set off the verdict as an excerpt of the larger document. More-land does not contest its accuracy or applicability to Moreland and in fact repeats and depends on the quotation in his response to the motion.


author: Blackburn, Judge. Birdsong, Presiding Judge,

text:
    A96A2091.
    YELLOW CAB OF CHATHAM COUNTY, INC. v. KARWOSKI.
    (486 SE2d 39)
   Blackburn, Judge.

The sole issue before us in this workers’ compensation case is whether Francis R. Karwoski was an independent contractor or an employee.

Karwoski was injured while driving a taxicab for Yellow Cab of Chatham County, Inc. (Yellow Cab). Relying upon this Court’s decision in Worrell v. Yellow Cab Co., 146 Ga. App. 748 (247 SE2d 569) (1978), the cases cited therein, and certain provisions of the Savannah City Code, the administrative law judge found that Yellow Cab was estopped to deny that Karwoski was its employee. On this basis, it granted his summary judgment motion for workers’ compensation benefits. The State Board of Workers’ Compensation reversed, and the superior court reversed the State Board. Yellow Cab now contends that the ALJ and the superior court erroneously construed Worrell and the Savannah City Code to preclude the use of independent contractors as cab drivers.

In Worrell, we found that the language of the Code of Ordinances of the City of Atlanta prohibited licensed taxicab companies from using independent contractors to operate their vehicles. Therefore, Worrell was an employee and the Workers’ Compensation Act applied. Id. at 749. Our opinion in Worrell was controlled by several earlier taxicab cases interpreting the same Ordinances of the City of Atlanta, including Atlanta Million Cooperative Cab Co. v. Wilson-Acomb, 108 Ga. App. 465 (1) (133 SE2d 437) (1963); Diamond Cab Co. v. Adams, 91 Ga. App. 220 (85 SE2d 451) (1954); and one case involving the City of Albany Code which was similar to the City of Atlanta Code, that being Malone v. Gary, 98 Ga. App. 699 (106 SE2d 320) (1958). Both the Atlanta and Albany codes required that any driver be either an owner or employee of the taxicab company.

In both Diamond Cab, supra, and Atlanta Million, supra, this Court had to determine whether the subject cab drivers were employees or independent contractors. The controlling Atlanta City Code provided that “no taxicabs shall be operated by any person other than the owner, or his duly licensed employee.” (Punctuation omitted; emphasis supplied.) Diamond Cab, supra at 221. This language clearly precludes the use of independent contractors, and we therefore held that the injured cab drivers were employees of the respective cab companies for purposes of workers’ compensation. Id.; Atlanta Million, supra at 465.

The Atlanta City Code involved in Worrell had been amended. In Worrell, the code read, “[n]o vehicle provided for under the provisions of this article shall be operated by any person other than the owner or his duly authorized employee or agent.” (Punctuation omitted.) Worrell, supra at 748-749. In Worrell, Yellow Cab contended that Worrell was an independent contractor. In Worrell, however, unlike the present case, Yellow Cab owned the taxi and leased same to Worrell. Since Yellow Cab owned the vehicle Worrell drove, it is clear that Worrell was not an independent contractor. Under these facts and the otherwise clear language of the ordinance, this Court held that Worrell was an employee, notwithstanding the amendment to the ordinance. Id. at 750.

In Malone, supra, the applicable Albany code required that all vehicles be owned by the owner of the taxicab business. Id. at 700. Malone, the taxicab business owner, did not own the vehicle involved in the collision, and he contended that his ^third-party driver was an independent contractor. This Court rejected that argument and held that the owner of the business could not avoid the duties of operating the taxicab business by allowing third-party owners of automobiles to operate as independent contractors where the Albany ordinance required that all taxis be owned by the owner of the business. Both the Atlanta and Albany codes required that all vehicles be owned by the business owner, or driven by his or her employee. The statutory schemes involved in each of these codes dictate ownership of the vehicles or the status of the driver and thereby preclude an operator of a vehicle from having the status of an independent contractor.

Unlike the Atlanta and Albany codes, the Savannah code in this case contains no provisions dictating ownership of the taxicabs, and no language specifically requiring that drivers be either owners or employees. Rather, the Savannah code dictates that separate licenses be obtained both for ownership of a taxicab business and to drive a taxicab. Under Section 6-1423 of the Savannah City Code, it is unlawful to operate a taxicab business without a license from the city. In addition, each taxicab driver must have a separate taxicab driver’s permit. See Section 6-1429. Therefore, in order to operate lawfully, an independent contractor must have both a driver’s permit and a taxicab business license. The superior court concluded that the language of the Savannah City Code precludes the use of independent contractors as drivers. The superior court held that Karwoski was an employee of Yellow Cab, not an independent contractor, and that the Workers’ Compensation Act was applicable in this case.

The trial court found that although Karwoski had a cab driver’s permit, he had no taxicab business license, and he therefore failed to meet the first requirement for being an independent contractor. Nor did he have any of the other requirements for a licensed taxicab business/independent contractor: a fixed place of business (Section 6-1424), both doors of his cab permanently marked with his own company’s name in letters at least four inches high (Section 6-1446), a number on display in his cab assigned to him by the city (Section 6-1447), and his cab painted in his own cab company’s distinctive color scheme (Section 6-1450).

Instead, Karwoski operated from Yellow Cab’s taxi stand. His cab was painted Yellow Cab’s assigned shade of yellow, it had Yellow Cab’s name on its sides and top, and the number on display in his cab was assigned by the city to Yellow Cab. The trial court also found that Yellow Cab was cognizant of all of these facts during the time it associated with Karwoski.

Under these facts, Karwoski did not meet the requirements for being an independent contractor under the Savannah City Code. The only status recognized by the Savannah code which fits the facts here is that of an employee of Yellow Cab. All parties are presumed to act in a lawful manner, and under the licensing scheme of the Savannah code, all drivers are either owners or employees. Worrell, Diamond Cab, Atlanta Million, and Malone were each controlled by the particular municipal code involved and the cases interpreting such code. The clear language of each of these codes precludes the use of an independent contractor as a driver. The subject case involves the interpretation of the Savannah code which contains different statutory provisions and schemes, which code has not been addressed in any of the cited cases. The Savannah code has a unique statutory scheme and contains provisions different from those involved in Worrell, Diamond Cab, Atlanta Million, and Malone. While this case is not controlled by Worrell, on analysis, the result is the same. The trial court did not err in concluding that Yellow Cab was estopped to deny that Karwoski was its employee for the reasons herein outlined.

Judgment affirmed.

McMurray, P. J., Johnson, Ruffin, JJ, and Senior Appellate Judge Harold R. Banke concur. Beasley, J., concurs in the opinion but does not participate in the “On Motion for Reconsideration.” Andrews, C. J., Birdsong, P. J., Pope, P. J., and Smith, J., dissent.

Birdsong, Presiding Judge,

dissenting.

As I cannot agree that the Savannah city ordinance requires that we find either Karwoski or the driver in Smith v. Yellow Cab Co. of Chatham County, 223 Ga. App. 143 (476 SE2d 887), was an employee of Yellow Cab, I must respectfully dissent.

The majority’s premise in this case that these Savannah taxicab drivers must be employees is based upon its conclusion that, as the Savannah taxicab ordinance requires that taxicabs be driven by one who possesses both a taxicab business license and a taxicab driver’s permit, if one has only a driver’s permit, he must be classified as an employee of the entity that has the taxicab business license. I cannot agree with this conclusion. Even though we may conclude that the ordinance requires that independent contractors, i.e., owner/operators, in the taxicab business possess both taxicab business licenses and taxicab driver’s permits, it is a great leap to conclude that this scheme demands the conclusion that independent contractors who do not possess taxicab business licenses must be employees of the entity who leases them taxicabs.

The definition of an independent contractor under workers’ compensation law is contained in OCGA § 34-9-1 (2). The Savannah city ordinance on taxicabs does not alter that result. Although we have in other cases found that some local ordinances require that taxicabs be driven only by the owners of taxicab businesses or their employees (see Atlanta Million Cooperative Cab Co. v. Wilson-Acomb, 108 Ga. App. 465 (133 SE2d 437); Malone v. Gary, 98 Ga. App. 699 (106 SE2d 320); Diamond Cab Co. v. Adams, 91 Ga. App. 220 (85 SE2d 451)), the Savannah ordinance contains no such requirement. Thus, in Savannah there is no restriction on the legal status of persons who drive taxicabs as long as they have the required licenses.

Consequently, as I know of no rule of law that requires that we hold that one who does not have a valid business license becomes the employee of one who does (a proposition that should send tremors through the ranks of lessors), I must dissent from the majority’s opinion in Karwoski.

In Smith we considered whether the driver was an actual employee or an independent contractor under tort law, and the facts required the conclusion that the driver was an independent contractor. Because Smith was an actual independent contractor and not an actual employee we reached the correct result in Smith: Yellow Cab was not liable as respondeat superior, even if a non-licensed operator violated the Savannah city ordinance by driving a cab without a taxicab business license. That Yellow Cab allows unlicensed independent contractors to lease its cabs may be of interest to enforcers of the city code, but it does not require us to deem an actual independent contractor to be an “employee” so as to hold Yellow Cab liable in tort to third parties for the acts of an actual independent contractor. Yellow Cab may have been subject to prosecution for violation of the city code, but this does not make it vicariously liable to third parties under respondeat superior.

Accordingly, I would reverse the judgment in Karwoski and not overrule Smith. I am authorized to state that Chief Judge Andrews, Presiding Judge Pope and Judge Smith join in this dissent.

On Motion for Reconsideration.

The case law dealing with the use of independent contractors as drivers of taxicabs within municipalities has become blurred and confused over the years. These cases generally divide into two lines: those tort cases involving the doctrine of respondeat superior and those workers’ compensation cases involving coverage for injured drivers. In each category, the plaintiffs seek to hold the taxicab company liable as the employer of the driver-employee, while the taxicab companies seek to avoid liability on the basis that the drivers are independent contractors, not employees.

While the case law has become confused, the statutory law is quite clear. OCGA § 46-1-1 (9) (C) (ii) and its predecessor statute provide that “[tjaxicabs . . . which operate within the corporate limits of municipalities . . . are subject to regulation by the governing authorities of such municipalities!’ (Emphasis supplied.) See Brunson v. Valley Coaches, 173 Ga. App. 667 (327 SE2d 758) (1985). It is clear, therefore, that individual cases in this area are controlled by the applicable city ordinance where it addresses such issues, directly or indirectly. The first step in analyzing these cases is to look to the applicable city code. Where such code addresses the issue, it is controlling. Where it does not, then general law would apply.

The case law confusion has arisen because: (1) the applicable city ordinance has not always been raised, or addressed where raised; (2) appellate opinions have relied upon cases involving the ordinances of different cities which vary greatly, or upon different versions of the same city ordinance; and (3) appellate opinions have sometimes erroneously relied on prior decisions which properly applied the general law, but which general law did not control the case being decided. For example, if the subject city ordinance in the prior case did not address the issue of the employment status of taxicab drivers, and the case was decided based on general law, such case could not properly control a present case wherein the city ordinance was raised, and it required that all taxicab drivers be either an owner or an employee of the taxicab company.

The effect of the current structure for the control of taxicab companies in the area of tort and workers’ compensation liability has been to create an erratic body of state case law where the true controlling authority is assorted city ordinances, resulting from the legislature’s delegation of such authority to the municipalities under OCGA § 46-1-1. In his special concurrence in Loudermilk Enterprises v. Hurtig, 214 Ga. App. 746 (449 SE2d 141) (1994) (physical precedent only), Judge Johnson called upon the legislature and local governments to re-examine their policies in connection with the regulation of the taxicab industry for the protection of the public. I second Judge Johnson’s call for action.

On motion for reconsideration, Yellow Cab contends that this case is controlled by our decision in Smith v. Yellow Cab Co. of Chatham County, 223 Ga. App. 143 (476 SE2d 887) (1996), a case in which this author concurred. Smith was a negligence action arising from an automobile collision in which this Court affirmed the trial court’s grant of summary judgment to Yellow Cab based on a determination that the driver therein was an independent contractor rather than an employee. Smith involved the Savannah city ordinance which was properly raised and presented as an issue in the trial court and to this Court. Smith was wrongly decided, as this Court decided same based on the general law, rather than the Savannah city ordinance as required by OCGA § 46-1-1 and Worrell v. Yellow Cab Co., 146 Ga. App. 748 (247 SE2d 569) (1978).

This Court held in Smith that “[tjhis case is controlled by Loudermilk” Id. at 144. Loudermilk is a one-judge panel opinion, in which one judge concurred specially and the other judge on the panel concurred in the judgment only. Although the case arose in the City of Atlanta and the City of Atlanta ordinance in effect at the time would have applied, the same was not raised or addressed in the opinion, and the case was determined under general law. The opinion found that the driver therein was an independent contractor and that there was insufficient evidence to establish that an employer-employee relationship existed between the driver and the cab company. This Court reversed the trial court’s denial of the defendant cab company’s motion for directed verdict and the jury verdict in the amount of $74,046.61. As Loudermilk is physical precedent only, it cannot be cited as authority and did not control Smith. Court of Appeals Rule 33 (a).

Smith also cited another case which is physical precedent only and may not be cited as authority, West End Cab Co. v. Stovall, 98 Ga. App. 724 (106 SE2d 810) (1958). West End is a panel case in which one of the judges concurred in the judgment only. West End also was set in Atlanta and was subject to the Atlanta City Code, but this issue was not raised in the case or addressed at any level.

A review of the cases reveals that city ordinances sometimes address the issue of the status of drivers directly by requiring that drivers be either owners or employees. See Diamond Cab Co. v. Adams, 91 Ga. App. 220, 221 (85 SE2d 451) (1954) (a case involving the City of Atlanta ordinance); see also Malone v. Gary, 98 Ga. App. 699, 700 (106 SE2d 320) (1958) (a case involving the City of Albany Code which required that all taxicabs be owned by the owner of the taxicab business).

Savannah City Code § 6-1423 provides in part, that “(a) No person . . . shall operate a business involving the use of one (1) or more taxicabs on the streets of the City unless a license for such business has first been granted by the City.” In addition, each driver, including owners, must have a taxi driver’s permit issued by the City under Savannah City Code § 6-1422 (f). Therefore, any true independent contractor who was operating a taxicab under Yellow Cab’s name would not be controlled by Yellow Cab and would be required to have a taxicab business license for its independent business in addition to a taxi driver’s permit. It is undisputed in Smith and the present case that the drivers had only a taxi driver’s permit and not a business license.

Decided March 6, 1997

Reconsideration, denied April 4, 1997

Before Judge Freesemann.

Parkerson, Shelfer & Groff, David B. Groff, for appellant.

Jones, Boykin & Associates, Noble L. Boykin, Jr., for appellee.

In Worrell, supra, this Court held that where a taxicab company failed to comply with the relevant requirements of the applicable city ordinance, it could not avoid its obligations to provide workers’ compensation coverage, and that a finding was therefore demanded that the relationship of employer and employee existed between the claimant and the defendant taxicab company. In Smith and here, with knowledge of Yellow Cab, these drivers were permitted to operate without a business license for their “independent” businesses. As in Worrell, such facts demand a finding that the relationship of employer and employee existed in Smith and the present case and Yellow Cab is estopped to deny such relationship. For the above reasons, our opinion in Smith is overruled and our holding herein is unchanged.