author: Pope, Presiding Judge.

text:
    A95A1156.
    HARTMAN et al. v. SHALLOWFORD COMMUNITY HOSPITAL, INC.
    (466 SE2d 33)
   Pope, Presiding Judge.

Plaintiffs Barbara Hartman and her husband sued defendants, Shallowford Community Hospital, Inc. and Dr. Hoyt Dees, for negligence, medical malpractice and loss of consortium. Following a jury verdict and the denial of their motion for a new trial, plaintiffs appeal contending that the verdict form used in the case was improper in that it did not allow for an award of general pain and suffering damages against Shallowford, and that the trial court erred in recharging the jury and in excluding certain evidence. We agree that the verdict form in this case was improper and that the trial court erred in its recharge to the jury. Consequently, we reverse and remand this case for a new trial in accordance with this opinion.

On June 15, 1990, Dees performed a hysterectomy on Hartman at Shallowford Hospital. Prior to the surgery, an indwelling urinary catheter was placed in Hartman’s bladder to facilitate urinary drainage. This catheter was removed by one of Shallowford’s nurses on the morning after the surgery. According to plaintiffs, the nurse negligently failed to record the time at which she removed the catheter on Hartman’s medical chart, which in turn delayed the reinsertion of the catheter when Hartman was unable to void her urine. At trial, plaintiffs contended that the failure to properly record the above information caused Hartman to undergo pain and suffering while waiting for the catheter to be reinserted, and that Shallowford was liable for the damages attributable to its employee’s negligence. Plaintiffs also contended that Dees negligently failed to properly administer the informed consent process; negligently performed any surgery beyond a cystectomy; negligently placed a stitch through Hartman’s bladder during the hysterectomy, which resulted in the development of a fistula and stress incontinence; and negligently monitored Hartman during her first post-operative day.

During trial, plaintiffs sought to have an expert demonstrate on a pig’s bladder how a stitch through the bladder would allow urine to leak out of the hole created by the stitch. Shallowford’s counsel objected to the demonstration, and after plaintiffs’ expert was questioned outside the presence of the jury, the trial court ruled that the pig bladder demonstration would not be allowed. Plaintiffs objected to this ruling.

The case was submitted to the jury along with a verdict form which contained numerous interrogatories. One interrogatory asked the jury whether Dees negligently performed the hysterectomy by including the bladder in a stitch of Hartman’s vaginal cuff. Another interrogatory asked whether Shallowford’s nurses negligently failed to record any facts regarding the removal of the catheter. It is undisputed that the liability portion of the verdict form only allowed for the recovery of damages associated with the development of the fistula and for stress incontinence subsequent to the repair of the fistula.

After deliberating for a short time, the jury returned to court with the following two questions: “If an error during surgery is unintentional or unknown, is this negligent? If an error during surgery is unintentional or unknown, is this below the standard of care?” In response to these questions, the trial court instructed the jury that: “[T]he law does not require that treatment given by a physician or surgeon to a patient shall yield nearly perfect, or perfect results. A physician is not responsible in damages for lack of success or an honest mistake or an error in judgment unless it is shown from the evidence that the physician did not exercise the necessary degree of skill ordinarily employed by physicians generally, under similar conditions and like surrounding circumstances.” The trial court then recharged the jury as to the medical standard of care by stating that: “The standard of care which a physician is required to exercise is that degree of care and skill as, under similar conditions and like surrounding circumstances, is ordinarily employed by the profession generally. If a physician in the treatment and care of his patient should use that degree of care and skill ordinarily employed by the profession generally under similar conditions and like surrounding circumstances, he would not be guilty of negligence.” Plaintiffs timely objected to the trial court’s response to the jury’s questions.

After further deliberation, the jury returned with a verdict finding that Dees was not negligent under any of plaintiffs’ theories including the theory regarding the placing of a stitch through Hartman’s bladder. The jury did find, however, that Shallowford was negligent based on its nurse’s failure to record the facts surrounding the removal of Hartman’s catheter. But, no damages were awarded to plaintiffs in that the verdict form only allowed recovery based on the fistula and stress incontinence.

1. Plaintiffs contend that they should be granted a new trial as to the issue of damages to be assessed against Shallowford in light of the jury’s express finding of liability on Shallowford’s part. Specifically, plaintiffs argue that they are entitled to a new trial on this issue because the verdict form did not provide for recovery of general pain and suffering damages. We agree. Under Georgia law, consequential damages may be awarded for pain and suffering upon the successful presentation of a theory of recovery in tort. Moreover, a jury may award pain and suffering damages for any temporary or transient pain if it is associated with another’s negligence. See Sam Finley, Inc. v. Russell, 75 Ga. App. 112 (42 SE2d 452) (1947).

In the instant case, negligence on Shallowford’s part was proven, but the jury had no option to award general damages to plaintiffs because of the restrictive nature of the verdict form. Under such circumstances, we conclude that even if plaintiffs failed to object to the verdict form prior to the time the verdict was published, use of the verdict form in itself constituted substantial and harmful error as a matter of law, and resulted in a gross injustice to plaintiffs. See Foskey v. Foskey, 257 Ga. 736, 737 (363 SE2d 547) (1988); Nelson v. Miller, 169 Ga. App. 403, 405 (312 SE2d 867) (1984). Accordingly, we remand the case to the trial court with the direction that a new jury be impanelled to determine what damages, if any, plaintiffs suffered as a proximate result of Shallowford’s negligent failure to record information concerning the removal of the catheter.

2. Plaintiffs also contend that they are entitled to a new trial based on the trial court’s response to the two questions the jury asked shortly after it began deliberating. We agree. The above-mentioned questions demonstrate that the jury was confused as to how to determine whether Dees had violated the professional standard of care, and that they were seeking clarification as to whether Dees’ intent during surgery had any bearing on the issue. When a jury requests clarification of a specific point, the trial court is not required to restate its entire charge, but instead is only required to give such parts as are necessary to answer the jury’s request. Elliott v. Floyd, 85 Ga. App. 416, 420 (1) (69 SE2d 620) (1952); accord Burnett v. Doster, 144 Ga. App. 443 (241 SE2d 319) (1978). The trial court properly performs its duties in this regard by providing a correct statement of the law that responds to the jury’s request. See Elliott, 85 Ga. App. at 420.

In this case, although the first portion of the trial court’s response to the jury was a correct statement of the law as it relates to medical malpractice cases involving errors in judgment, see Hopper v. McCord, 115 Ga. App. 10 (153 SE2d 646) (1967), it did not adequately address the questions posed by the jury. In fact, the first portion of the trial court’s response was likely to mislead the jury into believing that intent was a relevant consideration in determining whether Dees was negligent and breached the professional standard of care. The trial court should have instructed the jury that intent had no relevance with regard to the determination of whether any actions on Dees’ part during surgery were negligent, or whether Dees breached the professional standard of care during the performance of the hysterectomy. Then the trial court should have recharged the jury as follows: “A person professing to practice surgery or the administering of medicine for compensation must bring to the exercise of the profession a reasonable degree of care and skill. Any injury resulting from a want of such care and skill shall be an act for which a recovery may be had. This standard, when applied to the facts and circumstances of any particular case, must be such degree of care and skill as, under similar conditions and like surrounding circumstances, is ordinarily employed by the profession generally. If a physician or surgeon in the treatment and care of a patient should use that degree of care and skill ordinarily employed by the profession generally under similar conditions and like surrounding circumstances, then the physician or surgeon would not be guilty of negligence. If, on the other hand, the doctor should fail to use such degree of care and skill, the doctor would be guilty of negligence, and if injury resulted because of such failure, the doctor would be liable on account of the same.” Suggested Pattern Jury Instructions, Vol. I, Civil Cases (3rd ed. 1991), pp. 251-252; see also OCGA § 51-1-27; Simpson v. Dickson, 167 Ga. App. 344 (306 SE2d 404) (1983); Mull v. Emory Univ., 114 Ga. App. 63 (150 SE2d 276) (1966); Hinkle v. Smith, 12 Ga. App. 496 (77 SE 650) (1913).

In light of the above, we conclude that the trial court’s response to the jury’s questions constituted harmful error because it likely misled and confused the jury. Therefore, we remand the case to the trial court for a new trial to determine whether Dees was negligent in breaching the appropriate standard of care during the performance of the hysterectomy, and whether plaintiffs are entitled to recover for any damages which proximately resulted from any such alleged negligence on Dees’ part.

3. Finally, we find no merit to plaintiffs’ contention that the trial court erred in disallowing the demonstration involving the pig bladder. The admission of evidence is a matter resting largely within the sound discretion of the trial court, and appellate courts will not interfere absent an abuse of that discretion. Brannen v. Prince, 204 Ga. App. 866, 870 (4) (421 SE2d 76) (1992). Upon review of the record, we conclude that the trial court was justified in disallowing the pig blad-. der evidence because plaintiffs never laid a proper foundation demonstrating that a pig bladder was similar to a human bladder or that it would react to surgical stitches in the same manner in which a human bladder would react. Thus, the trial court did not abuse its discretion by excluding the demonstration from the evidence presented to the jury.

Judgment

reversed.

Ruffin, J., concurs. Beasley, C. J., concurs in judgment only.

Decided December 4, 1995

Reconsideration denied December 19, 1995

Robert C. Koski, Shelby A. Outlaw, for appellants.

Nall, Miller, Owens, Hocutt & Howard, James S. Owens, Jr., Kelly E. Malone, for appellee.


source: Caselaw Access Project

author: Ruffin, Judge.

license: Public Domain

text:
    A95A1171, A95A1172.
    GEORGIA MAGNETIC IMAGING, INC. v. GREENE COUNTY HOSPITAL AUTHORITY; and vice versa.
    (466 SE2d 41)
   Ruffin, Judge.

Georgia Magnetic Imaging, Inc. (“GMI”) had three two-year contracts with the Greene County Hospital Authority d/b/a Minnie G. Boswell Hospital (“hospital authority”) to provide CT Scan, mammogram and sonogram services to the hospital authority. Sixteen months into the contracts, the hospital authority unilaterally terminated the contracts, and GMI sued to recover sums due for services rendered and lost revenues for the time remaining on the contracts. The hospital authority filed a counterclaim alleging that GMI breached its obligation to provide 24-hour emergency CT Scan services. The trial court denied both parties’ motions for summary judgment, and both petitioned this court for interlocutory review. We granted GMI’s application to consider whether GMI was obligated to provide 24-hour emergency CT Scan services and whether the hospital authority’s chief financial officer was authorized to enter into contracts on the hospital authority’s behalf. We denied the hospital authority’s application which raised the question of whether the hospital authority suffered financial detriment under the contracts and therefore was justified in terminating them. Both parties now appeal.

Case No. A95A1171

1. GMI contends it was entitled to summary judgment on the hospital authority’s counterclaim because it was not obligated under the contract to provide 24-hour emergency CT Scan services.

The contract indicated that GMI was providing nuclear medicine and ultrasound services to area hospitals on a shared basis and that it planned to provide mobile CT Scan services on a shared basis as that arrangement had proved to be a cost-effective method of satisfying the need for such services. With regard to scheduling, the contract provided in pertinent part: “[GMI] will provide CT scanner on mutually agreed time schedule. ... If at any time it is determined by HOSPITAL that the delay under any of the above conditions is dangerous to the welfare of the patient, then HOSPITAL is free to make any other arrangements that it desires for scanning an emergency patient.” An addendum to the contract also provided that if the hospital “exceeds 50 or more [scans] in three consecutive months, [GMI] will negotiate placing a C. T. scanner in house for full time coverage.”

In support of its motion for summary judgment, GMI submitted the affidavit of Richard Smith, its president and chief executive officer, who stated that GMI and the hospital agreed that CT Scans would be performed on Wednesdays; that the hospital never reached the volume of 50 scans per month requiring the parties to negotiate for a full-time in-house scanner as provided in the addendum; that until termination, the hospital never contended that GMI was obligated to furnish CT Scans on a 24-hour or emergency basis; that, as a courtesy, GMI did send the mobile unit to the hospital whenever the hospital requested and the unit was available; and that GMI informed the radiologist and other hospital officials that due to the location of the CT Scan units at various times, one was not always available for emergencies. Smith also stated that during the terms of the contracts, the hospital hired a new administrator, Louis Kuntz, who attempted to negotiate new contracts for in-house, daily CT Scan, mammography and sonography services and that when the parties could not agree to new terms, he terminated the contracts.

In opposition to the motion for summary judgment, the hospital authority submitted the affidavit of Dr. William Rhodes, a member of the hospital’s board of directors, who stated that in reference to the hospital board meetings in which the proposed contract with GMI was discussed, “it was his impression” that GMI “was to be available at any time for emergency ‘CT Scans’ at the Hospital, under any agreements under discussion.” The hospital authority also argues that the phrase “mutually agreed time schedule” is ambiguous and presumably can be interpreted to mean that GMI was obligated to provide CT Scan services on a 24-hour emergency basis.

“OCGA § 13-2-3 declares that ‘(t)he cardinal rule of construction is to ascertain the intention of the parties.’ ‘It is ordinarily the duty of the court to interpret a contract as a matter of law and, where necessary, to construe it by applying the rules of construction set forth in OCGA § 13-2-2. (Cits.) . . . Where the language of an instrument may fairly be understood in more than one way, it should be interpreted to reflect the sense in which the parties understood it at the time of execution, and extrinsic evidence is admissible to establish what that original understanding was. (Cit.) That meaning is to be preferred which will give effect to the contract as a whole. OCGA § 13-2-2 (4).’ [Cit.]” DeKalb County v. Rockdale Pipeline, 189 Ga. App. 121, 123-124 (2) (375 SE2d 61) (1988). “Words in [a] . . . contract must be given their usual, ordinary, and common meaning. OCGA § 13-2-2 (2). . . . Tt is the function of the court to construe the contract as written and not to make a new contract for the parties. (Cit.)’ [Cit.]” Bold Corp. v. Nat. Union Fire Ins. Co. &c., 216 Ga. App. 382, 383-384 (1) (454 SE2d 582) (1995). We are not authorized to “make an unambiguous contract ambiguous by the introduction of parol evidence.” Houston v. Jefferson Standard Life Ins. Co., 119 Ga. App. 729, 732 (168 SE2d 843) (1969).

We agree with GMI that there is no factual dispute as to whether the contract obligates GMI to provide 24-hour emergency CT Scan service. The clear and unambiguous terms of the contract provided that GMI would supply service on a shared basis with other hospitals; that there would be a schedule for use of the scanner; that the hospital was free to obtain emergency service elsewhere; and that there could be re-negotiation for continuous service if certain volumes were reached. Richard Smith’s unrebutted affidavit supports this construction, and it cannot be logically maintained that under the circumstances of this case, “mutually agreed time schedule” can be construed to mean 24-hour emergency service. Furthermore, Dr. Rhodes’ affidavit does not demonstrate the presence of a genuine issue of material fact but serves only to make this otherwise unambiguous contract ambiguous. See id. Accordingly, the trial court erred in failing to grant summary judgment to GMI on the question of GMI’s obligation to provide CT Scan services.

2. In its answer to GMI’s complaint, the hospital authority asserted, as a defense, that the person who signed the contracts on its behalf was without authority to bind the hospital authority and that the contracts were therefore unenforceable. GMI contends it was entitled to summary judgment on this issue because it submitted unrebutted evidence demonstrating that Timothy Thomas, the hospital’s chief financial officer, was authorized to sign the contracts on behalf of the hospital authority. GMI also contends that the hospital authority ratified the contracts as a matter of law by accepting its services for 16 months of the 24-month contracts. We agree.

GMI concedes that there is no single document clearly stating that Thomas did or did not have authority to sign the contracts. However, GMI submitted an affidavit from the hospital authority board chairman which showed that the board was aware of Thomas’s negotiations with GMI for CT Scans, mammograms, and sonograms for the hospital; that board policy permitted the hospital administrator or her designee to negotiate and execute routine contracts for the hospital; that the contracts at issue would be deemed routine if they mirrored previous agreements; that the board did not formally vote on contract approvals; that no one on the board objected to Thomas’s negotiations or his execution of the contracts on their behalf; and that during his service on the board, he never heard any board member contend that Thomas was without authority to sign contracts with GMI. GMI also submitted the affidavit of the hospital administrator at the time the contracts were executed which showed that the administrator designated Thomas to negotiate and execute the three contracts and that he did so with her knowledge and approval. Moreover, in his deposition, Thomas testified that the only difference between the contracts in question and previous contracts between the parties was the reduced rates he negotiated in the contracts at issue.

OCGA § 31-7-74 (a) provides in part that “[t]he [hospital] authority shall make rules and regulations for its governance and may delegate to one or more of its members, officers, agents, or employees such powers and duties as may be deemed necessary and proper.” The evidence referenced above and the minutes from board meetings held during Thomas’ negotiations and execution of the contracts demonstrate that the contracts were executed under a proper delegation of authority and were therefore binding. The hospital authority submitted no relevant evidence to the contrary. Moreover, the hospital authority obviously cannot seriously maintain that Thomas’s actions in its behalf were not authorized and that it did not ratify the contracts after 16 months of performance because they failed to follow their own policies in approving the contracts. Even if Thomas had acted without authority, because the hospital authority failed to promptly rescind the contracts, its acceptance of GMI’s services for 16 months would have constituted ratification of the contracts. See Southern Motors &c. v. Krieger, 86 Ga. App. 574 (1) (71 SE2d 884) (1952). Furthermore, Kuntz’s termination of the contracts presupposed the hospital authority’s ratification of the agreements and GMI’s performance under their terms. Accordingly, the trial court also erred in denying GMI’s motion for summary judgment regarding Thomas’ authority to execute contracts on the hospital authority’s behalf and the hospital authority’s ratification of the contracts.

Case No. A95A1172

3. In its first enumeration of error, the hospital authority contends that the contracts were invalid because Timothy Thomas executed them without authority and they were not approved by the hospital board; therefore, GMI cannot recover lost profits or revenue on the contracts. Because we have already addressed Thomas’s authority to contract on the hospital authority’s behalf and ratification of the contracts, we need only to address the hospital authority’s contention that GMI is not entitled to recover lost revenue under the contracts.

“ ‘In order to prevail on a motion for summary judgment ... a defendant-movant is required to pierce the allegations of the complaint and to establish as a matter of law that the plaintiff could not recover under any theory fairly drawn from the pleadings and the evidence.’ . . . [Cit.]” Martin v. Dunwoody-Shallowford Partners, 217 Ga. App. 559, 560 (2) (458 SE2d 388) (1995).

Relying on a series of cases involving municipal and county governments, the hospital authority contends that GMI’s recovery is limited to the value of services rendered. Not only are these cases inapplicable to a hospital authority, but the hospital authority’s argument incorrectly assumes that the contracts in question are invalid for one reason or another. We agree with GMI that while there may be limitations on cities and counties, there is no similar limitation in Georgia law on the abilities of hospital authorities to create binding contracts through ratification of contracts made by their agents. See OCGA §§ 31-7-74 (a) and 31-7-75 (3) and (18). The hospital authority has cited no authority which limits GMI to a quantum meruit recovery and therefore “has failed to make a prima facie showing that it is entitled to summary judgment as a matter of law.” Martin, supra. Consequently, the trial court did not err in denying the hospital authority’s motion on this ground.

4. Relying on Alonso v. Hosp. Auth. of Henry County, 175 Ga. App. 198 (332 SE2d 884) (1985), the hospital authority contends the trial court erred in failing to find that as a matter of law, under a “totality of circumstances test,” it had “just cause” to terminate the contracts. The hospital authority argues it was justified in terminating the contracts because it suffered financial hardships while operating under the agreements due to changes in Medicare/Medicaid regulations and the unavailability of GMI’s equipment on a full-time basis. In its appellate brief, the hospital authority makes the rather bold statement that “[i]t is clear in this case that the Hospital gained financially from terminating its arrangement with [GMI] through direct billing services from American Imaging Services ... as well, it improved its quality of patient care by providing 24-hour service regarding the medical tests in question.” However, even if in the interest of providing better patient care, the hospital authority was not justified in terminating the contracts purely because, in its judgment, the contracts proved to be financially detrimental or because it was able to strike a better deal with someone else. “If a firm contract can be terminated on such a basis with impunity then indeed is the basis of our industry and commerce on shifting sands. Perhaps the [hospital authority] here . . . made a bad bargain — one that was uneconomic for it. But such is the tuition in the school of hard knocks where lessons are learned that will be of incalculable value in determining the course of future policies and operations. If [the hospital authority] had desired an ‘escape clause’ in [its] contract so that [it] might terminate the agreement at will, it should have been included as a part of the contract when it was made. Industry and commerce demand stability in contracts and business relationships and such we must have.” Gulbenkian v. Patcraft Mills, 104 Ga. App. 102, 106 (3) (121 SE2d 179) (1961). Indeed, the hospital authority’s reliance on Alonso is misplaced as that case involved the termination of an employment contract based on a “just cause” provision in the contract. The facts in Alonso showed that the contract between the hospital and its radiologist was financially detrimental to the hospital and that the radiologist refused to enter into a new agreement which would have been more favorable to the hospital and would not have caused him any financial detriment. However, neither the hospital’s financial status, Medicare regulations nor the radiologist’s lack of cooperation justified the termination of the contract. Instead, the court determined that the hospital authority was authorized to terminate the contract because the decision was based on the employee’s “ability and fitness to discharge his responsibility as a key hospital staff member.” Alonso, supra at 201.

Decided December 5, 1995

Reconsideration denied December 19, 1995

Moore & Mangum, Joab 0. Mangum III, for appellant.

David G. Kopp, for appellee.

The foregoing demonstrates that the trial court did not err in denying the hospital authority’s motion for summary judgment on the question of the hospital authority’s termination of the contracts.

5. In its order denying GMI’s motion for summary judgment, the trial court stated that the contracts are not unconscionable under the circumstances of the case. The hospital authority contends the court erred in so ruling as a matter of law because GMI’s profit margin was 94.7 percent.

“An unconscionable contract is ‘such an agreement as no sane man not acting under a delusion would make and that no honest man would take advantage of.’ [Cits.]” R. L. Kimsey Cotton Co. v. Ferguson, 233 Ga. 962, 966 (3) (214 SE2d 360) (1975). The hospital authority’s bare assertion does not demonstrate that the contracts were so one-sided as to be deemed unconscionable. This argument is without merit.

Judgment affirmed in Case No. A95A1172. Judgment reversed in Case No. A95A1171.

Beasley, C. J., and Pope, P. J., concur.


text:
    A95A1195.
    OLUKOYA v. AMERICAN ASSOCIATION OF CAB COMPANIES, INC.
    (465 SE2d 715)
   Pope, Presiding Judge.

Plaintiff Oluyole Pius Olukoya appeals the trial court’s denial of his motion for partial summary judgment. Concluding that the trial court erred in denying the motion, we reverse.

Plaintiff operated a taxicab as an independent contractor for United Cab Company. Defendant American Association of Cab Companies, Inc. provided insurance coverage for a fee to taxicab owners who were associated with United and used its name on their taxicabs. AACCI also provided coverage to other companies and other individual taxicab owners in the Atlanta area. The record demonstrates that taxicab companies and individual owners/drivers would come to AACCI and negotiate policy conditions and the cost of coverage. AACCI would then require all registered taxicab owners to convey title in their vehicles jointly to AACCI. This was done because AACCI held a self-insurance certificate rather than a certificate authorizing it to write insurance for non-owned vehicles, and was necessary to enable AACCI to provide insurance coverage for the vehicles. See former OCGA § 40-9-101 (a) (1) (Michie 1991). After title was conveyed jointly to AACCI and the original owner, the original owner was instructed to take the new title to the Insurance Commissioner’s office to have the vehicle added to AACCI’s self-insurance plan. Thereafter, AACCI, in this case via United, collected a monthly insurance fee from the original owner and provided an insurance card for the vehicle. Upon termination of the insurance coverage, AACCI would reconvey its interest in the insured vehicle to the original owner.

Following a car accident, plaintiff sued AACCI and its president and majority shareholder, defendant Cheru Terefe, alleging that he was entitled to certain medical benefits under AACCI’s self-insurance plan, and that AACCI had acted in bad faith and been stubbornly litigious in failing to provide the medical benefits to him. He further alleged that Terefe was personally liable to plaintiff for the benefits because Terefe had been the recipient of certain demand loans from AACCI, which left the company without sufficient assets to cover its obligations. Plaintiff later amended his complaint to include a State civil RICO claim wherein he alleged that the manner in which defendants sought to have third parties participate in AACCI’s self-insurance plan constituted an illegal attempt to sell insurance without a license and that the scheme amounted to racketeering activity in that it constituted theft and was carried out in violation of the federal mail and wire fraud statutes. See OCGA §§ 16-14-3 (9) (A) (ix), (xxix) and 16-14-4; 18 USC §§ 1341 and 1343.

After defendants denied the material allegations of plaintiff’s complaint, plaintiff moved for partial summary judgment seeking a determination from the trial court that AACCI’s self-insurance plan, as operated, constituted an illegal attempt to sell insurance, and as such could constitute one element of a prima facie RICO case because it could establish the predicate acts necessary to prove a pattern of racketeering activity as defined by OCGA § 16-14-3 (8). The trial court denied plaintiff’s motion on the ground that it could not determine as a matter of law that operation of AACCI’s self-insurance plan constituted an illegal scheme to sell insurance without a license. In his sole enumeration, plaintiff contends that the trial court erred in denying him partial summary judgment on the limited issue set forth above. We agree.

Under OCGA § 33-3-2 (a) “[n]o person shall act as an insurer and no insurer shall transact insurance in Georgia except as authorized by a subsisting certificate of authority granted to it by the Commissioner, except as to any transactions as are expressly otherwise provided for in this title.” “Transacting insurance” is defined in OCGA § 33-1-2 (6) to include the solicitation, inducement, and effectuation of a contract of insurance. “Insurance” is defined as “a contract which is an integral part of a plan for distributing individual losses whereby one undertakes to indemnify another or to pay a specified amount of benefits upon determinable contingencies.” OCGA § 33-1-2 (2). In addition to the above, “[n]o person shall act as ... an agent... in this state unless such person first procures a license from the Commissioner [and] [n]o agent. . . shall solicit or take applications for, procure, or place for others any kind of insurance for which such agent or subagent is not then licensed and for which a certificate of authority is not currently on file with the Commissioner. ...” See OCGA § 33-23-4 (a) and (b). Thus, in Georgia, it is illegal to act as an insurer or transact insurance without proper authority from the Insurance Commissioner, and it is illegal to sell insurance without an agent’s license.

In this case, the record clearly demonstrates that defendants were transacting insurance business, as defined above, and it is undisputed that Terefe is not an authorized insurance agent. Therefore, the marketing of the plan to third parties for a fee must be considered illegal absent some statutory, regulatory or case authority to the contrary. We have found no such authority. Defendant’s marketing of the plan was not authorized by the terms of AACCI’s self-insurance certificate or by any other document obtained by AACCI from the Insurance Commissioner. The statute governing self-insurers at all times relevant to this case also did not authorize such a marketing scheme, nor did any of the Insurance Commissioner’s regulations relating to self-insurance. See former OCGA § 40-9-101 (Michie 1991). See Automobile Self-Insurance Regulations, § 120-2-46.01 - .09. Although defendants contend that such a scheme is authorized by this Court’s holdings in Proctor v. Rapid Group, 203 Ga. App. 232 (416 SE2d 774) (1992) and Olukoya v. American Assn. of Cab Cos., 202 Ga. App. 251 (414 SE2d 275) (1991), a review of those cases demonstrates that this Court has never actually addressed the issue.

Decided December 4, 1995

Reconsideration denied December 19, 1995

Hicks, Casey, Young & Barber, Mark A. Barber, Calabro & Jen-

nette, Michael M. Calabro, for appellant. Sidney L. Moore, Jr., for appellee.

In light of the above, and absent any authority to the contrary, we conclude that defendants’ marketing of AACCI’s self-insurance plan to third parties, as a matter of law, constituted the illegal sale or transaction of insurance in this state without a license. Consequently, we hold that the trial court erred in denying plaintiff’s motion for partial summary judgment on this sole issue. In so holding, we note that the illegal sale of insurance is not in and of itself a basis for a civil RICO action in this state, but it may serve as such if it was conducted in violation of federal mail and wire fraud statutes or if it is proven to have been a fraud amounting to theft committed against plaintiff. See OCGA §§ 16-14-3 (9) (A) (ix), (xxix) and 16-14-4; 18 USC §§ 1341 and 1343. The trier of fact must resolve these issues however.

Judgment reversed.

Beasley, C. J., and Ruffin, J., concur.

       OCGA § 40-9-101 (as amended 1994) also does not authorize the marketing of a self-insurance plan to third parties. Moreover, it specifically prohibits the issuance of a self-insurance certificate to any taxicab owner who does not actually operate 25 or more taxicabs registered in its name. Id. at (3) (B).


text:
    A95A1225.
    THE STATE v. BISHOP.
    (466 SE2d 8)
   Ruffin, Judge.

Melvin Bishop was arrested for possessing cocaine with intent to distribute on October 8, 1993. On January 25, 1994, his attorney entered a notice of appearance and filed numerous pretrial motions as well as other documents. A committal hearing was held on February 10, 1994, and on June 8, 1994, Bishop was indicted. On August 10, 1994, he waived arraignment and filed the same pretrial motions and documents he had filed six months earlier.

The case was first set for trial on September 12, 1994, but was not heard at that time. It was reset for January 12, 1995. On January 12, Bishop’s attorney filed an untimely motion to suppress without notice to the State, and that day the trial court permitted the late filing of the motion. The State moved to dismiss the motion as untimely and because there were no extenuating circumstances such as newly discovered evidence which would justify extending the time to file the motion. The court denied the motion to dismiss and granted the motion to suppress. The State appeals.

1. The State enumerates as error the trial court’s failure to grant its motion to dismiss.

Uniform Superior Court Rule 31.1 requires that all motions in a criminal case “be made and filed at or before time of arraignment, unless time therefor is extended by the judge in writing prior to trial.” “[M]otions to suppress must be filed by the time a defendant enters his plea unless there was no opportunity to do so or a written extension is granted by the court. . . .” (Citations omitted.) Ellis v. State, 216 Ga. App. 232, 233 (1) (453 SE2d 810) (1995). The trial court has discretion in granting such extensions which will not be disturbed absent abuse. State v. Grandison, 192 Ga. App. 473 (385 SE2d 139) (1989).

Here, Bishop’s attorney had ample opportunity to file a timely motion given that he had the information upon which the motion was based for six months prior to Bishop’s waiver of arraignment. See Holton v. State, 243 Ga. 312 (253 SE2d 736) (1979) (Supreme Court upheld the trial court’s dismissal of defendant’s second motion to suppress as dilatory because it was filed on the eve of trial and was predicated upon facts already known to the defendant from a previous hearing).

Nor did Bishop seek a written extension of time to file the motion to suppress. In State v. Grandison, supra, we held that the trial court abused its discretion in granting an untimely motion to suppress when the defendant’s attorney failed to apply for a written extension of time to file a motion to suppress. “[Rule 31.1] allows of no exceptions as such but is hedged by authorizing the court to extend the time for filing, prior to trial and in writing. When [Bishop] filed his late motion to suppress, however, he did not seek an extension so as to give cognizability to his motion. Instead, he simply [moved for the evidence to be suppressed].” Id. at 474.

In addition, Bishop’s attorney failed to serve the State with a copy of the motion to suppress. Such practice does not comply with Uniform Superior Court Rule 4.1 which provides that “[e]xcept as authorized by law or rule, judges shall neither initiate nor consider ex parte communications by interested parties or their attorneys concerning a pending or impending proceeding.” Based on the facts that Bishop’s attorney failed to timely file the motion to suppress despite having an ample opportunity to do so, failed to seek a written extension of time to file the motion, argues neither below or on appeal why such extension was warranted, and filed the motion and obtained the order extending time without notifying the State, we find that the discretion exercised by the trial court in considering the motion was contrary to that authorized by Uniform Superior Court Rules 31.1 and 4.1. See also State v. Grandison, supra. Thus, the trial court erred in denying the State’s motion to dismiss.

2. Based on our holding in Division 1, we need not address the State’s remaining enumeration of error.

Judgment reversed.

Beasley, C. J., and Pope, P. J., concur.

On Motion for Reconsideration.

On motion for reconsideration, Bishop argues that this court has no jurisdiction to consider the propriety of the late filing of his motion to suppress because the State never appealed the rule nisi issued by the trial court which granted permission for the late filing of the motion and ordered the parties to appear and show cause why the motion should not be granted. In addition, Bishop argues that the State’s notice of appeal specified the grant of the motion to suppress rather than the denial of the State’s motion to dismiss. He cites no authority to support his argument that the State was required to appeal a rule nisi granting relief (permission for late filing of the motion) for which Bishop never moved. Moreover, OCGA §§ 5-7-1 and 5-6-34 (b) speak in terms of appeals taken from an “order, decision, or judgment” in a case. In Beck v. Dean, 177 Ga. App. 144 (338 SE2d 693) (1985), we discussed the difference between a rule nisi and an order. We stated that a rule nisi is “not a judgment on an issue.” Id. at 145. Accordingly, in these specific circumstances, the State was not required to appeal from the rule nisi in order to appeal the trial court’s order denying its motion to dismiss Bishop’s motion to suppress.

Nor do we lack jurisdiction to consider the State’s arguments with respect to the court’s denial of its motion to dismiss simply because the grant of Bishop’s motion to suppress is identified in the State’s notice of appeal. To begin with, the State argued to dismiss the motion to suppress as untimely in conjunction with its argument to deny the motion. Moreover, “[b]ecause it is clear from the enumerations of error that the [State] seekfs] to appeal from the trial court’s [denial of its motion], the failure to include the [denial of the motion] does not prevent our review of this matter. ‘Where it is apparent from the notice of appeal, the record, the enumeration of errors, or any combination of the foregoing, what judgment or judgments were appealed from . . . the appeal shall be considered in accordance therewith notwithstanding that the notice of appeal fails to specify definitely the judgment appealed from. . . .’ OCGA § 5-6-48 (f); [cit.]” Rea v. Bunce, 179 Ga. App. 628, 631 (2) (347 SE2d 676) (1986).

Decided September 21, 1995

Reconsideration denied December 19, 1995.

Britt R. Priddy, District Attorney, Johnnie Mae Graham, Assistant District Attorney, for appellant.

John L. Tracy, for appellee.

Finally, Bishop argues on reconsideration that we erroneously stated in the opinion that his motion was never served on the State. The State argued at the hearing on its motion to dismiss that it had “no knowledge” of the filing of the motion, a statement which Bishop’s attorney did not dispute. The certificate of service which Bishop cites as proof of service of the motion is attached to the rule nisi, not the motion to suppress. At any rate, service of the motion or lack thereof does not change the outcome of this opinion.

Motion for reconsideration denied.


author: Andrews, Judge. Smith, Judge, McMurray, Presiding Judge,

text:
    A95A1345.
    BAKER v. WINN DIXIE STORES, INC.
    (465 SE2d 710)
   Andrews, Judge.

Baker sued Winn Dixie Stores, Inc. claiming that, because Winn Dixie negligently failed to keep its store in a safe condition, she was injured when she stepped on a green bean and slipped and fell as she was exiting the store. She appeals from the trial court’s order granting summary judgment in favor of Winn Dixie.

As the record reflects and Baker states in her brief on appeal, “[she] did not see the green bean prior to her fall. After her fall, she saw the green bean which caused her fall and other green beans located somewhere else on the floor. Prior to her fall, [she] was walking in a normal manner, looking straight ahead, did not see anything on the floor, and was not anticipating anything to be on the floor because she had assumed that the most trafficked area of the floor would be clean and safe.” At her deposition, Baker said she did not see the green beans on the floor as she was walking out of the store because she was not looking down and, “I usually, you know, have my head up looking outward.” When asked if there was more than one green bean on the floor or just the one she stepped on, Baker responded: “No, there was more on the floor, but they were not in that spot. There may have been, what I could see when I glanced around, five or six more down, you know, in front of the register area.” Baker’s daughter, who accompanied Baker to the store, also saw the green bean after Baker fell. She stated by affidavit: “After my mother fell, I ran to her side and noticed that she had slipped on a green bean.” There was no evidence that Baker’s view of the area where the green bean was on the floor was obstructed or that her attention was diverted from the area by any distraction created by Winn Dixie.

“[I]n order to state a cause of action in a case where the plaintiff alleges that due to an act of negligence by the defendant he slipped and fell on a foreign substance on the defendant’s floor, the plaintiff must show (1) that the defendant had actual or constructive knowledge of the foreign substance and (2) that the plaintiff was without knowledge of the substance or for some reason attributable to the defendant was prevented from discovering the foreign substance.” Alterman Foods v. Ligon, 246 Ga. 620, 623 (272 SE2d 327) (1980). Even assuming that Winn Dixie had actual or constructive knowledge of the hazard created by green beans on the floor, Winn Dixie would still be entitled to summary judgment if Baker had knowledge of the hazard or should have discovered it, unless Winn Dixie somehow prevented her from discovering it. Id.; Smith v. Wal-Mart Stores, 199 Ga. App. 808, 810 (406 SE2d 234) (1991). Under this standard, in order to recover, Baker must “exercise ordinary care for [her] own safety, and must by the same degree of care avoid the effect of the [store’s] negligence after it becomes apparent to [her] or in the exercise of ordinary care [she] should have learned of it. [She] must make use of all [her] senses in a reasonable measure amounting to ordinary care in discovering and avoiding those things that might cause hurt to [her].” (Citations and punctuation omitted.) Alterman Foods, supra at 623.

Here, the record shows that Baker failed to exercise ordinary care to discover and avoid the clearly visible hazard presented by the green beans on the floor. Baker’s own testimony and the affidavit of her daughter show that the green bean she stepped on was clearly visible on the floor of the store. Baker admitted that she did not see the green bean because she was walking with “[her] head up looking outward” assuming that the exit area would be clean and safe. Regardless of the store’s knowledge of the hazard, the proximate cause of Baker’s fall was her own failure to exercise ordinary care to discover and avoid the hazard. Minor v. Super Discount Markets, 211 Ga. App. 123, 124-125 (438 SE2d 384) (1993); Colevins v. Federated Dept. Stores, 213 Ga. App. 49, 52 (443 SE2d 871) (1994); Bruno’s, Inc. v. Pendley, 215 Ga. App. 108 (449 SE2d 637) (1994). The trial court correctly granted summary judgment in favor of Winn Dixie.

Judgment affirmed.

Birdsong, P. J., Pope, P. J., and Blackburn, J., concur. Johnson and Smith, JJ., concur specially. Beasley, C. J., McMurray, P. J., and Ruffin, J., dissent.

Smith, Judge,

concurring specially.

While I concur in the majority opinion, I write separately to point out what I believe to be a serious misconstruction of the Georgia Supreme Court’s opinion in Barentine v. Kroger Co., 264 Ga. 224 (443 SE2d 485) (1994). The dissent contends, incorrectly, that Barentine involved a “self-induced” distraction created by the plaintiff alone. In Barentine, the cashier was not at his post, and Barentine was distracted by the necessity of calling him to the checkout line. The rule, then, is simply that some conduct on the part of the employee must distract the plaintiff. The dissent’s approach would abrogate the well-established distinction between a “distraction” created by the proprietor and one which is “in the nature of being self-induced.” Riggs v. Great A & P Tea Co., 205 Ga. App. 608, 610 (423 SE2d 8) (1992).

This case is unlike Grovner v. Winn Dixie Stores, 218 Ga. App. 495 (462 SE2d 427) (1995), which involved the active concealment of a hazard by the proprietor. In Van Dyke v. Emro Marketing Co., 211 Ga. App. 744 (440 SE2d 469) (1994), both a visible and a concealed hazard were present, and the plaintiff was unaware of the true extent of the danger. Neither of these circumstances is present here, and the trial court properly granted summary judgment in favor of Winn Dixie.

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

McMurray, Presiding Judge,

dissenting.

I respectfully dissent as I do not believe a loose green bean in the highest traffic area of a grocery store is such an open and obvious danger so as to authorize the majority’s conclusion (as a matter of law) that Cora Baker’s own carelessness was the sole proximate cause of her injuries.

“In Barentine v. Kroger Co., 264 Ga. 224, 225 (443 SE2d 485) (1994), our Supreme Court held that the plaintiffs explanation as to why he was not looking where he was going as he approached the check-out counter, that being, that he was looking at the cashier to tell him he was ready to check out, created a fact issue for jury determination. ‘This testimony is some evidence that Barentine exercised reasonable care for his own safety in approaching the check-out counter.’ Id.” Sheriff’s Best Buy v. Davis, 215 Ga. App. 290, 291 (450 SE2d 319). In the case sub judice, Cora Baker testified that she had just left the checkout counter and entered the highest traffic area of the store (with a fresh bag of Winn Dixie doughnuts) when she slipped and fell. Baker also explained that she saw her daughter waiting for her at the entrance of the store just before the fall. “If the facts of Barentine establish ‘some evidence’ that Barentine exercised reasonable care for his own safety, then clearly [Cora Baker’s testimony, along with the favorable inference that the green bean was not clearly visible against the color of Winn Dixie’s floor, constitute] a much stronger case of such evidence.” Sheriff’s Best Buy v. Davis, 215 Ga. App. 290, 291, supra.

Decided December 4, 1995

Reconsideration denied December 19, 1995.

Alan D. Tucker, for appellant.

Lee, Black, Scheer & Hart, Christopher L. Rouse, for appellee.

I believe the trial court erred in granting Winn Dixie’s motion for summary judgment. See Grovner v. Winn Dixie Stores, 218 Ga. App. 495 (462 SE2d 427). Also see Van Dyke v. Emro Marketing Co., 211 Ga. App. 744 (440 SE2d 469), where this Court reversed summary judgment even though there was evidence that the plaintiff had prior knowledge of the hazard which allegedly caused his fall.


text:
    A95A1385.
    ISDOLL v. SCOTTSDALE INSURANCE COMPANY.
    (466 SE2d 48)
   Pope, Presiding Judge.

Plaintiff Mary Isdoll appeals the trial court’s denial of her motion for summary judgment and the trial court’s grant of summary judgment to defendant Scottsdale Insurance Company. We affirm the trial court’s grant of summary judgment to Scottsdale regarding Is-doll’s claim for attorney fees, but we reverse the remainder of the judgment.

Isdoll was an inmate in the City of Forest Park’s jail. On September 2, 1987, one of her jailers, Jack McBerry, sexually assaulted her. Following the assault, Isdoll filed suit under 42 USC § 1983 and state law in the United States District Court for the Northern District of Georgia against Forest Park, McBerry and two other individuals not relevant to this appeal. The federal lawsuit was tried before a jury with McBerry in default, and resulted in a $100,000 verdict against McBerry and a $200,000 verdict against Forest Park. In addition, costs in the amount of $8,682.84 and attorney fees in the amount of $54,111.50 were assessed jointly and severally against Forest Park and McBerry. Forest Park filed an appeal with the Eleventh Circuit Court of Appeals, but the appeal was dismissed after Forest Park entered into a settlement agreement with Isdoll for $175,000.

Scottsdale insured Forest Park’s police department during the time period including September 1987. It denied coverage for Isdoll’s claim. Following her settlement with Forest Park, Isdoll filed the lawsuit, which is the subject of this appeal, against Scottsdale to recover the balance of the judgment she obtained against Forest Park, her judgment against McBerry, and the attorney fees she incurred in pursuing this case. After Scottsdale answered Isdoll’s complaint denying liability, both parties moved for summary judgment. The trial court granted Scottsdale’s motion and denied Isdoll’s motion. On appeal, Isdoll contends that the trial court erred in determining that the insurance policy issued to Forest Park did not cover McBerry, and that Isdoll was not entitled to attorney fees. Isdoll has not appealed the trial court’s decision that Scottsdale is not liable for the balance of the judgment she obtained in federal court against Forest Park.

1. Isdoll contends that the trial court erred in determining that the insurance policy Scottsdale issued to Forest Park did not cover McBerry in this case because McBerry’s actions against her constituted a wilful violation of a penal statute, and because her injuries did not arise out of the performance of McBerry’s law enforcement duties. We agree.

The insurance policy in this case states that Scottsdale “will pay on behalf of the INSURED all sums which the INSURED shall become legally obligated to pay as damages because of WRONGFUL ACT(S) which result in . . . PERSONAL INJURY . . . caused by an OCCURRENCE and arising out of the performance of the INSURED’S duties to provide law enforcement and/or other departmentally approved activities. ...” “Insured” is defined to include Forest Park “and all full or part-time . . . law enforcement officers of [Forest Park].” “Occurrence” is defined as “an event . . . which results in PERSONAL INJURY . . . sustained during the policy period, by any person . . . and arising out of the performance of the INSURED’S law enforcement duties.” Finally, “personal injury” is defined to include “assault and battery . . . and [the] violation of [a person’s] civil rights protected under 42 USC § 1981 et sequential or State Law. . . .”

Both parties agree that McBerry clearly fits within the definition of an “insured” as set forth above. Even so, Scottsdale contends that McBerry is not covered by the policy because his actions constituted a wilful violation of a penal statute. Although it is true that the policy contains an exclusion for “damages arising out of the willful violation of a penal statute or ordinance committed by or with the knowledge or consent of any INSURED . . . ,” that exclusion conflicts with the specific endorsement affording coverage for personal injury, including assault and battery and civil rights violations, which by their very nature involve wilfulness. “Thus we have a situation where one provision of the policy excludes liability and another accepts liability. Every written provision of an insurance contract must be given its apparent meaning and effect. The provisions currently under consideration are repugnant to one another. When that occurs in an insurance contract, the provision most favorable to the insured will be applied. Welch v. Gulf Ins. Co., 126 Ga. App. 115, 117 (190 SE2d 101) (1972). Accord Cotton States Mut. Ins. Co. v. Crosby, 149 Ga. App. 450 (254 SE2d 485) (1979), rev’d on other grounds, 244 Ga. 456 (260 SE2d 860) (1979).” (Punctuation omitted.) United States Fire Ins. Co. v. Hilde, 172 Ga. App. 161, 164 (2) (322 SE2d 285) (1984). Accordingly, we conclude that the trial court should not have granted summary judgment to Scottsdale on the ground that the policy’s exclusion clause barred Isdoll’s recovery in this case.

Under the above rationale, we also conclude that there is no merit to Scottsdale’s contention that Isdoll is barred from recovery under the policy because her injuries did not arise out of the performance of McBerry’s law enforcement duties. McBerry was, at the time of the incident, performing his duties as a jailer and took advantage of his position to accomplish his ends. Moreover, Scottsdale’s contention is not consistent with the very purpose of the insurance policy as it relates to coverage for assault and battery and civil rights violations. It could always be argued that assault, battery and civil rights violations do not arise out of the performance of one’s duties, yet to accept that argument in this case would make coverage for such actions merely illusory, despite the fact that such coverage is expressly provided for in the policy. Whenever the phrasing of an insurance policy is so confusing that an average person could not make out the boundaries of the coverage, there is a genuine ambiguity in the policy. See Ga. Baptist Children’s Homes &c. v. Essex Ins. Co., 207 Ga. App. 346, 347 (427 SE2d 798) (1993); Gary L. Shaw Builders v. State Auto. Mut. Ins. Co., 182 Ga. App. 220, 224 (355 SE2d 130) (1987). In the case of ambiguity, the insurance contract must be construed against the drafter — in this case Scottsdale. See Anderson v. Southeastern Fidelity Ins. Co., 251 Ga. 556, 557 (307 SE2d 499) (1983).

Based on the above, we hold that Isdoll is not barred from recovery in this case by either the policy terms or exclusion set forth above, and that the trial court erred in ruling to the contrary.

2. We also agree with Isdoll that the trial court erred in determining that she was barred from recovery based on McBerry’s failure to request coverage under the policy. The rule that coverage must affirmatively be requested is not applicable in an employer/employee context where the employer is potentially vicariously liable for the

Decided December 5, 1995

Reconsideration denied December 19, 1995

Ralph S. Goldberg, for appellant.

Chambless, Higdon & Carson, Mary M. Katz, for appellee.

actions of its employee, and the employer, though not the employee, elects coverage. See Adwater v. Ga. Ins. Co., 170 Ga. App. 29, 31 (316 SE2d 2) (1984). Contrary to Scottsdale’s assertion, Isdoll’s federal lawsuit did involve vicarious liability premised on state law, and in fact Isdoll was successful in obtaining a judgment against Forest Park in federal court under that theory of liability. Thus, we conclude that Isdoll’s recovery under the policy is not barred as a matter of law by McBerry’s failure to affirmatively elect coverage. See generally Starnes v. Cotton States Mut. Ins. Co., 194 Ga. App. 320 (2) (390 SE2d 419) (1990).

3. Finally, we reject Isdoll’s contention that she is entitled to attorney fees in this case. The attorney fees she was awarded in federal court were assessed jointly and severally against Forest Park and McBerry, and thus were encompassed in the settlement agreement she reached with Forest Park. We also find no merit to Isdoll’s contention that she is entitled to additional attorney fees from Scottsdale under 42 USC §§ 1983 and 1988. It is undisputed that Scottsdale has not been accused of any civil rights violations, and the claims Isdoll has made against Scottsdale in this case are contractual in nature and totally discrete from her civil rights claim against McBerry. Thus, we conclude that the trial court properly granted defendant’s motion for summary judgment as to the matter of attorney fees.

Judgment affirmed in part and reversed in part.

Beasley, C. J., and Ruffin, J., concur.


text:
    A95A1397.
    PCS JOINT VENTURE, LTD. v. DAVIS.
    (465 SE2d 713)
   Ruffin, Judge.

PCS Joint Venture, Ltd. is a fertilizer manufacturer doing business as Farmer’s Favorite Fertilizer (“FFF”). In addition to making standard grades of fertilizer, FFF also manufactures special grades based on the requests of various distributors. In 1987, James Davis contacted FFF requesting that it manufacture for him approximately 1,500 to 2,000 tons of a special grade of fertilizer annually. After adjustments to the originally requested composition, FFF agreed to manufacture the fertilizer. There is no evidence that the parties agreed to any territorial limits concerning the oral agreement. The parties continued operating under the agreement until December 1991, and during that time FFF did not sell the special grade fertilizer to anyone but Davis. In December 1991 however, FFF agreed to sell 500 tons of the special grade fertilizer to one of its former customers, Kaiser Estech (“Kaiser”). A Kaiser representative testified that Kaiser purchased the fertilizer for sale to one customer, Hamil McNair, who was also one of Davis’ customers.

FFF later sued Davis for money due on his account, and Davis counterclaimed, alleging FFF breached the parties’ agreement that he would be the exclusive distributor of the fertilizer. Davis also claimed damages for FFF’s alleged misappropriation of a trade secret. The jury returned a special verdict awarding Davis damages for FFF’s breach of contract, but denying his claim for misappropriation of a trade secret. The court entered judgment on the verdict, and FFF moved for judgment n.o.v. or new trial, asserting in part that the exclusive sales agreement was unenforceable because it was overly broad and indefinite. We agree with FFF and reverse.

1. The parties devote numerous pages of their briefs attempting to classify the oral agreement and the laws governing it. We find the agreement is governed by Article 2 of the Uniform Commercial Code (“UCC”) which “applies to transactions in goods. . . .” OCGA § 11-2-102. Article 2 broadly defines goods as “all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale. . . .” OCGA § 11-2-105 (1). Undoubtedly, the fertilizer at issue meets the UCC definition of “goods.” Furthermore, whether we classify the agreement as one for the sale of fertilizer, or as a distributorship agreement, does not matter. Each would be governed by the UCC. See OCGA § 11-2-106 (1); Intercorp v. Pennzoil Co., 877 F2d 1524 (11th Cir. 1989).

2. FFF contends the trial court erred in failing to grant its motion for new trial on Davis’ counterclaim because the agreement was unenforceable due to being overly broad, too indefinite, and in restraint of trade. FFF argues that the absence of a territorial limit on the exclusive distribution agreement made it unenforceable. We agree.

While the UCC recognizes exclusive dealing agreements, it requires that all such agreements be lawful. OCGA § 11-2-306 (2). See also 6 Williston on Contracts, § 13:17 (4th ed. 1995). The agreement at issue here, however, is unlawful because it is a contract in general restraint of trade and “ ‘[b]y both constitutional and legislative provision, Georgia prohibits contracts or agreements in general restraint of trade. (Cits.)’ ” Roberts v. Tifton Med. Clinic, 206 Ga. App. 612, 614 (426 SE2d 188) (1992). The parties orally agreed that FFF would sell the special grade fertilizer exclusively to Davis, thereby making Davis the exclusive distributor. While the effects of such an agreement will not always be considered an unlawful restraint of trade, in this case the parties did not place any territorial limits on their agreement. The net effect of such an agreement is to exclude all other competition from selling and distributing the particular product, whether by FFF or by other distributors in other markets.

Decided December 4, 1995

Reconsideration denied December 19, 1995

Gardner, Willis, Sweat & Goldsmith, Donald A. Sweat, for appellant.

Hodges, Erwin, Hedrick & Coleman, William H. Hedrick, for appellee.

While we have not ruled on the validity of such provisions in exclusive dealing contracts, there is abundant authority regarding their enforceability in other types of contracts. See Jenkins v. Jenkins Irrigation, 244 Ga. 95 (2) (259 SE2d 47) (1979) (discussing the several different types of covenants in restraint of trade). Of the several types of covenants discussed in Jenkins, the agreement in this case is most closely analogous to a covenant ancillary to a distributorship agreement because the parties agreed that Davis would have the exclusive right to distribute the fertilizer. Such an agreement is enforceable “only where it is strictly limited in time and territorial effect. . . .” Id. at 98. Because the agreement in this case did not contain any territorial limitations, it is unenforceable, and the trial court erred in denying FFF’s motion for a new trial on this ground.

3. Having ruled in Division 2 that the trial court erred in denying FFF’s motion for new trial, it is unnecessary to address FFF’s remaining enumerations asserting the evidence did not support two of the court’s jury instructions.

Judgment reversed.

Beasley, C. J., and Pope, P. J., concur.


author: Pope, Presiding Judge. Beasley, Chief Judge,

text:
    A95A1420.
    DRUMMOND et al. v. GLADSON.
    (465 SE2d 687)
   Pope, Presiding Judge.

This case arises from a collision between plaintiff Ronald Drummond, on his motorcycle, and defendant Jimmy Lee Gladson, in his pickup truck. Plaintiffs Ronald Drummond and his wife appeal from a judgment entered on a jury verdict for defendant. In their sole enumeration of error, plaintiffs contend the trial court erred in admitting a diagram prepared by the investigating officer based on his observations of physical evidence at the scene, including motorcycle skid marks leading to the point of impact. The officer’s diagram showed the course of the two vehicles prior to the accident (the vehicles were traveling towards each other, in opposite directions) and indicated that Ronald Drummond was driving his motorcycle on the wrong side of the road. Concluding that the trial court did not abuse its discretion in admitting the diagram and that plaintiffs’ failure to provide a transcript of all the evidence at trial would preclude us from finding harmful error anyway, we affirm.

1. An investigating officer, as an expert, is allowed to testify about what he observed at the accident scene and to give his conclusions from those observations about what happened (as opposed to which party was at fault). See Emory v. Dobson, 206 Ga. App. 482 (426 SE2d 50) (1992). Indeed, we have held that it is an abuse of discretion not to allow an investigating officer to testify about how an accident occurred. See Jefferson Pilot Life Ins. Co. v. Clark, 202 Ga. App. 385, 391-392 (3) (414 SE2d 521) (1991).

In this case, the diagram reflected the investigating officer’s conclusions based on his observations and thus was properly admitted. Although the trial court never formally found the officer to be an expert as it should have (see Dimambro Northend Assoc. v. Williams, 169 Ga. App. 219, 221 (2) (312 SE2d 386) (1983)), the evidence showed that the witness had been a police officer for more than 20 years, had received training in accident investigation, and had investigated well over 100 traffic accidents. Moreover, “[t]here can be no doubt a police officer with investigative experience on automobile collisions is an expert.” Jefferson Pilot, 202 Ga. App. at 392. Thus, because it would have been an abuse of discretion not to accept the officer as an expert, the court’s failure to formally do so could not have prejudiced plaintiffs and does not negate the officer’s status as an expert. Cf. Dimambro Northend Assoc., 169 Ga. App. at 222-223 (although the trial court should have allowed the other party to cross-examine the witness about his qualifications before declaring him an expert, its failure to do so was not prejudicial where it would have been abuse of discretion not to accept the witness as an expert).

Plaintiffs also point out that the officer himself did not consider himself an expert. But because status as an expert is a legal question for the court to decide, see Dept. of Transp. v. Great Southern Enterprises, 137 Ga. App. 710, 712 (1) (225 SE2d 80) (1976), the witness’s failure to consider himself an expert is not determinative. The witness may choose not to call himself an expert because of false modesty, or it may be because he knows he has colleagues with the same or more expertise. After all, “expert” is a relative term: amongst any community of specialists, only a few are considered by the others to be the real “experts,” but to the rest of the world any of the specialists would be an “expert” and would be considered one in a court of law.

2. Although we have concluded that the trial court did not err, we nonetheless address plaintiffs’ disturbing position that they did not need to file a transcript of all the evidence presented at the trial. Plaintiffs suggest that the judges of this court are too busy to read the whole transcript of the trial; that there is therefore no need to file the whole transcript; and that if the defendant wants more of the transcript filed, he must file it himself. But this line of reasoning ignores that it is the burden of the plaintiffs (as appellants) to show harmful error, see City of Atlanta v. Barton, 153 Ga. App. 426 (265 SE2d 345) (1980); a determination of whether an error was harmful simply cannot be made without a review of all the evidence presented at trial. It is true that parties must cite to us the portions of the record supporting their arguments, to enable us to find them easily (see Court of Appeals Rule 27 (c) (3)), but this does not mean we do not review all the evidence before making any determination which — like a determination of whether an error is harmless — requires us to evaluate the evidence. Plaintiffs’ suggestion that defendant (as appellee) must file any portions of the trial transcript which show that an error is harmless might make our job easier, but it would effectively shift the burden on this issue and is therefore unacceptable.

Judgment affirmed.

Beasley, C. J., and Ruffin, J., concur specially.

Beasley, Chief Judge,

concurring specially.

I agree that the judgment should be affirmed but I do not fully concur in the opinion.

1. Out of the presence of the jury, the court heard testimony and argument with respect to whether the police officer was qualified as an expert to give his opinion with respect to how the collision occurred. The court expressly refused to permit the officer to testify as to his conclusions about the path of the motorcycle prior to the collision, applying its understanding of the ruling in Emory v. Dobson, 206 Ga. App. 482 (426 SE2d 50) (1992). In that case, the Court held that “the trial court correctly prohibited the officer from opining concerning which party was at fault in the accident.” Id. at 484.

The court in this instance distinguished the opinion on the ultimate question and the opinion that the skid marks coming towards the truck on the truck’s lane of travel came from the motorcycle because they were single, fresh and led right to the vehicle’s impact with the truck. If what was excluded was admissible as expert testimony pursuant to Jefferson Pilot Life Ins. Co. v. Clark, 202 Ga. App. 385, 391-392 (3) (414 SE2d 521) (1991), it would have undermined the plaintiffs’ case. The officer’s opinion was that the motorcyclist swung wide as he exited the driveway from work on the left side of the street and traveled in the oncoming truck’s lane, locked his brakes when he saw the truck, and skidded head-on into the right front wheel well area of the truck as it tried to move to the left to avoid him. I do not agree that the court should have deemed the officer an expert witness for the purpose of presenting this evidence. It was not necessary for the purpose of helping the jury understand the sequence of events and the placement of the vehicles, particularly the motorcycle, as they traveled towards each other. See Allison v. State, 256 Ga. 851, 853 (5) (353 SE2d 805) (1987).

Plaintiffs’ sole enumeration of error is that the court erred in admitting defendant’s Exhibit 1 into evidence over objection. It was the drawing of the scene of the collision, made by the officer in fulfillment of his duty as the investigating officer. This was not reversible error because the drawing merely visually illustrated the officer’s unobjected-to descriptive testimony of what he observed and where the vehicles were coming from, that is, defendant coming from the south in the northbound lane and plaintiff coming from his place of work on the west side of the road. The crucial difference between the defendant’s exhibit and the plaintiffs’ exhibit is the line of skid marks; the plaintiffs show them as beginning on the opposite side of the road from where the officer testified he found them.

2. I do not agree with appellee that plaintiffs as appellants were required to submit the entire transcript of the four-day trial. It was not necessary for our review of their sole enumeration of error. Plaintiffs should not be faulted for exercising efficiency and care in reducing the costs of appeal. This not only makes good sense, but it is in keeping with the statutes and with the spirit of the constitutional mandate for Georgia courts to have rules which provide for the “speedy, efficient, and inexpensive resolution of disputes.” 1983 Ga. Const., Art. VI, Sec. IX, Par. I.

OCGA §§ 5-6-37, 5-6-38, 5-6-41, and 5-6-42 not only allow a partial record to be selected by appellant but provide a method for additional portions of the record to be added if appellee desires such in order to support appellee’s position. See Brand v. Montega Corp., 233 Ga. 35 (209 SE2d 583) (1974). In their notice of appeal, the Drummonds expressly pointed out that they had ordered only part of the transcript to be included in the record, and it was already filed. What plaintiffs have done here does not constitute a failure to fulfill their obligation to have transmitted to us those portions of the record which show the harmful error complained of. See, e.g., Tadlock v. Duncan, 215 Ga. App. 441 (451 SE2d 80) (1994). “[F]or a civil litigant to present for appellate review a claim of error made during the course of the proceedings at trial, the litigant must include, at the barest minimum, a transcript of that portion of the proceedings in which the alleged error occurred. ...” (Emphasis supplied in part and omitted in part.) Id. at 443 (1). In City of Atlanta v. Barton, 153 Ga. App. 426 (265 SE2d 345) (1980), the case cited in the majority opinion, the enumerations of error challenged the trial court’s findings of fact, and no transcript of evidence was provided for this court to examine. It thus was deprived of the material on which to base a knowledgeable decision. That is not the case here.

Decided October 20, 1995

Reconsideration denied December 19, 1995

Flournoy & Gentry, Matthew C. Flournoy, William C. Gentry, for appellants.

Downey & Cleveland, Joseph C. Parker, for appellee.

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


text:
    A95A1472.
    PET, INC. et al. v. WARD.
    (466 SE2d 46)
   Ruffin, Judge.

We granted Pet, Inc. and National Union Fire Insurance Company’s (collectively “Pet”) application for discretionary appeal to consider whether their defense of Willie Ward’s claim for workers’ compensation benefits was unreasonable and therefore warranted the assessment of attorney fees under OCGA § 34-9-108 (b). Because the evidence does not support the full board’s determination that Pet’s defense of the claim was unreasonable, we reverse the superior court judgment affirming the award.

It is undisputed that while employed as a factory production line worker, Ward sustained two work-related injuries on November 15, 1989 and June 14, 1991, and her back condition gradually worsened until she ceased working on September 2, 1992. The board adopted the ALJ’s conclusion that Ward sustained a new accident on September 2, “the date she was forced to cease her employment and her disability manifested itself’ and awarded temporary total disability benefits. At this stage in the litigation, Pet does not contest that award. Instead Pet contends it had reasonable grounds to controvert Ward’s claim because there was reliable evidence that her September 2 injury originated in May 1992, when Ward was laid off from work for non-medical reasons.

The record shows that Ward was laid off from work from January 2, 1992 until mid-June of that year. On June 2, 1992, during the layoff, she sought chiropractic treatment from Dr. John Ellis for pain in her lower back, right hip and leg. His records indicate that her symptoms were “a gradual occurrence.” Ward continued to seek treatment from Dr. Ellis on a regular basis until August 18, 1992. Dr. Ellis’ records indicate that by Ward’s July 14 visit, she had experienced notable improvement, such that her condition was almost completely resolved. Ward took an extended weekend off from July 16 through July 19, 1992. When she returned to Dr. Ellis on July 20, her condition had worsened significantly, almost to the point at which it was when she began treatment. She also saw Dr. Alexander Doman on July 20, 1992. His records show that he evaluated her for lower back pain; that she had a two-year history of lower back pain which had increased over the preceding three months; and that she could not recall any recent trauma.

On September 1, 1992, Ward was extremely upset when she learned that a close friend died from a stroke. At work on the following day, she was nervous, crying, experienced shortness of breath, and almost passed out. She was granted two days emergency leave to attend the funeral. However, she never returned to work after September 2, 1992.

On September 3, 1992, she saw Dr. Mark Kozinn. Dr. Kozinn’s records reflect that Ward’s problem began on May 28, 1992, when she awoke with pain in her back and that she had been in pain since that date. Ward likewise testified to that fact. She also told Dr. Kozinn that she twisted her back the previous year on the job but that the problem was resolved. On October 23, 1992, Dr. Thomas Croft examined Ward for back pain which Ward said had its origin on May 28,1992, when she awoke in severe pain in her right hip and down her right leg. Dr. Croft’s records show that several days later, Ward began to experience lower back pain.

The ALJ determined that Pet’s defense was unreasonable based on the following findings of fact: Ward sustained a work-related injury on November 15, 1989. The condition of her back progressively worsened because of the strenuous demands of her job until she had to stop working in September 1992. Ward’s supervisor was aware of her initial injury, a subsequent work-related injury in 1991, and that Ward had complained of back pain off and on since 1989. The ALJ noted that Pet stipulated to knowing that Ward ceased working on September 2, 1992 because of back pain. However, Pet did not concede that the latest onset of pain was work-related.

While the question of whether there are reasonable grounds for resisting an award of compensation is an issue of fact to be determined by the board, attorney fees may not be awarded where the matter is closely contested on reasonable grounds. Brigmond v. Springhill Homes of Ga., 180 Ga. App. 875, 876 (350 SE2d 846) (1986). In this case, it appears that the ALJ completely ignored the evidence supporting Pet’s defense. The board does not satisfy its burden of proving that a defense is unreasonable by setting forth its own separate basis for the award. See Mt. Vernon Mills v. Gunn, 197 Ga. App. 109, 111 (397 SE2d 603) (1990). Rather, the board must prove by the record that there is “ ‘evidence upon which to base a finding of unreasonableness with respect to [the employer’s] defense of [a] claim.’ [Cit.]” Brigmond, supra. “It is not necessary that the defense presented be such that the award may deny compensation. ‘A defense going far enough to show reasonable and probable cause for making it, would vindicate the good faith of the company as effectually as would a complete defense to the action.’ [Cit.]” Pacific Employers Ins. Co. v. Peck, 129 Ga. App. 439, 442 (200 SE2d 151) (1973).

Decided December 5, 1995

Reconsideration denied December 19, 1995

Gorby & Reeves, Michael S. Reeves, Douglas R. Kertscher, for appellants.

Moskowitz & Carraway, Bruce H. Carraway III, for appellee.

The evidence in this case clearly provided a reasonable basis for Pet’s contention that Ward’s injury occurred on or about May 28, 1992, while she was laid off. Furthermore, the medical records upon which Pet relied to show that the injury occurred on May 28 demonstrate “ ‘that reasonable grounds for defending the matter did exist and were presented. While, in view of other evidence presented by [Ward], the award of compensation was authorized, it was not demanded. The board did not accept the defense made and awarded compensation, but it was not an unreasonable or unfounded defense.’ [Cit.]” Goode Bros. Poultry Co. v. Kin, 201 Ga. App. 557, 560 (3) (411 SE2d 724) (1991). Accordingly, the superior court erred in affirming the board’s award of attorney fees. Ga.-Pacific Corp. v. Sanders, 171 Ga. App. 799, 804 (3) (320 SE2d 850) (1984).

Judgment reversed.

Beasley, C. J., and Pope, P. J., concur.


text:
    A95A1503.
    PAKWOOD INDUSTRIES, INC. et al. v. JOHN GALT ASSOCIATES et al.
    (466 SE2d 226)
   Ruffin, Judge.

Pakwood Industries, Inc., (“Pakwood”) is a custom woodworking business owned by Joseph Brusich (“Brusich”) and Ann Brusich. John Galt Associates is a joint venture comprised of Garett Backman, Charles Backman and Gene Anderson (collectively “Galt”). In September 1990, Pakwood leased space for its business from Montreal Court AA (“lease”). The lease provided in part that Pakwood could not assign the lease or sublease the premises without the prior written consent of the landlord, which consent could not be unreasonably withheld. Galt subsequently purchased Montreal Court AA. Shortly thereafter, in the spring of 1993, Pakwood had financial difficulties and failed to pay rent, which ultimately caused Galt to file a dispossessory action. Pakwood eventually paid the past-due rent and the dispossessory action was dismissed.

In June 1993, the Brusichs began negotiating the sale of Pakwood’s assets to System Implementation Services, Inc. (“SIS”) and its owner Michael Greenberg. Greenberg formed SIS, a manufacturing consulting company of which he was the only employee, in 1990. On August 2, 1993, SIS and Pakwood executed a purchase agreement for Pakwood’s assets. The purchase agreement provided that SIS would purchase all of Pakwood’s assets but would assume none of Pakwood’s liabilities or other obligations. Under the agreement, SIS was to pay Pakwood, or any entity Pakwood directed payment to, $200,000 cash at closing, $337,000 in promissory notes and a $100,000 “earn out” to be paid over five years. Although the purchase agreement also stated that Pakwood assigned the lease to SIS, the parties had not executed an assignment or obtained Galt’s consent for an assignment. As security for the outstanding notes, SIS executed a security agreement pledging all the assets acquired from Pakwood under the sale. Finally, at Pakwood’s insistence, Greenberg executed a personal guaranty for the $437,000 in outstanding debt.

Galt subsequently informed Pakwood that it would consent to an assignment of the lease if both Greenberg and Brusich would guaranty SIS’s obligations under the lease. In a letter to Pakwood, Galt stated the reasons it required the guaranties. Galt explained that even if Pakwood remained liable for rent under the assignment, since it retained all liabilities and was being stripped of all assets in the sale to SIS, Pakwood’s viability as an ongoing entity was questionable. Galt further explained that it had reviewed SIS’s financial statements and discovered that SIS also had no significant assets. When Green-berg and Brusich refused to personally guaranty the lease, Galt proposed an alternative condition under which it would forego the personal guaranties in return for an option to terminate the lease upon the sale of the premises to another party. The proposed alternative was also rejected, and Greenberg subsequently terminated the purchase agreement because Pakwood could not obtain the lease assignment.

Pakwood sued Galt for damages allegedly caused by Galt’s unreasonable refusal to consent to an assignment of the lease. The trial court granted Galt’s motion for summary judgment and Pakwood appealed. Because we conclude that Galt’s conditional consent for assignment was reasonable as a matter of law, we affirm.

1. A defendant may prevail at summary judgment by showing the court that the evidence in the record reveals “that there is no evidence sufficient to create a jury issue on at least one essential element of plaintiff’s case. If there is no evidence sufficient to create a genuine issue as to any essential element of plaintiff’s claim, that claim tumbles like a house of cards. All of the other disputes of fact are rendered immaterial. [Cit.] ... If the moving party discharges this burden, the nonmoving party cannot rest on its pleadings, but rather must point to specific evidence giving rise to a triable issue. [Cit.]” Lau’s Corp. v. Haskins, 261 Ga. 491 (405 SE2d 474) (1991). In Stern’s Gallery &c. v. Corp. Prop. Investors, 176 Ga. App. 586 (4) (337 SE2d 29) (1985), this court ruled that a lease clause providing that a lessor cannot unreasonably withhold consent to assign the lease is a covenant upon the landlord. Id. The court held that under such a clause, the term “reasonable” cannot comprehend arbitrary or capricious reasons, or merely personal preferences, and that the term refers to considerations of fairness and commercial reasonableness. Id. Although “the question of reasonableness and unreasonableness is most often a jury issue, in plain and palpable cases the determination may be made by the court.” Id. at 596.

The primary factor courts have considered in determining the reasonableness of a lessor’s refusal to consent is the financial ability of the proposed tenant to perform under the lease. 54 ALR3d 679. See also Jack Frost Sales v. Harris Trust &c. Bank, 433 NE2d 941 (Ill. App. 1982) (not unreasonable to withhold consent where proposed tenant had insufficient capital). In light of our ruling in Stern’s that “reasonable” refers to commercial reasonableness, we agree that the proposed tenant’s ability to perform under the lease should be a key consideration.

Under the circumstances of this case, Galt’s requirement of personal guaranties was reasonable. We note, that in its brief in response to Galt’s motion for summary judgment and in its brief on appeal, Pakwood has neither argued nor pointed to evidence showing that Galt’s concerns regarding SIS’s ability to perform were unreasonable. The undisputed evidence showed that Galt was concerned with SIS’s ability to perform under the lease. SIS was a relatively new business, and the record revealed no rental history. Under the purchase agreement, SIS acquired all of Pakwood’s assets, but pledged those assets to secure its substantial debts to Pakwood. Although SIS’s owner, Greenberg, had experience as a business consultant, he had no significant experience in furniture or cabinet making or any associated industry. Likewise, the undisputed evidence showed that Pakwood, which had financial difficulties and failed to pay rent in the past, sold all its assets under the purchase agreement, leaving it with no assets to which Galt could turn in the event of a default under the lease. Faced with these facts, which led to concerns over the parties’ ability to perform under the lease, Galt did not refuse to consent, but rather required personal guaranties. Because there is no conflict in the evidence supporting Galt’s concerns, which concerns were further supported by Pakwood’s own insistence on a personal guaranty from Greenberg for the asset purchase, we find the requirement for personal guaranties was clearly and palpably commercially reasonable.

Decided December 4, 1995

Reconsideration denied December 19, 1995

Holland & Knight, Gregory J. Digel, James H. Rollins, Elizabeth C. Helm, for appellants.

Eidson & Associates, James A. Eidson, William G. Moise, Timothy R. Brennan, for appellees.

Finally, we find no merit in Pakwood’s contention that Galt’s proposal for amending the lease to allow for termination in the event the premises were sold was commercially unreasonable. That proposal was offered as an alternative only after Brusich and Greenberg refused to personally guaranty the lease. Because Brusich and Green-berg could have accomplished the assignment by agreeing to guaranty the lease, a requirement we have already concluded was reasonable, Pakwood’s contentions concerning Galt’s proposed alternatives are immaterial. See Lau’s Corp., supra. Accordingly, the trial court did not err in granting summary judgment to Galt on Pakwood’s breach of contract claim.

2. Pakwood also asserts that the trial court erred in granting summary judgment to Galt as to Pakwood’s claims for tortious interference with business relations and tortious interference with contract. However, because both these claims require a showing that Galt acted improperly and without privilege, and we ruled in Division 1 that Galt acted properly, this enumeration is without merit. See Valdez v. Power Indus. Consultants, 215 Ga. App. 444 (2) (451 SE2d 87) (1994); Lothridge v. First Nat. Bank &c., 217 Ga. App. 711 (6) (458 SE2d 887) (1995).

3. Finally, Pakwood contends the trial court erred in ruling that its claim for a constructive trust was moot. Because Pakwood premised the claim on Galt’s requirement for guaranties being unreasonable, a claim which we have already decided adversely to Pakwood, we agree with the trial court that the claim is moot.

Judgment affirmed.

Beasley, C. J., and Pope, P. J., concur.


author: McMurray, Presiding Judge. Blackburn, Judge,

text:
    A95A1614, A95A1615.
    CROWLEY v. TRUST COMPANY BANK OF MIDDLE GEORGIA, N.A.; and vice versa.
    (466 SE2d 24)
   McMurray, Presiding Judge.

Trust Company Bank of Middle Georgia, N.A. (“the bank”) filed a legal malpractice action against attorney J. Wayne Crowley after Crowley erroneously certified title to a parcel of real property (“the parcel”) that Patrick R. Cramer pledged as collateral for an $86,442.98 loan. The bank alleged that the collateral failed because Cramer does not own the parcel; that both Cramer and his guarantor, Steve Luce, have refused to pay the loan and that Crowley’s substandard legal services, along with the fact that the bank “has been unsuccessful in collecting from Patrick R. Cramer and Steve Luce the amount owed under the loan agreement,” has resulted in loss of the entire principal amount of the loan, plus interest and attorney fees. Crowley admitted in his answer that he provided the bank with inaccurate information regarding title to the parcel, but asserted that the resulting failure of collateral did not impair the bank’s ability to recover the $86,442.98 loan, plus interest and attorney fees.

After the case was called for a jury trial, Crowley acknowledged that he failed to exercise the requisite degree of care and skill in representing the bank and that the only issue remaining was the range of damages, if any, precipitated by his inaccurate title certification. The bank then asserted that the facts relevant to the issue of damages were not in dispute and the parties agreed to surrender the case to the trial court upon stipulation that Steve Luce guaranteed Cramer’s $80,000 loan; that the bank extended this credit based on Crowley’s title certification and that, even though the parcel was sufficient to cover Cramer’s debt, the bank would not have made the loan without Steve Luce’s guarantee that the debt would be paid. The parties also stipulated that the loan is now in default; that Steve Luce is capable of curing this default, instanter, and that the bank instituted this action against Crowley after crediting $25,000 toward a consent judgment the bank obtained against Luce for failing to honor his promise to cover Cramer’s debt.

The trial court entered judgment in favor of the bank for $95,692.08, plus daily interest, calculating damages based upon the total balance of Cramer’s debt less the $25,000 the bank credited against its consent judgment against Steve Luce. Crowley challenges this judgment via direct appeal in Case No. A95A1614, arguing that the bank was not injured as a result of his “negligent title examination” because it is stipulated that Steve Luce “is financially able and has ample assets with which to satisfy that indebtedness.” The bank cross-appeals in Case No. A95A1615, contending that the trial court erroneously reduced its recovery against Crowley by $25,000 because this amount represented “a collateral source payment received from a party who was not a joint tortfeasor.” Held:

A client may recover for legal malpractice only if the negligence of the attorney is the proximate cause of damages to the client. Mauldin v. Weinstock, 201 Ga. App. 514, 517 (4) (411 SE2d 370); Whitehead v. Cuffie, 185 Ga. App. 351 (2), 352-353 (364 SE2d 87). And if it is shown, without dispute, that a client could have avoided damages resulting from an attorney’s mistake but did not do so, recovery for legal malpractice (as with any other tort) is limited to those losses the client would have suffered had damages been properly mitigated. See OCGA § 51-12-11, and McDow v. Dixon, 138 Ga. App. 338, 340 (226 SE2d 145), citing Theobald v. Byers, 13 Cal. Rptr. 864 (1961).

According to the parties’ stipulations, the only adverse effect of attorney Crowley’s inaccurate title certification is failure of the parcel as collateral for Cramer’s loan. However, contrary to the allegations in the complaint, the bank precludes that this omission resulted in loss of the entire principal balance of Cramer’s loan, plus interest and attorney fees, via stipulating that it has acquired a consent judgment against Steve Luce for Cramer’s debt (including interest and attorney fees) and that Steve Luce is capable of satisfying this judgment, instanter. See Simpson v. Coosa Valley Production Credit Assn., 495 S2d 1029, 1033 (1986). These stipulations either eliminate the possibility that damages arose from Crowley’s alleged malpractice, Whitehead v. Cuffie, 185 Ga. App. 351 (2), 352-353, supra, or amount to a concession by the bank that all damages it stipulated or specifically claimed (in its complaint) have been fully mitigated. McDow v. Dixon, 138 Ga. App. 338, 340, supra.

Nonetheless, the bank asserts the trial court properly calculated damages based upon the total balance of Cramer’s debt, arguing “it [would be] manifestly unjust to allow [Crowley,] an admittedly negligent legal malpractice defendant^] to shift the responsibility for his negligence back onto the shoulders of the [bank,] or to some innocent third party, such as a guarantor, by requiring such persons to incur liabilities and satisfy obligations that they would never have had absent the negligence of the attorney.” In similar fashion, the bank contends the trial court erroneously reduced the judgment against Crowley by $25,000, reasoning that “[u]nder the ‘collateral source rule’ payments made, either voluntarily or contractually, by a third party who was not a joint tortfeasor would not serve to diminish a tortfeasor’s liability. Wachtel v. Leonard, 45 Ga. App. 14 (1) (163 SE 512); Thompson v. Milam, 115 Ga. App. 396, 397 (154 SE2d 721); Cincinnati, N. O. &c. R. Co. v. Hilley, 121 Ga. App. 196, 201 (173 SE2d 242); N. C. & St. L. R. Co. v. Miller, 120 Ga. 453 (1-3) (47 SE 959, 67 LRA 87, 1 AC 210); State Farm Mut. Auto. Ins. Co. v. Board of Regents, 226 Ga. 310, 311 (174 SE2d 920).” Cagle v. Atchley, 127 Ga. App. 668, 673 (4), 674 (194 SE2d 598).

Although at first blush the bank’s position appears consistent with Georgia’s policy of precluding tortfeasors from taking advantage of payments made, either voluntarily or contractually, by outside collateral sources, the circumstances in the cases sub judice reveal that Steve Luce’s guaranty is not such an outside collateral source, i.e., it is not wholly independent of the loan transaction which forms the basis of the bank’s damage claim against Crowley. See Cobb & Eldridge, Georgia Law of Damages (3rd ed.), p. 220, § 12.2.1; and 22 AmJur2d, Damages, §§ 566-569. To this extent, the parties have stipulated that Luce’s guaranty was security for the same loan that was purportedly secured by the parcel and that the bank would not have extended credit to Cramer absent Luce’s promise to cover the debt. Moreover, it appears undisputed that Luce did not vouch for Cramer out of personal friendship or unbridled charity, but that he extended his guaranty because the proceeds derived from Cramer’s loan were to enhance a business venture in which Luce was a primary investor. Under these circumstances, it cannot be said that Luce’s ability to make good on his guaranty agreement is an outside collateral source that cannot be considered in mitigation of any loss the bank sustained as a result of Crowley’s erroneous title certification. Consequently, since the bank stipulated that failure of the parcel as collateral will not impair its ability to recover the entire principal balance of Cramer’s loan, plus attorney fees and interest, and since the bank asserted no other claim or stipulation of damage flowing from Crowley’s inaccurate title certification, the trial court erroneously entered judgment against Crowley for legal malpractice. See Hendricks v. Davis, 196 Ga. App. 286, 287 (2) (395 SE2d 632), overruled on other grounds in Hardaway Co. v. Amwest Surety Ins. Co., 263 Ga. 698, 699 (436 SE2d 642).

Judgment reversed on the main appeal (case no. A95A1614). Judgment affirmed on the cross-appeal (case no. A95A1615).

Andrews and Blackburn, JJ., concur specially.

Blackburn, Judge,

concurring specially.

I concur specially to point out that because Luce was not a party to this action, we in no way reach any potential third-party claims against Crowley. This case addressed only the action between the Bank and Crowley.

To prevail, the Bank had to establish two distinct claims: (1) that Crowley committed malpractice and (2) that but for Crowley’s negligence, the Bank would not have been harmed. McDow v. Dixon, 138 Ga. App. 338, 339 (226 SE2d 145) (1976). Although Crowley admitted negligence, the Bank failed to make a showing on the second prong of its case. The Bank sought payment from Luce as the loan’s guarantor when Cramer refused to pay the loan due to the failure of the collateral. See OCGA § 10-7-1. Luce consented to the entry of a judgment against him in the aggregate amount of $99,409.43 and the Bank stipulated that Luce was capable of curing the default. Having received the judgment and made this stipulation, the Bank cannot claim that it was harmed by Crowley’s negligence. Therefore, the trial court erred in entering judgment for the Bank.

Decided November 30, 1995

Reconsideration denied December 19, 1995

Martin, Snow, Grant & Napier, John T. McGoldrick, Jr., Wallace D. Bonner, Jr., for appellant.

Adams & Adams, Charles R. Adams III, Phillips & Messer, Arthur L. Phillips, for appellee.

I agree that the collateral source rule does not apply to payments received by a creditor from a party who was contractually answerable to it in the same transaction which is the claimed basis for the creditor’s damages. See Bennett v. Haley, 132 Ga. App. 512, 522 (16) (208 SE2d 302) (1974). Because the majority correctly reversed the judgment against Crowley, however, reaching this issue was unnecessary.

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