text:
    73279.
    REESE REALTY COMPANY, INC. et al. v. PAL REALTY COMPANY, INC. et al.
    (355 SE2d 125)
   Benham, Judge.

This case arose as a dispute over the splitting of a real estate commission. Appellants, a real estate brokerage firm and its principal broker, sold a piece of property shortly after their exclusive listing on the property had expired. After the expiration, but prior to the sale, an agent of appellee Pal Realty Co., Inc. (“Pal”), had procured a listing for the property. When the property was sold, Pal demanded a split of the commission. Reese Realty Co., Inc. (“Reese”), refused to pay any of the commission to Pal. When agreement could not be reached, Pal requested arbitration of the dispute by the Arbitration Committee of the Atlanta Board of Realtors, Inc. Reese agreed to submit to binding arbitration, but when the arbitrators awarded Pal half of the commission, Reese refused to pay. Pal brought suit to enforce the arbitration award. Reese answered the suit, admitting the allegations regarding the arbitration award, but contending that it was entitled to a set-off because of the tortious conduct of an agent of Pal. That agent, McCray, had testified before the arbitrators, but had not been a named party to that proceeding. Reese alleged in a counterclaim and in a pleading designated as a third-party claim that McCray, a former employee of Reese, had, after his termination by Reese and in the scope of his employment by Pal, taken customer information and used it for Pal’s benefit. This appeal is from the grant of summary judgment to Pal, its principal broker, and McCray.

1. Appellants admitted in their pleadings sufficient facts to entitle the plaintiffs in this case (Pal and its principal broker) to judgment as a matter of law. The arbitration award, entered in a proceeding before a body which appellants admit was of competent jurisdiction, encompassed, as between appellants and the plaintiffs in this action, all the issues involved in appellants’ counterclaim. The only issue appellants can point to on appeal as having been outside the scope of the arbitration proceeding is the purported liability of McCray for conversion of appellants’ personalty. However, even the effect of that alleged conversion on the rights and liabilities of Pal and Reese was in issue or could have been placed in issue in the arbitration proceeding since it was relevant to Pal’s right to split the commission with Reese. We conclude, therefore, that the trial judge was correct in ruling that appellants are estopped by the award of the arbitrators from further contesting their liability to Pal and its principal broker. McFadden Business Publications v. Guidry, 177 Ga. App. 885 (1b) (341 SE2d 294) (1986); see also Callaway v. Bridges, 79 Ga. 753 (4 SE 687) (1887).

2. The trial court also granted summary judgment to McCray. The fact that McCray had not filed a motion for summary judgment does not, of itself, render that judgment erroneous: “It is well settled that summary judgment can be granted to a non-moving party provided that the grant is proper in all respects. [Cits.]” Wiggins v. C & S Nat. Bank, 173 Ga. App. 761 (2) (328 SE2d 222) (1985). We find appellants’ argument in that regard particularly unavailing in light of the fact that their opposition to the motion for summary judgment was directed toward McCray as well as the other parties and the merits of the issues regarding his liability were fully raised and argued by appellants in the trial court. Cf. Eiberger v. West, 247 Ga. 767 (1a) (281 SE2d 148) (1981).

The grant of summary judgment to McCray was based on the same ground as the grant of judgment to Pal and its principal broker: estoppel by judgment. It is clear, however, after applying the principles of privity enunciated in Gilmer v. Porterfield, 233 Ga. 671 (2) (212 SE2d 842) (1975), that McCray is not in privity with Pal so as to be able to claim the benefit of an adjudication in favor of Pal. Nonetheless, we do not find it necessary to reverse the judgment in favor of McCray: a judgment which is correct will not be reversed merely because the wrong reason is given for granting it. Tony v. Pollard, 248 Ga. 86 (1) (281 SE2d 557) (1981).

Reese’s claim against McCray, essentially, is based on the theory that Reese would not have had to split the commission with Pal if McCray had not stolen customer information from Reese after his employment with Reese had ended and then used that information for Pal’s benefit. Reese filed an affidavit by its principal broker in which he stated that information regarding the listing involved here was contained in a book in Reese’s office, that McCray came to the office and sat in the room where the book was kept, and that the page containing the information regarding the listing involved here was stolen. Those facts, it is clear from the context of the affidavit, are within the personal knowledge of the affiant and are to be considered notwithstanding the absence from the affidavit of a statement that the affidavit is based on personal knowledge. See Johnson v. Crews, 165 Ga. App. 43 (299 SE2d 99) (1983). However, the further statement in the affidavit to the effect that McCray stole the missing page of the listing book, is not so clearly within the affiant’s personal knowledge. There are no facts stated which would indicate that the affiant saw the page stolen. Since that statement is no more than a conclusion of the affiant, it would not be of probative value on a motion for summary judgment. Id. In McCray’s affidavit, on the other hand, he swears that he did not steal the page from Reese’s listing book, that the only information he ever got from Reese was gotten while he was employed there and was for the purpose of his employment there, and that the specific information which Reese claims was stolen was procured by the affiant from a computerized listing service available to its subscribers. McCray’s affidavit, like Reese’s, failed to state that it was made on personal knowledge. However, unlike Reese’s affidavit, McCray’s concerned his own activities and was, thus, clearly based on his personal knowledge. McCray’s affidavit established the legitimacy of his obtention and use of information about Reese’s listings; Reese’s affidavit set forth allegations and conclusory facts and was, therefore, insufficient to defeat summary judgment. Peterson v. Midas Realty Corp., 160 Ga. App. 333, 335 (287 SE2d 61) (1981). The record as it now stands shows that there are no questions of material fact regarding McCray’s liability to Reese and that McCray is entitled to judgment as a matter of law. Cf. McFadden, supra, Div. 1 & 1c.

Judgment affirmed.

Deen, P. J., and Beasley, J., concur.

Decided March 18, 1987.

John F. Sweet, for appellants.

Stephen J. Anderson, William E. Sumner, Nancy Becker Hewes, for appellees.


source: Caselaw Access Project

author: Benham, Judge.

license: Public Domain

text:
    73345, 73453.
    STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY v. ACHESON; and vice versa.
    (355 SE2d 128)
   Benham, Judge.

Leonard S. Acheson died of a ruptured aortic aneurysm one week after being in an automobile wreck. After his widow made a claim on a policy covering the vehicle, State Farm, issuer of the policy, brought an action for declaratory judgment seeking a determination that Mr. Acheson’s death was not the result of an insured event. A jury found that it was and that the death was covered by State Farm’s policy. That determination is not at issue here. What is at issue is the order in which benefits are to be paid out of the Personal Injury Protection part of the policy.

The policy provides for $25,000 PIP benefits and $5,000 excess medical coverage. The medical expenses incurred prior to Mr. Acheson’s death amounted to $14,751.33, and funeral expenses totalled $3,675.40. State Farm took, and still takes, the position that the proper order of payment was to pay all the medical expenses and $3,500 of the funeral expenses from the PIP coverage, cover the balance of the funeral expenses from the excess medical coverage, and then pay the remaining PIP coverage as survivor’s benefits. That remainder was $6,748.67. The trial court, however, decided that the proper order was to pay the expense which was first incurred, the medical expenses, then to calculate the survivor benefit, which became fixed, according to the trial court, at the moment of Mr. Acheson’s death, and subtract that from the remaining PIP benefits. The remainder would be applied to funeral expenses, the unpaid balance of which would then be covered by the excess medical coverage. That plan would result in all the medical and funeral expenses being paid and in Mrs. Acheson receiving $8,109 in survivor’s benefits.

In Case No. 73345, State Farm appeals from the order establishing the trial court’s version of the order of payment and awarding Mrs. Acheson prejudgment interest. In Case No. 73453, Mrs. Acheson cross-appeals, enumerating as error the trial court’s striking of her claim for bad faith penalties and attorney fees.

1. Although we agree with the result reached by the trial court, we do not find it necessary to resort to calculating the date on which the various expenses were incurred. Instead, we look to a basic principle of insurance law and to the purpose of the No-Fault Act.

“The law favors coverage, as that is the intent of purchasing insurance in the first place. [Cit.]” Reynolds v. Transport Ins. Co., 178 Ga. App. 462, 464 (343 SE2d 502) (1986). If the various expenses and entitlements involved in this case were to be distributed as the trial court ordered, there is sufficient coverage to meet them all without exhausting the coverage for which the Achesons paid State Farm. The notion that benefits should be allocated so as to maximize coverage is reinforced by the language in OCGA § 33-34-5 (a) (1), which directs that optional no-fault benefits be paid “as determined by the insured without apportionment” to cover certain listed expenses and entitlements, including those at issue in this case. Clearly, that principle supports the ruling of the trial court.

“The purposes of this no-fault statute include the elimination of wasteful litigation over moderate to small claims, and the provisions of certain minimal insurance coverage for automobile accident victims. [Cit.]” Cannon v. Georgia Farm &c. Ins. Co., 240 Ga. 479, 482 (241 SE2d 238) (1978). State Farm’s grudging approach to allocation of losses among different coverages is contrary to both purposes of the Act. Obviously, State Farm’s approach is intended to limit the amount payable to Mrs. Acheson as survivor’s benefits, contravening the second stated purpose. As to the first stated purpose, we note that the amount of money at stake in the controversy concerning allocation of benefits is $1,360.33, which brings this case squarely within the class mentioned in Cannon.

We hold, therefore, that application of the principle stated in Reynolds, supra, and of the clear intent of the legislature in OCGA § 33-34-5 (a) (1) requires the conclusion that the coverage of the policy issued by State Farm should have been utilized so as to be most beneficial to the insured and the beneficiaries. In this case, that allocation was as the trial court directed.

2. The second issue raised in State Farm’s appeal is the award of prejudgment interest. State Farm claims that the award is inappropriate because both liability and damages were contested. That contention is controlled adversely to State Farm by this court’s opinion in Intl. Indem. Co. v. Terrell, 178 Ga. App. 570 (2) (344 SE2d 239) (1986). Contrary to State Farm’s argument, the fact that the survivor’s benefits were payable monthly for one year did not make the trial court’s award of interest incorrect: the trial court calculated the interest on the basis of monthly payments of that benefit. We find no error in the award of interest for any reason asserted by State Farm.

3. In her cross-appeal, Mrs. Acheson complains of the trial court’s action in striking, without explanation, her claim for bad faith penalties and attorney fees. We agree with her concerns and reverse.

Decided March 18, 1987.

Kenneth R. Hilyer, for appellant.

James W. Hurt, A. Douglas Newsome, for appellee.

The question of the insurer’s good faith or lack thereof is one of fact for the jury. Binns v. MARTA, 250 Ga. 847 (301 SE2d 877) (1983). While there are cases in which the issue can be decided as a matter of law, i.e., where there is no evidence of bad faith or where the evidence on the issue of liability is so close as to demand a finding of good faith (see Georgia Farm &c. Ins. Co. v. Matthews, 149 Ga. App. 350 (254 SE2d 413) (1979)), our review of the record does not support such a finding in this case. Accordingly, the portion of the trial court’s order which struck Mrs. Acheson’s claim for statutory bad faith penalties and attorney fees must be reversed.

Judgment affirmed in Case No. 73345; judgment reversed in Case No. 73453.

Deen, P. J., and Beasley, J., concur.


author: McMurray, Presiding Judge.

text:
    73470.
    GARY L. SHAW BUILDERS, INC. v. STATE AUTOMOBILE MUTUAL INSURANCE COMPANY.
    (355 SE2d 130)
   McMurray, Presiding Judge.

State Automobile Mutual Insurance Company (State Automobile) initiated this declaratory judgment action seeking a determination as to whether it has a duty to defend Gary L. Shaw Builders, Inc. (Shaw Builders) in an action filed against Shaw Builders by James E. and Sheila M. Clark (Clarks).

In 1978 Shaw Builders constructed a house in Augusta, Georgia for Mr. & Mrs. Dick Rumbley (Rumbleys). Thereafter, a dispute arose between Shaw Builders and the Rumbleys concerning the structural integrity of the house. To resolve the dispute, Shaw Builders purchased the house from the Rumbleys on March 11, 1985. Shaw Builders then performed certain repairs on the house and, in April 1985 purchased a comprehensive general liability (CGL) insurance policy from State Automobile covering the house. (The CGL insurance policy was effective from February 7, 1985, to February 7, 1986.) On June 17, 1985, Shaw Builders sold the house to the Clarks and, in conjunction therewith, provided James E. Clark with the following express warranty: “STRUCTURAL WARRANTY . . . The undersigned seller [Shaw Builders] hereby warrants to James E. Clark that the dwelling located on the captioned property is structurally sound and in conformity with the VA/FHA published minimum property standards. Should the said James E. Clark notify seller, in writing, within one year of the date hereof as to any non-conformity with said standards then said seller shall be bound to correct any such non-conformity. This structural warranty shall be binding on the warrantor for one year from the date hereof and is limited to the structural integrety [sic] of the improvements only.”

Shortly after the Clarks purchased the house, they complained to Shaw Builders of certain defects in the house and complained that they were not given full information concerning the prior defects in the house. In this regard, the Clarks sent Shaw Builders the following letter, in pertinent part, dated August 7, 1985: “It has come to our attention now that we were not informed by you ... of all the problems the house had before we purchased it. We were told by our realtor there had only been a water problem, a pipe had broken and now had been repaired. We were not told that part of the house had actually shifted because of the foundation sinking, until after we had purchased the house. The house is not level, the front of the house slopes downward. The kitchen and utility room floors are very bad, they are uneven and floor joists are appearing in several places on the floor. The refrigerator is actually slipping towards the front of the house and the microwave oven also slopes. We expect the floors levelled [sic] and corrected in accordance with your warranty given with the purchase of the house. Would you please contact us regarding these problems.” There was no resolution of this claim and the Clarks brought an action against Shaw Builders in a three-count complaint.

Count 1 of the complaint is based on breach of the express warranty given to James E. Clark by Shaw Builders. Count 2 is based on fraud, in that Shaw Builders willfully and knowingly concealed structural defects in the house, thereby fraudulently inducing the Clarks to purchase the house; and, Count 3 is based on negligent construction and design of the house.

Shaw Builders demanded State Automobile to defend it in the action brought by the Clarks and to pay damages that may be recovered by the Clarks against Shaw Builders. In response, State Automobile denied liability under the CGL insurance policy and filed this declaratory judgment action. Subsequently, State Automobile moved for summary judgment and, after a hearing, the trial court entered, in pertinent part, the following order: “The subject policy contains the following exclusions to coverage: This insurance does not apply . . . (n) to property damage to the named insured’s products arising out of such products or any part of such products; (o) to property damage to work performed by or on behalf of the named insured arising out of the work or any portion thereof,. . . The language of these exclusions is clear and unambiguous. The comprehensive general liability policy is not intended to insure against defective workmanship caüsing damage to the work product itself. . . . As to the Clarks’ claim for fraudulent misrepresentation, the subject policy provides coverage only for an ‘occurrence,’ which is defined as ‘an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured.’ The Georgia Courts have uniformly held that intentional or non-accidental damages are not covered under such a provision. Georgia Farm Bureau Mutual v. Meriwether, 169 Ga. App. 363 (1983); Thrift-Mart, Inc. v. Commercial Union Assurance Cos., 154 Ga. App. 344 (1980). Based on the foregoing findings of fact and conclusions of law, IT IS HEREBY ORDERED that the Motion of [State Automobile] for summary judgment is hereby granted, and that a declaratory judgment of no coverage is granted in favor of [State Automobile.] . . .” It is from this order that Shaw Builders appeals. Held:

1. In its first enumeration of error Shaw Builders contends the trial court erred in granting summary judgment to State Automobile as “[a] genuine issue of material fact exists as to the extent of coverage for foundation work ...” because the record shows that an agent for State Automobile “ ‘advised Shaw Builders that the policy contained coverage for certain types of damage arising from foundation work . . .’”

Where an insurance policy is unambiguous, parol evidence as to what was said by parties at the time application for the policy was taken is inadmissible to vary or alter the terms of the policy. Fowler v. Liberty Nat. Life Ins. Co., 73 Ga. App. 765, 770-771 (4) (38 SE2d 60). In the case sub judice, subsections (n) and (o) of the section entitled “Exclusions” in the CGL insurance policy, as set forth in the trial court’s order, clearly and unambiguously exclude coverage for property damage resulting from the insured’s negligently constructed work product. See Weedo v. Stone-E-Brick, Inc., 81 N. J. 233, 245 (405 A2d 788). Consequently, the trial court did not err in granting summary judgment in favor of State Automobile with regard to Count 3 of the Clarks’ complaint.

2. Shaw Builders contends in its second enumeration of error that the trial court erred in granting summary judgment to State Automobile finding that exclusions (n) and (o) of the CGL policy applied with regard to the Clarks’ claim for breach of warranty because the CGL policy provides specific coverage for the insured’s work product where the insured has given an express warranty of the quality of the work performed and the product produced therefrom. In support of this contention, Shaw Builders points to exclusion “(a)” of the policy, which provides: “This insurance does not apply ... to liability assumed by the insured under any contract or agreement except an incidental contract; but this exclusion does not apply to a warranty of fitness or quality of the named insured’s products or a warranty that work performed by or on behalf of the named insured will be done in a workmanlike manner.” (Emphasis supplied.)

Notwithstanding the language of exclusion (a), State Automobile argues that exclusions (n) and (o) “preclude coverage for claims arising out of the ‘structural warranty.’ ” In rebuttal, Shaw Builders argues that exclusions (n) and (o) do not preclude coverage for its alleged faulty workmanship under the warranty it issued to James E. Clark because there exists an apparent ambiguity between exclusions (n) and (o) and the emphasized language of exclusion (a). Citing OCGA § 13-2-2 (5); Davis v. United American Life Ins. Co., 215 Ga. 521 (2) (111 SE2d 488); and American Cas. Co. v. Callaway, 75 Ga. App. 799 (1) (44 SE2d 400), Shaw Builders contends that this ambiguity must be construed in its favor.

At the outset, we note that “[exclusion (a) has been included in substantially the same form in many comprehensive liability insurance policies issued in this country in recent years.” Bond Bros. v. Robinson, 393 Mass. 546, 548 (471 NE2d 1332). In addressing the same argument asserted by Shaw Builders, there has been a split among jurisdictions in determining whether an insurer has a duty to defend under circumstances analogous to the case sub judice. See Note 1 in Stillwater Condominium Assn. v. American Home Assur. Co., 508 FSupp. 1075, 1077 (D. Montana 1981), affirmed, 688 F2d 848 (9th Cir. 1982), cert. denied, 460 U. S. 1038 (103 SC 1429, 75 LE2d 789). “The majority view holds that [there is no ambiguity because the overriding] purpose of this comprehensive liability insurance coverage is to provide protection for personal injury or for property damage caused by the completed product, but not for the replacement and repair of that product.” LaMarche v. Shelby Mut. Ins. Co., 390 S2d 325, 326 (Sup. Ct. Fla. 1980). A minority of jurisdictions “essentially take the view that exclusion (a), in the face of another exclusion denying coverage for a loss ‘within’ the exception to exclusion (a), creates an ambiguity justifying coverage: [Cits.]” Bond Bros. v. Robinson, 393 Mass. 546, 551, supra.

In the case sub judice, we adopt the majority view which is clearly enunciated in Weedo v. Stone-E-Brick, Inc., 81 N. J. 233, supra, where the Supreme Court of New Jersey said “[bjecause we are of the view that exclusion ‘(a)’ cannot serve to becloud the clear import of the ‘business risk’ exclusions, [exclusions (n) and (o) of the CGL policy in the case sub judice,] we necessarily disagree that an ambiguity exists in the policy before us. We have only recently reaffirmed the view that only genuine ambiguities engage the so-called ‘doctrine of ambiguity,’ [cit.]; and without intending in any wise to undercut the salutary effects of this ‘doctrine,’ we observe that it is, and indeed always has been, one of construction, simply an aid to the proper interpretation of terms devised by the professional underwriter. . . . [S]uch an aid ‘usually serves to describe a result rather than to assist in reaching it.’ [Cit.]

“We conceive a genuine ambiguity to arise where the phrasing of the policy is so confusing that the average policyholder cannot make out the boundaries of coverage. In that instance, application of the test of the objectively reasonable expectation of the insured often will result in benefits of coverage never intended from the insurer’s point of view. The benefits granted, however, will pertain to the same landscape of risk as contemplated by the policy in issue, that is, the ‘doctrine of ambiguity’ works to effectuate the consumer’s expectation that the policy purchased extended greater coverage in the particular underwriting area. The rule of construction embraces ambiguities which are artificial, however, when the reading of coverage urged by the insured affords indemnity in an area of insurance completely distinct from that to which the policy applies in the first instance, [sic.] To use an extreme example, no amount of semantical ingenuity can be brought to bear on a fire insurance policy so as to afford coverage for an intersection collision. Such an interpretation of a fire policy would hardly be based on any ‘objectively reasonable’ expectation. [Cit.]” Weedo v. Stone-E-Brick, Inc., 81 N. J. 233, 246-247, supra.

In LaMarche v. Shelby Mut. Ins. Co., 390 S2d 325 supra, the Florida Supreme Court reached the same conclusion, when confronted with the issue asserted by Shaw Builders in the case sub judice, holding that “[t]o interpret the policy as providing coverage for construction deficiencies, as asserted by the petitioners and a minority of states, would enable a contractor to receive initial payment for the work from the homeowner, then receive subsequent payment from his insurance company to repair and correct deficiencies in his own work. We find this interpretation was not the intent of the contractor and the insurance company when they entered into the subject contract of insurance, and the language of the policy clearly excludes this type of coverage. Rather than coverage and payment for building flaws or deficiencies, the policy instead covers damage caused by those flaws. We agree with the explanation of this type of coverage as stated by the Supreme Court of New Jersey in Weedo v. Stone-E-Brick, Inc., 81 N. J. 233, 405 A2d 788 (1979), in which it said: An illustration of this fundamental point may serve to mark the boundaries between ‘business risks’ and occurrences giving rise to insurable liability. When a craftsman applies stucco to an exterior wall of a home in a faulty manner and discoloration, peeling and chipping result, the poorly-performed work will perforce have to be replaced or repaired by the tradesman or by a surety. On the other hand, should the stucco peel and fall from the wall, and thereby cause injury to the homeowner or his neighbor standing below or to a passing automobile, an occurrence of harm arises which is the proper subject of risk-sharing as provided by the type of policy before us in this case. 405 A2d at 791-92.” LaMarche v. Shelby Mut. Ins. Co., 390 S2d 325, 326-327, supra.

Decided March 18, 1987.

James B. Wall, for appellant.

J. Arthur Davison, Percy J. Blount, William C. Reed, for appellee.

Consequently, in the case sub judice, for the reasons expressed above, we find the trial court did not err in granting summary judgment in favor of State Automobile with regard to its responsibility to defend Shaw Builders as to the Clarks’ claim for breach of warranty.

3. In its third and fourth enumerations of error Shaw Builders contends the trial court erred in granting summary judgment in favor of State Automobile because the CGL insurance policy provides coverage for “products hazard” and “collapse hazard,” as these terms are defined in the policy. We do not agree.

The damages alleged to have occurred by the Clarks are as a result of work performed and the product produced by Shaw Builders. Damages arising from such work or work product are specifically excluded from coverage under exclusions (n) and (o) of the policy. See Division 1 of this opinion. Consequently, these enumerations of error are without merit.

4. There is another reason the trial court properly granted summary judgment in favor of State Automobile. The CGL insurance policy further provides: “This insurance does not apply ... to property damage to premises alienated by the named insured arising out of such premises or any part thereof.” “Because [Shaw Builders] had already alienated the premises by the time damages were incurred, the insurance policy afforded no coverage for defending the action for damages asserted by the [Clarks].” Wilmington Island Constr. Co. v. Cincinnati Ins. Co., 179 Ga. App. 477 (1), 478 (347 SE2d 308).

Judgment affirmed.

Carley and Pope, JJ., concur.


text:
    73292.
    GUILLEBEAU v. JENKINS.
    (355 SE2d 453)
   McMurray, Presiding Judge.

This is a legal malpractice action in which the attorney, John Stephen Jenkins, closed two real estate transactions involving the same parcel of land. In the first transaction, Mrs. Frances K. Smith, an 83-year-old widow, sold her land to Messrs. Yeargin and Dove. Hours later, in the second transaction, Yeargin and Dove sold the land for a considerable profit.

The facts giving rise to this appeal are summarized as follows: On or about January 30, 1980, Mrs. J. W. Guillebeau entered the office of Yeargin Realty in Elberton, Georgia and inquired about the value of an acre of land. The real estate agent on duty, Dove, informed Mrs. Guillebeau that the value of land depended upon where it was situated and what was situated on it. Mrs. Guillebeau got more specific. She said she wanted to know the value of land located directly across the street. She told Dove that the land belonged to her sister, Mrs. Smith, and that a friend of the family offered her sister $1,000 for an acre of it. Dove excused himself and spoke with his broker, Yeargin. Yeargin said the land was worth at least ten times the amount offered by the family friend and that he would pay that amount himself without getting out of his chair. Dove returned to Mrs. Guillebeau and told her that the land was worth at least ten times $1,000. He asked Mrs. Guillebeau if Yeargin Realty could list the property on behalf of her sister. Mrs. Guillebeau replied that she would be returning to Elberton (she lived in Thomson, Georgia) in about a week and that she and her sister would contact Dove to discuss the matter at that time. In the meantime, Dove and Yeargin talked things over and decided that if the land was to be offered for sale, they would consider buying it together.

Mrs. Guillebeau returned to Elberton on February 6, 1980, and went to her sister’s house. She called Dove from there and invited him to come over. Dove arrived and met Mrs. Smith. Again, Dove offered to list the property. He was informed that Mrs. Smith was more interested in selling the property then and there. Dove offered $10,000. When Mrs. Guillebeau asked Dove if he was willing to give $12,500 for the land, he called Yeargin. Yeargin said he would be willing to pay $12,500 but not a penny more. He also said that he would only pay $12,500 if he was given a right of first refusal with regard to an adjacent tract of land and if Mrs. Smith paid closing costs, including attorney fees. Dove surmised that closing costs would be in the neighborhood of $200. He returned to the negotiating table. In short order, it was agreed that the property would be sold for $12,500, that $1,000 of that amount would be allocated to a right of first refusal, and that Mrs. Smith would pay closing costs of up to $200.

When things were wrapped up, Dove asked Mrs. Smith whom she preferred to handle the closing. She replied that Heard, Leverett and Adams had always done her legal work and that she preferred they do the closing.

Dove went back to his office and drew up a contract which reflected the terms of the deal. The contract was signed by Yeargin and Dove as purchasers and Mrs. Smith signed the contract as seller. Mrs. Guillebeau also signed the contract. Dove asked Mrs. Smith if he could make the arrangements for the closing and she agreed.

Dove had a working relationship with John Stephen Jenkins, an associate with the Heard, Leverett and Adams firm. (Jenkins closed between 10 and 15 real estate transactions for Dove during the period of time in which Dove was a real estate agent. Dove also used other Elberton lawyers to perform closings; he did not use Jenkins more than any other lawyer.) Dove brought the contract to Jenkins on the afternoon of February 6 or the morning of February 7. According to Dove, he told Jenkins that he had a sale he wanted him to handle. He also said that Mrs. Smith wanted the Heard, Leverett and Adams firm to do the closing. In Dove’s words: “I told him that Mrs. Smith had indicated that the firm Heard, Leverett and Adams had always done their legal papers, and she also indicated that would be who [sic] she would prefer.” (Jenkins disputes this version of the facts. He contends that Dove did not tell him that Mrs. Smith wanted the Heard, Leverett and Adams firm to handle the closing until long after the closing took place.) Dove did not tell Jenkins, however, that Mrs. Smith wanted Heard, Leverett and Adams to represent her at the closing.

Jenkins looked over the contract. He suggested that Dove have a survey made of the property and he asked whether Dove and Yeargin were willing to pay closing costs in excess of $200. Dove assured Jenkins that they were willing to pay excess costs and Jenkins began making preparations for the closing.

Within a couple of days, Yeargin learned that Grady Albertson, an Elberton entrepreneur, was in the market for a piece of property. Yeargin approached Albertson and told him that he had a contract to buy Mrs. Smith’s land. Albertson was interested. He told Yeargin that he was considering the purchase of another piece of property which he valued at $40,000. He added that he would rather buy Mrs. Smith’s land because the location suited him more. Yeargin told Albertson that he would be willing to sell him Mrs. Smith’s property for $40,000 and Albertson said he would give that some thought. A few days later, Albertson told Yeargin that he would buy Mrs. Smith’s property for the price they discussed.

Albertson had been a longtime client of the firm of Heard, Leverett and Adams and he told Yeargin that he wanted that firm to do the closing. Dove prepared a contract for the sale of the property to Albertson. It reflected a $40,000 purchase price. Albertson never signed the contract; but Dove was confident he would go through with the deal. Accordingly, on February 12 or 13 Dove brought the contract, unsigned, to Jenkins. Dove told Jenkins about the sale to Albertson and he told him that Albertson wanted Heard, Leverett and Adams to do the closing. It was decided that the Smith closing would take place on February 15, in the morning, and that the Albertson closing would take place the same day, in the afternoon. Dove telephoned Albertson and told him about his scheduled closing.

The Smith closing took place on February 15, 1980, as scheduled. It was attended by Mrs. Smith, Mrs. Guillebeau, Dove and Yeargin. Between the time Dove first brought the Smith contract to Jenkins and the time of the closing, Jenkins had no contact whatsoever with either Mrs. Smith or Mrs. Guillebeau. At the closing, Jenkins observed that Mrs. Smith appeared competent and alert. (In fact, she requested that at least one change be made in the documents.) Mrs. Smith voiced no objection to the sale price and, according to Jenkins, she appeared to be satisfied with the terms of the transaction. Jenkins exchanged pleasantries with the sisters; but, essentially, that was all that passed between them. Later in the day, as planned, Jenkins closed the deal between Yeargin, Dove and Albertson.

Two years later, Mrs. Smith died. Her nephew, Ned Guillebeau, became executor of her estate. In April 1983 Guillebeau filed suit against Yeargin, Dove and Albertson in the Superior Court of Elbert County. In that case (which is related to the legal malpractice action sub judice), the estate sought the cancellation of the deed from Mrs. Smith to Yeargin and Dove pursuant to OCGA § 23-2-2. It also sought damages based upon allegations of fraud. The estate voluntarily dismissed that case when the trial court indicated that it would grant summary judgment to Albertson and deny the estate’s motion to join Jenkins and the Heard, Leverett and Adams firm as parties. Thereupon, Yeargin and Dove filed motions to set aside the voluntary dismissal, to reinstate the case, and to grant them summary judgment.

In the meantime, the estate filed a new action in Oconee County against Dove (who lived in that county), Yeargin, Jenkins and the law firm. While the Oconee County suit was pending, the Elbert County Superior Court reinstated the action against Yeargin and Dove and granted their motion for summary judgment. The estate appealed that ruling and in Guillebeau v. Yeargin, 254 Ga. 490 (330 SE2d 585), the Supreme Court determined that the Elbert County Superior Court properly reinstated the case. It also ruled that factual questions remained with regard to the estate’s claims against Yeargin and Dove. Accordingly, the superior court reversed the award of summary judgment to Yeargin and Dove.

The Supreme Court’s decision created a venue problem in the Oconee County suit because Dove was the only Oconee County resident (and the action against Yeargin and Dove was reinstated in Elbert County). Accordingly, the Oconee County suit (which proceeded against Jenkins and the law firm) was transferred to Elbert County. It is this suit which is the subject of this appeal.

After this suit was transferred to Elbert County, the trial court dismissed Heard, Leverett and Adams because of a defect in the service of process. (This ruling is not at issue in this appeal.) The case went on, however, against defendant Jenkins. The estate alleged that Jenkins was liable upon one of two theories: (1) breach of a lawyer’s fiduciary duty to his client and (2) fraud. Following discovery, Jenkins moved for summary judgment. The trial court granted Jenkins’ motion and the estate appealed. Held:

1. “[I]t is the general rule in the majority of states that in a legal malpractice action, the client has the burden of establishing three elements: (1) employment of the defendant attorney, (2) failure of the attorney to exercise ordinary care, skill and diligence, and (3) that such negligence was the proximate cause of damage to the plaintiff. [Cits.]” Rogers v. Norvell, 174 Ga. App. 453, 457 (330 SE2d 392). Jenkins contends he negated each of these elements and that, therefore, the trial court was correct in granting his motion for summary judgment upon the legal malpractice claim.

“It is generally held that an attorney-client relationship must be demonstrated before a plaintiff may recover in a legal malpractice suit. . . . This is essential in establishing the element of duty that is necessary to every lawsuit based upon a theory of negligence. . . .” Friedman, Creation of the Attorney-Client Relationship: An Emerging View, 22 Cal. W.L. Rev. 209, 210 (1986). Accordingly, the threshold question in the case sub judice is whether or not there was an attorney-client relationship between Jenkins and Mrs. Smith.

“Generally, the relation of attorney and client is a matter of contract but the contract may be express, or implied from the conduct of the parties.” In the Matter of Dowdy, 247 Ga. 488, 491 (277 SE2d 36). Thus, contractual formalities are not essential to the creation of the relationship. Nicholson v. Shockey, 192 Va. 270 (64 SE2d 813) (1951); Lawrence v. Tschirgi, 244 Iowa 386 (57 NW2d 46) (1953). And, in fact, the relation of attorney and client may be implied from the conduct of the parties. E. F. Hutton & Co. v. Brown, 305 FSupp. 371, 388 (S.D. Tex. 1969); Lawrence v. Tschirgi, supra. As it is said, “[t]he employment is sufficiently established when it is shown that the advice or assistance of the attorney is sought and received in matters pertinent to his profession.” In the Matter of Dowdy, 247 Ga. 488, 491, supra.

Does the evidence demonstrate that an attorney-client relationship existed between Jenkins and Mrs. Smith? We think not. In our view, the record is devoid of evidence from which the existence of such a relationship could be found. Mrs. Smith had no contact with Jenkins until the day of the closing. Neither she nor Dove informed Jenkins that she was looking to Jenkins for legal representation and Jenkins did not offer any legal advice or assistance to Mrs. Smith. True, when given the choice, Mrs. Smith said she preferred that Heard, Leverett and Adams do the closing. This evidence is not sufficient, however, to create an issue of fact upon the attorney-client question. At best, it merely shows that Mrs. Smith trusted Heard, Leverett and Adams and relied on its expertise to draft the closing documents. Dolan v. Hickey, 385 Mass. 234 (431 NE2d 229) (1982). It does not demonstrate the existence of a confidential relationship. Id. We conclude, therefore, that an attorney-client relationship did not exist between Jenkins and Mrs. Smith.

The mere fact that Mrs. Smith paid attorney fees does not lead us to a different conclusion. As a general rule, the test of legal employment is the payment of a fee. Brown v. Matthews, 79 Ga. 1, 2 (3) (4 SE 13); Harkless v. Smith, 115 Ga. 350, 353 (41 SE 634). Exceptions to the general rule abound, however. Thus, an attorney-client relationship may be found to exist where no fee is paid. Friedman, Creation of the Attorney-Client Relationship: An Emerging View, supra at 212. See also E. F. Hutton & Co. v. Brown, 305 FSupp. 371, supra. And the payment of a fee does not necessarily demonstrate the existence of the relationship. Friedman, Creation of the Attorney-Client Relationship: An Emerging View, supra at 213. In the case sub judice, the payment of Jenkins’ fee by Mrs. Smith sheds no light upon the attornéy-client issue. The payment was made by Mrs. Smith pursuant to a real estate sales contract. Under that contract, Mrs. Smith obligated herself to pay closing costs before anyone contacted Jenkins. Thus, Mrs. Smith did not pay Jenkins’ fee in the furtherance of a contract of legal employment.

Our view of this matter is buttressed by the deposition testimony of Mrs. Guillebeau. (Jenkins’ attempts to depose Mrs. Guillebeau in this case were frustrated by the estate. See Division 3, infra. However, Mrs. Guillebeau’s deposition was taken in the lawsuit which the estate filed against Yeargin and Dove and the trial court permitted its use in this case. See OCGA § 9-11-32 (a) (5); Colbert Co. v. Newsom, 125 Ga. App. 571 (1) (188 SE2d 266); Clover Realty Co. v. J. L. Todd Auction Co., 146 Ga. App. 576, 578 (5) (246 SE2d 695). See also Wright & Miller, Fed. Practice & Procedure: Civil § 2150.) Mrs. Guillebeau averred that she urged her sister to hire an attorney; that her sister refused to do so; and that her sister did not retain an attorney. Thus, it cannot be said that Mrs. Smith “thought” that Jenkins represented her interests at the closing.

Even if Mrs. Smith did think that Jenkins was her attorney, we would be constrained to hold that no attorney-client relationship existed. Mrs. Smith’s state of mind, unless reasonably induced by representations or the conduct of Jenkins, was not sufficient to create a confidential relationship. Fox v. Pollack, 181 Cal. App.3d 954 (226 Cal. Rptr. 532) (1986). An attorney-client relationship cannot be created unilaterally in the mind of a would-be client; a reasonable belief is required. Id. See also Friedman, Creation of the Attorney-Client Relationship: An Emerging View, supra at 231.

An attorney-client relationship did not exist between Jenkins and Mrs. Smith. Accordingly, the trial court properly awarded summary judgment to Jenkins upon the breach of fiduciary duty claim.

2. The estate contends that even if Jenkins did not breach a fiduciary duty to Mrs. Smith, he is liable, nevertheless, because he participated in a fraud which was perpetrated upon Mrs. Smith. In this regard, it is alleged that Jenkins was aware of the fraud which Year-gin and Dove perpetrated; that he assisted Yeargin and Dove in the perpetration of the fraud; that he failed to disclose the fraud to Mrs. Smith; and that, therefore, he was a participant in the fraud.

We cannot agree with the estate’s contention. Although questions of fact remain in the related case with regard to the acts of Yeargin and Dove, Guillebeau v. Yeargin, 254 Ga. 490, 493 (4), supra, we find no evidence whatsoever which points to Jenkins’ complicity in a fraudulent scheme. In the absence of evidence pointing to Jenkins’ knowing participation in a fraud, there can be no basis for a finding of fraud on his part. See Guthrie v. Gen. Motors &c. Corp., 172 Ga. App. 260, 261-262 (2) (322 SE2d 752). See also Samuels v. Smith, 196 Iowa 336 (196 NW 45, 47) (1923). “[I]t is a cardinal rule of law that one cannot plead fraud against A because B has misled or taken advantage of him.” Johnson v. Durrence, 136 Ga. App. 439, 442 (221 SE2d 652).

Jenkins averred that he was unaware of any statements made by Yeargin and Dove to Mrs. Smith concerning the value of the property or any other aspect of the sale; that he did not know the actual value of the property; that he did not know if Mrs. Smith received too little for the property or Albertson paid too much; and that he was unaware of any fraud perpetrated by Yeargin and Dove. No evidence was introduced by the estate to dispute Jenkins’ averments. There is not even any evidence showing the actual fair market value of the property at the time in question. The mere disparity in the selling prices of the property does not show that Jenkins was aware of any wrongdoing on the part of Yeargin and Dove.

“ ‘Questions of fraud and bad faith are ordinarily for a jury. Bloodworth v. Bloodworth, 225 Ga. 379, 391 (169 SE2d 150); Nixon v. Brown, 225 Ga. 811, 813 (171 SE2d 512).’ Crowder v. Electro-Kinetics Corp., 228 Ga. 610, 614 (187 SE2d 249). However, a party asserting fraud must introduce some evidence from which an inference of fraud may be drawn in order to make an issue.” Leachman v. Cobb Dev. Co., 229 Ga. 207, 209 (190 SE2d 537). Since there is no evidence from which an inference of fraud may be drawn, the trial court properly awarded summary judgment to Jenkins upon the fraud claim. Id.

3. The estate urges us to reverse an order of the trial court granting Jenkins’ motion for sanctions and attorney fees. In his motion, Jenkins asserted that the estate was frustrating discovery by the use of delay tactics. He demonstrated that counsel for the estate delayed the taking of Mrs. Guillebeau’s deposition on several occasions. On the last occasion, counsel for the estate sought a postponement only minutes before Jenkins’ counsel was to leave to take the deposition.

We cannot say the trial court abused its discretion in awarding attorney fees to defendant. OCGA § 9-11-37 (a) (4). See Nixon v. Sandy Springs &c. Center, 167 Ga. App. 272 (1) (306 SE2d 362). See also Ogletree v. Keebler Co., 78 FRD 661 (N.D. Ga. 1978) (defendant’s request for attorney fees granted pursuant to Rule 37 (d), Fed. Rules Civ. Proc., where plaintiff’s attorney caused postponement of a deposition on two occasions without reasonable notice).

4. The estate contends the trial court erred by quashing a subpoena on án ex parte basis. Through the subpoena the estate sought the deposition testimony of a secretary who was employed by counsel for Jenkins. The subpoena was served on March 24, 1986. The deposition was to take place on April 3, 1986. The estate sought the secretary’s testimony in connection with Jenkins’ motion for sanctions and attorney fees. The secretary moved for a protective order quashing the subpoena. On March 28, 1986, the trial court entered an order doing just that. No hearing was held upon the secretary’s motion.

“Although there is some fragmentary authority for the handling of motions to quash on an ex parte basis (see Clinton v. Joshua Hendy Corp., 285 F2d 848, 851 (9th Cir. 1960), certiorari denied, 366 U. S. 932 (81 SC 1654, 6 LE2d 391) . . . the better practice is one in which the party seeking the subpoena has the opportunity to contest the motion to quash.” Reinders Bros. v. Rain Bird &c. Sales Corp., 627 F2d 44, 51-52 (7th Cir. 1980). See also Grizzard v. Davis, 131 Ga. App. 577, 578 (1) (206 SE2d 853). On the other hand, ex parte action may be warranted where delay will render the motion to quash moot. Reinders Bros. v. Rain Bird &c. Sales Corp., supra. Moreover, a party can be held to have acquiesced in an ex parte ruling quashing a subpoena unless they seek a prompt reconsideration of the ruling. Id.

In the case sub judice, it was necessary for the trial court to consider the motion to quash expeditiously in view of the relatively short time fuse attached to the subpoena. Furthermore, the estate failed to move for a reconsideration of the trial court’s ex parte ruling. Under these circumstances, we find no reversible error.

Judgment affirmed.

Carley and Pope, JJ., concur.

Decided March 9, 1987.

Harold D. Corlew, James I. Roberts, for appellant.

Jeffrey M. Smith, Karen B. Bragman, for appellee.


author: Banke, Presiding Judge.

text:
    73966.
    73967.
    ROME HOUSING AUTHORITY v. ALLIED BUILDING MATERIALS, INC. et al. ALLIED BUILDING MATERIALS, INC. et al. v. DOUBLE DIAMOND CONSTRUCTION COMPANY OF TENNESSEE, INC. et al.
    (355 SE2d 747)
   Banke, Presiding Judge.

This litigation arose from a dispute among the owner, the contractor, and one of the subcontractors involved in the construction of a public housing project. On October 28, 1983, Allied Building Materials, Inc. d/b/a Allied Construction Company (hereinafter “Allied” or “the contractor”), contracted with the Housing Authority of the City of Rome (hereinafter “the housing authority”) to build the housing units for the fixed sum of $2,800,900. On that same date, Double Diamond Construction Company of Tennessee, Inc. (hereinafter “Double Diamond” or “the subcontractor”), subcontracted with Allied to perform the necessary excavation, grading, and storm sewer installation work on the project for the total price of $305,000. While engaged in the performance of its excavation and grading work, Double Diamond encountered a substantial quantity of subsurface rock, the removal of which was not provided for by the contract specifications governing the project.

Article 9 of the contract between Allied and the housing authority provided, in pertinent part, as follows: “b. Should the contractor encounter subsurface or latent conditions at the site materially differing from those provided for in this contract, ... he shall promptly, and before such conditions are disturbed, notify the [housing authority] in writing. They (sic) shall cause the architect to investigate such conditions and if they do materially differ, make such changes in the drawings and specifications as the architect may find necessary, c. Any discrepancies which may be discovered between actual conditions and those represented by the topographical maps and plans shall be reported to the [housing authority] at once, and the work shall not proceed, except at the contractor’s risk, until written instructions have been received by him.” (Emphasis supplied.)

Similarly, Article 8 of the contract, which authorized the housing authority to order changes in the work, specified as follows: “b. Except in an emergency endangering life or property, no changes shall be made by the contractor unless he has received a prior written order from the [housing authority] . . . authorizing the change. [Emphasis supplied.] Any change in the work shall be ordered and the adjustment of the contract price or time shall be determined by one of the following methods: Method 1 Adjustment before performance. By issuance of a change order providing for an agreed lump-sum adjustment. . . Method 2 — Adjustment after performance. By prior issuance of a proceed order, authorizing the contractor to proceed with the change by the most economical method. If net extra cost is anticipated, such order shall state the maximum sum, including all items of overhead and profit. If such sum is exhausted prior to the completion of the change, the contractor shall not proceed with the work without an additional and separate proceed order ...”

Double Diamond encountered the subsurface rock on January 31, 1984. On February 2, 1984, Allied notified the housing authority in writing of the existence of the rock and requested that appropriate action be taken to procure its removal. The housing authority responded by instructing Allied to expose the subsurface rock to determine the extent of the problem, and this was subsequently done by Double Diamond at Allied’s direction. Negotiations then ensued between Allied and the housing authority to reach agreement on a unit cost for the removal of the rock. In the meantime, Double Diamond continued to perform excavation and grading work at other locations on the job site, encountering other subsurface rock as it did so. At Allied’s express direction, Double Diamond also engaged in some blasting and rock removal work, using special equipment leased for that purpose. However, because Allied never received an anticipated written change order from the housing authority authorizing such additional work, these latter activities were soon discontinued.

By mid-April, Double Diamond had reached a point where, it contends, further excavation and grading work was not possible until the subsurface rock was removed. On April 23, 1984, Allied notified the housing authority in writing that the presence of subsurface rock had stopped work on the project and requested “an immediate decision on the course of action you want us to follow in the performance of this work.” In early May of 1985, Allied and the housing authority finally agreed on a unit price for the removal of the rock; however, a new disagreement then arose over the extent to which Allied was entitled to be compensated for its additional expenses incurred to that point as a result of the delay in securing the rock’s removal. In mid-May, both Allied and Double Diamond removed their equipment from the job site; and on June 14, 1984, Allied filed suit against the housing authority seeking a declaration that it was in breach of the construction contract. The housing authority, in turn, filed a counterclaim charging that Allied had breached the contract, impleading as an additional defendant-in-counterclaim the surety on Allied’s payment and performance bond, Fireman’s Insurance Company of Newark, New Jersey.

By consent of the parties, the issues of whether the contract had been breached and by whom were tried before the court without a jury. In an order entered on August 21,1984, the trial court concluded that “neither party [had] moved with any promptness in attempting to resolve their disputes nor in utilizing the provisions of the contract which provide for the handling of disputes.” Although the court further determined that “the contractor may well have been unreasonably delayed by the failure of [the housing authority] to promptly move on the issue of the removal of the rock and the issuance of the necessary change orders or proceed order,” the court concluded that such delay did not “at the present time” authorize Allied to treat the contract as terminated and to abandon work on the project. The court gave the housing authority an additional 30 days to resolve the rock issue, “either by issuing a supplemental contract to a third party for the removal of the rock or issuing such instructions to the contractor so that it may proceed with the rock removal and the completion of the project.” The issue of whether and to what extent Allied was entitled to recover delay damages was reserved for determination at a later date “in accordance with the contract provisions.”

At a subsequent meeting between the parties held on September 4, 1986, Allied notified the housing authority that it estimated the cost of removing the subsurface rock to be approximately $1,000,000. On September 18, 1984, the housing authority forwarded to Allied a change order authorizing payment of some rock removal costs as well as some “remobilization” costs. While objecting to certain aspects of this change order, Allied made arrangements to commence the removal of the rock. However, on October 5, 1984, the housing authority verbally, and subsequently in writing, issued a stop-work order prohibiting Allied from removing any rock in the particular location where it was prepared to do so. Based on the issuance of this stop-work order, the trial court, on November 7, 1984, declared the housing authority to be in material breach of the contract, reserving the issue of damages for trial by jury at a later date. Allied thereafter notified Double Diamond that, due to the housing authority’s termination of the main contract, it considered their subcontract also to be terminated.

On February 24, 1985, Double Diamond filed suit against Allied and its surety, Fireman’s Insurance, to recover damages for the breach of the subcontract. Specifically, Double Diamond sought to recover (1) its unrealized anticipated profits allegedly lost as a result of the termination of the contract and (2) its unanticipated additional expenses incurred as a result of the delays caused by the rock problem. Allied then filed a third-party complaint against the housing authority, seeking to be indemnified for any damages which it might be required to pay Double Diamond. By agreement of the parties, Double Diamond’s suit against Allied was consolidated for trial with the already pending litigation between Allied and the housing authority, as to which only the issue of damages remained. By further agreement of the parties, the issue of the housing authority’s liability to Allied on the third-party complaint was reserved for determination by the trial court without a jury, following resolution of the other remaining issues in the case.

The jury returned a verdict in favor of Double Diamond on its claim against Allied and Fireman’s Insurance, awarding it $46,315 for its additional expenses resulting from the “unreasonable delay” in resolving the rock problem and $33,338 for its lost profits resulting from the termination of the subcontract. The issue of the amount of damages suffered by Allied as a result of the housing authority’s breach of the main contract was submitted to the court for resolution without a jury, resulting in a judgment in favor of Allied in the amount of $352,751. Thereafter, based on a determination that the housing authority was equally responsible with Allied for Double Diamond’s delay damages, the trial court awarded Allied $23,157.50 on its third-party complaint, i.e., one-half the total amount of delay damages which the jury had awarded to Double Diamond. The housing authority, but not Allied, subsequently filed a motion for new trial. This motion was denied, and within 30 days thereafter both Allied and the housing authority filed notices of appeal. Double Diamond has moved to dismiss Allied’s appeal on the ground that it was not filed within 30 days of the entry of the judgment appealed from. Held:

1. The motion to dismiss Allied’s appeal is denied. In Smith v. Smith, 128 Ga. App. 29 (2) (195 SE2d 269) (1973), this court held that a defendant in a civil action against whom judgment has been entered is not entitled to file an appeal during the pendency of a motion for new trial filed by a third-party defendant. Accord Dept. of Transp. v. Rudeseal, 148 Ga. App. 179 (1) (251 SE2d 11) (1978). Thus, Allied’s right to appeal the judgment entered on the jury’s verdict did not accrue until the housing authority’s motion for new trial was denied, with the result that Allied’s notice of appeal was timely filed.

2. The housing authority contends that Double Diamond was not authorized to sue on the subcontract because prior to trial it had executed an assignment conveying to a bank, as security for an indebtedness, its right “to receive the proceeds or property payable by reason of [its] performance” under the subcontract, including “any judgment or settlement proceeds” obtained as a result of the present litigation. This contention is without merit for two reasons. In the first place, the document in question did not purport to be an assignment of the subcontract itself, i.e., it did not authorize the bank to pursue in its own name claims or choses in action arising under the subcontract. See generally OCGA § 44-12-22. Rather, it merely authorized the bank to “receive” the contract proceeds payable to Double Diamond, including specifically any proceeds which might be recovered by Double Diamond in the present action. Compare William Iselin & Co. v. Davis, 157 Ga. App. 739, 741 (278 SE2d 442) (1981); Rigdon v. Walker Sales & Svc., 161 Ga. App. 459, 462 (288 SE2d 711) (1982). Secondly, because the housing authority first raised this issue in its motion for new trial, the objection must be deemed waived in any event. “[A] real-party-in-interest objection is similar to the defense of failure to join an indispensable party under [OCGA § 9-11-19] and may be made at any time up to and including a trial on the merits. [Cits.]” Rigdon v. Walker Sales & Svc., supra at 462.

3. The trial court was authorized to conclude from the evidence that the housing authority had materially breached the construction contract by preventing Allied from completing its performance thereunder, first by waiting almost eight months after receiving notice of the existence of the rock problem to issue a written change order to Allied directing the removal of the rock, and then by issuing the stop-work order after a written change order was finally issued. The question of whether there was other work that Allied could have engaged in pending resolution of the dispute over the rock removal was clearly taken into consideration by the trial court and was resolved in Allied’s favor as an issue of fact.

The housing authority’s reliance on Decatur County v. Praytor, Howton &c. Co., 165 Ga. 742 (142 SE 73) (1927), as authority for a contrary result is misplaced. Unlike the contract in the present case, the contract at issue in Decatur County v. Praytor specified a method for calculating the additional amounts which were to be paid to the contractor in the event additional work was necessitated by variances between the topographical conditions existing at the job site and those anticipated by the bid documents. Moreover, there was no contention in that case that the owner had hindered the contractor’s performance of the contract by failing to issue required change or proceed orders. Similarly, in State Hwy. Dept. v. Hewitt Contracting Co., 113 Ga. App. 685 (149 SE2d 499) (1966), the issue was not whether the owner had prevented the contractor from performing the work required by the contract but whether the contractor, who had proceeded with the performance of certain additional work, had complied with its contractual obligation to give written notice of its intention to claim additional compensation for such work.

4. Allied contends that Double Diamond’s separate recovery of its alleged expenses incurred as a result of the delays in resolving the rock problem was violative of the standard of recovery set forth in Williams v. Kerns, 153 Ga. App. 259 (265 SE2d 605) (1980). In that case, this court held that the damages recoverable by a contractor for the owner’s breach of a fixed-price construction contract consist of the net profit which the contractor would have received had full performance of the contract been permitted, to be calculated as follows: “That figure is reached by subtracting from the contract price the amount which full performance would have cost the contractor. If performance by either party had begun prior to the breach, adjustments must be made to ensure that the contractor receives the full amount of the profit, but no more. First, there must be added to the profit figure the amount of the contractor’s net loss up to the point of the breach. . . . The sum of those figures (the profit which would have been realized from full performance plus net loss incurred by performance to the date of breach) may in no event exceed the contract price. Second, there must be deducted from the recovery those amounts received by the contractor from the owner as prepayment or progress payment.” Id. at 266-267.

It is quite clear from an examination of the transcript that the jury’s award of lost profits to Double Diamond was in complete accordance with the above formula in that it represented the anticipated net profit which Double Diamond would have realized had it been able to complete its performance of the subcontract, plus the expenses which it had actually incurred towards that end up to the date of the breach, minus all progress payments received from Allied. The additional recovery of delay damages in the amount of $46,315 was in no way duplicative of that award but represented the additional expenses Double Diamond had incurred in performing the blasting and rock removal work ordered by Allied and in maintaining its earth-moving and rock-drilling equipment idle at the project site for several weeks at the specific directive of Allied, pending a resolution of the dispute between Allied and the housing authority. Evidently because these additional expenses were not contemplated by the terms of the written subcontract, they were not included by Double Diamond in its calculation of its lost profits but were sought as a separate element of damages. Since these additional expenses were incurred at Allied’s express direction and for its benefit, we can conceive of no reason why their recovery should not be allowed. Accordingly, we hold that the trial court did not err in denying Allied’s motion for directed verdict with respect to this element of damages.

5. Allied contends that the trial court contradicted itself by ruling that it (Allied) was equally responsible with the housing authority for Double Diamond’s delay damages while simultaneously ruling that, as between Allied and the housing authority, the housing authority was the party responsible for terminating the contract. This contention is also without merit. While it is true that the trial court attributed the ultimate breach of the contract to the housing authority’s issuance of the stop-work order, it was not the ultimate breach of the contract which gave rise to Double Diamond’s claim for delay damages. Rather, those damages were attributable to the additional costs incurred by Double Diamond as a result of the joint failure of Allied and the housing authority to move, in the words of the court, “with any promptness in attempting to resolve their disputes [or] in utilizing the provisions of the contract” to prevent the work from coming up to a halt. As there is evidence to support such a joint assessment of blame, we hold that the trial court was authorized to apportion the delay damages in question equally between these two parties.

Decided March 18, 1987.

Walter J. Matthews, for Housing Authority.

John T. Flynn, Frederick L. Wright, Edward Hine, Jr., for Allied and Fireman’s Insurance.

William T. Alt, for Double Diamond.

6. The remaining enumerations of error have been determined to be without merit for the reasons set forth above.

Judgment affirmed.

Carley and Benham, JJ., concur.


text:
    74154.
    PEARSON v. THE STATE.
    (355 SE2d 470)
   Banke, Presiding Judge.

The appellant was convicted of kidnapping, cruelty to children, aggravated assault, aggravated child molestation, and four counts of rape, all involving the same victim and arising from the same series of events. He was also convicted of possession of cocaine and possession of a firearm by a convicted felon. On appeal, he contends that the evidence was insufficient to support any of the convictions and that he received ineffective representation from his retained trial counsel. Held:

1. From our review of the record, we are convinced that the evidence presented at trial was sufficient to enable a rational trier of fact to find the appellant guilty beyond a reasonable doubt of each and every one of the 10 charges of which he was convicted. See generally Jackson v. Virginia, 443 U. S. 307 (99 SC 2781, 61 LE2d 560) (1979).

2. The appellant contends that he could not have received effective assistance from his retained trial attorney because, by the time of trial, he had come to mistrust and lack confidence in the attorney, thus giving rise to a situation incompatible with the existence of an effective attorney-client relationship. More specifically, the appellant asserts: “[T]he trial attorney asked extremely few questions of most of the witnesses (none of the victim); ... a change of venue motion was not pursued;. . . exceptions to the court’s charge to the jury were not reserved; and ... no evidence was presented on appellant’s behalf at sentencing. Although these points, in themselves do not reveal ineffective counsel, they do tend to illumine appellant’s claim that he had no faith in his attorney.”

An examination of the record and transcript reveals that the appellant’s trial counsel pursued numerous pretrial motions in the case, including a successful motion for the severance of certain charges originally set forth in the indictment. At the hearing on the motion for new trial, counsel testified that he had obtained “complete and comprehensive” discovery from the state, including information that the state was not obligated by law to provide him. He further testified that he had interviewed all the potential witnesses suggested to him by the appellant and had considered all potential avenues of defense made known to him by the appellant, including the possibility “that there was . . . somebody putting something in his water. . . .” Counsel additionally revealed that he had explored the possibility of an insanity defense by arranging for the appellant to undergo a psychiatric examination but that the report submitted by the psychiatrist had not been supportive of such a defense.

With regard to his contention that counsel failed to conduct an adequate cross-examination of the state’s witnesses, we note that the appellant has not suggested the existence of any additional areas of inquiry which might have benefited him had they been pursued at trial. With regard to counsel’s failure to conduct any cross-examination of the victim, it is apparent from counsel’s testimony that this was a matter of trial strategy which was discussed in advance with the appellant and to which the appellant assented.

With regard to the appellant’s contention that counsel was remiss in not seeking a change in venue, the record reveals that a motion for change in venue was in fact filed but that consideration of the motion was reserved pending completion of the voir dire, at which time, based on the responses of the prospective jurors to the questions asked of them on voir dire, counsel abandoned the motion. There has been no suggestion that a qualified panel of jurors was not in fact available to try the case, nor any showing that a change in venue was otherwise mandated in the case.

With regard to the appellant’s complaint that no exceptions were reserved to the jury’s charge, we note that no portion of the court’s charge is asserted on appeal to have been erroneous. Similarly, with regard to the appellant’s complaint that no mitigating evidence was introduced in his behalf at the sentencing hearing, there has been no showing on appeal that any mitigating evidence existed which could have been introduced at the sentencing hearing. Cf. Cook v. State, 255 Ga. 565 (17) (g) (340 SE2d 843) (1986).

Decided March 18, 1987.

Carl P. Greenberg, for appellant.

Robert E. Wilson, District Attorney, Barbara B. Conroy, Albert D. Frasier, Assistant District' Attorneys, for appellee.

“The accepted standard regarding ineffective assistance of counsel is ‘not errorless counsel and not counsel judged ineffective by hindsight, but counsel . . . rendering reasonably effective assistance.’ ” Pugh v. State, 250 Ga. 668, 670 (2) (300 SE2d 504) (1983). See also Hawes v. State, 240 Ga. 327, 329 (240 SE2d 833) (1977); Lipsey v. State, 170 Ga. App. 770 (5) (318 SE2d 184) (1984). We have no hesitancy in holding that this standard was met in the present case. The appellant’s convictions clearly did not result from any deficiency on the part of his trial counsel but from the overwhelming evidence of his guilt.

Judgment affirmed.

Carley and Benham, JJ., concur.


author: Banke, Presiding Judge. Birdsong, Chief Judge,

text:
    73302.
    TRAVILLIAN v. GEORGIA FARM BUREAU MUTUAL INSURANCE COMPANY.
    (355 SE2d 677)
   Banke, Presiding Judge.

On June 30, 1984, appellant Travillian was operating his automobile, which was insured under an automobile insurance policy issued by appellee Georgia Farm Bureau Mutual Insurance Company (Georgia Farm), when he was struck from the rear by another vehicle. The appellant reported the accident to Georgia Farm’s agent by telephone on the next business day and orally asserted a claim for collision (i.e., property damage) coverage against the insurance company. The appellant maintains that he was advised by the appellee’s agent at that time that, since the other driver appeared to be at fault, he (the appellant) would be required to pursue his claim against the other driver’s insurance carrier. In subsequent conversations with Georgia Farm’s agent, the appellant demanded that Georgia Farm repair or replace his vehicle, which had been evaluated as a total loss. The appellant contends that he was again advised that Georgia Farm would not pay the claim because it did not “get involved” when the other driver was at fault. The record is in fact devoid of evidence that Georgia Farm at any time offered to pay any portion of the appellant’s claim.

The appellant retained counsel and, approximately three and one-half months after reporting the claim to Georgia Farm and demanding payment, ultimately reached a settlement with the other driver’s insurance carrier in the amount of $2,500, the agreed upon market value of the automobile. However, the appellant realized only $1,250 from this settlement, the remaining $1,250 being paid to his attorney as a 50 percent contingent fee.

The appellant subsequently brought this suit against Georgia Farm to recover the market value of his automobile less the deductible under the policy, as well as a 25 percent bad-faith penalty and attorney fees pursuant to OCGA § 33-4-6. Georgia Farm sought summary judgment contending that the appellant had compromised its right of subrogation as set forth in the policy by settling his claim with the other driver’s carrier, that he had further violated the policy provisions by failing to submit a sworn proof-of-loss statement, and that he had already been compensated in full for his loss. The trial court granted the motion, based on a determination that the appellant had been compensated in full for his damages by the other driver’s carrier and had forfeited any right of recovery he might otherwise have had by his failure to submit a sworn proof of loss, as required by the policy. The court further concluded as a matter of law that there, had been no bad faith on the part of the insurer. Held:

1. We agree with the appellant’s contention that an issue of material fact existed as to whether Georgia Farm’s refusal to consider his claim resulted in a waiver of the policy requirements concerning proof of loss.

In Mattison v. Travelers Indent. Co., 157 Ga. App. 372 (2) (277 SE2d 746) (1981), this court held that it makes no difference “who gave notice of the lawsuit and claim so long as notice is given in a reasonable and timely manner,” with the result that the carrier has actual knowledge of the pendency of a claim. In the present case, there is ample evidence to establish that the insured repeatedly notified the appellee’s agent of the existence of his claim and demanded compensation for his property loss, only to be told, in effect, that he had no coverage under the circumstances. It may be inferred from this evidence “that the defendant was fully aware of the facts and circumstances surrounding the [accident].” Mattison, supra at 375. “[T]here being some evidence that the insurer had refused to consider [the appellant] as an insured, an issue of fact remains as to whether same constituted a waiver of the policy requirements as to notice [and] proof of loss . . .” Id. at 376.

2. We also reject the appellee’s argument that, as a matter of law, the appellant violated the subrogation provision of the policy when he elected to pursue his tort claim against Liberty Mutual. Clearly, a question of fact also exists as to whether the appellee, by instructing the appellant to take this very course of action, also waived any rights it might otherwise have had under this provision. Accordingly, the trial court erred in concluding that the appellee’s failure to comply with the policy requirements in this respect precluded any recovery by him in the present action.

3. In his complaint, the appellant sought to recover for the loss of his automobile as well as to recover a bad-faith penalty and attorney fees based on the appellee’s refusal to honor the claim. The trial court determined that, having already settled with the tortfeasor’s insurance carrier for the loss of his car, the appellant was barred from asserting the same cause of action against his own carrier. We agree. “ ‘No matter what right the party wronged may have of electing between remedies or of pursuing different defendants for the same cause of action, when he once obtains full satisfaction from one source, his cause of action ends, and he can assert it no further. If the plaintiff in a suit brought upon a given cause of action accepts a sum of money in full settlement thereof, he cannot thereafter set up the same cause of action against another whom he had the election of suing in the first instance.’ [Cits.]” Nannis Terpening & Assoc. v. Mark Smith Constr. Co., 171 Ga. App. 111, 114 (318 SE2d 89) (1984). However, while we affirm the trial court’s grant of summary judgment to the appellee with respect to the appellant’s claim to recover for the damage to his vehicle, we note that the evidence of record does raise material factual issues with respect to whether the appellee may be held liable in contract for the $1,250 in attorney fees which the appellant contends he was forced to expend as a direct and natural consequence of the appellee’s refusal to pay the claim. See generally OCGA §§ 13-6-1; 13-6-2; Crawford & Assoc. v. Groves-Keen, Inc., 127 Ga. App. 646, 650 (194 SE2d 499) (1972).

4. Material issues of fact also exist with respect to the appellant’s liability for a bad-faith penalty and attorney fees pursuant to OCGA § 33-4-6. That code section provides: “In the event of a loss which is covered by a policy of insurance and the refusal of the insurer to pay the same within 60 days after a demand has been made by the holder of the policy and a finding has been made that such refusal was in bad faith, the insurer shall be liable to pay such holder, in addition to the loss, not more than 25 percent of the liability of the insurer for the loss and all reasonable attorney’s fees for the prosecution of the action against the insurer.”

The trial court concluded that the appellant had no claim under this provision due to his failure to submit a sworn proof of loss as required by the policy. However, as held in Division 1 of this opinion, supra, a jury might reasonably conclude that the appellee waived the proof of loss requirement by instructing the appellant that it did not intend to pay the claim in any event.

While an insurance carrier has a right to require its insured to abide by the terms of the contract “that right is limited by the reasonableness of its exercise under the circumstances when it delays payment.” Falagian v. Leader Nat. Ins. Co., 167 Ga. App. 800, 801 (307 SE2d 698) (1983). The question of reasonableness is generally for the jury. Id. Since the evidence of record in this case does not establish as a matter of law that the appellee acted reasonably in refusing to honor the appellant’s claim, the trial court erred in granting summary judgment on the claim for a bad-faith penalty and attorney fees.

Judgment affirmed in part and reversed in part.

McMurray, P. J., Carley, Sognier, Pope, and Benham, JJ., concur. Birdsong, C. J., and Deen, P. J., dissent. Beasley, J., concurs in the judgment only of the dissent.

Birdsong, Chief Judge,

dissenting.

1. I am compelled to enter my disagreement with the reasoning and conclusions reached by the majority in Divisions 2, 3 and 4 of this opinion. The substance of those divisions is that Travillian did not receive a full compensation for his property loss and that an issue of fact remains as to whether the appellee Georgia Farm Bureau acted in an arbitrary manner in denying coverage for Travillian’s property loss. While there may be arguable issues of fact as discussed by the majority, it is my belief that such potential issues of fact are not material nor are they the dispositive issues for decision in this case.

It is not in question that Travillian suffered a property loss when his automobile was struck from behind by another. Travillian sought from his insurer (Georgia Farm Bureau) reimbursement for that property loss. When Georgia Farm Bureau adamantly refused to honor such coverage, Travillian abandoned the demand against his insurer for his collision loss and sought and recovered his property loss from the tortfeasor. Likewise, it is not in dispute that the amount of property loss suffered by Travillian was $2,500. Finally it is undisputed that the tortfeasor paid from his coffers the amount of the damage, i.e., $2,500. These facts seem clear and undisputed.

2. Part III of the contract of insurance between Georgia Farm Bureau and Travillian required Georgia Farm Bureau to pay for loss caused by collision to the owned automobile for the amount of the loss in excess of the deductible amount. There was no limitation upon that coverage; thus, proof of collision loss filed with the insurer vested a right of coverage in Travillian. It is manifest that Travillian suffered a breach of the contract by Georgia Farm Bureau when the insurer declined to cover the collision loss.

It is equally clear that in addition to the contract action against his insurer, Travillian had a cause of tort action for this same property loss against the tortfeasor. Pretermitting any right of action that Travillian potentially may have had against the tortfeasor for economic damages or injuries in addition to the property loss, it seems clear that the only recovery obtained (i.e., the property loss of $2,500) was the result of Travillian’s election of one of his two remedies, the self-same right of recovery but through the alternative avenue against the tortfeasor.

Travillian’s obvious right of recovery against Georgia Farm Bureau contractually was based upon the “collision” provisions of his contract with Georgia Farm Bureau. Thus provisions of “no-fault” law concerning the right of subrogation did not come into play. Subrogation rights inuring to Georgia Farm Bureau as a matter of statutory right arise out of the law governing payment of collision coverage. It is clear that had Travillian elected his remedy through a complaint against Georgia Farm Bureau and the insurer had paid Travillian under the terms of the collision coverage, the insurer would have been subrogated fully to the right to seek recovery of the $2,500 from the tortfeasor. Carter v. Banks, 254 Ga. 550, 552 (1) (330 SE2d 866). Having elected however to recover from the tortfeasor, if Travillian were to be successful in this suit against Georgia Farm Bureau, he would be doubly paid for his single loss (a fact he candidly admitted he sought and to which he believed himself entitled) for he has recovered the entirety of the value of the auto from the tortfeasor. The completeness of that recovery defeated any right by a subrogated insurer to effect a recovery of its payment for the collision loss. We cannot apply the collateral source rule even though the right of recovery is based upon different avenues of recovery, i.e., contract and tort for there still remains only one loss and the collateral source rule has no application where the right of subrogation exists. See McGlohon v. Ogden, 251 Ga. 625, 628 (1) (308 SE2d 541).

OCGA § 9-2-5, as declared by the Legislature, is wholly consistent with “prevailing jurisprudential philosophy that [a] party is not entitled to prosecute a suit for the same cause of action in different Courts. . . . [The statute] simply provides the mechanism by which the one viable action is to be determined. If the actions are commenced at different times, the plaintiff has no election, must proceed with the initially filed action, and such former suit shall be a good defense to the latter. . . . It is to be noted that the statute allows the plaintiff to elect the case which he will prosecute . . . and not the one which he will first prosecute.” (Emphasis deleted.) Clark v. Weaver, 159 Ga. App. 594, 595 (284 SE2d 95). Travillian, having elected to seek and obtain his recovery from the tortfeasor, is barred from seeking an identical recovery for the same loss from his insurer, who, incidentally, he has barred from the statutorily granted right of subrogation.

I also disagree with the argument that Travillian has not recovered fully his loss of $2,500 because he was forced to pay half that recovery to his attorney, apparently based upon a contingency fee contract. As between Travillian and the tortfeasor, the loss has been made whole for the only amount sought was $2,500 and $2,500 was recovered. Travillian’s payment to his attorney from his recovery was based upon an agreement between a client and his attorney and satisfaction had to come from Travillian but from a source of assets selected by Travillian with only the amount of the payment being affected by the amount of the recovery. If attorney fees inherently are a part of a recovery from a tortfeasor as opposed to a punitive addition to a recovery, then every recovery must be adjusted to include injury as well as attorney fees. I do not understand the law to contemplate such to be a part of ordinary damages.

3. As I view the applicable law, I find no error on the part of the trial court in its grant of summary judgment to Georgia Farm Bureau in relation to the claim for the basic $2,500 satisfied by the tortfeasor. Likewise, I can find no error in the implied denial of a right to recover the 25% penalty and attorney fees authorized upon a proper factual finding under the provisions of OCGA § 33-4-6. While it is clear that liability existed under the contractual provisions of Georgia Farm Bureau’s collision coverage of Travillian, that liability could be waived by Travillian either by not conforming to the requirements of the contract (i.e., by not filing a claim, by not giving reasonable notice, etc.) or, as in this case, electing not to pursue his remedy against his insurer but electing to seek satisfaction against the tortfeasor. The provisions of OCGA § 33-4-6 assume several conditions: (1) coverage; (2) a demand; (3) a bad faith refusal to honor a good claim for more than 60 days; (4) followed by a right of recovery (i.e., by a lawsuit) of the amount of coverage, a 25% penalty and attorney fees. It is clear that Travillian had collision coverage, made his demand and I have indicated my belief that the denial of coverage was improper. Thus of the four prerequisites to bring OCGA § 33-4-6 into play, Travillian had met three. His right to pursue penalties and attorney fees was established after the passage of 60 days. The liability of the insurer for collision, penalties, and attorney fees continued for approximately 40 days. But the right to pursue penalties and attorney fees based upon bad faith is appendant to liability for coverage. When Travillian voluntarily abandoned his right to pursue his claim against Georgia Farm Bureau and elected to seek to be made whole by the tortfeasor, he relinquished or waived the underlying liability for collision coverage. The waiver of the liability likewise waived any right to recover the attorney fees and penalties which could only arise where the company has wrongfully forced the insured to pursue recovery by way of litigation. Accordingly, I would affirm the judgment of the trial court.

Decided March 6, 1987

Rehearing denied March 19, 1987

James W. Lewis, for appellant.

Earl W. Gunn, Joseph C. Parker, for appellee.

I respectfully dissent. I am authorized to state that Presiding Judge Deen joins in this dissent and Judge Beasley joins in the judgment only of this dissent.