author: Andrews, Presiding Judge. Eldridge, Judge,

text:
    A01A1410.
    WILDER et al. v. JEFFERSON INSURANCE COMPANY OF NEW YORK.
    (555 SE2d 771)
   Andrews, Presiding Judge.

Jefferson Insurance Company of New York (“Jefferson”) brought a declaratory judgment action asking the trial court to declare that a tow truck leased by LaCosta Recovery Services, Inc. was not covered under a commercial vehicle policy issued by Jefferson to LaCosta. LaCosta was owned by C. T. DeFranks who operated a towing business with numerous tow trucks insured under the policy. The coverage question arose after the tow truck at issue was involved in an accident, and claims were made against DeFranks and LaCosta by Ella Wilder and others who were injured in the accident. Jefferson made alternative claims that there was no coverage because: (1) the tow truck at issue was never listed as an insured vehicle under the policy, or (2) even if the vehicle was covered under the policy, the policy was void from its inception because of fraudulent misrepresentations by the insured. In the event the second alternative was accepted and the policy was found to be void from its inception, Jefferson further characterized its action as a bill in the nature of an interpleader by which it tendered the entire amount of the policy premiums paid by the insured under the void policy. Jefferson asked the trial court to determine what portion of the tendered premiums should be refunded to the insured, and what portion was earned by Jefferson because of the requirement that it provide compulsory vehicle insurance.

The trial court granted summary judgment to Jefferson under the first alternative finding that the tow truck was not covered because it was never an insured vehicle under the policy. In the same order, the trial court also denied a motion to dismiss the declaratory judgment action which alleged there was no actual controversy to support the action because Jefferson had already declared the policy void. This appeal was taken by Wilder and other parties injured in the accident, who were named as defendants in the declaratory judgment action because of their interests in coverage under the policy. For the reasons set forth below, we find that the trial court correctly denied the motion to dismiss and correctly concluded that the tow truck was not covered by the Jefferson policy. Accordingly, we affirm the grant of summary judgment in favor of Jefferson.

1. The trial court correctly denied the motion to dismiss the declaratory judgment action.

After filing the declaratory judgment on October 11,1996, Jefferson notified its insured on October 25, 1996, that it was cancelling the policy effective November 29, 1996. As a reason for the cancellation, the notice stated:

At the time of issuing this Notice of Cancellation, Jefferson . . . hereby notifies you that it is asserting that [the policy] is void from inception because of fraud by the insured. You are hereby notified that Jefferson ... is filing a declaratory judgment action . . . against the insured seeking a declaration of its rights under the policy and asserting that [the policy] is void from its inception for fraud. By cancelling this policy, Jefferson . . . does not in any way concede that this policy was operating as written from its effective date of December 05, 1995, to the date of cancellation, and specifically reserves the right to litigate that issue in the above-referenced Declaratory judgment action.

The appellants contend that, by giving this cancellation notice, Jefferson declared the policy void from its inception and cancelled the policy retroactively from its December 5, 1995 effective date. Since the accident at issue occurred on July 21, 1996, they argue that no uncertainty remained to be resolved by the declaratory judgment action and that the trial court erred by not dismissing the action.

To the contrary, the cancellation notice shows that Jefferson can-celled the policy, not retroactively from its December 5,1995 effective date, but prospectively as of November 29,1996. Moreover, a reading of all the relevant portions of the cancellation notice shows that Jefferson did not unilaterally declare the policy void from its inception for fraud, but merely notified the insured that it was litigating this issue in the declaratory judgment action. Under these circumstances, an actual controversy as to coverage remained, and the trial court correctly denied the motion to dismiss. Atlanta Cas. Co. v. Fountain, 262 Ga. 16 (413 SE2d 450) (1992).

2. The trial court also correctly ruled that the tow truck involved in the accident was not listed as an insured vehicle under the policy and was never covered by the policy.

The facts related to this issue show that the tow truck involved in the accident was a 1996 International truck with vehicle identification number 1HTSCAAM8TH346393. It is undisputed that this truck was not listed as a covered vehicle under the policy, was not added to the policy by endorsement, nor was any premium ever charged for this truck. Nevertheless, the appellants claim that a factual issue exists as to whether the truck was covered by the policy on the accident date because an insurance agency, Hamby & Aloisio (Hamby), acting on behalf of the insured, sent a written policy change request to Southern Insurance Underwriters (SIU), an insurance agency with binding authority for Jefferson, requesting that the tow truck at issue be added to the policy by endorsement effective February 23, 1996. This was approximately one month prior to the date that the insured leased the tow truck on March 26,1996. Jefferson contended that no such request was made until after the July 21 accident date.

Despite this request, no endorsement or premium charge was ever issued adding the tow truck to the policy. The record shows that, prior to the accident date, Hamby sent numerous requests to SIU on behalf of the insured asking that various vehicles be added or deleted from the policy. Endorsements were issued on some of these requests with addition or deletion of premiums, but no immediate action was taken on others. The record also shows that, even though the tow truck had not been added to the policy by endorsement nor had any premium been charged, Hamby prepared a certificate of insurance for a lienholder bank showing the truck was insured under the Jefferson policy and sent a copy of this certificate to SIU in March 1996. The certificate of insurance contained the following notice: “This certificate is issued as a matter of information only and confers no rights upon the certificate holder. This certificate does not amend, extend or alter the coverage afforded by the policies below.” Contrary to the assertion in the dissent, there is no evidence that Jefferson issued an “insurance verification” showing coverage under its policy on the tow truck. The “insurance verification” referred to by the dissent is a document prepared by Coast to Coast Leasing Corporation, a company involved in the insured’s lease of the tow truck. This document states under the heading “insurance information” that the leased truck is insured by Jefferson and states that the insurance agent is Hamby. Hamby, which issued the certificate of insurance on the truck, was the insured’s agent, not Jefferson’s agent, and had no authority to bind Jefferson to a contract of insurance.

In fact, the evidence shows that the insured was aware the truck at issue had not been added to the policy pursuant to the February 23 request. On July 22, 1996, the day after the July 21 accident, the insured asked Hamby if it had received a fax sent by the insured on July 19 asking that the truck at issue be added to the policy. Pursuant to that contact, Hamby sent another policy change request to SIU on July 22, 1996, requesting that the truck be added to the policy effective July 19, 1996. Hamby later sent SIU a letter on September 26, 1996, noting that several change requests were pending, including the one requesting that the tow truck at issue be added effective February 23, 1996, and asked to be advised on the status of the requests.

None of the above evidence creates a factual question on the issue of coverage. At best, this is evidence that prior to the accident Jefferson had knowledge through its agent, SIU, that the insured, through Hamby, requested that the truck be added to the policy and that Hamby, acting as the insured’s agent, issued a certificate of insurance showing the truck was covered. Even if Jefferson had knowledge of these facts through its agent, this is not sufficient to support a claim that a contract of insurance was created covering the truck.

An application for insurance creates no binding contract of insurance until the insurer manifests its acceptance. Protective Life Ins. Co. v. Robinson, 193 Ga. App. 316, 317 (387 SE2d 603) (1989); Seibels, Bruce & Co. v. H. H. Burnet & Co., 154 Ga. App. 577, 579 (269 SE2d 40) (1980). Neither an insurer’s silence in response to an application, nor its delay in passing upon an application has the effect of creating a contract of insurance, even when the insured has forgone seeking other insurance. Robinson, 193 Ga. App. at 318; Cohran v. Liberty Mut. Ins. Co., 258 Ga. 341 (368 SE2d 751) (1988).

In essence, the appellants are claiming that, because Jefferson knew about the coverage request and the insurance certificate issued by Hamby, it either waived defenses to coverage or is estopped from denying coverage. Although waiver or estoppel has been applied to establish coverage in some situations where the insurer knew certain facts about the insured or the claim and was deemed to have accepted the risk, neither doctrine has ever been applied “to create a liability not created by the contract and never assumed by the insurer under the terms of the policy.” (Citations and punctuation omitted.) Sandner, Inc. v. Centennial Ins. Co., 189 Ga. App. 277, 280 (1) (375 SE2d 611) (1988), rev’d in part on other grounds, 259 Ga. 317 (380 SE2d 704) (1989); American Resources Ins. Co. v. Conner, 209 Ga. App. 885, 887 (434 SE2d 737) (1993); compare Corp. of the Royal Exchange Assurance &c. v. Franklin, 158 Ga. 644, 647-649 (124 SE 172) (1924) (insurer bound by waiver or estoppel where insurer or its authorized agent consents to change in policy and promises to make the necessary endorsement to the policy). Even if SIU had authority to bind Jefferson to a contract of insurance, it never did so. Moreover, neither SIU nor Jefferson did or said anything that could be construed as accepting the truck as covered under the policy or that induced the insured to believe the truck was covered. Compare Sutker v. Pennsylvania Ins. Co., 115 Ga. App. 648, 653 (155 SE2d 694) (1967) (failure to effect insurance pursuant to promise to modify policy); Seabrook v. Underwriters Agency, 43 Ga. 583, 586-587 (1871) (conduct which induced belief there was coverage). Accordingly, no coverage was created by waiver or estoppel.

The trial court also correctly held that the truck at issue was not covered under the after-acquired vehicle clause of the policy, which provided in relevant part that: “[I]f symbol 7 is entered next to a coverage in ITEM TWO of the Declarations, an ‘auto’ you acquire will be a covered ‘auto’ for that coverage only if: a. We already cover all ‘autos’ that you own for that coverage . . . and b. You tell us within 30 days after you acquire it that you want us to cover it for that coverage.” The declarations page of the policy shows symbol 7 next to the applicable coverage provided under the policy. It follows that a vehicle acquired by the insured after the inception of the policy will be deemed insured for that coverage if all vehicles owned by the insured are already insured under the policy for that coverage, and within 30 days after the vehicle is acquired, the insured tells the insurer that he wants the vehicle to be insured under the policy for that coverage.

The record establishes that LaCosta Recovery Services, Inc., the named insured on the policy at issue, was not a corporate entity, but was actually one of several trade names under which DeFranks operated his towing business. DeFranks also operated under the trade name of Official Towing of Atlanta, Inc. Official Towing was the named insured on a second Jefferson policy which provided coverage at different rates for other tow trucks owned by DeFranks. As the trial court concluded, DeFranks, operating under the trade names, was the actual insured who owned vehicles insured under coverage provided by the policy at issue and owned other vehicles insured under coverage provided by a separate policy. Southern Guaranty Ins. Co. v. Premier Ins. Co., 219 Ga. App. 413, 414 (465 SE2d 521) (1995). Thus, he could not satisfy the requirement for application of the after-acquired vehicle clause that all the vehicles he owned were already insured under the policy at issue for that coverage.

The trial court correctly granted summary judgment to Jefferson on the basis that the tow truck at issue was not covered under the policy.

Judgment affirmed.

Johnson, P. J., Ruffin and Ellington, JJ., concur. Eldridge, Barnes and Miller, JJ., dissent.

Eldridge, Judge,

dissenting.

Jefferson Insurance Company of New York brought a declaratory judgment action and a bill in the nature of an interpleader against its insured, C. (Carmen) T. DeFranks d/b/a LaCosta Recovery Services, Inc. and others, to void ab initio its commercial line insurance policy for fraud, covering motor vehicles, because Jefferson averred that the insured had given the business address of a store, Fortner’s Discount Center, near rural Loganville, Walton County, Georgia, instead of the true business address in metropolitan Atlanta in order to get lower risk rates; was not a corporation as was represented; concealed that Jefferson also insured Official Towing, another trade name; concealed that the business was also engaged in the repossession of motor vehicles, which would increase its rates; and the tow truck was not covered under the LaCosta policy of insurance. Such inceptive fraud was so material to the insurance contract, because it constituted a fundamental basis for the establishment of the insurance risks for underwriting purposes; however, Jefferson cancelled the policy prior to instituting the declaratory judgment action. Thus, Jefferson’s action in cancelling the policy fixed everyone’s rights as of that date, and there existed no uncertainty of future course of conduct for a declaratory judgment action; thus, the action was properly pending only as a bill in the nature of an interpleader. Further, third party interests in the mandatory motor vehicle insurance coverage had already attached so that the policy could be cancelled only prospectively.

LaCosta Recovery Services, Inc. is a fictional trade name and is not a corporation; this name was used by DeFranks as one of many trade names, i.e., Official Towing of Atlanta and Atlanta Towing, that he used in the operation of a wrecker/towing business. DeFranks operated all of his wrecker/towing businesses, but as different named entities, from a single office located at 1632 Crescent Center Boulevard, Tucker, DeKalb County, Georgia, as a single business, using trucks and drivers interchangeably between these different names. There is only a store at 136 C. S. Floyd Road, Loganville, Walton County, used as the address for the insurance policy application at issue; however, DeFranks never conducted or garaged any insured trucks there. When DeFranks obtained the first Jefferson policy covering Official Towing, DeFranks used the business address of 2160 Huntington Drive, Loganville, Walton County, which was not a place of business or a place where his vehicles were garaged.

Jefferson rated the risk and premium on its policies of insurance based upon the county of a business’s operation; therefore, a business in Walton County would have different lower risk and premiums than the same business located in Fulton/DeKalb County. When Southern Insurance Underwriters discovered that 2160 Huntington Drive, Loganville, was a vacant lot, it required that Official Towing be rated at the correct Fulton/DeKalb rates.

Then, on December 5, 1995, DeFranks obtained coverage from Jefferson in policy no. JCV772121 for the trade name LaCosta Recovery Services, Inc. using the address 136 C. S. Floyd Road, Loganville, as the garaging location, but did not list the tow truck at issue as a covered vehicle. In both the LaCosta and Official Towing applications, DeFranks on specific inquiry denied that he was engaged in repossession work under either trade name, because repossession created a higher underwriting insurance risk with higher premiums.

In February 1996, DeFranks, acting as Official Towing, transferred the wrecker in question along with others to himself as LaCosta, which removed the vehicles from a different Jefferson policy. This lowered his insurance rates, since this trade name was listed as located in Walton County. Further, on February 23, 1996, DeFranks notified Jefferson that he wanted the white 1996 International S1600 tow truck, vehicle identification number IHTSCAAM8TH346393, added to the LaCosta policy. However, LaCosta did not execute a lease for this vehicle from Horton Truck & Equipment Company/Coast to Coast Leasing Corporation until March 26, 1996. Moreover, Jefferson on March 22, 1996, issued an insurance verification for this vehicle to Coast to Coast Leasing for this tow truck with coverage under this LaCosta policy number by Jefferson. The evidence in the record creates a material issue of fact that the truck in question was added to the LaCosta coverage prior to the occurrence, creating a jury question. Lau’s Corp. v. Haskins, 261 Ga. 491 (405 SE2d 474) (1991).

On July 21, 1996, at Snow & Red’s Tire Service, at 2387 Bank-head Highway, Atlanta, Georgia, Alray Goolsby, a LaCosta employee, while within the scope of his employment for DeFranks, lost control of his tow truck and struck a vehicle that in turn struck Timothy Johnson, husband of Patsy Johnson, David M. Wilder, the son of David and Ella Wilder, Festus Watts, and Anthony Jones, injuring them.

On October 25, 1996, Jefferson cancelled the LaCosta policy no. JCV772121 retroactively effective to December 5, 1995, because the policy was void from the inception for fraud. The cancellation notice stated: “By cancelling this policy, Jefferson Insurance Company of New York does not in any way concede that this policy was operating as written from its effective date of December 05, 1995, to the date of cancellation, and specifically reserves the right to litigate that issue in the above-referenced Declaratory judgment action.”

On October 11, 1996, Jefferson filed this declaratory judgment action against the insured and all who had an interest in the coverage. The parties filed cross-motions for summary judgment, and on December 9, 1999, the trial court granted Jefferson’s and denied the defendants’ motions.

1. The defendants contend that the trial court erred in granting summary judgment to Jefferson, because there were fact issues as to the fraud being material.

The defendants contend that there is no evidence that LaCosta made material misrepresentations in the policy application and that questions as to what constitutes material misrepresentations of fact are for a jury to decide.

In cases where the application for insurance is attached to and becomes a part of the policy, in order to avoid the policy for a misrepresentation of the applicant made in the application, the insurer need only show that the representation was false and that it was material in that it changed the nature, extent, or character of the risk. OCGA § 33-24-7 (b). This is true although the applicant may have acted in good faith, not knowing that a representation is untrue. A material representation is one that would influence a prudent insurer in determining whether or not to accept the risk, or in fixing the amount of the premium in the event of such acceptance. . . . While ordinarily the question as to the materiality of misrepresentations is for the jury, where the evidence, as [in this case], excludes every other reasonable inference except that they were material, no issue is presented on that point for consideration. . . . If a party to a contract seeks to avoid it on the ground of fraud or mistake, he must, upon discovery of the facts, at once announce his purpose and adhere to it. Otherwise, he can not avoid or rescind such contract.

(Citations and punctuation omitted.) Haugseth v. Cotton States Mut. Ins. Co., 192 Ga. App. 853, 854-855 (386 SE2d 725) (1989); see also Morris v. State Farm &c. Ins. Co., 143 Ga. App. 617, 618 (1) (239 SE2d 187) (1977); see generally Fla. Intl. Indem. Co. v. Osgood, 233 Ga. App. 111 (503 SE2d 371) (1998). The evidence of material fraud is plain, palpable, and undisputed. Thus, the policy was properly voided for fraud. Defendants failed to create a material issue of fact as to material fraud in the application by DeFranks.

2. The defendants contend that the trial court erred because the policy could be voided only prospectively, not retroactively, and that there was no issue for declaratory relief because Jefferson cancelled the policy prior to suit.

(a) Although the policy is void for material fraud in the application, the insurance policy, providing mandatory motor vehicle liability coverage, can be cancelled only prospectively as a matter of Georgia public policy, because injured third parties acquired an interest in the mandatory motor vehicle coverage after the occurrence and prior to the cancellation. Although Pearce v. Southern Guaranty Ins. Co., 246 Ga. 33 (268 8E2d 623) (1980), was decided under the compulsory coverage of no-fault motor vehicle insurance, since repealed, no-fault insurance was replaced by other mandatory minimum motor vehicle liability coverage. Thus, as a matter of public policy, “an automobile insurance policy providing basic third party liability insurance and basic personal injury protection benefits . . . issued pursuant to Georgia law cannot be voided retrospectively under [OCGA § 33-24-7].” Id. at 39; see also OCGA §§ 33-34-4; 40-5-71; Ga. Farm &c. Ins. Co. v. Phillips, 251 Ga. 244, 246 (304 SE2d 725) (1983); Sentry Indem. Co. v. Sharif, 248 Ga. 395, 397 (282 SE2d 907) (1981). Even a binder for motor vehicle liability coverage cannot be voided for fraud retroactively for the same reasons. Sentry Indem. Co. v. Sharif, supra at 396-397. Coverage in excess of the mandatory minimum can be voided only prospectively for fraud. Ga. Farm &c. Ins. Co. v. Phillips, supra at 245. Such public policy limitations extend to void or narrow coverage exclusions under the written terms of mandatory motor vehicle liability insurance policies, which further demonstrates such overriding public policy in this area.

The public policy considerations relating to . . . exclusion provisions in automobile liability insurance policies stem from the legislature’s enactment of the mandatory insurance statute. The purpose of the statute was to provide protection in the form of insurance. We have held that compulsory insurance is required for the protection of the innocent victims of the negligent members of the motoring public. We have also held that the legislature intended that Georgia’s compulsory insurance law protected the insured from unfair exposure to unanticipated liability. ... [I]n view of our overriding policy of complete liability coverage for the protection of the public and the insured, if the exclusion were broader than the tort immunity of this state, the exclusion would be against public policy.

(Citations and punctuation omitted.) Stepho v. Allstate Ins. Co., 259 Ga. 475, 476 (1) (383 SE2d 887) (1989). See also Govt. Employees Ins. Co. v. Dickey, 255 Ga. 661, 662 (340 SE2d 595) (1986); Cotton States Mut. Ins. Co. v. Neese, 254 Ga. 335, 341 (1) (329 SE2d 136) (1985); Federated Mut. Ins. Co. v. Dunton, 213 Ga. App. 148, 149-150 (1) (444 SE2d 123) (1994); Jones v. Wortham, 201 Ga. App. 668, 670 (411 SE2d 716) (1991). Where there are policy exclusions as to motor vehicle liability coverage, such exclusions may limit liability in excess of the mandatory minimum coverage. See Ga. Farm &c. Ins. Co. v. Burch, 222 Ga. App. 749, 750 (476 SE2d 62) (1996). Thus, the coverage in this case could not be retroactively voided by the terms of the contract or by fraud, only prospectively voided.

(b) However, Jefferson’s rights and liabilities as to the defendants became fixed on October 25, 1996, when it issued the policy termination notice for fraud prior to filing its declaratory judgment action. The facts of this case are unlike Atlanta Cas. Co. v. Fountain, 262 Ga. 16, 17 (413 SE2d 450) (1992), where coverage was neither declined payment nor voided the policy by the insurer prior to the commencement of a declaratory judgment action. Jefferson could not void the policy and at the same time reserve rights under the policy to contest the policy; such would be to take inconsistent positions. Jefferson’s action of voiding the policy was an affirmative act fixing its and all interested parties’ rights and liabilities under the policy.

“Thus, when a claim for insurance has been made, and a legitimate question exists as to the propriety of denying coverage, the insurance company may file a declaratory judgment action before denying the claim. It is not necessary for the insurance company to wait for the insured to file a lawsuit against it.” Atlanta Cas. Co. v. Fountain, supra at 17-18. Declaratory judgment actions are appropriate to resolve and afford relief from uncertainty and insecurity as to actions not yet taken with respect to rights, status, and other legal relations before liability becomes fixed by act or omission. OCGA § 9-4-1; Burgess v. Burgess, 210 Ga. 380, 382-383 (2) (80 SE2d 280) (1954); see also Venable v. Dallas, 212 Ga. 595 (94 SE2d 416) (1956). When a party has already acted, fixing rights, and seeks confirmation of the correctness of such action, declaratory judgment is not an appropriate remedy, because there no longer exists uncertainty of action. Norfolk &c. Ins. Co. v. Jones, 124 Ga. App. 761, 763-764 (2) (186 SE2d 119) (1971). Thus, “declaratory judgment is not available where a judgment cannot guide and protect the petitioner with regard to some future act — as where an insurance company has already denied a claim.” Atlanta Cas. Co. v. Fountain, supra at 18; see also Mayor &c. of Athens v. Gerdine, 202 Ga. 197 (1) (42 SE2d 567) (1947); Norfolk &c. Ins. Co. v. Jones, supra at 764. Declaratory judgment cannot be employed simply to test the viability of its defenses to an action that has already vested. Chattahoochee Bancorp v. Roberts, 203 Ga. App. 405, 406 (416 SE2d 875) (1992); Allstate Ins. Co. v. Shuman, 163 Ga. App. 313, 316 (4) (293 SE2d 868) (1982). Thus, the trial court should have denied the motion for summary judgment for a declaratory judgment and dismissed the declaratory judgment action.

Decided October 19, 2001

Reconsideration denied November 27, 2001

(c) Also, Jefferson brought this action as a bill in the nature of an interpleader and paid into court the premiums paid to determine what refund of the unearned premiums that it owed DeFranks. OCGA § 9-11-22; Algernon Blair, Inc. v. Trust Co. of Ga. Bank of DeKalb, 224 Ga. 118, 120-121 (160 SE2d 395) (1968). The trial court failed to determine what if any of the insurance premium should be refunded to DeFranks as unearned by Jefferson.

Where there exist multiple competing claims to liability insurance coverage proceeds, an insurer may protect itself by an inter-pleader action to determine the priorities of claims or liens to such coverage. See Holland v. State Farm &c. Ins. Co., 244 Ga. App. 583 (536 SE2d 270) (2000); Holland v. State Farm &c. Ins. Co., 236 Ga. App. 832 (513 SE2d 48) (1999).

Under OCGA § 9-12-90, where there has been a common disaster or occurrence, as in this case with multiple parties who have personal injuries, judgment liens stand in equal rank or priority if the actions were filed within 12 months of the occurrence giving rise to the tort action. Jefferson has limited coverage but has multiple claims for personal injury and a substantial judgment. Therefore, interpleader of the coverage is appropriate for judicial determination of the priorities of the claims on remand, if Jefferson chooses to pay the coverage into the trial court.

I am authorized to state that Judge Barnes and Judge Miller join in this dissent.

Wilson & Epstein, Norman S. Epstein, Holland & Knight, Sara L. Doyle, Jonathan P. Sexton, for appellants.

Drew, Eckl & Farnham, James M. Poe, James L. Creasy III, Catherine E. Diamond, for appellee.

       Notice of appeal was filed on January 7, 2000, in the Superior Court of Fulton County. This case was docketed in the Court of Appeals of Georgia on March 19, 2001.


source: Caselaw Access Project

author: Phipps, Judge.

license: Public Domain

text:
    A01A1446.
    HOOPER v. STATE OF GEORGIA.
    (555 SE2d 842)
   Phipps, Judge.

John Wayne Hooper, as executor of the estate of John L. Hooper, appeals the trial court’s order forfeiting certain real property owned by John L. Hooper and a tavern and mobile home located on the property. He claims that the State failed to prove a prima facie case for forfeiture and that the trial court’s determination that the forfeiture was not excessive was clearly erroneous. We agree that the State failed to sustain its burden of proof with respect to the property containing the tavern, but find that the State met its burden with respect to the property containing the mobile home. On the excessiveness issue, we find that Hooper has failed to meet his burden of proof and therefore affirm the forfeiture of the property containing the mobile home.

In November and December 1998, an investigator with the Piedmont Multi-Agency Narcotics Squad made seven separate undercover purchases of methamphetamine from John L. Hooper and Darrell Elrod at Hooper’s mobile home residence located at 852 Pleasant Hill Church Road in Winder. On December 22, investigators executed a search warrant on John L. Hooper, Elrod and the property at 852 Pleasant Hill Church Road. They found Elrod in the mobile home and Hooper in the office section of the Valley Tavern Bar, which is approximately 50 feet from the mobile home. The investigators seized less than one gram of methamphetamine from Hooper’s pants pocket. They also seized two videocameras and one monitor that had been set up to provide a view of the front yard of the residence and the area between the residence and the back door of the tavern.

Piedmont Multi-Agency Narcotics Squad investigators had executed search warrants on the same property in 1995 and 1996. During the 1995 search, they did not recover any drugs but found more than $8,000 in Hooper’s mobile home. In 1996, they again seized more than $8,000 from Hooper’s mobile home and seized 1.2 grams of methamphetamine from insulation found in the yard between the tavern and the mobile home. They also searched the nearby residence of Randy Hooper (one of Hooper’s sons) and seized $12,000 from PVC pipe located in his backyard.

In February 1999, the State filed a complaint for forfeiture of the real property known as 852 Pleasant Hill Church Road and all improvements thereon, the video equipment and $189 in cash. In its complaint, the State described the defendant real property as two separate tracts. For Tract One, the State provided a formal legal description. For Tract Two, which encompassed more than 25 acres, the State referred to a 1964 plat, not included in the record, for a further description of the property. The State then carved out five separate parcels from Tract Two as exceptions. One of the exceptions was Tract One, which had been deeded to Gary Hooper (another of Hooper’s sons) in 1978. The complaint alleges and Hooper admits in his answer that law enforcement officers executed a search warrant at the mobile home residence located on the defendant real property. The complaint does not allege that the tavern is located on the defendant real property.

At the hearing on the forfeiture proceeding, the State did not offer any evidence that either the tavern or the mobile home was located on the defendant property. Neither party offered any evidence as to the value of the property. Following the hearing, the trial court determined that the Valley Tavern, the mobile home, the property on which they are located and cash found on the property and on Hooper were subject to forfeiture. The court ordered that the property named by the State in its complaint be forfeited to the State and directed the prosecuting attorney to prepare orders for the distribution of the forfeited property.

1. Hooper argues that the State failed to meet its burden of proving which parcel, if any, contained the mobile home.

To meet its burden of proving a prima facie case for forfeiture, the State must establish by a preponderance of the evidence that the property sought to be forfeited falls into one of six categories of property declared to be contraband under OCGA § 16-13-49 (d). Because Hooper admitted in his answer that the mobile home residence was located on the defendant real property, the State had no obligation to present evidence to that effect at the hearing. But Hooper made no admissions regarding the tavern. Although evidence was presented that the tavern and the mobile home were in relatively close proximity, the State offered no proof that the tavern was located on the defendant real property. “Absent such evidentiary nexus between the parcel found to be subject to forfeiture and the parcels alleged to be subject to forfeiture, there is a failure with regard to the specificity of the legal description in the complaint and a failure of proof with regard to the [S]tate’s evidentiary burden. . . .”

The State seeks to distinguish Stancil because it involved three separate parcels of land, only one of which was ruled subject to forfeiture. Although we recognize the factual distinctions, we find the rule set forth in Standi equally applicable here. The State provided a confusing description of the property in its complaint and made no effort to show that the described property contained the tavern. As a result, we find that the evidence was insufficient to support the forfeiture of the property containing the tavern and reverse the trial court’s forfeiture of that property.

2. Given our holding in Division 1, we need only examine the trial court’s determination that the forfeiture was not excessive with respect to the property containing the mobile home. We reject the State’s contention that Hooper failed to raise the excessiveness issue in the trial court.

In 1994, the Supreme Court of Georgia adopted a three-factor analysis as the minimal inquiry for analyzing a claim that a forfeiture violates the Eighth Amendment’s prohibition against excessive fines. The factors are: (1) the inherent gravity of the offense compared with the harshness of the penalty; (2) whether the property seized was close enough to the offense to render it “guilty”; and (3) whether the criminal activity involving the defendant property was extensive in terms of time and/or spatial use. To evaluate the harshness of the penalty, the court must consider the monetary value of the property forfeited as well as the intangible value of the type of property involved, particularly whether it is a home.

The State suggests that the test established in Thorp may no longer be viable given the United States Supreme Court’s decision in United States v. Bajakajian, which involved a criminal forfeiture. In Bajakajian, the court held that “a punitive forfeiture violates the Excessive Fines Clause if it is grossly disproportional to the gravity of a defendant’s offense.” Any analysis under this standard would require some consideration of the value of the property forfeited.

Decided October 25, 2001

Reconsiderations denied November 27,2001.

Ralph J. Hunstein, for appellant.

Timothy G. Madison, District Attorney, Thomas W. Hayes, Gary D. Bergman, for appellee.

We do not reach the issue of whether the test established in Thorp has been supplanted by Bajakajian because we find that under either standard, Hooper has failed to meet his burden of proving that the forfeiture was excessive by coming forward with some evidence regarding the value of the defendant real property. In its final order of forfeiture, the trial court stated that it had applied the Thorp test and determined that the forfeiture was not excessive. Although we agree that the trial court could not have properly applied that test without any evidence regarding the value of the real property, we nevertheless affirm the forfeiture of the property containing the mobile home because Hooper had the burden to present some evidence of the property’s value and failed to meet it. The specific property to be forfeited shall include only that portion of the defendant real property on which the mobile home sits and the mobile home itself.

Judgment affirmed in part and reversed in part.

Smith, P. J., and Barnes, J., concur.

       John L. Hooper died before the hearing on the forfeiture proceeding. His will named his son John Wayne Hooper as executor of his estate and devised all of his property to his four children.

        Hinton v. State of Ga., 224 Ga. App. 49 (1) (479 SE2d 424) (1996).

       OCGA § 24-3-30.

       (Citation and emphasis omitted.) Stancil v. State of Ga., 230 Ga. App. 240, 241-242 (a) (495 SE2d 870) (1998).

       Id.

        Thorp v. State of Ga., 264 Ga. 712, 717-718 (3) (450 SE2d 416) (1994).

       Id.

       Id. at 717.

       524 U. S. 321 (118 SC 2028, 141 LE2d 314) (1998).

       Id. at 334 (III) (A).

       See id. at 336-340.

       See United States v. 817 N.E. 29th Drive, 175 F3d 1304, 1309 (11th Cir. 1999) (to sustain his contention that forfeiture of his property violates the Eighth Amendment, property owner must demonstrate that forfeiture is excessive).

       See Cherokee Warehouses v. Babb Lumber Co., 244 Ga. App. 197, 198 (535 SE2d 254) (2000) (although the reason for a trial court’s ruling may he wrong, we may affirm if it is right for any reason).


author: Blackburn, Chief Judge.

text:
    A01A1328.
    BOARD OF PUBLIC SAFETY v. JORDAN.
    (556 SE2d 837)
   Blackburn, Chief Judge.

Under the auspices of OCGA § 47-2-2, the Georgia Board of Public Safety (“Board”) terminated Bennett A. Jordan’s employment as Superintendent of the Georgia Police Academy. Following his discharge, Jordan sued the Board and other defendants, asserting multiple claims and amending his initial complaint five times. Ultimately, the sole issue remaining for trial was Jordan’s claim for intentional infliction of emotional distress. The jury found against the Board and awarded Jordan $1.8 million in compensatory damages and $360,000 in attorney fees which was reduced to the statutory limit of $1 million.

In this appeal, the Board contends that (1) sovereign immunity bars Jordan’s claim, (2) Jordan should have been collaterally estopped from injecting evidence of a Board “pretext” for termination at trial, (3) the facts presented failed to support Jordan’s claim, and that the trial court erred by (4) allowing the admission of character evidence, (5) failing to bifurcate the trial, (6) restricting the Board from tendering the hearing officer’s recommendation to terminate Jordan to the jury, (7) failing to admit testimony from Board members, and (8) refusing to give three specific charges to the jury. After review, we reverse.

As a merit system employee in a classified position, Jordan could be terminated only upon a “for cause” finding pursuant to OCGA § 47-2-2. Subsection (d) of the Employees’ Retirement System of Georgia (“ERS”) Code lists the following grounds for termination for cause:

An employee may be discharged from employment pursuant to the requirements of this Code section for insubordination, irresponsible performance of duties, malingering, neglect of duty, or unsatisfactory performance of duties in a willful manner or for any combination of such reasons. Any employee so discharged from employment shall not be entitled to and shall not receive a retirement benefit based on involuntary separation from employment without prejudice pursuant to Code Section 47-2-123.

OCGA § 47-2-2 (d). The ERS Code specifically defines each ground, including the two pertinent here: “[i] irresponsible performance of duties” and “neglect of dutfies].” OCGA § 47-2-2 (c) (5), (7). When discharge is under consideration, the State employer must transmit a written notice to the employee in the format specified by subsection (g). See OCGA § 47-2-2 (g). An employee’s service may end by “involuntary separation from employment without prejudice,” or “involuntary separation from employment with prejudice.” OCGA § 47-2-2 (a).

In early October 1991, the Board sent two state troopers to Jordan’s house to serve Jordan with formal notice of the proposed termination and the right to a hearing. In the letter, the Board formally apprised Jordan of eight charges, most of which pertained to Jordan’s failure to reduce expenditures during a state-wide budgetary crisis and his failure to disclose certain information to the Board. The Board subsequently sent two amended notices to Jordan. More than two months after the initial notice, on December 11, 1991, presiding officer Melvin M. Goldstein conducted an administrative hearing on the eight charges pending against Jordan. At the hearing, the State sought to prove that Jordan “had been fiscally irresponsible” and “deceptive” in providing or failing to provide certain information to members of the Board. In his opening statement, Jordan’s counsel disputed the validity of the charges and argued, “This is a case that has an underlying motive that’s going to have to be explored in this matter and has really two levels of motive.” Jordan’s attorney claimed that the Board was “attempting to terminate Mr. Jordan as part of a reorganization of the Georgia Police Academy, the Georgia Fire Academy and the Georgia Public Safety Training Center.” He argued that the Board did not want to give him his rights and privileges as a merit system employee and that the Board wanted to prevent him from obtaining involuntary separation benefits and submitting his case to the Merit System Board.

The Board offered evidence showing that despite an ongoing severe budget crisis, Jordan went on trips to Unicoi State Park and Jekyll Island costing $5,000 and over $17,000 respectively. Vice Chairman of the Board, Robert E. Wilson, testified that the Board had oversight responsibility for the Department of Public Safety, the Georgia Bureau of Investigation, the Police Academy, the Fire Academy, and the Georgia Public Safety Training Center. According to Wilson, while there was a proposed plan to create a “supercop” to oversee all these agencies, Jordan’s position would not be eliminated, but the hierarchy would change and he would have reported to an intermediary and not directly to the Board. Under the reorganization plan, Wilson explained that the Police Academy would form an operational division of the Public Safety Training Center. Wilson described political in-fighting as a continuing problem between the Police Academy and the other agencies. Wilson also detailed instances in which he felt that Jordan had not been completely forthright with members of the Board. Wilson testified that it was his conclusion that Jordan’s Jekyll Island trip was “a boondoggle,” “a defiant act toward the Governor,” and “an attempt by Mr. Jordan to have a nice outing, one in the mountains for in the fall, and one at the beach in the summer for chiefs and sheriffs that he could get to attend to keep his political wheels greased.” According to Wilson, Jordan admitted having used bad judgment. Wilson testified that Jordan refused to retire and “insisted that we fire him” because “he wanted involuntary separation” benefits. The administrative hearing consumed three days.

The hearing officer, Goldstein, submitted a lengthy decision to the Board in which he recommended Jordan’s termination for cause. In a 25-page decision, that included comprehensive factual findings as well as legal conclusions, the hearing officer found that: Jordan had misled the Board with respect to the use of certain computer equipment; Jordan’s participation in unnecessary seminars was fiscally irresponsible; Jordan had been untruthful regarding the cancellation of one seminar; Jordan’s decision to proceed with a staff retreat was fiscally irresponsible; and Jordan had been untruthful about his awareness of the general budget crisis in state government. The hearing officer recommended Jordan’s employment be terminated pursuant to OCGA § 47-2-2 (c) (5) (D) for “irresponsible performance of duties” and under OCGA § 47-2-2 (c) (7) for “neglect of duty.” The Board adopted the hearing officer’s recommendation, and Jordan’s employment ceased effective February 5, 1992.

For reasons not made clear by the record, Jordan did not avail himself of his right to judicial review of the Board’s decision as provided in OCGA § 47-2-3. Acting without a jury, a superior court is empowered to reverse or modify the decision of the employer,

if substantial rights of the employee have been prejudiced because the administrative findings, inferences, conclusions, or decision of the employer were: (1) In violation of constitutional or statutory provisions; (2) In excess of statutory authority of the employer; (3) Affected by other error of law; (4) Clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record; or (5) Arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion.

OCGA § 47-2-3 (f). Although judicial review is normally confined to the record, “[i]n cases of alleged irregularities in procedure before the employer, not shown in the record, proof thereon may be taken in the court,” and the superior court, “upon request, shall hear oral argument and receive written briefs.” OCGA § 47-2-3 (e).

Instead of exercising his statutory right to appeal the Board’s decision, Jordan waited nearly two years after his discharge to file a multi-count lawsuit which included a claim for intentional infliction of emotional distress. The gravamen of Jordan’s suit was that his rights were abrogated and his reputation sullied when he was wrongfully discharged and that he suffered great emotional harm as a consequence. In a claim for intentional infliction of emotional distress, Jordan specifically alleged that “[the] reprimands, suspensions and ultimate termination of Plaintiff’s employment as the Superintendent of the Georgia Police Academy have caused Plaintiff to suffer and to continue to suffer severe emotional anguish, humiliation, distress and embarrassment.” The Board moved to dismiss Jordan’s case, in part relying upon the doctrine of sovereign immunity. The trial court denied the motion, and the case proceeded to trial.

Eventually the legal issues were narrowed and confined to the parameters of a consolidated pre-trial order. The gist of Jordan’s case as outlined in the PTO was that the Board desired to reorganize and restructure certain public safety organizations and wanted to eliminate certain positions including his superintendent position. According to Jordan’s theory of the case:

[t]he “Super Chief” bill, as it was referred to, would have consolidated all state law enforcement training agencies under one umbrella agency with one agency director. The proposed legislative reorganization plan would have eliminated the Superintendent positions for both the Police Academy and the Fire Academy. The “Super Chief” bill failed to pass the legislature.

According to Jordan’s theory of his case, he was removed from his job and became a “target” because he presented an obstacle to the reorganization plan. By his theory,

[t]he evidence in this case shows that when the “Super Chief” bill failed to pass the legislature, Defendant — knowing elimination of Jordan was essential — began the malicious process of terminating Jordan. Defendant asserted pretextual allegations not of a kind or nature normally relevant to O.C.G.A. § 47-2-2. Ultimately, Jordan was terminated pursuant to O.C.G.A. § 47-2-2 with prejudice based upon Defendant’s pretextual allegations.

By his theory, the Board

in its zeal to accomplish its objective! ] engaged in conduct that exceeded the bounds of decency and committed acts that are intolerable in a civilized community, causing Jordan to experience severe emotional anguish, humiliation, distress and embarrassment. Defendant’s conduct was willful, intentional and carried out with utter disregard of Jordan’s rights and the laws governing their conduct.

At trial, Jordan presented evidence to show that the Board “set in motion the malicious process of fabricating ‘cause’ to justify his termination” in order to facilitate a reorganization plan, thereby causing him to suffer emotional distress. As part of the “malicious process,” Jordan testified that a television news reporter had been tipped off about a seminar that he attended at Unicoi State Park during the budget crisis. Jordan testified that the reporter told him that Board Vice Chairman Wilson was quite upset that he attended the seminar, and the reporter aired a segment on television indicating that Jordan had misused state funds. Jordan testified that he had been “set up” so he could be discredited.

Jordan testified that at an October 1,1991 meeting with Wilson, then the Vice Chairman of the Board, Wilson mentioned that the Board was “talking about terminating” him. According to Jordan, Wilson warned that the Board could “make it hard or easy” and that he should voluntarily resign. Jordan testified that when he refused to resign, Wilson threatened that he would “write [Jordan’s] termination in a way to protect the Governor. . . . This will become a permanent record. We will dig things up if necessary. . . . We must make it legal with [the] reorganization plan.” At a Board meeting, Wilson stated words to the effect that it would strengthen the Board’s position legally, “if everybody bellied up to the bar, signed the [termination] letter, and that we would hang alone or hang together, but there is less chance of hanging if we all join in.” After his discharge became final, Jordan testified that he learned that his record contained notice that he had been permanently disqualified from future merit system employment, although according to Jordan, no statutory authority for such action existed.

Jordan offered testimony to show that an employee’s complete employment history was usually a “material” consideration when determining disciplinary actions. Jordan testified that he had not received any prior notification of any job performance deficiency from the Board and that he was never provided an opportunity to correct any claimed deficiency. One witness testified that the statute upon which Jordan was terminated was usually reserved for “alcoholics, criminals, malingerers, those who use state property for personal use or gain and excessive absenteeism,” and that the statute had been used on fewer than five occasions in eight years. Moreover, other employees who committed the same acts upon which Jordan was terminated were not similarly disciplined. Jordan testified that because he had been terminated under OCGA § 47-2-2, instead of under the merit system provisions, he was denied involuntary separation retirement benefits. Jordan testified that his termination was widely publicized in the news media. The jury entered a verdict for Jordan in the amount of $1.8 million in compensatory damages for intentional infliction of emotional distress and $360,000 in attorney fees, which was reduced to the statutory maximum of $1 million.

1. We review the trial court’s denial of the Board’s motion to dismiss on sovereign immunity grounds de novo. See Cobb County v. Jones Group, P.L.C.

“Under the Georgia Constitution, sovereign immunity extends to the state and all of its departments and agencies. This immunity may be waived only by a legislative act which specifically provides that sovereign immunity is thereby waived and the extent of such waiver.” (Punctuation and footnotes omitted.) Dept. of Veterans Svcs. v. Robinson. , The Georgia Tort Claims Act, OCGA § 50-21-20 et seq., provides a limited waiver of sovereign immunity for torts committed by State employees acting within the scope of their employment. Rhoden v. Dept. of Public Safety ; McLemore v. City Council of Augusta. But there are exceptions to the limited waiver. Under OCGA § 50-21-24, the State remains immune for “losses” resulting from performance of a discretionary function or from slander and libel.

To determine whether these exceptions protect the Board’s sovereign immunity, we focus upon the conduct which actually produced Jordan’s “losses,” his severe emotional distress and loss of reputation. See Youngblood v. Gwinnett Rockdale &c. Svc. Bd. ; Ga. Military College v. Santamorena; Dept. of Human Resources v. Hutchinson. If the Board’s conduct that caused Jordan’s emotional distress was based on its policy judgment or if the Board’s acts were slanderous or libelous, then the Board was protected by immunity. See OCGA § 50-21-22 (2).

We find that the conduct at issue either involved slander, libel, or discretionary acts of the Board. Under OCGA § 51-5-4 (a) (3), a party slanders or orally defames by “[m]aking charges against another in reference to his trade, office, or profession, calculated to injure him therein.” OCGA § 51-5-1 (a) defines libel as “a false and malicious defamation of another, expressed in print, writing, pictures, or signs, tending to injure the reputation of the person and exposing him to public hatred, contempt, or ridicule.” Jordan’s allegations concerning the Board’s purported statements to the media that Jordan was engaged in extravagant seminars and was misusing funds constitute slander as defined under the statute. Even assuming arguendo that Jordan’s employment record contained a malicious and false notation permanently disqualifying him from future merit system employment, and further assuming arguendo that such writing constituted libel, no liability attached. See OCGA § 50-21-24 (7).

We find that the remaining Board actions were within the ambit of the Board’s discretion inherent to the exercise of its administrative functions. See OCGA § 50-21-24 (5). OCGA § 50-21-24 (2) allows the government to retain its immunity for discretionary acts, whether or not that discretion is abused. See Brantley v. Dept. of Human Resources. Discretionary acts involve “a function or duty requiring a state officer or employee to exercise his or her policy judgment in choosing among alternate courses of action based upon a consideration of social, political, or economic factors.” OCGA § 50-21-22 (2). The exception prevents “judicial second-guessing of legislative and administrative decisions grounded in social, economic, and political policy through the medium of an action in tort.” (Punctuation omitted.) Brantley, supra at 682-683. “A discretionary act. . . calls for the exercise of personal deliberation and judgment, which in turn entails examining the facts, reaching reasoned conclusions, and acting on them in a way not specifically directed.” Schulze v. DeKalb County.

Apparently recognizing the preclusive effect of the factual findings entered by the hearing officer and ratified by the Board, Jordan claims that he is not contesting his discharge but the manner in which it occurred. As stated in the response to the Board’s reply brief, “Jordan’s claim does not challenge an employment decision by the Board; the discretionary decision-making process is not the issue in Jordan’s case. Rather Jordan’s claim rests upon the Board’s conduct in carrying out that termination.” Somewhat incongruously, Jordan asserts that he did not base his intentional infliction of emotional distress claim upon the decision to terminate him but that the manner in which the Board effected his termination caused his distress.

Here, there can be no doubt that the Board’s actions in effectuating Jordan’s termination were grounded in social, economic, or political goals or a combination thereof. The manner in which the Board effected Jordan’s termination was wholly a matter of choice by the Board. Jordan offered no evidence showing that the Board’s decision did not fully comply with the provisions of OCGA § 47-2-2. Nor has he pointed to any specific rule or regulation directing the Board to follow any particular procedure in effecting the minor details of his termination. Even assuming arguendo that the Board was attempting to follow what it perceived were the Governor’s guidelines for reorganizing the public safety agencies, no specific instructions were provided to the Board regarding how to effect the reorganization, i.e., utilizing “for cause” provisions of OCGA § 47-2-2, serving notice and retrieving his automobile from his house at 9:00 p.m., trying to get the support of the entire Board so they could “all hang” together, failing to similarly discipline others that committed the same acts as Jordan, and failing to give Jordan the chance to cure his alleged deficiencies. Thus, the Board’s actions were discretionary in nature and protected, even if the Board could be said to have abused its discretion. OCGA § 50-21-24 (2). See Brantley, supra; Rowe v. State Bd. of Pardons & Parole.

In so holding, we note that

[n]othing we have said goes to the wisdom of refusing to waive sovereign immunity in circumstances such as those in this case. Sovereign immunity is a harsh doctrine, not an equitable one. Indeed, it is just the opposite of equity — it is the state declaring that it cannot be sued even where it would otherwise be liable. . . . Our job is to read the statute, not to rewrite it to conform to an equitable result.

Dept. of Human Resources v. Coley (physical precedent only).

2. The Board contends that the trial court erred by failing to direct a verdict on Jordan’s claim for intentional infliction of emotional distress. The Board argues that since it acted within its rights to terminate the employment for cause, then, as a matter of law, Jordan’s allegation that his termination was pretextual is insufficient to support a claim for intentional infliction of emotional distress.

To establish a claim for intentional infliction of emotional distress requires evidence of four essential elements: (1) the conduct must be intentional or reckless; (2) the conduct must be extreme and outrageous; (3) the existence of a causal connection between the wrongful conduct and the emotional distress; and (4) the emotional distress must be severe. Jarrard v. United Parcel Svc. “Liability for intentional infliction of emotional distress has been found only where the conduct has been so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community.” (Punctuation omitted.) Biven Software v. Newman.

It has not been enough that the defendant has acted with an intent which is tortious or even criminal, or that he has intended to inflict emotional distress, or even that his conduct has been characterized by malice, or a degree of aggravation which would entitle the plaintiff to punitive damages for another tort. Liability has been found only where the conduct has been extreme and outrageous.

(Punctuation omitted.) Jarrard, supra at 61. The issue of whether the conduct at issue rises to the requisite level of outrageousness is a question of law for the trial court: Johnson v. Savannah College of Art &c. When the acts of an employer, even when proven, are not sufficiently outrageous and egregious to constitute intentional infliction of emotional distress, the employer is entitled to judgment as a matter of law. See Fox v. Ravinia Club. For this reason, even if Jordan’s claim for intentional infliction of emotional distress had not otherwise been foreclosed by the doctrine of sovereign immunity, reversal would be warranted on this basis. See Odem v. Pace Academy

3. In light of the above, we need not address the Board’s remaining enumerations of error, including its collateral estoppel argument. See Swain v. State. We note that while Jordan claims that the administrative hearing was inherently “unfair” and that he did not have an opportunity to argue “pretext,” the transcript of that hearing and a contrary finding by the trial court belie those assertions.

Decided November 27, 2001

Thurbert E. Baker, Attorney General, Kathleen M. Pacious, Deputy Attorney General, John C. Jones, Senior Assistant Attorney General, Gray, Hedrick & Edenfield, Bruce M. Edenfield, Evan R. Mermelstein, for appellant.

Weinstock & Scavo, Michael Weinstock, Richard J. Capriola, Jet Harris, for appellee.

The trial court explicitly decided that the findings of fact made by the hearing officer and adopted by the Board were “binding and conclusive because there was a full and fair opportunity to litigate those matters.” The trial court continued, “Having said that, I consider those findings of fact to be the equivalent of what would be an evidentiary stipulation.” Moreover, the transcript of the administrative hearing is replete with testimony as well as argument about the impact of the Williams Commission Report that studied governmental effectiveness and economy and the prospect of pending reorganizing and restructuring the public safety agencies. In any event, it is undisputed that Jordan failed to avail himself of the opportunity under OCGA § 47-2-3 for independent judicial review of the Board’s decision to discharge him from the position of Superintendent of the Police Academy. Nor did Jordan appeal the findings of fact adopted by the Board that his discharge was for cause.

Judgment reversed.

Pope, P. J., and Mikell, J., concur.

       Jordan also asserted claims under 42 USC § 1983, the Age Discrimination in Employment Act, 42 USC § 1988, as well as tortious interference with business opportunity, conspiracy to commit tortious and illegal conduct, and violation of his substantive due process rights based upon an alleged liberty interest in his reputation. These other claims were summarily adjudicated or dismissed and are not at issue in this appeal.

       A letter from the Commissioner of the State Merit System indicates that Jordan was disqualified only from reemployment by the Department of Public Safety. The letter states, “NOT ELIGIBLE FOR REHIRE IN TERMINATING DEPARTMENT.” Jordan testified that the disqualifying language was later removed.

        Cobb County v. Jones Group, P.L.C., 218 Ga. App. 149, 153 (460 SE2d 516) (1995).

        Dept. of Veterans Svcs. v. Robinson, 244 Ga. App. 878, 879 (536 SE2d 617) (2000).

        Rhoden v. Dept. of Public Safety, 221 Ga. App. 844, 845 (1) (473 SE2d 537) (1996).

        McLemore v. City Council of Augusta, 212 Ga. App. 862, 864 (2) (443 SE2d 505) (1994).

        Youngblood v. Gwinnett Rockdale &c. Svc. Bd., 273 Ga. 715, 717 (3) (545 SE2d 875) (2001).

        Ga. Military College v. Santamorena, 237 Ga. App. 58, 60 (1) (514 SE2d 82) (1999).

        Dept. of Human Resources v. Hutchinson, 217 Ga. App. 70, 71-72 (1) (456 SE2d 642) (1995).

       Jordan also claims that he should have been able to argue at trial that the Board made “false” statements concerning his job performance and that such conduct caused him distress.

        Brantley v. Dept. of Human Resources, 271 Ga. 679, 680 (523 SE2d 571) (1999).

        Schulze v. DeKalb County, 230 Ga. App. 305, 308 (2) (496 SE2d 273) (1998).

       Federal courts interpreting the very similar Federal Tort Claims Act have found that employment decisions, in particular, involve discretionary acts, since they “require consideration of numerous factors, including budgetary constraints, public perception, economic conditions, individual backgrounds, office diversity, experience and employer intuition.” (Punctuation omitted.) Beebe v. Wash. Metro. Area Transit Auth., 129 F3d 1283, 1287 (III) (D.C. Cir. 1997); see also Rickman v. Straley, 48 F3d 1139, 1146-1147 (III) (10th Cir. 1995) (“Decisions regarding employment and termination are inherently discretionary, especially where, as here, the relevant statutes provide no guidance or restrictions. [Cit.] Such sensitive decisions are precisely the types of administrative action the discretionary function exception seeks to shield from judicial second-guessing.”).

        Rowe v. State Bd. of Pardons & Parole, 240 Ga. App. 163, 164 (523 SE2d 40) (1999) (supervision of employee requires exercise of discretion).

        Dept. of Human Resources v. Coley, 247 Ga. App. 392, 398-399 (3) (544 SE2d 165) (2000).

        Jarrard v. United Parcel Svc., 242 Ga. App. 58, 59 (529 SE2d 144) (2000).

        Biven Software v. Newman, 222 Ga. App. 112, 113-114 (1) (473 SE2d 527) (1996).

        Johnson v. Savannah College of Art &c., 218 Ga. App. 66, 67 (460 SE2d 308) (1995).

        Fox v. Ravinia Club, 202 Ga. App. 260, 262 (414 SE2d 243) (1991).

        Odem v. Pace Academy, 235 Ga. App. 648, 655 (510 SE2d 326) (1998).

        Swain v. State, 251 Ga. App. 110 (552 SE2d 880) (2001).


author: Ruffin, Judge.

text:
    A01A0958.
    PAUL DEAN CORPORATION et al. v. KILGORE.
    (556 SE2d 228)
   Ruffin, Judge.

James Kilgore purchased Smyrna Cleaners & Laundry (the “laundry”) from Paul Dean Corporation and signed a promissory note. To secure the note, Kilgore granted the corporation a security interest in the laundry. Kilgore subsequently defaulted on the promissory note, and PDC threatened foreclosure proceedings. Kilgore then sued PDC and Paula Ortiz, president of PDC, (collectively “PDC”) asserting that he had reached a binding settlement agreement with PDC. Kilgore sought injunctive relief, a declaratory judgment, attorney fees, and punitive damages. Following a bench trial, the trial court determined that PDC and Kilgore had reached a valid settlement agreement, which Kilgore had honored. The trial court further concluded that PDC’s foreclosure actions “were not justified,” and it awarded Kilgore $10,000 in punitive damages. PDC filed this appeal, asserting multiple enumerations of error. For reasons that follow, we affirm in part and reverse in part.

The relevant facts demonstrate that, on August 1, 1996, PDC sold the laundry to Kilgore for $125,000. The sales contract required Kilgore to pay $25,000 at closing and to sign a promissory note for the balance of the purchase price. The contract provided that, beginning on September 1, 1996, Kilgore would pay six monthly installments of $1,219.80, followed by a balloon payment of the remainder of the loan on March 1, 1997. PDC retained a security interest in the laundry.

In connection with the sale, Ortiz signed a “Consent Agreement for Sale of Collateral and Assignment of Lease” with PDC’s landlord, who originally sold PDC the laundry and held a security interest in various laundry assets. This agreement provided that the “[purchaser” of the laundry would pay approximately $101,000 of the purchase price by assuming two notes originally given by Ortiz and another member of her family to First Family Financial Services. Kilgore did not sign this agreement.

Kilgore made the six monthly payments required by the contract. In February 1997, however, Kilgore informed Ortiz that he would not be able to make the March balloon payment. Instead, Kilgore continued to make monthly payments of $1,219.80 through June 1997. On June 27, 1997, PDC notified Kilgore that he was in default of the promissory note and security agreement, and it gave Kilgore ten days to cure the default. When Kilgore failed to cure, PDC informed him that it planned to foreclose on the property.

According to Kilgore, he and PDC reached a settlement agreement prior to foreclosure. A July 22, 1997 letter from Kilgore’s attorney to PDC’s attorney purported to memorialize that agreement. The letter enclosed a check in the amount of $59,625.02, payable to First Family Financial Services and PDC, and stated:

Under the terms of the Agreement, Mr. Kilgore is to tender this sum, representing outstanding principal and interest, on a note held by First Family from Paula Glover-Ortiz. Further, Mr. Kilgore will pay the monthly installments due on a mortgage held by First Family from Mr. Joe Wells [Ortiz’s father] for a period not to exceed 24 months and will pay, in full, the balance due on said note and deed to secure debt on or before July 1999. This agreement is predicated upon the outstanding balance on the Wells note being no more than $40,000.00. Your client will immediately mark the note from Mr. Kilgore “paid in full” and release its security interest in the assets of the business known as Smyrna Cleaners.

Kilgore’s attorney requested confirmation of these terms so that he could “finalize an agreement,” but no finalized agreement was signed by the parties. Nevertheless, PDC accepted the check, which was used to pay off the Ortiz loan. In addition, on August 1, 1997, Kilgore sent PDC’s attorney a second check for $2,500, which stated on its face “[s]ettlement/Paul Dean Corp.” This check represented payment for attorney fees, which Kilgore allegedly agreed to pay as part of the settlement.

Kilgore began making payments in accordance with the July 1997 letter. According to Kilgore, however, he never received the note marked “paid in full” as required by the agreement. In November 1997, Kilgore wrote PDC’s attorney requesting the documentation, and PDC’s attorney responded that he would urge his client to “comply with the Agreement.” Rather than forwarding the documentation, in January 1998, PDC notified Kilgore that he was still in default of the original promissory note and, once again, threatened foreclosure.

Before PDC began foreclosure proceedings, Kilgore filed suit against PDC. In his complaint, Kilgore alleged that the July 1997 settlement agreement governed his relationship with PDC. However, PDC denied having reached any such settlement with Kilgore and maintained that Kilgore was in default of the original promissory note and security agreement. The trial court agreed with Kilgore and found that PDC had breached the settlement agreement. The trial court awarded Kilgore $10,000 in punitive damages, which was offset by the $31,775.37 that Kilgore still owed PDC.

1. The crux of this appeal is whether the parties reached a settlement agreement in July 1997.

PDC’s argument in this regard is somewhat unclear. It vigorously asserts that the settlement agreement was not a valid novation. “Novation” is a term of art, which “signifies a very particular type of accord or modification.” A novation acts to extinguish the original obligation. Because Kilgore still had to pay the original indebtedness under the settlement agreement, we agree that it was not a novation. “[A]lthough every novation involves a new contract, not every new contract involves [a] novation.” Thus, the agreement between PDC and Kilgore may be enforceable even if it is not a novation.

The new agreement between PDC and Kilgore is more accurately characterized as an accord and satisfaction. “Accord and satisfaction occurs where the parties to an agreement, by a subsequent agreement, have satisfied the former agreement, and the latter agreement has been executed.” Whether an accord and satisfaction has been reached is generally an issue for the factfinder. Here, the evidence shows that PDC accepted and negotiated the checks Kilgore tendered in connection with the settlement agreement. It follows that the trial court was authorized to conclude that there was an accord and satisfaction between the parties.

PDC also appears to assert that the evidence was insufficient for the trial court to find that any contract was formed. We disagree.

“Appeals from bench trials, where the trial judge sits as the trier of fact and has the opportunity to assess the credibility of the witnesses, are reviewed under the clearly erroneous standard.” And we will not disturb a trial court’s findings if there is any evidence to support them. Here, there is ample evidence to support the trial court’s conclusion that the parties reached a settlement agreement in July 1997, including the fact that Kilgore’s attorney wrote a letter memorializing the agreement and forwarding a check to PDC’s attorney in the amount of $59,625.02, which was negotiated. Kilgore also paid PDC $2,500 for attorney fees that Kilgore contended were part of the settlement. And PDC’s attorney referenced the settlement agreement when Kilgore sought to obtain documentation that the loan in Ortiz’s name had been paid in full. Under these circumstances, the trial court’s conclusion that the parties reached a settlement agreement was not clearly erroneous.

To the extent that PDC contends the agreement is unenforceable because the parties never signed it, this contention lacks merit. As this Court has recognized, “[i]f a settlement agreement is disputed, it must be in writing to be enforceable. Ideally, a writing satisfying this requirement consists of a formal written agreement signed by both parties. But letters prepared by the parties’ attorneys may suffice if they memorialize the terms of the agreement.” Accordingly, the trial court was authorized to conclude that the letter from Kilgore’s attorney to PDC’s attorney, which evidently was provided to Ortiz, constituted an enforceable agreement.

2. PDC contends that the trial court erred in concluding that Kilgore’s complaint stated a claim for which relief could be granted. According to PDC, Kilgore is not entitled to injunctive relief because he defaulted on the original promissory note and, thus, has unclean hands. PDC also asserts that Kilgore is not entitled to declaratory judgment because he defaulted on the original agreement, and PDC was entitled to foreclose. We find both declaratory judgment and injunctive relief appropriate under the circumstances.

“The granting of injunctive relief lies in the sound discretion of the trial judge.” Here, Kilgore sought to enjoin PDC from foreclosing until the trial court could “adjudicate the rights of the parties.” Indeed, the purpose of an “injunction is to preserve the status quo of the parties pending a final adjudication of the case.” As the parties disputed which agreement governed their relations, the trial court did not abuse its discretion in concluding that injunctive relief was appropriate.

PDC argues that, under the equitable principle of “unclean hands,” Kilgore is not entitled to equitable relief, such as an injunction. Again, PDC’s argument is predicated on Kilgore’s default on the original promissory note and PDC’s contention that no settlement agreement had been reached. The trial court, however, concluded that the parties reached a valid settlement. Where, as here, the trial court resolves conflicts in the evidence in connection with granting an interlocutory injunction, we will not disturb that court’s ruling as an abuse of discretion unless the ruling was based on an erroneous interpretation of the law. As PDC’s argument on appeal flows from factual disputes, it presents no basis for reversal.

We find PDC’s argument that Kilgore was not entitled to declaratory judgment equally unavailing. Under the Declaratory Judgment Act,

a court has the power to issue declaratory judgments in cases of actual controversy and in any civil case in which it appears to the court that the ends of justice require that the declaration should be made. The object of the declaratory judgment is to permit determination of a controversy before obligations are repudiated or rights are violated. In order to obtain a declaratory judgment, a plaintiff must show that he is in a position of uncertainty or insecurity because of a dispute and of having to take some future action which is properly incident to his alleged right, and which future action without direction from the court might reasonably jeopardize his interest.

Here, there was an actual dispute as to which agreement governed Kilgore’s obligations to PDC, and Kilgore was uncertain because of that dispute. Accordingly, declaratory relief was appropriate.

3. PDC also asserts that, under the purchase agreement, Kilgore assumed the two promissory notes given by Ortiz and another member of her family to First Family Financial Services. Such assumption allegedly occurred in the “Consent Agreement for Sale of Collateral and Assignment of Lease,” which was executed in connection with the sale of the laundry. As discussed above, however, Kilgore never signed that consent agreement. Accordingly, the trial court concluded that he did not assume the two notes. We agree with the trial court.

OCGA § 13-5-30 (2) provides, in pertinent part, that, in order to be binding, “[a] promise to answer for the debt... of another” must be in writing and signed by the party against whom the agreement is being enforced. Here, PDC asserts that, although Kilgore did not sign the “Consent Agreement for Sale of Collateral and Assignment of Lease,” he signed other documents that were executed contemporaneously, including the memorandum of sale, security agreement, promissory note, and landlord’s consent to assignment. Accordingly, PDC contends that Kilgore is bound by the “Consent Agreement for Sale of Collateral and Assignment of Lease.” We disagree.

It is true that “[a] 11 contemporaneous writings shall be admissible to explain each other.” What PDC fails to recognize is that Kilgore never executed the “Consent Agreement for Sale of Collateral and Assignment of Lease.” Accordingly, unless PDC can point to an agreement that Kilgore actually executed indicating he agreed to assume the notes, Kilgore cannot be bound by the agreement that he did not sign. As the Supreme Court has noted, the overarching premise is that “[p]eople should do what they say they will do; and the law will require competent adults to do what they voluntarily promise to do.” Here, however, the documents, when read together, do not show that Kilgore promised to assume the loans. It follows that the trial court did not err in concluding that Kilgore was not bound by the “Consent Agreement for Sale of Collateral and Assignment of Lease.”

4. PDC asserts that the trial court erred in failing to award it attorney fees. According to PDC, the trial court “completely overlooked the fact that this is a foreclosure and suit on a note in default” and that PDC was entitled to such fees under the terms of the original agreement. What PDC overlooks, however, is that the trial court concluded that a new agreement had been reached, which Kilgore had not breached. Thus, this alleged error presents no basis for reversal.

5. In PDC’s final enumeration of error, it contends that the trial court erred in awarding punitive damages to Kilgore. We agree. At the heart of Kilgore’s complaint is his assertion that PDC breached the terms of the settlement agreement. It is axiomatic that “punitive damages are not recoverable for breach of contract, even if the breaching party acted in bad faith as [Kilgore] contends in this case.” If, however, there is evidence of fraud, punitive damages can be awarded, as fraud constitutes tortious conduct.

Here, it does not appear that the trial court based its award on fraud. Indeed, the trial court expressly rejected Kilgore’s contention that PDC made material misrepresentations. Rather, the trial court’s award of punitive damages was predicated upon its finding that PDC’s “actions [were] based on malice, and not on any justifiable claim against [Kilgore].” It is clear, however, that PDC’s actions constituted a breach of the settlement agreement, which is an insufficient basis to sustain an award of punitive damages. It follows that the trial court erred in awarding such damages.

Judgment affirmed in part and reversed in part.

Johnson, P. J., and Ellington, J., concur.

Decided November 7, 2001

Reconsideration denied November 28, 2001.

Browning & Tanksley, George T. Smith, for appellants.

Bentley, Bentley & Bentley, Cecil G. McLendon, Jr., Donald L. Mize, for appellee.

       PDC also filed a motion to strike appellee’s revised brief, which we hereby deny.

       The record demonstrates that Kilgore filed two suits — one against PDC and another against Ortiz, which the trial court consolidated.

        Lindenberg v. First Fed. Sav. &c. Assn., 528 FSupp. 440, 443 (III) (A) (N.D. Ga. 1981), affid, 691 F2d 974 (11th Cir. 1982).

       See Randall v. Norton, 192 Ga. App. 734, 736 (2) (386 SE2d 518) (1989).

       See id.

        Lindenberg, supra.

       See id.; see also Randall, supra.

       (Punctuation omitted.) Nebraska Plastics v. Harris, 236 Ga. App. 499, 502 (512 SE2d 388) (1999).

       See id.

       See Mitchell v. W. S. Badcock Corp., 230 Ga. App. 352, 355-356 (4) (496 SE2d 502) (1998).

        Smith v. Direct Media Corp., 247 Ga. App. 771-772 (544 SE2d 762) (2001).

       See id. at 772.

        Vildibill v. Palmer Johnson of Savannah, Inc., 244 Ga. App. 747, 748-749 (1) (536 SE2d 779) (2000). See also Capitol Materials v. Kellogg & Kimsey, Inc., 242 Ga. App. 584, 587 (4) (530 SE2d 488) (2000).

       See id.

       (Punctuation omitted.) Penland v. Corlew, 248 Ga. App. 564, 566 (1) (547 SE2d 306) (2001).

       (Punctuation omitted.) Id.

        Covington v. D. L. Pimper Group, Inc., 248 Ga. App. 265, 267 (546 SE2d 37) (2001).

       (Punctuation and footnotes omitted.) Head v. DeKalb County, 246 Ga. App. 756, 760 (2) (542 SE2d 176) (2000).

       (Punctuation omitted.) Baker v. Jellibeans, Inc., 252 Ga. 458, 459 (1) (314 SE2d 874) (1984); OCGA § 24-6-3 (a).

       See OCGA § 13-5-30, which requires that the writing be “signed by the party to be charged therewith or some person lawfully authorized by him.” Cf. Jellibeans, supra at 460 (1) (“Here, the writings are contemporaneous and signed and the requirements of the Statute of Frauds are satisfied thereby.”).

        Jellibeans, supra at 458 (1).

        Mikart, Inc. v. Marquez, 211 Ga. App. 209, 212 (6) (438 SE2d 633) (1993); OCGA § 13-6-10.

       See Ledbetter v. Ledbetter, 222 Ga. App. 858, 863 (3) (476 SE2d 626) (1996).

       Cf. id.


text:
    A01A0866.
    GEORGIA TEXTILE MACHINERY, INC. v. FEDERAL EXPRESS CORPORATION.
    (556 SE2d 845)
   Phipps, Judge.

On May 25, 1998, Federal Express Corporation (FedEx) accepted a shipment of five packages of vertically lapped fibers in the Czech Republic for delivery to Georgia Textile Machinery, Inc. (GTM) in Dalton, Georgia. FedEx delivered the shipment on June 1, 1998. A few days later, GTM telephoned FedEx, complaining that the goods had been delivered damaged. It faxed FedEx notice of the damaged goods on June 30, 1998. GTM discarded the entire shipment without inspection by FedEx. FedEx billed GTM for the shipping charges on July 22, 1998, and GTM refused to pay.

FedEx sued GTM to recover the unpaid shipping charges. GTM counterclaimed, alleging that FedEx had “ruined” the goods during transit. FedEx sought summary judgment on its claim and argued that GTM’s counterclaim was barred by a notice provision of the Warsaw Convention. GTM sought summary judgment as to FedEx’s claim, arguing that it was barred because FedEx failed to bill it in accordance with 49 CFR § 377.205 (a) (2). The trial court granted FedEx’s motion and denied GTM’s motion. GTM appeals, contending that the notice provision does not apply to its counterclaim and that the billing regulation precludes FedEx’s claim. We disagree with GTM’s contentions and affirm.

Summary judgment is proper when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. A de novo standard of review applies to an appeal from a grant of summary judgment, and we view the evidence, and all reasonable conclusions and inferences drawn from it, in the light most favorable to the nonmovant.

1. GTM contends that its claim is not barred by the notice provision of the Convention because the shipper did not sign the associated FedEx international air waybill and thus the Convention, referenced therein, cannot be binding upon it.

The air waybill stated, “By giving us your shipment, you agree to the conditions on the back of this Non-Negotiable Air Waybill. Certain international treaties, including the Warsaw Convention, may apply to this shipment and limit our liability for damage, loss or delay, as described in the Conditions of Contract.” The air waybill also stated, “Use of this Air Waybill constitutes your agreement to the Conditions of Contract on the back of this Air Waybill.” And text on the back provided, “By giving us your shipment, you agree, regardless of whether you sign the front of this Air Waybill for yourself or as an agent for and on behalf of any other person having an interest in this shipment, to all terms of this NON-NEGOTIABLE Air Waybill. . . .”

The Convention, governing the liability of air carriers in international air travel and preempting local law in areas where it applies, creates and exclusively governs GTM’s claim. Article 26 of the Convention requires that the recipient of a delivery complain in writing of damaged goods within seven days of receipt. Failure to do so defeats an otherwise valid damage claim. It is uncontroverted that GTM failed to provide written notice of the alleged damage within seven days of delivery. It seeks to avoid summary judgment against it, however, by pointing out that the air waybill does not contain the shipper’s signature. It argues that therefore it is not contractually bound by the Convention referenced by the air waybill.

The Convention is clear: “The absence, irregularity, or loss of [an air waybill] shall not affect the existence or the validity of the contract of transportation which shall, subject to the provisions of article 9, be none the less governed by the rules of this convention.” And in this case, the provisions of Article 9 do not affect FedEx’s right to notice under Article 26. Article 9 provides that a carrier which has failed to include on the air waybill certain items listed in Article 8 “shall not be entitled to avail himself of the provisions of this convention which exclude or limit his liability.” Article 8 does not list the shipper’s signature as a required item. Thus, although the shipper did not sign the air waybill, GTM’s claim remains governed by the Convention, and FedEx is not deprived of the notice protection of Article 26.

2. Relying on Dalton v. Delta Airlines, GTM claims that the goods were “destroyed,” thus eliminating the notice requirement of Article 26. In Dalton, dogs in good condition were handed to Delta Airlines for transport. Upon reaching the destination, however, a Delta agent notified the shipper’s representative that the dogs had arrived dead. The district court granted Delta Airlines summary judgment because the owner had failed to provide written notice of a complaint within seven days as required by Article 26 of the Convention. The former Fifth Circuit determined that Article 26 was applicable only to cases involving damaged or delayed goods, then determined that the dead dogs were “destroyed” goods. The Fifth Circuit reversed the district court, holding that no Article 26 notice was required for destroyed goods “since notice would serve no useful purpose to the carrier” who already knows that the goods were delivered destroyed. Construing this holding, the Eleventh Circuit later held that “if Dalton applies at all beyond animal cases, it controls only situations where the destruction is both total and obvious.”

In this case, GTM supports its claim that the goods were destroyed by pointing to its interrogatory response that states: “The roll was wrapped in plastic — this plastic was torn in various places. The roll was white originally — when received grease etc., was all over it and the fabric was torn. There were holes in it etc.” But although GTM claims that the packages were totally “ruined” before delivery, its agent accepted the shipment without any such notation. Receipt without complaint by the person entitled to the goods is prima facie evidence that the goods have been delivered in good condition. GTM presented no photographs of the alleged destruction. We agree with the trial court that the evidence here was insufficient as a matter of law to establish that the shipment was destroyed and that the destruction was total and obvious to FedEx so as to bring this case within the rule of Dalton. Accordingly, the trial court did not err in determining that FedEx was entitled to Article 26 notice.

3. GTM contests the trial court’s denial of its motion for summary judgment against FedEx’s claim. It cites 49 CFR § 377.205 (a) (2), a billing regulation applicable to certain transportation by motor vehicle by common carriers of property. The regulation provides, “The time period for a carrier to present its freight bill for all transportation charges shall be 7 days, measured from the date the carrier received the shipment. This time period does not include Saturdays, Sundays, or legal holidays.” GTM argues that because FedEx did not bill it within that time period, the regulation bars FedEx’s claim.

FedEx counters that the shipment was not subject to the billing regulation because pursuant to 49 USC § 13506 (a) (8) (B), it was exempt from the billing regulation. That Code section pertains to “transportation of property (including baggage) by motor vehicle as part of a continuous movement which, prior or subsequent to such part of the continuous movement, has been or will be transported by an air carrier. . . .” The trial court agreed with FedEx.

On appeal, GTM argues only that there is no evidence that the shipment was in “continuous movement,” stating in its brief, “[i]t is difficult to understand how the goods could have been in continuous movement by air carrier for a week prior to delivery.” A shipment, however, need not be in motion throughout transit to be in “continuous movement” within the meaning of the subject regulation.

Rulings by the former Interstate Commerce Commission and court decisions that have considered whether property was transported as part of a “continuous movement” under identical language of former 49 USC § 10526 (a) (8) (B) have not imposed a literal interpretation of the term. Instead, the test used to determine the nature of the transportation of property is the intent of the shipper at the start of the transportation. This intent fixes and governs the character of the shipment, provided that intention persists throughout the entire movement. The intent of the shipper can be ascertained from all the facts and circumstances surrounding the transportation, e.g., “the presence of common incidents of through carriage such as through billing, uninterrupted movement, continuous possession by the carrier, or unbroken bulk.” Further, the movement of the goods may be continuous even in the absence of such incidents where it is admitted that a shipment made to the ultimate destination had at all times been so intended. Delivery of goods to customers is often a multi-step process involving temporary interruptions, and the simple fact that the transit is temporarily interrupted does not mean that the shipment is no longer a part of a “continuous movement.”

Decided November 28, 2001.

John T. Longino, for appellant.

James W. Martin, for appellee.

Here, the uncontroverted evidence shows that, from the start, the fixed and persistent intent of the shipper was for the shipment to move through to its ultimate destination, GTM in Dalton. And FedEx delivered it there one week after accepting it. Any transportation by motor vehicle of the shipment was part of a continuous movement, and the mere fact that the movement of the shipment may have been temporarily interrupted does not change its character to deprive FedEx of the exemption.

Judgment affirmed.

Smith, P. J, and Barnes, J, concur.

       Officially denominated “Convention for Unification of Certain Rules Relating to International Transportation by Air” and reprinted at 49 USC § 40105.

       OCGA § 9-11-56 (c).

        Matjoulis v. Integon Gen. Ins. Corp., 226 Ga. App. 459 (1) (486 SE2d 684) (1997).

        Highlands Ins. Co. v. Trinidad & Tobago &c. Corp., 739 F2d 536, 537, n. 2 (11th Cir. 1984).

       See Warsaw Convention, Articles 1, 18, 24; see also El Al Israel Airlines v. Tseng, 525 U. S. 155 (119 SC 662, 142 LE2d 576) (1999); Boehringer-Mannheim Diagnostics v. Pan American World Airways, 737 F2d 456, 458 (5th Cir. 1984); Highlands Ins. Co., supra.

        Highlands Ins. Co., supra at 538.

       Id.

       Warsaw Convention, Article 5 (2).

       See Warsaw Convention, Article 8 (a)-(i), (q).

       570 F2d 1244 (5th Cir. 1978).

       Id. at 1247.

       Id. at 1245.

       Id. at 1246; Warsaw Convention, Article 26 (2).

        Dalton, supra at 1247-1248.

        Highlands Ins. Co., supra at 539 (II).

       Warsaw Convention, Article 26 (1); Highlands Ins. Co., supra at 538 (I).

       49 CFR § 377.101.

       (Emphasis in original.)

       “The Interstate Commerce Commission does not have jurisdiction under this sub-chapter over . . . transportation of property (including baggage) by motor vehicle as part of a continuous movement which, prior or subsequent to such part of the continuous movement, has been or will be transported by an air carrier or (to the extent so agreed by the United States and approved by the Civil Aeronautics Board or its successor agency) by a foreign air carrier.”

       See, e.g., Package Express Svcs., 133 MCC 124 (1983); Fabulous Fur Corp. v. United Parcel Svc., 664 FSupp. 694 (E.D. N.Y. 1987).

        Package Express Svcs., supra.

        Armstrong World Indus., 2 ICC2d 63 (1986).

       Id.

        Quaker Oats Co., 4 ICC2d 1033 (1987).

       Accord Package Express Svcs., supra (determining that delayed, misplaced, or misrouted baggage, originally intended to accompany a passenger, maintains its “continuous movement” status, and concluding that any motor transportation of such baggage that has had an immediate prior or subsequent movement by air falls within 49 USC § 10526 (a) (8) (B)); compare Fabulous Fur Corp., supra at 696, n. 3 (where shipments arrived by air to the shipper’s agent, and upon receipt of the shipments, the agent broke down and repackaged the shipments for subsequent deliveries to individual recipients, court found that the shipments were not continuous enough to fall within 49 USC § 10526 (a) (8) (B)).