text:
    A99A0049.
    AL AND ZACK BROWN, INC. v. BULLOCK.
    (518 SE2d 458)
   Ruffin, Judge.

Barbara Bullock, d/b/a Unique Welding & Fabricating (Unique), sued Al and Zack Brown, Inc. (Brown) for breach of contract, seeking $140,000 in damages, plus interest. A jury awarded Unique $30,661.25, and the trial court entered judgment for that amount, plus costs and post-judgment interest. Brown orally moved for directed verdict at the close of trial and later filed written motions for judgment notwithstanding the verdict and new trial, arguing that Unique failed to properly prove both its damages and to prove the existence of a contract between the parties. The trial court denied all three motions, and Brown appeals. For reasons that follow, we affirm.

A directed verdict or j.n.o.v. should be granted only “[i]f there is no conflict in the evidence as to any material issue and the evidence introduced, with all reasonable deductions therefrom, shall demand a particular verdict.” OCGA § 9-11-50 (a) & (b). Accordingly,

[w]here a jury returns a verdict and it has the approval of the trial judge, the same must be affirmed on appeal if there is any evidence to support it as the jurors are the sole and exclusive judges of the weight and credit given the evidence. The appellate court must construe the evidence with every inference and presumption in favor of upholding the verdict, and after judgment, the evidence must be construed to uphold the verdict even where the evidence is in conflict. As long as there is some evidence to support the verdict, the denial of [a] motion for directed verdict [or] j.n.o.v. will not be disturbed.

(Punctuation omitted.) Ballenger Paving Co. v. Gaines, 231 Ga. App. 565, 566 (1) (499 SE2d 722) (1998). Likewise, we will affirm a trial court’s denial of a motion for new trial if there is any evidence to support the jury’s verdict. Lofty v. Fuller, 223 Ga. App. 95, 97 (2) (477 SE2d 30) (1996).

Viewing the evidence in the light most favorable to Unique, Unique submitted to Brown a bid of $764,998 for the detailing, fabrication, and erection of steel bins and related structures at an industrial plant Brown was building. The bid included the price of purchasing the raw steel needed to complete the job, and the amount of the bid was based on price quotes Unique received from O’Neal Steel (O’Neal), a wholesale supplier. To calculate the bid, Unique added the price per pound of the raw steel plus a price per pound for detail drawings, labor and other expenses, and profit, then multiplied that sum by the total pounds of steel required for the job. Brown accepted the bid.

Unique then learned that, as a new business, it could not purchase steel on credit from O’Neal and would instead have to buy from higher-priced suppliers, cutting into its profits on the job. Brown agreed to help Unique by supplying a line of credit to O’Neal on behalf of Unique, so that O’Neal would bill Brown directly for the raw steel and Brown would deduct its payments to O’Neal from the installment invoices it received from Unique.

Unique began performing under the contract, first subcontracting out the creation of detail drawings of the structures. Unique billed Brown $46,260 for 60 percent of the detail drawings, and Brown promptly paid. Next, Unique began ordering raw steel from O’Neal and other suppliers and fabricating it to Brown’s specifications. After several weeks of work, Unique billed Brown $64,638 for 120,000 pounds of fabricated steel, or about 10 percent of the total project. Unique never received payment on the second invoice. Upon inquiry, Unique learned that Brown had, in fact, paid the bill — but had made the check out to a former employee of Unique who, unbeknownst to Unique, had entered into a separate agreement with Brown to finish the project. Brown promised Unique that, if Unique gave Brown all the steel it had for the project, Brown would settle with Unique. Unique accordingly stopped work on the project and sent all unfinished and partially finished steel for the job to Brown and Unique’s former employee. However, Brown never paid Unique any more money.

1. In its first and second enumerations of error, Brown contends that Unique failed to properly prove its damages because it did not quantify either the expenses it incurred to the date of the breach or the profit it earned on the work it had performed. We find no error in Unique’s method of proving damages.

The purpose of awarding damages for breach of contract is to “put [the plaintiff] in as good a position as if the defendant had fully performed the contract.” PMS Constr. Co. v. DeKalb County, 243 Ga. 870, 872 (2) (257 SE2d 285) (1979). When an owner breaches a fixed-price construction contract, the usual measure of damages is the net profit the contractor would have received had it fully performed, which is calculated by subtracting from the contract price the amount that full performance would have cost the contractor. Dill v. Chastain, 234 Ga. App. 770, 771 (507 SE2d 872) (1998); Williams v. Kerns, 153 Ga. App. 259, 266 (1) (265 SE2d 605) (1980). If the contractor has partially performed,

there must be added to the profit figure the amount of the contractor’s net loss up to the point of the breach. That figure is reached by subtracting from the expenses incurred by reason of the contractor’s performance the salvage or resale value of the material left on hand. . . . Second, there must be deducted from the recovery those amounts received by the contractor from the owner as prepayment or progress payment.

Williams, supra at 267; Energy Contractors v. Ga. Metal Systems &c., 186 Ga. App. 475, 477 (2) (367 SE2d 324) (1988). This formula permits the contractor to realize the benefit of its bargain by recovering profits it would have earned both on work performed but not yet paid and on work not yet performed. Imaging Systems Intl. v. Magnetic Resonance Plus, 227 Ga. App. 641, 643 (1) (490 SE2d 124) (1997).

As an alternative to suing for the benefit of the bargain, the contractor may “treat[] the contract as rescinded and at an end,” in which case “he can sue and recover the full value of the labor done and materials furnished in the partial performance of the contract, less payments made thereon.” Decatur County v. Praytor, Howton & Wood Contracting Co., 163 Ga. 929, 937 (3) (137 SE 247) (1927). Under these circumstances, a contractor who has partially performed “is entitled to the compensation provided for in the contract, so far as he has performed the work and furnished materials.” Id.

As an initial matter, Unique argues that the above measure of damages does not apply because this case is governed by the Uniform Commercial Code (UCC), which permits a seller to recover the price of goods accepted by the buyer. OCGA § 11-2-709 (1). We disagree. Article 2 of the UCC applies only to actions involving the sale of goods. OCGA § 11-2-102; Mail Concepts v. Foote & Davies, Inc., 200 Ga. App. 778, 779 (1) (409 SE2d 567) (1991). Here, the contract was not primarily for the sale of goods. The primary purpose of the parties’ amended agreement was the provision of steel fabrication and installation services, not the purchase of steel, as evidenced by the fact that Brown purchased most of the steel directly from O’Neal. See OMAC, Inc. v. Southwestern Machine & Tool Works, 189 Ga. App. 42 (374 SE2d 829) (1988) (UCC did not apply where “[i]n essence, appellee agreed to perform a service, making appellant’s material into the parts appellant needed”). Accordingly, the UCC does not govern this case, and Unique was required to prove damages in accordance with general principles of contract law.

At trial, Unique sought only the amount Brown owed Unique for Unique’s performance up until the breach. Unique’s founder, Bobby Bullock, explained how he calculated Unique’s damages. First, Bullock determined the price paid for the steel purchased for the job through O’Neal and other suppliers by referring to purchase orders and shipping receipts. Bullock then estimated the percentage of the purchased steel that Unique had fabricated by the time of the breach and multiplied that number by the contract price per pound of steel, which included both the cost of the steel and a charge for detailing and fabrication. From this figure, Bullock subtracted Brown’s estimated direct payments to O’Neal for raw steel, the partial payments Brown already had made to Unique, and the two payroll checks issued at Brown’s direction. The resulting number — $56,169.28 — represented the amount Unique contended it was owed at the agreed-upon contract price for Unique’s actual performance prior to the breach.

Brown contends that Unique was required to follow the benefit-of-the-bargain damages formula outlined above because Unique’s alleged damages included profits Unique expected to earn on the work it had performed. Brown further contends that Unique failed to comply with this formula because Unique failed to separate its overhead expenses from its expected profits for work already performed. We find that Unique was not required to follow the benefit-of-the-bargain procedure for proving damages because Unique did not request profits for work it had not yet performed. Instead, Unique sought only to be paid “the compensation provided for in the contract” for the work it already had done — a valid alternative measure of damages. Decatur County, supra. That Unique’s actual damages may have included “profit” earned on the work already performed does not change this analysis. Unique presented sufficient evidence that the compensation provided for in the contract could be computed on a per-pound basis, and it was for the jury to decide how to calculate the exact amount.

2. In several enumerations of error, Brown claims that Unique’s proof of damages was based on purely speculative evidence that could not have permitted the jury to determine damages with reasonable certainty. Brown points to Bobby Bullock’s testimony that Unique’s damages calculations were based on Bullock’s estimates of the amount of work Unique had completed at the time of the breach because some of the records which would permit Unique to present exact figures were taken by the departing Unique employee whom Brown engaged to finish the project. Bobby Bullock explained, however, that his estimates were based on the records Unique still had, on Bullock’s personal knowledge and experience on the job, and on photographs of the work Unique completed. Moreover, where Bullock was uncertain of exactly how much steel Unique had fabricated, he estimated conservatively.

Decided May 26, 1999 — Cert. applied for.

Jones, Cork & Miller, Howard J. Strickland, Jr., Wendell K. Howell, Alan G. Snipes, for appellant.

Smith & Fleming, Robert O. Fleming, Jr., Peter M. Crofton, for appellee.

Although Brown correctly states that damages may not be based on speculation and conjecture,

[t]he rule against the recovery of vague, speculative, or uncertain damages relates more especially to the uncertainty as to cause, rather than uncertainty as to the measure or extent of the damages. Mere difficulty in fixing their exact amount, where proximately flowing from the alleged injury, does not constitute a legal obstacle in the way of their allowance, when the amount of the recovery comes within that authorized with reasonable certainty by the legal evidence submitted.

(Punctuation omitted.) Crosby v. Spencer, 207 Ga. App. 487, 488 (1) (428 SE2d 607) (1993). Here, there was no uncertainty as to the cause of Unique’s damages, and “[t]he jury had sufficient evidence by which it could determine damages with a reasonable degree of certainty.” Williams, supra at 268 (2) (affirming damages award based, in part, on contractor’s estimate of cost savings). Although Brown’s attorney attempted to undermine Bobby Bullock’s damages computations during cross-examination, the jury obviously concluded Unique was entitled to a recovery.. The jury award was less than half the amount Unique sought and was well within the range permitted by the evidence. Pippin v. Burnum, 172 Ga. App. 553, 555 (2) (323 SE2d 857) (1984).

3. Finally, we reject Brown’s argument that the jury verdict was against the weight of the evidence. Our review is limited to a determination of whether the evidence, when viewed in the light most favorable to Unique, supports the verdict. Willis v. State, 263 Ga. 597, 598 (1) (436 SE2d 204) (1993). We find that it does.

Because the trial court did not err in denying Brown’s motions for directed verdict, j.n.o.v., and new trial, we affirm.

Judgment affirmed.

McMurray, P. J., and Andrews, J, concur.

       At Brown’s direction, the former Unique employee gave Unique two checks totaling $26,278.58 so that Unique could meet its payroll.

       Unique initially sought damages for lost future profits, as well, but abandoned this claim prior to trial.

       We note that Brown never requested a jury instruction on this damages formula.

       By paying Unique’s first bill, paying the second bill to the former Unique employee, and promising to settle with Unique, Brown essentially admitted that it owed Unique partial payments as the job progressed based on a negotiated contract price.


source: Caselaw Access Project

author: Judge Harold R. Banke.

license: Public Domain

text:
    A99A0120.
    EDENS v. O’CONNOR.
    (519 SE2d 691)
   Judge Harold R. Banke.

Objecting to certain interrogatories and document requests as burdensome and irrelevant, defendant John Edens refused to provide the requested discovery. After a hearing, the court ordered Edens to provide the information. When Edens provided inadequate responses, O’Connor moved for sanctions, which Edens opposed in a written brief. The court decided to schedule a hearing on the sanctions motion and published notice of the hearing in the local legal organ. It is undisputed that Edens’ counsel received no written notice of the sanctions hearing other than the publication.

Edens’ counsel did not appear at the sanctions hearing, which was conducted in his absence. Three months later the court entered discovery sanctions, including a $4,500 award to reimburse O’Connor’s attorney fees. Citing lack of notification, Edens moved under OCGA § 9-11-60 (d) (3) to have the order set aside. This appeal followed the denial of that motion. Held'.

1. Edens contends that the failure to provide written notice of the hearing requires reversal of the judgment. Anderson v. Anderson, 264 Ga. 88, 89 (441 SE2d 240) (1994), held that the failure of counsel to receive proper notice of a hearing constitutes a nonamendable defect under OCGA § 9-11-60 (d) that requires the setting aside of the judgment. See Brown v. C & S Nat. Bank, 245 Ga. 515, 518 (265 SE2d 791) (1980).

King v. Bd. of Regents &c., 215 Ga. App. 570, 571 (451 SE2d 482) (1994), explained that if a hearing is held, OCGA § 9-11-6 (d) requires notice of the hearing to be served on counsel as per OCGA § 9-11-5 (b). This is not discretionary. “Publication of notice of a motion hearing date is not, by itself, sufficient compliance with OCGA § 9-11-6 (d).” (Citation and punctuation omitted.) Id. Based on the lack of proper written notice of the hearing, King reversed, holding the trial court should have set aside an award of attorney fees arising out of a party’s failure to comply with a discovery order.

O’Connor’s efforts to distinguish the facts of this case are ineffectual. Although a hearing is not always required to make a finding of wilfulness (see Schrembs v. Atlanta Classic Cars, 261 Ga. 182 (402 SE2d 723) (1991)), if a hearing is held then proper notice is required, if for no other reason than to avoid the appearance of ex parte contact. Here a hearing was held; no written notice was served on Edens; Edens did not appear at the hearing; claiming lack of notice, Edens moved to set aside the order that resulted from the hearing. Under King, the court had no choice but to set aside the order. This, of course, does not preclude the trial court from holding a hearing on remand (with proper notice to Edens) and then entering an appropriate order. See King v. Bd. of Regents &c., 238 Ga. App. 4 (516 SE2d 581) (1999).

Decided May 26, 1999.

James J. McGinnis, for appellant.

Nadler, Beskin & Scott, Gary M. Nadler, for appellee.

Orrel v. Amerada Hess Corp., 224 Ga. App. 625, 628 (481 SE2d 624) (1997), is inapplicable, since no hearing was conducted in that case.

2. The decision in Division 1 moots the other enumerations of error.

Judgment reversed.

Blackburn, P. J., and Barnes, J., concur.


author: Blackburn, Presiding Judge.

text:
    A99A0191.
    POLLARD v. THE STATE.
    (518 SE2d 463)
   Blackburn, Presiding Judge.

Following a jury trial, Jack Pollard appeals his conviction of voluntary manslaughter, contending that there was insufficient evidence to support the conviction and that the trial erred by: (1) admitting into evidence the victim’s statements to witnesses; (2) admitting into evidence his incriminating statements made to police at the scene; (3) admitting into evidence his incriminating custodial statements; (4) limiting defense counsel’s cross-examination of the victim’s sister regarding prior acts of violence by the victim; and (5) allowing physicians who treated the victim to testify regarding the extent of the victim’s wound and the degree of force required to cause such a wound. For the reasons discussed below, we affirm.

1.

On appeal the evidence must be viewed in the light most favorable to support the verdict, and [Pollard] no longer enjoys a presumption of innocence; moreover, an appellate court determines evidence sufficiency and does not weigh the evidence or determine witness credibility. The verdict must be upheld if any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.

(Punctuation omitted.) Barber v. State, 235 Ga. App. 170 (509 SE2d 93) (1998). See Jackson v. Virginia, 443 U. S. 307 (99 SC 2781, 61 LE2d 560) (1979).

Viewed in this light, the evidence shows that on November 2, 1996, Theodore Kirksey, Phillip Moore and Pollard went to Pollard’s home to watch a video. Subsequently, Moore’s wife called him to lunch, and he returned to his home next door in the duplex. Minutes later, while Moore was eating, Kirksey knocked on his door. Kirksey told Moore that Pollard had just stabbed him. When Kirksey lifted his shirt, Moore saw a small cut to the left of Kirksey’s breast bone, but Kirksey was not bleeding a lot. Moore went in his duplex to call for help and did not see Kirksey again.

Kirksey left the duplex and went to an apartment complex where Cheryl Girard met him in the yard. Kirksey asked to use the phone and said that he needed help, because he had been stabbed. Shortly thereafter, Kirksey also told Mary Ellen Rollins that Pollard had stabbed him.

Brunswick Police Officer Ron Harris and Corporal McKenney Tremble arrived while Kirksey was being treated by medical personnel and spoke with the bystanders who directed them to Pollard’s house. Harris, Tremble and two other officers went to Pollard’s home and identified themselves. The officers stated they were investigating a stabbing, whereupon Pollard invited them into his house and immediately told the officers that he had stabbed Kirksey and demonstrated how it had happened. The officers asked where the knife was, and Pollard gave it to them.

Pollard was arrested on charges of aggravated assault, taken to the police station and advised of his Miranda rights. Pollard signed a waiver of rights form and then gave an oral statement to Corporal Tremble in which he admitted to stabbing Kirksey after a dispute over watching a video.

Although Kirksey did not appear seriously injured, the stabbing proved fatal. Kirksey died at the hospital. However, prior to his death, Kirksey told an emergency room nurse, Mary Jane Hurd, that he had been stabbed with a kitchen knife.

Pollard gave a taped statement to Detective Chanclor in which he admitted to stabbing Kirksey. Pollard learned after giving this statement that Kirksey had died. Pollard was tried and convicted and filed this appeal.

There is ample evidence to authorize the jury’s finding that Pollard was guilty, beyond a reasonable doubt, of voluntary manslaughter and to support the conviction. See Jackson, supra.

2. Pollard contends the trial court erred by admitting into evidence Kirksey‘s statements made to witnesses shortly after the stabbing. However, by failing to object to this testimony at trial, Pollard has waived his right to assert on appeal that the statements were inadmissible hearsay. Basu v. State, 228 Ga. App. 591, 592 (1) (492 SE2d 329) (1997).

Moreover, the statements were so close in time to the stabbing that the witnesses’ testimony was admissible under the doctrine of res gestae. Basu, supra; Park v. State, 230 Ga. App. 274, 278 (5) (495 SE2d 886) (1998). OCGA § 24-3-3 provides that “[declarations accompanying an act, or so nearly connected therewith in time as to be free from all suspicion of device or afterthought, shall be admissible in evidence as part of the res gestae.”

As explained in Brantley v. State, [177 Ga. App. 13, 14-15 (2) (338 SE2d 694 (1985)] what the law altogether distrusts is not after-speech but afterthought. ... If the declarations appear to spring out of the transaction — if they elucidate it — if they are voluntary and spontaneous, and if they are made at a time so near to it, as reasonably to preclude the idea of deliberate design, then they are to be regarded as contemporaneous.

(Punctuation omitted.) Sims v. State, 234 Ga. App. 678, 682 (2) (507 SE2d 845) (1998). Kirksey spoke to the witnesses while still under the strain and anxiety of the stabbing. The statements were so closely connected in time to the stabbing so as to be free of afterthought and were therefore admissible.

3. Pollard next contends that his statements made in response to Officer Tremble’s initial inquiry at Pollard’s residence were inadmissible since he had not been given his Miranda warnings. “ Miranda warnings are not required when a person responds to an officer’s initial inquiry at an on-the-scene investigation which has not become accusatory.’ ” Thompson v. State, 234 Ga. App. 74, 75 (1) (506 SE2d 201) (1998).

A suspect must be in a custodial situation for Miranda to apply; a suspect is not entitled to Miranda warnings, as a matter of right, unless he has been taken into custody or has been deprived of freedom of action in another significant way. Hardeman v. State, 252 Ga. 286, 288 (1) (313 SE2d 95) (1984); Carroll v. State, 208 Ga. App. 316, 317 (2) (430 SE2d 649) (1993).

(Punctuation omitted.) Thompson, supra at 76 (1).

A person is not in a state of custody merely because he is a prime suspect at the time he is interrogated by the police or their agent. Even if the police have probable cause to arrest at the time of the interview and secretly intend to charge the suspect at some future time, such facts are immaterial to a determination of whether the suspect was in custody at the time of the interview, except when and to what extent the police communicate their future intent to arrest during the course of the interview. . . . The real issue for adjudication is whether the individual was formally arrested or restrained to the degree associated with a formal arrest. In resolving this issue, the relevant inquiry is how a reasonable person in a suspect’s position would perceive his situation; that is, whether a reasonable person in [Pollard’s] position would have understood the situation to constitute restraint on freedom of movement of the degree which the law associates with formal arrest.

(Citations and punctuation omitted.) Thompson, supra at 75-76 (1); Hendrix v. State, 230 Ga. App. 604, 605-606 (1) (497 SE2d 236) (1997).

In this case, Pollard, while in his own home, voluntarily confessed to the stabbing moments after the police officers told him they were conducting an investigation. Even if Pollard were a suspect at the time, there is no evidence that he was restrained or placed under arrest, and as such, legal safeguards applicable to custodial statements are inapposite to this case. His initial statements to Tremble were voluntarily made under noncustodial circumstances, and the trial court did not err in admitting the statement. Hendrix, supra; Whatley v. State, 196 Ga. App. 73, 78 (5) (395 SE2d 582) (1990).

4. Pollard argues that his incriminating custodial statements made at the police station were involuntary and therefore inadmissible at trial. “[W]hether a defendant waives his rights under Miranda and makes a voluntary and knowing statement depends on the totality of the circumstances.” (Citation omitted.) Henry v. State, 264 Ga. 861, 862 (2) (452 SE2d 505) (1995). “On appeal, the standard of review is whether the trial court was clearly erroneous in its factual findings on the admissibility of this statement.” Id.

With regard to the oral statement made to Tremble, Pollard points to the fact that the statement was not recorded and that Pollard did not sign or verify the notes taken by Tremble. However, these circumstances go to the weight and credibility of the statement, not to the admissibility of the statement. The trial court did not err in determining that the custodial statement to Tremble was admissible.

With regard to his recorded statement to Chanclor, Pollard contends the statement was involuntary, arguing that he was tricked because he was unaware at the time that Kirksey had died.

[U]se of trickery to obtain a confession does not render the confession inadmissible so long as “ ‘the means employed are not calculated to procure an untrue statement.’ ” Moore v. State, 230 Ga. 839, 840 (1) (199 SE2d 243) (1973). And absent any evidence that the police investigative techniques were designed to induce the “slightest hope of benefit or . . . fear of injury,” the resulting statements are not rendered involuntary and inadmissible under OCGA § 24-3-50. State v. Ritter, 268 Ga. 108 (1) (485 SE2d 492) (1997); Lewis v. State, 255 Ga. 681 (3) (341 SE2d 434) (1986).

DeYoung v. State, 268 Ga. 780, 789 (8) (493 SE2d 157) (1997).

In this case, during the interview, Pollard did not ask about Kirksey, and Chanclor did not make any representations about the well-being of Kirksey. Pollard again stated that he had stabbed Kirksey. Toward the end of the interview, Chanclor told Pollard that Kirksey had died. Unlike Ritter, supra, upon which Pollard relies, the record does not show that Chanclor misrepresented the condition of Kirksey in the hopes of obtaining a statement. Based on this evidence, we cannot say that the trial court’s determination that Pollard’s statement was freely and voluntarily made was clearly erroneous. Moreover, in light of Pollard’s previous incriminating statements, first at his home and later to Officer Tremble, any error in admitting the recorded statement would be harmless. See Johnson v. State, 266 Ga. 775 (5) (470 SE2d 637) (1996).

5. Pollard contends the trial court erred by limiting defense counsel’s cross-examination of Mary Kirksey Clark, the victim’s sister, with regard to prior acts of violence by the victim. Although “[t]he right of a thorough and sifting cross-examination shall belong to every party as to the witnesses called against him,” OCGA § 24-9-64, the trial court has the discretion to limit the scope of cross-examination. Duckworth v. State, 268 Ga. 566, 567 (1) (492 SE2d 201) (1997). Absent an abuse, the court’s discretion will not be interfered with on appeal. Sweeney v. State, 233 Ga. App. 862, 866 (6) (506 SE2d 150) (1998).

On cross-examination, defense counsel questioned Clark about a prior incident in which the victim had struck another man with a pipe. Clark testified that she had no knowledge of the incident. Defense counsel sought to continue this line of questioning and proffered a police report which failed to refresh Clark’s memory. Since Clark had no knowledge of the incident, the trial court properly restricted defense counsel’s cross-examination.

6. Pollard contends that the trial court erred by allowing the physicians who treated Kirksey to testify regarding the force required to cause such an injury. At trial, Dr. Stephen Kitchen testified to the force required without objection, so any error was waived. However, an objection was raised to Dr. Peter Bossak’s opinion that the injury resulted from a crosswise or upward thrust with more force than a casual jab.

Decided May 26, 1999.

James J. Lacy, Timothy L. Barton, for appellant.

Stephen D. Kelley, District Attorney, Ann S. Williams, Assistant District Attorney, for appellee.

Whether or not a witness is allowed to testify as an expert is a question for the sound discretion of the trial court and such discretion, unless abused, will not be disturbed. Generally nothing more is required to entitle one to give testimony as an expert than that he has been educated in the particular trade or profession; and special knowledge involving a particular subject may be derived from experience as well as study and mental application.

(Citation omitted.) Dennis v. State, 158 Ga. App. 142, 143 (3) (279 SE2d 275) (1981). The State qualified Dr. Bossak as an expert in the field of emergency medicine with experience in treating stab wounds. We find no abuse of discretion by the trial court.

Judgment affirmed.

Barnes, J., and Senior Appellate Judge Harold R. Banke concur.

       Kirksey’s statements to Moore, Girard, Rollins and Hurd.


author: McMurray, Presiding Judge.

text:
    A99A0204.
    A99A0205.
    SCOTT v. THE STATE. WILLIAMS v. THE STATE.
    (518 SE2d 468)
   McMurray, Presiding Judge.

Defendants Scott and Williams appeal their conviction of the offense of burglary. Held:

1. On the morning in question, Mrs. Lucia Reardon was at home with her visiting parents. Mr. Reardon had left for work. At approximately 8:00 a.m., the doorbell rang. Mrs. Reardon was not expecting anyone and went to look out a window to see who was at the door. She did not recognize the man, whom she identified at trial as defendant Williams, so she did not go to the door. After ringing the doorbell and knocking on the door, defendant Williams entered a car parked in the driveway, then got back out and began to walk around the house. Mrs. Reardon and her mother telephoned 911 to request assistance and Mrs. Reardon armed herself with a B-B or pellet pistol before listening for any noise indicating an intrusion into the home. Shortly thereafter, she encountered defendant Williams coming up a stairway inside the home. Mrs. Reardon stuck the B-B or pellet pistol in defendant Williams’ face and asked him if he wanted something. Defendant Williams retreated back down the stairway and Mrs. Reardon went to and out of the front door of the house where she saw defendant Williams, now accompanied by defendant Scott running to the car which they quickly drove away. Mrs. Rear-don chased the vehicle on foot before returning to the house where she called 911 once more to report the break-in, and provide a description of the car along with a partial tag number. The fleeing defendants were spotted by police dispatched in response to the burglary report, and were stopped and seized. Afterwards, Mrs. Reardon discovered that a jewelry box in her downstairs bedroom had been disturbed and certain rings taken. Also, a sliding glass door on the lower level of the house was found to have been removed from its track and found nearby were abandoned tools, a screwdriver and a pair of pliers, which were unfamiliar to Mr. and Mrs. Reardon.

Defendant Scott maintains that the evidence was wholly circumstantial and insufficient to support his conviction since there was no evidence that he had knowledge that Williams intended to burglarize the home or that he had possession of anything taken from the home. The testimony of defendant Scott was that he and Williams frequently did yard work together, that they were seeking such work when they stopped at the Reardon home, that Williams was driving and chose to stop there, that Williams went to the door where he knocked and rang the door bell, then walked down the side of the house, and that Williams was gone only three or four minutes before he returned with Mrs. Reardon in pursuit. Defendant Scott argues that his presence at the scene of a crime and flight are not sufficient to support a conviction.

It has been held that mere presence at the scene of a crime or where criminal acts are committed, even when coupled with flight, is insufficient to authorize conviction. Benjamin v. State, 16 Ga. App. 376 (85 SE 349); Burchfield v. State, 40 Ga. App. 506 (150 SE 459). “Neither presence, nor flight, nor both together without more, is conclusive of guilt.” Griffin v. State, 2 Ga. App. 534 (58 SE 781). Where there are only unexplained and suspicious circumstances, they are not sufficient to convict the defendant. Rodgers v. State, 213 Ga. 797, 803 (102 SE2d 10); Mach v. State, 109 Ga. App. 154, 161 (135 SE2d 467); Hodges v. State, 103 Ga. App. 284 (118 SE2d 858).

Williams v. State, 126 Ga. App. 350, 355 (190 SE2d 785). See also Denham v. State, 144 Ga. App. 373 (241 SE2d 295).

However, “it has also been held that presence, companionship, and conduct before and after the offense are circumstances from which one’s participation in the criminal intent may be inferred.” Thornton v. State, 119 Ga. 437, 439 (46 SE 640) (1903). Accord, Jones v. State, 242 Ga. 893 (252 SE2d 394) (1979); Kimbro v. State, 152 Ga. App. 893 (264 SE2d 327) (1980).

Slack v. State, 159 Ga. App. 185, 189 (3) (283 SE2d 64). Here, there is evidence that the defendants frequently did yard work together, had been together since earlier that morning and traveled a substantial distance to the Reardon residence, that while they were ostensibly seeking yard work they had no tools appropriate for that purpose with them but did apparently bring the burglary tools abandoned near the damaged sliding door in the rear of the house, that defendant Scott did not remain close by the car as he testified but was seen by Mrs. Reardon to be running back to the car from the side of the house, and that defendant Scott had given a false name when they were stopped by police.

We note that under OCGA § 16-2-20, the prosecution was not required to prove that defendant Scott was directly involved in the entry and theft from the home, but was subject to conviction as a party to the crime if he aided, abetted, advised, encouraged, or counseled his co-defendant Williams. Insofar as defendant Scott may have remained towards the front of the house, an inference would be authorized by that position that he was standing as a lookout while defendant Williams entered the home. Kimbro v. State, 152 Ga. App. 893, 894, supra. After a careful review of the entire record, we find that the evidence was sufficient to enable a rational trier of fact to have found defendant Scott guilty beyond a reasonable doubt of burglary. Jackson v. Virginia, 443 U. S. 307 (99 SC 2781, 61 LE2d 560); Kimbro v. State, 152 Ga. App. 893, 894, supra.

2. Defendant Scott also contends that he received ineffective assistance from his trial counsel. This contention is based upon the trial counsel’s decision to withdraw a request to charge criminal trespass as a lesser included offense without consulting with defendant Scott.

Trial counsel testified that his decision to withdraw the requested charge on criminal trespass was a strategic decision. Counsel’s decisions on matters of tactic and strategy, even if unwise, do not amount to ineffective assistance of counsel. Reynolds v. State, 231 Ga. App. 33, 38 (6) (c) (497 SE2d 580); Milliken v. State, 230 Ga. App. 810, 811, 812 (2) (b) (498 SE2d 127).

During the charge conference, trial counsel was called upon to identify which version of criminal trespass he contended was applicable. Trial counsel argued, based on defendant Scott’s testimony that he had urinated while on the premises, that the jury could find that defendant Scott had entered upon the Reardon land for an unlawful purpose, in order to publicly urinate. See OCGA §§ 16-7-21 (b) (1) and 16-6-8. After some colloquy, between the trial court and trial counsel, during which several issues were raised and discussed concerning whether this position was supported by the evidence and whether trial counsel’s credibility with the jury would be affected by arguing the position he had stated, trial counsel chose to withdraw the request to charge on criminal trespass. We find that trial counsel correctly characterized his choice as a strategic decision. Reynolds v. State, 231 Ga. App. 33, 38 (6) (c), supra; Milliken v. State, 230 Ga. App. 810, 811, 812 (2) (b), supra.

Furthermore, we find no evidence which would have required that a requested charge on criminal trespass be given, that is, which would support a finding that defendant Scott entered the Reardon premises for the purpose of publicly urinating. There has been no alternative theory advanced below or on appeal to support a request for a charge on criminal trespass.

Both defendants testified that they went to the Reardon home for the purpose of soliciting yard work. Defendant Williams went to the front door and knocked. Defendant Scott testified that he moved in the direction away from the house before he urinated nearby the side of the car and that there were trees all around. There was no evidence that he was observed or could reasonably be expected to be viewed by anyone at the place he urinated. Compare Clark v. State, 169 Ga. App. 535 (3), 536 (313 SE2d 748). Thus, there was no evidence of criminal trespass other than that which merged into the offense of burglary. Stephens v. State, 232 Ga. App. 738, 740 (4) (503 SE2d 643).

As no charge on criminal trespass would have been required, if requested, it follows that there could have been no adverse consequences as a result of trial counsel’s failure to consult with defendant Scott on whether to retain the request to charge on criminal trespass. Hill v. State, 228 Ga. App. 362, 363 (1) (492 SE2d 5).

The well known two pronged test of allegations of ineffective assistance of counsel is provided by Strickland v. Washington, 466 U. S. 668 (104 SC 2052, 80 LE2d 674). Since it appears that the allegations of defendant Scott fail with respect to both parts of the test, we conclude that this enumeration of error lacks merit.

3. In his first enumeration of error, defendant Williams contends that his trial counsel rendered ineffective assistance of counsel by calling the jury’s attention to his exercise of his right to remain silent. Appellate counsel, who is different from trial counsel, filed defendant Williams’ motion for new trial, containing a general allegation of ineffective assistance of trial counsel, as well as an amended motion for new trial, containing a number of specific claims of ineffective assistance of trial counsel. Nonetheless, defendant Williams’ motion for new trial as amended does not state the claim of ineffective assistance of trial counsel upon which this first enumeration of error is predicated. Nor was the issue now presented in defendant Williams’ first enumeration of error to this Court raised at the hearing on the motion for new trial where defendant Williams was represented by a third attorney. This failure to raise the issue of ineffective assistance of trial counsel now argued to this Court at the earliest practicable moment requires that it be deemed to have been waived. Spear v. State, 270 Ga. 628, 631 (5) (513 SE2d 489); Bagwell v. State, 270 Ga. 175, 179 (1) (f) (508 SE2d 385).

4. The remaining enumeration of error submitted by defendant Williams challenges the denial of his motion for new trial. The argument in support of this enumeration of error by appellate counsel may be divided into two parts.

First, a portion of the argument submitted is in substance a criticism of the third attorney’s handling of the motion for new trial hearing and seeks to argue issues or facts which were not raised or supported by evidence below. This portion of defendant’s argument is directed to issues beyond the scope of the enumeration of error, which may not be expanded by the argument contained in the brief. Mackey v. State, 235 Ga. App. 209, 210 (1) (509 SE2d 68); Duffey v. State, 232 Ga. App. 693 (498 SE2d 816).

The remainder of defendant Williams’ argument with regard to the denial of his motion for new trial is directed to one of the claims of ineffective assistance which was raised by the amended motion for new trial and concerning which evidence was presented at the hearing. The issues involve trial counsel’s decision to forego any challenge to the validity of certain convictions which formed the predicate for the recidivist sentencing of defendant Williams. Of course, any challenge to the validity of convictions on which a recidivist sentence rests must be raised at sentencing. Brenneman v. State, 200 Ga. App. 111, 115 (6) (407 SE2d 93). The only relevant evidence is the testimony of trial counsel at the motion for new trial hearing that he had discussed these prior convictions with defendant Williams, who had acknowledged that the convictions under other names reflected aliases he had used and were in fact his prior convictions. Trial counsel testified that this was consistent with defendant Williams’ criminal history obtained from “the GCIC” (apparently the Georgia Crime Information Center), that he had seen a photostatic copy of the convictions, and that defendant Williams did not want to launch a challenge of the convictions since it would only have delayed the proceedings. This evidence does not show any deficient performance on the part of his trial attorney and thus we need not address the second prong of the test provided in Strickland v. Washington, 466 U. S. 668, supra, before concluding that this claim of ineffective assistance of trial counsel lacks merit. See also Anderson v. State, 262 Ga. 331, 333 (5) (418 SE2d 39). The trial court did not err in denying defendant Williams’ motion for new trial.

Decided May 26, 1999 — Cert. applied for.

Parker & Day, Vallerina F. Day, for appellant (case no. A99A0204).

Lloyd J. Matthews, for appellant (case no. A99A0205).

Tommy K. Floyd, District Attorney, Thomas R. McBerry, Assistant District Attorney, for appellee.

Judgments affirmed.

Andrews and Ruffin, JJ, concur.


author: Ruffin, Judge.

text:
    A99A0230.
    DAWSON v. THE STATE.
    (518 SE2d 477)
   Ruffin, Judge.

Neil Dawson was convicted of possession of cocaine with the intent to distribute. He appeals the denial of his motion to suppress evidence arising from the search of his automobile, arguing that the State did not have probable cause for the search. We affirm.

On appeal of a trial court’s ruling on a motion to suppress, we are guided by three principles:

First, when a motion to suppress is heard by the trial judge, that judge sits as the trier of facts. The trial judge hears the evidence, and his findings based upon conflicting evidence are analogous to the verdict of a jury and should not be disturbed by a reviewing court if there is any evidence to support it. Second, the trial court’s decision with regard to questions of fact and credibility must be accepted unless clearly erroneous. Third, the reviewing court must construe the evidence most favorably to the upholding of the trial court’s findings and judgment.

(Citations, punctuation and emphasis omitted.) Tate v. State, 264 Ga. 53, 54 (1) (440 SE2d 646) (1994).

Officer Michael Albritton of the Richmond Hill Police Department testified that, on September 27, 1996, he saw a white Cadillac traveling southbound on 1-95. Albritton activated his radar gun, which showed that the car was traveling at 76 miles per hour, well over the 55 mile per hour speed limit. Albritton stopped the car, which was being driven by Dawson, and asked Dawson to get out of the car and produce his driver’s license and proof of insurance. Dawson exited the vehicle and handed Albritton his driver’s license, explaining that his insurance card was in the glove box. Dawson told Albritton that one of his co-workers was a passenger in the car. Albritton then approached the passenger door to speak with the passenger, Cosmo Thomas, and to get the insurance card from the glove box. As Thomas rolled down the passenger window, Albritton detected a strong odor of burnt marijuana coming from the interior of the car. Albritton testified that he was familiar with the smell of marijuana from his experience as a police officer and from his military training.

Albritton asked Dawson to move the vehicle to a less exposed position off the interstate, and wrote Dawson a ticket for speeding. Albritton then retrieved his drug dog, Jessica, from his patrol car and had Jessica perform a free-air search around the exterior of Dawson’s vehicle. Jessica alerted on the right rear door of the car, indicating the presence of narcotics. Albritton asked Dawson if he would consent to a search of his car for drugs. After initially indicating that he would consent, Dawson refused to sign a consent form produced by Albritton. However, after Albritton informed Dawson that he had probable cause to search the vehicle even if Dawson refused, Dawson consented to a search and executed the consent form.

Albritton then had Jessica search the interior of the car, and she alerted on a briefcase in the rear passenger area. Albritton opened the briefcase and found two plastic bags, each one containing several smaller bags of a white powdery substance that appeared to be cocaine. Albritton also found a green leafy substance that appeared to be marijuana on the rear portion of the seat.

Dawson moved to suppress evidence resulting from the search, arguing (1) that his consent was not voluntarily given, and (2) that the drug dog’s alerts did not provide probable cause to search the vehicle because the State did not prove the dog’s reliability. The trial court denied the motion on both grounds.

1. We have previously held that a drug dog’s alert on a vehicle gives an officer probable cause to believe that contraband is present therein. Milan v. State, 228 Ga. App. 310, 311 (491 SE2d 401) (1997); Roundtree v. State, 213 Ga. App. 793, 794-795 (446 SE2d 204) (1994); Donner v. State, 191 Ga. App. 58, 60 (380 SE2d 732) (1989). However, Dawson contends that the alert in this case was not, in and of itself, sufficient to establish probable cause because the drug dog was not shown to be reliable.

As an initial matter, Dawson is mistaken in focusing solely on the drug dog’s alert as providing the basis for a finding of probable cause. As we stated in State v. Gilman, 218 Ga. App. 895, 897 (463 SE2d 720) (1995),

the existence of probable cause is determined by whether, “given all the circumstances . . ., including the ‘veracity’ and ‘basis of knowledge’ of persons supplying hearsay information, there is a fair probability that contraband or evidence of a crime will be found in a particular place.” Illinois v. Gates, [462 U. S. 213, 238 (103 SC 2317, 76 LE2d 527) (1983)].

“[P]robable cause need not be defined in relation to any one particular element, but may exist because of the totality of circumstances.” (Punctuation omitted.) Howie v. State, 218 Ga. App. 45, 46 (1) (459 SE2d 179) (1995). In addition to the drug dog’s alert, there was evidence that Officer Albritton detected a strong odor of burnt marijuana from inside the vehicle. In reviewing the trial court’s denial of Dawson’s motion to suppress, we consider whether the totality of the circumstances, and not merely the drug dog’s alert, supports a finding of probable cause. See O’Keefe v. State, 189 Ga. App. 519, 526-527 (3) (376 SE2d 406) (1988) (regardless of whether odor of burning marijuana by itself supplies probable cause for search, it may be considered in totality of circumstances); Holmes v. State, 163 Ga. App. 753, 755 (1) (294 SE2d 719) (1982) (trooper’s detection of odor of marijuana, together with totality of circumstances, sufficient to provide probable cause); Johnson v. State, 230 Ga. App. 535, 538 (496 SE2d 785) (1998) (drug dog’s alert, together with totality of circumstances, sufficient to provide probable cause).

Although we are aware of no Georgia cases directly on point, several federal cases have discussed what evidence must be shown of a drug dog’s reliability in order to find probable cause based on the dog’s alert. In United States v. Daniel, 982 F2d 146, 151-152 & n. 7 (5th Cir. 1993), the Fifth Circuit held that, if it is shown that a dog is trained to detect the presence of controlled substances, it is not necessary to show how reliable the dog has been in the past in order to uphold the issuance of a search warrant based on the dog’s alert. The Fifth Circuit applied this ruling to warrantless searches in United States v. Williams, 69 F3d 27, 28 (5th Cir. 1995), holding that, “[b]ecause a showing of the dog’s reliability is unnecessary with regard to obtaining a search warrant, a fortiori, a showing of the dog’s reliability is not required if probable cause is developed on site as a result of a dog sniff of a vehicle.”

The Sixth Circuit has held that “[f]or a positive dog reaction to support a determination of probable cause, the training and reliability of the dog must be established.” United States v. Diaz, 25 F3d 392, 394 (6th Cir. 1994). However, that Court did not define the quantum of evidence necessary to establish a drug dog’s reliability, stating that

[w]hen the evidence presented, whether testimony from the dog’s trainer or records of the dog’s training, establishes that the dog is generally certified as a drug detection dog, any other evidence, including the testimony of other experts, that may detract from the reliability of the dog’s performance properly goes to the “credibility” of the dog. Lack of additional evidence, such as documentation of the exact course of training, similarly would affect the dog’s credibility. As with the admissibility of evidence generally, the admissibility of evidence regarding a dog’s training and reliability is committed to the trial court’s sound discretion.

Id. Thus, under Diaz, evidence that a dog is certified as a drug detection dog essentially constitutes prima facie evidence of the dog’s reliability. Although the dog’s “credibility” may be undermined by evidence of its lack of training or past unreliability, the ultimate determination as to whether the dog is sufficiently reliable to support a determination of probable cause is for the trial court as the trier of fact.

The Sixth Circuit has subsequently held that

[a] positive reaction by a properly trained narcotics dog can establish probable cause for the presence of controlled substances. United States v. Diaz, [supra]. However, for such a reaction to support a determination of probable cause, the training and reliability of the dog must be established.

United States v. Berry, 90 F3d 148, 153 (6th Cir. 1996). However, the Court in Berry indicated that evidence that the dog has been trained as a drug detection dog is sufficient to establish its reliability:

We find that the information contained in the affidavit [supporting the issuance of a search warrant] in this case was sufficient to establish the training and reliability of the drug-detecting dog. The affidavit’s references to the dog as a “drug sniffing or drug detecting dog” reasonably implied that the dog was a “trained narcotics dog.” Further, the affidavit stated that the dog was trained and qualified to conduct narcotics investigations. . . . Contrary to defendant’s suggestion, to establish probable cause, the affidavit need not describe the particulars of the dog’s training. Instead, the affidavit’s accounting of the dog sniff indicating the presence of controlled substances and its reference to the dog’s training in narcotics investigations was sufficient to establish the dog’s training and reliability. See United States v. Daniel, [supra at 151, n. 7] (rejecting defendant’s argument that an affidavit must show how reliable a drug-detecting dog has been in the past in order to establish probable cause); United States v. Venema, 563 F.2d 1003, 1007 (10th Cir. 1977) (stating that an affidavit in support of a search warrant need not describe the drug-detecting dog’s educational background and general qualifications with specificity to establish probable cause).

Although these cases differ as to whether proof of a dog’s “reliability” is necessary, they all properly recognize that evidence that the dog has been trained and certified as a drug detection dog constitutes prima facie evidence of its reliability for purposes of a probable cause determination. Although a defendant may try to attack the dog’s reliability by showing that it was not properly trained or that it has been unreliable in the past, such evidence presents an issue of fact for the trial court, and its decision must be accepted on appeal unless clearly erroneous. See Tate, supra. Moreover, in determining whether probable cause exists, the trial court does not focus simply on the drug dog”s alert, but on whether the totality of the circumstances shows a fair probability of the presence of contraband. See Gilman, supra. Where a drug dog’s alert is the only basis for suspecting the presence of contraband (e.g., where the dog alerts on luggage carried by a passenger at the airport), evidence that the dog has been extremely unreliable in the past may lead the trial court to conclude that the dog’s alert, by itself, does not indicate a “fair probability” of the presence of contraband. However, where there are additional indications of the presence of contraband (e.g., where an officer detects an odor of a controlled substance and uses the drug dog to confirm his suspicion), the totality of the circumstances may support a finding of probable cause notwithstanding evidence of the dog’s unreliability.

In this case, Officer Albritton testified that he and the dog, Jessica, had been trained together in drug detection at the Global Training Academy in Texas. Albritton and Jessica received a score of 97% on a performance test involving searches of buildings, vehicles, and luggage. They received a certificate of training on August 1, 1996, indicating the successful completion of 120 hours of training. The State introduced Jessica’s training records from the academy, indicating that she successfully located hidden drugs on 95 out of 99 occasions. The State also introduced records kept by Albritton relating to Jessica’s continuing training after leaving the academy. According to these reports, during the months of August and September 1996, Jessica successfully located narcotics on 49 occasions during training without a single false alert. Albritton also testified about Jessica’s performance during actual field searches in August and September. Although Albritton’s records of these searches are somewhat unclear, it appears that during these two months Jessica performed 92 vehicle searches. On 58 occasions she located contraband, and on 22 occasions she alerted but no contraband was found. Albritton testified that the only way to reliably evaluate a dog’s performance is through controlled tests, since a dog may correctly detect the residual odor of contraband even though the contraband itself has been discarded. Thus, an apparent false alert in a field search may not indicate a mistake by the dog, although there is no way to verify whether the dog actually detected a residual odor of contraband or whether it made a false alert.

Although Jessica may have alerted on occasion where no drugs were found, there was significant evidence of her reliability and training in detecting controlled substances, and the trial court did not err in relying on her alert to support a finding of probable cause. Moreover, the reliability of Jessica’s alert in this case was supported by the fact that Officer Albritton himself detected an odor of burnt marijuana inside the automobile. The trial court’s finding that the totality of the circumstances showed a fair probability of the presence of contraband was not clearly erroneous. See Holmes, supra; Johnson, supra.

2. Dawson argues that the trial court erred in admitting evidence regarding the drug dog because the Richmond Hill Police Department has not published rules regarding the use of drug dogs, as he contends is required by OCGA § 50-13-3. Regardless of the merits of this argument, Dawson did not make any objection below on this ground, and cannot raise such objection for the first time on appeal. See Gordon v. State, 235 Ga. App. 169 (2) (508 SE2d 782) (1998).

3. In a supplemental brief, Dawson argues that because he was not placed under arrest at the time of the search, the search did not qualify as a valid “search incident to arrest.” See Knowles v. Iowa, 525 U. S. 113 (119 SC 484, 142 LE2d 492) (1998). As an initial matter, Dawson has not shown that he made this argument in the trial court. Moreover, his argument is irrelevant, since the search was based on probable cause and was not incident to an arrest. “Once the officer had probable cause to believe that contraband was contained somewhere in [Dawson’s] automobile, he was authorized to conduct a search of its contents, including the [briefcase].” Boggs v. State, 194 Ga. App. 264, 265 (390 SE2d 423) (1990). See also Turner v. State, 213 Ga. App. 77, 78 (1) (443 SE2d 703) (1994); State v. Dopson, 204 Ga. App. 51-52 (418 SE2d 623) (1992).

Decided May 26, 1999 — Cert. applied for.

Lloyd D. Murray, for appellant.

Dupont K. Cheney, District Attorney, Carole E. Wall, Assistant District Attorney, for appellee.

Judgment affirmed.

McMurray, P. J., and Andrews, J., concur.

       Dawson contends that his consent was invalid because it was not given until after Albritton stated that he had probable cause for the search even if Dawson refused. The State does not address this issue in its brief, stating that it does not rely on the consent because the search was supported by probable cause. Due to our holding below, it is not necessary to consider the validity of Dawson’s consent.


author:
Eldridge, Judge. Senior Appellate Judge Harold R. Banke,
      Smith, Judge,

text:
    A99A0253.
    LOSTOCCO v. D’ERAMO.
    (518 SE2d 690)
   Eldridge, Judge.

Alexander Lostocco, plaintiff-appellant, and Anthony R D’Eramo, defendant-appellee, formed as stockholders and investors a corporation, Performance Leasing, Inc. (“PLI”), and plaintiff operated it in Atlanta. Such day-to-day operations by the plaintiff included all accounting. Defendant lived in Cincinnati and had no involvement with the management or day-to-day operations of PLI. Defendant believed that the plaintiff was utilizing PLI for his individual interests rather than the company’s interests. Therefore, early in 1987, defendant took over PLI to liquidate it. Defendant shipped PLI’s books and records to Cincinnati. On May 31, 1988, plaintiff filed suit against the defendant for taking over the company.

On May 31, 1988, to settle the suit the parties entered into a written settlement agreement in which plaintiff transferred all of his stock in PLI to defendant. The defendant, in consideration, agreed to indemnify plaintiff from federal taxes arising from PLI. Under the agreement, defendant “shall pay and hereby agrees to indemnify [plaintiff], and each of them, from and against any liability for federal taxes arising out of PLI and its operations. There is no agreement between the parties with respect to any state withholding taxes, and the parties’ respective rights or liabilities concerning any state withholding taxes shall be unaffected by this settlement agreement or the releases or covenants contained herein.”

Beginning in 1987, the IRS began an audit of PLI, focusing on the trust fund taxes. Plaintiff alleged that neither PLI nor defendant paid federal employees’ withholding trust fund taxes totalling $18,917.53 for federal income, FICA, and Medicare for the quarters ending December 31,1986 and March 31,1987. In October 1987, PLI filed its withholding tax return for the first quarter of 1987 without paying the taxes due. In June 1991, the IRS gave notice of its intent to levy such taxes against the corporate officers, plaintiff and defendant, for failure to pay such trust fund taxes. As of February 23, 1991, the interest and taxes were $22,721.71. To stop the running of interest, plaintiff paid the IRS $22,790.28.

The IRS levied upon plaintiff’s bank account to collect the trust fund taxes due. Plaintiff demanded indemnification under the agreement for the taxes paid, but defendant refused to indemnify what he contended were federal penalties.

In September 1991, plaintiff sued defendant for breach of contract. Defendant answered and raised several affirmative defenses. Plaintiff moved for summary judgment. Defendant responded and filed his own cross motion for summary judgment. Defendant moved to strike the affidavits of plaintiff’s witnesses. Plaintiff moved to strike defendant’s affidavits.

After oral argument, the trial court granted defendant’s motion for summary judgment and denied plaintiff’s motion for summary judgment. Plaintiff appealed.

Plaintiff’s first and second enumerations of error are that the trial court erred in denying plaintiff’s motion for summary judgment and in granting defendant’s motion for summary judgment. We agree.

The plain and unambiguous language of the agreement obligates defendant to pay PLI’s federal taxes and to indemnify plaintiff for any federal taxes that he had to pay on behalf of PLI. See Hartley-Selvey v. Hartley, 261 Ga. 700 (410 SE2d 118) (1991); CareAmerica v. Southern Care Corp., 229 Ga. App. 878 (494 SE2d 720) (1997). However, the phrase “federal taxes” is ambiguous, because it may include corporate income tax, fiduciary fund taxes, interest, and penalties. The parties do not agree that 26 USC § 6672 penalties come within this provision, but agree that PLI was under a duty to pay over the employees’ withholding taxes under 26 USC § 7501. The trial court refused to resolve such issue of construction and instead resolved the dispute under federal public policy that rendered the indemnity agreement void.

(a) The Internal Revenue Code § 7501, 26 USC § 6672, imposes the obligation upon the employer to collect, report, and pay over such trust account taxes. Failure to do so makes the employer and officers liable for such sums as “responsible persons.” See 26 USC § 6672. Under 26 USC § 6672, while the IRS can collect trust account taxes from the responsible person, it cannot collect late penalties and interest levied against the employer for non-payment. See First Nat. Bank in Palm Beach v. United States, 591 F2d 1143, 1149 (5th Cir. 1979).

Under 26 USC § 7501 (a), an employer is required to withhold taxes from employees in a “special fund in trust for the United States.” Under 26 USC § 6672 (a), the IRS may impose “a penalty equal to the total amount of the tax evaded[.]” The IRS can make such assessment of 100 percent of the payroll withholding liability against all people liable for such taxes. But 26 USC § 6672 policy limits the IRS to only one satisfaction of the payroll tax liability. Gens v. United States, 615 F2d 1335, 1339 (222 Ct. Cl. 407) (1980). Such penalty is to be levied against “(1) a responsible person, who has (2) willfully failed to perform a duty to collect, account, or pay over the taxes. [Cit.]” George v. United States, 819 F2d 1008, 1011 (11th Cir. 1987). The levy under 26 USC § 6672 against the responsible person, who has committed a “flagrant violation of the law,” is based on a willful breach of trust imposed by statute. Smith v. United States, 894 F2d 1549, 1553 (11th Cir. 1990).

The Code and the regulations thereunder require employers to withhold from employees’ paychecks the employees’ share of FICA taxes and income taxes. See Slodov v. United States, 436 U. S. 238, 242-43 (98 SC 1778, 1782-83, 56 LE2d 251) (1978). See also 26 CFR §§ 31.6011 (a)-1, 31.6011 (a)-4. Once the employer deducts funds from the employees’ checks, the Government credits the employees for the funds withheld. Regardless of whether or not the employer pays the withheld taxes over to the Government, the Government’s only recourse is against the employer. Slodov [v. United States, supra at 1783]. Withheld funds constitute a trust in favor of the United States from the time that the employer deducts them from employees’ checks, and the employer is liable to the Government for any amounts withheld. Id.; Code § 7501 (a) .

Smith v. United States, supra at 1552-1553. “[T]he purpose of section 6672 . . . is to give the Government a second person to turn to in the event that withholding taxes prove uncollectible from the employer. [Cits.]” Id. at 1555.

(b) Under 26 USC § 6672, the sum imposed upon the officers for failure to pay the employees’ trust fund taxes is designated a penalty. Notwithstanding such designation, it is a sum equal to the trust fund taxes of the employees that the officers failed to turn over to the IRS. See United States v. Sotelo, 436 U. S. 268, 275 (98 SC 1795, 56 LE2d 275) (1978); see also Smith v. United States, supra at 1553; Botta v. Scanlon, 314 F2d 392 (2nd Cir. 1963). However, 26 USC § 6671 (a) expressly provides that “any reference in this title to ‘tax’ imposed by this title shall be deemed also to refer to the penalties and liabilities provided by this subchapter (including [26 USC] § 6672).” (Citation omitted.) Botta v. Scanlon, supra at 393.

The funds here involved [, employee withholding taxes,] were unquestionably “taxes” at the time they were “collected or withheld from others.” . . . That the funds due are referred to as a “penalty” when the [IRS] later seeks to recover them does not alter their essential character as taxes ... at least in a case in which, as here, the § 6672 liability is predicated on a failure to pay over, rather than a failure initially to collect, the taxes.

United States v. Sotelo, supra at 275. Thus, the penalty is a mere collection device to recover the unpaid taxes and does not impose an additional penalty beyond the taxes owed. See Newsome v. United States, 431 F2d 742, 745 (5th Cir. 1970); United States v. Molitor, 337 F2d 917 (9th Cir. 1964). “The nature of the penalty imposed . . . shows that § 6672 is simply a means for ensuring that the tax is paid, and does not impose a criminal liability.” Botta v. Scanlon, supra at 393. The IRS treats payment of the trust account sums under 26 USC § 6672 as a tax. See Kelly v. Lethert, 362 F2d 629, 633 (8th Cir. 1966); Botta v. Scanlon, supra at 393. Consequently, the IRS can collect such trust account sums only once, no matter who ultimately pays it. United States v. Huckabee Auto Co., 783 F2d 1546 (11th Cir. 1986); Newsome v. United States, supra at 742; Gens v. United States, supra at 1339; Brown v. United States, 591 F2d 1136, 1142-1143 (5th Cir. 1979); Kelly v. Lethert, supra at 635. The IRS cannot collect 26 USC § 6672 sums greater than the amount due as a delinquent tax. United States v. Sotelo, supra at 279, n. 12; see also United States v. Security Pacific Business Credit, 956 F2d 703, 705, 707 (7th Cir. 1992).

(c) In pre-1996 tax refund cases, several federal district courts have refused to recognize contribution or indemnification theories under 26 USC § 6672 as a federal claim; this occurs when the IRS either brings in a third-party defendant or additional defendant in counterclaim on a refund case. In Rebelle v. United States, 588 FSupp. 49, 51 (M.D. La. 1984), relied upon by the defendant, the trial court wrote, “[t]he question for this Court, then, is whether a statutory right to contribution under section 6672 has been sanctioned by Congress.” In 1984, the answer was no, but the federal trial court went on to reject a state contract indemnity claim for the same reasoning, although it had no subject matter jurisdiction over such claim as a state action. Id. The federal district courts have no original subject matter, ancillary, or pendent jurisdiction over state indemnity claims.

It is well settled that an individual subject to a tax assessment pursuant to § 6672 has no federal common law or statutory right of action for contribution or indemnity against another individual who may also be so liable. ... It has been consistently recognized in the federal courts that where an action is patently without merit, a federal court may dismiss such action for want of subject matter jurisdiction.

(Citations and punctuation omitted.) Cook v. United States, 765 FSupp. 217, 219 (M.D. Pa. 1991). Therefore, to simplify the tax collection process, such state claims were routinely dismissed because of the limited subject matter jurisdiction of federal courts. See United States v. Amerson, 808 FSupp. 695 (W.D. Mo. 1992); Cook v. United States, supra; Rebelle v. United States, supra at 52. Federal district courts have given many reasons for the deniability of such claims in federal court under federal contribution or state indemnity theories. However, the right to bring such contract claims in state forums has not been prohibited by the federal district court opinions stating federal public policy, regarding federal tax administration, collection, and refund. “Clearly, the ‘statute serves as a collection device for the government, and not as a source of a cause of action between or among persons found to be “responsible” parties.’ [Cit.]” Cook v. United States, supra at 219.

In this case, plaintiff paid the IRS all the taxes due and did not seek a tax refund in federal district court but, instead, seeks reimbursement from the defendant under the written agreement for indemnity, which was the consideration for the PLI stock transfer. Therefore, no delay or interference with the collection policies of the IRS resulted from this case, nor have federal courts been burdened. Therefore, no federal public policy is involved in this case that would prohibit a state contract claim for indemnification. See Schoot v. United States, supra at 298; Swift v. Levesque, supra at 173.

While most of these federal district court opinions may hold that, to allow indemnity would frustrate federal tax policy to penalize the responsible party, such cases are merely persuasive and not binding. Further, they do not even come from the Eleventh Circuit. The foregoing Supreme Court and Circuit Court of Appeals cases do not prohibit indemnification in state actions for a 26 USC § 6672 penalty after it has been paid by the responsible person. Thus, the trial court erred as a matter of law.

Further, 26 USC § 6672 (d) was added by amendment in 1996 to provide a new federal right of contribution, so that Congress has drastically changed the pre-existing court-made federal policy in this regard. In fact, the Congressional legislative history to this amendment plainly states that, prior to the amendment, responsible persons could bring actions in state courts under state theories of contribution and indemnity for reimbursement. Thus, the trial court erred in this state contract action for indemnification by applying federal public policy as barring such state action.

(d)

The construction of contracts involves three steps. At least initially, construction is a matter of law for the court. First, the trial court must decide whether the language is clear and unambiguous. If it is, the court simply enforces the contract according to its clear terms; the contract alone is looked to for its meaning. Next, if the contract is ambiguous in some respect, the court must apply the rules of contract construction to resolve the ambiguity. Finally, if the ambiguity remains after applying the rules of construction, the issue of what the ambiguous language means and what the parties intended must be resolved by a jury. Century 21 Pinetree Properties v. Cason, 220 Ga. App. 355, 358 (2) (d) (469 SE2d 458) (1996).

CareAmerica v. Southern Care Corp., supra at 880. Ambiguity exists when the meaning is uncertain, and the language may be fairly understood in more than one way. Id. at 881. Thus, “federal tax” in the indemnity agreement may be construed to mean only federal corporate income taxes owed by the corporation or may include withholding trust fund taxes as well as interest and penalties; such fair interpretations render the indemnity agreement ambiguous regarding the meaning of federal taxes, even though the Revenue Code defines the term taxes to include penalties. See 26 USC § 6671 (a).

“The cardinal rule of contract construction is to ascertain the intention of the parties.” OCGA § 13-2-3. Since PLI was in financial difficulty, then it had no income and no federal corporate income tax liability. However, it did have a long history of liability for trust fund taxes withheld from employees under 26 USC § 7501, for which plaintiff could be held liable as the responsible person. Further, the agreement expressly excluded “any state withholding taxes, and the parties’ respective rights or liabilities concerning any state withholding taxes,” which demonstrates that the parties had in mind such class of tax liability and intended that “federal taxes” meant federal withholding taxes because the comparable state taxes were expressly excluded but such federal withholding taxes were not expressly excluded. See OCGA §§ 48-7-101; 48-7-106 (c); 48-7-108; 48-7-109. If the penalty under 26 USC § 6672 was not intended to come within the federal tax indemnity, then plaintiff would receive no real consideration for the transfer of his stock.

“If the construction is doubtful, that which goes most strongly against the party executing the instrument or undertaking the obligation is generally to be preferred.” OCGA § 13-2-2 (5). While both parties executed the agreement, plaintiff fully performed by transferring the PLI stock, leaving defendant to perform by paying the federal taxes and indemnifying plaintiff from federal taxes. Therefore, the interpretation that does not relieve the defendant from liability for the federal trust fund withholding taxes is the one to be preferred. CareAmerica v. Southern Care Corp., supra at 881. PLI had failed to pay all federal trust fund withholding taxes.

Generally, parol evidence is not admissible “to add to, take from, or vary a written contract,” because the language of the indemnity is not clear; however, we may consider “[a]ll the attendant and surrounding circumstances” to explain the ambiguity. OCGA § 13-2-2 (1); CareAmerica v. Southern Care Corp., supra at 881. PLI had a history of late filings and payments of the trust account taxes under plaintiff; therefore, the indemnity against all federal taxes, interest, and penalties of the plaintiff was the sole consideration that he received or wanted and that the parties bargained for. Thus, the parties intended that plaintiff be protected by (1) the defendant’s promise to pay all federal taxes, including the trust fund withholding taxes; and (2) the promise to indemnify plaintiff against any tax liability of PLI that he was required to pay under 26 USC § 6672 or other federal taxes. Since plaintiff immediately transferred his PLI stock and resigned as officer, then the only federal taxes that he could become liable for would be under 26 USC § 6672.

Since, as a matter of law, the IRS cannot levy against the responsible party under 26 USC § 6672 unless the trust fund taxes have not been paid, and since, as a matter of law, the IRS can satisfy the trust fund taxes only once, the legal presumption then arises that neither PLI nor the defendant paid the federal trust fund taxes, because the IRS levied against and fully collected the trust fund taxes from the plaintiff as the responsible person. See United States v. Sotelo, supra at 275, 279, n. 12; United States v. Schroeder, 900 F2d 1144, 1146, and n. 1 (7th Cir. 1990); United States v. Huckabee Auto Co., supra; Newsome v. United States, supra; Brown v. United States, supra. Therefore, the legal presumption arises that the trust fund taxes were not paid by PLI. Thus, defendant breached his promise to pay PLI’s taxes and breached his promise to indemnify the plaintiff against any and all federal taxes that he was forced to pay on behalf of PLI. The trial court erred in granting summary judgment to the defendant and denying summary judgment for the plaintiff as a matter of law. See OCGA § 9-11-56 (e); Lau’s Corp. v. Haskins, 261 Ga. 491 (405 SE2d 474) (1991).

Judgment reversed.

Pope, P. J., and Barnes, J., concur. Blackburn, P. J., and Senior Appellate Judge Harold R. Banke concur specially. Johnson, C. J., and Smith, J., dissent

Senior Appellate Judge Harold R. Banke,

concurring specially.

I fully concur with the majority but write separately to emphasize several points.

To conclude their litigation, the parties executed a 12-page settlement agreement on May 31, 1988. Within this contract, they signed mutual releases and agreed to the transfer of all of Lostocco’s stock ownership in PLI to D’Eramo. Their settlement contract also included an Article 3 which bore the title: “Reimbursements/Assumptions/Indemnities.” This section providing for reimbursements, assumptions, and indemnities contains ¶ 3.02 which states, “Second Parties [D’Eramo and others] (except Ruby) shall pay and hereby agree to indemnify First Parties [including Lostocco] and each of them, from and against any liability for federal taxes arising out of PLI and its operations.” (Emphasis supplied.)

As I read the plain and unambiguous language of ¶ 3.02, D’Eramo and the others agreed not only to indemnify Lostocco against any federal tax liability but also to reimburse or to “pay . . . any liability for federal taxes.” It is undisputed that the liability at issue arose out of the operation of PLI and its apparent underpayment of federal taxes for the tax periods ending 12/31/86 and 3/31/87. PLI incurred this tax liability notwithstanding a tax refund check for more than $18,000 from the IRS made payable to PLI in mid-1987 for PLI’s overpayment of taxes. In his deposition, D’Eramo confirmed that in 1987, PLI did, in fact, receive a refund check of $18,000 from the IRS.

It is also undisputed that after entering into the settlement agreement in May 1988, D’Eramo did not pay the taxes incurred during the operation of PLI in 1986 and 1987, notwithstanding the fact that D’Eramo controlled the operation of PLI after the settlement agreement and despite Lostocco’s repeated letters requesting that he do so. As the unpaid assessments and statutory additions continued to remain unpaid by PLI, interest continued to accrue. Ultimately, due to PLI’s complete failure to pay the outstanding balance, the IRS decided to proceed against Lostocco whom PLI had designated as its corporate president on Form 433-B, “Collection Information Statement for Businesses,” completed on 12/8/87 for IRS use.

About ten months after the parties entered into their settlement agreement, the IRS addressed the following notice dated March 27, 1989 to Lostocco:

Our efforts to collect Federal taxes described in the enclosed Form 2751 have not resulted in the full payment of the corporate tax liability. We therefore propose to assess a penalty against you as a person required to collect, account for, and pay over withheld taxes for the above corporation [Performance Leasing, Inc.].

(Emphasis supplied.) The enclosed IRS Form 2751 (a proposed assessment for $18,917.53) stated that it was a “Report of Corporation’s Unpaid Tax Liability.” When the Notice of IRS Levy dated 10/ 18/90 remained unsatisfied by PLI, the IRS proceeded in February 1991 to levy not against PLI or D’Eramo but against Lostocco’s bank accounts.

Without question, the evidence established that D’Eramo breached the terms of the settlement by not paying the amount due to the IRS as set forth on Form 2751, the “Report of Corporation’s [PLI’s] Unpaid Tax Liability.” (Emphasis supplied.) To embrace the strained contract construction employed by D’Eramo, we must overlook the express contract terms by which D’Eramo agreed “to pay . . . any liability for federal taxes.” Although the parties could have drafted their contract terms differently and specified that D’Eramo would not be obligated to pay any interest or penalties relating to the liability for federal taxes, they did not elect to do so. Under the guise of construing the contract, we cannot alter its plain and unambiguous terms.

I am also concerned that the dissent ignores the fact that the IRS elected to proceed against Lostocco personally only after PLI, the corporation being operated by D’Eramo after the settlement agreement was entered, failed to pay the tax liability owed by PLI and sought by the IRS. I cannot imagine how public policy would be furthered by permitting D’Eramo to evade the plain terms of a contract to which he freely assented. Nor can I see how the public interest would be advanced by precluding indemnification or contribution for liability incurred under 26 USC § 6672. Congress implicitly rejected the position of the dissent by amending 26 USC § 6672 in 1996 to add subsection (d) which ensures a statutory right to contribution where more than one person incurs liability under § 6672.

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

Smith, Judge,

dissenting.

I respectfully dissent. In Georgia, an indemnity clause must be strictly construed against the indemnitee. See, e.g., DeKalb County v. Lenowitz, 218 Ga. App. 884, 889 (4) (463 SE2d 539) (1995); McMichael v. Robinson, 162 Ga. App. 67, 69 (2) (290 SE2d 168) (1982). Here, the indemnity clause in the settlement agreement required D’Eramo to indemnify Lostocco “from and against any liability for federal taxes arising out of PLI and its operations.” It did not expressly require indemnification for the assessment of a penalty. The assessment against Lostocco, even though it may have been “assessed and collected like tax,” was an assessment against Lostocco personally of a penalty under 26 USC § 6672. Liability under this statute “may be imposed only upon (1) a responsible person, who has (2) willfully failed to perform a duty to collect, account, or pay over the taxes. [Cits.]” George v. United States, 819 F2d 1008, 1011 (11th Cir. 1987).

While Lostocco argues that the penalty was, in fact, a tax, I do not agree. First, the Code itself identifies liability under § 6672 as a penalty. 26 USC § 6672 (a). Also, I find persuasive the federal authority relied on by the trial court and by D’Eramo for the proposition that § 6672 is penal in character. See, e.g., Stallard v. United States, 12 F3d 489, 493 (5th Cir. 1994) (distinguishing penalty under § 6672 from liability on employer to remit trust fund taxes); Rebelle v. United States, 588 FSupp. 49, 51 (M.D. La. 1984); United States v. Amerson, 808 FSupp. 695, 696 (W.D. Mo. 1992). United States v. Sotelo, 436 U. S. 268 (98 SC 1795, 56 LE2d 275) (1978) is not controlling on this issue. In quoting this case, the majority omits an essential phrase. The Court in Sotelo stated, in relevant part,

The funds here involved were unquestionably “taxes” at the time they were “collected or withheld from others.” . . . That the funds due are referred to as a “penalty” when the Government later seeks to recover them does not alter their essential character as taxes for purposes of the Bankruptcy Act, at least in a case in which, as here, the § 6672 liability is predicated on a failure to pay over, rather than a failure initially to collect, the taxes.

(Emphasis supplied.) Id. at 275.

As argued by D’Eramo, Sotelo is distinguished from this case. There, the “responsible person” filed bankruptcy and attempted to avoid liability under § 6672 by arguing that the penalty was dis-chargeable. Id. at 272. The Supreme Court rejected this argument and concluded that for purposes of the Bankruptcy Act, the penalty would be treated as a tax. The issue here is not dischargeability or nondischargeability under the Bankruptcy Act but instead involves construction of indemnity language in a contract. And as discussed above, the contract language in this case requires indemnification for tax liability, not for penalties. Given the general rule that contracts of indemnity must be strictly construed against the indemnitee, the trial court correctly granted summary judgment in favor of D’Eramo and denied summary judgment to Lostocco.

Moreover, the trial court’s ruling was correct on public policy grounds. The trial court concluded that the settlement agreement could not be construed to include indemnification for assessment of penalties under § 6672 “because such a construction would violate public policy and frustrate the IRS’ intent in pursuing plaintiff and not defendant for collection of the funds at issue.” As stated in Cook v. United States, 765 FSupp. 217 (M.D. Pa. 1991), the statute at issue here

has been construed by several courts as penal in nature. Thus, to allow parties to recover from other responsible persons would greatly hinder the deterrent purpose of the statute. Without the possibility that any one of several responsible persons might be held solely accountable for a penalty imposed without benefit of contribution, little incentive would exist for anyone to act in accordance with the law by coming forward sua sponte to pay or account for the taxes in question.

(Citation and punctuation omitted.) Id. at 219-220. Moreover,

when a person willfully acts and has a penalty assessed pursuant to section 6672, that person should not and must not have that liability for the penalty shared or placed wholly on another because of some contractual or fiduciary duty. The sound policy reasons against allowing a right of contribution or indemnity to someone who has willfully, consciously, and intentionally acted must and do apply under the facts of this case. The high penalty, and the omission by Congress of such a statutory right of contribution or indemnity, are intended to deter such willful conduct. It is for the Congress and not the courts to formulate a common law right of contribution when a penalty is assessed under section 6672.

Rebelle, supra at 52. See also Amerson, supra at 69.

Finally, I note that Lostocco did not contest or otherwise appeal the findings implicit in the decision by the IRS to assess a penalty under § 6672: that he was a responsible person and that he acted willfully. He consequently waived any right to seek indemnification from D’Eramo. See generally GAF Corp. v. Tolar Constr., 246 Ga. 411, 412 (271 SE2d 811) (1980) (indemnification unavailable where party seeking indemnification had valid defense but failed to assert it).

Decided May 26, 1999.

Raiford, Dixon & Thackston, Tyler C. Dixon, for appellant.

Weiner, Yancey, Dempsey & Diggs, Beryl H. Weiner, Thomas C. Dempsey, for appellee.

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

       See also DiBenedetto v. United States, 35 AFTR2d 75-1502; 75-1 USTC ¶ 9503 (D.R.I. 1974); Cohen v. United States, 35 AFTR2d 75-1445 (E.D. Mich. 1975); Geiger v. United States, 41 AFTR2d 78-1230 (D.Md. 1978); Hanhauser v. United States, 85 FRD 89 (M.D. Pa. 1979); Moats v. United States, 564 FSupp. 1330 (W.D. Mo. 1983); Rice v. Pearce, 574 FSupp. 23 (S.D. Iowa 1983); Swift v. Levesque, 614 FSupp. 172 (D. Conn. 1985); Schoot v. United States, 664 FSupp. 293 (N.D. Ill. 1987); Continental Illinois Nat. Bank & Trust Co. v. United States, 87-2 US Tax Cas. ¶ 9442 (E.D. Ill. 1987); Padalino v. United States, 89-2 US Tax Cas. ¶ 9632 (D.C. N.J. 1989); Cook v. United States, supra; Carlucci v. United States, 793 FSupp. 482 (S.D. N.Y. 1992).

       The majority of the courts which have considered this question have concluded that no such right [to contribution under IRC] exists. This Court agrees with the majority. The seminal case on this question is DiBenedetto v. United States, [supra]. In DiBenedetto, the court concluded that no such statutory right to contribution existed, and articulated several policy reasons which supported this conclusion. First, in addition to any taxes which might be owed, section 6672 provides that the penalty for nonpayment of such taxes is 100% of the taxes owed. The penal nature of this statute would be reduced, if not entirely defeated, by allowing a person found to be a “responsible person” to share the burden or cost of this assessment. Another reason given by the court was that the penalty is only assessed for the willful failure to collect or truthfully account for these taxes, which suggests a higher degree of culpability than the person whose act was merely accidental or inadvertent. As the court noted in DiBenedetto, courts have been loath to extend to a right of contribution in favor of an intentional wrongdoer who has acted in pari delicto with others. This Court would add that denial of a right of contribution serves another useful purpose in addition to those mentioned above. The threat that any one of a group of responsible persons could be held to pay 100% of the penalty without benefit of contribution, while the other actors might altogether avoid payment of even a portion of the penalty, might provide sufficient incentive for one or more in the group to act lawfully and pay or account for the taxes in question. A ‘responsible person’s’ resolve to willfully fail to collect such taxes may be weakened when faced with the possibility of bearing all of the 100% penalty than it would be if there was a right to spread and diversify this burden or risk among the group. The need for government action to collect these taxes is obviated if only one potentially liable person in a group of potentially liable people acts properly. The risk of bearing this penalty alone may bring that one person to the forefront a little more readily, and thus save the government the additional enforcement expenses.
      (Emphasis supplied.) Rebelle v. United States, supra at 51.

        Schoot v. United States, supra at 298; Swift v. Levesque, supra at 177; and Reid v. United States, 558 FSupp. 686 (N.D. Miss. 1983), allowed an action for indemnification in federal court of funds paid under 26 USC § 6672.

       P. L. 104-168, § 903, Title IX, 110 Stat. 1465.

       Legislative history — 4 1996 U. S. Code Congressional and Administrative News, pp. 1143, 1163 “Present law”:
      A responsible person may seek to recover part of the amount which he has paid to the IRS from other individuals who also may have the obligations of a responsible person but who have not yet contributed their proportionate share of their liability under Section 6672. Taxpayers must pursue such claims for contribution under state law (to the extent state law permits such claims). The variations in state law sometimes make it difficult or impossible to press successful suits in state courts to force a contribution from other responsible persons.
      “Reasons for change”: “The IRS may collect this penalty from a responsible person with the greatest culpability for the failure. It would accordingly promote fairness in the administration of the tax laws to establish a right of contribution among multiple responsible parties.”