author: Beasley, Chief Judge.

text:
    A95A2350.
    WRIGHT CARRIAGE COMPANY et al. v. BUSINESS DEVELOPMENT CORPORATION OF GEORGIA, INC.
    (471 SE2d 218)
   Beasley, Chief Judge.

The Wright Carriage Company began its business operations in 1983, producing conversion vans and other customized vehicles. Over the course of four years beginning in 1985, it obtained three loans from The Business Development Corporation of Georgia (“BDC”), and its president obtained a fourth loan, the proceeds of which were applied to the business. The president and her husband, who was the general manager and corporate secretary of the company, were its sole shareholders.

Each of these secured loans had an interest rate which fluctuated with the prime rate, and BDC sent monthly statements to the borrowers notifying them of the amounts due. This procedure was followed from the initial loans in September 1985 to November 1989, when the loans were foreclosed for nonpayment. The payments were due on the first of each month. The Wrights worked with BDC’s Senior Vice President Karraker with respect to the loans throughout the negotiations and life of the loans.

Up until July 1989, all of the payments were made within ten days of the due date. More specifically, 73 out of 119 were made after the first, but only one was made as late as the tenth. Some were made before the due date and others were made within a few days of the first. Because of a worsening financial condition, the borrowers asked for deferment of the August, September, and October 1989 payments. Deferment was granted and also approved by the U. S. Small Business Administration, guarantor of two of the loans. This deferment was not contained in a single comprehensive document but was nonetheless agreed upon by the parties, and each of the statements sent during the period of the deferment stated that payments were to resume on November 1, 1989.

The borrowers did not make payment on November 1 but instead sought further deferment, which BDC refused. It also refused a compromise of the debt, which was proposed by the borrowers at a meeting on November 22. There being no payment, BDC accelerated the entire indebtedness on November 27, notified the borrowers and their attorney, declared default, and began foreclosure. BDC’s attorney received a check from the borrowers for the November and December payments around December 1, but refused it.

The borrowers filed a Chapter 11 petition in bankruptcy and the foreclosure was halted. Several months later, they sued BDC for breach of contract, defamation, attempted wrongful repossession, and intentional infliction of emotional distress. BDC counterclaimed for breach of contract. The jury found in favor of BDC both on its counterclaim and on the borrowers’ claims. The borrowers’ motion for new trial was denied and they appealed, citing as error two jury charges given by the trial court and one charge borrowers requested which was rejected by the court.

1. The borrowers contend that the parties by their course of conduct mutually departed from the terms of the original loan contracts as to the date monthly payment was due and that the requirement that payment be made by the first of the month was thus suspended. Under OCGA § 13-4-4, they argue, BDC could not insist on the November 1 payment due date — and therefore could not declare the borrowers in default and accelerate the loans — until it gave them notice of its intent to again rely on the exact terms of the contracts.

Several jury charges were given in this connection, including an almost verbatim recitation of OCGA § 13-4-4. It provides: “Where parties, in the course of the execution of a contract, depart from its terms and pay or receive money under such departure, before either can recover for failure to pursue the letter of the agreement, reasonable notice must be given to the other of intention to rely on the exact terms of the agreement. The contract will be suspended by the departure until such notice.”

The court also gave the following charge taken directly from Suggested Pattern Jury Instructions 65 (Council of Superior Court Judges of Georgia, 3d ed. 1991): “In order for [OCGA § 13-4-4] to have application, it is necessary that the circumstances be such as will in law imply a mutual new agreement, whereby new, distinct, and definite terms are supplied in lieu of those provided for by the original contract. Mere acceptance of past-due payments, made at irregular times and not in accordance with the terms of the contract, would not be sufficient. The departure from the terms of the contract must have been substantial and such as to make it inequitable for the creditor to demand without previous notice all past-due payments, or to proceed to collect by suit.” (Emphasis supplied.) The borrowers enumerate as error the court’s charge, given at BDC’s request over the borrowers’ objection. They claim the italicized language contradicts the statute and negates its effectiveness in supporting their position, even though the charge is from the Suggested Pattern Jury Instructions.

Neither party could supply case authority for this portion of the charge, and as pointed out by the borrowers, it is misleading. Reading the charge in its entirety suggests its drafters intended the italicized portion to mean that the mere acceptance of late payments on an occasional, irregular basis is not sufficient. However, while the statute provides that a mutual departure suspends the affected portion of the contract, the challenged language read literally suggests that acceptance of past due payments is not the sort of variance deemed to be a mutual departure, that it must somehow be more “substantial.” This view ignores the actual language of the statute and eliminates the concept that a course of conduct or business practices of the parties may vary the due date term of a written agreement, so that the lender may not then declare a default without granting “reasonable notice” of its intention to rely on the strict terms of the loan documents. Hayes v. Fidelity Acceptance Corp., 147 Ga. App. 144, 145 (248 SE2d 209) (1978). In addition, it implies that the due date is an insignificant term, a view that lenders would undoubtedly dispute.

A more precise statement of the law, consistent with the Code section, is that “evidence of the buyer’s repeated, late, irregular payments, which are accepted by the seller, does create a factual dispute as to whether a quasi new agreement was created under [OCGA § 13-4-4].” Smith v. Gen. Fin. Corp. of Ga., 243 Ga. 500, 501 (255 SE2d 14) (1979). Accord Baxter v. Ga. Fed. Sav. &c. Assn., 152 Ga. App. 753 (264 SE2d 242) (1979); Adamson v. Trust Co. Bank, 155 Ga. App. 646, 648 (271 SE2d 899) (1980); Mayo v. Bank of Carroll County, 157 Ga. App. 148, 149 (276 SE2d 660) (1981). Although the court gave a charge based on this language, the challenged charge suggests the opposite. We urge the Council of Superior Court Judges to make an appropriate change in the pattern instructions.

None of this is to suggest that mere acceptance by a lender on a couple of occasions of periodic payments after their due date would, standing alone, constitute a waiver of the due date term, nor create a new due date term upon which the borrower would be entitled to rely and insist. Prudential Ins. Co. of America v. Nessmith, 174 Ga. App. 39, 40 (329 SE2d 249) (1985); Continental Cas. Co. v. Union Camp Corp., 230 Ga. 8, 11 (195 SE2d 417) (1973); Sovereign Camp W.O.W. v. Whitaker, 57 Ga. App. 418, 423 (195 SE 584) (1938). If a pattern develops of the lender repeatedly accepting late payments, however, then a jury is entitled to find the parties have established a course of conduct that varies that term of the agreement. Smith, supra at 501; United Svcs. Auto. Assn. v. Gottschalk, 212 Ga. App. 88, 90 (1b) (441 SE2d 281) (1994); Holland v. Allstate Ins. Co., 200 Ga. App. 668, 669 (1) (409 SE2d 79) (1991).

Although we acknowledge that the charge was not as accurate as it might have been, we find any error harmless to the borrowers under these circumstances. American Fidelity &c. Co. v. Farmer, 77 Ga. App. 192, 195 (48 SE2d 141) (1948). Both BDC and the borrowers assume that the underlying issue here is whether there was a mutual departure from the written due date term and the creation of a new due date term, so that BDC’s foreclosure and acceleration of the loan was wrongful since it did not give notice that it intended to rely on the original written term. The mutual departure from the due date terms for the particular payments at issue here — the August, September, and October 1989 payments — was not the result of course of conduct or business practice of the parties. There was an express mutual departure from the original contracts, a new agreement, resulting in deferral of payment until November 1, and there is no evidence that BDC in any way acquiesced in a further deferment. Any evidence of mutual departure from the terms of the original loan documents has no bearing upon the controversy concerning the new agreement to allow the borrowers to defer the three specific payments. Minor v. C & S Nat. Bank, 177 Ga. App. 115, 118 (338 SE2d 466) (1985). The November 1 payment date was agreed upon by the parties, BDC made reference to it in each monthly notice sent to the borrowers, and demand for by November 1 was expressly made to the borrowers prior to foreclosure and acceleration of the loans.

The record does not establish whether the parties intended the November 1 payment to consist merely of the payment that would have been due on November 1 under the original contract or also to include the three deferred payments. Whether this issue was clear to the jury when determining the facts and to the trial judge when instructing the jury is not disclosed in the record. In either event, whether four payments were due on November 1 or only the November payment, the indisputable fact remains that the November payment was not made. It was not paid on or before November 1, or within ten days as had been done on other occasions, or within even 27 days, the 27th day being the day the lender issued notices of acceleration and commenced foreclosure. The lender had made abundantly clear that payment was due on November 1.

Even if BDC’s practice of accepting late payments could be construed as a mutual departure that the borrowers could rely on in submitting payment beyond November 1, they failed to tender the payment in accordance with even their pre-August practice, since there is no evidence that BDC ever accepted a payment after the tenth of the month. Instead, the borrowers in effect made no payment of the deferred amount, and “while it is arguable that [BDC and the borrowers] may have reached a quasi new agreement as to acceptance of late payments, there is no evidence that [BDC] consented to non-payment. . . . Before the provisions of [OCGA § 13-4-4] would apply to non-payment, the evidence must establish a pattern or course of conduct evidencing an agreement or waiver of the provisions in the original contract relating to non-receipt of monthly payments.” Newby v. Bank of Pinehurst, 159 Ga. App. 890, 891 (285 SE2d 605) (1981). See also Booth v. Gwinnett Fed. Savings &c. Assn., 200 Ga. App. 60, 61 (406 SE2d 568) (1991); Gordon v. South Central Farm Credit, 213 Ga. App. 816, 819 (446 SE2d 514) (1994). BDC never agreed to non-payment by course of conduct. Thus, even if the pattern statement were in error as a matter of law, giving it could not have harmed appellants.

Decided March 8, 1996

Reconsideration denied March 29, 1996

Lamar, Archer & Cofrin, Robert C. Lamar, David W. Davenport, for appellants.

Alston & Bird, Ben F. Johnson III, Rebecca M. Lamberth, for appellee.

2. The borrowers also challenge another sentence of pattern charge no. 65 given by the court: “In order for this rule to have application, it is necessary that the circumstances be such as will in law imply a mutual new agreement, whereby new, distinct, and definite terms are supplied in lieu of those provided for by the original contract.” This language is taken directly from early Georgia cases. See Bearden Mercantile Co. v. Madison Oil Co., 128 Ga. 695, 704 (58 SE 200) (1907); Ball v. Foundation Co., 25 Ga. App. 126 (103 SE 422) (1920); Jones v. Lawman, 56 Ga. App. 764 (194 SE 416) (1937). See also Continental Cas. Co., supra at 11. This portion of the charge merely states the requirement that a jury may only find that terms established by the course of conduct or business practices of the parties have replaced written express terms if the new terms are definite and clear. It conflicts neither with the statute nor with the holding in Smith, supra.

3. The borrowers cite as error the trial court’s refusal to grant a specific charge they requested, citing as authority for the charge both OCGA § 13-4-4 and Eaves & Collins v. Cherokee Iron Co., 73 Ga. 459, 470 (1884). The statute was derived from this early case. See Annot., OCGA § 13-4-4; Maguire v. Ivey, 212 Ga. 151, 153 (91 SE2d 35) (1956). The requested charge and the authorities relied on by the borrowers do not in any substantive way conflict with the pattern charges given by the court, except as we noted in Division 1, and we thus find no error. See Shirley v. State, 245 Ga. 616, 619 (3) (266 SE2d 218) (1980).

Judgment affirmed.

Pope, P. J., and Ruffin, J., concur.

       Mutual departure affects only the particular terms at issue; other executory terms in the agreement remain in force. State Mut. Ins. Co. v. Strickland, 218 Ga. 94 (126 SE2d 683) (1962).

       No payment was made at all until after the loans were accelerated, and at such a late date, BDC’s counsel refused it. The check was marked as the November and December payments, even though the loan had been accelerated. Payments made after acceleration are treated as payments on the full indebtedness, rather than installment payments made pursuant to any prior agreement to defer payments. See Adamson v. Trust Co. Bank, 155 Ga. App. 646, 649 (271 SE2d 899) (1980).


source: Caselaw Access Project

author: Andrews, Judge. Blackburn, Judge,

license: Public Domain

text:
    A95A2584.
    ALLEN et al. v. CALDWELL.
    (470 SE2d 696)
   Andrews, Judge.

Shirley and John Allen appeal the trial court’s order granting defendant Alton Caldwell, D.O.’s, motion to dismiss their complaint in the underlying medical malpractice case. Caldwell’s motion to dismiss was based on the Allens’ failure to comply with the mandates of OCGA § 9-11-9.1. We affirm.

1. On December 16, 1994, the Allens filed the underlying renewal of their medical malpractice action pursuant to OCGA § 9-2-61. Attached to their renewed complaint was a copy of an unnotarized affidavit signed by Steven Todd Flax, M.D., that had been transmitted by facsimile to the Allens’ attorney.

While a facsimile affidavit can satisfy the requirements of OCGA § 9-11-9.1, see Sisk v. Patel, 217 Ga. App. 156, 158 (456 SE2d 718) (1995), “[i]n the absence of a valid jurat, a writing in the form of an affidavit has no force, no validity, amounts to nothing, when standing alone, or when construed in connection with other evidence.” (Punctuation omitted.) Harvey v. Kidney Center of Central Ga., 213 Ga. App. 319, 320 (444 SE2d 590) (1994); Hill-Everett v. Jones, 197 Ga. App. 872, 873 (1) (399 SE2d 739) (1990).

Additionally, the facsimile affidavit is not identical to the original affidavit filed by the Allens with their Amendment to Complaint on March 1, 1995, over two and one-half months after the complaint had been filed in this action and over four years since the alleged malpractice. It is acknowledged by the Allens that the original affidavit with jurat was not in the possession of their counsel when the complaint was filed, due to Dr. Flax’s surgery schedule.

Therefore, the affidavit attached to the Allens’ renewed complaint did not satisfy the requirements of OCGA § 9-11-9.1.

2. Neither can we accept the dissent’s conclusion that, because paragraph 4 of the complaint incorporates the pleadings from the Al-lens’ prior action, the Allens were relying on the 1993 affidavit of Dr. Flax, filed with that action, which affidavit was properly notarized. This contention, however, is specifically negated by paragraph 13 of the complaint that states “[t]he affidavit required by OCGA § 9-11-9.1 is attached hereto.” (Emphasis supplied.) No copy of the 1993 affidavit is attached, only the facsimile.

In addition, the facsimile and the original 1994 affidavits differ in the signatures of Dr. Flax and the number of lines of print appearing on the pages. The facsimile contains more lines of print per page than the “original.” As pointed out in Sisk, supra, for there to be a facsimile, there must be an original. The definition of “facsimile” is “[a]n exact copy or reproduction, as of a document.” American Heritage Dictionary, Second College Edition, 1985, p. 484. Therefore, there is no rational conclusion possible from Sisk except that the facsimile there contained the jurat and was identical to the original. Such is not the case here. See also Roberts v. Faust, 217 Ga. App. 787 (459 SE2d 448) (1995).

At what point would the dissent cease to expand OCGA § 9-11-9.1 beyond its terms? If the facsimile is not required to be exact, how close to the original must it be? Is it enough if there is no written signature of the affiant, only a typed name and line? Is it enough if the “original” when filed contains the “gist” of the facsimile?

As the trial court concluded here, the affidavit filed with the complaint did not comply with the plain terms of OCGA § 9-11-9.1.

Judgment affirmed.

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

Blackburn, Judge,

dissenting.

I respectfully dissent from Division 2 of the majority as I believe that the existence in the record of the properly notarized affidavit containing the elements of negligence against Dr. Caldwell as required, saves the Allens’ complaint from the unforgiving jaws of OCGA § 9-11-9.1 (e). It is important to recognize that the parties are now in the same positions as when the original complaint was filed. The renewed action merely sought to add new defendants which have since been dismissed. I agree with the majority that the affidavit attached to the renewed complaint, being without a valid jurat, was not an affidavit within the meaning of OCGA § 9-11-9.1.1 also agree with the majority that by filing the new affidavit with the renewed complaint the Allens were not exclusively relying on the original affidavit even though it was incorporated into the renewed action. However, there is no requirement for such exclusive reliance on the part of a plaintiff. It is enough that a proper affidavit is in the record informing Dr. Caldwell of the negligent acts or omissions alleged on his part. The very purpose of OCGA § 9-11-9.1 was met by Dr. Flax’s review of the medical records and determination of negligent acts.

Dr. Flax executed an affidavit containing a valid jurat on June 11, 1993, that was filed with the Allens’ original complaint. In paragraph 4 of their renewed complaint, the Allens incorporated by reference all of their pleadings from their former action. Dr. Flax’s first affidavit set forth allegations of negligence specifically against Dr. Caldwell. Although I recognize that Dr. Flax’s affidavits are not identical, the differences relate to the additional defendants added in the Allens’ renewed action and not to the allegations of negligence against Dr. Caldwell. The affidavit filed in the original action and incorporated by reference in the renewed action sufficiently meets the requirements and purpose of OCGA § 9-11-9.1. Plaintiff’s reliance statement in paragraph 13 of their renewed complaint in no way negates the existence of the proper affidavit incorporated by reference in paragraph 4.

In Sisk v. Patel, 217 Ga. App. 156, 159-160 (456 SE2d 718) (1995), a majority of this Court agreed that “the history of OCGA § 9-11-9.1 in the appellate courts has shown beyond a reasonable doubt that it is only with great difficulty made workable in the practical arena of litigation, and has largely failed to achieve its purpose of reducing frivolous litigation. Rather, it has created an added layer of motions regarding the sufficiency of affidavits preceding the motions for summary judgment on the merits. Rather than continuing to interpret and reconcile subsection after subsection added to the statute by the legislature in attempts to fix what is fundamentally broken, the better approach is to construe pleadings liberally to do substantial justice in accordance with OCGA § 9-11-8 (f).”

Decided March 11, 1996

Reconsideration denied March 29, 1996

Stefano A. Didio, for appellants.

Long, Weinberg, Ansley & Wheeler, Robert G. Tanner, Stephen R. Chance, for appellee.

In Bell v. Figueredo, 190 Ga. App. 163, 164 (378 SE2d 475) (1989), rev’d on other grounds, 259 Ga. 321 (381 SE2d 29) (1989), this Court determined that a lawsuit renewed under OCGA § 9-2-61 is an action de novo, and therefore, all procedural prerequisites such as “filing of a new complaint and perfection of service must be met anew.” However, in the present case as it relates to Dr. Caldwell, the statutory requirements of OCGA § 9-11-9.1 are met anew by the renewed complaint’s reference to and incorporation of the previously filed affidavit. Furthermore, statutory prerequisites designed to limit frivolous medical malpractice actions hardly compare to the due process protections surrounding filing and service of complaints addressed in Bell, supra.

Based on the foregoing, I would find that the trial court erred in dismissing the Allens’ complaint.

I am authorized to state that Presiding Judge McMurray and Presiding Judge Pope join in this dissent.


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

text:
    A95A2596.
    GOMEZ v. PETERS et al.
    (470 SE2d 692)
   Pope, Presiding Judge.

Defendant Peters represented plaintiff Gomez in a criminal trial in which Gomez was convicted of one count of child molestation and acquitted on two other counts (one for child molestation and one for cruelty to children). With new counsel, Gomez filed a motion for new trial, alleging ineffective assistance of trial counsel among other claims. After a hearing on the motion, the trial court explicitly rejected the ineffective assistance claim but granted the motion for new trial on other grounds. Having spent approximately nine months in jail while his motion for new trial was pending, Gomez then entered a negotiated plea to a simple battery charge based on the same conduct as the child molestation offense of which he had been convicted — touching and rubbing the penis of a five-year-old boy. He was sentenced to one year and released on time served.

Gomez subsequently brought this legal malpractice action against Peters and his firm (referred to collectively as “Peters”). The trial court granted summary judgment for Peters on several alternative grounds, and Gomez appealed.

1. Gomez argues that the trial court erred in granting summary judgment without oral argument, since he made a timely written request for oral argument. See Uniform Superior Court Rule 6.3 (oral argument on summary judgment motion “shall be permitted” upon timely written request). Oral argument on the motion was scheduled for April 12, 1995, at 9:30 a.m. At approximately 8:45 that morning, Gomez’ counsel called the judge’s chambers to inform him that he would be unable to attend the hearing because he was seriously ill, and that his partner was on trial in another county. According to Gomez’ counsel, the law clerk he talked to reassured him and told him not to worry, and advised him to contact opposing counsel to save him an unnecessary trip to the courthouse. Gomez’ counsel sent defense counsel a fax to this effect, but did not reach him in time. Rather than rescheduling the hearing, the court gave Gomez additional time for a written response to Peters’ papers, and then granted Peters’ motion for summary judgment on May 26, 1995.

Contrary to Gomez’ assertion, the trial court’s failure to reschedule oral argument under these circumstances did not contravene USCR 6.3. Oral argument was “permitted” as required by that rule, and was prevented only by counsel’s last minute inability to attend.

Instead, we think the situation should be viewed as the denial of a motion for a continuance due to the illness of counsel under OCGA § 9-10-155 — a motion which the trial court has broad discretion to grant or deny, but which it can grant only if the movant complies with the requirements of the statute. See Adams v. Hill, 177 Ga. App. 492 (340 SE2d 27) (1986). In this case, Gomez not only failed to meet the requirements of the statute, but did not even make a formal request for continuance on this ground. Particularly in light of the court’s prior continuation of the hearing at Gomez’ request and the inconvenience caused opposing counsel by a needless trip to the courthouse, the trial court did not abuse its discretion in deciding the motion for summary judgment without rescheduling oral argument on the motion. See also McKinnon v. Shoemaker, 166 Ga. App. 231 (1) (303 SE2d 770) (1983) (a continuance because of the absence of counsel is not favored).

Gomez suggests that his counsel’s conversation with the judge’s clerk should somehow change this result. As counsel should realize, however, a judge cannot be bound by what his staff (or personnel in the court clerk’s office) may say regarding how the judge will exercise his or her discretion; and a party who relies on the assurances of staff, at least with respect to a discretionary matter, does so at his own risk.

2. Gomez also challenges the grant of summary judgment on its merits.

(a) The trial court’s first basis for summary judgment was collateral estoppel. In Gomez’ criminal action, the court’s order granting the motion for new trial fully addressed Gomez’ allegations of sub-par performance on the part of Peters and then stated: “Specifically, the Court holds that Defendant Gomez was assisted by a trial lawyer who presented a cohesive, logical, and vigorous defense. A careful review of the conduct of the trial as a whole establishes that Mr. Gomez’ original representation was, in fact, highly effective in that Defendant was acquitted on two of the three charges against him.” The logic of the trial court’s application of collateral estoppel is compelling, since the quality of Peters’ representation has already been actually litigated and decided. Nonetheless, we must hold that collateral estoppel does not apply in this situation based on Kent v. Kent, 265 Ga. 211 (1) (452 SE2d 764) (1995), a recent case in which the Supreme Court rejected the proposition that collateral estoppel applies to matters “necessarily or actually adjudicated” and clarified that collateral estoppel applies only to determinations which were essential to the earlier judgment. See 265 Ga. at 211, n. 2. Here, of course, the determination that Peters was effective was not essential to the prior judgment, since the motion for new trial was granted despite that determination. Accordingly, summary judgment was not properly based on collateral estoppel.

(b) The trial court’s second basis for granting summary judgment was that Gomez’ legal malpractice claim was barred by his own guilty plea. On this ground, we conclude that summary judgment was proper.

In order to establish legal malpractice, a plaintiff must show that he would have prevailed in the underlying litigation if the defendant had not been negligent, see McDow v. Dixon, 138 Ga. App. 338 (226 SE2d 145) (1976); and where the underlying action is a criminal trial, the plaintiff is precluded from doing this if he has pled guilty. See Hockett v. Breunig, 526 NE2d 995 (Ind. App. 1988); Carmel v. Lunney, 518 NYS2d 605 (Ct. App. 1987). Regardless of his asserted reasons for doing so, Gomez pled guilty to touching and rubbing the penis of a five-year-old boy, and the time he had to serve for this offense was the time he had already served for the prior conviction which he blames on Peters. It follows that Gomez’ damages were the result of his acknowledged guilt, and he is unable to show any damage proximately caused by any alleged negligence of Peters.

In other words, a client who has acknowledged his guilt cannot assert that his attorney’s poor performance caused his incarceration. Hockett, 526 NE2d at 998-999. Moreover, this is true even in a situation like this one where the plaintiff pled guilty to a lesser included offense, as long as his “damage” (i.e., the time he already served on the initial conviction) is no greater than what he would have had to sustain for the offense to which he pled anyway. Contrary to Gomez’ assertion, Hogan v. Peters, 181 Ga. App. 670 (353 SE2d 601) (1987), does not hold or suggest otherwise.

3. Gomez further contends that the trial court erred in imposing costs under OCGA § 9-11-37 (a) (4) (A) without giving him an opportunity to speak to the issue. That Code section provides that “[i]f the motion [to compel] is granted, the court shall, after opportunity for hearing, require the party . . . whose conduct necessitated the motion ... to pay to the moving party the reasonable expenses incurred in obtaining the order . . . unless the court finds that the opposition to the motion was substantially justified or that other circumstances make an award of expenses unjust.” (Emphasis supplied.)

Peters filed a motion to compel seeking (among other things) discovery from Dr. James Stark, a psychologist who evaluated Gomez and was a witness at the hearing on his motion for new trial. At the hearing on Peters’ motion to compel this discovery, Gomez’ counsel clearly stated to the court that he would not be using Dr. Stark at trial. Based on that statement, the court denied the portion of Peters’ motion to compel relating to Dr. Stark. After the hearing, however, Gomez’ counsel denied having said that he would not be using Dr. Stark. Thus, Peters was forced to revisit the issue of Dr. Stark’s testimony, and to pay $208 for a transcript which showed that Gomez’ counsel had in fact clearly stated he would not be using Dr. Stark. Peters requested recovery of the cost of the transcript in a letter to the court dated May 1, 1995, and the court granted Peters’ request in an order dated May 5, 1995, without giving Gomez any opportunity to respond.

We agree with Gomez that OCGA § 9-11-37 (a) (4) (A) requires the court to give a party an opportunity to be heard before costs are imposed. In most cases, this can be done at the hearing on the motion to compel itself. Here, however, that course was not possible because Gomez’ unjustified position was taken after the hearing on the motion to compel. In this unusual situation, the court must give the party losing the motion to compel the opportunity to respond to the winner’s request for costs related to the motion. Even if, as here, it seems clear that the position taken by the losing party was not substantially justified, he should have the chance to attack the reasonableness of the costs or convince the court that other circumstances make an award of expenses unjust. We therefore remand the case for the limited purpose of allowing Gomez to respond before the trial court decides whether to impose costs under OCGA § 9-11-37 (a) (4) (A).

Decided March 11, 1996

Reconsideration denied March 29, 1996

Lenzer & Lenzer, Thomas P. Lenzer, Robert W. Lenzer, for appellant.

Troutman Sanders, A. William Loeffler, Daniel S. Reinhardt, William N. Withrow, Jr., for appellees.

4. Gomez’ motion to recuse the trial court judge, filed after summary judgment had already been granted, was properly denied as untimely. See USCR 25.

5. Gomez’ remaining arguments are rendered moot by our decision in Division 2 (b) that summary judgment was proper based on Gomez’ guilty plea.

Judgment affirmed in part and remanded in part.

Beasley, C. J.,

concurs specially. Ruffin, J., concurs in judgment only.

Beasley, Chief Judge,

concurring specially.

I fully concur except with respect to Division 2 (a). The trial court was not in error in granting summary judgment on the ground of collateral estoppel, because the issue was fully adjudicated in the prior action. The trial court there made an express ruling on the legal adequacy of counsel’s representation of Gomez.


author: Ruffin, Judge.

text:
    A95A2701.
    CITY OF ATLANTA v. HOUSTON.
    (471 SE2d 12)
   Ruffin, Judge.

The City of Atlanta petitioned the Superior Court of Fulton County by writ of certiorari for review of the City of Atlanta Civil Service Board’s decision reinstating police officer Vince Houston. The city appeals from an order directing that former members of the Board, whose terms had expired, reconvene at the city’s expense in order to comply with a previous order in which the trial court remanded the matter to the Board for clarification and further review. For reasons which follow, we reverse.

On April 19, 1991, the Atlanta Bureau of Police Services dismissed police officer Houston for violating several police department employee work rules. Houston appealed to the City of Atlanta Civil Service Board, and on September 17, 1992, the Board conducted a full evidentiary hearing. After consideration of the evidence, the Board issued an order overturning Houston’s dismissal and instead imposing a 30-day suspension. The city appealed the Board’s order by writ of certiorari to the Superior Court of Fulton County. On February 16, 1993, the court issued an order remanding the case back to the Board to clarify certain aspects of its decision and directing the Board to cite the evidentiary basis for its factual determination. The court also directed the Board “based upon further review to issue a final determination which either affirms or reverses its initial decision. . . .” The court’s order further stated, “This Court shall maintain jurisdiction to hear any further certiorari issues should any parties to this proceeding seek further review of the Board’s supplemental decision.” On March 17, 1993, an assistant city attorney, acting as legal counsel for the Board, responded to the February 16, 1993 order by filing a supplemental order consisting of one paragraph, purportedly written by the Board members. This supplemental order only partially complied with the court’s directive because it did not cite any evidence or state whether the Board reversed or affirmed its prior decision as the trial court ordered. Houston offered evidence that the Board members never saw the supplemental decision or authorized their names to be affixed to it.

On April 5, 1993, the trial court held a second hearing and issued a second court order on May 16, 1993, which again required the Board to further clarify its decision within 30 days, affirm or reverse its initial decision to reinstate Houston, and serve all counsel of record with a copy of that decision.

Subsequent to this order, the Board took no action and failed to respond for over one and one-half years. The Board members’ terms expired on May 31, 1994, and a new mayor and new Board members took office in the interim. On December 5, 1994, Houston filed a “Petition to Show Cause Why the Defendant in Certiorari Should Not Be Reinstated to the Position of Police Officer.” In an apparent response, the newly constituted Board issued a second decision on December 20, 1994, which cited to evidence adduced in the evidentiary hearing, reversed Houston’s reinstatement, and upheld his dismissal.

On March 20, 1995, the court held a third hearing, during which the former Board chairman testified that the former members were never shown the May 26, 1993 order, were never asked to convene, and were never asked to review their decision with respect to Houston. The court expressed concern that the newly constituted Board which did not hear the evidence, could not make a decision concerning the demeanor and credibility of witnesses. Consequently, the court issued an order on May 17, 1995, striking the Board’s supplemental decision of December 20, 1994 and concluding that the newly constituted Board had no “appellate or subsequent review authority” to issue a supplemental decision. The court remanded the case for consideration, review and decision by the same individuáis who served on the Board in November 1992, whose terms expired on May 31, 1994. This order conferred upon these individuals all authority provided to the Board by the City of Atlanta’s Charter and Code of Ordinances and directed the city to pay the standard rate for time spent in review. This appeal followed.

1. The city contends the Board’s decision of December 20, 1994 became final and binding on all parties because it was not appealed within 30 days as required by OCGA § 5-4-6 (a). We disagree and remind the city of the procedural posture of this case, which has been significantly complicated by its failure to comply with the court’s orders.

The city’s initial writ of certiorari is still pending in the superior court. The matter was merely remanded to the Board for clarification and further proceedings to enable the trial court to render a decision pursuant to that initial writ of certiorari. See OCGA § 5-4-14 (a). Of course, Houston is not required to file a second petition for certiorari in this case when the first petition has yet to be decided. Therefore, the superior court abused its discretion in striking the December 20, 1994 decision. At this juncture, the court should review that decision to determine whether it satisfied the court’s directive and then reach a final determination on the city’s writ of certiorari.

2. The city contends the superior court erred as a matter of law by ordering the reconstitution of the former Board thereby impermissibly bestowing upon ordinary citizens authority that could only be granted to them by the charter, code of ordinances and mayoral appointment. We agree.

Although the court was understandably concerned about the city’s delay and noncompliance with the court’s orders, particularly the inexplicable time gap from February 1993 until December 1994 in which the city failed to act as directed, the court cites to no authority, the parties offer none, and we have found none which authorizes the superior court to reconvene the old Board to respond to its order at this juncture. To the contrary, although the former Board members are named in the pleadings, the court’s order did not call upon them to act as individuals nor were they ever parties to these proceedings in that capacity. Rather, the court’s order directed the Atlanta Civil Service Board, and therefore its members acting in their official capacities, to clarify its decision and conduct further review. Accordingly, on remand after the terms of the former Board members expired, “the successors to the members named in the order [were required to] comply in the same manner as their predecessors were directed. [Cits.]” Styles v. Waters, 212 Ga. 644, 648 (94 SE2d 702) (1956). Moreover, in finding that the newly constituted Board had no “appellate or subsequent review authority” to issue a supplemental decision, the court overlooked its own directive to the Board to clarify and affirm or reverse its initial decision, authorized under OCGA § 5-4-14 (a). Thus, we find that the court abused its discretion in ordering the former Board members to reconvene to clarify their initial decision.

Decided March 15, 1996

Reconsideration denied March 29, 1996.

Overtis H. Brantley, Elizabeth T. Marinelli, Clifford E. Hardwick TV, for appellant.

McKenney & Froelich, William J. McKenney, for appellee.

Judgment reversed.

Pope, P. J., concurs. Beasley, C. J., concurs in the judgment only.


author: Blackburn, Judge. Birdsong, Presiding Judge, Beasley, Chief Judge, McMurray, Presiding Judge, Pope, Presiding Judge, Smith, Judge,

text:
    A95A2781.
    HUMANA, INC. et al. v. KISSUN et al.
    (471 SE2d 514)
   Blackburn, Judge.

We granted Humana, Inc.’s (Humana) application for interlocutory review of the trial court’s order denying its motion for summary judgment as to all plaintiffs’ claims. Plaintiffs brought the underlying medical malpractice action against Humana and its wholly-owned subsidiary General Hospital of Galen, Inc., (General) d/b/a Humana Hospital-Newnan (the hospital). Humana contends the trial court erred in denying its motion for summary judgment, thereby effectively disregarding its separate corporate status absent a showing that it had abused the corporate form or that adherence to its separate corporate identity would promote injustice or protect fraud. The first issue on appeal, therefore, is whether plaintiffs’ evidence pierces the corporate veil between General and Humana.

1. In order for the plaintiffs’ evidence to pierce the corporate veil, “it must be shown that [Humana’s] disregard of the corporate entity made [General] a mere instrumentality for the transaction of [Humana’s] affairs; that there is such unity of interest and ownership that the separate personalities of the [subsidiary] and the owners no longer exist; and to adhere to the doctrine of corporate entity would promote injustice or protect fraud.” (Punctuation omitted; emphasis supplied.) Derbyshire v. United Bldrs. Supplies, 194 Ga. App. 840, 844 (392 SE2d 37) (1990).

Both factors must be found because “[o]ne reason the law establishes separate corporate identity is so that a corporation can hold itself independently apart and insulated from the existence of another related corporation even while it uses the related corporation or controls it to promote its own ends.” Boafo v. Hosp. Corp. of America, 177 Ga. App. 75, 76 (338 SE2d 477) (1985). “For the issue to be submitted to a jury there must be evidence that the corporate arrangement was a sham, used to defeat justice, to perpetrate fraud or to evade statutory, contractual or tort responsibility.” Derbyshire, supra at 844. See also Hogan v. Mayor &c. of Savannah, 171 Ga. App. 671, 673 (3) (320 SE2d 555) (1984); Kelley v. Austell Bldg. Supply, 164 Ga. App. 322, 325 (3) (297 SE2d 292) (1982).

In Boafo, supra, the plaintiffs’ attempt to pierce the corporate veil between the Hospital Corporation of America (HCA) and its wholly-owned subsidiary, Medical Center West, Inc. which operated Parkway Regional Hospital, the allegedly negligent hospital, was unsuccessful.

Therein, the evidence indicated “that the two corporations shared some officers, that they jointly purchased the hospital property from bankruptcy receivership, that Medical Center West, Inc. was not incorporated in Georgia until six days after the property was purchased, that HCA own[ed] 100% of the Medical Center West stock, that some officers were paid only by HCA and the hospital administrator was paid by HCA for security reasons while the amount was charged back against Parkway Regional Hospital, that major (not day-to-day) accounting and financial functions [were] performed by HCA through a national cash management system, that Medical Center West [had] insurance coverage of the hospital by an insurer who [was] another wholly owned subsidiary of HCA, that HCA operated] a Center for Health Studies which provided] non-mandatory educational seminars for hospitals which [was] available to Parkway Regional Hospital at less than full cost, that HCA employ[ed] a national purchasing director to negotiate purchasing agreements for HCA and subsidiary-owned hospitals but Medical Center West [was] free to, and [did], negotiate its own purchasing contracts if it [got] better rates.” Id. at 75-76.

We determined that “no basis exist[ed] for disregarding HCA’s separate identity unless its ulterior motive or purpose [was] to promote fraud and injustice or defeat a public convenience.” Id. at 77. As there was no evidence of HCA’s purpose, we affirmed the trial court’s grant of HCA’s motion for summary judgment. Id.

In the present case, the evidence likewise fails to produce any evidence that Humana sought to perpetrate fraud or evade contractual or tort responsibility. The evidence shows that General is incorporated under the laws of Utah and Humana is incorporated in the State of Delaware. Each corporation maintained separate minute books and separate corporate seals. The two corporations share officers in that all the officers of General are also officers of Humana, although Humana has many officers who are not officers of General. The hospital used the Humana national logo on its letterhead, sign, and advertising, but the hospital did its own local advertising. Humana hired attorneys for General to handle suits for or against the hospital. The hospital’s chief executive officer, Jack Davis, was hired and supervised by Humana’s regional vice president. Davis was responsible for the hospital’s day-to-day operation. He exercised complete hiring, firing, and purchasing authority for the hospital, as long as the decisions were within the budget set by the regional vice president. Davis signed all contracts and leases on the part of General Hospitals of Humana, Inc. d/b/a Humana Hospital-Newnan.

Humana supported its motion for summary judgment by, among other things, the affidavit and deposition of Walter Neely, its vice president and general counsel. The overall import of Neely’s affidavit was that although General was a wholly-owned subsidiary corporation of Humana, the two corporations were separate in all means and sustained independent identities. Upon being cross-examined regarding his affidavit, Neely admitted that his averments were based upon his general knowledge of Humana’s relationship with its subsidiary corporations rather than any specific knowledge of Humana’s relationship with General. As Neely’s affidavit was not based upon personal knowledge, it is without probative value. See Williams v. Hajosy, 210 Ga. App. 637, 639 (436 SE2d 716) (1993). Further, where the testimony between Neely’s affidavit and deposition is contradictory, it will be construed against him. See Prophecy Corp. v. Charles Rossignol, Inc., 256 Ga. 27, 30 (343 SE2d 680) (1986).

In Neely’s deposition he testified as to the usual way Humana interacted with its subsidiaries. While we do not consider this as direct evidence of Humana’s interaction with General, it is some evidence of their interaction, especially considering that no contradictory evidence was produced. Neely deposed that Humana operated a credit and charge back accounting system by withdrawing cash from its hospitals’ depository accounts on a daily basis and creating an asset on the hospital’s books in the intercompany account. Neely deposed that Humana was very scrupulous in accurately keeping the account. Neely further deposed that Humana would reduce any hospital’s deficit by crediting its intercompany account or lessening its intercompany liability so that the hospitals were always funded with the amount necessary to meet their obligations. Additionally, the hospital was issued liability insurance of at least five million dollars. Although the existence of excess liability insurance was discussed during Neely’s deposition, no admissible evidence of such insurance is contained in the record.

Our review of the evidence reveals very little difference between the present case and the evidence outlined in Boafo, supra, as to the issues raised in this division. The present case involves the use of the Humana name and logo by the hospital but such fact does not require a different result. The common use of advertising and the use of the same logo is not sufficient to pierce the corporate veil. See Cornwell v. Williams Bros. Lumber Co., 139 Ga. App. 773 (229 SE2d 551) (1976).

Most importantly, no evidence was produced indicating that Humana’s interaction with its subsidiaries was calculated in any way “to promote fraud and injustice or defeat a public convenience.” Boafo, supra at 77. See also Fla. Shade Tobacco Growers v. Duncan, 150 Ga. App. 34, 35 (256 SE2d 644) (1979). Compare Kelley, supra (sufficient evidence to authorize jury to find use of separate entities used to evade contractual responsibility).

The law allows a parent corporation to use its subsidiary to promote its own purposes and yet, to keep its separate identity. See Boafo, 177 Ga. App. at 76. In order to disregard the separate corporate entity which the law has created, evidence that General was a “mere instrumentality for the transaction of [Humana’s] affairs . . . [and] that the separate personalities of the corporation and the owner no longer exist” in order to promote injustice or protect fraud must be presented. Plaintiffs have failed to present such evidence.

“A defendant who will not bear the burden of proof at trial need not affirmatively disprove the nonmoving party’s case; instead, the burden on the moving party may be discharged by pointing out by reference to the affidavits, depositions and other documents in the record that there is an absence of evidence to support the nonmoving party’s case. If the moving party discharges this burden, the nonmoving party cannot rest on its pleadings, but rather must point to specific evidence giving rise to a triable issue.” Lau’s Corp. v. Haskins, 261 Ga. 491 (405 SE2d 474) (1991).

In view of the absence of evidence outlined above, the trial court erred in denying Humana’s motion for summary judgment as to this division, effectively disregarding the separate corporate status of Humana absent a showing that it had abused the corporate form or that adherence to its separate corporate identity would promote injustice or protect fraud.

2. Plaintiffs assert that even if insufficient evidence was presented to pierce the corporate veil between Humana and General, their additional theories of liability preclude summary judgment to Humana. Plaintiffs contend that Humana is liable for the negligent acts and omissions attributable to the staff and doctors at the hospital, as all of these individuals and the hospital are its apparent/ostensible agents. Plaintiffs alternatively assert that Humana is liable for the negligent acts and omissions attributable to its joint venturer, General.

Apparent or ostensible authority as a basis upon which a hospital could be held liable for the medical negligence of doctors was recognized in Brown v. Coastal Emergency Svcs., 181 Ga. App. 893, 897 (354 SE2d 632) (1987), in which this Court held that “the doctrine of apparent agency is predicated on principles of estoppel and applies where it can be shown that the third party dealt with the agent in reliance upon the authority which the principal has apparently conferred upon him.” (Punctuation omitted.) “ ‘One who represents that another is his servant or other agent and thereby causes a third person justifiably to rely upon the care or skill of such apparent agent is subject to liability to the third person for harm caused by the lack of care or skill of the one appearing to be a servant or other agent as if he were such.’ ” Id.

In affirming the opinion of this Court, the Georgia Supreme Court held: “There is an objective standard. The apparent principal must represent or hold out the apparent agent. Then, too, justifiable reliance must lead to the injury.” Richmond County Hosp. Auth. v. Brown, 257 Ga. 507, 509 (361 SE2d 164) (1987).

In response to defendant’s motion for summary judgment, plaintiffs provided the affidavit of plaintiff Ray M. Thomas, which averred that he had relied upon the name and reputation of Humana in leaving Amala Thomas in the care of the hospital; that the brochures and signs which he saw at the hospital prominently featured the “Humana” name; that he was unfamiliar with and no one advised him that the hospital was owned or operated by anyone other than Humana. Plaintiffs argue that Humana held out the hospital and its staff, as its agents, acting on its behalf and that Amala Thomas was injured as a result of a reliance upon the representations of Humana.

Plaintiffs argue that Humana has failed to factually pierce' or otherwise respond to plaintiffs’ apparent/ostensible agent and joint venturers theories of liability and that questions of fact exist as to such matters and the trial court did not err in denying defendant’s motion for summary judgment as to such claims.

Plaintiffs’ assertions require this Court to address an issue of first impression, that being, can those uses of a subsidiary corporation by its parent corporation which the court has approved without jeopardizing the separate identity and liability shield of the parent, be used to establish the elements of a claim against the parent based on apparent authority or joint venturer?

Plaintiffs’ reliance upon Brown v. Coastal Emergency Svcs., supra; Richmond County Hosp. Auth. v. Brown, supra; Abdul-Majeed v. Emory Univ. Hosp., 213 Ga. App. 421, 423 (445 SE2d 270) (1994), and Whitaker v. Zirkle, 188 Ga. App. 706, 709 (374 SE2d 106) (1988), is misplaced as none of these cases involves an attempt to impose liability upon a parent corporation for the acts of its subsidiary corporation which owns and operates the involved hospital. Rather, they involve an attempt to impose liability upon the hospital and the corporation with which it has contracted to provide medical services (usually emergency room) for the acts of the physicians who are retained to actually treat the patients of the subject hospital.

Standing alone, the lawful uses of a subsidiary corporation by its parent corporation cannot support a claim against such parent under a theory of apparent agency or joint venturer. Such claims must rest upon factors other than those which the law contemplates and approves. Since the law allows a parent corporation to use its subsidiary to promote its own purposes and yet keep its separate identity, to hold otherwise, would be to allow the very uses approved in “piercing the veil” tests to establish a claim under a theory of apparent agency or joint venturer, thus vitiating the law of parent/subsidiary corporate use. See Boafo, supra.

In the present case, plaintiffs attempt to hold Humana (parent corporation) liable for the actions of General (subsidiary corporation) and those physicians actually treating patients at the hospital operated by General under alternative apparent agency and joint venturer theories. Plaintiffs argue that the fact that the Humana sign and logo were used at the hospital distinguishes this case from Boafo, and is evidence that Humana allowed General to hold itself out as being Humana, relying upon Watson v. Howard Johnson Franchise Systems, 216 Ga. App. 237 (453 SE2d 758) (1995).

Watson, supra, was a case which involved a franchise arrangement, did not involve the uses of a subsidiary corporation by its parent corporation, and turned on the specific facts therein involved. In that case, the franchise agreement required the franchisee to have a plaque at the motel check-in desk advising customers of the details of ownership and operation of the motel. The franchisor inspected the subject motel, did nothing about the violation, and was charged with knowledge thereof. Additionally, the franchisor had control of the advertising signs which were used by the franchisee to attract customers.

While Boafo did not involve the use of a sign, the use of a common logo and advertising was involved in Cornwell, supra, and such facts were deemed to be insufficient, even in light of additional facts, to treat two corporations as a single entity. We cannot consider those approved uses of a subsidiary corporation by a parent corporation in support of a claim under a theory of apparent agency or joint venturer. Construing other evidence most favorably to plaintiffs there is an absence of evidence giving rise to a triable issue as to such claims.

Plaintiffs contend that Humana has not addressed its apparent authority or joint venturer contentions and therefore summary judgment should be denied. Humana however moved for summary judgment as to all of plaintiffs’ claims and pointed out a lack of evidence to support plaintiffs’ contentions. Humana met its burden under Lau’s Corp. v. Haskins, supra, and it thus fell to plaintiffs to point to specific admissible evidence contained in the record giving rise to a triable issue. Plaintiffs having failed to do so, Humana was entitled to summary judgment and the trial court erred in denying such motion.

Judgment reversed.

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

Birdsong, Presiding Judge,

concurring specially.

In my opinion, the analysis of the majority in this case is correct and this case is controlled by Boafo v. Hosp. Corp. of America, 177 Ga. App. 75, 76 (338 SE2d 477).

Beasley, Chief Judge,

concurring in part and dissenting in part.

I agree with Judge Smith except that I would affirm the trial court on the issues of apparent agency and joint venture only; I would reverse the trial court’s denial of summary judgment as to the issue of piercing the corporate veil.

McMurray, Presiding Judge,

dissenting.

I respectfully dissent from the judgment of reversal. In my view, there is no question but that defendant Humana, Inc. is, as a matter of law, liable for the alleged medical malpractice of employees of Humana, Inc.’s wholly-owned subsidiary and joint-venturer, defendant General Hospital of Galen, Inc., d/b/a Humana Hospital-Newnan. “ ‘Joint venturers bear the same relation to each other as do the partners in a partnership. Each is an agent of the entity.’ [Cit.] ... [A] joint venture [is] not a distinct legal entity separate and apart from the parties composing it and thus an employee engaged in activities of the joint venture is an employee of each of the joint venturers under ordinary principles of agency.” Boatman v. George Hyman Constr. Co., 157 Ga. App. 120, 123 (276 SE2d 272). “A partner in a joint venture is liable for the wrongful acts of its partner committed in the ordinary course of business of the joint venture and cannot avoid this liability by an agreement between the partners that one of the partners will carry out the business of the joint venture as an independent contractor.” Block v. Woodbury, 211 Ga. App. 184, 186 (2) (438 SE2d 413). In the case sub judice, the trial court correctly determined that summary judgment in favor of the joint venturer defendant Humana, Inc., is unwarranted. As my colleagues in the majority would nevertheless reverse that correct determination, I respectfully dissent.

Pope, Presiding Judge,

dissenting.

I respectfully dissent. The trial court correctly denied summary judgment since the plaintiffs presented sufficient evidence to create a jury issue as to whether the corporate veil was pierced.

“Using terminology such as ‘piercing the corporate veil,’ ‘looking at the substance rather than at the form,’ or ‘disregarding the corporate fiction,’ our courts have disregarded the separate entity of a corporation where it has overextended its privileges. [Cit.] To activate this cut-through, there must be abuse of the corporate form. ‘Sole ownership of a corporation by one person or another corporation is not a factor,. . . and neither is the fact that the sole owner uses and controls it to promote his ends.’ [Cit.]” Derbyshire v. United Bldrs. Supplies, 194 Ga. App. 840, 844 (2) (392 SE2d 37) (1990).

“The law intervenes when the separate personalities of the corporation and its owner no longer exist. The question is whether the corporation serves as the alter ego or business conduit of its owner. To establish this, ‘it must be shown that the stockholders’ disregard of the corporate entity made it a mere instrumentality for the transaction of their own affairs; that there is such unity of interest and ownership that the separate personalities of the corporation and the owners no longer exist; and to adhere to the doctrine of corporate entity would promote injustice or protect fraud.’ [Cit.]” Id. at 844. Similarly, in the context of parent/subsidiary corporations, “great caution should be exercised in disregarding or going behind the corporate entity, [but] it may be done when the subsidiary is shown to be the alter ego or business conduit of the parent. However, it must appear that the subsidiary is a mere instrumentality of the parent.” (Citation and punctuation omitted.) SunAmerica Financial v. 260 Peachtree St., 202 Ga. App. 790, 798 (3) (415 SE2d 677) (1992).

“ ‘When litigated, the issue of “piercing the corporate veil is a jury question.” [Cit.] For the issue to be submitted to a jury there must be evidence that the corporate arrangement was a sham, used to defeat justice, to perpetrate fraud or to evade statutory, contractual or tort responsibility.’ ” Derbyshire, 194 Ga. App. at 844.

Here, the following evidence was presented. At the time of the incident in 1991, General Hospital of Galen, Inc., d/b/a Humana Hospital-Newnan (“the hospital”) used the Humana national logo on its letterhead, signs, and in various advertising. The Humana logo was displayed on hospital brochures, maps to the hospital, and the hospital’s annual report. The Humana logo was also displayed on the hospital’s admission and discharge summary sheets, and on the sign in front of the hospital.

During his deposition, Walter Neely, Humana’s vice-president and general counsel, acknowledged that Humana and its various subsidiaries tried to create a public awareness that the Humana name was synonymous with good service and good quality. Neely also stated that the name “Humana” was equated with a large national health care company, and that this name recognition was a “goal.”

Humana hired attorneys for the hospital to handle lawsuits. Moreover, there was evidence that Humana pursued collection suits on behalf of the hospital in the name “Humana Hospital-Newnan.”

The hospital’s chief executive officer, Jack Davis, was hired and supervised by Humana’s regional vice president. All the officers of the hospital were also officers of Humana and Humana owned 100 percent of the stock in the hospital. Davis received stock options or stock bonuses in Humana stock. The hospital’s budget was set by Humana’s regional vice-president. Bills and payroll were paid for the hospital on Humana’s intercompany account and the hospital had no separate banking account. When the hospital received payments, they were withdrawn by Humana and “an asset was created on the hospital books in the intercompany account.” The hospital did not have access to the money which it was paid, instead this money “was swept daily into a Humana, Inc. account.”

As the majority notes, the hospital managed its day-to-day affairs, maintained its separate minute books and corporate seal, and was fully insured. Although there was evidence that the hospital was fully capitalized, Davis explained that “Humana always funded whatever was necessary in order to allow the hospital to maintain a position where it could pay its creditors, payroll, et cetera. . . .”

There was sufficient evidence to create a jury issue on the issue of piercing the corporate veil. Unlike the facts of Boafo v. Hosp. Corp. of America, 177 Ga. App. 75 (338 SE2d 477) (1985), the evidence of the control that Humana exerted over the hospital here created a factual issue. There was evidence that there was such a unity of interest and ownership that the separate personalities of Humana and the hospital no longer existed, and to adhere to the doctrine of corporate entity would unfairly allow Humana to evade tort responsibility. See generally Mark Six Realty Assoc. v. Drake, 219 Ga. App. 57 (463 SE2d 917) (1995).

I do not agree with the suggestion in the majority opinion that an element resembling scienter is necessary to pierce the corporate veil. In this case, the fact that Humana corporation was operating legally does not factor into the assessment of the distinctiveness of the corporate entities. See Condenser Svc. &c. Co. v. Brunswick Port Auth., 87 Ga. App. 469, 475 (74 SE2d 398) (1953) (veil may be pierced to avoid fraud, injustice, or for other equitable reasons).

Because a jury issue was created as to whether the corporate veil was pierced, I need not address the issue of whether Humana may be sued under a theory of apparent authority. Usually the question of apparent authority has been combined into the analysis of whether the corporate veil has been pierced, see generally Triple “C” Recreation Assn. v. Cash, 124 Ga. App. 754 (186 SE2d 145) (1971). Although there could be situations in which a corporation acts with the apparent authority of another and the corporate veil has not been pierced, the instant case does not present this separate question. Similarly, because of my conclusion, I need not reach the issue of joint venture addressed in Presiding Judge McMurray’s dissent.

Smith, Judge,

dissenting.

I agree with the majority that insufficient evidence was presented in this case to pierce the corporate veil. Nothing in this record indicates to me that arrangements between General and Humana were used to perpetrate fraud or to evade responsibilities.

I must respectfully dissent, however, because I disagree with the majority’s conclusion that because Humana did not abuse the corporate form we are precluded from finding that it may be liable to the plaintiffs here under a theory of apparent or ostensible agency. In my view, applying an apparent agency theory in this case would not undermine or “vitiate” the law pertaining to parent and subsidiary corporations. It is possible to refuse to pierce the corporate veil with respect to many of the operations of General here while still holding that Humana may be liable to certain plaintiffs under a theory of apparent agency.

Piercing the corporate veil looks to the relationship between the two defendants; apparent agency, on the other hand, looks to the relationship of the defendant to the plaintiff. As the majority correctly points out, apparent agency is basically an estoppel theory; it is called into play when a member of the public deals with another and justifiably relies upon representations by the defendant that he is dealing with the defendant’s agent. In Richmond County Hosp. Auth. v. Brown, 257 Ga. 507 (361 SE2d 164) (1987), the hospital and the emergency room group were two separate entities; the doctor who treated the plaintiff was not actually the hospital’s employee or agent. The hospital was nevertheless liable to the plaintiff for any negligence on the part of the doctor because the hospital, by its actions, represented to the public that the emergency room doctors were its employee agents.

Decided March 15, 1996

Reconsideration denied March 29, 1996

Smith, Gambrell & Russell, David M. Brown, S. David McLean, Jr., for appellants.

Butler, Wooten, Overby & Cheely, James E. Butler, Jr., Joel O. Wooten, Jr., Alston & Bird, Judson Graves, R. Clay Milling II, Floyd & Stanford, Jackson C. Floyd, Jr., for appellees.

The same is true here. The separate corporate identities were not abused, and the two separate corporations were not used to perpetrate fraud or evade responsibilities. They are actually separate corporations. Nevertheless, Humana represented to the public that it owned or managed the hospital. Signs, brochures, and advertisements proclaimed to the world that this was a Humana hospital. Ray Thomas, the husband of the decedent in this case, stated in his affidavit that he had seen the signs and knew of Humana’s reputation. According to Thomas, in allowing his wife to be treated at the hospital, he specifically relied upon Humana’s reputation for quality medical care.

I see nothing in the record rebutting this evidence. It is sufficient, in my opinion, to support a claim of apparent agency, the viability of which remains despite the failure to pierce the corporate veil. Consequently, I would affirm the trial court.

       William Thomas Redwood, M.D., was also named as a defendant but is not involved in this appeal.

       General Hospitals of Humana, Inc. later changed its name to General Hospitals of Galen, Inc.

       Presiding Judge Pope recognizes this possibility in his separate dissent. He does not reach this issue, however, because in his view the corporate veil was pierced.


text:
    A95A2864.
    PARSONS, BRINCKERHOFF, QUADE & DOUGLAS, INC. et al. v. HARDAWAY COMPANY.
    (470 SE2d 904)
   Ruffin, Judge.

The Hardaway Company sued Parsons, Brinckerhoff, Quade & Douglas, Inc. and DRC Consultants, Inc. (collectively “Parsons”) to recover for economic losses incurred in its construction of ten approach bridges for the Eugene Talmadge Memorial Bridge in Savannah. Hardaway alleged that Parsons negligently designed portions of the bridges and sought to recover for additional work and other expenses incurred when it had to abandon Parsons’ plans. The trial court denied Parsons’ motion for summary judgment in which it alleged that the suit was not filed within the statute of limitation. We granted Parsons’ application for interlocutory appeal to determine an issue of first impression: when does a cause of action accrue where parties seek recovery for economic losses incurred as a result of alleged negligent misrepresentation, a claim authorized under Robert &c. Assoc. v. Rhodes-Haverty Partnership, 250 Ga. 680 (300 SE2d 503) (1983). Because we find that Hardaway’s cause of action accrued on the day it executed its contract with the Georgia Department of Transportation to construct the bridges, we reverse the denial of summary judgment to Parsons.

The material facts are not in dispute. In 1984, Parsons contracted with the Georgia Department of Transportation (“DOT”) to perform certain design activities in relation to the construction of the bridge. On May 24, 1988, the DOT and Hardaway executed a contract for the construction of the approach bridges, and construction was scheduled to commence in the fall of 1989. According to Hard-away, when it bid the job, it intended to use the temporary support system and erection procedure depicted in Parsons’ plans. However, on June 15,1989, when the DOT informed Hardaway of a column deflection problem, Hardaway contends it was forced to abandon the sequence and installation shown in the plans. As a result, construction was delayed until February 1990, and Hardaway claimed that it incurred substantial costs.

Hardaway filed its complaint on April 8, 1993. In the complaint, Hardaway alleged that Parsons held itself out to the public and to the construction community as a professional engineering firm, able to render bridge construction design for structures such as those involved in this case in a skillful and non-negligent manner; that at the time Parsons entered into its contract with the DOT and during the development of the plans, it was aware that the design would be used by the DOT and that the plans and specifications derived therefrom would be relied on by a limited class of persons, including prospective bidders and the construction company that ultimately would be selected to perform the work; and that in preparing its bid for the project, Hardaway relied on the design and information performed and provided by Parsons. Hardaway claimed that as a result of Parsons’ negligence it suffered increased damages, including but not limited to, additional costs for labor, materials, equipment, overhead, loss of profit, inefficiencies, and the wrongful imposition of liquidated damages and improper retainage by the DOT. Hardaway also sought punitive damages based on an alleged scheme between the DOT and Parsons to withhold information regarding the alleged defects.

In its sole enumeration of error, Parsons contends that in denying its motion for summary judgment, the trial court erred in failing to find, as a matter of law, that Hardaway’s complaint was barred by the applicable statute of limitation. At the outset we note that both sides agree that the four-year limitation period applicable to actions for injuries to personalty (OCGA § 9-3-31) is applicable in this case. Therefore, the only question remaining for our resolution is when Hardaway’s cause of action accrued.

“ ‘(T)he true test to determine when the cause of action accrued is “to ascertain the time when the plaintiff could first have maintained his action to a successful result[.]” A right of action has its inception from the time there has been a breach of duty; and this would entitle the party to file a suit for the breach, without regard to whether any actual damage had in fact resulted.’ [Cits.]” Shapiro v. Southern Can Co., 185 Ga. App. 677, 678 (365 SE2d 518) (1988), quoting Mobley v. Murray County, 178 Ga. 388 (173 SE 680) (1934).

Parsons contends Hardaway’s cause of action accrued on May 24, 1988, the day it executed its contract with the DOT, and that the limitation period therefore expired on or about May 24, 1992. On the other hand, relying on cases involving damage to personal property or for personal injury which resulted from defective construction, Hardaway argues that its cause of action for “negligent design” accrued on June 15, 1989, the day it first used Parsons’ plans and thus was injured.

Although Hardaway alleged that Parsons negligently designed portions of the approach bridges, the complaint does not state a cause of action for personal injury or injury to personal property due to defective construction. Nor does Hardaway have legal standing to maintain such a claim. Instead, the complaint demonstrates that Hardaway seeks recovery for economic losses which resulted from its reliance on Parsons’ plans. See Robert &c. Assoc., supra. In Robert &c. Assoc., the Court held that liability for economic loss is limited to those circumstances in which a third party justifiably relies upon allegedly false information. Id. at 682. “In making a determination of whether the reliance by the third party is justifiable, we will look to the purpose for which the report or representation was made. If it can be shown that the representation was made for the purpose of inducing third parties to rely and act upon the reliance, then liability to the third party can attach.” Id. Parsons does not dispute that it was aware of the plans’ intended use and that both prospective bidders and the company ultimately selected to perform the contract would rely on them. Nor is there any dispute that Hardaway relied on those plans in preparing its bid for the contract. Thus, under Robert &c. Assoc., liability attached to Hardaway.

Parsons contends that Hardaway’s right to commence an action arose on May 24, 1988, the day Hardaway executed its contract with the DOT. On that date, the allegedly false information had been supplied, any justifiable reliance had taken place, and Hardaway was obligated to perform under the contract. Thus, Parsons argues, if Hard-away could not so perform due to a design error, it could first have asserted a claim against Parsons on May 24, 1988.

Since there are no Georgia cases addressing when such a cause of action accrues, we have turned to other jurisdictions for guidance. Recovery for economic losses resulting from negligent misrepresentation is not universally recognized, and only a few of the states which allow such recovery have considered the question of when the cause of action accrues. In those states where the question has been submitted for appellate review, the courts have first decided whether a claim based on negligent misrepresentation sounds in negligence or fraud. The important distinction between the two is that “[a] cause of action in negligence accrues and the statute of limitation begins to run when there is a negligent act coupled with a proximately resulting injury. [Cit.]” U-Haul Co. &c. v. Abreu & Robeson, 247 Ga. 565, 566 (277 SE2d 497) (1981). However, in fraud cases, the cause of action accrues from the discovery of the fraud. Shapiro, supra. The prevailing view is that a claim based on negligent misrepresentation sounds in negligence.

In Duyck v. Tualatin Valley Irrigation Dist., 742 P2d 1176 (Or. 1987), for example, where farmers sought recovery for crop damage after relying on the water irrigation district’s representations regarding the availability of water, the court held that although a claim for negligent misrepresentation involves a misrepresentation, the theory of recovery lies in negligence rather than fraud. Id. at 1181. The court acknowledged that this view is supported by the Restatement of Torts 2d, § 552 which, in setting forth the elements of negligent misrepresentation, also provided that “ ‘the rule stated in this Section is based upon negligence of the actor in failing to exercise reasonable care or competence in supplying [correct] information. . . .’” Id. See also Bottrell v. American Bank, 773 P2d 694, 705-706 (Mont. 1989) (the court recognized causes of action for negligent misrepresentation sounding in fraud and negligence under Restatement).

In Ebrahimi v. E. F. Hutton & Co., 794 P2d 1015 (Colo. 1989), the court distinguished negligent misrepresentation and fraud as follows and concluded that a negligent misrepresentation claim is based in negligence: “The defendant’s state of mind is irrelevant to a claim for negligent misrepresentation, except to the extent that it must be shown that the defendant failed to act reasonably in ascertaining the accuracy of the information supplied or in communicating that information. Thus, in such a case, the defendant may have had an honest intention, but simply failed to exercise reasonable care. In a fraud case, on the other hand, the gravamen of the tort is the defendant’s conscious knowledge of the falsity of the representation or such recklessness as amounts to a conscious indifference to the truth. Thus, the scienter element required for [fraud] significantly distinguishes that tort from any tort based upon simple negligence.” (Indention omitted.) Id. at 1017. See also Milestone Properties v. Federated Metals Corp., 867 SW2d 113, 118-119 (Tex. App.-Austin 1993); Brown v. Underwriters at Lloyd’s, 332 P2d 228 (Wash. 1958).

Thus, applying principles of negligence to determine when the cause of action accrued in Duyck, the court did not find that the statute of limitation began to run when the crops were ultimately damaged. Rather, the court recognized that “[u]nder the Restatement (Second), the claim is complete when (1) the actor negligently ‘supplies false information for the guidance’ of the plaintiffs, and (2) the plaintiffs sustain ‘pecuniary loss caused to them by their justifiable reliance upon the information.’ This suggests that the statute of limitations on a claim for negligent misrepresentation begins to run when the plaintiffs knew or should have known that they had a loss caused by their reliance upon the defendant’s information. This . . . directly tracks the elements of misrepresentation, reliance and injury. The causal nexus required by section 552 — ‘loss caused to them (the plaintiffs) by their justifiable reliance upon the information’ is met.” (Emphasis in original.) Duyck, supra at 1182. See also Hall v. Romero, 685 P2d 757, 761 (Ariz. Ct. App. 1984) (the statute of limitation for negligent misrepresentation begins to run when plaintiff knows or should have known of the defendant’s negligent conduct or when the plaintiff is first able to sue).

In Duyck, the water irrigation district told members in newsletters between May 1976 and May 1978 that they would receive water service on or about June 1, 1978. Although the water irrigation district’s manager learned in the interim that water would not actually be available until late summer or early fall, he never informed the farmers. Relying on the water irrigation district’s representations, the plaintiffs planted crops in May 1978. The plaintiffs ultimately filed their complaint for crop damage on June 18, 1980. The court held that the complaint was time-barred by Oregon’s two-year statute of limitation because on June 1, 1978, plaintiffs’ claim was complete: plaintiffs knew the water was not available, and they had expended money in reliance upon the water irrigation district’s representations and therefore could have filed an action for damages on June 1, 1978. Duyck, supra at 1182-1183.

Accepting these principles, we find that Hardaway’s cause of action accrued on May 24, 1988, when Hardaway executed its contract with the DOT. On that date, the “causal nexus” was met, and Hard-away “ ‘ “could first have maintained his action to a successful result.” ’ ” Shapiro, supra. See also Hall, supra at 762. Parsons had produced the designs upon which Hardaway relied in preparing its bid, and Hardaway was injured when it assumed the obligation to construct the bridges based on the defective plans and specifications. Although Hardaway contends it did not know the designs were defective until June 1989, “[ajccrual of a negligence claim does not await awareness of negligence.” Duyck, supra at 1183. The statute of limitation on a negligence claim is not “suspended for purposes of allowing a plaintiff to develop facts to support or identify a theory of recovery or . . .to learn ‘all of the facts which they might ultimately be able to advance to support their claim.’ [Cit.]” Id. “Ignorance that the cause of action existed would not toll the statute.” U-Haul Co., supra at 567.

Hardaway also contends that it had not suffered any injury on May 24, 1988. However, as we have held in legal malpractice cases, “a right of action arises immediately upon the wrongful act having been committed, even though there are no special damages. [Cits.] . . . [I]t is not the special damage or injury resulting from the wrongful act which gives rise to a cause of action, but . . . the fact that nominal damages may be recovered is sufficient to create a cause of action and therefore result in the statute of limitation beginning to run. Even in the jurisdictions which clearly require the sustaining of damage as a triggering device for the statute of limitation, the suffering of damages to the fullest extent possible is seldom required. ‘The cause of action arises, however, before the [plaintiff] sustains all, or even the greater part, of the damages occasioned by [the defendant’s] negligence. [Cits.] Any appreciable harm and actual harm flowing from the . . . negligent conduct establishes a cause of action. . . .’ [Cit.]” Jankowski v. Taylor, Bishop & Lee, 246 Ga. 804, 806 (273 SE2d 16) (1980). In this respect, the instant case may be compared with certain legal malpractice actions sharing the common essential elements, alleged professional negligence, reliance, and injury. See Jones, Day &c. v. American Envirecycle, 217 Ga. App. 80 (1) (456 SE2d 264) (1995) (and cases cited therein where negligent preparation of a contract alleged and the court held that the cause of action accrued upon execution of the contract).

Similarly, a cause of action for fraudulent inducement to enter into a contract accrues upon execution of the contract. In spite of the fraud element, the discovery rule is not applied. See Kerce v. Bent Tree Corp., 166 Ga. App. 728 (305 SE2d 462) (1983); Smith v. Alimenta Processing Corp., 197 Ga. App. 57 (397 SE2d 444) (1990); Sears Roebuck & Co. v. Green, 142 Ga. App. 770 (237 SE2d 10) (1977). Hardaway contends these cases bear no relation to the instant case because it had no direct contractual relationship with Parsons. However, in Robert &c. Assoc., the court specifically contemplated that there would be no privity between one who supplies information and the foreseeable third party who justifiably relies. Robert &c. Assoc., supra at 681.

Although we have concluded that Hardaway failed to file its complaint within four years of the accrual of its cause of action on May 24, 1988, Hardaway argues that the denial of summary judgment was nonetheless proper because the statute of limitation was tolled due to Parsons’ and the DOT’s fraudulent concealment of information regarding the design defects.

“To constitute concealment of a cause of action so as to prevent the running of limitations, some trick or artifice must be employed to prevent inquiry or elude investigation, or to mislead and hinder the party who has the cause of action from obtaining information, and the acts relied on must be of an affirmative character and fraudulent. [Cit.] The fraud which will relieve the bar of the statute of limitation must be of that character which involves moral turpitude, and must have the effect of debarring or deterring the plaintiff from his action. (Cit.)” (Punctuation omitted.) Kerce, supra at 729; OCGA § 9-3-96.

Before the trial court, Hardaway enumerated a litany of acts, some of which pre-dated its contract with the DOT, which purportedly demonstrated Parsons’ and the DOT’s knowledge of the design defects, its inquiries regarding the validity of the designs, and their deliberate attempts to conceal such information. Although that evidence reveals repeated discussions concerning the alleged defects over a significant period of time between Parsons and the DOT and that both knew about the alleged defects well in advance of June 15, 1989, when the DOT responded to Hardaway’s inquiry, that evidence also reveals that Hardaway communicated only with the DOT. There is no evidence whatsoever, and Hardaway does not contend that any exists, that it made any inquiries directly to Parsons. In fact, there is no evidence of any communication between Hardaway and Parsons whatsoever. Nor has Hardaway shown that Parsons was under any duty to disclose information regarding alleged defects or that Parsons prevented it from learning about the alleged defects through other means. Thus, Parsons’ actions are not of such character involving moral turpitude which prevented Hardaway from learning about the alleged defects and deterred it from filing its complaint within the statute of limitation. Accordingly, since Hardaway’s complaint was not filed within four years of the date the action accrued and OCGA § 9-3-96 is inapplicable, the trial court erred in denying Parsons’ motion for summary judgment.

Judgment reversed.

Beasley, C. J., and Pope, P. J., concur in the judgment only.

Decided March 15, 1996

Reconsideration denied March 29, 1996

Webb, Carlock, Copeland, Bernier & Stair, Kent T Stair, James R. Doyle II, Gregory H. Wheeler, for appellants.

King & Spalding, Joseph B. Haynes, Charles K McKnight, Jr., for appellee.


author: Judge Harold R. Banke.

text:
    A95A2877.
    WASHINGTON v. JEFFERSON COUNTY et al.
    (470 SE2d 714)
   Judge Harold R. Banke.

Mildred Washington sued Jefferson County and former Sheriff Zollie Compton on behalf of her son, David Washington, and appeals the trial court’s grant of summary judgment. For the reasons which follow, we affirm.

Viewed in a light most favorable to the non-movant, Washington, the evidence was as follows. Lau’s Corp. v. Haskins, 261 Ga. 491 (405 SE2d 474) (1991). About four months after his arrest by the Jefferson County Sheriff’s Department, while out on bond on charges of aggravated assault and terroristic threats, Johnnie Lee Carr got into a fight with David Washington and shot him in the head. Washington and Carr had fought the weekend prior to the shooting, and the subsequent fight where Carr shot him was a continuation of that fight. During the week between the two fights Washington did not seek assistance from the sheriff’s department or request that Carr be arrested. The Jefferson County Sheriff’s Department had arrested Carr on two other occasions and each time bond was set.

The gravamen of Washington’s complaint is that Carr should not have been released from jail because he was too dangerous. Specifically, Washington alleged that Jefferson County and Sheriff Compton negligently allowed bail for Carr, breached a duty to protect the public from Carr, and failed to properly train personnel. Washington also asserted various federal constitutional and statutory violations; however, the trial court deemed all the federal claims abandoned except for the 42 USC § 1983 claim. Held:

The trial court correctly granted summary judgment because Washington failed to set forth all the elements of a prima facie case for either his state tort claims or his federal statutory claims.

As to the state tort claims, Washington’s case is legally insufficient for two reasons either of which would have warranted, under the facts herein, a judgment on the pleadings: 1) a lack of control over the bail process, and 2) a lack of a special relationship with Washington. See OCGA § 9-11-12 (c).

A superior court judge, not a sheriff or county, controls the bail procedure for aggravated assault, the offense for which Carr obtained bond. OCGA § 17-6-1 (a) (11). Neither Compton, as Sheriff of Jefferson County, nor Jefferson County had any responsibility for determining, setting, or allowing bail for Carr. See Howard v. State, 197 Ga. App. 693 (399 SE2d 283) (1990) (amount of bail to be assessed in each criminal case generally within the sound discretion of the trial judge).

Nor is there any merit to Washington’s negligent surety issue. OCGA § 17-6-15 (b) provides statutory authority for a sheriff to make the determination of the acceptability of a surety. Compton’s approval of the surety on Carr’s bond involved the use of judgment and was thus a discretionary function protected by sovereign immunity. Gilbert v. Richardson, 264 Ga. 744 (452 SE2d 476) (1994). See McDay v. City of Atlanta, 204 Ga. App. 621, 622 (2) (420 SE2d 75) (1992) (absent evidence of malice, wilfulness, or corruption, public officer afforded immunity in the exercise of official duties).

To survive summary judgment on his negligence claim, Washington had to show that the County and Compton had a special relationship with him, apart from that owed to the general public and that this special relationship created a special duty owed to him which the County and Compton then breached causing his injury. City of Rome v. Jordan, 263 Ga. 26, 28 (426 SE2d 861) (1993). The failure to establish the existence of a special relationship is fatal to this type of claim. A special relationship has three requirements: “(1) an explicit assurance by the [government entity] through promises or actions, that it would act on behalf of the injured party; (2) knowledge on the part of the [government entity] that inaction could lead to harm; and, (3) justifiable and detrimental reliance by the injured party on the [government entity’s] affirmative undertaking. Jordan, 263 Ga. at 29.

In his responsive pleadings, Washington negated an element of his own prima facie case by admitting, “[N]or is any special relationship between the Defendants and David Washington alleged.” Washington also conceded that Carr posed a risk of harm to all members of the public and that “Carr’s victim could have been anyone. . . .” Washington admitted he did not ask for assistance from the sheriff’s department after the first fight. Compton testified he did not know Carr posed a threat to Washington. Because the record lacks any evidence of special assurances, knowledge of danger, and justifiable and detrimental reliance, summary judgment was properly granted.

As to Washington’s federal statutory claim, it also fails because Washington failed to show a nexus between his injury and any state action. Section 1983 imposes liability where persons acting under color of state law have deprived a person of a federal constitutional or statutory right. Hendon v. DeKalb County, 203 Ga. App. 750, 757 (3) (417 SE2d 705) (1992). As discussed above, because there was no special relationship, neither the County nor Compton had a duty to protect Washington any more than any other member of the general public. Washington was not in state custody and did not face any special danger of assault by Carr, as distinguished from the danger to the general public. DeShaney v. Winnebago County Social Svcs. Dept., 489 U. S. 189 (109 SC 998, 103 LE2d 249) (1989) (no cognizable claim brought under 42 USC § 1983 where state employee had no duty to protect an individual, not in state custody, against private violence).

Decided March 14, 1996

Reconsideration denied March 29, 1996.

H. Brannen Bargeron, for appellant.

Barnhart, O’Quinn & Williams, Michael A. O’Quinn, Margaret E. Sanders, Michael J. Moses, for appellees.

After Compton presented testimony that neither he nor any member of his department made any assurances to Washington that he would be protected, the burden shifted to Washington to come forward with some contrary evidence. Washington could no longer rest upon the mere allegations of his pleading but was required to set forth specific facts showing a genuine issue for trial. OCGA § 9-11-56 (e). This he did not do. Because Washington failed to offer any specific facts which would give rise to a triable issue, we find that summary judgment was properly granted as to the 42 USC § 1983 claim.

Judgment affirmed.

McMurray, P. J, and Blackburn, J., concur.