author: Beasley, Presiding Judge. Andrews, Judge,

text:
    A94A0138.
    SALMON v. PEARSON & ASSOCIATES, INC.
    (446 SE2d 762)
   Beasley, Presiding Judge.

This case comes to us on the grant of defendant’s motion for summary judgment. In such a posture, as on consideration of the motion initially, “[t]he party opposing the motion ... is entitled to all favorable inferences and the benefit of every doubt, and the evidence is construed most strongly in [her] favor. [Cit.]” Dixieland Truck Brokers v. Intl. Indem. Co., 210 Ga. App. 160, 163 (2) (435 SE2d 520) (1993). “[A]t summary judgment a party who will not bear the burden of proof at trial. . . must demonstrate by reference to evidence in the record that there is an absence of evidence to support at least one essential element of the non-moving party’s case.” Lau’s Corp. v. Haskins, 261 Ga. 491, 495 (4) (405 SE2d 474) (1991).

Plaintiff Salmon purchased a town house from HUD. The lender retained defendant, a professional land survey firm, to prepare a flood certification, which was required for closing and was paid for as a part of closing costs. The certification document was not ready for the closing, so the lender’s closing attorney who ordered it called the firm. In consequence of the phone call he told the plaintiff purchaser that the house was not in a flood hazard zone. She testified that on the strength of this information she signed the flood insurance agreement which the lender required and which obligated her to buy flood insurance if the lender and/or investor should require it. The closing attorney signed this document certifying the flood zone status of the property according to the “attached Certification of Pearson & Associates, Inc.” The “Insurance Certificate,” as defendant terms it, was not in fact attached because it was not yet available, and the attorney’s affidavit explains the incomplete information as to flood status by stating that he told the purchaser, after making the phone call, that the property was not in a flood hazard area.

The closing proceeded to finality, and the purchaser was mailed the certification, which is dated two days after the closing. It references her name and the street address of the property and states that it “is not contained within a special flood zone hazard area”; notation is made that “no flood hazard exists (as per recorded subdivision plat) due to piping of creek.”

The purchaser moved into the house about ten days after the closing, and four months thereafter the house, her personal property, and her car suffered extensive flood damage. The market value of the property decreased, and Salmon was required to buy flood insurance.

She sued the land survey firm which provided the certification, alleging negligence and attaching the affidavit of an expert pursuant to OCGA § 9-11-9.1. The trial court granted summary judgment to defendant, holding that Badische Corp. v. Caylor, 257 Ga. 131 (356 SE2d 198) (1987), controls. Based thereon, the court concluded that it is undisputed that the evidence does not show that defendant knew that Salmon “or anyone else similarly situated” would rely on its representation and act on it.

There is evidence which shows otherwise. Defendant was asked to do this certification for a lender by a closing attorney. Defendant prepared the certification “Pursuant to your request,” inferentially meaning either the lender or its attorney. Defendant knew the purchaser’s name and, of course, the particular parcel, as it appears on the certification and was the very subject of the defendant’s examination and opinion. Defendant was paid from the closing proceeds.

Although the property purchaser was not in privity with the surveyor with respect to the alleged misrepresentation, she need not be. Southeast Consultants v. O’Pry, 199 Ga. App. 125 (1) (404 SE2d 299) (1991). In the first place, she suffered more than mere economic loss; she sustained extensive property damage. See Robert &c. Assoc. v. Rhodes-Haverty Partnership, 250 Ga. 680, 681 (300 SE2d 503) (1983). Even if she must show that her reliance was the desired result of the representation, under the rule adopted in Robert &c. Assoc. for cases of solely economic loss, it is evident that she has done so. When the purpose for which the opinion was given is looked for, there is evidence that it was undertaken and submitted for the sale of the property to plaintiff, that is, for the lender to advance the purchase money and for the borrower to purchase at the agreed price. Thus the test of Robert &c. Assoc. is satisfied, at least for the purpose of defendant’s motion for summary judgment.

Badische, supra at 133, established that in the absence of certain factors such as property damage (of which there is evidence in this case), “professional liability for negligence . . . extends to those persons, or the limited class of persons who the professional is actually aware will rely upon the information he prepared.” (Emphasis supplied; footnote omitted.) As related above, the record contains such evidence. Defendant admits having given plaintiff the opinion that the house was not in a flood zone. Reasonable inferences are that defendant knew that its services were being secured for a specific real property purchase and that the buyer would rely upon its professional opinion.

There is also evidence that the buyer did rely on defendant’s opinion, which was memorialized in the written certification dated two days after the closing but referred to in the flood insurance agreement. The fact that she did not see the certification document at that time does not avoid her testimony that she relied on what she understood was defendant’s opinion in signing the agreement, which understanding was confirmed by the certification, and that she completed the closing on the agreed terms.

Hardage v. Lewis, 199 Ga. App. 632 (405 SE2d 732) (1991), differs because in that case involving only economic loss, plaintiffs’ reliance on the survey performed at the instance of the lender was after-the-fact and was not justified. They had not relied on it at closing, and they had not exercised diligence in determining the truth or falsity of the sellers’ representations. Here the purchaser’s testimony and the closing attorney’s affidavit show, and the flood insurance agreement indicates, that she did rely on the defendant’s opinion regarding flood status. Secondly, considering the nature of the information, there is no evidence at this stage of lack of diligence in ascertaining whether the property was in a flood hazard area. That is, her failure to undertake an independent personal investigation of this matter did not preclude her reliance from being justified as a matter of law, for the very purpose of the certification was to provide this information from a commercial expert who had special skill and knowledge and was paid for it. This is not a case of blind reliance on the seller’s representations regarding a matter of title, which with proper diligence should have been investigated through title survey, as in Hardage, but rather a case of reliance on professional opinion, regarding flooding, which the buyer was not bound as a matter of law to challenge by independent inquiry. Any notice of flood possibilities which arguably arose when the buyer, a lay person, visually inspected the premises, was satisfied by the certification. Whether the buyer was justified in relying on it (not merely on a seller’s or sales agent’s representation) or was required instead to obtain information such as provided by the federal insurance map, is a jury question.

Copeland v. Home Savings of America, 209 Ga. App. 173 (433 SE2d 327) (1993), differs in that Copeland relied on the real estate agent’s representations about flooding, not on a professional certification.

Judgment reversed.

Pope, C. J., McMurray, P. J., Johnson, Smith, JJ., and Senior Appellate Judge Harold R. Banke concur. Birdsong, P. J., Andrews and Blackburn, JJ., dissent.

Andrews, Judge,

dissenting.

I believe this case is controlled by Hardage v. Lewis, 199 Ga. App. 632, 633 (405 SE2d 732) (1991), and that Salmon has failed to show any justifiable reliance upon the certification provided by Pearson or the oral communication by the closing attorney of the flood hazard status. Therefore, I respectfully dissent.

Here, accepting the premise that the property was, in fact, within the 100-year flood plain, does not resolve the issue of Salmon’s responsibilities as a purchaser. She deposed that she had visited the property at least twice and had the opportunity to view all around the premises. She was aware that the town house was located below the grade of Warsaw Road and that across a private drive on the rear of the property was located a creek. This creek was partially contained in a pipe large enough for a person to walk through. The entire property sloped towards the creek. Prior to closing, Salmon made no inquiry of anyone concerning the possibilities of flooding. After the flood at issue here, Salmon obtained a copy of the federal insurance map, upon which she is basing her claim that the property is in a flood hazard area.

Decided July 1, 1994

Reconsideration denied July 15, 1994.

Wood & Perry, Jere F. Wood, for appellant.

Steven H. Ballard, for appellee.

This case appears to be on all fours with Copeland v. Home Savings of America, 209 Ga. App. 173, 174 (433 SE2d 327) (1993). There, Copeland purchased a home and noticed a creek adjacent to the lot during one of her property inspections before purchase. She also noticed some dankness in the basement. She asked her real estate agent if there had been any problem with flooding and received a negative response. After a flood, she sued the seller, the real estate broker, and the surveying company, alleging concealment of the fact the house was in a flood hazard area.

In affirming the grant of summary judgment to defendants, this court concluded that “[t]he law does not afford relief to one who suffers by not using the ordinary means of information, whether the neglect is due to indifference or credulity. When the means of knowledge are at hand and equally available to both parties, and the subject of purchase is alike open to their inspection, if the purchaser does not avail himself of these means he will not be heard to say, in impeachment of the contract of sale, that he was deceived by a vendor’s representations.” (Citations and punctuation omitted.) Copeland, supra at 174. Here, the federal insurance map was as available to Salmon before her purchase as it was afterwards. See also Southeast Toyota Distrib. v. Fellton, 212 Ga. App. 23, 26 (2) (440 SE2d 708) (1994).

I am authorized to state that Presiding Judge Birdsong and Judge Blackburn join in this dissent.

       Although this case applies a literal “foreseeable” relier test, citing Robert &c. Assoc. v. Rhodes-Haverty Partnership, 250 Ga. 680 (300 SE2d 503) (1983), rather than the “actually aware of” relier test which Badische Corp. says is the proper one, the opinion’s description of the facts gives some indication that the defendant was actually aware that plaintiff would rely on its percolation tests.


source: Caselaw Access Project

author: Pope, Chief Judge.

license: Public Domain

text:
    A94A0520.
    BAGWELL v. THE STATE.
    (446 SE2d 739)
   Pope, Chief Judge.

Defendant Darren Bagwell pled guilty to speeding and to violating the Georgia Controlled Substances Act, reserving his right to appeal the overruling of his motion to suppress certain evidence. His sole enumeration of error on appeal challenges the denial of his motion to suppress methamphetamine found on his person in a search incident to his arrest. Because we hold the search of defendant’s person and the seizure of this evidence was both reasonable and within the scope of the statutory provisions allowing a search incident to arrest, we affirm.

On November 21, 1992, defendant was stopped for a speeding violation. The officer conducting the stop discovered defendant’s license had been suspended. The officer immediately placed defendant under arrest for speeding and for driving on a suspended license and then conducted a “frisk, pat-down type search” of the defendant’s person. In the defendant’s right front pocket, the officer felt a three-and-one-half inch metal object. The officer removed the object and recognized it as a screw-type container commonly used in drug trafficking. The officer testified when he shook the container he heard rattling inside. He proceeded to open the container and discovered a bag containing a yellow-white powdery substance later determined to be methamphetamine.

The defendant concedes the search of his person was a lawful search incident to arrest. During a lawful custodial arrest, “ ‘an officer may, without a warrant, make a full search of the accused for the discovery and preservation of criminal evidence.’ [Cit.]” Anderson v. State, 177 Ga. App. 130, 131 (2) (338 SE2d 716) (1985). Because the officer was entitled to conduct a full search of the defendant incident to his arrest and this search is per se reasonable as long as the custodial arrest is lawful, the seizure of the metal container found by the officer during the search was not unlawful. See Anderson, supra; Powell v. State, 170 Ga. App. 185 (316 SE2d 779) (1984); and Graves v. State, 138 Ga. App. 327 (226 SE2d 131) (1976) for Georgia cases upholding searches and seizures of drugs found on defendants during searches incident to arrests.

The defendant argues, however, that notwithstanding the officer’s right to conduct a search incident to defendant’s arrest, the officer was without authority to open the container discovered during that search because this action was outside the scope of Georgia’s statutory limitations on a search incident to arrest. See OCGA § 17-5-1. In United States v. Robinson, 414 U. S. 218, 235 (94 SC 467, 38 LE2d 427) (1973), the Supreme Court granted police officers broad authority when conducting a search incident to arrest. In Dasher v. State, 166 Ga. App. 237 (304 SE2d 87) (1983), this court, relying on Graves, 138 Ga. App. at 327, in which the court adopted the analysis in Robinson, upheld the admission of evidence discovered in eight match boxes and eleven manila envelopes found on defendant’s person during a search incident to arrest. The court concluded the search was not beyond the permissible scope of OCGA § 17-5-1. In the instant case, the officer testified that he recognized the metal container as one which was commonly used for carrying illegal drugs. Because the officer came upon the container in the course of a lawful search, “ ‘he was entitled to inspect it; and when his inspection revealed the [methamphetamine], he was entitled to seize [it] as “fruits, instru-mentalities, or contraband” probative of criminal conduct.’ ” Graves, 138 Ga. App. at 329-330, citing Robinson, 414 U. S. at 235. The officer’s actions in this case did not exceed the permissible scope of a search incident to arrest under the Fourth Amendment, the Georgia Constitution or OCGA § 17-5-1. We also note the broad scope of authority granted to police officers in conducting searches of automobiles pursuant to the search incident to arrest exception. In this situation, the authority to search extends to the entire passenger compartment of the automobile and any closed containers therein. See New York v. Belton, 453 U. S. 454 (101 SC 2860, 69 LE2d 768) (1981); State v. Elliott, 205 Ga. App. 345 (422 SE2d 58) (1992). The admission of the evidence seized on defendant’s person in the instant case was properly admitted.

Decided May 11, 1994

Reconsideration denied July 15, 1994

Banks & Stubbs, Rafe Banks III, for appellant.

Garry T. Moss, District Attorney, C. David Gafnea, Assistant District Attorney, for appellee.

Judgment affirmed.

McMurray, P. J., and Smith, J., concur.


author: Smith, Judge.

text:
    A94A0523.
    HACKWORTH v. BOARD OF EDUCATION FOR THE CITY OF ATLANTA et al.
    (447 SE2d 78)
   Smith, Judge.

This appeal involves the applicability of OCGA § 50-18-70 et seq., commonly known as the Georgia Open Records Act (the Act), to certain records maintained by Laidlaw Transit, Inc., a private corporation.

The record reveals that CB Hackworth, a producer at an Atlanta television station, submitted a request to the Board of Education for the City of Atlanta (the Board) to inspect the personnel records of certain named drivers or former drivers transporting pupils in the Atlanta city school system to and from public schools in buses owned by the school system. In response to Hackworth’s request, the Board released the few documents in its possession, claiming it had complied completely with Hackworth’s request and did not have access to the personnel files. It informed Hackworth that the drivers were employees of Laidlaw Transit, Inc. and the records were in the exclusive possession and control of Laidlaw, with whom the Board had contracted to maintain the buses and to furnish drivers to operate them. Laidlaw refused to release the files, claiming it was a private entity to which the Act did not apply. After expanding his request to encompass the personnel records of all bus drivers who drove city school buses, Hackworth filed this action against the Board and Laidlaw. Cross-motions for summary judgment were filed by all parties, and the trial court granted the motions of the defendants and denied that of Hack-worth. The trial court did not disclose the basis for its rulings. We must, therefore, determine whether they were correct for any reason.

1. “Where there is a request for disclosure of documents under the Public Records Act, the first inquiry is whether the records are ‘public records.’ ” Napper v. Ga. Television Co., 257 Ga. 156, 160 (a) (356 SE2d 640) (1987). OCGA § 50-18-70 (a) defines “public records” as those records “prepared and maintained or received in the course of the operation of a public office or agency.” In 1992, this Code section was amended to include as “public records” “such items received or maintained by a private person or entity on behalf of a public office or agency which are not otherwise subject to protection from disclosure.” Ga. L. 1992, p. 1061, § 5.

We must decide initially whether the records sought by Hack-worth were either “prepared and maintained or received in the course of the operation of” the school system or were “received or maintained by [Laidlaw] on behalf of” the school system. Hackworth contends that a fair reading of the statute mandates their inclusion in both categories.

(a) In Macon Telegraph Pub. Co. v. Bd. of Regents, 256 Ga. 443 (350 SE2d 23) (1986), a newspaper made a request under the Act to the Board of Regents of the University System of Georgia for certain financial documents relating to the Athletic Association. The Board refused, claiming that the Athletic Association was a private corporation and therefore the documents were not “public records” within the meaning of the Act. It was undisputed that the operation of the athletic program at the University of Georgia is “a legitimate function” of the University and its responsibility, and there was uncontra-dicted testimony that the Athletic Association is the management tool used by the university to carry out this function and responsibility. Id. at 444. Consequently, and “because the maintenance of documents relating to [the financial affairs] of the intercollegiate sports program is an integral part thereof,” the Supreme Court held that “regardless of whether the documents are prepared by employees of a private Athletic Association or by [university officials who are also employees of the association], it is clear that they are ‘documents, papers, and records prepared and maintained in the course of the operation of a public office’ and are therefore ‘public records’ under the Open Records Act.” Id. at 445.

Hackworth argues that the facts here are analogous. The transportation of pupils is similarly a “legitimate function” and responsibility of this Board, and Laidlaw is a similar “management tool” used by the Board, a public agency, to carry out its public responsibilities. Because in carrying out this responsibility drivers must be hired, evaluated, and managed, personnel records must be kept and are in like fashion an “integral part” of the Board’s public responsibility. Therefore, notwithstanding the Board’s delegation of its responsibility for transporting students to Laidlaw, the records are “public records” within the meaning of the Act.

We agree. We find these facts indistinguishable in any important way from those in Macon Telegraph. Contrary to appellees’ argument, we do not find controlling the fact that local school systems and boards of education are not mandated by law to provide transportation for their students to and from school. See OCGA § 20-2-1071. It is undisputed that the Board has both the power and the authority to undertake such transportation. The transportation of students to and from school by bus makes public education accessible to them and is part of the “operation” of the school system. Roberts v. Baker, 57 Ga. App. 733 (196 SE 104) (1938). Without question, then, operating school buses, or arranging for their operation, is “a legitimate function” of the Board and therefore within the “operation” of a public agency. Certainly, if the Board had chosen not to contract with Laidlaw to perform this function but instead operated the buses itself, no question would exist that the public would be entitled to inspect the records pertaining to this operation.

Neither do we find applicable the federal decisions cited by appellees holding that for the purpose of determining whether a private entity is a “state actor” within the meaning of 42 USC § 1983, the test is whether the activity performed by the actor has traditionally been the exclusive prerogative of the state. The focus in § 1983 actions is on the character of the actor, in order to determine liability. Because of the statutory definition, our focus in cases under the Act is necessarily not on the actor but on the particular, discrete function performed by that actor. We must determine whether that function is a public one, rendering the records generated in the course of its performance subject to the Act.

No doubt exists that Laidlaw is a private entity rather than an arm of the Board; indeed, it transports other passengers under other contracts. Hackworth does not seek to examine all of Laidlaw’s records, and no question exists that he could not do so. When we concentrate upon the records generated by Laidlaw in the course of carrying out a function delegated to it by a public agency — the transportation of Atlanta public school system pupils — it is apparent that the issue of whether those documents are “public records” is governed by the operations in which the documents were generated.

The issue here is controlled by the decisions in Macon Telegraph, supra, and other previously decided cases. See Cremins v. Atlanta Journal &c., 261 Ga. 496 (405 SE2d 675) (1991) (outside consultant contracts of university athletic coaches arise out of their public activities and records pertaining thereto are “public records”); Dooley v. Davidson, 260 Ga. 577, 580 (4) (397 SE2d 922) (1990) (regulations promulgated by Board of Regents regulate outside income of university athletic coaches; therefore documents regarding such contracts are “public records” even though maintained by private persons). The documents in issue, although generated and maintained by Laidlaw, a private entity, are an integral part of the course of the operation of a public agency and are therefore “public records.”

(b) We also agree with Hackworth that the fact that the records in issue were created and in the control of Laidlaw has no bearing on whether they were “public records” because of the recent amendment to OCGA § 50-18-70 (a). These records were “received or maintained by a private person or entity on behalf of a public office or agency.” Were we to permit the Board to avoid opening these records to the public merely by delegating certain of its public functions — and the documents thereby generated — to a private entity, that amendment would be meaningless.

Appellees protest that the Board had no access to or interest in documents pertaining to the drivers beyond the minimal records required by the contract to be delivered by Laidlaw to the Board and that access to those records was not necessary for the transportation program to be carried out. This assertion is unsupported by the terms of the contract between the Board and Laidlaw. The contract does specify that the only documents Laidlaw must provide the Board concerning bus drivers are those showing that the drivers are licensed, met all applicable legal requirements, passed drug screening tests, and were fingerprint-screened for criminal records.

It also specifies, however, that the Board has the right “to approve the employment of all drivers employed under this Contract” and to “direct Laidlaw to remove any employee for any cause deemed by the Board to constitute just cause and designate specific drivers for specific routes.” Further, it provides that “all buses shall be operated by qualified, experienced, licensed operators of good moral character, subject to Board approval.” (Emphasis supplied.) In order for the Board to enforce effectively these contractual provisions to which Laidlaw agreed, it necessarily would have to obtain access to drivers’ personnel records beyond the minimal reports required under the contract. Therefore, to the extent necessary under the contract to enable the Board to carry out its public duty to provide safe transportation to its students, Laidlaw was required to maintain the records “on behalf of” the Board, rendering them “public records.”

The finding that the documents sought are “public records” also supports the public policy of this state, which the legislature has expressed clearly in adopting the Open Records Act. Its “purpose is not only to encourage public access to such information [regarding the operation and responsibilities of public agencies] in order that the public can evaluate the expenditure of public funds and the efficient and proper functioning of its institutions, but also to foster confidence in government through openness to the public.” Athens Observer v. Anderson, 245 Ga. 63, 66 (263 SE2d 128) (1980). The public has a legitimate interest in the operation of student transportation, and in the drivers who carry out that public function. If access to the documents sought from Laidlaw is denied, the purpose of the Open Records Act would be frustrated.

2. Having determined that the records sought are “public records,” we must decide whether they may be exempted from disclosure by OCGA § 50-18-72 (a), which provides that public disclosure is not required for certain types of documents. Although the federal Freedom of Information Act exempts from disclosure “personnel and medical files and similar files the disclosure of which would constitute a clearly unwarranted invasion of personal privacy,” 5 USC § 552 (b) (6), OCGA § 50-18-72 (a) (2) exempts only “[m]edical or veterinary records and similar files, the disclosure of which would be an invasion of personal privacy.” “[T]here is no requirement under OCGA § 50-18-72 that a report generated by or used by [a public agency under state law] be exempted from disclosure merely because that report would be kept confidential if generated or used by the federal government for federal purposes.” Ga. Hosp. Assn. v. Ledbetter, 260 Ga. 477, 479 (3) (396 SE2d 488) (1990).

Even assuming the documents are “public records” and therefore subject to the Act, they may be exempt from disclosure under state law if they are “similar” to medical and veterinary records, as contended by Laidlaw. They contain much personal information regarding the drivers’ private affairs, such as medical information, tax information, credit histories, etc., about which the public has no legitimate concern and the disclosure of which would be an invasion of both Laidlaw’s and the employees’ privacy.

We have found no Georgia cases deciding the issue of whether personnel records in general are exempt from disclosure under OCGA § 50-18-72 (a) (2) because they are “similar” to medical records. Compare Irvin v. Macon Telegraph Pub. Co., 253 Ga. 43, 44-45 (2) (316 SE2d 449) (1984) and Athens Observer, supra at 64-65 (2) (declining to address this issue because the records in issue were not personnel records). However, given that the legislature was aware of the language of the federal statute and yet chose to omit personnel records from the Georgia exemption, and applying the venerable construction maxim expressio unius est, exclusio alterius, we conclude it was not the intent of the legislature to create a “blanket” exclusion for personnel records. See generally Travelers Ins. Co. v. McNabb, 201 Ga. App. 297, 299 (410 SE2d 788) (1991), disapproved on other grounds Yoho v. Ringier of America, 263 Ga. 338, 342, n. 1 (434 SE2d 57) (1993).

Nevertheless, Georgia courts have held that “ ‘[p]roperly construed, the section forbids disclosure to the general public from (public) records or files of any information which would invade the constitutional, statutory or common law rights of . . . privacy. [Cit.]’ [Cit.]” Napper, supra, 257 Ga. at 160 (c). Various factors must be considered in determining whether matters are exempt from disclosure because they invade privacy rights: “While this state has a strong policy of open government, there is a corresponding policy for protecting the right of the individual to personal privacy. References to matters about which the public has, in fact and in law, no legitimate concern, though found in a public document are not subject to disclosure under the Public Records Act because they are not the subject of ‘legitimate public inquiry.’ ” Harris v. Cox Enterprises, 256 Ga. 299, 302 (1) (348 SE2d 448) (1986).

The public has a strong and legitimate interest in this case in certain portions of the bus drivers’ records maintained by Laidlaw, since they affect the safety of the children transported to and from Atlanta public schools. The drivers’ and Laidlaw’s privacy rights cannot outweigh this public interest in the disclosure of information regarding the drivers’ job performance, disciplinary actions, accidents on the job, and the like. Id. at 301-302 (1). Certain other portions, however, may be exempt from disclosure under the Act, either because they are medical records or because they contain information the disclosure of which would constitute the tort of invasion of privacy. See generally Dortch v. Atlanta Journal &c., 261 Ga. 350, 351-352 (2) (405 SE2d 43) (1991).

Determination of whether portions of the records in issue must be withheld because they fall in this category and, if so, which portions, must be made by the trial court. We therefore remand this case to the trial court for in camera inspection of the records and determination of this question. Only those portions found by the trial court not to meet the test in Dortch must be disclosed.

Decided June 29, 1994

Reconsideration denied July 15, 1994

Powell, Goldstein, Frazer & Murphy, James C. Rawls, Joseph D. Wargo, for appellant.

Smith, Howard & Ajax, Julie J. Weatherly, England, Weaver & Kytle, George M. Weaver, for appellees.

Judgment reversed and remanded.

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

       It is undisputed that the Atlanta city school system is a “public . . . agency” within the contemplation of this Code section. OCGA § 50-18-70 (a) provides that the word “agency” carries the definition in OCGA § 50-14-1 (a) (1). Subparagraph (B) of OCGA § 50-14-1 (a) (1) defines “agency” as including “[e]very county, municipal corporation, school district, or other political subdivision of this state.”

       Indeed, at the hearing on the motions for summary judgment, the Board’s counsel indicated the Board has terminated its contract with Laidlaw and is itself operating the buses at the present time.

        Rendell-Baker v. Kohn, 457 U. S. 830, 842 (102 SC 2764, 73 LE2d 418) (1982); Black v. Indiana Area School Dist., 985 F2d 707, 710 (3rd Cir. 1993).


text:
    A94A0610.
    LUMBERMENS MUTUAL CASUALTY COMPANY v. PLANTATION PIPELINE COMPANY.
    (447 SE2d 89)
   Smith, Judge.

In this dispute regarding coverage under an excess liability insurance policy, Lumbermens Mutual Casualty Company (LMC) appeals from the grant of partial summary judgment to Plantation Pipeline Company (PPL) and the denial of its own motion for summary judgment.

PPL is a bulk petroleum transmission company that operates across the southeastern United States. It purchased from American Re-Insurance Company general liability policies with limits of $900,000 in excess of $100,000 for which PPL was self-insured, providing coverage for events occurring between November 30, 1973 and November 30, 1976. From November 30, 1974 through November 30, 1975, PPL also held a certificate of excess insurance issued by California Union Insurance Company, which provided coverage for claims exceeding the $1,000,000 ceiling of the American policy up to a maximum of $3,000,000. In addition, from November 30, 1972 through November 30, 1975, PPL held a comprehensive catastrophe liability policy of excess insurance issued by LMC, which provided a third layer of coverage up to $5,000,000, for claims in excess of the ceiling on the California Union excess insurance policy.

PPL has an easement to maintain its pipelines at a certain site in Mecklenburg County, North Carolina. In March 1975, a leak was discovered in a 14-inch underground pipeline at the Mecklenburg County site. PPL repaired the pipeline immediately and began efforts to recover the. spilled petroleum. From that time through June 1983, approximately 2,022 barrels of spilled petroleum products were recovered from standpipes at the leak site. During the period between January and June 1983, only eight-and-one-half barrels were recovered. During the next 15 months — through September 1984 — PPL recovered no measurable quantity of petroleum product, and on October 1, 1984, recovery was discontinued. PPL expended approximately $18,663 on repairing the leak and on the entire recovery operation from 1975 to 1984. It also paid $3,000 to the property owner, Michael Finch, in consideration for the execution of a release and indemnification agreement. It is undisputed that although PPL notified the North Carolina Division of Environmental Management of the leak in 1975, it did not at that time notify its insurers.

In June 1989, Finch sold the property to a North Carolina partnership, which thereafter contracted to sell the property to Mecklenburg County. In conjunction with its contract to purchase the property, the county conducted an environmental assessment and installed groundwater monitoring wells. Through this monitoring activity, the county detected petroleum products in the groundwater. It then advised the partnership it was considering cancelling the purchase. The purchase was not completed. In a notice of violation dated July 25, 1990, the North Carolina Department of Environmental Health and Natural Resources (DEHNR) directed PPL to carry out a remedial action plan. Within a few days, on August 2, 1990, PPL notified all its insurance carriers in writing that it faced possible responsibility for remedial action under North Carolina pollution control laws, as well as possible liability to third parties. PPL requested that the insurers defend and indemnify it for this potential liability. The partnership subsequently filed suit against PPL in federal court seeking to recover damages stemming from the loss of the sale of the property. When the insurers denied coverage, PPL filed this declaratory judgment action.

LMC moved for summary judgment on two grounds: that the claim was not timely filed, bréaching a policy condition requiring timely notice of a claim; and that coverage was excluded because of policy “pollution” exclusions. PPL filed a cross-motion for summary judgment, claiming the exclusions were not applicable and that it was entitled to coverage for this claim under the policy. The trial court ruled against LMC and in favor of PPL on both grounds. LMC raises the same contentions on appeal.

1. LMC contends the trial court erred in finding that PPL’s claim was timely filed. The policy provides that “[w]henever it appears that an occurrence is likely to involve indemnity under this policy, written notice thereof shall be given to the company or any of its authorized agents as soon as practicable.” LMC contends PPL knew or should have known in 1975 of the seriousness of the 1975 leak and the likelihood that it would “involve indemnity under this policy.” It asserts that the number of barrels of petroleum product eventually recovered by PPL and the fact that PPL entered into a release and indemnification agreement with Finch support this contention. It argues, therefore, that PPL had an obligation to notify its insurers as soon as the leak was discovered, but certainly not as late as 1990, and that PPL’s failure to do so is a breach of this policy condition, precluding coverage.

LMC correctly notes that PPL alone possessed the ability to investigate and evaluate the value of the claim from 1975 through 1990. It also points out that cleanup costs at the site may range as high as over $4,000,000. Nevertheless, we do not agree that PPL’s evaluation of the claim as not requiring notice to LMC was unreasonable. Cases such as Protective Ins. Co. v. Johnson, 256 Ga. 713, 714 (1) (352 SE2d 760) (1987) and Townsend v. Nat. Union Fire Ins. Co., 196 Ga. App. 789 (397 SE2d 61) (1990), cited by LMC in support of its argument, are not apposite. Such cases, where delay in notifying the insurer was held to be unreasonable, all involve personal injury protection under no-fault automobile policies that required notice to the insurer as soon as practicable after an event. None involves an excess policy, where, as here, the notice obligation is triggered by the insured’s assessment of the likelihood of the monetary amount of the property damage for which it may be liable exceeding the “ceiling” of the primary policy.

The number of barrels of petroleum product that would eventually be recovered from the leak site and the cost of the eventual cleanup were certainly not known in 1975. However, since the LMC policy was an excess insurance policy, its coverage would not be reached until the limits of both the American Re-Insurance and the California Union policies were exhausted, i.e., when liability exceeded $3,000,000. In nine years of recovery operations, PPL expended only $18,663 on cleanup and $3,000 to obtain the release from Finch. PPL’s total expenditure by 1984 was therefore approximately 0.7 percent of LMC’s floor of coverage. Moreover, at no time between 1984 and 1990 did any government agency make demand upon PPL to conduct any further remediation. The word “likely” means “probable,” not merely possible. We do not agree with LMC that these facts “indicate” that PPL was “clearly aware” that coverage under the LMC policy would be involved.

Given these facts, and considering that LMC has pointed to no other facts showing that PPL should have known that its liability would exceed $3,000,000 and that the limits of the California Union policy would even be reached, much less exceeded, no basis existed for finding that the LMC policy would become “involved.” The trial) court properly granted summary judgment to PPL and denied summary judgment to LMC on this issue.

2. LMC also maintains the trial court erred in ruling that, as a matter of law, the policy exclusions did not bar coverage for the claim. The policy contains two pertinent exclusions: a general contamination or pollution exclusion, and a supplementary exclusion. The general contamination or pollution exclusion bars coverage for personal injury or property damage “arising out of the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, waste materials or other irritants, contaminants or pollutants into or upon land, the atmosphere or any watercourse or body of water; but this exclusion does not apply if such discharge, dispersal, release or escape is sudden and accidental.” In Claussen v. Aetna Cas. &c. Co., 259 Ga. 333 (380 SE2d 686) (1989), the Supreme Court held that “sudden and accidental” means unexpected and unintended. Because it is undisputed that PPL did not expect or intend the leak, the release was “sudden and accidental” within the meaning of the general exclusion, and that exclusion does not apply.

The supplementary exclusion precludes coverage with regard to operations described in the endorsement for “a discharge, dispersal, release or escape of oil or other petroleum substance or derivative . . . into or upon any watercourse or body of water” regardless of whether it is “sudden and accidental.” LMC maintains this exclusion bars coverage for PPL’s claim. The dispute centers on the meaning of the phrase “any watercourse or body of water,” an issue that appears to be one of first impression in Georgia. LMC contends the trial court erred in finding that the contaminated groundwater at the North Carolina site is not contemplated by this phrase, because groundwater is a body of water. In support of this contention, LMC points to several cases from other jurisdictions. However, a review of the cases cited by LMC reveals that these cases involved varying facts and do not constitute persuasive authority for a blanket holding that the term “body of water” necessarily includes all groundwater.

Morton Intl. v. Harbor Ins. Co., 607 NE2d 28 (Ohio App. 1992), cited by LMC, where a similar exclusion was held to apply, clearly involved pollution of both groundwater and surface water, which includes bodies of water. Id. at 34. In Mapco Alaska Petroleum v. Central Nat. Ins. Co., 784 FSupp. 1454 (D. Alaska 1991), cited by LMC, a trial court decision involving the contamination of groundwater by an oil refinery, the court gave no rationale for its decision but simply relied upon the decision in Time Oil Co. v. Cigna Property &c. Ins. Co., 743 FSupp. 1400 (W.D. Wash. 1990), in which a petroleum exclusion was held to bar coverage under a policy issued to an oil recycler. Both the language of the petroleum exclusion and the contaminated water in Time Oil are distinguishable from those in this case. Time Oil involved the contamination of a major aquifer, the South Tacoma Channel Aquifer. In addition, the exclusionary language in the policy reviewed there is far broader than the language in the LMC policy, barring coverage not only for contamination of “any watercourse or body of water” but also any “bog, marsh, swamp or wetland.” Id. at 1409. In reaching its decision, the court in Time Oil noted that this “broad language,” id. at 1410, “clearly and unequivocally reflects an intent to exclude cleanup of any and all water.” Id. at 1411.

Moreover, as PPL points out, at least one court has held that the common and ordinary meaning of the term “body of water” in a policy exclusion does not preclude coverage for contaminated groundwater. State v. Travelers Indem. Co., 508 NYS2d 698, 701 (A.D. 1986) (involving coverage of seepage into groundwater of petroleum from a service station’s underground gas tanks).

The issue is complicated by the fact that the term “body of water” is a term of common usage, not a precise or scientific geological term, while the testimony regarding the particular water contaminated is given in scientific and technical terms. PPL’s expert, Harry LeGrand, a hydrogeologist of considerable experience, testified he was familiar with the hydrogeology literature and knew of no reference in the literature to the term “body of water” in connection with groundwater. It is apparent from our review of numerous cases in other jurisdictions that some groundwater may be a “body of water,” particularly major aquifers. See, e.g., Time Oil, supra; State of South Dakota v. Kansas City Southern Indus., 880 F2d 40, 41 (8th Cir. 1989) (describing a certain aquifer as “an enormous, mostly subterranean body of water”); Lizotte v. Conservation Comm., of Somers, 582 A2d 1186, 1190 (Conn. 1989) (referring to aquifers as bodies of water); George v. Commonwealth, Dept. of Environmental Resources, 517 A2d 578, 580, n. 9 (Pa. 1986) (noting that under Pennsylvania statute, aquifer or another body of water may be significant source of water for public water supply systems); Mosley v. Johnson, 453 P2d 149, 152 (Utah 1969) (referring to “aquiferous strata” as “water bodies”). We have found no case, however, setting forth a special or different test or rationale for determining whether particular groundwater is encompassed within the term “body of water.” Accordingly, we apply the same criteria to groundwater as are employed in ordinary usage to determine whether surface water is a “body of water.”

Since the word water has a clear and unambiguous meaning, we need only define the word “body” as used in this context. The American Heritage Dictionary (2d college ed. 1991) illustrates one definition of the word “body” — “[a] bounded aggregate of matter” — with the term “a body of water.” We find this to be the accepted and ordinary meaning of the term “body of water”: an aggregate of water having defined boundaries.

We must then take the technical expert testimony regarding the nature of the water found under the surface of the site in issue in this case, and determine whether this particular described groundwater falls within the purview of the policy exclusion that uses the common and ordinary language meaning of the term “body of water.”

The same dictionary defines aquifer as “[a] water-bearing rock, rock formation, or group of rock formations.” In an affidavit submitted by PPL on summary judgment, plaintiff’s expert LeGrand defined an aquifer as a groundwater system in which “the quantity of water is sufficient to supply water to wells and springs.” He testified at deposition that the groundwater system at the North Carolina site is an aquifer only “in a technical sense” and certainly not a major one.

That courts in other jurisdictions, particularly in western states, have held that aquifers are “bodies of water” is not dispositive of the issue in this case. It is apparent that aquifers differ in different geographic regions. LeGrand stated in his affidavit that in the Piedmont region, where the contaminated site is located, “[t]here are no horizontal bedded formations containing extensive aquifers and confining beds, which typify other areas.” The groundwater rather consists “of either the water held in the small openings between sand grains and clay particles in the soil and saprolite zones or in the small fractures in the underlying bedrock.” He stated both at deposition and by affidavit that in his expert opinion the contamination in issue in this case involved no “body of water.” Using LeGrand’s description of the groundwater in issue and applying the ordinary meaning of “body of water” we reach the same conclusion: because the groundwater at the site in issue is not bounded by “confining beds,” although it is technically an aquifer, it is not a “body of water.”

This conclusion also is more in keeping with principles of Georgia law regarding the construction of contracts. Being a matter of law for the court, an issue involving the construction of contracts may properly be disposed of by summary judgment. Graphic Prep v. Graphcom, 206 Ga. App. 689, 691 (1) (426 SE2d 183) (1992). Under Georgia law, “[contracts of insurance are to be construed strictly against the insurer and in favor of the insured when language contained therein is susceptible to two or more constructions. Where the insurer grants coverage to an insured, it must define any exclusions in its policy clearly and distinctly. [Cits.]” American Southern Ins. Co. v. Golden, 188 Ga. App. 585, 586 (373 SE2d 652) (1988). The exclusion in issue in this case is ambiguous in describing the items for which coverage was barred. Therefore, the trial court was obligated to construe it more favorably toward finding coverage, using the applicable rules of contract interpretation, OCGA § 13-2-1, including the rule codified in OCGA § 13-2-2 (2): “Words generally bear their usual and common signification.” Applying these principles of Georgia law persuades us as well that the language of the policy exclusion in issue in this case, specifically the term “body of water,” was not intended to apply to the groundwater found at this site, as defined by the expert testimony. The trial court properly granted summary judgment to PPL and denied summary judgment to LMC on this ground.

Decided June 30, 1994

Reconsideration denied July 15, 1994

Whitehurst & Frick, Stephen P. Riexinger, for appellant.

Hunton & Williams, K. Dennis Sisk, Lawrence J. Bracken II, Edward T. Floyd, for appellee.

Judgment affirmed.

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

       California Union filed a similar motion with the same result. A companion appeal by California Union has been withdrawn.

       Black’s Law Dictionary defines a “water course” as “[a] running stream of water . . . usually flowing in a particular direction.” The definition notes that water flowing underground may be a water course if it flows in “a known and well defined channel.” LMC makes no argument that the groundwater at this site is a “watercourse.” This is understandable, given that the expert testimony showed that it was not.


author: McMurray, Presiding Judge.

text:
    A94A0631.
    MITCHAM v. BLALOCK et al.
    (447 SE2d 83)
   McMurray, Presiding Judge.

Michael Mitcham (plaintiff) maintained accounts at Atlanta Securities & Investments, Inc. (“ASI”) at a time when William J. Blalock, Charles Lee Bradley, Rollo Fredrick Ingram and John Ringo (defendants) were corporate officers and directors of ASI. However, the value of plaintiff’s accounts dwindled under the supervision and control of ASI Investment Broker Fred H. Jones, Jr., and plaintiff filed for arbitration (in accordance with standards set by the National Association of Securities Dealers, Inc.) and alleged that his losses were caused by unlawful, fraudulent and deceitful acts of Jones and careless supervision, control and management of ASI by defendants. The arbitration petition was dismissed as to defendants because of lack of notice and proceeded against Jones and ASI, resulting in a $60,000 award for plaintiff on June 25, 1991. Plaintiff subsequently filed a multi-count action against defendants in the Superior Court of DeKalb County, Georgia, alleging in Count 7 of an amended complaint that defendants are responsible for his losses because they failed to properly control and supervise Jones as required by the Georgia Securities Act of 1973, OCGA § 10-5-14 (c). Plaintiff further alleges that defendants are jointly and severally liable for plaintiff’s losses under the doctrine of respondeat superior (Counts 8 and 9) and that defendants breached fiduciary duties as corporate officers and directors of ASI (Count 10).

On September 29, 1992, the trial court granted defendant Ingram’s motion to compel discovery and directed plaintiff’s attorney to “pay $300 to counsel for Defendant Ingram . . . within thirty (30) days of the date of this Order, said sum representing the time spent by Defendant Ingram’s counsel in Court on Monday, September 28, 1992.” The trial court reserved “ruling on the amount of attorneys’ fees and expenses to be awarded which were associated with obtaining this Order as requested by counsel for Ingram pursuant to [OCGA] § 9-11-37, pending submission of an affidavit by Defendant Ingram’s counsel.” The trial court then directed “counsel for Ingram [to] submit said affidavit to the Court by Monday, October 5, 1992, with a copy (via telecopy) to counsel for Plaintiff.”

On January 20, 1993, the trial court granted summary judgment in favor of defendant Ingram as to plaintiff’s claim under the Georgia Securities Act of 1973 (Count 7) and, on March 1, 1993, the trial court ordered plaintiff to pay “$1286.25 to counsel for Defendant Ingram . . . within ten (10) days of the date of this Order, said sum representing the award of the attorneys’ fees expenses incurred in obtaining the Order of this Court compelling Plaintiff to submit full and separate answers to Defendant Ingram’s First Interrogatories. ...”

On March 29, 1993, defendant Ingram filed a motion to dismiss plaintiff’s complaint or, in the alternative, to hold plaintiff in contempt for failing to pay $1,286.25 in attorney fees within ten days of the trial court’s order of March 1, 1993. The trial court granted this motion, finding “that Plaintiff willfully failed to obey the Order of this Court . . . filed March 1, 1993, and after hearing argument of counsel and affording Plaintiff an opportunity to present evidence of poverty and no such evidence being presented, the Court hereby orders and decrees that the complaint against [defendant] Ingram be dismissed with prejudice.”

On May 4, 1993, the trial court granted partial summary judgment in favor of defendants Blalock, Bradley and Ringo as to plaintiff’s claim under the Georgia Securities Act of 1973 (Count 7). On September 15, 1993, the trial court granted summary judgment in favor of defendants Blalock, Bradley and Ringo as to Counts 8, 9 and 10 of the complaint. This appeal followed. Held:

1. Plaintiff contends the trial court erred in granting summary judgment in favor of defendants as to his claim under the Georgia Securities Act of 1973 (Count 7).

“With respect to the purchase, sale, or offer to purchase or sell a security, no person may sue under [OCGA § 10-5-14] more than two years from the date of the contract for sale or sale, if there is no contract for sale.” OCGA § 10-5-14 (d). It is undisputed that plaintiff filed the case sub judice on September 16, 1991, and that the last trade Jones executed on plaintiff’s behalf was in “mid May of 1989.” Further, plaintiff admits (in a brief filed in opposition to summary judgment) that he was aware of the alleged deceitful and fraudulent acts which form the basis of Count 7 of his complaint in “early 1989.” It thus appears that plaintiff’s claim against defendants under OCGA § 10-5-14 (c), is barred by the applicable two-year statute of limitation. Nonetheless, plaintiff contends that an arbitration claim he allegedly asserted against ASI, Jones and defendants in June 1990 tolled the statute of limitation until the arbitration concluded on June 25, 1991. This contention is without merit.

In Butler v. Glen Oak’s Turf, 196 Ga. App. 98 (395 SE2d 277), this court held that the two-year statute of limitation in an employee’s tort claim against her employer was tolled during the employee’s pursuit of an unsuccessful workers’ compensation claim. Id. at 101, supra. In Butler, this court adopted reasoning that the purpose of the statute of limitation was accomplished because the employer was placed on notice of the employee’s alleged injuries within the applicable limitation period by virtue of the pending workers’ compensation claim. Butler v. Glen Oak’s Turf, 196 Ga. App. 98, 99, supra. The same reasoning does not apply in the case sub judice as plaintiff admits (in his complaint) that defendants were dismissed as parties to the arbitration because they were never served with notice of the time, date and location of the arbitration. Under these circumstances, we cannot say that the two-year statute of limitation with regard to plaintiff’s claim under OCGA § 10-5-14 (c) was tolled during the arbitration against ASI and Jones. Consequently, the trial court did not err in granting summary judgment in favor of defendants as to Count 7 of plaintiff’s complaint.

2. Next, plaintiff contends the amount of the attorney fees awarded by the trial court was not supported by sufficient evidence. We agree.

“ ‘An award of attorney fees is unauthorized if [defendant Ingram] failed to prove the actual costs of the attorney and the reasonableness of those costs. (Cit.)’ Fiat Auto U.S.A. v. Hollums, 185 Ga. App. 113, 116 (5) (363 SE2d 312) (1987).” Southern Cellular Telecom v. Banks, 209 Ga. App. 401, 402 (433 SE2d 606). In the case sub judice, defendant Ingram submitted billing sheets sent to him by his attorney with the affidavit of his attorney, Michael K. Wolensky, in support of his claim for attorney fees. Attorney Wolensky deposed that 13.5 hours of services provided by two attorneys and a paralegal were reasonably worth $1,286.25 and that these services were necessary to press a motion to compel on behalf of defendant Ingram. Attorney Wolensky then deposed that he expended a quarter of an hour (at a rate of $205 per hour) reviewing the motion to compel and he enumerates in his affidavit billings allegedly entered by an “Associate” (11.25 hours at $100 per hour) and a “Paralegal” (2 hours at $55 per hour) in executing the motion to compel. However, differences seem to appear between certain notations explaining services rendered in the billing statements sent to defendant Ingram and explanations for billing what appears to be the same time in attorney Wolensky’s affidavit. Further, it is apparent that the statements regarding the billings of the associate attorney and the paralegal were not based upon attorney Wolensky’s personal knowledge, but were based upon information given to him by others. Such evidence is hearsay, and hearsay, even when admitted into evidence without objection, lacks probative value to establish any fact. Howell Mill/Collier Assoc. v. Pennypacker’s, 194 Ga. App. 169, 171 (2) (390 SE2d 257). Moreover, the time entries in the billing statements in attorney Wolensky’s affidavit and the billing statements attached to the affidavit include brief notations that a conference was held; that letters were received, reviewed and written; that telephone calls were conducted; that a conference was conducted between attorney Wolensky and an associate attorney; that research was performed; that a motion and brief were drafted, revised and reviewed; that time was spent in preparation for a hearing; that an order was drafted (apparently for the trial court); that time was spent waiting at the courthouse and traveling to the courthouse and that an associate attorney reviewed local rules of court. “Such broad statements fail to demonstrate the function or substance of the task with sufficient particularity to permit the court to distinguish between time and expenses attributable to the successful [motion to compel discovery] and time and expenses attributable to . . . other [aspects of defendant Ingram’s defense].” Southern Cellular Telecom v. Banks, 209 Ga. App. 401, 402, supra. Additionally, there is no indication that attorney Wolensky, the associate attorney who purportedly billed out most of the hours relevant to defendant Ingram’s motion to compel or the paralegal who was attributed with two hours of pertinent billings were made available for cross-examination.

“A determination of the amount of an award of attorney fees cannot be based on guesswork. See generally Wahnschaff Corp. v. O. E. Clark Paper Box Co., 166 Ga. App. 242, 244 (2) (304 SE2d 91) (1983).” Southern Cellular Telecom v. Banks, 209 Ga. App. 401, 402, supra. Such an award must be based on competent evidence, not inadmissible hearsay. See Short & Paulk Supply Co. v. Dykes, 120 Ga. App. 639, 643 (3), 646 (171 SE2d 782) (1969); Copelan v. Burrell, 174 Ga. App. 63, 64 (2), 65 (329 SE2d 174). A party opposing a claim for attorney fees has a basic right to confront and challenge testimony as to the value and need for legal services. See Southern Cellular Telecom v. Banks, 209 Ga. App. 401, 402, supra. This is particularly true where, as in the case sub judice, it is alleged that extensive billings are necessary for pressing a relatively simple matter and where unexplained inconsistencies appear to exist between billing statements to a client and an affidavit filed in support of a claim for attorney fees. Consequently, since there was no admissible evidence supporting the trial court’s award of attorney fees in the amount of $1,286.25 and since plaintiff was not provided opportunity to cross-examine the two attorneys and the paralegal who purportedly worked-up the motion to compel, the trial court’s award of attorney fees in the amount of $1,286.25 was not authorized. This award must therefore be vacated and the case remanded for an evidentiary hearing to establish the amount of attorney fees attributable to defendant Ingram’s motion to compel. See Southern Cellular Telecom v. Banks, 209 Ga. App. 401, 402, supra.

3. In his third enumeration, plaintiff contends the trial court erred in dismissing Counts 8, 9 and 10 of the complaint because he wilfully failed to obey the trial court’s order to pay attorney fees in the amount of $1,286.25 within 10 days of March 1, 1993.

“ ‘A voidable or erroneous order cannot be disregarded; it is valid and enforceable until set aside. 60 CJS Motions and Orders § 65 (d). Moreover, unlike a void order, a merely erroneous order will support rights, remedies and proceedings predicated thereon. See 60 CJS Motions and Orders § 65 (e).’ Golden Key Restaurant & Lounge v. Key Management Corp., 137 Ga. App. 251, 253 (2) (223 SE2d 284).” Mathews v. City of Atlanta, 167 Ga. App. 168, 169 (306 SE2d 3). Consequently, the fact that the trial court’s order awarding attorney fees in the amount of $1,286.25 was not supported by competent evidence (as held in Division 2 of the opinion) does not diminish plaintiff’s duty to comply with the trial court’s directive to pay the attorney fees within ten days of March 1, 1993. However, “a dismissal with prejudice is warranted only where a clear record of delay or contumacious conduct by the plaintiff exists and a lesser sanction would not better serve the interest of justice. Gonzalez v. Firestone Tire & Rubber Co., 610 F2d 241, 247 (6).” Mathews v. City of Atlanta, 167 Ga. App. 168, 169, supra. Applying this standard in the case sub judice, we do not find a clear record of contumacious conduct by plaintiff. Although plaintiff did not pay $1,286.25 to defendant Ingram’s attorney within ten days of March 1,1993, plaintiff paid defendant Ingram’s attorney $1,286.25 before the hearing on defendant Ingram’s motion to dismiss plaintiff’s complaint or, in the alternative, to hold plaintiff in contempt for failing to pay the attorney fees within ten days of the trial court’s order of March 1, 1993. Moreover, plaintiff did not ignore the trial court’s order as in Mathews v. City of Atlanta, 167 Ga. App. 168, 169, supra. On the contrary, plaintiff’s attorney explained (in a letter to the trial court) that his client could not come up with $1,286.25 on such short notice. Under these circumstances and in light of our holding in Division 2 of this opinion, we find dismissal of plaintiff’s complaint pursuant to OCGA § 9-11-37 (b) (2) (C) too harsh a sanction. See Campbell v. Gormley, 185 Ga. 65, 66 (2) (194 SE 177). Consequently, the trial court erred in dismissing plaintiff’s complaint because plaintiff failed to obey the trial court’s order to pay attorney fees in the amount of $1,286.25 within ten days of March 1, 1993. See Serwitz v. Gen. Elec. Credit Corp., 184 Ga. App. 632, 633 (362 SE2d 439).

4. Plaintiff contends the trial court erred in granting summary judgment in favor of defendants Blalock, Bradley and Ringo as to Counts 8, 9 and 10 of his complaint.

“ ‘An inherent purpose of incorporation is insulation from liability. A corporation possesses a legal existence separate and apart from that of its officers and share-holders so that the operation of a corporate business does not render officers and shareholders personally liable for corporate acts. (Cit.)’ Derbyshire v. United Bldrs. Supplies, 194 Ga. App. 840, 844 (392 SE2d 37).” Commonwealth Financial Corp. v. Sherrill, 197 Ga. App. 403 (1) (398 SE2d 438). Further, the Georgia Supreme Court has “said that the cardinal rule of corporate law is that the corporation possesses a legal existence separate and apart from that of its officers, employees, shareholders, and directors. 6 EGL Corporations, § 6 (1978 Rev.). A suit against the corporation cannot proceed against its members in their personal capacities unless some persuasive reason is presented for piercing the corporate veil. See, e.g., Farmers Whse. of Pelham v. Collins, 220 Ga. 141, 150 (137 SE2d 619) (1964); Lincoln Land Co. v. Palfery, 130 Ga. App. 407, 411 (203 SE2d 597) (1973); Hamilton Bank &c. Co. v. Holliday, 469 FSupp. 1229, 1241 (N.D. Ga. 1979).” Kilsheimer v. State, 250 Ga. 549, 550 (299 SE2d 733).

“ ‘The concept of piercing the corporate veil is applied in Georgia to remedy injustices which arise where a party has over extended his privilege in the use of a corporate entity in order to defeat justice, perpetrate fraud, or evade contractual or tort responsibility.’ (Punctuation and citation omitted.) Cheney v. Moore, 193 Ga. App. 312-313 (387 SE2d 575).” Commonwealth Financial Corp. v. Sherrill, 197 Ga. App. 403 (1), 404, supra. In the case sub judice, plaintiff presented affidavits from two experts in the field of securities management supporting his claim that defendants’ management of ASI was far below industry standards. However, plaintiff presented no evidence that defendants disregarded separation of the corporate entity by commingling assets or abuses of the corporate form. Nonetheless, plaintiff argues that evidence of defendants’ substandard management of ASI and the $60,000 arbitration award against ASI and Jones authorized a finding that defendants are personally liable for his losses. This argument is without merit.

Decided June 30, 1994

Reconsideration denied July 15, 1994

Land, McKnight & Cohen, Robert H. McKnight, Jr., for appellant.

Bruce C. Bailey, Michael K. Wolensky, Kutak & Rock, Angela M. Gottsche, Tinkler & Groff, William P. Tinkler, Jr., for appellees..

“ ‘ “(A)n officer of a corporation who takes part in the commission of a tort by the corporation is personally liable therefor, but an officer of a corporation who takes no part in the commission of a tort committed by the corporation is not personally liable unless he specifically directed the particular act to be done or participated or co-operated therein.” (Cit.)’ Lincoln Land Co. v. Palfery, 130 Ga. App. 407, 411 (1a) (203 SE2d 597) (1973).” Smith v. Hawks, 182 Ga. App. 379, 384 (4), 385 (355 SE2d 669). In the case sub judice, plaintiff presented no evidence that defendants misappropriated plaintiff’s accounts or duped plaintiff into believing that his investments were fruitful and sound. On the contrary, it is undisputed that plaintiff had no direct contact with defendants regarding management of his accounts. Consequently, there is no basis for holding defendants jointly and severally liable under the doctrine of respondeat superior or under plaintiff’s claim that defendants breached fiduciary duties by negligently carrying out responsibilities as officers and directors of ASI. Kilsheimer v. State, 250 Ga. 549, supra. Commonwealth Financial Corp. v. Sherrill, 197 Ga. App. 403 (1), supra.

The trial court did not err in granting summary judgment in favor of defendants Blalock, Bradley and Ringo as to Counts 8, 9 and 10 of plaintiff’s amended complaint.

5. In his final enumeration, plaintiff contends the trial court erred in denying his motion for reconsideration, arguing that defendants are precluded from disputing their alleged reckless conduct in managing ASI pursuant to the doctrine of estoppel by judgment. In support of this contention, plaintiff points out that a $60,000 arbitration award was entered against ASI and Jones. This contention is without merit as it is undisputed that defendants were not parties to the arbitration. See Blackwell v. Ga. Real Estate Comm., 205 Ga. App. 233 (421 SE2d 716).

Judgment affirmed in part and reversed in part and case remanded.

Pope, C. J., and Smith, J., concur.


author: Johnson, Judge. Andrews, Judge,

text:
    A94A0659.
    DAVIS v. THE STATE.
    (447 SE2d 68)
   Johnson, Judge.

We granted Linda Davis’ application for interlocutory review of the trial court’s denial of her motion to suppress evidence seized from a house pursuant to a search warrant. Davis’ sole contention is that the court erred in denying her motion because the affidavit supporting the warrant did not establish probable cause. Although it is not clear from the record whether Davis has standing to challenge the validity of the warrant, the state has not raised this issue and in fact seems to concede in its brief that she has standing. We therefore presume that Davis has standing and shall address the merits of her appeal.

The affidavit set out below was the only evidence presented to the magistrate who issued the warrant: “Affiant was contacted by S/A Jimmy Lomax of the Georgia Bureau of Investigation on 03-08-93. That he was contacted by a concerned citizen. That the concerned citizen (CC) stated it was at the residence of Robert Maddox-AKA; ‘Animal.’ That while there it observed a quantity of crack-cocaine in the bedroom ... It was in a clear plastic type bag. That in the bag was small white chunks of substance. That there were also syringes, and small vials with a water type substance in them. That it had been observed by the CC within the past 48 hours of the time of this affidavit. That affiant was advised by Lomax that the CC displayed a truthful demeanor in describing what had been observed by the CC. That CC had never gave Lomax information before, but, was able to tell the location of the . . . house . . . and also, that CC gave what sounded to be an accurate description of what crack-cocaine looks like as well as the [paraphernalia] that is usually found to be around it. CC stated there was also a white female there by the name of Linda Davis. . . . That also affiant is familiar with Robert Maddox due to the fact that affiant has arrested and convicted Maddox with conspiracy to traffic in cocaine before. Therefore it is believed that the CC has gave true and reliable information as to the fact of Maddox and the Davis woman being in possession of crack-cocaine.”

“In determining whether an affidavit sufficiently establishes the probable cause necessary for issuance of a warrant, we employ the totality of the circumstances analysis enunciated in Illinois v. Gates, 462 U. S. 213 (103 SC 2317, 76 LE2d 527) (1983), and adopted by [the Georgia Supreme C]ourt in State v. Stephens, 252 Ga. 181 (311 SE2d 823) (1984), with the admonition that prudence counsels that Gates be considered as the outer limit of probable cause. Under that analysis, the task of the issuing magistrate is simply to make a practical, common-sense decision whether, given all the circumstances set forth in the affidavit before him, including the veracity and basis of knowledge of persons supplying hearsay information, there is a fair probability that contraband or evidence of a crime will be found in a particular place. And the duty of a reviewing court is simply to ensure that the magistrate had a substantial basis for concluding that probable cause existed. In addition, [the Georgia Supreme CJourt has cautioned attesting officers and magistrates to make every effort to see that supporting affidavits reflect the maximum indication of reliability.” (Citations, punctuation and emphasis omitted.) Gary v. State, 262 Ga. 573, 577 (422 SE2d 426) (1992). Here, the attesting officer and the magistrate did not make every effort to see that the affidavit reflects the maximum indication of reliability. Based on the unreliable information in the affidavit, the magistrate did not have a substantial basis for concluding that contraband would be found in the house searched.

Although the affiant referred to the informant as a concerned citizen, the informant is not entitled to that status. “This court has always given the concerned citizen informer a preferred status insofar as testing the credibility of his information. However, before an anonymous tipster can be elevated to the status of concerned citizen, thereby gaining entitlement to the preferred status regarding credibility concomitant with that title, there must be placed before the magistrate facts from which it can be concluded that the anonymous tipster is, in fact, a concerned citizen.” (Citations and punctuation omitted.) State v. White, 196 Ga. App. 685, 686-687 (396 SE2d 601) (1990). No such facts were placed before the magistrate in the instant case. The affiant did not actually speak to the informant. The GBI agent who relayed the information to the affiant had never before received information from the informant. Although the GBI agent told the affiant that the informant displayed a truthful demeanor, no factual basis was given for this conclusion. The affidavit does not indicate how the informant contacted the agent or whether the agent even observed the informant in person. The informant was merely an anonymous tipster, not entitled to preferred status regarding the credibility of his information. The complete lack of information about the informant relegated the information he supplied to the status of rumor. Eaton v. State, 210 Ga. App. 273, 275 (435 SE2d 756) (1993).

Moreover, the anonymous tip is unreliable because the independent investigation done by the police in an effort to corroborate it was insufficient; the police corroborated only that the house was located where the tipster said it was. “ ‘Our decisions applying the totality of circumstances analysis have consistently recognized the value of corroboration of details of an informant’s tip by independent police work.’ [Cit.]” (Punctuation omitted.) State v. Stephens, 252 Ga. 181, 183 (311 SE2d 823) (1984); compare Munson v. State, 211 Ga. App. 80 (438 SE2d 123) (1993).

The affiant also failed to present sufficient facts upon which the magistrate could have determined the veracity of the informant. “An informant’s veracity, reliability, and basis of knowledge are highly relevant in determining the value of his report and while these elements are not entirely separate and independent elements to be rigidly exacted in every case, they are closely intertwined issues that may usefully illuminate the common-sense, practical question whether there is probable cause to believe that contraband or evidence is located in a particular place.” (Citation and punctuation omitted.) State v. White, supra at 687; State v. Brown, 186 Ga. App. 155, 157-158 (2) (366 SE2d 816) (1988). Here, the magistrate did not have probable cause to issue the search warrant. The trial court therefore erred in denying Davis’ motion to suppress.

Judgment reversed.

McMurray, P. J., Birdsong, P. J., Beasley, P. J., Blackburn, Smith, JJ., and Senior Appellate Judge Harold R. Banke concur. Pope, C. J., and Andrews, J., dissent.

Andrews, Judge,

dissenting.

I respectfully dissent since I believe the warrant used to search the residence was supported by probable cause. “In determining whether an affidavit sufficiently establishes the probable cause necessary for issuance of a warrant, we employ the ‘totality of the circumstances’ analysis enunciated in Illinois v. Gates, 462 U. S. 213 (103 SC 2317, 76 LE2d 527) (1983), and adopted by this court in State v. Stephens, 252 Ga. 181 (311 SE2d 823) (1984). . . . Under that analysis, ‘(t)he task of the issuing magistrate is simply to make a practical, common-sense decision whether, given all the circumstances set forth in the affidavit before him, including the “veracity” and “basis of knowledge” of persons supplying hearsay information, there is a fair probability that contraband or evidence of a crime will be found in a particular place. And the duty of a reviewing court is simply to ensure that the magistrate had a “substantial basis for concluding” that probable cause existed. (Cit.)’ ” Gary v. State, 262 Ga. 573, 577 (422 SE2d 426) (1992); see generally Munson v. State, 211 Ga. App. 80 (438 SE2d 123) (1993). This test is not a hypertechnical test implemented by legal technicians, but is based on the “factual and practical considerations of everyday life on which reasonable and prudent men” act. (Punctuation omitted.) Curry v. State, 255 Ga. 215, 217 (1) (336 SE2d 762) (1985).

Here, a practical, common-sense analysis indicated that there was a fair probability that contraband would be found in the residence. The affidavit stated that the concerned citizen had described in considerable detail the crack cocaine he saw in the bedroom. The affidavit stated that “[i]t was in a clear plastic type bag. That in the bag was small white chunks of substance. That there were also syringes, and small vials with a water type substance in them.” The affiant stated that he was familiar with Maddox because he had previously arrested and convicted Maddox of conspiracy to traffic in cocaine. See generally Caffo v. State, 247 Ga. 751 (2) (c) (279 SE2d 678) (1981). These facts plus the detailed description of the residence and subsequent corroboration were sufficient to support the affidavit. See generally Futch v. State, 178 Ga. App. 115 (342 SE2d 493) (1986).

The majority’s approach is not the “totality of the circumstances” approach from Illinois v. Gates. The majority’s concern that the only information regarding the informant’s veracity was that he “displayed a truthful demeanor” and that the only corroboration of the tip was the address of the residence. “[Although information regarding the reliability of the informant is highly relevant to the totality of the circumstances determination, the absence of significant information regarding reliability is not necessarily fatal to an affidavit. Indeed, corroboration of the information given by an informant may provide a substantial basis for finding probable cause, despite deficiencies in the showing of the informant’s veracity, reliability, or basis of knowledge.” (Citations and punctuation omitted.) Munson, supra at 82; compare State v. Bryant, 210 Ga. App. 319, 321 (436 SE2d 57) (1993); State v. Teague, 192 Ga. App. 839 (386 SE2d 718) (1989). In concluding that no probable cause existed, the majority overlooks the importance of the details regarding the drugs and the fact that the magistrate was informed that Maddox had previously been convicted of a drug offense.

The determination that the warrant here was sufficient comports with the deference given searches performed pursuant to warrant. “A grudging or negative attitude by reviewing courts toward warrants, is inconsistent both with the desire to encourage use of the warrant process by police officers and with the recognition that once a warrant has been obtained, intrusion upon interests protected by the Fourth Amendment is less severe than otherwise may be the case. A deferential standard of review is appropriate to further the Fourth Amendment’s strong preference for searches conducted pursuant to a warrant. . . . Although in a particular case it may not be easy to determine when an affidavit demonstrates the existence of probable cause, the resolution of doubtful or marginal cases in this area should be largely determined by the preference to be accorded to warrants.” (Citations and punctuation omitted.) Mincey v. State, 180 Ga. App. 898, 900 (1) (350 SE2d 852) (1986); Munson, supra at 83.

While our task is not to encourage minimal compliance with the standards set forth for the issuance of warrants, we are required to determine when those minimal standards have been met. In the instant case, those minimal standards were complied with and the trial court properly denied the motion to suppress.

Decided June 24, 1994

Reconsideration denied July 15, 1994

Dickinson, Noel & Peeples, Joseph S. Peeples, for appellant.

Timothy G. Madison, District Attorney, Jeffrey G. Morrow, Assistant District Attorney, for appellee.

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


author: Johnson, Judge.

text:
    A94A0706.
    McKOON v. JONES et al.
    (447 SE2d 50)
   Johnson, Judge.

Elizabeth McKoon, as a shareholder of The Citizens Bank and of its holding company Northwest Georgia Financial Corporation, instituted a shareholder’s derivative action against T. Ruben Jones, Jon L. Bloomfield, Steve Jones, Earl Duncan, Stevan H. Crew, J. W. Rake-straw, and Northwest. In her complaint, McKoon alleges that the above-named individuals, who were president, chief executive officer, chairman of the board and members of the board of directors of Citizens Bank and Northwest, wasted the assets of both corporations through acts of negligence and violations of the Georgia Racketeer Influenced & Corrupt Organizations (RICO) Act, OCGA § 16-14-1 et seq. T. Ruben Jones and Northwest moved to dismiss the action on several grounds, one of which was that McKoon’s right to pursue a derivative action was terminated when Citizens Bank, in response to McKoon’s demand that action be taken against the officers and directors, filed suit against its surety to recover on a fidelity bond. The trial court granted the motion to dismiss as to all defendants solely on that basis. McKoon appeals.

McKoon contends that the trial court erred in deciding that Comment 4 to OCGA § 14-2-742 precluded her from commencing an action against the officers and directors. We agree and reverse.

The trial court’s reliance on Comment 4 as controlling authority is misplaced. In a section entitled “Code Revision Commission Note on Comments,” included in the introductory material to the Georgia Business Corporation Code when it was adopted in 1988 and repeated when the Code was amended in 1990 and 1993, the Georgia Corporation Code Revision Committee specifically addressed the issue when it wrote: “The comments appearing in this chapter have been prepared under the supervision of the Georgia Corporation Code Revision Committee of the Corporate and Banking Law Section of the State Bar of Georgia and are included in the Official Code of Georgia Annotated at the request of the committee. Neither the General Assembly of Georgia nor the Code Revision Commission of the State of Georgia has participated in the drafting of these comments or has reviewed the comments for their content. The comments should not be considered to constitute a statement of legislative intention by the General Assembly of Georgia nor do they have the force of statutory law.” (Emphasis supplied.) OCGA Title 14, Chapter 2 (1989 ed.), p. 11; see also OCGA Title 14, Chapter 2 (1993 Supp.), p. 1. This is consistent with the Supreme Court’s observation that while a comment to the Code may indeed be helpful in ascertaining the meaning of a statutory provision, in other words, may serve as persuasive authority, it is not controlling authority and does not preclude the application of the rules of statutory construction by courts. See Service Corp. Intl. v. H. M. Patterson &c., 263 Ga. 412, 415, n. 5 (434 SE2d 455) (1993). Thus, the trial court erred in basing its decision on Comment 4 to OCGA § 14-2-742.

Furthermore, even if the comment did have some binding authority, it does not bar the plaintiff’s derivative action in this case. OCGA § 14-2-742 (1) allows a shareholder to commence a derivative proceeding after making a written demand upon the corporation to take suitable action. If the corporation, after receiving the demand, decides to institute litigation or, after a derivative proceeding has commenced, decides to assume control of the litigation, the shareholder’s right to commence or control the proceeding ends unless it can be shown that the corporation will not adequately pursue the matter. OCGA § 14-2-742, Comment 4. The letter sent by McKoon’s attorney to the directors of Northwest demanded that an action be commenced on behalf of the corporation against the officers and directors responsible for the wasting of the assets of Northwest. The only action commenced by Citizens Bank or Northwest was a breach of contract action against Pinnacle Insurance. The issue in that case is whether Pinnacle breached its agreement by refusing to indemnify Citizens Bank pursuant to a fidelity bond for losses resulting from dishonest or fraudulent acts committed by Citizens Bank employees. Pinnacle has denied all liability and that case is still pending. That issue is very different from the issue of whether the directors and officers of Northwest violated a duty owed to the corporation and whether they are directly liable for damages for losses incurred by the corporation. Moreover, McKoon’s complaint alleges that the defendants committed numerous RICO violations, including theft by deception, mail fraud and securities violations. Citizens Bank’s complaint contains no such allegations. Contrary to the arguments set forth in Jones’ brief, in construing McKoon’s complaint in the light most favorable to her, we cannot conclude as a matter of law, upon the state of the record as it now exists, that McKoon would not be entitled to relief pursuant to the RICO claim under any state of provable facts. Time Ins. Co. v. Fulton-DeKalb Hosp. Auth., 211 Ga. App. 34, 35 (1) (438 SE2d 149) (1993); State of Ga. v. Shearson Lehman Bros., 188 Ga. App. 120, 121 (2) (372 SE2d 276) (1988). Finally, we do not interpret Comment 4 of OCGA § 14-2-742 (1) as prohibiting the commencement of a shareholder’s derivative action once the corporation files suit, without regard to the type of action filed and without reference to whom is being sued. We do not believe that the legislature intended officers and directors who have committed fraud upon a corporation, or have negligently performed their duties with the result that the corporation has been damaged thereby, to be able to avoid all liability by simply filing an action against the corporation’s surety. Because it is apparent that the corporation has yet to adequately pursue the claims asserted by McKoon, we find that the trial court erred in dismissing the case on that basis.

Decided June 22, 1994

Reconsideration denied July 15, 1994

Barnes, Browning, Tanksley & Casurella, Roy E. Barnes, for appellant.

Chilivis & Grindler, Anthony L. Cochran, Carol M. Kayser, Smith, Gambrell & Russell, Robert W. Beynart, Edwin Marger, for appellees.

As the other grounds for dismissal asserted by the defendants have not been ruled upon in the trial court, we cannot consider them on appeal. Hinson v. Kinard, 237 Ga. 422 (228 SE2d 819) (1976); see Atlantic Wood Indus. v. Lumbermen’s &c. Alliance, 196 Ga. App. 503, 506 (3) (396 SE2d 541) (1990); see also Motorcycle Stuff v. Bryant, 182 Ga. App. 554, 555 (2) (356 SE2d 521) (1987). “Ordinarily, a judgment right for any reason must be affirmed, but where it is apparent that the court rests its judgment on reasons which are erroneous or upon an erroneous legal theory it commits reversible error.” (Citations omitted.) Lorentzson v. Rowell, 171 Ga. App. 821, 825 (321 SE2d 341) (1984), rev’d in part on other grounds, Smith, Miller & Patch v. Lorentzson, 254 Ga. 111 (327 SE2d 221) (1985); Derbyshire v. United Builders Supplies, 194 Ga. App. 840, 843 (1) (392 SE2d 37) (1990); Power v. Mobley, 170 Ga. App. 167, 168 (1) (316 SE2d 580) (1984). Thus, the judgment of the trial court must be reversed.

In light of our holding above, the trial court’s ruling that Jones’ and Northwest’s discovery motions are moot must be vacated. Motorcycle Stuff, supra.

Judgment reversed in part, vacated in part, and case remanded.

Beasley, P. J., and Andrews, J., concur.