author: Miller, Judge.

text:
    A13A0667.
    SUPERIOR ROOFING COMPANY OF GEORGIA, INC. et al. v. AMERICAN PROFESSIONAL RISK SERVICES, INC. et al.
    (744 SE2d 400)
   Miller, Judge.

Superior Roofing Company of Georgia, Inc. and Ron Herring (collectively “Plaintiffs”) filed suit in Fulton County against American Professional Risk Services, Inc. (“AmPro”), and several AmPro employees (collectively the “Defendants”), raising claims of breach of contract, negligence, negligent misrepresentation, breach of fiduciary duty, fraud, and an action in equity in relation to AmPro’s administration of the Roofing and Sheet Metal Contractors Association of Georgia Workers’ Compensation Trust Fund (the “Trust Fund”). The Superior Court of Fulton County subsequently placed the Trust Fund under permanent receivership and appointed the Georgia Insurance Commissioner as permanent receiver of the Trust Fund. The trial court granted the Defendants’ motion to dismiss, concluding that the Insurance Commissioner had exclusive standing to prosecute the Plaintiffs’ claims. On appeal, the Plaintiffs contend that the Insurance Commissioner did not have exclusive standing to prosecute their claims. Whether an appointed receiver of an insolvent trust fund has exclusive standing to prosecute the claims of the fund’s members and policyholders is an issue of first impression. Based on the statutory framework designed to protect the interests of the members and policyholders, we conclude that the Insurance Commissioner, as the receiver in this case, has the exclusive authority to prosecute legal claims that are common to the Trust Fund, and that the Plaintiffs have standing to prosecute claims that are personal in nature and not common to the Trust Fund. Accordingly, we reverse.

Under OCGA § 9-11-12 (b) (6), a motion to dismiss for failure to state a claim upon which relief can be granted should not be sustained unless (1) the allegations of the complaint disclose with certainty that the claimant would not be entitled to relief under any state of provable facts asserted in support thereof; and (2) the movant establishes that the claimant could not possibly introduce evidence within the framework of the complaint sufficient to warrant a grant of the relief sought. In deciding a motion to dismiss, all pleadings are to be construed most favorably to the party who filed them, and all doubts regarding such pleadings must be resolved in the filing party’s favor.

(Citation and punctuation omitted.) Anderson v. Daniel, 314 Ga. App. 394, 395 (724 SE2d 401) (2012).

So viewed, the complaint alleged that the Trust Fund, a self-insured workers’ compensation fund whose members were roofing contractors, was licensed by the Georgia Insurance Department in 1994. In 1997, the Trust Fund entered into an agreement for services with AmPro (the “Agreement”), providing that AmPro was to administer the workers’ compensation trust fund in accordance with Georgia law and all applicable regulations. The Agreement specifically provided that AmPro was to determine estimates of the possible cost to the Trust Fund; prepare periodic reports requested by the Georgia Workers’ Compensation Board or other regulatory authority; and provide a monthly Risk Management Information Systems Report that estimated the future costs of each open claim.

The complaint further alleged that the Trust Fund was not a viable insurance vehicle at any time after 2008 because the Defendants systematically and grossly under-reserved for known claims, provided materially inaccurate and misleading information to an actuary, and prepared inaccurate financial statements. Specifically, AmPro represented in September 2009 that the Trust Fund had a surplus of $802,284. Several months later, AmPro represented that the Trust Fund had a deficit of $1,154,094. AmPro subsequently conceded that the September 2009 financial statement was wildly inaccurate and overstated. Although AmPro represented to Trust Fund members that the Trust Fund was in compliance with all Georgia regulatory requirements, the Trust Fund was actually out of compliance with Georgia law and insurance regulations when it ran a negative balance and under-reserved for known claims. Superior Roofing relied upon Defendants’ financial statements and other representations regarding the Trust Fund to renew its workers’ compensation insurance and to continue to pay its insurance premiums.

The Trust Fund closed in April 2010 and began to assess its members. Superior Roofing had to pay a $91,375 assessment and may be subjected to additional assessments.

Superior Roofing subsequently brought this suit. In a related case, the superior court entered a consent order of permanent injunction and appointment of permanent receiver that placed the Trust Fund into permanent receivership and named the Insurance Commissioner as the receiver. Defendants filed their motion to dismiss. Thereafter, the Insurance Commissioner filed a motion to intervene as plaintiff and a brief in support of the Defendants’ motion to dismiss. The Defendants and the Insurance Commissioner both argued that the Insurance Commissioner had exclusive standing to prosecute the Plaintiffs’ claims. The superior court granted the Defendants’ motion to dismiss, concluding that the Insurance Commissioner, as the appointed receiver of the Trust Fund, represented the interests of the fund’s creditors and members, and that it was the receiver’s right to determine which causes of action to pursue on behalf of interested parties.

On appeal, the Plaintiffs contend that the trial court erred in dismissing their appeal on the ground that the Insurance Commissioner, as receiver of the Trust Fund, had the exclusive right to prosecute their claims against the Defendants. We agree.

Under OCGA § 34-9-168, the Superior Court of Fulton County has the authority to enjoin a self-insured workers’ compensation trust fund from conducting any further business when, among other things, the fund has failed to comply with workers’ compensation statutory provisions or is unable to meet its financial obligations and claims. The superior court also has the authority to make the injunction permanent and to appoint a receiver of the Trust Fund to take possession of the insolvent fund and liquidate its assets. OCGA § 34-9-168. There is no dispute that the superior court was authorized in this case to appoint the Insurance Commissioner as receiver of the Trust Fund.

The liquidation of an insolvent fund, such as the one in this case, shall proceed

in the same manner as are domestic insurers under [the Insurers Rehabilitation and Liquidation Act (“IRLA”)]; and the Commissioner shall have the same powers and limitations in such proceedings as are provided under [the IRLA], except as otherwise provided for in this article.

OCGA § 34-9-173 (b); see also OCGA § 33-37-1 (a). The legislature enacted the IRLA for the “protection of the interests of insureds, claimants, creditors, and the public generally [.]” OCGA § 33-37-1 (d). To achieve the IRLA’s purpose, the legislature designed the IRLA to, among other things, enhance the efficiency of liquidation and minimize legal uncertainty and litigation. OCGA § 33-37-1 (d) (3). The IRLA mandates that its provisions be liberally construed to effect its purpose to protect the interests of policyholders, claimants, creditors, and the public generally. OCGA § 33-37-1 (c).

We note that the statutory scheme here has conferred extensive authority upon the receiver, as a liquidator of an insolvent fund, to carry out the purpose of the IRLA. See OCGA § 33-37-20 (providing a nonexclusive list of powers the liquidator shall exercise); see also 1 Couch on Insurance, § 5:37 (3d ed. 2012). Specifically, when liquidating a fund, the receiver shall have the authority

(14) To continue to prosecute and to institute in the name of the insurer or in his own name any and all suits and other legal proceedings . . . and to abandon the prosecution of claims he deems unprofitable [; and]
(15) To prosecute any action which may exist on behalf of creditors, members, policyholders, or shareholders of the insurer against any officer of the insurer or any other person[.]

OCGA § 33-37-20 (a) (14) and (15).

Relying on OCGA § 33-37-20 (a) (14) and (15), the Defendants contend that the authority vested in the receiver to prosecute the claims of the Trust Fund and its members is exclusive.

In construing a statute, the courts must try to effectuate the intent of the legislature as discerned from the act as a whole. The intent of the General Assembly will control over the literal meaning of those terms which appear in the statute. Where a law is susceptible of more than one construction, it must be given that construction which is most equitable and just.

(Citations and punctuation omitted.) Randolph County v. Bantz, 270 Ga. 66, 67 (508 SE2d 169) (1998).

While OCGA § 33-37-20 grants authority to the Insurance Commissioner to act on behalf of the Trust Fund and its members, including the power to prosecute the claims of its members and policyholders, nothing in the plain language of OCGA § 33-37-20 states that this authority is exclusive. Neither party cited, nor have we found, any Georgia cases directly on point regarding the right of a member of a self-insured fund to initiate and prosecute its own claims. Accordingly, we look to authority from other jurisdictions that have adopted provisions similar to the IRLA.

The weight of authority makes it clear that a statutory receiver, such as the [liquidator here, may prosecute claims on behalf of creditors and policyholders of the insolvent company in order to preserve its estate assets, but may not maintain a suit in such a representative capacity if it is strictly personal in nature, that is, if the cause of action belongs clearly to the individual creditor or policyholder.

(Citation and punctuation omitted.) Boedeker v. Rogers, 746 NE2d 625, 638 (III) (B) (Ohio Ct. App. 2000); see also In the Matter of the Liquidation of American Mut. Liability Ins. Co., 632 NE2d 1209, 1213-1214 (1) (b) (Mass. 1994); In the Matter of the Liquidation of Integrity Ins. Co., 573 A2d 928, 933-935 (N.J. App. Ct. 1990); Cotten v. Republic Nat. Bank, 395 SW2d 930, 941 (II) (Tex. App. 1965). Notably, one authority states:

The insurance commissioner acting as liquidator of an insolvent insurance company may, and under some circumstances must, pursue any litigation that has the potential of increasing the assets of the company. . . . The commissioner may also instigate a lawsuit against the directors and officers of the insurer for breach of fiduciary duty or violations of the Racketeer Influenced and Corrupt Organizations Act.... The commissioner can sue for the recovery of assets fraudulently transferred. The commissioner can bring suit on behalf of the insurer’s members, creditors, policyholders, shareholders, and annuitants. However, a liquidator does not have the authority to prosecute claims that are strictly personal in nature; namely, the claims that belong to an individual creditor or policyholder.

(Punctuation and footnotes omitted; emphasis supplied.) 1 Couch on Insurance, supra, § 5:39. Moreover, as one court explained:

Certainly a receiver for an insolvent insurance corporation .. . has a right to maintain a suit which is necessary to preserve the corporation’s assets and to recover assets of which the corporation has been wrongfully deprived through fraud. In such a suit the receiver may be said to sue as the representative of the corporation and its creditors, stockholders and policyholders, for they have an interest in the corporation’s assets and upon liquidation they are entitled to a proper distribution of the assets.
But some actions for fraud are by their nature personal to each creditor, or each stockholder, or each policyholder, and the receiver may not then maintain a suit in his representative capacity for their joint benefit. In such case each claimant and he alone may bring and maintain the suit himself, for the action is personal, separate and several, not joint, and extends no further than the individual loss of each particular creditor who sues. For example, one who proves that he relied on false representations as to the corporation’s financial condition and was thereby induced to extend credit to the corporation, or to purchase stock in it, or to take out an insurance policy with it, must in his own name maintain a separate suit for his damages against the person who uttered the fraudulent representations. The aggrieved party and he alone may maintain the suit.

(Punctuation omitted.) Cotten, supra, 395 SW2d at 941 (II). Furthermore,

[w]hen pursuing claims on behalf of the insurer’s creditors, members, policyholders, or shareholders, the [receiver] is in truth advancing those claims on behalf of the insurer so that the insurer’s obligations may be extinguished. A [policyholder’s] direct claim against an officer or director, by contrast, is personal to the [policyholder] and is not on behalf of the insurer.

Boedeker, supra, 746 NE2d at 640 (III) (B). In other words, if the claim is personal and any recovery thereon will not benefit the estate of the insolvent insurance company, the receiver may not prosecute the claim.

We find the weight of this authority to be persuasive and adopt the reasoning therein. Consequently, we conclude that the Insurance Commissioner, as the receiver in this case, has the exclusive authority to prosecute legal claims that are common to the Trust Fund, and that the Plaintiffs were not prohibited from pursuing their personal claims. This conclusion provides the most equitable and just construction of the receiver’s powers under the IRLA. In particular, we are required to liberally construe the provisions of the IRLA to effect its purpose of protecting the interests of insureds, like the Plaintiffs. See OCGA § 33-37-1 (c). Giving the receiver exclusive authority to prosecute claims may not always serve the interests of the insureds, because nothing in the IRLA statutory scheme requires that the receiver prosecute the personal claims of the Trust Fund members or policyholders. See OCGA §§ 34-9-173 (b); 33-37-1 (d). Moreover, the members or policyholders are statutorily barred from asserting any action against the receiver, OCGA § 33-37-23 (a), and, therefore, cannot compel the receiver to prosecute their personal claims. Thus, if we were to conclude that the Insurance Commissioner, as the receiver, had the exclusive authority to prosecute all claims of the Trust Fund members and policyholders, the members and policyholders would have no recourse to pursue claims that the Insurance Commissioner, in his broad discretion, declined to prosecute. Similarly, we find no statutes indicating that personal claims abandoned by the receiver would revert back to the fund’s members or policyholders. Compare Richards v. D. R. Horton, Inc., 320 Ga. App. 771, 772 (2) (740 SE2d 732) (2013) (noting that under bankruptcy law, once a bankruptcy trustee, who has exclusive standing to prosecute a debtor’s legal claims, abandons those claims, the debtor had standing to pursue his personal claims).

We note that in its order appointing the Insurance Commissioner as receiver, the superior court also enjoined any action at law or equity against the Trust Fund or the Insurance Commissioner. However, the trial court did not enjoin actions against AmPro, the former manager of the Trust Fund, or its employees. Likewise, while the superior court enj oined anyone from transferring the assets of the Trust Fund without the Insurance Commissioner’s express permission, nothing in the injunction precludes the Plaintiffs from seeking damages against AmPro.

Since the superior court dismissed the action on the ground that the Plaintiffs had no authority to pursue any claims, it did not address whether any of the alleged injuries suffered by the Plaintiffs were personal or common in nature. We decline to resolve this issue in the first instance, and return the case to the superior court for a determination of which of the Plaintiffs’ claims are personal or common to the Trust Fund.

Judgment reversed.

Barnes, R J., and Ray, J., concur.

Decided June 12, 2013

Reconsideration denied July 26, 2013

Beloin, Brown, Blum & Wise, Frederick S. Beloin, for appellants.

Goodman, McGuffey, Lindsey & Johnson, W. Davis Hewitt, Jay W. Pakchar, for appellees.

        State of Ga., ex rel., Ralph T. Hudgens, Commissioner v. Roofing and Sheet Metal Contractors Assn. of Ga. Workers’ Compensation Trust Fund, Civil Action No. 2011-CV-19722.

       The common line of authority holds:
      The dividing line is whether the cause of action is one which is purely personal, in which no other claimant or creditor of the corporation has an interest, or whether the cause of action is one in favor of creditors in general. Where the injury alleged is primarily to the corporation, and is an injury to the plaintiff creditor only insofar as it decreases the assets of the corporation to which he must look for satisfaction of his debt, then the suit is for a tort suffered by the corporation, and properly brought by the trustee; if there is a special damage to the creditor suing, not common to other creditors, then it is a personal creditor action which the trustee may not pursue.
      (Punctuation omitted.) American Mut., supra, 632 NE2d at 1214 (quoting 3A Fletcher, Law of Private Corporations, § 1134, at 202 (rev. perm. ed. 1984)).

       The Defendants rely on an unpublished case from Tennessee that upheld the trial court’s dismissal of a suit brought by a member of a self-insured workers’ compensation fund against the administrator. See Western Express v. Brentwood Svcs., No. M2008-02227-COA-R3-CV, 2009 WL 3448747 (Tenn. Ct. App. Oct. 26, 2009). That case, however, does not support the Defendants’ argument that the Insurance Commissioner has exclusive authority to bring claims of the members and policyholders in this case. The Tennessee Court of Appeals expressly recognized that a liquidator had the statutory authority to bring the common claims of its members and policyholders, but lacked the authority to raise claims that were strictly personal in nature. Id. at *8. The Tennessee Court of Appeals affirmed the trial court’s dismissal in Western Express because, unlike the superior court here, the trial court considered whether the plaintiff’s claims were common or personal. Id. at *8-9.


source: Caselaw Access Project

author: ANDREWS, Presiding Judge.

license: Public Domain

text:
    A13A1084.
    BAILEY v. THE STATE.
    (747 SE2d 210)
   ANDREWS, Presiding Judge.

A Fulton County jury found Christopher Bailey guilty of driving under the influence of alcohol with an unlawful blood alcohol concentration in violation of OCGA § 40-6-391 (a) (5). On appeal from his judgment of conviction, Bailey contends that the trial court erred in charging the jury and in failing to grant a mistrial after the bailiff improperly communicated with the jury. We agree with Bailey that the trial court erred in charging the jury, and reverse.

1. Bailey contends that the trial court erred in charging the jury as follows:

Now, ladies and gentlemen, I’m going to give you the law as it relates to the inspection of the Intoxilyzer 500 [0]. A chemical analysis of a person’s breath shall be considered valid under Georgia law if it has been performed according to methods approved by the Division of Forensic Sciences of the Georgia Bureau of Investigation on a machine which was operated with all of its electronic and operating components described by its manufacturer properly attached in a good working order and by an individual possessing a valid permit issued by the Division of Forensic Services for the Sciences for this purpose.

(Emphasis supplied.) After the trial court instructed the jury, it asked the parties for exceptions. Bailey objected to the foregoing charge and complained that the instruction improperly shifted the burden of proof in that “[t]he jury was told that the State’s test had a conclusive presumption of validity.” Bailey then moved for a mistrial. The trial court acknowledged that Bailey had preserved his objection to the charge and then denied his motion.

Bailey contends, and we agree, that the issue is controlled by Muir v. State, 248 Ga. App. 49 (545 SE2d 176) (2001). The language of the charge in this case, as in Muir was generally derived from OCGA § 40-6-392 (a) (1) (A), which “deals with the admissibility of chemical test results.” Burke v. State, 233 Ga. App. 778, 779 (3) (505 SE2d 528) (1998). As given, the charge “implied] that the analysis or result for a particular individual ‘shall be considered valid,’ ” and “mandated that the jury find valid the test results showing that [Bailey’s] blood alcohol level exceeded the legal limit.” Muir, 248 Ga. App. at 52 (1) (a), (b). Compare Dougherty v. State, 259 Ga. App. 618, 621-622 (1) (c) (578 SE2d256) (2003) (although breathalyzer results may be properly admitted, “[a] defendant remains free to challenge the weight and credibility of that evidence before the [factfinder]”) (footnote omitted); Burke, 233 Ga. App. at 779 (3) (the weight to be given chemical test results is for the jury). Accordingly, as in Muir, we find the trial court’s charge both erroneous and harmful.

The State concedes that the charge at issue in Muir involved “nearly identical wording.” The State suggests, however, that Bailey acquiesced to the charge as given and so any error was induced by the conduct of his trial attorney. We disagree. On appeal “[o]ne cannot complain of a result he procured or aided in causing, and induced error is not an appropriate basis for claiming prejudice.” Borders v. State, 285 Ga. App. 337, 340-341 (2) (646 SE2d 319) (2007) (punctuation omitted). Thus, for example, we have found that a defendant cannot make a written request to charge and then claim on appeal that the requested charge was erroneous and requires reversal. Pincherli v. State, 295 Ga. App. 408, 414 (3) (a) (671 SE2d 891) (2008).

In this case, it does not appear that Bailey was the source of the erroneous charge. A discussion between defense counsel and the trial court shows that the trial court “indicated that [it was] going to give the law under [OCGA §] 40-6-392” during an off-the-record bench conference following defense counsel’s closing argument. Defense counsel did not then object, but it is not necessarily error for a trial court to give an instruction that touches on the foundational requirements for the admission of the chemical analysis of a person’s breath under OCGA § 40-6-392. See Goethe v. State, 294 Ga. App. 232, 233-234 (1) (668 SE2d 859) (2008) (finding that it was not error to charge the jury with an “accurate reflection of the law,” citing OCGA § 40-6-392 (a) (1) (A)). After the trial court gave the actual instruction, however, defense counsel made an appropriate objection. We cannot conclude that the trial court’s error in charging the jury was induced by defense counsel.

2. During deliberations, the jury asked the bailiff if their verdict had to be unanimous and he responded yes. See, e.g., Lindsey v. State, 277 Ga. App. 18, 20 (625 SE2d 431) (2005) (finding that “[wjhere the bailiff’s communication with the jury is, in effect, a supplemental charge, it is a communication which should have been delivered to the jury by the trial judge in open court”). After Bailey claimed that this was an improper communication, the trial court instructed the jury that “all charges of law and all instructions regarding the law come from me.” Notwithstanding the curative instruction, Bailey moved for a mistrial, which the trial court denied. Pretermitting whether the trial court erred in doing so, it is unlikely that this issue will reoccur on retrial, and we decline to address it here. See Benton v. State, 265 Ga. 648, 650 (6) (461 SE2d 202) (1995).

Decided July 26, 2013.

Jackie G. Patterson, for appellant.

Carmen D. Smith, Solicitor-General, R. Leon Benham, Assistant Solicitor-General, for appellee.

Judgment reversed.

Dillard and McMillian, JJ., concur.

       The jury found Bailey not guilty of driving under the influence of alcohol to the extent that it was less safe to drive. See OCGA § 40-6-391 (a) (1).

       The charge at issue in Muir provided:
      I charge you, ladies and gentleman, that a chemical analysis of a person’s blood, urine, breath or other bodily substance shall be considered valid if their analysis was performed according to the methods approved by the Division of Forensic Sciences of the Georgia Bureau of Investigation, and by individuals possessing a valid permit issued by the Division of Forensic Sciences for this purpose. And if the arresting officer at the time of the arrest advised the person arrested of her right to an additional chemical test or tests of her blood, urine, breath, or other bodily substance.
      (Emphasis omitted.) Id. at 50 (1).

       In contrast, OCGA § 40-6-392 (a) (1) (A) provides, in relevant part: “Chemical analysis of the person’s . . . breath ... to be considered valid under this Code section, shall have been performed according to methods approved by the Division of Forensic Sciences of the Georgia Bureau of Investigation.” (emphasis supplied). The statute places OCGA § 40-6-392 (a) (1) (A) within the context of OCGA § 40-6-392 (a) (“evidence of the amount of alcohol.. .in a person’s... breath ... as determined by a chemical analysis of the person’s . . . breath . . . shall be admissible”). The trial court’s charge begins by reading language generally corresponding to OCGA § 40-6-392 (a) (1) (A), without explanation other than “it relates to the inspection of the Intoxilyzer.”

       Bailey also contends that the trial court erred when, at the jury’s request, the trial court recharged the law of DOT per se, and it again charged the law of OCGA § 40-6-392, to which Bailey again objected. Inasmuch as the recharge did not cure the error in the first charge, we need not consider if the second charge compounded the error. Compare Land v. Ricks, 288 Ga. App. 497, 503 (3) (654 SE2d 643) (2007).

       The State also contends that in Muir, this Court “made a Constitutional rendition with regard to a Georgia law” and that “[sjince the Court of Appeals is not empowered by the Georgia Constitution to make such analysis, the holding of that case should be seen as a nullity by any reviewing courts of this state.” See Ga. Const, of 1983, Art. VI, Sec. VI, Par. II (1). But, Muir says nothing about the constitutionality of OCGA § 40-6-392 (a) (1) (A), only that it was error to give the charge at issue. Similarly, we make no pronouncements as to the constitutionality of a Georgia law here.

       The charge at issue in Goethe did not contain the language which formed the basis of Bailey’s objection here. Id. at 233 (1). Rather, the permissible instruction
      essentially informed the jury that the person administering the test has received some level of training, for which a permit is issued; and that possession of such a permit does not imply that the operator is somehow an expert on the science applied to the machine’s functioning, nor is the operator required to be such an expert to administer a breath test using this machine.
      Id. at 234 (1).


author: Branch, Judge.

text:
    A13A0068.
    JOHNSON v. ALLIED RECYCLING, INC.
    (746 SE2d 728)
   Branch, Judge.

Dana Johnson (“Dana”) brings this interlocutory appeal from the denial of her motion to dismiss the claims asserted against her by Allied Recycling, Inc. Dana contends that the trial court erred in denying her motion because Allied’s claims against her are barred by the bankruptcy filing of one of her co-defendants, Demon Demo, Inc. Specifically, Dana argues that because Allied’s complaint alleges the improper use of Demon Demo’s assets, including the fraudulent transfer of those assets to her and/or her conversion of those assets to her personal use, Allied is not the proper party to assert those claims. Rather, the claims belong to Demon Demo’s trustee in bankruptcy. We disagree, and therefore affirm the order of the trial court.

“Because this appeal involves a question of law, we review both the record and the decision of the court below de novo.” (Citation omitted.) Outlaw v. Rye, 312 Ga. App. 579, 580 (718 SE2d 905) (2011). And because this appeal involves a motion to dismiss, in analyzing the legal issue presented “we view all of [Allied’s] well-pleaded material allegations as true, and view all denials by [Dana] as false, noting that we are under no obligation to adopt [either] party’s legal conclusions based on these facts.” (Citation omitted.) Love v. Morehouse College, 287 Ga. App. 743-744 (652 SE2d 624) (2007).

Taking all of the allegations in the complaint as true, the record shows that in 2006 Allied Recycling sued Demon Demo in DeKalb County Superior Court, seeking to recover for certain supplies and services it had provided to Demon Demo. On August 15, 2007, the DeKalb County court entered a consent order under which Demon Demo agreed to pay Allied $81,869.16, payable in monthly installments. After Demon Demo defaulted on these payments, Allied obtained a judgment against Demon Demo on May 22, 2009, in the amount of $60,119.16.

In 2008, Allied filed suit against Demon Demo in Gwinnett County State Court, again seeking to recover payment for supplies and services it had provided to Demon Demo. On February 26, 2009, the Gwinnett County court entered a consent order under which Demon Demo agreed to pay Allied $33,000, payable in monthly installments. Demon Demo also defaulted on these payments, and on May 27, 2009, Allied obtained a judgment against Demon Demo in Gwinnett County in the amount of $31,750.

On April 7, 2009, shortly before Demon Demo defaulted on the payments due under the consent orders, the company’s principal, Donald Wayne Johnson, registered a new corporate entity, DDI Companies, LLC, with the Georgia Secretary of State. Approximately 17 months after DDI came into existence, Demon Demo was administratively dissolved by the Georgia Secretary of State, based on the company’s failure to pay and file its annual registration.

On August 9, 2011, Allied filed the current lawsuit in Hall County Superior Court against DDI, Donald Wayne Johnson, and an alleged co-conspirator identified only as Jane Doe. According to the complaint, DDI provides the exact same services as Demon Demo and uses the same telephone and fax numbers as Demon Demo. Additionally, the complaint asserts that any attempt to access the website for Demon Demo results in the user being automatically redirected to the website for DDI. The complaint also alleges additional facts showing that DDI simply stepped into the shoes of, and assumed the business of, Demon Demo, including the fact that DDI advertises itself as having been in business for over a decade; projects DDI advertises as having participated in or completed were, in fact, projects contracted for or performed by Demon Demo; and DDI’s website specifically references the relationship between that entity and Demon Demo. Allied’s original complaint asserted that Donald Wayne Johnson conspired to avoid Demon Demo’s liability to Allied by transferring the assets of Demon Demo to himself and/or DDI and by commingling the assets of Demon Demo with his personal assets.

Allied filed an amended complaint on November 8,2011, naming Demon Demo as an additional defendant and alleging that it had conspired with the other named defendants to transfer the company’s assets and avoid its liability to Allied. On February 7, 2012, Donald Wayne Johnson filed a voluntary petition under Chapter 7 of the Bankruptcy Code. Approximately two weeks later, Allied filed a notice of substitution, naming Donald Johnson’s wife, Dana, as a defendant in lieu of Jane Doe. Allied then filed a second amended complaint, alleging that Dana had conspired with her husband, DDI, and Demon Demo to avoid Demon Demo’s liability to Allied by having some of the corporate assets of Demon Demo transferred to her personally, and by otherwise unlawfully converting the corporate assets of Demon Demo and DDI to her personal use.

One month after Allied named Dana as a defendant, Demon Demo filed a Chapter 7 petition in bankruptcy. Dana filed a motion to dismiss Allied’s claims against her, arguing that Allied was not the real party in interest as to any claim alleging fraudulent transfer of Demon Demo’s property, as that claim belonged solely to Demon Demo’s bankruptcy trustee. The trial court denied that motion, but granted Dana a certificate of immediate review. Dana then filed an application for an interlocutory appeal, which we granted. This appeal followed. After the case was docketed in this Court, Demon Demo’s bankruptcy case was closed by order of the bankruptcy court.

The question before us is whether the claims against Dana may be brought by Allied, or whether those claims are the property of the bankruptcy estate, meaning that only the bankruptcy trustee may assert them. As noted above, the complaint asserts claims against Dana for conspiracy to defraud Allied, so as to prevent it from recovering on the judgments Allied obtained against Demon Demo. Allied seeks to recover for this fraud by requiring Dana to pay to Allied, in satisfaction of Allied’s judgments against Demon Demo, the value of any assets or monies received, taken, or converted from that company. It also seeks to hold Dana personally liable for the judgments based on her participation in the fraudulent scheme to transfer assets away from the company and/or under an “alter ego” theory of liability. In other words, the claims asserted against Dana by Allied fall into two categories: (i) claims seeking to void the transfer of Demon Demo’s assets to Dana (the fraudulent transfer claims); and (ii) claims seeking to hold Dana personally liable for her conversion and/or misuse of Demon Demo’s assets as well as her commingling of Demon Demo’s assets with her own (the personal liability claims). For the reasons explained below, we find that Allied, rather than the bankruptcy trustee, is the proper party to assert the fraudulent transfer claims. We also find that, given the facts alleged in the complaint, the trial court properly denied Dana’s motion to dismiss the personal liability claims.

The Fraudulent Transfer Claims

1. Under Sections 544 and 548 of the Bankruptcy Code, the trustee has the exclusive right to pursue any claim that a creditor might have for the fraudulent or improper transfer of the debtor’s property away from the debtor. See 11 USC § 544 (b) (1) (“the trustee may avoid any transfer of an interest of the debtor in property... that is voidable under applicable law by a creditor holding an unsecured claim”); 11 USC § 548 (a) (1) (A) (“[t]he trustee may avoid any transfer ... of an interest of the debtor in property . . . that was made ... on or within 2 years before the date of the filing of the petition, if the debtor voluntarily or involuntarily . . . made such transfer ... with actual intent to hinder, delay, or defraud any entity to which the debtor was or became, on or after the date that such transfer was made . . . , indebted”). See also In re Adam Furniture Industries, 191 BR 249, 253 (Bankr. S.D. Ga. 1996) (“[t]he Bankruptcy Code provides a singular grant of power to the trustee to institute actions avoiding fraudulent and preferential transfers”) (citations omitted). The trustee possesses the right to assert these “avoidance” claims for only a limited time, however. Section 546 of the Bankruptcy Code provides, in relevant part, that any cause of action for the voidable or fraudulent transfer of the debtor’s assets must be brought before “the time the [bankruptcy] case is closed or dismissed.” 11 USC § 546 (a) (2). Once this statute of limitation expires, “[a] creditor regains standing to pursue a state law fraudulent conveyance action, in its own name and for its own benefit.” (Citations omitted.) In re Integrated Agri, 313 BR 419, 427-428 (Bankr. C.D. Ill. 2004). See also In re Tessmer, 329 BR 776, 779 (Bankr. M.D. Ga. 2005) (a creditor regains the right to sue under state law for the fraudulent transfer of a debtor’s assets where the trustee “ ‘no longer has a viable cause of action’ because, for example, the statute of limitations has run”) (quoting In re Integrated Agri, supra).

Here, Demon Demo’s bankruptcy case began with the filing of its bankruptcy petition on April 3, 2012, and ended with the entry of the October 2, 2012 order closing that case. During that time, the bankruptcy trustee had the exclusive right to pursue an action seeking to recover fraudulently conveyed assets of the company, and Allied was stayed from pursuing such a claim on its own behalf. See, e.g., Unisys Corp. v. Dataware Products, 848 F2d 311, 313-314 (1st Cir. 1988); In re Vandevort, 2009 WL 7809927, *5-6 (9th Cir. BAP 2009). Demon Demo’s trustee, however, declined to pursue that claim during the pendency of the bankruptcy case. Accordingly, once the case was closed, Allied regained its right to pursue that claim. In re Tessmer, supra at 779; In re Integrated Agri, supra at 427-428.

In an attempt to avoid this result, Dana argues that the fraudulent conveyance claim remains with the bankruptcy estate because the trustee did not abandon that claim under section 554 of the Bankruptcy Code. This argument is unavailing.

Section 554 provides:

(a) After notice and a hearing, the trustee may abandon any property of the estate that is burdensome to the estate or that is of inconsequential value and benefit to the estate.
(b) On request of a party in interest and after notice and a hearing, the court may order the trustee to abandon any property of the estate that is burdensome to the estate or that is of inconsequential value and benefit to the estate.
(c) Unless the court orders otherwise, any property scheduled under section 521 (a) (1)[] of this title not otherwise administered at the time of the closing of a case is abandoned to the debtor and administered for purposes of section 350 of this title.
(d) Unless the court orders otherwise, property of the estate that is not abandoned under this section and that is not administered in the case remains property of the estate.

11 USC § 554. Here, Dana argues that because the fraudulent conveyance claim was not scheduled by Demon Demo as an asset, and because the property was not otherwise administered, it remains with the estate. We disagree.

This argument, made by Dana in the supplemental brief she filed after the bankruptcy estate was closed, ignores the law holding that a fraudulent conveyance claim remains with the bankruptcy trustee only so long as the trustee has a viable cause of action, at which point the creditor regains the right to bring that claim. In re Tessmer, supra at 779; In re Integrated Agri, supra at 427-428. Dana’s argument also ignores the fact that section 554 deals with an entirely different subject matter than section 548. As noted above, section 554 provides that property (i.e., assets) must be scheduled by the debtor, and any such assets that the debtor fails to schedule will not be deemed abandoned back to the debtor upon the closing of the estate. Under section 554, “[t]he word ‘scheduled’... has a specific meaning and refers only to assets listed in a debtor’s schedule of assets and liabilities.” (Citation and punctuation omitted.) In re Kottmeier, 240 BR 440, 443 (II) (M.D. Fla. 1999). Prior to the enactment of section 554 (c), any asset not administered by the trustee could be deemed abandoned back to the debtor, even if the debtor had failed to inform the trustee that the asset existed. Id. (“[p]rior to the enactment of section 554 (c) such ‘assumed abandonment’ [of an undisclosed asset back to the debtor] was not impossible”) (citations omitted). Thus, Congress amended section 554 in such a way that it now prevents debtors in bankruptcy from surreptitiously retaining assets, thereby avoiding having to forfeit those assets to their creditors. In re McCoy, 139 BR 430, 432 (Bankr. S.D. Ohio 1991). If an unscheduled asset is discovered after the estate is closed, therefore, the trustee may petition to reopen the case for the purposes of administering that asset. Id.

As the foregoing demonstrates, the concept of abandoning estate property back to the debtor “is inapplicable to” actions to recover fraudulently conveyed estate property. In re Integrated Agri, supra at 422, n. 2. Indeed, Dana’s argument that sections 548 and 554 must be read together would render the statute of limitation imposed against bankruptcy trustees under section 548 meaningless. Under Dana’s reasoning, a trustee could retain a fraudulent transfer action in perpetuity, and he could choose to assert it at any time by petitioning to reopen the estate. That simply is not the law. Instead, section 548 makes clear that fraudulent transfer actions are automatically available to the trustee for a certain period of time, after which they revert to the creditor, as opposed to the debtor. And section 554 does not provide any mechanism which allows a trustee to interfere with the operation of section 548. Accordingly, because Demon Demo’s bankruptcy has closed, the right to assert the fraudulent transfer claims at issue has reverted to Allied, and the trial court properly denied Dana’s motion to dismiss.

The Personal Liability Claims

2. Under section 541 of the Bankruptcy Code, the bankruptcy estate includes “all legal or equitable interests of the debtor in property as of the commencement of the case.” 11 USC § 541 (a) (1). And such property includes any legal cause of action the debtor might have. In re Icarus Holdings, 290 BR 171, 175 (Bankr. M.D. Ga. 2002). The Bankruptcy Code is structured so as to preserve property of the bankruptcy estate and ensure that similarly situated creditors receive equal distributions. S.I. Acquisition, Inc. v. Eastway Delivery Svc., 817 F2d 1142, 1152 (III) (5th Cir. 1987). Thus, if a cause of action belongs to the debtor, only the trustee may pursue it. St. Paul Fire & Marine Ins. Co. v. PepsiCo, 884 F2d 688, 701 (2) (c) (2d Cir. 1989). On the other hand, if a cause of action belongs to a creditor personally, the creditor is the proper party to pursue it; the trustee can only pursue claims that are “property of the estate.” In re Ozark Restaurant Equip. Co., 816 F2d 1222, 1225 (II) (A) (8th Cir. 1987). A claim is considered personal to the creditor where it is specific to that creditor, as opposed to being a general claim, “common to all creditors.” In re Icarus Holding, 391 F3d 1315, 1321 (II) (11th Cir. 2004). See also Baillie Lumber Co. v. Thompson, 279 Ga. 288, 289 (612 SE2d 296) (2005).

In this case, the allegations of the complaint, together with the documents from the Bankruptcy Court, indicate that the tort claims asserted by Allied against Dana are personal to Allied; they are not general to all creditors. Allied is alleging that Dana acted in concert with her co-defendants to assist Demon Demo in avoiding its contractual liability (which had been reduced to money judgments) to Allied. The record shows that shortly after Demon Demo entered into two separate consent judgments with Allied, its principal formed DDI; following the formation of DDI, Demon Demo began winding down its operations and transferred its assets to Dana, Donald Johnson, and/or DDI; when Allied sued Donald Johnson and DDI, Donald Johnson responded by filing bankruptcy, in an apparent attempt to avoid personal liability; when Allied then named Demon Demo and Dana as defendants, Donald (and perhaps Dana) had Demon Demo file for bankruptcy (approximately 19 months after that company had been administratively dissolved); and shortly after Demon Demo filed bankruptcy, Dana filed her motion to dismiss, asserting that only Demon Demo’s trustee in bankruptcy could recover corporate assets fraudulently transferred to her. These facts would support a finding that the defendants acted for the specific purpose of avoiding Demon Demo’s liability to Allied, rather than to avoid Demon Demo’s liability to all of its creditors, in general.

Furthermore, there is no evidence anywhere in the record, including in the documents from the Bankruptcy Court, showing that the Johnsons, DDI, or Demon Demo was being actively pursued for payment by any other creditor of Demon Demo. Under these particular circumstances, we find that the claims asserted by Allied against Dana, seeking to hold Dana liable for Demon Demo’s debt to Allied, are personal to Allied, rather than general to all creditors. Accordingly, given the current evidence of record, we find that these claims are not the property of the bankruptcy estate, and Allied is the proper party to bring them. The trial court, therefore, did not err in denying Dana’s motion to dismiss.

Decided July 16, 2013

Reconsideration denied July 29, 2013.

Myers & Stroberg, John W. Wingate III, for appellant.

John L. Strauss, for appellee.

Judgment affirmed.

Phipps, C. J., concurs. Ellington, P. J., concurs in judgment only.

       To avoid any confusion with her husband, Donald Wayne Johnson, who is also a named defendant below, we refer to Mrs. Johnson as “Dana.”

       DDI advertises itself as providing “Exterior and Interior Demolition, Abatements, Concrete Cutting and Removal, Building and Site Clearing.” Demon Demo previously advertised itself as providing identical services.

       Allied filed relevant documents from the bankruptcy court in the court below, and we granted Allied’s motion to supplement the appellate record in this case with those documents. This Court may take judicial notice “of public records from other proceedings.” (Punctuation andfootnote omitted.) Mosera v. Davis, 306 Ga. App. 226, 230 (1) (701 SE2d 864) (2010). See also Rothenberg v. Security Mgmt. Co., 667 F2d 958, 961, n. 8 (llthCir. 1982) (an appellate court may take “judicial notice of subsequent developments in cases that are a matter of public record and are relevant to the appeal”) (citations omitted).

       To establish an alter ego cause of action in Georgia, or an action to “pierce the corporate veil,” it must be shown that the shareholders of a corporation “disregarded the corporate entity and 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.” (Citations and punctuation omitted.) Baillie Lumber Co. v. Thompson, 279 Ga. 288, 289-290 (1) (612 SE2d 296) (2005). This concept “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, perpetuate fraud or to evade contractual or tort responsibility.” (Citation and punctuation omitted.) Id. at 290 (1). Here, at the pleadings stage of the case, it is unclear whether or to what extent Dana has or had an ownership interest or managerial or other role in either Demon Demo or DDL

       Although not pled specifically, it appears that Allied is asserting these claims under Georgia’s Uniform Fraudulent Transfers Act, OCGA § 18-2-70 et seq.

       Although the personal liability claims appear to involve a taking or misuse of Demon Demo’s assets for Dana’s personal use, they do not necessarily involve an actual transfer of those assets to Dana. See Maryland Cas. Ins. Co. v. Welchel, 257 Ga. 259, 261 (356 SE2d 877) (1987) (“Conversion consists of an unauthorized assumption and exercise of the right of ownership over personal property belonging to another, in hostility to his rights; an act of dominion over the personal property of another inconsistent with his rights; or an unauthorized appropriation----Consequently, in order to be chargeable with conversion, technically it is not necessary that the defendant assert any right of ownership over the property”) (citations and punctuation omitted); Levenson v. Word, 294 Ga. App. 104, 106 (1) (668 SE2d 763) (2008). See also Southwest Health & Wellness v. Work, 282 Ga. App. 619, 625 (2) (b) (639 SE2d 570) (2006) (dealing with claims for misuse and waste of corporate assets that were not premised on the transfer (fraudulent or otherwise) of those assets).

       That statute requires the debtor to file “a schedule of assets and liabilities.” 11 USC § 521 (a) (1) (B) (i).

       Notably, Dana acknowledged this law in her opening brief, filed while the bankruptcy case was still pending.

       In Baillie Lumber Co., the Supreme Court of Georgia answered a certified question from the United States Court of Appeals for the Eleventh Circuit: whether Georgia law would allow a corporation to bring an alter ego action against itself? 279 Ga. at 289. The Supreme Court answered that question in the affirmative, and in doing so acknowledged the Eleventh Circuit’s holding that under federal bankruptcy law, such a cause of action could belong to the trustee only where the claim is “ ‘a general claim that is common to all creditors’...” Id., quoting In re Icarus Holding, supra at 1321 (II).

       We note, however, that because we are reviewing this case at the pleadings stage, Dana may still come forward with evidence that these claims are not personal to Allied. Should additional evidence be developed, the question of whether that evidence refutes the conclusion that the claims are personal to Allied, rather than common to all creditors, would be for the trial court to determine.


author: Phipps, Chief Judge.

text:
    A13A0092.
    BOURASSA et al. v. STATE OF GEORGIA.
    (746 SE2d 815)
   Phipps, Chief Judge.

In this in rem civil forfeiture action, Jason Bourassa, Jeffrey Bourassa, and CheriRau challenge judgments of forfeiture. Because no timely hearing on the underlying forfeiture complaint was held, we reverse.

On November 12, 2008, the state filed, pursuant to OCGA § 16-13-49, a complaint of forfeiture. The complaint alleged that certain real and personal property had been seized as having been used, or intended for use, to facilitate an illegal drug trade operation or as having been found in close proximity to unlawful drugs. Jason Bourassa, Jeffrey Bourassa, and Rau answered, each claiming interests in various items seized and denying that the property was subject to forfeiture. More than three years later, at the forfeiture hearing, the court granted the state’s motion to strike the answers of Jason Bourassa and Jeffrey Bourassa and thereupon entered judgments of forfeiture as to them. After a hearing on the merits, the court granted the state’s forfeiture complaint as to Rau. This appeal arises from these three individuals’ joint notice of appeal.

1. The appellants contend that the trial court should have dismissed the forfeiture action for lack of a timely forfeiture hearing. We agree.

OCGA § 16-13-49 (o) (5) pertinently provides: “If an answer is filed, a hearing must be held within 60 days after service of the complaint unless continued for good cause.” In State v. Henderson, the Supreme Court of Georgia construed “must” as used therein as “mandatory, rather than directory,” reasoning that such a requirement was “consistent with the apparent purpose of that paragraph, which is to ensure a speedy resolution of contested forfeiture cases in the courts, as well as a speedy resolution of property rights.”

Here, from December 2008 through September 10, 2010, the court entered a series of consent orders continuing the forfeiture hearing. Then in October 2010, the state filed a motion to stay the proceedings. In its motion, the state claimed that Rau had filed in federal court a civil suit against the prosecutor and case agent involved in the forfeiture action in their individual capacities, alleging that they had acted with malice and prejudice against her and in violation of her civil rights; and that both defendants in that civil suit had filed a dismissal motion. The state urged the court to “find the filing of a Federal action is good cause to stay this proceeding until the Federal Court issues rulings” on the dismissal motions.

Jason Bourassa and Rau filed an objection to any further continuances, raising the issue whether the forfeiture statute allowed for “the postponement of a hearing ad infinitum.” But on November 4, 2010, the trial court granted the state’s motion to stay. In its order, the court found that “the filing of a Federal lawsuit against the prosecutor and case agent, in their individual capacities, has created good cause to stay this proceeding pending the outcome of the Motions to Dismiss in that case”; and thus ordered that the forfeiture case be “stayed until orders are issued in both Motions to Dismiss filed in the Federal Court” and that the forfeiture “case be calendared within sixty days of the issuance of the second of those two orders.” Then, in February 2012, Jeffrey Bourassa filed a motion to dismiss the complaint for failure to timely hold a forfeiture hearing, alleging that the federal lawsuit did not constitute “good cause to indefinitely stay the proceeding.”

Meanwhile, the court scheduled the forfeiture hearing for a date in March 2012, then reset it for April 30, 2012 — on which date the forfeiture hearing ultimately commenced. And on that morning, the state filed a motion to strike the answers of Jason Bourassa and Jeffrey Bourassa for their alleged ongoing failures to respond to discovery and for the entry of judgments of forfeiture. Notwithstanding, when the parties convened for the hearing, the claimants maintained that the case should be dismissed for lack of a timely forfeiture hearing. With respect to Jason Bourassa and Jeffrey Bourassa, however, the state successfully pursued its motion to strike their answers, thereupon obtaining judgments of forfeiture as to them. The court denied Rau’s motion to dismiss for lack of a timely forfeiture hearing, and after a hearing on the merits, granted the state’s complaint as to her.

Given the foregoing, we agree with Jason Bourassa, Jeffrey Bourassa, and Rau that the judgments of forfeiture must be reversed. “The 60-day period is a statutorily prescribed time limit within which the State must either conduct a hearing or seek a [good-cause] continuance.” The state argues that the trial court was authorized to conclude that the pendency of the civil federal case instituted by Rau was good cause for a continuance. Even if so, this court has repeatedly held: “[T]he outermost limits of a continuance would be another 60-day period before either the matter is heard or another continuance is granted.” In this case, after the trial court granted the state’s motion to stay, approximately one year passed before either a hearing or another continuance.

Next, citing OCGA § 16-13-49 (w), the state argues that the trial court was authorized to stay the forfeiture case “pending the resolution of a related legal matter” filed by Rau in federal court. That Code provision is unavailing, given its own circumscribing language: “For good cause shown, the court may stay civil forfeiture proceedings during the criminal trial resulting from a related indictment or information alleging a violation of this article.” Had the General Assembly intended for that Code provision to encompass a civil case as the state argues here, it could have so provided; but the language of the provision is plainly not so broad, and we have no authority to interpret it as the state urges. “Forfeiture is a quasi-criminal proceeding that permanently extinguishes a property owner’s rights to certain property, and, accordingly, the forfeiture statute must be strictly construed against the State.”

Decided July 16, 2013

Reconsideration denied July 29, 2013

Elizabeth A. Brandenburg, Marcia G. Shein, for appellants.

Patrick H. Head, District Attorney, Anna G. Cross, D. Victor Reynolds, Andrew J. Saliba, Assistant District Attorneys, for appellee.

Generally, the result of a failure to conduct a hearing within 60 days, without obtaining a good-cause continuance, is dismissal of the state’s complaint. That result is not avoided here, where the approximately one-year stay entitled the claimants to a dismissal of the complaint, yet the state thereafter pursued a motion to strike claimants’ answers. Under the circumstances presented here, the judgments of forfeiture entered as to Jason Bourassa, Jeffrey Bourassa and Rau must be reversed. “Such a lengthy delay in conducting the hearing renders meaningless the very purpose of the statute — the speedy resolution of contested forfeiture actions.”

2. Our holding in Division 1 renders moot the appellants’ remaining contentions.

Judgment reversed.

Ellington, P. J., concurs. Branch, J., concurs in judgment only.

       See OCGA § 5-6-44 (a) (allowing for joint appeals).

       (Emphasis supplied.)

       263 Ga. 508, 510-511 (436 SE2d 209) (1993).

       Id. at 510-511 (citations omitted).

       Jason Bourassa and Rau point out that they did not consent to the September 10, 2010 order to continue the case; the consent order entered on July 14, 2010 was their last. Those circumstances do not change the ultimate disposition of this appeal, however.

       It appears that the trial court scheduled a hearing on the motion to dismiss for a date in December 2011, but the hearing was thereafter removed from the calendar.

       See OCGA § 9-11-37 (setting forth sanctions available to trial court for failure to make discovery).

        Blanks v. State of Ga., 240 Ga. App. 175, 178 (1) (522 SE2d 770) (1999).

        McDowell v. State of Ga., 290 Ga. App. 538, 540 (2) (660 SE2d 24) (2008) (citations and punctuation omitted); Blanks, supra.

       We note that, for Jason Bourassa and Rau, the pertinent 60-day period began even before entry of the stay. See further footnote 5, supra, and its accompanying text.

       (Emphasis supplied.)

       See Hollowell v. Jove, 247 Ga. 678, 681 (279 SE2d 430) (1981) (holding that where the statutory language is “plain and susceptible of but one natural and reasonable construction, the court has no authority to place a different construction upon it, but must construe it according to its terms”).

        State of Ga. v. Williams, 278 Ga. 447, 449 (603 SE2d 278) (2004); see Gen. Motors Acceptance Corp. v. State of Ga., 279 Ga. 328, 331 (613 SE2d 641) (2005) (“[B]ecause forfeiture of property is disfavored, the statutory scheme must be strictly construed and limited.”) (citation and punctuation omitted).

        See Henderson, supra; Williams v. State of Ga., 302 Ga. App. 617, 618-619 (691 SE2d 385) (2010); McDowell, supra; Rice v. State of Ga., 246 Ga. App. 414, 416-417 (2) (541 SE2d 58) (2000); Blanks, supra.

        Rice, supra at 415-416 (2) (where dismissal was warranted because more than 60 days had passed without either a hearing or a continuance, the trial court erred by granting state’s subsequent motion to strike claimants’ answers for failure to comply with discovery and thereupon entering judgment of forfeiture for the state with respect to real and personal property).

        Henderson, supra at 511; McDowell, supra; Rice, supra at 416-417 (2); Blanks, supra.

        Rice, supra at 416 (2) (citation and punctuation omitted).


author: BARNES, Presiding Judge. RAY, Judge,

text:
    A13A0200.
    A13A0201.
    NASH v. THE STATE. DAVIS v. THE STATE.
    (746 SE2d 918)
   BARNES, Presiding Judge.

After the traffic stop of the vehicle in which they were passengers, Kashif Nash and Antoine Davis were indicted on charges of possession of marijuana (Nash and Davis), and possession of cocaine with intent to distribute and trafficking in methamphetamine (Davis). Nash and Davis filed interlocutory appeals from the trial court’s denial of their motions to suppress evidence obtained as a result of the traffic stop. The appeals — Case No. A13A0200 and Case No. A13A0201 — have been consolidated for purposes of our review. For the reasons discussed below, we reverse.

At a hearing on a motion to suppress, “the trial judge sits as the trier of fact.” State v. Hamby, 317 Ga. App. 480, 481 (731 SE2d 374) (2012). When this Court reviews the grant or denial of a motion to suppress, we construe the evidence “most favorably to uphold the findings and judgment of the trial court, and that court’s findings as to disputed facts and credibility must be adopted unless clearly erroneous.” Id. Upon our review, however, we owe “no deference to the trial court’s conclusions of law” and are instead “free to apply anew the legal principles to the facts.” (Punctuation omitted.) Martin v. State, 316 Ga. App. 220, 220 (729 SE2d 437) (2012).

So viewed, the evidence adduced at the hearing on the motion to suppress shows that an officer with the Gwinnett County Police Department initiated the stop of a vehicle after observing what appeared to be a window tint violation. As the officer approached the vehicle, which had a South Carolina license plate, he noticed an air freshener hanging from a rear driver side handle, and noticed an overwhelming odor of air freshener when the passenger let down the window. The officer also observed that there were three additional “air fresheners that were shaped like trees” and clip-on “air freshener [s] in every single one of the vents and the dash.”

In addition to the driver, there were two other individuals in the vehicle — Nash, who was the front seat passenger and Davis, who was seated in the back. The officer took the driver of the vehicle back to his patrol car while he verified his driver’s license and the vehicle’s registration. Nash and Davis remained in the vehicle, which was registered to Nash’s mother. The driver told the officer that Nash was the owner of the car, that Nash and Davis were his cousins, and that he was visiting family in Atlanta, although the driver subsequently told the officer that he was visiting family in Buford but that he also had family in Atlanta. The officer testified that the driver “wasn’t able to give [him] an exact location in the Atlanta area.”

The officer then tested the window tint and, after determining that tint level did not comply with the “thirty two percent that the law states in Georgia,” informed Nash that he needed to remove or redo the tint to make sure that it was compliant with South Carolina law. The officer also asked Nash where the men were coming from and if they were related, and Nash told him that the driver was his cousin but that Davis was a friend. The officer testified that Davis “chimed in” that the men had “visit[ed] his people down in Atlanta.”

The officer testified that after he went to the window to measure the window tint, he radioed for officer assistance because he had become suspicious of criminal activity because of the air fresheners and conflicting stories. The second officer arrived less than ten minutes after the radioed request, at about twenty minutes into the stop. The officer wrote the driver a warning citation, which the driver signed. He then counseled the driver about the citation, returned the driver’s license and gave him a copy of the citation, but not the registration. The officer then asked the driver if “there was anything illegal inside the vehicle, specifically marijuana, cocaine, methamphetamine, or ecstasy.” The driver responded that there was not. The officer testified that he asked about the contraband because air fresheners are “commonly used as masking agents,” and because of the conflicting stories about who and where they were visiting, and their relationship.

The officer went back to the vehicle to give the registration to Nash and also asked him if “marijuana, cocaine, methamphetamine, [or] ecstasy’ were present in the vehicle. The officer testified that he knew that the driver could not consent to a search of the car, so he had gone back to the car to get consent from Nash to search. Nash refused. The officer testified that he had to ask him for consent to search twice because when Nash first refused consent he mumbled and “would not make eye contact with [the officer] and he mumbled his response.” The officer also noted that Nash appeared nervous, and that he was surprised that the nervousness had not subsided after Nash had been told “he was getting a [warning].”

The officer then radioed for a K-9 unit to be dispatched to the location. The K-9 officer testified that his unit was about 25 to 27 miles away when they received the dispatch and that it had taken “twenty minutes, give or take” to respond. After a free air search around the vehicle, the K-9 unit dog alerted on the trunk of the vehicle. Upon searching the trunk, the officers recovered a gallon size freezer bag containing marijuana weighing one pound. At the jail, police also recovered two small bags of marijuana and 100 ecstasy pills from Davis’ person. Police also retrieved cocaine from under the back seat of the patrol car that transported Davis.

Davis testified at the hearing on the motions that he sat in the first officer’s patrol car for approximately 45 minutes after the window tint investigation concluded, waiting for the K-9 unit to arrive. He also testified that the two officers searched under the seat and in the glove compartment before the K-9 unit arrived.

After the driver, Nash and Davis were indicted on charges related to the discovery of the drugs, the men moved to suppress evidence of the drugs, essentially arguing that there was no reasonable articulable suspicion of criminal activity to justify their continued detention once the officer wrote the warning for the window tint. After a hearing, the trial court denied the motions, but issued a certificate of immediate review.

In denying the motions, the court found that the officer “had sufficient information to justify a continued detention for the purpose of investigating his suspicion that there were illegal drugs in the vehicle.” The trial court further found that while the presence of air fresheners and conflicting stories about the men’s travel destination and relationships “may not each be sufficient standing alone to justify a continued detention ... based on the totality of the particular facts in this case, [the officer] had sufficient articulable suspicion to justify a continued detention for the few extra minutes it took the K-9 officer to arrive.” The trial court found that the K-9 officer arrived on the scene within “30-45 minutes of the initial stop of the vehicle.”

On appeal, Nash and Davis essentially contend that the trial court erred in denying their motions to suppress because of the lengthy detention after the traffic stop was complete, and because the extended detention was not supported by reasonable articulable suspicion.

We first consider the reasonableness of the length of the detention. Upon this Court’s review, “it is appropriate to examine whether the police diligently pursued a means of investigation that was likely to confirm or dispel their suspicions quickly, during which time it was necessary to detain the defendant.” (Punctuation and footnote omitted.) Pollack v. State, 294 Ga. App. 400, 404 (3) (b) (670 SE2d 165) (2008) (physical precedent).

A reasonable time to conduct a traffic stop includes the time necessary to verify the driver’s license, insurance, registration, and to complete any paperwork connected with the citation or a written warning. A reasonable time also includes the time necessary to run a computer check to determine whether there are any outstanding arrest warrants for the driver or the passengers.

(Citation and punctuation omitted.) Sommese v. State, 299 Ga. App. 664, 669 (1) (b) (683 SE2d 642) (2009).

Here, while the officer was completing his investigation of the window tint, he questioned the driver about his destination and relationship with Nash and Davis, and also questioned Nash regarding the same matters when he returned to the vehicle to get the reading on the window tint. This questioning did not unreasonably expand the scope or duration of the stop. See State v. Davis, 283 Ga. App. 200, 203 (2) (641 SE2d 205) (2007) (while carrying out these tasks, an officer may ask the driver questions wholly unrelated to the traffic stop or otherwise engage in “small talk” with the driver, “so long as the questioning does not prolong the stop beyond the time reasonably required to complete the purpose of the traffic stop”).

Moreover,

[a]n officer may order a free-air search of the area surrounding the vehicle by a trained canine without implicating the Fourth Amendment, if the same is performed without unreasonably extending the stop. As with any Fourth Amendment analysis, the touchstone of our inquiry is the reasonableness of the officer’s conduct, which is measured in objective terms by examining the totality of the circumstances.

Young v. State, 310 Ga.App. 270, 273 (712 SE2d 652) (2011). We have approved brief detentions of 15 minutes or less to await the arrival of a drug dog when an officer had reasonable suspicion of other criminal activity. See Richbow v. State, 293 Ga.App. 556 (667 SE2d 418) (2008) (no constitutional violation occurred when police delayed motorist for “a minute or two” pending drug dog’s arrival in light of multiple air fresheners and cell phones in car and driver’s nervousness bordering on panic during traffic stop); Jones v. State, 259 Ga. App. 849 (578 SE2d 562) (2003) (delay of a few minutes for arrival of K-9 unit was justified because officer saw driver hide something under seat during traffic stop).

Here, the detention was not brief, nor justifiable in its length to confirm or dispel any suspicions of criminal activity quickly. See Pollack v. State, 294 Ga. App. at 404 (3) (b). Although there is no bright-line rule for determining when the length of a detention becomes unreasonable, see Grandberry v. State, 289 Ga. App. 534, 538 (2) (658 SE2d 161) (2008), here, the officer had concluded the investigation into the window tint and issued the warning citation before he inquired into any other criminal activity and asked for consent to search. He then detained the men an additional 20 minutes to wait for the K-9 unit. See State v. Thompson, 256 Ga. App. 188, 189-190 (569 SE2d 254) (2002) (excluding evidence obtained as a result of officer’s continued questioning of defendant after citation had been written and license returned to defendant, resulting in a 20-minute delay while waiting for drug dog after traffic stop had concluded).

The officer testified that he had suspected criminal activity much earlier in the stop because of the air fresheners and conflicting stories — which then precipitated his call for officer backup — yet he did not at that time inquire into whether the men had illegal substances in the car, nor did he ask for consent to search, or request the K-9 unit. Instead, the officer continued with the investigation of the window tint violation, and even completed the warning citation and gave the driver back his driver’s license. At that point, even though suspicious of criminal activity much earlier in the interaction, he then questioned the men about illegal contraband, asked for consent to search, and requested a K-9 unit that was almost 30 miles away. See, e.g., Weems v. State, 318 Ga. App. 749, 752 (1) (734 SE2d 749) (2012) (no apparent reason existed to justify the officer’s decision to continue to detain defendant, particularly since he had already written defendant a warning citation before he inquired into other criminal activity); compare Sommese v. State, 299 Ga. App. at 669-670 (1) (b) (rejecting appellant’s claim that traffic stop was unreasonably prolonged by officer waiting for backup when officer was otherwise engaged in other tasks and had not yet completed citation paperwork when backup arrived); Bowens v. State, 276 Ga. App. 520, 521-522, n. 3 (623 SE2d 677) (2005) (upholding as reasonable free-air search of vehicle conducted while officer awaited results of license check); Byers v. State, 272 Ga. App. 664, 665-666 (613 SE2d 193) (2005) (concluding that free-air search conducted while officer was writing traffic citation was lawful and did not expand the scope of the stop).

Thus, under these circumstances, the actions of the officer unreasonably expanded the scope or duration of the traffic stop, and accordingly, because the officer illegally detained Nash and Davis, the order of the trial court is reversed and the case is remanded with direction to grant appellants’ motions to suppress.

Judgment reversed.

Doyle, P. J., Miller and McMillian, JJ., concur. Andrews, P. J., Dillard and Ray, JJ., dissent.

RAY, Judge,

dissenting.

This case implicates the delicate balance that must be found between law enforcement’s ability to perform its duties and every citizen’s Fourth Amendment protections against unreasonable search and seizure. The question before the Court is whether the officer had reasonable suspicion of criminal conduct and could “prolong a stop” for an additional 20 minutes while waiting for a K-9 free-air search after the stop’s original purpose has been completed. The majority believes the officer did not have reasonable articulable suspicion to detain the motorists. I disagree.

Under the standard set forth in Terry v. Ohio, 392 U. S. 1, 21 (III) (88 SCt 1868, 20 LE2d 889) (1968), a police officer may briefly detain persons “when the officer has a particularized and objective basis for suspecting the persons are involved in criminal activity.” (Citation and punctuation omitted.) Minor v. State, 298 Ga. App. 391, 395 (1) (b) (690 SE2d 459) (2009). “The officer’s action must be justified by specific and articulable facts which . . . reasonably warrant that intrusion, and the officer must have some basis from which the court can determine that the detention was neither arbitrary nor harassing.” (Citation and punctuation omitted.) Id. “Detention beyond that authorized by Terry is an arrest, and, to be constitutional, such an arrest must be supported by probable cause.” (Citation and punctuation omitted.) Id.

An officer must have reasonable suspicion of criminal conduct before conducting additional questioning and searching a vehicle once a normal traffic stop has ended and the officer has told the motorists they are free to go. To meet the reasonable suspicion standard, an officer’s investigation during a traffic stop must be justified by specific, articulable facts sufficient to give rise to a reasonable suspicion of criminal conduct. Although this suspicion need not meet the standard of probable cause, it must be more than mere caprice or a hunch or an inclination.

(Footnote omitted.) Pollack v. State, 294 Ga. App. 400, 403 (3) (670 SE2d 165) (2008). This Court has further defined “specific articulable facts” instructing “that the totality of the circumstances — the whole picture •— must be taken into account.” (Footnote omitted.) State v. Ledford, 247 Ga. App. 412, 415 (1) (b) (543 SE2d 107) (2000). This “whole picture” includes “consideration of the modes or patterns of operation of certain kinds of lawbreakers.” (Footnote omitted.) Id.

When the officer decided to call for the K-9 unit and prolong the stop, he knew that: (1) the Dodge Charger’s windows were tinted past the legal level (and that often tinted windows are used to disguise criminal activity); (2) the car had an “overwhelming odor” of air freshener and was equipped with an abnormally large quantity of air fresheners (and that air fresheners are often used to disguise the smell of narcotics); (3) the three motorists gave inconsistent accounts of their itinerary, could not name the family members that they had allegedly just visited, or where within Atlanta they had visited; (4) the driver became more nervous, rather than less nervous, when he received a warning rather than a violation, which coincided with the officer asking him if any drugs were inside the vehicle; and (5) the car owner would not make eye contact with the officer, first mumbling his initial response and then stating “I don’t want you to search my shit” when the officer asked to search the vehicle. I agree with the trial court that

[w]hile conflicting accounts of their relationship and their travel destinations, or the overwhelming air fresheners may not each be sufficient standing alone to justify a continued detention . .. based on the totality of the particular facts in this case, [the officer] had sufficient articulable suspicion to justify a continued detention for the few extra minutes it took the K-9 officer to arrive.

We have previously found that nervousness, a strong scent of several air fresheners, erratic driving, traveling a known drug route, and passengers’ conflicting statements as to their itinerary proved sufficient to detain the motorists for 30 minutes for a canine unit to arrive. Jones v. State, 253 Ga. App. 870, 871-873 (560 SE2d 749) (2002). Further, we have held that increasing nervousness, multiple cell phones within the vehicle, and a strong odor of air freshener, plus two visible air fresheners proved sufficient. Richbow v. State, 293 Ga. App. 556, 556-559 (667 SE2d 418) (2008). Compare Migliore v. State of Ga., 240 Ga. App. 783, 786 (525 SE2d 166) (1999) (nervousness, conflicting explanations for the purpose of their trip, and other meaningless inconsistencies provided insufficient basis to extend a traffic stop).

We weigh heavily the “specific reasonable inferences which [an officer] is entitled to draw from the facts in light of his experience.” (Citation omitted.) Terry, supra at 27 (III). The motorists’ incongruous stories, forgetting family members’ names, overly tinted windows, a strong odor of air freshener coming from an unusual number of devices, and increased nervousness all amount, in my opinion, to evidence sufficient to justify further detaining the motorists.

Further, “[i]n considering whether the length of a detention was reasonable, it is appropriate to examine whether the police diligently pursued a means of investigation that was likely to confirm or dispel their suspicions quickly, during which time it was necessary to detain the defendant.” (Punctuation and footnote omitted.) Pollack, supra at 404 (3) (b). The officer in this case attempted to expediently confirm or dispel his suspicions when he first asked to search the vehicle for drugs. When the car owner declined his request, the officer did not yet have probable cause to search the car; therefore, a free-air search became the next prong of investigation, and he promptly called for a K-9 unit. “The dog’s reaction would either confirm or fail to confirm the officer’s belief that [the motorist] possessed drugs in the car trunk. In the event of the latter, [the motorist] would be free to leave. In the event of the former, probable cause for the search would exist. . . .” Schmidt v. State, 188 Ga. App. 85, 88-89 (372 SE2d 440) (1988) (Beasley, J., concurring specially).

Decided July 16, 2013

Reconsiderations denied July 29, 2013

Michael A. Kay, for appellant (case no. A13A0200).

This Court in Schmidt found that an additional thirty-minute, one hour total wait for a K-9 unit to arrive after the driver already received a warning and the return of his driver’s license constituted an arrest. Schmidt, supra at 87. However, in Pollack, the officers detained a motorist for a total of 43 minutes while the police waited for the K-9 unit to arrive, an amount of time this Court found reasonable given that the officers smelled marijuana in the vehicle and the driver admitted he was on parole. Pollack, supra at 401. In the present case, the trial court found that the K-9 unit arrived on the scene between 30 and 45 minutes after the initial stop, indicating an equal or lesser detention than the motorist in Pollack.

Because the “totality of the circumstances” test evaluates the strength of the evidence in conjunction with the length of continued detention in determining the detention’s appropriateness, the case sub judice is distinguishable from State v. Thompson, 256 Ga. App. 188 (569 SE2d 254) (2002), which the majority cites for support. In Thompson, the only indicia of suspicion included a “real strong” odor of detergent or air freshener, although no detergents or fresheners were observed in the car, and the driver’s unusual nervousness; we found this insufficient to warrant a 20-minute wait for a K-9 unit. Id. at 188-189. The officer in the present case experienced much more convincing warning signs than the officer in Thompson, resulting in a methodical and reasonable investigation by the police officer and a brief detention.

As I find that the trial court correctly concluded that this 20-minute additional delay was justified, given the officer’s reasonable suspicion, I hereby respectfully dissent.

I am authorized to state that Presiding Judge Andrews and Judge Dillard join in this dissent.

Dawn M. Belisle, for appellant (case no. A13A0201).

Daniel J. Porter, District Attorney, Wesley C. Ross, Assistant District Attorney, for appellee.

       James Nash, the driver, was also indicted for possession of marijuana and possession of cocaine with the intent to distribute.

       The amount of time which elapsed after the warning was issued until the dog arrived was only “twenty minutes, give or take.”


text:
    A13A0227.
    PAUL et al. v. SMITH, GAMBRELL & RUSSELL.
    (746 SE2d 739)
   Miller, Judge.

This is the third appeal arising out of a legal malpractice action that Appellants G. Douglas Paul, Sharon V. Paul, Catspaw Productions, Inc. (“CPI”), Catspaw, Inc., Atlanta Catco, Inc., and Recording Studio, Inc. (“RSI”) commenced against Smith, Gambrell & Russell (“Smith Gambrell”) in 2002. See Paul v. Smith, Gambrell & Russell, 267 Ga. App. 107 (599 SE2d 206) (2004) (“Paul I”); Paul v. Smith, Gambrell & Russell, 283 Ga. App. 584 (642 SE2d 217) (2007) (“Paul II”). In Paul II, the parties filed cross-appeals from the trial court’s April 11, 2005 order granting in part and denying in part Smith Gambrell’s second motion for summary judgment. 283 Ga. App. at 584-585. For the next five years after the April 11, 2005 order, no written order was enteredin the trial court. On July 12,2011, the trial court entered an order memorializing the automatic dismissal of the case pursuant to OCGA §§ 9-2-60 (b) and 9-11-41 (e), concluding that more than five years had elapsed since the last order was entered in the case. On appeal, Appellants argue, among other things, that the five-year period was tolled during the pendency of the cross-appeals in Paul II. Finding this and Appellants’ other arguments unavailing, we affirm.

This appeal presents a question of law subject to de novo review. See Jinks v. Eastman Enterprises, 317 Ga. App. 489, 489-490 (731 SE2d 378) (2012).

As recounted in greater detail in Paul II, Appellants’ action arises out of Smith Gambrell’s representation of Appellants prior to and during a lawsuit Ralph Destito, a shareholder of RSI and a former employee of CPI, commenced against Appellants for fraud, breach of fiduciary duty, and related claims (the “Destito action”). 283 Ga. App. at 584-587. The Destito action resulted in a substantial verdict and judgment against Appellants, and the judgment was affirmed on appeal. Id. at 584.

In the first of two motions for summary judgment in the present case, Smith Gambrell sought summary judgment on the issue of punitive damages and its liability for failing to call an accounting expert at trial in the Destito action, and the trial court granted its motion on both issues. See Paul I, supra, 267 Ga.App. at 107-108. On appeal, this Court affirmed on the issue of punitive damages but reversed as to the claim for failure to call an accounting expert. Id. at 108. Prior to the decision in Paul I, Smith Gambrell filed its second motion for summary judgment on the issues of its alleged malpractice in preparing documents to merge RSI into CPI and subsequent Articles of Correction to reverse the merger and its failure to prepare the Pauls to testify at trial in the Destito action. Smith Gambrell’s second motion did not address the claim regarding the failure to call an accounting expert, as the trial court had granted summary judgment in its favor on that claim.

In its April 11, 2005 order, the trial court granted Smith Gambrell summary judgment on the issue of failing to prepare the Pauls for trial but denied summary judgment on the issue of Smith Gambrell’s failure to exercise reasonable care in preparing the merger documents. The parties filed cross-appeals, and this Court affirmed the April 11, 2005 order. Paul II, supra, 283 Ga. App. at 585.

No written order was entered in the record following the April 11, 2005 order until an order was entered on December 13,2010 specially setting the matter for trial. After a jury was empaneled on April 12, 2011, the trial court declared a mistrial, finding that Appellants failed to identify one of its claims and supporting expert opinions during discovery. Smith Gambrell subsequently moved to strike the action from the docket under OCGA §§ 9-2-60 (b) and 9-11-41 (e), and the trial court entered an order memorializing the automatic dismissal of the case.

1. Appellants argue the trial court erred in concluding that its action was dismissed by operation of law because the five-year period under OCGA §§ 9-2-60 (b) and 9-11-41 (e) was tolled during the pendency of the cross-appeals in Paul II. We disagree.

“OCGA §§ 9-2-60 (b) and 9-11-41 (e) are the statutory embodiment of the ‘five-year rule.’ Together, they provide for the automatic dismissal of any action filed in a Georgia court of record when ‘no written order is taken for a period of five years [.]’ ” Zepp v. Brannen, 283 Ga. 395, 396 (658 SE2d 567) (2008). The five-year rule is “a reasonable procedural rule” that serves “the dual purpose of preventing court records from becoming cluttered by unresolved and inactive litigation and of protecting litigants from dilatory counsel.” (Citation and punctuation omitted.) Brown v. Kroger Co., 278 Ga. 65, 68 (597 SE2d 382) (2004). These Code sections are mandatory, and dismissal occurs by operation of law. Republic Claims Svc. Co. v. Hoyal, 264 Ga. 127, 128 (441 SE2d 755) (1994); Roberts v. Eayrs, 297 Ga. App. 821, 822 (2) (678 SE2d 535) (2009). We apply a bright-line rule for determining whether an order is sufficient to reset the five-year clock. Windsor v. City of Atlanta, 287 Ga. 334, 336 (2) (695 SE2d 576) (2010). “[I]n order to toll the running of the five-year period that results in automatic dismissal for non-action, an order must be written, signed by the trial judge, and properly entered in the records of the trial court by filing it with the clerk.” (Citation and punctuation omitted.) Id.

Here, it is undisputed that more than five years elapsed following the entry of the April 11, 2005 order before another written order was entered in the record. Appellants attempted to avoid the otherwise straightforward application of the five-year rule by arguing that the five-year period was tolled for 22 months while the April 11, 2005 order was on appeal in Paul //because a supersedeas was in effect pursuant to OCGA § 5-6-46 (a), depriving the trial court of jurisdiction. We have recognized that the five-year period may be tolled under certain circumstances when a trial court completely loses jurisdiction over a case. See, e.g., Jinks, supra, 317 Ga. App. at 491 (bankruptcy stay); Southern Bell Tel. & Tel. Co. v. Perry, 168 Ga. App. 387, 388 (308 SE2d 848) (1983) (removal to federal court). It is well established, however, that “[t]he supersedeas that stems from the filing of [a] . .. notice of appeal is limited in that it supersedes only the judgment appealed; it does not deprive the trial court of jurisdiction as to other matters in the same case not affecting the judgment on appeal.” (Citation and punctuation omitted.) Auren v. Garten, 289 Ga. 186, 190 (6) (710 SE2d 130) (2011).

Appellants argue that the trial court was divested of all jurisdiction in the case during the Paul II cross-appeals because Smith Gambrell’s second motion for summary judgment stated that Smith Gambrell was entitled to summary judgment on the “entire case.” Once this Court issued its decision in Paul I reinstating Appellants’ claim regarding the failure to call an accounting expert, however, it was apparent that a portion of Appellants’ case would remain pending even if Smith Gambrell prevailed on its second motion for summary judgment. As such, the trial court had jurisdiction to proceed with at least part of the case during the pendency of the cross-appeals, see Craft’s Ocean Court v. Coast House, Ltd., 255 Ga. 336, 337-338 (2) (338 SE2d 277) (1986), and we conclude that no tolling of the five-year period occurred.

Nelson v. Haugabrook, 282 Ga. App. 399 (638 SE2d 840) (2006), upon which Appellants rely, does not support a contrary result. In Nelson we held that the five-year period was not tolled in between the time a certificate of immediate appellate review of an interlocutory order was filed in the trial court and the appellant’s application for interlocutory review was denied. 282 Ga. App. at 401-402 (1) (b). Since the application was denied, the appellant in Nelson never filed a notice of appeal effecting a supersedeas, and no loss of jurisdiction occurred. Id. at 402 (1) (b). In Nelson, we did not address whether a supersedeas would provide a basis for tolling the five-year period, and indeed, we acknowledged that a supersedeas effects a loss of jurisdiction only “as to matters contained within the appeal.” (Footnote omitted.) Id.

2. Relying on Simmerson v. Blanks, 183 Ga. App. 863 (360 SE2d 422) (1987), Appellants contend that the Court should reverse the trial court’s dismissal order to avoid a “manifest injustice.” We disagree. In Simmerson, the trial court dismissed an action under the five-year rule, concluding that a prior continuance order that would have prevented dismissal was invalid because it was entered ex parte and without a written motion. Id. This Court disagreed that the continuance order was invalid and applied the rule that a trial judge may not revoke a granted continuance where “manifest injustice would result.” (Citation and punctuation omitted.) Id. at 864. The Court concluded that revocation would result in a manifest injustice because revocation occurred three years after the continuance was granted and five years had passed from the last written order prior to the continuance order. Id. No similar circumstances are present here, and the trial court in this case did not enter any order at all for a period in excess of five years after the April 11, 2005 order.

3. Appellants also rely on Jefferson v. Ross, 250 Ga. 817 (301 SE2d 268) (1983), to argue that dismissing their case would not serve the purposes of the five-year rule. In Jefferson, the Supreme Court of Georgia held that a trial court’s authority to enter judgment at any time after a jury verdict is not extinguished by the passage of five years from the date of the verdict, finding that “the reasons behind the Code sections... no longer exist once the case has been prosecuted to verdict.” Id. at 818. Jefferson stands for the proposition that the five-year rule “applies to cases awaiting disposition, not to cases already adjudicated by verdict or judgment.” (Citations omitted.) Lott v. Arrington & Hollowell, P.C., 258 Ga, App. 51, 55 (2) (b) (572 SE2d 664) (2002). Appellants’ action never proceeded to verdict. Further, the issue here is not the passage of five years following a disposition in the case. Rather, five years passed without a written order before this case was set for trial. Since the case was automatically dismissed as a matter of law, a trial and verdict would have been a “mere nullity.” (Citations omitted.) Goodwyn v. Carter, 252 Ga. App. 114, 116 (555 SE2d 474) (2001). The holding in Jefferson cannot save Appellants’ action from automatic dismissal.

Decided July 16, 2013

Reconsideration denied July 29, 2013

Frank J. Beltran, for appellants.

Weinberg, Wheeler, Hudgins, Gunn & Dial, Shawn D. Scott, Robert G. Tanner, for appellee.

4. Finally, Appellants cite to news stories reporting that the trial judge’s case manager had engaged in misconduct such as discarding original orders and pleadings and hiding files in a utility closet. They argue that “[wjhile there is no evidence that any files related to this case were discovered [in the closet], a reasonable probability exists that [the] case manager hid or threw away orders in this case.” While the accounts that Appellants reference are disturbing, “[t]he mandatory duty... falls upon the plaintiff to obtain a written order and have it entered upon the record to prevent an automatic dismissal.” (Punctuation and footnote omitted.) Roberts, supra, 297 Ga. App. at 822 (2). As it was Appellants’ responsibility to obtain and file an order, they cannot avoid dismissal by speculating about unspecified orders that were possibly mishandled by a court employee.

Judgment affirmed.

Barnes, P. J., and Ray, J., concur in judgment only.

       See Paul v. Destito, 250 Ga. App. 631 (550 SE2d 739) (2001).

       In their reply brief Appellants argue that due to statements in Smith Gambrell’s Appellant’s Brief in Paul II, as to the scope of the merger-related issues on appeal, Appellants reasonably believed the “entire case” was before this Court, and, as a result, the five-year period was tolled, at a minimum, for the eight months between the filing of Smith Gambrell’s brief and the remittitur from this Court. Given that the claim regarding the failure to call an accounting expert was indisputably still pending in the trial court, Appellants’ alleged belief that the entire case was on appeal was not reasonable. In any event, an alleged mistaken impression as to the issues on appeal would not relieve Appellants of the duty to ensure that a written order signed by the trial judge was entered in the record. See Willis v. Columbus Medical Center, 306 Ga. App. 331, 333 (702 SE2d 673) (2010) (counsel’s mistaken belief that Office of Dispute Resolution filed mediation order with clerk, as was its usual practice, could not prevent dismissal).