source: Caselaw Access Project

author: Branch, Judge.

license: Public Domain

text:
    A15A2375.
    AGSOUTH FARM CREDIT, ACA v. GOWEN TIMBER COMPANY, INC.
    (784 SE2d 913)
   Branch, Judge.

On appeal from a jury verdict for defendant Gowen Timber Company (Gowen Timber) in this action for timber conversion, plaintiff AgSouth Farm Credit, ACA (AgSouth) argues that the trial court erred when it denied AgSouth’s motion for judgment notwithstanding the verdict because no evidence showed that Gowen Timber received written consent to cut the timber at issue. AgSouth also argues that the trial court erred when it denied its motions in limine to exclude parol evidence concerning AgSouth’s alleged consent to Gowen Timber’s cutting and other topics. We agree that the trial court erred when it admitted parol evidence as to AgSouth’s alleged consent, which the jury apparently considered in reaching a verdict for Gowen Timber. We therefore reverse the trial court’s denials of AgSouth’s motions in limine and for judgment notwithstanding the verdict as to liability, but we order a new trial as to damages, interest, and attorney fees.

“The jury is the final arbiter of the facts, and the verdict must be construed by the trial and appellate courts in the light most favorable to upholding [that] verdict.” Wilmock, Inc. v. French, 185 Ga. App. 259, 261 (1) (363 SE2d 789) (1987) (citation and punctuation omitted). So viewed, the record shows that in November 2012, AgSouth sued Gowen Timber for timber conversion pursuant to OCGA § 51-12-51 (a), which provides that a holder of “legal title” to “an interest in land as security for debt” may recover “the unpaid portion of the secured indebtedness, interest thereon, and a reasonable attorney’s fee” from any person who converts “trees growing or grown on such land” to his own uses “without the written consent” of the secured party. The “unpaid portion of the secured indebtedness” at issue in this case arose after George Gowen and Shirley Bluff, LLC defaulted on the residue of a $2 million loan first extended by AgSouth on July 29, 2009. In exchange for the loan, George Gowen and Shirley Bluff provided AgSouth with a promissory note, a deed to secure the debt in favor of AgSouth, and a security agreement. By means of the deed to secure debt, which was signed by the members of Shirley Bluff, LLC and George Gowen individually, Shirley Bluff, LLC conveyed a 1,057-acre parcel of land in Charlton County, known as the Shirley Bluff tract, as collateral for the loan. The deed provided in relevant part that the borrowers “will not, except with the written consent of [AgSouth,] cut, use or remove, or permit the cutting, use or removal of, any timber or trees on [the parcel] for sawmill, turpentine or other purposes, except for firewood and other ordinary farm purposes.” (Emphasis supplied.) The deed also contained a so-called “dragnet” provision to secure AgSouth’s lien as to “all renewals,. .. extensions, refinances, modifications, or other rearrangements thereof”; that any agreement by the lender to such modifications “shall not discharge the lien of this security deed[,] which is to remain in full force and effect until the total indebtedness secured hereby has been paid in full”; and that in the event of default, the borrowers agreed “to pay reasonable attorney[ ] fees of not less than 10% of the amount secured,” as well as costs. The security agreement, which was also signed by the members of Shirley Bluff, LLC and George Gowen individually, identified the collateral securing the loan as “[a]ll merchantable or pre-merchantable standing, felled and harvested pine, hardwood, or other timber growing or to be planted” on the property. Also on July 29, 2009, Gowen Oil Company, Inc., executed a promissory note in favor of Shirley Bluff, which Shirley Bluff assigned to AgSouth with the understanding that Gowen Oil would make the payments on the loan from AgSouth based on the recovery Gowen Oil anticipated in certain lawsuits.

Although George Gowen, the longtime owner of the Shirley Bluff tract, died before the trial in this case, AgSouth’s loan officer Dan Good testified that George Gowen knew at the July 2009 closing that he needed written consent to harvest timber from the Shirley Bluff property. Good acknowledged, however, that at the same closing, given George Gowen’s and his family’s longstanding ownership of the Shirley Bluff tract, and “despite it being [AgSouth’s] collateral,” George Gowen claimed “basically exclusive rights to cut and do what he wanted to with” the property. Some evidence thus shows that at the 2009 closing, George Gowen and Good agreed that George Gowen could “cut[ ] [his] trees so long as [he did] it in accordance with good timber management practices.” George Gowen did not request or obtain a written modification of the terms of the loan documents before signing them, however. On July 30, 2009, the day after the closing, the deed to secure debt and the security agreement were recorded in Charlton County, with Uniform Commercial Code financing statements also recorded the same day.

Good visited the property twice between the original August 2009 closing and the loan’s first renewal in August 2010. On the first of these visits, which occurred on or around February 1, 2010, Good walked two or three hundred yards on the property. On the second visit, which occurred on or around the original loan maturation date of August 1, 2010, George Gowen and Good drove through the property with George’s son Curtis in the back seat. Although Good testified at trial that he did not notice any evidence of timber cutting or thinning on either of these visits, he admitted that the parties “talked about timber” on the second occasion. Curtis Gowen testified that his father told Good about his thinning of the Shirley Bluff property on Good’s second visit and that Good approved of the thinning. Documentary evidence showed that 297 loads of timber had been harvested from the property by August 2010. George Gowen’s son Doug e-mailed Good that month that the family “had only cut a small amount of timber” and that his father was “adamant” that “he wanted the leniency to cut some timber without having to apply it to the bank note.”

As the parties prepared for a second renewal in the summer of 2011, AgSouth’s review of the Shirley Bluff 2010 tax return showed that Gowen Timber had harvested and had paid Shirley Bluff, LLC for $144,500 worth of Shirley Bluff timber during 2010. At trial, Gowen Timber’s managing officer and co-owner, Alvin Hopkins, confirmed that the 2010 harvest was done without AgSouth’s written consent. Before AgSouth renewed the loan for a second time on August 31, 2011, AgSouth therefore required Shirley Bluff and George Gowen to make a principal reduction of $150,000 “to make good on th[e] timber harvest” already taken, as reflected in the second, 2011 renewal of the note and deed.

In an e-mail written on August 26, 2011, five days before the second renewal, Good told Doug Gowen that he “need[ed] to get” documents “in[to] [AgSouth’s] loan committee[’]s hands” on the following Monday “so that we can close Tuesday or Wednesday] AM.” Good wrote that his goal was to provide “[j]ust a little bit of something to make [the] loan committee feel confident that [the] loan will pay off soon[,] or at least pay down — below $ 1 million at least.” Good’s e-mail went on:

I’m going to try and justify the [timber] harvest to say it was used to make last yearf’s] payments and interest and hope it flys [sic]. When we first closed [the] loan [in 2009,] I expected it would pay off with [in] 12-months. I told your Dad tha[t] thinning, etc. would be OK, [but] I had no idea he would clear-cut 80 acres.

The 2011 renewal documents, which were signed by George Gowen, Shirley Bluff LLC, and Gowen Oil a few days later, specified that the debtors would provide “a complete accounting of all timber removed from the property within seven days of the renewal,” that “no timber [could] be removed without prior written consent” of AgSouth, and that AgSouth reserved the right to pursue defendants “for conversion of the collateral” should they not comply with the terms and conditions of the renewal. Although Good and George Gowen again discussed thinning procedures at closing, Good again did not provide any written consent to harvest timber, and there is no indication that George Gowen provided any accounting to AgSouth after the 2011 closing.

As the parties negotiated for a third renewal in August 2012, AgSouth reviewed a 2011 tax return from Shirley Bluff, LLC indicating that Gowen Timber had again harvested timber that year, for which it paid Shirley Bluff, LLC $276,523.40. Alvin Hopkins testified that by the end of 2011, Gowen Timber had harvested timber from and clear-cut approximately 200 acres of the Shirley Bluff property without AgSouth’s written consent. Two AgSouth officers, including Good, testified that AgSouth never received any accounting of the 2011 harvest other than the tax returns later received in the course of the August 2012 renewal negotiations.

The parties were unable to agree to a third renewal, and the loan went into default in August 2012. AgSouth gave George Gowen, Shirley Bluff, LLC, and Gowen Oil notice of the default as well as its intention to collect attorney fees under OCGA § 13-1-11. AgSouth also obtained an appraisal valuing the property at $2,000,000. In anticipation of a foreclosure sale, AgSouth also prepared a “Bid Rationale” that valued the outstanding principal balance at $1,876,150.80, interest at $62,851.04, late charges at $10,000, appraisal costs at $6,500, and attorney fees at $193,925.18, for an estimated total claim of $2,149,427.02. AgSouth subtracted $421,023.63, or the amount paid by Gowen Timber to Shirley Bluff, LLC for the timber harvested in 2010 and 2011, from this estimate to reach AgSouth’s planned “net bid” of $1,728,403.29. AgSouth’s counsel recommended this strategy to his client as “leaving] the amount of the actual unauthorized timber sale as the amount owing assuming AgSouth acquires at this bid” and “the best method to preserve the maximum amount of [timber conversion] claim against” Gowen Timber. AgSouth then acquired the Shirley Bluff property as planned by nonjudicial foreclosure in November 2012 for $1,728,403.29. Shortly afterward, AgSouth sold the property to a third party for $1,730,000, or slightly more than its successful foreclosure bid.

AgSouth did not pursue a deficiency judgment against Shirley Bluff, LLC because that entity’s only asset was the Shirley Bluff property. Instead, on November 26, 2012, AgSouth filed this timber conversion action against Gowen Timber for $421,023.63, or the amount paid by Gowen Timber to Shirley Bluff, LLC for the value of the 2010 and 2011 timber. Gowen Timber answered and filed a third-party complaint against Shirley Bluff, five members of the Gowen family, and the estate of George Gowen. The trial court denied both parties’ motions for summary judgment, finding that “an issue of fact remain[ed] as to the amount owed, if any, of the unpaid portion of the secured indebtedness held by” AgSouth. AgSouth then filed motions in limine to exclude evidence on topics including the value of the Shirley Bluff property and AgSouth’s oral consent to harvest timber. In a detailed order, the trial court initially granted AgSouth’s motions on the ground that any “alleged oral consent” was not relevant “to show compliance with the timber conversion statute” or “to show an oral modification of the written loan contract.” On Gowen Timber’s motion for reconsideration, however, the trial court reversed itself and authorized the admission of evidence showing “any alleged oral consent given by AgSouth to harvest timber [.]”

After the trial court denied both parties’ motions for directed verdict, a jury considered whether Gowen Timber was liable for the conversion of the Shirley Bluff timber. In the course of its deliberations, the jury asked the trial court whether “the testimony of [a] witness” could “override the [terms of the] signed legal document.” The trial court answered the jury’s question in the affirmative. The jury later returned a verdict in favor of Gowen Timber. The trial court denied AgSouth’s motion for judgment notwithstanding the verdict, entered judgment on the verdict, and denied AgSouth’s motion for new trial. This appeal followed.

1. AgSouth first argues that the trial court erred when it denied AgSouth’s motion for summary judgment as to Gowen Timber’s liability for converting the Shirley Bluff timber. But “ ‘it is well settled that after verdict and judgment, it is too late to review a judgment denying a summary judgment [because] that judgment becomes moot when the court reviews the evidence upon the trial of the case.’ ” Malcom v. Morgan County Bd. of Tax Assessors, 308 Ga. App. 61 (706 SE2d 583) (2011), quoting Self v. Hall, 233 Ga. App. 330, 331 (503 SE2d 918) (1998). The only exception to the rule is that

if the legal issues raised and resolved in denying the motion for summary judgment were not considered at trial, then the denial of the motion is not rendered moot by the verdict and judgment. Under such circumstances, a party may appeal the denial of summary judgment as part of the party’s direct appeal from the final judgment, and the denial will be reviewed and determined by this Court.

Coregis Ins. Co. v. Nelson, 282 Ga. App. 488, 489 (1) (639 SE2d 365) (2006) (citations and punctuation omitted). The exception does not apply here. AgSouth’s case went to trial with the issue of AgSouth’s consent squarely before the jury, which entered a verdict that was accepted by the trial court. “[B]ecause the legal issue raised and resolved in denying the motion for summary judgment was considered at trial,” AgSouth’s motion for summary judgment is moot. One Bluff Drive v. K.A.P., Inc., 330 Ga. App. 45, 51 (2) (766 SE2d 508) (2014).

2. AgSouth’s principal argument on appeal is that the trial court erred when it denied its motions in limine and for judgment notwithstanding the verdict because (a) undisputed evidence showed that Gowen Timber cut timber to which AgSouth held legal title by virtue of its security interest in the Shirley Bluff property and (b) it did not give Gowen Timber written consent to cut timber, which was required under both the timber conversion statute and the original loan documents. We agree with these contentions.

In order to prevail on its motion for judgment notwithstanding the verdict, AgSouth is obliged to show “that there was no conflict in the evidence as to any material issue and [that] the evidence introduced, with all reasonable deductions therefrom, demanded the verdict sought.” Harrouk v. Fierman, 291 Ga. App. 818, 820 (1) (662 SE2d892) (2008) (citation and punctuation omitted). See also OCGA § 9-11-50 (a); South Fulton Med. Center v. Poe, 224 Ga. App. 107,108 (1) (480 SE2d 40) (1996) (standards of review for directed verdict and judgment notwithstanding the verdict are the same). “We review a trial court’s ruling on a motion in limine for abuse of discretion. A motion in limine is properly granted when there is no circumstance under which the evidence under scrutiny is likely to be admissible at trial.” Hankla v. Jackson, 305 Ga. App. 391, 392 (1) (699 SE2d 610) (2010) (punctuation and footnote omitted). “[M]otions in limine should only be granted with great care and when there is no circumstance under which the evidence at issue could be admissible at trial.” One Bluff Drive, 330 Ga. App. at 51 (3), citing Andrews v. Wilbanks, 265 Ga. 555, 556 (458 SE2d 817) (1995).

(a) AgSouth brought this timber conversion action against Gowen Timber pursuant to OCGA § 51-12-51, which provides:

(a) Every person, firm, or corporation who, without the written consent of the person holding legal title to land or to an interest in land as security for debt, as shown by the public records of the county where such land is located, buys, sells, cuts, removes, holds, disposes of, changes the form of, or otherwise converts to the use of himself, itself, or another any trees growing or grown on such land shall be liable to the holder of the legal title for such trees, in any form, bought, sold, cut, removed, held, disposed of, changed in form, or otherwise converted by him or it, or for the value of such trees, provided that recovery may not be for more than the unpaid portion of the secured indebtedness, interest thereon, and a reasonable attorney’s fee. Recovery may be had by action at law from one who purchases, without the consent of the holder of the legal title, such interest in the trees, mineral or other rights, or interest in the encumbered real estate, either jointly or severally, with the holder of the equitable title.
(b) The equitable owner of the land shall be allowed to use the timber for his own use, such as for firewood or other necessary uses of timber in and around his farm.

(Emphasis supplied.) A legal owner of land seeking to recover for the cutting or other conversion of timber on that land is not required to show that the converter acted fraudulently or in bad faith. See Thakkar v. St. Ives Country Club, 250 Ga. App. 893, 896 (5) (553 SE2d 181) (2001) (unauthorized removal of trees from plaintiff’s land justified award of damages and attorney fees under OCGA § 51-12-51; “[t]o what specific ‘use’ the trees are then put after the unauthorized removal” was irrelevant) (emphasis in original).

Undisputed evidence showed that Gowen Timber cut timber as to which AgSouth held legal title. The trial testimony of Gowen Timber’s manager and co-owner, Alvin Hopkins, showed that in the course of 2010 and 2011, Gowen Timber clear cut up to 200 acres from the Shirley Bluff tract; that Gowen Timber did so without checking public records for any security interest in the timber because of its longstanding business relationship with George Gowen; that Gowen Timber sold the harvested timber on the open market; and that Gowen Timber paid Shirley Bluff, LLC $421,023.63 for the timber thus harvested.

(b) Given the undisputed facts showing that Gowen Timber cut timber on the Shirley Bluff tract, to which AgSouth held legal title by virtue of the deed to secure debt, the only question before this jury was whether AgSouth ever granted its “written consent” to any such removal efforts, as required by both OCGA § 51-12-51 (a) and the unambiguous terms of the deed to secure debt and the renewals of that deed. Gowen Timber asserts that the jury was authorized to determine that (i) verbal consent to cut timber was given at the 2009 closing sufficient to vary the explicit terms of the deed signed the same day; (ii) the parties mutually departed from the explicit terms of the closing documents; and (iii) Good gave written consent in his August 2011 e-mail. We disagree.

(i) Verbal Consent. In Martin v. Fairburn Banking Co., 218 Ga. App. 803 (463 SE2d 507) (1995), our discussion of the timber conversion statute began with the observation that

[w]hen interpreting a statute, all its words must be given due weight; we are forbidden to “read out” any words in the statute unless a clear reason appears for doing so. Further, if a statute is plain and unambiguous, its words (except for terms of art or those with a particular meaning in connection with a specific trade or subject matter) must be assigned their common and ordinary meaning.

Id. at 803-804 (1) (citations omitted). We went on to hold that because OCGA § 51-12-51 (a) “clearly and unambiguously requires written consent” by the legal owner to any timber harvest, and because “verbal consent [was] inadequate to satisfy the statute,” a trial court did not err when it granted the legal owner summary judgment on its timber conversion claim. Id. at 804 (1). Here, likewise, Don Good’s verbal consent to George Gowen’s expressions of intent to cut timber on the property, whether expressed at the original closing, at visits to the property, or at the 2010 or 2011 renewals, was inadequate as a matter of law to grant Shirley Bluff, LLC or Gowen Timber the right to harvest any timber on the Shirley Bluff property. See id.

Gowen Timber seeks to forestall this conclusion by citing this Court’s recent decision in Dobson v. Matt Owens Logging, 326 Ga. App. 879 (755 SE2d 374) (2014), in which we held that parol evidence was admissible to show that two parties had orally modified a loan agreement’s terms on harvesting timber. Dobson was decided, however, under longstanding law to the effect that “an oral modification to a written contract subject to the Statute of Frauds maybe effective if the contract as so modified has been acted or performed by one of the parties.” Id. at 882 (citation and punctuation omitted). Dobson, which enforced a well-settled rule of contract law in the context of a claim for breach of contract, has no bearing on the statutory tort of timber conversion. Here, by contrast, OCGA § 51-12-51 (a) imposes a requirement on any person or entity seeking to cut timber to obtain “written consent” from the legal owner of that timber, and there is nothing in the statute or our case law to suggest that this requirement may be waived.

Further, the general rule is that “parol contemporaneous evidence shall be generally inadmissible to contradict or vary the terms of a valid written instrument.” OCGA § 24-3-1; see also OCGA § 13-2-2 (1) (“Parol evidence is inadmissible to add to, take from, or vary a written contract” unless there is “an ambiguity, latent or patent”). As our Supreme Court has often repeated,

there is no rule of law better settled, or more salutary in its application, than that which refuses to admit oral testimony to contradict, vary, or materially affect, written agreements It would be extremely dangerous and inconsistent with those general rules of evidence, by which we proceed in courts of justice, to allow a party, after giving an instrument, in which he says, “I promise to pay on demand,” to say by parol evidence, “You know I did not mean to pay on demand.”

Weintraub v. Cobb Bank & Trust Co., 249 Ga. 148, 148-149 (1) (288 SE2d 553) (1982) (affirming exclusion of parol evidence of an alleged oral agreement to vary the terms of a written agreement), quoting Rogers v. Atkinson, 1 Ga. 12 (1846). Any oral agreement that these parties reached at the 2009 closing as to timber thinning flatly contradicted the unambiguous terms of the security deed signed by both parties at that closing, and thus could not have amounted to a “separate and distinct, collateral oral agreement that is consistent with and forms part of the consideration or inducement for a written agreement.” Great American Builders v. Howard, 207 Ga. App. 236, 240 (2) (427 SE2d 588) (1993) (citation omitted) (rejecting parol evidence as to oral agreement that contradicted the parties’ written contracts, which also barred any verbal agreement).

(ii) Mutual Departure or Subsequent Agreement. We must also reject Gowen Timber’s assertion that after the execution of the 2009 loan documents, as in the drives across the property in 2010, the parties mutually departed from the deed’s explicit and unambiguous requirement that AgSouth give written consent to cut timber. The deed to secure debt contained a dragnet clause that ensured that the deed remained in full force and effect even in the event of a modification. Accordingly, the provision requiring written consent to cut trees was unchanged. Martin, 218 Ga. App. at 804-805 (3) (parties’ execution of renewal notes did not abrogate the secured party’s security interest in timber when the original security deed contained a dragnet provision that it was intended to secure any renewals of the loan; “because debt continued to exist between [the borrower and the lender], the original security deed remained effective”) (emphasis in original). Further, even when parties to a written contract reach some “mere understanding” as to the meaning of the “clear and express terms” of that contract after its execution, parol evidence of that understanding is inadmissible and its admission error. Choice Hotels Intl. v. Ocmulgee Fields, 222 Ga. App. 185, 187 (474 SE2d 56) (1996). Again, parol evidence that George Gowen and Don Good reached some “understanding” at or even after the closing was inadmissible because it could be taken to contradict the plain terms of the loan documents, which barred cutting without “written consent.” Id. (reversing jury verdict when trial court erred in admitting parol evidence to show that parties mutually departed from the terms of a clearly written contract).

(iii) Purported Written Consent before the 2011 Renewal. Gowen Timber also points to Good’s e-mail of August 26, 2011 to Doug Gowen, characterizing it as written consent to cut timber on the Shirley Bluff tract. But at least 80 acres of the timber were cut in 2010, months before Good composed his August 2011 e-mail for the purpose of explaining or asking AgSouth to excuse the previous harvesting by Gowen Timber as the loan committee considered whether to renew the $2 million loan for the third time and whether to require George Gowen and Shirley Bluff, LLC to make a $150,000 reduction in principal: “I’m going to try and justify the [timber] harvest to say it was used to make last year [’s] p ayments and interest and hope it flys [sic].” Good also noted that he had expected the borrowers to pay off the loan in the first year, and that although he had told George Gowen that “thinning, etc. would be ok,” Good “had no idea” that George Gowen would “clear-cut 80 acres.” This last statement cannot be interpreted as written consent to cutting, either past or future; rather, it merely confirmed that Good had previously given verbal consent, which we have held above to be inadequate as a matter of law for the purpose of granting harvesting rights in the property to Gowen Timber, and also expressed Good’s surprise that such consent had been relied upon to clear-cut a portion of the property.

In sum, the record provides no evidence of a prior or contemporaneous oral agreement to vary the explicit terms of the original loan documents or of any subsequent agreement so as to vary those terms. The record shows, however, that the admission of evidence as to AgSouth’s purported consent to timber harvesting likely had an impact on the jury’s verdict in favor of Gowen Timber, as when the jury asked the trial court whether it could consider “the testimony of [a] witness” such that “the testimony [could] override the [terms of the] signed legal document.” The trial court answered the jury’s question in the affirmative. Given that, as discussed above, parol evidence had no probative value on the issue whether Gowen Timber obtained the written consent required by OCGA § 51-12-51 (a) (or even the 2009 security deed to cut timber from the Shirley Bluff tract), and that the jury apparently considered such parol evidence in the course of reaching its verdict for Gowen Timber, the trial court committed harmful error when it denied AgSouth’s motion in limine to exclude this parol evidence and when it responded affirmatively to the jury’s question as to this evidence’s probative value. See Martin, 218 Ga. App. at 804 (2) (affirming trial court’s exclusion of parol evidence as “inadmissible to contradict or vary the terms of the written documents” requiring written consent to harvest timber); Lee v. White, 249 Ga. 99, 101 (1) (b) (286 SE2d 723) (1982) (affirming grant of motion in limine to exclude parol evidence when such evidence was not admissible to modify the terms of an unambiguous written contract and when party offering parol evidence had unclean hands).

For the same reasons, the trial court also erred when it denied AgSouth’s motions for directed verdict and for judgment notwithstanding the verdict as to Gowen Timber’s liability for converting the Shirley Bluff timber. Martin, 218 Ga. App. at 804 (1) (affirming grant of summary judgment to bank which had purportedly given verbal consent to timber cutting); Cordele Sash, Door & Lumber Co. v. Prudential Ins. Co., 86 Ga. App. 738, 742 (2) (72 SE2d 497) (1952) (where evidence showed that plaintiff held a recorded security deed in land and that defendant had cut and removed timber from that land without plaintiff’s consent, “a verdict was demanded for the plaintiff”).

3. Given that Gowen Timber’s liability for timber conversion is established as a matter of law, the only question remaining is the proper scope of a new trial.

“The issue of damages is a matter for the jury, and a reviewing court should not interfere with the jury’s damages award unless it is so small or excessive that it justifies an inference of gross mistake or undue bias.” Lou Robustelli Marketing Svcs. v. Robustelli, 286 Ga. App. 816, 820 (4) (650 SE2d 326) (2007) (citation and punctuation omitted). Here, we cannot know whether, had the jury been directed that Gowen Timber was liable for timber conversion as a matter of law, that jury wouldhave awarded AgSouth any or allofthe $421,023.63 claimed as “the unpaid portion of the secured indebtedness” as well as “interest” and “a reasonable attorney fee.” OCGA § 51-12-51 (a). Because the issues of damages, interest, and fees are properly left to a jury, we order a new trial only as to them. Cordele Sash, Door & Lumber Co., 86 Ga. App. at 742 (2) (affirming trial court’s submission of “the amount of the value of the timber cut and removed” as well as “the issue as to the recovery of reasonable attorney fees” to a jury); see also Robustelli, 286 Ga. App. at 821 (4) (remanding for a new trial limited to damages arising from breach of fiduciary duty when the appellate court could not determine whether the jury’s award was based on proper or improper claims of such breach); Douglas v. Bigley, 278 Ga. App. 117, 124-125 (1) (e) (628 SE2d 199) (2006) (granting a new trial on issues of breach of fiduciary duty and fees where trial court improperly denied defendants’ motion for directed verdict on other issues).

We now consider AgSouth’s contentions that the trial court erred when it denied other portions of AgSouth’s motions in limine because some of these matters are likely to recur at a new trial as to damages. AgSouth asserts that the trial court erred when it admitted evidence as to (a) the appraisal of Shirley Bluff as having a value of $2 million; (b)the profits made by Gowen Timber on its sale of the timber at issue; (c) AgSouth’s alleged violations of Gowen Timber’s rights under the Farm Credit Act, 12 USC § 2001 et seq.; and (d) the reasonableness of AgSouth’s attorney fees, which it sought pursuant to OCGA § 13-1-11.

(a), (b) “Evidence having a tendency to establish facts in issue is relevant and admissible, and no matter how slight the probative value, our law favors admission of relevant evidence.” Martin v. Williams, 215 Ga. App. 649, 651 (3) (451 SE2d 822) (1994) (citations and punctuation omitted). Although AgSouth asserts that the value of the Shirley Bluff tract is “not an issue” in its timber conversion case against Gowen Timber, a jury would be authorized to consider a variety of evidence, including any appraisals of the property, in determining whether AgSouth’s purchase price for the property at foreclosure was artificially low as part of a strategy to increase the value of its timber conversion action to recover the “unpaid portion of [AgSouth’s] secured indebtedness.” OCGA § 51-12-51 (a). A jury might also find the profit Gowen Timber made on the sale of the converted timber on the market relevant to the extent of Gowen Timber’s liability under the statute. Because both of these topics might have some bearing on the calculation of damages, the trial court should allow the admission of evidence concerning the Shirley Bluff property’s appraised value and Gowen Timber’s profits from the sale of the converted timber. See One Bluff Drive, 330 Ga. App. at 51 (3) (trial court did not abuse its discretion when it denied motion in limine and authorized the admission of evidence as to damages).

(c) Our determination in Division 1 that Gowen Timber is liable as a matter of law for its conversion of the Shirley Bluff timber moots AgSouth’s contention that the trial court erred in denying its motion in limine to exclude evidence of AgSouth’s conduct under the Farm Credit Act.

(d) AgSouth also argues that because the deed to secure debt gave it the right to recover “reasonable attorney[ ] fees of not less than 10% of the amount secured,” and because the computation of such fees is a question of law, the trial court erred when it allowed the jury to consider whether AgSouth was entitled to reasonable attorney fees. We agree in part.

It is true that because a party’s entitlement to reasonable attorney fees under OCGA § 13-1-11 “is one of contract construction and the application of mathematical computation to uncontroverted amounts, it is a question of law for the Court.” Toombs v. Meyer M. Cardin Living Trust # 2, 279 Ga. App. 682, 685 (2) (632 SE2d 410) (2006). AgSouth’s timber conversion claim sounds in tort, however, and OCGA § 13-1-11 itself specifies that “[t]he provisions of this Code section shall not authorize the recovery of attorney’s fees in any tort claim.” OCGA § 13-1-11 (d). Further, and as Gowen Timber noted when it objected to the trial court’s charge on OCGA § 13-1-11, Gowen Timber was not a party to and did not sign either the deed to secure debt, the original promissory note from Gowen Oil, or any of the subsequent loan agreements. It follows that the trial court erred when it instructed the jury as to the provisions of OCGA § 13-1-11, but not when it instructed that jury to consider whether to award AgSouth reasonable attorney fees, to which AgSouth was entitled under the timber conversion statute. OCGA § 51-12-51 (a) (plaintiff in timber conversion “may not [recover] more than the unpaid portion of the secured indebtedness, interest thereon, and a reasonable attorney’s fee”).

Judgment reversed and case remanded with direction.

Andrews, P. J., and Miller, P. J., concur.

Decided March 30, 2016.

Brown Rountree, George H. Rountree, Robert F. Mikell, for appellant.

Gilbert, Harrell, Summerford & Martin, MarkD. Johnson, Samantha A. DiPolito, Theresa D. Beaton, James O. Hodges VI, for appellee.

       See Martin v. Fairburn Banking Co., 218 Ga; App. 803, 804 (3) (463 SE2d 507) (1995) (describing and enforcing dragnet provision in original security deed).

       Gowen Timber was not a party to the 2009 loan documents or any of the renewals.

       Shirley Bluff’s 2009 tax return confirmed that more than $80,000 in timber was harvested in that year.

       See Wells Fargo Bank v. Twenty-Six Properties, 325 Ga. App. 662, 665 (1), n. 5 (754 SE2d 630) (2014) (“[W]hen a borrower gives a lender a deed to secure debt, the borrower grants and conveys outright legal title in the subject real property to the lender (the grantee) and ‘takes a bond for title back to the grantor upon the payment of the debt[.]’ OCGA § 44-14-60. ... Thus, the borrower retains an equitable title and the right to regain or redeem legal title by payment of the secured indebtedness; the borrower also retains the right of possession.”).

       Our grant of a new trial moots AgSouth’s contentions, made without citation to authority, that the trial court erred in overruling AgSouth’s objections to charges on promissory estoppel, mutual departure, and a subsequent oral agreement.

       OCGA § 13-1-11 provides in relevant part:
      (a) Obligations to pay attorney’s fees upon any note or other evidence of indebtedness, in addition to the rate of interest specified therein, shall be valid and enforceable and collectable as a part of such debt if such note or other evidence of indebtedness is collected by or through an attorney after maturity, subject to... the following provisions: (1) If such note or other evidence of indebtedness provides for attorney’s fees in some specific percent of the principal and interest owing thereon, such provision and obligation shall be valid and enforceable up to but not in excess of 15 percent of the principal and interest owing on said note or other evidence of indebtedness; (2) If such note or other evidence of indebtedness provides for the payment of reasonable attorney’s fees without specifying any specific percent, such provision shall be construed to mean 15 percent of the first $500.00 of principal and interest owing on such note or other evidence of indebtedness and 10 percent of the amount of principal and interest owing thereon in excess of $500.00 ....
      (d) The provisions of this Code section shall not authorize the recovery of attorney’s fees in any tort claim.

      (Emphasis supplied.)


author: Andrews, Presiding Judge.

text:
    A16A0532.
    EDWARDS v. THE STATE.
    (784 SE2d 924)
   Andrews, Presiding Judge.

Dennis Leon Edwards appeals from the trial court’s denial of his plea in bar in which he contends that the constitutional prohibition against double jeopardy precludes retrial after his first trial for rape and child molestation ended in a mistrial. We find no error and affirm.

After a jury was impaneled and sworn to try Edwards on charges of rape and child molestation, but before any evidence was presented, Edwards’s defense counsel and the prosecutor brought to the trial court’s attention that, during the trial of the case, they expected defense counsel would have an actual or a potential conflict of interest under ethical standards set forth in the Georgia Rules of Professional Conduct. Defense counsel told the court that, in unrelated proceedings, he had previously represented the mother of the alleged molestation victim, that during the prior representation the mother disclosed confidential information to him that could be used to impeach her if she testified as a witness during the trial, and that counsel was concerned he was ethically prohibited from using that information to cross-examine and impeach the victim’s mother for the benefit of Edwards’s defense. The prosecutor informed the court that, based on his investigation, the State expected the defense would claim that the victim’s mother falsely planted the idea in the victim’s mind that Edwards molested the victim, and that the State would respond by presenting testimony from the victim’s mother refuting that claim. Defense counsel told the court that “[the prosecutor] and I have been talking about this constantly, trying to figure out where we’re going to go with it, and we told you that we thought it would be a problem----” Without revealing the confidential information, defense counsel informed the court that, “[i]f someone knew [the confidential information he had acquired from the victim’s mother] and wanted to use it, it would certainly be very strong impeachment material.” Given the actual or potential conflict of interest described by the prosecutor and defense counsel, the trial court gave defense counsel an opportunity to confer privately with Edwards to discuss the conflict. After defense counsel met with Edwards, counsel and Edwards informed the court that Edwards had elected to waive the conflict and proceed with the trial with the understanding that, if the victim’s mother testified at the trial, defense counsel could not use the confidential information during cross-examination to impeach the witness. Edwards does not claim, and nothing in the record shows, that the victim’s mother waived the conflict or consented to the disclosure or use of the confidential information. On these facts, the trial court concluded, in effect, that the attempted waiver by Edwards did not cure the problem, and that an actual or serious potential conflict of interest disqualified defense counsel from representing Edwards at the trial. Based on these conclusions, the trial court sua sponte disqualified defense counsel and declared a mistrial over Edwards’s objection.

Over four months later, Edwards filed a plea in bar claiming that the Double Jeopardy Clause barred a second prosecution for the same offenses because jeopardy had attached in the first trial, and there was no manifest necessity for the trial court to declare the mistrial. The Double Jeopardy Clause of the federal Constitution (applicable to the states through the Fourteenth Amendment) provides: “No person... shall... be subject for the same offen[s]e to be twice put in jeopardy of life or limb____” Jeopardy attaches in a jury trial when the jury is impaneled and sworn. Harvey v. State, 296 Ga. 823, 830 (770 SE2d 840) (2015). Where jeopardy has attached and the trial judge declares a mistrial prior to verdict over the defendant’s objection, the Double Jeopardy Clause does not bar retrial “whenever, in [the judge’s] opinion, taking all the circumstances into consideration, there is a manifest necessity for [the mistrial].” Renico v. Lett, 559 U. S. 766, 773-774 (130 SCt 1855, 176 LE2d 678) (2010) (citation and punctuation omitted). The “ ‘manifest necessity’ standard cannot be interpreted literally, and ... a mistrial is appropriate when there is a ‘high degree’ of necessity.” Id. at 774 (citation and punctuation omitted). “[W]hether the required degree of necessity for a mistrial has been shown is a matter best judged by the trial court.” Harvey, 296 Ga. at 831. The existence of “manifest necessity’ is determined by weighing the accused defendant’s right to have his trial completed before the first trier of fact “against the interest of the public in having fair trials designed to endin just judgments____" Reed v. State, 267 Ga. 482, 484 (480 SE2d 27) (1997) (citation and punctuation omitted). Accordingly, whether “manifest necessity” exists for a mistrial in the various situations that arise in the course of a criminal trial cannot be determined by use of any mechanical formula, and the decision is reserved to the “broad discretion” of the trial court taking into consideration all the circumstances. Harvey, 296 Ga. at 831; Reed, 267 Ga. at 484. The trial court is not required to explicitly find “manifest necessity,” or to set forth all the factors that informed its exercise of discretion, but “the record must show that the trial court actually exercised its discretion” to declare a mistrial. Harvey, 296 Ga. at 832.

For this reason, we have instructed trial courts to give careful, deliberate, and studious consideration to whether the circumstances demand a mistrial, with a keen eye toward other, less drastic, alternatives.... Where it is clear from the record that the trial court actually exercised its discretion in deciding to grant a mistrial, the Double Jeopardy Clause generally will not bar retrial.

Id. (citation and punctuation omitted).

The record supports the trial court’s refusal to accept Edwards’s attempted waiver of his defense counsel’s conflict of interest, and the court’s conclusion that an actual or serious potential conflict of interest required disqualification of defense counsel. Although Edwards had an interest in continuing to be represented by his public defender defense counsel, who investigated and prepared his case for trial, “a defendant does not have a right to be represented by an attorney who is ethically prohibited from doing so, most commonly due to a conflict of interest.” Registe v. State, 287 Ga. 542, 544 (697 SE2d 804) (2010); Davis v. State, 261 Ga. 221, 222 (403 SE2d 800) (1991) (discussing circumstances under which indigent defendant may assert preference for counsel). A defendant’s choice of counsel “may be overcome not only by a demonstration of actual conflict of interest but by a showing of a serious potential for conflict.” Heidt v. State, 292 Ga. 343, 346 (736 SE2d 384) (2013) (citations and punctuation omitted). Edwards contends that there was no need for the trial court to disqualify his defense counsel based on conflict of interest because he waived his counsel’s actual or potential conflict of interest. But

[t]he defendant’s waiver of his attorney’s conflict of interest does not always cure the problem, because courts have an independent interest in ensuring that criminal trials are conducted within the ethical standards of the profession and that legal proceedings appear fair to all who observe them.

Registe, 287 Ga. at 544 (citation and punctuation omitted). “The trial court’s decision on whether an ethical requirement bars a lawyer from representing a defendant is reviewed on appeal for abuse of discretion.” Id. at 844.

The Georgia Rules of Professional Conduct (see State Bar Rule 4-102) set forth the applicable ethical standards. It is undisputed that Rule 1.6 (a), concerning confidentiality of information, imposed on defense counsel a continuing professional obligation to keep certain information confidential that counsel acquired from his former client, the victim’s mother, during prior representation of the mother in an unrelated matter. As the prosecutor and defense counsel informed the trial court, the State expected to call the victim’s mother as a witness in the trial to refute Edwards’s defense, and the confidential information provided a strong basis for the defense to impeach and attack the credibility of this witness for the State. To protect the ongoing duty of confidentiality arising from the former attorney-client relationship, Rule 1.9 (c) provides: “A lawyer who has formerly represented a client in a matter ... shall not thereafter use information relating to the representation to the disadvantage of the former client. . . [or] reveal information relating to the representation....” Defense counsel proposed to resolve the conflict between the duty to protect his former client’s confidential information and the duty to use the information to zealously defend his current client, by obtaining Edwards’s consent to allow him to continue as defense counsel at the trial without using the information to cross-examine or impeach his former client as a witness for the State. Essentially, Edwards attempted to waive his right to conflict-free counsel under circumstances where his defense counsel’s loyalties were divided by the above-stated ethical duties. The general rule applicable to the conflict of interest is set forth in Rule 1.7, which provides in subsection (a): “A lawyer shall not represent or continue to represent a client if there is a significant risk that the ... lawyer’s duties to ... a former client... will materially and adversely affect the representation of the client, except as permitted in [subsection] (b).” Under subsection (b) (l)-(3) of Rule 1.7, a conflict described in subsection (a) may be waived

but only if both the current and former clients consent after consultation with the attorney, have received in writing reasonable and adequate information about the material risks of [and reasonable available alternatives to] the representation, and have been given the opportunity to consult with independent counsel.

Registe, 287 Ga. at 547.

We find that, pursuant to the relevant ethical rules, the trial court did not abuse its discretion by refusing to accept the attempted waiver of the conflict and by disqualifying defense counsel. The record shows that the attempted waiver of the conflict was ineffective because it failed to comply with the requirements in Rule 1.7 (b). To waive the conflict created by defense counsel’s divided loyalties to his former and current clients required the informed consent of both the former client (the victim’s mother) and the current client (Edwards). Rule 1.7 (b); Registe, 287 Ga. at 547. There was no consent from the victim’s mother. Apart from the lack of consent from defense counsel’s former client, the consent obtained from Edwards was not “informed consent” pursuant to the requirements in subsection (b) (l)-(3), which require that consent be confirmed in writing, after consultation with the lawyer, after receiving in writing reasonable and adequate information about the material risks of and available alternatives to the representation, and after being given the opportunity to consult with independent counsel. Although the record before the trial court showed that Edwards consulted with his defense counsel about the conflict prior to the trial court’s ruling, nothing was presented to the court prior to the ruling showing that Edwards consented in writing, received the required information in writing about risks and alternatives, or had the opportunity to consult with independent counsel. Evidence that, during Edwards’s initial consultation with his public defender defense counsel, he consulted with another public defender from the same office, did not satisfy the requirement for an opportunity to consult with independent counsel. See In re Formal Advisory Opinion 10-1, 293 Ga. 397, 398 (744 SE2d 798) (2013). The written waiver filed by Edwards over five months after the trial court rejected the oral waiver and disqualified defense counsel was untimely and failed to satisfy the requirements of Rule 1.7 (b).

Decided March 30, 2016.

Brandon A. Bullard, Margaret E. Heinen, for appellant.

Jack Browning, Jr., District Attorney, Jordan L. Stover, Assistant District Attorney, for appellee.

The record showed at least a serious potential for a conflict of interest, which ethically barred defense counsel from representing Edwards at the trial. Rule 1.7. Edwards’s attempted waiver of the conflict was ineffective under the relevant ethical rules, so the trial court did not abuse its discretion by refusing the waiver and disqualifying defense counsel. In the absence of an effective waiver of the right to conflict-free representation, allowing the trial to proceed to verdict would have created a serious potential for error sufficient to allow Edwards to obtain reversal of any guilty verdict by claiming on appeal that he was prejudiced by the conflict. Illinois v. Somerville, 410 U. S. 458, 464 (93 SCt 1066, 35 LE2d 425) (1973) (manifest necessity for mistrial where verdict of conviction could be reached but would have to be reversed on appeal due to obvious procedural error). Because a trial under these circumstances would have been inconsistent with the public interest in a fair trial, conducted in accordance with ethical standards, designed to end in a just judgment, the trial court did not abuse its discretion by concluding that “manifest necessity” existed for the mistrial. It follows that the trial court did not err by denying Edwards’s subsequent plea in bar.

Judgment affirmed.

Doyle, C. J., concurs. Ray, J., concurs in judgment only.

       Although the trial court had already sua sponte declared the mistrial, the court also granted the State’s motion for a mistrial on the same basis.

       Subsection (a) of Rule 1.6 provides:
      A lawyer shall maintain in confidence all information gained in the professional relationship with a client, including information which the client has requested to be held inviolate or the disclosure of which would be embarrassing or would likely be detrimental to the client, unless the client gives informed consent, except for disclosures that are impliedly authorized in order to carry out the representation, or are required by these Rules or other law, or by order of the court.
      The duty of confidentiality set forth in subsection (a) continues after the client-lawyer relationship has ended. Rule 1.6 (e). Nothing in the record shows that the former client, the victim’s mother, consented to disclosure of the confidential information at issue, or that the information was subject to disclosure “to carry out the representation,” or otherwise required by the Rules of Professional Conduct, other law, or by court order.

       Rule 1.7 (c) (3) further provides that the conflict cannot he waived by an affected client’s informed consent where “the representation... involves circumstances rendering it reasonably unlikely that the lawyer will he able to provide adequate representation to one or more of the affected clients.”

       “Where a constitutional right to counsel exists, our Sixth Amendment cases hold that there is a correlative right to representation that is free from conflicts of interest.” Wood v. Georgia, 450 U. S. 261, 271 (101 SCt 1097, 67 LE2d 220) (1981). “Effective counsel is counsel free from conflicts of interest.” Garland v. State, 283 Ga. 201, 202 (657 SE2d 842) (2008).

       “[Prejudice is presumed ‘if the defendant demonstrates that counsel actively represented conflicting interests and that an actual conflict of interest adversely affected his lawyer’s performance.’ Burger [v. Kemp, 483 U. S. 776, 783 (III) (107 SCt 3114, 97 LE2d 638) (1987)].” Tolbert v. State, 298 Ga. 147, 150, n. 4 (780 SE2d 298) (2015).


author: Dillard, Judge.

text:
    A15A2150.
    FAMILY THRIFT, INC. et al. v. BIRTHRONG.
    (785 SE2d 547)
   Dillard, Judge.

In this premises-liability action, Cheryl Birthrong sued Family Thrift, Inc. and Olympia Management, Inc. (“defendants”), owners and operators of a chain of thrift stores, alleging that the defendants negligently breached a duty they owed to her as an invitee when she suffered injuries near the store’s dressing room as a result of a chair collapsing as she sat upon it. Following a trial and jury verdict in Birthrong’s favor, the defendants filed a motion for judgment notwithstanding the verdict (j.n.o.v.), which the trial court denied. The defendants now appeal, arguing that the trial court erred in denying their motion for j.n.o.v. because (1) there was no evidence that the defendants had superior knowledge of the chair’s alleged defect; (2) the doctrine of res ipsa loquitur was not applicable; and (3) there was no evidence that Olympia owned or occupied the property. For the reasons set forth infra, we reverse.

On appeal from the denial of a motion for a directed verdict or a motion for j.n.o.v., we construe the evidence “in the light most favorable to the party opposing the motion, and the standard of review is whether there is any evidence to support the jury’s verdict.” And because jurors are the sole and exclusive judges of the weight and credit given the evidence, we must construe the evidence with “every inference and presumption in favor of upholding the verdict, and after judgment, the evidence must be construed to uphold the verdict even where the evidence is in conflict.” Nevertheless, we review questions of law de novo.

So construed, the evidence shows that Family Thrift owns a small chain of thrift stores, selling donated clothes, housewares, and some furniture, and it operates these stores under the name Park Avenue Thrift. Olympia Management, a separate corporation with common ownership, is responsible for establishing the operating policies and procedures for all of Family Thrift’s stores, including policies pertaining to safety and inspection of merchandise for sale, and it is also responsible for ensuring that such policies and procedures are implemented. And toward that end, Olympia managers conduct weekly meetings with Family Thrift personnel at each of the stores’ locations.

On February 4, 2011, Birthrong and a friend went to the Park Avenue Thrift in Lawrenceville to shop for clothes. After browsing for a bit, Birthrong’s friend wanted to try on some clothes, so Birthrong accompanied her to the dressing-room area of the store, which was located near the front of the store not far from the cash registers. As her friend entered the dressing room, Birthrong noticed two chairs just outside the dressing room, one of which was occupied by a male customer. As a result, Birthrong assumed the chairs were for waiting customers’ use and, therefore, decided that she would sit while her friend tried on clothes. But just as Birthrong sat down on the unoccupied chair, its seat collapsed underneath her, and she fell to the floor, injuring her left shoulder.

Immediately, one of the store’s cashiers approached and asked Birthrong if she was hurt. Believing at the time that she was only bruised, Birthrong responded that she was not injured, at which point the cashier picked up pieces of the broken chair and told Birthrong that she was going to find the store’s manager. A few moments later, the cashier returned, informed Birthrong that the manager was not there, and asked for contact information, which Birthrong provided.

Over the course of the following week, the pain in Birthrong’s shoulder increased, and no one from the store contacted her. Thus, Birthrong returned to the store in an attempt to speak with the manager. She was unable to do so; but before leaving the store, she noticed a chair that looked similar to the one that had collapsed and decided to take a photograph of it.

Thereafter, Birthrong filed a lawsuit against Family Thrift and Olympia to recover damages for the injuries that she suffered as a result of the chair collapsing underneath her while shopping at the defendants’ store. The defendants filed an answer, and discovery then ensued. Ultimately, the case proceeded to trial, during which Birthrong, the cashier who assisted her after she fell, and two of Olympia’s general managers testified. At the close of evidence, the defendants moved for a directed verdict, arguing that they lacked superior knowledge of the hazard posed by the chair and that, in any event, Olympia did not own or occupy the premises and, thus, could not be held liable. But the trial court denied the defendants’ motions, and at the conclusion of the trial, the jury found in favor of Birthrong, with both defendants being held liable for damages.

Subsequently, the defendants filed a motion for j.n.o.v., reiterating the same arguments that they made in their motions for directed verdict. Birthrong filed a response, and, once again, the trial court denied the defendants’ motion and issued an order affirming the jury’s verdict. This appeal follows.

1. In their first enumeration of error, the defendants contend that the trial court erred in denying their motion for j.n.o.v., arguing that there was no evidence that they possessed superior knowledge of the hazard posed by the allegedly defective chair. We agree.

It is, of course, well established that under Georgia law a proprietor has a statutory duty to exercise ordinary care to keep its premises safe, which “includes inspecting the premises to discover possible dangerous conditions of which the [proprietor] does not have actual knowledge, and taking reasonable precautions to protect invitees from dangers foreseeable from the arrangement or use of the premises.” But in order for a plaintiff to recover damages for injuries sustained in a premises-liability action, an invitee must prove “(1) that the defendant had actual or constructive knowledge of the hazard; and (2) that the plaintiff lacked knowledge of the hazard despite the exercise of ordinary care due to actions or conditions within the control of the owner/occupier.” Indeed, it is fundamental that, in a premises-liability case, the true ground of liability is “the proprietor’s superior knowledge of the perilous instrumentality and the danger therefrom to persons going upon the property.” Thus, it is when the “perilous instrumentality” is “known to the owner and not known to the person injured that a recovery is permitted.”

In this matter, there was no evidence presented during trial that any employee of Family Thrift or Olympia had actual knowledge of the hazard posed by the chair. As a result, this case necessarily turns on “whether constructive knowledge of the alleged hazard can be imputed to the store,” which may be shown by demonstrating that

(1) an employee of the defendant was in the immediate vicinity of the fall and had an opportunity to correct the hazardous condition prior to the fall, or (2) the hazardous condition had existed for a sufficient length of time that it would have been discovered and removed had the proprietor exercised reasonable care in inspecting the premises.

Here, Birthrong argues that the defendants had constructive knowledge that the chair was defective because, if they had followed their inspection procedures, which entailed inspecting every donated item before placing it in the main store area for sale, they would have discovered the defect. But Birthrong presented no evidence during trial “establishing exactly how the chair was defective, whether the defect was one which would be visible during an inspection, or how long the defect existed.” There is, then, “no logical foundation for arguing that such a defect should have been discovered during the... inspection procedure.” And as we have previously held, “there is no duty to discover a defect which is not manifested until the incident causing injury.” Thus, given that Birthrong failed to produce evidence from which a jury could properly infer that defendants had superior knowledge that the chair was defective, the trial court erred in denying their motion for j.n.o.v. as to this issue.

2. Nevertheless, at trial, Birthrong apparently overcame this lack of specific evidence of any defect in the chair by arguing that the doctrine of res ipsa loquitur applied to create an evidentiary presumption that the chair was indeed defective. Consequently, in their second enumeration of error, the defendants contend that the trial court likewise erred in denying their motion for j.n.o.v. based on its ruling that the doctrine of res ipsa loquitur was applicable. Again, we agree.

As all first-year law students learn, “res ipsa loquitur” is a legal maxim that means the transaction or thing speaks for itself. More precisely, it is a rule of evidence to be applied in cases when “there is no evidence of consequence showing negligence on the part of the defendant,” and one which allows “but does not require, the jury to infer facts from the circumstances in which the injury occurred, thereby filling the evidentiary gap.” The application of res ipsa loquitur is authorized, then, when

(1) the injury is of a kind which ordinarily does not occur in the absence of someone’s negligence; (2) it must be caused by an agency or instrumentality within the exclusive control of the defendant; and (3) it must not have been due to any voluntary action or contribution on the part of the plaintiff.

But as we have previously emphasized, the doctrine of res ipsa loquitur should always be “applied with caution and only in extreme cases.”

Here, res ipsa loquitur was not applicable because Birthrong failed to show that this is “the type of accident which ordinarily occurs only if someone is negligent.” Certainly, through normal wear and tear, a chair — especially a used chair donated to a thrift store — can cease fulfilling its intended function and create a hazardous condition without negligence on the part of any individual. Furthermore, Birthrong similarly failed to show that the defendants had exclusive control of the chair. As one of the defendants’ managers testified, although store policy required furniture to remain in the furniture section of the store, it was not uncommon for customers to move chairs around the store for their own use. Indeed, Birthrong testified that she sat in the chair at issue after observing another customer near the dressing room sitting in a similar chair. Thus, the uncontroverted evidence showed that the chair was accessible to other customers and not within the defendants’ exclusive control. Given these particular circumstances, Birthrong also failed to satisfy the second element of res ipsa loquitur, and the trial court erred in denying the defendants’ motion for j.n.o.v. as to this issue as well.

Decided March 8, 2016 —

Reconsideration denied March 31, 2016

Law Office of Dan J. Colley, William E. Gray II, for appellants.

Kelly & Kelly, Roy R. Kelly TV, Gini L. Jenkins, for appellee.

3. The defendants also contend that the trial court erred in denying their motion for j.n.o.v., specifically as to Olympia’s liability, because there was no evidence that Olympia owned or occupied the premises where Birthrong’s injury occurred. But given our holdings in Divisions 1 and 2, supra, we need not address this issue.

Thus, for all of the foregoing reasons, the trial court erred in denying the defendants’ motion for j.n.o.v. Accordingly, we reverse the jury’s verdict and trial court’s judgment in favor of Birthrong.

Judgment reversed.

Ellington, P. J., and McFadden, J., concur.

        Atlanta Emergency Servs., LLC v. Clark, 328 Ga. App. 9, 11 (1) (761 SE2d 437) (2014) (punctuation omitted).

        Id. (punctuation omitted).

        See id.

        See OCGA § 51-3-1 (“Where an owner or occupier of land, by express or implied invitation, induces or leads others to come upon his premises for any lawful purpose, he is liable in damages to such persons for injuries caused by his failure to exercise ordinary care in keeping the premises and approaches safe.”).

        Robinson v. Kroger Co., 268 Ga. 735, 740 (1) (493 SE2d 403) (1997) (citations omitted); accord Benefield v. Tominich, 308 Ga. App. 605, 608 (1) (708 SE2d 563) (2011).

        Robinson, 268 Ga. at 748-49 (2) (b); accord Gaskin v. Berry’s Boat Dock, 334 Ga. App. 642, 644 (780 SE2d 83) (2015); Avery v. Cleveland Ave. Motel, 239 Ga. App. 644, 645 (2) (521 SE2d 668) (1999).

        Freeman v. Eichholz, 308 Ga. App. 18, 22 (2) (705 SE2d 919) (2011) (punctuation omitted); accord Ballard v. S. Reg'l Med. Ctr., Inc., 216 Ga. App. 96, 97 (1) (453 SE2d 123) (1995).

        Freeman, 308 Ga. App. at 22-23 (2) (punctuation omitted); Ballard, 216 Ga. App. at 97 (1).

        Benefield, 308 Ga. App. at 608 (1) (punctuation omitted); accord Blocker v. Wal-Mart Stores, 287 Ga. App. 588, 589-90 (651 SE2d 845) (2007); Washington v. J.D. Royer Wholesale Florist, 275 Ga. App. 407, 408 (620 SE2d 626) (2005).

        Benefield, 308 Ga. App. at 608 (1) (punctuation omitted); accord Gibson v. Halpern Enterprises, 288 Ga. App. 790, 791 (655 SE2d 624) (2007); Bolton v. Wal-Mart Stores, 257 Ga. App. 198, 198 (570 SE2d 643) (2002).

        Freeman, 308 Ga. App. at 23 (2).

       Id.

        Ballard, 216 Ga. App. at 98 (1); accord Freeman, 308 Ga. App. at 23 (2).

        See Freeman, 308 Ga. App. at 23 (2) (holding that summary judgment in defendant’s favor was proper because there was no evidence from which it could be inferred that defendant had constructive knowledge that chair, which collapsed when plaintiff sat upon it, was defective).

        Law v. BioLab, Inc., 325 Ga. App. 500, 502 (2) (753 SE2d 446) (2013); accord Evans v. Heard, 264 Ga. 239, 240 (442 SE2d 753) (1994); Atlanta Ry. & Power Co. v. Johnson, 120 Ga. 908 (48 SE 389) (1904); Dawson v. Am. Heritage Life Ins. Co., 121 Ga. App. 266, 269 (173 SE2d 424) (1970).

        Aderhold v. Lowe’s Home Centers, Inc., 284 Ga. App. 294, 295 (643 SE2d 811) (2007) (punctuation omitted); accord Kmart Corp. v. Larsen, 240 Ga. App. 351, 352 (522 SE2d 763) (1999).

        Aderhold, 284 Ga. App. at 295 (punctuation omitted); accord Larsen, 240 Ga. App. at 352.

        Aderhold, 284 Ga. App. at 295 (punctuation omitted); accord Larsen, 240 Ga. App. at 352.

        Law, 325 Ga. App. at 502 (2) (punctuation omitted); accord Hosp. Auth. of City of St. Mary’s v. Eason, 222 Ga. 536, 541 (1) (150 SE2d 812) (1966); see generally Sinkovitz v. Peters Land Co., 5 Ga. App. 788 (64 SE 93) (1909) (“The maxim res ipsa loquitur, is of limited application, but embodies a perfectly sound legal principle.”).

        Ballard, 216 Ga. App. at 99 (2).

        See Watts & Colwell Builders, Inc. v. Martin, 313 Ga. App. 1, 6 (2) (720 SE2d 329) (2011) (holding that res ipsa loquitur was not applicable to find defendant liable for injury caused when the door to a bathroom stall fell off its hinges and knocked plaintiff to the ground because the failure of a hinge could have occurred in the absence of negligence); Ballard, 216 Ga. App. at 99-100 (2) (holding that res ipsa loquitur was not applicable to find defendant liable for injury caused when handrail pulled out from the wall because it could become defective and created a dangerous condition without someone’s negligence, and thus accident was not of the type that ordinarily occurs only because of someone’s negligence).

        See Watts & Colwell Builders, Inc., 313 Ga. App. at 6 (2) (holding that res ipsa loquitur was not applicable to find defendant liable for injury caused when the door to a bathroom stall fell off its hinges and knocked plaintiff to the ground because stall door was not within defendant’s exclusive control); Aderhold, 284 Ga. App. at 295-96 (holding that defendant store did not retain exclusive control over the box on a shelf that fell and injured plaintiff, as required for application of res ipsa loquitur, because the uncontroverted evidence reflected that the box was within the reach of other customers); Sams v. Wal-Mart Stores, Inc., 228 Ga. App. 314, 316 (491 SE2d 517) (1997) (same). Cf. Turry v. Hong Kong Delight, Inc., 215 Ga. App. 193, 194 (449 SE2d 873) (1994) (holding that res ipsa loquitur was applicable when evidence showed that sofa in restaurant’s reception area, which collapsed as plaintiff sat upon it, was furnished and controlled by defendant); Gresham v. Stouffer Corp., 144 Ga. App. 553, 554 (241 SE2d 451) (1978) (holding that res ipsa loquitur was applicable when evidence showed that restaurant’s dining chair, which collapsed as plaintiff sat upon it, was furnished and controlled by restaurant for customer use).


author: McFadden, Judge.

text:
    A15A2311.
    FINANCIAL EDUCATION SERVICES, INC. v. STATE OF GEORGIA.
    (785 SE2d 544)
   McFadden, Judge.

Financial Education Services, Inc., filed this direct appeal of a superior court order compelling it to comply with an investigative demand issued by the Governor’s Office of Consumer Affairs. We conclude that under binding Supreme Court of Georgia authority, that demand constitutes the decision of an “administrative agency” for the purpose of OCGA § 5-6-35 (a) (1), and consequently that Financial Education Services was required by that provision to apply for a discretionary appeal. Because it did not do so, we lack jurisdiction over the appeal, and must therefore dismiss.

At the time relevant to this appeal John D. Sours was the administrator of the Fair Business Practices Act of 1975, OCGA § 10-1-390 et seq., which he enforced as director of the Governor’s Office of Consumer Affairs. After receiving complaints alleging that Financial Education Services was illegally selling credit repair services, see OCGA §§ 10-1-393 (a) and 16-9-59, Sours issued an investigative demand to the company under former OCGA § 10-1-403 (a), seeking information and documents.

Financial Education Services submitted what Sours determined to be an incomplete response to the investigative demand. Sours directed Financial Education Services to comply fully with the investigative demand by a certain deadline. Instead of complying, Financial Education Services submitted a formal response, asserting various defenses, including that the information Sours requested encompassed protected trade secrets. Sours disputed Financial Education Services’s characterization of the information and directed it to comply fully by a new deadline. He warned that should Financial Education Services fail to comply, he would ask the attorney general to file a motion to compel on his behalf. Financial Education Services responded again, reiterating its objections.

The attorney general, on behalf of Sours, filed in superior court an application for an order compelling compliance with the investigative demand, and Financial Education Services filed a motion for protective order or, in the alternative, motion to quash. The superior court conducted a hearing, determined that Financial Education Services’s objections lacked merit, and thus ordered it to produce the requested information within 21 days of the order.

Financial Education Services filed this direct appeal. The attorney general moved to dismiss the appeal, arguing that Financial Education Services was required to follow the discretionary appeal procedure of OCGA § 5-6-35. We agree, and the motion is granted.

With some limited exceptions, to appeal a decision of a superior court reviewing a decision of a state administrative agency, a party must file an application for discretionary appeal with the appellate court. OCGA § 5-6-35 (a) (1). And in Tri-State Bldg. & Supply v. Reid, 251 Ga. 38, 39 (302 SE2d 566) (1983), our Supreme Court held that an “agency’s decision to issue an investigative demand is a decision of an administrative agency within the meaning of OCGA § 5-6-35 (a).”

As in the instant case, Tri-State involved an investigative demand issued under OCGA § 10-1-403 (a) of the Fair Business Practices Act. Nonetheless, Financial Education Services argues that Tri-State is distinguishable because there, the subject of an investigative demand filed an action in superior court to quash the demand, whereas here, the attorney general filed an action to compel compliance with the demand. This is a distinction without a difference; in both cases, the superior court reviewed a decision of a state agency. “OCGA § 5-6-35 (a) (1) . . . applies to appeals from the superior court’s ‘review’ of an administrative agency decision, however that judicial review is sought.” Hamryka v. City of Dawsonville, 291 Ga. 124, 125 (2) (728 SE2d 197) (2012) (citation, punctuation and emphasis omitted).

Financial Education Services also argues that Tri-State was wrongly decided in that it ignores the rationale behind OCGA § 5-6-35 (a) (1): that once two tribunals have already heard a matter, a party must apply for an appeal. “But this [c]ourt has no authority to overrule or modify a decision made by the Supreme Court of Georgia, as ‘[t]he decisions of the Supreme Court shall bind all other courts as precedents.’ ” Pak v. Ga. Dept. of Behavioral Health & Developmental Disabilities, 317 Ga.App. 486, 488 (731 SE2d 384) (2012) (quoting Ga. Const. of 1983, Art. VI, Sec. VI, Par. VI). We are bound by Tri-State. And that binding authority dictates that the issuance of an investigative demand is an administrative agency decision subject to the discretionary appeal procedure of OCGA § 5-6-35 (a) (1), even if two tribunals have not adjudicated the matter. See also Roy E. Davis & Co. v. Dept. of Revenue, 256 Ga. 709 (353 SE2d 195) (1987) (denying reconsideration of dismissal of appeal involving agency’s refusal to issue corporate certificate of registration); Strohecker v. Gwinnett County Police Dept., 182 Ga. App. 853 (357 SE2d 305) (1987) (dismissing appeal involving refusal to expunge criminal records).

Finally, Financial Education Services argues that the discretionary appeal statute does not apply because the administrator of the Fair Business Practices Act, not an administrative agency, issued the investigative demand. “An administrative agency is a governmental authority, other than a court and other than a legislative body, which affects the rights of private parties through either adjudication or rulemaking.” Dept. of Transp. v. Del-Cook Timber Co., 248 Ga. 734, 739 (3) (e) (285 SE2d 913) (1982) (citation, punctuation and emphasis omitted). The administrator of the Fair Business Practices Act served this function under former OCGA § 10-1-404 (a). And we note that in this regard, this case is no different than Tri-State; both here and there, the investigative demand was issued by the administrator of the Fair Business Practices Act.

Decided march 1, 2016 —

Reconsideration denied April 1, 2016

The Burke Law Group, E. Earle Burke, Jordan M. Mahoney, for appellant.

Samuel S. Olens, Attorney General, Daniel S. Walsh, Robin G. Cohen, Senior Assistant Attorneys General, Charlene R. Swartz, Assistant Attorney General, for appellee.

Appeal dismissed.

Ellington, P. J., and Dillard, J., concur.

       Effective July 1,2015, after entry of the superior court’s order and the filing of Financial Education Services’s notice of appeal, the General Assembly amended Title 10 to assign the powers and responsibilities of what had been the Governor’s Office of Consumer Affairs to the attorney general. See Ga. L. 2015, p. 1088, § 2. The office is now known as the Consumer Protection Unit; and the attorney general, rather than the agency head, is now administrator of the Act. As a consequence, the attorney general was substituted for Administrator Sours as the named defendant. OCGA § 9-11-25 (d). See also State of Ga. v. Sun States Ins. Group, 332 Ga. App. 197, n. 3 (770 SE2d 43) (2015).


author: MILLER, Presiding Judge.

text:
    A15A2346, A15A2347.
    COBRA 4 ENTERPRISES v. POWELL-NEWMAN et al.; and vice versa.
    (785 SE2d 556)
   MILLER, Presiding Judge.

These consolidated cases arise from an automobile accident that injured Karen Powell-Newman. Danny Ayala was driving a truck leased to his employer Yellow Ribbon Tree Experts (‘Yellow Ribbon”) at the time of the accident. Ayala was arrested and charged with various traffic violations. Powell-Newman and her husband Stephen Newman (collectively “the Newmans”) filed a complaint against Ayala, Yellow Ribbon, and Yellow Ribbon’s owner Gary Robertson, alleging negligence; negligent hiring, supervision, retention, and entrustment; and liability under a theory of respondeat superior. They also named as a defendant Cobra 4 Enterprises (“Cobra 4”), another company owned by Robertson and the owner of the truck Ayala had been driving. Cobra 4 moved for summary judgment, arguing that it could not be held vicariously liable because it had no control over the truck at the time of the accident. It further argued that the fact that Robertson owned both Yellow Ribbon and Cobra 4 did not create liability. The trial court considered three bases for Cobra 4’s potential liability: as an alter ego of Yellow Ribbon; for engaging in a joint venture with Yellow Ribbon; and for negligently entrusting its truck to Yellow Ribbon. The trial court concluded that there was no evidence to support a joint venture because Cobra 4 did not have any right to control the conduct of Yellow Ribbon. The trial court found, however, that the evidence supported a claim of negligent entrustment and alter ego, and it denied summary judgment on these claims (“the 2014 order”).

Thereafter, Robertson, Yellow Ribbon, Ayala, and their insurance company entered into a limited liability release (“the Release”) with the Newmans in which the Newmans accepted $131,506.12 for their claims against Robertson, Ayala, and Yellow Ribbon.

Cobra 4 then renewed its motion for summary judgment, seeking to enforce the Release. Cobra 4 argued that the trial court found that it was an agent of Yellow Ribbon and therefore a party to the Release. The trial court denied the motion (“the 2015 order”), finding that the 2014 order did not conclude that Cobra 4 was an agent of Yellow Ribbon. Rather, in the 2014 order, the trial court simply concluded that there was enough evidence for the jury to consider whether Cobra 4 was an alter ego of Yellow Ribbon. The trial court explained that “agent” was not synonymous with “alter ego,” and thus the Release did not cover Cobra 4. Cobra 4 sought interlocutory review, and this Court granted its application. These appeals followed.

In Case No. A15A2347, the Newmans argue that the trial court erred in finding that Yellow Ribbon and Cobra 4 were not a joint venture. In Case No. A15A2346, Cobra 4 argues that the trial court erred in finding that it could have been an alter ego of Yellow Ribbon and that it could be liable under a theory of negligent entrustment. It also argues that the trial court erred in finding it was not a party to the Release. For the reasons that follow, we affirm in part, reverse in part, and remand the cases with direction.

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

(Citation and punctuation omitted.) Carter v. Scott, 320 Ga. App. 404, 405 (750 SE2d 679) (2013).

So viewed, the evidence shows that Robertson is the sole owner of Yellow Ribbon, a limited liability company formed in 2006 to provide arboricultural services. In 2009, Robertson formed Cobra 4 to provide a leasing company for Yellow Ribbon’s trucks. Cobra 4 purchased Yellow Ribbon’s vehicles for $1 each and leased the trucks back to Yellow Ribbon for $2,500 per month. Robertson is the sole shareholder and owner of Cobra 4, and the only member of its board of directors. Although Cobra 4’s articles of incorporation require the corporation to hold shareholder meetings and to elect officers, Cobra 4 has done neither.

The principal office of both Cobra 4 and Yellow Ribbon is Robertson’s home address, and Robertson is the registered agent for both corporations. It is undisputed that Robertson formed Cobra 4 to protect his assets — the equipment- — -from judgments against Yellow Ribbon. Robertson kept the finances of the two companies separate; each had its own bank account, and Robertson did not pay any expenses for one company from the other’s funds. Yellow Ribbon employed a secretary, who was not paid out of Cobra 4 funds. And there was some evidence that, in the past, Cobra 4 had leased vehicles to a company Robertson did not own. Nevertheless, there was some overlap of the work. When Yellow Ribbon needed another truck, Cobra 4 would buy one. Robertson admitted that some tasks were done “50/50” for both Cobra 4 and Yellow Ribbon.

Although Cobra 4 owned the trucks, it had no right of control over the vehicles while they were leased to Yellow Ribbon. The Lease and Property Agreement (“the Agreement”) between Cobra 4 and Yellow Ribbon required Yellow Ribbon to maintain insurance against personal injuries up to $500,000 and to indemnify Cobra 4. The limits of the policy maintained by Yellow Ribbon, however, were $150,000, and Cobra 4 had no insurance of its own. Robertson could not explain why the insurance coverage was less than required under the terms of the Agreement. Instead, Robertson testified that Yellow Ribbon was to “take care of” this claim against Cobra 4, “just like the paperwork says.”

Ayala worked for Yellow Ribbon on a day-to-day basis cleaning up tree branches. Ayala was not hired as a driver and, therefore, Robertson did not check Ayala’s driving record when he hired Ayala. Ayala did not have a Georgia driver’s license and did not drive any of Yellow Ribbon’s trucks before the day of the accident. On that day, Ayala’s supervisor allowed Ayala to drive the truck from one work site to another.

Notably, the record on appeal does not contain any information regarding Powell-Newman’s injuries or the damage to her car. Robertson testified that he remembered Powell-Newman walking around after the accident. She had her arm in a sling, but she did not leave the accident site in an ambulance.

Generally, one of the purposes of incorporating a business is insulation from liability. Derbyshire v. United Builders Supplies, Inc., 194 Ga. App. 840, 844 (2) (a) (392 SE2d 37) (1990). And “[a] cardinal precept of corporate law is that corporations are separate legal entities from their shareholders, officers, directors, and employees... even in the situation in which a corporation is owned solely by one person.” (Citations omitted.) Dept. of Transp. v. McMeans, 294 Ga. 436, 437 (754 SE2d 61) (2014). Courts, therefore, should be cautious about ignoring the corporate structure. Id. at 437-438. The corporation shields its members from liability unless there is a reason to “pierce the corporate veil.” Id. at 437. A plaintiff may rely on three intertwined theories in an attempt to pierce the veil: (1) alter ego; (2) agency; and (3) joint venture. Kissun v. Humana, Inc., 267 Ga. 419, 419-420 (479 SE2d 751) (1997).

Case No. A15A2347

1. The Newmans argue that the trial court erred in finding that Cobra 4 and Yellow Ribbon were not engaged in a joint venture. We disagree.

A joint venture arises “where two or more parties combine their property or labor, or both, in a joint undertaking for profit, with rights of mutual control (provided the arrangement does not establish a partnership), so as to render all joint venturers liable for the negligence of the other.” (Citation omitted.) Kissun, supra, 267 Ga. at 420. The right to exercise mutual control is a crucial part of a joint venture. Williams v. Chick-fil-A, Inc., 274 Ga. App. 169, 170 (617 SE2d 153) (2005). “For a joint venture to exist, there must be not only a joint interest in the purpose of the enterprise but also an equal right, express or implied, to direct and control the conduct of one another in the activity causing the injury. . . .” (Citation and punctuation omitted.) Id.

Here, the record is devoid of any evidence that Cobra 4 had any right to direct or control the conduct of Yellow Ribbon. There was no commingling of funds, the companies had separate bank accounts, and Cobra 4 had no right of possession of any of its trucks while they were leased to Yellow Ribbon. We therefore find that the trial court properly granted summary judgment on the joint venture claim.

Case No. A1SA2346

2. Cobra 4 argues that the trial court erred in finding that there was a factual question for the jury regarding whether it could have been an alter ego of Yellow Ribbon. We agree.

“Under the alter ego doctrine, equitable principles are used to disregard the separate and distinct legal existence possessed by a corporation where it is established that the corporation served as a mere alter ego or business conduit of another.” (Citations omitted.) Kissun, supra, 267 Ga. at 419-20. Under Georgia law, piercing the corporate veil requires some evidence of abuse of the corporate form, and sole ownership by one person is not a factor. Amason v. Whitehead, 186 Ga. App. 320, 322 (367 SE2d 107) (1988). Rather, there must be evidence that the defendant “disregarded the separateness of legal entities by commingling on an interchangeable or joint basis or confusing the otherwise separate properties, records or control.” (Citation and punctuation omitted.) Id.; see also Farmers Warehouse of Pelham, Inc. v. Collins, 220 Ga. 141, 149-150 (2) (d) (137 SE2d 619) (1964) (declining to apply alter ego doctrine where there was no evidence that the companies were used as a subterfuge, and finding that to ignore the corporate form would work an injustice). Where there is no evidence that the corporate arrangement is a sham that was designed to defeat justice, perpetuate fraud, or evade statutory, contractual, or tort liability, the issue of alter ego liability is not a jury question. Derbyshire, supra, 194 Ga. App. at 844 (2) (a).

There can be no dispute that the Newmans could have pierced the veil of either Cobra 4 or Yellow Ribbon to hold Robertson liable. Robertson was the sole owner of each corporation, he funded them initially with his own money, and he used them to protect his assets. Robertson underinsured Yellow Ribbon and Cobra 4, and he sold Yellow Ribbon’s trucks to Cobra 4 for only a dollar a piece. Moreover, Robertson admittedly ignored corporate formalities with respect to Cobra 4. He failed to hold shareholder meetings or elections of corporate officers. Under these facts, it is clear that the Newmans could have pierced the veil to get to Robertson. See Amason, supra, 186 Ga. App. at 322. Importantly, however, the Newmans chose to settle their claims against Robertson, and he is no longer a defendant in this action.

Because they can no longer hold Robertson liable, the Newmans now attempt to impose liability on Cobra 4 by piercing the veil horizontally between Cobra 4 and its sibling corporation Yellow Ribbon. Georgia courts have never applied the alter ego doctrine to impose liability in this manner. Moreover, other courts that have considered this issue have refused to impose liability in such circumstances. See, e.g., Madison County Communications Dist. v. Century-link, Inc., CV-12-J-1768-NE, 2012 WL 6685672, *4 (N.D. Ala. 2012) (finding no grounds to pierce the veil between sibling companies under Alabama law because there was no evidence that one corporation completely dominated and controlled the other); Minno v. Pro-Fab, Inc., 121 Ohio St. 3d 464, 468 (905 NE2d 613) (2009) (“[A] plaintiff cannot pierce the veil of one corporation to [impose liability] on its sister corporation”).

The Newmans focus on Robertson’s failure to adhere to the corporate form as a basis to establish that Cobra 4 was an alter ego of Yellow Ribbon. This is not sufficient to impose liability on Cobra 4 as a sibling corporation to Yellow Ribbon. Although the evidence shows that Robertson failed to adhere to corporate formalities with respect to Cobra 4, this fact is relevant only to piercing Cobra 4’s veil to hold Robertson liable.

We cannot conclude that Yellow Ribbon and Cobra 4 were alter egos because there was no evidence that the two companies were interchangeable entities. There was no evidence of any commingling of assets between the two corporations. Cobra 4 had no right of control or possession over the trucks leased to Yellow Ribbon, and Cobra 4 leased vehicles to a company Robertson did not own. The two corporations had separate bank accounts and different accountants. Neither corporation paid any expenses for the other, and Robertson’s secretary at Yellow Ribbon was not paid out of Cobra 4 funds. In other words, there was no evidence that the two corporations commingled their assets or otherwise confused their separate records or control. Amason, supra, 186 Ga. App. at 322. Therefore, after a thorough review, we are constrained to conclude that there is no evidence in this case to raise a question of fact for the jury regarding whether Cobra 4 was an alter ego of Yellow Ribbon. Derbyshire, supra, 194 Ga. App. at 844 (2) (a).

We recognize that there was some overlap between the two companies. In the absence of any evidence of commingling or abuse of the corporate entity by Cobra 4 and Yellow Ribbon, however, we cannot find Cobra 4 to be Yellow Ribbon’s alter ego. Collins, supra, 220 Ga. at 150 (2) (d) (declining to apply alter ego doctrine where the evidence was insufficient to show that separation between the corporation and the individual did not exist and allowing the corporate fiction would promote injustice or protect fraud); see also Florida Shade Tobacco Growers, Inc. v. Duncan, 150 Ga. App. 34 (256 SE2d 644) (1979) (finding no evidence that the corporation was a sham so as to justify ignoring the separation of the entities). Simply put, although there was plenty of evidence to enable the Newmans to pierce the veil to hold Robertson liable, under the facts of this case, there is no basis to extend the alter ego doctrine to cover sibling companies. Therefore, we conclude that the trial court erred when it denied Cobra 4’s summary judgment motion on alter ego grounds.

3. Cobra 4 next argues that the trial court erred in finding that it could be liable under a theory of negligent entrustment because there was no evidence that Cobra 4 had the right to control the conduct of Yellow Ribbon and, in the absence of any such relationship, there can be no vicarious liability. We agree.

Under the doctrine of negligent entrustment, a party is liable if he entrusts someone with an instrumentality, with actual knowledge that the person to whom he has entrusted the instrumentality is incompetent by reason of his age or inexperience, or his physical or mental condition, or his known habit of recklessness.

Decided March 16, 2016 —

Reconsideration denied April 1, 2016

Barrickman, Allred & Young, Elizabeth G. Howard, for appellant.

(Citations and footnote omitted.) Gunn v. Booker, 259 Ga. 343, 347 (3) (381 SE2d 286) (1989). Here, there was no evidence of any mutual control between Cobra 4 and Yellow Ribbon, and the Newmans have not shown that Cobra 4, as the owner of the truck, had any knowledge of a habit of recklessness by Ayala, or even that such knowledge could be inferred. But see CGL Facility Mgmt. v. Wiley, 328 Ga. App. 727, 732 (2) (b) (760 SE2d 251) (2014) (allowing the claim to go to the jury because there was a question of fact where the employer could have had knowledge of the driver’s recklessness based on prior incidents). Rather, the record here shows that Ayala was not hired as a driver and had never driven one of the trucks before the day of the accident. Therefore, the Newmans’ negligent entrustment claim against Cobra 4 fails as a matter of law, and Cobra 4 was entitled to summary judgment on this claim.

4. Cobra 4 argues that the trial court erred in denying its renewed motion for summary judgment on the ground that it is not a party to the Release. We need not address this argument in light of our holdings in Divisions 1,2, and 3.

In summary, in Case No. A15A2347, we conclude that the trial court properly granted partial summary judgment to Cobra 4 on the ground that it was not engaged in a joint venture with Yellow Ribbon. We therefore affirm the 2014 order in part on these grounds. In Case No. A15A2346, we find that the trial court erred when it denied summary judgment to Cobra 4 on its alter ego and negligent entrustment claims. Accordingly, we reverse in part the 2014 order on these grounds and remand the case to the trial court with instructions to enter judgment in favor of Cobra 4 on these claims. In light of these holdings, we need not address Cobra 4’s enumeration of error with respect to the 2015 order.

Judgment affirmed in Case No. A1SA2347. Judgment reversed and case remanded with direction in Case No. A15A2346.

Andrews, P. J., concurs. Branch, J., concurs fully in Divisions 1, 3, and 4, and concurs in judgment only in Division 2.

Katz, Stepp, Wright & Fleming, Robert N. Katz, Briant G. Mildenhall; Jacobs & King, Scott R. King, for appellees.

       Robertson also filed a motion for summary judgment, which the trial court granted in part. That order is not at issue on appeal.

       The Newmans did not specifically allege an agency relationship as the basis for holding Cobra 4 liable. They argued only that Cobra 4 was an alter ego of and engaged in a joint venture with Yellow Ribbon.

       In their reply brief, the Newmans note that Yellow Ribbon was underinsured, which was a breach of the Agreement, hut that Cobra 4 did not seek to terminate the Agreement or retake possession of its trucks. We do not consider arguments made for the first time in a reply brief. McReynolds v. The Prudential Ins. Co. of America, 276 Ga. App. 747, 751 (1) (b) (624 SE2d 218) (2005). Even if we were to consider this argument, such evidence is relevant only to piercing the veil against Robertson, not Cobra 4.

       We note that, given our conclusions that Cobra 4 was not an alter ego of or engaged in a joint venture with Yellow Ribbon, the Newmans’ negligent hiring and negligent supervision claims against Cobra 4 would fail as a matter of law. There can be no claim for negligent hiring, supervision, or retention where there was no evidence that Cobra 4 was Ayala’s employer. See McLaine v. McLeod, 291 Ga. App. 335, 336, n. 3 (661 SE2d 695) (2008) (noting that there could be no negligent hiring claim where the defendant was not the employer).