author: MCMILLIAN, Judge. MILLER, Presiding Judge, MCFADDEN, Judge,

text:
    A12A1814.
    RICHARDS v. D. R. HORTON, INC. et al.
    (740 SE2d 732)
   MCMILLIAN, Judge.

Mark A. Richards, pro se, filed the present appeal after the trial court dismissed his claims against his homebuilder D. R. Horton, Inc., various subcontractors and an insurance company (collectively referred to as appellees). We now conclude that the trial court erred by dismissing Richards’ claims against D. R. Horton, but affirm the dismissal of his claims against the remaining appellees.

The pertinent facts, insofar as we can glean them from the voluminous record on appeal, show the following: In September 2010, Richards filed suit against D. R. Horton asserting claims based on the allegedly defective construction of his home. That case apparently was removed to federal district court, and in January 2011, Richards filed a voluntary petition for relief under Chapter 7 of the United States Bankruptcy Code in which he disclosed his “fraud” suit against “D. R. Horton.” In June 2011, the district court concluded that, because of the bankruptcy filing, the trustee was now the real party in interest to prosecute the claims asserted in Richards’ negligent construction suit and dismissed the complaint without prejudice.

In late April 2011, the trustee entered a report of no distribution, and the bankruptcy court approved that report, discharged Richards and the trustee, and closed the estate by order dated July 19,2011. On August 25, 2011, Richards filed a “Complaint for Breach of Contract, Breach of Warranty, Fraud, Bad Intent and Improper Site Preparation” against the appellees in this appeal. Each of the appellees answered and moved to dismiss Richards’ claims, based in part on the doctrine of judicial estoppel and standing. On September 30, 2011, Richards filed a responsive pleading asserting, among other things, that appellees’ motions to dismiss should be denied because his bankruptcy case had been closed and his claims against the appellees abandoned back to him. The trial court rejected these contentions and dismissed Richards’ complaint, finding that he lacked standing to pursue his claims. Richards timely filed his notice of appeal from that order on March 13, 2012.

Thereafter, on April 30, 2012, the United States Bankruptcy Court for the Northern District of Georgia entered an order on Richards’ motion to reopen his Chapter 7 case and for an order of abandonment. The bankruptcy court refused Richards’ request to reopen, noting that Richards had disclosed his claim “against his homebuilder,” the trustee had filed a report of no distribution on April 25, 2011, and the bankruptcy court discharged Richards and closed his case on July 19, 2011. Thus, the bankruptcy court concluded

that, by operation of 11 USC § 554 (c), [Richards’] cause of action against D. R. Horton, Inc. was abandoned to [Richards] on July 19, 2011, is presently vested in [Richards] and [Richards] alone, and only [Richards] has the right to pursue this cause of action. The bankruptcy estate has no further interest in it.

With this procedural backdrop in place, we now consider whether the trial court properly dismissed Richards’ complaint.

1. In his first, second, third and fifth enumerations of error, Richards makes various assertions concerning the merits of his underlying claims or other matters irrelevant to the disposition of the standing issue, which is the only issue before us. Thus, because these enumerations present nothing for this Court to review, we will not consider them.

2. We now turn to the pivotal issue in this case, which is whether the trial court erred by dismissing Richards’ complaint for lack of standing because his claims remained property of the bankruptcy estate.

D. R. Horton argues on appeal that there was no evidence in the record before the trial court that the trustee had abandoned the cause of action against it. Pertinent to this issue, the record shows that Richards’ claims against D. R. Horton were clearly disclosed in the schedules he filed with his bankruptcy petition and, under well-settled law, became part of the bankruptcy estate. Parker v. Wendy’s Intl., Inc., 365 F3d 1268 (11th Cir. 2004) (causes of action belonging to the debtor at the commencement of the bankruptcy case vest in the bankruptcy estate upon filing of the petition). Further, those claims were not “otherwise administered” by the trustee, who entered a report of no distribution. Cf. Period Homes, Ltd. v. Wallick, 275 Ga. 486 (569 SE2d 502) (2002) (bankruptcy estate closed by successful distribution).

Based on this record, the starting point of our analysis is 11 USC § 554, which governs the abandonment of property of the bankruptcy estate. Subsection (c) provides in relevant part: “Unless the court orders otherwise, any property scheduled under section 521 (a) (1) of this title .. . not otherwise administered at the time of the closing of a case is abandoned to the debtor and administered for purposes of section 350 of this title . . . .” Thus, pursuant to 11 USC § 554 (c), Richards’ claims against D. R. Horton were abandoned back to him at the time his bankruptcy case was closed in July 2011. We, therefore, agree with the bankruptcy court that Richards, and Richards alone, had standing from that date forward to pursue this cause of action. Accordingly, at the time he filed the present action in August 2011, Richards had standing to pursue his claims against D. R. Horton and the trial court erred by dismissing his claims against that defendant.

But we reach a different result concerning the dismissal of Richards’ claims against the remaining appellees. These claims, like Richards’ claims against D. R. Horton, all related to the negligent construction of his home, clearly accrued prior to the filing of his bankruptcy petition, and therefore became an asset of the bankruptcy estate when Richards filed his petition. Parker v. Wendy’s Intl., 365 F3d at 1272. However, unlike his claims against D. R. Horton, Richards did not list his claims against these appellees on his bankruptcy schedule, and this “[f]ailure... leaves that interest in the bankruptcy estate.” Id. Further, Richards’ attempt to re-open the case after it was closed was unsuccessful. Thus, it appears that Richards only had standing to pursue his claims against D. R. Horton, and his claims against the remaining appellees were properly dismissed. Kittle v. ConAgra Poultry Co., 247 Ga. App. 102, 106-107 (1) (543 SE2d 411) (2000); see also Sevostiyanova v. Tempest Recovery Svcs., Inc., 307 Ga. App. 868, 870-871 (1) (705 SE2d 878) (2011); Zahabiuon v. Automotive Finance Corp., 281 Ga. App. 55, 56 (1) (635 SE2d 342) (2006); Battle v. Liberty Mut. Fire Ins. Co., 276 Ga. App. 434, 436 (623 SE2d 541) (2005); Cochran v. Emory Univ., 251 Ga. App. 737, 738-739 (1), (2) (555 SE2d 96) (2001).

Judge McFadden argues in his dissent, however, that instead of affirming the dismissal of Richards’ claims against the other defendants, “[w]e should vacate and remand for the trial court to conduct a hearing to determine whether Richards sufficiently itemized his claims to put the trustee on notice to investigate further, . . . , and whether Richards had a motive to conceal his claims.” But, unlike the cases cited by the dissent, this case does not involve the use of a mere “misnomer,” which nevertheless clearly identified the defendant (Kuehn v. Cadle Co., 2007 U. S. Dist. LEXIS 18387 (M.D. Fla. 2007)), or an expansive identification of a claim related to a certain incident (In re Bonner, 2005 Bankr. LEXIS 1683 (BAP 6th Cir. 2005)), or actual notice of a claim (Donarumo v. Furlong, 660 F3d 81, 87 (1st Cir. 2011)).

We are also unpersuaded that Richards’ motive or intent is relevant here. The trial court dismissed these claims based on lack of standing, not the doctrine of judicial estoppel, which, as the dissent acknowledges, is an equitable doctrine invoked at the court’s discretion. Thus, cases such as Reciprocal Merchandising Svcs. v. All Advertising Assoc., 163 BR 689 (S.D. N.Y. 1994), in which the court invoked that doctrine and then considered the debtor’s motive in failing to list the claim, are likewise unavailing.

Further, unlike the plaintiff/debtor in Gingold v. Allen, 272 Ga. App. 653, 654 (613 SE2d 173) (2005), which Presiding Judge Miller cites in her separate dissent, Richards has already filed one motion to reopen in the bankruptcy court, and he did so after the trial court dismissed his claims based on lack of standing. Thus, we see no need to halt and delay the trial court proceedings to give Richards an additional opportunity to pursue another motion to reopen.

However, we are mindful that Richards’ motion to reopen the bankruptcy estate was not included in the record on appeal. Thus, it is unclear to us whether Richards, who by all appearances was proceeding pro se in filing that motion, appreciated the different positions occupied by D. R. Horton versus the other appellees based on how he listed his claims in his bankruptcy schedule, and it is likewise unclear to us whether his request to reopen would have alerted the bankruptcy court that he had additional claims against these defendants and that he was also seeking to have those claims abandoned back to him. Thus, while, unlike the dissents, we would not vacate the trial court’s dismissal of these claims to allow Richards to pursue an evidentiary hearing in the trial court or stay the proceedings to ensure that Richards gets another bite at the apple in the bankruptcy court, we would emphasize that nothing we say here prevents Richards from returning to the bankruptcy court and seeking clarification concerning the status of his claims against these defendants. It may well be that if these claims have not been adequately assessed by the trustee, the bankruptcy court will allow the case to be reopened for the purpose of either allowing the trustee to pursue those claims or abandoning the claims back to Richards, at which point he could seek to add the claims to his state court case. Otherwise, however, and based on clear authority, e.g., Kittle v. ConAgra Poultry, 247 Ga. App. at 106-107 (1), we find these claims were properly dismissed and no further proceedings are mandated on this issue.

Judgment affirmed in part and reversed in part.

Doyle, P. J., Ray and Branch, JJ., concur. Barnes, P. J., Miller, P. J., andMcFadden, J., concur in part and dissent in part.

MILLER, Presiding Judge,

concurring in part and dissenting in part.

I concur with the majority’s opinion to reverse the trial court’s dismissal of Richards’s claims against D. R. Horton, Inc., because he does in fact have standing to raise these claims. I respectfully dissent from the majority’s conclusion that we affirm the trial court’s dismissal of Richards’s claims against the other defendants. While I agree with Judge McFadden that the trial court’s order should be reversed with respect to Richards’s claims against the additional defendants, I write separately because I would reverse on this point for a different reason and remand with instructions.

As noted by the majority, a cause of action arising before the filing of a bankruptcy petition is the property of the Chapter 7 bankruptcy estate, “and only the trustee in bankruptcy has standing to pursue it.” (Citation and punctuation omitted.) Parker v. Wendy’s Inti., 365 F3d 1268, 1272 (II) (11th Cir. 2004); see also Baillie Lumber Co. v. Thompson, 391 F3d 1315, 1319 (II) (11th Cir. 2004) (providing that a debtor’s assets include potential legal causes of action). The failure to list an interest on a bankruptcy schedule leaves that interest in the bankruptcy estate until it has been either administered or abandoned by the trustee. See Parker, supra, 365 F3d at 1272 (II). Therefore, the trustee is the proper party in interest and has exclusive standing to prosecute Richards’s undisclosed causes of action. Id.; see also Gingold v. Allen, 272 Ga. App. 653, 654 (613 SE2d 173) (2005).

“Nevertheless, when an action is not prosecuted by the real party in interest, the trial court should not dismiss the action until a reasonable time has been allowed after obj ection for ratification of commencement of the action by, or joinder or substitution of, the real party in interest.” (Citations and punctuation omitted.) Gingold, supra, 272 Ga. App. at 656; see also OCGA § 9-11-17 (a). In circumstances similar to those presented in the instant appeal, we remanded a case to the trial court with instructions to allow the plaintiff “a reasonable amount of time to take affirmative steps in the bankruptcy court to either secure an abandonment by the bankruptcy trustee or to substitute the trustee as the plaintiff.” Gingold, supra, 272 Ga. App. at 656. Indeed, Richards may return to bankruptcy court for a reopening of his bankruptcy case in order to add the undisclosed claims. See In re Upshur, 317 BR 446, 450, 452 (Bankr. N.D. Ga. 2004). The bankruptcy court would be authorized to reopen the case and appoint a trustee to administer or abandon Richards’s undisclosed claims. See id. at 451 (providing that bankruptcy courts have “a duty to reopen the [bankruptcy] estate whenever there is proof that it has not been fully administered”). Unless these undisclosed claims are administered or abandoned to Richards, however, the trustee retains the exclusive right to prosecute those claims. See Parker, supra, 365 F3d at 1272 (II).

Although I agree with Judge McFadden that we should remand the case, I would not do so for the purpose of having the trial court determine whether Richards sufficiently apprised the trustee of his additional claims or had a motive to conceal them. This misses the point that only the bankruptcy trustee has standing to pursue the undisclosed claims, and Richards does not. Whether judicial estoppel should apply is not relevant until the undisclosed claims have been administered or abandoned to Richards. See In re Upshur, supra, 317 BR at 454. To address any questions as to whether Richards acted in good faith, understood his disclosure obligations, or intentionally omitted the claim from his bankruptcy schedule is simply premature at this point. See id.; In re Phelps, 329 BR 904, 909 (Bankr. M.D. Ga. 2005).

Therefore, I conclude that the trial court’s order should be reversed in whole, and the case should be remanded with instructions for the trial court to “give [Richards] a reasonable amount of time to take affirmative steps in the bankruptcy court to either secure an abandonment by the bankruptcy trustee or to substitute the trustee as the plaintiff.” Gingold, supra, 272 Ga. App. at 656.

MCFADDEN, Judge,

concurring in part and dissenting in part. I concur with the reversal of the trial court’s dismissal of Richards’ claims against D. R. Horton, Inc. based on a finding of abandonment by the bankruptcy trustee. I respectfully dissent to the affirmance of the trial court’s dismissal of Richards’ claims against the other defendants. We should vacate and remand for the trial court to conduct a hearing to determine whether Richards sufficiently itemized his claims to put the trustee on notice to investigate further, Donarumo v. Furlong, 660 F3d 81, 87 (1st Cir. 2011), and whether Richards had a motive to conceal the claims. Barger v. City of Cartersville, 348 F3d 1289, 1296 (C) (1) (11th Cir. 2003).

Upon the filing of a bankruptcy petition, virtually all of a debtor’s assets, both tangible and intangible, vest in the bankruptcy estate. 11 USC § 541 (a) (1) (providing that the bankruptcy estate includes “all legal or equitable interests of the debtor in property as of the commencement of the case”). That property includes

causes of action belonging to the debtor at the commencement of the bankruptcy case. Thus, a trustee, as the representative of the bankruptcy estate, is the proper party in interest, and is the only party with standing to prosecute causes of action belonging to the estate. Once an asset becomes part of the bankruptcy estate, all rights held by the debtor in the asset are extinguished unless the asset is abandoned back to the debtor pursuant to [11USC] § 554 of the Bankruptcy Code. At the close of the bankruptcy case, property of the estate that is not abandoned under § 554 and that is not administered in the bankruptcy proceedings remains the property of the estate. Failure to list an interest on a bankruptcy schedule leaves that interest in the bankruptcy estate.

Parker v. Wendy’s Intl., 365 F3d 1268, 1272 (II) (11th Cir. 2004).

A debtor has a statutory duty to fully disclose all assets, and this is a continuing duty of complete and honest disclosure. Robinson v. Tyson Foods, 595 F3d 1269, 1274 (A) (11th Cir. 2010). “Failure to list an interest on a bankruptcy schedule leaves that interest in the bankruptcy estate,” depriving the debtor of standing to pursue that interest. Parker, 365 F3d at 1272 (II). Alternatively, a debtor who has failed to disclose claims in his bankruptcy proceeding may be judicially estopped from pursuing those claims. Burnes v. Perneo Aeroplex, 291 F3d 1282 (11th Cir. 2002).

But “[w]hile a debtor has a duty to prepare schedules carefully, completely, and accurately, . . . [a]s investigation is part of the [t]rustee’s duties ..., a debtor is required only to do enough itemizing to enable the trustee to determine whether to investigate further.” (Citations and punctuation omitted.) Donarumo, 660 F3d at 87.

There are no bright-line rules for how much itemization and specificity is required for bankruptcy schedules. What is required is reasonable particularization under the circumstances. The Official Forms themselves have generally been regarded as subject to a rule of substantial compliance. It would be silly to require a debtor to itemize every dish and fork, but every bankrupt must do enough itemizing to enable the trustee to determine whether to investigate further.

(Citations and punctuation omitted.) Kuehn v. Cadle Co., 2007 U. S. Dist. LEXIS 18387 at *13 (M.D. Fla. 2007). “[D]ebtors can list lawsuits on their bankruptcy schedules in the most general of terms, even without identifying any defendants, and still satisfy the filing requirements of § 521 (a) (1) (B) (i) and the abandonment requirements of § 554 (c).” Id. (holding that debtor who listed in bankruptcy a lawsuit naming one defendant was not barred from pursuing same lawsuit against a different defendant). See also In re Bonner, 2005 Bankr. LEXIS 1683 (BAP 6th Cir. 2005) (debtors’ scheduling of an asset labeled “Auto Accident Claim” without identifying any potential defendants “plainly and unambiguously included any claim that the debtors may have had for any personal injury arising out of the automobile accident”); Reciprocal Merchandising Svcs. v. All Advertising Assoc., 163 BR 689 (S.D. N.Y. 1994) (Chapter 11 debtor was not judicially estopped from pursuing claims for unjust enrichment and breach of alleged oral contract even though he failed to name the defendants or detail the nature of the claims in prior bankruptcy proceeding, where there was no evidence that debtor deliberately intended to mislead bankruptcy court or to obtain unfair advantage, and debtor did not conceal during proceedings that it had claims arising out of wrongful transfer of assets).

Here, the trial court ruled that “[t]he subject matter of [the] earlier case is identical to the matter [at hand], with the exception that [Richards] now sues additional defendants.” Given this finding, the trial court should reconsider whether Richards’ listing of his lawsuit satisfied the filing requirements of § 521 (a) (1) (B) (i) and the abandonment requirements of § 554 (c) to determine whether he has standing to pursue his action against the defendants other than D. R. Horton.

In addition to arguing that Richards lacked standing, at least one of the appellees argued that Richards’ claims are barred by judicial estoppel. “Judicial estoppel is an equitable doctrine invoked at a court’s discretion.” (Citation omitted.) Burnes, 291 F3d at 1285 (III) (A). It is “intended to be a flexible rule in which courts must take into account all of the circumstances of each case in making [their] determination^].” (Citation omitted.) Ajaka v. BrooksAmerica Mtg. Corp., 453 F3d 1339, 1344 (11th Cir. 2006). The “two primary factors in determining whether to apply judicial estoppel [are whether] the allegedly inconsistent positions [were] taken under oath in a prior proceeding, and [whether] they [were] calculated to make a mockery of the judicial system.” (Citations omitted.) Id. The court looks to see if the debtor (1) knew about the cause of action that should have been listed; and (2) had a motive to conceal the cause of action. Barger, 348 F3d at 1296 (C) (1).

It is undisputed that Richards did not list the additional defendants on his schedule. So the questions become whether his disclosure was “full enough” to put the trustee on notice to inquire further and whether he had a motive to conceal his cause of action against these defendants. As noted previously, the trial court ruled that “[t]he subject matter of [the] earlier case is identical to the matter [at hand], with the exception that [Richards] now sues additional defendants.” He made no finding about Richards’ intent. The trial court should consider these questions upon remand.

Decided March 26, 2013.

Mark A. Richards, pro se.

Leitner, Williams, Dooley & Napolitan, Craig R. Allen, Thomas O. Sippel, Jatrean M. Sanders, Waldon, Adelman, Castilla, Hiestand & Prout, Trevor G. Hiestand, Ashley G. Rice, Mozley, Finlayson & Loggins, William D. Harrison, Crim & Bassler, Jason D. Darneille, Moore, Clarke, DuVall & Rodgers, Charles J. Willcox, Freeman, Mathis & Gary, Philip W. Savrin, Hanks & Brookes, Jerald R. Hanks, Barry S. Noeltner, for appellees.

The cases upon which the majority relies are distinguishable. In Kittle v. ConAgra Poultry Co., 247 Ga. App. 102 (543 SE2d 411) (2000), Zahabiuon v. Automotive Finance Corp., 281 Ga. App. 55 (635 SE2d 342) (2006), and Sevostiyanova v. Tempest Recovery Svcs., 307 Ga. App. 868 (705 SE2d 878) (2011), we held that the plaintiffs were judicially estopped from pursuing their complaints when their claims accrued before they filed for bankruptcy yet they never listed them on any bankruptcy schedules at any time. In Cochran v. Emory Univ., 251 Ga. App. 737 (555 SE2d 96) (2001), we held that the plaintiff was judicially estopped from pursuing a medical malpractice claim when she did not list it on her bankruptcy schedule and only sought to reopen her bankruptcy to amend the schedule once the defendant was granted summary judgment on judicial estoppel grounds. In Battle v. Liberty Mut. Fire Ins. Co., 276 Ga. App. 434 (623 SE2d 541) (2005), we held that the plaintiff was judicially estopped from pursuing his claim for fire insurance benefits because he failed to list the insured property in his bankruptcy. Here, on the other hand, Richards listed the identical lawsuit on his schedule, albeit with only one of the defendants.

Whether the fact that the trustee had before her the “identical” case should have placed her on notice as to these other defendants and whether Richards had a motive to conceal the claims are questions the trial court should resolve within its discretion.

I am authorized to state that Presiding Judge Barnes joins in this opinion.

       The remaining appellees are Murrell’s Construction Company, Andy Lewis Heating & Air-Conditioning, LLC, Raggahianti Foundations II, Inc., Dupree Plumbing Company, Executive Landscaping, Inc. and Grange Mutual Insurance Company.

       We remind the parties that our rules require that citations to the record and transcripts must be to the appellate record, and must include the specific volume or part. Court of Appeals Rule 25 (a).

       We are mindful that the trial court did not have the benefit of the bankruptcy court’s order when it dismissed Richards’ claims.

       This Court has specifically considered and rejected the assertion that an unlisted claim may be deemed abandoned by operation of law even if the trustee has actual notice of the unlisted claim. Kittle v. ConAgra Poultry, 247 Ga. App. at 106-107 (1). See also Wright v. Vanderbilt Mtg. & Finance, Inc., 2009 Bankr. LEXIS 3564 *11, n. 8 (Bankr. N.M. 2009).

       Although the majority notes that Richards has unsuccessfully attempted to reopen his bankruptcy case, it does not appear that he did so for the purposes of adding the undisclosed causes of action against the subcontractors and the insurance company. Richards’s motion to reopen was not included in the record before us, but the bankruptcy court’s order denying his motion makes no mention of whether Richards sought to add the undisclosed claims relating to the subcontractors and the insurance company. Rather, the bankruptcy court’s order shows that Richards filed the motion to reopen for the purpose of obtaining an order of abandonment as to his claims against D. R. Horton. The bankruptcy judge declined to reopen the bankruptcy case, finding that Richards’s claims against D. R. Horton were abandoned to him by operation of law when his bankruptcy case was closed, as this cause of action was listed in his bankruptcy schedule. See 11 USC § 554 (c). In other words, the motion to reopen to pursue an order of abandonment was unnecessary because Richards’s claims against D. R. Horton had already been abandoned to him.

       Judicial estoppel would not apply to the trustee in the event the trustee was substituted as the plaintiff in this case. See Parker, supra, 365 F3d at 1272 (II) (holding that trustee cannot be judicially estopped from prosecuting debtor’s undisclosed claims).


source: Caselaw Access Project

author: BARNES, Presiding Judge.

license: Public Domain

text:
    A12A1921.
    FALAY v. THE STATE.
    (740 SE2d 738)
   BARNES, Presiding Judge.

Omar Falay appeals from the denial of his motion for new trial following his conviction for aggravated assault. He contends on appeal that the evidence was insufficient to sustain the conviction, that the trial court erred in denying his motion to exclude a witness’s testimony, and that the trial court erred in refusing to charge the jury on abandonment. Following our review, we affirm.

“On appeal from a criminal conviction, we view the evidence in the light most favorable to the verdict, with the defendant no longer enjoying a presumption of innocence.” Reese v. State, 270 Ga. App. 522, 523 (607 SE2d 165) (2004). We neither weigh the evidence nor judge the credibility of witnesses, but determine only whether, after viewing the evidence in the light most favorable to the prosecution, a “rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.” Jackson v. Virginia, 443 U. S. 307, 319 (III) (B) (99 SC 2781, 61 LE2d 560) (1979).

So viewed, the evidence shows that on the night of December 23, 2008, the two victims drove to meet two men at a subdivision in Grayson. When the men, later identified as Falay and co-defendant Zachary Bivens, got into the car, the victim showed them a bag of marijuana and asked to see their money. Falay and Bivens pulled out guns and said, “This is a jack move,” meaning a robbery. Falay and Bivens told the victims to get out of the car, and then ordered them to empty their pockets. The first victim attempted to take the gun from Falay, and while the two men struggled, Falay called out for help. Bivens walked over to help Falay and shot his gun three times, after which the second victim ran toward the woods, while Falay and Bivens ran in the opposite direction. The second victim went back to help the first victim, who had been shot. The first victim later died at the hospital.

While the victims were at the hospital, Gwinnett County police responded to a “person shot” call and discovered Falay, who had also been shot, on the front porch of a house approximately a quarter of a mile from the robbery. He refused to cooperate with police, and after police conducted an area check of the surrounding area, they were able to find and secure the crime scene. Another detective testified that uniform patrol officers had responded to another person shot call from the hospital within four minutes of the call about Falay, and he surmised that because of the shootings’ close proximity in time and place, they might be related. He interviewed the surviving victim, who identified Falay from a photographic lineup.

At trial, a ballistics expert testified that the bullets recovered from Falay and the first victim, the decedent, were from the same gun. A crime scene specialist testified that a shoe print found at the scene of the shooting matched the size, pattern, and wear characteristics of the shoe worn by Falay. Police received a telephone call from a friend of the decedent’s who said that on the night of the shooting he had provided the decedent’s number to a person looking to buy marijuana. Police contacted the person, who was identified as co-defendant Francelis Dorce.

At the trial, Dorce, who was granted testimonial immunity, testified that he, Falay, and Bivens were hanging out at a gas station the night of the incident and decided to buy some marijuana from the decedent. The three placed several calls to the surviving victim over the period of several hours as they waited to meet him. While they waited, Dorce heard Falay mention “hitting a lick.” Dorce also testified that Bivens had a gun, but did not recall seeing Falay with a gun. Dorce testified that he left before the victim came to pick up Falay and Bivens, and that he did not warn the victim because he did not know if Falay and Bivens were serious about the robbery. Dorce also admitted during his testimony that he had given the police several inconsistent statements, and that he had wanted to protect Bivens.

Falay testified that he had gone to the area to see a girl and that he saw Dorce and Bivens and smoked marijuana with them. He further testified that Dorce called someone to buy more marijuana, and that he, Bivens and Dorce went to meet the seller at the place where the shooting occurred. Falay testified that he saw Dorce give Bivens a gun, but when he heard Dorce say that he was going to “hit a lick,” Falay walked away into the woods because he did not want to participate. Falay further testified that he waited around to see what would happen and saw Dorce and the decedent fighting, saw Bivens come around the car to help, and saw Bivens raise his gun. Falay testified that he heard three gunshots. Bivens and Dorce ran toward him in the woods, and after he asked Bivens, “what the hell did you just do,” Bivens shot him. Falay admitted that he had initially told police that he had gone to the area to visit a girl, and that he was in the woods urinating when he was approached by two males, and one of the men shot him.

1. Falay and Bivens were indicted for two counts of felony murder, and two counts of aggravated assault, and Falay, Bivens and Dorce were indicted for criminal attempt to commit armed robbery and armed robbery. Falay was convicted of only one count of aggravated assault for the shooting of the victim.

On appeal Falay contends that based on the verdict on the other counts the jury believed his account of the events of the shooting, and thus he could not have been guilty of committing aggravated assault.

As noted earlier, our review is not of the weight to be given the evidence, but “whether the evidence viewed in the light most favorable to the conviction is sufficient to support the verdict.” (Citation omitted.) Fields v. State, 263 Ga. App. 11 (587 SE2d 171) (2003). Thus, notwithstanding Falay’s acquittal for felony murder of the decedent, we consider whether the evidence in this case, viewed in the light most favorable to the verdict, was sufficient for any rational trier of fact to conclude that he was guilty beyond a reasonable doubt of the aggravated assault of the decedent “with a handgun, a deadly weapon, by shooting the handgun at [the victim].”

In our cases endorsing the abolition of the inconsistent verdict rule, we have determined it is not generally within the court’s power to make inquiries into the jury’s deliberations, or to speculate about the reasons for any inconsistency between guilty and not guilty verdicts. As we observed[,] appellate courts cannot know and should not speculate why a jury acquitted on one offense and convicted on another offense. The reason could be an error by the jury in its consideration or it could be mistake, compromise, or lenity. Stated another way, it is imprudent and unworkable to allow criminal defendants to challenge inconsistent verdicts on the ground that in their case the verdict was not the product of lenity, but of some error that worked against them. Such an individualized assessment of the reason for the inconsistency would be based either on pure speculation, or would require inquiries into the jury’s deliberations that the courts generally will not undertake.

(Citations and punctuation omitted.) Turner v. State, 283 Ga. 17, 20 (2) (655 SE2d 589) (2008).

We find that the evidence was sufficient. See State v. Robinson, 275 Ga. App. 117, 117-118 (619 SE2d 806) (2005) (finding evidence sufficient to support a guilty verdict for possession of firearm during commission of aggravated assault notwithstanding defendant’s acquittal on aggravated assault charge).

2. Falay contends that the trial court erred by failing to grant his motion to exclude the testimony of the surviving victim based on an alleged discovery violation. He contends that the trial court should have granted his objection to the victim testifying because the State did not comply with the trial court’s instruction to provide him with a copy of the victim’s plea transcript in an unrelated robbery. We do not agree.

The record reflects that, on the morning of the trial, Falay notified the court that he had just become aware that the surviving victim had pled guilty to an unrelated charge, but had not yet been sentenced. The trial court reviewed its plea book and retrieved the victim’s file, which included a transcript of his plea hearing. The trial court then provided Falay with the transcript and recessed while Falay reviewed it. When the trial court reconvened, Falay moved to exclude the victim’s testimony because of the State’s alleged discovery violation. Falay maintained that the plea transcript revealed that the trial court had directed the State to provide him with a copy of the transcript when it became available, and that the State did not do so. After quoting the referenced portion of the transcript, the trial court noted that it had not intended that the State had to provide Falay with a copy of the transcript but

to make defense counsel aware of the situation ... that [the victim] was out on bond and may be a material witness in the case. So I’m not prepared to read too much into this, that somehow the State’s violated the Court’s directive thereby causing undue prejudice to [Falay], no.

The court then responded that it would not find that the State had intentionally violated a ruling of the court, or intentionally concealed the transcript from Falay because it “did . . . not hand carry a transcript to any of the defense attorneys.” The State responded that Falay was given ample time to review the transcript and that the witness was present if Falay wanted to interview him. The trial court noted for the record that jeopardy had not yet attached because the jury had not been sworn in. The trial court then denied the motion, finding that the State had not “run afoul of discovery procedures and there’s no prejudice otherwise that I can perceive at this point now that counsel has the benefit of the transcript. . . .”

OCGA § 17-16-6 provides:

If at any time during the course of the proceedings it is brought to the attention of the court that the state has failed to comply with the requirements of this article, the court may order the state to permit the discovery or inspection, interview of the witness, grant a continuance, or, upon a showing of prejudice and bad faith, prohibit the state from introducing the evidence not disclosed or presenting the witness not disclosed, or may enter such other order as it deems just under the circumstances. . . .

“[T]o obtain the exclusion of evidence for the State’s alleged discovery violation, [Falay] must show both prejudice and bad faith.” Clay v. State, 290 Ga. 822, 841 (5) (b) (725 SE2d 260) (2012). In this case, Falay showed neither. Further, he did not seek a recess or continuance or request any other remedy authorized by OCGA § 17-16-6, except to move to exclude the victim’s testimony. Accordingly, the trial court did not abuse its discretion in denying Falay’s motion to exclude the testimony and in permitting the victim to testify. Taylor v. State, 305 Ga. App. 748, 753 (2) (a) (700 SE2d 841) (2010).

3. Falay last contends that the trial court erred in refusing to give his charge on abandonment in response to a jury question. The record reveals that during deliberations, the jury sent out the following question: “When you know a crime is going to be committed, does walking away and not reporting it make you a party to the crime? Does not reporting it when you witness it make you a party to the crime?” The trial court asked Falay and the State for their input, and Falay responded that “the Court could choose to give them a charge on abandoning the enterprise or abandonment of the enterprise.” He had not previously requested the charge. The State objected to any new charges, and the trial court determined that the question was one of fact, and “for applying the law to facts,” and thus “cannot be answered by the court.” The trial court then noted that abandonment would not be warranted under the facts of the case, or appropriate since the evidence was closed and the jury had been charged. It then responded to the jury that it could not answer the question and directed it to “apply the jury instructions to the evidence presented during the trial in reaching your decision.”

Pretermitting whether in this circumstance Falay waived any error by not requesting the charge or objecting when the trial court did not give additional instructions, we find no error, plain or otherwise. “As a general rule, the need, breadth, and formation of additional jury instructions are left to the sound discretion of the trial court.” (Citation and punctuation omitted.) McElroy v. State, 244 Ga. App. 500, 501 (1) (a) (536 SE2d 188) (2000).

The court may properly refuse to instruct the jury on matters not relevant to the issues on trial. Indeed, the court should enlighten rather than confuse the jury in responding to questions. Thus, refusing to answer jury questions requesting irrelevant information is entirely proper. Instead, the court may respond to a jury’s question by repeating charges which are legally sufficient and not misleading.

Decided March 26, 2013.

Sliz, Drake, Estes & Greenwald, Scott A. Drake, for appellant.

Daniel J. Porter, District Attorney, Teresa B. Klein, Assistant District Attorney, for appellee.

(Citations and punctuation omitted.) Holloman v. State, 257 Ga. App. 490, 492 (571 SE2d 486) (2002).

Abandonment, a “voluntary and complete renunciation of his criminal purpose,” OCGA § 16-4-5 (a), is available only where the defendant first “admit [s] engaging in the [underlying] crime.” Younger v. State, 288 Ga. 195, 197 (1) (702 SE2d 183) (2010). Falay made no such admission; instead he maintained that he did not know about the plan to rob the victim, and left the scene when he found out that Bivens and Dorce were going to rob the victim. Thus, in this circumstance, the trial court did not err in refusing to give a charge on abandonment.

Judgment affirmed.

McFadden and McMillian, JJ., concur.


author: DOYLE, Presiding Judge.

text:
    A12A2093.
    PARSONS v. MERTZ et al.
    (740 SE2d 743)
   DOYLE, Presiding Judge.

Richard L. Parsons filed suit in magistrate court against Jamie Mertz, Patrick Ryan, Virtual Properties Realty, Inc., and Virtual Properties Plus, Inc., (collectively, “Virtual Properties”) to recover earnest money that Virtual Properties returned to Mertz and Ryan after a failed real estate closing. Following a hearing, the magistrate court ruled in favor of the defendants, and Parsons appealed to the superior court. The superior court granted Mertz’s and Virtual Properties’ subsequent motion to dismiss, and we granted Parsons’s subsequent pro se application for discretionary appeal. We affirm in part, reverse in part, and remand the case, for the following reasons.

The record shows that on December 9,2006, Parsons entered into an agreement with Mertz and Ryan to purchase a house in Gwinnett County; the closing was scheduled for December 21, 2006. The purchase agreement required Parsons to pay the sellers earnest money in the amount of $1,000. On May 17, 2011, Parsons filed a pro se breach of contract action in magistrate court against Mertz, Ryan, and Virtual Properties, alleging therein that after Parsons’s attorney sought to examine Ryan’s identification, Ryan left the closing proceedings and did not return, resulting in Ryan’s and Mertz’s failure to execute the closing documents, which constituted a breach of the purchase agreement. Virtual Properties subsequently released the $1,000 earnest money to Mertz, and Parsons sought return of the earnest money and damages.

Parsons filed returns of service for all three defendants. The return of service for Ryan indicates that “Patrick A. Ryan” was served at a Lawrenceville address on June 24, 2011. In August 2011, the Ryan who was served wrote to the clerk of court, stating therein:

My name is Patrick A. Ryan[,] but I am not the Patrick A. Ryan that was involved in the activity prompting this civil action. Until this civil action[,] I have had no knowledge or contact with ... Parsons, or the defendants,... Mertz ... or Virtual Properties.... I believe the plaintiff has wrongfully identified me as a defendant in this case and, if necessary, would testify to that in court. I have been in contact with ... Parsons and provided a copy of my identification to him to assure him I was not the party he wishes to pursue with this action[,] but he said he was unable to remove me from the action. . . .

At the October 6,2011 hearing in magistrate court, a man named Patrick Ryan appeared and explained that he had been served but had no connection to the property or involvement in the actions forming the basis of the lawsuit. Parsons stated that he did “not recognize” the Ryan that appeared at the hearing, and Mertz agreed that the man was not her fiancé, Patrick Ryan, who was a party to the purchase agreement. After Parsons’s former attorney testified that he was “virtually sure” that the Patrick Ryan who appeared at the hearing was not the same Patrick Ryan who appeared at the closing, the magistrate court released the man from the hearing, stating that although he failed to file a timely or proper answer, “it is clear that [he was] not the person that was there [at the closing].”

At the conclusion of the hearing, at which witnesses from the parties testified about what took place at the closing, the magistrate court announced that it was entering judgment in favor of the defendants, finding that based on the evidence, Parsons was not entitled to a refund of his earnest money. The court also dismissed Ryan from the action.

Parsons appealed to superior court, where Mertz and Virtual Properties filed a motion to dismiss or motion for judgment on the pleadings on the grounds that Parsons had failed to serve the proper Patrick Ryan, an indispensable party under OCGA § 9-11-19 (a) (1), and that the purchase agreement between the sellers and Parsons contained a “hold harmless” provision stating that all parties agreed not to bring suit against Virtual Properties for damages relating to its decision to disburse the earnest money. Following a hearing, the superior court granted the motion to dismiss. This appeal followed.

1. Parsons argues that he was entitled to a default judgment against Ryan. We disagree.

According to Parsons, he properly served Patrick A. Ryan, the man listed on the purchase agreement. Thus, Parsons argues, Ryan failed to timely answer and was in default, and the trial court erred by failing to enter a default judgment against Ryan.

“Service on the proper party is the responsibility of the plaintiff. .. .” “Atrial court’s finding of insufficient service of process will be upheld on appeal absent a showing of an abuse of discretion. Such an abuse occurs where the trial court’s ruling is unsupported by any evidence of record or where that ruling misstates or misapplies the relevant law.” “The trial court resolves factual disputes regarding service, and we will uphold the court’s findings if there is any evidence to support them.”

There is evidence in the record to support the trial court’s conclusion that the Patrick Ryan whom Parsons served had no connection to the parties or the purportedly breached agreement. Parsons concedes that the man who appeared at the magistrate court hearing was not the man who identified himself as Ryan at the closing. Thus, in the absence of proper service on the correct defendant Ryan, the trial court did not abuse its discretion by failing to grant a default judgment against Ryan.

2. Parsons contends that even if he was not entitled to a default judgment against Ryan, he was still permitted to proceed against Virtual Properties and Mertz.

(a) Virtual Properties. The purchase agreement between the parties addressed which party was entitled to disbursement of the earnest money and provided that Virtual Properties would disburse it to the proper party “upon a reasonable interpretation of the contract.” The agreement also contained, however, an indemnification and hold harmless clause:

All parties hereby agree to indemnify and hold [Virtual Properties] harmless from and against all claims, causes of action, suits [,] and damages arising out of or related to the performance by [Virtual Properties] of its duties hereunder. All parties further covenant and agree not to sue [Virtual Properties] for damages relating to any decision of [Virtual Properties] to disburse earnest money made in accordance with the requirements of this Agreement.

Parsons’s agreement not to bring suit against Virtual Properties (who had the authority to make a reasonable determination regarding which party was entitled to the earnest money) for damages resulting from disbursement of the earnest money is fatal to his claim against Virtual Properties. Accordingly, the trial court did not err by granting Virtual Properties’ motion to dismiss.

(b) Mertz. Parsons argues that the trial court erred by dismissing his claim against Mertz on the grounds that the correct Patrick Ryan was an indispensable party and that Parsons’s failure to serve and join him as a party required dismissal of his claim against her.

[O]rdinarily, it is error to dismiss a petition for failure to join an indispensable party. Rather, the party should be joined so the case can be considered on the merits. However, a complaint may be dismissed for failure to join an indispensable party when the court lacks jurisdiction of the indispensable party.

OCGA § 9-11-19, which governs the joinder of indispensable parties, provides in subsection (a):

A person who is subject to service of process shall be joined as a party in the action if:
(1) In his absence complete relief cannot be afforded among those who are already parties; or
(2) He claims an interest relating to the subject of the action and is so situated that the disposition of the action in his absence may:
(A) As a practical matter impair or impede his ability to protect that interest; or
(B) Leave any of the persons who are already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of his claimed interest.

If the trial court concludes that a person described in OCGA § 9-11-19 (a) can be served, it “must allow a reasonable time for the absent parties to be joined.” If a trial court concludes that a party described in OCGA § 9-11-19 (a) cannot be joined as a party for venue, lack of jurisdiction, or some other reason, then the trial court “shall determine whether in equity and good conscience the action should proceed among the parties before it or should be dismissed, the absent person being thus regarded as indispensable.” In making that decision, the trial court must consider the following five factors:

(1) To what extent a judgment rendered in the person’s absence might be prejudicial to him or to those already parties;
(2) The extent to which, by protective provisions in the judgment, by the shaping of relief, or by other measures, the prejudice can be lessened or avoided;
(3) Whether a judgment rendered in the person’s absence will be adequate;
(4) Whether the plaintiff will have an adequate remedy if the action is dismissed for nonjoinder; and
(5) Whether and by whom prejudice might have been avoided or may, in the future, be avoided.

Here, the record does not reflect that the trial court gave Parsons a reasonable time to join Ryan. Pretermitting whether Parsons’s continued insistence that he was entitled to a default judgment against Ryan obviated the requirement that the trial court give him additional time to serve Ryan, there is no indication in the record that the trial court made a determination regarding whether Ryan could be served.

Accordingly, we reverse the trial court’s grant of Mertz’s motion to dismiss and remand the case for the trial court to determine whether Ryan is an indispensable party who must be joined pursuant to OCGA § 9-11-19 (a) and whether he can be served. If the trial court concludes that Ryan cannot be served, it must then decide whether the case should proceed in his absence pursuant to OCGA § 9-11-19 (b), taking into account the factors listed in that Code section.

Decided March 26, 2013.

Richard L. Parsons, pro se.

Andersen, Tate & Carr, R. Matthew Reeves, for Jamie Mertz, Virtual Properties Realty, Inc. and Virtual Properties Plus, Inc.

Patrick A. Ryan, pro se.

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

Ellington, C. J., Barnes, P. J., Miller, P. J., Phipps, P. J., Andrews, Dillard, McFadden, Boggs, Ray, Branch and McMillian, JJ., concur.

       Parsons made a verbal motion for a default judgment against Ryan, but the trial court responded that it was “not the appropriate time.”

       A representative for Virtual Properties testified that the sellers wanted to close, but Parsons would not do so. Parsons’s attorney testified that he picked up Ryan’s identification at the closing to verify his identity, and Ryan “snatched” it out of his hand, stormed out, and did not return. Mertz testified that Parsons’s attorney picked up Ryan’s driver’s license after the closing attorney had verified Ryan’s identity and confirmed that the sellers could convey good and marketable title; in response to Parsons’s concerns regarding title, Mertz offered to purchase additional title insurance, but Parsons declined.

       In support of his argument, Parsons alleges that there is only one “Patrick A. Ryan” in Gwinnett County, the location of the house he contracted to buy.

       (Punctuation omitted.) Charming Shoppes of Delaware v. Parrish, 214 Ga. App. 729, 730-731 (448 SE2d 781) (1994).

       (Citations and punctuation omitted.) Mathis v. BellSouth Telecommunications, 301 Ga. App. 881 (690 SE2d 210) (2010).

        Aikens v. Brent Scarbrough & Co., 287 Ga. App. 296, 297 (651 SE2d 214) (2007).

       See Charming Shoppes, 214 Ga. App. at 731 (plaintiff is not entitled to judgment against the wrong defendant); Deal v. Rust Engineering Co., 169 Ga. App. 60, 61 (1) (311 SE2d 499) (1983) (“reasonable diligence to ensure proper timely service upon a defendant is the plaintiff’s responsibility’).

       The agreement provided that Mertz and Ryan were entitled to the earnest money if the agreement was “terminated due to the default of [Parsons].” Otherwise, Parsons was entitled to the earnest money.

       (Emphasis supplied.)

       See, e.g., Waller v. Economic & Community Dev. Dept., 269 Ga. App. 129, 132 (1) (603 SE2d 442) (2004).

       (Citation and punctuation omitted.) Dixon v. Cole, 277 Ga. 353, 354 (1) (589 SE2d 94) (2003).

       (Citations omitted; emphasis supplied.) Altama Delta Corp. v. Howell, 225 Ga. App. 78, 80-81 (3) (483 SE2d 127) (1997).

       OCGA § 9-11-19 (b).

       Id.

       Neither the written order nor the hearing transcript indicates the basis for the trial court’s ruling dismissing the case. Thus, although the trial court apparently granted Mertz’s motion to dismiss based on her argument that Parsons failed to join Ryan, Parsons was never so advised.

       See Hill v. McGarity, 205 Ga. App. 850, 851 (424 SE2d 62) (1992) (reversing dismissal of the action based on failure to join indispensable parties because “[njothing in the record indicates that the trial court lacks jurisdiction over the remaining [defendants], that they would not be amenable to service of process, or that they cannot be joined for some other reason”).

       See Wright v. Safari Club Intl., 307 Ga. App. 136, 139 (706 SE2d 84) (2010); Hill, 205 Ga. App. at 851.

       To determine if a joint obligor is an indispensable party, the trial court must consider the factors set forth in OCGA § 9-11-19 (b) in light of the substantive law regarding contractual joint obligors. In Winder v. Winder, 218 Ga. 409, 412-413 (128 SE2d 56) (1962), the Supreme Court of Georgia held that a joint obligor
      was, under the provisions of [OCGA § 9-2-26] and the uniform rulings of this [C]ourt, a necessary and essential party to the suit to enforce the contract (Graham v. Marks & Co., 95 Ga. 38, 39 (21 SE 986) [(1894)]; Wall v. Wall, 176 Ga. 757, 759 (168 SE 893) [(1933)]), in the absence of an averment that would have shown [the joint obligor] to be dead, beyond the jurisdiction of the court, or “not to be found.”

      (Emphasis supplied.) In Turner Outdoor Advertising v. Old South Corp., 185 Ga. App. 582, 583 (2) (365 SE2d 149) (1988), and Indus. Mechanical v. Siemens Energy & Automation, 230 Ga. App. 1, 3 (495 SE2d 103) (1997), this Court wrongly relied on quoted language from Wall, 176 Ga. at 759, to find that substantive law requires that breach of contract actions must he dismissed in all cases where joint obligors cannot be joined. We conclude that the Supreme Court’s opinion in Winder sets forth the substantive law regarding joint obligors and clarified or implicitly overruled any statement in Wall that could be construed to hold that all cases must be dismissed where joint obligors cannot be joined. Thus, consistent with the holding in Winder, we overrule Turner and Indus. Mechanical to the extent they require dismissal of all breach of contract cases where joint obligors cannot be joined.


text:
    A12A2107.
    THE STATE v. ANDREWS.
    (740 SE2d 748)
   BARNES, Presiding Judge.

The State appeals from the trial court’s order granting a motion to suppress evidence seized from a pat-down search of Perry Andrews. Andrews was arrested and indicted for possession of cocaine. He filed a motion to suppress alleging that he was illegally detained and searched. Following a hearing, the trial court granted his motion. For the reasons set forth below, we reverse.

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

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

So viewed, the evidence demonstrates that at approximately 1:00 a.m. on January 23, 2009, a deputy with the Telfair County Sheriff’s office was on patrol when another officer contacted him and told him that “there was a subject . . . walking to a known drug suspect’s residence.” The officer testified at the motion to suppress hearing that he “circled the block a couple of times [,] . . . jumped a street” and then made contact with the subject, whom he identified as Andrews after he rolled his window down and “noticed who it was.” The officer testified that he knew Andrews and “made small talk like, hey, haven’t seen you in a while.”

Andrews told the officer that he was out walking, and the officer, who was still sitting in his patrol vehicle, testified that since he “knew where [Andrews] was coming from . . . [he] asked him did he have anything illegal on him.” The officer further testified that he did not see Andrews come out of the residence of the suspected drug dealer, but that he could see the front yard of the residence from where he was stopped.

Andrews told the officer that he did not have anything illegal and “started emptying out his pockets.” The officer exited his patrol vehicle, and asked Andrews if he had anything else on him, and when Andrews responded that he did not, he asked Andrews if he “had a problem” with being patted down. Andrews responded “no,” and when the officer patted him down he “felt a hard chunky substance” in the pocket of Andrews’ sweatshirt. Believing the substance to be contraband, the officer “reached in [Andrews’] pocket and seized it.” The officer retrieved a small baggie containing an off-white substance which was later determined to be cocaine.

Andrews testified that after being stopped, the officer asked him if he had

any weapons or anything illegal on him and I said, No. [The officer] stepped out of the vehicle. He asked me, ... Do you mind if I search you? I said, No and I pulled out what I had in my pockets. I said I don’t have anything on me. He said, Well, can you turn around and put your hands on the car and let me pat you down.

Andrews further testified that he “felt that [he] had to allow [the officer] to search” him, but that he had never felt threatened during the encounter and, when asked if he had felt that he was in the officer’s custody and could not leave, he responded, “No.” Andrews also testified that he consented to the pat-down.

In granting Andrews’ motion to suppress, the trial court found:

When the officer got out of his patrol car and immediately began patting [Andrews] down and searching his pockets, the encounter with [Andrews] was elevated to a second tier investigation. [Andrews] testified that he felt he was not free to go when the Officer got out of his patrol car and put his hands on [Andrews] to search him. There is simply no particularized or objective basis for the Officer to detain and seize [Andrews] at that time and conduct a search of his clothing. This was not a pat down for weapons for the Officer’s safety as the Officer did not testif [y] that he had any suspicion that [Andrews] might pose[ ] a threat to the Officer. The Court can only conclude that the search was for contraband. Even though [Andrews] voluntarily pulled items from his pocket, the Officer’s own search of [Andrews] would have exceeded the parameters of any consent of [Andrews] to show the Officer what was in his pocket____As the Officer did not have any particularized or reasonable suspicion to justify searching [Andrews], the search was unlawful. . . .

(Emphasis supplied.)

The trial court further found that the officer “did not ask permission to search [Andrews] nor did [Andrews] testify that he consented to the search of his clothing and pockets,” and that Andrews’ conduct in “pulling out the items from his pocket to show the Officer did not give the Officer any form of consent to conduct a further search of [Andrews’] pockets himself.” (Emphasis supplied.) It also found that the officer “did not ask for consent nor did [Andrews] give his consent.”

Although the trial court may resolve any inconsistencies in the evidence and make credibility determinations, the trial court’s factual finding that there was no consent asked for or given is clearly erroneous. The officer and Andrews both testified that Andrews consented to a pat-down search after the officer got out of his car and before the officer patted Andrews down. The parties dispute, however, whether Andrews’ consent to the pat-down encompassed the officer’s further intrusion into his pocket to retrieve the cocaine.

With this in mind, the State contends on appeal that the search was based on a valid consent that Andrews gave to the officer. It further contends that the scope of the consent to search was for anything illegal, and that the trial court erred in finding that Andrews’ consent was limited to the items he voluntarily removed from his pockets.

In a first-tier encounter, “police may approach citizens, ask for identification, ask for consent to search, and otherwise freely question the citizen without any basis or belief of criminal activity so long as the police do not detain the citizen or convey the message that the citizen may not leave.” Carrera v. State, 261 Ga. App. 832, 834 (584 SE2d 2) (2003). Arequest to search during a first-tier encounter does not require articulable suspicion. Id. at 833.

If a police officer lawfully pats down a suspect’s outer clothing and feels an object whose contour or mass makes its identity immediately apparent, there has been no invasion of the suspect’s privacy beyond that already authorized by the officer’s search for weapons pursuant to Terry; if the object is contraband, its warrantless seizure would be justified by the same practical considerations that inhere in the plain-view context.

(Citation and punctuation omitted.) State v. Cosby, 302 Ga. App. 204, 205 (690 SE2d 519) (2010). Moreover, “[a]n officer need not conclusively identify what type of drug the defendant was carrying in order for the ‘plain feel’ doctrine to make the seizure of the contraband lawful.” (Citation and punctuation omitted.) Dunn v. State, 289 Ga. App. 585, 586 (1) (b) (657 SE2d 649) (2008).

Likewise, when a defendant consents to a pat-down search, such consent extends to that authorized by the parameters of a search under Terry. Thus, the suspect’s consent would extend to those items already authorized by the officer’s search for weapons pursuant to Terry, including any contraband discovered under the plain feel doctrine. See Springsteen v. State, 206 Ga. App. 150, 152-153 (424 SE2d 832) (1992) (officer authorized to reach into suspect’s pants pockets upon feeling a bulge where the suspect had responded to a request for consent to search by responding “okay,” and voluntarily assumed a search position). Compare Foster v. State, 285 Ga. App. 441, 443-444 (646 SE2d 302) (2007) (when officer asked suspect to consent to a search for weapons, officer was not authorized to remove the contents of the suspect’s pockets unless he came upon something that felt like a weapon or an object immediately identifiable as contraband).

Decided March 26, 2013.

Timothy G. Vaughn, District Attorney, Joshua W. Powell, Assistant District Attorney, for appellant.

Steven M. Harrison, for appellee.

Here, it is undisputed that the officer asked for, and Andrews gave, consent to a pat-down search. Further, the officer testified that he askedAndrews to consent to a pat-down because it was “1:15 in the morning, it’s dark outside, we are in a high crime area . . . [and] I patted him down for my safety.” He further testified that when he patted Andrews down he felt a “hard chunky substance” that he believed “[b]ased on [his] experience” to be contraband, specifically crack cocaine. “As a result, the [officer] was authorized to remove the bag from [Andrews’] pocket.” Dunn, 289 Ga. App. at 587 (1) (b).

In this circumstance, the officer’s search did not exceed the scope of the consent given, and, thus, the trial court erred in granting Andrews’ motion to suppress.

Judgment reversed.

McFadden and McMillian, JJ., concur.

       We are highly cognizant that credibility determinations made by the trial court should ordinarily be deferred to by this Court upon appellate review, and we do not, in this instance, substitute our own credibility determination as to the consent. But as it is undisputed that Andrews consented to a pat-down search, we need not accept clearly erroneous factual findings in undertaking our review. See State v. Peterson, 273 Ga. 657, 661 (3) (543 SE2d 692) (2001).

       The trial court found that “[e]ven though [Andrews] voluntarily pulled items from his pocket, the Officer’s own search of [Andrews] would have exceeded the parameters of any consent of [Andrews] to show the Officer what was in his pocket.”


author: Branch, Judge.

text:
    A12A2268.
    COOK et al. v. BOTTESCH. COOK et al. v. SHOREY. GLOVER v. COOK et al. COOK et al. v. ROBERTSON.
    A12A2269.
    A12A2506.
    A13A0006.
    (740 SE2d 752)
   Branch, Judge.

These cases require us to determine whether Georgia has properly implemented a certain asset transfer penalty dictated by the federal Medicaid statute in connection with coverage for long-term care. The difficulty is that there appear to be conflicting provisions of the statute pertaining to the penalty, specifically, the circumstances under which the penalty applies to annuities purchased by the Medicaid applicant or his or her spouse. One provision imposes a penalty on couples who, in a five-year, look-back period, purchase an annuity without naming the State as a remainder beneficiary. The other provision excludes certain annuities from the asset transfer penalty. In the four cases before us, the Georgia Department of Community Health (DCH) imposed an asset transfer penalty on the applicants for Medicaid benefits because either they or their spouses refused to name the State as the remainder beneficiary on an annuity. For the reasons explained herein, we rule in favor of DCH on three cases but against DCH on one case with distinguishing facts.

The parties do not dispute the essential facts found by the superior courts. John Bottesch, Carol Shorey, Boyce Robertson, and Jerry Glover (the “applicants”) are elderly persons who reside, or did reside before death, in nursing homes and who sought Medicaid benefits for that care. Near in time to Bottesch, Shorey, and Robertson applying for Medicaid benefits, their respective spouses purchased one or more irrevocable, nonassignable, and actuarially sound annuities, which provide monthly benefits to the “community spouse” (i.e., not the institutionalized spouse). Glover purchased such an annuity for himself.

In connection with processing the applicants’ Medicaid benefits applications, DCH asked the purchasers of the annuities to verify that they had named the State of Georgia as the remainder beneficiary as required by § 2339 of DCH’s Economic Support Services Manual (the “State Medicaid Manual”). The purchasers refused and claimed that § 2339 was inapplicable and in contravention of other provisions of federal law. In each case, DCH approved the applications for benefits but also imposed a multi-month penalty in light of the purchasers’ refusal. The penalty had an adverse effect on the applicants by precluding benefit payments to the nursing homes during the penalty period. The applicants thereafter sought a hearing and review before the Office of State Administrative Hearings (OSAH).

With regard to Bottesch, Shorey, and Robertson, OSAH determined that the penalty was inapplicable but that the applicants were not eligible for Medicaid benefits until they submitted a statement that they had designated the State as a remainder beneficiary. After an unsuccessful attempt at additional agency review, Bottesch and Shorey petitioned for review in the Superior Court of Union County; Robertson petitioned for review in the Superior Court of Towns County. The same judge from the Enotah Judicial Circuit was assigned to all three cases. On March 29, 2012, that judge signed orders in all three cases reversing the administrative rulings. The judge held that the State Medicaid Manual’s § 2339 requirement that the community spouse name the State as a remainder beneficiary violates federal Medicaid law, both because the annuities were not “assets” for purposes of imposing a transfer of assets penalty and because the § 2339 requirement contravened separate spousal impoverishment protection provisions of the Medicaid statute. In May 2012, this Court granted DCH’s applications for discretionary review in each of these three cases.

With regard to Glover, OSAH reversed the penalty and concluded that § 2339 of the State Medicaid Manual violated federal law because the annuity did not fall within the definition of an asset for purposes of imposing the penalty. DCH sought review by the Appeals Reviewer, which reinstituted DCH’s decision; this final decision held that Glover was subject to the penalty. Glover petitioned for review in the Superior Court of Hall County. On May 7,2012, the superior court affirmed the final agency decision. We granted Glover’s application for discretionary review.

Thus the Bottesch, Shorey, and Robertson cases require us to determine whether the Department correctly assessed the asset transfer penalty on annuities purchased with marital assets for the benefit of the community spouse, whereas the Glover case requires us to answer the same question for an annuity purchased for the benefit of the institutionalized spouse. In all four cases, however, DCH’s final decision held that the applicants were eligible for medical assistance but that they were subject to the asset transfer penalty because they failed to name the State as a remainder beneficiary.

1. “Judicial review of an administrative decision requires the court to determine that the findings of fact are supported by ‘any evidence’ and to examine the soundness of the conclusions of law that are based upon the findings of fact. OCGA § 50-13-19 (h).” Pruitt Corp. v. Ga. Dept. of Community Health, 284 Ga. 158, 160 (3) (664 SE2d 223) (2008). This scope of judicial review is narrow, andin a case where the facts are not in dispute, such as here, the court

may reverse or modify the agency decision if substantial rights of the appellant have been prejudiced because the administrative decision is: (1) in violation of constitutional or statutory provisions; (2) in excess of the statutory authority of the agency; (3) made upon unlawful procedure; (4) affected by other error of law. OCGA § 50-13-19 (h).

(Punctuation omitted.) Id. at 161 (3); see also Ga. Dept, of Community Health v. Medders, 292 Ga. App. 439, 440 (664 SE2d 832) (2008). The primary issue in this case is whether § 2339 of DCH’s Medicaid Manual is in violation of the Medicaid statute. Thus, we begin by interpreting that statute.

2. When construing a federal statute, “the starting point must be the language employed by Congress, and courts must assume that the legislative purpose is expressed by the ordinary meaning of the words used.” (Punctuation omitted.) A Fast Sign Co. v. American Home Svcs., 291 Ga. 844, 846 (734 SE2d 31) (2012), quoting American Tobacco Co. v. Patterson, 456 U. S. 63, 68 (II) (102 SC 1534, 71 LE2d 748) (1982). And “judicial construction is necessary only when a statute is ambiguous; in fact, when the language of a statute is plain and unequivocal, judicial construction is not only unnecessary but forbidden.” (Citation omitted.) Fleming v. State, 271 Ga. 587, 589 (523 SE2d 315) (1999).

(a) The Plain Language of the Statutory Asset Transfer Penalty. Federal law requires that a state plan for medical assistance comply with the provisions of 42 USC § 1396p with respect to transfers of assets. 42 USC § 1396a (a) (18). Subsection 1396p (c) requires that the state plan provide a penalty for disposal of assets for less than fair market value during a five-year, look-back period:

[I]f an institutionalized individual or the spouse of such an individual . . . disposes of assets for less than fair market value on or after the look-back date . . . , the individual is ineligible for medical assistance for [inter alia, nursing facility services] during the period beginning on the [look-back] date [for a period of time related to the uncompensated value of assets transferred on or after the look-back date].

The remainder of subsection (c), including the provisions relevant here, provides additional rules regarding the assessment of penalties for transfers of various types of assets, as well as rules protecting certain transfers from the penalty.

Subsection (c) (1) (F) contains the requirement that the purchase of an annuity will be treated as the disposal of an asset for less than fair market value unless the State is named as a remainder beneficiary:

(F) For purposes of this paragraph, the purchase of an annuity shall be treated as the disposal of an asset for less than fair market value unless - (i) the State is named as the remainder beneficiary in the first position for at least the total amount of medical assistance paid on behalf of the institutionalized individual under this [subchapter]; or (ii) the State is named as such a beneficiary in the second position after the community spouse or minor or disabled child and is named in the first position if such spouse or a representative of such child disposes of any such remainder for less than fair market value.

42 USC § 1396p (c) (1) (F). Standing alone, the plain language of subsection (c) (1) (F) is unrestricted; it applies to the “purchase of an annuity.” Thus, under a plain reading of this subsection, unless the State is named as the remainder beneficiary as provided, the purchase of any annuity during the look-back period is automatically considered the disposal of an asset for less than fair market value, thereby triggering the asset transfer penalty.

The relevant portion of subsection (c) (1) (G), however, states that although in general the purchases of annuities are considered transfers of assets subject to the penalty, the purchases of certain defined annuities are not considered transfers of assets subject to the penalty:

(G) For purposes of this paragraph with respect to a transfer of assets, the term “assets” includes an annuity purchased by or on behalf of an annuitant who has applied for medical assistance with respect to nursing facility services or other long-term care services under this [subchapter] unless - (i) . . . []; or (ii) the annuity is irrevocable and nonassignable; is actuarially sound . . . ; and provides for payments in equal amounts during the term of the annuity, with no deferral and no balloon payments made.

42 USC § 1396p (c) (1) (G).

We first find that the plain language of subsection (c) (1) (G) shows that it pertains only to annuities purchased “by or on behalf of an annuitant who has applied for medical assistance.” An “annuitant” is the beneficiary of an annuity. Black’s Law Dictionary (9th ed. 2009). The annuitant relevant to subsection (c) (1) (G), therefore, is the Medicaid applicant, i.e., the institutionalized spouse. Thus, annuities naming the community spouse as the beneficiary are considered assets with respect to transfers of assets under § 1396p (c), and therefore they are not protected from the penalty even if they are irrevocable, nonassignable, and actuarially sound. Accordingly, only annuities benefitting the institutionalized spouse are protected from the penalty under subsection (c) (1) (G). Glover’s annuity falls under this protection.

Second, the language of subsection (c) (1) (G) protects qualifying annuities benefitting the institutionalized spouse by removing them altogether from the definition of “assets” with respect to a “transfer of assets” under “this paragraph.” 42 USC § 1396p (c) (1) (G). Rereading subsection (c) (1) (F) in light of the plain meaning of subsection (c) (1) (G) shows that annuities protected from the asset-transfer penalty by subsection (c) (1) (G) can never be treated as the disposal of an asset for less than fair market value because they cannot be considered “assets” for the purpose of a transfer of assets in the first place. Thus, compliance with subsection (c) (1) (G) operates to exempt complying annuities from the requirement of having to name the State as a remainder beneficiary under subsection (c) (1) (F).

Finally, subsection (e) (l) requires the couple to disclose “any interest the individual or community spouse has in an annuity . . . , regardless of whether the annuity is irrevocable or is treated as an asset.” (Emphasis supplied.) 42 USC § 1396p (e) (1). This provision supports our reading of subsection (c) (1) (F) and (G): it makes clear that couples must disclose both (i) annuities that are irrevocable, i.e., those annuities benefitting the institutionalized spouse that conform with subsection (c) (1) (G), and (ii) annuities that are treated as assets for the purpose of the asset-transfer penalty, i.e., all annuities benefitting the community spouse plus those annuities benefitting the institutionalized spouse that fail to conform with subsection (c) (1) (G).

Furthermore, subsection (e) (1) goes on to provide that the Medicaid application must include “a statement that under paragraph (2) the State becomes a remainder beneficiary under such an annuity or similar financial instrument by virtue of the provision of such medical assistance.” 42 USC § 1396p (e) (1). And the referenced “paragraph 2” of subsection (e) implicitly distinguishes between annuities that are subject to subsection (c) (1) (F)’s requirement (of naming the State as the remainder beneficiary) from those that are not:

In the case of disclosure concerning an annuity under subsection (c) (1) (F) of this section, the State shall notify the issuer of the annuity of the right of the State under such subsection as a preferred remainder beneficiary in the annuity for medical assistance furnished to the individual.

42 USC § 1396p (e) (2) (A). Thus, subsection (e) buttresses the conclusion that subsection (c) (1) (F) does not apply to all annuities, regardless of form.

In sum, a plain reading of subsections (c) (1) (F) and (G) shows that annuities benefitting community spouses must name the State as a remainder beneficiary to avoid automatically being treated as the disposal of an asset for less than fair market value, but annuities benefitting applicant institutionalized spouses that conform with the requirements of subsection (c) (1) (G) (ii) need not do so.

(b) We note that the relevant administrative agency interpretation of the Medicaid statute is partly inconsistent with our reading of the plain language. The Centers for Medicare & Medicaid Services (CMS), a division of the Department of Health and Human Services, is the federal agency in charge of administering Medicaid. Consistent with our reading, CMS first interprets (c) (1) (F) to apply to annuities purchased by either spouse, and it interprets (c) (1) (G) to apply only when the institutionalized spouse is the annuitant:

Unlike the new section [ ](c) (1) (G)... section [ ] (c) (1) (F) does not restrict application of its requirements only to an annuity purchased by or on behalf of an annuitant who has applied for medical assistance for nursing facility or other long term-care services. Therefore, we interpret section [ ] (c) (1) (F) as applying to annuities purchased by an applicant or by a spouse, or to transactions made by the applicant or spouse. . . .
Unlike the new section [ ] (c) (1) (F) discussed above, [new section (c) (1) (G)] does not apply to annuities for which the community spouse is the annuitant.

See Centers for Medicare & Medicaid Svcs., § 6012, Changes in Medicaid Annuity Rules Under the Deficit Reduction Act of 2005, pt. (II) (B) and (C) (2006). But inconsistent with our reading, CMS then interprets the two subsections in a manner it argues that both can apply:

[The] requirement [provided by subsection (c) (1) (G)] is in addition to those specified in [ ] (c) (1) (F) pertaining to the State’s position as a remainder beneficiary.

Id. at pt. (II) (C). Thus, under the CMS interpretation of the relevant statutes, even annuities that conform with subsection (c) (1) (G) requirements must meet subsection (c) (1) (F) requirements in order to be protected from the asset transfer penalty.

We recognize that “judicial deference is to be afforded the agency’s interpretation of statutes it is charged with enforcing or administering and the agency’s interpretation of rules and regulations it has enacted to fulfill the function given it by the legislative branch.” (Citations omitted.) Pruitt Corp., supra at 159 (2). See also Chevron U.S.A. v. Natural Resources Defense Council, 467 U. S. 837, 844 (II) (104 SC 2778, 81 LE2d 694) (1984) (“a court may not substitute its own construction of a statutory provision for a reasonable interpretation made by the administrator of an agency”) (footnote omitted). Nevertheless, an agency interpretation cannot contravene the plain meaning of the words chosen by the legislature when those words are not ambiguous:

When a court reviews an agency’s construction of the statute which it administers, it is confronted with two questions. First, always, is the question whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.

Chevron, 467 U. S. at 842-843 (II); cf. Christensen v. Harris County, 529 U. S. 576, 588 (120 SC 1655, 146 LE2d 621) (2000) (where language is not ambiguous deference to agency interpretation is unwarranted). We find that that portion of CMS’s interpretation that provides that an annuitant applicant must comply with both subsections (c) (1) (F) and (G) to avoid the asset transfer penalty contravenes the plain meaning of the statutory language and, therefore, is not entitled to deference.

(c) The Spousal Protection Provisions of the Medicaid Statute. Bottesch, Shorey, and Robertson contend that our interpretation of (c) (1) (F) and (G) is superseded by the combined impact of three “spousal protection” provisions of the Medicaid statute pursuant to which (i) a community spouse may retain the CSRA (see 42 USC § 1396r-5 (c) (2) and (f) (2)); (ii) unlimited transfers are allowed between spouses (see 42 USC § 1396r-5 (c) (4) and 42 USC § 1396p (c) (2) (B) (i)); and (iii) a community spouse’s income has no effect on an institutionalized spouse’s Medicaid eligibility (42 USC § 1396r-5 (b) (1)). The applicants contend the combined effect of these provisions dictates that subsection (c) (1) (G) applies to the community spouse as well as the institutionalized spouse and frees them from the requirement of having to name the State as a remainder beneficiary. We disagree for several reasons.

First and foremost, as shown above, the plain language of subsection (c) (1) (G) specifically limits its application to annuities “purchased by or on behalf of an annuitant who has applied for medical assistance.” 42 USC § 1396p (c) (1) (G). And although § 1396r-5 provides that it supersedes any other provision of the subchapter (which would include § 1396p), the annuity provisions of § 1396p were added to the Medicaid statute more recently, specifically to address the proper handling of annuities. “[S]pecific statutes govern over more general statutes,” Glinton v. And R, Inc., 271 Ga. 864, 867 (524 SE2d 481) (1999) (citation omitted), and “the most recent legislative expression prevails.” (Citations omitted.) Jenkins v. State, 265 Ga. 539, 540 (1) (458 SE2d 477) (1995).

Second, the applicants’ reliance on the various spousal protection features of the Medicaid statute is a red herring because those features concern an individual’s overall eligibility for Medicaid. The application of a penalty, in the form of delayed eligibility, for failure to comply with the rules regarding purchase of an annuity, is a separate question. The applicants acknowledge this distinction: “[DCH] is correct that the issue before this Court does not involve an eligibility determination, as the [applicants have] been found eligible.” And § 1396r-5 provides that it supersedes other provisions of the subchapter only “[i]n determining the eligibility for medical assistance of an institutionalized spouse.” See 42 USC § 1396r-5 (a) (l). The question of whether the annuities at issue in this case are countable resources for the purpose of determining eligibility is not before us.

More specifically, none of three spousal protection features cited by the applicants has any bearing on the penalty provision in § 1396p (c), or vice versa. First, the CSRAis a portion of the couple’s countable resources that is not considered available to the institutionalized spouse for the question of eligibility. See 42 USC § 1396r-5 (c) (2) and (f) (2). A “resource” for this purpose is defined in § 1396r-5 (c) (5). See also 20 CFR § 416.120 (c) (3) (“Resources means cash or other liquid assets or any real or personal property that an individual owns and could convert to cash to be used for support and maintenance.”). The term “assets” for the purpose of the asset transfer penalty is defined in § 1396p (h). The definition of assets includes income, resources, and other items, and the remainder of § 1396p (c) further delineates what constitutes an asset for this purpose; in so doing, it repeatedly and explicitly begins by stating “For purposes of this paragraph with respect to a transfer of assets, the term ‘assets’ includes. .. .” See 42 USC § 1396p (c) (1) (G), (I), and (J). It is clear, therefore, that the definition of “resources” under § 1396r-5 (c) (5) and the definition of “assets” for the purposes of a “transfer of assets” under § 1396p (c) are not the same. Accordingly, the portions of the Medicaid statute that concern countable resources do not control our decision regarding when annuities are subject to the asset transfer penalty.

The argument that the second spousal protection feature cited by the applicants — that unlimited resource transfers are allowed between spouses — should govern our decision is also without merit. See 42 USC § 1396p (c) (2) (B) (i). The applicants fail to point out that the complete wording of the Code section provides that “[a]n individual shall not be ineligible for medical assistance by reason of [the asset transfer penalty] to the extent that . . . the assets . . . were transferred to the individual’s spouse or to another for the sole benefit of the individual’s spouse.” (Emphasis supplied.) Id. Notably, Bottesch, Shorey, and Robertson only argue that this provision should guide our decision; they do not argue that their spouses are the sole beneficiary of the relevant annuities, and they cannot because their annuities name children, trusts and others as beneficiaries.

Finally, and similarly, the fact that a community spouse’s income has no effect on an institutionalized spouse’s eligibility for Medicaid benefits, see 42 USC § 1396r-5 (b) (1), is also unrelated to assessing penalties for improper transfers of assets.

3. Some of the relevant provisions of Georgia’s Medicaid Manual are consistent with our construction of subsections 1396p (c) (1) (F) and (G), and some are not. The Manual provides:

Effective with annuities purchased on or after 2/8/06, for [applicant/recipients] applying for or already receiving [long-term care] Medicaid, the State of Georgia must be named as the remainder beneficiary of the annuity in the first position for the total amount of medical assistance paid on behalf of the individual receiving [long-term care] Medicaid.
EXCEPTION: If there is a community spouse and/or minor or disabled children), the State may be named in the next position after those individuals. If that is the case and any of those individuals or their representatives dispose of any of the remainder of the annuity for less than the [fair market value], the State must then be named in the first position.

And, pursuant to the multi-step procedure for addressing annuities set forth in Section 2339 of the Georgia Manual, Step 1 requires determining whether the applicant, spouse, or representative has given full disclosure of all annuities; if they have not, Medicaid coverage is denied. Step 2 requires verification that the State has been named as the remainder beneficiary on any annuity; if so, the procedure skips Step 3 and goes to Step 4. If the answer is no, Step 3 provides that DCH proceed with assessing a transfer of assets penalty, and the analysis is concluded. Thus, Step 4, in which certain annuities are slotted for special treatment “if the annuity is one which is exempt from the transfer of assets penalty” is only reached if the State has been named as a remainder beneficiary under Step 3.

Thus, § 2339 fails to exempt annuities that comply with subsection (c) (1) (G) from the requirement of naming the State as a remainder beneficiary, and it is therefore inconsistent with the plain language of the Medicaid statute. Because DCH’s Medicaid Manual as applied to Glover is in violation of federal law and Glover’s substantial rights have been prejudiced by application of the asset transfer penalty, we are authorized to reverse the agency decision below, and accordingly, the judgment of the superior court. OCGA § 50-13-19 (h). See also Medders, supra at 440.

With regard to Bottesch, Shorey, and Robertson, we uphold the agency ruling that they are subject to the asset transfer penalty because they failed to comply with the requirement found in 42 USC § 1396p (c) (1) (F) to name the State as a remainder beneficiary of the annuities relevant to their cases on appeal. The decisions of the superior court in their cases must therefore be reversed.

Judgments reversed.

Miller, P. J., and Ray, J., concur.

Decided March 26, 2013

Case Nos. A12A2268 and A12A2269

Samuel S. Olens, Attorney General, Shalen S. Nelson, Senior Assistant Attorney General, Penny Hannah, Jason S. Naunas, Michelle Townes, Assistant Attorneys General, for Cook et al.

Joel K. Tharpe, for Bottesch and Shorey.

Case No. A12A2506

Samuel S. Olens, Attorney General, Shalen S. Nelson, Senior Assistant Attorney General, Penny Hannah, Jason S. Naunas, Michelle Townes, Assistant Attorneys General, for Cook et al.

Joel K. Tharpe, for Glover.

Case No. A13A0006

Samuel S. Olens, Attorney General, Shalen S. Nelson, Senior Assistant Attorney General, Penny Hannah, Jason S. Naunas, Michelle Townes, Assistant Attorneys General, for Cook et al.

Joel K. Tharpe, for Robertson.

       Given the similarity of the underlying facts and the controlling legal issues, we have consolidated these cases for the purpose of appeal.

       Carol Shorey died in January 2011.

       Bottesch and Shorey sought review of the OSAH decision by the Appeals Reviewer for DCH. The Appeals Reviewer effectively reinstituted DCH’s original decision, including the penalty.

       Subsection (c) (1) (G) (i) shelters certain annuities defined under the Internal Revenue Code, as well as annuities purchased with the proceeds of IRAs, simplified employee pensions, and Roth IRAs; but the annuities at issue in this opinion do not fall into these categories.

       Glover points out that DCH did not ask him to name the State as a remainder beneficiary on annuities that he owns that fall under subsection (c) (1) (G) (i) (addressing certain retirement related annuities).

       The full text of subsection 42 USC § 1396p (e) (1) provides:
      In order to meet the requirements of this section for purposes of section 1396a(a) (18) of this title, a State shall require, as a condition for the provision of medical assistance for services described in subsection (c) (1) (C) (i) of this section (relating to long-term care services) for an individual, the application of the individual for such assistance (including any recertification of eligibility for such assistance) shall disclose a description of any interest the individual or community spouse has in an annuity (or similar financial instrument, as may he specified by the Secretary), regardless of whether the annuity is irrevocable or is treated as an asset. Such application or recertification form shall include a statement that under paragraph (2) the State becomes a remainder beneficiary under such an annuity or similar financial instrument by virtue of the provision of such medical assistance.

       See Douglas v. Independent Living Center of Southern California,_U. S._(132 SC 1204, 1207, 182 LE2d 101) (2012); 42 USC § 1396 (a). See also 42 USCA § 1396p (e) (3) (“The Secretary may provide guidance to States on categories of transactions that may be treated as a transfer of asset for less than fair market value.”).

       “One provision of the MCCA allows an institutionalized spouse to qualify for Medicaid assistance while reserving for the community spouse a capped amount of assets for the community spouse’s benefit, known as the ‘community spouse resource allowance’ or ‘CSRA.’ ” Hutcherson v. Arizona Health Care Cost Containment System Admin., 667 F3d 1066, 1069 (III) (9th Cir. 2012).

       In 1988, as a part of the Medicare Catastrophic Coverage Act of 1988, Pub. L. No. 100-360 (102 Stat. 683) (MCCA), Congress added the “spousal impoverishment” provisions to the Medicaid statute, which were codified at 42 USC § 1396r-5. Pub. L. No. 100-360, § 303. In 2005 (effective February 8, 2006), Congress amended the Medicaid statute as a part of the Deficit Reduction Act of 2005, Pub. L. No. 109-171 (120 Stat. 4) (DRA), and added the three subsections of § 1396p that specifically address annuities. Several cases cited by the applicants are distinguishable because they address annuities purchased before the DRA became effective or they are based on the law as it existed prior to the DRA. See, e.g., James v. Richman, 547 F3d 214, 215 (3rd Cir. 2008); James v. Richman, 465 FSupp.2d 395 (M.D. Pa. 2006); Mertz v. Houstoun, 155 FSupp.2d 415 (E.D. Pa. 2001).

       The Code section goes on to provide that “Except as this section specifically provides, this section does not apply to — (A) the determination of what constitutes income or resources, or (B) the methodology and standards for determining and evaluating income and resources.” 42 USC § 1396r-5 (a) (3).

       Many of the cases cited by the applicants are distinguishable because they address whether annuities are countable resources for the purpose of determining eligibility; and one of these cases is further distinguished because it is based on application of subsection (c) (1) (G) to annuities purchased for community spouses. See, e.g., Lopes v. Dept, of Social Sues., 696 F3d 180, 188 (2nd Cir. 2012) (issue presented was whether payment stream of annuity purchased by community spouse was a countable resource for the purposes of the institutionalized spouse’s eligibility for medical assistance); Morris v. Oklahoma Dept. of Human Svcs., 685 F3d 925, 938 (III) (B) (4) (10th Cir. 2012) (addressing whether an annuity benefitting the community spouse is a countable resource for the purpose of determining the institutionalized spouse’s eligibility; and based on application of subsection (c) (1) (G) to community spouses); Weatherbee v. Richman, 595 FSupp.2d 607, 616-617 (IV) (W.D. Pa. 2009) (determining that annuity cannot be treated as a countable resource); Geston v. Olson, 857 FSupp.2d 863, 878 (II) (D) (N.D. 2012) (addressing whether annuity payments were countable resources); Vieth v. Ohio Dept, of Job & Family Svcs., 2009 WL 2332870 (2009) (whether funds used to purchase annuity for the sole benefit of the community spouse was a countable resource for Medicaid eligibility purposes).