text:
    A13A0047.
    HWA PROPERTIES, INC. et al. v. COMMUNITY & SOUTHERN BANK.
    (746 SE2d 609)
   Ellington, Presiding Judge.

HWA Properties, Inc. (“HWA”) and Harry Albright (collectively, “the appellants”) appeal from an order of the Superior Court of Fulton County granting summary judgment to Community & Southern Bank (“CSB”) and awarding the bank a judgment on its suit to collect on a note and a guaranty. The appellants contend that the trial court erred in ruling in favor of CSB, arguing that CSB failed to prove that it was entitled to enforce the note or the guaranty. They also assert that the court erred in awarding CSB a “deficiency judgment” for the difference between the amount due on the note and the proceeds of the nonjudicial foreclosure sale of certain collateral, arguing that this Court recently reversed a separate order confirming the foreclosure sale. For the following reasons, we affirm the court’s order as to Albright’s liability on his unconditional personal guaranty of the note, but reverse as to HWA’s liability for a deficiency judgment on the note.

“Summary judgment is proper when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. We review the grant of summary judgment de novo, construing the evidence in favor of the nonmovant.” (Citations and punctuation omitted.) White v. Ga. Power Co., 265 Ga. App. 664, 664-665 (595 SE2d 353) (2004).

Viewed in this light, the record shows the following undisputed facts. In June 2008, HWA and Appalachian Community Bank executed a note for approximately $4 million. The note was secured by about 188 acres of real property in Fannin County, as well as a contemporaneous, unconditional, personal guaranty executed by Albright. In October 2008, HWA renewed the note for a smaller principal balance of approximately $2.7 million. The renewed note matured on October 24, 2009, but HWA defaulted on the entire principal balance.

In February 2010, Appalachian Community Bank sued HWA on the note and Albright on his guaranty in Fulton County. In May 2010, Appalachian Community Bank filed a motion to substitute CSB as the party plaintiff, attaching a March 19, 2010 Gilmer County consent order appointing the Federal Deposit Insurance Corporation (“FDIC”) receiver of the former bank’s business and property, as well as the purchase and assumption agreement of the former bank by CSB, executed the same day. The appellants did not object to the motion or challenge the supporting documents on the basis that they constituted hearsay or were not authenticated. The trial court granted the motion and substituted CSB as the “real party plaintiff in interest” in this action, based upon its finding that CSB was “the successor in interest to the Federal Deposit Insurance Corporation as receiver for Appalachian Community Bankf.]”

Over the next 16 months, the appellants did not move to set aside the substitution order. Then, in September 2011, they filed a joint answer to the suit, admitting, inter alia, that Albright had executed the renewed note on behalf of HWA and his personal guaranty, that the principal amount of the note was $2,683,534, and that HWAhad defaulted on the note. The appellants challenged CSB’s right to collect on the note, however, asserting that CSB was not the payee on the note nor the named beneficiary of the guaranty.

On November 1, 2011, while the suit on the note was pending in Fulton County, CSB conducted a nonjudicial foreclosure sale of the Fannin County real property that had secured the note, and the property was sold for $1.59 million. Following a hearing on the confirmation petition filed by CSB, the Superior Court of Fannin County entered a foreclosure confirmation order on March 28,2012. The appellants appealed the order the same day (hereinafter, “the confirmation appeal”), contending that the Fannin County court improperly relied on inadmissible hearsay in finding that the foreclosure sale brought the fair market value of the property. See HWA Properties v. Community & Southern Bank, 320 Ga. App. 334 (739 SE2d 770) (2013). Despite their earlier claim that CSB was not the payee on the note, however, the appellants never sought to set aside the foreclosure sale of the property that had secured the note, nor did they file suit against CSB for wrongful foreclosure.

While the confirmation appeal was pending in this Court, CSB moved for summary judgment in the Fulton County suit on the note and the guaranty, asserting that it was entitled to a judgment for the difference between the amount due on the note and the proceeds of the foreclosure sale. According to CSB, after it applied the foreclosure proceeds to the outstanding balance on the note, the remaining principal balance was approximately $1.09 million, plus interest on the note, fees and other expenses. In response to the summary judgment motion, the appellants filed a motion to stay the trial court’s consideration of CSB’s motion until this Court issued a ruling in the confirmation appeal.

On June 7, 2012, the Fulton County trial court entered an order in which it denied the appellants’ motion to stay the proceedings pending the confirmation appeal. It also granted CSB’s motion for summary judgment, reasserting its earlier conclusion that CSB was the real party plaintiff in interest in this action. Further, because it was undisputed that Albright had executed the $2.7 million renewed note on behalf of HWA, that he had executed his unconditional personal guaranty of the note, and that HWA had defaulted on the note, the court awarded CSB a judgment for the amount of the difference between the proceeds of the foreclosure sale and the total amount of principal due on the note. According to the court, the difference at that time was $1,093,534.38 in principal, plus interest on the note, late fees, expenses, and attorney fees. The appellants timely appealed the summary judgment order (hereinafter, “the instant appeal”).

Then, on March 13, 2013, while the instant appeal was pending, this Court issued a ruling in the confirmation appeal in which we reversed the confirmation order based upon our conclusion that the Fannin County trial court had improperly relied upon inadmissible hearsay and that there was insufficient competent evidence to support a finding that the foreclosure sale brought the fair market value of the property. HWA Properties v. Community & Southern Bank, 320 Ga. App. at 334. The appellants immediately filed a supplemental appellate brief in the instant appeal in which they asserted that, as a result of this Court’s reversal of the Fannin County foreclosure confirmation order, the Fulton County trial court’s order granting summary judgment in favor of CSB must also be reversed.

1. The appellants contend that the trial court erred in granting summary judgment to CSB without sufficient competent evidence that CSB was entitled to enforce the note or guaranty. Specifically, they argue that there was no evidence that CSB was either a “holder” or “nonholder in possession of the instrument” under Georgia’s Uniform Commercial Code, OCGA § 11-3-101 et seq. (“Commercial Code”). They also argue that the court erred in considering the “unsworn” purchase and assumption agreement between the FDIC and CSB that was attached to the motion to substitute CSB as the party plaintiff.

As an initial matter, the record shows that the Georgia Department of Banking and Finance (the “Department”) took possession of Appalachian Community Bank in March 2010. The Department filed a petition for the appointment of the FDIC as receiver of the business and property of Appalachian Community Bank, and the Superior Court of Gilmer County granted a consent order naming the FDIC as the receiver, pursuant to 12 USC § 1821. On March 19, 2010, CSB acquired all of the assets of Appalachian Community-Bank from the FDIC. The record includes copies of the consent order and the purchase and acquisition agreement, as well as copies of the note and guaranty at issue in this case.

(a) Turning to the appellants’ arguments on appeal, the record shows that the appellants failed to raise any issue about CSB’s status as a holder or nonholder in possession of the note and guaranty under the Commercial Code, or to even refer to any statutes within the Code, in the court below. Further, the appellants failed to object to the court’s consideration of either the consent order naming FDIC as the receiver or the purchase and assumption agreement on the basis that they were unsworn documents, constituted hearsay, or were otherwise not authenticated. Because the appellants failed to raise and elicit rulings on these issues in the trial court, these issues have been waived. See West v. State, 300 Ga. App. 583, 585 (2) (685 SE2d 486) (2009) (“Issues and objections not raised in the trial court and ruled on by the trial court are deemed waived and cannot be raised for the first time on appeal.”) (footnote omitted).

(b) Further, even though the appellants would have been entitled to a judgment instanter in the suit if they were able to obtain a ruling that CSB was not the real party in interest in the suit, they did not object or respond to the motion to substitute CSB as the real party in interest, pursuant to OCGA § 9-11-25 (c), nor did they move to set aside the trial court’s order granting that motion. In fact, the appellants waited 16 months before first raising the issue of CSB’s standing in their answer to the complaint. In addition, the appellants did not seek an interlocutory appeal from the substitution order, nor did they object to CSB’s foreclosure of the property securing the note or its application of the foreclosure proceeds to their indebtedness while the instant suit was pending.

Thus, pretermitting whether the appellants are correct in asserting that the trial court’s substitution of CSB as the real party in interest, pursuant to OCGA § 9-11-25 (c), was simply an administrative procedure and not a binding substantive determination that CSB was, in fact, the holder of the note and guaranty, their failure to timely challenge the substitution order or the actions CSB took in reliance on that order supports a finding that they acquiesced to the substitution of CSB as the real party in interest. It is axiomatic that a party cannot simply sit on its hands and acquiesce in the trial court’s procedural decisions and then complain about such decisions later. Davis v. Phoebe Putney Health System, 280 Ga.App. 505, 506 (1) (634 SE2d 452) (2006).

(c) The appellants also contend that CSB failed to present any evidence to show that, when it (CSB) purchased the assets of Appalachian Community Bank, it acquired the specific note and guaranty at issue in this case. They argue that, because the purchase and acquisition agreement in the record does not specifically identify the note and guaranty at issue here among the assets that CSB acquired in the transaction, the note and guaranty may not have been transferred to CSB but, instead, may have been transferred by Appalachian Community Bank to a different entity before CSB acquired its assets.

However, when Appalachian Community Bank sued the appellants to collect on the note and guaranty in February 2010, the appellants did not challenge its standing to do so. And, when the FDIC was appointed the receiver in March 2010, it succeeded to all of the rights and titles to the books, records, and assets of the bank, pursuant to 12 USC § 1821 (d) (2) (A). Further, on the cover of the March 19, 2010 purchase and assumption agreement between the FDIC and CSB, the phrases “WHOLEBANK” and “ALLDEPOSITS” were printed in bold, capital letters. (Emphasis in original.)

Moreover, the affidavit of an officer of CSB’s Special Assets Department states that CSB is “the successor in interest to the [FDIC] as receiver for Appalachian Community Bank,” that he has “personal knowledge of the account of [HWA] and the business records of Appalachian Community Bank and CSB,” that the copies of the note and guaranty that are attached to the affidavit are “true and correct” copies of the documents at issue and “are business records of Appalachian Community Bank and CSB”; and that the “originals [of the documents are] in the possession of Appalachian Community Bank and CSB.” (Emphasis supplied.)

Given this affirmative and uncontradicted evidence of CSB’s acquisition and actual possession of the note and guaranty at issue here, the appellants’ unsupported assertion that the CSB may not have acquired the note and guaranty when it acquired Appalachian Community Bank’s assets constitutes mere speculation or conjecture that is insufficient to defeat CSB’s motion for summary judgment. See OCGA § 9-11-56 (e) (When a party moves for summary judgment and supports his or her motion by submitting affidavits, depositions, or answers to interrogatories, the opposing party “may not rest upon the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided in this Code section, must set forth specific facts showing that there is a genuine issue for trial. If he does not so respond, summary judgment, if appropriate, shall be entered against him.”); Isbell v. Credit Nation Lending Svc., 319 Ga. App. 19, 25 (2) (a) (ii) (735 SE2d 46) (2012) (“Guesses or speculation which raise merely a conjecture or possibility are not sufficient to create even an inference of fact for consideration on summary judgment.”) (citation and punctuation omitted); Mimick Motor Co. v. Moore, 248 Ga. App. 297, 299 (1) (b) (546 SE2d 533) (2001) (“Bare conclusions and contentions unsupported by an evidentiary basis in fact are insufficient to oppose a motion for summary judgment.”) (citation omitted).

(d) Finally, it is undisputed that both the original $4.1 million note and the $2.7 million renewed note identify the “Lender” as Appalachian Community Bank and “its successors and assigns.” Similarly, the guaranty identifies the “Lender” as Appalachian Community Bank and its “participants, successors and assigns,” and it states that it is binding upon Albright and “shall inure to the benefit of Lender and its participants, successors and assigns.”

Accordingly, given the evidence presented, we find no error in the trial court’s conclusion that CSB was the real party in interest with standing to enforce the note and guaranty in the instant suit.

2. The appellants contend that, because this Court reversed the Fannin County foreclosure confirmation order, we must likewise reverse the Fulton County court’s order granting summary judgment to CSB in the instant suit on the note and guaranty. Specifically, they argue that, because CSB’s foreclosure sale of the property securing the note was not validly confirmed, CSB was not entitled to a “deficiency judgment” against them, pursuant to OCGA § 44-14-161 (a). They contend that, as a result, the court was not authorized to award CSB a judgment for the difference between the amount due on the note and the foreclosure sale price.

(a) We agree with the appellants that HWA can no longer be deemed liable for a deficiency judgment on the note due to this Court’s reversal of the judicial confirmation of CSB’s foreclosure sale of the real property that secured the note.

A creditor who holds a promissory note secured by a deed is not put to an election of remedies as to whether he shall sue upon the note or exercise a power of sale contained in the deed, but he may do either, or pursue both remedies concurrently until the debt is satisfied. Although concurrent pursuit of both remedies is not barred, it is nevertheless clear that if it is the foreclosure remedy that is pursued to an initial conclusion, the creditor must then comply with OCGA § 44-14-161 so as to retain the right of continued pursuit of his remedy of obtaining a judgment against the debtor. . . . Continuing to pursue a lawsuit on a promissory note after the foreclosure proceedings have been concluded obviously constitutes “action” on the part of the creditor to obtain a deficiency judgment against the debtor [under OCGA § 44-14-161 (a)].

(Citations and punctuation omitted; emphasis in original.) Vaughan v. Moore, 202 Ga. App. 592, 592-593 (415 SE2d 47) (1992) (physical precedent only).

Thus, because CSB did not obtain a judgment on the note against HWA prior to the foreclosure sale, it was required to comply with the confirmation requirements of OCGA § 44-14-161 in order to obtain a deficiency judgment on the note. See Vaughan at 593. Because this Court has reversed the confirmation order obtained by CSB after finding that it was unsupported by sufficient evidence and, thus, void ab initio, it necessarily follows that CSB is estopped from obtaining a deficiency judgment against HWA, and the trial court’s order as to HWA’s liability on the note must be reversed. Id.

(b) The trial court did not err, however, in granting summary judgment to CSB against Albright, whose liability on the note is based upon his unconditional personal guaranty. The guaranty states, in relevant part, as follows:

1. No act or thing need occur to establish the liability of [Albright], and no act or thing, except full payment and discharge of all indebtedness, shall in any way exonerate [Albright] or modify, reduce, limit or release the liability of [Albright]. . . .
4. The liability of [Albright] shall be limited to a principal amount of $ Unlimited (if unlimited or if no amount is stated, [Albright] shall be liable for all indebtedness, without any limitation as to amount), plus accrued interest thereon and all attorneys’ fees, collection costs and enforcement expenses referable thereto. Indebtedness may be created and continued in any amount, whether or not in excess of such principal amount, without affecting or impairing the liability of [Albright], The Lender[] may apply any sums received by or available to Lender on account of the Indebtedness from Borrower or any other person (except [Albright]), from their properties, out of any collateral security or from any other source to payment of the excess. Such application of receipts shall not reduce, affect or impair the liability of [Albright]. . . .
6. .. . The liability of [Albright] shall not be affected or impaired by any of the following acts or things (which Lender is expressly authorized to do, omit or suffer from time to time, both before and after revocation of this guaranty, without notice to or approval by [Albright]): (i) any acceptance of collateral security, guarantors, accommodation parties or sureties for any or all indebtedness;... (iii) any waiver, adjustment, forbearance, compromise or indulgence granted to Borrower, any delay or lack of diligence in the enforcement of Indebtedness, or any failure to institute proceedings, file a claim, give any required notices or otherwise protect any Indebtedness; (iv) any full or partial release of, settlement with, or agreement not to sue, Borrower or any other guarantor or other person liable in respect of any Indebtedness; (v) any discharge of any evidence of Indebtedness or the acceptance of any instrument in renewal thereof or substitution therefor; (vi) any failure to obtain collateral security (including rights of setoff) for Indebtedness, or to see to the proper or sufficient creation and perfection thereof, or to establish the priority thereof, or to protect, insure, or enforce any collateral security, (vii) any foreclosure or enforcement of any collateral security[.] . . .
7. [Albright] waives any and all defenses, claims and discharges of Borrower, or any other obligor, pertaining to Indebtedness, except the defense of discharge by payment in full. Without limiting the generality of the foregoing, [Albright] will not assert, plead or enforce against Lender any defense of waiver, release, statute of limitations, res judicata, statute of frauds, fraud, incapacity, minority, usury, illegality or unenforceability which may be available to Borrower or any other person liable in respect of any Indebtedness, or any setoff available against Lender to Borrower or any such other person, whether or not on account of a related transaction. [Albright] expressly agrees that [he] shall be and remain liable, to the fullest extent permitted by applicable law, for any deficiency remaining after foreclosure of any mortgage or security interest securing Indebtedness, whether or not the liability of Borrower or any other obligor for such deficiency is discharged pursuant to statute orjudicial decision. [Albright] shall remain obligated, to the fullest extent permitted by law, to pay such amounts as though the Borrower’s obligations had not been discharged,

(Emphasis supplied.)

“A guarantor may consent in advance to a course of conduct which would otherwise result in his discharge, and this includes the waiver of defenses otherwise available to a guarantor.” (Citation omitted.) Baby Days v. Bank of Adairsville, 218 Ga. App. 752, 755 (3) (463 SE2d 171) (1995). Here, Albright’s personal guaranty includes an express and comprehensive waiver of any and all defenses to his liability on the entire balance due on the note. Further, even absent this broad waiver of defenses, the guaranty expressly gives Albright’s consent for the “Lender” to collect on other collateral and to apply the proceeds to the amount due on the note and that “[sjuch application of receipts shall not reduce, affect or impair the liability of [Albright] (Emphasis supplied.) In fact, the guaranty specifically provides that Albright shall remain liable for any deficiency remaining after the foreclosure of any property securing the note,

whether or not the liability of Borrower or any other obligor for such deficiency is discharged pursuant to statute or judicial decision. [Albright] shall remain obligated, to the fullest extent permitted by law, to pay such amounts as though the Borrower’s obligations had not been discharged.

(Emphasis supplied.)

Consequently, given these provisions, we conclude that CSB’s failure to obtain a valid confirmation of the foreclosure sale, pursuant to OCGA § 44-14-161, does not impair its authority to collect the difference between the amount due on the note and the foreclosure sale proceeds from Albright based upon his personal guaranty. See Baby Days v. Bank of Adairsville, 218 Ga. App. at 755 (3). It follows that the trial court did not err in granting summary judgment to CSB on its suit against Albright as a personal guarantor of the note. Id.; see also Gen. Motors Acceptance Corp. v. Newton, 213 Ga. App. 405, 406-407 (444 SE2d 805) (1994) (The failure to confirm a nonjudicial foreclosure sale pursuant to a security deed does not prevent a creditor from seeking to enforce a contractual right to recover against additional security on the debt.); Worth v. First Nat. Bank, 175 Ga. App. 297, 297-298 (1) (333 SE2d 173) (1985) (accord).

Decided July 15, 2013

Troutman Sanders, Matthew R. Brooks, Jeffrey W. Kelley, for appellants.

Thompson, O’Brien, Kemp & Nasuti, Aaron M. Kappler, Bret T. Thrasher, for appellee.

Judgment affirmed in part and reversed in part.

Phipps, C. J., and Branch, J., concur.

       See OCGA § 9-11-25 (c) (“In case of any transfer of interest, the action may he continued by or against the original party unless the court, upon motion, directs the person to whom the interest is transferred to be substituted in the action or joined with the original party”).

       Between July 2010 and July 2011, the parties agreed to at least ten stipulations extending the time for the appellants to answer or otherwise respond to the suit on the note and guaranty.

       See OCGA § 44-14-161 (a) (requiring confirmation and approval of a nonjudicial foreclosure sale before the party conducting the sale can pursue a deficiency judgment against the debtor); (b) (before confirming the sale, the court must find that the evidence proved that the sale brought the true market value of the property); (c) (before confirming the sale, the court must find that the evidence proved the legality of the notice and advertisement and the regularity of the sale).

       See OCGA § 7-1-157 (a) (“The department in possession shall be vested with all the rights, powers, and duties of such financial institution; with the title or the right to possession of all property to which the financial institution has title or the right to possession, including debts due, and liens and other security therefor; and with the financial institution’s rights of action or redemption. This shall be so whether such property and debts due, such liens or other security therefor, or such rights of action or redemption are held in the name of such financial institution or in the name of some other corporation or person.”); (c) (“The department is authorized to collect all moneys due to the financial institution and to do such other acts as are necessary to conserve its assets and business.”).

       See 12 USC § 1821 (c) (appointment of FDIC as receiver of an insured depository institution); see also 12 USC § 1821 (d) (2) (A) (“The Corporation shall, as conservator or receiver, and by operation of law, succeed to - (i) all rights, titles, powers, and privileges of the insured depository institution, and of any stockholder, member, accountholder, depositor, officer, or director of such institution with respect to the institution and the assets of the institution; and (ii) title to the books, records, and assets of any previous conservator or other legal custodian of such institution.”); (d) (2) (B) (“The Corporation may (subject to the provisions of section 40 [12 USC § 1831q]), as conservator or receiver - (i) take over the assets of and operate the insured depository institution with all the powers of the members or shareholders, the directors, and the officers of the institution and conduct all business of the institution; (ii) collect all obligations and money due the institution; (iii) perform all functions of the institution in the name of the institution which are consistent with the appointment as conservator or receiver; and (iv) preserve and conserve the assets and property of such institution.”).

       See footnote 1, supra.

       See Goodyear v. Trust Co. Bank, 248 Ga. 407, 408 (284 SE2d 6) (1981) (The Supreme Court ruled that the plaintiff’s claims, which were based upon its status as a landowner, did not survive its transfer of its interest in the property to a third party. As a result, the plaintiff lacked standing to maintain its claims, because OCGA § 9-11-25 (c) “does not determine what actions shall survive the transfer of interest by a party; it deals only with the mechanics of substitution in an action which does survive under the applicable substantive law.”) (citation, punctuation and footnote omitted; emphasis in original).

       See footnote 5, supra.

       As the trial court properly concluded, the affidavit of the officer of CSB’s Special Assets Department provided a sufficient foundation to authorize the admission of the note and guaranty under the business records exception to the hearsay rule. See Ross v. State, 298 Ga. App. 525, 527 (680 SE2d 435) (2009) (“It is well established that a factual document may be admitted under the business records exception when an officer or employee of a business that received, relied upon, and retained the document in the regular course of its business testifies to that effect, despite the lack of testimony from a witness associated with the business that originally created the document.”) (footnote omitted; emphasis in original).
      Further, to the extent that the appellants attack the relevance or legal significance of this affidavit on appeal, such objections will not be entertained for the first time on appeal where the trial court considered the affidavit, without objection, in ruling on a motion for summary judgment. Worth v. First Nat. Bank, 175 Ga. App. 297, 298 (3) (333 SE2d 173) (1985).

       See OCGA § 44-14-161 (a) (“When any real estate is sold on foreclosure, without legal process, and under powers contained in security deeds, mortgages, or other lien contracts and at the sale the real estate does not bring the amount of the debt secured by the deed, mortgage, or contract, no action may be taken to obtain a deficiency judgment unless the person instituting the foreclosure proceedings shall, within 30 days after the sale, report the sale to the judge of the superior court of the county in which the land is located for confirmation and approval and shall obtain an order of confirmation and approval thereon”).

       We note that it is possible that the Fannin County court will allow CSB to conduct a resale of the property and to obtain a confirmation of that sale. See OCGA § 44-14-161 (c) (If the evidence is insufficient for the trial court to find that the foreclosure sale was conducted properly and brought the property’s fair market value, the court may deny the confirmation petition, and it “may order a resale of the property for good cause shown.”). However, the potential effect of such resale and confirmation on HWA’s liability on the note in the instant suit and the Fulton County court’s order thereon is not before us in this appeal.

       “A grant of summary judgment must be affirmed if right for any reason, whether stated or unstated. It is the grant itself that is to be reviewed for error, and not the analysis employed.” (Punctuation and footnote omitted.) Alston & Bird LLP v. Mellon Ventures II, 307 Ga. App. 640 (706 SE2d 652) (2010).

       As noted above, the guaranty identifies the “Lender” as Appalachian Community Bank and its “participants, successors and assigns,” which includes CSB. See Division 1 (d), supra.

       In addition, the guaranty includes the following relevant provisions:
      9. If any payment applied by Lender to Indebtedness is thereafter set aside, recovered, rescinded or required to be returned for any reason..., the Indebtedness to which such payment was applied shall for the purpose of this guaranty be deemed to have continued in existence, notwithstanding such application, and this guaranty shall be enforceable as to such indebtedness as fully as if such application had never been made.
      10. [Albright] waives any claim, remedy or other right which [he] may now have or hereafter acquire against Borrower or any other person obligated to pay Indebtedness arising out of the creation or performance of [his] obligation under this guaranty, including, without limitation, any right of subrogation, contribution, reimbursement, indemnification, exoneration, and any right to participate in any claim or remedy [he] may have against the Borrower, collateral, or other party obligated for Borrower’s debts, whether or not such claim, remedy or right arises in equity, or under contract, statute or common law.

       Notably, the appellants did not address the guaranty’s waiver of all defenses in their appellate briefs.


source: Caselaw Access Project

author: Ray, Judge.

license: Public Domain

text:
    A13A0088.
    WARD v. WARD et al.
    (747 SE2d 95)
   Ray, Judge.

This case involves a dispute between shareholders regarding majority ownership, management, and control over B & W CarryOut, Inc. (“B & W”), a small, family-owned corporation. Gordon Frank Ward, Jr. (the appellant) filed a complaint against his sisters, Pamela Ward and Denise Eilers (the appellees), seeking a declaratory judgment and asserting claims for injunctive relief, accounting, money had and received, misappropriation and waste, and attorney fees. The appellees each filed answers and counterclaims seeking a declaratory judgment and asserting claims for accounting, conversion, tortious interference with contractual relations, tortious interference with business relations, intentional infliction of emotional distress, punitive damages, and attorney fees. The trial court entered a declaratory judgment, finding that the issuance of certain shares of stock did not comply with Georgia law and, thus, that the appellant is not the majority shareholder of the corporation. The trial court did not rule on the parties’ other claims, which remain pending below. The appellant appeals the trial court’s order on declaratory judgment. For the following reasons, we affirm.

1. We first address our jurisdiction. The appellees contend that the appellant’s direct appeal from the order on declaratory judgment is not properly before this Court. The appellees contend that the order is not a final judgment subject to direct appeal because the parties’ other claims remain pending. However, we find that we have jurisdiction. A declaratory judgment is directly appealable because it has the “force and effect of a final judgment” and is reviewable as such. OCGA § 9-4-2 (a). This is so even if other issues in the case remain pending before the trial court. Building Block Enterprises, LLC v. State Bank and Trust Co., 314 Ga. App. 147, 150 (1) (723 SE2d 467) (2012).

2. In this case, all the parties sought a declaratory judgment as to who was the majority shareholder in B & W. The resolution of this issue turns on whether certain stock certificates issued to the appellant, which purportedly make him the majority shareholder, were validly issued. After hearing oral argument and reviewing the record, the trial court found that the transfer of the stock certificates at issue did not comply with OCGA § 14-2-621 (b) because the transfer was not authorized by B & W’s board of directors. In four enumerations of error, the appellant contends that the trial court erred in finding that the transfer of the stock at issue was not valid. We discern no error.

“A trial court’s findings of fact after a declaratory judgment hearing are analogous to a jury verdict and will not be interfered with if there is any evidence to support them. However, we review the trial court’s conclusions of law de novo.” (Citation and punctuation omitted.) Bank of the Ozarks v. DKK Dev. Co., 315 Ga. App. 539, 540 (726 SE2d 608) (2012).

The record shows that B & W was incorporated on October 4, 1960. According to its bylaws, B & W transacted business and acted under the authority of a board of directors. The president of the corporation has general and active management of the corporation, and is required to ensure that all orders and resolutions of the board of directors are carried into effect. The president is also required to perform other duties as the board may direct. Among those duties, the president, along with the secretary of the corporation, is required to sign all stock certificates.

From its inception until 2006, B & W issued forty-five stock certificates. Said certificates were either expressly authorized by the board of directors prior to the issuance of the stock or ratified by the board thereafter. B & W had a history of receiving loans from its shareholders and then later converting this debt to equity in B & W by issuing additional shares of stock in exchange for cancellation of the debt. The record shows that such transactions required approval from the board of directors.

The last meeting of the board of directors and shareholders was on February 3, 2005. The appellant contends that in 2006, B & W’s board of directors consisted of three members. Although the record is unclear, there is some evidence to indicate that B & W had five members on its board of directors at that time: Gordon Frank Ward, Sr., Martha Ward, appellees Pamela Ward and Denise (Ward) Eilers, and the appellant. In addition to serving as board members, Gordon Frank Ward, Sr., was B & W’s president, and the appellant was its vice-president/secretary. Prior to the transfer of the specific stock certificates at issue in this case, no shareholder had majority ownership of stock in B & W.

Between 2006 and 2008, the president, along with the appellant, issued stock certificates numbered 46, 48, 49, 50, and 51 (the “disputed stock certificates”) to the appellant to compensate him for monies he personally paid on behalf of the corporation for repairs to corporate property and for other matters. This was done without a formal resolution or authorization by the board of directors. The issuance of the disputed stock certificates significantly increased the appellant’s number of shares and purportedly made him the majority shareholder in B & W.

On April 25, 2006, the president executed an affidavit to be used as a substitute for the 2006 meetings of the stockholders and board of directors. The board of directors also signed the document, acknowledging and approving the use of the affidavit for this purpose. At the time the board of directors signed the document, the affidavit did not mention the issuance of the disputed stock certificates to the appellant. The record is undisputed that exhibits B through F to the affidavit, signed only by the president and the appellant in their capacities as officers of the corporation, were later attached to the affidavit as purported authorization for the issuance of the disputed stock certificates and that the exhibits were not approved by other members of the board.

(a) The appellant contends that the trial court erred in finding that the disputed stock certificates were not valid due to the lack of authorization by the board of directors. The appellant argues that the issuance of the disputed stock certificates did not require a formal resolution board, but that the issuance of the disputed stock certificates was nevertheless approved by the board because the appellant and Gordon Frank Ward, Sr., who had a power of attorney from board member Martha Ward, constituted a majority of the board of directors and that they signed the stock certificates in their respective capacities as officers of the corporation. We find that this argument lacks merit.

OCGA § 14-2-621 (b) provides:

The board of directors may authorize shares to be issued for consideration consisting of any tangible or intangible property or benefit to the corporation, including cash, promissory notes, services performed, contracts for services to be performed, or other securities of the corporation.

Furthermore, Article IV, Section 4 (a) of B & W’s bylaws provides that “[a] majority of the members of the [b]oard of [directors shall be necessary to constitute a quorum for the transaction of [corporate] business, and all action by the [directors shall require a majority vote of said [directors.” Article IV, Section 3 also requires that notice be given to each director prior to all meetings of the board of directors.

The evidence is undisputed that B & W’s board of directors did not hold a meeting in 2006 or enter a formal resolution authorizing the disputed stock certificates. Although the appellees approved of the use of the April 25, 2006, affidavit in lieu of any 2006 meetings of the board of directors, the affidavit, when signed, did not mention the issuance of stock. Also, the act of signing the stock certificates as officers of the corporation does not substitute for the formal approval of the board, and nothing on the certificates themselves even indicates as such. Accordingly, we find that the issuance of the disputed stock certificates did not comply with B & W’s bylaws.

Based on our above finding, we need not address the appellant’s argument that the issuance of the disputed stock certificates was supported by adequate consideration as contemplated by OCGA § 14-2-621 (c).

(b) The appellant contends that the trial court erred by failing to recognize B & W’s settled course of business regarding the issuance of stock and the board of directors’ acquiescence in the president’s authority to issue stock. This position is without merit.

The appellant relies on Garmany v. Lawton, 124 Ga. 876 (53 SE 669) (1906). In Garmany, our Supreme Court held that where all of the directors and shareholders of a corporation, by their acquiescence, invested the executive officer of the company with the powers and functions of the board of directors under a continuous and permanent arrangement, and where the board of directors was entirely inactive, that the actions by the executive officer on behalf of the corporation were valid as against the corporation even though the officer’s actions were not formally authorized by the board of directors or shareholders. Id. at 879 (1). Although the appellant contends that B & W had a settled course of business of allowing the president and the secretary to informally issue stock, there is evidence such stock issuances (other than the ones at issue here) were either expressly authorized by the board of directors or ratified by the board thereafter. Moreover, the evidence shows that all issuance of B & W stock to shareholders in exchange for cancellation of corporate debt required authorization from the board of directors.

Also, unlike in Garmany, the evidence in this case shows that the board of directors were actively involved in the affairs of the corporation, regularly holding meetings and approving the corporate minutes, from 1960 to 2006. Although the last formal meeting occurred in 2005, the record in this case shows that the board of directors remained active after its last formal meeting, as evidenced by the fact that it approved the president’s April 25, 2006, affidavit shortly before the president began issuing the disputed stock certificates. There is no evidence that the board of directors delegated its authority or that the president was solely responsible for the management of the corporation’s affairs on a continuous and permanent basis.

(c) In a related enumeration of error, the appellant contends that the trial court erred in finding that the president lacked the authority to issue the disputed stock certificates, arguing that the president had the implied authority to do so. For the reasons stated in Division 2 (a) and (b), this argument lacks merit.

(d) Finally, the appellant contends that the trial court erred because the issuance of the stock was ratified when the corporation received the benefit of the consideration, i.e. — the cancellation of corporate debt owed to the appellant. We disagree.

The appellant cites Jackson v. Southern Pan and Shoring Co., 258 Ga. 401 (369 SE2d 239) (1988), to support his argument. In that case, Jackson guaranteed a loan for Southern Pan in exchange for receiving a stock warrant giving her the option to purchase 80 percent of Southern Pan’s stock. When Jackson attempted to exercise her stock warrant, the corporation initiated a declaratory judgment action arguing that the stock warrant was void because it was issued prior to Southern Pan’s incorporation. Id. at 401. Our Supreme Court found that the stock warrant was enforceable because the evidence was undisputed that the individuals who ultimately served on Southern Pan’s board of directors expressly authorized the stock warrant prior to Southern Pan’s incorporation, and they expressly ratified the warrant immediately following its incorporation. The Court further found that Southern Pan unquestionably received the benefits of the consideration for the stock warrant — Jackson’s guaranty of the loan. Id. at 401 (1).

Decided July 15, 2013.

Edwin Marger, for appellant.

Clark & Clark, Barry A. Lee, Mary E. Priest, for appellees.

The facts of the present case are inapposite. In Jackson, the members of the board had knowledge and notice of both the stock warrant and the benefit received by the corporation. Here, there is no evidence that the appellees had notice or knowledge of the issuance of the disputed stock certificates or the benefit received by the corporation. To prove ratification by a corporation, it must be proven that the governing body of the corporation had full knowledge of all material facts in connection with the transaction in question. Dragon Corp. v. Syphers, 85 Ga. App. 781, 784 (70 SE2d 105) (1952). Furthermore, the corporation’s knowledge must be more than just knowledge on the part of the agent(s) whose acts are the subject of the purported ratification. Id. Although the record shows that B & W’s president and the appellant had knowledge of the issuance of the disputed stock certificates in exchange for cancellation of corporate debt, the record does not show that their knowledge was notice to the full board of directors. Under these circumstances, we cannot say that the issuance of the disputed stock certificates was ratified by the corporation.

For the above reasons, we find that the trial court did not err in granting declaratory judgment in favor of the appellees.

Judgment affirmed.

Barnes, P. J., and Miller, J., concur.

       Stock certificate 47 was an apparent transfer of 4.75 shares to B & W based on the appellant’s surrender of those shares to satisfy a debt he owed to B & W.

       In our ruling herein, we do not reach the issue as to whether the debt formerly owed by the corporation to the appellant springs back to life, given that the stock at issue has been declared null and void.


text:
    A13A0535.
    HARRIS et al. v. TENET HEALTHSYSTEM SPALDING, INC. et al.
    (746 SE2d 618)
   Ray, Judge.

After the death of their mother, Destinie Harris and David Mitchell, as the next of kin, and Harris, as the administratrix of the estate (collectively, “plaintiffs”), filed a medical malpractice suit against the following defendants: Tenet Healthsystem Spalding, Inc. d/b/a Spalding Regional Medical Center; Griffin Clinic; South Atlanta Lung and Sleep Clinic, Inc.; Sanjeeva Rao, M.D.; Appaswamy Gowda, M.D., P.C.; Hari G. Madichetty, M.D., P.C.; and HariMadichetty, M.D. (collectively, “defendants”). To aid in their discovery, the defendants filed a joint motion for a qualified protective order under the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), requesting that they be permitted to conduct ex parte interviews with the health care providers who treated the decedent, Mary Mitchell. After oral argument, the trial court granted the defendants’ motion. We now review this matter on an interlocutory basis to evaluate the following enumerations of error asserted by the plaintiffs: (1) that the trial court’s qualified protective order is overly broad; (2) that the trial court’s qualified protective order fails to adequately protect plaintiff’s right to access and amend personal health information; and, (3) that the trial court erred in granting defendant’s motion for a qualified protective order because the defendants did not make a showing of good cause as required by OCGA § 9-11-26 (c). Because we find that the trial court did not abuse its discretion, we affirm.

Factual Background

The plaintiffs’ complaint contains the following relevant allegations. On February 1, 2009, Mary became nauseated and began to vomit what appeared to be blood. On February 2, 2009, she was taken by ambulance to Spalding Regional Medical Center (“Spalding”) suffering symptoms of a gastrointestinal bleed, chest pain, and back pain. Mary was admitted into Spalding’s emergency room, and a single-view chest x-ray was ordered and performed. During the first three days of her stay at Spalding, the radiologist reviewing Mary’s case advised her attending physician on several occasions to perform a two-view x-ray or a CT scan. However, a two-view x-ray was not performed until February 7, 2009, which showed that her condition was worsening. Based on these results, the radiologist recommended a CT scan and other tests on February 7, 2009. No CT scan was ordered until February 12, 2009, which revealed that the decedent had a possible perforation of her esophagus.

On February 13, 2009, Mary was transferred to Emory Crawford Long Hospital in Atlanta (“Emory”), where it was discovered that she had a perforated esophagus and a paraesophageal hernia, necessitating the excision of her esophagus and resection of her stomach. While at Emory, she was treated for an array of conditions, including streptoccocal septicemia, acute respiratory failure, severe sepsis, septic shock, abscess of the mediastinum, acute renal failure, empyema, pleural effusions, asthma, hypertension, cardiomegaly, hypotension, anemia, steroid-induced hyperglycemia, various infections including klebsiella and MRS A, hypopotassemia, hypocalcaemia, hemoptysis, and dysthymia. Mary also received treatment and medications for depression and anxiety. Mary was released from the hospital, but returned to Emory on September 11, 2009, for reconstructive surgery. She remained a patient there until her death on May 13, 2010.

After their mother’s death, the plaintiffs filed the present complaint against the defendants alleging that during the decedent’s stay at Spalding that the defendants were negligent in failing to order or fully perform necessary imaging and diagnostic tests, and in failing to diagnose the decedent’s medical conditions, with the result that they did not recognize her worsening condition. The plaintiffs also contend that Spalding deviated from the standard of care when treating decedent.

During discovery, the plaintiffs consented to the release of the decedent’s medical records in paper and electronic format. The defendants filed a joint motion for a qualified protective order. After a hearing, the trial court granted the motion, authorizing the defendants to engage in ex parte communications with named health care providers for the limited purpose of discussing “the medical condition^) [pjlaintiffs have placed in issue in this civil proceeding.” The trial court’s order narrowed the scope of the defendants’ right to conduct ex parte communications by imposing the following limitations on the ex parte communications: (1) by providing an exclusive list of the health care providers who are authorized to engage in ex parte communications with defendants; (2) by limiting the communications to discussing only 40 specific medical conditions; (3) by ordering that the decedent’s past medical conditions could be discussed only to the extent that they are relevant to the medical conditions placed at issue in this case; (4) by forbidding defendants from engaging in any ex parte communications regarding any mental health treatment the decedent had undergone at any time; and, (5) by limiting the discussion of the decedent’s consumption of alcohol to an inquiry regarding the effect it had on the gastrointestinal conditions suffered by decedent. Plaintiffs filed the present interlocutory appeal challenging this order.

1. Plaintiffs first argue that the trial court erred in granting the qualified protective order because any ex parte communications between the defendants and her treating physicians may lead to disclosure of Mary’s psychological or other mental health issues, which had not been placed at issue in the present action.

Georgia law has long held that once a plaintiff puts her medical condition at issue in a case, she waives her right to privacy with regard to any medical records that are relevant to that medical issue. Moreland v. Austin, 284 Ga. 730, 732 (670 SE2d 68) (2008). Accord Orr v. Sievert, 162 Ga. App. 677, 678-679 (292 SE2d 548) (1982). However, our Supreme Court has held that HIPAA “preempts Georgia law with regard to ex parte communications between defense counsel and plaintiff’s prior treating physicians.” Moreland, supra at 733. Accordingly, since the passage of HIPAA, “in order for defense counsel to informally interview plaintiff’s treating physicians, they must first obtain a valid authorization, or court order or otherwise comply with the provisions of 45 CFR § 164.512 (e).” Id. at 734. Under 45 CFR § 164.512 (e), the disclosure of protected health information is authorized in the course of judicial proceedings if the party seeking the information provides “satisfactory assurance” of its “reasonable efforts... to secure a qualified protective order.” 45 CFR § 164.512 (e) (1) (ii) (B). However, simply obtaining a qualified protective order is not sufficient to comply with HIPAA. In Baker v. Wellstar Health Systems, Inc., 288 Ga. 336 (703 SE2d 601) (2010), our Supreme Court held that it is insufficient for a trial court to “sign[ ] off on a broad, blanket order authorizing ex parte contacts with any number of unnamed physician-witnesses without further notice to the patient-plaintiff.” Id. at 339 (3) (a). Therefore, the Baker Court held that in order to comply with Georgia law and HIPAA, a trial court’s order authorizing ex parte interviews should be narrowly tailored by limiting the scope of the interview to “matters relevant to the medical condition [s] [the plaintiff] has placed at issue in this proceeding.” Id. at 338 (2).

Additionally, the Baker Court requires that the order state the following with particularity:

(1) the name(s) of the health care provider(s) who may be interviewed; (2) the medical condition(s) at issue in the litigation regarding which the health care provider(s) may be interviewed; (3) the fact that the interview is at the request of the defendant, not the patient-plaintiff, and is for the purpose of assisting defense counsel in the litigation; and (4) the fact that the health care provider’s participation in the interview is voluntary.

(Citations omitted.) Id. at 339 (3) (b). The Baker Court further held that a trial court issuing such a qualified protective order should determine whether the circumstances of the case, including

any evidence indicating that ex parte interviews have or are expected to stray beyond their proper bounds — warrant requiring defense counsel to provide the patient-plaintiff with prior notice of, and the opportunity to appear at, scheduled interviews or, alternatively, requiring the transcription of the interview. . . .

(Citation omitted.) Id. at 340 (3) (b). In explaining its rationale behind imposing such requirements, our Supreme Court noted that

the use of carefully crafted orders specifying precise parameters within which ex parte interviews may be conducted will serve to enforce the privacy protections afforded under state law and advance HIPAA’s purposes while at the same time preserving a mode of informal discovery that may be helpful in streamlining litigation in this State.

Id. at 340 (3) (b).

On appeal, this Court reviews the trial court’s decision to grant or deny a motion for a qualified protective order under an abuse of discretion standard. See Tender Loving Health Care Svcs. of Ga., LLC v. Ehrlich, 318 Ga. App. 560, 573 (2) (b) (734 SE2d 276) (2012), overruled on other grounds by Wellstar Health System, Inc. v. Jordan, 293 Ga. 12, 17, n. 6 (743 SE2d 375) (2013).

In the present case, the plaintiffs contend that the trial court’s order did not provide adequate protections to safeguard the decedent’s privacy regarding her mental conditions. Specifically, the plaintiffs note that the decedent had received treatment for depression and anxiety prior to the injuries referenced in the complaint, but that these conditions were not at issue in the litigation because they were not mentioned in the complaint. In support of this argument, the plaintiffs note that one of the individuals listed in the trial court’s order is Stacie Anita Hamilton, who, as a social worker, would necessarily have been privy to issues relating to the decedent’s mental conditions. The plaintiffs also argue that several of the named medical care providers listed in the qualified protective order potentially provided treatment to the decedent for depression, anxiety, and panic attacks as evidenced by prescriptions to treat these medical disorders.

However, we find that the plaintiffs’ privacy right as to the decedent’s mental conditions is adequately safeguarded by the terms of the qualified protective order which sufficiently complies with all of the procedural requirements set forth in Moreland and Baker. The trial court’s order specifically names the health care providers that may be interviewed, sets forth the medical conditions at issue in the litigation, includes that the interview is at the request of the defendants and is for the purpose of assisting defense counsel, and that the health care providers’ participation in the interview is voluntary. See Baker at 339. The order also addresses the plaintiffs’ concerns regarding the defendants’ ability to obtain information regarding the decedent’s mental condition by specifically forbidding the defendants from engaging in ex parte communication with the health care providers “regarding any mental health treatment that [decedent] may have undergone at any time” (Emphasis supplied). The order also states that the defendants “shall not make any inquiry as to treatment that [decedent] may have undergone for alcohol or other substance abuse.” (Emphasis omitted.)

The plaintiffs correctly note that the Baker Court identified several dangers associated with the ex parte interviews by defendants of health care providers, including:

(1) the potential for unwarranted probing into matters irrelevant to the litigation yet highly sensitive and possibly prejudicial to the patient-plaintiff; (2) the potential for disclosure of information, such as mental impressions not documented in the medical record, that the health care provider has never actually communicated to the patient-plaintiff; and (3) the potential for defense counsel to influence the health care provider’s testimony, unwittingly or otherwise, by encouraging solidarity or arousing sympathy for a defendant health care provider.

Id. at 339 (3) (a). However, the Baker Court found that a trial court can avoid these dangers by issuing a qualified protective order that is fashioned “carefully and with specificity as to scope.” Id. Here, given the length of the decedent’s hospital stay, the number of medical conditions placed in issue in the case, the number of health care providers involved in her care, and the complicated nature of the case, the trial court has fashioned an adequately narrow protective order. Compare Tender Loving Health Care Svcs. of Ga., LLC, supra at 575 (2) (b) (holding that trial court’s denial of defendant’s motion seeking a qualified protective order allowing defendants to question the patient-plaintiff’s health care providers about “any and all medical care she received” during a three-month period was not an abuse of discretion because the qualified protective order was not sufficiently tailored to limit the defendants to discussing only “the medical condition(s) at issue in the litigation” when the plaintiff’s complaint involved only the “cause, extent, treatment, and consequences” of the patient’s wound) (punctuation and emphasis omitted).

The Baker Court also instructed that a trial court could, in its discretion, consider whether the circumstances in the present case “warrant requiring defense counsel to provide the patient-plaintiff with prior notice of, and the opportunity to appear at, scheduled interviews or, alternatively, requiring the transcription of the interview by the court reporter at the patient-plaintiff’s request.” (Citation omitted.) Baker, supra at 340 (3) (b). In the present case, the plaintiffs argue that they should be able to appear at scheduled interviews because the defendants sought information regarding the decedent’s mental condition earlier in the litigation. Specifically, the plaintiffs point to the defendants’ proposed qualified protective order, which sought to be able to question the health care providers about the decedent’s alcohol and substance abuse and mental conditions. However, considering the plaintiffs’ argument at the motions hearing, the trial court elected in its qualified protective order to forbid any ex parte discussions of these matters. Plaintiffs next point to evidence that the defendants previously requested information regarding the decedent’s mental condition in general interrogatories and at the plaintiffs’ depositions. However, none of these questions were directed at health care providers. The transcript of the motions hearing reveals that the trial court heard and considered this evidence and determined that the additional precautions proposed by the Baker Court were not required in the present circumstances. Because the trial court’s qualified protective order is narrowly tailored to the relevant conditions at issue in the case, and specifically prohibits the disclosure of such information, we find no abuse of discretion in the trial court’s decision to decline to adopt additional precautionary measures set forth in Baker

2. Plaintiffs next argue that the trial court’s qualified protective order allowing defendants to engage in ex parte communications with the decedent’s health care providers denies the plaintiffs their right to access and to amend the decedent’s health information as guaranteed by 45 CFR §§ 164.524 (a) and 164.526 (a). This argument is misguided.

HIPAA does provide patients with a right to access or amend protected health information. See 45 CFR §§ 164.524 (a) (1); 164.526 (a) (1). However, that right to access and amend applies only to information collected in a “designated record set.” HIPAA defines a “[designated record set” as a set of records maintained by or for a covered entity, including:

(i) [t]he medical records and billing records about individuals maintained by or for a covered health care provider; (ii) [t]he enrollment, payment, claims adjudication, and case or medical management record systems maintained by or for a health plan; or (iii) [u]sed, in whole or in part, by or for the covered entity to make decisions about individuals.

45 CFR § 164.501 (1). The right to access and to amend granted by HIPAA does not, as argued by the plaintiffs, guarantee a patient or her representatives the right to access or amend any information within the health care provider’s memory or mental impressions about the care received by the patient. Accordingly, this enumeration is without merit.

Decided July 15, 2013

Parks, Chesin & Walbert, Thomas D. Trask, for appellants.

Commander & Pound, Scott C. Commander, Lori E. Jolly, Insley & Race, Kevin P. Race, Brian K. Mathis, Huff, Powell & Bailey, Anna B. Fretwell, Taylor C. Tribble, Carlock, Copeland & Stair, Wayne D. McGrew III, Heather H. Miller, for appellees.

3. Plaintiffs contend that the trial court erred in granting the defendants’ motion for a qualified protective order because the defendants failed to make a showing of good cause as required by OCGA § 9-11-26 (c).

OCGA § 9-11-26 (c) states that a trial court may grant a motion for a protective order only if “good cause [is] shown.” In support of their motion for a qualified protective order, defendants argued that they should be granted the right to conduct ex parte interviews with the decedent’s health care providers for the following reasons: (1) they are entitled to “equal access” to potential trial witnesses; (2) ex parte interviews would protect the attorney work-product, mental impressions, and trial strategy of defendants; and (3) ex parte interviews would be more efficient and less costly than formal depositions or joint meetings with plaintiffs’ counsel.

“What constitutes ‘good cause’ must be left largely to the trial judge who has a latitude of discretion in determining whether the showing has been made.” Sorrells v. Cole, 111 Ga. App. 136, 142 (2) (c) (141 SE2d 193) (1965). See Tender Loving Health Care Svcs. of Ga., LLC, supra at 573 (2) (a) (ii) (upholding trial court’s decision to deny defendant’s motion for a qualified protective order and rejecting “the defendants’ request to adopt a new rule that effectively strips trial courts of all discretion in deciding whether to issue [qualified protective orders]”) (footnote omitted). Further, as noted above, this Court reviews a trial court’s decision to grant or deny a motion for a qualified protective order under an abuse of discretion standard. See id. at (2) (b). Reviewing the entirety of the record, we find that the trial court did not abuse its discretion in determining that the defendants provided good cause and in subsequently granting defendants’ motion for a qualified protective order.

Judgment affirmed.

Barnes, P. J., and Miller, J., concur.

       In support of these arguments, plaintiffs rely on documents they attached as exhibits to their notice of appeal. Plaintiffs argue that these documents show that the decedent was prescribed certain medications that were commonly prescribed to treat both medical issues and mental conditions such as anxiety, sleep disorders, and depression. However, it appears from the appellate record properly before this Court that these documents were not made a part of the record in the trial court before the trial court granted the defendants’ motion, and were not part of the trial court’s record prior to appeal. Accordingly, we decline to consider these records. See In re Estate of Dorroh, 255 Ga. App. 366 (565 SE2d 565) (2002) (exhibits contained in an appellate brief which do not appear in the record or transcript on file with this Court cannot be considered by this Court). See also Piedmont Hosp., Inc. v. Reddick, 267 Ga. App. 68, 72 (2) (599 SE2d 20) (2004) (“in reviewing a grant of summary judgment, this Court will only consider evidence presented to the trial court before that court ruled on the motion”) (footnote omitted).

       As noted above, the plaintiff’s complaint alleged that while at Emory the decedent was treated for at least twenty medical conditions.

       We further note that our Supreme Court has held that even if a trial court’s protective order requires the transcription of such ex parte interviews, such interviews are not always discoverable by the patient-plaintiff. It is possible for the trial court to order the preparation of transcripts, not for the benefit of the patient-plaintiff’s discovery, but rather to provide a method for determining through an in camera inspection whether the court’s protective order had been violated. See Wellstar Health System, Inc. v. Jordan, supra.

       45 CFR § 164.524 (a) (1) provides that a patient has a “right of access to inspect and obtain a copy of protected health information about the individual in a designated record set, for as long as the protected health information is maintained in the designated record set....” (Emphasis supplied). 45 CFR § 164.526 (a) (1) also grants patients the right to “amend protected health information or a record about the individual in a designated record set for as long as the protected health information is maintained in the designated record set." (Emphasis supplied.)


text:
    A13A0550.
    GOMEZ v. INNOCENT et al.
    (746 SE2d 645)
   Ray, Judge.

Josh Gomez sued PetFirst Animal Hospital, Inc. and veterinarian Garry Innocent in a dispute over medical bills and boarding costs for Gomez’s dog. He appeals from orders in which the trial court stated that it was granting summary judgment to Innocent and dismissing Gomez’s action for failure to state a claim upon which relief maybe granted. For the reasons that follow, we reverse in part, vacate in part, and remand the case with direction.

The facts show that Gomez took his dog, Pilot, to PetFirst during the late night and early morning hours of August 26 and 27, 2007, because the dog was lethargic and throwing up. Innocent diagnosed the dog with a virus that could have killed Pilot if it remained untreated. Innocent gave Gomez an estimate of $1,453.25 for the dog’s care. PetFirst required full payment up front, but because Gomez was unable to pay, Innocent agreed to accept $400 for that night’s care, and Gomez’s then-girlfriend paid the bill. Gomez left the dog for the night, then telephoned on August 27, 2007, when an employee told him he owed an additional $751.25. Neither the employee nor Gomez addressed whether there would be further charges. Gomez paid the $751.25 on August 28, 2007, after getting some of the funds as an advance from his employer. He returned on August 29, 2007, to pick up the dog. After he put the dog in his car, he was told he owed an additional $484.80. He believed that his bill had been satisfied by the prior payment, even though the dog had remained at the facility for an additional day. He neither objected to nor identified any inaccurate charges. Because Gomez was unable to pay the $484.80, Innocent asked him to leave the dog at PetFirst until the bill was paid, and Gomez did. After the dog had been at PetFirst for 20 days, a “Good Samaritan” paid the dog’s accrued bill of $972.

Gomez sued, alleging that Innocent and PetFirst breached their contract by refusing to return the dog after he paid the amounts agreed to, but before he paid “additional sums . . . not agreed by the parties in their initial contract.” Gomez also claimed unjust enrichment, conversion, and “tortious invasion of [pjlaintiff’s rights,” and sought damages. Innocent and PetFirst answered and counterclaimed, and then moved for summary judgment, which the trial court denied; they then moved for reconsideration and simultaneously filed an amended summary judgment motion, which the trial court also denied. The trial court additionally denied Gomez’s motion for summary judgment.

The case went before a jury on February 13 and 14, 2012, but before the close of Gomez’s presentation of the evidence, the trial court announced that it planned to dismiss the case for failure to state a claim. The trial court refused to allow Innocent to testify, refused to allow Gomez to finish presenting his case, and cut short Gomez’s proffer. The trial court then issued an order sua sponte granting summary judgment in favor of Innocent and PetFirst and dismissing the case for failure to state a claim. The trial court later entered another order indicating it dismissed the case at trial rather than granting summary judgment, but also stating that it had granted summary judgment as the “actual technical mechanism dismissing [pjlaintiff’s complaint.” Gomez appeals.

1. In his first and second enumerations of error, Gomez contends that the trial court erred in dismissing his case for failure to state a claim, and in dismissing the case and granting summary judgment, without first giving him notice, a hearing, and an opportunity to present evidence. We agree.

In the instant case, the trial court indicated that it considered trial testimony in rendering its decision. Where, as here, the trial court considers matters outside the pleadings, a dismissal for failure to state a claim

shall be treated as one for summary judgment and disposed of as provided in Code Section 9-11-56, and all parties shall be given reasonable opportunity to present all material made pertinent to such motion by that code section. OCGA § 9-11-12 (b) . . . Thus, when a trial court opts to convert a motion to dismiss for failure to state a claim into one for summary judgment, the party opposing the motion may, if he so desires, have 30 days’ notice in which to prepare evidence in opposition.

(Citations and punctuation omitted.) Cox Enterprises v. Nix, 273 Ga. 152, 153 (538 SE2d 449) (2000) (reversed in part on other grounds by Cox Enterprises v. Nix, 274 Ga. 801, 803 (1) (560 SE2d 650) (2002)).

Here, the trial court interrupted Gomez’s testimony and announced that it would dismiss the case. Gomez’s counsel began to make an offer of proof and presented some evidence from Gomez’s deposition transcript and Innocent’s affidavit, but before counsel had finished, the trial court cut off the proffer, noted counsel’s exception, and called in the jury so they could be excused.

The trial court’s decision to truncate Gomez’s proffer deprived him of his right to “present all material made pertinent” to the motion. (Emphasis supplied.) Id. “[Wjhere an offer of proof is necessary it is error for the trial judge to deny counsel an opportunity to state what he proposes to prove by the evidence offered. It was error not to allow counsel to complete the record.” (Citation omitted.) Hendrix v. Byers Bldg. Supply, Inc., 167 Ga. App. 878, 879 (2) (307 SE2d 759) (1983).

2. Gomez next argues that the trial court erred in granting summary judgment because genuine issues of material fact remained as to whether there was an agreement, course of conduct, or understanding between the parties such that Innocent was justified in relying on the veterinary lien statute, OCGA § 44-14-490, to retain the dog when Gomez failed to pay his bills. This enumeration is unripe for our review because Gomez did not have a full and fair opportunity to respond prior to the entry of summary judgment. Thus, the grant of summary judgment must be reversed and the case remanded so that Gomez may be given fair notice and an opportunity to respond. Sumner v. Dept. of Human Resources, 225 Ga. App. 91, 93 (2) (483 SE2d 602) (1997).

Decided July 15, 2013.

McCrimmon & McCrimmon, Edward W. McCrimmon, Lisa L. McCrimmon, for appellant.

Robert N. Levinson, for appellee.

3. Gomez argues that the trial court lacked authority to issue its Final Order because that order was entered on September 26, 2012, after Gomez filed his Notice of Appeal to this Court on September 6, 2012.

Anotice of appeal divests the trial court of jurisdiction to supplement, amend, or modify the judgment while the appeal of that judgment is pending. McLeod v. Clements, 306 Ga. App. 355, 357 (2) (702 SE2d 638) (2010). Thus, the trial court erred, and this order is vacated.

4. Because of our determination in Division 3, we need not reach Gomez’s remaining enumeration of error.

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

Barnes, P. J., and Miller, J., concur.

       Gomez’s first notice of appeal states that he is appealing the trial court’s June 22, 2011, order denying his February 25, 2011, motion for summary judgment. However, as he presents no argument and no related enumerations of error as to this order on appeal, we need not address the issue.

       PetFirst did not appear for the hearing, so the trial court struck the company’s answer and declared a default.

       We question why the trial court did not simply allow the plaintiff to finish his case and deal with the merits therein at the directed verdict stage.