text:
    A14A0360.
    SHUTTLEWORTH et al. v. RANKIN-SHUTTLEWORTH OF GEORGIA, LLC et al.
    (759 SE2d 873)
   Miller, Judge.

Rankin-Shuttleworth of Georgia, LLC (“RSG”) and Marvin Rex Rankin III (collectively “Plaintiffs”) filed suit against Rankin’s former business partner, J. Sterling Shuttleworth, Shuttleworth’s wife, Linda Nethery, and Shuttleworth’s business, Venture Captive Management (collectively “Defendants”), alleging conversion, breach of fiduciary duty, tortious interference with business relations, fraud, misappropriation of trade secrets, defamation, unfair competition, malicious prosecution, civil conspiracy, and other claims. Plaintiffs moved to disqualify Wayne Pierce and his law firm, Pierce & Dunkelberger (collectively “Pierce”), as Defendants’ counsel based on Pierce’s prior representation of Plaintiffs. The trial court granted the motion, finding a clear conflict based on Pierce’s prior representation of RSG and Rankin.

This Court granted Defendants’ application for interlocutory appeal, and on appeal, Defendants contend that the trial court erred in disqualifying their counsel and in failing to first hold an evidentiary hearing. For the reasons that follow, we affirm the trial court’s ruling.

“The ultimate determination of whether an attorney should be disqualified from representing a client in a judicial proceeding rests in the sound discretion of tjie trial judge. This Court will not interfere with a trial court’s ruling absent abuse of that discretion.” (Punctuation and footnotes omitted.) Duvall v. Bledsoe, 274 Ga. App. 256, 258 (617 SE2d 601) (2005).

Here, the evidence shows that Rankin and Shuttleworth first entered into the insurance business together sometime in 2002 or 2003. Their first joint-venture was named Rankin-Shuttleworth, Inc., and they later created RSG. In 2004, Rankin and Shuttleworth executed a membership agreement giving Shuttleworth the option to purchase Rankin’s share of RSG. Pierce was involved in litigation regarding the membership agreement, represented RSG in its business, and handled leases and employment matters for RSG.

In 2002, Shuttleworth was sued by Uni-Ter Underwriting Management Corporation, which alleged breach of contract, breach of fiduciary duty, interference with business and employment relations, and misappropriation of opportunities due to the violation of a noncompete agreement between Shuttleworth and Uni-Ter. In 2003, Rankin and Rankin-Shuttleworth, Inc. were added as defendants in the Uni-Ter litigation. Pierce represented all the defendants in the Uni-Ter litigation.

In 2007, Shuttleworth tried to exercise his ability to buy out Rankin’s share of RSG, and Rankin refused. From 2007 onward, Pierce represented Shuttleworth in his efforts to buy out Rankin’s interest in RSG.

Plaintiffs filed this litigation in December 2010, but Defendants were not served until July 2011. Defendants, represented by Pierce, filed their answer in August 2011. In July 2012, Plaintiffs first sent a letter to Pierce notifying him of a potential conflict of interest. In February 2013, Plaintiffs filed their motion to disqualify Pierce, which the trial court granted.

1. On appeal, Defendants contend that the trial court abused its discretion in disqualifying Pierce as their counsel. We disagree.

The right to counsel is an important interest which requires that any curtailment of the client’s right to counsel of choice be approached with great caution. In determining whether to disqualify counsel, the trial court should consider the particular facts of the case, balancing the need to ensure ethical conduct on the part of lawyers against the litigant’s right to freely chosen counsel.

(Citation and punctuation omitted.) Clough v. Richelo, 274 Ga. App. 129, 132 (1) (616 SE2d 888) (2005).

The circumstance of representing a client against a former client in an action that is of the same general subject matter, and grows out of an event that occurred during the time of such representation, creates an impermissible appearance of impropriety [that requires disqualification].

(Punctuation omitted.) Crawford W. Long Mem. Hosp. of Emory Univ. v. Yerby, 258 Ga. 720, 722 (3) (373 SE2d 749) (1988).

Also, under Rule 1.9 (a) of the Georgia Rules of Professional Conduct, “[a] lawyer is disqualified from representing a party against a former client in a matter that is substantially related to the lawyer’s prior representation.” (Citations, punctuation and footnote omitted.) Rescigno v. Vesali, 306 Ga. App. 610, 612 (1) (703 SE2d 65) (2010). As the party seeking disqualification, Plaintiffs had the burden to show that the “matters embraced within the pending suit are substantially related to the matters or the cause of action involved in the previous representation.” (Citations omitted.) Cardinal Robotics v. Moody, 287 Ga. 18, 21 (694 SE2d 346) (2010). To do so, Plaintiffs were required to show that Pierce’s former representation of Rankin and RSG had both material and logical connections to the pending litigation. Id.; Duvall, supra, 274 Ga. App. at 259.

(a) Here, we agree with the trial court that Plaintiffs met their burden, because the evidence showed that Pierce was actively involved in all legal aspects of the day-to-day operations of RSG, including hiring and discharging employees, and representing the business in a variety of matters. Moreover, although Pierce did not draft the membership agreement, he acted as RSG’s general counsel at the time the membership agreement was executed and he advised RSG regarding the agreement. Pierce also represented Rankin and Rankin and Shuttleworth’s prior j oint-venture in the Uni-Ter litigation in 2002 and 2003, defending essentially identical claims to those presented in this litigation.

Therefore, it appears that Pierce’s prior representation of Plaintiffs was substantially related to the current litigation. Yerby, supra, 258 Ga. at 721 (1). Moreover, the current litigation encompasses the same general subject matter and grew out of events that occurred during the time Pierce represented Plaintiffs, creating an appearance of impropriety. Id. at 721-722 (3).

(b) In so holding, we find that Plaintiffs’ motion to disqualify Pierce was not untimely.

A motion to disqualify should be made with reasonable promptness after a party discovers the facts which lead to the motion. Four factors are determinative of this issue: the length of the delay in light of the circumstances of the particular case, inclusive of when the movant learned of the conflict; whether the movant was represented by counsel during the delay; why the delay occurred; and whether disqualification would result in prejudice to the nonmoving party.

(Citations and punctuation omitted.) Rescigno, supra, 306 Ga. App. at 613 (1). The trial court must weigh these factors against the seriousness of the conflict alleged and the extent to which the public’s confidence in the judicial system would be eroded if the motion was denied. Ga. Baptist Health Care System v. Hanafi, 253 Ga. App. 540, 542 (559 SE2d 746) (2002).

In this case, Plaintiffs waited eleven months after Pierce first entered an appearance in the instant litigation before notifying him of a potential conflict and an additional seven months before seeking disqualification, despite the fact that Plaintiffs knew of Pierce’s possible conflict before the litigation began. The delay in this case is troubling and unexplained, especially in light of the fact that Plaintiffs have been represented by counsel since the complaint was filed in 2010. Nevertheless, there is little prejudice to the Defendants because there are still numerous motions to compel on which the trial court has not yet ruled and, therefore, discovery is not yet complete.

Decided July 8, 2014 —

Reconsideration denied July 29, 2014 —

Pierce & Dunkelberger, J. Wayne Pierce, for appellants.

Theodore Salter, Jr., for appellees.

Under these particular facts, and given the seriousness of the conflict in this case, we conclude that the trial court did not abuse its discretion in disqualifying Pierce. Duvall, supra, 274 Ga. App. at 258.

2. Defendants contend that this Court should require trial courts to hold evidentiary hearings before granting motions to disqualify counsel or, in the alternative, should remand this case for an evidentiary hearing. We disagree.

Although Defendants requested an evidentiary hearing, they point to no law and we have found none requiring the trial court to hold an evidentiary hearing. Here, the parties submitted affidavits and other documentary evidence in support of their positions, and the trial court heard oral argument on the matter. The trial court did not in any way limit Defendants’ ability to offer evidence. As detailed above, the evidence presented to the trial court supported the trial court’s ruling, and there does not appear to be any reason to remand for an evidentiary hearing or mandate evidentiary hearings in all disqualification cases.

Judgment affirmed.

Phipps, C. J., concurs. McMillian, J., concurs fully in Divisions 1 (a) and 2 and in judgment only in Division 1 (b).

       The complaint also named Gene Church as a defendant, but the claims against him were later dismissed.


source: Caselaw Access Project

author: ANDREWS, Presiding Judge.

license: Public Domain

text:
    A14A0607.
    WHITE et al. v. WEINBERG.
    (759 SE2d 903)
   ANDREWS, Presiding Judge.

Pursuant to a written consignment agreement, Robert Weinberg consigned jewelry (a ring) for auction by L. R. Barnes, LLC d/b/a Four Seasons Auction Gallery of Forsyth (Barnes) and its licensed auctioneer, Steve White. The ring was auctioned without reserve on February 5, 2011, and White accepted the bid made by the highest bidder in the amount of $2,300. The bidder failed to make payment and close the sale, and the ring remained in the possession of Barnes and White. Weinberg sued Barnes and White (individually) on various theories after they refused his demand that they return the unsold ring without payment of commission or other fees under the agreement. Asserting rights under the consignment agreement to a commission and other fees, both defendants answered and denied the allegations, and Barnes counterclaimed for breach of contract. White and Barnes appeal from the trial court’s orders partially granting Weinberg’s motion for summary judgment, and partially denying their motion for summary judgment. For the following reasons, we affirm.

In a seven count complaint, Weinberg sought to impose liability and collect damages as follows: “fraud” (Count 1); “negligent misrepresentation” (Count 2); “violation of OCGA § 10-1-393 (b)” (Count 3); “conversion” (Count 4); “piercing the corporate veil as to defendant White and alter ego” (Count 5); “unjust enrichment or in the alternative breach of contract” (Count 6), and “attorneys’ fees pursuant to OCGA § 13-6-11 and punitive damages” (Count 7). Weinberg moved for summary judgment on his fraud, negligent misrepresentation, and conversion claims. Barnes and White moved for summary judgment on all of Weinberg’s claims, and Barnes moved for summary judgment on its breach of contract counterclaim.

As to Weinberg’s claims based on fraud (Count 1) and negligent misrepresentation (Count 2), the trial court denied summary judgment to Weinberg and granted summary judgment in favor of Barnes and White. As to Weinberg’s claim based on a violation of OCGA § 10-1-393 (b) (Count 3), the trial court noted in its summary judgment orders that Weinberg’s attorney announced at a motions hearing that Count 3 would be dismissed. Although the record does not reflect that Weinberg has dismissed Count 3 of the complaint, the trial court ruled that the summary judgment orders had the effect of dismissing Count 3. As to the conversion claim in Count 4 of the complaint, the trial court granted summary judgment in favor of Weinberg on the issue of liability, and denied the motion by Barnes and White for summary judgment. Count 6 of the complaint sets forth claims for unjust enrichment or alternatively for breach of contract. Although Weinberg did not move for summary judgment on either of the alternative claims asserted in Count 6, the trial court granted summary judgment in favor of Weinberg for breach of contract (liability only), and denied the motion by Barnes and White for summary judgment on Count 6. Count 5 of the complaint captioned “piercing the corporate veil as to defendant White and alter ego as to all defendants,” alleges that White acted as the representative, agent, and auctioneer for Barnes, and that, to the extent White is a member of the Barnes LLC, “the corporate veil must be pierced” to hold White individually responsible for damages in contract and tort. Weinberg did not specifically move for summary judgment on the allegations in this count, nor did his motion for summary judgment request a specific ruling on White’s individual liability on contract or tort claims. Nevertheless, to the extent the trial court granted summary judgment in favor of Weinberg and against White, it found that White signed the consignment agreement as an individual and not in any representative capacity for the LLC, and granted summary judgment against White individually. The trial court denied the motion by Barnes and White seeking summary judgment in their favor on the allegations in Count 5. As to claims for attorney fees pursuant to OCGA § 13-6-11 and punitive damages asserted by Weinberg in Count 7 of the complaint, the trial court ruled that whether these damages should be awarded and the amount were issues of fact, and denied the motion by Barnes and White for summary judgment in their favor on these issues. Finally, the trial court denied the motion by Barnes for summary judgment on the issue of liability on its counterclaim for breach of contract.

1. Barnes and White contend that the trial court erred by granting summary judgment in favor of Weinberg on his conversion claim.

The relationship between Weinberg (as seller of consigned property) and Barnes and White (as auctioneers of the property) was that of principal and agent, and the consignment agreement between the parties set forth the terms or scope of the relationship. Deere & Co. v. Miller-Godley Auction Co., 249 Ga. App. 797, 799 (549 SE2d 762) (2001). “[I]f a paid agent does something wrongful, either knowing it to be wrong, or acting negligently, the principal may have either an action in tort or an action of contract.” Restatement (Second) of Agency § 401 cmt. a (1958); Hoffman v. Ins. Co. of North America, 241 Ga. 328, 329 (245 SE2d 287) (1978). An agent who acts in excess of granted authority to wrongfully assert dominion over the principal’s property may be held liable for conversion. Youngblood v. Mock, 143 Ga. App. 320 (238 SE2d 250) (1977); Deere & Co., 249 Ga. App. at 798-799. It follows that Weinberg’s conversion count requires a determination as to whether, when Barnes and White refused to relinquish possession of the ring acquired pursuant to the consignment agreement, they wrongfully exercised dominion over the ring in a manner inconsistent with their authority under the agreement.

Undisputed evidence shows that pursuant to the consignment agreement, Weinberg placed his property (a ring) in the possession of Barnes and its auctioneer, White, to act as his agents to auction without reserve the ring to the highest bidder; that Barnes and White conducted an auction on February 5, 2011 and accepted the highest bid on the ring in the amount of $2,300; that the bidder failed to pay the bid amount and close the sale; that Barnes and White retained possession of the ring while attempting to collect payment from the bidder; and that no later than April 1,2011, Weinberg demanded that Barnes and White return the ring. Weinberg contends that, pursuant to the consignment agreement, he is entitled to return of the unsold ring without payment or condition; that he demanded return of the ring from Barnes and White; and that their refusal to return the ring is conversion of his property. Barnes and White contend that, under the consignment agreement, even though the ring remained unsold after the February 5, 2011 auction, they had the right to retain possession of the ring indefinitely to sell it at a subsequent auction; that when Weinberg demanded return of the unsold ring, the ring became an “item withdrawn by the seller” from auction on which they were entitled to payment of a 25% commission and a buyer’s premium; and that these sums were a lien on the ring which entitled them to retain possession until it was satisfied. See OCGA § 44-14-400. In the alternative, Barnes and White contend they had a right to retain possession of the unsold ring because, even if Weinberg’s demand for return of the ring was not a withdrawal of the ring from auction under the consignment agreement, he left the unsold ring with them in excess of ten business days after the February 5, 2011 auction, which entitled them under the agreement to storage and other fees (constituting a lien on the ring) and to sell the ring at a subsequent auction without notice.

Construction of the consignment agreement is a question of law for the court, unless the language in the agreement presents an ambiguity that cannot be resolved by the rules of construction. Hardman v. Dahlonega-Lumpkin County Chamber of Commerce, 238 Ga. 551, 553 (233 SE2d 753) (1977).

The cardinal rule of construction is to ascertain the intent of the parties. Irvin [v. Laxmi, Inc., 266 Ga. 204, 205 (467 SE2d 510) (1996)]. “Where the contract terms are clear and unambiguous, the court will look to that alone to find the true intent of the parties.” Southern Fed. Sav. & Loan Assn. &c. v. Lyle, 249 Ga. 284, 287 (290 SE2d 455) (1982); Park ’N Go of Ga. v. U. S. Fidelity &c. Co., 266 Ga. 787, 791 (471 SE2d 500) (1996). To determine the intent of the parties, all the contract terms must be considered together in arriving at the construction of any part, and a construction upholding the contract in whole and every part is preferred. Cole v. Thrasher, 246 Ga. 683, 684 (272 SE2d 696) (1980); McCann v. Glynn Lumber Co., 199 Ga. 669, 674 (34 SE2d 839) (1945).

Municipal Elec. Auth. of Ga. v. Gold-Arrow Farms, Inc., 276 Ga. App. 862, 866-867 (625 SE2d 57) (2005).

The consignment agreement (which was written by White) provided that the ring would be sold by auction at a scheduled time to the highest bidder, and that “[i]n case of an interruption of the scheduled auction due to weather, illness, or other unforeseen factors[,] the lots will be sold at an appropriate auction time as designated by auctioneer which may be prior to, or later than, the original date.” The agreement provided that fees and other amounts due to the auctioneer be deducted from the gross sales receipts collected from the auction sale, and provided that the auctioneer be paid a commission fee of 15% and a buyer’s premium. The agreement provided for a higher auctioneer’s commission fee under certain circumstances: “[auctioneer shall receive full commission of 25% and buyer’s premium on any item withdrawn by the seller, sold after date of this contract, or items not meeting reserves.” Under the agreement, “no items will be considered sold until [Barnes] is paid in full by the winning bidder.” On items sold as a result of winning bids at the auction, the agreement provided that the auctioneer would settle with the seller only after the seller comes to Barnes’s business office to sign for and receive the auction results, records, and net proceeds from the sale “no sooner than 2 weeks (excluding holidays) following the auction,” except that, “[u]nder special conditions, bookkeeping may require up to 30 days to settle from the day of the auction, as no items will be considered sold until [Barnes] is paid in full by the winning bidder.” The agreement further provides that

[a]ny unsold lots left by [seller] in excess of 10 business days after the announced auction will be charged $10 per day per item ...[;] will be sold at auction without prior notice . .. [; and seller] will be charged a minimum of 25% auctioneer fee and will be additionally held liable for accrued storage fees and moving charges.

Applying the above-stated rules of contract construction, we find that the ring at issue remained unsold under the provisions of the consignment agreement because it is undisputed that the winning bidder did not close the sale by paying for the ring at or after the auction. Under these circumstances, the agreement provided for a period of time up to 30 days after the auction to allow the auctioneer to take steps to collect payment and close the sale with the winning bidder. In this case, it is undisputed that the winning bidder did not pay within 30 days after the auction and that the ring remained unsold and in the possession of the auctioneer. We find no support in the agreement for the construction advanced by Barnes and White that the agreement gave them the right to possession of the unsold ring for an indefinite period of time until the winning bidder paid, or until they sold the ring to another winning bidder, no matter how many subsequent auctions or how long that might take. We conclude that the agreement to auction the ring contemplated a single scheduled auction (which could be rescheduled under certain circumstances), and that, when the ring remained unsold more than 30 days after the auction (because the auctioneer was unable during that period to collect payment from the winning bidder), Weinberg was entitled to return of the ring without payment of any sum under the agreement. Under the agreement, the charges for a normal commission fee of 15% and a buyer’s premium are calculated on and deducted from gross sales receipts collected on a sold item. Since the ring was not sold, Weinberg did not owe these sums. The provision of the agreement that “[auctioneer shall receive full commission of 25% and buyer’s premium on any item withdrawn by the seller, sold after date of this contract, or items not meeting reserves” applies to other circumstances not applicable in this case. “[Withdrawn by the seller” under the agreement means an item withdrawn from auction. When Weinberg demanded return of the unsold ring more than 30 days after the auction, he did not withdraw the ring from auction. The auction was completed and time had expired under the agreement for the auctioneer to close the sale with the winning bidder after the auction. The ring was not “sold after date of this contract” because the auctioneer’s efforts after the auction date to collect from the winning bidder and close the sale were unsuccessful. The ring was not an item “not meeting reserves” because the ring was auctioned without reserve. Finally, we conclude that the portion of the agreement imposing storage and other fees on the seller for leaving unsold items with the auctioneer in excess of ten days after the auction does not apply to Weinberg under the present circumstances. That provision states:

Any unsold lots left by [seller] in excess of 10 business days after the announced auction will be charged $10 per day per item ...[;] will be sold at auction without prior notice . .. [; and seller] will be charged a minimum of 25% auctioneer fee and will be additionally held liable for accrued storage fees and moving charges.

Construing all the terms of the agreement together to reconcile terms and uphold the agreement in whole and every part, we conclude that this provision applies only where an unsold item remains in the auctioneer’s possession immediately after the auction, and the auctioneer has no interest under the agreement in retaining possession of the item. For example, the auctioneer would have no interest in retaining possession of an unsold item auctioned without reserve on which no bid was made. In that case, where the seller fails to retake possession of the unsold item during ten business days immediately following the announced auction, the seller thereafter owes storage and other fees and the item is subject to being sold at a subsequent auction without notice. But other provisions of the agreement apply where the auction produces a winning bid on an item, and (as in the present case) the auctioneer retains possession of the item after the auction because the bidder did not pay at the auction. In that case, the agreement provides the auctioneer with a period of up to 30 days after the auction to retain possession of the unsold item for the purpose of collecting payment from the bidder and closing the sale. We find no basis for concluding, as Barnes and White argue, that the provision imposing storage and other fees on a seller for leaving an unsold item with the auctioneer for ten business days immediately following the announced auction also applies if a seller leaves an unsold item with the auctioneer for more than ten days after the expiration of the 30-day period for collecting payment from the winning bidder.

It follows that the refusal by Barnes and White to return the ring to Weinberg was a wrongful exercise of dominion over the ring in a manner inconsistent with their authority under the consignment agreement. Because undisputed facts show that Barnes and White had no authority under the consignment agreement to retain possession of the ring owned by Weinberg, the trial court correctly granted summary judgment in favor of Weinberg on the issue of liability on the conversion claim set forth in Count 4. Lau’s Corp. v. Haskins, 261 Ga. 491 (405 SE2d 474) (1991). To the extent the trial court granted summary judgment on Count 4 under a different construction of the consignment agreement, we affirm under the right for any reason rule. City of Gainesville v. Dodd, 275 Ga. 834 (573 SE2d 369) (2002).

2. Barnes and White contend that, because Weinberg did not move for summary judgment on the breach of contract claim set forth in Count 6, the trial court erred by sua sponte granting summary judgment in favor of Weinberg on that claim.

Weinberg did not move for summary judgment on his breach of contract claim, but the trial court sua sponte granted summary judgment on the issue of liability in favor of Weinberg on that claim. “[I]n most cases it is [the] better practice to await a motion for summary judgment before entering it for a party, [but] it may not be erroneous under the circumstances of a given case, where the issues are the same as those involved in the movant’s motion.” Stephens v. Alan V Mock Constr. Co., Inc., 302 Ga. App. 280, 288 (690 SE2d 225) (2010) (citation and punctuation omitted). In other words, “a trial court may grant summary judgment sua sponte under certain circumstances, so long as it ensures that the party against whom summary judgment is rendered is given full and fair notice and opportunity to respond prior to entry of summary judgment.” Id. (citation and punctuation omitted).

The issues raised in Weinberg’s conversion claim regarding the construction of the consignment agreement are the same issues raised in Weinberg’s claim that there was a breach of contract with respect to the consignment agreement. Moreover, Barnes raised these same issues in its counterclaim for breach of contract regarding the consignment agreement. Accordingly, the issues raised and addressed with respect to Weinberg’s motion for summary judgment for conversion, and with respect to Barnes’s motion for summary judgment on its breach of contract counterclaim, were the same as the issues on Weinberg’s breach of contract claim. Under these circumstances, Barnes and White had full and fair notice and opportunity to respond to the issues, and the trial court did not err in sua sponte granting summary judgment in favor of Weinberg on the issue of liability on his breach of contract claim. Stephens, 302 Ga. App. at 288-289.

3. Barnes contends that the trial court erred by denying its motion for partial summary judgment on its counterclaim for breach of contract regarding the consignment agreement. For the reasons stated in Division 1, supra, the trial court correctly denied Barnes’s motion for summary judgment on this issue.

Judgment affirmed.

McFadden and Ray, JJ., concur.

Decided July 9, 2014 —

Reconsideration denied July 29, 2014 —

Perry A. Phillips, for appellant.

Merritt & Fletcher, Richard V Merritt, for appellee.

       White is the owner and sole member of the LLC. The consignment agreement stated that it was between Weinberg and “Four Seasons Auction Gallery of Forsyth/Steve White,” and was signed by Weinberg and White.

       “It is unnecessary to show that the defendant applied [the property] to his own use, if he exercised dominion over it in defiance of the owner’s right, or in a manner inconsistent with it.” Deere & Co., 249 Ga. App. at 799 (citation and punctuation omitted).

       The trial court granted summary judgment in favor of Weinberg on conversion and breach of contract on the issue of liability only. The issue of damages was not raised by the parties or ruled on by the court. Although Weinberg is entitled to pursue conversion and breach of contract remedies to a point, “he is not permitted a double recovery of the same damages for the same wrong.” Marvin Nix Development Co. v. United Community Bank, 302 Ga. App. 566, 568 (692 SE2d 23) (2010) (citation and punctuation omitted). To the extent a double recovery is sought based on breach of contract and tort claims, an election of remedies is required. Nat. City Bank of Rome v. Busbin, 175 Ga. App. 103, 104-105 (332 SE2d 678) (1985).


author: Dillard, Judge.

text:
    A14A0717.
    COMMUNITY & SOUTHERN BANK v. DCB INVESTMENTS, LLC et al.
    (760 SE2d 210)
   Dillard, Judge.

Community Southern Bank (“CSB”) brought this action against DCB Investments, LLC, David Belke, Glenn Couey, and Julie Couey (the latter three collectively “defendants”), seeking a deficiency judgment pursuant to three simultaneously executed promissory notes and guaranties. Following the denial of its motion for summary judgment and the grant of summary judgment in favor of the defendants, CSB appeals, arguing that the trial court erred in finding that CSB is barred from seeking a deficiency judgment because it failed to obtain judicial confirmation of an earlier foreclosure and in finding that this same failure also bars it from recovering on the guaranties. For the reasons set forth infra, we affirm the trial court’s ruling that CSB cannot seek a deficiency judgment against the borrowers because it failed to comply with the judicial-confirmation requirements. However, we reverse the ruling that CSB is barred from recovering on the guaranties, and, thus, we reverse the denial of summary judgment to CSB on this issue.

At the outset, we note that summary judgment is only warranted if the “pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” If summary judgment is granted by a trial court, it enjoys no presumption of correctness on appeal, “and an appellate court must satisfy itself de novo that the requirements of OCGA § 9-11-56 (c) have been met.” And in our de novo review of a trial court’s grant of a motion for summary judgment, we are charged with “viewing the evidence, and all reasonable conclusions and inferences drawn from the evidence in the light most favorable to the nonmovant.”

So viewed, the record shows that on February 13, 2009, Belke, Glenn Couey, Julie Couey, and DCB Investments, LLC (an entity controlled by Belke), executed three separate promissory notes with First Commerce Community Bank (“FCCB”) for the purpose of developing real estate in Douglas and Carroll Counties. The first note (Loan No. 4000287300, “Note 1”) named DCB as the borrower of a principal sum of $616,961, and indicated that its purpose was for renewal and the development of commercial real estate. Note 1 also indicated that it was secured by certain property in Douglas County and stated that it was “CROSSED WITH LOAN #’S 4000310300 & 400194800” (“Notes 2 and 3,” respectively). Accordingly, DCB executed a security deed, pledging the Douglas County property as security for Note l.

In a form identical to that of Note 1, Note 2 named Belke and both of the Coueys as borrowers of a principal sum of $1,012,708.93, and indicated that its purpose was similarly for renewal and the development of commercial land. Additionally, Note 2 stated that it was secured by certain property in Carroll County and that it was “CROSS DEFAULTED WITH [Notes 1 and 3].” And pursuant to Note 2, Belke and the Coueys executed a security deed, pledging the Carroll County property as security.

In a form identical to the previous two, Note 3 designated Belke and both of the Coueys as borrowers of a principal sum of $1,600,543.92. Note 3 indicated that its purpose was for renewal and additional money for the development loan. It too was secured by the Carroll County property, via a security deed, which specifically noted that it was inferior to the deed pledging the same property as collateral for Note 2. Note 3 similarly indicated that it was cross defaulted with Notes 1 and 2.

On the same day that the three promissory notes were executed, Belke, Glenn Couey, and Julie Couey executed three separate guaranties of the notes. And finally, also on that same day, the parties executed two modification agreements, which pertained to the Carroll and Douglas County properties, respectively. The purpose of these agreements was to further ensure that all three notes were subject to cross-default and cross-collateralized, i.e., that all three notes were secured by both the Carroll and Douglas County properties. Toward that end, for instance, the Douglas modification, in part, provides: “Lender has required as a condition to the extension of credit evidenced by [Note 2] and [Note 3], that [Note 2] and [Note 3] also be secured by the [Douglas] Security Deed.” In a similar fashion, the Carroll modification, in part, provides: “In addition to all other indebtedness described therein, the First [Carroll] Security Deed and the Second [Carroll] Security Deed shall secure payment of [Note 2], [Note 3], and [Note 1].” Both agreements also included provisions stating that a default under any one of the notes would constitute a default under all of the notes.

On June 1, 2009, FCCB, DCB, Belke, and the Coueys executed what they collectively characterized as the Assumption Agreement. Pursuant to that agreement, FCCB allowed Belke and the Coueys to transfer ownership of the Carroll County property to DCB, and, as a result, DCB assumed Belke and the Coueys’ obligations as “borrower” on Notes 2 and 3. However, Belke and the Coueys’ obligations under the separate personal guaranties remained intact. The Assumption Agreement also reconfirmed the parties’ intention to cross-collateralize all three notes.

At some point thereafter, DCB defaulted on Note 1, and on April 6, 2010, FCCB foreclosed on the Douglas County property. The foreclosure sale garnered $734,558.88. It is undisputed, however, that FCCB did not seek judicial confirmation for that foreclosure sale. Then, nearly six months later, FCCB failed, and the Federal Deposit Insurance Corporation (“FDIC”) was appointed as receiver. Ultimately, pursuant to an agreement with the FDIC, CSB acquired all rights and possession of the subject notes, guaranties, and loan-related documents.

In November 2011, CSB notified DCB, Belke, and the Coueys that the notes were in default. Subsequently, on or about December 14, 2011, CSB foreclosed on the Carroll County property, and the foreclosure sale garnered $1,980,000. Thereafter, CSB filed an application for judicial confirmation of that foreclosure sale in the Superior Court of Carroll County, which the court granted on March 1, 2012.

Less than one week after obtaining judicial confirmation of the foreclosure sale of the Carroll County property, CSB filed suit against DCB, Belke, Glenn Couey, and Julie Couey, alleging breach of all three of the promissory notes and guaranties and seeking, inter alia, a deficiency judgment. And although it indicated that it was seeking such a judgment pursuant to all three of the notes, as well as the foreclosure sale of the Carroll County property, CSB’s complaint made no mention of the Douglas County property, which originally secured Note 1, or the foreclosure sale of that property.

Belke and the Coueys filed answers, and the parties engaged in discovery. Subsequently, the parties filed cross motions for summary judgment. And after a hearing and supplemental briefing by both parties, the trial court denied CSB’s motion and granted summary judgment in favor of defendants. Specifically, the trial court found that CSB was barred from seeking a deficiency judgment because it failed to obtain judicial confirmation of the foreclosure sale of the Douglas County property and that this same failure also barred it from recovering on the personal guaranties. This appeal follows.

1. CSB contends that the trial court erred in finding that its failure to obtain judicial confirmation of the foreclosure sale on the Douglas County property associated with Note 1 barred it from seeking a deficiency judgment on Notes 2 and 3, arguing that the debts represented by the three notes are not inextricably intertwined. We disagree.

Under Georgia law, a deficiency judgment is “the imposition of personal liability on mortgagor for unpaid balance of mortgage debt after foreclosure has failed to yield full amount of due debt.” And the requirements for obtaining such a judgment are delineated in OCGA § 44-14-161 (a), which provides:

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.

As our Supreme Court has noted, the purpose of this legislation “was stated to limit and abate deficiency judgments in suits and foreclosure proceedings on debts.” Thus, as made clear by the plain meaning of the relevant statutory text, before a creditor is entitled to file an action to obtain a deficiency judgment against a debtor, it must report the foreclosure sale to and obtain confirmation of the sale from the superior court of the county where the foreclosed land was located by demonstrating that the sale was lawfully conducted and brought at least the fair-market value of the land on the date of the sale.

Importantly, this Court has applied OCGA § 44-14-161 (a) to “foreclosure proceedings on separate debts which are inextricably intertwined to prevent creditors from circumventing the statute’s mandates by making successive loans against the security of the same property.” Such an application prevents creditors from avoiding the central dictates of the confirmation statute, which are there to “protect debtors from deficiency judgments when their property is sold at a foreclosure sale for less than its market value.” And as a general rule, “two debts that are incurred for the same purpose, secured by the same property, held by the same creditor, and owed by the same debtor are inextricably intertwined.”

Here, although there were three separate promissory notes that were secured by two separate parcels of property, all three notes were executed on the same date by DCB, Belke, the Coueys, and the same creditor (FCCB) and were executed for the same purpose of developing the properties at issue. In addition, each note contained cross-default language that specifically referenced the other two notes. Furthermore, as previously noted, to unequivocally ensure that all three notes were subject to cross-default and cross-collateralized, on the same day that the notes were executed, the parties also executed the two modification agreements, which explicitly stated that both the Douglas and Carroll County properties secured all three notes. Given these circumstances, we conclude that the three notes were indeed inextricably intertwined. Accordingly, the trial court did not err in finding that CSB’s failure to obtain judicial confirmation of the foreclosure sale of the Douglas County property barred it from seeking a deficiency judgment from the borrowers on the notes.

2. CSB also contends that the trial court erred in finding that its failure to obtain judicial confirmation of the foreclosure sale on the Douglas County property likewise barred it from recovering on the personal guaranties. We agree.

At the outset, we note that Georgia’s appellate courts are required to construe agreements in a manner that “respects the parties’ sacrosanct freedom of contract.” Indeed, it is well settled that contracts will not be avoided by the courts as against public policy, “except where the case is free from doubt and where an injury to the public interest clearly appears.” Consequently, 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.”

In the case sub judice, Belke’s guaranty, in relevant part, provides:

1. No act or thing need occur to establish the liability of Undersigned hereunder, and no act or thing, except full payment and discharge of all indebtedness, shall in any way exonerate Undersigned or modify, reduce, limit or release the liability of the Undersigned hereunder.
4. The liability of the Undersigned hereunder shall be limited to a principal amount of $ Unlimited (if unlimited or if no amount is stated, the Undersigned shall be liable for all Indebtedness, without any limitation as to amount), plus accrued interest thereon and all other costs, fees, and expenses agreed to be paid under all agreements evidencing the Indebtedness and securing the payment of the Indebtedness, 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 the Undersigned hereunder. The Lender [] may apply any sums received by or available to Lender on account of the Indebtedness from Borrower or any other person (except the Undersigned), 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 the Undersigned hereunder. . . .
6. . . . The liability of the Undersigned 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 the Undersigned): (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; or any release, modification, substitution, discharge, impairment, deterioration, waste, or loss of any collateral security; (vii) any foreclosure or enforcement of any collateral security [.]...
7. The Undersigned 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, the Undersigned 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. The Undersigned 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 or judicial decision. The Undersigned shall remain obligated, to the fullest extent permitted by law, to pay such amounts as though the Borrower’s obligations had not been discharged.

The guaranties executed by Glenn and Julie Couey were identical to each other—although they contained language somewhat different than Belke’s guaranty—and, in relevant part, provide:

1.... This Guaranty may be enforced by the Lender against the Guarantor without the necessity at any time of the Lender’s resorting to or exhausting any other security or collateral now or hereafter pledged, assigned, or granted to the Lender and without the necessity at any time of the Lender’s having recourse against the Borrower on the Note or against the Land through foreclosure proceedings under the Security Deed or otherwise. . . .
2. . . . Without limiting the generality of the foregoing, the Guarantor gives its consent for the Lenders to do any one or more of the following without in any manner affecting, impairing, limiting, modifying or releasing any of the obligations of the Guarantor under this Guaranty and without notice to or consent of the Guarantor (a) exchange, compromise, or surrender the whole or any part of the security now or hereafter held for the Indebtedness, (b) exchange, extend or renew the time or place of payment of the Indebtedness in whole or in part, to a time certain or otherwise whether or not longer than the original period, or withdraw credit or time to pay, (c) extend or change the terms of performance of any other obligations of the Borrower under the Loan Documents, (d) modify, amend, or waive any of the provisions of the Loan Documents, (e) release or grant indulgences to the Borrower, any co-guarantor, or any party to the Loan Documents, (f) receive additional property or other security as collateral for the Indebtedness, (g) fail to exercise due diligence or omit to enforce any right, power, or privilege under the Loan Documents, and (h) apply any payment received by the Lender from the Borrower of, or on account of, the Indebtedness, in any manner the Lender elects.
3. Waiver of Rights. The Guarantor expressly waives (a) notice of the execution and delivery of the Loan Documents and creation of the Indebtedness, (b) notice of acceptance of this Guaranty by the Lender and of all extensions of credit to the Borrower by the Lender, (c) presentment and demand for payment of any of the Indebtedness, (d) protest and notice of dishonor or of default or nonpayment to the Guarantor or to any other party with respect to the Indebtedness or with respect to any security therefor, (e) notice of the Lender’s obtaining, amending, substituting for, releasing, waiving, or modifying any security interest, liens, or encumbrances now or hereafter securing the Indebtedness, or the Lender’s subordinating, compromising, discharging, or releasing such security interests, liens, or encumbrances and any other notices whatever, (f) the defense of impairment of collateral, (g) demand for payment under this Guaranty, (h) the provisions of Section 10-7-24 ..., and (i) all rights of subrogation, indemnification, contribution and reimbursement from the Borrower, all rights to enforce any remedy the Lender may have against the Borrower, and any benefit of, or right to participate in, any collateral or security now or hereafter held by the Lender in respect of the Indebtedness, even upon payment in full of the Indebtedness.

A review of the language contained in these respective guaranties demonstrates that both include an express waiver of any and all defenses to Belke and the Coueys’ liability on the notes. In fact, Belke’s guaranty specifically provides that he 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. Similarly, the guaranties executed by the Coueys include language specifically stating that CSB may enforce the guaranty without the necessity at any time of CSB having recourse against the Borrower on the Note or against the Land through foreclosure proceedings under the Security Deed. Given the aforementioned 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 [Belke and the Coueys] based upon [their] personal [guaranties].” Accordingly, the trial court erred in granting the defendants’ motion for summary judgment and in denying CSB’s motion as to this specific issue.

Decided July 11, 2014 —

Reconsideration denied July 29, 2014 —

Busch Slipakoff & Schuh, Bryan E. Busch, TawanaB. Johnson, Christopher M. Porterfield, Shane P. Stogner, for appellant.

Hobgood & Rutherford, T. Tucker Hobgood, D. Scott Bass, for appellees.

Judgment affirmed in part and reversed in part.

Doyle, P. J., and Miller, J., concur.

       OCGA § 9-11-56 (o).

        Cowart v. Widener, 287 Ga. 622, 624 (1) (a) (697 SE2d 779) (2010).

        Benefield, v. Tominich, 308 Ga. App. 605, 607 (1) (708 SE2d 563) (2011) (punctuation omitted); see also Roberson v. Leone, 315 Ga. App. 459, 460 (726 SE2d 565) (2012).

       This security deed was originally executed on April 21, 2008, as the Douglas property served as collateral for an earlier loan agreement between DCB and FCCB. Note 1 was a renewal of that earlier agreement. In fact, all three notes were renewals of earlier agreements between FCCB, DCB, Belke, and the Coueys, and, thus, the security deeds serving as collateral, discussed infra, were executed on dates earlier than February 13, 2009.

       CSB dismissed DCB without prejudice, and, therefore, DCB is no longer a party in this matter.

        Iwan Renovations, Inc. v. N. Atlanta Nat’l Bank, 296 Ga. App. 125, 127 (1) (673 SE2d 632) (2009) (punctuation omitted); see Hill v. Moye, 221 Ga. App. 411, 412 (1) (471 SE2d 910) (1996) (noting that a deficiency judgment is a judgment for that part of a debt secured by a mortgage not realized from a sale of the mortgaged property).

        First Nat'l Bank & Trust Co. v. Kunes, 230 Ga. 888, 890 (199 SE2d 776) (1973) (emphasis omitted) (punctuation omitted); see also Bank of N. Ga. v. Windermere Dev., Inc., 316 Ga. App. 33, 37 (728 SE2d 714) (2012) (“This statute, which was enacted in 1935 during the Great Depression, was intended to relieve debtors from the economic depression of the times____[T]he aim of the legislation was stated to limit and abate deficiency judgments in suits and foreclosure proceedings on debts.”) (citation and punctuation omitted).

        See Bank of N. Ga., 316 Ga. App. at 38 (1); OCGA § 44-14-161 (b), (c).

        Iwan Renovations, Inc., 296 Ga. App. at 128 (1).

        Id. (punctuation omitted).

        Id.; accord Bank of N. Ga., 316 Ga. App. at 38 (1); Tufts v. Levin, 213 Ga. App. 35, 39 (2) (443 SE2d 681) (1994).

        See Bank of N. Ga., 316 Ga. App. at 39 (1) (holding that because mortgages and letters of credit both were used for purpose of developing properties subject to mortgage, were held by the same creditor, and were secured by the same property, debts were inextricably intertwined such that mortgagee’s action against mortgagors was a suit for deficiency judgment and was barred by mortgagee’s failure to obtain judicial confirmation of foreclosure sale); Iwan Renovations, Inc., 296 Ga. App. at 129 (1) (holding that two debts were inextricably intertwined given the fact that notes were incurred only seven months apart for the same purpose, both deeds pertained to same property, were held by same creditor, and contained cross-default clauses). Compare Lawson v. Habersham Bank, 233 Ga. App. 88, 91-92 (503 SE2d 341) (1998) (finding that mortgagee’s attempt to foreclose on mortgagors’ home after foreclosing on their farm, pursuant to a consolidated loan secured by both properties, was not an action for a deficiency judgment, but was a separate contractual remedy not barred by mortgagor’s failure to obtain judicial confirmation of foreclosure on home).

        Monitronics Int’l, Inc. v. Veasley, 323 Ga. App. 126, 134-135 (746 SE2d 793) (2013) (physical precedent only as to Division 2); see also Duncan v. Integon General Ins. Corp., 267 Ga. 646, 650 (482 SE2d 325) (1997) (“Georgia has historically afforded great protection to the freedom to contract with another person. Georgia courts are thus bound to enforce contracts as made so long as they are not contrary to law or public policy.”).

        Id. (punctuation omitted).

        HWA Props., Inc. v. Cmty. & S. Bank, 322 Ga. App. 877, 887 (2) (b) (746 SE2d 609) (2013) (punctuation omitted).

       The guaranty identifies the “Lender” as FCCB and its “participants, successors and assigns,” which includes CSB.

        HWA Props., Inc., 322 Ga. App. at 888 (2) (b); see also Gen. Motors Acceptance Corp. v. Newton, 213 Ga. App. 405, 406-07 (444 SE2d 805) (1994) (holding that 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).


author: McFADDEN, Judge.

text:
    A14A0100.
    LAGROON et al. v. LAWSON et al.
    (759 SE2d 878)
   McFADDEN, Judge.

This appeal concerns a grant of summary judgment to three law enforcement officers — Lincoln County Sheriff Gerald S. Lawson and Lincoln County Deputies James K. Foskey and Jack Hancock—in an action brought by Robert Jay Lagroon and Kelli Sue Barnett for false imprisonment, false arrest, and malicious prosecution. Lagroon and Barnett were charged in a special presentment with contributing to the delinquency of minors by being present at a party where minors were consuming alcohol, which was held at the home of another person, Kathy Rhodes. They argue that the defendants were motivated to arrest and prosecute them, without probable cause to do so, out of friendship with Barnett’s estranged husband and Kathy Rhodes’ estranged ex-husband. The state eventually obtained an order nolle prosequi dismissing the charges.

Because we find that malicious prosecution is the exclusive remedy available to Lagroon and Barnett, we affirm the grant of summary judgment to the defendants on the claims for false imprisonment and false arrest. We reverse the grant of summary judgment on the malicious prosecution claims, however, because there are genuine issues of material fact as to whether the defendants were entitled to official immunity, whether they honestly and reasonably believed there was probable cause, and whether they acted with malice.

1. Facts.
Summary judgment is appropriate when no genuine issues of material fact remain and the moving party is entitled to judgment as a matter of law. On appeal, we review a trial court’s grant of summary judgment de novo, construing the evidence and all inferences drawn from it in a light favorable to the nonmovant.

Stolte v. Hammack, 311 Ga. App. 710 (716 SE2d 796) (2011) (citation and punctuation omitted). Consequently, we view the evidence in the light most favorable to Lagroon and Barnett, even though the defendants have provided evidence depicting a dramatically different version of the events at issue, and even though a nonparty witness, who had given affidavit testimony favorable to Lagroon and Barnett, flatly contradicted that testimony in a subsequent affidavit. See Thompson v. Ezor, 272 Ga. 849, 852-853 (2) (536 SE2d 749) (2000) (self-contradictory testimony rule of Prophecy Corp. v. Charles Rossignol, Inc., 256 Ga. 27 (343 SE2d 680) (1986) “applies only to the testimony of parties to a case, and not to the testimony of witnesses who are not parties”) (citations omitted).

So viewed, the evidence shows that Appellant Lagroon was a dentist in South Carolina and Appellant Barnett was his office employee and babysitter for his two young children. On January 6, 2007, the two embarked on a driving trip to Savannah where Lagroon would attend a professional meeting and Barnett would babysit the children. They were towing a camper. When the lights on the camper began to malfunction, they stopped at property adjacent to the house of Kathy Rhodes, an acquaintance of Barnett. Lagroon could not repair the lights, and he and the children prepared to stay the night in the camper while Barnett waited to be picked up by a relative.

Unbeknownst to Lagroon and Barnett, Kathy Rhodes’ two teenaged sons had arranged to have a party at her house to celebrate the older son’s 18th birthday. Teenagers began arriving on the property, bringing coolers, food and drinks. Wade Rhodes, who was Kathy Rhodes’ ex-husband and the father of the two boys, knew about the party and was concerned that the teenagers would be drinking alcohol. He and a friend watched the party through binoculars, became convinced that the party involved underage drinking, and reported the party to Sheriff Lawson.

Sheriff Lawson arrived at Kathy Rhodes’ house with two deputies, one of whom was Deputy Foskey. They saw cars parked everywhere and a large number of underage people outside of the house near a bonfire. Many of the partygoers were drinking alcohol. On the deck of the house, teenagers were getting beer from coolers, and there was alcohol available inside the house, as well. As the law enforcement officers approached, many partygoers scattered, but the officers corralled some of them into the house.

Deputy Foskey interviewed partygoers to determine who had provided the alcohol. Most of them said they did not know who had provided the alcohol, but some gave statements indicating that Lagroon and Barnett had been at the party, and four gave statements identifying “the dentist” as the alcohol source. Two out of those four witnesses, however, subsequently testified that they originally told law enforcement officers they did not know who provided the alcohol and that they gave the statements implicating Lagroon only after being coerced to do so. In one case, at Sheriff Lawson’s direction, Deputy Foskey tore up the witness’s original statement and told the crying teenager to sign a new statement implicating Lagroon or else the deputy would arrest him and take him to the Juvenile Detention Center. In another instance, when a teenaged witness refused to give a statement implicating Lagroon, the teenager’s father began “physically abusing” him and told him that he would “throw [the teenager] out of the house if [he] did not write a statement for the Sheriff stating that Dr. Lagroon had brought the beer to the party.” This occurred in front of Sheriff Lawson. According to another teenager, the law enforcement officers “were telling us basically what to write down, at the beginning, that night.... They were sitting there telling us that we needed to write this and we need to write that.”

After receiving the statements from the teenagers, Sheriff Lawson went to the camper, accompanied by his chief investigator, Deputy Hancock, whom he had called to the scene, as well as Wade Rhodes and Rhodes’ friend. Deputy Hancock knocked on the camper door, and Lagroon answered. Sheriff Lawson asked for his identification and told him that he had eyewitnesses that Lagroon was serving drinks to kids out of the camper, a representation that was not supported by any of the witness statements. When Lagroon informed Sheriff Lawson that his children and Barnett were inside the camper, Deputy Hancock yelled: “Call DFACS!” Deputy Hancock took Barnett out of the camper and told her that they had eyewitnesses that she was either selling or serving alcohol to minors. As Barnett began to explain their presence on the adjacent property, Sheriff Lawson approached and said “arrest all the adults because they are going to lie for each other.” He told Deputy Foskey that the witness statements supported the arrest of Lagroon and Barnett, and he instructed Deputy Hancock to interview them at the sheriff’s office. Deputy Hancock walked Barnett to Kathy Rhodes’ house and told her to get into a law enforcement vehicle.

Barnett was driven to the sheriff’s office and placed in a holding cell until the following morning, when Deputy Hancock interviewed her. He did not question her about what happened at the party; instead, he questioned her primarily about her estranged husband, whom she was divorcing. He told Barnett that he was the officer who had to “kick [her] husband out of the house” in response to a temporary restraining order that Barnett had obtained the month before, that he felt bad about kicking her husband out, that her husband was a “nice guy,” and that he had her husband’s cell phone number and would call him to “come up there” to the sheriff’s office. He also told Barnett that he would be testifying against her in her divorce action. Barnett provided Hancock with a written statement explaining why she had been in the camper on the property adjacent to the party, and she was returned to her cell.

Lagroon was taken separately to the sheriff’s office where, after waiting several hours, he was interviewed by Deputy Hancock. Deputy Hancock questioned him about an alcohol purchase he had made before leaving on his trip to Savannah. Deputy Hancock then asked Lagroon to sign a paper that set forth his Miranda rights, and when Lagroon asked whether he was under arrest replied, “I don’t know.” Deputy Hancock finally told Lagroon he was under arrest and demanded that he make a written statement. Lagroon refused and was placed in a cell.

Deputy Hancock also interviewed Kathy Rhodes at the sheriff’s office. In that interview, she repeatedly told Deputy Hancock that neither Lagroon nor Barnett provided alcohol for the party. She gave Deputy Hancock a written statement to that effect.

After the interviews, Deputy Hancock told Deputy Foskey that there was probable cause to arrest Lagroon and Barnett, and based on the earlier witness statements and Deputy Hancock’s interviews, Deputy Foskey obtained arrest warrants for Lagroon and Barnett from a magistrate judge for contributing to the delinquency of minors. Lagroon and Barnett were released on bond, and they appeared in court and pled not guilty to the charges. Their arrests negatively affected Lagroon’s dental practice, Barnett’s ability to find employment, and Barnett’s ongoing divorce proceedings.

The sheriff’s office sent the case file to the district attorney’s office in February 2007. Later that spring, Kathy Rhodes gave Deputy Hancock a further written statement that neither Lagroon nor Barnett had provided alcohol at the party. In July 2007, she sought a copy of that statement, and Deputy Hancock told her that he had torn it up. He asked her to write another statement and she did, again stating that neither Lagroon nor Barnett provided alcohol at the party. Deputy Hancock did not forward Rhodes’ July 2007 statement to the district attorney’s office at that time.

Sheriff Lawson requested that the district attorney’s office seek indictments against Lagroon and Barnett on multiple counts. In January 2008, Deputy Foskey testified before a grand jury about the case against Lagroon and Barnett, and the grand jury returned a special presentment charging Lagroon and Barnett with seven counts each of contributing to the delinquency of a minor.

In April 2008, Deputy Hancock sent the district attorney’s office the statement he had obtained from Kathy Rhodes nine months before. The district attorney testified in his deposition that he thought the statement “completely exonerated” Lagroon and Barnett. He testified that he “really became angry” after receiving the statement from Hancock, and he testified, “it’s my career that this man [Hancock] was messing with, and I’m still upset about it.” The district attorney also testified that if he had known of the statement’s existence earlier he would have approached the case differently before the grand jury and might not have taken the case to the grand jury at all. On December 15, 2008, the district attorney obtained a order of nolle prosequi dismissing the charges against Lagroon and Barnett.

2. Official immunity.

As a threshold issue, we address the defendants’ argument that, as a matter of law, they are entitled to official immunity. See Marshall v. Browning, 310 Ga. App. 64, 67 & n. 3 (712 SE2d 71) (2011). The doctrine of official immunity “protects individual public agents from personal liability for discretionary actions taken within the scope of their official authority, and done without wilfulness, malice, or corruption.” McDowell v. Smith, 285 Ga. 592, 593 (678 SE2d 922) (2009) (citation and punctuation omitted). See also Ga. Const, of 1983, Art. I, Sec. II, Par. IX (d).

Because the defendants’ actions challenged in this case are discretionary, they are immune from suit unless they acted with wilfulness or actual malice. See Marshall, 310 Ga. App. at 67 (police detective was acting within discretionary authority in investigating case, obtaining search and arrest warrants, and executing warrants); Anderson v. Cobb, 258 Ga. App. 159, 160 (2) (573 SE2d 417) (2002) (decision to arrest is discretionary act). “Actual malice requires a showing that the actor had a deliberate intention to do wrong, and... wilful conduct is based on an actual intention to do harm or inflict injury.” Griswold v. Collins, 318 Ga. App. 556, 558 (2) (a) (734 SE2d 425) (2012) (citations and punctuation omitted). A factfinder may infer from evidence that a defendant acted with actual malice. City of Atlanta v. Shavers, 326 Ga. App. 95, 98 (2) (b) (756 SE2d 204) (2014). As explained below, a jury could infer from the evidence in this case that all three defendants acted with actual malice.

(a) Sheriff Lawson and Deputy Foskey.

As to Sheriff Lawson and Deputy Foskey, there is evidence that they were told at the scene that Lagroon and Barnett had no involvement with the alcohol available at the party. Nevertheless, there is evidence that they used or condoned threats to pressure teenaged eyewitnesses into giving statements to the contrary, and that they dictated the contents of some of those statements. Furthermore, there is evidence that Sheriff Lawson and Deputy Foskey used these improperly-procured statements as the basis for arresting and prosecuting Lagroon and Barnett despite knowing of the statements’ falsity, inaccuracy or unreliability.

From this evidence, a jury reasonably could infer that Sheriff Lawson and Deputy Foskey arrested Lagroon and Barnett and took steps to secure grand jury charges against them despite knowing that they had not committed any offenses, “thereby establishing that the officer [s] deliberately intended to do a wrongful act.” City of Atlanta, 326 Ga. App. at 98-99 (2) (b) (citation and punctuation omitted). Such evidence raises a fact question about whether Sheriff Lawson and Deputy Foskey acted with actual malice. See Bateast v. DeKalb County, 258 Ga. App. 131, 132 (572 SE2d 756) (2002); see also Greenway v. Northside Hosp., 328 Ga. App. 473, 474 (763 SE2d 488) (2014) (where deputy falsely stated to hospital patient that he worked for Humane Society, failed to correct statements made by medical personnel in his presence that patient’s dogs would go to Humane Society and later could be reclaimed, refused to read release form — allowing for euthanization of dogs — to patient after learning patient could not read form without glasses, and used his position to coerce patient to “sign the damn form” at a time when patient was on medication and “out of it,” fact question existed as to whether deputy-acted with actual malice); Jackson v. Payne, 326 Ga. App. 536, 538 (1) (757 SE2d 164) (2014) (where there was evidence that deputies “arrested [the plaintiff] during the execution of [a] fi. fa. and detained him without authority, thereby deliberately intending to do a wrongful act,” jury question existed as to actual malice). Cf. Marshall, 310 Ga. App. at 68 (in finding that officer was entitled to official immunity against malicious prosecution claim, noting that officer was not “accused of manufacturing evidence or knowingly presenting perjured testimony”) (citation omitted; emphasis supplied).

(b) Deputy Hancock.

There is evidence that Deputy Hancock used his interview with Barnett to question her about her estranged husband, rather than the facts of the case, and then misrepresented to Deputy Foskey that the interview supported the decision to seek an arrest warrant. There is evidence that Deputy Hancock threatened to bring Barnett’s husband to the jail despite the protective order against him, and evidence that he bragged to Barnett about testifying against her in her upcoming divorce trial. And there is evidence that for nine months Deputy Hancock concealed from the district attorney exculpatory evidence favoring Barnett and Lagroon, failing to provide this information until after the grand jury proceedings. A jury could infer from this evidence that Deputy Hancock acted with actual malice. See Greenway, 328 Ga. App. at 474.

3. Applicable cause of action.

Lagroon and Barnett brought claims for false imprisonment, false arrest, and malicious prosecution. These are three different, related torts. Because Lagroon and Barnett were arrested pursuant to a warrant and the action was carried on to a prosecution, the applicable cause of action is malicious prosecution.

Although the distinctions among the torts of false imprisonment, false arrest, and malicious prosecution are not always clear in our case law,

(1) false imprisonment... is “unlawful” detention without judicial process, or without the involvement of a judge at any point (OCGA § 51-7-20); (2) false or malicious arrest... is detention “under process of law” (OCGA § 51-7-1); and (3) malicious prosecution ... is detention with judicial process followed by prosecution (OCGA § 51-7-40).

Ferrell v. Mikula, 295 Ga. App. 326, 329 (2) (672 SE2d 7) (2008). The “key distinction” between false imprisonment and false or malicious arrest is “whether the person was detained using a warrant or not.” Id. And where there has been an arrest pursuant to warrant,

the remedy of the accused depends on whether or not he is actually prosecuted under the warrant. If after the arrest the warrant is dismissed or not followed up, the remedy is for malicious arrest. But if the action is carried on to a prosecution, an action for malicious prosecution is the exclusive remedy, and an action for malicious arrest will not lie.

Garner v. Heilig-Meyers Furniture Co., 240 Ga. App. 780, 781-782 (1) (525 SE2d 145) (1999) (citation omitted).

The undisputed evidence in this case showed that law enforcement officials obtained warrants for the arrest of Lagroon and Barnett and that the state subsequently charged them with criminal offenses pursuant to a special presentment by the grand jury. See generally OCGA § 17-7-51 (“All special presentments by the grand jury charging defendants with violations of the penal laws shall be treated as indictments”). Consequently, the applicable cause of action in this case is malicious prosecution. McCord v. Jones, 168 Ga. App. 891, 892 (311 SE2d 209) (1983) (case raised claim of malicious arrest rather than malicious prosecution “since the district attorney sought no indictment and no prosecution has been carried on”). And the trial court did not err in granting summary judgment to the defendants on the claims for false imprisonment and false arrest.

4. Malicious prosecution.

“A criminal prosecution which is carried on maliciously and without any probable cause and which causes damage to the person prosecuted shall give him a cause of action.” OCGA § 51-7-40. A plaintiff asserting malicious prosecution must show: “(1) prosecution for a criminal offense instigated by defendant; (2) issuance of a valid warrant, accusation, or summons; (3) termination of the prosecution in favor of plaintiff; (4) malice; (5) want of probable cause; and (6) damage to the plaintiff.” Willis v. Brassell, 220 Ga. App. 348, 350 (469 SE2d 733) (1996) (citations omitted). Lagroon and Barnett have produced enough evidence as to each of those elements to reach a jury.

About most of those elements, little more needs to be said. As discussed in Division 3, supra, Lagroon and Barnett have shown that they were prosecuted for criminal offenses, and there is evidence by which a jury could find that the three defendants instigated the prosecution. The evidence also established that Lagroon and Barnett were prosecuted under warrants obtained from the magistrate court and that the prosecution ultimately terminated in their favor by way of nolle prosequi. See State v. Davis, 196 Ga. App. 785, 786 (397 SE2d 58) (1990) (entry of nolle prosequi brought prosecution to an end). Finally, the record also contains evidence of some damage to Lagroon and Barnett, including reputational damage and Lagroon’s hiring of an attorney to defend him against the criminal prosecution. See Medoc Corp. v. Keel, 166 Ga. App. 615, 616 (1) (305 SE2d 134) (1983) (attorney fees paid to defend against criminal action are recoverable damages in malicious prosecution action).

(a) Want of probable cause.

“Want of probable cause is the gravamen of an action for malicious prosecution[.]” Condon v. Vickery, 270 Ga. App. 322, 324 (1) (606 SE2d 336) (2004) (citation and punctuation omitted). “Lack of probable cause shall exist when the circumstances are such as to satisfy a reasonable man that the accuser had no ground for proceeding but his desire to injure the accused. Lack of probable cause shall be a question for the jury, under the direction of the court.” OCGA § 51-7-43. Ajudge, however, “may determine the issue when the material facts are undisputed.” Adams v. Carlisle, 278 Ga. App. 777, 782 (1) (630 SE2d 529) (2006) (citations omitted). And while a grand jury’s return of charges is prima facie evidence of probable cause, it is not conclusive and can be rebutted by direct or circumstantial evidence. See Rowe v. CSX Transp., 219 Ga. App. 380, 381 (465 SE2d 476) (1995); Auld v. Colonial Stores, 76 Ga. App. 329, 336 (2) (45 SE2d 827) (1947).

“Probable cause does not depend on the actual state of the case in point of fact, but on the honest and reasonable belief of the party commencing the prosecution.” Harmon v. Redding, 135 Ga. App. 124, 125 (1) (218 SE2d 32) (1975) (citation omitted). The defendants testified that they believed that there was probable cause that Lagroon and Barnett committed the offense of contributing to the delinquency of a minor based on evidence that they were present at a party where underage drinking occurred and evidence that Lagroon had supplied alcohol for the party. The evidence, however, raises a question of fact as to whether they had a basis for their professed belief.

First, the presence of Lagroon and Barnett at the party, without more, does not support a reasonable belief that probable cause existed, because such behavior is not a crime. Although a minor’s consumption of alcohol fell within the definition of a delinquent act under former OCGA § 15-11-2 (6) (A) (2013), an unrelated adult does not commit the crime of contributing to that delinquent act merely by being present when the underage consumption occurs. See Boyd v. State, 314 Ga. App. 883, 885 (726 SE2d 135) (2012) (mere presence, without evidence supporting inference of active participation in offense, generally is insufficient to show criminal conduct). Instead, “[a] person commits the offense of contributing to the delinquency... of a minor when such person... [kjnowingly and willfully encourages, causes, abets, connives, or aids a minor in committing a delinquent act.” OCGA § 16-12-1 (b) (1).

In cases where we have found evidence to support the conviction of an adult for this offense for being in the presence of an unrelated minor who was consuming alcohol, there were circumstances beyond the adult’s mere presence when the alcohol was consumed. For example, in Boyd, supra, there was evidence that the defendant adult and the minor went together to a park where the minor proceeded to drink beer. We found that this evidence supported an inference that the two were at the park together for that specific purpose and, consequently, a jury could find that the adult had actively participated in “conniving” in the minor’s possession and consumption of alcohol. Boyd, 314 Ga. App. at 885. And in Beckom v. State, 286 Ga. App. 38 (648 SE2d 656) (2007), the defendant adult knowingly allowed a party with underage drinking to occur in her home. Id. at 40 (1). In contrast, the evidence of Lagroon’s and Barnett’s presence merely shows that they were at the house of another at the same time as delinquent minors.

below, the defendants had no additional evidence that Lagroon or Barnett knowingly or willingly acted to encourage, cause, abet, connive, or aid any of the minors in drinking alcohol. None of the witness statements, upon which the defendants claim to have relied in finding probable cause, indicated that Barnett brought alcohol to the party or served or encouraged anyone there to use alcohol. And a question of fact exists as to whether the defendants formed an honest or reasonable belief that there was probable cause from the statements linking Lagroon to the alcohol. ., addressed

A defendant’s belief is not “honest” or “reasonable” where there is evidence that the defendant knew the information he supplied to commence the prosecution was false, failed to set forth a full, fair and complete statement of the facts, or concealed facts. Brooks v. H&H Creek, 223 Ga. App. 635, 638 (1) (d) (478 SE2d 451) (1996); Willis, 220 Ga. App. at 353 (4). The reliability of a defendant’s source of information is relevant to the issue of the reasonableness of the defendant’s belief, Willis, 220 Ga. App. at 351 (1) (b), and a fact question can be raised where the existence of probable cause turns upon the credibility of a witness who gave the defendant information about the incident. Harmon, 135 Ga. App. at 127 (1).

Decided July 9, 2014 —

Reconsideration denied July 30, 2014 —

John P. Batson, for appellants.

Williams, Morris & Way mire, Terry E. Williams, Jason C. Way mire, for appellees.

Lagroon and Barnett have pointed to evidence from which a jury could find that Sheriff Lawson and Deputy Foskey knew at the time that the witness statements were false or unreliable, yet proceeded to obtain arrest warrants and pursue the prosecutions. In addition, Lagroon and Barnett have pointed to evidence from which a jury could find that Deputy Hancock instructed Deputy Foskey to obtain an arrest warrant for Barnett without questioning Barnett about the charged offense and kept from the district attorney potentially exculpatory evidence that would have altered the way in which the district attorney presented the case to the grand jury. This evidence rebuts the prima facie evidence of probable cause that arose upon the grand jury’s return of charges against them and creates a question of fact about the element of want of probable cause.

(b) Malice.

The malice needed for a malicious prosecution action may be inferred from circumstances such as a “total lack of probable cause,” OCGA § 51-7-44, or actions of a defendant “done with a reckless disregard for or conscious indifference to the rights of the plaintiff.” Willis, 220 Ga. App. at 352 (3) (citation and punctuation omitted). See generally Anderson, 258 Ga. App. at 160 (2) (acknowledging difference between malice in malicious prosecution context and malice in official immunity context). As discussed in Division 2, supra, Lagroon and Barnett have presented evidence from which a jury could find that the three defendants acted with malice.

Judgment affirmed in part and reversed in part.

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

       A similar definition of “delinquent act” can be found in Georgia’s new Juvenile Code at OCGA § 15-11-2 (19).