author: Branch, Judge. BARNES, Presiding Judge,

text:
    A15A0458, A15A1438.
    RES-GA SCL, LLC v. STONECREST LAND, LLC et al.; and vice versa.
    (776 S.E.2d 489)
   Branch, Judge.

In this suit on a loan agreement, including a promissory note and associated personal guaranties, the trial court granted summary judgment in favor of the creditor, RES-GA SCL, LLC. The debtor and a guarantor appeal; RES-GA cross-appeals. For the reasons stated below, we affirm summary judgment in favor of RES-GA but reverse the trial court’s decision not to award attorney fees in favor of RES-GA against one of the guarantors.

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. OCGA § 9-11-56 (c). We review a grant or denial of summary judgment de novo and construe the evidence in the light most favorable to the nonmovant. Home Builders Assn. of Savannah v. Chatham County, 276 Ga. 243, 245 (1) (577 SE2d 564) (2003).

So construed, the record shows that in March 2007, Stonecrest Land, LLC entered into a commercial promissory note with Integrity Bank in the original principal amount of $15,937,000 (with funds to be advanced as necessary) and that Thomas Brock and Wayne H. Mason agreed to guarantee Stonecrest’s obligations under the note. Stonecrest obtained the two-year-term loan in order to add infrastructure and other improvements to a 63-acre tract of raw land in DeKalb County near Stonecrest Mall so that a residential community could be developed on the site. Under the “balloon” note, Stonecrest was required to make only monthly interest payments until March 30, 2009, at which time a balloon payment of all advanced principal, interest, and other loan obligations was due. But because the project was not designed to be income producing during construction, Integrity agreed in the loan documents to make advances under the loan to fund the interest payments; the loan had a pre-funded “interest carry” of $1.5 million earmarked for this purpose. During the term of the loan, Integrity advanced $11,937,690.58 of principal to Stonecrest, and Integrity made monthly interest advancements for the first year of the loan.

By early 2008, Integrity apparently was experiencing some financial distress, and by May 2008, it may have had concerns about Stonecrest’s progress with the development. Ultimately, Integrity decided to reverse the interest advancement that it made in April 2008 and not to make any further interest advancements thereafter even though sufficient funds remained in the pre-funded “interest carry.” After Integrity ceased making interest advancements, Stone-crest failed to make any interest payments required by the promissory note. And ultimately, neither Stonecrest nor the guarantors made a single payment to any of the holders of the loan documents.

In August 2008, Integrity was placed into receivership with the Federal Deposit Insurance Corporation (FDIC). On September 25, 2008, in a letter to Stonecrest, the FDIC accelerated the note “because of [Stonecrest’s] failure to make timely payments.” FDIC also published notice of the Integrity closure in the Atlanta Journal Constitution on September 5, 2008, October 6,2008, and November 4, 2008. The notices are titled “FDIC NOTICE TO CREDITORS AND DEPOSITORS OF INTEGRITY BANK ALPHARETTA, GA,” and they provide that “All creditors having claims against the Failed Institution must submit their claims in writing, together with proof of the claims, to the [FDIC] by December 04, 2008 (the ‘bar date’).” As further explained below, Stonecrest did not make such a claim. FDIC later assigned all its rights in the loan documents to Multibank 2009-1 RES-ADC Venture, LLC, and on May 10, 2010, Multibank sent a demand letter to Stonecrest, Brock and Mason in an attempt to collect on the debt. Multibank later assigned all its rights in the loan documents to appellee RES-GA.

In February 2012, RES-GAfiled suit against Stonecrest and the guarantors for breach of the loan documents and guaranties. Both Stonecrest and Brock (hereinafter “the defendants”) answered and raised certain defenses; the claims against Mason were transferred to Gwinnett County and are therefore not before us. Following discovery, RES-GA and the defendants filed cross-motions for summary judgment; following a hearing, the trial court denied both motions. After additional discovery, RES-GA renewed its motion for summary judgment and argued that the defendants’ defenses to the suit were barred by federal law, namely the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (“FIRREA”), 12 USC § 1821. RES-GA also argued that the defendants failed to raise an issue of fact regarding their defenses even if they were not so barred. On July 23, 2014, the trial court granted summary judgment without providing specific grounds and entered final judgment in favor of RES-GA. The court entered judgment “in the amount of $18,245,115.21, plus per diem interest in the amount of $2,652.82 and, if appropriate, post-judgment interest in accordance with the applicable statutes.” In Case No. A15A1438, Stonecrest and Brock appeal the judgment entered against them. In Case No. A15A0458, RES-GA appeals the trial court’s failure to award attorney fees against Brock based on his guaranty. These two cases have been consolidated in this Court for purposes of appeal.

Case No. A15A1438

1. On appeal, the defendants do not dispute that RES-GA established a prima facie right to recover under the loan documents and guaranty. Instead they contend the trial court erred by granting summary judgment in favor of RES-GA because that court failed to consider their “affirmative defenses” to RES-GA’s suit. Because they are challenging the grant of summary judgment, we interpret the defendants’ argument to be that their defenses are not barred by FIRREA and that there are issues of fact regarding these defenses. We conclude that the defendants have abandoned many of their defenses on appeal and that FIRREA bars the remaining defenses. Accordingly, we affirm.

(a) The defendants have abandoned consideration of many of their defenses. In their separate answers to the complaint, the two defendants raise the same 16 defenses. In their appellate briefs, the defendants do not specifically refer to these numbered defenses, making it difficult for this Court to determine which specific defenses the trial court allegedly overlooked. Construing these arguments in their favor, we find that the defendants mention, at most, ten of the sixteen defenses asserted in their answers. As numbered in Stonecrest’s answer, these are defense Nos. 3, 4, 7 through 13, and 15. Thus, any argument regarding defense Nos. 1, 2, 5, 6, 14, and 16 have been abandoned. See Court of Appeals Rule 25 (c) (2).

Next, several of the ten defenses that were referred to in Stonecrest and Brock’s initial brief are redundant or so similar that they can be combined and treated as one. For the purposes of this opinion, we find that the defenses arguably being pursued on appeal can be summarized as follows: (1) failure of Integrity to fund the interest advancements under the terms of the loan documents, constituting a failure of consideration and a breach of the terms of those documents thereby causing the defendants to default on their obligation to make payments on the note (hereinafter the breach of contract/failure of consideration defense); (2) failure of Integrity to perform its obligations under the loan documents in good faith, as well as breach by Integrity of an implied covenant of good faith and fair dealing, by preventing Stonecrest from performing under the loan documents (hereinafter the breach of duty of good faith defense); and (3) failure to mitigate damages. With regard to failure to mitigate damages, however, the defendants have not attempted to show that they raised an issue of fact in the trial court, and accordingly, any assertion of error regarding that defense is also waived. Rule 25 (c) (2).

Thus, as the defendants essentially admit in their brief, the only remaining defenses are breach of contract/failure of consideration and breach of the duty of good faith. As the defendants further admit, moreover, “[s]uch defenses all stem from the failure to fund the interest reserve.” Accordingly, what remains for consideration are the defendants’ assertions that Integrity breached the loan documents, failed to provide consideration, or breached a duty of good faith in performing under the loan documents, all by failing to fund the interest advancements. Construing the facts in favor of the defendants, we also conclude that the defendants have raised an issue of fact regarding these preserved defenses.

(b) The primary issue presented in this appeal is whether the trial court was prohibited from asserting jurisdiction over the preserved defenses based on the defendants’ failure to exhaust administrative remedies under FIRREA. The defendants argue that their preserved defenses are not subject to the FIRREA exhaustion requirement because their defenses are properly characterized as “affirmative” defenses, which are not so barred.

“FIRREA ‘was enacted to strengthen regulation of the nation’s financial system in the wake of the savings and loan crisis of the 1980s,’ and ‘it grants the FDIC broad powers under 12 U.S.C. § 1821 to manage the affairs of insolvent banks as receiver or conservator.’ ” Bobick v. Community & Southern Bank, 321 Ga. App. 855, 861 (3) (743 SE2d 518) (2013), quoting Iberiabank v. Beneva 41-I, LLC, 701 F3d 916, 921 (II) (A) (11th Cir. 2012). FIRREA has its own administrative claims process for claims against failed banks:

The Act also created an administrative process for addressing claims against failed banks for which the FDIC has been appointed as receiver. Pursuant to that process, the FDIC is authorized to determine claims against a failed bank under procedures established by the Act.

Gravitt v. Bank of the Ozarks, 326 Ga. App. 461, 466 (2) (756 SE2d 695) (2014) (citations omitted). FIRREA also established limits on judicial review of such claims. Id. In this regard, FIRREA eliminates jurisdiction in all courts over specified types of claims and actions:

Except as otherwise provided in this subsection, no court shall have jurisdiction over —
(i) any claim or action for payment from, or any action seeking a determination of rights with respect to, the assets [] of any depository institution for which the [FDIC] has been appointed receiver, including assets which the [FDIC] may acquire from itself as such receiver; or
(ii) any claim relating to any act or omission of such institution or the [FDIC] as receiver.

12 USC § 1821 (d) (13) (D). The only exception provided in the subsection is that courts have jurisdiction to review claims that have been presented in the FIRREA claims process. 12 USC § 1821 (d) (6) (A); Placida Professional Center v. Fed. Deposit Ins. Corp., 512 Fed. Appx. 938, 945 (11th Cir. 2013). Our Court has adopted the reasoning of the Eleventh Circuit, which is shared by other circuit courts, that “the limitation on judicial review imposed by 12 USC § 1821 (d) (13) (D)... establishes] an administrative exhaustion requirement.” Bobick, 321 Ga. App. at 862, citing Interface Kanner v. JPMorgan Chase Bank, 704 F3d 927, 934 (III) (B) (11th Cir. 2013); see also Tri-State Hotels v. Fed. Deposit Ins. Corp., 79 F3d 707, 715 (B) (8th Cir. 1996); Freeman v. Fed. Deposit Ins. Corp., 56 F3d 1394, 1400 (II) (B) (D.C. Cir. 1995); Nat. Union Fire Ins. Co. of Pittsburgh, Pa. v. City Savings, 28 F3d 376, 383 (B) (3d Cir. 1994). “Accordingly, if a claim or counterclaim falls within the scope of 12 USC § 1821 (d) (13) (D), courts are divested of subject matter jurisdiction if the claimant failed to exhaust his or her administrative remedies before the FDIC.” Gravitt, 326 Ga. App. at 467 (2) (citation and footnote omitted). Finally, the Eleventh Circuit and other circuits have held that an entity such as RES-GA that purchases a failed lending institution’s promissory note or other assets from the receiver “stands in the shoes of the [receiver] and acquires its protected status under FIRREA,” at least for claims arising out of the actions of the failed institution or the FDIC. American First Fed. v. Lake Forest Park, 198 F3d 1259, 1263 (B), n. 3 (11th Cir. 1999) (citation omitted); see also Benson v. JPMorgan Chase Bank, 673 F3d 1207, 1209 (9th Cir. 2012); Village of Oakwood v. State Bank and Trust Co., 539 F3d 373, 386 (II) (C) (2) (6th Cir. 2008). Thus, RES-GA is authorized to argue that it is protected by FIRREA’s administrative exhaustion requirement.

Based on the language of 12 USC § 1821 (d) (13) (D), quoted above, the Eleventh Circuit and other circuit courts have held, “affirmative defenses are not subject to the requirements of exhaustion under [12 USC §] 1821 (d) (13) (D).” Lake Forest, 198 F3d at 1264 (B), and cases cited therein. In Lake Forest, the Eleventh Circuit quoted the Third Circuit who parsed the plain language of 12 USC § 1821 (d) (13) (D) to conclude that it divests courts of jurisdiction “over requests for relief” that can be characterized as:

(1) claims for payment from assets of any depository institution for which the RTC has been appointed Receiver;
(2) actions for payment from assets of such depository institutions;
(3) actions seeking a determination of rights with respect to the assets of such depository institutions; and
(4) a claim relating to any act or omission of such institution or the RTC as receiver.

Id. at 1263, quoting Nat. Union, 28 F3d at 393 (II) (B) (3). After agreeing with other circuits that conclude that all requests for relief falling into these categories, whether asserted as claims or counterclaims, are subject to the exhaustion requirement, the Eleventh Circuit again adopted the Third Circuit’s reasoning that the statute’s use of the terms “claims” and “actions” precluded application of the jurisdictional bar to “true affirmative defenses,” i.e., “ ‘a response to a plaintiff’s claim which attacks the plaintiff’s legal right to bring an action.’ ” Id. at 1264 (B), quoting Black’s Law Dictionary (6th ed. 1991) (emphasis in original). Following this reasoning, Stonecrest and Brock argue that their preserved defenses are true affirmative defenses not subject to FIRREA’s exhaustion requirement.

Even if true affirmative defenses are not barred by the FIRREA exhaustion doctrine, however, as explained by the Eleventh Circuit, simply naming something an affirmative defense does not determine whether a request for relief is a true affirmative defense or is, in fact, a claim or action encompassed by FIRREA:

[A] court must look beyond the nomenclature of a request for relief to ascertain whether it is a true affirmative defense or is, in actuality, a claim requiring exhaustion as a prerequisite to jurisdiction. Whether a request for relief is titled an affirmative defense or a counterclaim is not dispositive to the question of subject matter jurisdiction. The germane question is whether the remedy sought by a party, regardless of its label, is encompassed by Section 1821 (d) (13) (D), that is, whether the assertion is in reality a claim against the assets or actions of the failed institution or the [FDIC] as receiver.

Lake Forest, 198 F3d at 1264-1265 (B) (emphasis supplied). For example, Lake Forest involved a $9 million construction/development loan, the terms of which required Lake Forest to obtain a letter of credit to ensure the availability of funds for certain expenses related to the development. Id. at 1261. In exchange for the letter of credit, Lake Forest signed a promissory note payable on demand to Professional Savings Bank; two individuals guaranteed the note. Id. After the entire line of credit had been exhausted thereby causing an insurer to refuse to insure the construction loan, Professional, the successor-in-interest to the original lender on the construction loan, refused to fund the remaining $793,325 balance of that loan. Id. at 1263 (B). Professional later went into receivership, and the Resolution Trust Corporation (RTC) was appointed receiver. The RTC then sold the note and rights thereunder to American First Federal (AFF). Id. at 1261. When AFF later brought suit against Lake Forest on the promissory note, Lake Forest counterclaimed, “asserting that Professional had wrongfully failed to release the balance of the construction loan proceeds, thereby causing Lake Forest to default on the promissory note.” Id. Lake Forest sought to offset any recovery awarded to AFF on the note with the damages flowing from Professional’s failure to fund the loan. Id. The district court refused to consider the set-off claim because Lake Forest had not exhausted its administrative remedies under FIRREA. Id.

On appeal, the Eleventh Circuit affirmed the trial court’s decision to allow Lake Forest to re-designate its counterclaim as an “affirmative defense.” Lake Forest, 198 F3 dat 1263 (B). Nevertheless, the circuit court proceeded to examine Lake Forest’s “affirmative defense” to determine whether it should be disallowed because Lake Forest failed to pursue the matter under FIRREA’s administrative process. Id. The court concluded that “Lake Forest’s claim for damages stemming from Professional’s refusal to fund the balance of the construction loan is clearly a claim against the assets of the failed institution rather than a defense which attacks AFF’s legal right to bring the action.” Id. at 1265 (B). Thus, because Lake Forest did not pursue its set-off claim under FIRREA, the trial court did not have jurisdiction to consider Lake Forest’s so-called “affirmative defense.” Id.

(c) Here, the defendants’ preserved defenses are not true affirmative defenses under Lake Forest. In the pre-trial order, the defendants assert that as a result of Integrity’s breach of contract, failure of consideration, and breach of the duty of good faith in performing the contract the defendants are entitled either (i) to offset their damages against the plaintiff’s damages or (ii) to complete relief from their obligations under the note and guaranty.

(i) The defense claims that seek a determination of damages caused by Integrity as a means of offsetting the defendants’ own damages constitute claims for recoupment. “Recoupment is a right of the defendant to have a deduction from the amount of the plaintiff’s damages for the reason that the plaintiff has not complied with the cross-obligations or independent covenants arising under the contract upon which suit is brought.” OCGA § 13-7-2. “Recoupment may be pleaded in all actions ex contractu where the plaintiff is liable to the defendant under the same contract. If the damages of the defendant exceed those of the plaintiff, the defendant shall be awarded the amount of such excess from the plaintiff.” OCGA § 13-7-13. A claim of setoff is similar but involves two separate transactions. Under Georgia law, “both setoff and recoupment are considered counterclaims.” Hill v. Green Tree Servicing, 280 Ga. App. 151, 154 (2) (633 SE2d 451) (2006) (footnote omitted); Baxter v. Fairfield Financial Svcs., 307 Ga. App. 286, 295 (4) (704 SE2d 423) (2010) (punctuation and footnote omitted); French Quarter v. Peterson Young Self & Asselin, 220 Ga. App. 852, 854 (3) (471 SE2d 9) (1996). And “[w]hen a party has mistakenly designated a defense as a counterclaim or a counterclaim as a defense, the court on terms, if justice so requires, shall treat the pleadings as if there had been a proper designation.” OCGA § 9-11-8 (c). Because the defendants’ defenses seek, at least in part, a determination of damages caused by Integrity as a means of offsetting the defendants’ own damages, they are properly designated as counterclaims of recoupment.

The defendants’ recoupment counterclaims are barred by failure to pursue them under FIRREA’s administrative claims process. As already shown, FIRREA bars a court from taking jurisdiction over “any claim or action for payment from... the assets of any depository institution for which the [FDIC] has been appointed receiver.” 12 USC § 1821 (d) (13) (D). Because the defendants’ so-called affirmative defenses are, at least in part, properly characterized as counterclaims in which they seek payment from the assets of Integrity, they are claims that are subject to the FIRREA administrative claims process. See Interface Kanner, 704 F3d at 934 (III) (B); Lake Forest, 198 F3d at 1263-1264; Tri-State, 79 F3d at 713 (III) (B); F.D.I.C. v. Stovall, 2014 U. S. Dist. LEXIS 183100 (N.D. Ga. Oct. 2, 2014) (order); Bobick, 321 Ga. App. 855, 864 (3) (a). Thus, Stonecrest and Brock’s defensive claims of recoupment are barred by the defendants’ failure to exhaust administrative remedies under FIRREA.

(ii) The defendants also contend they have asserted an affirmative defense by arguing that Integrity’s alleged breach of the loan document entitles the defendants to be excused from liability under the note. This assertion is either also barred by 12USC § 1821 (d) (13) (D) or altogether without merit. First, it is undisputed that the agreement between the parties was partially performed. Integrity disbursed approximately $12,000,000 in principal to Stonecrest and made monthly interest advancements for the first year of the loan, none of which has been repaid by Stonecrest. Furthermore, Stonecrest never sought to rescind the agreement as a result of Integrity’s alleged breach. Thus, the alleged breach of the agreement or failure of consideration by Integrity was, at most, partial. The remedy for any purported partial failure of consideration or partial breach of contract is an offset of damages and is therefore properly characterized as a claim for recoupment and barred by FIRREA as shown above. Second, even if the defendants’ argument is otherwise legally sound, which we do not decide, “[bjefore partial failure of performance of one party will excuse the other from performing his contract or give him a right of rescission, the act failed to be performed must go to the root of the contract.” Chamberlin v. Booth & McLeroy, 135 Ga. 719, 720 (70 SE 569) (1911). Here, Integrity’s failure to make interest advancements under the loan agreement does not go to the root of the contract being enforced in this action, i.e., the promissory note. Rather, it pertains to the loan agreement and only to that part of the loan agreement under which Integrity agreed to make interest advancements. Indeed, the note provides that no provisions of the loan agreement “shall in any manner affect or impair the absolute and unconditional obligation of Maker to pay the outstanding principal balance hereof and unpaid accrued interest hereon as the same shall become due and payable.” Thus, this argument by the defendants is without merit.

Accordingly, all of the defendants’ preserved defenses are barred by 12 USC § 1821 (d) (13) (D) or wholly without merit.

(d) The defendants contend that any bar of their defenses would violate the Due Process Clause of the United States Constitution. They raise several arguments in this regard.

(i) They first argue briefly that because FIRREA provides that notice of the claims process shall be provided to “creditors,” it would violate due process to enforce the jurisdictional bar against debtors, such as the defendants, to whom notice is not required under FIRREA. But a review of the law shows that this position has been rejected based on the language of the statute itself. See McCarthy v. Fed. Deposit Ins. Corp., 348 F3d 1075, 1077 (II) (9th Cir. 2003); Tri-State, 79 F3d at 714 (B); Freeman, 56 F3d at 1400; Nat. Union, 28 F3d at 385-389 (II) (B) (2). FIRREA provides an exception to timely exhaustion only where the claimant can show that it did not “receive notice of the appointment of the receiver in time to file [a] claim.” 12 USC § 1821 (d) (5) (C) (ii) (I); see also Olde Towne Tyrone v. Multibank 2009-1 CRE Venture, 326 Ga. App. 322, 327-328 (1) (a) (756 SE2d 558) (2014) (citation omitted); Freeman, 56 F3d at 1401-1403 (II) (B). Here, on September 25, 2008, the FDIC sent a letter to the defendants informing them that the FDIC was the “Receiver of Integrity Bank.” The defendants therefore have not shown a violation of due process on this ground.

(ii) The defendants argue that the anti-injunction provision of FIRREA may bar the type of relief — declaratory — that they would have to seek by way of an administrative claim under FIRREA for the types of relief they seek in this suit. In other words, they argue that RES-GA’s interpretation of FIRREA violates due process because it might bar the very type of administrative claim that the defendants would have to bring if they had chosen to do so. But, as the defendants admit, the Eleventh Circuit has recently ruled that even if a claimant files an administrative claim that is barred by FIRREA’s anti-injunction provision, having then exhausted administrative remedies under FIRREA, the claimant is free to file a suit in court and raise the issue barred in the administrative proceeding. Placida, 512 Fed. Appx. at 945. Moreover, in this case the defendants did not file a declaratory judgment claim under the FIRREA claims process, and therefore this issue is not presently before us.

(iii) The defendants further argue that enforcement of FIRREA’s exhaustion requirement against them would lead to “patently absurd consequences” like requiring them to file defenses before having notice of the claims being asserted against them. First, as shown above, true affirmative defenses are not barred by the FIRREA exhaustion requirement. Second, by the time that the FDIC was appointed as a receiver, the defendants were fully aware that Integrity had ceased making interest advancements under the loan, which is what they contend triggered their defenses. Thus no patently absurd consequences result from this opinion.

In sum, the defendants’ attempt to raise a due process violation fails.

2. The defendants also contend the trial court erred as a matter of law by awarding default interest on the judgment in favor of RES-GA because Integrity failed to give notice of nonmonetary default when it decided to cease making interest advancements and, as a result, the FDIC improperly accelerated the note. For the same reasons stated above, these assertions of improper actions by Integrity and the FDIC are barred by the FIRREA exhaustion doctrine. They seek a determination of rights with respect to an asset (the loan) of a failed bank for which the FDIC was appointed as a receiver, which is encompassed in 12 USC § 1821 (d) (13) (D), and this defense is not a true affirmative defense.

3. Finally, we affirm the trial court’s grant of summary judgment against Brock for the separate reason that in his guaranty, he clearly waived all defenses to this suit. The guaranty provides:

No act, failure to act, or omission of any kind on the part of the Undersigned, the Principal, the Bank or any other person shall be a legal or equitable discharge or release of the Undersigned from their obligation hereunder unless agreed to hereafter in writing by the Bank.

In the guaranty, Brock also waived and renounced “any defense to any of the liabilities which may be available to or could be asserted by the Principal, except for payment.” Brock’s waiver of defenses is enforceable. Roberts v. Community & Southern Bank, 331 Ga. App. 364, 367 (1) (771 SE2d 68) (2015); see also Community & Southern Bank v. DCB Investments, 328 Ga. App. 605, 610 (2) (760 SE2d 210) (2014) (“[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 and footnote omitted).

Case No. A15A0458

4. In the cross-appeal, RES-GA contends the trial court erred by failing to award it attorney fees against Brock under the terms of his guaranty. We agree.

Brock’s guaranty provides:

If any legal action or actions are instituted by the Bank to enforce any of its rights against the Undersigned hereunder, then the Undersigned, jointly and severally, agree to pay the Bank all expenses incurred by the Bank relative to such legal action or actions, including, but not limited to, court costs plus 15% of the total amount of the principal and accrued interest then due the Bank hereunder as attorney’s fees.

On September 25, 2008, after Integrity was placed into receivership with the FDIC, the FDIC sent a letter to Brock stating that it held the note and that unless Brock paid in full within ten days of receipt of the letter, the FDIC intended to seek attorney fees and costs of collection:

As you know, the FDIC is the holder of the Note. . . . Unless the Amounts Due [defined to include principal, interest and other amounts owed on the loan] are paid in full within 10 days of your receipt of this letter the FDIC may turn this matter over to counsel to initiate collection activities and you will also become liable for attorney fees and costs of collection.

And on May 10, 2010, Multibank sent a letter to Brock, which Brock received, that provided essentially the same notice:

[Multibank] is the owner of the Loan and all of the documents that evidence and secure the Loan. . . . [Pursuant to [OCGA §] 13-1-11, you are hereby notified of Lender’s intention to recover attorneys’ fees and costs of collection. You are also notified that you have the opportunity to pay the indebtedness within ten (10) days of your receipt (whether actual or constructive) of this letter to avoid the additional liability of attorneys’ fees and costs of collection.

In its complaint, RES-GA demanded recovery of the attorney fees provided in the guaranty, but it did not inform Brock that he had ten days from the receipt of the complaint to pay the principal and interest to avoid attorney fees. In its order granting summary judgment in favor of RES-GA, the trial court did not award attorney fees. In addressing this aspect of the trial court’s order granting summary judgment, we again apply the de novo standard of review. Long v. Hogan, 289 Ga. App. 347 (656 SE2d 868) (2008).

RES-GA travels under OCGA § 13-1-11 (a) which provides:

Obligations to pay attorney’s fees upon any note or other evidence of indebtedness, in addition to the rate of interest specified therein, shall be valid and enforceable and collectable as a part of such debt if such note or other evidence of indebtedness is collected by or through an attorney after maturityf.]

And “[a] guaranty contract is an ‘evidence of indebtedness’ within the meaning of [the statute].” RadioShack Corp. v. Cascade Crossing II, 282 Ga. 841, 845 (653 SE2d 680) (2007) (citation omitted). If the statutory prerequisites are met, an award is mandatory

where a party complies with the requirements of OCGA § 13-1-11, the party is entitled to receive statutory attorney fees. Because the language of the statute is mandatory rather than permissive, we further hold that the trial court is without discretion to deny fees under section 13-1-11 when all the conditions of that statute are unquestionably satisfied.

TermNet Merchant Svcs. v. Phillips, 277 Ga. 342, 344-345 (1) (588 SE2d 745) (2003) (footnote omitted).

(a) Brock contends that the notices set forth above do not comply with the statute because notice must be given “after maturity of the obligation,” OCGA § 13-1-11; Brock argues that RES-GA’s calculation of the maturity date in this case is flawed because Integrity failed to give notice of nonmonetary default in May 2008 and therefore the declaration of default and acceleration of the debt in September 2008 was not proper. But again, this argument is based on Stonecrest’s defense that Integrity breached the loan documents, which is barred by FIRREA. Moreover, Brock waived all defenses that Stonecrest could assert except payment. Here, on May 10, 2010, Multibank demanded payment on the note and gave statutory notice of intent to collect attorney fees, all after the note matured, yet Brock has failed to make any payment on his unconditional guaranty. “[N]otice under this statute may be given any time between the maturity of the obligation and ten days prior to judgment.” Lockwood, v. Fed. Deposit Ins. Corp., 330 Ga. App. 513, 515-516 (1) (767 SE2d 829) (2014) (punctuation omitted). We find no error on this ground.

(b) Brock contends that RES-GA is not entitled to the amount of fees it seeks because it is not entitled to default interest because of Integrity’s improper acceleration of the note. But as shown above, the trial court did not err by awarding default interest under the note, Brock has waived all defenses, and the specific defenses asserted are barred by FIRREA.

(c) Finally, Brock contends that the trial court did not err because neither the May 10, 2010 demand letter from Multibank nor the earlier demand letter from the FDIC identifies RES-GA as the party who would be seeking attorney fees, i.e., the party filing suit. RES-GA argues that the FDIC and Multibank notices met the statutory requirements.

The notice clause of OCGA § 13-1-11 provides:

The holder of the note or other evidence of indebtedness or his or her attorney at law shall, after maturity of the obligation, notify in writing the maker, endorser, or party sought to be held on said obligation that the provisions relative to payment of attorney’s fees in addition to the principal and interest shall be enforced and that such maker, endorser, or party sought to be held on said obligation has ten days from the receipt of such notice to pay the principal and interest without the attorney’s fees. If the maker, endorser, or party sought to be held on any such obligation shall pay the principal and interest in full before the expiration of such time, then the obligation to pay the attorney’s fees shall be void and no court shall enforce the agreement. . . .

OCGA § 13-1-11 (a) (3). Thus, as this Court has explained, a proper demand notice

must as a matter of substance: (1) be in writing; (2) to the party sought to be held on the obligation; (3) after maturity; (4) . . . state that the provisions relative to payment of attorney fees in addition to principal and interest will be enforced; and (5). . . state that the party has ten days from the receipt of such notice to pay the principal and interest without the attorney fees.

Trust Assoc. v. Snead, 253 Ga. App. 475, 476 (1) (559 SE2d 502) (2002) (citations omitted). Also, the notice must be sent by the holder of the note. Krapf v. Wiles, 252 Ga. 452, 453 (314 SE2d 656) (1984). Only substantial compliance with OCGA § 13-1-11 (a) (3) is required for most of these elements, Brzowski v. Quantum Nat. Bank, 311 Ga. App. 769, 774 (3) (a) (717 SE2d 290) (2011), but strict compliance applies to the requirement that the note holder must send the notice, Krapf, 252 Ga. at 453, which requirement is satisfied in this case because the FDIC and Multibank both held the note at the time they provided the relevant notice.

As can be seen, nothing in the plain language of the statute requires that the notice indicate the name of the party that would be filing suit if the defendant failed to pay the principal and interest within the ten-day period provided in the notice. In other words, the statute does not address whether an assignee of the note may recover attorney fees where the assignee’s predecessor in interest provided the notice required by OCGA § 13-1-11 but the assignee filed suit.

In 1984 and 2002, respectively, the Supreme Court and this Court quoted earlier case law for the proposition that the notice must indicate who intends to file suit:

“ ‘Statutory notice for the purpose of fixing liability for attorney’s fees should disclose who is the holder of the note, and who it is that intends to bring suit, and to whom the payment should be made; and if notice is so worded as to mislead or as to be likely to mislead the defendant in material respects as to these features, it is inadequate.’ ”

Krapf, 252 Ga. at 453-454, quoting Gelders v. Kennedy, 9 Ga. App. 389, 390 (71 SE 503) (1911) (emphasis supplied); Snead, 253 Ga. App. at 476 (1) (a) (same quotation). The quotations in both Krapf and Snead are dicta, however, and both rely on much earlier cases that were decided when the notice provision of the statute required that the holder of the note provide notice “of his intention to bring suit.” See Civil Code 1910, § 4252; Miller v. Roberts, 9 Ga. App. 511, 514 (71 SE 927) (1911). See, e.g., Baskins v. Valdosta Bank & Trust Co., 5 Ga. App. 600, 601 (63 SE 648) (1909) (notice insufficient where it failed, among other things, to indicate that an assignee would be filing suit). The quotations in Krapf and Snead, therefore, are not controlling. And we have not found any other case law addressing the question before us under the current statute.

Because the notice provision of OCGA § 13-1-11 does not provide that the required notice indicates who will be filing suit, we conclude that a subsequent assignee of the note may file suit and collect attorney fees if a predecessor-in-interest has provided proper notice. Looking back to the notice provision of the statute and the notices provided in this case, we conclude that proper statutory notice was given twice, that Brock failed to pay within ten days of either proper notice, and that RES-GA is therefore authorized to collect attorney fees. We therefore reverse the trial court’s decision not to award fees and remand for entry of a fee award in accordance with the terms of the promissory note as governed by OCGA § 13-1-11.

In conclusion, we affirm summary judgment in favor of RES-GA but reverse the trial court’s decision not to award attorney fees in favor of RES-GA and against Brock.

Judgment affirmed in Case No. Al 5A1438. Judgment reversed in Case No. A15A0458.

McMillian, J., concurs. Barnes, R J., concurs specially.

BARNES, Presiding Judge,

concurring specially.

While I concur fully in Divisions 1, 3, and 4 of the majority opinion and with the judgment, I do not agree with the majority’s analysis and conclusion in Division 2 regarding the application of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (“FIRREA”), 12 USC § 1821. In my view, the defendant’s challenge to the plaintiff bank’s entitlement to “default interest” is a basic defense that is not subject to FIRREA’s administrative exhaustion requirement. Thus, in contrast to the majority, I would conclude that the defendants’ challenge to a “default interest” award can be asserted in this litigation, although I would conclude that such a challenge fails on the merits as a matter of law.

As the majority notes, FIRREA imposes an administrative exhaustion requirement on all claims and actions that fall within the ambit of 12 USC § 1821 (d) (13) (D). See Gravitt v. Bank of the Ozarks, 326 Ga. App. 461, 466 (2) (756 SE2d 695) (2014); Olde Towne Tyrone v. Multibank 2009-1 CRE Venture, 326 Ga. App. 322, 325-326 (1) (756 SE2d 558) (2014); Bobick v. Community & Southern Bank, 321 Ga. App. 855, 862 (3) (743 SE2d 518) (2013). See siso American First Fed. v. Lake Forest Park, 198 F3d 1259, 1263-1264 (11th Cir. 1999). The exhaustion requirement applies to requests for relief properly characterized as:

(1) claims for payment from assets of any depository institution for which the FDIC has been appointed Receiver;
(2) actions for payment from assets of such depository institutions;
(3) actions seeking a determination of rights with respect to the assets of such depository institutions; and
(4) claims relating to any act or omission of such institution or the FDIC as receiver.

(Punctuation omitted.) Bobick, 321 Ga. App. at 862 (3) (quoting American First Fed., 198 F3d at 1263). “Moreover, all claims falling within 12 USC § 1821 (d) (13) (D) are subject to the exhaustion requirement regardless of whether they are asserted as initial claims or as counterclaims,” and, therefore, “if a claim or counterclaim falls within the scope of [the statute], courts are divested of subject matter jurisdiction if the claimant failed to exhaust his or her administrative remedies before the FDIC.” (Citation and punctuation omitted.) Gravitt, 326 Ga. App. at 467 (2). See Bobick, 321 Ga. App. at 862-863 (3).

Unlike counterclaims, affirmative defenses generally are not subject to the administrative exhaustion requirement. See Bobick, 321 Ga. App. at 867 (3) (e). “An affirmative defense is a response to a plaintiff’s claim which attacks the plaintiff’s legal right to bring an action. A counterclaim, in contrast, seeks some type of affirmative relief against the plaintiff.” (Citations and punctuation omitted.) Id.

Additionally, although we have not been called upon to address the issue, basic defenses to a lawsuit, even if they do not technically constitute affirmative defenses, fall outside the exhaustion requirement imposed by 12 USC § 1821 (d) (13) (D). In Nat. Union Fire Ins. Co. of Pittsburgh, Pa. v. City Savings, 28 F3d 376, 393 (3d Cir. 1994), the Third Circuit Court of Appeals addressed the scope of the exhaustion requirement and, in doing so, explained the difference between a basic defense and an affirmative defense.

Black’s Law Dictionary defines “defense,” in relevant part, as follows:

That which is offered and alleged by the party proceeded against in an action or suit, as a reason in law or fact why the plaintiff should not recover or establish what he seeks. That which is put forward to diminish plaintiff’s cause of action or defeat recovery. . . .
A response to the claims of the other party, setting forth reasons why the claims should not be granted. The defense may be as simple as a flat denial of the other party’s factual allegations or may involve entirely new factual allegations. In the latter situation, the defense is an affirmative defense.

“Affirmative defense” is defined in more detail as follows:

In pleading, matter asserted by defendant which, assuming the complaint to be true, constitutes a defense to it. A response to a plaintiff’s claim which attacks the plaintiff’s [legal] right to bring an action, as opposed to attacking the truth of claim. Under the [Federal] Rules of Civil Procedure, and also under most state Rules, all affirmative defenses must be raised in the responsive pleading (answer).

(Emphasis omitted.) Id. at 393 (quoting Black’s Law Dictionary 60, 419 (6th ed. 1990)). The Third Circuit reasoned “that a defense or affirmative defense is not properly called an ‘action’ or a ‘claim’ but is rather a response to an action or a claim,” and that, as a result, neither basic defenses nor affirmative defenses are subject to the exhaustion requirement imposed by 12 USC § 1821 (d) (13) (D). (Emphasis in original.) Nat. Union Fire Ins. Co., 28 F3d at 393.

Both this Court and the Eleventh Circuit have previously relied upon the Third Circuit’s reasoning in Nat. Union Fire Ins. Co. to ascertain the meaning of “claim” and “action” under 12 USC § 1821 (d) (13) (D), and we should do so again here and recognize that both basic and affirmative defenses are not subject to administrative exhaustion. See American First Fed., 198 F3d at 1263; Bobick, 321 Ga. App. at 862 (3). The pertinent question in this case thus is whether the defendants’ contentions are properly characterized as counterclaims (which are subject to administrative exhaustion), or as basic or affirmative defenses (which are not subject to administrative exhaustion).

Decided July 16, 2015

Schulten, Ward & Turner, Kevin L. Ward, Andrea L. Pawlak, for appellant.

Andersen, Tate & Carr, R. Matthew Reeves, Graham K. Brantley; The Barnes Law Group, Roy E. Barnes, John F. Salter, J. Cameron Tribble; Levenson & Associates, Louis Levenson, for appellees.

In outlining their contentions in the consolidated pretrial order, the defendants contend that Integrity failed to provide them with proper notice of their alleged default on the loan, eliminating or reducing any award of “default interest” to RES-GA SCL, LLC. In my view, the defendants’ contention that RES-GA should be denied all or part of its request for “default interest” should be characterized as a basic defense rather than as a counterclaim. The defendants’ contention is merely an argument over the amount and type of damages RES-GA should be entitled to recover on its claims for breach of the note and guaranty. In other words, it is simply an effort by the defendants to explain “why [RES-GA] should not recover or establish what [it] seeks” and to “diminish [RES-GA’s] cause of action,” and thus should be construed as a basic defense falling outside the scope of the exhaustion requirement. (Citation and punctuation omitted.) Nat. Union Fire Ins. Co., 28 F3d at 393.

For this reason, the trial court erred to the extent that it granted summary judgment to RES-GA on the ground that the defendants’ basic defense to the amount and type of damages RES-GA sought to recover was barred by FIRREA’s administrative exhaustion requirement imposed by 12 USC § 1821 (d) (13) (D). Nevertheless, it is well established that a trial court’s grant of summary judgment will be affirmed if right for any reason. See Dan J. Sheehan Co. v. Fairlawn on Jones Homeowners’ Assn., 312 Ga. App. 787, 790 (1), n. 11 (720 SE2d 259) (2011). RES-GA also moved for summary judgment on the alternative ground that the defendants’ defenses, including their challenge to an award of “default interest,” failed on the merits as a matter of law. My review of the record leads me to conclude that RES-GA is right in this respect and, therefore, I believe that the trial court’s grant of summary judgment to RES-GA should be affirmed, as the majority ultimately concludes.

       The loan documents are the promissory note, loan agreement, deed to secure debt, and their subsequent amendments and modifications.

       The judgment amount was comprised of the unpaid principal balance of $11,937,690.58, interest of $360,700.64, “default interest” of $5,413,825.58, and escrow advances of $532,898.41. The term “default interest” is defined in the March 2007 commercial promissory note, wherein Stonecrest agreed that in the event of a default, such as failure to pay interest due under the note, it would pay an additional 4% interest on outstanding principal balance of the note:
      Interest (hereinafter referred to as “Default Interest”) shall accrue on the outstanding principal balance of this Note from maturity, or sooner following the occurrence of a default hereunder and after the expiration date of any period provided for the curing of such default and for so long as such default continues, regardless of whether or not there has been an acceleration of the indebtedness evidenced hereby as set forth herein, at the rate equal to the lesser of (i) four percent (4%) per annum in excess of the applicable interest rate in effect at the time of such default, or (ii) the highest rate of interest allowable under applicable law per annum.

       Brock raises one defense - his “Second Defense” - not asserted as a defense by Stonecrest. This defense, in which Brock asserts that RES-GA’s claims are barred by a prior pending action, is not mentioned in the defendants’ appellate brief, and therefore any claim of error based on that defense has been abandoned. See Court of Appeals Rule 25 (c) (2).

       The defendants’ argument that they in fact filed an administrative claim under FIRREA is belied by the record. The defendants were required to file a claim with the receiver by December 4, 2008, the bar date. 12 USC § 1821 (d) (3) (B) (i); 12 CFR § 380.34. The defendants have only cited one letter sent to Integrity, not the FDIC as required, and a second letter sent after the bar date. “[C]laims filed after the [claims bar date] shall be disallowed and such disallowance shall he final.” 12 USC § 1821 (d) (5) (C) (i). The only exception to the timeliness requirement is when “the claimant did not receive notice of the appointment of the receiver in time to file such claim before such date.” 12 USC § 1821 (d) (5) (C) (ii) (I); see also Rundgren v. Washington Mut. Bank, FA, 760 F3d 1056, 1060 (II) (9th Cir. 2014). Here, Stonecrest received notice of the appointment of the receiver on September 25, 2008, well before the bar date.

       The FDIC as receiver is given the authority to “place the insured depository institution in liquidation and proceed to realize upon the assets of the institution, having due regard to the conditions of credit in the locality.” 12 USC § 1821 (d) (2) (E) (2000). The FDIC as conservator may take such action as may be “(i) necessary to put the insured depository institution in a sound and solvent condition; and (ii) appropriate to carry on the business of the institution and preserve and conserve the assets and property of the institution.” 12 USC § 1821 (d) (2) (D) (2000).

       An outstanding loan is an asset of a bank. Freeman v. Fed. Deposit Ins. Corp., 56 F3d 1394, 1400 (II) (B) (D.C. Cir. 1995) (loan issued by failed institution to debtors was an asset of that bank).

       In their initial appellate brief, Stonecrest and Brock do not dispute that RES-GA is Integrity’s successor-in-interest to the loan documents at issue in this action. But in their reply brief, the defendants attempt to argue that RES-GA is not authorized to assert the receiver’s defense of failure to exhaust FIRREA administrative remedies. This argument is not timely. “[Tjhis Court will not consider arguments raised for the first time in a reply brief.” Barron v. Wells Fargo Bank, 332 Ga. App. 180, 187 (4) (769 SE2d 830) (2015) (citation omitted).

       “Setoff does not operate as a denial of the plaintiff’s claim; rather it allows the defendant to set off a debt owed him by the plaintiff against the claim of the plaintiff.” OCGA § 13-7-1. “Recoupment differs from setoff in this respect: Any claim or demand the defendant may have against the plaintiff may be used as a setoff, while only a claim or demand arising out of the same transaction as that sued on by the plaintiff may be used as a recoupment.” OCGA § 13-7-3. “Although there are distinctions between the two terms, they are frequently used interchangeably.” Gwinnett Commercial Bank v. Flake, 151 Ga. App. 578, 580 (1) (260 SE2d 523) (1979) (citation omitted).

        See McIntosh v. McLendon, 162 Ga. App. 220, 221 (2) (290 SE2d 157) (1982) (“Although the facts alleged by the defendant in his answer might support a counterclaim for breach of contract, they do not set forth a defense to the note, which constitutes by its terms an unconditional promise to pay the instrument according to its tenor.”); Park v. Fortune Partner, 279 Ga. App. 268, 272, n. 1 (630 SE2d 871) (2006) (“The defendants characterize Fortune’s alleged breach of the sales contract as a ‘defense’ to payment on the note, but the alleged breach may he more accurately asserted as the basis for a claim of recoupment or counterclaim.”); but see Lowery v. Dallis, 237 Ga. App. 309, 311 (2) (513 SE2d 740) (1999) (treating breach of asset purchase agreement as a defense to suit on promissory note given in exchange for purchased assets).

       On January 8,2009, the FDIC sent a second demand letter to Brock, hut the copy in the record does not show the complete language of the attorney fee demand.

       RES-GA does not argue that it provided proper notice in its complaint; nor can it. See Shier v. Price, 152 Ga. App. 593, 595 (2) (263 SE2d 466) (1979) (notice in complaint in accordance with OCGA § 13-1-11 “that the provision for 10% attorney fees in the note would he enforced if the principal and interest owing thereon were not received within ten days ... is a proper notice”); see also Lockwood, 330 Ga. App. at 515 (1), n. 7, and cases cited therein.

        Krapf addressed whether notice of intent to enforce an attorney fees provision must be sent by the holder of the note. Krapf, 252 Ga. at 453. Snead addressed a notice that failed to identify the notes and the note holder and failed to specify that the maker could make payment within ten days to avoid payment. Snead, 253 Ga. App. at 476.

       Consequently, Division 2 of the majority opinion may not be cited as binding precedent. See Court of Appeals Rule 33 (a).


source: Caselaw Access Project

author: BARNES, Presiding Judge.

license: Public Domain

text:
    A15A0477.
    STL MANAGEMENT CONSULTANTS, LLC v. MANHATTAN LEASING ENTERPRISES, LTD.
    (775 S.E.2d 758)
   BARNES, Presiding Judge.

This case considers whether the resignation of a limited liability company’s registered agent for service of process becomes effective 31 days after the resignation was “received” by the Secretary of State’s office, or 31 days after the resignation was subsequently stamped “filed” by the Secretary’s office. We hold that the former date controls, and that the document was filed on the date it was received by the Secretary. Therefore, the registered agent’s resignation had become effective when he was served, and the corporate guarantor was not in default for failing to file a timely answer to the complaint. Accordingly, we reverse the grant of a default judgment to the plaintiff leasing company against the corporate guarantor in this case.

Manhattan Leasing sued John Michels and STL Management Consultants, LLC, contending that Michels had defaulted on a lease agreement for a 2010 Porsche Panamera and that STL had guaranteed the lease. The complaint stated that STL could be served with process by serving its registered agent, and on April 2, 2013, the sheriff filed a return of service indicating that STL had been served by delivering a copy of the complaint and summons to its registered agent, Jeffrey Allen. On the return under the words “registered agent” is the handwritten notation “(resigned).” STL did not file an answer to the complaint within 45 days of this service, and in June 2013, Manhattan Leasing filed a certificate of default. STL objected, arguing that its agent for service of process had resigned on February 14, 2013, and submitted a copy of the letter of resignation that was dated February 14, 2013. Per statute, he contended, his agency appointment had expired 31 days later, before he was served on March 25, 2013, and therefore STL had never been served properly and was not in default.

In response to STL’s objection to the entry of a default judgment, Manhattan Leasing submitted a copy of STL’s resignation letter to the Secretary of State, which had two date stamps on it. The first stamp says:

2013 FEB 20 AM10:08
Secretary of State
Administrative Support
The second stamp says:
Control No: 0519117
Date Filed: 05/20/2013 03:54 PM
Brian P. Kemp
Secretary of State

The letter also has a third undated stamp or label that says:

State of Georgia
Reg Agent Resignation 1 Page(s)
[Bar Code]
T1314307302

Manhattan Leasing argued that the resignation was “filed” on May 20, 2013, and did not become effective until June 21, 2013, 31 days later. Therefore, it concludes, STL was properly served through its registered agent in March 2013, and its failure to file an answer constituted a default. The trial court apparently held a hearing on the motion for default in June 2013, although no hearing transcript is included in the appellate record.

In July 2013, after it had filed its Certificate of Default and STL had filed its objection, Manhattan Leasing filed an amended complaint asserting that STL could be served at its principal office rather than through its registered agent. Manhattan Leasing mailed notice of its service of process on STL through the Secretary of State, and filed its return of service on August 20, 2013. STL filed an answer on September 10, 2013.

A year later, in June 2014, the trial court issued a default judgment against STL, finding that the registered agent did not effectively resign until June 20, 2013, and therefore STL was properly served and failed to answer the complaint. The trial court awarded $124,479.20 in damages to Manhattan Leasing and reserved the issue of attorney fees and litigation costs for a later time. This court subsequently granted STL’s petition for an interlocutory appeal.

STL argues that the effective date of its registered agent’s resignation was 31 days after the Secretary of State received the resignation notice, because the document was “filed” when it was received. Therefore, it contends, Manhattan Leasing’s service upon STL’s former registered agent 39 days after the Secretary of State received the agent’s resignation letter was ineffective. Manhattan Leasing responds that the resignation letter was not filed on the day the Secretary of State received the resignation notice, but rather on the later date when the Secretary stamped the document as “filed.” Because the document was not filed until the later date, after the registered agent was served in March 2013, its service upon STL through its registered agent was valid because the agent’s resignation was not yet effective.

“Factual disputes regarding service are to be resolved by the trial court, and the court’s findings will be upheld if there is any evidence to support them.” Woodyard v. Jones, 285 Ga. App. 323 (646 SE2d 306) (2007) (emphasis omitted). “When, as here, a question of law is at issue we owe no deference to the trial court’s ruling and apply a de novo standard of review.” Fisher & Phillips v. Amerex Environmental Technologies, 332 Ga. App. 261, 262 (772 SE2d 59) (2015).

‘When a defendant in a lawsuit challenges the sufficiency of service, he bears the burden of showing improper service,” and if he does so, then the burden shifts to the plaintiff to provide additional evidence in support of proper service. (Punctuation and footnote omitted.) Wilkinson v. Udinsky, 242 Ga. App. 464, 465 (1) (530 SE2d 215) (2000).

Whether the resignation of STL’s registered agent had become effective on the date he was served is the determinative issue in this appeal, because if it had become effective, then personal service on the former agent did not constitute personal service on STL, and STL did not default by failing to file an answer. Chapter 11 of the Georgia Business Code relates to limited liability companies (LLCs), and OCGA § 14-11-209 (a) (2) provides that an LLC must maintain a registered agent for service of process on the limited liability company. An LLC’s registered agent “may resign ... by signing and delivering to the Secretary of State for filing a statement of resignation^] . . . The agency appointment is terminated ... on the . . . thirty-first day after the date on which the statement of resignation was filed.” OCGA § 14-11-209 (d).

OCGA § 14-11-206 describes the duties of the Secretary of State with regard to documents filed on behalf of an LLC, and specifies that the Secretary’s duty to file documents is ministerial. OCGA § 14-11-206 (c). The process of filing is outlined as follows:

(a) A signed original and one exact or conformed copy of any document required or permitted to be filed pursuant to this chapter shall be delivered to the Secretary of State [.]... Unless the Secretary of State finds that the document does not conform to the filing provisions of this chapter, upon receipt of all filing fees and additional information required by law, he or she shall:
(1) Stamp or otherwise endorse his or her official title and the date and time of receipt on both the original and copy;
(2) File the original in his or her office; and
(3) Return the copy to the person who delivered the document to the Secretary of State or the person’s representative.

OCGA § 14-11-206 (a). This subsection appears to contemplate that the document must be stamped at the time of delivery, and that the stamp must include the official title of Secretary of State, and the date and time the document is received. The statute further specifies that

... a document accepted for filing is effective:
(1) At the time of filing on the date it is filed, as evidenced by the Secretary of State’s date and time endorsement on the original document; or
(2) At the time specified in the document as its effective time on the date it is filed.

OCGA § 14-11-206 (e). If the Secretary determines that a document does not conform to the statutory filing provisions, that document “is deemed to have been filed at the time of delivery” if the Secretary later determines that the document did actually conform, or if a conforming document is filed within 30 days after the Secretary gives notification of nonconformance. (Emphasis supplied.) OCGA § 14-11-206 (d). In other words, the filing date of a re-filed corrected document is the date when the first filing was delivered to the Secretary.

Here, STL met its initial burden of showing improper service. The return of service indicates that the registered agent had resigned, and the registered agent’s resignation letter had been received by the Secretary of State and copied to STL more than 31 days earlier. The burden then shifted to Manhattan Leasing to provide additional evidence to show that service was proper. Manhattan Leasing responded by filing a copy of the agent’s resignation letter with the two date and time stamps on it — February 20, 2013, and May 20, 2013 — and argued that the latter date was the date when the letter was first “filed” for purposes of OCGA § 14-11-209 (d).

In support of its contention that the resignation letter was not filed until May 20, 2013, and thus service before that date was effective, Manhattan Leasing argues that the import of the stamps can be derived from reviewing the relevant statutes related to filing documents with the Secretary of State, including OCGA § 14-2-125 (b), contained in Chapter 2 of the Georgia Business Code and related to corporations. Citing to OCGA § 14-2-125 (b), Manhattan Leasing argues that the February 20, 2013, date stamp was not “endorsed by Brian P. Kemp, the Georgia Secretary of State,” but merely stamped “Secretary of State Administrative Support,” which “is not the official title of the Secretary of State,” and further argues that the February stamp does not include the word “filed.”

As Manhattan Leasing noted in its response to STL’s objection to default in the trial court, however, STL is an LLC, and the applicable statutes are found in Chapter 11. The equivalent Code section in Chapter 11 does not specify that the stamp must include the Secretary’s actual name or the word “filed” for the document to be considered as filed; it states that, unless the document does not conform to the filing provisions of the chapter, “upon receipt of all filing fees and additional information required by law, [the Secretary of State] shall... [s]tamp or otherwise endorse his or her official title and the date and time of receipt on both the original and copy.” OCGA § 14-11-206 (a) (1). The February 2013 stamp includes the time, date, and official title “Secretary of State,” and OCGA § 14-11-206 (e) provides that a document accepted for filing is effective “[a]t the time of filing on the date it is filed, as evidenced by the Secretary of State’s date and time endorsement on the original document.” Further, subsection (d)’s provision that a re-filed corrected document is deemed effective as of the date of its delivery reinforces the understanding that a document is “filed” when it is delivered to the Secretary.

The record contains no evidence explaining the distinction between these two stamps. We cannot determine their significance just by looking at them — perhaps the latter stamp indicates when the Secretary of State entered the document into its database, or perhaps the third stamp or sticker with the bar code is related to a database. We do not know how the Secretary of State processed this document, and nothing in the record enlightens us. Thus, Manhattan Leasing failed to show from the stamps that the letter was first “filed” on May 20, 2013, rather than February 20, 2013.

Manhattan Leasing further argues that no evidence shows that the agent gave notice of his resignation to STL as required by OCGA § 14-11-209 (d), but the “cc: STL Management Consultants, LLC” followed by an address at the bottom of the letter constitutes evidence that he gave the required notice “[o]n or before the date of the filing of the statement of resignation” required by that Code section.

Lastly, the legislature is presumed to have enacted all statutes with full knowledge of the existing law, and statutes should be construed in harmony with that law. Blackmon v. State, 266 Ga. App. 877, 879 (598 SE2d 542) (2004). While we have found no cases on point addressing the filing of a document with the Secretary of State’s office, the filing of a pleading in a court clerk’s office is analogous. In 1988, our Supreme Court noted that “[i]t is a well established rule in Georgia that a paper is said to be filed, when it is delivered to the proper officer, and by him received to be kept on file.” (Citation and punctuation omitted.) Valentine v. Hammill, 258 Ga. 582 (372 SE2d 435) (1988).

The duties of the clerk relating to the filing of pleadings are ministerial in nature, and it is the official duty of the clerk of a court to file all papers in a cause presented by the parties, and to mark them filed, with the date of filing. A paper is said to be filed, when it is delivered to the proper officer, and by that officer received, to be kept on file. Causing a paper to be actually placed in the hands of the clerk of a trial court within the time prescribed by law for filing the same in the clerk’s office is all that is, in this respect, required of a party. The actual date of filing is the date upon which the paper is handed to the clerk to be filed. So, where [for example] a motion for new trial has been delivered for filing to the clerk, it will be deemed filed even though that officer fails to make the proper entry of filing thereon.

(Citations and punctuation omitted.) Hood v. State, 282 Ga. 462, 464 (651 SE2d 88) (2007). See also Hutchison v. Jarriel, 286 Ga. 883, 884 (692 SE2d 383) (2010).

Because the registered agent’s resignation was effective 31 days after the Secretary of State received the agent notice of resignation, service on him after that date did not constitute service on the limited liability company. Accordingly, we reverse the grant of default judgment to Manhattan Leasing.

Judgment reversed.

Ray and McMillian, JJ., concur.

Decided July 16, 2015.

Cohen, Cooper, Estep & Allen, Jefferson M. Allen, for appellant.

Rogers Law Offices, Beth E. Rogers, James F F Carroll, for appellee.

       Michels was served and moved to dismiss the complaint for lack of personal jurisdiction. The trial court denied the motion, and the case remains pending against Michels in the trial court.

       Although STL raises the defenses of insufficient process and insufficient service of process in its September 2013 answer, it concedes in its appellate brief that this service was valid.

       While Manhattan Leasing also argues that STL waived its right to make this argument on appeal by failing to raise it in the trial court, Manhattan Leasing raised this argument in the trial court, and the trial court ruled on it. Therefore, it is properly before us for review.


author: PHIPPS, Presiding Judge.

text:
    A15A0549.
    GEORGIA DEPARTMENT OF CORRECTIONS v. GRADY MEMORIAL HOSPITAL CORPORATION. DOUGLAS COUNTY v. GRADY MEMORIAL HOSPITAL CORPORATION.
    A15A0550.
    (775 S.E.2d 773)
   PHIPPS, Presiding Judge.

Grady Memorial Hospital Corporation d/b/a Grady Health System (“Hospital”) filed a complaint against the Georgia Department of Corrections (“DOC”) and Douglas County, Georgia, seeking payment for emergency medical care provided by the Hospital to an inmate who had been injured while housed at the Douglas County jail. The DOC and Douglas County moved for summary judgment based on sovereign immunity; Douglas County additionally moved for summary judgment based on the Hospital’s alleged failure to comply with the notice provisions of OCGA § 36-11-1. The trial court denied both defendants’ motions for summary judgment. For the reasons that follow, we reverse the judgments.

On appeal from the grant or denial of a motion for summary judgment, we conduct a de novo review of the law and evidence, viewing the evidence in the light most favorable to the nonmovant, to determine whether a genuine issue of material fact exists and whether the moving party was entitled to judgment as a matter of law.

Further, “[w]hether sovereign immunity has been waived is a matter of law, which we review de novo.”

The record reveals that Shaun Hood was an inmate at a DOC state prison when the DOC transferred physical custody of Hood to the Douglas County sheriff on or about July 10, 2008 pursuant to a superior court production order, so that Hood would be available for trial in a Douglas County criminal case. The production order further provided that after his court appearance, Hood was to be returned by the Douglas County sheriff or his deputies to the custody of the DOC. On or about August 11, 2008, while he was being housed in the Douglas County jail, Hood was injured. Douglas County sheriff’s deputies transported Hood to Grady Memorial Hospital, where he remained until August 31, 2008. The sheriff’s deputies returned Hood to the custody of the DOC in September 2008.

Case No. A15A0549

1. The trial court denied the DOC’s motion for summary judgment on the basis that the state’s sovereign immunity was waived under OCGA § 42-5-2. The DOC contends that this was error because, inter alia, OCGA § 42-5-2 requires the governmental entity to have physical custody of the inmate, which the DOC did not.

Except as specifically provided in this Paragraph, sovereign immunity extends to the state and all of its departments and agencies. The sovereign immunity of the state and its departments and agencies can only be waived by an Act of the General Assembly which specifically provides that sovereign immunity is thereby waived and the extent of such waiver.

The party seeking to benefit from a waiver of sovereign immunity has the burden of establishing that sovereign immunity has been waived.

The Hospital has contended, below and on appeal, that OCGA § 42-5-2 establishes a waiver of sovereign immunity. That statute pertinently provides:

. . . [I]t shall be the responsibility of the governmental unit, subdivision, or agency having the physical custody of an inmate to maintain the inmate, furnishing him . . . any needed medical and hospital attention.... [I]t shall remain the responsibility of the governmental unit having the physical custody of an inmate to bear the costs of such medical and hospital care, if the custody of the inmate has been transferred from the department pursuant to any order of any court within this state. . . .

OCGA § 42-5-2 (a). The cited statute does not establish a waiver of sovereign immunity under the circumstances presented in this case, because Hood was not in the physical custody of the DOC at the time he was injured and taken for treatment at the Hospital. Physical custody of Hood had been transferred from the DOC to the Douglas County sheriff pursuant to a court order. Under the express terms of OCGA § 42-5-2, the DOC was not responsible for the costs of Hood’s medical care.

There being no waiver of sovereign immunity in this case pursuant to OCGA § 42-5-2, the trial court erred by denying the DOC’s motion for summary judgment based on sovereign immunity.

Case No. A15A0550

2. Douglas County contends that, even assuming arguendo that sovereign immunity for counties was waived by OCGA § 42-5-2, the trial court erred by concluding that the Hospital had complied with the notice requirement of OCGA § 36-11-1.

OCGA § 36-11-1 pertinently provides: “All claims against counties must be presented within 12 months after they accrue or become payable or the same are barred.” “[Wjhile the . . . statute requires simply that a claim be presented within 12 months, the cases have held that such claims must be presented in writing, and a mere oral statement is insufficient.” “Formal, written notice is required.” The burden is on the plaintiff to prove that it substantially complied with the statute.

In its appellate brief, the Hospital points to the following as evidence that it served the required notice on Douglas County: the Hospital’s discovery response in which counsel for the Hospital stated that the Hospital had sent a bill to the Douglas County police department showing Hood’s medical costs; an unsigned form titled “Medical Cost Reimbursement Report,” on which Hood’s name and medical expenses were written, and which Douglas County apparently would submit or would have submitted to the DOC; a letter purportedly written by counsel for the Douglas County sheriff to an official at the DOC; a printout of an e-mail regarding the hospital bill, purportedly written by counsel for Douglas County and directed to an individual whose relationship to this case was not indicated; and written summaries of phone conversations purportedly held between various parties regarding the medical bill. None of the documents was sworn, certified or otherwise authenticated.

Decided July 16, 2015.

Samuel S. Olens, Attorney General, W. Wright Banks, Jr., Deputy Attorney General, Julie A. Jacobs, Senior Assistant Attorney General, for appellant (case no. A15A0549).

Freeman, Mathis & Gary, Theodore Freeman, Brian R. Dempsey, for appellant (case no. A15A0550).

Samuel C. Harvey, for appellee.

Unauthenticated documents cannot be considered in opposition to a motion for summary judgment. In any event, the Hospital has not pointed to any formal, written notice of the claim that it gave to Douglas County. Therefore, the trial court erred by denying Douglas County’s motion for summary judgment.

3. In light of our holding in Division 2, we do not consider Douglas County’s contention that it was entitled to summary judgment on the additional ground that “OCGA § 42-5-2 does not create a cause of action against Georgia counties.”

Judgments reversed.

Doyle, C. J., and Boggs, J., concur fully in Divisions 1 and 3, and concur in judgment only in Division 2.

        Warnell v. Unified Govt. of Athens-Clarke County, 328 Ga. App. 903 (763 SE2d 284) (2014) (citation omitted).

        DeKalb County v. Kirkland, 329 Ga. App. 262, 265 (764 SE2d 867) (2014) (citation omitted); see Ga. Dept. of Natural Resources v. Center for a Sustainable Coast, 294 Ga. 593, 596 (1) (755 SE2d 184) (2014).

       Ga. Const. 1983, Art. I, Sec. II, Par. IX (e).

       See Kirkland, supra.

        Doyal v. Dept. ofTransp., 142 Ga. App. 79, 80 (234 SE2d 858) (1977) (citations omitted). See generally Burton v. DeKalb County, 202 Ga. App. 676, 677 (415 SE2d 647) (1992) (the requirements of the statute were substantially complied with where the claimant had given timely written notice of the grievance to the governing authority).

        Cobb v. Bd. of Commissioners of Roads & Revenue of Tift County, 151 Ga. App. 472, 473 (2) (260 SE2d 496) (1979) (citation omitted).

        Jones v. City of Willacoochee, 299 Ga. App. 741, 742 (683 SE2d 683) (2009).

        Cordell v. Bank of North Ga., 295 Ga. App. 402, 407 (1) (b) (672 SE2d 429) (2008); Lee v. CSX Transp., 233 Ga. App. 30, 31 (1) (503 SE2d 309) (1998).

       See Cobb, supra.

       Supra.


author: McMlLLIAN, Judge.

text:
    A15A0586.
    SEKI v. GROUPON, INC.
    (775 S.E.2d 776)
   McMlLLIAN, Judge.

Shiho Seki d/b/a Magical Adventures Balloon Rides (“Magical Adventures”) appeals from the trial court’s grant of summary judgment on her claims for breach of contract, tortious interference with contractual relations, and invasion of privacy through misappropriation against Groupon, Inc. For the reasons that follow, we affirm the trial court’s order as to the breach of contract and tortious interference with contractual relations claims, but reverse the grant of summary judgment on the claim of invasion of privacy through misappropriation.

Summary judgment is appropriate when no genuine issues of material fact remain and the movant is entitled to judgment as a matter of law. On appeal, we review the grant or denial of summary judgment de novo, construing the evidence and all inferences in a light most favorable to the nonmoving party.

(Citation omitted.) LeCroy v. Bragg, 319 Ga. App. 884, 885 (1) (739 SE2d 1) (2013).

So viewed, the pertinent facts are as follows. Seki is a sole proprietor operating a hot air balloon ride business in the Temecula Valley region of California under the registered trade name, “Magical Adventures Balloon Rides.” Groupon, Inc. is an online marketplace engaged in offering daily promotions whereby customers purchase discount price vouchers redeemable by Groupon’s vendors. Magical Adventures and other providers of hot air balloon rides in the Temecula Valley entered into an oral agreement that they would not advertise with Groupon or similar online marketers. In addition, the written bylaws of the Temecula Valley Balloon Association prohibits its members, which includes Magical Adventures, from contracting with Groupon without preapproval.

In September 2012, Groupon had a business relationship with Sportations, a Georgia business that agreed to provide Groupon’s customers with hot air balloon rides for the designated price of $139 per voucher. Groupon marketed and sold 25 vouchers for hot air balloon rides through its Internet campaign with Sportations. Several months later, however, Groupon ended its business relationship with Sportations. At that time, 18 of the 25 purchased Sportations vouchers had not yet been redeemed.

Groupon, which had made numerous unsuccessful vendor solicitations to Magical Adventures, requested that it honor the unredeemed Sportations vouchers in exchange for the payment of $150 per voucher. Magical Adventures agreed to do so and signed a “Declaration,” the substance of which, although not technically accurate, provided:

I, [Shiho Seki, authorized representative of Magical Adventures,] contracted with Sportations to provide these services to customers who purchased Groupon vouchers at the price of $150.00.... I agree to provide the same services, at the same price, to customers who present me with Groupon vouchers.

Groupon informed Magical Adventures that

[t]o facilitate the process [of the provider change], we will notify our customers to contact you directly and follow any specific instructions and systems you have for scheduling your services. Please provide us your reservation contact information (phone, email, website, etc.) when you reply to this email.

Magical Adventures informed Groupon that it “prefer [red] that the customers call [it] directly” and provided a phone number.

Groupon subsequently sent e-mails to the 18 individuals holding the outstanding Sportations vouchers notifying them that their “reservations will now have to be made directly through Magical Adventure Balloon Rides” and providing them with Magical Adventures’s telephone number and website. Additionally, Groupon updated the Sportations “deal page” on its website to substitute Magical Adventures’s trade name and telephone number for that of Sportations’s.

Sometime thereafter, Groupon contacted the operator of D&D Ballooning, one of Magical Adventures’s competitors, and informed him that Magical Adventures had been advertising in a Groupon campaign. Based upon this conversation and Groupon’s website containing Magical Adventures’s name and likeness, the operator of D&D assumed that Magical Adventures had breached their oral agreement and, despite having previously declined Groupon’s offers to advertise (citing the standing agreement between the providers), he agreed to contract with Groupon “in order to maintain competition.”

Magical Adventures contacted Groupon and asserted that its act of publishing Magical Adventures’s name, brand, and likeness on its website and printable vouchers was unauthorized and demanded that they be removed. Magical Adventures alleges that Groupon refused to remove the publication and, as a direct result, an Internet search for “Magical Adventures Balloon Rides” resulted in a higher position for Groupon’s website than for its own.

Magical Adventures further alleges that, during this same time period, its revenues decreased by $139,817.02, and that the revenues rebounded after its name was eventually removed from Groupon’s website. It submitted the affidavits of two potential customers who asserted that they specifically researched Magical Adventures’s online reviews and, based on the positive feedback, sought to purchase a balloon ride from Magical Adventures. During the searches, they discovered what they believed to be a Groupon campaign advertising Magical Adventures balloon rides. After going to Groupon’s website, however, they learned that the Magical Adventures’s campaign had expired, and that Groupon offered balloon rides from other vendors for a lesser price. Both customers ultimately purchased balloon rides through Groupon.

Magical Adventures thereafter filed suit against the company alleging breach of contract, tortious interference with business/contractual relations, and invasion of privacy through misappropriation, among other claims. Groupon successfully moved for summary judgment, and this appeal followed.

1. Magical Adventures contends that the trial court erred in granting summary judgment to Groupon on its claim for breach of contract. In the complaint, Magical Adventures alleged that it had entered into an enforceable contract with Groupon pursuant to which Groupon agreed to pay it $150 for each Sportations voucher honored and that Groupon failed to tender payment pursuant to that agreement.

The record belies Magical Adventures’s claim. At the time of the proceedings, 15 of the 18 outstanding customer vouchers had been redeemed and honored by Magical Adventures. As admitted by Magical Adventures, Groupon tendered payment for the seven redeemed vouchers for which Magical Adventures submitted a written request, and Magical Adventures did not request payment for the remaining eight. Nevertheless, it is undisputed that Groupon repeatedly attempted to pay Magical Adventures for the remaining eight vouchers and Magical Adventures refused tender.

Under Georgia law, “[t]he elements of a right to recover for a breach of contract are the breach and the resultant damages to the party who has the right to complain about the contract being broken.” (Citation and punctuation omitted.) Budget Rent-A-Car of Atlanta, Inc. v. Webb, 220 Ga. App. 278, 279 (1) (469 SE2d 712) (1996). Accord UWork.com, Inc. v. Paragon Technologies, Inc., 321 Ga. App. 584, 590 (1) (740 SE2d 887) (2013). “A breach occurs if a contracting party repudiates or renounces liability under the contract; fails to perform the engagement as specified in the contract; or does some act that renders performance impossible.” UWork.com, Inc., 321 Ga. App. at 590 (1). And “[a] tender properly made is the equivalent of performance.” Anderson v. Barron, 208 Ga. 785, 793 (2) (69 SE2d 874) (1952) ; see B-X Corp. v. Jeter, 210 Ga. 250, 255 (2) (78 SE2d 790) (1953) (“Tender, when made or waived, satisfies the requirement for payment.”).

Contrary to Magical Adventures’s allegation that Groupon failed to pay it the monies owed for the Sportations vouchers that it had honored, the undisputed record establishes that Groupon paid or attempted to pay for each of the redeemed vouchers. It follows that Magical Adventures has failed to establish a breach of the contract, and the trial court did not err in granting summary judgment to Groupon on this claim.

2. Magical Adventures further argues that the trial court erred in granting summary judgment to Groupon on its claim for tortious interference with contractual relations. The premise of this claim is Magical Adventures’s assertion that Groupon’s use of its name and likeness on Groupon’s website induced D&D to breach their oral contract to refrain from engaging in Groupon advertising and, further, induced Magical Adventures’s breach of the Temecula Valley Balloon Association bylaws prohibiting the same without prior approval.

To succeed on a tortious interference with contractual relations claim,

a plaintiff must show that a defendant: (1) acted improperly or wrongfully and without privilege; (2) acted purposely, with malice, and with the intent to injure; (3) induced a third party to breach a contract with the plaintiff; and (4) caused plaintiff financial injury.

Medlin v. Morganstern, 268 Ga. App. 116, 119 (a) (601 SE2d 359) (2004).

(a) Although we see several potential problems with Magical Adventures and D&D’s agreement to refrain from contracting with Groupon, we need go no further than recognizing that Magical Adventures has failed to come forward with evidence sufficient to establish a causal connection between its alleged decrease in revenue and D&D’s alleged breach so as to establish damages. Since evidence of damages is an essential element of a claim for tortious interference with contractual relations, the trial court correctly determined that Groupon is entitled to summary judgment. See OCGA § 9-11-56 (c); Duke Galish, LLC v. Manton, 291 Ga. App. 827, 832 (1) (662 SE2d 880) (2008) (“[I]f a plaintiff cannot show that damage to his rights or obligations under a contract proximately resulted from the third party’s alleged interference, his claim for tortious interference fails as a matter of law.”) (citation and punctuation omitted); see also Carter v. Willowrun Condominium Assn., Inc., 179 Ga. App. 257, 259 (4) (345 SE2d 924) (1986).

(b) Magical Adventures’s claim that Groupon’s use of its name and likeness induced it to breach the Temecula Valley Balloon Association’s bylaws forbidding Groupon advertising without preapproval also fails as a matter of law. Pretermitting whether a claim for tortious interference may be predicated upon a breach of bylaws in this context, Magical Adventures’s claim fails because the breach it alleges is its own. Cf. Atlanta Market Center Management Co. v. McLane, 269 Ga. 604, 609 (2) (503 SE2d 278) (1998) (one cannot tortiously interfere with one’s own contracts). Moreover, Magical Adventures has admitted that the Association took no action with respect to the breach and, thus, its failure to show damages is also fatal to its claim. See OCGA § 9-11-56 (c); Duke Galish, LLC, 291 Ga. App. at 832 (1); Carter, 179 Ga. App. at 259 (4).

3. Finally, Magical Adventures argues that the trial court erred in granting summary judgment to Groupon on its claim for invasion of privacy through misappropriation. Noting that the common law right to privacy has never been extended to protect the name and likeness of a trade name, as opposed to the individual using the trade name, the trial court held that Magical Adventures’s claim failed as a matter of law because no allegations had been made pertaining to a misappropriation of the identity of Shiho Seki, Magical Adventures’s individual proprietor.

Georgia law is well established that “the appropriation of another’s name and likeness ... without consent and for the financial gain of the appropriator is a tort.” Martin Luther King, Jr., Center for Social Change, Inc. v. American Heritage Products, Inc., 250 Ga. 135, 143 (1) (296 SE2d 697) (1982); see Bullard v. MRA Holding, LLC, 292 Ga. 748, 752 (2) (740 SE2d 622) (2013). Sometimes referred to as a right to publicity, misappropriation of someone’s name or likeness constitutes one of four recognized forms of invasion of privacy, the others being “(1) [intrusion upon the plaintiff’s seclusion or solitude, or into his private affairs; (2) public disclosure of embarrassing facts about the plaintiff; [and] (3) publicity which places the plaintiff in a false light in the public eye.” (Punctuation and footnote omitted.) Yarbray v. Southern Bell Tel. & Tel. Co., 261 Ga. 703, 704-705 (1) (409 SE2d 835) (1991). But while the latter three seek to prevent injury to feelings, sensibilities, or reputation, “[t]he interest protected in the appropriation cases is not so much a mental as a proprietary one, in the exclusive use of the plaintiff’s name and likeness as an aspect of his identity.” (Citation and punctuation omitted.) Martin Luther King, Jr., 250 Ga. at 142 (1); see Zacchini v. Scripps-Howard Broadcasting Co., 433 U.S. 562, 573 (97 SCt 2849, 53 LE2d 965) (1977) (contrasting the “important” differences between the tort of misappropriation with other claims for invasions of privacy); Bullard, 292 Ga. at 752 (2) (“[Ujnlike a claim based on intrusion, disclosure, or false light, appropriation . . . does not require the invasion of something secret, secluded or private pertaining to plaintiff, nor does it involve falsity. Instead, the tort consists of the appropriation, for the defendant’s benefit, use or advantage, of the plaintiff’s name or likeness.”) (citations and punctuation omitted). The rationale behind the tort “is the straight-forward one of preventing unjust enrichment by the theft of good will.” (Citation and punctuation omitted.) Martin Luther King, Jr., 250 Ga. at 141 (1). “No social purpose is served by having the defendant get free some aspect of the plaintiff that would have market value and for which he would normally pay.” (Citation and punctuation omitted.) Id.

Equally established under Georgia law is the axiom that “[a]n unincorporated proprietorship is not a legal entity separate from the proprietor, and the use of a trade name for the business does not create a separate legal entity.” (Citations omitted.) Brand v. Southern Employment Svc., 247 Ga. App. 638, 639 (545 SE2d 67) (2001); see England v. Simmons, 295 Ga. 1, 1 (757 SE2d 111) (2014); Dowis v. Watson, 161 Ga. App. 749, 750 (2) (289 SE2d 558) (1982). Indeed, “[a] trade name ... is merely a name assumed or used by a person recognized as a legal entity” and “is nothing more than the alter ego of the individual.” (Citations and punctuation omitted.) Miller v. Harco Nat. Ins. Co., 274 Ga. 387, 391 (3) (552 SE2d 848) (2001).

The determination whether Magical Adventures’s claim survives lies in the interplay between these independent bodies of law. Recognizing that a trade name is nothing more than an extension of the person using it, and that the rationale underpinning the tort of misappropriation is to protect the proprietary interest one has in the exclusive use of his or her name and likeness, we see no logical reason why that interest should be treated differently depending on whether it originates from the name and likeness of the individual proprietor or his or her trade name. Presumably both derive their value from the goodwill of that individual, who should be entitled to prevent others from unjustly profiting from the same. Cf. Carson v. Here’s Johnny Portable Toilets, Inc., 698 F2d 831, 835 (II) (6th Cir. 1983) (holding that, even though neither his name nor picture were used, Johnny Carson’s common law right to publicity was invaded through defendant’s use of the phrase “Here’s Johnny” for advertising purposes); Bell v. Foster, No. l:13-CV-405-TWT, 2013 WL 6229174, at *7 (N.D. Ga. Dec. 2, 2013) (holding that the heirs of a radio personality could sue for the misappropriation of his alias, “Jack the Rapper”); Bi-Rite Enterprises, Inc. v. Button Master, 555 FSupp. 1188, 1199 (IV) (S.D. N.Y. 1983) (interpreting the invasion of privacy by misappropriation laws of Georgia, California, Illinois, and New York to protect the name and likeness of a musical group because “[a] group that develops market value in its persona should be as entitled as an individual to publicity rights in its name”); Ackerman v. Ferry, No. B143751, 2002 WL 31506931, at *19 (Cal. Ct. App. Nov. 12, 2002) (holding that the misappropriation of a pen name was actionable “so long as the pseudonym has become widely known to the public as closely identified with the plaintiff”). Compare Eagle’s Eye, Inc. v. Ambler Fashion Shop, Inc., 627 FSupp. 856, 862 (IV) (E.D. Pa. 1985) (declining to extend the common law claim for misappropriation to a corporate trademark based upon defendant’s alleged use of a confusingly similar mark); Jaggard v. R. H. Macy & Co., 176 Misc. 88, 89 (26 N.Y.S.2d 829) (Sup. Ct. 1941) (holding that “a name assumed for business purposes only, the exclusive use of which has been granted to a corporation,” was not within the protection of New York’s right to privacy law prohibiting the use of another’s name for the purpose of trade without consent).

Decided July 16, 2015.

Mitchell & Shapiro, William R. Joiner, for appellant.

Weinberg, Wheeler, Hudgins, Gunn & Dial, Alan M. Maxwell, for appellee.

We note that this opinion is limited to the holding that Seki is not precluded from pursuing a claim for invasion of privacy through misappropriation based solely on the fact that the subject of the alleged appropriation was a trade name. Seki must still prove that Groupon appropriated Magical Adventures’s name or likeness, without consent, and for Groupon’s financial gain. See Bullard, 292 Ga. at 752 (2). But construing, as we must, the current record and all facts and inferences to be drawn from it in the light most favorable to Magical Adventures, genuine issues of material fact remain such that the trial court erred in granting Groupon summary judgment on this claim.

Judgment affirmed in part and reversed in part.

Barnes, P. J., and Ray, J., concur.

       It appears as though Seki’s official trade name is “Magical Adventure Balloon Rides.” Because the notice of appeal listed the trade name as ‘Magical Adventures Balloon Rides,” however, the case was docketed as such and we will continue to use the docketed name for the purposes of this opinion.

       In its complaint, Magical Adventures couched this claim as one for tortious interference with business relations, but argued both in its brief and at the summary judgment hearing as a claim for tortious interference with contractual relations. The trial court analyzed it under both torts and, for the purposes of appeal, Magical Adventures contends that the contractual relations claim should have survived.

       No new vouchers were offered for sale or purchased.

       Not the least of which is that any such oral agreement is unenforceable under the Statute of Frauds. See OCGA § 13-5-30 (5) (“To make [an agreement that is not to be performed within one year from the making] binding on the promisor, the promise must be in writing and signed by the party to be charged therewith____”); Moore v. BellSouth Mobility, Inc., 243 Ga. App. 674, 677 (2) (534 SE2d 133) (2000) (“There can be no breach of an unenforceable contract.”); Morgan v. American Ins. Managers, Inc., 239 Ga. App. 635, 637 (1) (521 SE2d 676) (1999) (holding that an oral employment contract that could, at its minimum duration, be performed in one year and one day was subject to the Statute of Frauds).