author: Ellington, Chief Judge. ANDREWS, Judge,

text:
    A10A1717.
    A10A2338.
    COE v. CARROLL & CARROLL, INC. COE v. GRIFFIN CONTRACTING, INC.
    (709 SE2d 324)
   Ellington, Chief Judge.

This personal injury action, pending in the State Court of Chatham County, arose from a vehicular accident in which Christopher Coe (“Coe”) crashed his car into a tractor-trailer that Melvin Williams had parked on the side of the road. Following Coe’s death, the action is now being prosecuted by his widow, Kathleen Coe, against Williams, Griffin Contracting, Inc. (“Griffin”), and Carroll & Carroll, Inc. (“Carroll”). Kathleen Coe appeals a number of interlocutory orders that are adverse to her, and we have consolidated these cases for decision.

The primary issue is whether either Griffin (which employed Williams as a truck driver) or Carroll (a contractor that hired the tractor-trailer and driver from Griffin) can be held derivatively liable for Williams’ alleged negligence in parking the tractor-trailer with its back end protruding into the roadway. The trial court concluded that neither Griffin nor Carroll can be held liable for Williams’ alleged negligence and, therefore, granted their motions for summary judgment, leaving the case pending against Williams only. In ruling on Carroll’s motion for summary judgment, the trial court concluded that, as a matter of law, Williams was not Carroll’s borrowed servant at the time of his alleged negligence and that, therefore, Carroll cannot be held liable for Williams’ conduct. In ruling on Griffin’s motion for summary judgment, the trial court concluded that, by detouring 2.5 miles away from his route in order to pick up lunch, Williams was, as a matter of law, on a purely personal mission at the time of his alleged negligence and was not acting in the scope of his employment with Griffin or furthering Griffin’s business and that, therefore, Griffin cannot be held liable under the doctrine of respon-deat superior. And, based on its conclusion that Williams’ alleged negligence was not committed within the scope of his employment with Griffin, the trial court granted Griffin’s motion for summary judgment on Kathleen Coe’s remaining claim against Griffin, for negligent hiring and retention.

In addition, the trial court overruled in part Kathleen Coe’s objections to certain medical testimony and denied her motion in limine to exclude evidence of Coe’s past drug use and the methadone drug therapy he was receiving at the time of the accident.

In Case No. A10A1717, Kathleen Coe appeals from the grant of summary judgment in favor of Carroll. In Case No. A10A2338, she appeals from the grant of summary judgment in favor of Griffin and from the evidentiary rulings. For the reasons explained below, we affirm in part and reverse in part.

Case No. A10A1717

1. In order to prevail on a motion for summary judgment under OCGA § 9-11-56,

the moving party must show that there exists no genuine issue of material fact, and that the undisputed facts, viewed in the light most favorable to the nonmoving party, demand judgment as a matter of law. Moreover, on appeal from the denial or grant of summary judgment the appellate court is to conduct a de novo review of the evidence to determine whether there exists a genuine issue of material fact, and whether the undisputed facts, viewed in the light most favorable to the nonmoving party, warrant judgment as a matter of law.

(Citations omitted.) Benton v. Benton, 280 Ga. 468, 470 (629 SE2d 204) (2006).

Viewed in the light most favorable to the appellant, the record shows the following. In June 2006, Carroll was building a section of Highway 17 in Chatham County under contract with the Georgia Department of Transportation. Carroll in turn hired Griffin to supply, at an hourly rate, a tractor, with a trash trailer, and a driver to haul away debris that was generated by the project. There was no written contract between Carroll and Griffin. Griffin’s owner assigned Williams to the job. Although Carroll lacked the authority to terminate Williams from his employment with Griffin, it had the authority to tell Griffin to send a different driver in place of Williams.

No one from Griffin directly supervised Williams while he was hauling debris for Carroll. Instead, Carroll’s foreman dictated what time Griffin’s driver and tractor-trailer should arrive at the job site and directed Williams in terms of when to take a particular load to a landfill, where to take each load (to which landfill), whether and when to take a break, and when to cease work for the day.

On June 30, 2006, Williams hauled a load of debris from the Carroll job site to the landfill, dumped the load, and then stopped at a church to pick up a boxed lunch he had ordered; he planned to eat lunch in his truck while he went back to the job site. According to Williams, he was “on the clock” at the time he parked Griffin’s tractor-trailer at the church. Williams deposed that Griffin’s tractor-trailer drivers, including himself, were not given time to take a break to stop and eat lunch. Instead, they would “steady roll,” by getting take out and eating on the road or back at the job site. Griffin later paid Williams for all the hours he worked that day, without deducting any break time, and Griffin billed, and received payment from, Carroll for all of that time.

At 12:50 p.m., within seconds after Williams parked the tractor-trailer on the side of the road in front of the church, Coe crashed into the rear of the tractor-trailer, which protruded two feet, seven inches into the roadway, and he sustained serious injuries.

In pursuing a claim against Carroll for Williams’ alleged negligence, the appellant contends that, at the time of his alleged negligence, Williams acted as an agent of both Carroll and his employer, Griffin.

Because Carroll hired the use of Griffin’s tractor-trailer and driver, the determination of whether Carroll was vicariously liable for Williams’ negligence is controlled in part by Georgia’s laws governing bailments. OCGA § 44-12-62 (b) provides that “[i]f [a] bailor sends his own agents with the thing bailed, the hirer shall not be liable for the acts of such agents but shall only be liable either to the bailor or to third persons for the consequences of his own directions and for gross neglect.” It is undisputed in this case that the bailor (Griffin) sent its own agent (Williams) with the thing bailed (the tractor with attached trash trailer). Thus, under OCGA § 44-12-62 (b), Carroll, as the hirer, is liable only for “the consequences of [its] own directions or for [its] gross negl[igence].” As the Supreme Court of Georgia has explained, “[t]he [statute’s] reference to the hirer’s ‘own directions’ . . . refers to the borrowed servant doctrine.” Tim’s Crane & Rigging v. Gibson, 278 Ga. 796, 797 (604 SE2d 763) (2004). In the case of a bailment, such as in the case at bar, an employee of the bailor is a borrowed servant of the hirer (1) if the hirer “had complete control and direction of the [bailor’s employee] for the occasion,” whereas the bailor had no such control, and (2) if the hirer “had the exclusive right to discharge the [bailor’s employee].” (Citation and punctuation omitted.) Id. Conversely, where there is a rental of a motor vehicle together with a driver, the driver is not a borrowed servant of the hirer if the hirer has no supervision or control of the driver’s operation of the vehicle and has “no right to discharge the driver and take over the operation of the vehicle himself or put it in the hands of another to operate^] ” (Citation and punctuation omitted.) Montgomery Trucking Co. v. Black, 231 Ga. 211, 213 (200 SE2d 882) (1973). Under such circumstances, “the owner of the vehicle who employs the driver[ (that is, the bailor)], rather than the hirer, is responsible for the driver’s negligence.” (Citation and punctuation omitted.) Id.

With regard to the first factor, that is, the control and direction of the employee, Georgia courts have held that a bailor’s employee is a borrowed servant of the hirer as a matter of law where an express contract between the hirer and the bailor “explicitly sets forth each requirement of the borrowed servant doctrine[,]” that is, where the contract grants the hirer the right to control the manner, method, and means of the employee’s execution of the work and the right to terminate the employee from the hirer’s job. (Citations and punctuation omitted.) Tim’s Crane & Rigging v. Gibson, 278 Ga. at 798. In such a case, the hirer accepts the status of an employer for the duration of the contract. Id. A bailor’s employee is not a borrowed servant of the hirer as a matter of law, on the other hand, where, by an express contract between the hirer and the bailor, the bailor acknowledges that it retains control of its employee and the hirer “waive[s] or renounce[s]” responsibility for the negligence of the bailer’s employee. (Citation omitted.) Id. Because “the contract between the parties is controlling as to their responsibilities thereunder,” where an express contract establishes that a bailor’s employee is, or is not, the hirer’s borrowed servant, the amount of control actually exercised by the hirer or by the bailor over the bailor’s employee is not in issue and summary judgment will often be appropriate. Montgomery Trucking Co. v. Black, 231 Ga. at 213.

In cases where each requirement of the borrowed servant doctrine is not explicitly set forth in an express contract, however, such as the instant case, the relationship between the hirer and the bailor’s employee is generally a question of fact to be decided by a jury. Enviromediation Svcs. v. Boatwright, 256 Ga. App. 200, 203 (568 SE2d 117) (2002). In Enviromediation Sues. v. Boatwright, the bailor (a construction company) supplied dump trucks and drivers, one of whom injured the plaintiff, to the hirer (the general contractor of a high school renovation) to remove debris from the job site. Id. at 201. There was evidence that the hirer’s supervisor controlled how the drivers supplied by the bailor were to back their trucks into the loading area; which type of debris to load into which truck; how heavily to load the trucks; how to secure the loads; which landfill to use to dump the loads; which route to take to the landfill; and how to document each load dumped. Id. at 202-204. In addition, there was evidence that the hirer decided whether or not a particular driver could participate in the job. Id. We held that the trial court correctly concluded that the evidence presented at least a factual issue regarding whether the driver who caused the plaintiff s injuries was a borrowed servant of the hirer. Id. at 204.

In this case, there was evidence that Carroll alone supervised Williams’ work hauling debris, that it controlled his schedule for each day, including whether he could take a lunch break, and that it dictated which landfill would receive the debris and when a load was ready. This evidence presented at least a factual issue regarding whether Williams was Carroll’s borrowed servant, and, therefore, the trial court erred in concluding that Carroll was entitled to summary judgment on the basis that Williams was not Carroll’s borrowed servant at the time of his alleged negligence. See Division 2, infra.

Case No. A10A2338

2. The appellant contends that there is evidence from which a jury could find that Williams was acting in the scope of his employment with Griffin and furthering its business at the time of his alleged negligence, as required for liability to attach under the doctrine of respondeat superior. As a result, the appellant contends, the trial court erred in granting Griffin’s motion for summary judgment on her claims based on Williams’ negligence.

Under OCGA § 51-2-2, a master “shall be liable for torts committed by [the master’s] servant by [the master’s] command or in the prosecution and within the scope of [the master’s] business, whether the same are committed by negligence or voluntarily.” Under the doctrine of respondeat superior, a master is liable for injuries caused to another by the master’s servant if at the time of the injury the servant was acting within the scope of his or her employment and in furtherance of the master’s business. Piedmont Hosp. v. Palladino, 276 Ga. 612, 613-614 (580 SE2d 215) (2003); Allen Kane’s Major Dodge v. Barnes, 243 Ga. 776, 777 (257 SE2d 186) (1979).

Where a vehicle is involved in a collision, and it is shown that the [vehicle] is owned by a person, and that the operator of the vehicle is in the employment of that person, a presumption arises that the employee was in the scope of his employment at the time of the collision, and the burden is then on the defendant employer to show otherwise. This must be done by clear, positive and uncontradicted evidence.

(Citations and punctuation omitted.) Allen Kane’s Major Dodge v. Barnes, 243 Ga. at 777. A defendant who moves for summary judgment may overcome the presumption with the “uncontradicted testimony of the defendant and/or the employee . . . that the employee was not acting within the scope of his employment” at the time of the collision. (Citations and punctuation omitted.) Hicks v. Heard, 297 Ga. App. 689, 690 (1) (678 SE2d 145) (2009). If the defendant overcomes the presumption, the burden shifts back to the plaintiff to show,

in addition to the facts which give rise to the presumption that he was in the course of his employment, some other fact which indicates the employee was acting within the scope of his employment. If this “other fact” is direct evidence, that is sufficient for the case to go to a jury. However, when the “other fact” is circumstantial evidence, it must be evidence sufficient to support a verdict in order to withstand the defendant’s motion for summary judgment.

(Citations and punctuation omitted; emphasis in original.) Id.

“[I]f a servant steps aside from his master’s business to do an act entirely disconnected from it” or commits a tortious act “for purely personal reasons disconnected from the authorized business of the master,” the servant is not acting in the scope of his or her employment and in the furtherance of the master’s business. (Punctuation, footnotes and emphasis omitted.) Piedmont Hosp. v. Palladino, 276 Ga. at 613-614; see also Elliott v. Leavitt, 122 Ga. App. 622, 630 (6) (178 SE2d 268) (1970) (An employee’s complete departure from the scope of employment and the intended use of a company vehicle will exonerate the owners from liability as a matter of law.). “Georgia courts have consistently held that [when] an employee takes a break for lunch and is not otherwise engaged in his employer’s business, the employee is on a purely personal mission[,]” such that the employer cannot be held liable for injuries resulting from the employee’s negligent driving while on a personal mission. (Footnote omitted.) Gassaway v. Precon Corp., 280 Ga. App. 351, 353 (634 SE2d 153) (2006); see also Nelson v. Silver Dollar City, 249 Ga. App. 139, 145 (4) (547 SE2d 630) (2001) (The fact that an hourly employee was paid during her lunch break did not change her personal mission of procuring lunch into a mission on behalf of the employer.).

It is equally well settled, however, that

if a servant or employee, while engaged in the business of his master, makes a slight deviation for ends of his own, the master remains liable when the act is so closely connected with the master’s affairs that, though the servant may derive some benefit from it, it may nevertheless fairly be regarded as within the scope of his employment. Where there is a deviation[,] the question should ordinarily be submitted to the jury as to whether or not the deviation from the master’s business was slight, so slight as not to affect the master’s responsibility for the negligent act.

(Citations and punctuation omitted.) Davis Gas Co. v. Powell, 140 Ga. App. 841, 844 (1) (232 SE2d 258) (1976). It follows that, if an employee, who is driving to or from a destination while acting within the scope of his employment and in furtherance of the employer’s business, detours slightly from the direct or customary route to that destination to get a meal, and if there is evidence that it serves the employer’s interests for the employee to make the slight detour for that purpose, a jury issue exists regarding whether the employee is acting within the scope of his employment during the brief detour. In this case, it is undisputed that, at the time of Williams’ alleged negligence, he was driving Griffin’s vehicle from a landfill to Carroll’s job site when he detoured to the church to pick up his lunch. Further, there is evidence that Williams’ act of driving the tractor-trailer from the landfill to Carroll’s job site furthered Griffin’s business, including evidence that Carroll paid Griffin for the use of the tractor-trailer and driver. Finally, there is evidence that it served Griffin’s interest for Williams to get his lunch en route and eat while driving because it allowed him to return more quickly to the job site. In light of the evidence, the question of whether Williams’ deviation from Griffin’s business was so slight and so closely connected with Griffin’s affairs that it can be held vicariously liable for his alleged negligence must be resolved by a jury, and the trial court erred in granting Griffin’s motion for summary judgment. Davis Gas Co. v. Powell, 140 Ga. App. at 844 (1); Parker v. Smith, 66 Ga. App. 567, 568-570 (1) (18 SE2d 559) (1942).

3. The appellant contends that Griffin knew, or should have known, that Williams was incompetent to drive a tractor-trailer based on his driving record and based on the suspension of his license for failure to pay child support after he began working for Griffin. The record shows that Williams, who obtained his commercial driver’s license in 1992, received a citation in 2003 for driving with an expired tag and received a citation for speeding (less than ten miles per hour over the speed limit) in 2004 and another speeding ticket in 2005. It follows, the appellant contends, that the trial court erred in granting Griffin’s motion for summary judgment on her negligent hiring and retention claim.

OCGA § 34-7-20 provides that an employer “is bound to exercise ordinary care in the selection of employees and not to retain them after knowledge of incompetency[.]”

The appropriate standard of care in a negligent hiring/retention action is whether the employer knew or should have known the employee was not suited for the particular employment. In accordance with this standard, this Court has granted summary judgment to employers when there is no evidence that the employer knew of violations on the employee’s driving record or ignored its own reasonable policy of investigating such records, and denied summary judgment when there is evidence that the employer knew of violations on the employee’s record.

(Punctuation, footnotes and emphasis omitted.) Western Indus. v. Poole, 280 Ga. App. 378, 381-382 (3) (634 SE2d 118) (2006); see also Munroe v. Universal Health Svcs., 277 Ga. 861, 863 (1) (596 SE2d 604) (2004) (“[A] defendant employer has a duty to exercise ordinary care not to hire or retain an employee the employer knew or should have known posed a risk of harm to others where it is reasonably foreseeable from the employee’s tendencies or propensities that the employee could cause the type of harm sustained by the plaintiff”) (citations and punctuation omitted).

In Western Indus. v. Poole, the allegedly negligent driver’s employer argued that the violation on its employee’s driving record, which was for misdemeanor hit-and-run, failed to show a tendency or propensity to drive in a dangerous fashion and, therefore, that the violation could not establish the essential causal connection between the employee’s particular incompetency for the job and the injury sustained by the plaintiff. 280 Ga. App. at 382 (3). We rejected that argument, noting that the offense of hit-and-run “appears in that portion of the Georgia Code entitled ‘Uniform Rules of the Road’ — the same chapter containing prohibitions on speeding, failure to maintain lane, and other moving violations.” (Footnote omitted.) Id. at 382-383 (3). We held that a jury could reasonably conclude that the employee’s hit-and-run conviction indicated that he would be an incompetent driver and that the employer failed to exercise reasonable care in hiring and retaining the driver when it violated its own policy by failing to obtain the prospective employee’s driving record. Id. at 383 (3).

It follows that a jury must resolve the issues of whether Williams’ moving violations (speeding) indicated that he would be an incompetent driver and whether Griffin failed to exercise reasonable care in hiring and retaining him. Western Indus. v. Poole, 280 Ga. App. at 383 (3). Accordingly, the trial court erred in granting Griffin’s motion for summary judgment on this claim. Id.; Cherry v. Kelly Svcs., 171 Ga. App. 235, 236 (2) (319 SE2d 463) (1984) (The employer’s actual knowledge of one traffic violation committed by the employee created a question of fact as to whether the employer should have inquired further into an employee’s driving record before hiring him.).

4. The appellant contends that there was no evidence that the methadone drug therapy Coe was receiving at the time of the accident would have impaired his driving and that there was no evidence that he was taking any other drugs during the two months before the accident. As a result, she contends, evidence of Coe’s previous drug use and methadone drug therapy would have no probative value and admission of such evidence would induce the jury to speculate. She contends that the trial court therefore erred in overruling her objections to medical testimony on the issue and in denying her motion in limine to such evidence. “We review a trial court’s decisions on the admissibility of evidence under an abuse of discretion standard.” (Citations, punctuation and footnote omitted.) Fuller v. Flash Foods, 298 Ga. App. 217, 220 (2) (679 SE2d 775) (2009).

In this case, there is evidence that the lane in which Coe was traveling was eight feet, ten inches wide, that Griffin’s tractor-trailer protruded two feet, seven inches into that lane, and that Coe’s car was five feet, five inches wide, which would authorize a jury to find that there was enough room in Coe’s lane of travel for his car to pass the tractor-trailer safely. In addition, there is evidence that Coe’s car did not leave any skid marks and that his reaction time may have been slower than a typical driver. It is undisputed that Coe received a dose of 120 mg of methadone every morning as treatment for an addiction to the opiate oxycodone and that he received that dose a few hours before the accident. Further, there is evidence that methadone is a central nervous system depressant and, depending on the dose, the user’s tolerance, and other factors, can cause fainting and dizziness and may impair the user’s ability to drive or operate machinery. See OCGA § 16-13-26 (2) (K) (methadone is a Schedule II controlled substance). Although Coe’s doctor opined that, on the day of the accident, Coe would have had normal reflexes and would have been “perfectly fine to drive,” the evidence did not establish as a matter of law that Coe’s ingestion of methadone on the morning of June 30, 2006, did not contribute to the accident. Consequently, the trial court did not abuse its discretion in denying the appellant’s motion in limine. Bd. of Regents &c. v. Casey, 300 Ga. App. 850, 853 (2) (686 SE2d 807) (2009).

Judgment affirmed in part and reversed in part.

Barnes, E J., Phipps, P. J., and McFadden, J., concur. Miller, P. J., concurs in judgment only. Andrews and Doyle, JJ., concur in part and dissent in part.

ANDREWS, Judge,

concurring in part and dissenting in part.

The undisputed evidence in this case establishes that, as a matter of law, neither the contractor Carroll nor the trucking company Griffin can be liable for the consequences of the truck driver Williams’s personal and unauthorized decision to drive past six restaurants and some miles off his route to pick up his lunch at a church. I therefore dissent to Divisions 1 and 2 of the majority opinion.

1. It is longstanding law that where a party hires a vehicle but has

“no supervision or control of the servant’s mechanical operation thereof, and no right to discharge the driver and take over the operation of the vehicle himself or put it in the hands of another to operate, the owner of the vehicle who employs the driver, rather than the hirer, is responsible for the driver’s negligence.”

(Emphasis supplied.) Montgomery Trucking Co. v. Black, 231 Ga. 211, 213 (200 SE2d 882) (1973), quoting Ellison v. Evans, 85 Ga. App. 292, 296 (69 SE2d 94) (1952).

Here, the evidence is undisputed that Carroll did not request any specific driver when it hired the truck at issue from Griffin; that Griffin, not Carroll, told Williams where to report on a given day, including the day of the accident; that Carroll had no duty to instruct Williams as to when he could take a lunch break; and that though Carroll could have requested that Williams not be sent back to a jobsite, it did not have the right to fire him. It is likewise undisputed that Williams maintained mechanical control over the truck at all times on the day of the accident, that he passed six restaurants in the course of driving at least 2.5 miles between the dump where he left the trash and the church, and that he parked the truck with more than two feet of its driver’s side back corner protruding into the roadway.

Because Carroll did not supervise the mechanical operation of Williams’s truck, it cannot be held liable for any negligent act Williams committed while operating the truck, including the illegal parking that was the alleged cause of the accident at issue here. The fact that Carroll could or did instruct Williams what trash to pick up and where to dispose of it has no bearing on this result. As we held in Flowers v. U.S.S. Agri-Chemicals, 139 Ga. App. 430 (228 SE2d 392) (1976):

Notwithstanding the work was performed under the supervision of an employee of the corporation, who directed the driver of the truck what soil to haul, where to haul it, and when to haul it, and this was the only supervision or control exercised by the corporation over the driver and the truck, and the corporation had no supervision, direction, or control over the driver’s mechanical operation of the truck, and had no right to discharge the driver or replace him or the truck, although the corporation may have had the right to discharge the unit consisting of the driver and the truck by terminating the contract with the owner, the driver of the truck was an employee of the owner of the truck and not of the corporation.

(Citations and punctuation omitted; emphasis supplied.) Id. at 432; see also Helms v. Young, 130 Ga. App. 344, 351 (203 SE2d 253) (1973); Brett v. Thiele Kaolin Co., 86 Ga. App. 506 (1) (71 SE2d 687) (1952); Albert v. Hudson, 49 Ga. App. 636 (1) (176 SE 659) (1934). In short, there is “nothing in the record to show that the collision occurred as a result of any directions given [to] the driver” by Carroll. Montgomery Trucking Co., 231 Ga. at 213 (affirming grant of summary judgment to hirer of truck). It follows that the trial court did not err when it granted summary judgment to Carroll under Coe’s bailment theory.

2. “Where an employee takes a break for lunch and is not otherwise engaged in his employer’s business, the employee is on a purely personal mission,” with the result that his employer cannot be held liable for injuries resulting from the employee’s negligent act. Gassaway v. Precon Corp., 280 Ga. App. 351, 353 (634 SE2d 153) (2006).

Decided March 25, 2011

Savage & Turner, R. Bartley Turner, Ashleigh R. Madison, for Coe.

Ellis, Painter, Ratterree & Adams, R. Clay Ratterree, Kimberly Cofer Harris, for Carroll & Carroll, Inc.

Barrow & Ballew, Walter W. Ballew III, Travis D. Windsor, R. Stephen Sims, for Griffin Contracting, Inc.

It is true that where there is a “slight deviation” from the master’s business, “the question should ordinarily be submitted to the jury” whether or not the deviation was “so slight as not to affect the master’s responsibility for the negligent act.” (Punctuation omitted.) Davis Gas Co. v. Powell, 140 Ga. App. 841, 844 (1) (232 SE2d 258) (1976). Likewise, under the so-called “special mission” exception, an employer may be liable for injuries resulting from an employee’s driving when the employee is “on his way home after performing, or on the way from his home to perform, some special service or errand or the discharge of some duty incidental to the nature of his employment in the interest of, or under direction of, his employer.” Jones v. Aldrich Co., 188 Ga. App. 581, 583 (1) (373 SE2d 649) (1988).

There is no evidence in this case, however, that Williams’s detour served anyone’s purpose other than his own. Williams was authorized to use the truck to deliver materials and supplies, to run business errands, and to get to and from his various job assignments, but not to pick up lunch for other employees or to drive off route for any reason. The fact that either Carroll or Griffin may have sometimes permitted drivers to bring or pick up a lunch along their assigned route does not show that Williams was authorized to depart from his route to the extent he did on the day of the collision. On the contrary, the undisputed evidence shows that when Williams went miles off route and parked his truck, he was not authorized to do so by either Carroll or Griffin. In other words, Coe cannot show that Williams’s parking of his truck for the purpose of picking up his lunch was “within the scope of the actual transaction of the master’s business for accomplishing the ends of his employment.” (Punctuation omitted; emphasis supplied.) Gassaway, 280 Ga. App. at 353. It follows that the trial court did not err when it granted summary judgment on Coe’s count concerning Griffin’s liability under a theory of respondeat superior.

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

       See OCGA §§ 44-12-40 (“A bailment is a delivery of goods or property upon a contract, express or implied, to carry out the execution of a special object beneficial either to the bailor or bailee or both and to dispose of the property in conformity with the purpose of the trust.”); 44-12-60 (“The term ‘hiring’ means a contract by which one person grants to another either the enjoyment of a thing or the use of the labor and industry of himself during a certain time and for a stipulated compensation or by which one person contracts for the labor or services of another person with regard to a thing bailed to such other person for a specified purpose.”); see also OCGA § 51-2-5 (5) (An employer is liable for the negligence of a contractor “[i]f the employer retains the right to direct or control the time and manner of executing the work or interferes and assumes control so as to create the relation of master and servant or so that an injury results which is traceable to his interference!.]”); Restatement (Second) Torts, § 414 (1965, update April 2010) (“One who entrusts work to an independent contractor, but who retains the control of any part of the work, is subject to liability for physical harm to others for whose safety the employer owes a duty to exercise reasonable care, which is caused by his failure to exercise his control with reasonable care.”).

       In Tim’s Crane & Rigging v. Gibson, the agreement between the hirer and the bailor provided, inter alia, that the equipment and the bailor’s employees while operating the equipment were “under the [hirer’s] exclusive jurisdiction, supervision and control[,]” that the hirer had the duty of giving “specific instructions and directions to all persons operating the leased equipment!,]” that the hirer had “the right to control and [was] deemed to have exercised that right as to all details or operation of the equipment and personnel furnishedt,]” that the hirer acknowledged that the bailor “complete[ly] surrender[ed]” control of its personnel and equipment, and that “no personnel [would] be replaced or substituted by [the bailor] except at the direction of and with the approval of [the hirer].” (Punctuation omitted.) Gibson v. Tim’s Crane & Rigging, 266 Ga. App. 42, 43 (596 SE2d 215) (2004). See also Montgomery Trucking Co. v. Black, 231 Ga. at 213-214 (A truck driver was not a borrowed servant of the hirer, a trucking company, as a matter of law, where the written contract between the contractor, who owned the truck and employed the driver, and the trucking company provided that the leased equipment was under “the complete control and direction” of the contractor and not of the trucking company.).

       Cf. Six Flags Over Ga. v. Hill, 247 Ga. 375, 377-378 (1) (276 SE2d 572) (1981) (Where a defendant claimed that it was an injured worker’s employer, and therefore the employee’s exclusive remedy was under the Workers’ Compensation Act, the defendant was entitled to judgment as a matter of law where the undisputed evidence showed that it, and not the worker’s direct employer, had complete supervision over the worker and complete control over how the work was done on the occasion when the injury occurred.).

        Flowers v. U.S.S. Agri-Chemicals, 139 Ga. App. 430 (228 SE2d 392) (1976), which Judge Andrews quotes in his dissenting opinion, does not require a different result. In that case, a manufacturer had agreements with many contract haulers that authorized them to haul loads of the manufacturer’s products on a first-come, first-served basis. Id. We concluded that the evidence established as a matter of law that the manufacturer did not have complete control over and direction of the defendant hauler’s driver, because the driver alone decided, inter alia, what days and times he would pick up a load of the hirer’s products and when he would make deliveries. Id. at 431. In this case, Williams had no such discretion. Nor does Montgomery Trucking Co. v. Black, also cited by Judge Andrews, require a different result. In that case, a written contract expressly provided that the bailor “understands and agrees that the equipment that is the subject of this lease, . . . during the term of the lease, is under the complete control and direction of [the bailor], and not the [hirer].” (Punctuation omitted.) 231 Ga. at 212. Thus, Montgomery Trucking Co. v. Black is distinguished from this case, in which there is not an express contract in which the parties provided that the bailor’s employee was, or was not, the hirer’s borrowed servant during the bailment. As we have explained, controlling precedents and the record in this case require that the relationship between Carroll and Williams be decided by a jury. Enviromediation Svcs. v. Boatwright, 256 Ga. App. at 203-204.

       See Bunch v. McLeskey, 173 Ga. 545, 548 (161 SE 128) (1931) (There was a jury issue regarding whether a driver was acting within the scope of his employment at the time of a collision where there was evidence that, after completing the employer’s business in another town, the driver drove about one mile out of the way and in the wrong direction instead of immediately returning to his place of employment.); Gordy Constr. Co. v. Stewart, 216 Ga. App. 882, 883-884 (456 SE2d 245) (1995) (There was a jury issue regarding whether an employee was acting within the scope of his employment at the time of a collision where there was evidence that the employee was living in a motel far away from his permanent residence with only the company truck as transportation, which gave rise to a reasonable inference that the employer knew the employee would use the truck for personal errands, including driving to and from some meals.); Intl. Business Machines v. Bozardt, 156 Ga. App. 794, 796-799 (275 SE2d 376) (1980) (There was a jury issue regarding whether an employee was acting within the scope of his employment at the time of a collision where there was evidence that the employee was lodging out of town while attending a business convention and that the employer knew that the employee would drive an expensed rental car to and from meals.); Elliott v. Leavitt, 122 Ga. App. at 629-630 (6) (There was a jury issue regarding whether a dump truck driver was acting within the scope of his employment at the time of a collision where there was evidence that he had permission to use the employer’s truck at the end of the work day to get something to eat at a place on the route or close to where he lived and to park the truck at his home and where he was driving the truck to go to a restaurant with a friend when the collision occurred.); Parker v. Smith, 66 Ga. App. 567 (18 SE2d 559) (1942) (There was a jury issue regarding whether an employee was acting within the scope of his employment at the time of a collision where there was evidence that, while en route to picking up equipment for the employer, the employee detoured a few blocks to his home, intending to pick up a suit he wanted to have pressed.); Dawson Motor Co. v. Petty, 53 Ga. App. 746, 749-750 (186 SE 877) (1936) (There was a jury issue regarding whether an automobile salesman was acting within the scope of his employment at the time of a collision where there was evidence that he used a company demonstration car to take acquaintances who might be potential customers to a social event.); Davies v. Hearn, 45 Ga. App. 276, 277-281 (164 SE 273) (1932) (There was a jury issue regarding whether a truck driver was acting within the scope of his employment at the time of a collision where there was evidence that he had permission to drive the employer’s truck home because it allowed the employee, who used the truck to pick up a load of lumber for the employer each morning, to start work earlier and because it saved mileage on the truck.); Limerick v. Roberts, 32 Ga. App. 755 (124 SE 806) (1924) (The trial court correctly charged the jury that “if a servant or employee, while engaged in the business of his master, makes a slight deviation for ends of his own, the master remains liable when the act was so closely connected with the master’s affairs that, though the servant may derive some benefit from it, it may nevertheless fairly be regarded as within the course of his employment.”) (citations and punctuation omitted).

       See also Division 1, supra, in which we hold that there is a jury issue regarding whether, at the time of his alleged negligence, Williams acted as the borrowed servant of Carroll and not as the servant of Griffin.

       Cf. Upshaw v. Roberts Timber Co., 266 Ga. App. 135, 136-137 (1) (596 SE2d 679) (2004) (An employer was not liable as a matter of law for its employee’s negligent driving which occurred during a trip unrelated to the employee’s employment to visit relatives.); Reese v. Ga. Power Co., 191 Ga. App. 125, 128-129 (3) (381 SE2d 110) (1989) (An employer was not liable as a matter of law for its employee’s negligent driving which occurred during the employee’s unpaid lunch hour, when the employee was returning to his job site after having had lunch, and when the employee was driving a company-owned vehicle that he had no authority to drive.).

       See Smith v. Commonwealth of Kentucky, 181 SW3d 53, 60 (Ky. App. 2005) (Evidence that, three hours before being involved in a vehicular accident, the defendant took her daily maintenance dose of 120 mg of methadone, plus another medication, and evidence of the side effects of the medications was relevant to the issue of whether the defendant knew or should have known that it was unsafe for her to drive.).

       Although the trial court cited two record sources for its conclusion that the church was 2.5 miles off Williams’s route, these sources show that Williams was as much as 5 miles away from the dump where he had left the load of trash.


source: Caselaw Access Project

author: Doyle, Judge.

license: Public Domain

text:
    A10A2000.
    CORE LaVISTA, LLC et al. v. CUMMING et al.
    (709 SE2d 336)
   Doyle, Judge.

In this suit on a promissory note and an unconditional personal guaranty of the note, Core LaVista, LLC and Steven Delonga appeal from the trial court’s order granting summary judgment to plaintiffs James Cumming and Clear Development, Inc. and awarding them $891,338.45 in principal, $228,721.50 in pre-judgment interest, and $5,803 in attorney fees, plus post-judgment interest and court costs. On appeal, Delonga contends that the trial court erred by finding that he is personally liable for the debt on the note pursuant to the personal guaranty he executed, arguing that the note was subsequently modified by the parties to increase the amount of debt and, as a result, his risk under the guaranty also increased. Both Core LaVista and Delonga also challenge the court’s award of attorney fees to the appellees. For the reasons that follow, we conclude that the trial court did not err by finding Delonga personally liable on the note, but we reverse the award of attorney fees made pursuant to the terms of the note.

“Summary judgment is proper when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. We review the grant of summary judgment de novo, construing the evidence in favor of the nonmovant.” The relevant facts of this case are straightforward and undisputed.

In August 2007, Core LaVista executed a promissory note in favor of Cumming in the amount of $650,000, with a maturity date of August 31, 2008. Delonga signed the note on behalf of Core LaVista as the company’s managing member. The note included, inter alia, the following provision:

The Security Deed, together with this Promissory Note, any guaranty executed in conjunction with this Promissory Note, and all other documents to or of which Lender is a party or beneficiary now or hereafter evidencing, securing or otherwise relating to the indebtedness evidenced hereby, are hereinafter collectively referred to as the “Loan Documents.”

Contemporaneously with the execution of the note, Delonga signed, in his personal capacity, an “Unconditional Guaranty of Payment and Performance” for the repayment of the note. The guaranty contained the following relevant provisions:

Guarantor does hereby unconditionally guarantee to Lender and its successors, successors-in-title and assigns: (a) the full and prompt payment when due, whether by acceleration or otherwise, with such interest as may accrue thereon, either before or after maturity thereof, of the indebtedness payable under that certain Promissory Note dated on or about even date herewith made by Borrower to the order of Lender in the original principal amount of SIX HUNDRED FIFTY THOUSAND AND NO/IOOTHS ($650,000) DOLLARS, together with any renewals, modifications, consolidations and extensions thereof (hereinafter referred to as the “Note”)[.]
Guarantor hereby covenants and agrees that Lender may at any time, and from time to time, without notice to or further consent from Guarantor, either with or without consideration, . . . modify the terms of the Note or the Loan Documents; [or] extend or renew the Note for any periodic . . . No such action which Lender shall take or fail to take in connection with any of the Loan Documents, . . . nor any course of dealing by Lender with Borrower or any other person, shall release Guarantor’s obligations hereunder, affect this Guaranty in any way or afford Guarantor any recourse against Lender. The provisions of this Guaranty shall extend and be applicable to all renewals, amendments, extensions, consolidations or modifications of the Note or the Loan Documents and shall be deemed to include any such renewals, extensions, amendments, consolidations or modifications thereof,

In addition, in the guaranty, Delonga waived any defenses related to the “creation or incurring of any new or additional indebtedness or obligation ... in connection with the obligation hereby guaranteed,” to notices to which he might otherwise be entitled, or to the sale or assignment by the lender of the loan documents. He also expressly agreed to pay the lender all expenses, including reasonable attorney fees, paid or incurred by the lender in trying to collect on the note, to enforce the obligations of the borrower under the note, or to enforce the guaranty.

Core LaVista did not pay the note when it matured on August 31, 2008. Instead, on September 25, 2008, Delonga (on behalf of Core LaVista) and Cumming executed a modification to the promissory note in which the parties agreed (a) to modify the principal amount of the note from $650,000 to $812,500 (the difference representing the outstanding accrued interest on the original principal amount); (b) to change the note’s maturity date from August 31, 2008, to February 28, 2009; and (c) to substitute “modified loan amount” for “principal” in Section 1 (a) of the note and reflect that the interest rate on the modified loan amount would be 25 percent per annum. The modification agreement further stated that “[a] 11 other terms and conditions of the Note remain in full effect and are not modified by this agreement.”

Ultimately, Core LaVista defaulted on the note, and Cumming notified Core LaVista and Delonga of the default and his intention to “avail himself of all remedies available to him under the terms of the Note, the Security Deed, as well as the Unconditional Guaranty of Payment and Performance signed by you in connection with the extension of credit by Lender to Borrower.” When neither Core LaVista nor Delonga cured the default, Cumming and Clear Development filed the instant suit against them on the note and the guaranty, seeking the principal, pre- and post-judgment interest, court costs, and attorney fees pursuant to either the terms of the note and the guaranty or OCGA § 13-6-11. Following a hearing on the plaintiffs’ motion for summary judgment, the trial court granted the motion, finding that the unambiguous language of the original note authorized the parties to modify the terms of the note without modifying, preempting, or altering the remaining terms. Further, the court found that

the absence of the Unconditional Guaranty or Mr. Delonga’s name in the Modification to Promissory [Note] does not extinguish his liability, but invokes the provisions of the Unconditional Guaranty that state that the guaranty applies to any “renewals, modifications, consolidations and extensions of the [Promissory Note] thereof!,]” thereby not releasing Defendant Delonga’s obligations under the Unconditional Guaranty, but [instead] imputing Core [LaVista], LLC’s obligation under the Modification to the Promissory Note upon Defendant Delonga [as guarantor].

Finally, the court awarded the plaintiffs attorney fees, pursuant to the terms of the note and the guaranty, after finding that the plaintiffs had provided the defendants with timely notice under OCGA § 13-1-11 (a) (3).

1. On appeal, Delonga contends that the trial court erred by granting summary judgment to the appellees as to his personal liability on the note under the guaranty. We disagree.

(a) Delonga argues that the trial court improperly construed the terms of his unconditional personal guaranty against him by concluding that the guaranty applied to the Modification to Promissory Note. “Contract disputes are particularly well suited for adjudication by summary judgment because construction of contracts is ordinarily a matter of law for the court.” Because the essential, relevant facts in this case were plain and undisputed, the interpretation of the guaranty executed by Delonga was a matter of law for the trial court to resolve.

In this case, the trial court correctly found that the language of the Promissory Note, the Unconditional Guaranty, and the Modification to Promissory Note was unambiguous. Because the documents’ provisions are clear, the court’s proper role was to apply the terms as written.

[I]f no ambiguity appears, the trial court enforces the contract according to its terms irrespective of all technical or arbitrary rules of construction. That is, where the terms of a written contract are clear and unambiguous, the court will look to the contract alone to find the intention of the parties.

Thus, Delonga has failed to show that, in reaching its conclusions, the trial court impermissibly construed the unambiguous language of the documents in a manner that relied upon evidence outside the documents or in a manner that was contrary to the plain meaning of the language.

(b) According to Delonga, because the appellees failed to present any evidence that he personally guaranteed the Modification to Promissory Note, the trial court erred by finding him liable under the guaranty.

“A plaintiff seeking to enforce a promissory note establishes a prima facie case by producing the note and showing that it was executed. Once that prima facie case has been made, the plaintiff is entitled to judgment as a matter of law unless the defendant can establish a defense.” Here, attached to the appellees’ complaint were copies of the August 31, 2007 Promissory Note; Delonga’s Unconditional Guaranty of the note, which was executed the same day; and the September 25, 2008 Modification to Promissory Note. By affidavit, Delonga admitted that he executed all three documents. Thus, the appellees presented a prima facie case entitling them to judgment as a matter of law unless Delonga established a defense to his liability on the guaranty.

In the guaranty, however, Delonga expressly waived all notices or defenses to which he might be entitled under the guaranty, to the extent permitted by law. As established above, the language of the waiver is plain, unambiguous, and capable of only one reasonable interpretation.

Georgia law is clear that creditors are entitled to summary judgment in a suit on an unconditional guaranty when the guarantor has waived all of his defenses. It is also axiomatic that “[cjompetent parties are free to choose, insert, and agree to whatever provisions they desire in a contract unless prohibited by statute or public policy.” Thus, because Delonga failed to assert any defense based upon an alleged incompetency to enter into a contract at the time he executed the guaranty, and because he failed to show that the guaranty’s broad waiver of defenses was prohibited by statute or public policy, he is bound thereby.

(c) Still, Delonga argues that, regardless of whether the guaranty was valid as to the original note, it did not apply to the note modification, which he refers to as the “New Promissory Note,” because there is nothing in that document that references or incorporates his personal guaranty, nor was he asked to sign the document in his personal capacity as a guarantor.

(i) There was no need, however, for the appellees to inform Delonga that they intended for the guaranty to apply to the note modification. As shown above, the guaranty expressly allowed the appellees to, “at any time, and from time to time, without notice to or further consent from Guarantor, either with or without consideration, . . . modify the terms of the Note or the Loan Documents; [or] extend or renew the Note for any period[.]” This language is unambiguous and clearly applies to the modification of the original promissory note at issue here.

(ii) Further, there was no need for the Modification to Promissory Note to refer to Delonga or his personal guaranty. The original note specifically defined “Loan Documents” as including Delonga’s personal guaranty, and the note modification expressly stated that “[a] 11 other terms and conditions of the Note remain in full effect and are not modified by this agreement.”

(d) Delonga also complains that the court erred when it ruled that the note modification was simply a modification of certain terms of the original note instead of a novation that substantially increased his personal liability under the guaranty and, therefore, discharged him as a guarantor.

(i) The Modification to Promissory Note, however, specifically stated that “Accrued interest [on the original loan amount], through the date of this modification has been added to the Original Loan Amount resulting in a modified loan amount of EIGHT HUNDRED-TWELVE THOUSAND, FIVE HUNDRED AND NO/100 DOLLARS ($812,500.00) (‘Modified Loan Amount’).” Clearly, at the time Delonga executed the note modification on behalf of Core LaVista, he was already personally obligated to pay the appellees, pursuant to the guaranty, $812,500 — the original principal amount plus the accrued interest. Therefore, there is no merit to Delonga’s contention that, at the time he executed the note modification, such modification contemporaneously increased his contractual obligations to the appellees.

(ii) Moreover, although a surety can be discharged by an increase of risk or a novation, “a party may consent in advance to the conduct of future transactions and will not be heard to claim his own discharge upon the occurrence of that conduct.” Given the unambiguous language of the guaranty in this case, no issue of fact exists as to whether Delonga was discharged by any increased risk or a purported novation, because he voluntarily and explicitly agreed in advance to the modification of the original note.

2. Core LaVista and Delonga contend that the trial court erred by awarding the appellees attorney fees because the appellees failed to provide sufficient and timely notice of their intent to pursue such fees, as required by OCGA § 13-1-11. We agree.

OCGA § 13-1-11 (a) provides as follows, in relevant part:

Obligations to pay attorney’s fees upon any note or other evidence of indebtedness . . . shall be valid and enforceable and collectable as a part of such debt. . . subject to the following provisions: . . .
(3) 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 . . . 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 . . . 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.

Here, the record in this case shows that, in the promissory note and guaranty, Core LaVista and Delonga, respectively, agreed to pay the lender all costs of collection (including reasonable attorney fees actually incurred and litigation expenses) if an attorney assisted in collecting on the note. Then, on December 15, 2008, after Core LaVista defaulted on the note, the appellees sent letters to Delonga, individually as well as in his capacity as the manager of Core LaVista, notifying him that he was in default on the note and guaranty. According to one of the letters,

Lender has given a prior written notice of default on September 2, 2008,[] and pursuant to Section 5 (A) of the Note and Section 2.02 of the Security Deed[] is not required to provide any additional notice regarding additional events of default. However, in order to provide you with the opportunity to cure these defaults, we are hereby notifying you about these additional defaults and we request that these defaults be cured immediately.
Be advised that Lender intends to avail himself of all remedies available to him under the terms of the Note, the Security Deed, as well as the Unconditional Guaranty of Payment and Performance signed by you in connection with the extension of credit by Lender to Borrower.

This language was not sufficient to satisfy the requirements of OCGA § 13-1-11. By the terms of OCGA § 13-1-11 (a), compliance with that Code section is a statutory prerequisite to collecting an otherwise valid obligation to pay attorney fees incurred in the collection on a note. If the debtor cures the debt in compliance with the requisite ten-day notice period, “then the obligation to pay the attorney’s fees shall he void and no court shall enforce the agreement.” This is true as a matter of statutory law, regardless of whether the parties agreed to such a ten-day grace period. Therefore, OCGA § 13-1-11 (a) (3) creates a mandatory condition precedent to the debtor’s obligation to pay attorney fees expended by the lender while collecting on a note.

Georgia case law requires only substantial compliance with OCGA § 13-1-11 (a) (3), and this Court has construed substantial compliance to include notice as follows: “So long as a debtor is informed that he has 10 days from receipt of [the] notice within which to pay principal and interest without incurring any liability for attorney fees[,\ the legislative intent behind the enactment of OCGA § 13-1-11 (a) (3) has been fulfilled.” Here, the demand letters did not satisfy this requirement, because the letters did not state that Delonga could avoid his obligation to pay attorney fees by curing his default within ten days of the notice, as required by the statute. Likewise, the complaint itself (with attached exhibits) did not satisfy the notice requirement because it incorporated a deficient demand letter, referred to the fact that the defaults “have not been cured within ten (10) days of the [demand letter], pursuant to [OCGA §] 13-1-11,” and alleged that therefore “the Lender is entitled to recover their reasonably incurred attorneys’ fees and expenses of litigation.” Incorporating the deficient demand letter did not cure the letter’s lack of notice, and rather than notifying Delonga that he had an opportunity to avoid paying attorney fees by timely curing the default, the complaint stated the opposite, i.e., that “the Lender is entitled to recover reasonably incurred attorneys’ fees.”

Decided March 25, 2011.

Stone & Bellus, John E. Bellus, Jr., for appellants.

Furthermore, the debt instruments themselves, including the note, the note modification, and the personal guaranty, did not satisfy the notice requirement because OCGA § 13-1-11 (a) (3) requires that the holder of the note “shall, after maturity of the obligation, notify in writing” the debtor of his intention to enforce the debtor’s existing obligation to pay attorney fees and that the debtor can avoid this obligation by curing his default within ten days of the notice. Therefore, the statute plainly requires a separate notice in writing after maturity, and in light of the inadequacy of the demand letters and complaint in this case, it would be error to conclude that the debt instruments themselves in some way satisfied this requirement. Therefore, we conclude that the trial court erred by awarding attorney fees pursuant to the note.

Judgment affirmed in part and reversed in part.

Ellington, C. J., and Andrews, J., concur.

Schulten, Ward & Turner, Dean R. Fuchs, for appellees.

       In this appeal, Core LaVista does not challenge the court’s ruling that it is liable on the note. Therefore, Core LaVista’s liability on the note is affirmed by operation of law.

       (Citations and punctuation omitted.) White v. Ga. Power Co., 265 Ga. App. 664, 664-665 (595 SE2d 353) (2004).

       (Emphasis supplied.)

       See Roswell Festival v. Athens Intl., 259 Ga. App. 445, 448 (2) (576 SE2d 908) (2003) (“A contract of guaranty or suretyship is primarily one to pay the debt of another which may be due and payable by the principal debtor to the creditor upon default.”) (citation and punctuation omitted).

       (Emphasis supplied.)

       In September 2007, Cumming assigned 40 percent interest in the note to Clear Development, Inc.

       See OCGA § 10-7-3 (“The contract of suretyship is one of strict law; and the surety’s liability will not be extended by implication or interpretation.”).

       (Citation omitted.) Brookside Communities v. Lake Dow North Corp., 268 Ga. App. 785, 786 (1) (603 SE2d 31) (2004). See OCGA § 13-2-1 (“The construction of a contract is a question of law for the court.”).

       See Brookside Communities, 268 Ga. App. at 786 (1).

        Magnetic Resonance Plus v. Imaging Systems Intl., 273 Ga. 525, 526 (1) (543 SE2d 32) (2001).

       (Punctuation and footnote omitted.) Collins v. Regions Bank, 282 Ga. App. 725, 726 (639 SE2d 626) (2006). See also Rodgers v. First Union Nat. Bank &c., 220 Ga. App. 821, 822 (1) (470 SE2d 246) (1996) (“When signatures on a negotiable instrument are admitted or established, production of the instrument entitles a holder to recover on it unless the defendant establishes a defense.”) (citation and punctuation omitted).

       See Brookside Communities, 268 Ga. App. at 786-787 (1).

       (Citation and punctuation omitted.) Id. at 786 (1).

       (Emphasis supplied.)

       Under OCGA § 10-7-21, “[a]ny change in the nature or terms of a contract is called a ‘novation’ [and] such novation, without the consent of the surety, discharges him.”

       Under OCGA § 10-7-22, “[a]ny act of the creditor, either before or after judgment against the principal, which injures the surety or increases his risk or exposes him to greater liability shall discharge him[.]”

       (Citation and punctuation omitted.) Fielbon Dev. Co. v. Colony Bank of Houston County, 290 Ga. App. 847, 854 (2) (b) (660 SE2d 801) (2008).

       Id. See Underwood v. Nationsbanc Real Estate Svc., 221 Ga. App. 351, 353 (471 SE2d 291) (1996) (accord); Ramirez v. Golden, 223 Ga. App. 610, 611-612 (478 SE2d 430) (1996) (accord).

       (Emphasis supplied.)

       The September 2008 notice of default is not in the appellate record. The notice, however, was relevant to the original note, which had a maturity date of August 31, 2008. Subsequent to this purported default, the parties executed the “Modification to Promissory Note,” which extended the maturity date of the note to February 28, 2009.

       The referenced security deed is not in the appellate record.

       (Emphasis supplied.)

       OCGA § 13-1-11 (a) (3).

       See, e.g., Miller v. Roberts, 9 Ga. App. 511, 515 (71 SE 927) (1911) (agreement in original debt to waive the statutory notice was void as against public policy).

       See Strickland v. Williams, 215 Ga. 175, 178 (2) (109 SE2d 761) (1959) (“Under a contract to pay attorney’s fees if the note or other obligation be collected by or through an attorney, only a contingent liability is created for the payment of attorney’s fees.”) (punctuation omitted).

       (Punctuation omitted; emphasis supplied.) Trust Assoc, v. Snead, 253 Ga. App. 475, 477 (1) (c) (559 SE2d 502) (2002).

       (Emphasis supplied.) Compare Upshaw v. Southern Wholesale Flooring Co., 197 Ga. App. 511, 513-514 (4) (398 SE2d 749) (1990) (“Where a pleading, setting up a claim on a note or other evidence of indebtedness which authorizes recovery of attorney’s fees, alleges that notice is thereby given, and the attached notice otherwise conforms to the requirements of OCGA § 13-1-11 (a) (3), such notice is sufficient to authorize an award of attorney’s fees.”) (punctuation omitted; emphasis supplied).

       (Emphasis supplied.)

       (Emphasis supplied.)


author: Adams, Judge.

text:
    A10A2098.
    NOORANI v. SUGARLOAF MILLS LIMITED PARTNERSHIP OF GEORGIA.
    (708 SE2d 685)
   Adams, Judge.

This case involves a suit on a guaranty. The trial court entered judgment against Amir Noorani, one of the guarantors, and he filed this appeal, seeking review of an order denying his motion to dismiss for lack of jurisdiction, an order imposing discovery sanctions, and the final judgment and order. The facts relevant to the consideration of each of these orders will be set forth in the numbered divisions below.

1. After the record in this appeal was transmitted to this Court and the case docketed here, the trial court issued an order purporting to dismiss this appeal based on Noorani’s inexcusable and unreasonable delay in causing the record to be transmitted to this Court. Plaintiff/appellee Sugarloaf Mills Limited Partnership of Georgia d/b/a Discover Mills (hereinafter Discover Mills) has filed a motion to dismiss or remand this appeal, “to give effect to the trial court’s dismissal order.” However, in Noorani v. Sugarloaf Mills Limited Partnership of Ga., 308 Ga. App. 168 (706 SE2d 750) (2011) we reversed the trial court’s order dismissing this appeal. Thus, Discover Mills’ motion to dismiss or remand is hereby denied. Lipsteuer v. CSX Transp., 236 Ga. App. 806, n. 1 (513 SE2d 532) (1999).

2. Noorani first challenges the trial court’s denial of his motion to dismiss based on lack of personal jurisdiction. We find no error and affirm.

The following facts are pertinent to the resolution of this issue. Amir and Shabnam Noorani, who are residents of Texas, executed a guaranty for rent owed under a retail lease at Discover Mills, which is located in Gwinnett County, Georgia. The lease was entered into by Chain D’Oro, Inc., a Texas corporation, as tenant, and Discover Mills, a Delaware limited partnership, as lessor, and was executed by Amir Noorani in his capacity as vice president of Chain D’Oro. Both the lease and guaranty were executed in Texas, and the guaranty was incorporated into and made a part of the lease. Further, the lease but not the guaranty contained a Georgia choice of law and a forum selection provision.

In 2005, Discover Mills obtained a default judgment against Chain D’Oro in the amount of $210,641.14 for rent owed under the lease plus post-judgment interest. Discover Mills then brought suit on the guaranty against Amir and Shabnam Noorani, seeking to recover the amount of its judgment. Amir and Shabnam Noorani filed a motion to dismiss based on lack of personal jurisdiction, and the trial court granted the motion as to Shabnam Noorani but denied the motion as to Amir. Amir now challenges the denial of his motion.

Pursuant to subsection (1) of the Georgia Long Arm Statute, OCGA § 9-10-91, a Georgia court is authorized to exercise personal jurisdiction over a nonresident who “| transacts any business within this state[.]”

In Innovative Clinical & Consulting Svcs. v. First Nat. Bank &c.], 279 Ga. [672, 675 (620 SE2d 352) (2005)], our Supreme Court overruled all cases taking a narrow view of subsection (1), instead clarifying that, if a cause of action arises out of conduct within this state, OCGA § 9-10-91 (1) grants Georgia courts the unlimited authority to exercise personal jurisdiction over any nonresident who transacts any business in this State ... to the maximum extent permitted by procedural due process.

Hyperdynamics Corp. v. Southridge Capital Mgmt., 305 Ga. App. 283, 293, n. 20 (699 SE2d 456) (2010) (physical precedent only).

As is pertinent to this issue, the record shows that Noorani visited the Chain D’Oro store at Discover Mills on several occasions to review records and check inventory. Additionally, Noorani visited the office of the general manager of Discover Mills for the purpose of discussing concerns regarding the performance of the store, to request rent reductions and to discuss other matters associated with the operation of the store. The general manager also averred that Noorani contacted him by phone on several occasions to discuss these same matters. Noorani confirmed at the hearing on the motion to dismiss that he had visited the manager’s office “one or two times” to discuss the rent reduction, but stated that “most of the time my brother-in-law was talking on the phone for the negotiation[s].” (Emphasis supplied.)

Further, the record shows that after suit was filed against Chain D’Oro to collect the unpaid rent, the summons and dispossessory proceeding were forwarded to Noorani by the store’s manager, and Noorani traveled to Georgia in his capacity as vice president in an attempt to defend the suit.

On appeal, Noorani argues that these contacts were insufficient to authorize a Georgia court to exercise personal jurisdiction over him based on the transacting business section of the Long Arm Statute.

In considering whether a Georgia court may exercise jurisdiction over a nonresident based on the transaction of business, we apply a three-part test: Jurisdiction exists on the basis of transacting business in this state if (1) the nonresident defendant has purposefully done some act or consummated some transaction in this state, (2) if the cause of action arises from or is connected with such act or transaction, and (3) if the exercise of jurisdiction by the courts of this state does not offend traditional fairness and substantial justice.

(Footnote omitted.) Robertson v. CRI, Inc., 267 Ga. App. 757, 759 (601 SE2d 163) (2004). In applying this test,

[w]e examine the first two factors “to determine whether (a) defendant has established the minimum contacts (with the forum state) necessary for the exercise of jurisdiction.” (Citation and punctuation omitted.) ATCO Sign &c. Co. v. Stamm Mfg., 298 Ga. App. 528, 534 (1) (680 SE2d 571) (2009). If such minimum contacts are found, we move to the third prong of the test to consider whether the exercise of jurisdiction is “reasonable” — that is, to ensure that it does not result solely from “ ‘random,’ ‘fortuitous’ or ‘attenuated’ contacts. (Cit.)” Id.

Paxton v. Citizens Bank &c., 307 Ga. App. 112, 116 (704 SE2d 215) (2010). Southern Electronics Distributors v. Anderson, 232 Ga. App. 648 (1) (502 SE2d 257) (1998).

Further, a defendant who files a motion to dismiss for lack of personal jurisdiction has the burden of proving lack of jurisdiction. Southern Electronics, 232 Ga. App. at 648 (1). And factual disputes must be resolved in favor of jurisdiction. Home Depot Supply v. Hunter Mgmt., 289 Ga. App. 286, 288 (656 SE2d 898) (2008).

(a) Noorani argues that the first part of the test cannot be met because he, personally, did not consummate any business transactions or conduct any business transactions in this state. He points to the fact that all the negotiations for the guaranty, as well as the underlying lease, took place in Texas, and that both the guaranty and the lease were executed in Texas. He also asserts that he was acting on behalf of the corporation and not his own behalf in executing the lease and in his subsequent visits to the store. Thus, relying on Southern Electronics, he argues the trial court erred by finding the required minimum contacts with this state. But as we recently noted, “[t]he legal principle upon which Southern Electronics seems to have been based — that electronic, telephonic, and postal contacts, as a matter of law, cannot amount to transacting business in Georgia — was flatly rejected by our Supreme Court in Innovative Clinical &c. Svcs., 279 Ga. at 675.” Paxton, 307 Ga. App. at 119 (1). Moreover, as also stated in Paxton, “for purposes of considering personal jurisdiction, we look not just to the place where the guaranties were executed, but we instead examine all of the relevant circumstances, including the purpose of the transaction and the terms of the contracts themselves. See Drennen v. First Home Savings Bank, 204 Ga. App. 714, 716 (1) (420 SE2d 376) (1992).” Id. at 116-117 (1).

In considering questions of personal jurisdiction our inquiry is not limited to the execution of the guaranty contracts alone, as the contract is ordinarily but an intermediate step serving to tie up prior business negotiations with future consequences which themselves are the real object of the business transaction. It is these facts — prior negotiations and contemplated future consequences, along with the terms of the contract and the parties’ actual course of dealing — that must be evaluated in determining whether the defendant purposefully established minimum contacts within the forum.

Robertson, 267 Ga. App. at 761.

The stated purpose of the guaranty Noorani executed was to “guarantee the full, faithful, and timely payment and performance by Tenant of all the payments, covenants and other obligations of Tenant under or pursuant to the Lease.” The lease was for the rental of retail space in a Georgia shopping mall, and Noorani personally guaranteed the rent obligations under the lease. Moreover, the guaranty was “annexed to” and made a part of the lease. Although not all of his contacts with this state directly related to the guaranty “the contacts did concern the business that the loan had funded, and show a nexus between [Noorani], the forum, and the transaction as a whole.” Robertson, 267 Ga. App. at 761. And although Noorani contends that his contacts with this state were only made in his capacity as a representative of the corporation, because Noorani had personally guaranteed the rent payments due under the lease, contacts relating to the financial success of the store, including the negotiations he undertook for rent reductions, were clearly of personal benefit to him.

Moreover, other factors distinguish this case from Southern Electronics. Southern Electronics involved an Alabama corporation that did not do business here, and the guaranty was for a credit line on an open account through which the Alabama corporation purchased computer hardware from a Georgia corporation to be shipped to Alabama. Southern Electronics, 232 Ga. App. at 648-649 (1). In contrast, the corporate entity here was operating a retail store in a Georgia shopping mall, providing a clear nexus with this state.

In our opinion, the facts of this case more closely align it with cases such as Paxton, and the cases it relies on, such as Robertson, Drennen and Ga. R. Bank &c. Co. v. Barton, 169 Ga. App. 821 (315 SE2d 17) (1984), which are summarized in Paxton. Based on those cases, as well as the particular circumstances here, we find Noorani’s contacts sufficient to satisfy the first prong of the test.

(b) Moreover, the direct connection between the loan, guaranty, Noorani’s activities here and Discover Mills’ claim under the guaranty “is so obvious as to require no elaboration. Suffice it to say that the second prong of the test is also satisfied.” Barton, 169 Ga. App. at 824. See also Paxton, 307 Ga. App. at 120 (2).

(c) Our final step in the application of the three-part test is to “determine whether the exercise of jurisdiction by a Georgia court... in this case comports with ‘traditional notions of fairness and substantial justice.’ Aero Toy Store, [LLC v. Grieves, 279 Ga. App. 515, 518 (1) (631 SE2d 734) (2006)].” Paxton, 307 Ga. App. at 120 (3).

“Due process requires that individuals have fair warning that a particular activity may subject them to the jurisdiction of a foreign sovereign.” (Punctuation and footnote omitted.) Home Depot Supply, 289 Ga. App. at 288.

Although, as stated in footnote 3, we agree with Noorani that the consent to jurisdiction provision in the lease did not individually and directly bind him since he only signed that contract in his corporate capacity and its terms were not incorporated into the guaranty, we do find it relevant to show that Noorani could anticipate being sued in a Georgia court for claims arising out of the operation of the store here. Moreover, although Noorani argues that “[e]very aspect and facet of the [gluaranty . . . occurred in Texas” this argument ignores the purpose of the guaranty — to guarantee rent payments on retail space located in a Georgia shopping mall. For this reason also, Georgia has a substantial interest in litigating these claims. And, in light of the circumstances here, as more fully set forth above, we conclude that Noorani is not being forced to litigate here because of random, fortuitous or attenuated circumstances. In sum, and considering the relevant factors, we find that “ ‘ “neither reasonableness nor fair play nor substantial justice would be offended” by haling [Noorani] into a Georgia court and exercising jurisdiction over [him].’ White House, Inc. v. Winkler, 202 Ga. App. 603, 605 (415 SE2d 185) (1992).” Paxton, 307 Ga. App. at 121 (3).

3. Noorani next contends that the trial court erred by entering an order on December 7, 2006 imposing discovery sanctions before the issue of jurisdiction had been determined and that, because the trial court subsequently determined that it lacked jurisdiction over Shabnam Noorani, that order was null and void as to her. He further contends that the trial court erred when, in the final order and judgment, it required him to pay the entire discovery sanction.

First we note that subsequent to the December 7 order, the trial court issued another order requiring the sanctions awarded in the December 7 order to be held in escrow by Discover Mills’ counsel and reserving ruling on the motion for sanctions “until a later date.” According to remarks made by the trial court at a subsequent hearing, it appears that ruling was deferred until the jurisdictional issue was decided. Thus, it does not appear that the sanctions were actually awarded until the jurisdictional issue was resolved. Moreover, Noorani cites no authority for the proposition that the trial court was required to re-allocate the amount of the sanctions once Shabnam was dismissed under the circumstances here, where the discovery replies were filed jointly. We thus find this enumeration to be without merit.

4. Lastly, Noorani contends the trial court erred by granting Discover Mills’ motion in limine thereby precluding him from presenting evidence contesting the debtor’s liability and the amount of the judgment as established by the default judgment in the dispossessory action, in essence finding that as a guarantor with notice and opportunity to be heard, he was bound by the previous judgment entered against the principal debtor.

Both parties agree that Escambia Chemical Corp. v. Rocker, 124 Ga. App. 434 (184 SE2d 31) (1971), provides the starting point of our analysis of this issue. In that case, the creditor had sued the principal debtors and the guarantor, and the guarantor filed an answer, but the case against the debtors went into default and a judgment was entered against them. The guarantor moved to set aside the default judgment so that he could contest the issue of liability or the amount of the judgment. The trial court denied the motion, but entered an order holding that the default judgment was not binding on the guarantor “in any manner,” and thus he could challenge both liability and the amount of the award. Id. at 434.

As framed by this Court, the issue on appeal was “whether a guarantor can question the liability or the amount thereof of the principal debtor to the creditor where those matters have been established by a judgment against the debtor in the creditor’s favor.” Escambia, 124 Ga. App. at 436 (2). We then quoted at length from 38 AmJur2d 1083, Guaranty, § 77, beginning with the following statement: “If the guarantor had notice of the action brought by the creditor against the principal debtor, and had an opportunity to be heard, the guarantor is precluded from questioning the debtor’s liability.” (Punctuation omitted; emphasis supplied.) Id. at 436 (2). We then went on to acknowledge that the authority was conflicting when the debtor did not have notice and opportunity to be heard, with some courts taking the view that even in the absence of an opportunity to be heard, a guarantor is bound by the judgment against the principal debtor; some courts taking the “middle view” that proof of the judgment in favor of the creditor creates a rebuttable presumption of the principals’ liability to the creditor; and some courts taking the view that evidence of the judgment in the action against the debtor is not admissible. Id. This Court then adopted the more prevalent “middle view,” as stated in Restatement, Security, p. 372, § 139 (2), and further held that this rule should be followed in cases involving default judgments, such as was the situation in Escambia, as well as in litigated cases. Id. at 439-440 (2). Applying that holding to the trial court’s order under review in that case, we then reversed that order to the extent that it held that the guarantor was not prejudiced by the default judgment “in any manner” and held that the judgment, while not conclusive on the issue of the debtors’ liability to the creditor, is prima facie evidence of liability. Additionally, we stated that a guarantor may present evidence rebutting the correctness of the amount, with the qualifications that while presenting rebuttal evidence as to liability or amount, “no defense may be interposed which would not have been available to the debtors if it had been timely presented, and that those defenses which are personal to the debtors may not, in any event, be raised.” Id. at 440 (2).

On appeal, Noorani and Discover Mills urge differing interpretations of Escambia. Noorani argues that we should apply the rule set forth above — and that pursuant to that holding, the trial court’s order granting the motion in limine should be reversed, and he should be allowed to present rebuttal evidence as to both liability and amount. Discover Mills argues that Escambia decided only the issue of which rule to apply when the guarantor did not have notice and opportunity to be heard, and that, although arguably dicta because the guarantor in that case “had not received the benefit of such notice and . . . opportunity” by “[q]uoting with approval [the italicized] excerpt from American Jurisprudence, this Court acknowledged the near-universally accepted view that” a guarantor who has notice of the action brought by the creditor and opportunity to be heard is bound by the judgment against the debtor. (Emphasis supplied.) Thus, Discover Mills argues, the trial court in this case correctly ruled that Noorani, as a guarantor with notice and opportunity to be heard, is precluded from challenging the liability of the debtor or the amount of the judgment.

However, the guarantor in Escambia was actually a named defendant along with the debtors in the action filed by the creditor to collect the debt, and the guarantor, but not the debtors, had filed an answer in that suit. Thus, it appears to us that the guarantor in Escambia had notice and opportunity prior to the entry of the default judgment. Moreover, in that case the trial court had not denied the guarantor the opportunity to be heard, but rather had found that he was not prejudiced by the default judgment “in any manner.” This Court reversed that portion of the trial court’s order, holding that proper proof of the judgment at trial would constitute prima facie evidence of the debtor’s liability, and the burden would then shift to the guarantor to rebut that evidence. Escambia, 124 Ga. App. at 441. Thus, while not holding that the guarantor was bound by the judgment against the creditor, this Court rejected the notion that the judgment against the debtor did not have any preclusive effect on the guarantor.

The holding in Escambia — that a guarantor is not conclusively bound by a judgment against the principal debtor, but that the liability and the amount established by that judgment constitutes prima facie evidence which may be rebutted by the guarantor, has been cited, or followed, by our appellate courts numerous times since it was decided, without any apparent consideration of whether the guarantor had notice and an opportunity to be heard. E.g., McCorvey Grading &c. v. Blalock Oil Co., 268 Ga. App. 795, 796-797 (602 SE2d 842) (2004) (guarantor was a party to the suit against the debtor); Walker v. Modnar Corp., 178 Ga. App. 374, 376 (2) (343 SE2d 148) (1986) (guarantors were parties to the suit against the debtors under a lease and filed both an answer and a counterclaim); Peterson v. Midas Realty Corp., 160 Ga. App. 333, 334 (287 SE2d 61) (1981). Compare Graybar Elec. Co. v. Opp, 138 Ga. App. 456, 459 (2) (226 SE2d 271) (1976) (default judgment properly entered against guarantors who did not answer in suit filed against them and the debtors, but nevertheless allowed to present rebuttal evidence as to amount of damages in a suit on an open account).

Decided March 25, 2011.

Steven J. Strelzik, Mary Trachian-Bradley, for appellant.

Arnall, Golden & Gregory, Richard A. Mitchell, Edward A. Marshall, James A. Gober, for appellee.

Moreover, we think reversal of the trial court’s order in this case is required even under Discover Mills’ interpretation of Escambia. Although Noorani had notice of the suit against Chain D’Oro and traveled to Georgia in an attempt to file responsive pleadings on behalf of the corporation, or to obtain an attorney to do so, there is no evidence that he, as a personal guarantor of the obligations under the lease, had a real or meaningful opportunity to be heard in that action. The trial court erred in holding otherwise, and by holding that Noorani was conclusively bound by the default judgment against the debtor.

Judgment affirmed in part and reversed in part.

Smith, P J., concurs. Mikell, J., concurs in Divisions 1, 2, and 3 and in the judgment.

       Chain D’Oro’s store at Discover Mills operates under the trade name of Watches, Inc.

       Chain D’Oro filed an application for discretionary review from the denial of its motion to set aside the default judgment, but we dismissed that application as untimely.

       Because the terms of the lease were not made a part of the guaranty, we agree with Noorani that he was not bound by the forum selection or choice of law provision contained in the lease.

        Stuart v. Peykan, Inc., 261 Ga. App. 46 (581 SE2d 609) (2003), on which Noorani also relies, is also readily distinguishable because the guarantor in that case had no direct or indirect interest in the Georgia enterprise involved in the transaction, but merely was acting as a gratuitous guarantor so that his son could purchase a business here. Id. at 49.