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Forthcoming Opinions

May 17, 2013

On Monday, May 20, 2013, the Supreme Court of Georgia will release opinions in 12 cases, five of which are within the scope of our coverage. Summaries of the cases are below and we will update on Monday morning with the opinions.

S12G1317. WOODCRAFT BY MACDONALD, INC., et al. v. GEORGIA CASUALTY AND SURETY COMPANY

This case began when an Atmos Energy underground gas pipeline broke and filled Coachcraft’s building with natural gas, resulting in an explosion and fire that destroyed the building and its contents. Coachcraft renovated the interiors of RVs and some of the items destroyed included customer RVs, along with tools and equipment of Coachcraft and their employees. Coachcraft’s insurer, Georgia Casualty, paid the customers and Coachcraft for damages up to the limits of the two policies Coachcraft maintained. Georgia Casualty then sued Atmos, seeking to recover its payments and Coachcraft also intervened in an attempt to recover damages beyond the policy limits. Atmos then settled with Georgia Casualty for $950,000 and with Coachcraft and its owner for $125,000.

Coachcraft and its owner then demanded that Georgia Casualty pay them enough to make them whole from the settlement proceeds received from Atmos, an amount totaling $179,130.59. When Georgia Casualty denied the demand, Coachcraft and its owner brought the present litigation. Georgia Casualty moved for summary judgment, stating it paid the policy limits and had no further duty under Georgia law to make Coachcraft whole. The trial court denied the motion for summary judgment, finding that the “made whole” doctrine in Georgia applicable to property claims. The court also granted Georgia Casualty’s motion for summary judgment as to Coachcraft’s bad faith claim.

The Court of Appeals (Phipps, Andrews, McFadden) reversed trial court’s decision, finding Georgia Casualty was entitled to summary judgment that it could not be held liable based on pursuing its contractual subrogation rights. The Court of Appeals determined that Georgia Casualty’s exercise of its subrogation rights did not deprive Coachcraft of their priority under the “made whole” doctrine.

On October 15, 2012, the Supreme Court unanimously granted the petition for certiorari to consider the following question:

  1. Did the Court of Appeals err in reversing the trial court’s denial of Georgia Casualty and Surety Company’s motion for summary judgment?

The case was heard on February 18, 2013.

S12G1629. WELLSTAR HEALTH SYSTEMS, INC., et al. v. JORDAN

This case is a spinoff from Baker v. Wellstar Health Systems. In that case, decided in 2010, the Supreme Court allowed ex parte interviews of medical providers under a qualified protective order. Wellstar then conducted the ex parte interviews and had them recorded by a court reporter. Counsel for the plaintiff sought the transcripts of those interviews. The trial court granted the motion to compel production of the transcripts to plaintiffs and Wellstar appealed, claiming that the transcripts could reveal work product of their counsel.

The Court of Appeals denied the application for interlocutory appeal from the trial court order and Wellstar petitioned for a writ of certiorari.

On November 5, 2012, the Supreme Court unanimously granted the petition for certiorari to consider the following issue:

  1. Did the trial court err when it granted the motion of the plaintiff to compel the production of transcripts of physician interviews that were conducted ex parte by counsel for the defendants pursuant to a qualified protective order? See OCGA § 9 -11-26 (b) (3); Baker v. WellStar Health Sys., Inc., 288 Ga. 336 (703 SE2d 601) (2010).

The case was heard on February 20, 2013.

S12G1842. CITY OF BALDWIN v. WOODARD & CURRAN, INC.

This appeal involves a jury award to a company that provided services to a city for its wastewater treatment plant.  In 2009, Woodward & Curran, Inc. (W&C) entered into a contract for engineering and design services for the water system of the City of Baldwin (which is located in two northeast Georgia counties, Banks and Habersham). The original agreement was for $5,000 to provide supporting documentation for the City’s application for stimulus funds to improve its wastewater treatment plant. W&C submitted an additional proposal later signed by the Mayor for a sum of no more than $210,000. The City paid W&C $5,000 and claimed the additional proposal was ultra vires and not binding on the City because it had not been approved by the city council. After a trial on W&C’s breach of contract claims, the jury awarded W&C $203,000. The City appealed.

The Court of Appeals (Andrews, Doyle, Boggs) unanimously affirmed the trial court’s decision. Judge Andrews explained that quantum meruit was a possible ground for recovery against a city because prior Supreme Court precedent finding it unavailable to plaintiffs challenging the actions of counties did not apply to cities. The prior decision of the Court of Appeals finding quantum meruit appropriate against cities (Stottler) has not been impliedly overruled and there was no error sending the issue to the jury. In addition, the trial court did not err in allowing the jury to consider a breach of contract theory regarding the original agreement because there was sufficient evidence to allow the issue to go to the jury.

On November 5, 2012, the Supreme Court unanimously granted the petition for certiorari to consider the following issues:

  1. Is quantum meruit an available remedy against a municipality when the municipality has entered into a contract that is ultra vires? See H.G. Brown Family, L.P. v. City of Villa Rica, 278 Ga. 819 (607 SE2d 883) (2005); City of St. Marys v. Stottler Stagg & Assoc., 163 Ga. App. 45 (292 SE2d 868) (1982).
  2. Did the Court of Appeals err in determining that the jury was properly allowed to consider the breach of contract claim concerning the May Agreement?

The case was heard on February 18, 2013.

S13Q0040 You v. JP Morgan Chase Bank, N.A., et al.

This case began with foreclosure proceedings instituted by Chase against a house in Gwinnett County. Two individuals purchased the home in 2003 with a mortgage from Excel Home Loans, secured by a promissory note and a security deed in favor of excel. The Note was sold or transferred to an unidentified entity and Chase’s predecessor obtained the Deed. After the individuals defaulted on their loan, Chase began foreclosure proceedings and conducted a nonjudicial foreclosure sale in August 2011 where Chase was the highest bidder. Chase then executed a quitclaim deed to the Federal National Mortgage Association (Fannie Mae). Fannie Mae then began dispossessory proceedings and the plaintiffs filed the present case against Chase and Fannie Mae, alleging wrongful foreclosure and wrongful eviction.

Chase and Fannie Mae removed the case to federal court and moved to dismiss the claims for failure to state a claim under Fed. R. Civ. P. 12(b)(6). The court dismissed a declaratory judgment claim, but found uncertainty in Georgia law regarding the wrongful foreclosure and eviction claims. The key question is how Georgia law defines “secured creditor” and whether Chase, as holder of the Deed but not the Note, could institute foreclosure proceedings. The second, related, question is whether the name of the secured creditor must be indicated on the notice of foreclosure sale.

The federal district court issued one order summarizing the issues and a separate order certifying the following questions to the Supreme Court of Georgia:

  1. Can the holder of a security deed be considered to be a secured creditor, such that the deed holder can initiate foreclosure proceedings on residential property even if it does not also hold the note or otherwise have any beneficial interest in the debt obligation underlying the deed?
  2. Does O.C.G.A. § 44-14-162.2(a) require that the secured creditor be identified in the notice described by that statute?
  3. If the answer to the preceding question is “yes,” (a) will substantial compliance with this requirement suffice, and (b) did defendant Chase substantially comply in the notice it provided in this case?

The case was heard at oral argument on January 7, 2013.

S13A0070 Austin v. Bank of America, N.A., et al.

This case began with a default on a mortgage, but now focuses on the constitutionality of an award of attorney fees pursuant to OCGA 13-1-11. Austin defaulted on a $1.62 million loan and was notified of the default in 2011. He did not cure the default, leading to an award on summary judgment of $1.9 million to Bank of America. The total amount of the award included $170,030 in attorneys’ fees. Austin appealed, arguing the attorney fees are an unconstitutional penalty, along with claims that the trial court improperly granted summary judgment.

The case was heard on January 8, 2013.

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