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Released Opinions

June 2, 2015
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On Monday, June 1, in addition to hearing oral argument, the Supreme Court of Georgia issued 29 opinions, three of which are within the scope of our coverage. Summaries of the cases and the opinions are below.

S14G1202 Considine v. Murphy, et al.

In a unanimous opinion by Justice Nahmias, the Supreme Court of Georgia affirmed the dismissal of Considine’s lawsuit against the receivers appointed in her lawsuit against a third-party Michael Affatato, albeit on different grounds than those relied on by the Georgia Court of Appeals. Relying on DeGraffenreid v. Brunswick & Albany R.R. Co., 57 Ga. 22 (1876), the Court held that Considine’s failure to obtain leave to file her lawsuit from the court that appointed the receivers barred her action. “[W]ithout prior leave being properly granted, the trial court had no jurisdiction over this separate lawsuit against the receivers.”

Considine’s lawsuit against Affatato arose out of a dispute over the management and control of a company named Model Master that specialized in engineering and 3D modeling technology. The circuit court found the appointment of a receiver to be appropriate, and Considine and Affatato agreed to the appointment of George Murphy and his accounting firm, Murphy & McInvale, P.C. In 2010, Considine filed suit against the receivers claiming gross negligence and breach of fiduciary duty, but she did so without obtaining leave of court from the appointing court. She voluntarily dismissed that lawsuit before the trial court ruled on the receivers’ motion to dismiss. She refiled in 2011, though, and, this time, the trial court dismissed her lawsuit holding that the receivers were entitled to official immunity. The Georgia Court of Appeals reversed on procedural grounds, but the trial court again dismissed the lawsuit on immunity grounds. The Court of Appeals affirmed, holding, in Division 3 of its opinion, that the receivers were entitled to official immunity.

Without addressing the immunity claim, the Supreme Court of Georgia held that dismissal was warranted given Considine’s failure to obtain leave from the appointing court to file her lawsuit. As noted above, that failure is a jurisdictional defect. After setting out the prevailing rule, the Court explained, “In states like Georgia that treat the rule as jurisdictional, the prior-leave requirement applies even to a separate lawsuit filed in the same court that appointed the receiver.” As a result, “the only ‘Court of competent jurisdiction’ to decide a separate lawsuit against the receivers would be a court hearing an action that a party in the Affatato case had asked for and received leave to file from the court in that case.”

Even though the Supreme Court of Georgia declined to rule on whether the receivers were entitled to immunity, it noted that the immunity might be judicial, constitutional official, or statutory immunity. Accordingly, while it affirmed the judgment of the Court of Appeals, it vacated Division 3 of its opinion in which the court set forth its immunity holding.

S14G1878 Travelers Home and Marine Ins. Co. v. Castellanos

In a unanimous opinion by Justice Hunstein, the Supreme Court of Georgia held that Castellanos, an insured driver, not Travelers, the uninsured motorist carrier, had the burden of proof to show both that the other driver was an uninsured motorist and that his carrier had legally denied him coverage. The Court reversed the decision of the Georgia Court of Appeals, which had divided 4-3 in assigning that burden to Travelers.

After a 2009 car accident, Castellanos filed suit against the other driver, Santiago, who was defended by United, his insurance carrier, but Santiago did not appear at trial. Castellanos was awarded compensatory and punitive damages, but United denied coverage for that award because Santiago did not cooperate in his defense. Castellanos then sought compensation from Travelers, under his uninsured motorist coverage. When Travelers did not respond to his demand, Castellanos filed suit claiming a bad faith failure to pay. In its defense, Travelers contended that United did not “legally deny” coverage to Santiago, which would make him uninsured, and that, as a result, Castellanos had no claim under the policy.

The trial court ruled in favor of Travelers, concluding that Castellanos “failed to present evidence that there was a ‘legal denial’ of coverage by United.” The Court of Appeals reversed, holding that “once Castellanos met his threshold burden of showing he was entitled to UM benefits, Travelers had the burden of presenting such evidence [of Santiago’s failure to cooperate] to justify its denial of coverage, as it would for any other affirmative defense.” In dissent, Judge McMillan contended that Castellanos had the burden to show that Santiago was an uninsured motorist within the meaning of the Travelers policy.

The Supreme Court of Georgia took the case to “clarify the burden of proof issue” and “adopt[ed] the straightforward analysis of the Court of Appeals dissent.” It explained, “Castellanos bears the burden of producing evidence that (1) United reasonably requested Santiago’s cooperation in the tort litigation; (2) Santiago willfully and intentionally refused to cooperate; and (3) prejudice resulting therefrom.” While prejudice might be presumed from Santiago’s absence from trial, evidence to support Castellanos’ claim was lacking as to the other two elements.

S15A0406 Land USA LLC v. Georgia Power Co.

In a unanimous opinion by Chief Justice Thompson, the Supreme Court of Georgia reversed the trial court’s finding that Georgia Power had a valid and enforceable written easement over certain property, but affirmed the trial court’s denial of an ejectment. The Court remanded the case for further proceedings on those and other issues.

In conjunction with a road-widening project undertaken by the Georgia Department of Transportation, Georgia Power had to relocate an electrical transmission line. It sought to obtain an easement from Fuller through negotiations, then by a condemnation lawsuit; among other things, Georgia Power wanted to block Fuller and any future owners from building any structure within 25 feet of the line’s center. Georgia Power and Fuller reached an agreement, but not before Fuller’s property was sold at a tax sale. The road project was completed and the transmission line re-energized in January 2010.

The purchaser served notice of foreclosure of the right to redeem on, among others, Georgia Power, but the company took no action. The purchaser then sold the property to Land USA, which filed suit challenging the validity of the easement. The trial court ruled in favor of Georgia Power, holding that it had a valid and enforceable easement and rejecting Land USA’s claims for trespass and ejectment.

The Supreme Court of Georgia reversed in part, affirmed in part, and remanded the case. It held that, while Fuller retained an interest in the property even after the tax sale, that interest was insufficient to give Georgia Power the “perpetual, express easement it sought.” Instead, it gave Georgia Power a right of redemption, which it did not exercise. The Court explained, “Had the property been redeemed by any party, title thereto would have reverted to Fuller and the easement Georgia Power purchased would have been validated.” When no party exercised the right of redemption, fee simple title vested in the purchaser.

The Court further concluded that, insofar as O.C.G.A § 44-9-7 expressly provides that easements recorded before the recording of a tax fieri facias are not extinguished by a tax sale, it “implicitly provides that any easement not so recorded is extinguished if the property is not redeemed.” Because Georgia Power’s easement was recorded after the recording of both the tax fieri facias and the tax deed, that easement was subject to and extinguished by the interests acquired through the tax sale process.

The Court reversed the trial court’s decision in part, holding that Land USA had standing to sue Georgia Power in trespass. In particular, it is entitled to complain that the easement and any related building restrictions constitute a continuing trespass. Even so, the Court affirmed the trial court’s rejection of an ejectment remedy, concluding that Land USA’s remedy was limited to money damages and remanded the case for that determination.

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