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Release Opinions

July 8, 2015
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On Monday, July 6, the Supreme Court of Georgia released nine opinions, two of which are within the scope of our coverage. Summaries of the cases and the opinions are below.

S14G1778 Zaldivar v. Prickett, et al.

In a unanimous opinion by Justice Blackwell, the Supreme Court of Georgia held that the apportionment statute, O.C. G.A. § 51-12-33, requires the trier of fact to consider the fault of a “nonparty” in assessing damages for tortious injuries “only when the nonparty is shown to have committed a tort against a plaintiff that was a proximate cause of his injury.” The Court also held that negligent entrustment can be such a proximate cause and reversed the decision of a divided Georgia Court of Appeals.

After a traffic accident, Zaldivar and Prickett each blamed the other. Zaldivar asserted that Prickett was at fault and that his employer, Overhead Door Company, was guilty of negligently entrusting him with the truck involved in the accident. Zaldivar gave notice of the intent to ask the trier of fact to assign a portion of the damages attributable to Pickett to Overhead Door. The trial court granted Prickett’s motion for summary judgment asserting that negligent entrustment could not be a proximate cause of the injuries, and a divided Court of Appeals affirmed.

The Supreme Court reasoned that the apportionment statute addresses the fault of plaintiffs, defendants, and “all persons or entities who contributed to the alleged injury or damages, regardless of whether the person or entity was, or could have been, named as a party to the suit.” As for plaintiffs, they are responsible in proportion to their fault, but cannot recover if “50 percent or more responsible;” the statute, thus, codifies comparative negligence for plaintiffs. As for defendants, they are liable to the extent they are at fault, that is, to the extent there is “a breach of a legal duty that a defendant owes to a plaintiff that is a proximate cause of the injury for which the plaintiff now seeks to recover damages.”

With respect to O.C.G.A. § 51-12-33(c), which applies to “all persons or entities that contributed to the alleged injury or damages,” the Court explained that it “must refer to a breach of a legal duty in the nature of a tort that is owed for the protection of the plaintiff, the breach of which is a proximate cause of his injury.” That includes all persons or entities “regardless of their liability or potential liability to the plaintiff in tort.” The Court observes that not all tortfeasors can be held liable in tort; they may be protected by an affirmative defense or by immunity. “Subsection (c) , then, is properly understood to require the consideration of the ‘fault’ of four classes of persons or entities: plaintiffs (also covered in subsection (a)), defendants with liability (also covered in subsection (b)), defendants without liability, and nonparties.”

Measured against that standard, the claim of negligent entrustment directed at the nonparty Overhead Door could constitute a proximate cause of the injuries. To the extent that the Court of Appeals’ decision in Ridgeway v. Whisman, 210 Ga. App. 169, 435 S.E. 2d 624 (1993), could be read to say otherwise, as the majority in the Court of Appeals did, that understanding was “simply wrong.”

S14G1876 Vinings Bank v. Brasfield & Gorrie, LLC

In a unanimous opinion by Justice Melton, the Supreme Court of Georgia held that a general contractor could not impose a constructive trust on funds paid to a bank on behalf of a subcontractor that did not pay its subcontractors and suppliers. The Court affirmed the decision of the Georgia Court of Appeals in part and reversed it in part.

The case arose out of a construction contract on which Brasfield & Gorrie was the general contractor and Wagner Enterprises, Inc. (“WEI”) was the drywall subcontractor. WEI pledged its receivables, including those from its contracts with Brasfield & Gorrie, to secure a loan from Vinings Bank. After WEI defaulted on the loan, Vinings Bank froze its accounts. WEI also failed to pay its subcontractors and suppliers, and Brasfield & Gorrie gave Vinings Bank general notice that some of the funds it was depositing in the bank for WEI’s benefit might be due to WEI’s subcontractors and suppliers. In the end, Vinings Bank applied the funds in WEI’s account to the debt, and Brasfield & Gorrie paid the subcontractors and suppliers of WEI to preserve the project from mechanic’s and materialmen’s liens.

The Supreme Court affirmed the denial of the Brasfield & Gorrie’s motion for summary judgment on its claim that the Bank converted the funds to the extent that they were due to WEI’s subcontractors and suppliers, asserting that they were held in a constructive trust. The Court held that Brasfield & Gorrie did not have standing to assert the counterclaim. It had no relationship to the Bank, was not one of WEI’s subcontractors or suppliers, and was not the beneficiary of an assignment of those subcontractors’ or suppliers’’ rights.

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