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Released Opinions

November 9, 2016
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On October 31, 2016, the Supreme Court of Georgia released 25 opinions, of which five are within the scope of our coverage. Summaries of the cases and decisions are set forth below.

S15G1878 Bank of America, N.A. v. Johnson

In a unanimous decision by Justice Nahmias, the Supreme Court of Georgia reversed the decision of the Court of Appeals, holding that Johnson’s concessions at oral argument made it clear that he lacked standing to challenge the assignment of the security deed on his residence to BOA.

In Ames v. J.P. Morgan Chase Bank, 298 Ga. 732, 783 SE 2d 614 (2016), the Court approved the holding of the Court of Appeals that debtors generally lack standing to challenge the assignment of their security deeds. It left open the question whether a property owner who claimed that he no longer owed on the property because the security deed had been cancelled could challenge the assignment. Johnson’s complaint raised that question, and the Court took the case to answer it. But, at oral argument, Johnson acknowledged that the security deed in favor of the Bank of America was valid, and that deed identified a holder that differed from the one Johnson identified in his complaint. The Court explained, “Because Pine State was not, in fact, the holder of title to the Property under the security deed, Johnson’s allegations as to the condition of Pine State and whether it conveyed anything to BOA are irrelevant and cannot serve as the basis for a challenge to BOA’s claim on the property.” Given these problems with Johnson’s complaint, the Court found it unnecessary to answer the question left open in Ames.

S16G0619 Yugueros v. Robles

In a unanimous decision by Presiding Justice Hines, the Supreme Court of Georgia held that the deposition of a corporate representative pursuant to OCGA § 9-11-30(b)(6) cannot be automatically admitted into evidence as expert testimony. It reversed the decision of the Court of Appeals.

The underling case involves a claim of medical malpractice that resulted in the death of Robles’ wife after surgery that Yugueros performed. The surgery included liposuction, buttock augmentation, and abdominoplasty surgery. Robles noticed and took the deposition of the administrator of the clinic at which Yugueros practiced pursuant to 30(b)(6). The trial court excluded the deposition, but the Court of Appeals reversed.

The Supreme Court explained that, while OCGA § 9-11-32(a)(2) allows an adverse party to  use a 30(B)(6) deposition “for any purpose,” that provision is subject to the caveat that the deposition can be used “so far as admissible under the rules of evidence applied as though the witness were then present and testifying ….” The “for any purpose” language in OCGA § 9-11-32(a)(2) “does not create a rule of evidence.” Rather, it provides “for the admission of the deposition when that admission is permitted under relevant rules of evidence.” Moreover, OCGA § 24-7-202 governs the establishment of the medical standard of care. The trial court’s gatekeeper role with respect to expert testimony “is not extinguished simply because deposition testimony, including expert testimony, is secured under OCGA § 9-11-30(b)(6).”

S16A1011 Western Sky Financial, LLC, et al. v. State of Georgia, ex rel., Samuel S. Owens,     Attorney General

S16A1012 State of Georgia, ex rel., Samuel S Owns, Attorney General v. Western Sky             Financial, LLC

In a unanimous decision by Justice Benham, the Supreme Court of Georgia rejected a number of challenges to the enforcement of the Georgia Payday Lending Act, codified at OCGA §§ 16-17-1, et seq., against out-of-state lenders. It affirmed the trial court’s rulings denying the defendants’ motions to dismiss and its modification of an injunction and reversed its order denying the State’s motion to add defendants.

Western Sky and others operate a payday lending business that operates outside Georgia and deals with borrowers through the Internet or over the telephone. The lenders contended that the last act in the transaction occurred on Indian lands in South Dakota and that their activities were part of interstate commerce. The State filed suit seeking civil penalties and injunctive relief as a remedy for allegedly usurious interest charges on the loans. The trial court entered an injunction directing one defendant to deposit a specified amount of funds into escrow and provide quarterly summaries of all payments received from Georgia borrowers, while providing also for subsequent modification. After learning that the lenders had collected more than $15 million, the trial court ordered that amount deposited, but stayed its order, modifying it to require the deposit of $1 million.

The Court rejected the lenders’ reliance on the Indian Commerce Clause and the Dormant Commerce Clause in the US Constitution. In OCGA § 16-17-1(d), the Legislature stated, “payday lending … does not encompass loans that involve interstate commerce.” The trial court pointed to this legislative finding, but the Supreme Court found any reliance misplaced. It explained, “We reject the notion that this phrase was meant to exclude loans that involve interstate commerce from the scope of the Act. If that were so, the Act would be virtually meaningless because it would prohibit nothing. Instead, we are persuaded that this language is simply a legislative finding of fact that is obviously factually inaccurate.”

Not bound by the Legislature’s factual finding, the Supreme Court concluded, “Given the clear and unambiguous scope of the Act as a whole, to interpret [that legislative finding] as a definitional limitation on payday lending and thereby exempt loans that involve interstate commerce from the prohibitions of the Act would create such a contradiction and absurdity as to demonstrate that the legislature did not mean it to create such a limitation.”
The Court also rejected several attacks on the trial court’s injunction. It held that the language of the Payday Lending Act contemplates injunctive relief, even though it is not expressly provided for in the statute. It also held that the trial court’s escrow order did not constitute an unlawful prejudgment attachment. Both the Georgia Supreme Court and the Eleventh Circuit have held that interlocutory injunctive relief may be available in cases in which equitable relief is sought.

Neither contract formation law nor contractual choice-of-law provisions removed these contracts from the reach of Georgia law. The Court explained, “[T]he police power to enforce the laws of this State cannot be defeated by the efforts of parties to an agreement to contract around it.” Likewise, the involvement of a tribal member did not defeat the State’s jurisdiction. As the Court noted, “’Absent express federal law to the contrary,’ Native Americans who conduct activities beyond reservation boundaries are generally subject to non-discriminatory civil and criminal laws.” (citing Mescalero Apache Tribe v. Jones, 411 US 145, 148-49 (1973)).

Finally, the Supreme Court held that the twenty-year statute of limitation in OCGA § 9-3-1 governs enforcement of the remedies set forth in the Payday Lending Act. It rejected the lenders’ contention that the one-year statute that governs usury claims in OCGA § 7-4-10(d) is the one to be applied. It noted that the remedial schemes under the two laws are “distinct,” and that the right of the State to enforce usury laws in contracts to which it is not a party and to recover a penalty owed to it is a statutory right, not one arising under common law. The Court explained, “Long ago this Court determined that the twenty-year statute of limitations granted by OCGA § 9-3-22 applies ‘to rights which arise under the legislative enactment and would not exist but for some act of the Legislature.” (quoting Williams v. Clemons, 178 Ga. 619, 173 SE 718 (1943)).

The twenty-year statute applies to laws “specifically conferring rights upon an individual or a class to which an individual belongs.” The Payday Lending Act is one of those statutes, providing in § 16-7-3 that “A civil action under Code Section 16-17-2 may be brought on behalf of an individual borrower or on behalf of an ascertainable class of borrowers.”

S16A1013 Reliance Equities v. Lanier 5, et al.

S15A1014 Whitney v. Lanier 5, et al.

In a unanimous decision by Justice Hunstein, the Supreme Court of Georgia held that a property holder’s right of redemption is not extinguished until all three conditions in OCGA § 48-4-45(a), including publication of the notice of foreclosure, have been met. The Court reversed the judgment of the trial court.

Whitney’s Habersham County property was sold at a tax sale to Lanier 5 after he became delinquent on his taxes. More than a year later, Lanier 5 sent notice of foreclosure of the right of redemption to Whitney at his residence in Forsyth County by certified and first class mail. Whitney attempted to redeem the property two days after the date set for foreclosure on September 21, 2014. In October, Lanier 5 published notice of foreclosure. The trial court entered an order quieting title in Lanier 5 finding the foreclosure valid and rejected Whitney’s cross motion to quiet title in him.

The Court observed that the statutory requirements governing the foreclosure of the right to redeem can be more demanding than those the Constitution requires. In particular, OCGA § 48-4-45 requires that notice be given by (1) service on specified persons residing in the county here the property was located, (2) certified or registered mail or overnight delivery to those persons living outside the county, and (3) publication. In this case, publication was necessary before Whitney’s right of redemption could be foreclosed. Publication did not occur until after Whitney sought to redeem the property, so his right of redemption was not cut off.

S16A1045 GeorgiaCarry.Org, Inc. v. Code Revision Commission, et al.

In a unanimous decision by Chief Justice Thompson, the Supreme Court of Georgia affirmed the dismissal of GeorgiaCarry’s challenge to the codification of OCGA § 16-11-127.1.

In the 2013-14 legislative session, the General Assembly passed two laws governing the carrying of firearms in school safety zones, both of which were signed into law. The first, House Bill 826, allowed persons licensed to carry to carry firearms in a school safety zone. The second, House Bill 60, expressly prohibited the carrying of firearms in school safety zones, subject to an exception for those who “carr[y} or pick[] up a student within a school safety zone.” The Code Revision Committee noted the inconsistency and codified the latter bill, HB 60. GeorgiaCarry filed suit seeking to codify the language of HB 826, and the trial court dismissed the lawsuit.

The Supreme Court agreed that the language in the two bills was in irreconcilable conflict. In such a case, the latter enactment controls. The codification of House Bill 60’s language made that language controlling law, and it controlled when the trial court ruled. Accordingly, there was no set of provable facts that would entitle Georgia Carry to relief.

 

 

 

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