Bo Phillips Company, Inc. v. R.L. King Properties, LLC , 336 Ga. App. 705 ( 2016 )

THIRD DIVISION
ELLINGTON, P. J.,
DILLARD and MCFADDEN, JJ.
NOTICE: Motions for reconsideration must be
physically received in our clerk’s office within ten
days of the date of decision to be deemed timely filed.
http://www.gaappeals.us/rules
March 23, 2016
In the Court of Appeals of Georgia
A15A2003. BO PHILLIPS COMPANY, INC. et al. v. R. L. KING
PROPERTIES, LLC et al.
ELLINGTON, Presiding Judge.
Appellants Bo Phillips Company, Inc. (“BPC”) and Ro Benn, d/b/a Big Benn
Entertainment (“Benn”) sued R. L. King Properties, LLC and Robert L. King
(collectively, the “appellees”) for conversion, among other claims. BPC and Benn
contend that they rented and delivered equipment to a DeKalb County nightclub, the
premises of which was owned by King Properties, and the appellees later denied BPC
and Benn access to the premises and refused to return their equipment.1 The trial
1
BPC and Benn also asserted claims for implied contract, unjust enrichment,
constructive trust, punitive damages, and attorney fees. Appellees moved for
summary judgment on all claims. BPC and Benn filed a cross-motion for summary
judgment on the issue of liability as to their conversion claim. BPC and Benn also
filed a motion to compel appellees to produce for inspection the pedestrian
barricades, allegedly owned by BPC, and the sound and lighting equipment, allegedly
court granted summary judgment in favor of the appellees on all claims and denied
BPC’s and Benn’s motion to compel discovery as moot. The trial court also impliedly
denied BPC’s and Benn’s cross-motion for summary judgment.2 BPC and Benn
appeal from the trial court’s grant of summary judgment on their claims for
conversion, punitive damages, attorney fees, and the remedy of a constructive trust.
They also appeal from the trial court’s denial of their motion to compel and the trial
court’s denial of their cross-motion for summary judgment. For the reasons set forth
below, we affirm in part and reverse in part.
Under OCGA § 9-11-56 (c),
[s]ummary judgment is warranted if the pleadings, depositions,
answers to interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to a judgment as a
matter of law. We review the grant or denial of a motion for summary
judgment de novo, and we view the evidence, and the reasonable
inferences drawn therefrom, in a light most favorable to the
nonmovant.
owned by Benn, which, they contended, remained on the premises.
2
The trial court did not expressly deny BPC’s and Benn’s cross-motion, but
that motion’s denial was implicit in the trial court’s grant of summary judgment to
appellees on all claims. See Georgian Art Lighting Designs, Inc. v. Gwinnett County
Bd. of Tax Assessors, 211 Ga. App. 510 n.1 (439 SE2d 687) (1993),
2
(Punctuation and footnotes omitted.) Assaf v. Cincinnati Ins. Co., 327 Ga. App. 475,
475-476 (759 SE2d 557) (2014).
The evidence shows that BPC is in the business of renting, selling, and
servicing traffic and pedestrian control devices, among other safety-related gear. BPC
purchased 150 eight-foot crowd control barricades on February 2, 2012, from an
identified vendor. John Craig, Jr., BPC’s vice president, testified by affidavit that on
or about March 8, 2012, BPC rented and delivered 20 of those barricades to a
nightclub known as Club Libra, which was operating on property located at 2549
Gresham Road in DeKalb County (the “premises”). BPC rented and delivered another
10 barricades to Club Libra on March 30, 2012. Attached to the affidavit, among
other documentation, were delivery tickets showing a rental of barricades at a daily
rate. BPC later attempted to regain possession of the barricades in October 2012, but
the premises were closed and padlocked.
Benn, through his business Big Ben Productions (“Big Ben”), owns, rents, and
services sound, stage, and lighting equipment. Benn testified that on October 17,
2011, Big Ben rented and delivered 42 pieces of equipment to Club Libra, as
described in an attached agreement with “Kareem Hawthorn ‘Club Libra’ BKE Ent.”
3
According to Benn, he was unable to regain possession of the equipment in July 2012
as the premises were closed and padlocked.
Kareem Hawthorn testified by affidavit that he is a member of Blacknights
Entertainment, LLC, which operated Club Libra on the Premises. Hawthorne’s
testimony showed the following. On or about October 17, 2011, Benn leased to
Blacknights sound, stage, and lighting equipment for use at Club Libra. In addition,
on March 8, 2012, BPC leased to Blacknights 20 eight-foot crowd control barricades
for use at Club Libra. BPC leased to Blacknights, also for use at Club Libra, an
additional 10 barricades on March 30, 2012. King permanently locked Blacknights
out of Club Libra on August 29, 2012, at which time the pedestrian barricades that
BPC had leased to Blacknights, and the equipment that Benn had leased to
Blacknights, remained on the premises.
On August 22, 2012, King Properties sued Blacknights, as lessee, and
Hawthorne and Tarrik Mabon, as lease guarantors, to recover for rent, taxes, and
insurance allegedly owing under a lease agreement with respect to the premises. In
an answer verified by Hawthorn and Mabon, the defendants asserted that the personal
property on the premises was both leased and owned. In discovery responses filed in
2013, Blacknights, Hawthorn, and Mabon identified the items remaining on the
4
Property as including “30 barricades (Leased Equipment),” six “DJ Speakers . . .
(Leased Equipment)” and “Sound and Lighting Equipment (Leased Equipment).” In
their discovery responses, Hawthorn and Mabon also identified “Bo Phillips” and
“Rogelio Benn” as two of the individuals with whom they or Blacknights “conducted
business and/or leased equipment from August 1, 2011 until August 25, 2012.”
1. BPC and Benn contend that the trial court erred in granting summary
judgment to appellees on their claim for trover and conversion of their personal
property.3 Conversion constitutes “an unauthorized assumption and exercise of the
right of ownership over personal property belonging to another, in hostility to his
rights; an act of dominion over the personal property of another inconsistent with his
rights; or an unauthorized appropriation.” (Citations and punctuation omitted.)
Maryland Cas. Ins. Co. v. Welchel, 257 Ga. 259, 261 (1) (356 SE2d 877) (1987). To
establish a prima facie case for conversion, “the complaining party must show (1) title
to the property or the right of possession, (2) actual possession in the other party, (3)
demand for return of the property, and (4) refusal by the other party to return the
property.” (Citation and punctuation omitted.) Trey Inman & Assocs., P.C. v. Bank
3
“The gist of [a trover] action is conversion.” Powers v. Wren, 198 Ga. 316,
319 (1) (31 SE2d 713) (1944).
5
of America, N.A., 306 Ga. App. 451, 457 (4) (702 SE2d 711) (2010). See Hooks v.
Cobb Center &c., Inc, 241 Ga. App. 305, 308 (5) (527 SE2d 566) (1999) (accord).
The parties agree that Blacknights was in possession of personal property when
King Properties locked it out of the Premises. And “[i]t is presumed that title follows
the possession of the property.” (Citation omitted.) Hinchcliffe v. Pinson, 87 Ga. App.
526, 529 (74 SE2d 497) (1953). The presumption that one in possession of personal
property is the owner of that property is, however, a rebuttable presumption. See
Hattaway v. Keefe, 191 Ga. App. 315, 317 (1) (381 SE2d 569) (1989). As set forth
above, BPC and Benn came forward with evidence, including statements by
Blacknights and its members, from which a trier of fact could conclude that BPC
owned the pedestrian barricades and Benn owned the sound and lighting equipment
which was in the possession of Blacknights when Blacknights was locked out of the
premises. The appellees claim that the evidence was insufficient because of a lack of
serial numbers or other particular identifying information as to the claimed property.
As to BPC, appellees argue that the delivery ticket for the pedestrian barricades
shows 50, not 30, were delivered; there was a lack of evidence of ongoing rental
payments for the barricades; the person who ordered the barricades, Rowan Reid, was
not shown to be associated with Club Libra or Blacknights; and Craig’s affidavit and
6
Hawthorne’s discovery responses are inconsistent as to the date of the lease. With
respect to Benn, the appellees argue that equipment listed in the lease agreement for
the DJ sound and lighting equipment was inconsistent with the demand letter for the
return of equipment sent by Benn’s counsel and with the list of leased equipment
produced in discovery by Blacknights; the complaint alleged Benn delivered 42
pieces of “sound and lighting” equipment but Hawthorne’s affidavit refers to 42
pieces of “sound, stage, and lighting equipment” (emphasis supplied); and Benn
failed to come forward with any evidence showing periodic payments consistent with
a lease. However, while the appellees point to inconsistencies and conflicts in the
evidence, they were for the jury to resolve. See Gateway Bank & Trust v. Timms, 259
Ga. App. 299, 300 (1) (577 SE2d 15) (2003) (in trial for conversion of a trailer,
conflicting evidence as to true ownership of the trailer, notwithstanding the lack of
serial number or other identifying information as to the trailer upon manufacture, was
sufficient to support the jury’s verdict).
The appellees also rely on evidence that King Properties retained a landlord’s
lien against Blacknights’ property. They do not, however, rely on a statutory
7
landlord’s lien.4 Rather, King Properties shows that, under its lease agreement5 with
Blacknights, it was entitled to retain possession of Blacknights’ personal property
“until all charges of any kind” were paid.6 See Colonial Self Storage, Inc. v. Concord
Properties, Inc., 147 Ga. App. 493, 494 (1) (249 SE2d 310) (1978) (rental contract
allowed landlord to seize tenant’s personal property upon non-payment of rent).
However, the appellees do not show that King Properties was authorized under its
agreement with Blacknights, or on any other basis, to retain personal property that
Blacknights did not own pending satisfaction of Blacknights’ obligation to King
4
Compare OCGA § 44-14-341 (“Landlords shall . . . have a general lien on the
property of the debtor which is subject to levy and sale, which general lien shall date
from the time of the levy of a distress warrant to enforce the general lien.”).
5
Although the lease attached to King Properties’ motion for summary
judgment was not expressly authenticated, we agree with King Properties that the trial
court was authorized to consider the agreement to be authenticated by the
circumstantial evidence, which included the production of the lease during discovery
and the appearance and contents of the document. See Nyankojo v. North Star Capital
Acquisition, 298 Ga. App. 6, 8 (679 SE2d 57) (2009) (documents which contained
very specific information and signatures on behalf of buyer and seller was sufficient
circumstantial evidence of authentication); Salinas v. Skelton, 249 Ga. App. 217, 220-
221 (1) (547 SE2d 289) (2001) (party’s production of document during discovery is
circumstantial evidence of authentication).
6
The lease provided that “[u]pon termination of this lease . . . , or upon default
by Lessee . . . , Lessor may enter the leased premises and remove any and all personal
property of Lessee and may retain possession of such personal property until all
charges of any kind, including rent, storage, or damages, shall be paid in full.”
8
Properties. They do suggest that, if BPC and Benn are the true owners of the personal
property at issue, then King Properties was entitled to retain such property pending
payment of storage fees, which the appellees’ counsel characterized as an “offset” at
summary judgment hearing. But pretermitting whether King Properties could assess
a storage fee,7 they have not offered BPC and Benn the opportunity to take the
property at issue upon payment of such a fee, and they do not show thereby an
absence of triable issues of material fact as to BPC’s and Benn’s title and right to
possession that would authorize the grant of summary judgment to the appellees on
the conversion claim.8
In addition to evidence as to their title, BPC and Benn came forward with
evidence that King Properties was in possession of their personal property, had
received their demands for the return of their property, and had refused those
7
The appellees rely on Domestic Sewing Machine Co. v. Watters, 50 Ga. 573,
575 (1874), which found that the “true limit” of the lien of a livery man or inn keeper
is that it “is only good against the true owner or prior incumbrancer for the expense
of feeding or taking care of that particular article.”
8
The appellees also argue that BPC and Benn failed to preserve their argument
on appeal that, under the Uniform Commercial Code – Leases, OCGA § 11-2A-101
et seq., the creditor of the lessee of goods takes subject to that lease. We agree with
appellees that BPC and Benn failed to raise the argument below, and we do not
address it here.
9
demands. The record shows that in 2013, counsel for BPC and Benn sent letters to
King Properties’ counsel demanding the return of BPC’s pedestrian barricades and
Benn’s sound and lighting equipment. King, the sole owner of King Properties, later
acknowledged in his deposition that he received the demand letters. King also
acknowledged that King Properties owns the premises, which it rented to
Blacknights, but that he locked Blacknights out of the premises when it failed to pay
rent. King testified that, as of the time of his deposition in 2014, there had been no
tenants in the premises after Blacknights. King acknowledged that there remained
sound and lighting equipment, as well as pedestrian barricades, on the premises.
According to King, none of the sound and lighting equipment, nor any of the
pedestrian barricades, had been taken off the premises. King intended to hold onto all
of the personal property on the premises until he received payment from Blacknights,
and, in the event Blacknights failed to pay, he intended to dispose of it in a sheriff’s
sale.
In light of the foregoing, as to defendant King Properties, we conclude that
BPC and Benn came forward with evidence to show a triable issue of fact as to each
element of their claim for conversion. As for defendant King, the evidence shows that
King was the sole member of King Properties, a limited liability company. “A LLC
10
member may be held individually liable if he or she personally participates or
cooperates in a tort committed by the LLC or directs it to be done.” (Citations
omitted.) Milk v. Total Pay & HR Solutions, Inc., 280 Ga. App. 449, 454 (634 SE2d
208) (2006). If King Properties committed the tort of conversion of BPC’s and
Benn’s property, a jury could find that King participated in and directed that
conversion and was therefore personally liable. See BTL COM v. Vachon, 278 Ga.
App. 256, 260 (1) (628 SE2d 690) (2006) (Summary judgment in favor of individual
defendants was improper as there remained issues of fact as to whether they
participated in false representations that induced plaintiff to enter into agreement with
the defendants’ company.); Jennings v. Smith, 226 Ga. App. 765, 766-767 (1) (484
SE2d 362) (1997) (If a jury found the corporation negligent in constructing or
repairing the house, it could also find appellee, a corporate officer, personally liable
for such negligence because he specifically directed or participated in the
construction and repairs.). It follows that the trial court erred in granting the
appellees’ motion for summary judgment as to BPC’s and Benn’s conversion claim.
2. BPC and Benn further contend that the trial court erred in granting the
appellees’ motion for summary judgment as to their claim for imposition of a
constructive trust. We agree. In their complaint, BPC and Benn asked that a
11
constructive trust be placed on their property as it was being held by the appellees
contrary to their lawful rights. “A constructive trust arises not from the intent of the
parties, but by equity with respect to property acquired by fraud, or although acquired
without fraud where it is against equity that the property should be retained by the
one who holds it.” Aetna Life Ins. Co. v. Weekes, 241 Ga. 169, 172 (1) (244 SE2d 46)
(1978). See OCGA §53-12-132 (a) (A constructive trust is “implied whenever the
circumstances are such that the person holding legal title to property, either from
fraud or otherwise, cannot enjoy the beneficial interest in the property without
violating some established principle of equity.”). Because material issues of fact
remained as to whether appellees, inconsistently with BPC’s and Benn’s rights and
contrary to equity, exercised dominion over their property, summary judgment was
not proper as to the claim for imposition of a constructive trust. See Gibbs v. Dodson,
229 Ga. App. 64, 69 (2) (492 SE2d 923) (1997) (trial court did not err in denying
summary judgment on appellee’s counterclaim for a constructive trust on an
insurance policy, which claim would have become viable upon appellant’s assertion
of paramount right to the policy, “thereby engaging in an act of dominion hostile to
[appellee’s] ownership rights and contrary to equity”).
12
3. BPC and Benn also contend that the trial court erred in granting the
appellees’ motion for summary judgment on their claim for punitive damages. We
agree. Punitive damages may be awarded in an action for conversion, which is an
intentional tort, “provided one or more of the criteria in OCGA § 51-12-5.1 (b) are
met.” Gateway Bank & Trust v. Timms, 259 Ga. App. at 301 (3). See Taylor v.
Powertel, Inc., 250 Ga. App. 356, 357 (1) (b) (551 SE2d 765) (2001) (finding that
actions for trover or for conversion are intentional torts). Punitive damages are
available “only in such tort actions in which it is proven by clear and convincing
evidence that the defendant’s actions showed willful misconduct, malice, fraud,
wantonness, oppression, or that entire want of care which would raise the
presumption of conscious indifference to consequences.” OCGA § 51-12-5.1 (b).
Viewing the evidence in a light most favorable to BPC and Benn, a trier of fact could
find that appellees became aware in pursuit of their claims against Blacknights that
King Properties was in possession of property that did not belong to Blacknights and
which King Properties was not entitled to retain under its agreement with
Blacknights. A trier of fact could also conclude that the appellees were thereafter
unwilling to return that property to BPC and Benn, its true owners, upon their
demand, thereby showing “that entire want of care which would raise the presumption
13
of conscious indifference to consequences.” Id. See Gateway Bank & Trust v. Timms,
259 Ga. App. at 301 (3) (where in trover action bank did not hold title to seized
trailer, but held a UCC financing statement against property of the true owner’s son,
and made no effort to identify the son as the owner of the trailer within a year of its
seizure, and, further, the bank’s loan officer responded to the owner’s request for the
return of her trailer by merely referring her to the bank’s counsel, there existed some
clear and convincing evidence authorizing the jury’s award of punitive damages).
4. BPC and Benn further maintain that the trial court erred in granting summary
judgment to the appellees on BPC’s and Benn’s claim for attorney fees on account of
the appellees’ bad faith. See OCGA § 13-6-11.9 “Bad faith warranting an award of
attorney fees must arise out of the transaction on which the cause of action is
predicated, and it may be found in how the defendant acted in his dealing with the
plaintiff.” (Footnote omitted.) Foxchase v. Cliatt, 254 Ga. App. 239, 240 (2) (562
SE2d 221) (2002). As we noted in Division 3, supra, conversion is considered an
9
“The expenses of litigation generally shall not be allowed as a part of the
damages; but where the plaintiff has specially pleaded and has made prayer therefor
and where the defendant has acted in bad faith, has been stubbornly litigious, or has
caused the plaintiff unnecessary trouble and expense, the jury may allow them.”
OCGA § 13-6-11. The statute “applies to both contract and tort cases.” Lowery v.
Roper, 293 Ga. App. 243, 244 n. 2 (666 SE2d 710) (2008).
14
intentional tort. And “[e]very intentional tort invokes a species of bad faith and
entitles a person so wronged to recover the expenses of litigation including attorney
fees.” (Citation and punctuation omitted.) Bunch v. Byington, 292 Ga. App. 497, 506
(5) (664 SE2d 842) (2008). See Ponce de Leon Condominiums v. Di Girolamo, 238
Ga. 188, 190 (2) (232 SE2d 62) (1977) (accord). The same evidence which, if viewed
in a light most favorable to BPC and Benn, would authorize an award of punitive
damages would also authorize an award of attorney fees. See id. (same testimony that
authorized jury’s award of punitive damages also provided authorization for jury to
find that appellants acted in bad faith). Therefore, the trial court also erred in granting
summary judgment to the appellees on BPC’s and Benn’s claim for attorney fees.
5. BPC and Benn also maintain that the trial court erred in denying their motion
to compel discovery as moot. The record shows that BPC and Benn moved to compel
the appellees to allow them access to the premises for purposes of inspecting their
personal property. The trial court found the motion to compel to be moot because the
appellees were entitled to summary judgment on all of BPC’s and Benn’s claims. As
we found supra, however, the trial court erred in granting summary judgment on
BPC’s and Benn’s claim for conversion, among other claims.
15
Although the motion to compel was filed after the conclusion of the six-month
discovery period, it was not necessarily too late to be considered, as appellees
contend. See Fisher v. Bd. of Commrs. of Douglas County, 200 Ga. App. 353, 354 (1)
(408 SE2d 120) (1991) (“So long as discovery is promptly and diligently pursued by
the moving party within the discovery period . . . , a motion to compel or for sanctions
may be brought after the expiration of the discovery period.”). Nor do we find, as the
appellees argue, that BPC and Benn waived this claim of error by failing to ask the
trial court continue or set aside its ruling on the summary judgment motion pending
resolution of the motion to compel. See Mallard v. Forest Heights Water Works, 260
Ga. App. 750, 752 (2) (580 SE2d 602) (2003) (holding that appellant waived
argument that the trial court erred by considering appellee’s summary judgment
motion without first ruling on appellant’s motion to compel discovery because
appellant never moved to continue the summary judgment ruling or otherwise object
at the trial level). The authority relied upon by appellees is distinguishable because
BPC and Benn do not contend that the trial court erred in ruling on their motion for
summary judgment before ruling on the motion to compel. Rather, because genuine
issues of fact remain for the jury on BPC’s and Benn’s claim for conversion, the
motion to compel was not moot and “may again be presented to the trial court for
16
ruling.” Daniel v. Earle, 174 Ga. App. 649, 650 (2) (331 SE2d 19) (1985) (as the trial
court determined the motion to compel to be moot in view of its grant of summary
judgment to the appellee, but this court found that genuine issues of material fact
remained for the jury, appellant was entitled to pursue a ruling on his motion to
compel).
6. Lastly, we consider BPC’s and Benn’s argument that the trial court erred in
denying their cross-motion for summary judgment on the issue of the appellees’
liability on their conversion claim. Viewing the evidence in a light most favorable to
the appellees for purposes of this claim of error, the appellees have pointed to
evidence, including the lack of ongoing lease or rental payments, from which a trier
of fact might find that neither BPC nor Benn overcame the presumption that property
in possession of Blacknights was owned by Blacknights, and that the property was
therefore lawfully in the possession of King Properties under its agreement with
Blacknights. It follows that the trial court did not err in denying BPC’s and Benn’s
cross-motion for summary judgment.
In summary, the trial court erred in granting summary judgment to the
appellees on BPC’s and Benn’s claims for conversion, imposition of a constructive
trust, punitive damages, and attorney fees. BPC’s and Benn’s motion to compel was
17
not moot and may again be presented to the trial court for consideration. The trial
court’s denial of BPC’s and Benn’s cross-motion for summary judgment is affirmed.
Judgment affirmed in part and reversed in part. McFadden, J., concurs.
Dillard, J., concurs in judgment only.
18
A15A2003. BO PHILLIPS COMPANY, INC. et al. v. R. L. KING
PROPERTIES, LLC et al.
DILLARD, Judge, concurring in judgment only.
I concur in judgment only because I do not agree with all that is said in the
majority opinion. As a result, the majority’s opinion decides only the issues presented
in the case sub judice and may not be cited as binding precedent. See Court of
Appeals Rule 33 (a).