Farm & Home Life Ins. Co. v. Skelton

• Decision Date: 01 December 1998
• Docket Number: No. A98A1218, No. A98A1219.
• Citation: 510 S.E.2d 76,235 Ga. App. 507
• Court: Georgia Court of Appeals
• Parties: FARM & HOME LIFE INSURANCE COMPANY v. SKELTON. Fleet Finance, Inc. v. Skelton.

510 S.E.2d 76

235 Ga. App. 507

FARM & HOME LIFE INSURANCE COMPANY v. SKELTON.

Fleet Finance, Inc. v. Skelton.

Nos. A98A1218, A98A1219.

Court of Appeals of Georgia.

December 1, 1998.

Macey, Wilensky, Cohen, Wittner & Kessler, Susan L. Howick, Atlanta, for appellant (case no. 198A1218).

Womble, Carlyle, Sandridge & Rice, Nisbet S. Kendrick III, Atlanta, for appellant (case no. 198A1219).

Troutman Sanders, Richard W. Gerakitis, Cashin, Morton & Mullins, Harry L. Cashin, Jr., Atlanta, for appellee.

McMURRAY, Presiding Judge.

Fleet Finance, Inc. of Georgia ("Fleet") retained attorney John L. Skelton, Jr. to collect accounts receivable, consisting of several purchase money notes and security deeds ("the collateral debts"), which Fleet held as collateral for certain loans ("the capital loans"). Fleet agreed to pay attorney Skelton a 25 percent contingency fee, plus expenses. Attorney Skelton initiated collection proceedings and acquired consent judgments which required periodic payments to satisfy a number of the collateral debts. Upon receiving these installments, attorney Skelton disbursed 75 percent of the proceeds to Fleet and retained 25 percent as attorney fees.

When the capital loans were satisfied, Fleet was obliged to assign the accounts receivable to a subordinate creditor that held interests in the accounts receivable—Chris Herstam, Director of Insurance and Domiciliary Receiver of Farm & Home Life Insurance Company, an Arizona Corporation ("the Receiver"). The Receiver, however, did not retain attorney Skelton and a dispute arose over attorney Skelton's attorney fee liens (encumbering the Gilmer County, Gordon County and Murray County realty which secured the collateral debts) and attorney Skelton's retention of 25 percent of the consent judgment installment payments.

Attorney Skelton initiated a declaratory judgment action against the Receiver and Fleet in the Cobb County, Georgia Superior Court, seeking a declaration of his rights to assert liens for 25 percent of the consent judgment installment payments. The Receiver filed a counterclaim, pertinently alleging that attorney Skelton wrongfully clouded title to the Gilmer County, Gordon County, and Murray County realty that secured the collateral debts. The Receiver also filed a motion to dismiss, alleging that attorney Skelton's declaratory judgment action violated an Arizona order prohibiting the enforcement of any lien against the collateral debts.¹ The Receiver and Fleet later filed cross-motions for summary judgment and attorney Skelton filed a motion for a summary declaration of his rights.

The trial court denied the Receiver's motion to dismiss and denied Fleet's motion for summary judgment. The trial court partially granted summary judgment in favor of the Receiver by ordering the dissolution of attorney Skelton's attorney fee liens in Gilmer County, Gordon County, and Murray County, Georgia. The trial court, however, did not address the Receiver's defamation of title to realty counterclaim. The trial court granted summary judgment to attorney Skelton by declaring "that [attorney Skelton] may properly and legally enjoy all rights in and to his attorney fees incurred during his employment for Fleet wherein [attorney Skelton] secured installment judgments [and that attorney Skelton] has a right to twenty-five percent of the judgments he secured on behalf of Fleet." The Receiver appeals this order in Case no. A98A1218, and Fleet cross-appeals in Case no. A98A1219. Held:

"OCGA § 9-4-2(c) provides that a `(r)elief by declaratory judgment shall be available, notwithstanding the fact that the complaining party has any other adequate legal or equitable remedy or remedies.' However, it has been held that this provision `does not mean that a declaratory judgment (action) will lie to have just any justiciable controversy decided.' Reliance Ins. Co. v. Brooks Lumber Co., 101 Ga.App. 620, 621, 115 S.E.2d 271 (1960). `(T)he plaintiff must show facts or circumstances whereby it is in a position of uncertainty or insecurity because of a dispute and of having to take some future action which is properly incident to its alleged right, and which future action without direction from the court might reasonably jeopardize its interest.' Phoenix Assur. Co. v. Glens Falls Ins. Co., 101 Ga.App. 530, 532-533, 114 S.E.2d 389 (1960). `A declaratory judgment may not be granted in the absence of a justiciable controversy. (Cits.) "The object of the declaratory judgment is to permit determination of a controversy before obligations are repudiated or rights are violated. As many times pointed out by this court, its purpose is to permit one who is walking in the dark to ascertain where he is and where he is going, to turn on the light...