All Fleet v. West Georgia Nat. Bank

• Decision Date: 07 July 2006
• Docket Number: No. A06A0825.,A06A0825.
• Parties: ALL FLEET REFINISHING, INC. et al. v. WEST GEORGIA NATIONAL BANK.
• Court: Georgia Court of Appeals

280 Ga. App. 676

Page 802

634 S.E.2d 802

ALL FLEET REFINISHING, INC. et al. v. WEST GEORGIA NATIONAL BANK.

No. A06A0825.

Court of Appeals of Georgia.

July 7, 2006.

Reconsideration Denied July 26, 2006.

COPYRIGHT MATERIAL OMITTED

H.L. Cromartie III, Rome, for appellants.

Sutherland, Asbill & Brennan, Richard L. Robbins, Andrew W. Broy, Atlanta, for appellee.

RUFFIN, Chief Judge.

West Georgia National Bank ("the Bank") brought an action against All Fleet Refinishing, Inc., Joel Walker, and Patricia Walker (collectively, "All Fleet"), alleging claims for conversion of collateral, interference with contract, and for collection on promissory notes.¹ All Fleet counterclaimed, asserting multiple causes of action. The parties filed cross-motions for summary judgment. The trial court granted the Bank's motion, disposing of all counterclaims, and it denied All Fleet's motion. In 17 enumerations of error, All Fleet appeals.² For reasons discussed below, we affirm.

A trial court properly grants a motion for summary judgment when there is no genuine issue of material fact and the movant demonstrates entitlement to judgment as a matter of law.³ We review, de novo, a grant of summary judgment, viewing the evidence, and all reasonable conclusions and inferences drawn therefrom, in a light most favorable to the nonmovant.⁴

Viewed in this manner, the record establishes that, beginning in 1997, the Bank made several loans to All Fleet, totaling approximately $500,000.⁵ Joel and Patricia Walker, the sole owners of All Fleet, personally guaranteed the loans. In July 1997, the Bank filed a UCC-1 Financing Statement, establishing itself as a secured creditor and asserting security interests in All Fleet's "business accounts receivable, inventory, contract rights and general intangibles now owned and hereafter acquired."

All Fleet began to experience financial difficulties, which it attributed to a commercial tort allegedly committed against it by a former employee named Brandenburg. As a result, All Fleet had difficulty meeting its loan obligations. Rather than declaring All Fleet in default, the Bank attempted to work with All Fleet and accepted interest only payments, extended due dates, and continued to extend credit. As of April 2001, however, All Fleet was apparently unable to make even the interest only payments.

All Fleet filed suit against Brandenburg and ultimately obtained a judgment of over $300,000 ("Brandenburg judgment"). Pursuant to the UCC-1 Financing Statement, the Bank claimed an interest in the proceeds from the Brandenburg judgment. The Bank, through its attorney, sent letters to All Fleet's counsel and the Walkers, notifying them that it claimed such interest. In one such letter to Mr. Walker, the Bank wrote,

[w]e remind you that the sale or disposition of encumbered collateral would constitute the criminal act of theft by conversion under Georgia law, and that any agreement or arrangement entered into with the intent to deprive a creditor of its collateral will constitute a criminal conspiracy under Georgia law. The Bank intends to prosecute any person or entity that may engage in any such acts with respect to the Bank's collateral.

Notwithstanding the Bank's claim to the proceeds from the tort judgment, none of the proceeds was paid to the Bank. Rather, All Fleet distributed over $100,000 to its attorneys, paid an unsecured creditor $50,000, and retained the balance of the proceeds. At some point, the Bank and All Fleet discussed an agreement in which All Fleet agreed to give the Bank $60,000 from the Brandenburg judgment—and confirm a security interest therein—in exchange for the Bank's forbearance on collecting the debt. On October 19, 2001, the Bank gave the Walkers a document, which reflected the agreement. Because the Bank officers believed the Walkers were refusing to sign it, the Bank withdrew the agreement on October 24, 2001. On October 26, 2001, the Walkers signed the document. However, the Walkers never attempted to tender payment in accordance with this alleged agreement. In 2002, the Bank began foreclosure proceedings pursuant to the promissory notes and security agreements. These proceedings were stopped when the Walkers and All Fleet filed for bankruptcy.

The Bank subsequently filed suit against All Fleet and the Walkers, who counterclaimed for multiple alleged torts including RICO violations, intentional infliction of emotional distress, intentional interference with business relations, wrongful foreclosure, slander of title, defamation, and invasion of privacy. After the Bank moved for partial summary judgment, the trial court dismissed all counterclaims asserted by All Fleet. This appeal ensued.

1. According to All Fleet, the trial court improperly granted summary judgment without considering certain deposition transcripts. Specifically, All Fleet maintains that the court erroneously considered only excerpts from depositions that the Bank attached to its motion for summary judgment, instead of the entire deposition transcript that purportedly revealed disputes of fact. Although All Fleet attempted to supplement the record to include the additional transcripts, it did not do so until after the trial court ruled on the summary judgment motion. This presents no basis for reversal.

Pursuant to OCGA § 9-11-56(a), motions for summary judgment may be served "at any time after the expiration of 30 days from the commencement of the action." The trial court then bases its ruling on "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits."⁶ "The burden of timely filing depositions and other discovery material with the trial court lies with the party [that] seeks to rely upon it."⁷ Here, oral argument on the motion for summary judgment was conducted on May 11, 2005. The trial court ruled on the motion by order dated June 28, 2005. By All Fleet's own admission, it did not file the transcripts until July 1, 2005. And the trial court cannot be faulted for failing to consider deposition transcripts that were not in the record at the time of its ruling on summary judgment.⁸

2. In three enumerations of error, All Fleet asserts the trial court erred in granting summary judgment on its RICO claim. "To establish liability for a RICO violation, [All Fleet] must establish a pattern of racketeering activity."⁹ "A `pattern' means engaging in at least two incidents of racketeering activity, which is defined as the commission of a crime in any of 37 specified categories of offenses."¹⁰ Here, All Fleet alleges that the Bank engaged in attempted extortion, attempted theft by deception, conversion, mail fraud, wire fraud, and perjury. Upon reviewing the actual record citations provided by All Fleet, it is apparent that all of these allegations stem from the Bank's actions in asserting a security interest in the Brandenburg judgment.

Although All Fleet does not articulate its position well on appeal, it seems that the crux of its argument is that, under the Georgia UCC, the Bank could not legally have asserted a claim in the proceeds from the Brandenburg judgment.¹¹ Thus, under All Fleet's reasoning, all of the actions the Bank took in this regard were illegal. It does not appear that there is any Georgia case on point. However, courts from other jurisdictions have addressed this issue and reasoned that, once a tort claim has been reduced to a contractual obligation to pay, the payment becomes a "payment intangible" in which a creditor may assert an interest.¹²

Pretermitting whether that is the case in Georgia, we find that the Bank at the very least had a cognizable claim to the proceeds from the Brandenburg judgment. And given the existence of a cognizable claim, we fail to see how the Bank's actions in asserting such claim could be considered predicate acts for purposes of civil RICO violations. The General Assembly enacted the RICO statutory framework to deter criminal conduct and "to impose sanctions against those who violate [RICO] and to provide compensation to persons injured or aggrieved by such violations." It does not appear that the intent of the General Assembly was "that isolated incidents of misdemeanor conduct or acts of civil disobedience be prosecuted under this chapter."¹³ We do not find that the legislature intended to proscribe the conduct alleged here—a Bank's attempts to secure payment of a debt through legal means.¹⁴ Accordingly, we find no error in the trial court's ruling that All Fleet failed "to offer evidence of `a pattern of racketeering' to support a RICO claim."

In a related argument, All Fleet asserts that the Bank "merely presented argument in the nature of a motion to dismiss alleging that [All Fleet's] allegations were not sufficient, and the trial court erred to the extent it required [All Fleet] to produce evidence in response to [ the Bank's] legal arguments." All Fleet cites Bruno's Food Stores v. Taylor¹⁵ for the proposition that, on motion for summary judgment, the nonmovant is not required to produce evidence unless the movant—here, the Bank—first presents evidence to pierce its pleadings. All Fleet, however, misconstrues this case, which makes clear that a defendant may pierce the plaintiff's pleadings and establish entitlement to summary judgment simply "by showing that no jury issue exists as to an essential element of the plaintiff's claim."¹⁶ In other words, a defendant need only point to the absence of evidence to support an essential element of the plaintiff's claim.¹⁷ The burden of production then shifts to the plaintiff—in this instance, All Fleet—to present evidence sufficient to create a factual issue.¹⁸

Here, all of All Fleet's RICO allegations stem from the Bank's allegedly illegal conduct in asserting a nonexistent security interest in the Brandenburg judgment. Thus, the Bank met its burden on summary judgment by contending that it had a valid interest in those proceeds. To refute...