Am. Radiosurgery, Inc. v. Rakes
| Decision Date | 22 November 2013 |
| Docket Number | No. A13A1197.,A13A1197. |
| Citation | 325 Ga.App. 161,751 S.E.2d 898 |
| Parties | AMERICAN RADIOSURGERY, INC. et al. v. RAKES. |
| Court | Georgia Court of Appeals |
OPINION TEXT STARTS HERE
Aaron B. Chausmer, Atlanta, for Appellants.
Fried & Bonder, Joseph Alan White, Katz, Stepp, Wright & Fleming, Robert J. Fleming, Atlanta, for Appellee.
Bruce Rakes sued American Radiosurgery, Inc. (ARI) and its chairman and chief executive officer, John Clark, seeking damages under various theories in connection with a contract of employment executed by Rakes and ARI. Because the defendants thereafter failed to timely file responsive pleadings and respond to discovery requests, the trial court granted an initial default judgment, which default was subsequently opened; granted partial summary judgment against ARI, which ruling rested at least partly upon an unanswered request for admissions; and struck the defendants' answer as a sanction for discovery abuse, entering a default judgment regarding liability as to both defendants. After a hearing on damages, the court entered final judgment against ARI and Clark jointly and severally. Contested in this appeal are the partial summary judgment, the sanction of striking the answer, and the final judgment. For reasons that follow, we affirm in part and vacate in part, and remand the case.
On March 21, 2008, Rakes filed a verified complaint that alleged the following. ARI was engaged in the business of marketing and selling a neurosurgical device used to treat brain tumors known as the “Rotating Gamma System.” A key component of the device was a software application that aided in the targeting and radiation prescription used by the device. Rakes was a physicist and software engineer, who previously had helped develop a software application for a device similar to the Rotating Gamma System. For that prior work, Rakes had become well known and highly regarded in his field.
As Rakes's complaint continued, Rakes and ARI entered into an “Employment Agreement” that commenced in March 2004 and continued “until ... such time as terminated by either party giving the other at least one month written notice.” Pursuant to their Agreement, Rakes would perform duties as the company's “Director, Software Development” and would also serve as a company officer. His compensation included a specified annual salary; a “completion bonus,” which was to be paid upon the first “successful installation and operation of the first paid [Rotating Gamma System] using [the software application]”; and “ongoing royalty” of a designated amount for each Rotating Gamma System placed with a client. Also, the Agreement stated that ARI would “pay or reimburse” Rakes for expenses he incurred in connection with his employment.
Rakes further alleged that, during the course of his employment with ARI, the company failed to pay and reimburse him monies owed. Nevertheless, Rakes continued working on the software application until April 2007, when it was substantially complete. At that time, ARI owed him for, inter alia, outstanding salary, unpaid bonuses, and unreimbursed expenses. In June 2007, ARI terminated its relationship with Rakes. Since that time, ARI had installed a Rotating Gamma System in at least one hospital and had supplied the software application for another Rotating Gamma System. Meanwhile, ARI had disregarded Rakes's demands to be paid the amounts owed him, as well as his demands to discontinue holding him out as a company officer in the company's marketing materials.
In his complaint, Rakes sought to recoup monies under theories of recovery including breach of contract and misappropriation of name and likeness. Rakes also pursued attorney fees and litigation expenses under OCGA § 13–6–11. And Rakes alleged that Clark had disregarded and abused the corporate form, and consequently was personally liable for any judgment entered against ARI.
Affidavits of a process server show that ARI and Clark (personally and in his capacity as ARI's agent) were personally served on April 10, 2008 with the complaint, summons, and numerous discovery requests. When neither ARI nor Clark filed an answer within the statutory period,1 the trial court granted Rakes a “default judgment against Defendants on liability and judgment on all claims” on June 5, 2008.2 Within a week, the defendants filed a verified answer and a motion to open default, wherein they claimed, inter alia, that they had not been served with process. After a hearing, the trial court granted on August 20, 2009 the defendants' motion to open default; the court noted Clark's claim that he had received the complaint (in his personal or corporate agent capacity) in the mail, but stated that it was “not specifically ruling upon the defense of proper [sic] service of process.”
On September 23, 2009, Rakes filed a motion for partial summary judgment on his breach of contract claim against ARI, asserting that the company had failed to respond to his request for admissions that had been served with the complaint over a year earlier. Rakes argued that the admissions thereby made conclusively established that ARI was liable to him for failing to pay him as agreed and that only the amount of damages needed to be determined.
On September 30, 2009, Rakes filed a motion to strike the defendants' answer for failure to respond to the discovery requests. He asserted that, along with the complaint and respective summonses, each defendant had been served with discovery requests, and that ARI had also been served at that time with a request for admissions.
On October 26, 2009, ARI responded to the summary judgment motion, asserting that Rakes had failed to show that he had served the request for admissions. ARI pointed out that the process server's affidavit did not list any request for admissions. Rather, the affidavit had enumerated as documents served: “S & C; Ntc of Filing of Verification; 1st Requests for Prod. to Clark & ARI; 1st Interr. to Clark,” which ARI understood as referring to “the Summons and Complaint, Interrogatories and Requests for Production of Documents.” Moreover, ARI reasserted on Rakes's motion for summary judgment that it had never been served with process, citing Clark's affidavit that had been attached to the defendants' motion to open default, wherein Clark averred:
I was not personally served in my individual capacity, but rather only received the complaint and summons via U.S. mail.... I was not personally served in my capacity as registered agent for the corporation, but rather only received the complaint and summons via U.S. Mail.
ARI acknowledged, however, that it had “actual notice” of Rakes's request for admissions “by at least June 11, 2008, over a year ago.” But it “denie[d] any inference that it was properly served with the disputed Requests for Admissions.”
On November 2, 2009, ARI and Clark responded to Rakes's motion to strike their answer. In their response, they stated that “neither Defendant has received the disputed Interrogatories or Requests for Production of Documents that are referenced in Plaintiff's Motion to Strike” and that:
Defendants have denied ever being personally served with the Complaint. The defective service of the Complaint cannot become the basis for service of the disputed discovery requests. There is no evidence that the discovery requests were ever properly served on either Defendant. Plaintiff has not alleged that the discovery requests were ever served in any other manner other than the alleged and disputed service with the Complaint. This Court should permit this case to be decided on the merits.3
A few days later, ARI mailed its response to Rakes's request for admissions. And on November 6, “[o]ut of an abundance of caution,” ARI filed a motion for leave to withdraw answers deemed admitted, maintaining that Rakes had not properly served it any request for admissions.
Rakes countered ARI's motion for leave, filing his attorney's affidavit stating that the lawyer had hired a process server to personally serve ARI and Clark, and that the documents counsel gave to the process server were the complaint, a summons to each defendant, interrogatories to ARI, interrogatories to Clark, a request for production of documents to each defendant, and requests for admissions to ARI. Further, the lawyer averred, he had not mailed any such documents to ARI or to Clark.
The record shows that, thereafter, on December 7, 2009, ARI responded to Rakes's interrogatories, Clark responded to Rakes's interrogatories, and both defendants responded to Rakes's request for production of documents.
Subsequently, the trial court entered the three orders contested in this appeal. In the first order, entered on December 16, 2009, the trial court granted Rakes's motion for partial summary judgment against the company. In the second order, entered on March 25, 2011, the trial court granted Rakes's motion to strike the defendants' answer and for entry of default judgment against them as to liability. When the court convened a hearing on the issue of damages on August 10, 2011, defendants' counsel reported to the court that he had filed earlier that morning “Defendants' Motion to Open Default and to Vacate Order Filed March 25, 2011.” Further, defendants' counsel stated that the defendants were not asking for a continuance and announced “ready to proceed with the damages hearing.” Accordingly, Rakes testified regarding damages and presented evidence as to attorney fees and litigation expenses.
On June 20, 2012, the trial court entered the third order challenged in this appeal. By final judgment, the court denied the defendants' motion to open default and vacate order, and awarded to Rakes damages for the breach of contract claim, prejudgment interest on the breach of contract damages award, damages for misappropriation of name and likeness, as well as attorney fees and litigation expenses.
1. ARI challenges the grant of partial summary judgment entered against it...
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