, LLC v. Walker

Decision Date08 December 2011
Docket NumberNo. S11G0417.,S11G0417.
Citation11 FCDR 3841,719 S.E.2d 489,11 FCDR 4001,290 Ga. 261
CourtGeorgia Supreme Court


Webb, Tanner & Powell, Robert Jackson Wilson, Lawrenceville, Owens, Clary & Aiken, Dana M. Campbell, Dallas, for appellant.

Samuel S. Olens, Atty. Gen., Amy C. Meyer Burns, Asst. Atty. Gen., Henry Abel Turner, Decatur, for appellee.

CARLEY, Presiding Justice.

Beginning in 2006, Carol Walker, who is a physician and a Georgia resident, sold nutritional supplements purchased from, LLC d/b/a AmeriSciences pursuant to an agreement which provided, among other things, that [a]ny disputes arising from the terms hereof or relating hereto will be brought in the state and/or federal court of Harris, Texas, the convenience of which I hereby recognize.” On February 5, 2009, Dr. Walker sent a written termination of the agreement and a demand that AmeriSciences repurchase certain unopened and unused products at a price not less than 90 percent of the original net cost pursuant to OCGA § 10–1–415(d)(1) of the Sale of Business Opportunities Act (SBOA). After expiration of the 30–day statutory waiting period provided in OCGA § 10–1–399(b) of the Fair Business Practices Act (FBPA), Dr. Walker filed a damage suit in the State Court of Gwinnett County on April 7, 2009 against AmeriSciences and three of the company's corporate officers (Appellants) under the FBPA for failure to disclose and comply with the repurchase requirements of OCGA § 10–1–415(d)(1). See OCGA § 10–1–417(b).

AmeriSciences previously had filed a declaratory judgment action on February 13, 2009 against Dr. Walker in a Harris County, Texas state court. On June 3, 2009, the Texas court entered a final default judgment declaring that any damage suit for failure to repurchase, whether brought pursuant to the Georgia FBPA or otherwise, is subject to the forum selection clause in the parties' contract, that this clause is enforceable, and that the filing of any such action in any forum other than Harris County, Texas constitutes a breach of contract.

Thereafter, the Georgia trial court granted summary judgment in favor of AmeriSciences, ruling that Dr. Walker's claims are subject to an enforceable forum selection clause and barred by res judicata. In the same order, the trial court also dismissed the individual defendants for lack of personal jurisdiction and held that, in any event, they are not subject to individual liability under the SBOA.

The Court of Appeals reversed, concluding that, because Dr. Walker's complaint was based on a statutory violation instead of a breach of contract, the contractual defense of a forum selection clause does not apply, and her claims are not barred by res judicata. Walker v., 306 Ga.App. 658, 660(1), 703 S.E.2d 100 (2010). After rejecting an alternative ground for summary judgment on which the trial court relied, the Court of Appeals also determined that the trial court had personal jurisdiction over the individual defendants even though they were present in Georgia only in their capacities as AmeriSciences officers, as they admittedly were founding members and top officers of a “multilevel distribution company” as defined by OCGA § 10–1–415 and generally knew Dr. Walker's cancellation rights thereunder, which apply to any agreement made in Georgia. Walker v., supra at 662–663(3), 703 S.E.2d 100. The Court of Appeals also held that the complaint was sufficient to state a claim against the individual defendants under the FBPA based on a violation of the SBOA. Walker v., supra at 663(3), 703 S.E.2d 100. We granted certiorari to consider Divisions 1 and 3 of the Court of Appeals' opinion.

1. Appellants contend that the Court of Appeals erred in failing to give res judicata effect to the earlier Texas declaratory judgment.

When jurisdictional issues such as the enforceability or applicability of a “choice of forum” clause are adjudicated in a foreign judgment, that judgment generally is not subject to collateral attack, but is entitled to full faith and credit and is conclusive between the parties and their privies as to all matters that were placed in issue or might have been placed in issue. Mid–Ga. Bandag Co. v. Nat. Equipment Rental, 164 Ga.App. 68, 69(2), 296 S.E.2d 391 (1982). See also Van Buskirk v. Great American Bank of Broward County, 175 Ga.App. 101, 102, 332 S.E.2d 394 (1985). We note that [a] collateral attack based on lack of personal jurisdiction is precluded only when the defendant has appeared in the foreign court and has had an opportunity to litigate the issue. [Cits.] Aqua Sun Investments v. Kendrick, 240 Ga.App. 671, 673(2), 524 S.E.2d 519 (1999).

(A) judgment is entitled to full faith and credit—even as to questions of jurisdiction—when the second court's inquiry discloses that those questions have been fully and fairly litigated and finally decided in the court which rendered the original judgment.” [Cits.]

Crosby v. Wenzoski, 164 Ga.App. 266, 270(2), 296 S.E.2d 162 (1982) (quoting Durfee v. Duke, 375 U.S. 106, 111, 84 S.Ct. 242, 11 L.Ed.2d 186 (1963)). The foreign judgment may not be entitled to full faith and credit when it is challenged on jurisdictional grounds in a collateral proceeding such that the jurisdictional issue has been ‘raised and tried out’ in the second court. Hoesch America v. Dai Yang Metal Co., 217 Ga.App. 845, 846(1), 459 S.E.2d 187 (1995) (quoting Baldwin v. Iowa State, etc., Assn., 283 U.S. 522, 525, 51 S.Ct. 517, 75 L.Ed. 1244 (1931) and Ins. Corp. v. Compagnie des Bauxites, 456 U.S. 694, 706, 102 S.Ct. 2099, 72 L.Ed.2d 492 (1982)). Under such precedent,

the only avenue available to [Dr. Walker] to relitigate the issue of whether the [Texas] court lacked personal jurisdiction over her ... is if the trial court [here] found that the issue was not fully and fairly litigated and finally decided in the [Texas] proceeding. [Dr. Walker] did not raise the issue of whether personal jurisdiction was fully and fairly litigated in the [Texas] proceeding in her [filings here in Georgia], she did not present evidence on that issue at trial, she did not ask the trial court to rule on that issue, and the trial court did not do so.

Sentinel Acceptance v. Hodson Auto Sales & Leasing, 45 S.W.3d 464, 469 (Mo.App.2001). ‘Issues never raised at trial will not be considered for the first time on appeal. (Cit.) [Cit.] Coweta County v. City of Senoia, 275 Ga. 707, 709(4), 573 S.E.2d 21 (2002). Dr. Walker has not challenged at trial or on appeal the general enforceability of the forum selection clause which may itself have formed the basis for the Texas court's exercise of personal jurisdiction over her. Instead, she has consistently challenged only the applicability of that clause to the Georgia action. In particular, she contends that the forum selection clause is a contractual term that does not apply to claims pursuant to Georgia statutes, such as the FBPA. However, the Texas court specifically ruled in its declaratory judgment that even a Georgia FBPA claim is subject to the forum selection clause.

Dr. Walker argues that the Texas judgment does not go to the merits of her FBPA claim and that it is contrary to the public policy of this state. In the first place, however, there is no public policy exception to the Full Faith and Credit Clause. “A valid judgment of a sister state must be accorded full faith and credit ‘even though such a judgment could not have been obtained in our own courts because the underlying contract is void as against the state's public policy.’ [Cits.] Boyer v. Korsunsky, Frank, Erickson Architects, 191 Ga.App. 549, 550, 382 S.E.2d 362 (1989). See also Baker v. Gen. Motors Corp., 522 U.S. 222, 233(II)(A), 118 S.Ct. 657, 139 L.Ed.2d 580 (1998) (public policy can guide determination of law applicable to a controversy, but “no roving ‘public policy exception’ to the full faith and credit due judgments (emphasis in original)); Cannon v. Cannon, 244 Ga. 299, 260 S.E.2d 19 (1979). Furthermore, the Texas judgment does go to the merits of, and adversely controls, Dr. Walker's claim that the forum selection clause is inapplicable to an FBPA claim. Therefore, she is barred by the Texas judgment from filing an FBPA claim against AmeriSciences in this state, and a Georgia court cannot make its own determination regarding whether the forum selection clause precludes the filing of an FBPA claim in Georgia.

2. However, this conclusion does not resolve the question of whether the State Court of Gwinnett County had personal jurisdiction over the individual defendants. See Keeton v. Hustler Magazine, 465 U.S. 770, 781, fn. 13, 104 S.Ct. 1473, 79 L.Ed.2d 790 (1984); Apparel Resources Intl. v. Amersig Southeast, 215 Ga.App. 483, 485(1), 451 S.E.2d 113 (1994). Therefore, we proceed to that issue next. Even though the Texas default judgment must be given full faith and credit, we still have to address the issues involving the individual defendants considered in Division 3 of the Court of Appeals' opinion, but only those issues, since the trial court has not yet addressed any other basis for dismissing the individual defendants.

Appellants contend, and the trial court held, that a nonresident individual cannot be subject to personal jurisdiction in Georgia courts based solely upon acts taken in his capacity as a corporate officer. This contention describes what is commonly known as the “fiduciary shield” doctrine, which has come under increasing criticism and been rejected by a number of courts. 3A William Meade Fletcher, Fletcher Cyc. Corp. § 1296.20; Sonja Larsen, Annotation, Validity, construction, and application of fiduciary shield” doctrine-modern cases, 79 A.L.R.5th 587 (2000); 21 CJs Courts § 67. Indeed, in light of Calder v. Jones, 465 U.S. 783, 790, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984) and Keeton v....

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