Barnett v. Holt Builders, LLC.

• Decision Date: 08 June 2016
• Docket Number: A16A0340
• Citation: 790 S.E.2d 75,338 Ga.App. 291
• Parties: Barnett v. Holt Builders, LLC.
• Court: Georgia Court of Appeals

338 Ga.App. 291

790 S.E.2d 75

Barnett

v.Holt Builders, LLC.

A16A0340

Court of Appeals of Georgia.

June 8, 2016

Reconsideration Denied July 26, 2016

Aaron Marcus Kappler, Norcross, for Appellant.

Gerald Davidson Jr., Lawrenceville, Joshua Paul Johnson, Monroe, Steven Arnold Pickens, Lawrenceville, Christopher Douglas Holbrook, for Appellee.

McMillian

, Judge.

Ken Barnett appeals the trial court's order denying his motion to dismiss this defamation action filed by Holt Builders, LLC (“Holt”). For the reasons set forth below, we find that the motion to dismiss should have been granted and reverse.

Before addressing the procedural posture of this case, it is helpful to briefly set out the facts of the underlying litigation giving rise to Holt's defamation action. In 2005, Vintage Communities, Inc. (“Vintage”) borrowed money from Bank of North Georgia (“BNG”) to develop Stonewater Creek subdivision (the “Subdivision”), a gated development with 124 lots planned in the initial phase. Vintage executed a deed to secure debt in favor of BNG in connection with that loan. Vintage also executed a construction deed to secure debt in favor of Integrity Bank, pledging additional property that was intended to comprise a future phase of the Subdivision. In 2007, Vintage recorded the Declaration of Covenants for Stonewater Creek (the “Declaration”) in Gwinnett County, naming itself the Declarant.¹

In 2009, Vintage defaulted on its loan to BNG, and BNG took title to 62 vacant lots in the Subdivision.² Holt subsequently purchased those lots from BNG, as well as three additional lots, for a total of 65 lots. Four days later, Vintage executed an “Assignment of Declarant's Rights With Reservation of Annexation Right” to Holt, which was filed and recorded in Gwinnett County. At that time, only eight houses were occupied, and the roads, clubhouse, and swimming pool remained unfinished.

In 2010, Holt appointed Corbitt Woods and Reiner Rietig as members of the board of directors of the Stonewater Creek Homeowners Association (the “HOA”) and Chafin as the board's president.³ Holt then oversaw the completion of the Subdivision's amenities, including the clubhouse, tennis courts, and swimming pool, and many of the streets. In order to fund that construction, Holt opened a $625,000 line of credit, secured by the lots it had purchased from BNG. Holt, in turn, loaned over $532,000 to the HOA (the “Loan”) to be repaid in part by the annual HOA fees and a special $6,000 fee assessed on each new lot completed.

In May 2014, non-party BCR Investments, LLC, a company affiliated with Holt, filed an application to rezone property adjacent to the Subdivision with the intent to annex that property into the Subdivision. Shortly thereafter, Barnett and eight other residents (collectively the “Residents”) filed a derivative suit for the benefit of the HOA against Holt and Chafin, asserting claims for breach of fiduciary duty, declaratory relief, and injunctive relief and seeking punitive damages and attorney fees (the “Litigation”). In August 2014, the Superior Court of Gwinnett County entered a temporary restraining order enjoining Holt from making further HOA payments on the Loan and from proceeding with the annexation of adjacent property.⁴ Following discovery, the parties filed cross-motions for partial summary judgment, seeking a declaratory judgment that Holt is not a Declarant under the Subdivision's Declaration and therefore does not have the authority to annex any additional property into the Subdivision.⁵

As this Litigation proceeded, Holt and Chafin employed various methods of updating the Subdivision's homeowners regarding the status of the Litigation. For example, on November 7, 2014, Homeowner Management Services (“HMS”)⁶ sent a letter to the Subdivision's homeowners on behalf of the Subdivision's board of directors, of which Chafin was the president, discussing the status of the ongoing Litigation in which “a group of members in the [HOA] is pursuing a lawsuit against the [HOA], its President, the Declarant, and others.” The letter enclosed correspondence from defense counsel to Chafin regarding the status of the Litigation and criticisms of the Residents' claims and tactics. And on February 20, 2015, HMS sent an email message on behalf of the HOA's board of directors with several updates, including commentary on the HOA's recent bill for legal fees relating to the Litigation and settlement negotiations:

The first update pertains to the lawsuit filed by several members against the Association, et al.

The Association received a bill for $17,098 for the Association's share of recent legal fees relating to the suit. This is in addition to the amount discussed at the annual meeting. This bill has been paid and will be reflected in the February financials. For perspective, the legal cost last month will consume 100% of 14 annual assessments, and is nearly double the annual pool budget. This would also pine straw the entire common area twice with a bit of money left over.

The recent attempt by the Association and other defendants to settle this were rejected without comment from the Plaintiffs. The Board sincerely hopes that this is resolved quickly and at the smallest cost possible to the Association. It has cost too much already. We will keep the members apprised of future costs and activities relating to this ongoing issue.

Several days later, HMS sent another email to homeowners entitled “Response to Questions from Eblast On Friday 2.20.15,” which attached a list of the Residents who were plaintiffs in the Litigation. The email also stated that the “[HOA]'s share alone of the legal fees thus far is in excess of $70,000 since the choice was made by the Plaintiffs to sue the Association among others.” Later that day, Barnett responded to HMS and all of the email's original recipients using the “reply all” function of the email in what he maintains was an attempt to clarify the misleading statements made by HMS on behalf of the board of directors. In his reply, Barnett attempted to explain the role of the HOA in the derivative lawsuit and the Residents' attempts to engage in settlement discussions with Holt and Chafin and attached various items of correspondence between counsel regarding these issues.

On March 11, 2015, Holt filed a defamation suit against Barnett, asserting claims for libel and slander and seeking punitive damages and attorney fees. The only statements specifically referenced in the complaint arise from Barnett's February 23, 2015 email that “[Holt] want(s) to continue to siphon off our money to pay for their development costs, legal costs, and other costs associated with them running their business” and that Holt was using HOA funds to pay its own legal expenses.⁷ Barnett filed his answer on March 17, 2015, asserting as a defense that Holt failed to include “the certifications required by Georgia law for claims asserted against Barnett related to his actions in furtherance of his right to free speech in connection with an issue of public interest or concern.” On April 2, 2015, Barnett moved to dismiss Holt's complaint for its continued failure to file the verification required under OCGA § 9–11–11.1

. Following a hearing, the trial court denied Barnett's motion to dismiss, finding that Holt's suit is not subject to the requirements of OCGA § 9–11–11.1.⁸

In his sole enumeration of error, Barnett asserts that the trial court erred in denying the motion to dismiss because his communication regarding the Litigation was protected under Georgia law. We review de novo the denial of a motion to dismiss. See, e.g., Emory University v. Metro Atlanta Task Force for the Homeless, Inc. , 320 Ga.App. 442, 443, 740 S.E.2d 219 (2013)

. The purpose of OCGA § 9–11–11.1, Georgia's anti-SLAPP (Strategic Lawsuits Against Public Participation) statute, is

to encourage citizen participation in matters of public significance through the exercise of the right of free speech and the right to petition the government for redress of grievances, and to prevent their valid exercise from being chilled through abuse of the judicial process.

Atlanta Humane Society v. Harkins , 278 Ga. 451, 452, 603 S.E.2d 289 (2004)

. To prevent such abuse, the statute requires any claim that could reasonably be construed as infringing upon these rights to be accompanied by a detailed verification and specifies the circumstances under which the verification must be filed:⁹

For any claim asserted against a person or entity arising from an act by that person or entity which could reasonably be construed as an act in furtherance of the right of free speech or the right to petition government for a redress of grievances under the Constitution of the United States or the Constitution of the State of Georgia in connection with an issue of public interest or concern, both the party asserting the claim and the party's attorney of record, if any, shall be required to file, contemporaneously with the pleading containing the claim, a written verification under oath....

OCGA § 9–11–11.1 (b)

. See also Harkins , 278 Ga. at 452–53(1), 603 S.E.2d 289 (“To accomplish these purposes, the crucial statutory provision is OCGA § 9–11–11.1 (b).”) (citation and punctuation omitted). Although the statute allows a 10–day safe harbour for the claimant to provide the necessary verifications after the omission is called to his attention,¹⁰ it is undisputed that Holt has not filed any verification.

Holt maintains, and the trial court agreed, that his complaint is not subject to the anti-SLAPP statute because the claims asserted by the Residents in the Litigation do not involve “an issue of public interest or concern” as required by the statute. We disagree. Subsection (c) of OCGA § 9–11–11.1

defines the term “act in furtherance of the right of free speech or the right to petition government for a redress of grievances under the Constitution of the United States or the Constitution of the State of Georgia in...