Boyd v. Johngalt Holdings, LLC

• Decision Date: 03 March 2014
• Docket Number: No. S13A1429.,S13A1429.
• Citation: 294 Ga. 640,755 S.E.2d 675
• Court: Georgia Supreme Court
• Parties: BOYD et al. v. JOHNGALT HOLDINGS, LLC et al.

294 Ga. 640

755 S.E.2d 675

BOYD et al.

v.JOHNGALT HOLDINGS, LLC et al.

No. S13A1429.

Supreme Court of Georgia.

March 3, 2014.

Francis X. Moore, FAtlanta, Lindsey Walker Hillis, Hillis, Robison & Coffelt, Atlanta, for appellants.

David H. Flint, Schreeder, J. Carole Thompson Hord, Schreeder, Wheeler & Flint, LLP, Atlanta, for appellees.

BLACKWELL, Justice.

This case concerns title to a small parcel of commercial property in Fulton County. Nathaniel and Lucy Boyd once owned the property, but according to the tax commissioner, they failed to pay their taxes,¹ and as a result, the property was sold in 1998 to National Tax Funding at a tax sale.² The next year, National Tax gave its tax deed to Southeast Diversified Development, Inc., and Southeast Diversified gave a promissory note and deed to secure debt back to National Tax. That security deed later was assigned to JohnGalt Holdings, LLC. Southeast Diversified eventually defaulted on the promissory note, and JohnGalt foreclosed on its security deed.

In the meantime, the Boyds had made efforts to redeem the property.³ Before Southeast Diversified defaulted on the note, the Boyds entered into an agreement with Southeast Diversified, by which the Boyds were to make periodic payments to Southeast Diversified to redeem the property. The Boyds, however, failed to make all of the payments required under this agreement. After JohnGalt foreclosed on its security deed, JohnGalt gave notice to the Boyds of its intent to foreclose their right of redemption, and the Boyds entered into a new agreement with JohnGalt, by which the Boyds were to make periodic payments to JohnGalt to redeem the property. Again, the Boyds failed to make all of the payments required under their agreement with JohnGalt. Accordingly, in 2004, JohnGalt gave notice to the Boyds that they had defaulted and that their right of redemption was foreclosed. The Boyds then attempted to rescind their agreement with JohnGalt.

In 2005, the Boyds sued JohnGalt for trespass and ejectment, contending that they had redeemed the property. JohnGalt promptly answered the suit, but it did not then assert a counterclaim to quiet title. About three years later, JohnGalt sought leave to amend its pleadings and assert such a counterclaim, and the trial court gave it leave to do so. Upon the assertion of the counterclaim to quiet title, the trial court appointed a special master. The Boyds then filed a motion to dismiss the counterclaim, and JohnGalt filed a motion for summary judgment on the counterclaim. In 2009, the special master made his report, concluding that JohnGalt had good title to the property by virtue of its foreclosure of the right of redemption. The trial court adopted the report of the special master and entered a judgment that quieted title in favor of JohnGalt. From that judgment, the Boyds appeal, asserting several claims of error.⁴ We see no error, however, and we affirm the judgment below.

1. First, the Boyds contend that the trial court abused its discretion when it allowed JohnGalt to assert its counterclaim to quiet title three years after its original responsive pleading was filed. “When a pleader fails to set up a counterclaim through oversight, inadvertence, or excusable neglect, or when justice requires, he may by leave of court set up the counterclaim by amendment.” OCGA § 9–11–13(f). JohnGalt has never argued “oversight, inadvertence, or excusable neglect.” But “when justice requires” “furnishes an independent ground for setting up an omitted counterclaim. Thus, a trial court should grant leave to set up an omitted counterclaim ‘when justice ... requires' even though the other grounds, ‘oversight, inadvertence, or excusable neglect’ are not present.” White v. Fidelity Nat. Bank, 188 Ga.App. 539, 540(1), 373 S.E.2d 640 (1988) (citation omitted). See also McKesson HBOC v. Adler, 254 Ga.App. 500, 505(4), 562 S.E.2d 809 (2002). “The determination of whether justice requires the grant of leave to set up an omitted counterclaim is a matter which addresses itself to the sound discretion of the trial court.” Hampton Island v. Asset Holding Co. 5, 320 Ga.App. 880, 884(2), 740 S.E.2d 859 (2013) (citation and punctuation omitted). Moreover, because the failure to plead a compulsory counterclaim can result in loss of that counterclaim forever, the courts generally should be forgiving when leave is sought to add compulsory counterclaims, at least so long as the plaintiff makes no showing of prejudice. Williams v. Buckley, 148 Ga.App. 778, 779(1), 252 S.E.2d 692 (1979); Kitchens v. Lowe, 139 Ga.App. 526, 527–528(1), 228 S.E.2d 923 (1976). See also 6 Wright, Miller, Kane, Marcus & Steinman, Federal Practice & Procedure § 1430 (3d ed.).

As the Boyds concede, the counterclaim of JohnGalt to quiet title is a compulsory counterclaim in this case. See OCGA § 9–11–13(a). And title to the property always has been an important issue in this case, insofar as the issue was presented squarely by the claims of the Boyds for trespass and ejectment, as well as by an earlier counterclaim of JohnGalt for trespass. As the trial court observed, a cause of action for quiet title had been “implicit throughout this case.” See OCGA § 23–3–44 (“Proceedings quia timet may be used to remove clouds on title caused by equities of redemption following tax sales....”). Given the nature of their own claims, the defenses asserted by JohnGalt against those claims, and the original counterclaim of JohnGalt, the Boyds were not surprised or prejudiced unfairly by the late assertion of a counterclaim to quiet title. See Kitchens, 139 Ga.App. at 529(1), 228 S.E.2d 923. See also White, 188 Ga.App. at 540(1), 373 S.E.2d 640. The Boyds had ample time to respond to the late counterclaim. See Kitchens, 139 Ga.App. at 529(1), 228 S.E.2d 923. And permitting the assertion of the late counterclaim fostered judicial economy. See Daniel v. Daniel, 250 Ga.App. 482, 486(3), 552 S.E.2d 479 (2001). That the counterclaim was asserted only after the case had appeared on trial calendars, and that it was not included in the consolidated pretrial order, certainly cuts against allowing the late amendment, but these circumstances alone are not dispositive. See White, 188 Ga.App. at 541(1), 373 S.E.2d 640. Considering all of the circumstances, we cannot say that the trial court abused its considerable discretion when it gave JohnGalt leave to assert its omitted counterclaim to quiet title.⁵ See Daniel, 250 Ga.App. at 486(3), 552 S.E.2d 479; White, 188 Ga.App. at 541(1), 373 S.E.2d 640; Williams, 148 Ga.App. at 779(1), 252 S.E.2d 692; Kitchens, 139 Ga.App. at 529(1), 228 S.E.2d 923. Cf. Eudaly v. Valmet Automation (USA), 201 Ga.App. 497, 498(1), 411 S.E.2d 311 (1991) (where it was “neither fair nor expeditious” to allow late counterclaims after the court's deadline for motions while using that same deadline as the basis for denying the plaintiff an opportunity to make any discovery as to the late counterclaims).

2. The Boyds complain that the trial court appointed a special master and required the parties to appear before him “for all further proceedings,” without prior notice or opportunity to be heard. But the appointment of a special master was mandatory, and notice and a hearing were therefore unnecessary, because OCGA § 23–3–43 says that where, as here, the plaintiff in a conventional quiet title action requests a special master, “the court, upon receipt of the complaint, shall submit the same to a special master....” (Emphasis supplied.) See also Stephens v. Dept. of Transp., 170 Ga.App. 784, 786(1), 318 S.E.2d 167 (1984) (statute providing that the superior court “shall make an order requiring” appearance “at a hearing before a special master” means that upon invocation of the statute, “[t]he superior court's ex parte appointment of a special master is required ”) (emphasis in original). As to the authority of the special master, OCGA § 23–3–66 provides in pertinent part that

... the special master shall have complete jurisdiction within the scope of the pleadings to ascertain and determine the validity, nature, or extent of petitioner's title and all other interests in the land, or any part thereof, which may be adverse to the title claimed by the petitioner, or to remove any particular cloud or clouds upon the title to the land and to make a report of his findings to the judge of the court....

So, the special master is authorized to handle every aspect of the quiet title claim. The trial court surely had this in mind when it required the parties to appear before the special master “for all further proceedings.” And the special master understood that his jurisdiction was limited to the quiet title counterclaim, as he said in his report that “the only matter before the Special Master is JohnGalt's Counterclaim for Quiet Title as to the Boyds.” Consequently, we see no error in the trial court's order appointing a special master.

3. After his appointment, the special master entered a scheduling order that included a deadline for any motions to disqualify. The Boyds claim that this order required the parties to initiate disqualification, and it thereby shifted to the parties the special master's statutory, ethical, and constitutional obligations to self-report disqualifying matters. Although the Boyds timely objected to the appointment of a special master, they have not noted any timely objection to the scheduling order. Indeed, it appears that they did not object to the scheduling order either at the time of its entry or during the special master proceedings that followed, and they have, therefore, waived their objection to that order. See In re Adams, 292 Ga. 617(1), 740 S.E.2d 134 (2013); Spencer v. State, 259 Ga.App. 664, 666, 577 S.E.2d 817 (2003). In any event, the setting of a deadline for the parties to file motions to disqualify does not violate any statute or rule. See Uniform Superior Court Rule 25.3. See also Birt v. State, 256 Ga....