Carrier 411 Servs., Inc. v. Insight Tech., Inc.

• Decision Date: 21 October 2013
• Docket Number: No. A13A0324.,A13A0324.
• Citation: 322 Ga.App. 167,744 S.E.2d 356
• Parties: CARRIER 411 SERVICES, INC. v. INSIGHT TECHNOLOGY, INC.
• Court: Georgia Court of Appeals

322 Ga.App. 167

744 S.E.2d 356

CARRIER 411 SERVICES, INC.

v.INSIGHT TECHNOLOGY, INC.

No. A13A0324.

Court of Appeals of Georgia.

June 11, 2013.

Certiorari Denied Oct. 21, 2013.

Slotkin & Caiola, Anne Peirce Caiola, Decatur, Fred Robert Slotkin, Jr., for appellant.

Bruce E. Mitchell, Atlanta, Jeremiah Richard Handschuh, Alpharetta, for appellee.

MILLER, Judge.

Insight Technology, Inc. obtained a $1.4 million judgment against Darren Brewer, and when Brewer failed to satisfy the judgment, Insight Technology filed a garnishment action against Carrier411 Services, Inc. (“Carrier411”). Carrier411 answered the garnishment summons and refused to pay the requested amount, claiming that Brewer was no longer an employee of Carrier411 and it was not holding any funds belonging to him. Insight Technology subsequently filed a traverse to Carrier411's answer. Carrier411 moved to dismiss the action on the ground that Insight Technology did not have the authority to maintain the action since it had not received a certificate of authority under OCGA § 14–2–1502(a). Following the hearing, the trial court denied Carrier411's motion to dismiss and granted Insight Technology's traverse, entering judgment against Carrier411 in the principal sum of $736,139.60. Carrier411 appeals from those rulings, contending that the trial court erred in (1) denying its motion to dismiss; (2) allowing the garnishment action to “reverse-pierce” an individual in order to reach the assets of a corporation; and (3) expanding the garnishment proceeding to consider claims of fraud and collusion, and granting Insight Technology's traverse without sufficient proof to support the action. For the reasons that follow, we affirm.

In a garnishment proceeding, “the question of ownership of the funds is one of fact for the trial court, as factfinder, to decide.” (Citation and punctuation omitted.) A.M. Buckler & Assoc., Inc. v. Sanders, 305 Ga.App. 704, 705–706, 700 S.E.2d 701 (2010). “On appeal of the judgment of a trial judge sitting without a jury, a judgment will not be disturbed if there is any evidence to sustain it.” (Citations and punctuation omitted.) Id. at 706, 700 S.E.2d 701.

The record shows that Carrier411 was organized in November 2004 by Michael Dawson, a long time friend of Darren Brewer. The following year, Dawson sold or transferred his shares in Carrier411 to Concentrik Technologies, LLC (“Concentrik”), at which point Concentrik became the sole shareholder of Carrier411. Brewer was involved in the forming of and owned a 70–percent interest in Concentrik, an off-shore “captive insurance company” that reinsured some of the receivables from a business in which Brewer was involved. The remaining shares of Concentrik were held by Dawson and Brewer's girlfriend. Within a month of the transfer of ownership of Carrier411 from Dawson to Concentrik, CarrierGuard, Inc. (“CarrierGuard”), an incorporated entity in which Concentrik is the sole shareholder, purchased a 15–percent interest in Carrier411.

Brewer was the president of CarrierGuard and the manager of Concentrik through at least November 20, 2010. Brewer also served as a director and the president of Carrier411 from August 2005 until August 21, 2010, at which time there appears in appellant's minutes a resignation prepared by Brewer. Thereafter, Brewer assumed the corporate office of secretary, without salary, and continued on as a director, without compensation. As Carrier411's secretary, Brewer acted as an interface between the board of directors and the president of the company and also dealt with financial matters with the company's accountant.

In July 2008, Insight Technology obtained a judgment against Brewer in the amount of $1,400,000. On September 1, 2010, Insight Technology filed the instant garnishment action, naming Carrier411 as garnishee and seeking collection in the principal amount of $1,163,594. The garnishment was served upon Carrier411 on September 3, 2010. Brewer's girlfriend signed and filed the garnishment answer, stating that Brewer was not then a current employee of Carrier411. Brewer admitted that his girlfriend was not employed by Carrier411 at that time, and that she did not have personal knowledge to form the basis of the company's garnishment answer. Brewer did not know who advised his girlfriend to complete the answer. Although Brewer maintained that he resigned as Carrier411's president in August 2010, Carrier411's payroll records reflect that Brewer drew a partial salary for September 2010 and that his termination date was September 13, 2010.

The garnishment period ended on or about March 1, 2011. Soon after the garnishment period expired, Carrier411 transferred $300,000 from its bank account to Concentrik, which Brewer claimed was a dividend payment. Carrier411 authorized the transfer of another $300,000 to Extranet Commerce, LLC, an entity solely owned by Brewer. Brewer received an unspecified portion of this $300,000.

Subsequent to the end of the garnishment period, the trial court held a hearing on Insight Technology's traverse. At the bench trial, Carrier411 moved to dismiss the action, arguing that Insight Technology was barred from pursuing the action because it was a foreign corporation that lacked authorization to conduct business in Georgia since it had not obtained a certificate of authority. Carrier411 conceded, however, that it did not have evidence that Insight Technology was transacting business. The trial court denied Carrier411's motion to dismiss, ruling that Carrier411 had not pled the issue as an affirmative defense.

Following the bench trial, the trial court issued an order granting Insight Technology's traverse and entered a judgment against Carrier411 in the principal sum of $736,139.60.¹ The trial court ruled that Carrier411's answer to Insight Technology's garnishment action was untrue, the evidence showed that Carrier411 continued to employ Brewer after being served with the garnishment summons, and Carrier411 did indeed possess property owned by Brewer. The trial court concluded that the evidence showed that Brewer and Carrier411 colluded to fraudulently suspend payments from Carrier411 to Brewer until the garnishment period expired and that, after the expiration, Carrier411 paid out large sums of money to other entities controlled by Brewer upon Brewer's direction. The trial court concluded that this conduct constituted a fraudulent and collusive attempt to avoid and defeat Insight Technology's garnishment. We granted Carrier411's application for discretionary review, and this appeal ensued.

1. Carrier411 contends that the trial court erred in denying its motion to dismiss on the ground that Insight Technology could not pursue the garnishment action since it was not authorized to conduct business in Georgia. We disagree.

A foreign corporation must obtain a certificate of authority from the Secretary of State before it can transact business in this State. OCGA § 14–2–1501(a). Additionally, “[a] foreign corporation transacting business in this [S]tate without a certificate of authority may not maintain a proceeding in any court in this [S]tate until it obtains a certificate of authority.” OCGA § 14–2–1502(a).

A motion to dismiss under OCGA § 14–2–1502(a) is a motion in abatement or a dilatory plea, which is not an adjudication on the merits. Such a plea based upon OCGA § 14–2–1502(a) is raised as an affirmative defense, which must be specially pled in the answer.(Citations, punctuation, and footnote omitted.) Health Horizons v. State Farm Mut. Auto. Ins. Co., 239 Ga.App. 440, 444, 521 S.E.2d 383 (1999); see also OCGA § 9–11–8(c). A defendant bringing a motion in abatement has the burden of proving the facts necessary to support a judgment of dismissal. See Jones Motor Co. v. Anderson, 258 Ga.App. 161, 162, 573 S.E.2d 429 (2002).

Here, Carrier411 did not plead an affirmative defense under OCGA § 14–2–1502(a) in its answer, and it waited until the trial to orally move to dismiss on this ground. “[The] purpose of the requirement that affirmative defenses be pleaded is to prevent surprise and to give the opposing party fair notice of what must be met as a defense.” (Citation and punctuation omitted.) Hansford v. Robinson, 255 Ga. 530(1), 340 S.E.2d 614 (1986). Since Carrier411 raised the issue for the first time at the trial, the affirmative defense was not properly raised in this case.

Even if properly raised, Carrier411 failed to establish that Insight Technology was transacting business in Georgia within the meaning of OCGA § 14–2–1501(a). Notably, at the trial, Carrier411 conceded that it did not have evidence that Insight Technology was transacting business. Moreover, a corporation is not considered to be transacting business in Georgia merely because it maintains an administrative action or a lawsuit, or attempts to secure a debt. OCGA § 14–2–1501(b)(1), (8); see also Hall v. Sencore, Inc., 302 Ga.App. 367, 368, 691 S.E.2d 266 (2010). Therefore, the trial court did not err in denying Carrier411's motion to dismiss.

2. Carrier411 contends that the trial court erred by allowing Insight Technology to “reverse-pierce” the corporate veil in order to reach the assets of Carrier411. We disagree.

Carrier411 correctly notes that the Georgia Supreme Court has held that there is no cause of action in Georgia for “reverse-piercing” of the corporate veil, whereby the traditional veil-piercing doctrine is extended to allow a third-party creditor to pierce the veil in order to satisfy the debts of an individual out of the corporation's assets. See Acree v. McMahan, 276 Ga. 880, 881–883, 585 S.E.2d 873 (2003). The Supreme Court refused to recognize a plaintiff's “reverse-piercing” claim as an equitable cause of action because there were other adequate remedies available at law. Id. at 883, 585 S.E.2d 873. “[D]isregard of the corporate form rests on equitable principles. As a consequence, [a claim for reverse-piercing of the corporate...