Cartwright v. Fuji Photo Film U.S.A., Inc.

• Decision Date: 19 March 2012
• Docket Number: No. A11A0903.,A11A0903.
• Citation: 11 FCDR 3533,312 Ga.App. 890,720 S.E.2d 200
• Parties: CARTWRIGHT et al. v. FUJI PHOTO FILM U.S.A., INC.
• Court: Georgia Court of Appeals

11 FCDR 3533

312 Ga.App. 890

720 S.E.2d 200

CARTWRIGHT et al.

v.FUJI PHOTO FILM U.S.A., INC.

No. A11A0903.

Court of Appeals of Georgia.

Nov. 8, 2011.Reconsideration Denied Nov. 29, 2011.Certiorari Denied March 19, 2012.

MacGuireWoods, George John Barry III, Robert James Waddell Jr., Atlanta, for appellants.

Finch McCranie, Michael A. Sullivan, Atlanta, Steven Salcedo, Sell & Melton, John A. Draughon, Macon, Michael Devlin Cooper, for appellee.

ELLINGTON, Chief Judge.

In this case arising from an alleged breach of contract and fraudulent transfer of funds, defendants Robert and Mindy Cartwright appeal from an order of the State Court of Fulton County denying their motion to dismiss or, in the alternative, transfer the case to Taylor County.¹ The Cartwrights contend that the trial court erred in ruling that Fulton County is the proper venue for the complaint, given that they are residents of Taylor County. For the following reasons, we affirm.

“The denial of a motion to transfer is reviewed for an abuse of discretion, and we will affirm the trial court's findings on disputed factual questions relating to venue if there is any evidence to support them. But we review de novo the trial court's application of the law to undisputed facts.” (Citations omitted.) HD Supply v. Garger, 299 Ga.App. 751, 683 S.E.2d 671 (2009). The record on appeal shows the following facts.

In 1993, Daniel Schooler, Timothy Schooler, and The Schooler Group, Inc. (collectively, “the Schoolers”) and Fuji Photo Film USA, Inc. (“Fuji”) verbally agreed to an arrangement under which the Schoolers agreed to assist Fuji in seeking an account with the Eckerd Drug Store chain. According to the Schoolers, several unidentified officers of Fuji promised them that, if they assisted Fuji in obtaining the Eckerd account, Fuji would pay them a three percent brokerage commission on the account for at least seven years. In 2000, a Fuji vice president, Robert Cartwright (one of the appellants), executed a “Food and Drug Broker Agreement” (“broker agreement”) with the Schoolers; the broker agreement provided that the Schoolers would, in fact, receive a three percent commission on all purchase orders from Fuji's newly-acquired Eckerd account. Instead of guaranteeing those commissions for seven years, however, the broker agreement stated that it was terminable at any time by either party with thirty days written notice. It also contained an “entire agreement” clause stating that it superseded all previous oral or written agreements between the parties.

In late 2002, Fuji concluded that the Schoolers were not performing their duties under the broker agreement and, as a consequence, the agreement was no longer cost effective. Fuji terminated the broker agreement in January 2003. Four months later, the Schoolers filed suit against Fuji and one of Fuji's account managers, Patrick Patten, alleging that Fuji had defrauded them and breached its oral promises to pay them commissions on the Eckerd account for at least seven years. It also alleged that Patten had intentionally and maliciously induced Fuji and/or Eckerd to discontinue their business relationships with the Schoolers. Because Patten resided in Fulton County, the Schoolers filed their complaint in the State Court of Fulton County.

Fuji and Patten filed a joint answer, denying the Schoolers' assertions and alleging, inter alia, that the Schoolers' claims were barred by unclean hands, the express terms of the broker agreement, and the Schoolers' breach of that agreement. In addition, Fuji, acting alone, filed a counterclaim in which it asserted that the Schoolers breached the broker agreement and breached their duties of trust and confidence and duties arising from its confidential relationship with Fuji and alleged that the Schoolers committed their wrongful actions wilfully, recklessly and in bad faith.

In December 2007, the Schoolers dismissed their complaint against Fuji and Patten without prejudice, thereby leaving only Fuji's counterclaim against the Schoolers pending before the trial court. Consequently, the court realigned the parties and changed the style of the case to reflect that Fuji was, henceforth, the plaintiff and the Schoolers were the defendants.

During discovery, Fuji deposed Timothy Schooler, Daniel Schooler, and Joyce Schooler, as well as Robert Cartwright and Patrick Patten. Fuji learned that, as soon as the Schoolers started receiving payments from Fuji under the written broker agreement in 2001, the Schoolers began secretly funneling about 20 percent of each of the payments to Robert Cartwright's wife, Mindy. In fact, in 2001 and 2002, the Schoolers paid Mindy Cartwright at least $90,000 as a result of this arrangement and, although the Schoolers issued her 1099 federal tax forms for such payments, she provided virtually no services for the Schoolers in return. Notably, the payments to Mindy Cartwright ended on January 20, 2003, just days after Fuji terminated its agreement with the Schoolers. In addition to those payments, Fuji learned that, during the same two-year period, the Schoolers sold the Cartwrights real property in Georgia for less than twenty-five percent of the Schoolers' basis, resulting in an undisclosed transfer of approximately $77,000 to the Cartwrights while the Schoolers were still receiving payments from Fuji under the broker agreement.

After learning of the secret financial dealings between the Schoolers and the Cartwrights, Fuji repeatedly sought tax and financial documents from the Cartwrights. With the exception of providing two pages, however, the Cartwrights refused to provide the documents, claiming that they no longer possessed the requested documents, that the documents were privileged, and/or that Fuji's requests were improper. The trial court ultimately granted in part a motion to compel the requested documents that was filed by Fuji and denied a motion for a protective order filed by the Cartwrights.²

While discovery was still on-going, Fuji amended its complaint to include a claim for fraud, alleging that the Schoolers were involved in an illegal “kickback” scheme with Robert and Mindy Cartwright. Then, in December 2009, Fuji filed a motion to add the Cartwrights as party defendants. The trial court granted the motion on February 13, 2010. Fuji then filed a second amendment to its complaint, asserting that the Cartwrights and the Schoolers were joint tortfeasors in its fraud claim.

On February 19, 2010, the Cartwrights filed a motion to dismiss Fuji's complaint against them on the basis of improper venue or, in the alternative, to transfer the case to Taylor County, where they have resided since approximately 2005. Daniel and Timothy Schooler also resided in Taylor County at the time of their 2003 initiation of their lawsuit against Fuji and Patten and at the time Fuji added the Cartwrights as co-defendants in its suit against the Schoolers.³ In March 2010, in response to the Cartwrights' motion to transfer, Fuji filed another amendment to its complaint to include the following assertion as to the issue of venue:

The Schooler defendants, by initiating this action originally, have subjected themselves to the jurisdiction and venue of this Court. Defendants Robert Cartwright and Mindy Cartwright were residents of the State of New York both at the time of [the] filing of this lawsuit in 2003 by the Schooler defendants, and at the time that all defendants devised and implemented the wrongful scheme and committed the wrongful acts described [in this complaint] through at least May 2004. The Cartwright defendants also assisted the Schooler defendants in the preparation and pursuit of this lawsuit filed by the Schooler defendants in Fulton County, Georgia, and, as described [herein], the Cartwright defendants had a beneficial interest in the claims asserted by the Schooler defendants in this lawsuit. As described [herein], (a) the filing in 2003 and pursuit of this lawsuit since 2003 in Fulton County by the Schooler defendants as assisted by the Cartwright defendants, as well as (b) all defendants' concealment of evidence in the Fulton County lawsuit that defendants had legal duties to disclose, and misrepresentations made by all defendants to conceal what they had a duty to disclose, were wrongful and tortious acts in furtherance of the scheme and conspiracy to defraud Fuji [.] ... Pursuant to that scheme and conspiracy to defraud Fuji and commit the wrongful acts described herein, in which all [of the] defendants have been involved in the same transactions and occurrences, all [of the] defendants have committed substantial tortious acts and violations of duties to Fuji in Fulton County, Georgia. All [of the] defendants are subject to the jurisdiction of this Court, and venue is proper in this County and Court as to all [of the] defendants.

In September 2010, the trial court denied the Cartwrights' motion to dismiss or to transfer, and the Cartwrights appeal.

1. The Cartwrights contend that the trial court erred in ruling that the joint tortfeasor provision of the Georgia Constitution⁴ supported venue in Fulton County. However, given our conclusions in Divisions 2 through 4, infra, that, in the alternative, venue was proper in Fulton County under Georgia's Long Arm Statute and the relation-back statute, this alleged error is moot.

2. The Cartwrights contend that the trial court erred when it ruled that Fuji's 2010 amended complaint, in which it first named them as co-defendants with the Schoolers, related back to its 2003 counterclaim, pursuant to OCGA § 9–11–15(c).

OCGA § 9–11–15(c), Georgia's relation-back statute, provides as follows:

Whenever the claim or defense asserted in the amended pleading arises out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading, the amendment relates back to the date of the original pleading. An amendment changing the party[ ⁵] against whom a...