Davis v. SOUTHERN EXPOSITION MANAGEMENT

• Decision Date: 04 June 1998
• Docket Number: No. A98A0673.,A98A0673.
• Citation: 232 Ga. App. 773,503 S.E.2d 649
• Parties: DAVIS et al. v. SOUTHERN EXPOSITION MANAGEMENT COMPANY.
• Court: Georgia Court of Appeals

503 S.E.2d 649

232 Ga. App. 773

DAVIS et al. v. SOUTHERN EXPOSITION MANAGEMENT COMPANY.

No. A98A0673.

Court of Appeals of Georgia.

June 4, 1998.

Rowan & Neis, Robert J. Neis, Atlanta, for appellants.

Manchel, Johnson & Wiggins, Norman G. Johnson, Scott M. Kaye, Zell & Zell, Glenn Zell, Atlanta, for appellee.

HAROLD R. BANKE, Senior Appellate Judge.

Enumerating eight errors, Jack Davis and University Auto Sales, Inc., d/b/a University Marine & Sailing Center, a/k/a Windsor Craft Boats ("UM") appeal the entry of a default judgment, the denial of their motion to set aside default and the failure to grant their motion to dismiss.

This case arose in the wake of the 1992 Atlanta Boat Show. Southern Exposition Management Company ("SEMCO"), the owner, operator, and producer of that show, alleged that Davis, an Alabama resident, his company UM, and Genmar Industries, Inc., d/b/a Wellcraft ("Genmar"), breached a boat show licensing agreement by displaying Wellcraft boats. SEMCO sought declaratory relief and to enforce an indemnification agreement.

At the time SEMCO filed the underlying action, UM's lawsuit against SEMCO arising from the same boat show had been pending for over two years in Alabama. In its action, UM claimed that SEMCO, along with Genmar, intentionally interfered with its business and breached the boat show leasing agreement which permitted UM to display Wellcraft boats.

SEMCO waited until the eve of the trial in Alabama to file in Georgia. On April 11, about a month before the Alabama trial, Davis was served with the Georgia suit to which he failed to timely respond. Meanwhile, the Alabama action was tried from May 19 through May 28, and culminated in a $600,000 verdict in favor of UM. The Alabama court entered a final judgment in that amount on June 12, 1997.¹

Six days after the entry of the judgment in Alabama, Davis and UM filed a motion to dismiss premised on res judicata and OCGA § 9-11-13(a). The Georgia trial court on June 20, 1997, granted SEMCO's motion for a default judgment on the issue of liability. When Davis and UM moved to set aside the default, a final judgment in Georgia had not yet been entered because the damages remained to be proven.

The trial court rejected the arguments that the Georgia action was a compulsory counterclaim and that it was procedurally foreclosed after the entry of the Alabama judgment. The court ordered Davis and UM to pay the $600,000 verdict entered in the Alabama case, plus statutory interest and to pay $140,617.69 plus interest for SEMCO's litigation expenses incurred in the Alabama action. Davis and UM appeal. Held:

1. Davis and UM contend that the trial court abused its discretion by denying their motion to open default. See West v. Smith, 196 Ga.App. 69, 70-71, 395 S.E.2d 302 (1990). We disagree.

Payment of costs is a condition precedent for opening default under OCGA § 9-11-55(b). C.W. Matthews Contracting Co. v. Walker, 197 Ga.App. 345, 346(1), 398 S.E.2d 297 (1990). Merely offering to pay costs, as here, is insufficient. Hazzard v. Phillips, 249 Ga. 24, 25(1), 287 S.E.2d 191 (1982). When this statutory requirement is not met, the trial court lacks discretion to open the default. Stinson v. Georgia Dept. of Human Resources Credit Union, 171 Ga.App. 303, 305(5), 319 S.E.2d 508 (1984). See Robinson v. Moonraker Assoc., 205 Ga.App. 597, 598, 423 S.E.2d 44 (1992).

2. Davis and UM contend that the trial court erred in awarding $600,000 to SEMCO for a judgment SEMCO has not paid. In its Georgia action, SEMCO sought damages for breach of contract and to enforce an indemnification clause. At the damages hearing, SEMCO sought only to obtain the amount of the Alabama judgment entered against it and the expenses incurred in defending the Alabama action.

Where no funds have yet been expended, a party's right to seek indemnification has not yet actualized. Carr v. Nodvin, 178 Ga.App. 228, 233(3), 342 S.E.2d 698 (1986). It is undisputed that at the time of the hearing on damages, SEMCO had not paid any portion of the Alabama judgment and was actively pursuing post-trial motions in Alabama. See Ranger Construction Co. v. Robertshaw Controls Co., 158 Ga.App. 179, 182, 279 S.E.2d 477 (1981) (where no payment is yet made, "actual legal liability" has not yet been incurred). Thus, until and unless SEMCO pays the Alabama judgment, no reimbursement to SEMCO need be made. To hold otherwise could enable SEMCO to recover a windfall in the event that SEMCO prevailed on its appeal of the Alabama judgment while receiving $600,000 to reimburse it for a judgment that it never paid.

3. Davis claims that the trial court erred in awarding judgment against him individually because he was not a party to the contract between SEMCO and UM. We agree.

Davis signed three documents: one as "authorized agent of exhibitor [UM]," another "in behalf of my company [Windsor Craft]," and a third one "by" Jack Davis. The Boat Show Authorization Form which contains the indemnification provisions at issue specifically provides that it is an agreement between the Exhibitor (Windsor Craft) and SEMCO. When Davis signed the agreement, he did so as being "authorized to sign this form in behalf of my company."

SEMCO failed to cite any authority or evidence in support of a right to proceed against Davis individually. Commonwealth Financial Corp. v. Sherrill, 197 Ga.App. 403, 404(1), 398 S.E.2d 438 (1990). In fact, SEMCO offered not a shred of evidence showing that this was Davis' debt rather than UM's corporate debt. Nor did SEMCO assert that it was entitled to pierce the corporate veil. See Derbyshire v. United Builders Supplies, 194 Ga.App. 840, 844(2)(a), 392 S.E.2d 37 (1990). Because the pleadings and the exhibits attached thereto do not show any contract between Davis and SEMCO, the judgment against Davis must be set aside. See Bayne v. Sun Finance Co., etc., 114 Ga.App. 27, 29(5), 150 S.E.2d 311 (1966) (conclusions of law and facts not well pleaded and forced inferences are not admitted by a default judgment).

4. The indemnification provisions at issue are not unenforceable and void as against public policy. In the agreement, UM agreed to release and indemnify SEMCO "against any and all claims for any such loss, damage or injury." However, the contract also plainly states that SEMCO's right to indemnification does not apply to any injury or damage or loss caused by SEMCO's "wilful or wanton misconduct" or to damages caused by SEMCO's "sole negligence." See, e.g., Allstate Ins. Co. v. City of Atlanta, 202 Ga.App. 692, 693, 415 S.E.2d 308 (1992) (indemnification for one's own misconduct permissible where provided by express language).

The jury in Alabama awarded $150,000 in compensatory damages and $450,000 in punitive damages. It is undisputed that the Alabama action was tried under Georgia substantive...