Fed. Deposit Ins. Corp. v. Loudermilk

• Decision Date: 13 March 2019
• Docket Number: S18Q1233
• Citation: 826 S.E.2d 116,305 Ga. 558
• Parties: FEDERAL DEPOSIT INSURANCE CORPORATION v. R. Charles LOUDERMILK, Sr. et al.
• Court: Georgia Supreme Court

305 Ga. 558

826 S.E.2d 116

FEDERAL DEPOSIT INSURANCE CORPORATION

v.R. Charles LOUDERMILK, Sr. et al.

S18Q1233

Supreme Court of Georgia.

Decided: March 13, 2019

Joyce Gist Lewis, KREVOLIN HORST, LLC, Curtis J. Martin, MOZLEY FINLAYSON & LOGGINS LLP, Michael P. Kohler, Laura Elisabeth Ashby, Atlanta, Charles B. Lee, MILLER & MARTIN PLLC, George P. Shingler, The Shingler Law Firm LLC, Decatur, Ashley Elizabeth Wilson Clark, BUCKLEY BEAL, LLP, Atlanta, Kathryn R. Norcross, James S. Watson, Colleen J. Boles, John Stuart Tonkinson, FEDERAL DEPOSIT INSURANCE CORPORATION, Ellis A. Sharp, STOKES, WILLIAMS, SHARP & DAVIES, for Appellant.

Robert Richard Long, Theodore J. Sawicki, Elizabeth Gingold Clark, Lauren Tapson Macon, Atlanta, Brian David Boone, ALSTON & BIRD LLP, for Appellee.

Warren, Justice.

This case comes to us by way of three certified questions from the United States Court of Appeals for the Eleventh Circuit. Given the lengthy history of this case, the facts are familiar to the federal courts and to ours. As the receiver of the Buckhead Community Bank, the Federal Deposit Insurance Corporation (FDIC) sued nine former directors and officers¹ of the Bank in the United States District Court for the Northern District of Georgia, alleging that the former directors and officers were negligent and grossly negligent under Georgia law for their approval of ten commercial real-estate loans. According to the FDIC, those loans led the Bank to sustain nearly $ 22 million in losses, ultimately resulting in the Georgia Department of Banking and Finance ordering the Bank to be closed and appointing the FDIC as the Bank’s receiver. As part of that litigation, the United States District Court for the Northern District of Georgia in 2013 certified to this Court a question asking whether the business judgment rule in Georgia precludes claims brought by the FDIC for ordinary negligence against bank directors and officers. In response to that certified question, we held in Federal Deposit Ins. Corp. v. Loudermilk , 295 Ga. 579, 761 S.E.2d 332 (2014) (" Loudermilk I "), that Georgia’s business judgment rule "forecloses claims against officers and directors that sound in ordinary negligence when the alleged negligence concerns only the wisdom of their judgment," but that it "does not absolutely foreclose such claims to the extent that a business decision did not involve ‘judgment’ because it was made in a way that did not comport with the duty to exercise good faith and ordinary care." Id. at 585-586, 761 S.E.2d 332. As a result, the FDIC, as receiver, was authorized to bring suit against the former directors insofar as its claims were premised on the former directors’ and officers’ "failure to exercise ordinary care with respect to the way in which business decisions are made." 295 Ga. at 593, 761 S.E.2d 332.

Before trial, the former directors and officers requested that the district court instruct the jury to apportion damages among them, in the event that the jury found any of the former directors and officers liable. The district court denied the requested instruction and the case proceeded to trial. During trial, the former directors and officers again requested—and the district court again denied—a jury instruction on apportionment. At the conclusion of the trial, the jury found that some of the former directors and officers were negligent in approving four of the ten loans at issue and awarded the FDIC $4,986,993 in damages. The district court entered a final judgment in that amount and held the former directors and officers jointly and severally liable. They timely appealed to the United States Court of Appeals for the Eleventh Circuit.

On appeal, the former directors and officers sought a retrial, arguing that the district court erred by failing to instruct the jury on apportionment, which, they say, is required by OCGA § 51-12-33 because purely pecuniary harms—such as the losses at issue here—are included within "injury to person or property" under Georgia’s apportionment statute. The FDIC countered that OCGA § 51-12-33does not apply because the statute is in derogation of common law and the definition of "property" in the apportionment statute must be construed narrowly to refer only to realty or other tangible property. The FDIC further argued that, even if the apportionment statute generally abrogates joint and several liability for most tort claims, Georgia’s common-law rule imposing joint and several liability on tortfeasors who "act in concert" survived enactment of the apportionment statute—meaning that joint and several liability still applies to the concerted actions of tortfeasors, including (it says) to the former directors’ and officers’ approval of the loans at issue here. The former directors and officers disagreed that the common-law concerted-action rule survived the apportionment statute and argued that the FDIC’s case was tried based on the former directors’ and officers’ individual behavior and decision-making, not on a theory of concerted action.

Concluding that these arguments required answers to questions of law that "have not been squarely answered by the Georgia Supreme Court or the Georgia Court of Appeals," the Eleventh Circuit certified the following questions to our Court:

1. Does Georgia’s apportionment statute, OCGA § 51-12-33, apply to tort claims for purely pecuniary losses against bank directors and officers?

2. Did Georgia’s apportionment statute, OCGA § 51-12-33, abrogate Georgia’s common-law rule imposing joint and several liability on tortfeasors who act in concert?

3. In a negligence action premised upon the negligence of individual board members in their decision-making process, is a decision of a bank’s board of directors a "concerted action" such that the board members should be held jointly and severally liable for negligence?

For the reasons that follow, we conclude that OCGA § 51-12-33 does apply to tort claims for purely pecuniary losses against bank directors and officers. We further conclude that OCGA § 51-12-33 did not abrogate Georgia’s common-law rule imposing joint and several liability on tortfeasors who act in concert insofar as a claim of concerted action invokes the narrow and traditional common-law doctrine of concerted action based on a legal theory of mutual agency and thus imputed fault. Given our answers to the first two questions and the related guidance we provide below, we decline to further answer the Eleventh Circuit’s third question.

Does Georgia’s apportionment statute, OCGA § 51-12-33, apply to tort claims for purely pecuniary losses against bank directors and officers?

1. To answer the first question before us, we must determine the reach of OCGA § 51-12-33 ’s application—and specifically, whether the scope of Georgia’s apportionment statute includes tort claims for purely pecuniary losses, such as the economic losses the FDIC sought to recover in this suit.² The subprovision of the apportionment statute most relevant to that inquiry is OCGA § 51-12-33 (b), which governs the circumstances under which an "award of damages" may be apportioned "among the persons who are liable":

Where an action is brought against more than one person for injury to person or property , the trier of fact, in its determination of the total amount of damages to be awarded, if any, shall after a reduction of damages pursuant to subsection (a) of this Code section, if any, apportion its award of damages among the persons who are liable according to the percentage of fault of each person. Damages apportioned by the trier of fact as provided in this Code section shall be the liability of each person against whom they are awarded, shall not be a joint liability among the persons liable, and shall not be subject to any right of contribution.

Id. (emphasis supplied).

Because it is undisputed that the FDIC’s suit was "brought against more than one person," the critical question is whether this action—a tort claim for negligence and gross negligence seeking damages for purely pecuniary losses against a bank’s directors and officers—is brought "for injury to person or property." To answer that question, we first look to the text because " ‘[a] statute draws its meaning ... from its text.’ " Zaldivar v. Prickett , 297 Ga. 589, 591, 774 S.E.2d 688 (2015) (quoting Chan v. Ellis , 296 Ga. 838, 839, 770 S.E.2d 851 (2015) ). And because we " ‘presume that the General Assembly meant what it said and said what it meant’ " when it comes to the meaning of statutes, id. (quoting Deal v. Coleman , 294 Ga. 170, 172, 751 S.E.2d 337 (2013) ), " ‘we must read the statutory text in its most natural and reasonable way, as an ordinary speaker of the English language would.’ " Loudermilk I , 295 Ga. at 588, 761 S.E.2d 332 (quoting Deal , 294 Ga. at 172-173, 751 S.E.2d 337 ). Important are " ‘[t]he common and customary usages of the words,’ " which, in cases like this one, include "the usual and customary meaning of ... term[s] as used in a legal context." Zaldivar , 297 Ga. at 591, 596, 774 S.E.2d 688 (quoting Chan , 296 Ga. at 839, 770 S.E.2d 851 ). "For context, we may look to other provisions of the same statute, the structure and history of the whole statute, and the other law—constitutional, statutory, and common law alike—that forms the legal background of the statutory provision in question." Id. at 591, 774 S.E.2d 688 (citation and punctuation omitted).

Here, we construe the meaning of "property" as it is used in OCGA § 51-12-33 (b), in the particular context of subsection (b)’s reference to actions brought "for injury to person or property," and in the context of the apportionment statute as a whole. In evaluating the meaning of "property," we note that neither Title 51 (Torts) nor the apportionment statute ( OCGA § 51-12-33 ) defines the term. But the Georgia Code provides a general definition: "[a]s used in this Code or in any other law of this state," " ‘[p]roperty’ includes real and personal property." OCGA...