General Motors Acceptance Corp. v. Yates Motor Co., Inc., s. 61612

• Decision Date: 09 July 1981
• Docket Number: 61691,Nos. 61612,s. 61612
• Citation: 283 S.E.2d 74,159 Ga.App. 215
• Parties: GENERAL MOTORS ACCEPTANCE CORPORATION v. YATES MOTOR COMPANY, INC. YATES MOTOR COMPANY, INC. v. GENERAL MOTORS ACCEPTANCE CORPORATION et al.
• Court: Georgia Court of Appeals

Page 74

283 S.E.2d 74

159 Ga.App. 215

GENERAL MOTORS ACCEPTANCE CORPORATION v. YATES MOTOR COMPANY, INC.

YATES MOTOR COMPANY, INC. v. GENERAL MOTORS ACCEPTANCE CORPORATION et al.

Nos. 61612, 61691.

Court of Appeals of Georgia.

July 9, 1981.

Jean Laramore, Tallahassee, Fla., for appellant in No. 61612.

James C. Brim, Jr., Frank S. Twitty, Jr., Camilla, for appellee in No. 61612.

James C. Brim, Jr., Alfred J. Powell, Jr., Camilla, for appellant in No. 61691.

Jean Laramore, Tallahassee, Fla., Frank S. Twitty, Jr., Camilla, for appellees in No. 61691.

SOGNIER, Judge.

Plaintiff Yates Motor Company, Inc. (Yates) transferred title and possession of three trucks to defendant Bill Peacock Chevrolet, Inc. (Peacock Chevrolet) in return for three checks totaling $19,860.19. The checks were dishonored because of insufficient funds. Peacock Chevrolet subsequently transferred title and possession of the vehicles to General Motors Acceptance Corporation (GMAC) on a "floor plan" arrangement.

On January 16, 1980 Yates, a Georgia corporation, filed a complaint in the Superior Court of Mitchell County against Peacock Chevrolet, a Florida corporation, GMAC and J. W. Peacock, Jr., the president of Bill Peacock Chevrolet, individually, alleging conversion. On January 21, 1980 Peacock Chevrolet filed a petition in the United States District Court, Tallahassee, Florida pursuant to the Bankruptcy Code (11 U.S.C. § 101 et seq.). J. W. Peacock, Jr. and GMAC timely filed motions to dismiss Yates' complaint for lack of jurisdiction. No answer was filed on behalf of any defendant in the case within the time required by Code Ann. § 81A-112(a).

On October 15, 1980, after a hearing on the motions to dismiss, the trial court entered an order (1) finding GMAC in default for failure to file defensive pleadings; (2) staying the proceedings as to Peacock Chevrolet in accordance with Section 362 of the Bankruptcy Code (11 U.S.C. § 362); and (3) finding the motion to dismiss filed on behalf of J. W. Peacock, Jr., individually, as sufficient to constitute defensive pleadings which made out issues of fact in the case. GMAC moved to open default claiming that the entire proceeding was stayed as to all defendants by the bankruptcy proceedings filed by Peacock Chevrolet and that their motion to dismiss was a sufficient responsive pleading to avoid entry of default judgment against them. Yates filed a motion for default judgment against GMAC. The trial court denied GMAC's motion and ordered the case to proceed to trial by jury on the issue of damages against GMAC. The jury entered a verdict in the amount of $19,860.19 and GMAC appeals. Yates cross appeals claiming the trial court erred in accepting J. W. Peacock's motion to dismiss as a responsive pleading and in refusing to allow Yates to recover attorney fees from GMAC.

1. Appellant GMAC contends that the trial court erred in failing to open default. Code Ann. § 81A-155(b) provides: "At any time before final judgment, the court, in its discretion, upon payment of costs, may allow the default to be opened for providential cause preventing the filing of a plea or for excusable neglect or where the judge, from all the facts, shall determine that a proper case has been made for the default to be opened, on terms to be fixed by the court. In order to allow the default to be thus opened, the showing shall be made under oath, shall set up a meritorious defense, shall offer to plead instanter, and announce ready to proceed with the trial."

There is nothing in the record to indicate that GMAC complied with the statutory requirements to open default. Appellants did not pay costs, nor did they file an answer and announce ready for trial. Under the circumstances the trial court did not err in refusing to open default against GMAC. Coleman v. Dairyland Ins. Co., 130 Ga.App. 228, 229, 202 S.E.2d 698 (1973); Taurus Productions v. Maryland, etc., Indus., 155 Ga.App. 147, 148, 270 S.E.2d 337 (1980).

2. Appellant GMAC contends, however, that the judgment entered in default is void for lack of subject matter jurisdiction since the entire proceeding was automatically stayed pursuant to 11 U.S.C. § 362 of the Bankruptcy Code. We do not agree.

Section 362(a)(1) of the Bankruptcy Code provides that "... a petition filed under ... this title operates as a stay, applicable to all entities, of--

"(1) the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title ..." (Emphasis supplied.)

The purpose of an automatic stay of proceedings against the debtor is to prevent the dissipation of the bankrupt's assets and to avoid the multiplicity of claims in different forums against the estate. Paden v. Union for Experimenting Colleges and Universities, 7 B.R. 289 (D.C.N.D.Ill.1980). The automatic stay is broad in scope and applies in almost any type of action against the debtor or the property of the estate. It stays collection efforts, harassment, and interference with the debtor's assets. In re Pagitt, 3 B.R. 588, 589 (Bkrtcy., W. D. La. 1980); see also 2 Collier on Bankruptcy § 362.04 (15th Ed. 1980).

Appellant argues that the entire proceedings were automatically stayed when Peacock Chevrolet filed its petition in bankruptcy and, therefore, GMAC was not required to file an answer while the bankruptcy case was pending. Appellant cites Federal Life Ins. Co. v. First Financial Group of Texas, 3 B.R. 375 (D.C.S.D.Tex.1980) as authority. In Federal Life Ins. Co., the court declined to grant a severance of individual defendants in an action where one defendant had filed a petition in bankruptcy. The court held that the automatic stay applied to judicial proceedings against a debtor in bankruptcy and its codefendants when the allegations against them arose from the same factual and legal basis, and were "inextricably interwoven."

We decline to follow this interpretation of Section 362 of the Bankruptcy Code. We do not view the allegations against Peacock Chevrolet and GMAC so "inextricably interwoven" as to require application of the stay to GMAC merely because it is a codefendant in the case sub judice. Yates' claim against all defendants alleged a concert of action in the conversion of Yates' property. Although concert of action is not required for a joint tort,...