GEORGIA RECEIVABLES, INC. v. Kirk, A99A1831.

• Decision Date: 16 March 2000
• Docket Number: No. A99A1831.,A99A1831.
• Citation: 242 Ga. App. 801,531 S.E.2d 393
• Parties: GEORGIA RECEIVABLES, INC. v. KIRK.
• Court: Georgia Court of Appeals

531 S.E.2d 393

242 Ga. App. 801

GEORGIA RECEIVABLES, INC. v. KIRK.

No. A99A1831.

Court of Appeals of Georgia.

March 16, 2000.

Frederick J. Hanna & Associates, Elizabeth C. Whealler, Marietta, Jerry C. Tootle, Jr., Duluth, for appellant.

Edward Kirk, pro se.

BARNES, Judge.

Georgia Receivables, Inc. appeals from the grant of summary judgment to Edward Kirk in Georgia Receivables' suit against him to collect payment under a health spa contract. The complaint alleged that Kirk was indebted to Georgia Receivables in the amount of $2,092.91, attorney fees of $278.46, interest of $441.74, and court costs of $55. Kirk filed a timely answer.

Georgia Receivables later amended the complaint to claim principal of $1,382.04, interest of $891.41, attorneys fees of $302.34, and court costs of $55. Thereafter, Georgia Receivables moved for summary judgment. The motion was supported by the affidavit of the president of Georgia Receivables and a copy of the health spa contract on which Georgia Receivables sued. Kirk's unsworn response to the motion asserted that he did not breach the contract and that he attempted to cancel the contract, but the original owner of the contract refused to do so.

Thereafter, the trial court denied Georgia Receivables' motion for summary judgment and dismissed the case with prejudice because "the contract was void ab initio." The trial court found that the contract on which Georgia Receivables relied was void and unenforceable because it did not comply with OCGA § 10-1-393.2 of the Georgia Fair Business Practices Act, which applies to health spa contracts. The trial court also questioned whether the contract was validly assigned to Georgia Receivables because no written assignment was in the record.

The trial court's order also recited that at argument on the motion, the court gave Georgia Receivables the opportunity to address whether the court could enforce this contract which appeared to be unenforceable under OCGA § 10-1-393.2. Georgia Receivables responded, however, that regardless of whether the contract was enforceable, Kirk had waived the issue.

Georgia Receivables' sole enumeration of error contends the trial court abused its discretion and erred by denying its motion for summary judgment and sua sponte dismissing the action with prejudice because a contrary judgment was demanded. On appeal, Georgia Receivables argues that it was improper for the trial court to go beyond the scope of the pleadings to find the contract void and unenforceable because Kirk did not raise the issue.

1. Georgia Receivables' motion to withdraw the appeal is denied.

2. This case is controlled adversely to Georgia Receivables by Ga. Receivables v. Te, 240 Ga.App. 292, 523 S.E.2d 352 (1999) and Ga. Receivables v. Welch, 242 Ga.App. 146, 529 S.E.2d 164 (2000). In Te, this court held that similar sua sponte grants of summary judgment to two defendants based upon violations of OCGA § 10-1-393.2 were authorized even though the defendants had failed to raise the issue, because any contract that does not comply with OCGA § 10-1-393.2 is void and unenforceable under OCGA § 10-1-393.2(n). Ga. Receivables v. Te, supra, 240 Ga.App. at 293, 523 S.E.2d 352. OCGA § 10-1-393.2(n) also provides that "no purchaser of any note associated with or contained in any health spa contract shall make any attempt to collect on the note ... if there has been any violation by the health spa of subsections (b) through (m) ... of this Code section." A contract that is null and void is illegal and against the public policy of Georgia and will not be enforced even if the defendant fails to raise this issue as an affirmative defense. Id.; see OCGA § 13-8-2(a): "A contract which is against the policy of the law cannot be enforced." Therefore the trial court did not err by dismissing the complaint with prejudice.

3. Because virtually the same argument made in this case was rejected in Ga. Receivables v. Te, and in Ga. Receivables, Inc. v. Welch, we have carefully considered whether sanctions for pursuing a frivolous appeal should be imposed against Georgia Receivables and its counsel. If not for Georgia Receivables' belated motion to withdraw this appeal, we would have assessed substantial penalties for pursuing this frivolous appeal. Since Georgia Receivables has now taken the appropriate action, we will not do so.

Nevertheless, we take this opportunity to remind counsel of their obligations to supplement the pleadings before this Court upon receipt of notice of legal authority directly adverse to their position or to withdraw their appeal.

Ethical Canon 7-20 of the State Bar Rules provides:

In order to function properly, our adjudicative process requires an informed, impartial tribunal capable of administering justice promptly and efficiently according to procedures that command public confidence

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