Hicks v. Gabor

• Decision Date: 12 March 2020
• Docket Number: A19A1648
• Citation: 841 S.E.2d 42,354 Ga.App. 714
• Court: Georgia Court of Appeals
• Parties: HICKS v. GABOR et al.

354 Ga.App. 714

841 S.E.2d 42

HICKS

v.GABOR et al.

A19A1648

Court of Appeals of Georgia.

March 12, 2020

Reconsideration Denied March 26, 2020

Dalziel Law Firm, Charles M. Dalziel Jr., for Appellant.

Lefkoff Law, Steven M. Lefkoff ; Busch Reed Jones & Leeper, M. Boyd Jones, John K. Schultz, John O. Padesky; Vaughan & Murphy, Charles C. Murphy, Jr., for appellees.

Gobeil, Judge.

Katherine Hicks appeals from several orders issued by the trial court in the instant interpleader action filed by Auto-Owners Insurance Company ("AOIC"). She contends that the trial court erred in: (1) dismissing AOIC's complaint against her; (2) (a) dismissing her counterclaim against AOIC, and (b) awarding attorney fees and sanctions to AOIC against her; (3) denying her motions for attorney fees and sanctions against the other parties in the action; and (4) "in effect" denying her motion for partial summary judgment. For the reasons explained below, we affirm in part and reverse in part the trial court's orders.

AOIC is a corporation that, among other things, acts as a corporate surety issuing bonds to used motor vehicle dealerships. Pursuant to OCGA § 43-47-8, every used car dealership in Georgia is required to acquire a bond of at least $35,000 in order to receive its license to do business. In 2012, AOIC issued a used motor vehicle dealers bond (the "Bond") to Automobiles, Holdings & Acquisitions, Inc. (the "Dealership"), a used car dealership located in DeKalb County. The Bond was in the amount of $35,000 and was "for the use and benefit of any purchasers of any used motor vehicles and their vendees or successors in title" as required by OCGA § 43-47-8. The Bond indemnifies for "all loss, damages, and expenses that may be sustained by any purchasers of any used motor vehicle and their vendees or successors in title by reason of any fraudulent misrepresentation as to liens against or titles to any used motor vehicle[.]"

In 2017, AOIC paid $8,012 to Auction Insurance Agency to settle a claim against the Bond. As a result, the remaining value of the Bond was $26,988. After receiving multiple additional claims against the Bond, AOIC sent written notices via certified mail to claimants Hicks, William Gabor, and Paul Williams invoking OCGA § 10-7-24,¹ and notifying them that they had only three months to file a lawsuit against the Dealership to preserve their right to recover funds from the Bond. The last of these notices was mailed on December 18, 2017.

On March 23, 2018, AOIC filed the instant Complaint for Interpleader and to Discharge Surety and Cancel the Bond. In the Complaint, AOIC stated that the claims against the Bond exceeded its remaining balance and asked the trial court to determine how to distribute the funds. The trial court ordered AOIC to deposit the remaining $26,988 of the Bond into the registry of the court.

1. On appeal, Hicks's first set of claims relates to the trial court's orders dismissing her from the action and/or dismissing AOIC's interpleader claim against her. As discussed more fully below, because we agree with Hicks that the trial court treated the motions to dismiss as motions for summary judgment, we conduct a de novo review, construing the record in the light most favorable to Hicks as the non-movant. See Howerton v. Harbin Clinic , 333 Ga. App. 191, 191-192, 776 S.E.2d 288 (2015).

Williams was the first claimant to answer the Complaint, and he simultaneously filed a motion for partial dismissal, asserting that Hicks should be dismissed from the action, as she had failed to file an action against the Dealership within three months of AOIC's notice, and thus her claim against the Bond had been discharged. He asked the court to take judicial notice of DeKalb County court records, which revealed that Hicks had not commenced an action against the Dealership as required by OCGA § 10-7-24, as outlined in AOIC's notice. Accordingly, Williams argued that AOIC's Complaint did not state a valid action against Hicks. Gabor also answered the Complaint, and filed a motion to dismiss Hicks from the action, raising essentially the same argument as Williams regarding Hicks's failure to preserve her right to the Bond proceeds by failing to file a timely lawsuit against the Dealership.

Hicks answered AOIC's Complaint. Regarding her failure to file a lawsuit against the Dealership, she did not contest that AOIC sent the notice via certified mail to her correct address, but she stated that she never received it. She attached a copy of the certified mail sent by AOIC with a postal stamp stating "return to sender[,] attempted - not known[,] unable to forward[.]" She also stated that she did not receive a copy of the notice via e-mail, even though the notice stated that it was being sent via certified mail and e-mail. Accordingly, she argued that OCGA § 10-7-24 did not apply to her, as she did not receive actual notice of the three-month deadline to file an action against the Dealership. Hicks repeated these arguments in responding to Gabor's and Williams's respective motions to dismiss.

The parties proceeded to a hearing, after which the court issued several orders resolving the pending motions. First, the court granted Gabor's motion to dismiss Hicks from the action. The court found that AOIC sent its notice to Hicks's correct address via certified mail, but she "failed to retrieve the Hicks Notice, so such notice was returned to sender as undeliverable." The court also took judicial notice of court records and found that Hicks had failed to commence a lawsuit against the Dealership within three months after AOIC sent her the notice.

Regarding the sufficiency of the notice sent to Hicks, the court concluded that " OCGA § 10-7-24 does not require actual notice be provided to the Defendant. If that were the case, potential Claimants could simply avoid delivery of the certified mail notice until it was convenient for them to begin the three-month limitations period." The court then noted that a recipient's failure to accept certified mail is sufficient to show notice for many other Georgia statutes, and the Supreme Court of Georgia has held that the intention of the legislature in drafting the statute, as reflected in the relevant text, is paramount. As a result, the court concluded that OCGA § 10-7-24 did not have an actual notice requirement as written. And inserting one into the statute would have unreasonable consequences not contemplated by the legislature, as a claimant could simply refuse to retrieve a properly mailed notice in order to avoid the limitations period. Additionally, the court concluded that AOIC did not have an affirmative duty to ensure Hicks received its notice. Accordingly, the court found that, in order to preserve her right to proceeds from the Bond, Hicks was required to file suit against the Dealership within three months of December 18, 2017, which she did not do. Thus, AOIC's claim against Hicks, which assumed that she was eligible for Bond proceeds, was due to be dismissed.

In a parallel order filed on the same day, the court also granted Williams's motion for partial dismissal of AOIC's Complaint for failure to state a claim against Hicks, based on generally the same reasoning. This appeal follows.

(a) First, Hicks contends that the trial court erred in considering Gabor's and Williams's motions to dismiss her from AOIC's interpleader action, as their motions were not based on typical dismissal grounds under OCGA § 9-11-12 (b) (6). However, this is an interpleader action. The relevant interpleader statute, OCGA § 23-3-90 (a), states:

Whenever a person is possessed of property or funds or owes a debt or duty, to which more than one person lays claim of such a character as to render it doubtful or dangerous for the holder to act, he may apply to equity to compel the claimants to interplead.

An interpleader action consists of two phases. First, it must be determined whether the complainant had a right to interplead, and second, the interpleading defendants are required to litigate matters in dispute between themselves.

Smith v. Folsom , 190 Ga. 460, 473-474 (8), 9 S.E.2d 824 (1940). During this second stage, "each defendant then occupies the position of a plaintiff as against the others, and should state his claim plainly, clearly, and distinctly, and as far as he can, take issue with the claims of others." Whatley v. Alto Corp. , 211 Ga. 718, 724 (2), 88 S.E.2d 398 (1955). Accordingly, after AOIC filed its interpleader action, named the parties who potentially had claims against the Bond, and deposited the funds into the court's registry, Hicks, Gabor, and Williams were required to litigate against each other and were free to take issue with each other's claims to the Bond proceeds. Thus, we find no error in the trial court's considering these motions to dismiss filed by Gabor and Williams against Hicks, their co-defendant in the interpleader.

(b) Next, Hicks argues that the trial court's dismissal orders were replete with facts outside of the pleadings and thus were not proper dismissal orders. We agree that the trial court converted the motions to dismiss into motions for summary judgment by considering matters outside the pleadings, but find no reversible error.

In deciding the motions to dismiss, the trial court relied on evidence other than the pleadings, including several exhibits attached to the Complaint and the court's judicial notice of its own docket. Thus, the trial court converted the motions to dismiss into motions for summary judgment. See Cox Enterprises v. Nix , 273 Ga. 152, 153, 538 S.E.2d 449 (2000) (if, in deciding a motion to dismiss for failure to state a claim, a trial court considers evidence other than what is contained in the pleadings, the motion is converted into a motion for summary judgment).

As a general rule, where the trial court elects to treat a motion to dismiss as a motion for summary judgment, that court "has the burden of informing the party opposing the motion...