Hines v. Holland

• Court: Georgia Court of Appeals
• Writing for the Court: McMILLIAN, Judge.
• Citation: Hines v. Holland, 334 Ga.App. 292, 779 S.E.2d 63 (Ga. App. 2015)
• Decision Date: 30 October 2015
• Docket Number: No. A15A1068.,A15A1068.
• Parties: HINES et al. v. HOLLAND et al.

334 Ga.App. 292

779 S.E.2d 63

HINES et al.

v.HOLLAND et al.

No. A15A1068.

Court of Appeals of Georgia.

Oct. 30, 2015.

Matthew Clinton Hines, Austell, for Appellant.

Neil Louis Wilcove, Atlanta, Benjamin Robert Keck, for Appellee.

McMILLIAN, Judge.

The sole issue in this appeal is whether the trial court erred by dismissing a third-party complaint for contribution and indemnification filed by Matthew C. Hines, individually, and the Hines Law Firm, P.C., (collectively referred to as "Hines"), against non-attorneys Hazel A. Holland and Holland Title Limited Liability Company (singularly referred to as "Hazel" and "Holland Title" and collectively referred to as "Holland") after Hines was sued by title insurer First American Title Insurance Company ("FATIC") for professional malpractice in rendering an opinion on the status of title to land related to a real estate closing. As more fully set forth below, we find no error and affirm.

The relevant facts are essentially undisputed.¹ Hines was retained as the settlement agent/closing attorney in connection with the refinancing of a loan related to certain real property (the "Property"). Hines hired Holland to perform the title examination of the Property, and the title examination revealed an open security deed to Berkley Park Properties, LLC ("Berkley Park"), as lender ("Berkley Loan"); however, another open loan secured by a security deed to the Bank of North Georgia's predecessor, as lender, in which Berkley Park was the borrower ("Bank of North Georgia Loan") was not identified when Holland performed the title search. Hines subsequently conducted the loan closing and disbursed payment for the Berkley loan but did not pay off or seek a release of the Bank of North Georgia loan. After the Berkley Loan was paid off, Hines, as title agent, rendered a legal opinion to FATIC to the effect that the property at issue was now free and clear of encumbrances. Based on this representation, FATIC then issued a lender/owner title insurance policy.

Some time later, foreclosure proceedings were instituted on the Bank of North Georgia loan. The property owner was given notice of the foreclosure sale, and she notified FATIC of the impending foreclosure.

FATIC ultimately paid off the outstanding loan amount of $144,985.17 and obtained a release to prevent the foreclosure sale and protect the owner's/insured's interest in the Property.

FATIC subsequently filed a legal malpractice and indemnification action against Hines based on Hines' failure to disclose and obtain a discharge and release of the Bank of North Georgia Loan in connection with the closing. Hines answered and filed a third-party complaint against Holland Title seeking contribution and indemnification for any damages Hines might be liable to pay FATIC, asserting that Holland Title breached the standard of care it owed to Hines in performing the title search and that it breached an unspecified oral contract between the parties. Subsequently, and without first seeking permission from the trial court, Hines amended his third-party complaint to add Hazel individually as a third-party defendant; Hines later moved for permission to add Hazel as a party to the lawsuit. Holland filed a motion to dismiss, asserting that because Hazel and the other Holland title examiners were not attorneys, they could not render a legal "opinion" on the status of the title to land and that, therefore, Holland could not be liable for any portion of the legal malpractice claim against Hines. Hazel Holland also filed a response to Hines' motion to add her as a party, contending that Hines' motion should be denied because, among other things, he had not attempted to pierce the corporate veil or made any allegations that she, individually, had committed a tort or breached a contract. Following a hearing, the trial court denied Hines' motion to add Hazel as third-party defendant and dismissed Hines' third-party claims on the basis that Hines could not seek indemnity or contribution from Holland for FATIC's professional negligence claim against Hines.²

FATIC and Hines subsequently entered into a consent judgment pursuant to which Hines agreed to pay FATIC the full amount paid out under the title insurance policy. Within 30 days of the entry of the consent judgment, Hines filed his notice of appeal, challenging only the trial court's order granting the third-party defendants' motion to dismiss.³

1. In Georgia, third-party practice is governed by OCGA § 9–11–14. Under subsection (a) of OCGA § 9–11–14, a third-party complaint may be brought by the defendant, as a third-party plaintiff, "upon a person not a party to the action who is or may be liable to him for all or part of the plaintiff's claim against him." As our appellate courts have expounded, subsection (a)

authorizes a defendant, as a third-party plaintiff, to file a claim against a third-party defendant for secondary liability on the plaintiff's claim, i.e., a claim for liability over, but not a direct claim for damages. [Thus, an] absolute requirement of every third-party proceeding is that its purpose must be to impose upon the third-party defendant a liability for part or all of the liability asserted by the original plaintiff against the third-party plaintiff. A third-party action may be maintained only against one who is secondarily liable to the original defendant for part or all of the original plaintiff's claim. When a recovery by the plaintiff against the defendant would necessarily be followed by recovery for the defendant against the third-party defendant, then a third-party action is proper.... [I]t is not a device for bringing into an action any controversy which may happen to have some relationship with it.... [A] defendant cannot assert an entirely separate claim against the third-party even though it arises out of the same general set of facts as the main claim. There must be an attempt to pass on to the third-party all or part of the liability asserted against the defendant but not to tender the third-party as a substitute defendant.

(Citations and punctuation omitted.) Cohen v. McLaughlin, 250 Ga. 661, 662(1), 301 S.E.2d 37 (1983). See also Satilla Community Svc. Board v. Satilla Health Svcs., Inc., 275 Ga. 805, 809, 573 S.E.2d 31 (2002) (Hines, Justice, concurring). Stated more succinctly, "[t]his section does not authorize defendant to seek affirmative relief solely on his own behalf. Instead, the complaint must be predicated on secondary or derivative liability...." (Citation omitted.) McCray v. Fed. Nat. Mtg. Assn., 292 Ga.App. 156, 160(3), 663 S.E.2d 736 (2008). Typically then, the " third-party plaintiff must establish a right over against the third-party defendant either by indemnity[,] ... subrogation, contribution or warranty." (Citation and punctuation omitted.) ARA Transp. v. Barnes, 183 Ga.App. 424, 425(1), 359 S.E.2d 157 (1987). Against this backdrop, we now turn to the specific allegations of Hines' third-party complaint and consider whether he has asserted any claims of derivative liability.

(a) Contribution. OCGA § 51–12–32 sets out a statutory right of contribution, subject to certain limitations not pertinent here. See Zurich American Ins. Co. v. Heard, 321 Ga.App. 325, 330(1), 740 S.E.2d 429 (2013) (explaining that the statutory right of contribution has not been completely abolished by the legislature's enactment of the OCGA § 51–12–33, Georgia's apportionment statute); see also Dist. Owners Assn., Inc. v. AMEC Environmental & Infrastructure, Inc., 322 Ga.App. 713, 718(2), 747 S.E.2d 10 (2013) (noting that "our Supreme Court has held that OCGA § 51–12–33 supplanted claims for common-law contribution and apportionment"). But, as expressly stated in the statute, "[t]he right to contribution relates only to joint tortfeasors, and where the proposed defendant cannot be made liable as a joint tortfeasor, the contribution action does not state a claim." (Citations and punctuation omitted; emphasis in original.) Greenhorne & O'Mara, Inc. v. City of Atlanta, 298 Ga.App. 261, 262, 679 S.E.2d 818 (2009). See also Ga. Ports Auth. v. Andre & Co., 262 Ga.App. 591, 596(5)(a), 585 S.E.2d 883 (2003) ("[a]n alleged joint tortfeasor who cannot be held liable on the underlying tort claim cannot be held liable for contribution or indemnity"), rev'd on other grounds, Hines v. Ga. Ports Auth., 278 Ga. 631, 604 S.E.2d 189 (2004) ; Southern R. Co. v. Brewer, 122 Ga.App. 292, 293, 176 S.E.2d 665 (1970) (third-party complaint based on contribution could not be maintained against third-party defendant who was not subject to suit by the plaintiff for negligence).

Here, we need not parse whether the non-attorney title examiners could be joint tortfeasors in this suit involving a legal malpractice claim because Hines has specifically denied that Holland is a joint tortfeasor with him. Hines argues instead that "as a result of the defective title examination conducted by [Holland], [Holland] are tortfeasors as to [Hines], and therefore secondarily liable for damages that [Hines] is ultimately obligated to pay FATIC pursuant to the judgment entered in this case[.]" (Emphasis supplied.) Accordingly, because Hines has not asserted a claim for contribution under OCGA § 51–12–32, the trial court did not err by dismissing Hines' third-party complaint to the extent it was grounded on a claim for contribution.

(b) Indemnity. Hines also asserted a claim for indemnity against Holland. Following the enactment of OCGA § 51–12–33, "Georgia law continues to recognize two broad categories of indemnity: as created by contract, as between a surety and a debtor; and under the common law of vicarious liability, as between principals and agents." (Citations and punctuation omitted.) AMEC, 322 Ga.App. at 715(1), 747 S.E.2d 10. Here, there is no contention that an express contract of indemnity exists between the third parties. Further, as to the second category of indemnity, we have held that this type of "[i]...