Kothari v. Patel, No. A03A0286

Decision Date17 June 2003
Docket Number No. A03A0286, No. A03A0287.
Citation585 S.E.2d 97,262 Ga. App. 168
PartiesKOTHARI v. PATEL. Patel et al. v. Patel.
CourtGeorgia Court of Appeals


Cohen, Cooper & Estep, Steven J. Estep, William A. Turner, Jr., Valdosta, for Kothari.

Helms & Helms, Homerville, Jack H. Helms, Jr., Bodker, Ramsey & Andrews, Stephen C. Andrews, Atlanta, for Arvind Patel et al.

Caldwell & Watson, Wade H. Watson III, Robert S. Carlson, Atlanta, Michael S. Bennett, Sr., Valdosta, for Vijay Patel. SMITH, Chief Judge.

This matter, arising from a business venture, appears in this court for the second time. The origins of this consolidated appeal lie in an action filed by Interstate Development Services of Lake Park, Georgia, Inc. (IDS) against Vijay Patel (Vijay). Vijay answered and counterclaimed, and the case went to trial in 1994, resulting in a verdict for IDS on its complaint and for Vijay on his counterclaim for lost profits. On appeal by IDS, we reversed the judgment for Vijay on the ground that the evidence supporting it was too speculative. Interstate Dev. Svcs. v. Patel, 218 Ga.App. 898, 463 S.E.2d 516 (1995).

In 1996, Vijay moved to set aside the judgment in the previous suit and brought suit against IDS and the other three individual principals in the corporation, Dr. Arvind Patel, who is Vijay's uncle, Arvind's wife Varsha Patel, and Dr. Prashant Kothari, Arvind's friend and business associate. He sought compensatory and punitive damages from the individuals, dissolution of the corporation, and other injunctive relief. Vijay's motion to set aside was granted, and the parties agreed to consolidate the prior suit, which had been returned to its pretrial status, with Vijay's action for trial. Because Vijay sought punitive damages, the trial was bifurcated.

In the first phase, the jury returned a verdict in favor of Vijay for $209,556 in compensatory damages, $248,854 to compensate Vijay for his interest in IDS, and $212,300 in expenses of litigation. It found that Vijay was not liable on the corporation's counterclaim and found clear and convincing evidence to support an award of punitive damages. In the second phase, the jury awarded punitive damages in the amount of $750,000 against Arvind Patel, $100,000 against Varsha Patel, and $350,000 against Kothari. Judgment was entered on the verdicts, and the defendants' motions for judgment notwithstanding the verdict (j.n.o.v.), for new trial, and to amend the judgment were denied. In Case No. A03A0286, Kothari appeals from the judgment against him, and in Case No. A03A0287, the remaining defendants appeal. The appellants have consolidated their appeals, with one brief being filed on behalf of IDS and another on behalf of all individual appellants. We follow their form, consolidating the appeals for review and addressing the enumerations raised by IDS separately from those raised by the individual appellants. We find no merit in any of the appellants' contentions, and we affirm the judgment.

Construed to support the verdict, the evidence presented at trial showed that the project in issue began when Vijay located property for sale in south Georgia. He believed that the site, along 1-75, would be perfect for tall billboards. He made a small down payment and sought other investors. The three individual appellants agreed to invest, and they formed IDS, a statutory close corporation. IDS then purchased the property. Vijay executed a stock subscription agreement, and he alone executed a personal guarantee of a note to the seller.

Matters soon became contentious between the parties, and IDS, at the direction of Arvind and Kothari, filed suit against Vijay, seeking collection on the note and acceleration of the stock subscription commitment requiring Vijay to contribute up to $200,000 in capital. Vijay answered and counterclaimed, claiming that he was entitled to recover lost profits from IDS and that IDS had violated the Georgia corporation code sections protecting minority shareholders. During the pendency of that litigation, Kothari engaged in negotiations for the sale of a small portion of IDS's property in south Georgia to Flying J, Inc., for development of a truck stop. In early 1994, an agreement was reached between IDS and Flying J to sell 20 acres for more than $1 million. Vijay was not informed of this agreement, although the other shareholders were notified. He did not learn of the contract until after the trial had ended and was not paid a share of the proceeds of the sale. In fact, IDS deliberately concealed the contract from Vijay. Arvind testified at trial that the property was worth less than they had paid for it and that IDS had offered the property to Flying J but had been unable to sell it. In actuality, the sale of a portion of the property had been completed for a price more than IDS paid for the entire property. The judgment against Vijay in the first suit was set aside when Vijay learned of the fraud. He then brought this action.

A. The Individual Appellants' Appeal.

1. The Patels and Kothari contend that the trial court abused its discretion in allowing Vijay to introduce evidence of appellants' business relationships with other individuals. They argue that this evidence was "irrelevant, prejudicial, and inflammatory character evidence disguised as `similar transaction' evidence." This contention refers to evidence presented by Vijay that Arvind and his wife and colleagues made it a practice to mistreat and defraud other Indian immigrants in their extensive and varied business dealings unrelated to the project with Vijay. Evidence was presented, for instance, that the individual appellants, through various corporations, own many motel properties, primarily in Georgia and Florida, and that they induced each of three Indian immigrants who testified to invest in leases for the motels by falsely inflating the motels' earnings and then took over the developments when the investors could not meet their rent or other obligations. Vijay also presented evidence that the individual appellants "watered" the stock of, and withheld payments due to, another Indian who was a minority shareholder in a close corporation controlled by the individual appellants, forcing him to sell his shares for a distressed price.

It is well established that the admissibility of evidence is a question for the court. Schulz v. Sherwinter, 227 Ga.App. 380, 382, 489 S.E.2d 348 (1997). In civil cases involving allegations of fraud, other transactions may be admissible to show motive or intent. To be admissible, the other transactions must be close in time and part of a common scheme, because "frequently the state of mind accompanying the doing of an act is illustrated by other acts of a similar nature, done or proposed by the defendant in such a way as to indicate a general practice or course of conduct." (Citations and punctuation omitted.) Troncalli v. Jones, 237 Ga. App. 10, 16, 514 S.E.2d 478 (1999). Appellants maintain the trial court failed to determine outside the presence of the jury whether the incidents in issue were admissible and then compounded this error by delegating this responsibility to the jury. According to the individual appellants, the trial court simply allowed the witnesses to testify and then charged the jurors it was up to them to decide if the incidents presented were similar.

This contention is belied by the record. It is clear that the trial court considered this issue previously because appellants moved in limine to exclude this evidence, and the trial court read the written motions and heard the parties' arguments. The trial court considered the nature and purpose of the evidence and ruled on its admissibility outside the presence of the jury.

To be sure, this evidence was harmful to the appellants, but the trial court determined that the evidence was sufficiently similar to Vijay's allegations to warrant admitting it. We agree with the trial court that the evidence was sufficiently similar to be admissible. The individual appellants argue correctly that differences exist between the similar incidents and the actions complained of by Vijay. For example, some of the incidents involved landlord-tenant situations and not shareholder relationships. But they have many similarities as well. The victims were Indians who relied on Dr. Patel's status in the Indian community and trusted him with investments. Like Vijay, their trust was betrayed by Dr. Patel's misrepresentations, enabling Dr. Patel to gain control of the investors' capital for his own benefit and that of his corporations. And all the incidents occurred within three years of the fraud alleged by Vijay.

The trial court mitigated the potential harm by instructing the jury immediately to limit its consideration of the similar transactions to the issue of motive, intent, or course of conduct, a practice approved by the Supreme Court in Webster v. Boyett, 269 Ga. 191, 196(2), 496 S.E.2d 459 (1998). Even in Cooper Tire &c. Co. v. Crosby, 273 Ga. 454, 543 S.E.2d 21 (2001), a product liability case relied upon by appellants, the Supreme Court emphasized the "sound discretion of the trial court, whose determination shall not be disturbed on appeal unless it amounts to an abuse of discretion.... Absent clear abuse, the trial courts' exercise of discretion in admitting or refusing to admit such evidence is entitled to deference, and should not be hamstrung by restrictive rulings." (Punctuation and footnote omitted.) Id. at 457, 543 S.E.2d 21. The trial court did not err in admitting these similar transactions.

2. Appellants contend the trial court erred in its charge by permitting the jury to award unlimited punitive damages based upon a "preponderance of the evidence" standard. The trial court charged the jury that "in order to find that the defendants acted with specific intent, that ... must be proven...

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