Mosera v. Davis

• Decision Date: 28 September 2010
• Docket Number: No. A10A1253.,A10A1253.
• Citation: 701 S.E.2d 864,306 Ga.App. 226,10 FCDR 3228
• Parties: MOSERA v. DAVIS et al.
• Court: Georgia Court of Appeals

701 S.E.2d 864

306 Ga.App. 226

10 FCDR 3228

MOSERA

v.DAVIS et al.

No. A10A1253.

Court of Appeals of Georgia.

Sept. 28, 2010.

Merolla & Gold, Angelo T. Merolla, for appellant.

Hawkins, Parnell, Thackston & Young, Kim M. Jackson, Atlanta, for appellees.

MIKELL, Judge.

Dan Mosera appeals from the order of the Superior Court of Fulton County granting summary judgment in favor of attorneys Michael P. Davis and R. Milton Crouch, and their law firm, Shapiro Fussell Wedge & Martin, LLP (hereinafter "appellees"), in this action for legal malpractice and breach of fiduciary duty. For the following reasons, we affirm.

To prevail on summary judgment, the moving party must show that no genuine issues of material fact remain to be tried and that the undisputed facts, viewed in the light most favorable to the nonmovant, warrant judgment as a matter of law. On summary judgment, we must construe the evidence and all reasonable inferences and conclusions that may be drawn from it most favorably to the nonmovant.¹

So viewed, the evidence shows that in 1998, Mosera formed a software distribution business in California with two partners. Represented by Atlanta attorney Wade Anderson, the business asserted legal claims against a software manufacturer, which claims were eventually settled in 2002. Mosera, who had moved to Atlanta in the meantime, received approximately $560,000 from the settlement. In January 2002, attorney Anderson approached Mosera about an investment opportunity involving Humberto Bethencourt, with whom Mosera had done business upon first arriving in Atlanta. Anderson advised Mosera that he had a client who had won land in a quiet title suit; that the client wanted to develop a subdivision; and that Bethencourt was going to be the developer.

Using the money from the settlement, Mosera loaned $500,000 to TBG Group, Inc. ("TBG"), a Bethencourt-related entity, which was the manager of a joint venture, Rowland Springs, LLC ("Rowland Springs"), for the development of a subdivision in Bartow County. On February 8, 2002, Mosera executed a loan agreement with TBG, which gave him a deed to secure debt on the subdivision. Bethencourt executed the loan agreement as president of TBG. According to the loan agreement, Mosera was to receive interest payments of $3,800 per month for 18 consecutive months, until August 29, 2003, when a balloon payment for the principal amount was due. The loan agreement also specifically provided that Andersonrepresented Rowland Springs. The interest payments were made, but the balloon payment was not. When Mosera threatened to foreclose on the property, Anderson told him that he could not because his deed to secure debt had never been filed.² After the loan default, Mosera was referred to appellees.

On October 24, 2003, attorney Davis wrote a letter to Mosera explaining Georgia's recording statutes and the consequences of Anderson's failure to file the deed to secure debt. Mosera testified that "90 percent of it [was] legalese, which you know, I got the gist of it." The letter explained that an unfiled deed to secure debt could be enforced against the party to the instrument, or against a transferee that had constructive notice of the instrument, but not against a bona fide purchaser.

On December 23, 2003, Mosera filed suit in Fulton County Superior Court against TBG, Rowland Springs, Bartow Group, Bethencourt, and Anderson ("defendants"), asserting claims for fraud, breach of contract, promissory estoppel, conspiracy, and theft by deception (the "underlying litigation"). The complaint alleged that Anderson and Bethencourt are officers, members, principals, or partners in TBG, Rowland Springs, and Bartow Group; that TBG had no ownership interest in the property at the time the loan agreement was executed; that Bartow Group was the true owner of the property; and that defendants made numerous transfers or conveyances of the property in an effort to confuse buyers and lenders as to its true owner. On January 7, 2004, Davis filed on Mosera's behalf a notice of lis pendens against the property relating to the underlying litigation.

Prior to and subsequent to the filing of the complaint in the underlying litigation, Mosera attempted to settle the matter with Anderson and Bethencourt. The record reflects that on February 27, 2004, Mosera approved the following counteroffer to defendants (excluding Anderson):

(1) The down payment of approximately $172,000.00 is acceptable[;] (2) Along with the properly executed Security Deed, I will need written certification from you that the title to the property remains in the name of Bartow Group, theentity which will be granting Mr. Mosera the Security Deed[;] (3) Dan Mosera to receive $15,000.00 from the first 50 closings which occur from the subdivision, for a total of $750,000.00[;] (4) [Defendants] will execute a Consent Judgment in favor of Mr. Mosera which will not be filed with the Court unless, following written notice and an opportunity to cure, your clients default on the terms of the settlement[;] (5) Mr. Mosera will release the Lis Pendens immediately upon payment of the $172,000.00 in down payment and the transfer of the Security Deed[;] (6) Upon execution of a Settlement Agreement, Mr. Mosera will dismiss the lawsuit without prejudice[;] (7) Mr. Mosera would credit your clients any funds which he might recover from Wade Anderson through this lawsuit or the Mosera Promissory Note.

No settlement was reached at that time, however, because Bethencourt insisted that the lis pendens be released prior to any settlement, so that he could refinance the property; and Mosera would not agree to such a release.

Sometime in April 2004, attorney Crouch became involved in the settlement negotiations; and on May 24, the parties reached a final agreement (the "Settlement Agreement") similar to Mosera's counteroffer. The Settlement Agreement provided as follows: (1) a settlement amount of $857,500; (2) an initial payment of $150,000; (3) execution of a Promissory Note and a second priority deed to secure debt, with the property (the land used to develop the Rowland Springs development) pledged as collateral, and Mosera's promise to file the deed to secure debt only upon breach of the Settlement Agreement and failure to cure; ³ (4) $15,000 payment per lot closing until payment of all principal of $707,500, plus interest of 2% per month on the unpaid balance; (5)release of the lis pendens upon payment of the proceeds of the sale of two of the three condominiums; (6) dismissal of the lawsuit; and (7) a consent judgment reflecting the settlement terms, to be filed in the event of an uncured default by defendants.

According to Mosera, Crouch and Davis advised him that under the Settlement Agreement, he was "100 percent secured in second position behind Cherokee Bank." Mosera read the terms of CherokeeBank's deed to secure debt and acknowledged that the filing of another deed to secure debt on the property would have resulted in a default under the terms of that document. At the time Mosera entered into the Settlement Agreement with defendants, he understood that the deed to secure debt would not be filed. Although Mosera objected to not filing the deed to secure debt because of his earlier bad experience with the deed to secure debt from TBG, he nonetheless signed the Settlement Agreement. Prior to execution of the Settlement Agreement, Davis also explained to Mosera the purpose of the consent judgment and how it would work in the event of a default. Davis testified that Mosera was advised of all the factors that went into the Settlement Agreement; that Mosera understood that there was some risk involved; that he understood that this was the best deal that appellees could obtain for him; and that he was anxious to get paid for the three condominiums.

Through August 2005, Mosera received $135,000 from nine lot closings and $154,450 in interest payments. Defendants then defaulted on the remaining amount owed. Several months later, Mosera learned that his unrecorded deed to secure debt was ineffective. Mosera contacted Crouch. Crouch sent a notice of default to Bethencourt on February 21, 2006, and filed Mosera's deed to secure debt on March 7, 2006. By that time, however, the real estate involved was encumbered by a secured debt to Southern National Bank in the amount of approximately $5,200,000. On March 20, 2006, Mosera e-mailed Crouch, asking that he file the consent judgment "ASAP." Crouch replied, "Will do," but later advised Mosera that the underlying litigation had been dismissed without prejudice; that the law firm Shapiro Fussell Wedge & Martin, LLP, no longer represented Mosera; and that Mosera would have to file the consent judgment himself. In July 2006, Southern National Bank foreclosed on the property and later sold it for $4,500,000. Mosera's security interest in the property was extinguished by other superior liens, and he was unable to recover additional funds from defendants.

Mosera filed this action against appellees on May 27, 2008, alleging that "[a]s a result of the tactical errors and incompetence of [appellees], [he] was required, and is still required, to initiate legal actions to recover the amounts due to him from [defendants], which has not occurred." Mosera's expert, Stephen Berk, averred that appellees breached their standard of care in several ways, including failing "to act competently in the negotiation, drafting, and execution of the Settlement Documents." Berk further averred that the settlement documents contained numerous inconsistencies; that the deed to secure debt was not recorded; and that by canceling the lispendens, Mosera "became an unsecured creditor by releasing his interest in the [property]."

Appellees moved for summary judgment. The trial court granted their motion, ruling that there was no evidence that appellees violated the applicable standard of care; that Mosera had read and understood the terms of the Settlement Agreement;...