Quattrocchi v. State

• Decision Date: 20 October 2020
• Docket Number: A20A1127
• Citation: 850 S.E.2d 432,357 Ga.App. 224
• Parties: QUATTROCCHI et al. v. STATE of Georgia.
• Court: Georgia Court of Appeals

357 Ga.App. 224

850 S.E.2d 432

QUATTROCCHI et al.

v.STATE of Georgia.

A20A1127

Court of Appeals of Georgia.

October 20, 2020

Schreeder Wheeler & Flint, John A. Christy, Jonathan A. Akins ; King Yaklin & Wilkins, Russell D. King, Collin D. Hatcher, for appellants.

Christopher M. Carr, Attorney General, Anne S. Infinger, Deputy Attorney General, Jacquelyn L. Kneidel, Melissa M. Devine, Andrew D. Chesser, Assistant Attorneys General, for appellee.

Rickman, Judge.

As a sanction for spoliating evidence, the trial court struck the answer of Asta Quattrocchi and Erran Yearty (collectively, "Appellants") in this unfair trade practices case brought by the State of Georgia. The court also ruled that Appellants were not entitled to a jury trial on the issue of remedies. Appellants appeal both rulings. For the following reasons, we affirm.

The record shows that in July 2017, the State sued Appellants and the business they operated, Marvelay, LLC, under the Georgia Fair Business Practices Act ("FBPA"), OCGA § 10-1-390 et seq. The complaint alleged that Appellants controlled approximately 4,700 Internet domain names through which they disseminated deceptive advertisements to induce consumers to make uninformed purchases. The State sought injunctive relief, restitution for wronged consumers, civil penalties, and attorney fees. In September 2017, Appellants, individually, each timely answered the complaint, denying liability and asserting affirmative defenses. The State amended the complaint several times to assert more specific allegations of wrongdoing against the defendants, most recently in its Third Amended Complaint filed in July 2018. Appellants initially did not file an answer or other response to the Third Amended Complaint.

During the litigation, however, the State moved for sanctions against Appellants, alleging that they had failed to comply with discovery requests and had destroyed crucial evidence. Following multiple hearings on the matter, the trial court struck Appellants’ answers as a sanction for the spoliation, directing the clerk to immediately enter default against Appellants and inviting the State to file a motion for default judgment.

Thereafter, Appellants filed an answer to the Third Amended Complaint, citing OCGA § 9-11-55 (a) (regarding default, opening default, and default judgment). In this answer, Appellants denied that the State was entitled to any money damages based on the factual allegations in the Third Amended Complaint. Further, Appellants requested a jury trial "as to all remaining issues."

The State moved to strike the answer. The State also moved for a default judgment, requesting an order making findings of fact and conclusions of law and awarding injunctive relief, civil penalties, and restitution as remedies for Appellants’ violations of the FBPA.

In response to these motions, the trial court entered an order finding that Appellants were in default as to the Third Amended Complaint and were not entitled to a jury trial. The court further ordered that all remaining issues would be resolved after an evidentiary hearing on FBPA remedies. We granted Appellants’ request for interlocutory review.

1. Appellants contend that the trial court erred by finding them to be in default as to the Third Amended Complaint. Appellants do not challenge the trial court's finding that they spoliated evidence or its determination that striking their answer was an appropriate sanction. Rather, they argue that despite the court's ruling, they are not in default as to the Third Amended Complaint because the court struck only their September 2017 answer to the original complaint, and they were not required to file an answer to the Third Amended Complaint.

Appellants are correct that they were not required to file an answer to the Third Amended Complaint. OCGA § 9-11-15 (a) provides that "[a] party may plead or move in response to an amended pleading" (emphasis supplied), and OCGA § 9-11-8 (d) provides that "[a]verments in a pleading to which no responsive pleading is required ... shall be taken as denied[.]" The effect of a failure to respond to an amended complaint, therefore, is that the allegations of the amended complaint stand denied. See Shields v. Gish , 280 Ga. 556, 557 (1), 629 S.E.2d 244 (2006) ; Building Assoc. v. Crider , 141 Ga. App. 825-826 (1), 234 S.E.2d 666 (1977). Appellants are also correct that it is error for a trial court to find a party in default for failing to file an answer to an amended complaint. See Shields , 280 Ga. at 558 (2), 629 S.E.2d 244.

But here, Appellants’ answers were struck as a discovery sanction, not for failure to respond to the Third Amended Complaint. In its sanctions order, entered after the Third Amended Complaint, the trial court simply stated that Appellants’ "answers ... are hereby stricken." At the time of the default, the Third Amended Complaint was the effective complaint,¹ and its allegations stood denied. And given that the spoliation sanctions were entered after the Third Amended Complaint was filed, no notice issues arise. See Water's Edge Plantation Homeowner's Assn. v. Reliford , 315 Ga. App. 618, 620-621, 727 S.E.2d 234 (2012) (plaintiff was not entitled to default judgment for claim of attorney fees raised in amended complaint that was filed after the defendants had already gone into default of the original complaint because the defendants had no notice of the claim).

Accordingly, the sanctions order was not limited to Appellants’ July 2017 answers to the original complaint; it also encompassed Appellants’ imputed answers to the Third Amended Complaint. See generally AMLI Residential Properties v. Ga. Power Co. , 293 Ga. App. 358, 361 (1), 667 S.E.2d 150 (2008) (trial court has wide discretion to fashion appropriate sanctions when a party destroys or fails to preserve evidence). Because the court struck Appellants’ answers in toto, Appellants were in default as to the allegations of the Third Amended Complaint. Accordingly, we find no reversible error.

2. Appellants also contend that they are entitled to a jury trial on the issue of damages. The State argues that no jury trial is warranted because it sought only restitution and civil penalties, but not damages.

When a case in default "is one ex delicto or involves unliquidated damages ... the plaintiff shall be required to introduce evidence and establish the amount of damages before the court without a jury, with the right of the defendant to introduce evidences as to damages[.]" OCGA § 9-11-55 (a). "[I]n the event a defendant, though in default, has placed damages in issue by filing a pleading raising such issue, either party shall be entitled, upon demand, to a jury trial of the issue as to damages." Id. Appellants contend that the restitution remedies that the State seeks for their FBPA violations count as "damages" within the meaning of OCGA § 9-11-55 (a), and that their "Answer on Damages and Demand for a Jury Trial" placed damages in issue and entitled them to a jury trial on that issue. The question, then, is whether the State's FBPA remedy of restitution qualifies as "damages" within the meaning of OCGA § 9-11-55 (a).

The resolution of this issue is primarily governed by the language of the FBPA. Under the well-established rules of statutory construction,

we must

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