RL BB ACQ I-GA CVL, LLC v. Workman, A16A1512

• Decision Date: 15 March 2017
• Docket Number: A16A1512
• Citation: 341 Ga.App. 127,798 S.E.2d 677
• Parties: RL BB ACQ I-GA CVL, LLC v. WORKMAN, et al.
• Court: Georgia Court of Appeals

341 Ga.App. 127

798 S.E.2d 677

RL BB ACQ I-GA CVL, LLC

v.WORKMAN, et al.

A16A1512

Court of Appeals of Georgia.

March 15, 2017

Michael Anthony Shaw, April Reeves Freeman, Christopher Hollis Ezell, Stephen Paul Drobny, Atlanta, Ben H. Harris, for Appellant.

Brent William Herrin, Gus H. Small, Benjamin S. Klehr, Atlanta, for Appellee.

Branch, Judge.

The current appeal arises out of a post-judgment discovery dispute, and it presents this Court with several unique questions. First, the appeal requires us to determine whether a party involved in a post-judgment discovery dispute can assert a claim for attorney fees under OCGA § 9-15-14. Additionally, this case poses the question of whether a party who fails to request an award of expenses (including attorney fees) at the time it moves for a protective order can seek such an award at a later time, by way of a separate motion for sanctions. And assuming that a party may bring a separate sanctions motion to recover expenses incurred in obtaining a protective order, the question becomes whether the Civil Practice Act allows that party to recover the expenses associated with such a sanctions motion. We address each of these questions, as well as other relevant issues, below.

The record shows that after RL BB ACQ I-GA CVL, LLC ("Rialto"), obtained a $1.9 million judgment against Cooper Village, LLC, and Howard Workman (collectively, the "Judgment Debtors"), the company served post-judgment discovery requests on Howard's wife, Honey C. Workman, and 16 separate LLCs¹ managed by Honey and in which Howard had an ownership interest. Honey and the LLCs (collectively, the "Third Parties") limited their discovery responses to information and documents relating to or evidencing assets belonging to or transferred from the Judgment Debtors and/or transactions involving the Judgment Debtors. Rialto then served additional discovery requests on Fidelity Bank, seeking numerous documents relating to any account held at Fidelity by Cooper Village, Howard, Honey, and/or any of the LLCs. The Third Parties sought and obtained a protective order that limited the discovery Rialto could receive from Fidelity. Approximately six weeks after entry of that order, and three days after Rialto's attorneys allegedly failed to appear to take Honey's deposition, the Third Parties filed a motion seeking costs, attorney fees, and sanctions under OCGA § 9-15-14, § 9-11-26, § 9-11-30, and § 9-11-37. Following a hearing, the trial court granted that motion and entered an order requiring Rialto and its attorneys to pay the fees and costs incurred by the Third Parties in moving for the protective order, in preparing for and attending Honey's deposition, and in pursuing their motion for sanctions.

That order also sanctioned Rialto by barring it from conducting a post-judgment deposition of Honey for a period of five years.

Rialto now appeals, asserting that the trial court erred in basing its award of fees and costs on OCGA § 9-15-14. Rialto further contends that any award based on OCGA § 9-15-14 must be reversed because the findings of fact on which the trial court based that award are not supported by the evidence and because the trial court failed to determine what portion of the fees claimed by the Third Parties were attributable to Rialto's sanctionable conduct. Additionally, Rialto argues that the trial court erred in awarding the Third Parties the costs and fees they incurred in preparing for and attending Honey's deposition and in bringing the sanctions motion. Finally, Rialto asserts that the Third Parties waived their right to seek an award under OCGA § 9-11-26 because they did not assert a right to recover under that statute until they filed their reply in support of their sanctions motion, and because they did not request their costs and fees at the time they moved for the protective order.

We find that OCGA § 9-15-14 does not apply to post-judgment discovery, and we reverse the trial court's order to the extent that it holds otherwise. Additionally, for reasons explained more fully below, we reverse the trial court's award of the Third Parties' costs and fees incurred in preparing for and attending Honey Workman's deposition and in bringing the sanctions motion. We also reverse the court's imposition of the non-monetary sanction against Rialto. Finally, we vacate that part of the court's order awarding the Third Parties the costs and fees associated with their motion for a protective order and remand for further proceedings on the question of whether OCGA § 9-11-26 permits a party to pursue such an award by way of a separate sanctions motion, filed after the motion for a protective order has been heard and decided.

"[T]rial courts are afforded broad discretion to control discovery and to impose sanctions for a party's failure to comply with discovery requests, and this Court will not reverse a trial court's ruling on such matters absent an abuse of discretion." North Druid Dev. v. Post, Buckley, Schuh & Jernigan, Inc. , 330 Ga.App. 432, 434-435 (1), 767 S.E.2d 29 (2014) (citation and footnote omitted). See also In Re Callaway , 212 Ga.App. 500, 501, 442 S.E.2d 309 (1994) (under the Civil Practice Act, the trial court's broad discretion with respect to discovery extends to post-judgment discovery). Such an abuse of discretion occurs where the trial court either fails to apply or misapplies the relevant law. See North Druid Dev. , 330 Ga.App. at 441, 767 S.E.2d 29 (on motion for reconsideration); Mathis v. BellSouth Telecommunications , 301 Ga.App. 881, 690 S.E.2d 210 (2010).

The relevant facts are undisputed and show that in exchange for a $5.5 million loan from BB&T Bank, Cooper Village provided the bank with both a promissory note and a security interest in certain real property located in Gwinnett County. Howard, who executed all of the loan documents in his capacity as manager of Cooper Village, also gave a personal guaranty to secure the note. BB&T eventually assigned its rights under all of the loan documents, including Howard's personal guaranty, to Rialto. After Cooper Village defaulted on the note and Howard refused to honor his guaranty, Rialto exercised its rights under the deed to secure debt, sold the Gwinnett County property for $4 million, and obtained a judicial confirmation of that sale.²

In July 2012, Rialto sued Cooper Village and the Workmans in Fulton County Superior Court seeking a deficiency judgment for the amounts owed under the promissory note. In its complaint, Rialto asserted a claim against Cooper Village for breach of the promissory note, a claim against Howard for breach of the guaranty, and a claim against both Howard and Honey for fraudulent transfer of property.³ Rialto sought and received summary judgment on its contractual claims against Cooper Village and Howard, and on May 22, 2013, the trial court entered judgment against those two defendants jointly and severally in the amount of $1,970,417.92 plus interest. Rialto voluntarily dismissed its remaining claims without prejudice on January 22, 2014, and the trial court entered an order closing the case on February 18, 2014.

During January and February 2014, Rialto served separate post-judgment discovery requests (including interrogatories and request to produce) on each of the Third Parties. The discovery requests served on Honey demanded all of her personal financial records and the financial records of any entity in which she owned at least a five percent interest, dating back to January 1, 2009. The requests served on the third party LLCs demanded, among other things, all of the financial records of each entity. The Third Parties objected to producing all of the financial information requested by Rialto, but agreed to produce documents relating to any assets belonging to Howard or any transfers of funds or property to or from Howard. It appears that the Third Parties thereafter provided such information to Rialto in the spring of 2014. Approximately one year later, in May 2015, Rialto served post-judgment discovery requests on Fidelity Bank, which sought "any and all documents that relate, reflect, or refer to bank statements, copies of checks (front and back), deposits, wire transfers, debits, and credits of Howard B. Workman; Honey B. [sic] Workman; Cooper Village, LLC; [the 16 LLCs;] or any other entity or trust in which Fidelity Bank knows that Howard B. Workman maintains an interest." The Third Parties objected to these requests, and when the parties could not reach an agreement as to the appropriate scope of discovery from Fidelity, the Third Parties filed a motion for a protective order. Following a hearing, the trial court entered an order granting the motion and limiting the discovery Rialto could obtain from Fidelity.⁴ The Third Parties did not request an award of their costs and fees at the time they moved for the protective order, and the order entered by the trial court did not make such an award.

The protective order was entered on July 24, 2015, and on that same day an attorney for Rialto emailed the attorneys representing the Third Parties requesting that they provide him with dates Honey and Howard would be available for post-judgment depositions. An attorney for the Third Parties responded that the firm no longer represented Howard and that they would provide possible dates for Honey's deposition at a later time. On August 3, the attorney emailed Rialto's lawyer reiterating that the firm no longer represented Howard, stating that it could not accept service on Howard's behalf, providing a list of six dates that Honey could be made available for a deposition (including September 1, 2015), and expressing their desire that Honey's deposition occur at her lawyers' offices. Rialto's attorney responded, "September 1, 2015 at your office. We'd like to depose [Howard] on September 2, if possible." The email did not specify a time for Honey's deposition, and Rialto never formally noticed that deposition.

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