Simpson Consulting, Inc. v. Barclays Bank PLC, A97A1500

• Court: United States Court of Appeals (Georgia)
• Writing for the Court: ELDRIDGE; BIRDSONG, P.J., and RUFFIN
• Citation: 490 S.E.2d 184,227 Ga.App. 648
• Parties: , RICO Bus.Disp.Guide 9311, 97 FCDR 2955 SIMPSON CONSULTING, INC. et al., v. BARCLAYS BANK PLC.
• Docket Number: No. A97A1500,A97A1500
• Decision Date: 28 July 1997

Page 184

490 S.E.2d 184 227 Ga.App. 648, RICO Bus.Disp.Guide 9311,
97 FCDR 2955 SIMPSON CONSULTING, INC. et al.,
v.
BARCLAYS BANK PLC. No. A97A1500. Court of Appeals of Georgia. July 28, 1997.

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[227 Ga.App. 659] Gray & Hedrick, William E. Gray II, Law Office of David W.M. Boone, Robert G. Ballard, Atlanta, for appellants.

King & Spalding, James N. Gorsline, Ralph B. Levy, Atlanta, Flournoy & Gentry, William C. Gentry, Marietta, for appellee.

[227 Ga.App. 648] ELDRIDGE, Judge.

Appellee, Barclays Bank PLC d/b/a Barclays Wholesale Consumer Services ("Barclays"), was granted summary judgment on November 27, 1996, on the multiple theories of liability set forth in the permissive joinder of claims and parties in a complaint by each of the appellants, Simpson Consulting, Inc.; Link Financial Consulting, Inc.; Financial Software Consultants; Comoro Services, Inc.; Monkiewicz Services, Inc.; Logan Computer Associates, Inc.; Datagen, Inc.; SDF & Associates, Inc.; Goforth Consulting, Inc.; Bandy Consulting, Inc.; North East Software Solutions, Inc.; and JHR Consultants Inc.; each of which had separate and independent claims that [227 Ga.App. 649] were virtually identical except as to the individual damages. Appellants timely filed its notice of appeal, as amended.

The complaint asserts the following theories of liability: (1) fraud; (2) breach of contract (written/oral); (3) Federal RICO; (4) Georgia RICO; (5) promissory estoppel; and (6) third-party beneficiary liability.

The complaint fails to set forth the circumstances constituting fraud, which "shall be stated with particularity." OCGA § 9-11-9(b). Appellants contend that statements made by appellee's agents to independent contractors working as its purchasing agents were relied upon by each of the appellants to its detriment and were false, although such statements were never made directly to any appellant or in its presence. None of the appellants entered into written contracts with appellee, even though the work was to be performed over more than 12 months; the parties made no oral contract. However, appellants contend that their agreement was binding, notwithstanding the lack of specificity, definiteness, or formality, due to custom and practice in the trade.

Appellants each entered into separate independent contractor agreements and confidentiality agreements, not with Barclays, but with independent contractors, Scott International Banc Systems, Inc. ("SIBS") and Manley & Associates, Inc. ("M & A"). Barclays had a contract with M & A but not with SIBS; M & A subcontracted such work with SIBS. Patrick E. Manley ("Manley") was president of M & A as well as an officer and shareholder of SIBS. Eric Scott ("Scott") was a vice president of Barclays as well as owner and president of SIBS; Barclays' management and Scott's superiors were unaware of the existence of SIBS; that Scott was president of SIBS; or that SIBS had a contract with M & A to do Barclays work. Such dealings between M & A and SIBS, and Scott's secret relationship and business with each while employed by Barclays, violated Barclays' employment and operations policies.

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Manley, on behalf of M & A, paid to Scott substantial sums, $15,000 and $60,000, which Scott deposited into his checking account.

Although Scott insisted that each appellant become a separate corporate entity and appellants as corporate entities dealt solely with the independent contractors, M & A and SIBS at all times and never with appellee, appellants assert that each appellant has a direct action against appellee.

Each appellant asserted special damages for unpaid work performed. Appellants also assert that each is entitled to damages for holding itself available for possible future work, but do not state with enforceable particularity the terms, rates, and conditions for such future work. Appellants invoiced the independent contractors for the work done and received checks drawn on the account of SIBS for the [227 Ga.App. 650] invoiced amounts. The checks that appellants received from SIBS were returned for insufficient funds.

Appellants' only enumeration of error is that the trial court erred in granting summary judgment because material issues of fact as to each theory of liability exist for jury determination. We do not agree.

In the case sub judice, appellee's motion for summary judgment pierced appellants' pleadings on at least one essential element of each theory of liability, thereby requiring appellants to come forward with evidence to create material issues of fact. It must also be remembered that appellants have separate and individual causes of action that may be similar, or even identical, but not a common cause of action or a class action; thus, each appellant as to their respective claim, although treated collectively, must individually show that there exist material issues of fact as to their claim. Appellants collectively and individually have failed to meet this shifted burden of proof. Lau's Corp. v. Haskins, 261 Ga. 491, 493-494(2), 405 S.E.2d 474 (1991).

1. Fraud.

OCGA § 51-6-1 codifies an action for common law fraud. The essential elements of fraud and deceit are that: (1) the defendant made the representation; (2) at the time he made the representation, he knew that the representation was false; (3) he made the representation with the intention and purpose of deceiving the plaintiff; (4) the plaintiff reasonably relied upon such representation; and (5) the plaintiff sustained loss and damages as the proximate result of the representation. Eckerd's Columbia v. Moore, 155 Ga.App. 4, 270 S.E.2d 249 (1980); Tolar Constr. Co. v. GAF Corp., 154 Ga.App. 127, 267 S.E.2d 635 (1980) rev'd on other grounds, 246 Ga. 411, 271 S.E.2d 811 (1980); Brown v. Ragsdale Motor Co., 65 Ga.App. 727, 16 S.E.2d 176 (1941).

If there is a promise made without mutuality of obligation so that the promise is not enforceable as a contract, then the failure to perform is not actionable as fraud; further, mere breach of contract is not fraud. Williams v. Southland Corp., 143 Ga.App. 111, 113(1), 237 S.E.2d 639 (1977); Kinard Realty v. Evans, 152 Ga.App. 813, 814(2), 264 S.E.2d 282 (1979); Ely v. Stratoflex, Inc., 132 Ga.App. 569, 571-572(2), 208 S.E.2d 583 (1974); Bullard v. Western Waterproofing Co., 63 Ga.App. 547, 548-549(1), 11 S.E.2d 713 (1940); Tallent v. Scarratt, 51 Ga.App. 577, 181 S.E. 141 (1935). Mere speculation or puffing as to a future performance is not a material misrepresentation of fact that is actionable as fraud. Vaughan v. Oxenborg, 105 Ga.App. 295, 299-300(1), 124 S.E.2d 436 (1962). Statements of opinion are not such factual representations that are actionable as fraud. Buckner v. Mallett, 245 Ga. 245, 246(1), 264 S.E.2d 182 (1980); Puckett [227 Ga.App. 651] Paving Co. v. Carrier Leasing Corp., 236 Ga. 891, 892, 225 S.E.2d 910 (1976); R.L. Kimsey Cotton Co. v. Ferguson, 233 Ga. 962, 966-968(4), 214 S.E.2d 360 (1975); U-Haul Co. of Western Ga. v. Dillard Paper Co., 169 Ga.App. 280, 281, 312 S.E.2d 618 (1983). A promise to perform some future act is not fraud unless made with the present intent not to perform or with a present knowledge that the future event will not take place. Craft v. Drake, 244 Ga. 406, 408, 260 S.E.2d 475 (1979); Clare Dev. Corp. v. First Nat. Bank of Columbus, 243 Ga. 709, 256 S.E.2d 452 (1979); First Nat. Bank, etc. v. Thompson, 240 Ga. 494, 495, 241 S.E.2d 253 (1978);

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Hayes v. Hallmark Apts., 232 Ga. 307, 308-309(1), 207 S.E.2d 197 (1974); Ga. Real Estate Comm. v. James, 152 Ga.App. 193, 195-196, 262 S.E.2d 531 (1979).

In the case sub judice, construing appellants' allegations of fraud most favorably, there exists no representation made directly to an appellant that was false and that was made with the intent to deceive the appellant into relying upon the representation to appellants' detriment. All that exists in the case sub judice is a business proposal that fell apart prior to it becoming formalized into a legally binding contract.

Appellants misplace reliance upon Robert & Co. Assoc. v. Rhodes-Haverty Partnership, 250 Ga. 680, 300 S.E.2d 503 (1983) and Southeast Consultants v. O'Pry, 199 Ga.App. 125, 404 S.E.2d 299 (1991), which are distinguishable on both the law and facts from the case sub judice. Factually in these cases, the tortfeasors prepared written documents as professionals, providing expert opinion and services for a fee, which documents contained erroneous, mistaken, or misleading statements of fact. The tortfeasors negligently gave such documents to another with the full expectation that such documents, unchanged, would be given to and relied upon by the plaintiffs. Liability was premised, not on scienter, but upon negligence in making the representations relied upon as experts upon whom it is reasonably expected that others will rely. "Under this standard [Restatement, Torts Second, § 552], one who supplies information during the course of his business, profession, employment, or in any transaction in which he has a pecuniary interest has a duty of reasonable care and competence to parties who rely upon the information in circumstances in which the maker was manifestly aware of the use to which the information was to be put and intended that it be so used. This liability is limited to a foreseeable person or limited class of persons for whom the information was intended, either directly or indirectly.... If it can be shown that the representation was made for the purpose of inducing third parties to rely and act upon the reliance, then liability to the third party can attach." Robert & Co. Assoc. v. Rhodes-Haverty Partnership, supra at 681-682, 300 S.E.2d 503.

The foregoing cases are a hybrid "fraud" action, based upon professional [227 Ga.App. 652] negligence, not scienter. Such standard applies under very limited factual circumstances that would give a right of action for professional malpractice, but for the absence of...