Summit Automotive Group, LLC v. Clark

• Decision Date: 10 July 2009
• Docket Number: No. A09A0105.,No. A09A0104.,A09A0104.,A09A0105.
• Citation: 681 S.E.2d 681
• Parties: SUMMIT AUTOMOTIVE GROUP, LLC v. CLARK et al. Kia Motors America, Inc. v. Clark et al.
• Court: Georgia Court of Appeals

681 S.E.2d 681

SUMMIT AUTOMOTIVE GROUP, LLC v. CLARK et al.

Kia Motors America, Inc. v. Clark et al.

No. A09A0104.

No. A09A0105.

Court of Appeals of Georgia.

July 10, 2009.

Dillard, Bower & Crowley, Terry A. Dillard, Waycross, for appellant (case no. A09A0104).

Brown, Readdick, Bumgartner, Carter, Strickland & Watkins, Terry L. Readdick, Steven G. Blackerby, for appellant (case no. A09A0105).

Gibson & Spivey, Douglas L. Gibson, Adam Ferrell, Kenneth A. Taft, Waycross, for appellees.

BERNES, Judge.

Southern Georgia Automotive Group, LLC ("Southern Georgia") and its affiliate Southern Georgia Imports, LLC ("Georgia Imports") operated Kia and Mitsubishi automobile dealerships in the Waycross area. The appellees¹ are dissatisfied consumers who had purchased vehicles from the dealerships. The appellees filed the instant action against Southern Georgia, Georgia Imports, and several of their employees, alleging that the dealerships had failed to pay off outstanding loans on vehicles traded in as part of their respective sales transactions and failed to obtain gap insurance, extended warranty, and life insurance policies that they had purchased during the transactions. Appellees later added as defendants franchisor, Kia Motors of America, Inc.,² and the subsequent purchaser of the Kia dealership, Summit Automotive Group, LLC. Appellees alleged that these entities conspired with other named defendants to defraud them. Kia Motors and Summit moved for summary judgment, and the trial court denied both motions. In Case No. A09A0104, we granted Summit's application for interlocutory appeal to review the trial court's decision. In Case No. A09A0105, Kia cross-appeals challenging the denial of its motion. For the reasons that follow, we reverse in both cases.

To prevail at summary judgment under OCGA § 9-11-56, the moving party must demonstrate that there is no genuine issue of material fact and that the undisputed facts, viewed in the light most favorable to the nonmoving party, warrant judgment as a matter of law. A defendant who will not bear the burden of proof at trial need not affirmatively disprove the nonmoving party's case; instead, the burden on the moving party may be discharged by pointing out by reference to the affidavits, depositions and other documents in the record that there is an absence of evidence to support the nonmoving party's case. If the moving party discharges this burden, the nonmoving party cannot rest on its pleadings, but rather must point to specific evidence giving rise to a triable issue. Our review of the grant or denial of summary judgment is de novo, and we construe the evidence and all inferences therefrom in favor of the nonmoving party.

(Citation omitted.) DaimlerChrysler Motors Co. v. Clemente, 294 Ga.App. 38, 38-39, 668 S.E.2d 737 (2008).

So viewed, the evidence shows that from July 2002 to April 2005, Southern Georgia and its affiliate, Georgia Imports, operated two auto dealerships commonly known as Kia of Waycross and Waycross Mitsubishi. Southern Georgia's operation of the Kia dealership was authorized by a franchise agreement with Kia Motors. The franchise agreement set forth the general standards that Southern Georgia was required to meet in its operations and incorporated a Business and Operating Plan that provided average sales performance standards. The franchise agreement also provided for annual performance evaluations and periodic facility evaluations to be conducted jointly by Southern Georgia and Kia Motors. A financial audit of the dealership, conducted in 2003, failed to disclose any problems or errors.

Between October 2002 and October 2004, appellees purchased vehicles from the Kia and Mitsubishi dealerships. As part of the purchase transactions, appellees traded in vehicles that had outstanding liens in favor of third party creditors. The dealerships agreed to pay off the remaining balances due to the creditors with funds from appellees' purchases, but failed to do so. Several appellees also purchased gap insurance, extended warranties, and/or life insurance as part of their transactions, but the dealerships failed to obtain the policies covering these additional protection plans. The dealerships had been experiencing financial difficulties and did not have adequate funds to cover their operating costs. Rather than paying off the liens on the trade-in vehicles and purchasing the insurance and warranty policies, the dealerships used the funds collected from appellees' transactions to pay the dealerships' financial obligations to their third-party primary lender.

In mid-December, 2004, after appellees discovered the dealerships had not paid off the liens, they filed the instant lawsuit against Southern Georgia, Georgia Imports, their franchisors, and employees. The matter also was reported to the Governor's Office of Consumer Affairs (the "OCA"). On December 22, 2004, the OCA's administrator issued a cease and desist order, finding that the dealerships' conduct in the transactions violated the Georgia Fair Business Practices Act of 1975, OCGA § 10-1-390 et seq. Southern Georgia agreed to comply with the terms of the cease and desist order and entered into a stipulated Assurance of Voluntary Compliance, which provided for Southern Georgia's payment of the trade-in vehicle liens and restitution to the impacted consumers, including appellees.

Thereafter, on December 31, 2004, Southern Georgia entered into an Asset Purchase Agreement whereby it agreed to sell its Kia dealership to Summit. Summit learned of the dealership's failing financial condition and liabilities while performing an in-depth investigation of the dealership in contemplation of its purchase, and appellees' pending lawsuit was disclosed in the agreement. Summit deposited $280,508.12 and Southern Georgia deposited $150,000 pursuant to an escrow agreement and release to pay the obligations under the Assurance of Voluntary Compliance. The closing for Summit's purchase of the Kia dealership took place in April 2005 and Summit subsequently took over operations of the dealership.

After Summit purchased the dealership, appellees added Summit as a party defendant to the lawsuit, claiming that it had violated the Georgia Bulk Transfer Act, OCGA § 11-6-101 et seq., and had conspired with Southern Georgia to defraud appellees. Summit denied appellees' claims and filed a motion for summary judgment. Kia Motors, the franchisor for the Kia dealership, also filed a motion for summary judgment. The trial court denied both motions.

Case No. A09A0104

1. Summit contends that the trial court erred in denying its motion for summary judgment on appellees' claims predicated upon the Georgia Bulk Transfer Act. We agree.

Appellees' amended complaint alleged that Summit's acquisition of Southern Georgia's assets under the asset purchase agreement constituted a bulk transfer, subject to the provisions of the Bulk Transfer Act, OCGA § 11-6-101, et seq. Appellees further alleged that they were creditors entitled to notice of the bulk transfer as required by OCGA §§ 11-6-105 and 11-6-107, and that as a result of Summit's failure to comply with the notice requirements, Summit was liable for the tort claims in this direct action. Appellees' claim, however, fails as a matter of law.

As we have previously held,

[a]ctions within the scope of the Bulk Transfer Act do not permit direct actions in tort against the transferee. In interpreting an earlier version of the Bulk Transfer Act, we held that its purpose was to protect creditors against fraudulent sales by debtors. More significantly, however, the Bulk Transfer Act preserves a creditor's remedy against the goods, not against the transferee personally.

(Punctuation and footnote omitted.) Tate v. Kia Autosport of Stone Mountain, 273 Ga. App. 627, 628, 616 S.E.2d 112 (2005). See also Brown Transport Corp. v. Street, 194 Ga.App. 717, 719-720(2), 391 S.E.2d 699 (1990). "[The] Bulk Transfer Act permits only an in rem action against the transferred goods or the proceeds therefrom, not an in personam action against the transferee." Tate, 273 Ga.App. at 628-629, n. 6, 616 S.E.2d 112. See also American Express Co. v. Bomar Shoe Co., 125 Ga.App. 408, 409-410, 187 S.E.2d 922 (1972). Accordingly, appellees may not maintain a direct action against Summit personally or against all of Summit's assets. Id. Because appellees' claim under the Bulk Transfer Act was precluded as a matter of law, summary judgment in favor of Summit on this ground was required.

2. Summit also contends that it was entitled to summary judgment in its favor as to appellees' claim for conspiracy. Again, we agree.

A conspiracy is a combination of two or more persons to accomplish an unlawful end or to accomplish a lawful end by unlawful means. Accurately speaking, there is no such thing as a civil action for conspiracy.... Where civil liability for a conspiracy is sought to be imposed, the conspiracy of itself furnishes no cause of action. The gist of the action is not the conspiracy alleged, but the tort committed against the plaintiff and the damage thereby done.

(Citations and punctuation omitted.) First Fed. Sav. Bank v. Hart, 185 Ga.App. 304, 305(2), 363 S.E.2d 832 (1987). The fact of a conspiracy, if proved, makes the act of any one conspirator chargeable to all and allows for the imposition of joint and several liability. Cook v. Robinson, 216 Ga. 328, 329(2), (4), 116 S.E.2d 742 (1960).

Through their allegations of a conspiracy, appellees attempt to hold Summit jointly liable for Southern Georgia's alleged tortious conduct. Appellees, however, have failed to present any evidence that a conspiracy existed or could be inferred. The undisputed evidence shows that Summit did not make any misrepresentations to appellees or participate in the auto sales transactions forming the basis of the complaint. All of the appellees' transactions took place prior to the December 31, 1994 Asset Purchase...