Taeger Enterprises, Inc. v. Herdlein Technologies, Inc.

• Decision Date: 01 July 1994
• Docket Number: Nos. A94A0500,A94A0501,s. A94A0500
• Citation: 445 S.E.2d 848,213 Ga.App. 740
• Parties: TAEGER ENTERPRISES, INC. v. HERDLEIN TECHNOLOGIES, INC. TAEGER ENTERPRISES, INC. v. OEHLER.
• Court: Georgia Court of Appeals

Page 848

445 S.E.2d 848

213 Ga.App. 740

TAEGER ENTERPRISES, INC. v. HERDLEIN TECHNOLOGIES, INC.

TAEGER ENTERPRISES, INC. v. OEHLER.

Nos. A94A0500, A94A0501.

Court of Appeals of Georgia.

July 1, 1994.

Jay M. Sawilowsky, Augusta, for appellant.

Fulcher, Hagler, Reed, Hanks & Harper, James W. Purcell, Hull, Towill, Norman & Barrett, George R. Hall, Augusta, for appellees.

McMURRAY, Presiding Judge.

After it was left unpaid for labor and services provided, plaintiff Taeger Enterprises, Inc. ("Taeger"), a Florida corporation, brought an action in the Superior Court of Columbia County, Georgia, alleging a variety of contract and tort claims against defendants Wallace Herdlein & Associates, Inc. ("Herdlein"), Herdlein's trade name, Herdlein, Inc., Herdlein's president, Cole Oehler, Jr., MetoKote Corporation ("MetoKote"), and John Deere Commercial Products, Inc. ("John Deere"). By amendment, Taeger alleged that defendant Herdlein Technologies, Inc. ("HTI") was "a corporation closely affiliated with" Herdlein and for "all purposes in Counts Three and Four of this Complaint, [HTI] is incorporated within the meaning of [Herdlein]." Herdlein and Oehler jointly answered and denied the material allegations except that Herdlein admitted to transacting business in Georgia and admitted being indebted to Taeger in the amount of $57,047.91 as alleged in the complaint. HTI denied all material allegations. John Deere and MetoKote settled with Taeger and were dismissed. Herdlein filed for federal bankruptcy protection and also was dismissed. As against the remaining defendants, Oehler and HTI, Count 3 of the complaint alleged that Taeger was fraudulently induced to perform services by Oehler and HTI when neither had any intention of paying for those services. Count 4 alleged a conversion of Taeger's property in the form of money owed to the insolvent Herdlein. HTI and Oehler each moved for dismissal of the complaint based upon the lack of personal jurisdiction. In separate orders, the trial court granted the respective motions to dismiss. In Case No. A94A0500, Taeger appeals from the order dismissing the complaint as against HTI and in Case No. A94A0501, Taeger appeals from the order dismissing the complaint against Oehler. Taeger raises identical enumerations of error arising out of substantially the same set of facts. Upon motion, the cases have been consolidated for disposition in this single opinion. Held:

In support of their motions to dismiss, Oehler and HTI adduced the following, mostly undisputed, facts: Herdlein, doing business as Herdlein, Inc., submitted to MetoKote a proposal to design, build, and install a wet paint finishing system on MetoKote's premises in Columbia County, Georgia, which was leased from John Deere. Herdlein's proposal was revised on June 27, 1991, and on August 6, 1991, MetoKote gave written notice of acceptance addressed to "Wallace Herdlein." The paint system was designed and prefabricated outside of Georgia. Herdlein is an Illinois corporation, which is a wholly-owned subsidiary of a Swiss company. HTI is a separate Illinois corporation, formed on April 8, 1991, and wholly-owned by George Karahalios, an Illinois resident. In his affidavit, Karahalios deposed that he is the sole shareholder and director of HTI and that he and his wife are the only officers. Karahalios formerly had been an employee and vice president of Herdlein until his resignation on April 1, 1991, and neither he nor his wife has ever been a director, or shareholder of Herdlein. HTI offers engineering and design consulting services, primarily to Herdlein but also to anyone else engaged in a similar business or requiring such services. HTI rents space and secretarial services from Herdlein at the latter's corporate headquarters in Illinois but maintains its own books of account, separate from any maintained by Herdlein. Karahalios denied that HTI had ever entered into any contract with Taeger. According to him, HTI contracted with Herdlein in Illinois to provide engineering consulting services to Herdlein as a subcontract to Herdlein's MetoKote project. All of HTI's services to Herdlein on this project were performed either in Illinois or Ohio. Karahalios admitted visiting the site in Georgia once for 15 minutes while he was otherwise in the Augusta area on behalf of a non-party to this action, but deposed that HTI "has not and does not solicit business in" or "engage in any course of conduct in" or "transact business in the State of Georgia." In a subsequent affidavit, after examining HTI's earnings, Karahalios deposed that HTI "has derived no revenue whatsoever from business transacted in Georgia."

In support of his motion, Oehler deposed by affidavit that he is an Illinois resident and the former president of Herdlein. He has never been a director of or shareholder in Herdlein. As the authorized and disclosed agent of Herdlein, he negotiated with Taeger for the installation subcontract. Negotiations between Taeger and Herdlein took place in the Herdlein office in Illinois and subsequent communications with Taeger were conducted between the Illinois office of Herdlein and the Florida office of Taeger. Oehler deposed that inquiries made by Taeger to Herdlein regarding sums owed Taeger under its subcontract originated from Taeger's Florida office. He stated that he visited the Georgia site once and spoke briefly with Herdlein's project manager but that "no financial dealings were discussed with Taeger representatives or anyone else during that trip." All financial decisions of Herdlein were made in Illinois and "all payment checks to Taeger were drafted in Illinois and sent to Taeger's Florida office." Oehler further deposed that he had "never personally conducted any business on my own behalf in the State of Georgia," in that he "never solicited business, engaged in any persistent course of conduct or derived revenue from Georgia." He identified as true and correct a copy of the revised proposal accepted by MetoKote. This proposal was submitted by Wallace Herdlein & Associates doing business as Herdlein, Inc. and contains no reference to HTI, either as a named party nor as an entity offering a limited warranty.

In opposition to the motions to dismiss, Taeger submitted the affidavit of its president, Jerry Taeger, whom we quote at length: After he had complained to Oehler that Taeger was not getting paid, Oehler "repeatedly promised deponent that there was money coming into Wallace Herdlein & Associates, Inc. and that deponent would certainly be paid if deponent kept on working on the job." As to HTI, Taeger deposed that Karahalios twice came to the Georgia job site "for the purpose of consulting with MetoKote Corporation and then checking Plaintiff's work. On each occasion Mr. Karahalios did spend time with MetoKote Corporation and then toured the job site, checked out Plaintiff's work, and complimented the deponent on the Plaintiff's work. During each of those trips Mr. Karahalios dealt with deponent regarding the construction project and the deponent's work on it at the job site in Columbia County, Georgia." Taeger further deposed that he was "under the impression that Herdlein Technologies, Inc. was simply a part of Wallace Herdlein & Associates, Inc. and not a separate corporation. No one, during the course of the construction job in question, told deponent that Herdlein Technologies, Inc. was a separate corporation." As an exhibit to his affidavit, Taeger attached a copy of a 90-day promissory note dated April 6, 1992, and signed by Oehler in his capacity as president of Herdlein. The note was in the amount of $58,789.91 and recites that it was offered in exchange for Taeger's promise not to assert a claim of lien against the real property of John Deere in Augusta, Georgia. An additional exhibit is a copy of Herdlein's bankruptcy petition, filed on July 16, 1992. In further opposition to the motions to dismiss, Taeger relied upon MetoKote's answer to the complaint and allegations in MetoKote's cross-claim wherein MetoKote "admitted" that HTI was subject to the jurisdiction of the Superior Court of Columbia County, Georgia. Also Taeger relied upon MetoKote's responses to interrogatories, wherein MetoKote states "Herdlein Technologies participated in the bid procedure and the installation of the wet paint system at the John Deere plant in Columbia County, Georgia" and that MetoKote has "numerous cancelled checks in its possession that indicate it paid Herdlein Technologies, Inc. and Wallace Herdlein for all services performed on the installation of the wet paint system." Also, Taeger submitted a copy of a letter of September 23, 1991, sent by Karahalios under the HTI letterhead to a MetoKote representative in Lima, Ohio, confirming financial details resulting from design changes to the Herdlein proposal as originally accepted by MetoKote.

1. In related enumerations of error, Taeger contends that the dismissal of his complaint was erroneous as to each non-resident defendant because the evidence is conflicting and because that evidence shows the commission of a tort with consequences in Georgia by defendants transacting business in Georgia. OCGA § 9-10-91(3) provides that a "court of this state may exercise personal jurisdiction over any nonresident ... as to a cause of action arising from any of the acts, omissions, ownership, use, or possession enumerated in this Code section, in the same manner as if he were a resident of the state, if in person or through an agent, he ... [c]ommits a tortious injury in this state caused by an act or omission outside this state if the tort-feasor regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered in this state." Contending that its evidence shows that Oehler and HTI are subject to the jurisdiction of the Superior Court of Columbia County, Georgia,...