Tafel v. Lion Antique Cars & Invs., Inc.
| Decision Date | 15 June 2015 |
| Docket Number | S15A0184.,Nos. S15A0183,s. S15A0183 |
| Court | Georgia Supreme Court |
| Parties | TAFEL v. LION ANTIQUE CARS & INVESTMENTS, INC.; and vice versa. v. TAFEL. |
Nowell Donald Berreth, William H. Hughes, Jr., Alston & Bird, LLP, Atlanta, Brian David Boone, Alston & Bird, LLP, Charlotte, Nicholas Hollmeyer Lynton, Atlanta, for appellant.
Michael James King, Greenberg Traurig, LLP, Andrew Nicholas Capezzuto, Atlanta, for appellee.
This appeal and cross-appeal involve a longstanding financial dispute between appellant and cross-appellee, Jim Tafel, and appellee and cross-appellant, Lion Antique Cars & Investments, Inc. a/k/a Lion Antique Investments & Consulting Services, involving two Ferrari race cars. In the main appeal, Tafel contends, among other things, that the trial court erred in declining to exercise its equitable powers to mark satisfied a judgment that Lion Antique had obtained against him. In the cross-appeal, Lion Antique argues that the trial court erred in valuing the race cars for purposes of offsetting a part of the judgment that it had obtained against Tafel. For the reasons that follow, we affirm.1
1. This controversy stems from a December 2007 “Race Car Loan Agreement,” in which Lion Antique agreed to purchase two Ferrari F430 GT race cars and loan them to Tafel for him to race. The agreement provided that Lion Antique would hold title to the race cars; that at the end of the 2008 season, Tafel either had to purchase the race cars or sell them to a third-party; and that the proceeds from any sale would go to Lion Antique, with Tafel being responsible for paying Lion Antique for any difference between the sales price and the original purchase price of the cars.
During the 2008 season, Lion Antique asserted Tafel committed a technical default of the agreement by failing to sufficiently insure the cars and filed suit against Tafel in California. In December 2008, Lion Antique obtained a stipulated judgment against Tafel for about $1.5 million, including $1,443,603.38 as the agreed purchase price of the two race cars.
Shortly thereafter, on January 14, 2009, Lion Antique filed a “Petition for Ne Exeat” against Tafel in Georgia, alleging that Tafel still had possession of the race cars and that Lion Antique had a reasonable fear that he would remove or sell the race cars to its detriment. Lion Antique sought, among other things, an injunction requiring Tafel to surrender the cars to it. Simultaneously, Lion Antique filed a separate action seeking to domesticate the California judgment.
The trial court held an emergency hearing on Lion Antique's ne exeat petition, and, on January 20, 2009, issued a “Turnover Order” directing Tafel to turn the race cars over to Lion Antique and ordering Lion Antique to immediately market and sell the cars and to report the sales prices to the court so that those amounts could be deducted from Lion Antique's judgment against Tafel. Tafel turned the race cars over to Lion Antique on January 22, 2009. Thereafter, Lion Antique shipped one of the cars overseas to race and shipped the second car to Nevada where it sat in a garage for the remainder of 2009. On June 29, 2009, Lion Antique's California judgment was domesticated in Georgia.
On April 28, 2010, Tafel filed a motion for satisfaction of judgment, arguing that Lion Antique's judgment against Tafel should be marked satisfied because Lion Antique violated the trial court's Turnover Order by failing to immediately market and sell the race cars. Following a hearing, the trial court issued an order on July 21, 2010, denying Tafel's motion, but agreeing to schedule a jury trial to determine the value of the cars as of the date of the Turnover Order so that the amount of the judgment could be reduced by that amount. The superior court's order also provided that upon completion of the jury trial the court would hear additional evidence in order to rule on the equitable issues raised by Tafel, including whether Lion Antique violated the Turnover Order.
In June 2013, the jury found that the value of the cars as of the date of the Turnover Order was $693,000. Thereafter, in anticipation of a final bench trial on the remaining equitable issues, the trial court allowed the parties to pursue additional discovery. During this discovery period, Tafel obtained a previously unproduced insurance binder which indicated that the race cars had been insured by Lion Antique at the time of the Turnover Order for $450,000 each.
On June 10, 2014, the trial court held a final hearing wherein it considered the remaining equitable issues as well as the appropriate amount by which to offset the judgment. In its final order entered June 30, 2014, the trial court determined, among other things, that subtraction of the fair market value of the race cars as of the date of the Turnover Order from the judgment remedied any damages suffered by Tafel. Saying that the jury's verdict was advisory and that the insurance documents would have been relevant to the jury's deliberation and verdict, the court exercised its “equitable powers” and adjusted the jury's verdict, finding that the combined fair market value of the race cars was $900,000, an amount which it then offset from the judgment as of the date of the Turnover Order. The trial court ruled that Lion Antique's judgment against Tafel was liquidated and denied Tafel's motion for attorney fees and expenses pursuant to OCGA § 9–15–14(b).
2. Tafel contends that a writ of ne exeat may only be used to restrain a person from leaving the State and that the trial court thus erred in the Turnover Order by issuing a writ of ne exeat ordering him to transfer the two race cars to Lion Antique. We find no error in the trial court's Turnover Order, as the trial court did not, in substance, issue a writ of ne exeat.
Tafel correctly notes that OCGA § 23–3–20 says that “[t]he writ of ne exeat shall issue to restrain a person from leaving the jurisdiction of the state” and that it gives five examples of when a person may be restrained from leaving the state, OCGA § 23–3–20(1) –(5). However, although Lion Antique styled its complaint as a petition for a writ of ne exeat, the substance of its complaint sought the equitable relief of the transfer of the two race cars. Because “ ‘substance, rather than nomenclature, governs pleadings,’ ” Kuriatnyk v. Kuriatnyk, 286 Ga. 589, 590, 690 S.E.2d 397 (2010), the style of Lion Antique's complaint did not bar the trial court from ordering the transfer of the cars pursuant to its equitable powers.
Moreover, the appellate record does not contain the transcript of the hearing on the petition for writ of ne exeat. Because Tafel bears the burden to show error and because the transcript is necessary to determine whether the trial court erroneously relied on ne exeat principles in granting relief or properly relied on equitable principles in doing so, we “ ‘must assume ... that there was sufficient competent evidence to support the trial court's findings,’ ” and that “ ‘the judgment ... was correct and affirm.’ ” Barnwell v. TPCII, LLC, 295 Ga. 153, 154, 758 S.E.2d 281 (2014) (citations omitted).
3. Tafel next contends that the “Race Car Loan Agreement” is governed by the Uniform Commercial Code (“UCC”), see OCGA § 11–9–101 et seq., and that the trial court erred by not ruling that, under the UCC, when Lion Antique retained the race cars instead of immediately selling them, it accepted the race cars in satisfaction of the judgment. Tafel, however, did not raise this issue below and therefore may not raise it on appeal. See Reliance Trust Co. v. Candler, 294 Ga. 15, 18, 751 S.E.2d 47 (2013) .
4. Tafel also contends that, even if the UCC does not directly govern the parties' transaction, the trial court, nevertheless, should have applied it under the principle that equity “follows the analogy of the law where no rule [of law] is directly applicable.” OCGA § 23–1–6. Tafel says that under OCGA § 11–9–610, a provision of the UCC, and this Court's decision in Contestabile v. Business Dev. Corp. of Ga., 259 Ga. 783, 783, 387 S.E.2d 137 (1990) ( “Contestabile I ”), a creditor forfeits the right to recover a deficiency if it conducts a commercially unreasonable sale of collateral; that Lion Antique's failure to immediately market and sell the cars after taking possession of them was commercially unreasonable; and that the trial court therefore erred in failing to rule that Lion Antique had forfeited its right to enforce the California judgment.
Tafel raised this issue below, but the trial court did not err in failing to follow Tafel's contention. To begin, Contestabile I created confusion by stating that if a foreclosure sale “is determined to be commercially unreasonable, the creditor loses not merely the right to recover a personal judgment against the debtor, but also the right to recover the deficiency.” This is the language on which Tafel relies.
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