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Alpha Balanced Fund, LLLP v. Irongate Performance Fund, LLC

Court of Appeals of Georgia, Third Division

June 27, 2017

ALPHA BALANCED FUND, LLLP
v.
IRONGATE PERFORMANCE FUND, LLC et al.; and vice versa.

          ELLINGTON, P. J., ANDREWS and RICKMAN, JJ.

          Rickman, Judge.

         After Alpha Balanced Fund, LLLP (an investor) requested a full withdrawal/redemption of its balance in the hedge fund Irongate Performance Fund, LLC ("the Fund") and waited the requisite time period for its right to its investment balance to purportedly vest, Irongate DPS, LLC ("the Fund Manager"[1]) suspended all Fund withdrawal requests indefinitely and terminated the Fund five months later, consequently depriving Alpha of its purportedly vested Fund balance. Alpha sued the Fund and the Fund Manager (collectively "Irongate"), alleging claims for breach of contract, breach of fiduciary duty, conversion, and unjust enrichment.[2] As of the last hearing in the trial court, the Fund was still in the process of winding-up and more than $4 million had thus far been dispersed in cash distributions to all Fund members/investors, including Alpha, which had received $430, 000 of its purportedly vested Fund balance of $1, 008, 229.78.[3] The gravamen of Alpha's complaint was that since it had submitted a withdrawal request before the decision was made to suspend all withdrawal requests, and its right to withdraw had vested, it should have been, but was not, treated as a creditor of the Fund and given priority (i.e., paid first) over other Fund members/investors; instead, Alpha asserts, it was "forced" to share in Fund losses that diminished its investment balance in the Fund.

          The trial court granted Irongate's motion for summary judgment[4] and denied Alpha's cross motion for partial summary judgment.[5] In Case No. A17A0303, Alpha appeals the summary judgment rulings. In Case No. A17A0539, Irongate appeals the trial court's denial of its motion to dismiss Alpha's appeal/Case No. A17A0303. For the reasons that follow, we affirm in both cases.

         Case No. A17A0539

         In Case No. A17A0539, Irongate appeals the trial court's denial of its motion to dismiss Alpha's appeal in the underlying action, Case No. A17A0303. The material facts are undisputed. On October 26, 2015, Alpha timely filed a notice of appeal from the trial court's summary judgment rulings, and said notice of appeal included direction to the trial court clerk that "No portion of the record shall be omitted from the record on appeal, " and a notice that "A transcript of evidence and proceedings WILL be transmitted as part of the record on appeal."[6]

          Pursuant to OCGA § 5-6-42, absent the grant of an extension of time, it was Alpha's responsibility to "cause [the motions for summary judgment transcript] to be filed within 30 days after filing of the notice of appeal[, ]" or risk possible dismissal of the appeal. See In the Interest of D. M. C., 232 Ga.App. 466, 467 (2) (b) (501 S.E.2d 305) (1998).[7] Although the transcript should have been filed by November 25, 2015, it was filed on August 18, 2016, about nine months late, and the appeal was thus docketed on September 15, 2016, almost one year after the notice of appeal was filed. Notably, it was in April 2016 (six months from when the notice of appeal was filed), however, that Alpha discovered that the transcript had not been filed; Alpha was alerted to the problem after Irongate filed a motion to dismiss on the ground that the transcript had not been filed. Apparently, Alpha attempted to have the transcript filed in April 2016, but Irongate objected, and the court reporter was prohibited from filing the transcript until the matter was resolved. In August 2016, a hearing was held on the matter.

          At the hearing, Irongate argued that Alpha's appeal should be dismissed due to Alpha's failure to ensure that transcripts were timely filed in the trial court. But the trial court issued an order denying Irongate's motion, and finding that the delay in filing the transcript was excusable and was not caused by Alpha.

         If a trial court finds that the delay in filing a transcript was: "(1) unreasonable; (2) inexcusable; and (3) caused by appellant, it can dismiss the notice of appeal." (Citations omitted.) In the Interest of D. M. C., 232 Ga.App. at 467 (2) (b); OCGA § 5-6-48 (c). "The trial court has discretion in passing on these questions, [and] that discretion is subject to appellate review for abuse."(Citation omitted.) Atlanta Orthopedic Surgeons v. Adams, 254 Ga.App. 532, 535 (562 S.E.2d 818) (2002).[8] "The court must find all these conditions before an exercise of discretion is authorized." (Citation and punctuation omitted; emphasis supplied.) In the Interest of D. M. C., 232 Ga.App. at 468 (2) (b); Hall v. Bussey, 200 Ga.App. 311 (408 S.E.2d 430) (1991).[9]

          Here, the trial court's findings that the delay in filing the transcript was excusable and was not caused by Alpha are supported by the record. The record reflects that before Alpha filed its timely notice of appeal, Alpha asked the court reporter to prepare the summary judgment hearing transcript, and to file it with the clerk of court and send Alpha a copy; Alpha paid the court reporter for a copy of the transcript; and Alpha received an emailed copy of the transcript from the court reporter. And well within 30 days after filing its notice of appeal, Alpha paid invoices from the clerk of court, for appeal costs. Alpha's counsel stated that he had had cases in the trial court's judicial circuit "that have taken two months, six months . . . for the record to get transmitted after the transcript has been filed, " and he had had cases "that took over a year for the record from the notice of appeal being filed until it is docketed at the Court of Appeals." Consequently, according to counsel, he had no reason to suspect any problem with the transcript until Irongate filed a motion to dismiss the appeal about six months after the notice of appeal was filed.

         The court reporter testified that she had received Alpha's written request to file the transcript with the clerk; that she thought that she had filed the transcript on the 8th or 9th of October 2015; that the e-filing system was "very new, " and that "[t]his may have been the first or one of the very first transcripts that I filed through e-filing"; and that when this matter was brought to her attention and she started looking into it, she realized that the transcript had not been filed and instead "had gone to the draft folder." The court reporter also testified that she did not recall whether she had communicated to Alpha either that she would file the transcript, or that she had in fact filed the transcript; and she affirmed that the error could be corrected "in a matter of minutes." It is, in part, based on this latter testimony that Irongate argues that Alpha caused the delay in filing the transcript.

         True, "[t]he statutory duty to file timely a transcript does not rest with the court reporter." (Citation and punctuation omitted.) In the Interest of D. M. C., 232 Ga.App. at 468 (2) (b). But it is also likewise true that pursuant to OCGA § 5-6-48 (f), "the failure of a court reporter to [timely] file the transcript will not constitute cause for dismissal 'unless it affirmatively appears from the record that the failure was caused by the appellant.'" (Citation and punctuation omitted.) Welch v. Welch, 212 Ga.App. 667, 668 (442 S.E.2d 857) (1994). The trial court found that when the court reporter tried to file the transcript, "we [had] just switched over to the electronic filing system. . . . [T]he attorneys asked for the transcript to be filed, submitted a check for the transcript. . . . [T]he attorneys received a copy of the transcript." The trial court stated to counsel,

You each have dealt with the Fulton County clerk's office in getting appeals up to the higher courts, and it is not a 30-day ritual. It sometimes does last 4 months, 6 months, a year to get a transcript to go up from the clerk's office; and I think in this case since they received the transcript, they had every indication that everything was good, that there was a reliance on the court reporter, but not an unjust reliance on the court reporter given her track record in this courthouse."

         The trial court iterated the court reporter's good record for following through with tasks, [10] and concluded that whether it was "her glitch" or a "system glitch, " the transcript "didn't get filed where it should have, " but that she "tried to do it, " and was "mortified when she found out that it didn't go through."

         Given the circumstances of this case, the trial court did not abuse its discretion by finding that Alpha did not cause the delay in filing the transcript and that the delay in filing the transcript was excusable. See generally Brandenburg v. All-Fleet Refinishing, 252 Ga.App. 40, 43-44 (6) (555 S.E.2d 508) (2001) (finding that delay was not inexcusable when it appeared to have been caused by an insurance company, rather than the party); Welch, 212 Ga.App. at 667-669 (holding that trial court abused its discretion in dismissing appeal where the record did not affirmatively establish that the appellants were the cause of the delay). Therefore, the trial court did not err in denying Irongate's motion to dismiss Alpha's appeal.

         Case No. A17A0303

         In Case No. A17A0303, Alpha appeals the trial court's grant of Irongate's motion for summary judgment and denial of Alpha's motion for partial summary judgment.

Summary judgment is proper when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. OCGA § 9-11-56 (c). To prevail on a motion for summary judgment, the moving party must show that there is no genuine dispute as to a specific material fact and that this specific fact is enough, regardless of any other facts in the case, to entitle the moving party to judgment as a matter of law. When a defendant moves for summary judgment as to an element of the case for which the plaintiff, and not the defendant, will bear the burden of proof at trial, the defendant may show that he is entitled to summary judgment either by affirmatively disproving that element of the case or by pointing to an absence of evidence in the record by which the plaintiff might carry the burden to prove that element. And if the defendant does so, the plaintiff cannot rest on his pleadings, but rather must point to specific evidence giving rise to a triable issue. We review a grant or denial of summary judgment de novo and construe the evidence in the light most favorable to the nonmovant. Because this opinion addresses cross-motions for summary judgment, we will construe the facts in favor of the nonmoving party as appropriate.

(Citations and punctuation omitted.) Maree v. ROMAR Joint Venture, 329 Ga.App. 282, 283 (763 S.E.2d 899) (2014).

         It is undisputed that the parties' relationship is governed by the terms of the Fund's Operating Agreement, [11] and that by investing in the Fund, Alpha became a signatory to the Operating Agreement, which formed the contract between Alpha and the Fund Manager and set forth the Fund's withdrawal procedures.[12] The following material facts are also undisputed. On September 23, 2010, Alpha submitted a written request for a full withdrawal of its balance in the Fund; Alpha was subsequently informed that its withdrawal request would be fulfilled; on December 22, 2010, the Fund Manager suspended all withdrawal requests, including Alpha's; and in May 2011, the Fund Manager terminated the Fund and began the winding up process to close the Fund.

         1. Breach of contract.

         Alpha contends that Irongate breached the terms of the Operating Agreement, specifically Section 4.2 (a) (i), [13] when: (a) Alpha's right of redemption purportedly vested, but Alpha was not given priority over other Fund members during the wind-up process; and (b) Irongate failed to exercise good faith in its decision to suspend redemptions and terminate the Fund before satisfying Alpha's redemption request.

         To establish a breach of contract claim, a party must prove: (1) the existence of a contract; (2) the breach of an obligation imposed by the contract; and (3) damages that the plaintiff suffered as a result of the breach. See VLIW Tech., LLC v. Hewlett-Packard Co., 840 A.2d 606, 612 (2003). In this action, the existence of a valid contract is uncontested.

         (a) Purportedly vested redemption right.

          Alpha contends that Irongate breached the terms of the Operating Agreement, specifically Section 4.2 (a) (i), when Alpha's right of redemption purportedly vested, but Alpha was not given ...


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