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Rebel Auction Co. Inc. v. The Citizens Bank

Court of Appeals of Georgia, First Division

October 4, 2017

REBEL AUCTION CO., INC.
v.
THE CITIZENS BANK.

          BARNES, P. J., MCMILLIAN and MERCIER, JJ.

          Mercier, Judge.

         Rebel Auction Company, Inc. ("Rebel Auction"), a defendant in the underlying suit, appeals the grant of summary judgment to the plaintiff, The Citizens Bank ("Citizens"), and the denial of its own motion for summary judgment. Rebel Auction contends on appeal that the trial court erred in denying its motion to withdraw admissions, in granting summary judgment to Citizens, and in denying Rebel Auction's cross-motion for summary judgment. For the reasons that follow, we affirm the trial court's denial of Rebel Auction's motion to withdraw admissions, reverse the grant of summary judgment to Citizens, and affirm the denial of summary judgment to Rebel Auction.

         Citizens filed a petition for writ of possession against Big Metal Construction, Inc. ("Big Metal") and Gina R. Bryant ("Bryant") in the Superior Court of Colquitt County, alleging that the defendants had defaulted on two promissory notes in favor of Citizens that were executed in 2013 by Big Metal and personally guarantied by Bryant (the "2013 notes"), and seeking possession of the property that served as collateral for the loans. The property includes several forklifts, which are described on a financing statement (the "financing statement") filed March 15, 2011, which is referenced in the 2013 notes and in the corresponding security agreements (the "2013 security agreements"). Citizens later filed an amended complaint that included claims of tortious conversion and fraudulent misrepresentation, contending that Big Metal and Bryant sold all of the machinery that had been pledged as collateral, and that at the time of execution of the 2013 notes, they "had already sold much of the equipment and machinery listed on the UCC and offered as security."

         Citizens sent a request for the production of documents to Rebel Auction, directed to "Mr. Larry Davis, Registered Agent, " seeking copies of "any and all records, documents, agreements, sales receipts, contracts, payment receipts; names, addresses and purchase price paid by purchasers for any of the equipment related to the sale of equipment for or on behalf of Big Metal Construction, Inc., Gina R. Bryant or C. Ray Bryant . . . from July 1, 2011 through December 31, 2012." Rebel Auction provided in response several bills of sale and an inventory receipt pertaining to several pieces of equipment, each showing sales from "Ray Bryant, " "Ray Bryant- Big Metal, " "Big Metal Construction, " or "Big Metal Construction Co., " to "Four-D, " "Four-D Equipment, " or "Four-D Equipment Co."

         Citizens then filed a second amended complaint, adding Rebel Auction and "Four-D Equipment" ("Four-D")[1] as defendants to the suit, alleging that Rebel Auction, acting as agent for Big Metal, committed tortious conversion by selling property to Four-D that was encumbered by a properly filed UCC financing statement in favor of Citizens. In their joint answer to the complaint, Rebel Auction and Four-D admitted, among other things, that Rebel Auction auctioned and sold to Four-D each piece of machinery and equipment identified in Citizens's complaint; that said items were sold on behalf of Big Metal; and that Rebel Auction was acting as Big Metal's agent at auction. Rebel Auction and Four-D also admitted that "Rebel Auction generally sells equipment and machinery owned by one party to another party without actually taking ownership itself." When their answer was filed on August 4, 2015, Rebel Auction and Four-D were represented by attorney K. S. ("first counsel").

         On September 15, 2015, Citizens sent its first request for production of documents and first continuing interrogatories to defendant Rebel Auction. On October 8, 2015, Citizens sent its first requests for admissions to Rebel Auction. On October 12, 2015, first counsel moved the trial court for permission to withdraw from representation of Rebel Auction and Four-D. On October 26, 2015, attorneys J. S., J. G. and W. R. (collectively, "second counsel") filed an entry of appearance on behalf of Rebel Auction. On November 3, 2015, an order was entered permitting first counsel's withdrawal from the case.

         On December 11, 2015, Citizens moved for summary judgment against Rebel Auction, noting that as of December 9, 2015, no response to its requests for admissions had been filed. A Rule 5.2 certificate of service filed January 4, 2016 indicated that second counsel served Rebel Auction's response to the requests for admissions on Citizens on December 30, 2015. Rebel Auction concedes that all of the allegations in Citizens's requests for admissions to Rebel Auction stand admitted because Rebel Auction did not respond within thirty-three days of service. See OCGA § 9-11-36 (a) (2); OCGA § 9-11-6 (e).

         Furthermore, although Rebel Auction's late written responses to the requests for admission are not contained in the record, Rebel Auction states in its brief that its "second counsel did respond to [the] request for admissions, albeit late, " and that its "[s]econd counsel . . . based the response to the request for admissions primarily upon . . . [Rebel Auction's] answer and defenses, which first counsel filed." Rebel Auction also states that its "original answer and the late response to request for admissions admitted that [Rebel Auction] conducted an auction for certain equipment owned by Big Metal Construction, Inc. and that Four-D Equipment purchased said equipment at said auction, . . . [and] further admitted that [Rebel Auction] acted as agent for Big Metal Construction, Inc. at said auction."

         On February 1, 2016, an entry of appearance was filed by attorneys J. S. and B. H. ("third counsel") on behalf of Rebel Auction and Four-D. On February 11, 2016, third counsel filed on behalf of Rebel Auction responsive pleadings in opposition to Citizens's summary judgment motion, including a cross-motion for summary judgment, an amended answer to the complaint, a motion to withdraw its prior admissions with supplemental responses to the requests for admission, and a brief in support of its motion to withdraw its prior admissions.

         In support of the motion to withdraw prior admissions, Rebel Auction submitted an affidavit from George Larry Davis, who was both the CEO of Rebel Auction and the CFO of Four-D. The affidavit essentially stated that an independent contractor of Four-D negotiated the sale of the equipment in question by Big Metal to Four-D; that Rebel Auction had no role in those sales; that Four-D subsequently contracted with Rebel Auction to sell the equipment at auction; that Rebel Auction paid the proceeds from the sale of the equipment directly to Four-D; and that Rebel Auction had no role whatsoever in the sale of the equipment from Big Metal to Four-D. The affidavit referenced an attached check ledger "showing checks issued by [Four-D] to [Big Metal] in the years 2011 and 2012, " to demonstrate that Big Metal sold the equipment to Four-D directly, but no such document was attached to the affidavit. The affidavit further stated that, having had the opportunity to review the late responses to the request for admissions filed by Rebel Auction's previous counsel, Davis "now realize[s] that Rebel Auction['s] . . . responses . . . were incorrect." It appears from the record that the trial court held a hearing on the motion to withdraw admissions and the summary judgment motions, but no transcript of the hearing was prepared. The trial court denied Rebel Auction's motion to withdraw admissions, granted Citizens's motion for summary judgment, and denied Rebel Auction's cross-motion for summary judgment.

         1. Rebel Auction contends that the withdrawal of its admissions would have preserved a determination of the case on its merits, and therefore the trial court erred in denying its motion to withdraw them. We disagree.

         OCGA § 9-11-36 (b) provides that "the court may permit withdrawal or amendment [of admissions] when [1] the presentation of the merits of the action will be subserved thereby[, ] and [2] the party who obtained the admission fails to satisfy the court that withdrawal or amendment will prejudice him in maintaining his action or defense on the merits." This statutory provision "vests broad discretion in the trial court to permit withdrawal or amendment of the admission, and the trial court's ruling on this issue may be reversed only upon a showing of abuse of discretion." Turner v. Mize, 280 Ga.App. 256, 257 (1) (633 S.E.2d 641) (2006) (citation and punctuation omitted).

The movant has the initial burden of demonstrating that presentation of the merits of the action will be served by allowing the withdrawal of its admissions. In carrying that burden, [Rebel Auction] was required to show that the admitted requests either were refutable by admissible evidence having a modicum of credibility or were incredible on their face, and that its denial was not offered solely for the purposes of delay. . . .If the movant satisfies the court on the first prong, the burden is on the respondent to show that the withdrawal or amendment will prejudice the respondent in maintaining its action ...

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