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EMM Credit, LLC v. Remington

Court of Appeals of Georgia, Third Division

November 2, 2017



          Rickman, Judge.

         Nearly 13 years after filing suit, EMM Credit, LLC prevailed in a jury trial against defendants Alexander Remington, Cara Guri, and American National Holding Corporation ("ANHC"). EMM Credit sought a declaratory judgment that Remington is the "true owner" of ANHC, meaning that Remington owns all of the shares of ANHC, and sought to set aside as fraudulent the conveyance of certain property from Remington to ANHC. The jury determined that Remington is the true owner of ANHC and that Remington fraudulently transferred property to ANHC. The trial court subsequently issued an order granting "Defendants' Renewed Motion for Directed Verdict/Motion for Judgment Notwithstanding the Verdict." EMM Credit appeals that order, contending that the trial court erred in granting a directed verdict on its declaratory judgment and fraudulent transfer claims and by refusing to admit certain evidence at trial. For reasons that follow, we affirm in part and reverse in part.

On appeal from a trial court's rulings on motions for directed verdict and judgment notwithstanding the verdict, we review and resolve the evidence and any doubts or ambiguities in favor of the verdict; directed verdicts and judgments notwithstanding the verdict are not proper unless there is no conflict in the evidence as to any material issue and the evidence introduced, with all reasonable deductions therefrom, demands a certain verdict.

(Citations and punctuation omitted.) Vol Repairs II Inc. v. Knighten, 322 Ga.App. 416, 417 (745 S.E.2d 673) (2013).

         So viewed, the evidence shows that in July 1997, Alexander Remington became a director of NewCom, Inc., now known as NCom, Inc. ("NCom"). Remington was also the majority owner of Micro Equipment Corporation ("MEC"), one of NCom's largest suppliers. In 2002, Remington entered a plea agreement in which he admitted to engaging in a scheme to defraud and embezzle money from NCom by padding invoices from MEC to NCom. This scheme began in 1996 and continued until 1999, resulting in the embezzlement of approximately $1, 100, 000. Remington pled guilty to and was convicted of committing mail fraud and wire fraud in federal court in California.

         After learning about Remington's guilty plea and investigating the nature of the crime, NCom demanded payment from Remington. When those demands went unanswered, NCom filed suit in federal court in California in 2003, and in 2006, obtained a $2, 533, 000 judgment for intentional fraud against Remington, MEC, and Cara Guri, MEC's chief financial officer and Remington's girlfriend. While the California litigation was ongoing, NCom discovered that in 1996, Remington had purchased an industrial building in Gwinnett County, Georgia, and immediately transferred it to ANHC. In 2003, NCom filed suit in Georgia against Remington, Guri, ANHC, and others, seeking, inter alia, a declaration that Remington owns all the shares of ANHC and that NCom may enforce its judgment against those shares and to void the allegedly fraudulent transfer of the Gwinnett County property (the "Property") from Remington to ANHC. In 2007, NCom assigned the California judgment to EMM Credit Corporation, who then assigned it to EMM Credit in 2008. EMM Credit was substituted as the party plaintiff in this case in 2009.

         At trial in Georgia, the parties presented a significant amount of evidence about the purchase and transfer of the Property. Curt Thompson testified that he had been the general counsel for MEC and ANHC and also served as Remington's personal attorney on occasion. He was involved in Remington's purchase of the Property in 1996 from Allstate Life Insurance Company and the subsequent transfer to ANHC. The Purchase and Sale Agreement was executed by Allstate as seller and Remington as buyer. There was an addendum to that agreement, which was prepared by counsel for Allstate, and provided that "[u]pon the Closing of the purchase of the Property, Buyer will transfer its interest in the Property to [ANHC], a Georgia corporation wholly owned by Buyer, " with Buyer being defined as Remington. Thompson struck through the words "wholly owned by Buyer, " and sent the document back to Allstate.[1]

         At the closing, Thompson represented Remington and ANHC and Remington was present, but no other representatives of ANHC attended. Remington executed the closing documents on behalf of himself individually and Thompson executed the documents on behalf of ANHC. Remington purchased the Property from Allstate for $1, 540, 000, then transferred it to ANHC for $800, 000, and executed a note in favor of Allstate for the remaining $740, 000.

         In addition to the Note, Remington executed a Deed to Secure Debt and a UCC 2, pledging the Property and his personal property as collateral. ANHC also pledged certain collateral to Allstate via a UCC 2 that was prepared by Allstate and originally had a signature line for Remington, as President of ANHC, but Thompson crossed that out and signed it himself as Vice President and general counsel of ANHC.[2]Remington, Thompson, and Guri also executed a Certified Corporate Resolution of ANHC for the purchase of the Property. Remington signed the document as President/CEO of ANHC.[3] Shortly after the closing in April 1996, MEC leased the building on the Property from ANHC.

         One of Remington's brothers, Seyed Hamid Zahari, also known as Gino, who claimed that he and another brother, Mohammed Zahari, also known as Tony, had been involved in ANHC since its inception in 1992 and that Remington was not involved, testified that Remington purchased the Property because he and Tony were not sufficiently credit-worthy to complete the transaction.[4] But Gino testified that they did come up with $800, 000 for ANHC's down payment, with Tony contributing $400, 000 from his business in Dubai and Gino contributing $400, 000 his father gave him. Gino testified that the $800, 000 was wired from Dubai to the United States for the closing, but there are no records of the wire transfer. The remaining $740, 000 owed to Allstate was personally guaranteed by Remington because Gino and Tony did not have the necessary credit, and was paid with funds from MEC.

         The trial included extensive testimony regarding ANHC's stock ledger and stock certificates. Guri testified that the original owners of ANHC were her and Remington's brothers, Gino and Tony. Guri identified a reconstructed stock ledger for ANHC showing that she, Gino, and Tony owned shares in ANHC, and testified that the original ledger was "lost or stolen or not found." Guri also identified replacement stock certificates dated September 2006, which indicated that she owned 300 shares, Gino owned 4900 shares, and Tony owned 4800 shares. According to Guri, the original certificates were "lost, stolen; we don't know." She does not recall ever looking at the corporate books. Gino testified that the original stock certificates were kept in a binder in Guri's office, but they were lost so they asked their attorney to prepare new ones.

         EMM Credit's director testified that, during the litigation, he had requested documentation to support the defendants' claim that Gino and Tony owned ANHC, and in response, ANHC's outside counsel sent a copy of a stock ledger. When EMM Credit's director questioned the legitimacy of the ledger, ANHC's counsel responded in October 2006 that "the stock transfer record was reconstructed by my firm as ANHC's corporate counsel due to lost/destroyed old records." EMM Credit's director testified that the attorney "came up with different stories" about how they lost the originals.

         At the close of EMM Credit's case, Remington, Guri, and ANHC moved for a directed verdict on several grounds, including that EMM Credit had failed to join necessary parties and that fraudulent transfer claims are not assignable. The trial court reserved ruling on the motions for directed verdict at that time and when the defendants renewed their motions at the close of the evidence. After the jury rendered its verdict that (1) Remington is the true owner of ANHC, (2) Remington fraudulently transferred the Gwinnett County building to ANHC, and (3) EMM Credit filed its lawsuit within ...

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