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The Depository Trust & Clearing Corp. v. Jones

Court of Appeals of Georgia, Second Division

January 24, 2019

THE DEPOSITORY TRUST AND CLEARING CORP.
v.
JONES. AMERIS BANK et al.
v.
JONES.

          MILLER, P. J., BROWN and GOSS, JJ.

          Miller, Presiding Judge.

         In this dispute arising from an allegedly mishandled transfer of stock, shareholder Billy N. Jones sued securities depository The Depository Trust and Clearing Corporation ("DTCC"), transfer agent Computershare, Inc., Ameris Bancorp, and Ameris Bank (collectively, "the defendants"), based upon the defendants' alleged failure to "properly maintain and properly exchange" Jones' stock in The Coastal Bank ("Coastal") following Coastal's acquisition by Ameris Bank. DTCC moved to dismiss Jones' complaint for failure to state a claim pursuant to OCGA § 9-11-12 (b) (6), arguing that Jones: (1) had no contractual relationship with DTCC; (2) could not satisfy any element of conversion against DTCC; and (3) had no right of action against DTCC under the Georgia Uniform Securities Act, OCGA § 10-5-1 et seq. ("the Act"). Computershare, Ameris Bancorp, and Ameris Bank filed a similar motion to dismiss, asserting that Jones failed to state a claim for: (1) violation of the Act; (2) breach of contract; (3) conversion; and (4) negligence. In addition, Ameris Bancorp contended that Jones "waived his ability to commence any action related to the consummation of the merger [between Coastal and Ameris Bank] against Ameris Bancorp." The Superior Court of Liberty County summarily denied both motions to dismiss, but granted each of the parties a certificate of immediate review. Thereafter, we granted the parties' applications for interlocutory appeal, and we have consolidated these cases for decision. We now affirm the trial court's order because we conclude that Jones has satisfied the minimal pleading requirements necessary to survive the defendants' motions to dismiss.

Under Georgia law,
[a] motion to dismiss for failure to state a claim upon which relief may be granted should not be sustained unless (1) the allegations of the complaint disclose with certainty that the claimant would not be entitled to relief under any state of provable facts asserted in support thereof; and (2) the movant establishes that the claimant could not possibly introduce evidence within the framework of the complaint sufficient to warrant a grant of the relief sought. If, within the framework of the complaint, evidence may be introduced which will sustain a grant of the relief sought by the claimant, the complaint is sufficient and a motion to dismiss should be denied. In deciding a motion to dismiss, all pleadings are to be construed most favorably to the party who filed them, and all doubts regarding such pleadings must be resolved in the filing party's favor.

(Footnotes omitted.) Anderson v. Flake, 267 Ga. 498, 501 (2) (480 S.E.2d 10) (1997). To that end,

minimum pleading requirements are found in OCGA § 9-11-8 (a) (2) (A), which requires that the complaint contain "[a] short and plain statement of the claims showing that the pleader is entitled to relief," and we have held that the touchstone is fair notice - "this short and plain statement must include enough detail to afford the defendant fair notice of the nature of the claim and a fair opportunity to frame a responsive pleading."

(Citations omitted.) Aetna Workers' Comp Access v. Coliseum Medical Center, 322 Ga.App. 641, 651 (4) (746 S.E.2d 148) (2013). Although "[a] trial court's ruling on a motion to dismiss for failure to state a claim is subject to de novo review[, ]" Infinite Energy, Inc. v. Pardue, 310 Ga.App. 355, 356 (1) (713 S.E.2d 456) (2011), we "accept the allegations of fact that appear in the complaint and view those allegations in the light most favorable to the plaintiff." Bush v. Bank of N.Y.Mellon, 313 Ga.App. 84, 89 (720 S.E.2d 370) (2011).

         So viewed, Jones alleged that Ameris Bank became the successor to, and surviving entity of, Coastal following Ameris Bank's acquisition of Coastal in June 2014. At the time of the acquisition, Jones owned 61, 960 shares of Coastal common stock; as a result of the acquisition, Jones was to receive 28, 941.516 shares of Ameris stock. Relevant to these appeals, it appears that, of the 61, 960 shares of Coastal common stock owned by Jones, 20, 294 shares were "purchased and/or received as dividends or stock splits" titled as "CEDE & Co. Billy N. Jones Beneficial Owner."[1]

         At some point, Jones received a statement from Ameris Bancorp and/or Computershare dated August 11, 2015, indicating that the nine stock certificates comprising the 20, 294 shares were surrendered on July 21, 2014. Thereafter, Jones received an October 22, 2015 letter from Computershare[2] indicating that "the Deposit Trust Company also known as CEDE and CO. submitted the certificate for exchange and was given the entitlement shares, which were then distributed to the brokerage firms." According to Jones, the 20, 294 shares of Coastal stock should have been converted to approximately 9, 479 shares of Ameris Bancorp stock, which he never received.

         As a result, Jones alleged that he had been "deprived . . . of his rightful ownership" of the 9, 479 shares of Ameris Bancorp stock due to the defendants' "individual and collective conduct[, ]" and that the defendants failed "to exercise ordinary care in the surrender, transfer, exchange and disbursement" of the shares. Jones then asserted claims of conversion, negligence, breach of contract, and violation of the Georgia Uniform Securities Act. The trial court denied the defendants' motions to dismiss Jones' complaint for failure to state a claim, see OCGA § 9-11-12 (b) (6), and these appeals followed.

         Case No. A18A2051

         1. DTCC argues that Jones' complaint fails to state a claim for breach of contract because it does not identify any contractual relationship, much less reference a specific contract, between Jones and DTCC. Similarly, DTCC contends that Jones cannot establish any element of conversion against DTCC, including (1) Jones' right to possess the shares at issue as against DTCC; (2) DTCC's possession of the shares; (3) a valid demand by Jones against DTCC for return of the shares; and (4) DTCC's refusal to return the shares. Finally, DTCC asserts that the trial court should have granted its motion to dismiss because Jones cannot demonstrate that DTCC owed Jones a duty, under either common law negligence or the Act, and that the Act did not afford Jones a private cause of action against DTCC. After review of Jones' complaint, including Jones' factual allegations coupled with the individual causes of action, and consideration of the liberal notice pleading requirements codified at OCGA § 9-11-8 (a) (2) (A), we cannot conclude that DTCC has demonstrated that Jones "could not possibly introduce evidence within the framework of the complaint sufficient to warrant a grant of the relief sought." Anderson, supra, 267 Ga. at 501 (2).

         To the contrary, "the objective of the [Civil Practice Act] is to avoid technicalities and to require only a short and plain statement of the claim that will give the defendant fair notice of what the claim is and a general indication of the type of litigation involved; the discovery process bears the burden of filling in details." (Emphasis supplied.) Dillingham v. Doctors Clinic, 236 Ga. 302, 303 (223 S.E.2d 625) (1976). See also Osprey Cove Real Estate v. Towerview Constr., 343 Ga.App. 436, 443 (6) (808 S.E.2d 425) (2017); Campbell v. Ailion, 338 Ga.App. 382, 384-385 (790 S.E.2d 68) (2016) ("[I]t is not necessary for a complaint to set forth all of the elements of a cause of action in order to survive a motion to dismiss for failure to state a claim[;] [r]ather, the Georgia Civil Practice Act requires only notice pleading and . . . pleadings are to be construed liberally and reasonably to achieve substantial justice. . . ."). Indeed, as we noted with approval in Osprey Cove, "basic discovery should eliminate any uncertainty about the basis of [Jones'] claims." 343 Ga.App. at 443 (6). For example, evidence developed through discovery may establish, inter alia, a contractual agency relationship between certain ...


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