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Stewart Ausband Enterprises, Inc. v. DO-065 Holden

Court of Appeals of Georgia, Fourth Division

March 8, 2019


          DILLARD, C. J., DOYLE, P. J., and MERCIER, J.

          Doyle, Presiding Judge.

         Stewart Ausband Enterprises, Inc., d/b/a Servpro of Norcross ("Ausband") sued Carl Holden; Holden Properties of Georgia, LLC; Holdpro, LLC (collectively, the "Holden Defendants"); James Pittman; and Pittman and Holden d/b/a Servpro of Northeast Greenville Franchise # 10069 ("Servpro Greenville").[1] A default judgment was entered against all defendants, but after further proceedings, the trial court vacated that order, dismissed Pittman, and ruled that Ausband could not recover damages from the remaining defendants. In Case No. A18A1758, Ausband appeals, contending that the trial court erred by (1) ruling that the original damages award was not supported by the record, (2) ruling that damages were unavailable because Ausband failed to demonstrate how to apportion fault among the defendants, and (3) setting aside the default judgment more than three years after it was entered. In Case No. A18A1759, Pittman filed a conditional cross-appeal, contending that the trial court erred by denying his motion to set aside the default judgment for lack of personal jurisdiction over him. For the reasons that follow, we affirm in part and reverse in part in Case No. A18A1758, and we dismiss as moot Pittman's appeal in Case No. A18A1759.

         The facts necessary to the appeal are not disputed. The record shows that in July 2012, Ausband filed a verified complaint against the defendants asserting claims for theft/conversion, fraud, breach of the duty of loyalty, unjust enrichment, Georgia RICO (Racketeer Influenced and Corrupt Organizations) Act[2] violations, punitive damages, and attorney fees. In general terms, the complaint alleged that Holden (an employee of Ausband) and Pittman stole or otherwise diverted money from Ausband. Holden, Holden Properties, Holdpro, and Holden d/b/a Servpro Greenville made a special appearance contesting jurisdiction and venue; Pittman failed to file an answer. Ausband moved for entry of a default judgment as to Pittman, and after Holden failed to respond to discovery requests, Ausband moved for sanctions and to strike his answer.

         In October 2014, the trial court entered a default judgment against Pittman as to liability. In March 2016, after the Holden Defendants continued to fail to participate in discovery or appear as ordered by the court, the court struck the Holden Defendants' answer and entered a default judgment as to liability.

         In May 2016, following a hearing at which no defendant appeared, the trial court entered a judgment in favor of Ausband for $51, 418.29 in principal damages with additional treble and punitive damages for a total award of $519, 061.63.

         In December 2016, Pittman and the Holden Defendants moved to set aside the default judgments against them under OCGA § 9-11-60 (d) (3).[3] In May 2017, following a hearing, the trial court entered an order finding no jurisdictional defects as to the defendants, [4] but setting aside the May 2016 judgment for a non-amendable defect on the ground that treble damages were entered erroneously without adequate support by the evidence or specificity in the verified complaint as to the principal judgment amount. Therefore, the court set aside the default judgment and set the case for a re-hearing on damages.

         In February 2018, after a November 2017 damages hearing, the trial court vacated the May 2016 damages award against Pittman on the ground that the record lacked sufficient factual allegations or evidence to support the award against him; found only $5, 960.63 in damages admitted by default against the Holden Defendants; found no evidence to support apportionment under OCGA § 51-12-33; and denied the availability of RICO treble damages as well as punitive damages and attorney fees. Based on these rulings, the trial court concluded that Ausband was not entitled to any damages. Ausband unsuccesfully moved to set aside the order, and these appeals follow.

         Case No. A18A1758

         1. In this case, Ausband challenges the trial court's order first by arguing that the initial damages award was authorized by the record and any defects in the award were amendable, so it was error to vacate the award.[5] Specifically, Ausband argues that pre-judgment interest and attorney fees were properly trebled, and if they were not, the trial court should have re-calculated the award instead of vacating it. "Because this question is a legal one, we review the record de novo and apply a plain legal error standard of review."[6]

         (a) Defects in damages award. The May 2016 order awarded damages as follows:

Principal Damages: $51, 418.29
Interest: $13, 658.08
Attorney Fees: $21, 692.12
Expenses: $2, 918.72
Subtotal: $89, 687.21
Treble Damages: $269, 061.63
Punitive Damages: $250, 000
Total: $519, 061.63

         After this award was set aside, a hearing on damages was conducted, and Ausband essentially relied on the existing record - the verified complaint and attached checks allegedly showing funds converted by the defendants. Based on this record, the trial court ultimately concluded that the damages Ausband sought had not been proved properly. The court found that the damages were unliquidated and required support by adequate evidence, there was no evidence as to apportionment, and all but one check ("Exhibit F" for $5, 960.63) attached to the complaint were part ...

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