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Federal Deposit Insurance Corp. v. Loudermilk

Supreme Court of Georgia

March 13, 2019

FEDERAL DEPOSIT INSURANCE CORPORATION
v.
R. CHARLES LOUDERMILK, SR. et al.

          Warren, Justice.

         This case comes to us by way of three certified questions from the United States Court of Appeals for the Eleventh Circuit. Given the lengthy history of this case, the facts are familiar to the federal courts and to ours. As the receiver of the Buckhead Community Bank, the Federal Deposit Insurance Corporation (FDIC) sued nine former directors and officers[1] of the Bank in the United States District Court for the Northern District of Georgia, alleging that the former directors and officers were negligent and grossly negligent under Georgia law for their approval of ten commercial real-estate loans. According to the FDIC, those loans led the Bank to sustain nearly $22 million in losses, ultimately resulting in the Georgia Department of Banking and Finance ordering the Bank to be closed and appointing the FDIC as the Bank's receiver. As part of that litigation, the United States District Court for the Northern District of Georgia in 2013 certified to this Court a question asking whether the business judgment rule in Georgia precludes claims brought by the FDIC for ordinary negligence against bank directors and officers. In response to that certified question, we held in Federal Deposit Ins. Corp. v. Loudermilk, 295 Ga. 579 (761 S.E.2d 332) (2014) ("Loudermilk I"), that Georgia's business judgment rule "forecloses claims against officers and directors that sound in ordinary negligence when the alleged negligence concerns only the wisdom of their judgment," but that it "does not absolutely foreclose such claims to the extent that a business decision did not involve 'judgment' because it was made in a way that did not comport with the duty to exercise good faith and ordinary care." Id. at 585-586. As a result, the FDIC, as receiver, was authorized to bring suit against the former directors insofar as its claims were premised on the former directors' and officers' "failure to exercise ordinary care with respect to the way in which business decisions are made." 295 Ga. at 593.

         Before trial, the former directors and officers requested that the district court instruct the jury to apportion damages among them, in the event that the jury found any of the former directors and officers liable. The district court denied the requested instruction and the case proceeded to trial. During trial, the former directors and officers again requested-and the district court again denied-a jury instruction on apportionment. At the conclusion of the trial, the jury found that some of the former directors and officers were negligent in approving four of the ten loans at issue and awarded the FDIC $4, 986, 993 in damages. The district court entered a final judgment in that amount and held the former directors and officers jointly and severally liable. They timely appealed to the United States Court of Appeals for the Eleventh Circuit.

         On appeal, the former directors and officers sought a retrial, arguing that the district court erred by failing to instruct the jury on apportionment, which, they say, is required by OCGA § 51-12-33 because purely pecuniary harms- such as the losses at issue here-are included within "injury to person or property" under Georgia's apportionment statute. The FDIC countered that OCGA § 51-12-33 does not apply because the statute is in derogation of common law and the definition of "property" in the apportionment statute must be construed narrowly to refer only to realty or other tangible property. The FDIC further argued that, even if the apportionment statute generally abrogates joint and several liability for most tort claims, Georgia's common-law rule imposing joint and several liability on tortfeasors who "act in concert" survived enactment of the apportionment statute-meaning that joint and several liability still applies to the concerted actions of tortfeasors, including (it says) to the former directors' and officers' approval of the loans at issue here. The former directors and officers disagreed that the common-law concerted-action rule survived the apportionment statute and argued that the FDIC's case was tried based on the former directors' and officers' individual behavior and decision-making, not on a theory of concerted action.

         Concluding that these arguments required answers to questions of law that "have not been squarely answered by the Georgia Supreme Court or the Georgia Court of Appeals," the Eleventh Circuit certified the following questions to our Court:

1. Does Georgia's apportionment statute, OCGA § 51-12-33, apply to tort claims for purely pecuniary losses against bank directors and officers?
2. Did Georgia's apportionment statute, OCGA § 51-12-33, abrogate Georgia's common-law rule imposing joint and several liability on tortfeasors who act in concert?
3. In a negligence action premised upon the negligence of individual board members in their decision-making process, is a decision of a bank's board of directors a "concerted action" such that the board members should be held jointly and severally liable for negligence?

         For the reasons that follow, we conclude that OCGA § 51-12-33 does apply to tort claims for purely pecuniary losses against bank directors and officers. We further conclude that OCGA § 51-12-33 did not abrogate Georgia's common-law rule imposing joint and several liability on tortfeasors who act in concert insofar as a claim of concerted action invokes the narrow and traditional common-law doctrine of concerted action based on a legal theory of mutual agency and thus imputed fault. Given our answers to the first two questions and the related guidance we provide below, we decline to further answer the Eleventh Circuit's third question.

         Does Georgia's apportionment statute, OCGA § 51-12-33, apply to tort claims for purely pecuniary losses against bank directors and officers?

         1. To answer the first question before us, we must determine the reach of OCGA § 51-12-33's application-and specifically, whether the scope of Georgia's apportionment statute includes tort claims for purely pecuniary losses, such as the economic losses the FDIC sought to recover in this suit.[2] The subprovision of the apportionment statute most relevant to that inquiry is OCGA § 51-12-33 (b), which governs the circumstances under which an "award of damages" may be apportioned "among the persons who are liable":

Where an action is brought against more than one person for injury to person or property, the trier of fact, in its determination of the total amount of damages to be awarded, if any, shall after a reduction of damages pursuant to subsection (a) of this Code section, if any, apportion its award of damages among the persons who are liable according to the percentage of fault of each person. Damages apportioned by the trier of fact as provided in this Code section shall be the liability of each person against whom they are awarded, shall not be a joint liability among the persons liable, and shall not be subject to any right of contribution.

Id. (emphasis supplied).

         Because it is undisputed that the FDIC's suit was "brought against more than one person," the critical question is whether this action-a tort claim for negligence and gross negligence seeking damages for purely pecuniary losses against a bank's directors and officers-is brought "for injury to person or property." To answer that question, we first look to the text because "'[a] statute draws its meaning . . . from its text.'" Zaldivar v. Prickett, 297 Ga. 589, 591 (774 S.E.2d 688) (2015) (quoting Chan v. Ellis, 296 Ga. 838, 839 (770 S.E.2d 851) (2015)). And because we "'presume that the General Assembly meant what it said and said what it meant'" when it comes to the meaning of statutes, id. (quoting Deal v. Coleman, 294 Ga. 170, 172 (751 S.E.2d 337) (2013)), "'we must read the statutory text in its most natural and reasonable way, as an ordinary speaker of the English language would.'" Loudermilk I, 295 Ga. at 588 (quoting Deal, 294 Ga. at 172-173). Important are "'[t]he common and customary usages of the words, '" which, in cases like this one, include "the usual and customary meaning of . . . term[s] as used in a legal context." Zaldivar, 297 Ga. at 591, 596 (quoting Chan, 296 Ga. at 839). "For context, we may look to other provisions of the same statute, the structure and history of the whole statute, and the other law-constitutional, statutory, and common law alike-that forms the legal background of the statutory provision in question." Id. at 591 (citation and punctuation omitted).

         Here, we construe the meaning of "property" as it is used in OCGA § 51-12-33 (b), in the particular context of subsection (b)'s reference to actions brought "for injury to person or property," and in the context of the apportionment statute as a whole. In evaluating the meaning of "property," we note that neither Title 51 (Torts) nor the apportionment statute (OCGA § 51-12-33) defines the term. But the Georgia Code provides a general definition: "[a]s used in this Code or in any other law of this state," "'[p]roperty' includes real and personal property." OCGA § 1-3-3 (16).[3] This codified definition, as well as the absence of a separately enacted definition of "property" in the apportionment statute, supports a broad reading of "injury to person or property" in OCGA § 51-12-33 (b) that includes tort actions brought for injury to both real and personal property. Common dictionary definitions reveal varying definitions of "property." See, e.g., Merriam Webster Dictionary ("something owned or possessed, specifically: a piece of real estate.") (2019 online edition); New Oxford American Dictionary (3d ed. 2010) ("a thing or things belonging to someone; possessions collectively."); Webster's II New College Dictionary (2001) ("Something tangible or intangible to which its owner holds legal title."); The American Heritage Dictionary (2d coll. ed. 1991) (same). More persuasive, however, is "the usual and customary meaning" of the term "property" "as used in a legal context." Zaldivar, 297 Ga. at 596. To that end, the Black's Law Dictionary definitions of "property"-both as it is used more generally, and as it is used with respect to "personal property"-contemplate or expressly include "intangible" property, which is defined as "[p]roperty that lacks a physical existence." See Black's Law Dictionary (8th ed. 2004) (noting that "property" is also termed "bundle of rights," and defining "personal property" as "[a]ny movable or intangible thing that is subject to ownership and not classified as real property" (emphasis supplied)). See also Black's Law Dictionary (10th ed. 2014) (expressly defining "property" as "[c]ollectively, the rights in a valued resource such as land, chattel, or an intangible" (emphasis supplied)); Zaldivar, 297 Ga. at 596 (citing Black's Law Dictionary in determining the customary meaning of the term "fault" as used in the apportionment statute).

         The FDIC argues for a narrower definition, insisting that "injury to person or property" extends only to tangible property.[4] In support, the FDIC cites Blackstone to show that at English common law, tort actions were those for "injury done to [] person or property"; that "property" pertained to real or personal property; and that personal property "consists in goods, money, and all other moveable chattels, and things thereunto incident; a property which may attend a man's person wherever he goes, and from thence receives its denomination." See 3 William Blackstone, Commentaries on the Laws of England (1st ed. 1768), 117, 144.[5] These definitions, the FDIC says, demonstrate conclusively that "property"-at least as contemplated in the context of common-law torts for "injury to person or property"-extended only to tangible property.

         It is this fixed, common-law definition of property, the FDIC argues, that the Georgia Court of Appeals must have implicitly relied on in 1964 when it asserted (without citing any legal authority) that "'[p]roperty' at common law was limited to tangible realty or personalty." City of Atlanta v. J.J. Black & Co., 110 Ga.App. 667, 670 (139 S.E.2d 515) (1964). Indeed, that single statement from J.J. Black-a statement that was repeated in only four Court of Appeals cases over the next five decades-is the linchpin of the FDIC's argument that "the existing jurisprudence at the time the Apportionment Statute was enacted held that 'injury to person or property' referred only to tangible property." See id.; see also City of Atlanta v. Benator, 310 Ga.App. 597, 601-602 (714 S.E.2d 109) (2011); Neely v. City of Riverdale, 298 Ga.App. 884, 885-886 (681 S.E.2d 677) (2009); Sims v. City of Alpharetta, 207 Ga.App. 411, 411 (428 S.E.2d 94) (1993); Holbrook v. City of Atlanta, 139 Ga.App. 510, 511 (229 S.E.2d 21) (1976). And because that fixed, common-law meaning of "property" existed and was well known at the time the apportionment statute was enacted in 2005, the argument goes, the term "injury to person or property" incorporates that fixed, common-law meaning and limits apportionment to tort actions brought for injury to tangible property.

         We disagree. The proposition set forth in J.J. Black does not support the absolute principle that the term property always includes only tangible property; instead, J.J. Black merely held that claims sounding in contract did not implicate a statutory municipal ante litem notice requirement because the ante litem statute applied only to tort damages for "injury to person or property." See J.J. Black, 110 Ga.App. at 670 ("'Property' at common law was limited to tangible realty or personalty, [and] therefore cannot be extended to include property rights in contracts." (emphasis supplied)). The J.J. Black court had no occasion to examine whether there was a customary, common-law usage of the phrase "injury to person or property" in the context we examine it here, since the primary question presented there-and also presented in the cases that followed it-was whether certain claims sounded in tort (in which case the ante litem statute would apply) or in contract (in which case it would not). Id. ("[For] claims arising out of contracts, as contrasted with torts, the city, being a party to the contract, is already on notice as to the existence and the circumstances of the contract which is the basis of the claim, therefore the reason for such notice does not exist." (emphasis supplied)). See also, e.g., Sims, 207 Ga.App. at 411[6]; Holbrook, 139 Ga.App. at 511 (citing J.J. Black and reversing dismissal of counterclaim in contract case because ante litem notice was not required for contract claims); Neely, 298 Ga.App. at 885-886 (relying on Holbrook and J.J. Black in holding that "the ante litem notice requirement of OCGA § 36-33-5 is not applicable to suits for breach of contract" and reversing grant of summary judgment to city based on plaintiff's failure to provide ante litem notice); Benator, 310 Ga.App. at 601 (quoting Neely's holding that "the ante litem notice requirement of OCGA § 36-33-5 is not applicable to suits for breach of contract" and affirming denial of city's motion to dismiss for failure to provide ante litem notice).[7]

         Moreover, it does not appear that English common law treated the definition of "property" so definitively. The former directors and officers point to the very same passages from Blackstone the FDIC cites to argue the contrary position: that "property" cannot be interpreted narrowly, in light of Blackstone's acknowledgement that personal property includes "money" and extends beyond just chattels to "things thereunto incident." 3 William Blackstone, Commentaries on the Laws of England (1st ed. 1768), 117, 144. Indeed, our Court of Appeals recognized a more expansive common-law definition of "injury to personalty" in Davis v. Atlanta Gas Light Co., 82 Ga.App. 460 (61 S.E.2d 510) (1950), when it concluded in a tort case-and after a thorough review of the common law that the court in J.J. Black did not undertake-that "so far as injuries to personalty are concerned, the statute allowing to the executor of the injured party a right of action surviving the death of the owner has been construed both by the British courts prior to 1776 and by our Federal courts to refer to injury to personalty, tangible or intangible." Id. at 464 (emphasis supplied). Professors Prosser and Keeton likewise acknowledged that the definition of property could extend to "intangible" property in the context of torts when they noted with respect to the tort of conversion: "Intangible rights of all kinds could not be lost or found, and the original rule was that there could be no conversion of such property. But this hoary limitation has been discarded to some extent by all of the courts." W. Page Keeton, Prosser and Keeton on the Law of Torts § 15, at 91 (5th ed. 1984) ("Prosser & Keeton").

         Whatever the exact parameters of the common-law definition of "property" were or are in the context of tort actions for "injury to person or property," it thus appears that the definition does not categorically exclude property that could be characterized as "intangible." As a result, we reject the FDIC's contention that "injury to person or property" retained a fixed, common-law meaning at all, let alone a meaning that excludes intangible property as a potential source of tort injury that may be subject to apportionment under OCGA § 51-12-33 (b). We instead adopt the usual and customary meaning of the term "property," as used in a legal context, and conclude that "injury to person or property" in OCGA § 51-12-33 (b) includes both tortious injuries to tangible and intangible property.

         Importantly, this broad definition of "property" comports with long-standing Georgia precedents that have, in various contexts, determined that injuries to "property" are not restricted to tangible property. In Crawford v. Crawford, 134 Ga. 114 (67 SE 673) (1910), for example, we considered whether plaintiff's fraud claims for purely pecuniary losses-the balance of a debt owed-were precluded by a statute of limitation for actions "for injuries done to the person" or a statute of limitation for cases claiming "injuries to personal property," and held that the damages sought "resulted from an injury to the personal property of the plaintiff, and not from an injury to his person." 134 Ga. at 120, 123 (quotation marks omitted). In so holding, we accepted that a tort action for purely pecuniary loss was an injury that was captured within the phrase "injuries to personal property" in the relevant statute of limitation. Id. See also Rigdon v. Barfield, 194 Ga. 77, 83-84 (20 S.E.2d 587) (1942) (relying on Crawford and holding that fraud claim alleged an injury to property); Lamb v. Howard, 145 Ga. 847 (90 SE 63) (1916) (relying on Crawford and holding that statute applying to anyone "whose person or property has been injured" was "broad enough to comprehend a wrongful conversion of property" (quotation marks omitted)).

         Similarly, in Frost v. Arnaud, 144 Ga. 26 (85 SE 1028) (1915), we held that the plaintiffs' action seeking damages for pecuniary losses due to fraudulent misrepresentations and concealment "to purchase worthless shares of stock in a corporation which was never legally organized" was governed by the statute of limitation for "[a]ll actions for injuries to property, real or personal." 144 Ga. at 29. Implicit in that determination was the notion that "injuries to property" included tort claims for purely pecuniary loss. See also Small v. Wilson, 20 Ga.App. 674, 677 (93 SE 518) (1917) (tort action in trover ...


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