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Siavage v. Gandy

Court of Appeals of Georgia, Second Division

June 18, 2019

SIAVAGE
v.
GANDY et al.

          RICKMAN, J., REESE and HODGES, JJ.

          Reese, Judge.

         Dr. Winston Gandy, Gerald Wilkins, and 12 other investors (collectively, the "Appellees"), filed suit against Michael Siavage (the "Appellant"), Gerald Ramdeen, and others, alleging, inter alia, that Ramdeen defrauded the Appellees out of approximately $3.5 million and that the Appellant, Ramdeen's attorney, aided and abetted Ramdeen's fraud. The Superior Court of Fulton County denied the Appellant's motion to dismiss, and we granted his application for interlocutory appeal. On appeal, the Appellant argues that the trial court erred in denying his motion to dismiss because Georgia does not recognize a claim for aiding and abetting fraud, and that, even if it did, the Appellees had failed to state a valid cause of action. For the reasons set forth infra, we affirm.

         Viewed in the light most favorable to the Appellees, as the nonmovants, [1] the complaint avers that "[t]hrough his lies and schemes, Mr. Ramdeen fraudulently induced [the Appellees] to collectively give him [approximately $3.5 million], which Mr. Ramdeen falsely promised to invest in various fabricated investments and business activities that he claimed to be undertaking[.]" Further, the Appellant served as attorney to Ramdeen and his fictitious companies and "aided and abetted Mr. Ramdeen's fraud by providing supposed corporate documents and other assistance that enabled Mr. Ramdeen to continue his fraudulent schemes[, ]" causing damage to the Appellees. Specifically, the Appellees alleged that the Appellant prepared documents that conveyed the false impression that Ramdeen's purported investments were legitimate, including documents regarding a supposed merger with a venture capital advisory firm that never occurred, a supposed NASDAQ listing, and a "Notice of Offering" and accompanying settlement agreement and release.

         The Appellees also alleged that the Appellant allowed Ramdeen to hold out the Appellant's law firm as a provider of legal services to Ramdeen and his companies, which conveyed the false impression that Ramdeen's activities were legitimate; the Appellant drafted transaction documents that evidenced the many "phony deals" that Ramdeen purported to undertake; and Ramdeen paid the Appellant for these "bogus transactions" using the money the Appellees had invested with him.

         The complaint alleged further that, in 2014, the Appellant refused to make the account books and records of one of Ramdeen's companies available for inspection after one of the Appellees requested access. At this point, the Appellees averred, "because of his unique access to information as Mr. Ramdeen's counsel, [the Appellant] was on notice of Mr. Ramdeen's fraudulent activity and should have undertaken an investigation, which would have uncovered Mr. Ramdeen's fraud."

         In response to the complaint, the Appellant filed a motion to dismiss the tort claims against him, asserting that Georgia does not recognize a cause of action for aiding and abetting fraud, and that, even if it did, the Appellees had failed to state such a claim, such that both the Appellees' claims for aiding and abetting fraud and for attorney fees failed.

         The trial court denied the Appellant's motion to dismiss, concluding that the Appellees' claim for aiding and abetting fraud was not prohibited under Georgia law. Further, the trial court found that the Appellees had adequately pled a claim for aiding and abetting fraud because they had sufficiently alleged the Appellant's knowledge of the fraud and his substantial assistance in advancing the fraud.

         Analyzing the complaint under the motion-to-dismiss standard, rather than the heightened-pleading standard for asserting a claim for fraud under OCGA § 9-11-9 (b), the trial court found that the Appellees had also adequately alleged the underlying fraud by Ramdeen. Specifically, the court concluded that "it [was] possible for [the Appellees] to introduce evidence showing that Ramdeen's false representations were made with a present intent not to perform, were designed to induce [the Appellees] to act or refrain from acting, and resulted in damage to [the Appellees] as a result of their justifiable reliance."

         The trial court also denied the Appellant's motion to dismiss the Appellees' claim for attorney fees, finding that the allegations against the Appellant were sufficient to support an inference of bad faith. This appeal followed.

Under Georgia law, a motion to dismiss pursuant to OCGA § 9-11-12 (b) (6) will 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. 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. While a trial court's ruling on a motion to dismiss for failure to state a claim is subject to de novo review, we accept the allegations of fact that appear in the complaint and view those allegations in the light most favorable to the plaintiff.[2]

         "The tort of fraud has five elements: a false representation by a defendant, scienter, intention to induce the plaintiff to act or refrain from acting, justifiable reliance by plaintiff, and damage to plaintiff."[3]

Although fraud must be pled with particularity under OCGA § 9-11-9 (b), a complaint alleging fraud should not be dismissed for failure to state a claim unless it appears beyond a doubt that the pleader can prove no set of facts in support of his claim which would entitle him to relief. Rather than move to dismiss, a defendant seeking greater particularity may either move for a more definite statement or wait for the outcome of discovery.[4]

         "In all cases, a person who maliciously procures an injury to be done to another, whether an actionable wrong or a breach of contract, is a joint wrongdoer and may be subject to an action either alone or jointly ...


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