SALEM CROSSING TOWNHOMES HOMEOWNERS ASSOCIATION, INC. v. WAGNER Et Al. , 347 Ga. App. 621 ( 2018 )

FOURTH DIVISION
DILLARD, C. J.,
DOYLE, P. J., and MERCIER, J.
NOTICE: Motions for reconsideration m us t be
physically re ceived in our clerk’s office within ten days
of the date of decision to be deemed timely filed.
http://www.gaappeals.us/rules
October 16, 2018
In the Court of Appeals of Georgia
A18A1359. SALEM CROSSING TOWNHOMES HOMEOWNERS
ASSOCIATION, INC. v. WAGNER et al.
MERCIER, Judge.
Salem Crossing Townhomes Homeowners Association, Inc. (“the
Association”) appeals from the DeKalb County Superior Court’s grant of summary
judgment to Angela M. Wagner and Gerald Peterson on the Association’s claim for
homeowners association assessments. The superior court granted summary judgment
based on the doctrine of res judicata. The trial court concluded, among other things,
that a prior DeKalb County State Court judgment had determined that “Peterson’s
house is not subject to payment of assessments because it is not a unit as defined by
the [Association] Covenants.” “Although we conclude the [superior] court erred in
granting summary judgment based on res judicata, the [superior] court’s rulings
support the grant of summary judgment based on the closely-related doctrine of
collateral estoppel[,]” and we therefore affirm. Body of Christ Overcoming Church
of God, Inc. v. Brinson, 287 Ga. 485, 486 (696 SE2d 667) (2010) (citation omitted).
Summary judgment is proper when there is no genuine issue of material fact and
the movant is entitled to judgment as a matter of law. OCGA § 9-11-56 (c). On appeal
from the grant or denial of a motion for summary judgment, this Court conducts a de
novo review of the law, viewing the evidence, and all reasonable conclusions and
inferences drawn from it, in the light most favorable to the nonmovant. General
Electric Capital Computer Services v. Gwinnett County Board of Tax Assessors, 240
Ga. App. 629, 630 (1) (523 SE2d 651) (1999). A grant of summary judgment will be
affirmed if it is right for any reason. See Coffee Iron Works v. QORE, Inc., 322 Ga.
App. 137, 139 (1) (744 SE2d 114) (2013).
Viewed in the light most favorable to the Association, the record shows that the
underlying superior court case was the second of two collection cases between the
Association and Peterson concerning homeowners association assessments allegedly
due on the single-family detached residence owned by Peterson and Wagner. It is
undisputed that the first collection case began in magistrate court on July 31, 2015,
when the Association filed an action against Peterson for failure to pay homeowners
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association assessments for the first, second and third quarters of 2015. The
magistrate court found in favor of the Association. Peterson appealed to the state
court and filed a motion for summary judgment, asserting his home is not subject to
the requirement to pay front lawn landscaping assessments because he does not live
in a “unit” as defined by the Association Covenants. Peterson introduced a copy of
the Association Covenants, which stated that the Association shall maintain “all
landscaped grounds areas within the boundaries of Units, except for landscaping, if
any, contained within patio areas,” and defined a “unit” as “a single-family attached
[town home], the driveway and the lot upon which the house is constructed.” The
Association did not respond to Peterson’s motion for summary judgment. Based on
Peterson’s motion, brief, affidavit, and statement of material facts not in dispute, the
state court granted Peterson’s motion for summary judgment in January 2016. The
Association apparently did not appeal that decision.
On July 18, 2016, the Association filed a second collection lawsuit in DeKalb
County Superior Court against Wagner and Peterson to collect unpaid homeowners
association assessments, collection costs, late charges, interest, and attorney fees for
the first, second and third quarters of 2016. Wagner and Peterson filed a motion for
summary judgment, asserting the Association’s claim was barred by the doctrine of
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res judicata. The Association responded, claiming res judicata did not apply because
there was no identity of the cause of action or an adjudication on the merits by a court
of competent jurisdiction. The Association further argued that a 1992 amendment to
the Association Covenants precluded Wagner and Peterson’s definition of “unit.” The
Association moved for summary judgment, claiming Wagner and Peterson owed the
unpaid assessments pursuant to the Association Covenants. The trial court granted
Wagner and Peterson’s motion for summary judgment, finding that res judicata
precluded the Association’s claim to unpaid 2016 assessments.
1. The Association first contends that the trial court erred in applying the
doctrine of res judicata in this case. We agree. It is well-established that the doctrine
of res judicata “prevents the re-litigation of all claims which have already been
adjudicated, or which could have been adjudicated, between identical parties or their
privies in identical causes of action.” Fulton County Tax Commissioner v. General
Motors Corp., 234 Ga. App. 459, 465 (1) (507 SE2d 772) (1998) (citation and
punctuation omitted). “Three prerequisites must be satisfied before res judicata applies
-- (1) identity of the cause of action, (2) identity of the parties or their privies, and (3)
previous adjudication on the merits by a court of competent jurisdiction.” Id. “The
fact that the subject matter of different lawsuits may be linked factually does not mean
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that they are the same ‘cause’ within the meaning of OCGA § 9-12-40.1 For [res
judicata] to act as a bar, ‘the cause of action in each suit must be identical.’” Morrison
v. Morrison, 284 Ga. 112, 115 (3) (663 SE2d 714) (2008) (citations omitted).
The Association does not disagree that the state and superior court cases
involve an identity of the parties or their privies, but instead argues that the cases do
not involve an identity of the cause of action because the final order in the state court
case was entered in January 2016 “and could have only decided the amount of
assessments owed by [Peterson and Wagner] to the Association prior to the date of
the final order.” The superior court action, on the other hand, sought assessments due
after the state court’s final order was entered. Clearly, the subject matter is not
identical between the state court action and the superior court action: the state court
action sought unpaid homeowners association assessments for the first, second, and
third quarter of 2015, while the superior court action sought unpaid homeowners
association assessments for the first, second, and third quarter of 2016. See Oakwood
Acceptance Corp., LLC v. Ahmad, 271 Ga. App. 356, 357 (1) (609 SE2d 700) (2005)
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OCGA § 9-12-40 states as follows: “A judgment of a court of competent
jurisdiction shall be conclusive between the same parties and their privies as to all
matters put in issue or which under the rules of law might have been put in issue in the
cause wherein the judgment was rendered until the judgment is reversed or set aside.”
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(each breach of contract payable in separate installments constitutes a separate cause
of action). Because the cause of action in superior court is not identical to the one in
state court, the doctrine of res judicata does not apply to preclude the superior court
action. Id.
2. Finding that the doctrine of res judicata does not apply to bar the present
action, we must determine whether the related doctrine of collateral estoppel applies.
“When a question of law is at issue, as here, we owe no deference to the trial court’s
ruling and apply the ‘plain legal error’ standard of review.” Nicholson v. Shafe, 294
Ga. App. 478, 480 (1) (669 SE2d 474) (2008) (citation and punctuation omitted).
Collateral estoppel
precludes the re-adjudication of an issue that has previously been litigated
and adjudicated on the merits in another action between the same parties
or their privies. Like res judicata, collateral estoppel requires the identity
of the parties or their privies in both actions. However, unlike res
judicata, collateral estoppel does not require identity of the claim -- so
long as the issue was determined in the previous action and there is
identity of the parties, that issue may not be re-litigated, even as part of
a different claim.
Fulton County Tax Commissioner, supra at 465 (1) (citation omitted). The doctrine
applies to “those issues that actually were litigated and decided in the previous action,
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or that necessarily had to be decided in order for the previous judgment to have been
rendered.” General Electric Capital Computer Services, supra at 631 (1).
(a) The Association asserts that the state court did not adjudicate the merits of
the underlying superior court case. According to the Association, “[t]he State Court
Judgment made it clear that judgment was granted in favor of [Peterson] due to the
Association’s lack of response, not because it had found that [Peterson] and the
Subject Property were not subject to the Declaration.” The record belies this assertion.
The state court’s order specifically notes:
The above-styled case, which is an appeal from Magistrate Court, comes
before the Court on Defendant’s Motion and Brief for Summary
Judgment, which was filed on November 16, 2015, along with the
Affidavit of Gerald Peterson and Statement of Material Facts not in
Dispute. Plaintiff has filed no response to the motion. Defendant’s
Motion for Summary Judgment is hereby GRANTED.
Peterson’s state court motion and brief for summary judgment, as well as his affidavit,
argue and introduce evidence that Peterson’s home is not subject to the Association
Covenants because the residence does not meet the Association Covenants’ definition
of a “unit.” Thus, contrary to the Association’s argument, the state court order does
not indicate that the court granted summary judgment based on the Association’s
failure to respond.
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Furthermore, the state court was not authorized to grant summary judgment
based solely on the Association’s failure to respond to Peterson’s motion. “Because
there is no such thing as a default summary judgment,” the Association’s failure to
respond to Peterson’s motion for summary judgment did not automatically entitle
Peterson to judgment in his favor. Rapps v. Cooke, 234 Ga. App. 131, 131 (1) (505
SE2d 566) (1998); see Tselios v. Sarsour, 341 Ga. App. 471, 473 (800 SE2d 636)
(2017). Although the Association waived its right to present evidence in opposition to
Peterson’s motion for summary judgment by failing to respond, Peterson was still
obligated to demonstrate from the pleadings and the evidence that summary judgment
was appropriate. See Rapps, supra at 131-132 (1). By submitting a statement of
material facts not in dispute, a supporting affidavit that complied with OCGA § 9-11-
56 (e), and relevant portions of the Association Covenants with his motion for
summary judgment, Peterson met his burden of demonstrating that summary judgment
was appropriate because his house is not a “unit” as defined by the Association
Covenants. See OCGA § 9-11-56 (e) (“When a motion for summary judgment is made
and supported as provided in this Code section, an adverse party may not rest upon
the mere allegations or denials of his pleading, but his response, by affidavits or as
otherwise provided in this Code section, must set forth specific facts showing that
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there is a genuine issue for trial. If he does not so respond, summary judgment, if
appropriate, shall be entered against him.”).
Moreover, contrary to the Association’s argument, the state court necessarily
adjudicated the merits of the issue raised in the superior court case. As the Association
admits, the issue adjudicated by the state court was Peterson’s liability for unpaid
homeowners association assessments that accrued in the first three quarters of 2015.
Given Peterson’s basis for summary judgment and the trial court’s ruling that Peterson
was not liable for the unpaid 2015 homeowners assessments, the state court
necessarily determined that Peterson’s home does not constitute a “unit” within the
meaning of the Association Covenants. Although the Association is now seeking
unpaid 2016 homeowners association assessments, the issue of Peterson’s liability for
these assessments once again depends on whether his home qualifies as a “unit” under
the Association Covenants, and resolution of the issue in superior court would require
reconsideration of the state court’s implicit ruling that Peterson’s home is not a “unit”
as defined by the Association Covenants. “This litigation therefore involves an issue
that had been resolved on the merits in prior litigation, satisfying one aspect of
collateral estoppel.” Body of Christ Overcoming Church of God, supra at 487. As
stated previously, “[c]ollateral estoppel does not require identity of the claim — so
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long as the issue was determined in the previous action and there is identity of the
parties, that issue may not be re-litigated, even as part of a different claim.” Rogers v.
Estate of Harris, 276 Ga. App. 898, 900 (625 SE2d 65) (2005) (citation and
punctuation omitted).
(b) The Association next argues that the state court was not a court of
competent jurisdiction to render a declaratory judgment about the future applicability
of the Association Covenants to Peterson’s home. According to the Association,
neither the State nor Magistrate Courts in the first lawsuit had jurisdiction
to make an adjudicatory declaration regarding whether or not the
Appellees would be liable to the Association for future assessments or
whether they were subject to the Salem Crossing Declaration of
Covenants in the first place. The authority to issue declaratory judgments
is a power reserved for the Superior Courts.
The Association’s argument misses the mark.
It is true that superior courts have exclusive jurisdiction to hear and determine
declaratory judgment actions. See OCGA § 9-4-2 (a); Mitchell v. Southern General
Ins. Co., 185 Ga. App. 870, 871 (1) (366 SE2d 179) (1988). However, this case was
not brought as a declaratory judgment action, and the state court did not issue a
declaratory judgment ruling. Whether Peterson’s home is a “unit” under the
Association Covenants so as to preclude the Association from collecting assessments
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against Peterson was a germane issue in the state court case, and the state court had
competent jurisdiction to determine that Peterson’s home is not a “unit” under the
Association Covenants. See OCGA § 15-7-4 (a) (2) (each state court shall have
jurisdiction over the trial of civil actions without regard to the amount in controversy).
The fact that the state court’s legal conclusion is binding on the issue of whether
Peterson’s home meets the definition of a “unit” under the Association Covenants
does not make it a declaratory judgment.
Because the issue was properly presented in the state court, and the state court
appropriately handled the case, the state court order presented an adjudication on the
merits in a court of competent jurisdiction. See Fulton County Tax Commissioner,
234 Ga. App. at 465 (1) (“it is only where the merits were not and could not have been
determined under a proper presentation and management of the case that res judicata
is not applicable”) (citation and punctuation omitted). In the absence of significant
factual change, and here no significant factual change has been shown, collateral
estoppel on the issue of whether Peterson’s home constitutes a “unit” under the
Association Covenants was made applicable to the Association on all future collection
suits relying on the definition of a “unit.” See General Electric Capital Computer
Services, 240 Ga. App. at 630 (1).
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3. The Association argues that despite the state court’s order, Peterson is liable
for 2016 assessments under the Association Covenants. According to the Association,
Peterson presented the state court with incomplete and misleading evidence by failing
to mention or introduce a 1992 amendment to the Association Covenants. The
Association notes that detached single family residences did not exist in the Salem
Crossing community when the original Association Covenants were recorded.
However, in June 1992, the Association Covenants were amended to include these
detached homes as “units.” Hovis Homes, Inc., the developer, owned the subject
property at the time and agreed to the amendment. In 1993, Hovis Homes deeded the
property to Michael and Laura Thomas, and the Thomases deeded the property to
Peterson and Wagner in 2004. Thus, according to the Association, Peterson and
Wagner’s home is a “unit” as defined by the Association Covenants.
However, the record is clear that the state court’s order was entered in January
2016, well after any amendment to the Association Covenants’ definitions. Thus,
evidence of the 1992 amendment to the Association Covenants does not qualify as a
significant factual change occurring after the state court’s final order. See generally
General Electric Capital Computer Services, supra. If the Association wanted to
introduce evidence disputing Peterson’s claim in state court, it was required to
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respond to Peterson’s motion for summary judgment, see OCGA § 9-11-56 (e),
appeal the state court’s judgment, see OCGA § 5-6-38 (a), or move to set aside the
judgment under OCGA § 9-11-60 (d). The Association failed to take any of these
actions, and it cannot attack the validity of the state court’s judgment by filing a new
action and arguing that the state court’s judgment was based on incomplete or
misleading evidence. See OCGA §§ 5-6-38 (a) (in general, adverse ruling must be
appealed within 30 days), 9-12-40 (judgment of court of competent jurisdiction
conclusive between parties as to all matters put in issue unless reversed or set aside).
The Association’s failure to appeal the state court’s final order precludes any
argument challenging the merits of that judgment, and any portion of this appeal
challenging the state court’s judgment is not properly before us. See Bienert v.
Dickerson, 276 Ga. App. 621, 622-623 (1) (624 SE2d 245) (2005); see generally
Hooper v. Harris, 236 Ga. App. 651, 652 (1) (512 SE2d 312) (1999) (unappealed
ruling is res judicata and appellate court cannot review merits of unappealed ruling).
Thus, the state court’s ruling that the Association is not entitled to recover
homeowners association assessments because Peterson’s home is not a “unit” as
defined by the Association Covenants is binding upon the Association. See generally
Rogers, supra at 899-900; Bienert, supra.
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Inasmuch as the Association was a proper party in the state court action, the
state court action properly and necessarily determined that Peterson’s home is not
subject to the payment of homeowners association assessments because it is not a
“unit” as defined by the Association Covenants, the state court’s order became a final
judgment unappealed by the Association, and there has been no significant factual
change since the state court’s ruling, collateral estoppel on the issue of Peterson’s
liability for assessments based on the Association Covenants is applicable to the
homeowners assessments currently sought in the superior court action. Thus, the
DeKalb County Superior Court properly granted summary judgment to Wagner and
Peterson. Body of Christ Overcoming Church of God, supra at 486; Coffee Iron
Works, supra.
Judgment affirmed. Dillard, C. J., and Doyle, P. J., concur.
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