UNIVERSAL INDUSTRIAL GASES, INC. v. ACTION INDUSTRIES, INC. ( 2021 )

FIFTH DIVISION
RICKMAN, C. J.,
MCFADDEN, P. J., and SENIOR APPELLATE JUDGE PHIPPS
NOTICE: Motions for reconsideration must be
physically received in our clerk’s office within ten
days of the date of decision to be deemed timely filed.
https://www.gaappeals.us/rules
DEADLINES ARE NO LONGER TOLLED IN THIS
COURT. ALL FILINGS MUST BE SUBMITTED WITHIN
THE TIMES SET BY OUR COURT RULES.
September 29, 2021
In the Court of Appeals of Georgia
A21A1183. UNIVERSAL INDUSTRIAL GASES, INC. v. ACTION
INDUSTRIES, INC. et al.
PHIPPS, Senior Appellate Judge.
In this action for breach of contract and related claims, plaintiff Universal
Industrial Gases, Inc. (“UIG”) appeals from the dismissal of its complaint against
defendants Action Industries, Inc. (“Action”) and Allegheny Casualty Company
(“Allegheny”). The trial court dismissed UIG’s complaint on the ground that UIG is
not authorized to maintain this action because it is a foreign entity that has not
obtained a certificate of authority to transact business in Georgia. UIG contends on
appeal that the trial court erred when it determined that UIG is transacting business
in Georgia for purposes of the applicable statutory scheme. For the reasons that
follow, we agree and reverse.
Unless otherwise noted, the following facts appear to be undisputed on the
current record, at least for purposes of the defendants’ motion to dismiss. According
to UIG’s complaint, it is a corporation organized under the laws of Delaware, with
its principal place of business in Pennsylvania. In May 2017, it entered into an Onsite
Gases Supply Agreement with non-party Anchor Glass Container Corporation
(“Anchor”), in which UIG agreed to: (i) buy real property adjacent to an Anchor
facility in Warner Robins; (ii) build an air separation unit (“ASU”) plant (to be owned
by UIG) on that property; and (iii) use the plant to provide all of Anchor’s gaseous
oxygen requirements for Anchor’s Warner Robins facility for an initial period of 15
years, and for an initial sum of $110,000 monthly. UIG’s parent company thereafter
organized two Georgia entities – UCG Warner Robins Realty, LLC, and UCG
Georgia, LLC, both of which are wholly owned by UIG’s parent company – to buy
the Warner Robins property and operate the ASU plant located there. In November
2017, Anchor sold the real property at issue here to UCG Warner Robins Realty. In
July 2018, UIG assigned to UCG Georgia: (i) all of UIG’s “rights, benefits and
privileges” under its Onsite Gases Supply Agreement with Anchor; and (ii) all of
UIG’s “right, title and interest in and to” the ASU plant.
2
In the August and September 2017 contracts at issue in this lawsuit, UIG hired
Action to dismantle an ASU plant in Louisiana and relocate it to Warner Robins, and
Allegheny issued a performance bond as Action’s surety in connection with the ASU
project. This proceeding began in October 2018, when UIG sued the defendants,
alleging that Action had breached various obligations under its contract with UIG and
that Allegheny was liable to UIG as Action’s surety.
The defendants moved to dismiss UIG’s complaint on the ground that UIG may
not maintain an action in a Georgia court because it has not obtained a certificate of
authority to transact business here. UIG opposed the defendants’ motion, contending
that its temporary activities in Georgia did not rise to the level of “transacting
business” for purposes of the certificate-of-authority requirement. The trial court
granted the motion to dismiss, concluding that “the extent of activity is considerable
and continuity is indicated with respect to UIG’s business activities in Georgia” and
that UIG’s failure to obtain authorization to transact business in Georgia therefore
barred its claims against the defendants. (Punctuation omitted.) This appeal followed.1
1
UIG filed an application for interlocutory review, which we granted on the
ground that the dismissal order is directly appealable because the trial court expressly
directed the entry of a final judgment and determined there is no just reason for delay
as to the dismissal of UIG’s claims against Allegheny. Universal Indus. Gases, Inc.
v. Action Indus., Inc., No. A21I0108 (Jan. 19, 2021); see OCGA § 9-11-54 (b); Spivey
3
By statute, a foreign corporation transacting business in this state is required
to obtain a certificate of authority from the Georgia Secretary of State, subject to
certain exceptions that include, as relevant here, “[c]onducting an isolated transaction
not in the course of a number of repeated transactions of a like nature.” OCGA § 14-
2-1501 (a), (b) (10). And a foreign corporation transacting business in Georgia may
not maintain a proceeding in a Georgia court until it has obtained the required
certificate. OCGA § 14-2-1502 (a).2 A motion to dismiss for failure to obtain a
certificate of authority to do business in Georgia is properly considered a motion in
abatement, in which the defendant has the burden of proving the facts necessary to
obtain a dismissal. Mfgs. Nat. Bank of Detroit v. Tri-State Glass, Inc., 201 Ga. App.
253, 253-254 (1) (410 SE2d 808) (1991); see Powder Springs Holdings, LLC v. RL
v. Hembree, 268 Ga. App. 485, 486, n. 1 (602 SE2d 246) (2004).
2
In its dismissal order, the trial court based its ruling on OCGA § 14-11-711
and, by necessary implication, OCGA § 14-11-702, which are parallel statutes that
apply the same material requirements and limitations as OCGA §§ 14-2-1501 and 14-
2-1502 on foreign LLCs, at least as relevant here. Our analysis relies on the foreign
corporation statutes because UIG claimed to be a corporation in its complaint and is
identified as a corporation in its contract with Anchor and assignments to UCG
Georgia, and, on appeal, neither party has identified any properly authenticated,
conclusive record evidence to the contrary. Regardless, the outcome here would be
the same under either set of statutes, given the material similarities between their
provisions, and we therefore rely on case law addressing both sets of statutes.
4
BB ACQ II-GA PSH, LLC, 325 Ga. App. 694, 696-697 (1) (754 SE2d 655) (2014)
(addressing the certificate-of-authority requirement in the context of LLCs under
OCGA §§ 14-11-702 and 14-11-711).
We review de novo a trial court’s ruling on a motion to dismiss raising a matter
in abatement. See Brock v. C & M Motors, Inc., 337 Ga. App. 288, 290 (1) (787 SE2d
259) (2016). If, on a motion to dismiss, the trial court conducts an evidentiary
hearing, “it may resolve disputed factual issues, and we will show deference to those
findings.” Hyperdynamics Corp. v. Southridge Capital Mgmt., LLC, 305 Ga. App.
283, 284 (I) (699 SE2d 456) (2010) (physical precedent only). On the other hand,
where a motion is resolved based solely on written submissions, including deposition
transcripts, “the reviewing court is in an equal position with the trial court to
determine the facts.” Id. at 284 (I) & n. 1 (citation and punctuation omitted); see also
Beasley v. Beasley, 260 Ga. 419, 420 (396 SE2d 222) (1990). Here, the trial court
decided the motion to dismiss based solely on documents already in the record
(including deposition transcripts) and counsel’s argument during the hearing on the
motion. We therefore owe no deference to the trial court’s factual findings. See
Beasley, 260 Ga. at 420; Hyperdynamics Corp., 305 Ga. App. at 284 (I) & n. 1.
5
Whether one is “transacting business” for purposes of the applicable statutes
should be decided on a case-by-case basis “and not by application of a mechanical
rule.” Winston Corp. v. Park Elec. Co., 126 Ga. App. 489, 495 (191 SE2d 340) (1972)
(addressing Code Ann. §§ 22-1401 and 22-1421, the predecessors to OCGA §§ 14-2-
1501 and 14-2-1502); accord Reisman v. Martori, Meyer, Hendricks, & Victor, 155
Ga. App. 551, 552 (1) (271 SE2d 685) (1980).
Under such test it is the extent of activities by the foreign corporation in
Georgia rather than the singleness that is considered, whether it be a
construction enterprise or some other business. Where the activities are
minimal and unsubstantial in connection with only one contract and
there is displayed no intention to continue these activities after
completion of the single contract, the foreign corporation does not have
to qualify because its contracts with Georgia relate to an isolated
transaction. If such activities are extensive in scope and involve a great
deal of work over a period of time, then qualification is required despite
all such activities being related to a single contract.
Winston Corp., 126 Ga. App. at 496; see also id. at 491, 494, 496-497 (concluding
that a party was not “transacting business” in Georgia for purposes of these statutes
where he “was in Georgia completing a subcontract as a sole proprietor,” and, after
incorporating his business in Tennessee, he “completed the performance of the
contract as an individual and in connection therewith undertook additional work in
6
the name of his foreign corporation without intention of doing any further business
in Georgia other than the isolated transaction”) (punctuation omitted); accord Barker
v. County of Forsyth, 248 Ga. 73, 75 (1) (281 SE2d 549) (1981) (“[A]n isolated
transaction indicates no purpose of continuity of conduct whereas doing business
implies an intent to conduct a continuous, as opposed to a temporary, business.”);
Reisman, 155 Ga. App. at 552 (1) (“[T]he purpose of [the predecessor to OCGA § 14-
2-1501] is to require registration of foreign corporations which intend to conduct
business in Georgia on a continuous basis, not as a temporary matter.”).
For example, in Barker, 248 Ga. at 73, 75 (1), the Supreme Court held that a
foreign corporation was “transacting business” in Georgia for purposes of the
predecessors to OCGA §§ 14-2-1501 (a) and 14-2-1502 (a), where the corporation
spent over $20,000 (in the 1980s) designing, surveying, and planning a project for an
alpine slide on a Georgia mountain; its staff members spent two weeks in Georgia
accomplishing some of these tasks; and it entered into an agreement to buy and lease
land on the mountain to operate both the slide and a scenic lookout. By way of
contrast, in Powder Springs Holdings, LLC, 325 Ga. App. at 696-697 (1), this Court
concluded that a foreign LLC was not “transacting business” in Georgia for purposes
of OCGA § 14-11-702 (a), where the foreign LLC merely acquired the loan
7
documents underlying the foreclosure sale at issue in that proceeding, advertised and
conducted the sale, bought the subject property at and reported the sale, and filed a
petition confirming the sale in superior court. And in Roberts v. Chancellor Fleet
Corp., 182 Ga. App. 69, 70-71 (1) (354 SE2d 628) (1987) (physical precedent only),
we held that no certificate of authority was required where the plaintiff, which was
in the lease underwriting business: (i) maintained a sales office in Georgia with one
sales representative, who solicited orders for the lease of equipment but had no
authority to accept contracts on behalf of the plaintiff; and (ii) made deliveries of
equipment pursuant to the terms of its lease agreements. With this background, we
turn to UIG’s claims on appeal.
1. In two related arguments, UIG contends that the trial court erred when it
determined that UIG’s activity in Georgia is continuous, rather than isolated. In its
dismissal order, the trial court identified two factors as central to its decision. First,
the court found that, in its complaint, UIG requested consequential damages,3 which,
the court reasoned, “depend upon additional circumstances giving rise to an
expectation of profits to be derived from continuing business operations” and thus
3
Consequential damages are “[l]osses that do not flow directly and
immediately from an injurious act but that result indirectly from the act.” Black’s Law
Dictionary 489 (11th ed. 2019).
8
necessarily contemplate “continuing business transactions by UIG flowing from [its
Onsite Gases Supply Agreement with Anchor] and the operation of the Warner
Robins facility.” Second, the court found that the deposition testimony of UIG’s
president that a UIG employee was the “plant manager” for the Warner Robins ASU
plant also indicated “substantial ongoing involvement of UIG in the operation of the
Georgia plant.” UIG contends that neither factor was a proper basis to support a
finding that it is “transacting business” in Georgia for purposes of the certificate-of-
authority requirement. We agree.
(a) In the “Facts” section of its complaint, UIG alleged that Action’s breach of
its contract with UIG has resulted in “consequential damages to UIG from its failure
to provide separated gas products to its customers.” In its request for relief, however,
it sought judgment in the amount of “at least $1,170,306,” which represented only
costs of work paid for within the scope of the Project but not performed
by Action, correction of work improperly performed by Action, and
increased costs to UIG due to Action’s breach, including additional
sums UIG has paid or will have to pay to third parties for labor and
material necessary to complete the Project according to the Contract,
9
i.e., the “price for the labor done and materials furnished due to Action’s breach.”
None of these items expressly implicate future lost profits, notwithstanding the trial
court’s implicit finding to the contrary.
Regardless, even if UIG’s complaint arguably may be read as seeking lost
profits, any such request would show – at most – that UIG potentially may have, at
some point in the past, contemplated engaging in long-term business activities in
Georgia. Any such request sheds little-to-no light, however, on whether UIG in fact
ever “transacted business” in Georgia, much less that it did so at any point after it
transferred all of its rights in the ASU plant and Onsite Gases Supply Agreement to
UCG Georgia (by which time UCG Warner Robins Realty already had acquired the
land on which the plant sits), including when it subsequently filed its complaint in
this case or at any other point thereafter.4
4
In other words, the very nature of a successful claim for lost profits
necessarily shows that business intended – at some point in the past – to be transacted
was not ultimately transacted. Of course, asking for and proving damages from lost
profits are two very different propositions. But even if lost future profits were to be
established, the amount of profit, standing alone, is insufficient to show that an entity
in fact transacted business in Georgia so as to trigger the registration requirement, see
Ovation Mktg., Inc. v. Sturz, No. 1-07-CV-1634-JEC, 2008 U.S. Dist. LEXIS 131381,
at *8-10 (II) (A) (N.D. Ga. 2008), given that lost future profits necessarily depend on
business not transacted.
10
Notably, the statute under which the defendants seek dismissal of this action
– OCGA § 14-2-1502 (a) – bars a foreign corporation from “maintain[ing] a
proceeding in any court in this state” only if the corporation is “transacting business”
in Georgia, i.e., actively doing so, without a certificate of authority. Thus, by its very
terms, the plain language of the statute does not encompass a foreign corporation that
merely may have contemplated potentially engaging in long-term business activities
in this state at some point before the court proceeding at issue.5 See generally Deal
v. Coleman, 294 Ga. 170, 172 (1) (a) (751 SE2d 337) (2013) (when considering the
meaning of a statute, a court must “presume that the General Assembly meant what
it said and said what it meant” and afford the statutory text its “plain and ordinary
meaning”) (citations and punctuation omitted). And that is what distinguishes this
case from Barker, in which the foreign corporation was, at the time of the lawsuit
(and appeal) “proposing to conduct a continuous business,” insofar as it had obtained
5
In that vein, the plain language of the statute – which uses the present
participle “transacting” – does not even encompass a foreign corporation that may
have actively “transacted business” in this state at some point in the past but ceased
doing so before initiating the court proceeding at issue. For that reason, we reject the
defendants’ conclusory assertion – unsupported by citation to authority – that the
transactions between UIG and its two affiliates (which occurred well before this case
began) “were ipso facto examples of UIG transacting business in Georgia” for
purposes of the certificate-of-authority requirement. (Emphasis and punctuation
omitted.)
11
(or was then presently in the process of obtaining) several parcels of land on a
Georgia mountain, with then-present plans to operate – on its own behalf – an alpine
slide and scenic overlook in Georgia. See 248 Ga. at 73, 75 (1). By way of contrast,
the record here shows that, well before it initiated this action, UIG had divested itself
of all of its interest in the land, plant, and business activities at issue in this case.
Consequently, even assuming that UIG’s complaint may be read to request future lost
profits, the trial court erred in relying on any such request as a basis for its ruling that
UIG is “transacting business” in Georgia for purposes of the certificate-of-authority
requirement.
(b) UIG president Samuel Piazza, Sr., testified in a deposition that a UIG
employee named Frank McDougal was the “plant manager” for the Warner Robins
ASU plant. As of the date of Piazza’s November 2019 deposition, McDougal had
been in that position, based in Georgia, for approximately 18 months. Piazza provided
no more information regarding McDougal’s activities or responsibilities.
When viewed in context with UIG’s assignment to UCG Georgia of its Onsite
Gases Supply Agreement and the ASU plant, the fact that a single UIG employee
acted as the ASU plant manager from mid-2108 through late 2019, without more, also
sheds little-to-no light on whether UIG itself conducted any activities that would
12
constitute “transacting business” in Georgia at any point after the assignments or
during the pendency of this action. See Roberts, 182 Ga. App. at 70-71 (1) (the
presence in Georgia of a sales representative who solicited lease orders and made
deliveries of leased equipment did not constitute “transacting business” in Georgia
for purposes of the certificate-of-authority requirement). This factor thus also was not
a sufficient basis for the trial court’s dismissal ruling.
(c) In its dismissal order, the trial court highlighted that “neither of the UCG
companies” – i.e., UCG Georgia and UCG Warner Robins Realty – “was in existence
when the [Onsite Gases] Supply Agreement was executed.” To the extent that the trial
court intended to rely on this fact as a basis for its ruling that UIG is “transacting
business” in Georgia for purposes of the certificate-of-authority requirement, that
ruling also was in error. For reasons similar to those discussed in Division 1 (a)
above, this fact – at most – suggests that UIG potentially may have contemplated,
well before it filed this action, engaging in long-term business activities in Georgia.
Contemplating such activities and actually engaging in them are, of course, two very
different propositions.
(d) In sum, the current record indicates that UIG’s activities in Georgia have
been limited to coordinating the construction of the Warner Robins ASU plant, an
13
isolated project that is not consistent with continuous and ongoing transaction of
business in this state. See OCGA § 14-2-1501 (b) (10) (“[c]onducting an isolated
transaction not in the course of a number of repeated transactions of a like nature”
does not constitute “transacting business” for purposes of the statute); Barker, 248
Ga. at 75 (1) (“doing business” implies “continuity of conduct,” i.e., “an intent to
conduct a continuous, as opposed to a temporary, business”) (emphases supplied);
Reisman, 155 Ga. App. at 552 (1) (the certificate-of-authority requirement applies to
foreign entities that “intend to conduct business in Georgia on a continuous basis, not
as a temporary matter”) (emphasis supplied); Winston Corp., 126 Ga. App. at 496
(no certificate of authority is required where a business’s activities show “no intention
to continue [the] activities after completion of [a] single contract”) (emphasis
supplied). Moreover, it is undisputed that UIG has not owned the Warner Robins
ASU plant or the land on which it sits and has had no rights under the Onsite Gases
Supply Agreement with Anchor since well before this action began.6 And to the
6
Even if it were to be established that UIG directly or indirectly owns or
controls UCG Warner Robins Realty and/or UCG Georgia, under the plain terms of
the statute, that would not be enough, standing alone, to require UIG to obtain a
certificate of authority to transact business in Georgia. See OCGA § 14-2-1501 (b)
(13) (providing that “[o]wning (directly or indirectly) an interest in or controlling
(directly or indirectly) another entity organized under the laws of, or transacting
business within, this state” does not constitute “transacting business” for purposes of
14
extent that – as the defendants suggest – UIG arguably may still, in the abstract, have
some obligations to Anchor under the supply agreement, the defendants have pointed
to nothing in the record showing that UIG ever has provided product to Anchor
pursuant to the agreement, much less that it has done so at any point during the
pendency of this proceeding.7 We will not cull the record on the defendants’ behalf
in this regard. See Ellison v. Burger King Corp., 294 Ga. App. 814, 815 (1) (670
SE2d 469) (2008) (“[W]e decline to look in the record for matters which should have
been set forth in the brief.”).
the certificate-of-authority requirement); see also generally Yukon Partners, Inc. v.
The Lodge Keeper Group, Inc., 258 Ga. App. 1, 5 (572 SE2d 647) (2002) (“The law
of corporations is founded on the legal principle that each corporation is a separate
entity, distinct and apart from its stockholders. . . . And a member of a limited liability
company similarly is considered separate from the company and is not a proper party
to a proceeding by or against a limited liability company, solely by reason of being
a member of the limited liability company . . . .”) (citations and punctuation omitted).
7
To the contrary, statements made by attorneys for Action and by the trial court
during the hearing on the defendants’ motion to dismiss suggest that the ASU plant
is not providing (and may have never provided) any product to Anchor. In fact, in
their motion to dismiss and appellate brief, the defendants – who bear the burden of
showing that UIG may not maintain this action – have pointed to no record evidence
indicating that the plant (much less UIG) currently is supplying product to any
customers.
15
We again emphasize that it is the defendants – who seek to prevent UIG from
having its day in court – who bear the burden of showing that UIG is improperly
“maintain[ing] a proceeding” in Georgia while simultaneously “transacting business
in this state.” See OCGA § 14-2-1502 (a); Powder Springs Holdings, LLC, 325 Ga.
App. at 696-697 (1). And for the above reasons, they have not met this burden.
Accordingly, the trial court erred when it granted the defendants’ motion to dismiss.
2. Given our ruling in Division 1, we do not address: (i) UIG’s alternative
contention that the defendants waived, by failing to raise in their answer, their claim
that UIG’s failure to obtain a certificate of authority bars it from maintaining this
action; or (ii) the defendants’ claim that UIG waived that argument by failing to
adequately raise it below. Should the defendants, upon further development of the
factual record, again seek the dismissal of this action due to UIG’s failure to obtain
a certificate of authority, the trial court should address any such waiver issues that are
properly before it in the first instance. See generally 9766, LLC v. Dwarf House, Inc.,
331 Ga. App. 287, 291 (4) (b) (771 SE2d 1) (2015) (“This court is for the correction
of errors, and where the trial court has not ruled on an issue, we will not address it.”)
(citation and punctuation omitted).
16
For each of the above reasons, the judgment of the trial court is reversed, and
this case is remanded to the trial court for further proceedings consistent with this
opinion.
Judgment reversed and case remanded. Rickman, C. J., and McFadden, P. J.,
concur.
17