Metro Atlanta Task Force for the Homeless, Inc. v. Ichthus Community Trust

In the Supreme Court of Georgia
Decided: November 23, 2015
S15A1021. METRO ATLANTA TASK FORCE FOR THE HOMELESS,
INC. v. ICHTHUS COMMUNITY TRUST et al.
S15X1022. CENTRAL ATLANTA PROGRESS et al. v. METRO
ATLANTA TASK FORCE FOR THE HOMELESS, INC. et al.
S15X1023. PREMIUM FUNDING SOLUTIONS, LLC v. METRO
ATLANTA TASK FORCE FOR THE HOMELESS, INC. et al.
S15X1024. EMANUEL FIALKOW v. METRO ATLANTA TASK FORCE
FOR THE HOMELESS, INC. et al.
S15A1027. CENTRAL ATLANTA PROGRESS et al. v. METRO
ATLANTA TASK FORCE FOR THE HOMELESS, INC. et al.
S15A1028. PREMIUM FUNDING SOLUTIONS, LLC v. METRO
ATLANTA TASK FORCE FOR THE HOMELESS, INC. et al.
S15A1029. EMANUEL FIALKOW v. METRO ATLANTA TASK FORCE
FOR THE HOMELESS, INC. et al.
S15X1030/S15X1031. METRO ATLANTA TASK FORCE FOR THE
HOMELESS, INC. v. ICHTHUS COMMUNITY TRUST et al.; and vice versa.
BENHAM, Justice.
These matters come to us from our grant of applications for interlocutory
review. At issue are two lower court orders: an order lifting a stay and allowing
for the filing of a dispossessory action and an order deciding the validity of
several substantive issues on summary judgment. For reasons provided below,
we do not reach the merits of the order granting leave to file a dispossessory
action and we affirm in part and reverse in part the summary judgment order.
The relevant facts show that Metro Atlanta Task Force for the Homeless
(the “Task Force”) operates a homeless shelter in a building located at the corner
of Peachtree Street and Pine Street in downtown Atlanta (“the property”). The
Task Force owned the property unencumbered from 1997 to 2001, when it took
out a total of $900,000 in loans with its two original lenders–Institute for
Community Economics (“ICE”) and the McAuley Institute, which transferred
its promissory note and security deed to Mercy Housing, Inc. (“Mercy”).1 In
2009, the Task Force was in default on its loans with ICE and Mercy, but the
parties entered into forbearance agreements in which ICE and Mercy agreed to
do nothing on the notes until February 28, 2010. On January 26, 2010,
however, defendant Ichthus Community Trust (“Ichthus”)2 purchased the
outstanding notes from ICE and Mercy for $781,112.84.3 Ichthus used money
1
Mercy Housing, Inc. transferred its rights to the Mercy Loan Fund. For the purposes of this
opinion, we will refer to these two entities collectively as “Mercy.”
2
Ichthus was formed on January 11, 2010.
3
The Task Force owed $822,262.84 when the forbearance agreement was entered into in
2009.
2
borrowed from defendant Premium Funding Solutions, LLC (“PFS”) to buy the
notes. After the forbearance period had expired and the Task Force had not
made payment, Ichthus foreclosed on the property and sold it on the courthouse
steps on May 4, 2010. Ichthus, as the sole bidder, purchased the property for at
least the amount it paid for the notes.4 On May 21, 2010, Ichthus filed an action
against the Task Force in the superior court requesting temporary and permanent
injunctive relief in the form of access to the property and the eviction of the
Task Force. At the same time, Ichthus also filed a dispossessory action in
magistrate court; but this action and any other dispossessory efforts by Ichthus
were ultimately stayed on June 17, 2010, by consent order. In the superior court
action, the Task Force counterclaimed for injunctive relief to maintain its right
of possession (wrongful foreclosure) and to quiet title in the property. In
addition, the Task Force counterclaimed for: violations of Georgia’s Racketeer
Influenced and Corrupt Organizations (RICO) Act; tortious interference with
business relations; libel, slander and defamation; bad faith; and punitive
damages. In June 2010, the Task Force filed a separate action against Central
4
There is some evidence in the record showing that Ichthus paid $900,000 for the property
at the foreclosure sale.
3
Atlanta Progress (“CAP”), Atlanta Downtown Improvement District (“ADID”),
Benevolent Community Investing Company, LLC (“BCIC”), PFS,5 and
Emanual Fialkow6 (“defendants”) for the same relief it counterclaimed for
against Ichthus. In 2011, while these actions were pending, Ichthus defaulted
on its loan obligation with PFS and, as a result, Ichthus executed a warranty
deed and transferred its interest in the property to PFS.
In 2013, the parties argued defendants’ motions for summary judgment
before a special master who issued an order on January 25, 2014, concluding
that the Task Force has viable claims for a jury to decide--specifically, its claims
for wrongful foreclosure, quiet title, tortious interference, bad faith, and punitive
damages. The parties filed objections to the special master’s summary judgment
order and the trial court heard argument on July 11, 2014. On August 8, 2014,
the trial court adopted the special master’s order on summary judgment. In
addition, the trial court issued an order granting PFS’s motion for leave to file
5
PFS was added as a party in 2011.
6
On March 2, 2009, defendant Fialkow, who is a businessman, made an offer of $2.1 million
dollars to buy the property from the Task Force, but the offer was turned down. Fialkow also
approached ICE and Mercy in or about April 2009 to inquire as to whether they were willing to sell
the notes on the property and they declined to sell at that time. Other facts related to defendant
Fialkow will be set forth below as necessary.
4
a dispossessory action against the Task Force. The trial court issued a
certificate of immediate review on August 18, 2014. We granted the parties’
interlocutory applications for review; the parties’ appeals and cross-appeals
were docketed to the April 2015 Term of this Court; and we heard oral argument
on June 2, 2015. For the reasons set forth below, we dismiss as moot the appeal
concerning the order granting leave to file a dispossessory action and we affirm
in part and reverse in part the summary judgement order as adopted by the trial
court.
Order Granting PFS Leave to File Dispossessory Action7
1. The Task Force contends the trial court erred when it granted PFS’s
motion for leave to file a dispossessory action.
a. Jurisdiction
It is “incumbent upon this Court, even when not raised by the parties, to
inquire into its own jurisdiction.” Advanced Disposal Services Middle Georgia
LLC v. Deep South Sanitation, LLC, 296 Ga. 103 (1) (765 SE2d 364) (2014).
In this case, by lifting a stay and finding that PFS could file a dispossessory
7
See appeal number S15A1021.
5
action prior to the resolution of matters pending for trial after summary
judgment, the trial court has effectively dissolved injunctive relief which was
shielding the Task Force from efforts to remove it from the property during the
course of the proceedings in the main case. Accordingly, this Court has subject
matter jurisdiction pursuant to Ga. Const. of 1983, Art. VI, Sec. VI., Par. III (2)
and the Task Force was entitled to immediately appeal the trial court’s order
pursuant to OCGA § 5-6-34 (a) (4). Once our equity jurisdiction is invoked, we
may consider appeals and cross-appeals of other rulings in the case pursuant to
OCGA §§ 5-6-34 (d) and 5-6-38 (a).
b. Merits
Relying on Howard v. GMAC Mortgage, LLC, 321 Ga. App. 285 (739
SE2d 453) (2013), the trial court determined that PFS could file a dispossessory
action while the main case is still pending and it terminated the stay prohibiting
the filing of any such action. The Task Force claims this ruling is an error. We
conclude that the issue is moot.
After Ichthus transferred its interest in the property to PFS in 2011, PFS
filed a dispossessory action and it received a writ of possession from the trial
6
court in February 2012. On appeal, however, the Court of Appeals reversed the
granting of the writ of possession based on the trial court’s failure to follow the
appropriate procedures. See Metro Atlanta Task Force for the Homeless, Inc.
v. Premium Funding Solutions, LLC, 321 Ga. App. 100 (1) (741 SE2d 225)
(2013). The trial court then issued the instant order granting leave to file a
dispossessory action and this Court denied the Task Force’s emergency motion
for supersedeas while the instant appeal was pending before us. The Task Force
then filed a motion to dismiss and plea in abatement below. The trial court
granted the plea in abatement and PFS filed an appeal with the Court of
Appeals. After this Court heard oral argument in the instant appeal, the Court
of Appeals issued a decision in Premium Funding Solutions, LLC v. Metro
Atlanta Task Force for the Homeless, 333 Ga. App. 718 (776 SE2d 504) (2015)
(physical precedent only), upholding the grant of the plea in abatement and
neither party petitioned for certiorari.8 Based on these developments, we
conclude that the instant allegation of error is moot inasmuch as the Task Force
has successfully obtained a remedy at law for the dispossessory action filed by
8
We therefore express no opinion regarding the merits of that decision.
7
PFS. The Court of Appeals decision is also res judicata as to any future
dispossessory actions between these parties while the case remains pending. See
Waggaman v. Franklin Life Ins. Co., 265 Ga. 565 (458 SE2d 826) (1995) (“A
prior action may bar a subsequent action under the doctrine of res judicata if the
prior action resulted in an adjudication by a court of competent jurisdiction and
the two actions have an identity of parties and subject matter.”). Accordingly,
appeal number S15A1021 is dismissed as moot. See OCGA § 5-6-48 (e). See
also Wetzel v. State, __ Ga. __, n. 11 (__ SE2d __), 2015 WL 6630379 (Nov.
2, 2015).
Summary Judgment Rulings9
“On appeal from the grant of summary judgment this Court conducts a de
novo review of the evidence to determine whether there is a genuine issue of
material fact and whether the undisputed facts, viewed in the light most
favorable to the nonmoving party, warrant judgment as a matter of law.”
(Citation and punctuation omitted.) Giles v. Swimmer, 290 Ga. 650 (1) (725
SE2d 220) (2012). The defendants and the Task Force allege errors concerning
9
The summary judgment rulings concern the following appeals and cross-appeals:
S15X1022, S15X1023, S15X1024, S15A1027, S15A1028, S15A1029, S15X1030, and S15X1031.
8
some of the summary judgment rulings made by the special master and adopted
by the trial court. We discuss each alleged error, including any additional
alleged facts, in turn.
2. Conspiracy and Tortious Interference Claims
a. Conspiracy
In this case, the Task Force alleges that, since 2006, defendants have
conspired to engage in tortious activities with the common design or goal of
permanently depriving the Task Force of the property. The defendants in
general and defendant Fialkow in particular allege there was no such conspiracy
and that no actionable torts were committed against the Task Force. The special
master and the trial court determined there are disputed issues of material fact
which must be resolved by a jury as to whether a civil conspiracy was afoot
amongst the defendants.
This Court has defined a civil conspiracy as follows:
A conspiracy upon which a civil action for damages may be
founded is a combination between two or more persons either to do
some act which is a tort, or else to do some lawful act by methods
which constitute a tort. Where civil liability for a conspiracy is
sought to be imposed, the conspiracy itself furnishes no cause of
action. The gist of the action, if a cause of action exists, is not the
conspiracy alleged, but the tort committed against the plaintiff and
9
the resulting damage. Thus, where the act of conspiring is itself
legal, the means or method of its accomplishment must be illegal.
While the conspiracy is not the gravamen of the charge, it may be
pleaded and proved as aggravating the wrong of which the plaintiff
complains, enabling him to recover in one action against all
defendants as joint tort-feasors.
The conspiracy may be pleaded in general terms, and this is true
although the jurisdiction of the court to render judgment against one
or more of the defendants depends upon allegations and proof of the
conspiracy.
If no cause of action is otherwise alleged, the addition of allegations
concerning conspiracy will not make one; but, where a cause of
action is alleged, the fact of conspiracy, if proved, makes any
actionable deed by one of the conspirators chargeable to all.
(Citations and quotations omitted.) Cook v. Robinson, 216 Ga. 328 (1)-(4) (116
SE2d 742) (1960). Tortious interference with a business relationship is a cause
of action for which proof of a civil conspiracy will expand liability among all
co-conspirators. See id.; Alta Anesthesia Associates of Georgia, P.C. v.
Gibbons, 245 Ga. App. 79 (3) (537 SE2d 388) (2000). The essential element
of a civil conspiracy is a common design. Outside Carpets, Inc. v. Industrial
Rug Co., 228 Ga. 263, 269 (185 SE2d 65) (1971). The existence of a
conspiracy may “be inferred from the nature of the acts done, the relation of the
parties, the interests of the alleged conspirators, and other circumstances.”
10
(Citation and punctuation omitted.) Nottingham v. Wrigley, 221 Ga. 386, 388
(144 SE2d 749) (1965). It is usually within the province of the jury to draw
such inferences; and so cases involving an alleged civil conspiracy are typically
not resolved on summary judgment. Outside Carpets, Inc. v. Industrial Rug Co.,
supra, 228 Ga. at 269 (the resolution of a conspiracy claim was not appropriate
for summary judgment); Tyler v. Thompson, 308 Ga. App. 221 (3) (707 SE2d
137) (2011) (trial court erred in granting summary judgment on civil conspiracy
issue).
Fialkow contends that the special master and trial court erred in denying
him summary judgment on the issue of conspiracy10 because, he argues, there
is no evidence he interfered with any of the relationships at the heart of the Task
Force’s tort claims, which are discussed in detail below. There is evidence,
however, that Fialkow may have been part of a concerted action with a common
design insofar as his role in acquiring the notes on the property through
defendant Ichthus. For instance, there is evidence that Fialkow communicated
with A.J. Robinson about his intent to form Ichthus as a vehicle to purchase the
10
The other defendants do not challenge the conspiracy claim directly, but address the
allegations through the individual tortious interference claims, which are discussed below.
11
notes from ICE and Mercy after his efforts to approach the Task Force to buy
the property and to approach lenders to buy the notes were turned down in early
2009. There is also evidence that PFS is majority-owned by Sunshine Property
Group, a company which is owned by defendant Fialkow’s wife; there is
evidence that Fialkow transferred, from his wife’s bank account, the money that
PFS used to loan Ichthus when it purchased the notes from ICE and Mercy in
2010; and there is some evidence that the sole officer and director of Ichthus is
defendant Fialkow’s longtime assistant. Thus, should a jury determine that a
conspiracy existed, then Fialkow could be held jointly liable for any torts
committed by the other defendants to effect the common design of the
conspiracy, even if he did not directly engage in each and every tort alleged.11
See Dee v. Sweet, 218 Ga. App. 18 (4) (460 SE2d 110) (1995). Given the issues
of material fact that exist, as discussed below, and because civil conspiracy
claims may be properly resolved by a jury, the special master and trial court did
not err in denying summary judgment to Fialkow and the other defendants on
the civil conspiracy claim.
11
In addition to the various tortious interference claims, Fialkow could also be liable for the
Task Force’s claim of wrongful foreclosure under a theory of civil conspiracy. See, e.g., Wilson v.
Mountain Valley Community Bank, 328 Ga. App. 650 (1) (b) (759 SE2d 921) (2014).
12
b. Tortious Interference with Charitable Donation/ Private Funding
The Task Force alleges that defendants engaged in conduct which led Dan
Cathy, the President and Chief Operating Officer of Chick-fil-A, Inc., to
discontinue his charitable contributions to the shelter. On summary judgment,
the Task Force argued that the relevant analysis to be applied was tortious
interference with a business relationship. See Witty v. McNeal Agency, Inc.,
239 Ga. App. 554, 561 (521 SE2d 619) (1999). The defendants countered that
the relevant analysis was tortious interference with a gift. See Morrison v.
Morrison, 284 Ga. 112 (663 SE2d 714) (2008). The special master rejected the
defendants’ argument and applied the business relationship analysis advocated
by the Task Force. The special master ultimately concluded, and the trial court
agreed, the claim needed to go to a jury.
Georgia’s appellate courts have recognized a cause of action for
interference with an economic expectancy in the form of a gift within the
context of receiving an inheritance or otherwise receiving a benefit upon the
death of another (i.e., payment on a life insurance policy). See id. at 113;
Morgan v. Morgan, 256 Ga. 250, 251 (347 SE2d 595) (1986); Mitchell v.
Langley, 143 Ga. 827, 835 (85 S.E. 1050) (1915); Ford v. Reynolds, 315 Ga.
13
App. 200 (726 SE2d 687) (2012). Indeed, our jurisprudence is similar, in this
respect, to the Restatement (Second) of Torts § 774B (1979), “Intentional
Interference with Inheritance or Gift,”12 which likewise contemplates such
claims and similar “noncontractual”13 relationships in the context of inheritance.
Compare Restatement (Second) of Torts § 766B (1979), “Intentional
Interference with Prospective Contractual Relation.”14
12
The Restatement (Second) of Torts § 774B provides:
One who by fraud, duress or other tortious means intentionally prevents another from
receiving from a third person an inheritance or gift that he would otherwise have
received is subject to liability to the other for loss of the inheritance or gift.
13
Comment (a) to the Restatement (Second) of Torts § 774B provides in pertinent part:
This Section represents an extension to a type of noncontractual relation of the
principle found in the liability for intentional interference with prospective contracts
stated in § 766B. It does not purport to cover liability for negligence when the actor,
in attempting to effectuate an inheritance or gift, breaches a duty to use reasonable
care that he owes to the donee as well as the donor.
14
The Restatement (Second) of Torts § 766B provides:
One who intentionally and improperly interferes with another's prospective
contractual relation (except a contract to marry) is subject to liability to the other for
the pecuniary harm resulting from loss of the benefits of the relation, whether the
interference consists of
(a) inducing or otherwise causing a third person not to enter into or continue the
prospective relation or
(b) preventing the other from acquiring or continuing the prospective relation.
14
Although Georgia appellate courts have not considered or analyzed such
a tort beyond the context of inheritance, given the unique circumstances of this
case, we agree with defendants that a charitable donation to the Task Force is
more akin to a gift than it is akin to a traditional business relationship. See, e.g.,
Comment (b) to the Restatement (Second) of Torts § 774B.15 Unlike a
traditional business relationship where the parties have some agreement or
contract that is mutually beneficial and where there is some consequence for
non-compliance with said agreement or contract, a charitable donor has no
According to Comment (c), the relationships contemplated by this Restatement are those relations
that will eventually lead to a formal contract or relations that are customary in nature:
The relations protected against intentional interference by the rule stated in this
Section include any prospective contractual relations, except those leading to
contracts to marry [cit.], if the potential contract would be of pecuniary value to the
plaintiff. Included are interferences with the prospect of obtaining employment or
employees, the opportunity of selling or buying land or chattels or services, and any
other relations leading to potentially profitable contracts. Interference with the
exercise by a third party of an option to renew or extend a contract with the plaintiff
is also included. Also included is interference with a continuing business or other
customary relationship not amounting to a formal contract. In many respects, a
contract terminable at will is closely analogous to the relationship covered by this
Section.
15
Comment (b) to the Restatement (Second) of Torts § 774B provides in pertinent part:
“Gift” is used to include in the broad sense any donation, gratuity or benefaction that
the other would have received from the third person. It includes, for example, the
designation of the other as a beneficiary under an insurance policy, with which the
actor interferes by tortious means.
15
obligation to bestow a gift; and the recipient typically has no obligation to give
anything or do anything16 in return for the gift. Furthermore, a charitable donor
can, more often than not, choose not to make a gift without any consequence.
In Mitchell v. Langley, supra, 143 Ga. at 835, this Court held:
[W]here an intending donor... has actually taken steps toward
perfecting the gift, or devise, or benefit, so that if let alone the right
of the donee, devisee, or beneficiary will cease to be inchoate and
become perfect, we are of the opinion that there is such a status that
an action will lie, if it is maliciously and fraudulently destroyed, and
the benefit diverted to the person so acting, thus occasioning loss to
the person who would have received it.
See also Ford v. Reynolds, supra, 315 Ga. App. at 202. Thus, to establish a
claim for tortious interference with a gift under Georgia law, a plaintiff must
show that the donor took steps toward perfecting the gift; that the defendant
engaged in fraudulent and malicious conduct to divert the perfection of the gift;
and that the defendant diverted the gift away from the plaintiff to himself. If the
production of evidence on any of these elements is lacking, then the claim
cannot prevail on summary judgment. See id. at 203. While the Task Force has
produced evidence that defendants approached Cathy about his donating to the
16
Of course there are legal requirements that a charitable organization act in a manner
consistent with its charitable purpose.
16
Task Force, the Task Force has failed to produce any evidence that defendants
diverted a charitable donation, which Cathy intended for the Task Force, to
themselves. Rather, the evidence is that Cathy donated to the Task Force for
two years (2006-2008) and made no further donations to the organization after
2008.17 As such, the claim cannot survive summary judgment. Id.
Accordingly, the special master’s and trial court’s denying summary judgment
on this tortious interference claim is reversed.
c. Tortious Interference with the Task Force’s Lenders
The special master and trial court denied defendants’ motions for
summary judgment regarding the Task Force’s claim of tortious interference
with its business relationships with its lenders ICE and Mercy. Defendants
allege the special master and trial court relied on “pure speculation” and
“inadmissible evidence” in denying summary judgment on this claim.
Defendants also assert their actions are privileged, and not wrongful. We find
no error.
17
With such a limited donation period, two years out of the eleven years the Task Force had
been operating at the property as of 2008, we likewise cannot conclude that Cathy’s donations were
“customary” in nature. See Comment (c) to Restatement (Second) of Torts § 766B.
17
i. The Task Force became indebted to ICE and Mercy in 2001 and
was in default on the notes for several years thereafter. In the fall of 2008,
defendants’ representatives had discussions with representatives of ICE and
Mercy. There is some dispute as to who initiated these discussions, but no
dispute that the conversations took place. The topics of discussion included the
defaulted notes on the property and the future disposition of the property–
namely, whether ICE and Mercy would be selling the outstanding notes,
including selling the notes to defendant CAP or to defendant Fialkow, or
foreclosing on the property. A representative from Mercy took notes during a
November 2008 conference call with some of defendants’ representatives.
Those notes indicate that the Task Force’s shelter was described during the call
as “poorly run” and as “a drag on the city.” These negative characterizations of
the Task Force are attributed to A.J. Robinson, president of defendants CAP and
ADID.
In 2009, after an alleged discussion with Robinson, defendant Fialkow
made inquiries of ICE and Mercy about purchasing the notes on the property,
but the lenders declined Fialkow’s overtures at that time. Fialkow continued to
communicate with Robinson about the disposition of the Task Force’s property.
18
In 2010, Fialkow created defendant corporation Ichthus, and that entity, with
money borrowed from defendant PFS, purchased the notes from ICE and Mercy,
foreclosed on the property, and, as the sole bidder, purchased the property at the
foreclosure sale.
The appellate courts of this state have recognized a claim for the tortious
interference with a business relationship. See Wilansky v. Blalock, 262 Ga. 95
(2) (414 SE2d 1) (1992); Tribeca Homes, LLC v. Marathon Inv. Corp., 322 Ga.
App. 596 (2) (745 SE2d 806) (2013); Gordon Document Products, Inc. v.
Service Technologies, Inc., 308 Ga. App. 445 (2) (708 SE2d 48) (2011). This
recognition includes situations where it is alleged that tortious conduct by the
defendant caused an entity to discontinue a business relationship with the
plaintiff. Tribeca Homes, LLC v. Marathon Inv. Corp., 322 Ga. App. at 598.
Indeed, a plaintiff may sustain a claim for tortious interference with a business
relationship where he establishes:
(1) improper action or wrongful conduct by the defendant without
privilege; (2) the defendant acted purposely and with malice with
the intent to injure; (3) the defendant induced a breach of
contractual obligations or caused a party or third parties to
discontinue or fail to enter into an anticipated business relationship
with the plaintiff; and (4) the defendant's tortious conduct
proximately caused damage to the plaintiff.
19
Id. There is no requirement that a valid contract already exist to establish or
maintain a claim for tortious interference with a business relationship. See
Renden, Inc. v. Liberty Real Estate Ltd. Partnership III, 213 Ga. App. 333 (2)
(444 SE2d 814) (1994). See also Comment (c) to Restatement (Second) Torts
§ 766B.
As to the first element of a tortious interference with a business
relationship claim, to be “without privilege” means that the defendant is a
stranger to the business relationship. Cox v. City of Atlanta, 266 Ga. App. 329
(1) (596 SE2d 785) (2004). Here, defendants were not in any way privy to the
relationships that the Task Force formed with ICE and Mercy in 2001.
Defendants were not parties to the loans, nor were they intended beneficiaries
of the loans. The Task Force’s subsequent default on the loans did not create a
privileged status for defendants simply because of defendants’ general concern
for the business environment in downtown Atlanta.
Defendants also take issue with the conclusions that may be drawn from
statements attributed to A.J. Robinson during the 2008 telephone conference call
with Mercy and ICE representatives, challenging whether such evidence is proof
20
of improper action or wrongful conduct on the part of defendants. See Disaster
Services, Inc. v. ERC Partnership, 228 Ga. App. 739, 741 (492 SE2d 526)
(1997) (“Improper actions constitute conduct wrongful in itself; thus, improper
conduct means wrongful action that generally involves predatory tactics such as
physical violence, fraud or misrepresentation, defamation, use of confidential
information, abusive civil suits, and unwarranted criminal prosecutions.”)
(Internal quotations omitted). Robinson’s comments, however, cannot be
viewed in isolation. Additional evidence suggests that defendants may have
been improperly interfering with the relationships between the Task Force and
the lenders by making misleading statements about the Task Force in order to
persuade the lenders to sever their relationship with the Task Force, either
through foreclosure or sale of the notes. For example, there is documentary
evidence that a Mercy executive, after speaking with defendants and others in
November 2008, began considering foreclosing on the property because she had
developed a concern that the Task Force was only “warehousing” the homeless
and not providing them with services. In contrast, there is evidence in the
record that the Task Force provided services, including job counseling and
substance abuse counseling, to homeless people in addition to providing shelter
21
to 30% of Atlanta’s homeless population. In January 2009, Robinson sent an
email about the property indicating that he had Mercy “very close to initiating
foreclosure proceedings.” Still, defendants counter there is no evidence that any
“decision-maker” from ICE or Mercy was moved by anything Robinson said
about the Task Force and point to the fact that ICE and Mercy never foreclosed
on the property. However, ICE and Mercy sold the notes to Ichthus, an entity
associated with defendant Fialkow, and Ichthus foreclosed on the notes in short
order. There is a genuine dispute of material fact as to whether the defendants,
by making targeted misrepresentations about the Task Force, influenced the
severing of the Task Force’s relationships with ICE and Mercy and the courts
are not authorized to reconcile such a dispute on summary judgment.18 See
Georgia Canoeing Association v. Henry, 263 Ga. 77, 78 (428 SE2d 336) (1993).
ii. Defendants next argue that the special master erred by relying on
the affidavit of Raylene Clark, who was a former ICE employee. Defendants
opine that, at trial, Clark would not be able to testify about what other
18
Defendants allege that this November 2008 conference call was initiated by Mercy and not
by any of the defendants. Inasmuch as defendants suggest that who initiated these various
conversations was determinative of defendants’ motives or intent in regard to this tortious
interference claim, such disputed matters are for a jury.
22
individuals knew about facts related to comments made about the Task Force.
In his summary judgment order, the special master made the following
observations about Clark’s affidavit:
As evidence of Defendants’ efforts to induce the lenders to
discontinue their relationship with the Task Force, the Task Force
submitted the Affidavit of Raylene Clark, who was employed by
ICE for more than 16 years. In 2001, Ms. Clark was responsible for
recommending that ICE lend the Task Force $600,000 for
renovations of the building on the Property. Ms. Clark was also
involved in the oversight of the disbursement of the loan from ICE
to the Task Force and had direct responsibility for overseeing the
performance of the Task Force loan from the date it was made until
the date it was set to mature, on or about June 15, 2006. Ms. Clark
testified that she heard negative statements about the Task Force by
third-parties, whom she did not identify. She recalled those
statements being about “the Task Force being in disputes with the
City, being in financial distress and unlikely to pay back its Notes,
not doing good work for the homeless, that [a certain financial
supporter of the shelter] was not willing to support them anymore
because of other issues in his life, and that the community felt the
shelter was in the wrong location.”
Ms. Clark’s Affidavit states that although ICE had previously sent
notice of default to the Task Force, the Task Force was highly
regarded by ICE. She directly refutes the assertion by CAP and
ADID that the relationship between the Task Force and ICE was
strained or damaged by the end of 2007.
However, Ms. Clark stated that negative comments did have a very
significant impact on the relationship between ICE and the Task
Force: “Among other things, ICE and [its successor organization]
began to have weekly meetings about the Task Force and switched
23
from a state of mind where they were supportive of the Task Force
to where they wanted to get out of the relationship. I felt a similar
shift in the attitude towards the Task Force at Mercy.”
The special master’s observations are an accurate summary of the Clark
affidavit. Clark stated in her affidavit that she heard negative comments about
the Task Force in 2008. She did not state that someone else told her about
negative comments being made about the Task Force. Accordingly, there
appears to be no hearsay issue that would prevent Clark’s affidavit from being
considered on summary judgment. See OCGA § 24-8-801 (c). Furthermore, the
special master did not solely rely on Clark’s affidavit to make its decision. We
find no reason to upset the decision to deny summary judgment regarding this
claim.
d. Tortious Interference with the Task Force’s Public Funding
Defendants claim the special master and trial court erred when they denied
summary judgment on the Task Force’s claim that they tortiously interfered with
the Task Force’s ability to obtain grant funding from the Georgia Department
of Community Affairs (GDCA). The evidence shows that in 2007, the Task
Force submitted applications for grant funding dispensed through the GDCA for
24
five programs. A precondition for applying for grant funding was certification
from the City of Atlanta, and the Task Force received such certification from the
City prior to submitting its applications. While the applications were still under
review by the GDCA, the chief of staff for the mayor wrote a letter to the GDCA
recommending that the Task Force not be funded for any of the five programs
for which it had applied in spite of the City’s prior certification. The GDCA
ultimately made the decision not to issue any funding to the Task Force in 2007.
In 2008, the City certified two of four of the Task Force’s programs to the
GDCA and the mayor’s chief of staff again sent a letter explaining the reasons
it would not support funding for all four programs. In 2009, the City certified
all five programs set forth by the Task Force, but the mayor’s chief of staff
included a letter asserting that the City had concerns about the programs.
The Task Force alleges defendants, by making misrepresentations about
the Task Force to City personnel, facilitated or influenced the City’s sending of
the letters to the GDCA to the Task Force’s detriment. The record includes
documentation from 2007 that defendants wanted to “shut off public funding to
the shelter.” There is also documentation from 2008 that defendants wanted to
limit their direct communication with the City about the Task Force because of
25
concerns that such communication would be subject to a “FOI” (freedom of
information) request. A City advisor on homelessness was involved first hand
in the discussions defendants had about the Task Force’s public funding. This
advisor on homelessness worked with and counseled the mayor’s chief of staff
at the time he wrote the 2007 and 2008 letters to the GDCA about publicly
funding Task Force programs and she consulted the City about the 2009
certificates.19 The record shows that at least one of the letters from the mayor’s
chief of staff echoed the statement, which is attributed to defendants, that the
Task Force was merely “warehousing” the homeless and not providing
services.20
Defendants argue that they are protected from any liability on this claim
pursuant to OCGA § 9-11-11.1, which is Georgia’s anti-SLAPP21 statute.
Defendants urge that the opinions expressed in the mayor’s chief of staff’s
19
In addition, the special master found there was sufficient proof of bribery regarding this
same advisor on homelessness as it pertained to the Task Force’s racketeering claim, which is
discussed, infra, at Division 6 of this opinion.
20
The Task Force alleges this statement and other similar statements are false and misleading.
21
SLAPP stands for “strategic lawsuit against public participation.” See Atlanta Humane
Society v. Harkins, 278 Ga. 451 (603 SE2d 289) (2004).
26
letters to the GDCA are the type of statements subject to the anti-SLAPP statute.
This may be true. But the issue at the crux of the Task Force’s tortious
interference claims is whether the defendants, along with the advisor on
homelessness as a co-conspirator, improperly influenced the mayor’s chief of
staff to write the letters to the GDCA recommending that the Task Force not
receive funding. For example, there is evidence, in the form of an email, that
defendants wanted to “shut off” the Task Force’s public funding and wanted to
apply “continued pressure” to achieve that goal. A similar email indicated that
defendants wanted to “whitt[le] away [] backing and support of [the] Task
Force,” and that defendants had plans on “attacking the cred[i]bility of [the Task
Force] with ...public funders.”
For a communication to fall under the protection OCGA § 9-11-11.1, it
must be privileged pursuant to OCGA § 51-5-7 (4). See OCGA § 9-11-11.1
(b); Atlanta Humane Society v. Harkins, 278 Ga. 451 (2) (603 SE2d 289)
(2004). OCGA § 51-5-7 (4) provides that the following statements are
privileged: “[s]tatements made in good faith as part of an act in furtherance of
the right of free speech or the right to petition government for a redress of
27
grievances under the Constitution of the United States or the Constitution of the
State of Georgia in connection with an issue of public interest or concern....”
However, the privilege cannot be “used merely as a cloak for venting private
malice....” (Internal quotations omitted) Atlanta Humane Society v. Harkins,
supra, 278 Ga. at 455. See also OCGA § 51-5-9 (“In every case of privileged
communications, if the privilege is used merely as a cloak for venting private
malice and not bona fide in promotion of the object for which the privilege is
granted, the party defamed shall have a right of action.”) There are material
issues of fact here as to whether defendants made the statements in “good faith”
such that their statements were privileged. From the evidence it appears that
defendants may have made the statements pursuant to a “private malice.” The
trial court did not err in denying summary judgment.
3. Quiet Title
The Task Force’s claim for quiet title only concerns defendant PFS.22 As
its first enumeration of error, PFS alleges the trial court erred in denying it
summary judgment because it contends the Task Force lacks record title such
22
The special master and trial court previously resolved the quiet title claims against Ichthus,
Fialkow, CAP, and ADID by dismissing them. On motion for summary judgment, the quiet title
claims against these defendants were denied as moot.
28
that it has no standing to sue. In addition, PFS argues that the forbearance
agreements that the Task Force entered into with ICE and Mercy bar the quiet
title claim. We agree that the quiet title action is not viable.
PFS contends that the Task Force lost “record” title to the property in
2001 when it originally took out loans against the property and, as such, the
Task Force has no standing to assert a claim for quiet title. According to
Georgia law, a deed to land for the purpose of securing a debt passes legal title
to the lender. See West Lumber Co. v. Schnuck, 204 Ga. 827 (1) (51 SE2d 644)
(1949). Such a deed does not, however, transfer equitable title. See Chase
Manhattan Mortgage Corp. v. Shelton, 290 Ga. 544 (3) (722 SE2d 743) (2012);
Tomkus v. Parker, 236 Ga. 478 (1) (224 SE2d 353) (1976). That is, the lender
does not gain complete title over the property unless and until it forecloses
thereon. See Vereen v. Deutsche Bank National Trust Company, 282 Ga. 284,
285 (646 SE2d 667) (2007); McCarter v. Bankers Trust Co., 247 Ga. App. 129
(543 SE2d 755) (2000). Therefore, the fact that the lender holds a security deed
does not mean the debtor is completely divested of title. In this case, however,
since Ichthus, rightly or wrongly, foreclosed on the property in 2010, the Task
Force was divested of all title at that point. Accordingly, the special master and
29
the trial court erred when they denied defendants summary judgment on the
quiet title claim.23 See Dykes Paving and Construction Co., Inc. v. Hawk’s
Landing Homeowners Assoc., Inc., 282 Ga. 305 (647 SE2d 579) (2007) (“To
state a claim for quiet title relief, a plaintiff must allege more than a right to
acquire title; it must allege that it presently holds current title or current
prescriptive title.”); In Re Rivermist Homeowners Assoc., Inc., 244 Ga. 515,
518 (260 SE2d 897) (1979) (In order to have standing to maintain a action to
quiet title, “a plaintiff must assert that he [h]olds some current record title or
current prescriptive title, in order to maintain his suit. Otherwise, he possesses
no title at all, but only an expectancy...”).24
4. Wrongful Foreclosure
a. Tender
The defendants argue that the Task Force cannot move forward on its
wrongful foreclosure claim because it has not tendered the amount that it owes
on the outstanding notes. It is true that in a typical wrongful foreclosure action,
23
We need not reach PFS’s argument regarding the effect of the forbearance agreements.
24
Here, the Task Force only has an expectancy that it may regain title should it prevail on its
wrongful foreclosure claim.
30
the plaintiff is required to tender the amount due under the security deed and
note in order to maintain an action in equity.25 See Berry v. Government
National Mortgage Association, 231 Ga. 503 (202 SE2d 450) (1973). Long ago,
however, this Court indicated that tender is not an absolute rule, especially
where it is alleged that the foreclosing party procured the sale of the property
through its own improper conduct:
Equity believes in good conscience, honesty, and morality. It will
not sanction oppression or extortion demanded by a party because
of his own illegal act. If he demands his pound of flesh, he must
take it without the letting of blood. A party who violates the law
knowingly and willfully, and thereby injures another, cannot
demand of the latter party to ‘do equity’ before he can establish his
right and place himself in statu quo.
Benedict v. Gammon Theological Seminary, 122 Ga. 412 (3) (50 S.E. 162)
(1905). See also Coates v. Jones, 142 Ga. 237 (82 S.E. 649) (1914) (plaintiff was
exempt from tender and was allowed to maintain an equitable petition to have
a sheriff’s sale set aside under circumstances which included fraudulent conduct
by the defendant); OCGA § 23-1-3 (“Equity jurisdiction is established and
allowed for the protection and relief of parties where, from any peculiar
25
In this case, the Task Force is seeking injunctive relief to retain the property.
31
circumstances, the operation of the general rules of law would be deficient in
protecting from anticipated wrong or relieving for injuries done.”).
In this case it is alleged that the sale of the notes was procured via
improper actions of the defendants that constituted tortious interference with the
Task Force’s relationships with its lenders and private and public funding
sources.26 As indicated above, there are material issues of fact that need to be
resolved by a jury regarding some of these tort claims. The alleged tortious
conduct in this case may have prevented the Task Force from tendering its debt
and is sufficient to create an exception to the tender requirement as
contemplated in Benedict v. Gammon Theological Seminary, supra. This is not
a case like many others over the years, where a party sought to excuse its failure
to tender on grounds like poverty, non-compliance with foreclosure procedures,
or other acts not involving tortious interference with the funds that would
potentially comprise the tender itself. See, e.g., Smith v. Citizens & Southern
Financial Corp., 245 Ga. 850 (1) (268 SE2d 157) (1980) (party’s lack of
personal liability for the underlying debt not an excuse for failing to tender);
26
There is some evidence that since 2006, the Task Force’s annual funding went from $1.7
million to a few hundreds of dollars.
32
Berry v. Government National Mortgage Association, 231 Ga. 503 (202 SE2d
450) (1973) (poverty not an excuse for failure to tender); Stewart v. Suntrust
Mortgage, Inc., 331 Ga. App. 635 (6) (770 SE2d 892) (2015) (plaintiff alleging
failure to follow foreclosure procedures not excused from tender). Accordingly,
the special master and trial court did not err in allowing the wrongful foreclosure
claim to proceed in the absence of payment of the amounts owed on the notes.
b. Merits
Defendants also contend that the wrongful foreclosure claim cannot be
sustained on the merits.
To assert a viable claim for wrongful foreclosure, a plaintiff must
establish a ‘legal duty owed to it by the foreclosing party, a breach
of that duty, a causal connection between the breach of that duty
and the injury it sustained, and damages.’ The legal duty imposed
upon a foreclosing party under a power of sale is to exercise that
power fairly and in good faith.
(Citation omitted.) Wells Fargo Bank, N.A. v. Molina-Salas, 332 Ga. App. 641
(1) (774 SE2d 712) (2015). One way to prevail in a wrongful foreclosure action
is to show that the foreclosure sale price was grossly inadequate and that the
grossly inadequate price was “accompanied by either fraud, mistake,
misapprehension, surprise or other circumstances which might authorize a
33
finding that such circumstances contributed to bringing about the inadequacy of
price that such a sale may be set aside by a court of equity.” Giordano v.
Stubbs, 228 Ga. 75 (3) (184 SE2d 165) (1971). “In determining whether this
duty... has been breached [in a wrongful foreclosure action,] the focus is on the
manner in which the sale was conducted and not solely on the result of the sale.”
(Emphasis supplied.) Kennedy v. Gwinnett Commercial Bank, 155 Ga. App.
327, 330-331 (1) (270 SE2d 867) (1980). In this case, the special master and the
trial court concluded that whether the foreclosure sale price was grossly
inadequate was an issue for the jury.
The evidence on summary judgment shows that Ichthus, which was the
sole bidder at the foreclosure sale, paid at least $781,112.84, and, possibly up
to $900,000 for the property. Just a year prior, defendant Fialkow had offered
to purchase the property for $2.1 million. Fialkow also made an admission that
the property was worth at least three times what Ichthus paid for it at the
foreclosure sale. A real estate broker, who was deposed, stated the property was
worth $8.3 million at the time of foreclosure. In addition to the evidence on the
purchase price versus the purported value of the property, there are material
issues of fact, as discussed above, concerning alleged tortious activities by the
34
defendants in relation to the purchase of the notes and the foreclosure on the
property. This evidence and these issues of material fact go to the heart of
whether a breach of duty occurred and whether there was harm to the Task
Force. These disputes of material fact must be considered and weighed by a jury
to determine whether a wrongful foreclosure occurred. The denial of summary
judgment on this issue was not erroneous.
5. Bad Faith
The Task Force raised a claim for attorney fees and litigation expenses
pursuant to OCGA § 13-6-11. That statute provides as follows:
The expenses of litigation generally shall not be allowed as a part
of the damages; but where the plaintiff has specially pleaded and
has made prayer therefor and where the defendant has acted in bad
faith, has been stubbornly litigious, or has caused the plaintiff
unnecessary trouble and expense, the jury may allow them.
The special master and the trial court denied summary judgment to defendants
on this claim and defendant Fialkow alleges this was error as to him because
there is a genuine controversy between him and the Task Force, precluding any
allegation of bad faith. As indicated by the plain language of the statute, the
determination of whether there has been bad faith in support of an award
pursuant to OCGA § 13-6-11 is normally an issue for a jury. Covington Square
35
Associates, LLC v. Ingles Markets, Inc., 287 Ga. 445, 446-447 (696 SE2d 649)
(2010). As discussed above, there are genuine disputes of material fact as to
whether defendants acted in bad faith in their dealings related to the Task Force.
The special master and the trial court did not err when they denied defendants,
including defendant Fialkow, summary judgment on this claim.
6. Racketeering
The special master and trial court ruled in favor of the defendants’
motions for summary judgment regarding the Task Force’s racketeering claim
pursuant to the Georgia RICO Act (see OCGA § 16-14-1, et seq.) because they
found the Task Force had failed to produce evidence of at least two predicate
acts supporting such a claim. Rather, the special master concluded the Task
force was only able to produce evidence establishing one predicate act (bribery)
out of the four predicate acts it had alleged in its amended complaint. In its
response to defendants’ motions for summary judgment, the Task Force asserted
the predicate act of wire fraud. Since the Task Force failed to amend its
complaint to add a claim of wire fraud, the special master elected not to consider
that claim on summary judgment. On appeal, the Task Force alleges the special
master and the trial court erred in failing to find an issue of material fact existed
36
as to whether the defendants had intimidated court officers in violation of
OCGA § 16-10-9727 as one of the predicate acts and erred when they elected not
to consider the wire fraud claim. We discuss each allegation in turn.
a. Violation of OCGA § 16-10-97
The special master and the trial court found that the Task Force failed to
produce evidence of violations of OCGA § 16-10-32 (b) (1) which concerns
27
OCGA § 16-10-97 states:
(a) A person who by threat or force or by any threatening action, letter, or
communication:
(1) Endeavors to intimidate or impede any grand juror or trial juror or any officer in
or of any court of this state or any court of any county or municipality of this state or
any officer who may be serving at any proceeding in any such court while in the
discharge of such juror's or officer's duties;
(2) Injures any grand juror or trial juror in his or her person or property on account
of any indictment or verdict assented to by him or her or on account of his or her
being or having been such juror; or
(3) Injures any officer in or of any court of this state or any court of any county or
municipality of this state or any officer who may be serving at any proceeding in any
such court in his or her person or property on account of the performance of his or
her official duties shall, upon conviction thereof, be punished by a fine of not more
than $5,000.00 or by imprisonment for not more than 20 years, or both.
(b) As used in this Code section, the term “any officer in or of any court” means a
judge, attorney, clerk of court, deputy clerk of court, court reporter, community
supervision officer, county or Department of Juvenile Justice juvenile probation
officer, or probation officer serving pursuant to Article 6 of Chapter 8 of Title 42.
(c) A person who by threat or force or by any threatening action, letter, or
communication endeavors to intimidate any law enforcement officer, outside the
scope and course of his or her employment, or his or her immediate family member
in retaliation or response to the discharge of such officer's official duties shall be
guilty of a felony and, upon conviction thereof, shall be punished by imprisonment
for not less than one nor more than five years, a fine not to exceed $5,000.00, or both.
37
physical or economic threats designed to prevent someone from participating in
an official proceeding.28 On appeal, the Task Force complains that the special
master and trial court erred by failing to analyze the evidence under OCGA §
16-10-97, which concerns the intimidation of a court officer. A review of the
initial complaint, as well as the first, second, and third amended complaints
shows, however, that the Task Force never raised a claim for a violation of
OCGA § 16-10-97. Rather, the Task Force specifically stated in its initial
complaint, and its multiple amendments thereto, that it was claiming violations
of OCGA § 16-10-32 (b) and OCGA §16-14-3 (9) (A) (xiv), which statutes
collectively concern interfering with a person or a witness, who is participating
in an official proceeding, by making physical or economic threats. Therefore,
any purported violation of OCGA § 16-10-97 was not properly before the trial
28
OCGA § 16-10-32 (b) (1) provides:
Any person who threatens or causes physical or economic harm to another person or
a member of such person's family or household, threatens to damage or damages the
property of another person or a member of such person's family or household, or
attempts to cause physical or economic harm to another person or a member of such
person's family or household with the intent to hinder, delay, prevent, or dissuade any
person from:
(1) Attending or testifying in an official proceeding....
38
court29 and is not properly before this Court for review. See Pfeiffer v. Georgia
Department of Transportation, 275 Ga. 827 (2) (573 SE2d 389) (2002).
b. Wire Fraud
The Task Force raised the predicate act of wire fraud for the first time in
its response to defendants’ motions for summary judgment. In his summary
judgment order, the special master stated he would not consider the wire fraud
argument due to the fact the Task Force had failed to raise the claim in its
amended complaints or counterclaims. Indeed, in its pleadings, the Task Force
identified the following predicate acts underscoring its racketeering claim:
bribery, attempting to influence persons in relation to official proceedings,
perjury,30 and battery. None of the factual allegations surrounding these four
predicate acts can be recast as wire fraud. The Task Force stated in its briefing
and at oral argument that it learned of the facts underlying the allegation of wire
fraud late in the discovery process and in the midst of having to meet summary
29
It is disingenuous for the Task Force to blame the special master and trial court for failing
to apply a statute that was never cited in support of its arguments, particularly when it amended its
complaint multiple times.
30
The allegations concerning perjury also included a subset of allegations regarding false
statements and impersonation of an officer.
39
judgment deadlines. The lateness of discovery is an inadequate excuse for the
failure to ask for an extension of the summary judgment deadline in order to
amend the complaint. See OCGA § 9-11-56 (f). The special master and the trial
court did not err in failing to consider this issue in the absence of an amendment
to the complaint. The special master and trial court did not err in granting
defendants’ motions for summary judgment regarding the Task Force’s RICO
claim.
Judgment affirmed in part and reversed in part in Case Nos. S15A1027,
S15X1022, S15A1028, S15X1023, S15A1029, S15X1024, S15X1030,
S15X1031. Appeal dismissed in Case No. S15A1021. All the Justices concur.
40