Hee Jin Lowery v. Noodle Life, Inc.

FIRST DIVISION
BARNES, P. J.,
GOBEIL and MARKLE, JJ.
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
February 15, 2022
In the Court of Appeals of Georgia
A21A1463. LOWERY et al. v. NOODLE LIFE, INC.
MARKLE, Judge.
After Hee Jin Lowery was injured when a container of hot soup spilled onto her
lap, she sued Noodle Life, Inc. for the negligence of its owners, alleging the soup was
improperly packaged. Noodle Life moved for summary judgment, which the trial
court granted. Lowery now appeals, alleging the trial court erred by granting
summary judgment in Noodle Life’s favor because there was sufficient evidence from
which a jury could find it liable for negligence under theories of alter ego, joint
venture, and/or agency. For the reasons that follow, we affirm.
In order to prevail on a motion for summary judgment under OCGA
§ 9-11-56, [Noodle Life], as the moving party, must show that there
exists no genuine issue of material fact, and that the undisputed facts,
viewed in the light most favorable to the nonmoving party, demand
judgment as a matter of law. Moreover, on appeal from the denial or
grant of summary judgment the appellate court is to conduct a de novo
review of the evidence to determine whether there exists 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 omitted.) In/Ex Systems v. Masud, 352 Ga. App. 722, 723 (2) (835 SE2d
799) (2019).
So viewed, the underlying facts of the case are as follows. In July 2017,
Lowery placed a “to go” order for soup from the restaurant, Noodle, in College Park.
Upon arriving at her destination, Lowery retrieved her package from the seat, and, as
she was attempting to exit her vehicle, the bottom of the paper bag broke, causing the
hot soup to spill onto her lap. Lowery was severely burned on her inner thighs and
groin area.
At the time of the incident, Noodle in College Park was owned and operated
by Shou & Shou, Inc. Noodle Life owned and operated its own business, also known
as Noodle, in midtown. The two companies are both owned by the same three
siblings, and they share the same website. They did not share the same employees, but
2
Noodle Life did the food prep for both restaurants. Although the two companies
combined vendor orders, they each paid their own portion of the orders.
Noodle Life had no ownership interest in either Shou & Shou, Inc. or Noodle
in College Park, nor did Shou & Shou, Inc. have an ownership interest in Noodle Life
or its restaurant located in midtown. Each company was responsible for operating its
own business; they maintained separate bank accounts; neither company paid the
staffing expenses of the other and they maintained separate payroll accounts; and
each company bore their own profits and losses. Additionally, each company had its
own employees for which they were responsible, and, on the date of this incident,
Shou & Shou, Inc. employed the individuals working at Noodle in College Park.
After Lowery was injured, she sued Noodle Life for negligence, asserting that
Shou & Shou, Inc. was the alter ego of Noodle Life; the two companies were a joint
venture; that they were agents for one another; and that Shou & Shou, Inc.’s
negligence is imputed to Noodle Life such that it was liable for her injuries.1 Lowery
also sued Shou & Shou, Inc., but settled her claims with it and its insurance company
via a consent judgment, leaving only the claims against Noodle Life pending.
1
Lowery also sued 3L Realty, LLC, and Bowl Fat, Inc., but they were
subsequently dismissed from the case.
3
Noodle Life moved for summary judgment, arguing that it was separate and
distinct from Shou & Shou, Inc. ,and it did not disregard the corporate form; alter ego
is not a viable theory for imputing liability to Noodle Life; and the two companies did
not share a joint venture or an agency relationship.2
Following a hearing, the trial court granted Noodle Life’s motion. Relying on
Cobra 4 Enterprises v. Powell-Newman, 336 Ga. App. 609 (785 SE2d 556) (2016)
(physical precedent only as to Division 2), it found that, even though the two
companies had the same owners and there may have been some overlap between
them, the companies were neither a joint venture nor alter egos of one another.
Lowery now appeals.
The concepts of alter ego, joint venture, and agency are separate but closely
related theories for imposing liability. Kissun v. Humana, 267 Ga. 419, 420-421 (479
SE2d 751) (1997). In evaluating one corporation’s liability for the acts of another, we
2
Noodle Life further argued that Lowery’s consent judgment with Shou &
Shou, Inc. should have resolved the case between her and Noodle Life because
Lowery agreed to a judgment with a joint tortfeasor, and that it was not liable to
Mr. Lowery on his loss of consortium claim. It also argued that Lowery could not
prevail on her negligence claims. Although Lowery’s husband asserted a loss of
consortium claim, because we conclude summary judgment in favor of Noodle Life
was proper this claim fails as well. See Behforouz v. Vakil, 281 Ga. App. 603, 604
(636 SE2d 674) (2006) (grant of summary judgment on loss of consortium claim was
also proper where claim was derivative of personal injury claims).
4
look to the business structure of each and the level of control one entity has over the
other. Id. But evidence sufficient to establish one relationship between corporate
parties may not be sufficient to establish another. Id. Likewise, business relationships
and interdependency of one corporation and another, alone, are insufficient to
establish liability under either of these three theories. See id. (evidence insufficient
to show alter ego does not as a matter of law negate the existence of an agency
relationship between the corporations); see also Gateway Atlanta Apts. v. Harris, 290
Ga. App. 772, 778 (2) (b) (660 SE2d 750) (2008) (“The mere existence of a business
interdependency does not create a joint venture.”) (citation omitted). With these
principles in mind, we evaluate Noodle Life’s alleged liability under each theory,
finding no merit to any of them.
(a) Alter ego.
Lowery asserts that the trial court erred by granting summary judgment in favor
of Noodle Life because there was a factual question regarding whether Noodle Life
operated and controlled the Noodle restaurant in College Park, making Shou & Shou,
Inc. merely the alter ego of Noodle Life. Because there was no evidence that the two
companies were interchangeable entities, we disagree.
5
Under the alter ego doctrine, equitable principles are used to disregard
the separate and distinct legal existence possessed by a corporation
where it is established that the corporation served as a mere alter ego or
business conduit of another. The concept of piercing the corporate veil
is applied in Georgia to remedy injustices which arise where a party has
over extended his privilege in the use of a corporate entity in order to
defeat justice, perpetuate fraud or to evade contractual or tort
responsibility. Plaintiff must show that the defendant disregarded the
separateness of legal entities by commingling on an interchangeable or
joint basis or confusing the otherwise separate properties, records or
control.
(Citations omitted.) TMX Finance v. Goldsmith, 352 Ga. App. 190, 210 (6) (833 SE2d
317) (2019). Additionally, “when the elements of the doctrine are satisfied, the
doctrine of piercing the corporate veil also can be used . . . to hold a ‘family of
corporations’ liable for the debts of each other.” Id. In order to pierce the corporate
veil, however, there must be some evidence of abuse of the corporate form, and sole
ownership of a corporation is not a factor. Cobra 4 Enterprises, 336 Ga. App. at 613
(2) (physical precedent only). “Where there is no evidence that the corporate
arrangement is a sham that was designed to defeat justice, perpetuate fraud, or evade
statutory, contractual, or tort liability, the issue of alter ego liability is not a jury
question.” Id.
6
Here, Lowery contends that Shou & Shou, Inc. was merely the alter ego for
Noodle Life, and that Noodle Life actually operated the College Park restaurant
because the College Park location used Noodle Life’s menu, recipes, and food
vendors; Noodle Life’s employees did the food prep for Noodle in College Park; all
catering orders for both locations were funneled through Noodle Life; both
restaurants used the same website, and shared income and supplies; and Shou &
Shou, Inc. paid Noodle Life’s insurance premiums. However, a review of the
evidence shows that, although there may have been some overlap between Shou &
Shou, Inc. and Noodle Life, such as commonality of ownership, there are no other
factors to impose the alter ego doctrine against Noodle Life.3
Contrary to Lowery’s contention, Cobra 4 Enterprises is controlling. As in
Cobra 4 Enterprises, each of these corporations maintained separate bank and payroll
accounts. Each company bore their own profits and losses. Additionally, each
company paid its own employees, and, on the date of this incident, Shou & Shou, Inc.
3
To the extent Lowery argues in her reply brief that Shou & Shou, Inc.’s use
of Noodle Life employees to prep food constitutes sharing employees, this is the first
time she raises this argument and thus it will not be considered. Stewart v. Johnson,
358 Ga. App. 813, 814 (856 SE2d 401) (2021) (“any enumeration of error which is
not supported in the principle brief by citation of authority or argument may be
deemed abandoned . . . and we do not consider arguments that are raised for the first
time in a reply brief.”) (citation and punctuation omitted; emphasis in original).
7
both employed and paid the individuals working at Noodle in College Park. Although
Noodle Life may have done the food prep for Noodle in College Park, all of the food
at the College Park location was cooked on site by Noodle College Park employees.4
As such, the evidence shows these corporations were run as two separate
entities, and Lowery has pointed to no evidence showing that one had control over
the other to establish liability under an alter ego theory. Cobra 4 Enterprises, 336 Ga.
App. at 614-615 (2) (no evidence of any commingling of assets between the two
companies, one had no right of control over the other, the two corporations had
separate bank accounts, and neither paid any expenses for the other); see also NEC
Technologies v. Nelson, 267 Ga. 390, 397 (5) (478 SE2d 769 ) (1996) (no evidence
that one corporation was an instrumentality for the transactions of the other, or that
4
Lowery attempts to create an issue of fact by pointing to the deposition
testimony of Lena Shou Kuo, one of the owners of both corporations, who testified
that Noodle Life operated both restaurants as one. Kuo subsequently clarified,
however, that the two restaurants shared the same menu and recipes, but that each
paid for their share of the ingredients and supplies, and each hired its own employees
to do the cooking and paid them from separate payroll accounts. Accordingly, under
these circumstances, this evidence is insufficient to create an alter ego relationship.
Cobra 4 Enterprises, 336 Ga. App. at 615 (2) (although there was some overlap
between the two companies, there was no evidence of commingling or abuse of the
corporate entity.).
8
there was commingling of money, records, or employees).5 Therefore, there is no
evidence in this case to raise a jury question regarding whether Shou & Shou, Inc.
was the alter ego for Noodle Life, and the trial court properly granted summary
judgment on this issue.6
(b) Joint venture.
Lowery next argues that the trial court erred in finding that Shou & Shou, Inc.
and Noodle Life were not engaged in a joint venture because there was evidence of
mutual control between the two corporations. Again, we disagree.
5
Although Lowery asserts that Shou & Shou, Inc. paid Noodle Life’s insurance
premiums, this evidence is insufficient to show the commingling of assets on an
interchangeable or joint basis or abuse of the corporate form sufficient to establish
liability under an alter ego theory. See Saks Mgmt. and Assoc. v. Sung Gen.
Contracting, 356 Ga. App. 568, 578-579 (3) (f) (849 SE2d 19) (2020); see also Cobra
4 Enterprises, 336 Ga. App. at 613 (2); TMX Finance v. Goldsmith, 352 Ga. App.
190, 210 (6).
6
Noodle Life argues that the consent judgment between Lowery and Shou &
Shou, Inc. further forecloses the issue of whether it should be held liable for the acts
of Shou & Shou, Inc. because Lowery had a valid remedy for claims without the trial
court finding evidence of alter ego sufficient to pierce the corporate veil. However,
the trial court did not address this issue, and, given our conclusion in favor of Noodle
Life on the issue of alter ego, we need not address it. See Fross v. Norfolk Southern
R. Co., 361 Ga. App. 235 __ (2) (863 SE2d 714, 721 (2)) (2021) (“Therefore, in the
absence of a ruling below, we will not address this issue.”); see also Pneumo Abex v.
Long, 357 Ga. App. 17, 29 (2) (849 SE2d 746) (2020) (“As we have repeatedly
explained, this is a Court for the correction of errors of law, and “if the trial court has
not ruled on an issue, we will not address it.”) (citation and punctuation omitted).
9
A joint venture arises where two or more parties combine their property
or labor, or both, in a joint undertaking for profit, with rights of mutual
control. Without the element of mutual control, no joint venture can
exist. In order for one party to be liable for the negligence of another
under a joint venture theory, the party must have had the right to direct
and control the conduct of the other party in the activity causing the
injury. The mere existence of a business interdependency does not create
a joint venture.
(Citations and punctuation omitted; emphasis supplied.) Gateway Atlanta Apts., 290
Ga. App. at 778 (2) (b); see also Shamblin v. Corp. of the Presiding Bishop of the
Church of Jesus Christ of Latter Day Saints, 352 Ga. App. 870, 877 (3) (836 SE2d
171) (2019); Cobra 4 Enterprises, 336 Ga. App. at 612 (1); Kitchens v. Brusman, 280
Ga. App. 163, 167 (3) (633 SE2d 585) (2006) (“Without the element of mutual
control, no joint venture can exist.”).
Here, Lowery relies on the same evidence asserted in support of her alter ego
theory, and further asserts that a joint venture existed between the two companies
because both restaurants were owned by the same three siblings with the right of
mutual control over both companies. However, Lowery has failed to present any
evidence showing that Noodle Life directed or controlled the conduct of Shou &
Shou, Inc. or its employees in the activity that caused Lowery’s injury. Gateway
10
Atlanta Apts., 290 Ga. App. at 778 (2) (b). Noodle Life did not do the cooking for
Noodle in College Park, and it did not employ or pay the individuals who allegedly
improperly packaged the soup at Noodle in College Park. Other than the testimony
of Lena Shou, who indicated she trained the Noodle employees at the College Park
location to double bag take-out soup orders, there is no evidence in the record that
Noodle Life or its employees had any involvement in the manner in which the soup
was packaged when Lowery was injured. To the extent Lowery argues that Noodle
Life and Shou & Shou, Inc. had mutual control over the other’s business, this
argument is unavailing as addressed supra. Although Lowery suggests that Noodle
Life ran Noodle in College Park because, for example, it prepped the food for that
location, she has pointed to no evidence showing that Shou & Shou, Inc. had any
right of mutual control over the operation of Noodle Life’s restaurant in midtown.
“Without the element of mutual control, no joint venture can exist.” (Citation omitted;
emphasis supplied). Gateway Atlanta Apts., 290 Ga. App. at 778 (2) (b); Kitchens,
280 Ga. App. at 167 (3). As such, Lowery’s claim that the two entities engaged in a
joint venture is without merit. Cobra 4 Enterprises, 336 Ga. App. at 612 (1); see also
Gateway Atlanta Apts., 290 Ga. App. at 778 (2). Accordingly, the trial court properly
granted summary judgment on this point.
11
(c) Agency.
Finally, Lowery argues that the trial court erred in granting Noodle Life’s
summary judgment motion because there was sufficient evidence to establish that
Shou & Shou, Inc. was Noodle Life’s apparent or ostensible agent.7 This argument
is unavailing.
“The relation of principal and agent arises wherever one person, expressly or
by implication, authorizes another to act for him or subsequently ratifies the acts of
another in his behalf.” OCGA § 10-6-1.
In order to impose liability pursuant to the doctrine of apparent or
ostensible agency, the evidence must show: (1) the apparent principal
represented or held out the apparent agent; and (2) justifiable reliance
upon the representation led to the injury.
(Citation omitted.) American Reliable Ins. Co. v. Lancaster, 356 Ga. App. 854, 858
(1) (b) (849 SE2d 697) (2020); see also Kid R Kids Intl. v. Cope, 330 Ga. App. 891,
894 (2) (769 SE2d 616) (2015); MCG Health v. Nelson, 270 Ga. App. 409, 414 (5)
7
Lowery does not argue that Shou & Shou, Inc. was Noodle Life’s actual
agent. See American Reliable Ins. Co, 356 Ga. App. 854, 858 (1) (b) (849 SE2d 697)
(2020).
12
(606 SE2d 576) (2004) (“liability is premised on the principal’s right to control the
time and manner of an agent’s work.”) (citations and punctuation omitted).
Here, Lowery has pointed to no evidence showing that Noodle Life held Shou
& Shou, Inc. out to be its agent or that she relied on any such representation.8
American Reliable Ins. Co., 356 Ga. App. at 858 (1) (b). Accordingly, Lowery has
failed to establish that Shou & Shou, Inc. was Noodle Life’s agent, and the trial court
properly granted summary judgment on this issue as well.
Judgment affirmed. Barnes, P. J., and Gobeil, J., concur.
8
Lowery argues that she justifiably relied on Noodle Life’s website, which
promoted Noodle as a single restaurant with three locations. However, we do not
consider this argument raised for the first time in her reply brief. Stewart, 358 Ga.
App. at 814.
13