Global Ship Systems, LLC v. Riverhawk Group, LLC

SECOND DIVISION
ANDREWS, P. J.,
MILLER and BRANCH, 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.
http://www.gaappeals.us/rules
November 20, 2015
In the Court of Appeals of Georgia
A15A1057. GLOBAL SHIP SYSTEMS, LLC et al. v.
RIVERHAWK GROUP, LLC et al.
ANDREWS, Presiding Judge.
Global Ship Systems, LLC, GSS Operations, LLC, Robert S. Creech, III and
the remaining plaintiffs1 (collectively, the “Global Ship Plaintiffs”) appeal from an
order of the Superior Court of Chatham County granting RiverHawk Group, LLC and
certain related defendants’2 (collectively, the “RiverHawk Defendants”) motion for
1
The additional plaintiffs include Southeast Industrial and Marine Services,
Inc. (“SIMS”), John G. Bennett, Jane H. Holmes, and James D. Stribling.
Bennett,Creech, Holmes and Stribling are individual members of both Global Ship
and GSS Operations and are individual shareholders of SIMS.
2
The additional RiverHawk Defendants include Nick Anacreonte, Robert J.
Cox, Mark T. Hornsby, Brian G. Reynolds, John K. Ross, Chris Weaver, Stephen M.
Wheelock, Paradigm Aerospace, LLC, RiverHawk Defense, LLC, RiverHawk
Marine, LLC, Maritime Security Strategies, LLC, and Maritime Security Strategies
of Florida, LLC. Additional defendants not parties to this appeal include Chatham
summary judgment and dismissing the Global Ship Plaintiffs’ complaint for violation
of Georgia’s voluntary dismissal statute. See OCGA §§ 9-11-41 (a) (1), (3); 9-12-40.
Because the trial court correctly dismissed Global Ship’s third civil action arising
from the same set of facts, we affirm.
In 2003 and 2004, Global Ship and Creech sought financing for the purchase
of a Savannah, Georgia shipyard. Their search for financing led to Fortress Credit
Corporation, a defendant in the first action.3 Global Ship ultimately secured
financing, but it alleged that in December 2005, a series of equipment failures
crippled Global Ship’s operations which led to a decline in revenue.4 Global Ship’s
demise culminated in an October 2007 effort by Drawbridge to foreclose on the
company’s real and personal property, as well as the shipyard.
Investment Fund II, LLC, Chatham Investment Fund QP II, LLC, Chatham Capital
Management II, LLC, Chatham Capital Partners, Inc., Chatham Capital Holding, Inc.,
Drawbridge Special Opportunities Fund, LP, and Drawbridge Special Opportunities
GP, LLC.
3
Global Ship further alleged that Fortress assigned its rights to Drawbridge
Special Opportunities Fund, LP, (“Drawbridge”) which then assigned certain rights
to Chatham Capital Management II, LLC, Chatham Investment Fund QP II, LLC, and
Chatham Investment Fund II, LLC.
4
For additional discussion of the equipment failures, see Global Ship Systems,
LLC v. Continental Cas. Co., 292 Ga. App. 214 (663 SE2d 826) (2008).
2
In an effort to stop the looming foreclosure of their property, Global Ship, GSS
Operations and Creech filed a civil action in the Superior Court of Chatham County
on October 31, 2007 (the “first action”).5 The first action sought: (1) an injunction to
stop the pending foreclosure of Global Ship’s equipment and shipyard; (2) an
accounting from the defendants “which reflects how the interest, penalties, and fees
claimed by the Defendants were calculated;” (3) money damages for breaches of the
duties of good faith, fair dealing, and loyalty; and (4) attorney fees. Of note, Global
Ship’s complaint in the first action alleged that the defendants exhibited bad faith
“given [their] active participation . . . in the daily activities of [Global Ship and GSS
Operations], their actions in declaring the Loan in default, and accelerating the debt,
and their refusal to negotiate in good faith concerning replacement financing.”6 On
November 20, 2007, Global Ship voluntarily dismissed the first action without
prejudice.
5
The defendants in the first action included Fortress Credit Corporation,
Drawbridge Special Opportunities Fund, LP, Chatham Capital Management II, LLC,
Chatham Investment Fund QP II, LLC, and Chatham Investment Fund II, LLC.
6
Global Ship also alleged that Hornsby, a defendant in the second and third
actions, participated in securing funding for Global Ship.
3
On November 14, 2008, the Global Ship Plaintiffs filed a second civil action
in the Superior Court of Fulton County (the “second action”). Global Ship added
SIMS and three individual members of the Global Ship and GSS Operations limited
liability companies as party plaintiffs and 16 additional party defendants, including
the RiverHawk Defendants.7 In a sprawling 28-count complaint,8 the Global Ship
Plaintiffs alleged a host of wrongs including breaches of contract, aiding and abetting
breaches of contract, breaches of fiduciary duties, conspiracies to breach fiduciary
duties, fraud, tortious interference with business relations, and “malicious
procurement of breach[es] of fiduciary dut[ies],” all stemming from Global Ship’s
efforts to secure original financing and its subsequent collapse. On April 24, 2009,
the trial court in the second action entered an order granting in part multiple
defendants’ motions for judgment on the pleadings. Ten days later, the Global Ship
Plaintiffs voluntarily dismissed the second action.
7
For a listing of the parties in the second action, see footnotes 1 and 2, supra.
8
Global Ship’s initial complaint in the second action included 22 separate
counts. However, on April 17, 2009, Global Ship filed a “First Amended and Restated
Complaint” which alleged 28 separate counts. The parties do not contest that Global
Ship’s first amended complaint controlled at the time of Global Ship’s voluntary
dismissal of the second action.
4
One day shy of the six-month renewal period, the Global Ship Plaintiffs filed
a complaint, identical to the second action, in the Superior Court of Chatham County
seeking the same relief it pursued in the second action (the “third action”). The
RiverHawk Defendants moved for summary judgment, claiming that the Global Ship
Plaintiffs’ third action was barred by OCGA § 9-11-41 (a) (3). The trial court agreed,
granting the RiverHawk Defendants’ motion for summary judgment and dismissing
the Global Ship Plaintiffs’ complaint. The Global Ship Plaintiffs (hereinafter, “Global
Ship”) appeal.
Summary judgment is appropriate when there is no genuine issue as to any
material fact and the moving party is entitled to a judgment as a matter of law. OCGA
§ 9-11-56 (c). This Court reviews a grant or denial of summary judgment de novo and
construes the evidence in the light most favorable to the nonmovant. Citifinancial
Svcs. v. Varner, 320 Ga. App. 170 (739 SE2d 477) (2013).
In the sole enumeration of error, Global Ship contends the trial court erred by
granting the RiverHawk Defendants’ motion for summary judgment and dismissing
Global Ship’s complaint for two reasons: (1) res judicata does not bar the actions of
Global Ship’s privies who were not parties to the first action (SIMS, Bennett,
Holmes, and Stribling); and (2) res judicata does not bar the third action because the
5
first and second actions were not based upon the same claims. We will address each
in turn.
1. First, Global Ship argues that the claims of SIMS, Bennett, Holmes and
Stribling are not barred by OCGA § 9-11-41 (a) (3) because they were not parties to
the first action; therefore, the third action actually represents these plaintiffs’ second
action.9 Relevant to this argument, OCGA § 9-11-41 (a) (1) (A) provides that “an
action may be dismissed by the plaintiff, without order or permission of court, [b]y
filing a written notice of dismissal at any time before the first witness is sworn.”
Moreover, “[a] dismissal under this subsection is without prejudice, except that the
filing of a second notice of dismissal operates as an adjudication upon the merits.”
OCGA § 9-11-41 (a) (3). “The plain meaning of OCGA § 9-11-41 is that a plaintiff’s
second voluntary dismissal of a case operates as an adjudication on the merits against
the plaintiff.” (Emphasis in original omitted.) Dillard Land Investments v. South
Florida Investments, 320 Ga. App. 209, 212 (2) (739 SE2d 696) (2013). It follows
that “[f]or a second notice of dismissal to operate as an adjudication upon the merits,
9
Tellingly, Global Ship, GSS Operations and Creech do not argue that their
claims in the third action are not barred due to the voluntary dismissals in the first and
second actions. Rather, they argue that “[f]or the reasons detailed hereinbelow, their
claims are not barred as there is no identity of claims between the [first] action and
the [second a]ction.”
6
. . . it must have been filed by the same plaintiff who filed the first notice of
dismissal.” Id. Therefore, in instances in which multiple plaintiffs filed multiple
actions and dismissals, the relevant inquiry is whether “any of the Appellants was a
plaintiff who voluntarily dismissed both actions.” (Emphasis supplied.) Id. See also
Belco Elec. v. Bush, 204 Ga. App. 811, 814 (420 SE2d 602) (1992) (under prior
version of OCGA § 9-11-41 (a) (3), fourth action dismissed where identity of
plaintiffs was not identical in three prior actions).
Here, the answer to this question is yes. Global Ship, GSS Operations, and
Creech were plaintiffs in the first and second actions, each of which was terminated
with a voluntary dismissal. Accordingly, Global Ship’s third action is barred by the
res judicata effect of OCGA § 9-11-41 (a) (3), and Global Ship’s inclusion of
additional plaintiffs does not alter this conclusion.10 See Dillard Land, 320 Ga. App.
at 212 (2). As a result, the trial court did not err in granting the RiverHawk
Defendants’ motion for summary judgment on this issue.
10
We need not consider whether the individual plaintiffs have a right to bring
individual, rather than derivative, actions. See Phoenix Airline Svcs. v. Metro
Airlines, 260 Ga. 584, 585 (1) (397 SE2d 699) (1990); Pinnacle Benning v. Clark
Realty Capital, 314 Ga. App. 609, 616 (2) (a) (724 SE2d 894) (2012).
7
2. Next, Global Ship asserts that res judicata does not bar the third action
because the first and second actions were not based upon the same claims.11 As noted
above, “[t]he plain meaning of OCGA § 9-11-41 is that a plaintiff’s second voluntary
dismissal of a case operates as an adjudication on the merits against the plaintiff.”
(Emphasis in original.) Dillard Land, 320 Ga. App. at 212 (2). To that end, “the
language of OCGA §§ 9-11-41 (a) and 9-2-61 (a) clearly speaks to the dismissal and
renewal of an ‘action’ or a ‘case,’ not a claim within an action where other claims
have also been asserted by the same plaintiffs.”12 (Emphasis in original.) Young v.
Rider, 208 Ga. App. 147, 149 (2) (430 SE2d 117) (1993). Indeed, the dismissal of
“claims,” or of less than all of a party’s causes of action, is governed by the pleading
amendment rules codified at OCGA § 9-11-15. See Id. See also Southeastern Hose
v. Prudential Ins. Co. of America, 167 Ga. App. 356 (1) (306 SE2d 308) (1983)
(defendant’s argument that fourth action precluded by voluntary dismissal “is
11
With the exception of the argument addressed in Division 1, supra, Global
Ship does not contend that identity of the parties is lacking or that there was no
previous adjudication on the merits by a court of competent jurisdiction. See Gunby
v. Simon, 277 Ga. 698, 699 (594 SE2d 342) (2004).
12
This differs from the corresponding Federal Rule of Civil Procedure, which
expressly provides that “if the plaintiff previously dismissed any federal- or
state-court action based on or including the same claim, a notice of dismissal operates
as an adjudication on the merits.” (Emphasis supplied.) Fed. R. Civ. P. 41 (a) (1) (B).
8
incorrect if any one of the previous actions is not based on or including the claim
presented in the present action”). Finally, OCGA § 9-12-40 is the codification “of
Georgia’s common law rule of res judicata” and provides that
[a] judgment of a court of competent jurisdiction shall be conclusive
between the same parties and their privies as to all matters put in issue
or which under the rules of law might have been put in issue in the cause
wherein the judgment was rendered until the judgment is reversed or set
aside.
(Emphasis supplied.) See Fowler v. Vineyard, 261 Ga. 454, 458 (3) (405 SE2d 678)
(1991).
In this case, we conclude that Global Ship’s third action is barred pursuant to
the res judicata effect of OCGA § 9-11-41 (a) (3). In addition to requesting equitable
relief, Global Ship’s first action included a claim for money damages from multiple
defendants for breaches of the duties of good faith, fair dealing, and loyalty. To
support its request for damages, Global Ship’s complaint in the first action alleged
that the defendants exhibited bad faith “given [their] active participation . . . in the
daily activities of [Global Ship and GSS Operations], their actions in declaring the
Loan in default, and accelerating the debt, and their refusal to negotiate in good faith
concerning replacement financing.” In the second and third actions, which were
9
identical to each other, Global Ship again sought money damages for a variety of
causes of action, including for breaches of duties consonant with those alleged in the
first action, based upon similar factual allegations. See Adams v. Tricord, LLC, 299
Ga. App. 310, 312 (1) (682 SE2d 588) (2009); Southeastern Hose, 167 Ga. App. at
356 (1) (defendant’s argument that fourth action precluded by voluntary dismissal
“incorrect if any one of the previous actions is not based on or including the claim
presented in the present action”). (Emphasis supplied.) Moreover, there is a continuity
in the defendants named in the first, second and third actions, including the Chatham
and Drawbridge defendants. See Belco, 204 Ga. App. at 815 (OCGA § 9-11-41
designed “to prevent a plaintiff from repeatedly filing actions for the same claim
against any defendant, not only previously named defendants”). Finally, Global Ship
has offered no explanation for its failure to bring the causes of action contained in the
second and third actions in the first action.13 See Fowler, 261 Ga. at 458 (3). See also
Cartwright v. First Baptist Church of Keysville, 316 Ga. App. 299, 302 (728 SE2d
893) (2012); Adams, 299 Ga. App. at 312 (1) (“The issue is not whether the plaintiffs
13
In fact, Global Ship’s singular acknowledgment of this failure comes from
its appellant’s brief in which it states the second action followed “substantial
investigation.”
10
litigated these claims in the previous action, but whether they could have litigated
these claims in the previous action.”).
The binding sinew between each of the three actions is the apparently complex
initial financing for, and subsequent failure of, the Global Ship shipyard. In fact, as
shown by its allegations, all of Global Ship’s causes of action from each of its three
civil actions may be traced to its initial financing and activities associated with its
financing.14 To preserve causes of action from res judicata, “one must assert all claims
for relief concerning the same subject matter in one lawsuit and any claims for relief
concerning that same subject matter which are not raised will be res judicata pursuant
to OCGA § 9-12-40.” Fowler, 261 Ga. at 458 (3). This was not done. Accordingly,
we find no error in the trial court’s order granting the RiverHawk Defendants’ motion
for summary judgment and dismissing Global Ship’s third action.
Judgment affirmed. Miller and Branch, JJ., concur.
14
For an example of an action which would differ from the causes of action
presented in Global Ship’s three civil actions discussed in this case, see Global Ship,
292 Ga. App. at 214. Similarly, Southeastern Hose is distinguishable. 167 Ga. App.
at 357 (1) (“[A]ctions predicated upon distinct and separate violations of a lease were
not based on the same claim.”). See also Gunby, 277 Ga. at 700 (subject matter of
different actions were separate surgeries and not identical causes of action).
11