Res-Ga McDonough, LLC v. Taylor English Duma LLP

Court of Appeals
of the State of Georgia
ATLANTA,____________________
February 06, 2017
The Court of Appeals hereby passes the following order:
A16A1989. RES-GA MCDONOUGH, LLC v. TAYLOR ENGLISH DUMA, LLP
et al.
Because this appeal is within the exclusive appellate jurisdiction of the Georgia
Supreme Court, we TRANSFER the appeal to the Supreme Court.
RES-GA McDonough, LLC (RES-GA) brought a legal malpractice action
against the law firm of Taylor English Duma, LLP and individual attorneys John J.
Richard and Donald P. Boyle, Jr. (the attorneys). The action arose out of the
attorneys’ representation of RES-GA in a prior action to collect amounts owed to
RES-GA on a 2006 promissory note and guaranties of the note which were originally
held by a federally insured bank placed into Federal Deposit Insurance Corporation
(FDIC) receivership. RES-GA obtained the note and guaranties in 2010 by
assignment from an FDIC assignee, Multibank 2009-1 RES-ADC Venture, LLC,
which was a plaintiff in a pending action to collect on the note and guaranties. After
being substituted as plaintiff in the pending action, RES-GA added a claim in 2012
against the guarantor under the Uniform Fraudulent Transfers Act (UFTA) (former
OCGA § 18-2-70 et seq.) alleging that in 2008 the guarantor had fraudulently
transferred property. The malpractice action alleged that, because the attorneys
negligently handled the prior UFTA action, RES-GA was damaged by loss of the
ability to collect its judgment on the guaranties by execution against property
fraudulently transferred by the guarantor.
RES-GA appealed from the trial court’s order dismissing the malpractice action
on the basis that RES-GA could not prove the third essential element of the action –
that the legal malpractice in the prior UFTA action was the proximate cause of the
alleged damage to the plaintiff. Leibel v. Johnson, 291 Ga. 180, 181 (728 SE2d 554)
(2012). Based on the holdings in Security Feed & Seed Co. &c. v. NeSmith, 213 Ga.
783 (102 SE2d 37) (1958) and RES-GA Hightower, LLC v. Golshani, 334 Ga. App.
176, 178-181 (778 SE2d 805) (2015), the trial court ruled as a matter of law: (1) that
the provisions of OCGA § 44-12-24 against assignment of fraud actions precluded
RES-GA from bringing the prior UFTA action acquired by assignment from
Multibank, and (2) therefore RES-GA had no standing to pursue the UFTA action
against the guarantor and no basis to prove that malpractice in the UFTA action
proximately caused the alleged damage.
On appeal, RES-GA contends that the trial court erred by rejecting its argument
that it had standing to bring the UFTA action because the federal Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA),1 as
applicable to the FDIC and subsequent assignees Multibank and RES-GA, preempts
the non-assignment provisions of OCGA § 44-12-24. We conclude that the federal
FIRREA preemption issue raised in this appeal gives the Supreme Court of Georgia
exclusive appellate jurisdiction. “The preemption doctrine is a product of the
Supremacy Clause, see U. S. Const., Art. VI, Cl. 2, which invalidates state laws that
interfere with, or are contrary to, federal law.” Norfolk Southern R. Co. v. Zeagler,
293 Ga. 582, 598 (748 SE2d 846) (2013) (citation and punctuation omitted). Whether
federal law preempts a Georgia statute and renders the statute unconstitutional under
the Supremacy Clause is an issue that “brings the appeal under [Georgia Supreme
1
Pub. L. No. 101-73, 103 Stat. 183 (codified as amended in various sections
of 12 USC).
Court] constitutional question jurisdiction. See Ga. Const. of 1983, Art. VI, Sec. VI,
Par. II (1).” Babies Right Start, Inc. v. Georgia Dept. of Public Health, 293 Ga. 553,
554 (748 SE2d 404) (2013); Ward v. McFall, 277 Ga. 649, 651 (593 SE2d 340)
(2004).
Court of Appeals of the State of Georgia
Clerk’s Office, Atlanta,____________________
02/06/2017
I certify that the above is a true extract from
the minutes of the Court of Appeals of Georgia.
Witness my signature and the seal of said court
hereto affixed the day and year last above written.
, Clerk.