Clarke v. Dye-Master Grp., Inc.

903 S.E.2d 828

CLARKE

v.DYE-MASTER GROUP, INC. et al.

A24A0093

Court of Appeals of Georgia.

June 25, 2024

Reconsideration Denied July 10, 2024

William Ralph Carlisle, Sugar Hill, for Appellant.

Timothy David Chambers, Atlanta, Charles R. Carson, Dunwoody, for Appellee.

Markle, Judge.

After Sandra Clarke failed to pay Dye-Master Group, Inc. and American Property Restoration, Inc. (collectively "Appellees") for renovation work completed on her home, the Appellees sued Clarke for breach of contract, conversion, violations of the Georgia Racketeer Influenced and Corrupt Organizations ("RICO") Act, and to foreclose on liens they filed on the property.¹ A jury found in Appellees’ favor, and awarded more than $365,000 in damages and attorney fees. Clarke now appeals, arguing that the trial court erred by (1) denying her motion for summary judgment; (2) granting a motion for contempt and striking her pleadings due to discovery violations; (3) denying her motion to dismiss or for judgment on the pleadings; (4) granting a motion in limine to exclude evidence showing that Dye-Master Group was not licensed to act as a contractor; (5) denying her motion to recuse based on comments the trial court made during a motions hearing; and (6) denying her motion for judgment notwithstanding the verdict. For the reasons that follow, we affirm.

The record shows that, in 2016, Clarke’s home was damaged by fire, and she hired Dye-Master Group ("DMG") to perform remediation services.² During the clean-up, Clarke asked DMG about some renovation work, and DMG advised her that it was not a licensed contractor. DMG recommended American Property Restoration ("American"), which was licensed as a contractor. DMG and American then entered into an agreement in which DMG would finance the renovation, American would obtain the permits and perform the work, and the two companies would split the profits. Clarke’s insurance company prepared an estimate of the repairs, which Clarke gave to DMG. DMG and American prepared their own estimate, matching the same amount, and Clarke approved it. DMG then provided funding to American to cover the renovation work. Clarke later made changes that added to the cost, bringing the total to $198,498.75.

After American completed the work and the insurance company verified it, Clarke signed a certification of completion, indicating that she was satisfied with the renovation. Clarke’s insurance company then released the funds to Clarke’s mortgagor. Despite her acceptance of the work, however, Clarke notified her mortgage company that she had already paid the contractor, and she requested that payment be sent to her directly.³ Once she received the money from the mortgagor, Clarke deposited the funds into her own bank account, and refused to pay DMG.

DMG sent Clarke a demand letter and, when she failed to remit payment, DMG and American filed suit against Clarke for breach of contract, conversion, and RICO violations.⁴ They also placed liens on the property. Clarke answered and filed a counterclaim, arguing that the allegations in the complaint demonstrated that DMG violated various statutes, including OCGA § 43-41-17, by providing renovation work without the proper license.⁵

During her deposition testimony, Clarke stated that she had evidence showing that she had paid DMG and purchased materials consistent with the information she gave her mortgage company. She further stated that the work performed had been substandard, requiring costly repairs. Clarke agreed to provide copies of those financial documents to the Appellees. But after the deposition, counsel withdrew, and the documents were not produced. DMG then sent Clarke’s new counsel another request, but he failed to submit any responses despite his assurances that he would do so. Appellees then moved for sanctions due to Clarke’s failure to respond to discovery requests. Counsel responded that there were no documents that were relevant to the request, and that Clarke had been unable to locate any of the financial records. Counsel then argued that DMG acted unlawfully by representing that it had a license to provide contractor services, and that, because it was in violation of the licensing requirements, it had no right to seek payment or to obtain discovery.

Clarke then moved for summary judgment, arguing that DMG violated licensing regulations and thus any contract was unenforceable. In response, the Appellees argued that there were no such violations because American completed all the work, American was properly licensed, and American and DMG entered into a joint venture for completion of the renovations. Clarke later supplemented her motion to include the outcome of a complaint she filed with the state licensing board, which resulted in DMG agreeing to a cease and desist order.

Following a hearing, the trial court denied the motion for summary judgment, and ordered Clarke to respond to the pending discovery request within 30 days. Despite the trial court’s order, Clarke did not provide any discovery, and the Appellees filed a second motion for sanctions and for contempt. The trial court deferred its ruling on the motion for sanctions and contempt and again ordered Clarke to comply with discovery. When she failed to do so, the trial court granted the motion for sanctions, noting that the discovery request had been pending for three years and that Clarke had twice ignored the trial court’s orders to respond. Accordingly, the trial court struck Clarke’s answer and entered a default judgment as to liability. The trial court further found Clarke in criminal contempt for ignoring the court’s order, and ordered her to pay a fine.

Clarke moved to vacate the order under OCGA § 9-11-60 (d) (3), and to dismiss the complaint, or to grant judgment on the pleadings. In doing so, Clarke repeated her argument that DMG violated licensing regulations and thus could not enforce the contract. The trial court denied the motion, finding that the motion improperly relied on documents outside the pleadings. The court further found that relief from judgment under OCGA § 9-11-60 was not warranted.

Prior to trial, the Appellees filed a motion in limine to exclude any evidence of the cease and desist order, as well as any argument that they could not collect because DMG was unlicensed. The trial court granted the motion.

At trial, Clarke again raised the issue of DMG’s alleged violation of licensing requirements and argued that she should be permit- ted to submit evidence to show that the Appellees failed to state a claim and to have a jury instruction on the licensing violations under OCGA § 43-41-17. The trial court reminded Clarke that she was in default and the issue of liability was not before the jury. DMG and American then testified to the amount of damages, and the Appellees’ attorneys testified to the amount of their fees and expenses. The jury ultimately awarded damages, including attorney fees, expenses, interest, and punitive damages, in excess of $365,000. Before the trial court entered judgment, Clarke moved for judgment notwithstanding the verdict (JNOV). Thereafter, the trial court entered judgment, without expressly denying the motion for JNOV, and this appeal followed.

1. Summary judgment.

Clarke first argues that the trial court erred by denying her motion for summary judgment because DMG was not licensed to act as a contractor; the agreement between DMG and American did not create a valid joint venture; and as a result, the Appellees could not enforce the contract. We disagree.

[1, 2] We review the denial of a motion for summary judgment de novo, viewing the evidence and drawing all reasonable inferences from it in the light most favorable to DMG and American as the nonmovants. Five Star Athlete Mgmt. v. Davis, 355 Ga. App. 774, 775, 845 S.E.2d 754 (2020). "Summary judgment is proper when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law." (Citation omitted.) Id.

Generally, a ruling on a motion for summary judgment becomes moot following the verdict and judgment. However, a party may appeal the denial of summary judgment as part of the direct appeal from the final judgment if the legal issues raised and resolved in denying the motion for summary judgment were not considered at trial.

(Citation and punctuation omitted.) Smith v. Saulsbury, 286 Ga. App. 322, 323 (1) (a), 649 S.E.2d 344 (2007); see also City of College Park v. City of Sandersville, 361 Ga. App. 529, 531 (1), 864 S.E.2d 680 (2021). Here, the jury did not consider whether the statute barred the Appellees’ claims. Thus, we may reach this issue in Clarke’s direct appeal. Smith, 286 Ga. App. at 323 (1) (a), 649 S.E.2d 344; see also Coregis Ins. Co. v. Nelson, 282 Ga. App. 488, 489 (1), 639 S.E.2d 365 (2006).

Clarke contends that she was entitled to summary judgment based on violations of OCGA § 43-41-17. That statute requires a contractor’s license for anyone performing contracting work. OCGA § 43-41-17 (b). "Contracting" is defined as, inter alia, "[t]he offering of contracting services and the negotiation of or bid or proposal for engagement or a contract requiring performance of these services[.]" OCGA § 43-41-2 (3); see also OCGA § 43-41-2 (4).

[3] Generally, OCGA § 43-41-17 (b) bars enforcement of a contract where a license was required and the performing party did not possess one. Restor-It v. Beck, 352 Ga. App. 613, 623 (6), 835 S.E.2d 398 (2019); see also Bennett v. Cashin, 370 Ga. App. 335, 336-337 (2), 897 S.E.2d 483 (2024). However, "[n]otwithstanding any other provision of law to the contrary, if a contract is rendered unenforceable under this subsection, … [t]his subsection shall not affect the rights of parties other than the unlicensed contractor to enforce contract, lien, or bond remedies." OCGA § 43-41-17 (b).

[4, 5] Any determination of whether DMG violated the statutory licensing requirements is only relevant if it engaged in contracting...