Parsons v. Mertz

320 Ga.App. 786

740 S.E.2d 743

PARSONS

v.MERTZ, et al.

No. A12A2093.

Court of Appeals of Georgia.

March 26, 2013.

Richard L. Parsons, pro se.

Andersen, Tate & Carr, R. Matthew Reeves, for Jamie Mertz, Virtual Properties Realty, Inc. and Virtual Properties Plus, Inc.

Patrick A. Ryan, pro se.

DOYLE, Presiding Judge.

Richard L. Parsons filed suit in magistrate court against Jamie Mertz, Patrick Ryan, Virtual Properties Realty, Inc., and Virtual Properties Plus, Inc. (collectively, “Virtual Properties”) to recover earnest money that Virtual Properties returned to Mertz and Ryan after a failed real estate closing. Following a hearing, the magistrate court ruled in favor of the defendants, and Parsons appealed to the superior court. The superior court granted Mertz's and Virtual Properties' subsequent motion to dismiss, and we granted Parsons's subsequent pro se application for discretionary appeal. We affirm in part, reverse in part, and remand the case, for the following reasons.

The record shows that on December 9, 2006, Parsons entered into an agreement with Mertz and Ryan to purchase a house in Gwinnett County; the closing was scheduled for December 21, 2006. The purchase agreement required Parsons to pay the sellers earnest money in the amount of $1,000. On May 17, 2011, Parsons filed a pro se breach of contract action in magistrate court against Mertz, Ryan, and Virtual Properties, alleging therein that after Parsons's attorney sought to examine Ryan's identification, Ryan left the closing proceedings and did not return, resulting in Ryan's and Mertz's failure to execute the closing documents, which constituted a breach of the purchase agreement. Virtual Properties subsequently released the $1,000 earnest money to Mertz, and Parsons sought return of the earnest money and damages.

Parsons filed returns of service for all three defendants. The return of service for Ryan indicates that “Patrick A. Ryan” was served at a Lawrenceville address on June 24, 2011. In August 2011, the Ryan who was served wrote to the clerk of court, stating therein:

My name is Patrick A. Ryan[,] but I am not the Patrick A. Ryan that was involved in the activity prompting this civil action. Until this civil action [,] I have had no knowledge or contact with ... Parsons, or the defendants, ... Mertz ... or Virtual Properties.... I believe the plaintiff has wrongfully identified me as a defendant in this case and, if necessary, would testify to that in court. I have been in contact with ... Parsons and provided a copy of my identification to him to assure him I was not the party he wishes to pursue with this action[,] but he said he was unable to remove me from the action....

At the October 6, 2011 hearing in magistrate court, a man named Patrick Ryan appeared and explained that he had been served but had no connection to the property or involvement in the actions forming the basis of the lawsuit. Parsons stated that he did “not recognize” the Ryan that appeared at the hearing, and Mertz agreed that the man was not her fiancé, Patrick Ryan, who was a party to the purchase agreement. After Parsons's former attorney testified that he was “virtually sure” that the Patrick Ryan who appeared at the hearing was not the same Patrick Ryan who appeared at the closing, the magistrate court released the man from the hearing, stating that although he failed to file a timely or proper answer, “it is clear that [he was] not the person that was there [at the closing].” ¹

At the conclusion of the hearing, at which witnesses from the parties testified about what took place at the closing,² the magistrate court announced that it was entering judgment in favor of the defendants, finding that based on the evidence, Parsons was not entitled to a refund of his earnest money. The court also dismissed Ryan from the action.

Parsons appealed to superior court, where Mertz and Virtual Properties filed a motion to dismiss or motion for judgment on the pleadings on the grounds that Parsons had failed to serve the proper Patrick Ryan, an indispensable party under OCGA § 9–11–19(a)(1), and that the purchase agreement between the sellers and Parsons contained a “hold harmless” provision stating that all parties agreed not to bring suit against Virtual Properties for damages relating to its decision to disburse the earnest money. Following a hearing, the superior court granted the motion to dismiss. This appeal followed.

1. Parsons argues that he was entitled to a default judgment against Ryan. We disagree.

According to Parsons, he properly served Patrick A. Ryan, the man listed on the purchase agreement.³ Thus, Parsons argues, Ryan failed to timely answer and was in default, and the trial court erred by failing to enter a default judgment against Ryan.

“Service on the proper party is the responsibility of the plaintiff....” ⁴ “A trial court's finding of insufficient service of process will be upheld on appeal absent a showingof an abuse of discretion. Such an abuse occurs where the trial court's ruling is unsupported by any evidence of record or where that ruling misstates or misapplies the relevant law.” ⁵ “The trial court resolves factual disputes regarding service, and we will uphold the court's findings if there is any evidence to support them.” ⁶

There is evidence in the record to support the trial court's conclusion that the Patrick Ryan whom Parsons served had no connection to the parties or the purportedly breached agreement. Parsons concedes that the man who appeared at the magistrate court hearing was not the man who identified himself as Ryan at the closing. Thus, in the absence of proper service on the correct defendant Ryan, the trial court did not abuse its discretion by failing to grant a default judgment against Ryan.⁷

2. Parsons contends that even if he was not entitled to a default judgment against Ryan, he was still permitted to proceed against Virtual Properties and Mertz.

(a) Virtual Properties. The purchase agreement between the parties addressed which party was entitled to disbursement of the earnest money ⁸ and provided that Virtual Properties would disburse it to the proper party “upon a reasonable interpretation of the contract.” The agreement also contained, however, an indemnification and hold harmless clause:

All parties hereby agree to indemnify and hold [Virtual Properties] harmless from and against all claims, causes of action, suits[,] and damages arising out of or related to the performance by [Virtual Properties] of its duties hereunder. All parties further covenant and agree not to sue [Virtual Properties] for damages relating to any decision of [Virtual Properties] to disburse earnest money made in accordance with the requirements of this Agreement.⁹

Parsons's agreement not to bring suit against Virtual Properties (who had the authority to make a reasonable determination regarding which party was entitled to the earnest money) for damages resulting from disbursement of the earnest money is fatal to his claim against Virtual Properties. Accordingly, the trial court did not err by granting Virtual Properties' motion to dismiss. ¹⁰

(b) Mertz. Parsons argues that the trial court erred by dismissing his claim against Mertz on the grounds that the correct Patrick Ryan was an indispensable party and that Parsons's failure to serve and join him as a party required dismissal of his claim against her.

“[O]rdinarily, it is error to dismiss a petition for failure to join an indispensable party. Rather, the party should be joined so the case can be considered on the merits. However, a complaint may be dismissed for failure to join an indispensable party when the court lacks jurisdiction of the indispensable party.” ¹¹OCGA § 9–11–19, which governs the joinder of indispensable parties, provides in subsection (a):

A person who is subject to service of process shall be joined as a party in the action if:

(1) In his absence complete relief cannot be afforded among those who are already parties; or (2) He claims an interest relating to the subject of the action and is so situated that the disposition of the action in his absence may:

(A) As a practical matter impair or impede his ability to protect that interest; or

(B) Leave any of the persons who are already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of his claimed interest.

If the trial court concludes that a person described in OCGA § 9–11–19(a) can be served, it “ must allow a reasonable time for the absent parties to be joined.” ¹² If a trial court concludes that a party described in OCGA § 9–11–19(a)cannot be joined as a party for venue, lack of jurisdiction, or some other reason, then the trial court “shall determine whether in equity and good conscience the action should proceed among the parties before it or should be dismissed, the absent person being thus regarded as indispensable.” ¹³ In making that decision, the trial court must consider the following five factors:

(1) To what extent a judgment rendered in the person's absence might be prejudicial to him or to those already parties;

(2) The extent to which, by protective provisions in the judgment, by the shaping of relief, or by other measures, the prejudice can be lessened or avoided;

(3) Whether a judgment rendered in the person's absence will be adequate;

(4) Whether the plaintiff will have an adequate remedy if the action is dismissed for nonjoinder; and

(5) Whether and by whom prejudice might have been avoided or may, in the future, be avoided.¹⁴

Here, the record does not reflect that the trial court gave Parsons a reasonable time to join Ryan. Pretermitting whether Parsons's continued insistence that he was entitled to a default judgment against Ryan obviated the requirement that the trial court give him additional time to serve Ryan, ¹⁵ there is no indication in the record that the trial court made a determination regarding whether Ryan...