Redcedar, LLC v. CML-Ga Soc. Circle, LLC

341 Ga.App. 110

798 S.E.2d 334

REDCEDAR, LLC

v.CML-GA SOCIAL CIRCLE, LLC.

CML-GA Social Circle, LLC

v.Redcedar, LLC.

A16A2192

A16A2193

Court of Appeals of Georgia.

March 15, 2017

Joel Lee McKie, Andrew Kevin Hazen, Atlanta, for Appellant in A16A2192.

David Scott Klein, Bradley Andrews Hutchins, Atlanta, for Appellee in A16A2192.

David Scott Klein, Bradley Andrews Hutchins, Atlanta, for Appellant in A16A2193.

Joel Lee McKie, Andrew Kevin Hazen, Atlanta, for Appellee in A16A2193.

Reese, Judge.

In these companion cases, the parties dispute whether Redcedar, LLC, a company which cut and removed timber from certain property, can be held liable under the Georgia Timber Collateral Conversion Statute ("GTCCS"), OCGA § 51-12-51, and, if so, the proper measurement of damages arising from such conversion. In Case No. A16A2192, Redcedar appeals from an order of the Superior Court of Newton County granting a motion for partial summary judgment filed by CML-GA Social Circle, LLC ("CML-GA"), based on a finding that Redcedar was liable under the GTCCS as a matter of law.¹ In Case No. A16A2193, CML-GA appeals from a related order granting Redcedar's cross-motion for partial summary judgment as to the applicable measure of damages to be determined at trial. For the reasons set forth, infra, we affirm the grant of partial summary judgment to CML-GA in Case No. A16A2192, and we affirm in part and reverse in part the judgment in Case No. A16A2193.

"On appeal from the grant of summary judgment this Court conducts a de novo review of the evidence to determine whether there is 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."² With these guiding principles in mind, we turn now to the parties' specific claims of error.

Case No. A16A2192

This case arose from the cutting and removal of timber from portions of undeveloped property in Newton County. In 2007, Carolyn Penland executed a security deed to the entire 463.74-acre parcel of land as collateral for three promissory notes.

In October 2010, the security deed executed by Penland was assigned to CML-GA. When Penland defaulted on the three notes secured by the security deed, CML-GA filed suit on the notes. In August 2012, CML-GA obtained a default judgment against Penland for approximately $9.6 million in principal, accrued interest, late charges, and attorney fees. CML-GA did not, however, institute foreclosure proceedings pursuant to the security deed at that time.

Georgia Timber, LLC, subsequently contracted with Little River Construction Company (a company owned by Penland's son, Michael), for the "thinning and removal" of timber from the property. In September 2013, Georgia Timber applied for a timber harvest permit from Newton County, and it hired Redcedar to cut the trees and haul them off the property. Georgia Timber then sold the timber to third parties.

In October 2014, CML-GA discovered that someone had "clear-cut" several acres of the property and removed the timber. In response, CML-GA filed a complaint for conversion against the Penlands, Georgia Timber, Redcedar, and others, asserting that they had illegally cut and removed timber from the property without first obtaining its written permission and that, as a result, they were liable under the GTCCS. The GTCCS provides, in relevant part, as follows:

Every person, firm, or corporation who, without the written consent of the person holding legal title to land or to an interest in land as security for debt, ... buys, sells, cuts, removes, holds, disposes of, changes the form of, or otherwise converts to the use of himself, itself, or another any trees growing or grown on such land shall be liable to the holder of the legal title for such trees, in any form, bought, sold, cut, removed, held, disposed of, changed in form, or otherwise converted by him or it, or for the value of such trees, provided that recovery may not be for more than the unpaid portion of the secured indebtedness, interest thereon, and a reasonable attorney's fee. Recovery may be had by action at law from one who purchases, without the consent of the holder of the legal title, such interest in the trees, mineral or other rights, or interest in the encumbered real estate, either jointly or severally, with the holder of the equitable title.³

In its complaint, CML-GA alleged that, because the removal of the timber had diminished the fair market value of the real property, the damaged property provided "inadequate security to cover the debt owed [by Penland] under the Security Deed."

CML-GA subsequently amended its complaint to add allegations that, under the GTCCS, Redcedar was a "purchaser" of the timber removed from the property or, in the alternative, purchased an "interest" in that timber. CML-GA also added a claim that Redcedar "aided, abetted, and assisted" Georgia Timber in the unauthorized removal and purchase of the timber removed from the property and, as a result, was just as liable as Georgia Timber for damages under the GTCCS.

In February 2015, while this conversion action was pending, CML-GA instituted foreclosure proceedings under the security deed. CML-GA purchased the property at the foreclosure sale, crediting $4.4 million toward Penland's outstanding debt on the notes.

Then, in July 2015, CML-GA filed a motion for partial summary judgment in the instant conversion action, seeking a ruling that the co-defendants were liable as a matter of law under the GTCCS. In its brief and documents supporting the motion, CML-GA asserted that, after it credited $4.4 million from the foreclosure sale to the balance owed on the promissory notes that were subject to the security deed, a deficiency remained unpaid on the notes. It claimed that the co-defendants were liable for this "unpaid portion of the indebtedness [that was] secured by the security deed."

In response to CML-GA's motion for partial summary judgment, Redcedar filed a cross-motion for summary judgment on CML-GA's complaint, denying that it was liable under the GTCCS because, although it had cut and removed timber from the property, it had been hired to do so by Georgia Timber and, as a result, was simply acting as a contractor under the direction of Georgia Timber. Redcedar also contended that CML-GA could not recover money damages under the GTCCS because it had foreclosed on its security interest in the property. According to Redcedar, the plain language of the statute provided that a plaintiff's "recovery may not be for more than the unpaid portion of the secured indebtedness, interest thereon, and a reasonable attorney's fee." It argued that the foreclosure on the security deed extinguished any "secured indebtedness" upon which to claim damages under the statute. Further, Redcedar argued that CML-GA should be estopped from trying to recover a deficiency judgment, i.e., the difference between the outstanding balance on the notes and the proceeds from the foreclosure sale, because CML-GA had failed to obtain a judicial confirmation of the sale, pursuant to OCGA § 44-14-161. Finally, it argued that, even if CML-GA had secured a judicial confirmation of the sale, it should be estopped from seeking a deficiency judgment from Redcedar because CML-GA had failed to provide it with notice of the confirmation proceedings, as required by OCGA § 44-12-161 (c).

Following motion hearings, the trial court denied Redcedar's motion for summary judgment and granted partial summary judgment to CML-GA, finding that the co-defendants were liable as a matter of law under the GTCCS. Redcedar appeals from the court's order.

1. Redcedar contends that the trial court erred in concluding that it was liable as a matter of law under the GTCCS, arguing that it is not within the class of defendants subject to liability under the statute. Given the plain language of the statute, however, this argument lacks merit.

In interpreting any statute, we necessarily begin our analysis with familiar and binding canons of construction. Indeed, in considering the meaning of a statute, our charge as an appellate court is to presume that the General Assembly meant what it said and said what it meant. And toward that end, we must afford the statutory text its plain and ordinary meaning, consider the text contextually, read the text in its most natural and reasonable way, as an ordinary speaker of the English language would, and seek to avoid a construction that makes some language mere surplusage. In sum, where the language of a statute is plain and susceptible of only one natural and reasonable construction, courts must construe the statute accordingly.⁴

With regard to the GTCCS, the General Assembly left little doubt as to how it expected this statute to be construed.⁵ Indeed, the statute explicitly provides as follows:

Every person, firm, or corporation who , without the written consent of the person holding legal title to land or to an interest in land as security for debt, ... buys, sells, cuts , removes , holds, disposes of, changes the form of , or otherwise converts to the use of himself, itself, or another any trees growing or grown on such land shall be liable to the holder of the legal title for such trees , in any form, bought, sold, cut , removed , held, disposed of, changed in form , or otherwise converted by him or it[.]⁶

In this case, Redcedar did not dispute that it cut and removed timber from the property without CML-GA's written authorization. It argued, however, that it had been hired as a contractor by Georgia Timber to cut and remove the timber and, as a result, it could not be held directly liable for its actions in this case. In support of this argument, Redcedar showed that it was not a party to the timber removal contract between Georgia Timber and Little River, and it did not obtain the timber removal permit from Newton County. Further, Redcedar argued that, as a contractor hired by Georgia Timber, it provided services...