Z-Space, Inc. v. Dantanna's CNN Ctr., LLC.

349 Ga.App. 248

825 S.E.2d 628

Z-SPACE, INC. et al.

v.DANTANNA'S CNN CENTER, LLC.

A18A1558

Court of Appeals of Georgia.

March 7, 2019

Page Law, Jonathan A. Page, Sr., Nicholas C. Broder, Parsa Garrett, for appellants.

The Burke Law Group, E. Earle Burke, for appellee.

Markle, Judge.

Z-Space, Inc., Z-Space Design, Inc., and their individual principals, defendants in the case below, appeal from the trial court's order denying their motions to dismiss, for judgment on the pleadings, and for more definite statement. The plaintiff, Dantanna's CNN Center, LLC, alleges, generally, that the defendants have fraudulently hidden their assets to avoid paying a judgment that was obtained by the plaintiff in an earlier suit.

For the reasons that follow, we conclude that the trial court erred in failing to dismiss the plaintiff's claim for account stated/unjust enrichment and its claim for theft as a predicate offense under the Georgia RICO statute, and we reverse the trial court's order as to these claims. We further find that the trial court properly denied the motion to dismiss the plaintiff's claim for mail and wire fraud as a predicate offense under the Georgia RICO statute, and claims for fraudulent transfer, fraudulent sale, and fraudulent attempt to avoid judgment, but that it erred in not requiring the plaintiff to make a more definite statement with regard to these claims. Therefore, we affirm the trial court's denial of the motion to dismiss, but vacate the denial of the motion for more definite statement and remand with instructions that the trial court direct the plaintiff to provide a more definite statement.

We review the trial court's denial of a motion to dismiss for failure to state a claim de novo, construing the complaint in the plaintiff's favor. Northway v. Allen , 291 Ga. 227, 229, 728 S.E.2d 624 (2012).

So viewed, the record shows that the plaintiff and Z-Space entered into a contract for construction of Dantanna's CNN Center restaurant. In 2009, the plaintiff filed an initial and separate action against Z-Space, Peter Zakas, and Spiros Zakas, seeking to recover compensation and damages for, among other things, breach of contract, and fraud in connection with the design service contract. Following a trial, a jury returned a verdict in favor of the plaintiff in the amount of $118,500.¹ The plaintiff filed a motion for attorney fees and expenses, and the trial court awarded the plaintiff $185,372.50 in attorney fees and $14,758.91 in expenses, plus $14,203.79 in interest on the verdict amount, for a total judgment of $332,835.20. The plaintiff then sent a letter to Z-Space's attorney offering to settle the matter and, in response, the attorney advised the plaintiff that Z-Space was unable to pay the judgment because it had no assets and was no longer in business. On September 30, 2015, the plaintiff obtained a writ of fieri facias in the total amount of the judgment. The plaintiff has been unable to collect on this judgment.

In July 2017, the plaintiff filed the instant action against Z-Space, Z-Space Design, and their individual principals Peter Zakas and Silvia Milic, raising claims of (1) account stated/unjust enrichment; (2) civil RICO; (3) alter ego liability; (4) fraudulent transfer; (5) fraudulent sale/transfer of business; (6) conspiracy to fraudulently convey assets; and (7) "continuation theory" or "fraudulent attempt to avoid judgment." The plaintiff also requested punitive damages, attorney fees under OCGA § 13-6-11, and interest.²

In its complaint, the plaintiff alleged that shortly after the jury's verdict in the initial action, Z-Space ceased operations and became insolvent. Zakas and Milic then created and incorporated Z-Space Design, Inc., in the State of Florida. Zakas served as the CEO, and Milic served as the CFO.

The plaintiff alleged that shortly after the initial suit was filed, the defendants began siphoning money from Z-Space and conspired with each other to transfer the assets of Z-Space to Z-Space Design in an effort to liquidate Z-Space, defraud the plaintiff, and engaged in conduct to avoid having to pay the plaintiff the outstanding judgment.

The defendants filed a joint answer, motion to dismiss, and motion for judgment on the pleadings. They also filed a motion for more definite statement with respect to the RICO, fraudulent transfer, fraudulent sale, conspiracy, and fraudulent attempt to avoid judgment claims. The trial court held a hearing on the motions, and subsequently issued a summary order denying same. The defendants requested a certificate of immediate review, which the trial court entered. This Court granted the defendants’ application for interlocutory appeal, and this appeal followed.

A motion to dismiss pursuant to OCGA § 9-11-12 (b) (6) will not be sustained unless

(1) the allegations of the complaint disclose with certainty that the claimant would not be entitled to relief under any state of provable facts asserted in support thereof; and (2) the movant establishes that the claimant could not possibly introduce evidence within the framework of the complaint sufficient to warrant a grant of the relief sought ....

(Citation and punctuation omitted.) Northway , 291 Ga. at 229, 728 S.E.2d 624 (2012). Further,

it is not necessary for a complaint to set forth all of the elements of a cause of action in order to survive a motion to dismiss for failure to state a claim. Rather, the Georgia Civil Practice Act requires only notice pleading and, under the Act, pleadings are to be construed liberally and reasonably to achieve substantial justice consistent with the statutory requirements of the Act. Thus, a motion to dismiss for failure to state a claim should not be granted unless the allegations of the complaint disclose with certainty that the claimant would not be entitled to relief under any state of provable facts asserted in support thereof. Put another way, if, within the framework of the complaint, evidence may be introduced which will sustain a grant of relief to the plaintiff, the complaint is sufficient.

(Citations and punctuation omitted.) Campbell v. Ailion , 338 Ga. App. 382, 384-385, 790 S.E.2d 68 (2016). See also OCGA § 9-11-8 (a) (2) (A). With this framework in mind, we turn to the defendants’ arguments on appeal.

1. The defendants first argue that the trial court erred in denying their motion to dismiss the claim for account stated or unjust enrichment because the plaintiff has not alleged that an account exists between the parties, and the prior judgment did not create an account. They further assert that there can be no unjust enrichment because the plaintiff failed to identify any benefit it conferred on them. We agree.

"An account stated is an agreement by which persons who have had previous transactions with each other fix the amount due in respect to such transactions and the one indebted promises payment of the balance."

Lawson v. Dixie Feed & Seed Co. , 112 Ga. App. 562, 563 (2), 145 S.E.2d 820 (1965). Agreement as to the amount and a promise to pay are essential requisites. Id. at 564 (2), 145 S.E.2d 820.

The plaintiff alleged in its complaint that the prior judgment established a judgment-creditor relationship between the parties, and that Z-Space is indebted to the plaintiff on an account in the principal amount of the judgment; thus, the judgment itself is the account stated. However, we have never held that a judgment, standing alone, can be an account stated, and we decline to do so here. See OCGA § 9-11-69 ("Process to enforce a judgment for the payment of money shall be a writ of execution unless the court directs otherwise."); Black v. Black , 245 Ga. 281, 282 (2), 264 S.E.2d 216 (1980) ("A garnishment proceeds from a money judgment."). The plaintiff alleged no facts in the complaint indicating the existence of a commercial account or an agreement between the parties as to the judgment.

Additionally, the plaintiff makes the conclusory allegation that all the defendants have made an express or implied agreement as to the prior judgment, thereby creating an account stated. We cannot agree. Even taking the facts in the complaint as true, nothing in the complaint shows an agreement between the parties as to an amount or a promise to pay, and the jury's verdict of liability simply does not create an account. Neither this Court nor the trial court is required to accept the plaintiff's legal conclusion that the judgment is the equivalent of an account stated, and couching it as a fact will not defeat a motion to dismiss. Mabra v. SF, Inc. , 316 Ga. App. 62, 65, 728 S.E.2d 737 (2012).

Nor does the complaint state a claim for unjust enrichment. "[T]he theory of unjust enrichment applies when as a matter of fact there is no legal contract, but where the party sought to be charged has been conferred a benefit by the party contending an unjust enrichment which the benefited party equitably ought to return or compensate for." (Citation and punctuation omitted.) Smith v. McClung , 215 Ga. App. 786, 789 (3), 452 S.E.2d 229 (1994). The plaintiff alleged Z-Space transferred cash, goodwill, and other assets between 2010 and 2013 to Z-Space Design without adequate consideration and thereby unjustly enriched Z-Space Design. However, there are no facts alleged in the complaint that the plaintiff conferred any benefit to the defendants. Thus, the trial court erred in not dismissing the claim for account stated/unjust enrichment for failure to state a claim.

2. The defendants next argue that the trial court erred in denying their motions as to the plaintiff's civil RICO claim, OCGA § 16-14-1 et seq., because: (1) fraudulent transfer is not a predicate RICO act, and the plaintiff failed to allege facts sufficient to support the use of theft of any kind as a predicate offense; (2) the plaintiff failed to allege a conspiracy required for a RICO claim; (3) the plaintiff failed to allege facts sufficient to support a claim for mail and wire fraud as a predicate...