Thomas Mote Trucking, Inc. v. PCL Civil Constructors, Inc.
Docket: A00A1528, A00A1529
Court: Court of Appeals of Georgia; October 6, 2000; Georgia; State Appellate Court
Barkay Construction, Inc. sold a slip form machine to PCL Civil Constructors, Inc. Thomas Mote Trucking, Inc. later claimed ownership of the machine, asserting that Barkay had transferred it to them. PCL sued Thomas Mote Trucking for trover. The trial court ruled in favor of PCL, affirming their ownership of the machine and ordering its return, but it awarded no damages for wrongful detention.
In Case No. A00A1528, Thomas Mote Trucking appealed the ruling on ownership, while in Case No. A00A1529, PCL appealed the lack of damages awarded. The court consolidated both cases and ultimately affirmed PCL's ownership but reversed the trial court's decision regarding damages, remanding the case for a determination of appropriate damages.
The background revealed that Thomas Mote had loaned Barkay a total of $31,260 between 1993 and 1994 in exchange for two unsecured promissory notes and stock ownership in Barkay. By late 1995, Barkay was nearly insolvent and held only the slip form machine as an asset. In an attempt to protect the machine from creditors, Roberts, the president of Barkay, prepared a letter dated May 15, 1995, stating that Barkay was transferring the machine to Mote for $30,000. However, Roberts claimed this letter was not a true transfer of ownership, as it was intended only to shield the machine from bankruptcy proceedings without any actual payment being made. Despite the claimed transfer, Barkay continued to use the machine without compensating Mote, and discussions about obtaining financing for Barkay using the machine as collateral ensued.
Mote provided testimony indicating his understanding of the May 15 letter differed significantly from other accounts. He claimed that Roberts drafted the letter and transferred the slip form machine to him due to Barkay's inability to pay promissory notes, accepting the machine as full payment for Barkay's debts. Despite this, Mote continued to seek additional funds from Roberts, believing she still owed him money. He allowed Barkay to use the machine rent-free, wanting Barkay, in which he held a 49% stake, to succeed. Felmer Cummins, Mote's financial planner, corroborated Mote's account, noting his concern over the lack of collateral for the notes and recalling Roberts' decision to give Mote the machine. Cummins confirmed the letter was executed on May 15 without being backdated.
In December 1995, Roberts sold the slip form machine to PCL for $40,000, with a Bill of Sale stating Barkay warranted clear title. PCL agreed to lease the machine back to Barkay, allowing for eventual repurchase through lease payments. Roberts informed Mote of the sale but indicated she had no proceeds left to pay him. On January 25 or 26, 1996, Mote took the machine from the PCL job site, claiming he learned of the sale only after his removal of the machine. Roberts testified that Barkay ceased operations immediately after Mote's action, leading to Barkay's bankruptcy in March 1996.
The trial court ruled that PCL held title to the machine and ordered Thomas Mote Trucking to return it, denying PCL any damages for rental value. Thomas Mote Trucking contended the trial court erred in denying its motion for summary judgment, but this was considered moot following the trial verdict. Additionally, it argued that Roberts' testimony regarding the May 15 letter was inadmissible parol evidence. PCL countered that such evidence was relevant to demonstrate potential fraud and the lack of consideration in the contract. Ultimately, the court permitted Roberts' testimony to support PCL's argument that the transfer was void from the start.
Thomas Mote Trucking asserts that the trial court erred in ruling that PCL owned a specific machine, contesting this decision through three main arguments. The court's ruling is upheld if supported by any evidence, while respecting the trial court's assessment of witness credibility. A trover action permits a true property owner to sue for conversion against someone who has wrongfully possessed the property. To prevail, the plaintiff must demonstrate ownership or a right to possession and that the defendant possessed the property and denied the plaintiff's claim to it. Thomas Mote Trucking acknowledges PCL's fulfillment of the second requirement but argues ownership based on a May 15 letter.
PCL counters that the letter did not constitute a valid transfer for three reasons:
1. **Intent to Defraud Creditors**: PCL claims the letter was intended to defraud creditors, citing testimony that it was meant to prevent creditors from seizing the machine. Under OCGA § 18-2-22(2), contracts made to defraud creditors are void against those creditors but not void in all contexts. Thus, PCL can challenge the validity of the original transfer only as it relates to Barkay and Thomas Mote Trucking, not as it relates to their own claim.
2. **Lack of Consideration**: PCL argues that the transfer lacked consideration, as Barkay reportedly received nothing in exchange for the machine. However, the letter states a transfer for $30,000. Even if this amount was not paid, the statement implies an obligation to pay, which does not invalidate the contract.
3. **Nature of the Transfer**: PCL contends that the May 15 letter was not a sales contract but rather a security interest for outstanding promissory notes, which Thomas Mote Trucking failed to perfect according to OCGA § 11-9-301.
Overall, the court finds that PCL's arguments do not invalidate its claim to the machine.
Mote and Cummins acknowledged understanding that Roberts was providing the machine as collateral; however, the May 15 letter explicitly states it was a sale for $30,000, with no mention of a security interest. Parol evidence cannot alter the letter's clear terms, leading to a rejection of PCL's arguments against its validity. The trial court could have also determined that the letter did not represent a genuine sale or transfer, as the parties had no intention for it to be so. Roberts had concerns about Barkay's potential bankruptcy; she drafted the letter to create an appearance of sale to Thomas Mote Trucking, intending to use it as a defense if bankruptcy occurred. Supporting this interpretation, Thomas Mote Trucking never took possession of the machine, Barkay continued to use it without rent, and Mote did not pay the $30,000, suggesting the transaction was a sham. Consequently, the court might have found Barkay retained ownership at the time of sale to PCL.
Thomas Mote Trucking contended that PCL waived rights to the machine by not perfecting its claim in Barkay's bankruptcy, arguing that the machine should have been included as an asset. However, no legal authority was provided for this assertion, and it was unclear why PCL needed to intervene in a matter that did not involve the property. PCL also argued that the trial court erred in awarding zero damages in a trover action, where plaintiffs can seek property return and its hire. PCL's construction manager testified that the reasonable rental value of the machine was $5,505.97 monthly, based on industry standards, and that it was leased to Barkay for $100 per week when not in use at the PCL site. Thomas Mote Trucking did not contest this testimony.
During closing arguments, PCL's attorney requested that the trial court award hire based on either Blue Book figures or the rental prices charged to Barkay. While the court acknowledged that PCL was entitled to some rent, it deemed the Blue Book figures unreasonable and concluded that any damages would be speculative, resulting in a zero hire award. The court, as the trier of fact, had the discretion to determine rental value but could not award zero damages after acknowledging PCL's ownership of the machine and entitlement to rent. Although the court was not obligated to accept the Blue Book figures, it could have considered the rental amount PCL charged Barkay. The court's assertion that any damages figure would be speculative was misapplied, as the difficulty in determining an exact amount does not preclude recovery, provided the damages flow from the injury and can be estimated with reasonable certainty based on the evidence. PCL was entitled to hire, and the only issue was the amount, for which the trial court had sufficient evidence. The judgment is thus affirmed in part, reversed in part, and remanded for the trial court to determine the reasonable rental value of the slip form machine during its wrongful detention by Thomas Mote Trucking. The case against Barkay and its founder, Barbara Roberts, is not relevant to this appeal.
Thomas Mote Trucking alleges that PCL violated OCGA § 18-2-22(1) concerning transfers by insolvent debtors; however, testimony from Roberts indicates Barkay Construction was solvent at the time of the Bill of Sale to PCL, with no evidence of fraud related to the transaction. While Thomas Mote Trucking argues that Barkay should have included its lease of the machine in the bankruptcy estate, it fails to demonstrate how Barkay's omission affected PCL's ownership rights. Furthermore, Thomas Mote Trucking claims that PCL waived its right to recover hire due to the terminology in the pretrial order. However, PCL clearly stated its election to recover both the property and hire during the trial, and the trial court's judgment was based on this election. The jury's verdict for the property and hire supports the conclusion that PCL did not waive its rights.
