A Crystal Enterprises, Ace, LLC v. the River West Condominium Association, Inc.

• Court: Court of Appeals of Georgia
• Decided: March 14, 2023
• Docket: A22A1604
• Status: Published

Opinion

SECOND DIVISION RICKMAN, C. J., MILLER, P. J., PIPKIN, J.

NOTICE: Motions for reconsideration must be physically received in our clerk’s office within ten days of the date of decision to be deemed timely filed. https://www.gaappeals.us/rules

March 14, 2023

In the Court of Appeals of Georgia A22A1604. A CRYSTAL ENTERPRISES, ACE, LLC v. THE RIVER WEST CONDOMINIUM ASSOCIATION, INC.

MILLER, Presiding Judge.

A Crystal Enterprises, Ace, LLC (“Ace”) appeals from the trial court’s order

granting summary judgment to the River West Condominium Association

(“Association”) on the Association’s claims for unpaid monthly assessments and

other fees and on Ace’s counterclaims for trover, conversion of funds, and fraud. Ace

contends that summary judgment was inappropriate because there are genuine

disputes of material fact, including whether Ace owes the Association any money,

whether the Association falsified records to create delinquencies, and whether the

Association wrongfully removed Ace’s leasing permit from its files and thereby prevented Ace from leasing its units. For the following reasons, we affirm the trial

court’s ruling.

Summary judgment is proper “if the pleadings, depositions, answers to

interrogatories, and admissions on file, together with the affidavits, if any, show that

there is no genuine issue as to any material fact and that the moving party is entitled

to a judgment as a matter of law[.]” OCGA § 9-11-56 (c). “We review the grant or

denial of a motion for summary judgment de novo, and we must view the evidence,

and all reasonable inferences drawn therefrom, in the light most favorable to the

nonmovant.” (Citation and punctuation omitted.) Woodcraft by MacDonald, Inc. v.

Ga. Cas. & Surety Co., 293 Ga. 9, 10 (743 SE2d 373) (2013).

So viewed, the record shows as follows. Ace owns several condominium units

in the River West community and is a member of the River West Condominium

Association. Pursuant to the Association’s Declaration, owners must pay an

assessment fee each month. In February 2016, the Superior Court of Fulton County

entered a judgment concerning three properties owned by Ace – 1101, 1106, and

1108 River Green Drive – which required Ace to pay a total of $16,531.58 and

granted the Association the right to foreclose on its statutory liens on the properties.

In August 2016, the superior court entered a similar judgment concerning another

2 property owned by Ace, 1110 River Green Drive, which required Ace to pay

$38,681.20.

In January 2017, Ace paid the Association a total amount of $26,813.03,

thereby satisfying the February 2016 judgment regarding Units 1101, 1106, and 1108

and paying the assessments and fees that had come due on those units since the

judgment was entered. In January 2019, after Ace sold Unit 1106, Ace paid the

Association $49,209.76, thereby paying off assessments and fees that had accrued on

Unit 1106 between 2017 and the sale, satisfying the August 2016 judgment regarding

Unit 1110, and paying assessments and fees that had come due on Unit 1110 since the

judgment was entered.

The Association filed the current action in September 2019, raising claims as

to 1108 River Green Drive. The Association alleged that as of August 1, 2019, Ace

owed $9,103.37 in past-due assessments plus $706.10 in late fees. The Association

sought a monetary judgment, foreclosure of the statutory lien it held on the property,

and attorney fees. As an exhibit to the complaint, the Association submitted a

statement of account for 1108 River Green, showing assessments, late fees, and

interest that accrued between May 2017 and December 2019. The exhibit shows that

in May 2017, Ace paid the regular assessment of $361.23 but did not pay the specific

3 assessment of $200. In subsequent months, Ace again paid the regular assessment fee

but did not pay the $200 specific assessment. After February 2018, Ace did not make

any payments..

Ace filed an answer and verified counterclaims, denying that it owes the

Association any money and raising counterclaims for trover (based on the

Association’s removal of Ace’s leasing permits), conversion (based on the

Association’s alleged movement of funds out of “Ace’s HOA account”), fraud (based

on several alleged actions), punitive damages, and attorney fees.

The parties engaged in litigation, including a failed attempt at mediation, until

February 2022 when the Association filed a motion for summary judgment. In support

of its motion, the Association argued that Ace has no legal excuse for failing to pay

the validly-levied condominium assessments and that Ace’s counterclaims fail as a

matter of law. According to an affidavit from the Association’s attorney and an

accompanying statement of account, as of February 2022 the Association had

incurred $37,798 in attorney fees, $697.54 in litigation expenses, and $215 in court

costs while pursuing the instant action. Additionally, according to an affidavit from

the community’s property manager, as of February 2022 Ace owed $18,635.90 in

unpaid assessments, late fees, and water usage fees plus $3,384.57 in interest.

4 The trial court granted the Association’s motion, awarding it $60,731.01 (the

sum of the amounts referenced in the Association’s affidavits) and decreeing that the

Association can foreclose its statutory lien on 1108 River Green. Ace then filed this

appeal, challenging the trial court’s judgment on a variety of grounds.1 After careful

consideration, we affirm the trial court’s judgment.

1. Ace contends that summary judgment on the Association’s claims was

improper because there is conflicting evidence as to whether Ace owes money to the

Association and whether the Association falsified records and delayed recording

payments so as to make Ace subject to late fees and other penalties. In support of this

contention, Ace points to statements it made in its verified answer – in which Ace

denied that it owes the Association money – and the affidavit of Crystal Adams,

Ace’s Managing Member, in which Adams averred that the Association’s records

were missing payments Ace had made, that the Association’s ledgers showed that

1 We note that Ace has failed to comply with our Court Rules regarding citations to the record. Pursuant to Rule 25 (d) (2), citations to an electronic record, like the one in this case, “should be indicated by the volume number of the electronic record and the PDF page number within that volume (Vol. Number – PDF Page Number; for example, V2-46).” Instead of following this convention, Ace’s citations to the record refer to the pleading’s Index number followed by the exhibit number or paragraph number. Thus, rather than referring to V3-132, Ace refers to “R.76 ¶¶ 13, 14.” Ace’s failure to follow the format required by our Rules has hampered our ability to review this case in a timely manner.

5 many payments were not deposited until nearly two weeks after they were received,

which caused late penalties, and that the Association added unsubstantiated moving

fines, water bills, and attorney fees to the ledgers, which increased the alleged

delinquency. The exhibits referred to in Adams’s affidavit, however, do not establish

that Ace made payments during the time period that is relevant to this case because

they relate to billing entries and payments made in February 2017 or earlier, while the

issues in this case concerns amounts that came due in May 2017 and later. Further,

to the extent Ace is alleging that the 2016 judgments were miscalculated, such an

argument is precluded by the doctrine of res judicata. See Rose v. Household Finance

Corp., 316 Ga. App. 282, 283 (1) (728 SE2d 879) (2012) (where a previous suit

resulted in a money judgment in favor of the creditor, the doctrine of res judicata

barred a debtor from pursuing a second lawsuit challenging the creditor’s method of

calculating interest). Thus, Ace has not shown there is a genuine issue of material fact

as to whether it owed money to the Association, and so we affirm the trial court’s

grant of summary judgment on the Association’s collection claims.

2. With respect to counterclaims Ace raised against the Association, Ace

contends that the trial court erred in granting summary judgment to the Association

on its counterclaims for trover, conversion, and fraud because (1) there is evidence

6 the Association removed Ace’s leasing permits and thereby denied Ace the

opportunity to lease its units; (2) there is evidence the Association used deception and

false statements to impose unwarranted penalties and fees and “take” funds from

Ace’s HOA accounts; and (3) there is evidence the Association used altered records

and deception to force Ace to pay amounts it did not owe. Lastly, Ace contends that

it is entitled to recover punitive damages and OCGA § 13-6-11 attorney fees. None

of these arguments are persuasive.

(a) Trover

Ace does not have a cognizable claim for trover based on the Association’s

removal of its leasing permits from its HOA files. To prevail on an action for trover,

a plaintiff must show that “(1) it has title to the property or a right of possession; and

(2) the defendant was in possession of the property when the action was brought and,

in its answer, denied that the plaintiff had title to, or the right to possess, the

property.” Thomas Mote Trucking, Inc. v. PCL Constructors, Inc., 246 Ga. App. 306,

309 (3) (540 SE2d 261) (2000).

Here, Ace has not established that it was entitled to possess the papers the

Association allegedly removed from its files. More importantly, the record clearly

establishes that in the River West community, an owner’s authority to lease his unit

7 is dependent not on his possession of a tangible certificate, but, rather, on his receipt

of permission from the Board of Directors,2 and nothing in the record suggests the

presence of a paper permit in an owner’s HOA file has any effect on an owner’s

authority to lease his unit. The Association’s alleged removal of a document from

Ace’s HOA files was, therefore, not an action that deprived Ace of any property it had

the right to possess, and the trial court correctly concluded that Ace’s action for trover

fails as a matter of law.

(b) Conversion & Fraud

Ace’s claims for conversion and fraud are based on its assertion that the

Association misapplied payments it made, imposed unwarranted late fees and other

penalties, and otherwise caused Ace to pay amounts it did not owe. The application

2 Specifically, Section 15 (a) of the Declaration provides: Owners desiring to lease their Units may do so only if they have applied for and received from the Board of Directors either a “leasing permit” or “hardship leasing permit.” . . . The Board of Directors shall have the authority to establish conditions as to the duration and use of such permits consistent with this Paragraph. All leasing permits and hardship leasing permits shall be valid only as to a specific Unit Owner and Unit and shall not be transferable between either Units or Unit Owners[.]

8 of payments is, however, governed by Sec. 10 (c) (ii) the Declaration, which provides

that “[i]f part payment of assessments and related charges is made, the amount

received may be applied first to costs and attorney’s fees, then to late charges, then

to interest, then to delinquent assessments, and then to current assessments.” Ace has

not alleged that the Association failed to follow this provision of the Declaration, and

it has not raised a claim of breach of contract. Instead, Ace raised claims for

conversion and fraud, neither of which are actionable under the facts of this case.

Ace does not have a cognizable claim for conversion because there is no

evidence the Association wrongfully took funds from Ace’s HOA account. “In order

to establish a claim for conversion, the complaining party must show (1) title to the

property or the right of possession, (2) actual possession in the other party, (3)

demand for return of the property, and (4) refusal by the other party to return the

property.” (Citation omitted). Trey Inman & Assocs., P.C. v. Bank of America, N.A.,

306 Ga. App. 451, 457 (4) (702 SE2d 711) (2010). Although money is not typically

the type of tangible personal property that is subject to a conversion claim, conversion

is available if a specific amount of money was placed in an account for a specific

purpose and the defendant converted it to another use. See Decatur Auto Center, Inc.

v. Wachovia Bank, N.A., 276 Ga. 817, 820-821 (583 SE2d 6) (2003). Here, Ace has

9 not established that the Association possesses any money that Ace has a right to have

returned. Further, although Ace contends that the Association failed to properly

record payments, thereby causing unwarranted late fees and other penalties, Ace has

presented no specific evidence of delayed recording of payments.

Ace also does not have a cognizable claim for fraud. The tort of fraud has five

elements: “(1) false representation by defendant; (2) scienter; (3) intent to induce the

plaintiff to act or refrain from acting; (4) justifiable reliance by the plaintiff; and (5)

damage to the plaintiff.” (Citation omitted.) Ades v. Werther, 256 Ga. App. 8, 11 (2)

(567 SE2d 340) (2002). “The absence of a single element warrants summary

judgment.” Id. Ace contends that the Association used deception and subterfuge to

create fictitious delinquencies and coerce Ace into paying amounts that were not due.

Again, however, Ace has not identified any specific evidence of delayed recording

of payments, nor has it identified any specific fee that was erroneously charged.

Overall, while it is clear Ace complains about how the Association applied its

payments, Ace has not established – or even alleged – that the Association’s

application of its payments was in derogation of the Declaration. Because Ace has not

stated a cognizable claim for conversion or fraud, the trial court correctly granted

summary judgment on these counterclaims.

10 (c) Punitive Damages & Attorney Fees

Finally, there is no merit to Ace’s assertion that the trial court erred by granting

summary judgment on its requests for punitive damages and attorney fees and

expenses of litigation under OCGA § 13-6-11. Because Ace’s main claims fail, these

derivative claims also fail. See ULQ, LLC v. Meder, 293 Ga. App. 176, 182 (4) (666

SE2d 713) (2008) (claims for punitive damages and attorney fees are derivative of a

plaintiff’s substantive claims); Cabrel v. Lum, 289 Ga. 233, 240 (6) (710 SE2d 810)

(2011) (“The expenses of litigation recoverable pursuant to OCGA § 13-6-11 are

ancillary and may only be recovered where other elements of damage are also

recoverable.”) (citation and punctuation omitted).

For the foregoing reasons, we discern no error in the trial court’s grant of

summary judgment to the Association.

Judgment affirmed. Rickman, C. J., and Pipkin, J., concur in the judgment only.