BEFEKADU v. ADDIS INTERNATIONAL MONEY TRANSFER, LLC Et Al.

795 S.E.2d 76, 339 Ga. App. 806, 2016 Ga. App. LEXIS 666
CourtCourt of Appeals of Georgia
DecidedNovember 18, 2016
DocketA16A0818
StatusPublished
Cited by8 cases

This text of 795 S.E.2d 76 (BEFEKADU v. ADDIS INTERNATIONAL MONEY TRANSFER, LLC Et Al.) is published on Counsel Stack Legal Research, covering Court of Appeals of Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
BEFEKADU v. ADDIS INTERNATIONAL MONEY TRANSFER, LLC Et Al., 795 S.E.2d 76, 339 Ga. App. 806, 2016 Ga. App. LEXIS 666 (Ga. Ct. App. 2016).

Opinions

McMlLLIAN, Judge.

In December 2011, Addis International Money Transfer, LLC (“Addis”) and a majority of its members filed suit against Tsega Befekadu, the remaining member, for conversion and breach of fiduciary duty. The case went to trial, and on the first day, the trial court disqualified Befekadu’s counsel and declared a mistrial. Befe-kadu then proceeded pro se at the second trial, which resulted in the jury finding in favor of Addis on both claims. Befekadu appealed from the final judgment and the disqualification order. In a prior opinion, this Court concluded that the trial court did not apply the correct legal standards when disqualifying Befekadu’s counsel and remanded the case to the trial court for further proceedings. Befekadu v. Addis Intl. Money Transfer, LLC, 332 Ga. App. 103, 106-07 (1) (c) (772 SE2d 785) (2015). The case is again before us following the trial court’s [807]*807determination on remand that Befekadu’s counsel is disqualified. For the reasons that follow, we find no error and affirm.

1. Befekadu asserts that the trial court erred in disqualifying his counsel, Larry Oldham, by misapplying the facts to the legal principles announced by this Court in our prior opinion. “The ultimate determination of whether an attorney should be disqualified from representing a client in a judicial proceeding rests in the sound discretion of the trial judge. This Court will not interfere with a trial court’s ruling absent abuse of that discretion.” (Citation and punctuation omitted.) Shuttleworth v. Rankin-Shuttleworth of Ga., LLC, 328 Ga. App. 593, 594 (759 SE2d 873) (2014).

In reviewing the trial court’s initial disqualification order, we found that the trial court appeared to have used the wrong standards in determining whether Oldham should be disqualified. First, we noted that it is not enough that an attorney previously represented an opposing party in the case. Befekadu, 332 Ga. App. at 106 (1) (c). Rather, an attorney is “disqualified from representing a party against a former client in a matter that is substantially related to the lawyer’s prior representation.” (Citation and punctuation omitted.) Id. A case is “substantially related to a prior representation if the two have material and logical connections.” (Citation omitted.) Id. Thus, we remanded the case to the trial court to “determine whether Addis can show that Oldham’s prior legal services on behalf of the LLC were substantially related to Addis’s litigation against Befekadu.” Id. at 107.

On remand, the trial court conducted a full evidentiary hearing at which “all the individuals” and Oldham testified, and the court heard argument of counsel. However, no transcript of the hearing is included in the record. Thus, although Befekadu argues on appeal1 that the trial court erred in reinstating the disqualification of Old-ham “after being provided with the factual and legal bases that showed there was no legal or factual basis for Oldham to be disqualified,” this Court has no method of reviewing what was presented to the trial court on remand. In the absence of a hearing transcript or any record evidence to the contrary, this Court must presume that the trial court properly considered the evidence before it and that its factual findings are supported by the evidence. Fine v. Fine, 281 Ga. 850, 852 (2) (642 SE2d 698) (2007). See also Tyson v. State, 301 Ga. App. 295, 298 (2) (687 SE2d 284) (2009) (physical precedent only).

[808]*808Turning to the facts of this case, as found by the trial court on remand and by this Court in the prior appeal, Addis was formed as a limited liability company in 2006 with four members, including Befekadu, to provide money transferring services between the United States and Ethiopia. Befekadu, 332 Ga. App. at 103. Oldham was a friend of Befekadu’s, who had been authorized by the other members to hire Oldham to perform the work necessary to form the company At the time, Addis believed that Oldham had prepared an operating agreement, but he had not. However, Oldham had drafted the articles of incorporation, obtained the employer identification number (EIN) for Addis, and was its registered agent through 2011. Each of the members contributed at least $7,000 at the time they joined Addis, and at least some of them believed that they were conducting themselves pursuant to an operating agreement. Id. at 103-04.

In 2010, Befekadu wrote several checks on the LLC’s account that the other members alleged they were unaware of and were not authorized under the operating agreement, including a $20,000 payment to himself. Befekadu, 332 Ga. App. at 104. The total amount that Befekadu took from Addis was over $55,000, and a small portion of those funds were used to pay Oldham. Several months later and prior to filing suit, counsel for Addis contacted Oldham, requesting a copy of the operating agreement. Oldham confirmed by e-mail that he had never prepared an operating agreement for Addis and also informed Addis’s counsel that he would be representing Befekadu. Id. at 104.

The case subsequently went to trial. During the first trial, Mesfin Shibeshi, the president of Addis, was the first witness to testify On direct examination, Shibeshi testified that Addis had no operating agreement, interjecting, “In fact, this lawyer which is sitting there, he’s the one who tried to set it up. Actually, what he did was he opened the EIN number. That’s all he did.” Shibeshi also stated that Befekadu had written an unauthorized check for $750 to Oldham, Addis’s lawyer.

On cross-examination, Oldham began by asking, ‘"You and I have known each other for quite some time, correct?” before the trial court admonished Oldham to “[j]ust ask questions.” Shortly thereafter, opposing counsel objected to Oldham’s line of questioning as “testifying,” which objection the trial court sustained. And when Oldham began to question Shibeshi regarding Addis’s payments to his law firm, the trial court cut him off, explaining ‘You ask five questions in one and you’re testifying and you’re getting really close to having a problem.” Oldham then presented Shibeshi with a copy of what he [809]*809characterized as the “articles of organization for the company.” The trial court excused the jury for the day and disqualified Oldham, stating:

You’re disqualified. You incorporated this corporation and now you’re up here fussing about what was done and when it was done and how it was done. And your name appears on all these documents. That’s a disqualification. You can’t do it on both sides. You’re trying to do it on both sides. . . .

Befekadu proceeded to a second trial several months later, and after an adverse judgment, appealed to this Court, which reversed the disqualification order and remanded the case for further proceedings.

On remand, the trial court concluded in a written order that Oldham’s prior representation was “substantially related” to Addis’s claims that Befekadu wrongfully converted company funds and breached his fiduciary duty because the lack of an operating agreement or any structure in place (contrary to what the other members of Addis were led to believe) allowed Befekadu to take the funds from Addis.2 Likewise, Befekadu’s defense was that he thought he was authorized to take the funds because no operating agreement was in place to prevent him from doing so.3

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Cite This Page — Counsel Stack

Bluebook (online)
795 S.E.2d 76, 339 Ga. App. 806, 2016 Ga. App. LEXIS 666, Counsel Stack Legal Research, https://law.counselstack.com/opinion/befekadu-v-addis-international-money-transfer-llc-et-al-gactapp-2016.