Carter v. Murphey

567 S.E.2d 326, 256 Ga. App. 150, 2002 Fulton County D. Rep. 1816, 2002 Ga. App. LEXIS 786
Court of Appeals of Georgia·Decided June 14, 2002·No. A02A0021·Published·Cited by 3 cases

Opinion

Miller, Judge.

Alexander Murphey won a jury verdict against C. E. and Margaret Carter in connection with a failed real estate development. The Carters did not receive a jury verdict in favor of their claim for money invested as alleged in the counterclaim. Pursuant to an appeal, Carter v. Murphey, 241 Ga. App. 340, 343-344 (1) (526 SE2d 149) (1999), this Court affirmed the award to Murphey and granted a new trial to the Carters on the counterclaim on procedural grounds. After the Carters rested in the second trial, Murphey successfully moved for a directed verdict on both counts of the counterclaim, and the Carters again appeal. Discerning no error, we affirm.

Murphey was the president of both Furey Development, Inc. (“Furey”), the owner of the property, and Murphey Real Properties, Inc. (“Properties”), the developer. Murphey was also the sole shareholder of Properties and owned half the stock of Furey, the Carters owning the other half.

The first count of the counterclaim sought to allege various breaches of fiduciary duty on Murphey’s part, but in fact alleged development contract breaches by Properties. In Murphey’s motion for a directed verdict as to that count, he successfully argued that the Carters could not maintain a direct, as opposed to a derivative, action against him. The second count relied on the theory that the Carters were the intended third-party beneficiaries of the develop *151 ment contract between Furey and Properties. In Murphey’s motion for a directed verdict as to that count, he successfully argued that the Carters were not third-party beneficiaries. The Carters’ appeals as to these substantive matters are addressed herein in Divisions 2 and 3, respectively.

1. The Carters first raise a procedural point. In the first trial, Murphey moved for a directed verdict on the counterclaim, which was denied. As noted, however, the jury awarded the Carters nothing on their counterclaim, and they appealed the denial of a continuance on it. Carter, supra, 241 Ga. App. at 340. Murphey did not cross-appeal the denial of his motion; therefore, this Court could not consider his assertions of the reasons he felt the counterclaim was not properly before the trial court. Id. at 344 (1).

The Carters contend that Murphey’s failure in Carter to cross-appeal the denial of his first trial motion for a directed verdict barred him from asserting at the second trial the defense he unsuccessfully presented at the first trial. A grant of a new trial, however, requires the case to be heard de novo unless the appellate court directs otherwise. Bankhead v. State, 253 Ga. App. 214, 215 (1) (558 SE2d 407) (2001). “The grant of a new trial eliminates everything which is pending in the old trial. When a new trial is granted, the effect is to set aside all proceedings in the old trial. Where a new trial has been granted, the case stands ready for trial as if there had been no trial.” (Citations and punctuation omitted.) Id. Thus, a trial court in a second trial is free to grant a directed verdict based on the new mix of evidence presented at the second trial, regardless of whether the denial of a directed verdict motion was appealed in the first trial. Cf. Tyson v. Cheek Mechanical &c. Svc., 218 Ga. App. 134, 135 (460 SE2d 536) (1995).

2. (a) Disputing the directed verdict granted on Count 1 of the counterclaim, the Carters argue that they had standing to plead that count directly, as contrasted with a shareholder’s derivative proceeding under OCGA § 14-2-740 et seq. asserting Furey’s claims. This count alleged that Murphey was the president of both Furey and Properties and was also the alter ego of the latter. It further alleged that he was the developer of a subdivision owned by Furey and that the Carters were 50 percent shareholders in Furey, to whom he owed fiduciary duties. It incorporated the development agreement between Furey and Properties and alleged that under it, Murphey was to do all the work in the development of the subdivision. The count alleged finally that the Carters lost their investment of over $300,000 due to Murphey’s various breaches of fiduciary duty.

The unsupported allegation that Murphey was the developer of the subdivision is contradicted by the express language of the development agreement that Properties was the developer of the subdivi *152 sion and was to do the development work. All but one of Murphey’s alleged “fiduciary duty” breaches were breaches of duties owed to Furey (not to the Carters) by Properties as the developer. Furey may thus have had a cause of action for breach of contract against Properties.

The only way that Furey could have brought such an action directly against Murphey was on a theory that Murphey was Properties’ alter ego. Our review of the record, however, revealed no evidence attempting to pierce the corporate veil of Properties and to establish that Murphey was the alter ego of Properties. See Dews v. Ratterree, 246 Ga. App. 324, 327, n. 3 (540 SE2d 250) (2000) (stating elements of alter ego theory). Accordingly, even assuming the Carters could have brought a direct action against Properties {Parks v. Multimedia Technologies, 239 Ga. App. 282, 293 (5) (520 SE2d 517) (1999)), the direct action against Murphey that they have attempted in their counterclaim must fail for lack of proof of an alter ego theory.

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Carter v. Murphey, 567 S.E.2d 326, 256 Ga. App. 150, 2002 Fulton County D. Rep. 1816, 2002 Ga. App. LEXIS 786 (Ga. Ct. App. 2002).

567 S.E.2d 326 (Carter v. Murphey) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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