Christopher Ware v. American Recovery Solution Services, Inc.

• Court: Court of Appeals of Georgia
• Decided: October 9, 2013
• Docket: A13A1305
• Status: Published

Opinion

SECOND DIVISION BARNES, P. J., MILLER, and RAY, JJ.

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. http://www.gaappeals.us/rules/

October 9, 2013

In the Court of Appeals of Georgia A13A1305. WARE v. AMERICAN RECOVERY SOLUTION SERVICES, INC.

BARNES, Presiding Judge.

American Recovery Solution Services, Inc. (ARSS) sued Christopher Ware for

computer theft and computer trespass under the Georgia Computer Systems

Protection Act, OCGA § 16-9-90 et seq. (the “Act”). Following a bench trial, the

court found that Ware committed computer trespass under OCGA § 16-9-93 (b) and

awarded ARSS damages totaling $70,225. Ware argues on appeal that the trial court

erred in imposing liability under the Act, in assessing damages, and in awarding

attorney fees without identifying the statute on which the award was based or making

findings of fact. We agree that Ware committed computer trespass but reverse the damages award for “past services,” and reverse and remand the attorney fees award

for further proceedings.

In the appellate review of a bench trial, this Court will not set aside the trial court’s factual findings unless they are clearly erroneous, and this Court properly gives due deference to the opportunity of the trial court to judge the credibility of the witnesses. The standard by which findings of fact are reviewed is the “any evidence” rule, under which a finding by the trial court supported by any evidence must be upheld.

(Citation and punctuation omitted.) Singh v. Hammond, 292 Ga. 579, 581 (2) (740

SE2d 126) (2013).

So viewed, the record reveals that ARSS is a collection agency which entered

into a written contract with Ware on August 30, 2009. Ware agreed to work as an

independent contractor to “design, develop, and implement applications software”

according to specifications attached to the contract as “Exhibit A.” 1 The contract

provided that the software, “including all versions in either source code or object

code form,” was to be delivered to ARSS no later than February 1, 2010.

1 Exhibit A is not included in the record, nor was it introduced or discussed at trial.

2 In exchange for completing the software development, ARSS agreed to pay

Ware $1,500 as a “down payment” and $500 per month “until completion,” as well

as necessary expenses. The contract provided that ARSS could request changes to the

specifications “or other aspects of the Agreement,” and that Ware would use his best

efforts to implement the requested changes at no additional expense or delay. If he

could not do so, ARSS could elect either to withdraw the change request or require

Ware to deliver the software with the change, “subject to the delay and/or additional

expense.” The contract further stated that the software would be the property of

ARSS, that the software development was “‘work for hire’ within the meaning of the

Copyright Act of 1976,” and that Ware “assign[ed] to [ARSS], without further

compensation, all of [his] right, title and interest in and to the Software” and any

related intellectual property.

Ware developed software for ARSS that allowed employees to access the

company’s database using a web-based application. When the parties entered into the

August 2009 contract, Ware had already completed about 85 percent of the web-

based application. He completed and installed it on ARSS’s system at some point

before February 2010, as provided in the contract. After the application was installed

and working, ARSS and Ware discussed building a faster program, and at some point

3 after February 2010 ARSS accepted Ware’s proposal to build a second application

based on Windows.

ARSS was still paying Ware for the completed web-based application when he

began developing the Windows-based application, and for a time ARSS was paying

Ware for both the completed first application and the developing second application.

Ware and ARSS’s chief financial officer (CFO), who was also a part-owner and the

operations manager, worked out a schedule for completing the new application and

making payments. ARSS agreed to pay Ware an initial $700 on September 1, 2011,

of a total fee of $1,905 due September 30, 2011, but when Ware arrived to pick up

the deposit, the check was for $350 instead of $700. Ware agreed to wait two weeks

for the second half of the down payment, and on Tuesday, September 13, the CFO

told him he would leave the second $350 check at the front desk for Ware to pick up

two days later. On Thursday, September 15, 2011, Ware came to ARSS’s offices and

corrected some bugs in the program, but when he asked for his check, he was told the

COO had taken it. The COO explained that she took the check so that she could “ask

[Ware] where were we on the remaining portion of what he had.” The COO sent Ware

an email the next afternoon, Friday September 16, 2011, asking him about the status

of the corrections, which Ware had already fixed.

4 Ware responded with what he later described as a “rash reaction,” admitting he

“mishandled” the situation. First, he logged into ARSS’s server remotely, using the

CFO’s login and password, and “disabled the login.” On Friday, September 16, 2011,

ARSS could not access its database of 36,000 accounts, and had to adapt temporarily

to a manual method of operation. That evening, Ware emailed the company owners,

demanding the immediate receipt of the rest of his agreed-upon fee for the latest

upgrades before he would allow them access to the application and database.

ARSS called in a software expert who restored access to the server and files.

Then on September 23, 2011, Ware again logged into the ARSS server with the

CFO’s credentials and, according to him, “restored the application and gave them the

previous package that they had paid for.” When ARSS employees tried to log into the

database, they only had access to a previous version of the program which did not

include data from 8,000 to 10,000 records that had been input into the newer version.

On Friday, September 30, 2011, ARSS filed a complaint against Ware,

contending that Ware remotely accessed ARSS’s server, disabled the software he

developed under the contract, and deleted files. ARSS asserted that Ware committed

computer theft in violation of OCGA § 16-9-93 (a) and computer trespass in violation

of OCGA § 16-9-93 (b) and was liable for damages and the costs of suit under OCGA

5 § 16-9-93 (g). ARSS also claimed to be losing $20,000 a day while its software was

down and sought an injunction against Ware requiring him to make all ARSS servers

and software operable and provide it with software itself and training manuals as

outlined in the August 2009 contract. Finally, ARSS sought attorney fees under

OCGA § 9-15-14.

In response to ARSS’s motion, the trial court held an emergency hearing the

following Monday, October 3, 2011. ARSS’s attorney communicated with Ware by

email but a process server was unable to serve Ware personally with the lawsuit and

he was not present at the hearing. The trial court issued a order restraining Ware from

accessing ARSS’s servers for 30 days and ordering him to remedy “any problems

caused by his past access” and give ARSS the source code and documentation for all

versions of the software. The court also set an October 31, 2011 hearing date and

directed the clerk to served the order and complaint on Ware.

On October 7, 2011, an attorney entered a notice of appearance for Ware and

moved the trial court to set aside the temporary restraining order (TRO) for lack of

service and grant him either an indefinite stay of compliance or a temporary stay until

his motion to set aside was heard and decided. ARSS responded three days later that

“it [was] reasonable to believe that [Ware] did have notice,” and noted that personal

6 service was not necessary for the TRO as long as the order was personally served on

Ware along with notice of a subsequent hearing. ARSS’s counsel submitted an

affidavit averring that he had spoken with Ware’s employer and that the employer

made Ware aware of the hearing, and attached copies of numerous email messages.

The next pleading in the record is ARSS’s motion for contempt and attorney

fees filed October 11, 2011, alleging that Ware was subject to the court’s jurisdiction

by being the subject of a TRO and could be served through his attorney. ARSS

further contended that Ware had failed to comply with the TRO and should be held

in contempt and ordered to pay attorney fees.

It appears from pleadings in the record that the trial court held another hearing,

but the record contains no transcript and no resulting order. On October 27, 2011,

ARSS filed a second motion for contempt and attorney fees, asserting that the trial

court had heard its motion to compel on October 13, 2011, and had ordered Ware to

comply by close of business October 14, 2011. The record contains no responsive

pleading or order related to that motion.

More than a year later, the trial court placed the case on a civil trial calendar

and ordered the parties to appeal for a calendar call. On November 14, 2012, the trial

court granted Ware’s request to allow his attorney to withdraw, and on November 28,

7 2012 the court conducted a bench trial at which Ware represented himself. On

December 14, 2012, the trial court issued an order and final judgment finding that

Ware committed computer trespass as defined by OCGA § 16-9-93 (b) and awarding

ARSS $22,000 in lost profits, $15,000 reimbursement of all fees it had paid Ware for

his services, $15,000 for repairs, $17,875 attorney fees, and $350 punitive damages.

1. Ware contends on appeal that the trial court erred in imposing liability under

the Act because he was an “authorized user” and retained ownership rights in the

software. The trial court found that Ware committed the offense of computer trespass.

OCGA § 16-9-93 (b) defines computer trespass and provides:

Any person who uses a computer or computer network with knowledge that such use is without authority and with the intention of:

(1) Deleting or in any way removing, either temporarily or permanently, any computer program or data from a computer or computer network;

(2) Obstructing, interrupting, or in any way interfering with the use of a computer program or data; or

(3) Altering, damaging, or in any way causing the malfunction of a computer, computer network, or computer program, regardless of how long the alteration, damage, or malfunction persists

8 shall be guilty of the crime of computer trespass.

OCGA § 16-9-92 (18) defines “without authority” as including “the use of a computer

or computer network in a manner that exceeds any right or permission granted by the

owner of the computer or computer network.” OCGA § 16-9-93 (g) clarifies that

someone who is injured due to the violation of any part of the Act has a civil cause

of action and can sue for damages, including lost profits.

Ware argues that he did not access the server “without authority” because he

owned the software that he tampered with and because he “restored the application

and gave them the previous package that they had paid for.” But whether Ware

“owned” the upgraded version or not is irrelevant to whether he committed computer

trespass. The statute only requires that the intruder use a computer or a network

knowing he was without authority and either temporarily or permanently remove data,

interfere with the use of a computer program, or cause a computer program to

malfunction. OCGA § 16-9-93 (b) (1) - (3). The CFO, whose login and password

Ware used to access the server, testified that he had not authorized Ware to disable

an administrative login or alter the program, and ARSS presented substantial

evidence that Ware’s actions first completely shut down the company and then

hampered its ability to operate for a significant length of time while hired experts

9 attempted to diagnose and restore the application. Ultimately, the company stopped

using Ware’s software and purchased the use of off-the-shelf software to conduct its

operations because, the CEO testified, it could not risk being shut down again.

Given these facts, the trial court was authorized to conclude that Ware

committed computer trespass by accessing ARSS’s server without authority and

interfering with the use of a computer program.

2. Ware also contends that the trial court erred in its damages award. The Act

provides that

[a]ny person whose property or person is injured by reason of a violation of any provision of this article may sue therefor and recover for any damages sustained and the costs of suit. Without limiting the generality of the term, “damages” shall include loss of profits and victim expenditure[, as well as] any additional civil remedy otherwise allowed by law.

OCGA § 16-9-93 (g) (1), (3). The statute further defines “victim expenditure” as “any

expenditure reasonably and necessarily incurred by the owner to verify that a

computer, computer network, computer program, or data was or was not altered,

deleted, damaged, or destroyed by unauthorized use.” OCGA § 16-9-92 (17).

10 Ware asserts that the trial court erred in awarding ARSS $15,000 “for [Ware’s]

services.” Ware argues that this sum was not a permissible “victim expenditure” as

defined in OCGA § 16-9-92 (17), because ARSS received the value of Ware’s

services during those two years, during which Ware developed, installed, and

modified the software and provided on-call technical assistance to company

employees, as well as the use of the software to operate a large portion of its business.

Additionally, Ware argues, he gave ARSS the source code to the second application

in response to the trial court’s order, which ARSS now owns exclusively, even

though the parties’ contract only covered the first application. According to Ware,

requiring him to pay back all of the money ARSS paid him during this time period

would mean it obtained both his services and the software he developed for free.

In response, ARSS argues that the trial court properly awarded it $15,000 “for

[Ware’s] services” because Ware’s actions deprived it of its full “use and enjoyment”

of the software it had paid Ware to develop. But the trial court did not award this sum

to compensate for the software that Ware developed and which ARSS now possesses;

it awarded it as refund of money paid to Ware for his past services, for which the

company had already received the benefit of the bargain. ARSS used the applications

to run its business and Ware provided technical support and maintenance services to

11 ARSS. The company received value in exchange for the money it paid to Ware, and

its cost of compensating Ware during that time period was not an element of damages

that resulted from Ware’s computer trespass. Accordingly, we reverse the award of

$15,000 for Ware’s services.

3. Finally, Ware correctly asserts that the trial court erred in failing to specify

the statutory grounds upon which it awarded attorney fees or make findings of fact

specifying the conduct upon which the award was based. In response, ARSS argues

that Ware never objected to the introduction of its attorney fees affidavit at trial and

never introduced evidence disputing the amount sought. Thus, ARSS asserts that the

evidence demanded the award of attorney fees.2

During the trial, at which Ware represented himself, ARSS’s counsel stated to

the court that “as a preliminary matter,” he was entering into evidence his “affidavit

of counsel in with the attorney fee matter.” The court replied, “Okay,” and the exhibit

was admitted. There is no indication in the record that counsel showed Ware the

affidavit before submitting it, nor was Ware asked if he had any response or objection

2 While ARSS also argues that the parties’ August 2009 contract gave ARSS the right to collect the costs of litigation, the contract only provided that Ware would indemnify ARSS for defending against any intellectual property claims related to the software he developed, including attorney fees and costs. No such issues appear in this case.

12 to it. Further, ARSS’s counsel never testified about his bill. The trial court simply

awarded to ARSS all of the fees listed in counsel’s affidavit, without making findings

of fact or identifying the code section upon which the award was based.

“Generally, an award of attorney fees is not available in Georgia unless

authorized by statute or contract.” (Citation and punctuation omitted.) Ward v. Ward,

289 Ga. 250, 251 (2) (710 SE2d 555) (2011). When a trial court awards attorney fees

to a party, it must specify the statutory basis for the award, and “[w]hen a trial court

exercises its discretion in assessing attorney fees and costs of litigation under OCGA

§ 9-15-14, it is incumbent upon the court to specify the conduct upon which the

award is made.” McKemie v. City of Griffin, 272 Ga. 843, 844-845 (4) (537 SE2d 66)

(2000).

In its complaint, ARSS sought attorney fees under OCGA § 9-15-14 “as well

as any other statutory or common law basis,” and again sought attorney fees in its two

subsequent motions for contempt without specifying the statutory basis that would

authorize the fees. Although ARSS states in its second contempt motion that the trial

court “upheld” the TRO after a hearing and ordered Ware to comply, the record

contains no order to that effect. In fact, other than the final order after the bench trial,

the only order in the record is the one granting ARSS an ex parte temporary

13 restraining order on October 3, 2011, three days after suit was filed, and the TRO

does not address attorney fees.

In its final order awarding ARSS $17,875 in attorney fees, the trial court erred

in failing to make express findings of fact or conclusions of law as to the statutory

basis for its award of attorney fees to ARSS. Woods v. Hall, 315 Ga. App. 93, 97-98

(2) (726 SE2d 596) (2012).

More importantly, the court’s order fails to even specify whether the attorney fees were awarded under OCGA § 9-15-14 at all, much less which subsection of the statute supports the award. Accordingly, we must vacate this award and remand this case to the trial court for reconsideration of the grant of attorney fees and to make express findings of fact and conclusions of law as to the statutory basis for any such award and the conduct which would authorize it.

(Footnote omitted.) Id. at 98 (2).

Judgment reversed in part, affirmed in part, and remanded. Miller and Ray,

JJ., concur.