Hee Jin Lowery v. Noodle Life, Inc.

• Court: Court of Appeals of Georgia
• Decided: February 15, 2022
• Docket: A21A1463
• Status: Published

Opinion

FIRST DIVISION BARNES, P. J., GOBEIL and MARKLE, 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. https://www.gaappeals.us/rules

February 15, 2022

In the Court of Appeals of Georgia A21A1463. LOWERY et al. v. NOODLE LIFE, INC.

MARKLE, Judge.

After Hee Jin Lowery was injured when a container of hot soup spilled onto her

lap, she sued Noodle Life, Inc. for the negligence of its owners, alleging the soup was

improperly packaged. Noodle Life moved for summary judgment, which the trial

court granted. Lowery now appeals, alleging the trial court erred by granting

summary judgment in Noodle Life’s favor because there was sufficient evidence from

which a jury could find it liable for negligence under theories of alter ego, joint

venture, and/or agency. For the reasons that follow, we affirm.

In order to prevail on a motion for summary judgment under OCGA § 9-11-56, [Noodle Life], as the moving party, must show that there exists no genuine issue of material fact, and that the undisputed facts, viewed in the light most favorable to the nonmoving party, demand judgment as a matter of law. Moreover, on appeal from the denial or grant of summary judgment the appellate court is to conduct a de novo review of the evidence to determine whether there exists a genuine issue of material fact, and whether the undisputed facts, viewed in the light most favorable to the nonmoving party, warrant judgment as a matter of law.

(Citation omitted.) In/Ex Systems v. Masud, 352 Ga. App. 722, 723 (2) (835 SE2d

799) (2019).

So viewed, the underlying facts of the case are as follows. In July 2017,

Lowery placed a “to go” order for soup from the restaurant, Noodle, in College Park.

Upon arriving at her destination, Lowery retrieved her package from the seat, and, as

she was attempting to exit her vehicle, the bottom of the paper bag broke, causing the

hot soup to spill onto her lap. Lowery was severely burned on her inner thighs and

groin area.

At the time of the incident, Noodle in College Park was owned and operated

by Shou & Shou, Inc. Noodle Life owned and operated its own business, also known

as Noodle, in midtown. The two companies are both owned by the same three

siblings, and they share the same website. They did not share the same employees, but

2 Noodle Life did the food prep for both restaurants. Although the two companies

combined vendor orders, they each paid their own portion of the orders.

Noodle Life had no ownership interest in either Shou & Shou, Inc. or Noodle

in College Park, nor did Shou & Shou, Inc. have an ownership interest in Noodle Life

or its restaurant located in midtown. Each company was responsible for operating its

own business; they maintained separate bank accounts; neither company paid the

staffing expenses of the other and they maintained separate payroll accounts; and

each company bore their own profits and losses. Additionally, each company had its

own employees for which they were responsible, and, on the date of this incident,

Shou & Shou, Inc. employed the individuals working at Noodle in College Park.

After Lowery was injured, she sued Noodle Life for negligence, asserting that

Shou & Shou, Inc. was the alter ego of Noodle Life; the two companies were a joint

venture; that they were agents for one another; and that Shou & Shou, Inc.’s

negligence is imputed to Noodle Life such that it was liable for her injuries.1 Lowery

also sued Shou & Shou, Inc., but settled her claims with it via a consent judgment,

leaving only the claims against Noodle Life pending.

1 Lowery also sued 3L Realty, LLC, and Bowl Fat, Inc., but they were subsequently dismissed from the case.

3 Noodle Life moved for summary judgment, arguing that it was separate and

distinct from Shou & Shou, Inc. ,and it did not disregard the corporate form; alter ego

is not a viable theory for imputing liability to Noodle Life; and the two companies did

not share a joint venture or an agency relationship.2

Following a hearing, the trial court granted Noodle Life’s motion. Relying on

Cobra 4 Enterprises v. Powell-Newman, 336 Ga. App. 609 (785 SE2d 556) (2016)

(physical precedent only as to Division 2), it found that, even though the two

companies had the same owners and there may have been some overlap between

them, the companies were neither a joint venture nor alter egos of one another.

Lowery now appeals.

The concepts of alter ego, joint venture, and agency are separate but closely

related theories for imposing liability. Kissun v. Humana, 267 Ga. 419, 420-421 (479

SE2d 751) (1997). In evaluating one corporation’s liability for the acts of another, we

2 Noodle Life further argued that Lowery’s consent judgment with Shou & Shou, Inc. should have resolved the case between her and Noodle Life because Lowery agreed to a judgment with a joint tortfeasor, and that it was not liable to Mr. Lowery on his loss of consortium claim. It also argued that Lowery could not prevail on her negligence claims. Although Lowery’s husband asserted a loss of consortium claim, because we conclude summary judgment in favor of Noodle Life was proper this claim fails as well. See Behforouz v. Vakil, 281 Ga. App. 603, 604 (636 SE2d 674) (2006) (grant of summary judgment on loss of consortium claim was also proper where claim was derivative of personal injury claims).

4 look to the business structure of each and the level of control one entity has over the

other. Id. But evidence sufficient to establish one relationship between corporate

parties may not be sufficient to establish another. Id. Likewise, business relationships

and interdependency of one corporation and another, alone, are insufficient to

establish liability under either of these three theories. See id. (evidence insufficient

to show alter ego does not as a matter of law negate the existence of an agency

relationship between the corporations); see also Gateway Atlanta Apts. v. Harris, 290

Ga. App. 772, 778 (2) (b) (660 SE2d 750) (2008) (“The mere existence of a business

interdependency does not create a joint venture.”) (citation omitted). With these

principles in mind, we evaluate Noodle Life’s alleged liability under each theory,

finding no merit to any of them.

(a) Alter ego.

Lowery asserts that the trial court erred by granting summary judgment in favor

of Noodle Life because there was a factual question regarding whether Noodle Life

operated and controlled the Noodle restaurant in College Park, making Shou & Shou,

Inc. merely the alter ego of Noodle Life. Because there was no evidence that the two

companies were interchangeable entities, we disagree.

5 Under the alter ego doctrine, equitable principles are used to disregard the separate and distinct legal existence possessed by a corporation where it is established that the corporation served as a mere alter ego or business conduit of another. The concept of piercing the corporate veil is applied in Georgia to remedy injustices which arise where a party has over extended his privilege in the use of a corporate entity in order to defeat justice, perpetuate fraud or to evade contractual or tort responsibility. Plaintiff must show that the defendant disregarded the separateness of legal entities by commingling on an interchangeable or joint basis or confusing the otherwise separate properties, records or control.

(Citations omitted.) TMX Finance v. Goldsmith, 352 Ga. App. 190, 210 (6) (833 SE2d

317) (2019). Additionally, “when the elements of the doctrine are satisfied, the

doctrine of piercing the corporate veil also can be used . . . to hold a ‘family of

corporations’ liable for the debts of each other.” Id. In order to pierce the corporate

veil, however, there must be some evidence of abuse of the corporate form, and sole

ownership of a corporation is not a factor. Cobra 4 Enterprises, 336 Ga. App. at 613

(2) (physical precedent only). “Where there is no evidence that the corporate

arrangement is a sham that was designed to defeat justice, perpetuate fraud, or evade

statutory, contractual, or tort liability, the issue of alter ego liability is not a jury

question.” Id.

6 Here, Lowery contends that Shou & Shou, Inc. was merely the alter ego for

Noodle Life, and that Noodle Life actually operated the College Park restaurant

because the College Park location used Noodle Life’s menu, recipes, and food

vendors; Noodle Life’s employees did the food prep for Noodle in College Park; all

catering orders for both locations were funneled through Noodle Life; both

restaurants used the same website, and shared income and supplies; and Shou &

Shou, Inc. paid Noodle Life’s insurance premiums. However, a review of the

evidence shows that, although there may have been some overlap between Shou &

Shou, Inc. and Noodle Life, such as commonality of ownership, there are no other

factors to impose the alter ego doctrine against Noodle Life.3

Contrary to Lowery’s contention, Cobra 4 Enterprises is persuasive. As in

Cobra 4 Enterprises, each of these corporations maintained separate bank and payroll

accounts. Each company bore their own profits and losses. Additionally, each

company paid its own employees, and, on the date of this incident, Shou & Shou, Inc.

3 To the extent Lowery argues in her reply brief that Shou & Shou, Inc.’s use of Noodle Life employees to prep food constitutes sharing employees, this is the first time she raises this argument and thus it will not be considered. Stewart v. Johnson, 358 Ga. App. 813, 814 (856 SE2d 401) (2021) (“any enumeration of error which is not supported in the principle brief by citation of authority or argument may be deemed abandoned . . . and we do not consider arguments that are raised for the first time in a reply brief.”) (citation and punctuation omitted; emphasis in original).

7 both employed and paid the individuals working at Noodle in College Park. Although

Noodle Life may have done the food prep for Noodle in College Park, all of the food

at the College Park location was cooked on site by Noodle College Park employees.4

As such, the evidence shows these corporations were run as two separate

entities, and Lowery has pointed to no evidence showing that one had control over

the other to establish liability under an alter ego theory. Cobra 4 Enterprises, 336 Ga.

App. at 614-615 (2) (no evidence of any commingling of assets between the two

companies, one had no right of control over the other, the two corporations had

separate bank accounts, and neither paid any expenses for the other); see also NEC

Technologies v. Nelson, 267 Ga. 390, 397 (5) (478 SE2d 769 ) (1996) (no evidence

that one corporation was an instrumentality for the transactions of the other, or that

4 Lowery attempts to create an issue of fact by pointing to the deposition testimony of Lena Shou Kuo, one of the owners of both corporations, who testified that Noodle Life operated both restaurants as one. Kuo subsequently clarified, however, that the two restaurants shared the same menu and recipes, but that each paid for their share of the ingredients and supplies, and each hired its own employees to do the cooking and paid them from separate payroll accounts. Accordingly, under these circumstances, this evidence is insufficient to create an alter ego relationship. Cobra 4 Enterprises, 336 Ga. App. at 615 (2) (although there was some overlap between the two companies, there was no evidence of commingling or abuse of the corporate entity.).

8 there was commingling of money, records, or employees).5 Therefore, there is no

evidence in this case to raise a jury question regarding whether Shou & Shou, Inc.

was the alter ego for Noodle Life, and the trial court properly granted summary

judgment on this issue.6

(b) Joint venture.

Lowery next argues that the trial court erred in finding that Shou & Shou, Inc.

and Noodle Life were not engaged in a joint venture because there was evidence of

mutual control between the two corporations. Again, we disagree.

5 Although Lowery asserts that Shou & Shou, Inc. paid Noodle Life’s insurance premiums, this evidence is insufficient to show the commingling of assets on an interchangeable or joint basis or abuse of the corporate form sufficient to establish liability under an alter ego theory. See Saks Mgmt. and Assoc. v. Sung Gen. Contracting, 356 Ga. App. 568, 578-579 (3) (f) (849 SE2d 19) (2020); see also Cobra 4 Enterprises, 336 Ga. App. at 613 (2); TMX Finance v. Goldsmith, 352 Ga. App. 190, 210 (6). 6 Noodle Life argues that the consent judgment between Lowery and Shou & Shou, Inc. further forecloses the issue of whether it should be held liable for the acts of Shou & Shou, Inc. because Lowery had a valid remedy for claims without the trial court finding evidence of alter ego sufficient to pierce the corporate veil. However, the trial court did not address this issue, and, given our conclusion in favor of Noodle Life on the issue of alter ego, we need not address it. See Fross v. Norfolk Southern R. Co., 361 Ga. App. 235 __ (2) (863 SE2d 714, 721 (2)) (2021) (“Therefore, in the absence of a ruling below, we will not address this issue.”); see also Pneumo Abex v. Long, 357 Ga. App. 17, 29 (2) (849 SE2d 746) (2020) (“As we have repeatedly explained, this is a Court for the correction of errors of law, and “if the trial court has not ruled on an issue, we will not address it.”) (citation and punctuation omitted).

9 A joint venture arises where two or more parties combine their property or labor, or both, in a joint undertaking for profit, with rights of mutual control. Without the element of mutual control, no joint venture can exist. In order for one party to be liable for the negligence of another under a joint venture theory, the party must have had the right to direct and control the conduct of the other party in the activity causing the injury. The mere existence of a business interdependency does not create a joint venture.

(Citations and punctuation omitted; emphasis supplied.) Gateway Atlanta Apts., 290

Ga. App. at 778 (2) (b); see also Shamblin v. Corp. of the Presiding Bishop of the

Church of Jesus Christ of Latter Day Saints, 352 Ga. App. 870, 877 (3) (836 SE2d

171) (2019); Cobra 4 Enterprises, 336 Ga. App. at 612 (1); Kitchens v. Brusman, 280

Ga. App. 163, 167 (3) (633 SE2d 585) (2006) (“Without the element of mutual

control, no joint venture can exist.”).

Here, Lowery relies on the same evidence asserted in support of her alter ego

theory, and further asserts that a joint venture existed between the two companies

because both restaurants were owned by the same three siblings with the right of

mutual control over both companies. However, Lowery has failed to present any

evidence showing that Noodle Life directed or controlled the conduct of Shou &

Shou, Inc. or its employees in the activity that caused Lowery’s injury. Gateway

10 Atlanta Apts., 290 Ga. App. at 778 (2) (b). Noodle Life did not do the cooking for

Noodle in College Park, and it did not employ or pay the individuals who allegedly

improperly packaged the soup at Noodle in College Park. Other than the testimony

of Lena Shou, who indicated she trained the Noodle employees at the College Park

location to double bag take-out soup orders, there is no evidence in the record that

Noodle Life or its employees had any involvement in the manner in which the soup

was packaged when Lowery was injured. To the extent Lowery argues that Noodle

Life and Shou & Shou, Inc. had mutual control over the other’s business, this

argument is unavailing as addressed supra. Although Lowery suggests that Noodle

Life ran Noodle in College Park because, for example, it prepped the food for that

location, she has pointed to no evidence showing that Shou & Shou, Inc. had any

right of mutual control over the operation of Noodle Life’s restaurant in midtown.

“Without the element of mutual control, no joint venture can exist.” (Citation omitted;

emphasis supplied). Gateway Atlanta Apts., 290 Ga. App. at 778 (2) (b); Kitchens,

280 Ga. App. at 167 (3). As such, Lowery’s claim that the two entities engaged in a

joint venture is without merit. Cobra 4 Enterprises, 336 Ga. App. at 612 (1); see also

Gateway Atlanta Apts., 290 Ga. App. at 778 (2). Accordingly, the trial court properly

granted summary judgment on this point.

11 (c) Agency.

Finally, Lowery argues that the trial court erred in granting Noodle Life’s

summary judgment motion because there was sufficient evidence to establish that

Shou & Shou, Inc. was Noodle Life’s apparent or ostensible agent.7 This argument

is unavailing.

“The relation of principal and agent arises wherever one person, expressly or

by implication, authorizes another to act for him or subsequently ratifies the acts of

another in his behalf.” OCGA § 10-6-1.

In order to impose liability pursuant to the doctrine of apparent or ostensible agency, the evidence must show: (1) the apparent principal represented or held out the apparent agent; and (2) justifiable reliance upon the representation led to the injury.

(Citation omitted.) American Reliable Ins. Co. v. Lancaster, 356 Ga. App. 854, 858

(1) (b) (849 SE2d 697) (2020); see also Kid R Kids Intl. v. Cope, 330 Ga. App. 891,

894 (2) (769 SE2d 616) (2015); MCG Health v. Nelson, 270 Ga. App. 409, 414 (5)

7 Lowery does not argue that Shou & Shou, Inc. was Noodle Life’s actual agent. See American Reliable Ins. Co, 356 Ga. App. 854, 858 (1) (b) (849 SE2d 697) (2020).

12 (606 SE2d 576) (2004) (“liability is premised on the principal’s right to control the

time and manner of an agent’s work.”) (citations and punctuation omitted).

Here, Lowery has pointed to no evidence showing that Noodle Life held Shou

& Shou, Inc. out to be its agent or that she relied on any such representation.8

American Reliable Ins. Co., 356 Ga. App. at 858 (1) (b). Accordingly, Lowery has

failed to establish that Shou & Shou, Inc. was Noodle Life’s agent, and the trial court

properly granted summary judgment on this issue as well.

Judgment affirmed. Barnes, P. J., and Gobeil, J., concur.

8 Lowery argues that she justifiably relied on Noodle Life’s website, which promoted Noodle as a single restaurant with three locations. However, we do not consider this argument raised for the first time in her reply brief. Stewart, 358 Ga. App. at 814.