Management by Design, Inc. v. Lakeview Utilities, Inc.

505 S.E.2d 37, 233 Ga. App. 711, 98 Fulton County D. Rep. 2769, 1998 Ga. App. LEXIS 1007
CourtCourt of Appeals of Georgia
DecidedJuly 16, 1998
DocketA98A0254, A98A0255
StatusPublished

This text of 505 S.E.2d 37 (Management by Design, Inc. v. Lakeview Utilities, Inc.) 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
Management by Design, Inc. v. Lakeview Utilities, Inc., 505 S.E.2d 37, 233 Ga. App. 711, 98 Fulton County D. Rep. 2769, 1998 Ga. App. LEXIS 1007 (Ga. Ct. App. 1998).

Opinions

Pope, Presiding Judge.

Management by Design, Inc., Charles Sirmans, Ray Stevens, Complete Mobile Homes, Inc. and Phyllis Slaght sued Lakeview Utilities, Inc., Martha Bailey, and Martin McDonald. Plaintiffs and defendant Bailey own rental lots and mobile homes in Lakeview Estates Subdivision. Lakeview Utilities is an unregulated private utility which is the exclusive governmental franchisee for the delivery of water and sewer services to the subdivision. Bailey is the president and sole shareholder of Lakeview Utilities. Defendant McDonald was an officer of Lakeview Utilities and a consultant on environmental matters.

In 1995, plaintiffs filed the instant complaint, alleging that Bailey and the defendants unreasonably raised water and sewer rates in order to make plaintiffs’ lots unrentable and gain control of all property in the subdivision. In their 21-page complaint, plaintiffs alleged that defendants’ actions violated the Sherman Antitrust Act, constituted fraud, and constituted federal and state RICO violations. Plaintiffs sought injunctive relief and sought damages for lost rental income and property and for payment of excessive water rates. Plaintiffs also sought damages for defendants’ violations of the Sherman Antitrust Act and sought treble damages for the violations of the RICO statutes.

The case was tried and the court granted McDonald’s motion for directed verdict. The jury found the water rates unreasonable almost in their entirety and awarded plaintiffs $24,539 in damages against defendants Bailey and Lakeview. In Case No. A98A0254, plaintiffs appeal; Case No. A98A0255 is the cross-appeal. Divisions 1 and 2 review the enumerations of error in the main appeal; Divisions 3 through 8 resolve the cross-appeal enumerations. For the following reasons, we reverse both cases.

Case No. A98A0254

As stated above, in this case plaintiffs appeal from denial of their motions for new trial and for relief from the judgment.

1. First, plaintiffs contend that the trial court improperly deprived them of an opportunity to litigate their claims for damages under RICO and the Sherman Act. Based on the following facts, we agree.

Plaintiffs filed a pretrial motion under OCGA § 9-11-42 (b) to sever the trial of the issues relating to the reasonableness of the rates from the trial of the alleged RICO and antitrust violations and [712]*712other claims for damages. Plaintiffs’ motion clearly stated that it sought to sever the issue of “the unreasonableness of the charges for water and sewer” from the other claims asserted in the action. In the affidavit supporting the motion, plaintiffs stated: “[a] separate trial of the latter [other] claims should be had for the reason that the moving parties plaintiff will be prejudice[d] by a single trial of all claims because they would have gone out of business or have been ruined financially as they need immediate relief from the exorbitant charges that are imposed by the defendants in order to rent their mobile homes and lots or they will be out of business before the other issues are reached and the other issues can conveniently be tried separately.”

The trial court granted the motion to sever, stating in its order: “[t]he Plaintiffs seek to sever the issue of the reasonableness of the charges for water and sewer utility services and other related charges. While the Defendants argue that this will cause them to try the case twice, the court finds that severance will further the interests of convenience, judicial economy and fairness, as well as reduce any unnecessary prejudice that might otherwise be occasioned by the Plaintiffs. It is clear that OCGA § 9-11-42 (b) was designed for such a purpose.” (Emphasis supplied.)

The case was tried before a jury. At the conclusion of the first phase of the trial, the court charged the jury regarding reasonable rates for water services and the meaning of unconscionability. The court then instructed the jurors that if they found for plaintiffs, they would then need to indicate on the special verdict form whether various charges for water, sewer, hook-ups and other services were reasonable or unreasonable. The jury concluded that most of the various rates were unreasonable and returned a plaintiffs’ verdict.

The court then instructed the jury that the case had been bifurcated and that the jurors would need to determine the appropriate amount of damages, if any, to award. After the evidence was presented, the court explained that the jury was to determine the issue of damages based on the rules regarding compensation.1 Plaintiffs did not seek RICO or antitrust damages and the court did not give any charges on these claims. The jury returned a plaintiffs’ verdict for $24,539.

After trial, plaintiffs filed a motion for new trial and a motion for relief from judgment, arguing that the court had failed to set a date for the trial of the remaining issues (i.e., the RICO and antitrust) and had failed to extend discovery with respect to those remaining issues. [713]*713The court denied the motions, in essence ruling that plaintiffs’ case had ended. The court’s order concluded that plaintiffs’ understanding of the order granting their motion to sever was incorrect. The order stated that the grant of the motion to sever did not mean that the case would be recessed or that plaintiffs would be allowed to select a second jury to hear the RICO and antitrust issues. Instead, the court stated plaintiffs had abandoned their additional claims by not raising them during the first phase of the trial.

We agree with plaintiffs that the order granting the motion to sever indicated that their claims for RICO and antitrust would be tried separately. The court’s order granting the motion did not state that the issue of damages and liability would be severed; it simply granted plaintiffs’ motion, as requested. Plaintiffs’ reasonable understanding of the trial — based on the granting of their motion to sever — was that it would involve the issue of reasonableness of the rates only. Their portion of the pretrial order which was submitted to the court, but never entered, also supports this interpretation.

Once the trial began, plaintiffs proceeded on their belief that the other issues had been severed and would be tried separately. Plaintiffs did not, as the trial court concluded, abandon their other claims; rather they thought that they would try their other claims separately. The trial court’s reference to the bifurcation of liability and damages on the issue of the unreasonableness of the fees was not inconsistent with its granting of the motion to sever and would not have altered plaintiffs’ understanding. Furthermore, plaintiffs’ efforts to recover lost rental income and property were not inconsistent with this understanding, because those damages were also part of the claim of unreasonable fees. Accordingly, the court erred in refusing to hear evidence on the remaining issues and should have granted plaintiffs’ post-trial motions.

2. Based on Division 1, we conclude that the trial court erred in dismissing defendant McDonald from the suit because issues remained to be tried.

Case No. A98A0255

Defendants cross-appeal from the judgment and from the denial of their motion for new trial.

3.

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Bluebook (online)
505 S.E.2d 37, 233 Ga. App. 711, 98 Fulton County D. Rep. 2769, 1998 Ga. App. LEXIS 1007, Counsel Stack Legal Research, https://law.counselstack.com/opinion/management-by-design-inc-v-lakeview-utilities-inc-gactapp-1998.