Regional Finance Company of Georgia, LLC v. Nicholas Pearson

• Court: Court of Appeals of Georgia
• Decided: October 30, 2024
• Docket: A24A0787
• Status: Published

Opinion

FIRST DIVISION BARNES, P. J., GOBEIL and PIPKIN, 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

October 30, 2024

In the Court of Appeals of Georgia A24A0787. REGIONAL FINANCE COMPANY OF GEORGIA, LLC v. PEARSON.

GOBEIL, Judge.

Nicholas Pearson sued Regional Finance Company of Georgia, LLC (“Regional

Finance”) for (1) negligence and (2) violations of the Georgia Fair Business Practices

Act (“GFBPA” or “the Act”), OCGA § 10-1-390 et seq., after Regional Finance sent

an unsolicited live check to Pearson, which was deposited without Pearson’s

knowledge or permission and created a loan in his name. On appeal, Regional Finance

argues that it is entitled to summary judgment on both claims. For the reasons set

forth below, we affirm in part and reverse in part the trial court’s judgment.

In reviewing a ruling on a motion for summary judgment, we construe the

evidence in the light most favorable to the non-moving party. We conduct a de novo review to determine whether there is a genuine issue of material fact and whether

undisputed facts, viewed in the light most favorable to the nonmoving party, warrant

judgment as a matter of law. See OCGA § 9-11-56; Cleveland v. Team RTR2, LLC, 359

Ga. App. 104, 104 (854 SE2d 756) (2021).

So viewed, the record shows that Regional Finance is a lender that sends

so-called “unsolicited live checks” to potential consumers. These checks become

loans subject to repayment once they are deposited or cashed by their recipient. The

critical facts here are generally undisputed. In August 2021, Regional Finance sent one

of these unsolicited live checks to Pearson, in the amount of $3,100. According to

Pearson (the non-movant in this case), he was unaware this check had been sent to

him, and it was deposited without his permission by an unknown third party. On

August 25, 2021, a Regional Finance employee contacted Pearson to solicit payment

for the now-pending loan in his name. Pearson assumed the phone call to be a scam,

and took no action at that time. He received a letter from Regional Finance several

days later that contained the terms of this loan, including an interest rate of 31.99

percent.

2 After receiving the letter, Pearson contacted Regional Finance to dispute the

loan. He spoke to a Regional Finance manager, and the two discussed the established

process Pearson would need to undertake to contest the loan as fraudulent, including

filing a police report, executing a notarized affidavit of fraud, and awaiting the results

of a Regional Finance investigation. Pearson alleges that the Regional Finance

employee admitted to him that similar instances of fraud had occurred via these

unsolicited live checks and that there was no system in place to reimburse him any

costs he might incur contesting the fraud.

Pearson demanded certain relief from Regional Finance, which was not

provided, and Pearson then filed the instant action.1 His amended complaint raised

three claims. The first two claims, for negligence and gross negligence, alleged that

Regional Finance breached its duties to “act reasonably in verifying that an individual

who was cashing an unsolicited live check was the consumer to whom [Regional

Finance] intended to send the check” and to “act reasonably in investigating any loan

that was initiated by the cashing of an unsolicited live check upon complaint by the

intended consumer that such loan was not initiated by him or her.” In Count 3,

1 Regional Finance did ultimately complete its investigation into Pearson’s situation and cancelled the loan in his name. 3 Pearson asserted a claim for violation of the GFBPA, alleging that Regional Finance

engaged in unfair and deceptive practices by (1) allowing someone other than him to

cash the check that consummated a loan in his name; (2) failing to verify that he was

the individual who cashed the check; (3) representing that he was obligated to repay

the loan that resulted from fraud; (4) reporting the fraudulent loan to credit reporting

agencies; and (5) failing to investigate the fraud without undertaking the “lengthy,

onerous, and costly process” outlined by Regional Finance.

Regional Finance moved for summary judgment. On the negligence claims,

Regional Finance argued that Pearson failed to establish all four essential elements:

duty, breach, causation, and damages (the failure of which to establish any element

would be sufficient to entitle it to summary judgment). As for the GFBPA claim,

Regional Finance argued that the GFBPA does not apply in this scenario because the

act applies only to the unregulated consumer marketplace, and Regional Finance

operates within the highly regulated lending industry. Regional Finance also argued

that Pearson could not show unfair or deceptive business practices, causation, or

damages under the GFBPA.

4 After a hearing, the trial court denied the motion. The court first found that

Regional Finance owed a duty to Pearson, pointing to evidence that Regional Finance

knew that there was a risk of fraud with sending unsolicited live checks to potential

customers. The trial court next found that questions of fact remained regarding breach

and causation. Finally, the court found that Pearson established damages sufficient to

survive summary judgment. Accordingly, the court denied summary judgment as to

the negligence and gross negligence claims.

Next, the trial court found that it is “undisputed that the unsolicited live check

at issue was not subject to the Georgia Installment Loan Act or regulations issued by

the Georgia Department of Banking and Finance given the amount of the

accompany[ing] loan,” thus negating Regional Finance’s arguments that it was

exempt from the GFBPA.2 Further, the court found sufficient evidence to support

Pearson’s allegations of unfair business practices. Accordingly, the trial court denied

summary judgment on this claim as well. Regional Finance obtained a timely

2 Ga. Comp. R. & Regs. r. 80-14-5-.04 (1) regulates unsolicited live checks to “activate a loan regulated by the Georgia Installment Loan Act[.]” The Georgia Installment Loan Act, in turn, covers loans in the amount of $3,000 or less. OCGA § 7-3-3 (7). The check sent to Pearson was for $3,100. 5 certificate of immediate review and we granted its application for interlocutory appeal.

Court of Appeals Case No. A24I0016 (granted Sept. 5, 2023).

1. On appeal, Regional Finance challenges the trial court’s failure to grant

summary judgment on Pearson’s negligence claims, arguing that Pearson failed to

establish (a) duty; (b) breach; and/or (c) causation. We hold that the trial court erred

in denying summary judgment on these claims.

To sustain a negligence claim, Pearson must establish four elements: duty,

breach of duty, causation and damages. See Retail Property Trust v. McPhaul, 359 Ga.

App. 345, 347 (1) (a) (857 SE2d 521) (2021). Georgia law provides that “[t]he

threshold issue in any cause of action for negligence is whether, and to what extent,

the defendant owes the plaintiff a duty of care.” Wilson v. Guy, 356 Ga. App. 509, 511

(1) (848 SE2d 138) (2020) (citation and punctuation omitted). “This issue is a

question of law.” Sheaffer v. Marriott Int’l, Inc., 349 Ga. App. 338, 340 (1) (826 SE2d

185) (2019) (citation and punctuation omitted). “A legal duty sufficient to support

liability in negligence is either a duty imposed by a valid statutory enactment of the

legislature or a duty imposed by a recognized common law principle declared in the

reported decisions of our appellate courts.” Id. (citation and punctuation omitted) “In

6 the absence of a legally cognizable duty, there can be no fault or negligence.” Id.

(citation and punctuation omitted).

Pearson asserted that Regional Finance breached its duties to: (1) “act

reasonably in verifying that an individual who was cashing an unsolicited live check

was the consumer to whom [Regional Finance] intended to send the check” and (2)

“act reasonably in investigating any loan that was initiated by the cashing of an

unsolicited live check upon complaint by the intended consumer that such loan was

not initiated by him or her.” Pearson argues that these duties find their “basis in the

longstanding common law maxim that defendants owe a duty to exercise ordinary care

to protect others based on the foreseeable risk of harm from their actions, and that

defendants owe a duty of care to ones that they have put in peril through their

actions.” However, the Supreme Court of Georgia has expressly rejected any

precedent “to the extent it created a general legal duty to all the world not to subject

others to an unreasonable risk of harm.” Dept. of Labor v. McConnell, 305 Ga. 812, 816

(3) (a) (828 SE2d 352) (2019) (citation and punctuation omitted). And, although a

party may have a legal duty to give reasonable assistance where its negligence has

caused a particular risk of harm, Alexander v. Harnick, 142 Ga. App. 816, 817 (3) (237

7 SE2d 221) (1977), Pearson does not assert that Regional Finance was negligent in

sending the check. Thus, this principle of law provides no basis for his claims.

Further, Pearson does not specify what level of care is required. See Wells Fargo

Bank, N. A. v. Jenkins, 293 Ga. 162, 164 (744 SE2d 686) (2013) (negligence plaintiff

must show “the alleged breach of a legal duty with some ascertainable standard of

conduct”). The trial court relied on evidence of Regional Finance’s anti-fraud policies

to establish a duty to prevent fraud. However, a company’s private policy does not

establish the governing standard of care, nor does it create a legal duty where one does

not otherwise exist. Bartenfeld v. Chick-fil-A, Inc., 346 Ga. App. 759, 764 (1) (b) (815

SE2d 273) (2018). See Doe v. HGI Realty, Inc., 254 Ga. App. 181, 182-183 (561 SE2d

450) (2002) (affirming grant of summary judgment in favor of landlord and holding

that landlord’s internal security manual stating that security guards should patrol the

inside of the mall daily did not create an affirmative duty to do so). And neither the

trial court nor Pearson have cited any relevant authority or provided any evidence

suggesting what standard of care Regional Finance owed Pearson beyond its

preestablished internal policies. See DaimlerChrysler Motors Co., LLC v. Clemente, 294

8 Ga. App. 38, 55 (7) (668 SE2d 737) (2008) (reversing the trial court’s denial of

summary judgment where the plaintiff failed to point to any statute or other basis

creating a standard of care owed by the defendant).

Accordingly, we conclude that the trial court erred in denying summary

judgment on Pearson’s negligence claims. See Retail Property Trust, 359 Ga. App. at

345 (“If there is no evidence sufficient to create a genuine issue as to any essential

element of plaintiff’s claim, that claim tumbles like a house of cards. All of the other

disputes of fact are rendered immaterial.”) (citation and punctuation omitted). We

therefore reverse in part the trial court’s judgment.

2. Regional Finance also disputes the trial court’s denial of summary judgment

on Pearson’s GFBPA claim, arguing that: (a) the GFBPA does not apply to its conduct

in this case; and/or Pearson did not establish that (b) Regional Finance committed

unfair or deceptive business practices; or that (c) Regional Finance’s actions caused

his injury. We ultimately affirm the trial court’s judgment on this claim.

a. The GFBPA was enacted to protect consumers from unfair or deceptive

practices in the conduct of any trade or commerce in this state. OCGA § 10-1-391 (a).

As the GFBPA sets forth, the Act “shall be liberally construed and applied to

9 promote” this underlying purpose. Id. However, our Court has held that “the Georgia

FBPA have a restricted application only to the unregulated consumer marketplace and

that FBPA not apply in regulated areas of activity, because regulatory agencies provide

protection or the ability to protect against the known evils in the area of the agency’s

expertise.” Chancellor v. Gateway Lincoln-Mercury, Inc., 233 Ga. App. 38, 45 (2) (502

SE2d 799) (1998). To that end, the Act carves out from its coverage any “[a]ctions or

transactions specifically authorized under laws administered by or rules and

regulations promulgated by any regulatory agency of this state or the United States[.]”

OCGA § 10-1-396 (1). This “specific authorization” exemption lies at the heart of this

dispute.

First, we acknowledge that there is limited authority on what precisely

constitutes “specific authorization.” At this stage of the proceeding, however, we find

that Regional Finance has failed to establish that its actions in this case were so

“specifically authorized” as a matter of law. Although unsolicited live checks are not

prohibited by law, the only regulations covering this specific type of financial

instrument relied upon by the parties is found in Ga. Comp. R. & Regs. r. 80-14-5-.04.

10 However, such regulations apply only to loans that qualify under the Georgia

Installment Loan Act (loans of $3,000 or less, OCGA § 7-3-3 (7)). By sending the

check to Pearson in the amount of $3,100, Regional Finance’s actions presumably are

not governed by such regulations.

Regional Finance argues that because the consumer lending industry and

lending institutions are heavily regulated, the GFBPA does not apply. Indeed, we have

excluded the GFBPA from disputes in certain heavily regulated industries, such as the

insurance industry, Ferguson v. United Ins. Co. of Am., 163 Ga. App. 282, 282-283 (2)

(293 SE2d 736) (1982), the motor vehicle finance industry, Chancellor v. Gateway

Lincoln-Mercury, Inc., 233 Ga. App. 38, 44-45 (2) (502 SE2d 799) (1998), and the

residential mortgage industry, James v. Bank of Am., N.A., 332 Ga. App. 365, 369 (4)

(772 SE2d 812) (2015). However, in each of those cases, we highlighted the existence

of more than just regulation of an industry broadly. Rather, we pointed to specific laws

or regulations that covered the allegedly unfair or deceptive actions of the defendants

in those cases. See Ferguson, 163 Ga. App. at 283 (2) (citing specific insurance

regulations that cover unfair trade practices within the industry); Chancellor, 233 Ga.

App. at 45 (2) (citing federal regulations that cover required disclosures by lenders);

11 James, 332 Ga. App. at 366-367 (1) (citing state laws covering notice requirements to

initiate foreclosure). Though not binding on this Court, we note that federal courts

have been more specific about when the GFBPA is excluded, stating that “where a

consumer remedy exists, with no need to fill in a legal gap or create a consumer right,

and where the industry which is the subject matter of the situation explicitly defines

wrongful conduct or unfair and deceptive practices, the FBPA has no application.”

In re Taylor, 292 BR 434, 438 (Bankr. N.D. Ga. 2002) (quoting Taylor v. Bear Stearns

& Co. et al., 572 FSupp. 667, 675 (II) (B) (N.D. Ga. 1983)).

To that end, Regional Finance does not help itself by failing to direct this Court

(or the trial court) to any specific laws or regulations that control its actions in this

case. Nor does Regional Finance point to laws or regulations that would provide

Pearson with a remedy for his allegations, or would define the adequacy of Regional

Finance’s policies to prevent or combat fraud.3 Given that Regional Finance is the

3 Regarding the evidence before the trial court, although Regional Finance asserts that “[t]he evidence further demonstrates that the lending industry itself is highly regulated,” its only citation to the record is to a page of a Regional Finance supervisor’s affidavit stating that Regional Finance used information gathered from the Credit Bureau to select Pearson as a recipient of one of these live-check loans, and describing that the loan was deposited, a loan was opened, and someone from Regional Finance spoke to Pearson about the fraud investigation. This obviously does not illuminate how the record included evidence that would entitle Regional Finance to 12 appellant in this Court, it bears the burden of showing that the trial court committed

error. See Healthcare Staffing, Inc. v. Edwards, 360 Ga. App. 131, 135 (2) (860 SE2d

874) (2021) (“It is not the job of this Court to find legal authority to support a party’s

claim of error, nor would it be appropriate for us to do so.”). Here, without Regional

Finance directing this Court to a state or federal law or regulation under which

Pearson may be able to seek review of these practices by Regional Finance, or

otherwise authorizing or controlling Regional Finance’s actions in this case, we find

that Regional Finance has failed to show that Pearson’s claim was excluded from the

GFPBA as a matter of law. See Horne v. Harbour Portfolio VI, LP, 304 FSupp.3d 1332,

1343-1344 (F) (N.D. Ga. 2018) (finding that defendant appellant did not meet its

burden to show that the GFBPA was inapplicable where it failed to cite legal authority

showing that its actions were regulated by any specific law or regulation).

b. Regional Finance also argues that the trial court erred in finding genuine

issues of material facts remain as to whether Regional Finance committed an unfair

summary judgment on this issue. Stewart v. Johnson, 358 Ga. App. 813, 814 (856 SE2d 401) (2021) (it is not this Court’s responsibility to search the record on behalf of a party to find the evidence that may support its claims). Although we do not deem this enumeration of error abandoned, Regional Finance’s failure to point this Court to any dispositive evidence that was before the trial court is relevant to our determination of whether it has shown error. 13 or deceptive business practice and whether Regional Finance’s actions were the

proximate cause of his injuries. However, both of these questions are typically for a

jury, except in plain and indisputable cases. See Regency Nissan, Inc. v. Taylor, 194 Ga.

App. 645, 648 (2) (391 SE2d 467) (1990) (“the question of whether a particular act or

omission, or a series thereof, constitutes unfair or deceptive acts or practices within

the meaning of OCGA § 10-1-393 generally is for jury resolution”); Zwiren v.

Thompson, 276 Ga. 498, 500 (578 SE2d 862) (2003) (“What amounts to proximate

cause is undeniably a jury question and is always to be determined on the facts of each

case upon mixed considerations of logic, common sense, justice, policy, and

precedent”) (citations and punctuation omitted). Here, where Pearson presented

evidence that Regional Finance took actions to collect on a loan after being informed

it was the result of fraud, we find no error in the trial court allowing this claim to

proceed.

As for causation, whether Regional Finance’s business practices caused

Pearson’s injuries remains a disputed issue of fact at this stage of the proceedings.

Regional Finance argues that because the risk of fraud to any particular individual

caused by the mailing of the unsolicited live checks is so remote (less than one percent

14 according to their internal statistics), it is not a foreseeable consequence for which

they can be held liable. However, although the risk is small, the injury complained-of

here does occur at least dozens of times per year. Thus, the statistics here do not

necessarily negate the question of foreseeability. See Boone v. Udoto, 323 Ga. App. 482,

484 (1) (747 SE2d 76) (2013) (“Foreseeable consequences are those which . . . because

they happen so frequently, may be expected to happen again. One is not bound to

anticipate or foresee and provide against that which is unusual or that which is only

remotely and slightly probable.”) (citation and punctuation omitted; emphasis

omitted). And even criminal intervenors only break the chain of causation when their

actions could not reasonably have been anticipated by the defendant. Blondell v.

Courtney Station 300 LLC, 362 Ga. App. 1, 8 (2) (865 SE2d 589) (2021) (“For an

independent act or event to eliminate other conduct as a proximate cause, it must be

neither foreseeable by the defendant nor triggered by the defendant’s act, and it must

have been sufficient of itself to cause the injury.”) (citation and punctuation omitted).

15 Accordingly, we find that questions of fact remain as to causation, and we ultimately

affirm the trial court’s order in part to the extent it denied summary judgment on

Pearson’s GFBPA claim.

Judgment affirmed in part, reversed in part. Barnes, P. J., and Pipkin, J., concur.