Forged Deeds Do Not Convey Title

In the opinion in Aurora Loan Services, LLC v. John Macelray Veatch, Admr.,  Appeal Case No. S10A1725 (March 18, 2011), the Georgia Supreme Court reaffirmed the principle that a forged deed is a nullity and cannot convey title to an innocent purchaser for value.  The facts recited in the case indicated that a financial institution had tried to enforce a security deed that it had received from a party receiving title from an estate under a forged deed.  The estate administrator sought to invalidate the mortgage lien on the grounds the financial institution had taken its security deed under a chain of title initiated by a forgery.

The supreme court noted that it had recently overruled authority in Georgia that had indicated that a bona fide purchaser for value without notice of a forgery could show good title.  The court held that forged deeds are nullities and can never give title.

Georgia Supreme Court Finds No Loopholes in Statute of Repose

In the legal opinion of Rosenberg v. Falling Water, Inc., Case No. S10G0877 (March 18, 2011), the Georgia Supreme Court held that the eight year statute of repose for bringing an action to recover for construction defects barred a personal injury victim from suing for physical injuries caused by a collapsed deck more than ten years after the issuance of the certificate of occupancy for the house.  The court rejected the idea that O.C.G.A. Section 9-3-51applied only to construction defects and did not extend to actions for personal injuries.

A statute of repose is a special statute of limitations that cuts off all possible claims after a statute of limitations has expired.  While four and six year statutes of limitations may apply to claims for defective construction, there are exceptions to the underlying statutes of limitations that can extend the operation of the statute of limitations, such as where a defendant conceals the defect.   The statute of repose then steps in to cut off the exceptions to the statute of limitations after another extended period so that a plaintiff cannot come back decades later and pursue a construction defect claim.  

In Georgia, the statute of repose for construction defects protects industry professionals from eternal liability for building structures that may last for a long time.   It applies to architects and engineers as well as builders.

This opinion of the court should be footnoted in that it was issued by a court divided 4-3.  

Georgia Supreme Court Upholds Offer of Settlement Statute in Nuisance Case

In the opinion in the case titled O'Leary v. Whitehall Construction, Appeal Case No. S10A144 (Georgia Supreme Court, March 18, 2011) (the "Whitehall Case"), a unanimous court affirmed an award of attorneys' fees under O.C.G.A. Section 9-11-68, the Georgia Offer of Settlement Statute, to the defendants - a builder and lot owner and one of its limited liability company members - who were accused of flooding the property of an adjacent downhill neighbor with sediment and stormwater during construction of a home in 2004.

In the Whitehall Case, the defendants won a jury verdict of no liability.  The Plaintiffs had argued for more than $250,000 in damages and fees after their property flooded during the heavy rains of the Summer of 2004, which included rains from Hurricane Ivan.  After the defense verdict, the defendants moved for fees under the Offer of Settlement Statute adopted by the Georgia General Assembly in 2005 and modified in 2006, and the trial judge in Forsyth County Superior Court awarded the defendants $60,291.52 for their fees incurred subsequent to rejection of the offer of settlement.

Counties Have Discretion to Abandon Roads

In an opinion issued on February 28, 2011, the Georgia Supreme Court reviewed a trial courts entry of an injunction against a board of county commissioners preventing them from abandoning a road.  Scarborough v. Hunter, Appeal Case No. S11A03476 (Feb. 28, 2011).   The plaintiffs, who were presumably landowners affecting by the road abandonment, filed suit against the Stephens County Board of Commissioners to prevent them from abandoning Winding Bluff Road as a county road, thereby returning title to the road to the landowner(s) along the road.    The Stephens County Superior Court issued an injunction against the abandonment before it was completed.  The Georgia Supreme Court reversed.

The case stands for two important propositions.  First, the court emphasized that a county board of commissioners has discretion to make a determination that a road is no longer needed by the public.  Second, the court held that a court should confine its review of a road abandonment matter to the point in time after the abandonment.  In other words, a court should not enjoin the abandonment before a board of commissioners has a chance to follow through with the statutory procedure for an abandonment.

Creditors and Plaintiffs May Void Transfers of Property Intended to Defeat Creditors

In a case captioned Bishop v. Patton, the Georgia Supreme Court addressed Georgia's Uniform Fraudulent Transfer Act, O.C.G.A. Section 18-2-71, et al. (the "UFTA"),  in the context of the claims against a man who had murdered the relative of the plaintiffs.  The court examined the facts of the case under a multi-factored approach under the UFTA and upheld a trial court's injunction against further transfers of the contents of financial accounts, while reversing the trial court's preliminary injunction against further transfers of a house.

The UFTA is an act that prevents someone who owes money or is subject to a lawsuit or claim for money from hiding or secreting his assets or giving a person close to him a preference in or gift of the assets.  The law in Georgia was adopted by the Georgia General Assembly and codifies centuries of common law regarding what constitutes a fraudulent conveyance.   Without the law, any party or debtor could simply transfer their assets away in anticipation of being the subject of a claim or lawsuit and avoid a debt.

The opinion in Bishop, supra, contains a straight forward assessment of facts of a case applying the UFTA's factors, or "badges of fraud," to review a trial court's order under the statute.  Anyone thinking about transferring their assets to a relative or other person to avoid having to pay creditors should consult an attorney about the law before doing so.  The consequence of violating the statute may cause a plaintiff or creditor to sue the person to whom a potential defendant transfers an asset.

Laches Prevents Associations and Neighbors From Stopping Construction

The principle of laches is an equitable legal doctrine that states that a person cannot stand by while another person spends money or effort and then complain later about the result.   In Waller v. Golden, Appeal Case No. S10A1598 (Ga. Supreme Ct., Feb. 28, 2011), the Georgia Supreme Court issued an opinion in which it addressed the application of this principle to the Eagle Ridge Homeowners Association neighborhood.   In Waller, neighbors filed suit to enforce restrictive covenants in a neighborhood after the property owners association failed to prevent a lot owner from building a swimming pool in the side yard of a lot.

The appellate court upheld the lower court's denial of the plaintiffs' request that the trial court enjoin the removal of the pool through a permanent injunction.  The courts found that laches applies when a neighborhood or its association wait to enforce covenants until after a lot owner has spent considerable money and effort in building a structure on a lot.

Georgia Supreme Court Issues Recent Stormwater Case

On February 28, 2011, the Georgia Supreme Court issued an opinion relating to stormwater management issues.  This opinion involved general civil procedure affecting the addition of parties to a proceeding. However, the opinion in Nashville Restaurant Management LLC v. Gwinnett County, Appeal Case No. S10A 2072 (Ga. Supreme Ct., Feb. 28, 2011), (the "Sinkhole Case") also provides insight for remedies in stormwater cases.

The facts of the lawsuit underlying the opinion in the Sinkhole Case involved a sinkhole that appeared due to the collapse of a storm water structure in Gwinnett County, Georgia.  The lower court added the adjacent property owner as a party to the lawsuit without giving the party an opportunity to address its level of responsibility for the sinkhole.   On the same day that the trial court ordered the county to invest in repairing the cause of the sinkhole, the court also added the adjacent property owner to the suit and ordered the new party to pay a proportionate cost of the repair.  The fault of the trial court was in failing to provide the new party the necessary time to contest its involvement in the matter.  This error led the appellate court to reverse the relief order.

The Sinkhole Case stands for the proposition that new parties to equitable proceedings are generally entitled to notice and opportunity to be heard before relief is entered against them.   The case will return to the trial court for reconsideration of the remedy after hearing from the adjacent owner.