RES-GA McDonough, LLC v. Taylor English Duma LLP
302 Ga. 444
Ga.2017Background
- RES-GA acquired a bank’s note, deed, and guaranties after the bank’s insolvency and sued the guarantor, Michael Langino, after Taylor English had been representing the prior assignee in collection proceedings.
- RES-GA informed Taylor English it believed Langino had fraudulently transferred real property to his wife in 2008 and asked Taylor English to pursue a claim under Georgia’s former UFTA to set aside that transfer.
- Taylor English amended the underlying complaint to assert UFTA claims and filed lis pendens and a motion to add the transferee (Debbie Langino); while that motion was pending, Debbie sold the property to a third party purchaser.
- The trial court in the underlying case refused to subject the third-party purchaser to the claim as a bona fide purchaser; RES-GA later obtained a money judgment against Michael Langino.
- RES-GA sued Taylor English for legal malpractice (and related claims), alleging counsel’s delay in pursuing the UFTA claim caused loss of the property as a judgment-collection asset; the trial court dismissed the malpractice complaint for failure to state a claim because RES-GA lacked standing under UFTA.
- The Georgia Supreme Court affirmed, holding RES-GA (a downstream assignee) could not bring the pre-2015 UFTA claim because OCGA § 44-12-24 bars assignment of fraud-based causes of action and federal law (FIRREA) did not preempt that result.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether RES-GA had standing under pre-2015 UFTA to pursue fraudulent-transfer claims as a downstream assignee | RES-GA claimed it acquired the bank’s rights and thus could assert the UFTA claim to set aside the transfer | Taylor English and appellees argued UFTA claims arising from fraud are nonassignable under OCGA § 44-12-24, so RES-GA lacked standing | Held: RES-GA lacked standing; OCGA § 44-12-24 barred the claim as a matter of law |
| Whether the trial court properly dismissed the legal malpractice claim for failure to state a claim | RES-GA argued factual issues (standing challenge not raised in the underlying case) precluded dismissal | Taylor English argued malpractice fails because, absent a viable underlying claim, RES-GA cannot show it would have prevailed but for counsel’s negligence | Held: Dismissal affirmed—malpractice claim fails because RES-GA could not have prevailed on the underlying UFTA claim |
| Whether the UCC (negotiable-instrument rules) preempt OCGA § 44-12-24 and permit assignment of the claim | RES-GA argued negotiable-instrument principles under the UCC preserve its assignee rights, displacing the nonassignment rule | Taylor English argued the underlying claim was a fraudulent-transfer action (not an action on the note) and the UCC/OCGA § 11-1-103 does not displace OCGA § 44-12-24 | Held: UCC does not preempt § 44-12-24; nonassignment statute applies |
| Whether FIRREA or federal law preempt OCGA § 44-12-24 for downstream assignees | RES-GA argued FIRREA’s successor-rights language and FDIC’s powers mean downstream assignees should be treated as having the bank’s rights | Taylor English argued FIRREA governs FDIC’s powers but does not show Congress clearly intended to preempt state nonassignment rules as to subsequent private assignees | Held: FIRREA does not preempt § 44-12-24 as to downstream assignees; plaintiff failed to show clear congressional intent to preempt state law |
Key Cases Cited
- Abramyan v. State of Ga., 301 Ga. 308 (standard for motion to dismiss and de novo review)
- Leibel v. Johnson, 291 Ga. 180 (legal-malpractice requires causation showing plaintiff would have prevailed in underlying case)
- Security Feed & Seed Co. of Thomasville, Inc. v. NeSmith, 213 Ga. 783 (fraud-based causes of action are not assignable)
- RES-GA Hightower, LLC v. Golshani, 334 Ga. App. 176 (downstream assignee lacked standing under pre-2015 UFTA; UVTA later changed the rule)
- Callaway Blue Springs, LLLP v. West Basin Capital, LLC, 341 Ga. App. 535 (applying nonassignment rule in similar context)
- Merrill Ranch Props., LLC v. Austell, 336 Ga. App. 722 (same)
- O’Melveny & Myers v. FDIC, 512 U.S. 79 (federal preemption principles; absence of explicit federal displacement supports state-law application)
- Castillo-Solis v. State, 292 Ga. 755 (standard for proving federal preemption of Georgia law)