Sun Nurseries, Inc. v. Lake Erma, LLC
316 Ga. App. 832
| Ga. Ct. App. | 2012Background
- Sun Nurseries, Inc. sued Lake Erma, LLC and BEC for past due invoices and related claims at Crystal Lake Golf Course, later adding individuals and Talon Equities as defendants.
- Sun and Lake Erma/BEC had a verbal landscape services agreement from 2003–2005; Sun invoiced but Lake Erma paid, with disputed post-2005 invoices totaling about $30,506.88.
- Lake Erma distributions to members in 2005/2006 totaled about $8.3 million; Sun argued these transfers rendered Lake Erma insolvent and were fraudulent.
- Sun prevailed at trial on contract and quantum meruit against Lake Erma and BEC, but the trial court directed verdicts on fraud, conversion, and related theories; only the directed verdict appeal remains.
- Evidence about misrepresentations and intent to defraud was found insufficient for fraud; the 2005 distributions and 2006 loan did not show veil-piercing; the Second Check issue barred conversion; overall, the directed verdicts were proper.
- The corporate defendants and some individuals did not appear; the appellate court reviews directed verdict de novo and upholds if the record compels it.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Fraud elements satisfied? | Sun argued Burke’s statements intended to fraudulently deter lien filing. | Lake Erma/BC argued no knowledge or intent to defraud; statements not made with requisite intent. | Directed verdict affirmed on Sun’s fraud claim. |
| Fraudulent transfer under OCGA 18-2-74(a)? | Sun claimed 2005 distributions evidence actual intent to hinder creditors. | Defendants showed lack of actual fraudulent intent; badges of fraud not proven. | Directed verdict affirmed on fraudulent transfer claim. |
| Conversion of checks? | Second Check allegedly Sun’s property via delivery and misdelivery of First/Second Check. | No delivery of Second Check; no possession by Sun; conversion not established. | Directed verdict affirmed on conversion claim. |
| Piercing corporate veil? | Distributions/loan transfers showed commingling and abuse of corporate form. | No substantial commingling or misuse; transactions reflected in corporate books. | Directed verdict affirmed; no veil piercing. |
Key Cases Cited
- Allen v. Spiker, 301 Ga. App. 893 (2009) (directed verdict/de novo review standards)
- Simmons v. Pilkenton, 230 Ga. App. 900 (1998) (fraud elements required)
- Beach v. B. F. Saul Property Co., 303 Ga. App. 689 (2010) (standards for summary judgment and directed verdict similar)
- Scarbrough v. Hallam, 240 Ga. App. 829 (1999) (fraud proof requirements; elements must be met)
- D. C. Ecker Constr. v. Ponce Investment, 294 Ga. App. 833 (2008) (timing of lien rights; completion of work)