Plaintiff Julius Hertling is a limited partner in Sahara Club/Desert Village Associates Limited Partnership (Sahara Club), which was formed to own and operate Regency Park Apartments in Atlanta. Hertling brought suit, individually and on behalf of Sahara Club, against Stone Harbor Limited Partnership (Stone Harbor) and Stone Harbor’s individual limited partners, Jerome Adler, Richard Adler, Thomas Adler and Sheldon Rogers (collectively referred to as the Limited Partners). Stone Harbor was formed to own and operate Stone Harbor Townhouses in Atlanta. In the first amended complaint, Hertling asserts claims against Stone Harbor and the Limited Partners for conversion pursuant to OCGA § 14-8-14, for money had and received, on open account, and for common law conversion. Hertling also asserts a claim for constructive trust against Stone Harbor and the Limited Partners and a claim for attorney fees. It is undisputed that both Stone Harbor and Sahara Club shared a common general partner, Jules Aaronson. It is also undisputed that Stone Harbor and Sahara Club’s apartment communities were both managed by Jason Property Management Company (Jason), another entity in which Jules Aaronson had a financial interest.
On or about December 1, 1987, Sahara Club refinanced its Regency Apartment real estate. As a result of this refinancing Sahara Club received net proceeds of approximately $2.8 million. It is undisputed that these proceeds were deposited into Sahara Club’s operat
On December 9, 1987, the same day Sahara Club transferred the abovementioned portion of its refinancing proceeds to Account 301-8, the record shows that Jules Aaronson, acting as general partner of Stone Harbor and on its behalf, caused $1,998,531.52 to be distributed from Account 301-8, by wire, to the Limited Partners. It is undisputed that these distributions were made to the Limited Partners because of their contributions to Stone Harbor. Two wire transfers were made. The first transfer of $477,983.57 was sent to defendant Sheldon Rogers. The second transfer of $1,520,547.95 was sent to defendant Thomas Adler for his own benefit and for the benefit of Jerome Adler and Richard Adler. Of the total amount wired to Thomas Adler, the record shows that he kept $980,110.95 and distributed $270,219 to Richard Adler and $270,219 to Jerome Adler.
First American Bank’s records show that at the beginning of the day on December 9, 1987, Account 301-8 had a balance of $530,321.91. The bank records also show that on that day a total of $1,945,341.34 was deposited into Account 301-8, $1,808,777.71 of which was comprised of Sahara Club refinancing proceeds, and $136,563.63 of which consisted of funds from other entities. Hertling contends that based on the above, at least $1,331,645.98 of the total $1,998,531.52 transferred to Stone Harbor and the Limited Partners necessarily consisted of money belonging to Sahara Club.
Hertling filed suit against Stone Harbor and the Limited Partners on behalf of Sahara Club pursuant to OCGA § 14-8-37, as a partner who had not wrongfully dissolved the partnership and, in the
On January 7, 1994, a hearing was held on the parties’ cross-motions for summary judgment. Upon conclusion of the hearing the trial court granted summary judgment to Hertling and Sahara Club as to the conversion claims and denied Stone Harbor and the Limited Partners’ summary judgment motion. The trial court delayed ruling on whether Sahara Club was entitled to interest from the date of the conversion and whether $290,000 that Hertling received in a settlement of a federal court lawsuit against Sahara Club, Jules Aaronson, Jason and other parties, should be set off against any monies recovered on the conversion claims in this case. On January 27,1994, Stone Harbor and the Limited Partners filed a request for reexamination of the trial court’s ruling as to summary judgment. On that date, they also filed the affidavit of Jerrell Rosenbluth, with attached exhibits, and the Limited Partners filed third party complaints. Hertling and Sahara Club moved to strike the Rosenbluth affidavit and the third party complaints as untimely.
By order dated February 24, 1994, the trial court set forth in detail its ruling with regard to the grant of summary judgment to Hertling and Sahara Club. The trial court found that no issue of material fact existed as to liability based on the conversion claims and that not less than $1,331,645.98 of the total $1,998,531.52 transferred to the Limited Partners consisted of funds belonging to Sahara Club. Additionally, the trial court determined that the Limited Partners’ liability was established by operation of OCGA § 14-9A-48, which states that “[a] limited partner holds as trustee for the partnership: . . . [m]oney or other property wrongfully paid or conveyed to him on account of his contribution.” Consequently the trial court entered judgment against Stone Harbor in the amount of $1,331,645.98 and judgment against the Limited Partners in the following amounts: Thomas Adler, $980,110.95; Sheldon Rogers, $477,983.57; Richard Adler, $270,219; and Jerome Adler, $270,219. The court also ordered that the judgment could be enforced severally against Stone Harbor and the Limited Partners until the total amount of the judgment against Stone Harbor, together with post-judgment interest from the date of the order, was satisfied. The court rejected the argument that the
In its February 24, 1994 order, the trial court also denied Stone Harbor and the Limited Partners’ request for reexamination of the court’s proposed ruling as to the grant of partial summary judgment to Hertling and Sahara Club. Additionally, the trial court granted Hertling and Sahara Club’s motion to strike the Rosenbluth affidavit, and dismissed the Limited Partners’ third party complaints without prejudice.
Jerome Adler, Richard Adler and Thomas Adler appealed from the trial court’s February 24, 1994 order and from the denial of their motion to dismiss for failure to join indispensable parties. Their appeal was docketed in this court as Case No. A94A1831. Sheldon Rogers’ appeal, which is based on the same grounds as the Adlers’ appeal, was docketed in this court as Case No. A94A1832. Stone Harbor’s appeal of the trial court’s February 24, 1994 order was docketed in this court as Case No. A94A1833. In Case No. A94A1834, Hertling and Sahara Club appeal that portion of the trial court’s order denying them prejudgment interest on the conversion claims.
Case Nos. A94A1831, A94A1832, A94A1833
Stone Harbor and each of the Limited Partners rely on and specifically incorporate by reference the arguments and enumerations of error found in the others’ individual appellate briefs. Consequently, we will combine the arguments and enumerations of error set forth in Case Nos. A94A1831, A94A1832 and A94A1833 and address them as a whole below.
1. Stone Harbor and the Limited Partners contend that the trial court’s grant of partial summary judgment to Hertling and Sahara Club on the common law conversion claims was error. Specifically, they argue that the trial court’s one day tracing of funds through Account 301-8 is flawed and incapable of proving conversion from said account or the existence of damages to Sahara Club. We disagree.
In this state “[conversion consists of an unauthorized assumption and exercise of the right of ownership over personal property belonging to another, in hostility to his rights; an act of dominion over the personal property of another inconsistent with his rights; or an unauthorized appropriation.” (Citation and punctuation omitted.)
DCA Architects v. American Bldg. Consultants,
Although Stone Harbor and the Limited Partners argue otherwise, the record clearly shows that the Investo-Matic Agreement was not modified so as to allow the use of Sahara Club funds by another entity. Under the terms of Sahara Club’s partnership agreement, such a modification would have required the prior written approval of all of Sahara Club’s limited partners and it is undisputed that no such approval was obtained. Any contention that the requirement of written approval was waived by Sahara Club’s limited partners also is unsupported by the evidence. Moreover, paragraph 14 of the Investo-Matic Agreement itself provides that any modification of said agreement requires a writing signed by all the parties to the Investo-Matic Agreement in order to be valid. It is undisputed that First American Bank’s representative did not sign any modification. Consequently, we conclude that under the terms of the Investo-Matic Agreement, the $1,808,777.71 deposited to Account 301-8 by Sahara Club amounted to a special deposit, and therefore title to said funds belonged to Sahara Club at the time the funds were transferred to the Limited Partners. See
Southern Exchange Bank v. Pope,
2. We also reject defendants’ assertion that Hertling and Sahara Club cannot recover for conversion because they do not seek the recovery of specific coins or bills. Money in an account is capable of being converted even if it does not consist of specific coins or bills, so
3. In light of the above, Stone Harbor and the Limited Partners’ contention that the trial court erred in allowing Hertling and Sahara Club to trace Sahara’s funds through Account 301-8 into the hands of Stone Harbor and the Limited Partners also is without merit. Based upon our determination in Division 1 that ownership of the funds was vested in Sahara Club at the time the funds were transferred and the fact that the funds were held in escrow for the sole use of Sahara Club, we conclude that the trial court’s application of the “trust pursuit rule” was appropriate. Under that rule, a beneficiary of trust funds, such as those funds held in escrow for Sahara Club, is entitled to follow the funds through changes in their form.
Pittman v. Pittman,
4. Defendants also contend Sahara Club cannot recover for conversion because it did not sustain a loss. Specifically, Stone Harbor and the Limited Partners argue that any money converted by them
5. The trial court was also correct in its determination that no genuine issue of material fact existed as to Stone Harbor and the Limited Partners’ liability under the statutory conversion claim. OCGA § 14-8-14 provides for the recovery from a partnership for losses caused by the wrongful act of a partner. Specifically, OCGA § 14-8-14 states that: “[t]he partnership is bound to make good the loss: (1) [w]here one partner acting within the scope of his apparent authority receives money or property of a third person and misapplies it; and (2) [w]here the partnership in the course of its business receives money or property of a third person and the money or property so received is misapplied by any partner while it is in the custody of the partnership.” In this case, Jules Aaronson testified by affidavit that, in his capacity as general partner of Stone Harbor and on its behalf, he caused Sahara Club funds (as traced) to be transferred to the Limited Partners on account of their contributions to Stone Harbor. Such a transfer .violated the terms of the Investo-Matic Agreement and Sahara Club’s partnership agreement and as such constitutes misapplication of the funds. Because Jason was acting as an agent of Stone Harbor at the time the funds were transferred, the misapplication of said funds necessarily occurred while they were in the custody of Stone Harbor. Therefore, Stone Harbor is liable to Sahara Club for conversion under OCGA § 14-8-14. Under OCGA § 14-9A-48 the Limited Partners also are liable to Sahara Club for common law and statutory conversion because they hold as trustees for Stone Harbor money or other property wrongfully paid to them on account of their contributions. Therefore, the trial court did not err in holding Stone Harbor and the Limited Partners severally liable to Sahara Club. Moreover, we reject the contention that the trial court held the Limited Partners liable to a greater extent than Stone Harbor. Review of the trial court’s February 24, 1994 order clearly shows that the Limited Partners’ liability for conversion in this case is only
6. Although we have concluded that no genuine issue of material fact exists with regard to Stone Harbor and the Limited Partners’ liability to Sahara Club and that at least $1,331,645.98 of distinct Sahara Club funds were wrongfully converted, there still remains a genuine issue concerning the recovery of damages by Sahara Club in this case. Specifically, an issue of fact remains as to whether Hertling’s recovery of money damages and a judgment against Sahara Club in his federal lawsuit affects the amount of damages Sahara Club is entitled to recover here. Even though the trial court was correct in its statement that the federal case and this case involve different parties and different causes of action, the record shows that both cases to some extent seek recovery for the misapplication of the proceeds from the refinancing of Sahara Club’s real estate. Under Georgia law, double recovery for the same injury is inappropriate even if it is sought from different parties. See
Mathis v. Melaver,
7. The Limited Partners’ contention that the trial court erred in denying their motion to dismiss for failure to join indispensable parties is without merit. Contrary to the Limited Partners’ assertions otherwise, Jules Aaronson, Allen Aaronson (Sahara Club’s other limited partner), Jason and all the entities that participated in Jason’s centralized accounting system are not indispensable to this lawsuit. Jules Aaronson and Jason are at most only joint tortfeasors and therefore, they are not necessary or indispensable to the present action because their liability is both joint and several.
Ford v. Olympia Skate Center,
8. We also reject Stone Harbor and the Limited Partners’ assertion that genuine issues of material fact exist as to the application of the statute of limitation and the equitable doctrines of waiver and estoppel to the case at bar. The uncontradicted evidence in this case clearly shows that Jules Aaronson, who had a fiduciary relationship with Sahara and Hertling, actively concealed the misappropriation of Sahara Club funds, as well as the transfer to the Limited Partners of said funds, from Hertling for approximately three years. We conclude that the trial court was correct in its determination that such active concealment was fraudulent, and therefore tolled the statute of limitation until such time as Hertling discovered the misappropriation. Under OCGA § 9-3-96, where a fiduciary relationship exists between the party defrauded and the party under whom defendants claim, the applicable statute of limitation is tolled until, the time such fraud is discovered. See
Middleton v. Pruden,
Additionally, the record evidence in this case does not support Stone Harbor and the Limited Partners’ contention that issues of fact exist as to whether or not Hertling was aware of the manner in which Jason’s centralized accounting system was operated prior to the conversion of Sahara Club’s funds. The affidavit testimony of Glenn Aaronson (Sahara Club’s other general partner) that a copy of the modification to the Agreement “was provided to [Hertling] in 1982 with one of the operating reports sent to him on a regular basis” does not create a genuine issue of fact to be resolved in this case. Hertling denied ever receiving a copy of said modification and there is no evidence in the record that any such modification was sent to Hertling by mail, properly addressed with proper postage affixed. See
American Express Travel Related Svcs. Co. v. Berlye,
Case No. A94A1834
In this appeal Hertling and Sahara Club claim that the trial court erred in denying their request for prejudgment interest from the date of Stone Harbor and the Limited Partners’ conversion of Sahara Club’s funds. In light of our holding in the cases above, we conclude that the trial court correctly determined that prejudgment interest was inappropriate here because the damages in this case are unliquidated in that their amount is in dispute. See OCGA § 7-4-15. Consequently, the trial court’s denial of Hertling and Sahara Club’s request for prejudgment interest is affirmed.
Judgment in Case Nos. A94A1831, A94A1832 and A94A1833 affirmed in part and reversed in part. Judgment in Case No. A94A1834 affirmed.