This case involves a suit on a guaranty. The trial court entered judgment against Amir Noorani, one of the guarantors, and he filed this appeal, seeking review of an order denying his motion to dismiss for lack of jurisdiction, an order imposing discovery sanctions, and the final judgment and order. The facts relevant to the consideration of each of these orders will be set forth in the numbered divisions below.
1. After the record in this appeal was transmitted to this Court and the case docketed here, the trial court issued an order purporting to dismiss this appeal based on Noorani’s inexcusable and unreasonable delay in causing the record to be transmitted to this Court. Plaintiff/appellee Sugarloaf Mills Limited Partnership of Georgia d/b/a Discover Mills (hereinafter Discover Mills) has filed a motion to dismiss or remand this appeal, “to give effect to the trial court’s dismissal order.” However, in
Noorani v. Sugarloaf Mills Limited Partnership of Ga.,
2. Noorani first challenges the trial court’s denial of his motion to dismiss based on lack of personal jurisdiction. We find no error and affirm.
The following facts are pertinent to the resolution of this issue. Amir and Shabnam Noorani, who are residents of Texas, executed a guaranty for rent owed under a retail lease at Discover Mills, which is located in Gwinnett County, Georgia. The lease was entered into by Chain D’Oro, Inc., a Texas corporation, 1 as tenant, and Discover Mills, a Delaware limited partnership, as lessor, and was executed by Amir Noorani in his capacity as vice president of Chain D’Oro. Both the lease and guaranty were executed in Texas, and the guaranty was incorporated into and made a part of the lease. Further, the lease but not the guaranty contained a Georgia choice of law and a forum selection provision.
In 2005, Discover Mills obtained a default judgment against Chain D’Oro in the amount of $210,641.14 for rent owed under the lease plus post-judgment interest. 2 Discover Mills then brought suit on the guaranty against Amir and Shabnam Noorani, seeking to recover the amount of its judgment. Amir and Shabnam Noorani filed a motion to dismiss based on lack of personal jurisdiction, and the trial court granted the motion as to Shabnam Noorani but denied the motion as to Amir. Amir now challenges the denial of his motion.
Pursuant to subsection (1) of the Georgia Long Arm Statute, OCGA § 9-10-91, a Georgia court is authorized to exercise personal jurisdiction over a nonresident who “| transacts any business within this state[.]”
In Innovative Clinical & Consulting Svcs. v. First Nat. Bank &c.], 279 Ga. [672, 675 (620 SE2d 352 ) (2005)], our Supreme Court overruled all cases taking a narrow view of subsection (1), instead clarifying that, if a cause of action arises out of conduct within this state, OCGA § 9-10-91 (1) grants Georgia courts the unlimited authority to exercise personal jurisdiction over any nonresident who transacts any business in this State ... to the maximum extent permitted by procedural due process.
Hyperdynamics Corp. v. Southridge Capital Mgmt.,
As is pertinent to this issue, the record shows that Noorani visited the Chain D’Oro store at Discover Mills on several occasions to review records and check inventory. Additionally,
Further, the record shows that after suit was filed against Chain D’Oro to collect the unpaid rent, the summons and dispossessory proceeding were forwarded to Noorani by the store’s manager, and Noorani traveled to Georgia in his capacity as vice president in an attempt to defend the suit.
On appeal, Noorani argues that these contacts were insufficient to authorize a Georgia court to exercise personal jurisdiction over him based on the transacting business section of the Long Arm Statute.
In considering whether a Georgia court may exercise jurisdiction over a nonresident based on the transaction of business, we apply a three-part test: Jurisdiction exists on the basis of transacting business in this state if (1) the nonresident defendant has purposefully done some act or consummated some transaction in this state, (2) if the cause of action arises from or is connected with such act or transaction, and (3) if the exercise of jurisdiction by the courts of this state does not offend traditional fairness and substantial justice.
(Footnote omitted.)
Robertson v. CRI, Inc.,
[w]e examine the first two factors “to determine whether (a) defendant has established the minimum contacts (with the forum state) necessary for the exercise of jurisdiction.” (Citation and punctuation omitted.) ATCO Sign &c. Co. v. Stamm Mfg.,298 Ga. App. 528 , 534 (1) (680 SE2d 571 ) (2009). If such minimum contacts are found, we move to the third prong of the test to consider whether the exercise of jurisdiction is “reasonable” — that is, to ensure that it does not result solely from “ ‘random,’ ‘fortuitous’ or ‘attenuated’ contacts. (Cit.)” Id.
Paxton v. Citizens Bank &c.,
Further, a defendant who files a motion to dismiss for lack of personal jurisdiction has the burden of proving lack of jurisdiction.
Southern Electronics,
(a) Noorani argues that the first part of the test cannot be met because he, personally, did not consummate any business transactions or conduct any business transactions in this state. He points to the fact that all the negotiations for the guaranty, as well as the underlying lease, took place in Texas, and that both the guaranty and the lease were executed in Texas. He also asserts that he was acting
on behalf of the corporation and not his own behalf in executing the lease and in his subsequent visits to the store. Thus, relying on
Southern Electronics,
he argues the trial court erred by finding the required minimum contacts with this state. But as we recently noted, “[t]he legal principle upon which
Southern Electronics
seems to have been based — that electronic, telephonic, and postal contacts, as a matter of law, cannot amount to transacting business in Georgia — was flatly rejected by our Supreme Court in
Innovative Clinical &c. Svcs.,
In considering questions of personal jurisdiction our inquiry is not limited to the execution of the guaranty contracts alone, as the contract is ordinarily but an intermediate step serving to tie up prior business negotiations with future consequences which themselves are the real object of the business transaction. It is these facts — prior negotiations and contemplated future consequences, along with the terms of the contract and the parties’ actual course of dealing — that must be evaluated in determining whether the defendant purposefully established minimum contacts within the forum.
Robertson,
The stated purpose of the guaranty Noorani executed was to “guarantee the full, faithful, and timely payment and performance by Tenant of all the payments, covenants and other obligations of Tenant under or pursuant to the Lease.” The lease was for the rental of retail space in a Georgia shopping mall, and Noorani personally guaranteed the rent obligations under the lease. Moreover, the guaranty was “annexed to” and made a part of the lease.
3
Although not all of his contacts with this state directly related to the guaranty “the contacts did concern the business that the loan had funded, and show a nexus between [Noorani], the forum, and the transaction as a whole.”
Robertson,
Moreover, other factors distinguish this case from
Southern Electronics. Southern Electronics
involved an Alabama corporation that did not do business here, and the guaranty was for a credit line on an open account through which the Alabama corporation purchased computer hardware from a Georgia corporation to be shipped to Alabama.
Southern Electronics,
In our opinion, the facts of this case more closely align it with cases such as
Paxton,
and the cases it relies on, such as
Robertson, Drennen
and
Ga. R. Bank &c. Co. v. Barton,
(b) Moreover, the direct connection between the loan, guaranty, Noorani’s activities here and Discover Mills’ claim under the guaranty “is so obvious as to require no elaboration. Suffice it to say that the second prong of the test is also satisfied.”
Barton,
(c) Our final step in the application of the three-part test is to “determine whether the exercise of jurisdiction by a Georgia court... in this case comports with ‘traditional notions of fairness and substantial justice.’
Aero Toy Store, [LLC v. Grieves,
“Due process requires that individuals have fair warning that a particular activity may subject them to the jurisdiction of a foreign sovereign.” (Punctuation and footnote
Although, as stated in footnote 3, we agree with Noorani that the consent to jurisdiction provision in the lease did not individually and directly bind him since he only signed that contract in his corporate capacity and its terms were not incorporated into the guaranty, we do find it relevant to show that Noorani could anticipate being sued in a Georgia court for claims arising out of the operation of the store
here. Moreover, although Noorani argues that “[e]very aspect and facet of the [gluaranty . . . occurred in Texas” this argument ignores the purpose of the guaranty — to guarantee rent payments on retail space located in a Georgia shopping mall. For this reason also, Georgia has a substantial interest in litigating these claims. And, in light of the circumstances here, as more fully set forth above, we conclude that Noorani is not being forced to litigate here because of random, fortuitous or attenuated circumstances. In sum, and considering the relevant factors, we find that “ ‘ “neither reasonableness nor fair play nor substantial justice would be offended” by haling [Noorani] into a Georgia court and exercising jurisdiction over [him].’
White House, Inc. v.
Winkler,
3. Noorani next contends that the trial court erred by entering an order on December 7, 2006 imposing discovery sanctions before the issue of jurisdiction had been determined and that, because the trial court subsequently determined that it lacked jurisdiction over Shabnam Noorani, that order was null and void as to her. He further contends that the trial court erred when, in the final order and judgment, it required him to pay the entire discovery sanction.
First we note that subsequent to the December 7 order, the trial court issued another order requiring the sanctions awarded in the December 7 order to be held in escrow by Discover Mills’ counsel and reserving ruling on the motion for sanctions “until a later date.” According to remarks made by the trial court at a subsequent hearing, it appears that ruling was deferred until the jurisdictional issue was decided. Thus, it does not appear that the sanctions were actually awarded until the jurisdictional issue was resolved. Moreover, Noorani cites no authority for the proposition that the trial court was required to re-allocate the amount of the sanctions once Shabnam was dismissed under the circumstances here, where the discovery replies were filed jointly. We thus find this enumeration to be without merit.
4. Lastly, Noorani contends the trial court erred by granting Discover Mills’ motion in limine thereby precluding him from presenting evidence contesting the debtor’s liability and the amount of the judgment as established by the default judgment in the dispossessory action, in essence finding that as a guarantor with notice and opportunity to be heard, he was bound by the previous judgment entered against the principal debtor.
Both parties agree that
Escambia Chemical Corp. v. Rocker,
As framed by this Court, the issue on appeal was “whether a guarantor can question the liability or the amount thereof of the principal debtor to the creditor where those matters have been established by a judgment against the debtor in the creditor’s favor.”
Escambia,
On appeal, Noorani and Discover Mills urge differing interpretations of Escambia. Noorani argues that we should apply the rule set forth above — and that pursuant to that holding, the trial court’s order granting the motion in limine should be reversed, and he should be allowed to present rebuttal evidence as to both liability and amount. Discover Mills argues that Escambia decided only the issue of which rule to apply when the guarantor did not have notice and opportunity to be heard, and that, although arguably dicta because the guarantor in that case “had not received the benefit of such notice and . . . opportunity” by “[q]uoting with approval [the italicized] excerpt from American Jurisprudence, this Court acknowledged the near-universally accepted view that” a guarantor who has notice of the action brought by the creditor and opportunity to be heard is bound by the judgment against the debtor. (Emphasis supplied.) Thus, Discover Mills argues, the trial court in this case correctly ruled that Noorani, as a guarantor with notice and opportunity to be heard, is precluded from challenging the liability of the debtor or the amount of the judgment.
However, the guarantor in
Escambia
was actually a named defendant along with the debtors in the action filed by the creditor to collect the debt, and the guarantor, but not the debtors, had filed an answer in that suit. Thus, it appears to us that the guarantor in
Escambia
had notice and opportunity prior to the entry of the default judgment. Moreover, in that case the trial court had not denied the guarantor the opportunity to be heard, but rather had found that he was not prejudiced by the default judgment “in any manner.” This Court reversed that portion of the trial court’s order, holding that proper proof of the judgment at trial would constitute prima facie evidence of the debtor’s liability, and the burden would then shift to the guarantor to rebut that evidence. Escambia,
The holding in
Escambia
— that a guarantor is not conclusively bound by a judgment against the principal debtor, but that the liability and the amount established by that judgment constitutes prima facie evidence which may be rebutted by the guarantor, has been cited, or followed, by our appellate courts numerous times since it was decided, without any apparent consideration of whether the guarantor had notice and an opportunity to be heard. E.g.,
McCorvey Grading &c. v. Blalock Oil Co.,
Moreover, we think reversal of the trial court’s order in this case is required even under Discover Mills’ interpretation of Escambia. Although Noorani had notice of the suit against Chain D’Oro and traveled to Georgia in an attempt to file responsive pleadings on behalf of the corporation, or to obtain an attorney to do so, there is no evidence that he, as a personal guarantor of the obligations under the lease, had a real or meaningful opportunity to be heard in that action. The trial court erred in holding otherwise, and by holding that Noorani was conclusively bound by the default judgment against the debtor.
Judgment affirmed in part and reversed in part.
Notes
Chain D’Oro’s store at Discover Mills operates under the trade name of Watches, Inc.
Chain D’Oro filed an application for discretionary review from the denial of its motion to set aside the default judgment, but we dismissed that application as untimely.
Because the terms of the lease were not made a part of the guaranty, we agree with Noorani that he was not bound by the forum selection or choice of law provision contained in the lease.
Stuart v. Peykan, Inc.,