Court Opinion

ID: 4366613
Source: CourtListenerOpinion
Date Created: 2019-02-11 18:06:30.057938+00
Date Added: 2024-06-11T11:49:39.842658
License: Public Domain

SECOND DIVISION
                                MILLER, P. J.,
                             BROWN and GOSS, JJ.

                   NOTICE: Motions for reconsideration must be
                   physically received in our clerk’s office within ten
                   days of the date of decision to be deemed timely filed.
                               http://www.gaappeals.us/rules

                                                                   January 24, 2019

In the Court of Appeals of Georgia
 A18A2051. THE DEPOSITORY TRUST AND CLEARING CORP.
     v. JONES.
 A18A2052. AMERIS BANK et al. v. JONES.

      MILLER, Presiding Judge.

      In this dispute arising from an allegedly mishandled transfer of stock,

shareholder Billy N. Jones sued securities depository The Depository Trust and

Clearing Corporation (“DTCC”), transfer agent Computershare, Inc., Ameris

Bancorp, and Ameris Bank (collectively, “the defendants”), based upon the

defendants’ alleged failure to “properly maintain and properly exchange” Jones’ stock

in The Coastal Bank (“Coastal”) following Coastal’s acquisition by Ameris Bank.

DTCC moved to dismiss Jones’ complaint for failure to state a claim pursuant to

OCGA § 9-11-12 (b) (6), arguing that Jones: (1) had no contractual relationship with

DTCC; (2) could not satisfy any element of conversion against DTCC; and (3) had
no right of action against DTCC under the Georgia Uniform Securities Act, OCGA

§ 10-5-1 et seq. (“the Act”). Computershare, Ameris Bancorp, and Ameris Bank filed

a similar motion to dismiss, asserting that Jones failed to state a claim for: (1)

violation of the Act; (2) breach of contract; (3) conversion; and (4) negligence. In

addition, Ameris Bancorp contended that Jones “waived his ability to commence any

action related to the consummation of the merger [between Coastal and Ameris Bank]

against Ameris Bancorp.” The Superior Court of Liberty County summarily denied

both motions to dismiss, but granted each of the parties a certificate of immediate

review. Thereafter, we granted the parties’ applications for interlocutory appeal, and

we have consolidated these cases for decision. We now affirm the trial court’s order

because we conclude that Jones has satisfied the minimal pleading requirements

necessary to survive the defendants’ motions to dismiss.

      Under Georgia law,

      [a] motion to dismiss for failure to state a claim upon which relief may
      be granted should not be sustained unless (1) the allegations of the
      complaint disclose with certainty that the claimant would not be entitled
      to relief under any state of provable facts asserted in support thereof;
      and (2) the movant establishes that the claimant could not possibly
      introduce evidence within the framework of the complaint sufficient to
      warrant a grant of the relief sought. If, within the framework of the

                                          2
      complaint, evidence may be introduced which will sustain a grant of the
      relief sought by the claimant, the complaint is sufficient and a motion to
      dismiss should be denied. In deciding a motion to dismiss, all pleadings
      are to be construed most favorably to the party who filed them, and all
      doubts regarding such pleadings must be resolved in the filing party’s
      favor.

(Footnotes omitted.) Anderson v. Flake, 267 Ga. 498, 501 (2) (480 SE2d 10) (1997).

To that end,

      minimum pleading requirements are found in OCGA § 9-11-8 (a) (2)
      (A), which requires that the complaint contain “[a] short and plain
      statement of the claims showing that the pleader is entitled to relief,”
      and we have held that the touchstone is fair notice — “this short and
      plain statement must include enough detail to afford the defendant fair
      notice of the nature of the claim and a fair opportunity to frame a
      responsive pleading.”

(Citations omitted.) Aetna Workers’ Comp Access v. Coliseum Medical Center, 322
Ga. App. 641, 651 (4) (746 SE2d 148) (2013). Although “[a] trial court’s ruling on

a motion to dismiss for failure to state a claim is subject to de novo review[,]” Infinite

Energy, Inc. v. Pardue, 310 Ga. App. 355, 356 (1) (713 SE2d 456) (2011), we “accept

the allegations of fact that appear in the complaint and view those allegations in the

                                            3
light most favorable to the plaintiff.” Bush v. Bank of N. Y. Mellon, 313 Ga. App. 84,

89 (720 SE2d 370) (2011).

      So viewed, Jones alleged that Ameris Bank became the successor to, and

surviving entity of, Coastal following Ameris Bank’s acquisition of Coastal in June

2014. At the time of the acquisition, Jones owned 61,960 shares of Coastal common

stock; as a result of the acquisition, Jones was to receive 28,941.516 shares of Ameris

stock. Relevant to these appeals, it appears that, of the 61,960 shares of Coastal

common stock owned by Jones, 20,294 shares were “purchased and/or received as

dividends or stock splits” titled as “CEDE & Co. Billy N. Jones Beneficial Owner.”1

      At some point, Jones received a statement from Ameris Bancorp and/or

Computershare dated August 11, 2015, indicating that the nine stock certificates

comprising the 20,294 shares were surrendered on July 21, 2014. Thereafter, Jones

      1
          “CEDE & Co.” was not named as a party in Jones’ complaint, nor is its role
— or Jones’ association with it, if any — explained at any point in the complaint.
However, DTCC cited to authorities from foreign jurisdictions which have outlined
CEDE & Co.s’ role as nominee of The Depository Trust Company (“DTC”), which
is itself a subsidiary of DTCC, and as “the direct holder of stock certificates for all
of its members which include most securities brokers and dealers in the country. . .
.” Pet Quarters, Inc. v. Depository Trust and Clearing Corp., 559 F3d 772, 776 (I)
(8th Cir. 2009).

                                          4
received an October 22, 2015 letter from Computershare2 indicating that “the Deposit

Trust Company also known as CEDE and CO. submitted the certificate for exchange

and was given the entitlement shares, which were then distributed to the brokerage

firms.” According to Jones, the 20,294 shares of Coastal stock should have been

converted to approximately 9,479 shares of Ameris Bancorp stock, which he never

received.

      As a result, Jones alleged that he had been “deprived . . . of his rightful

ownership” of the 9,479 shares of Ameris Bancorp stock due to the defendants’

“individual and collective conduct[,]” and that the defendants failed “to exercise

ordinary care in the surrender, transfer, exchange and disbursement” of the shares.

Jones then asserted claims of conversion, negligence, breach of contract, and

violation of the Georgia Uniform Securities Act. The trial court denied the

defendants’ motions to dismiss Jones’ complaint for failure to state a claim, see

OCGA § 9-11-12 (b) (6), and these appeals followed.

                                Case No. A18A2051

      2
       Contrary to the allegation in Jones’ complaint, this letter was not sent by
DTCC. In its letter, Computershare identified itself as “the transfer agent for Ameris
Bancorp.”

                                          5
      1. DTCC argues that Jones’ complaint fails to state a claim for breach of

contract because it does not identify any contractual relationship, much less reference

a specific contract, between Jones and DTCC. Similarly, DTCC contends that Jones

cannot establish any element of conversion against DTCC, including (1) Jones’ right

to possess the shares at issue as against DTCC; (2) DTCC’s possession of the shares;

(3) a valid demand by Jones against DTCC for return of the shares; and (4) DTCC’s

refusal to return the shares. Finally, DTCC asserts that the trial court should have

granted its motion to dismiss because Jones cannot demonstrate that DTCC owed

Jones a duty, under either common law negligence or the Act, and that the Act did not

afford Jones a private cause of action against DTCC. After review of Jones’

complaint, including Jones’ factual allegations coupled with the individual causes of

action, and consideration of the liberal notice pleading requirements codified at

OCGA § 9-11-8 (a) (2) (A), we cannot conclude that DTCC has demonstrated that

Jones “could not possibly introduce evidence within the framework of the complaint

sufficient to warrant a grant of the relief sought.” Anderson, supra, 267 Ga. at 501 (2).

      To the contrary, “the objective of the [Civil Practice Act] is to avoid

technicalities and to require only a short and plain statement of the claim that will

give the defendant fair notice of what the claim is and a general indication of the type

                                           6
of litigation involved; the discovery process bears the burden of filling in details.”

(Emphasis supplied.) Dillingham v. Doctors Clinic, 236 Ga. 302, 303 (223 SE2d 625)

(1976). See also Osprey Cove Real Estate v. Towerview Constr., 343 Ga. App. 436,

443 (6) (808 SE2d 425) (2017); Campbell v. Ailion, 338 Ga. App. 382, 384-385 (790

SE2d 68) (2016) (“[I]t is not necessary for a complaint to set forth all of the elements

of a cause of action in order to survive a motion to dismiss for failure to state a

claim[;] [r]ather, the Georgia Civil Practice Act requires only notice pleading and .

. . pleadings are to be construed liberally and reasonably to achieve substantial justice.

. . .”). Indeed, as we noted with approval in Osprey Cove, “basic discovery should

eliminate any uncertainty about the basis of [Jones’] claims.” 343 Ga. App. at 443 (6).

For example, evidence developed through discovery may establish, inter alia, a

contractual agency relationship between certain defendants for Jones’ benefit and the

existence of a duty by DTCC to “properly maintain and properly exchange” Jones’

stock in Coastal following Coastal’s acquisition by Ameris Bank. Accordingly, we

affirm the trial court’s denial of DTCC’s motion to dismiss.

                                  Case No. A18A2052

      2. Ameris Bancorp contends that Jones “expressly waived any claims against

[it] relating to the consummation of the merger [with Coastal]” by executing a

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Shareholder Voting Agreement that provides, in part, that Jones agreed “not to

commence or participate in . . . any claim, derivative or otherwise, against Ameris

[Bancorp], Coastal or any of their respective successors relating to the negotiation,

execution or delivery of this Agreement or the Merger Agreement or the

consummation of the Merger.” Jones asserts that the provision simply precludes him

from participating in a class action against Ameris Bancorp. The trial court summarily

denied the Ameris Defendants’ motion to dismiss. We find no error because this

clause does not preclude Jones’ right to sue for conduct unrelated to the completion

of the Shareholder Voting Agreement and the Merger Agreement.

      “Generally, contract construction is a question of law that we review de novo.”

(Citations omitted.) Comm. & Southern Bank v. First Bank, 338 Ga. App. 341, 343

(790 SE2d 80) (2016). To that end, “[t]he cardinal rule of contract construction is to

ascertain the intention of the parties. When the terms of a contract are clear and

unambiguous, this Court looks only to the contract itself to determine the parties’

intent, and we give the contract terms an interpretation of ordinary significance.”

(Citations omitted.) Id.

      Further, the construction which will uphold a contract in whole and in
      every part is to be preferred, and the whole contract should be looked to

                                          8
      in arriving at the construction of any part. Moreover, no construction is
      required or even permitted when the language employed by the parties
      in the contract is plain, unambiguous, and capable of only one
      reasonable interpretation.

(Citation omitted.) Megel v. Donaldson, 288 Ga. App. 510, 513 (1) (654 SE2d 656)

(2007).

      In this case, we need not resort to the rules of contract construction because the

parties’ agreement is clear and unambiguous. As noted, Section 13 of the Shareholder

Voting Agreement between Jones and Ameris Bankcorp3 provides that Jones may not

“commence or participate in, and to take all actions necessary to opt out of any class

in any class action with respect to, any claim, derivative or otherwise,” against

Ameris Bancorp “relating to the negotiation, execution or delivery of this Agreement

or the Merger Agreement or the consummation of the Merger.” It is therefore clear

that Jones may not “commence or participate in” certain actions against Ameris

Bancorp; such actions include “any claim . . . relating to the negotiation, execution

or delivery of [the Shareholder Voting] Agreement or the Merger Agreement or the

      3
         The Shareholder Voting Agreement further provided that “Ameris and
Coastal propose to enter into an Agreement and Plan of Merger, dated as of the date
hereof (the “Merger Agreement”. . .), pursuant to which, among other things, Coastal
will merge with and into Ameris (the “Merger”). . . .”

                                          9
consummation of the Merger.” However, Ameris Bancorp does not argue that Jones’

action is related “to the negotiation, execution or delivery of [the Shareholder Voting]

Agreement or the Merger Agreement. . . .”; rather, it contends that Jones’ claim that

“Ameris Bancorp violated duties that it supposedly owed [Jones] by failing to transfer

control of Ameris Bancorp shares to him as part of the merger” is related to the

“consummation of the merger.”

      “Consummation” is defined as “finish, complete.” Webster’s Ninth New

Collegiate Dictionary, p. 282 (1991). See, e.g., California DHI, Inc. v. Erasmus, No.

04-cv-1566-MSK-CBS, 2008 U.S. Dist. LEXIS 27233, *11 (D. Colo. Mar. 26, 2008)

(“The term ‘consummation’ is not defined in the statute, but the common dictionary

definition of that word is ‘the action of completing [or] finishing’ something. In other

words, a ‘plan of merger’ is ‘consummated’ when the ‘plan’ is completed and the

merger is accomplished.”) (citation omitted). Moreover, of particular interest, Section

1 (b) of the Shareholder Voting Agreement describes Jones’ duties under the

agreement, including the requirement that he

      vote (or cause to be voted), in person or by proxy, all the Shares that are
      beneficially owned by Shareholder . . . (i) in favor of adoption and
      approval of the Merger Agreement and the transactions contemplated
      thereby. . .; and (iii) against any Acquisition Proposal or any other

                                          10
      action, agreement or transaction that is intended to . . . impede, interfere
      or be inconsistent with, delay, postpone, discourage or materially and
      adversely affect consummation of the transactions contemplated by the
      Merger Agreement or this Agreement.

      Accordingly, the plain language of Section 13 of the Shareholder Voting

Agreement reveals that it was the parties’ intention that Jones waive any claims,

whether individually or as a member of a class, related to the preparation of the

merger agreements or to the completion or effectuation of the merger itself, and not

to any claim for which Jones may have a cause of action resulting from the merger.4

To that end, the acts underlying Jones’ causes of action for the allegedly mishandled

stock transfer could only occur after the merger between Ameris Bancorp and Coastal

had been consummated.5 For example, if the proposed merger between Ameris

Bancorp and Coastal failed, through no effort of Jones, at some point after Jones

executed the Shareholder Voting Agreement, no stock transfer would have been

necessary. It necessarily follows that Jones’ complaint does not “relat[e] to the

      4
        For the reasons stated herein, Jones’ argument that this restriction is limited
to class actions is unfounded.
      5
       Of note, the Shareholder Voting Agreement became effective on March 10,
2014, while the merger became effective June 30, 2014 and Jones’ stock transfer did
not occur until a later date (possibly as early as July 21, 2014).

                                          11
negotiation, execution or delivery” of the merger agreements or to “the consummation

of the Merger” because the complaint cannot be construed as an effort to interfere

with the merger. Therefore, we conclude that the trial court properly denied Ameris

Bancorp’s motion to dismiss.

       3. In four enumerations of error, Computershare, Ameris Bancorp, and Ameris

Bank (the “Ameris Bank Defendants”) assert that the trial court erred in failing to

dismiss Jones’ causes of action for violation of the Georgia Uniform Securities Act,

conversion, breach of contract, and negligence. For the reasons stated in Division 1,

supra, we conclude that the Ameris Bank Defendants have not shown that Jones

“could not possibly introduce evidence within the framework of the complaint

sufficient to warrant a grant of the relief sought.” Anderson, supra, 267 Ga. at 501 (2).

See also Dillingham, supra, 236 Ga. at 303; Osprey Cove, supra, 343 Ga. App. at 443

(6); Campbell, supra, 338 Ga. App. at 384-385. We therefore affirm the judgment of

the trial court.

       Judgments affirmed. Brown and Goss, JJ., concur.

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