Court Opinion

ID: 2819534
Source: CourtListenerOpinion
Date Created: 2015-07-23 07:17:49.410073+00
Date Added: 2024-06-11T11:30:53.117784
License: Public Domain

SECOND DIVISION
                               ANDREWS, P. J.,
                           MILLER and BRANCH, 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/

                                                                      July 15, 2015

In the Court of Appeals of Georgia
 A15A0116. ETOWAH ENVIRONMENTAL GROUP, LLC v.
     WALSH et al.

      BRANCH, Judge.

      In August 2006, defendant Highstar Capital Fund II, LP (“Highstar”) acquired

Advanced Disposal Services, Inc. (“ADS”) for $470 million. In a lawsuit later filed

against ADS, plaintiff Etowah Environmental Group, LLC (“Etowah”) claimed that

ADS had presented Etowah with an artificially low price for Federal Road, a Forsyth

County waste management facility owned by ADS and Etowah, and that ADS had

thus induced Etowah to forego its right to “tag along” in Highstar’s acquisition of

ADS. An arbitration panel later found that ADS had breached its fiduciary duty to

Etowah in the context of the ADS acquisition and awarded Etowah approximately

$19 million for the value of Federal Road.
      In February 2012, after collecting the arbitration award, Etowah brought this

action for fraud and other claims, and seeking punitive damages and attorney fees,

against Highstar and its principals Michael Walsh and Christopher Beall, as well as

Highstar’s subsidiary Adstar Waste Holdings Corporation (“the Highstar

defendants”). The Highstar defendants moved for summary judgment on the ground

that the issue of the value of Federal Road had already been determined by the

arbitration panel such that Etowah was collaterally estopped from raising that issue

in its action against the Highstar defendants. On appeal from the trial court’s grant of

the Highstar defendants’ motion, Etowah argues that the issue of the value of its share

of Federal Road is not precluded. Etowah also argues that the trial court erred when

it granted summary judgment as to Etowah’s claims for other compensatory and

punitive damages against Highstar and when it excluded documents produced by

Highstar’s consultants as privileged. We conclude that although the trial court did not

err when it barred Etowah from relitigating that portion of its fraud claim that would

have involved the issue of Federal Road’s value and when it excluded the documents,

genuine issues of fact remain as to Etowah’s claim for attorney fees and costs

incurred before the arbitration panel in discovering the extent of Highstar’s fraud, and

                                           2
thus as to punitive damages arising from that claim. We therefore affirm in part and

reverse in part.

      To prevail at summary judgment under OCGA § 9-11-56, the moving
      party must demonstrate that there is no genuine issue of material fact
      and that the undisputed facts, viewed in the light most favorable to the
      nonmoving party, warrant judgment as a matter of law. OCGA §
      9-11-56 (c). A defendant may do this by showing the court that the
      documents, affidavits, depositions and other evidence in the record
      reveal that there is no evidence sufficient to create a jury issue on at
      least one essential element of plaintiff’s case.

Lau’s Corp. v. Haskins, 261 Ga. 491 (405 SE2d 474) (1991).

      Thus viewed in favor of Etowah, the record shows that in 2001, Etowah and

Advanced Disposal Services, Inc. (“ADS”) agreed to form Federal Road, LLC, which

                                          3
would acquire and operate the Eagle Point landfill in Forsyth County.1 ADS held a

75% interest in Federal Road, with Etowah owning the remaining 25%. Section 10.6

of Federal Road’s operating agreement provided for Etowah’s “tag-along right” as

follows:

      (a) In the event a Member elects to transfer . . . all or a portion of its
      [Federal Road] Interest (the “Selling Member”) to an unaffiliated third
      party . . . , all remaining Members (“Non-Selling Members”) shall have
      the right to cause the Selling Member to effect the transfer of such Non-
      Selling Members’ respective [Federal Road] Interest to such Third Party
      at an incremental price and on the same terms and conditions (“the

      1
          Rather than citing to evidence as it may appear in an admittedly “unwieldy”
78-volume record of more than 13,000 pages (not including voluminous deposition
transcripts), Etowah cites only its own statement of material facts filed below as to
some of the events at issue. See Court of Appeals Rule 25 (a) (1) (“Record and
transcript citations shall be to the volume or part of the record or transcript and the
page numbers that appear on the appellate record or transcript as sent from the trial
court”), (c) (2) (i) (“Each enumerated error shall be supported in the brief by specific
reference to the record or transcript. In the absence of such reference, the Court will
not search for or consider such enumeration.”). We also remind Etowah that
“[c]ontentions as to undisputed material facts under [Uniform Superior Court] Rule
6.5 . . . are not evidence for purposes of summary judgment, nor does any lack of
response to such contentions amount to an admission of fact.” Southern Gen. Ins. Co.
v. Davis, 205 Ga. App. 274, 275 (421 SE2d 780) (1992) (citation omitted); see also
Cincinnati Ins. Co. v. Perimeter Tractor & Trailer Repair, Inc., 192 Ga. App. 243,
244 (1) (384 SE2d 449) (1989). We have accepted Etowah’s account of these matters
only because Highstar has not controverted that account. See Court of Appeals Rule
25 (b) (1) (“Except as controverted, appellant’s statement of facts may be accepted
by this Court as true.”)

                                           4
      Offer”) as the Selling Members proposes to transfer its [Federal Road]
      Interest to such Third Party (the “Tag-Along Right”).

Section 10.10 of the operating agreement, entitled “Consent to Merger,” provided in

relevant part:

      [E]ach Member hereby irrevocably consents to the merger or
      consolidation by any legal means of [Federal Road] with [ADS] (or its
      successor) upon (i) the election of [ADS] (or its successor); and (ii) the
      adoption of a plan of merger or other consolidation by Majority Vote
      which provides Units of relatively equal value in [ADS] or successor
      entity in exchange for the [Federal Road] Interest held by each Member.

Section 10.10 also provided that the “unit value” to be used in calculating each

Federal Road member’s interest “shall be made in accordance with paragraph 10.9

(b),” which provided in relevant part that

      [t]he Unit Value of Units issued by [Federal Road] and the Unit Value
      of Units issued by [ADS] shall be determined to arrive at the ratio of
      units in [ADS] exchanged for Units in [Federal Road] pursuant to a Unit
      Exchange. The Unit Value . . . shall be determined: (i) by agreement by
      and between each Member of [Federal Road] and [ADS], or (ii) . . . by
      an appraiser[, who] shall determine that total fair market value of
      [Federal Road] and divide that amount by the total Units outstanding
      and after considering voting rights and applicable discounts and

                                          5
      premiums, arrive at the Unit Value of the Units issued by [Federal
      Road] to such Member to be exchanged for Units in [ADS].

      On May 5, 2006, Highstar sent ADS’s principal, Charles Appleby, a written

offer to buy ADS for $425 million “less the balance of [ADS’s] existing debt,” with

Federal Road accounting for at least $62 million of ADS’s value. On May 10,

Highstar increased its offer for ADS by $25 million, to $450 million, but decreased

the value of Federal Road to between $45.5 million and $47 million. On May 19,

Highstar increased its written offer for ADS by another $20 million, to $470 million,

but also created a second offer letter, addressed to ADS, that purported to be an offer

for Federal Road alone at a price of $45.5 million. According to Etowah, Highstar

created the second May 19 letter for the purpose of deceiving Etowah as to the terms

of Highstar’s offer for ADS, including the value of Federal Road.

      On June 12, 2006, Highstar and ADS met in New York to discuss Highstar’s

offer. On the following day, ADS met with Etowah and showed its representatives

Highstar’s second offer letter (but not its first) as well as an analysis showing how

much Etowah would receive were it to “tag along” to the $45.5 million offer for

Federal Road. As a result of being shown this letter, and because it felt that the $45.5

million offer for Federal Road was too low, Etowah declined to exercise its tag-along

                                           6
right. A merger plan dated June 30, 2006, provided that Etowah would merge into

ADS, with Etowah’s 25% interest in Federal Road to be exchanged for ADS shares.

      In August 2006, Highstar acquired ADS for $470 million. On September 21,

2006, Etowah was merged into ADS in accordance with Delaware law. On May 19,

2007, ADS merged Etowah out of its minority ownership of ADS shares. On June 1,

2007, Etowah sued ADS and others, but apparently not the Highstar defendants,2 in

Forsyth County Superior Court for fraud, breach of contract, and other claims arising

from Highstar’s acquisition of ADS. On September 26, 2007, Etowah also filed a

petition for appraisal in Delaware’s Court of Chancery seeking “a determination of

the fair value of its shares of ADS common stock.” In March 2009, this Court

affirmed the trial court’s grant of ADS’s motion to compel arbitration in the Forsyth

County lawsuit according to the operating agreement’s arbitration clause. Etowah

Environmental Group v. Advanced Disposal Svcs., 297 Ga. App. 126, 130-131 (1)

(676 SE2d 456) (2009). The Forsyth County and Delaware actions were then

consolidated in arbitration.

      2
         Etowah has not explained why Highstar was not named as a defendant in its
lawsuit against ADS, which had apparently become a wholly owned subsidiary of
Highstar at the time Etowah filed its first action. Nor can we determine the identity
of all the defendants to Etowah’s first complaint because Etowah has failed to provide
a citation to that complaint as it appears in the appellate record.

                                          7
      Etowah’s arbitration demand alleged that ADS had breached the operating

agreement by “fail[ing] to disclose” its discussions with Highstar as part of a

“scheme” to acquire Etowah’s interest in Federal Road for less than its fair value; by

merging Federal Road into ADS; and by “forcing” ADS into a “tainted” appraisal

process. Etowah also alleged that as a result of this “scheme,” ADS “obtained cash

for the entire value of Federal Road, rather than just 75% of it, and then promised

Etowah ADS stock, and not cash, resulting in a windfall to ADS,” which received the

value of Etowah’s share in cash at the time of the acquisition. The parties soon

stipulated, however, that the panel would determine “the value as of [August or

September] 2006 . . . of Etowah’s 25 percent interest in Federal Road.” (Emphasis

supplied.)

      On the issue of the “value” of Etowah’s 25% interest in Federal Road, ADS

contended to the arbitration panel that Sections 10.9 and 10.10 of the operating

agreement provided it with the right to merge Federal Road into ADS and to convert

Etowah’s shares of Federal Road into shares of ADS. ADS also asserted that the

arbitration panel was required to accept an appraisal, prepared by Houlihan Lokey,

opining that Etowah’s share of Federal Road was worth less than $8.6 million. By

contrast, Etowah argued that ADS had breached a fiduciary duty when it failed to

                                          8
negotiate in good faith with Etowah in the Highstar transaction. In its closing

argument to the arbitration panel, for example, Etowah contended that it should have

been informed of ADS’s first May 5, 2006 letter to Highstar, which valued Federal

Road at $62 million or more, and that the arbitrators should increase the lost tag-

along value of Federal Road to 25% of $72 million, or $18 million.

      On July 1, 2010, the arbitrators awarded Etowah over $19 million “as the value

for Etowah’s interest in Federal Road.”3 The panel accepted Etowah’s argument that

ADS had breached its fiduciary duty to ensure that the Highstar transaction was “fair

to Etowah as to the details of the transaction and the price to be paid to Etowah for

its minority interest in Federal Road.” The panel also rejected ADS’s argument that

under Section 10.9 (b) of the operating agreement, Etowah was bound by the

Houlihan Lokey appraisal. Rather, the panel concluded that under Delaware law,

which enables courts to make a minority shareholder whole after a breach of fiduciary

duty, an “entire fairness” standard applied, under which Etowah, as a “beneficial

owner of ADS shares,” was entitled to a “proportionate share” of ADS. The panel

      3
        The arbitrators reached this figure by multiplying Federal Road’s estimated
income over the 12 months preceding the merger “by a factor of 9.8,” for a valuation
of more than $81 million, minus a deduction for debt, for a total “one-quarter interest
in the value of Federal Road” of $19,174,545.

                                          9
rejected Etowah’s claim under OCGA § 13-6-11 for attorney fees and costs, however,

due to its “concern” as to “Etowah’s delay in attempting to circumvent arbitration”

as well as the difficulty of distinguishing between Etowah’s bad-faith and other

claims against the ADS defendants, which the panel found “impossible [to do] in this

case.” But the panel also awarded Etowah prejudgment interest, nominal damages,

$3.9 million in punitive damages against ADS, and $250,000 in punitive damages

against Appleby, for a total award, after set-off, of $26.4 million. Etowah collected

the award and filed a notice of satisfaction with the panel.

      In February 2012, however, Etowah brought the instant action against the

Highstar defendants, alleging that they had participated in the scheme with ADS and

Appleby to obtain Etowah’s interest in Federal Road for less than its “true value.”

This second action included a claim that Highstar’s principals had intentionally

misrepresented Federal Road’s value and that Etowah had reasonably relied on these

misrepresentations to its detriment. In August 2012, the trial court denied Highstar’s

first motion for summary judgment on the ground that in light of the “limited record”

before it, the question whether Etowah was estopped from asserting the issue of

Federal Road’s value did not yet have a definitive answer.

                                         10
      In the course of discovery in its action against the Highstar defendants, Etowah

produced the testimony of an appraiser, Christopher Mercer, to the effect that because

Highstar’s offer to ADS had combined the values of ADS and Federal Road into one

price, a determination of Federal Road’s value in the Highstar transaction required

an “allocation of value based on economic contribution.” In December 2013, Highstar

filed a second motion for summary judgment on grounds including that the issue of

the value of Federal Road had been conclusively determined in the arbitration such

that Etowah was precluded from raising the issue in its second action. After a hearing,

the trial court granted the motion on the ground that the issue of Etowah’s “interest”

in Federal Road had been “litigated and determined in the arbitration proceeding.”

The court specifically rejected Etowah’s attempt, via Mercer, to “concoct another

valuation opinion” by “reverse-engineer[ing] a methodology strikingly similar to that

performed by the panel” in order to reach “a value [Mercer] opines should be afforded

to Federal Road based on the ADS purchase price.” The trial court also accepted the

panel’s finding that fees and expenses were “impossible” to calculate in the case. This

appeal followed.

      1. In two related assertions of error, Etowah argues that the trial court erred

when it concluded that Etowah was precluded from re-litigating the issue of the

                                          11
“actual value” of its interest in Federal Road as a part of its new fraud claim against

the Highstar defendants.

      As a preliminary matter, we note that these assertions of error raise a question

of collateral estoppel, or issue preclusion, and not one of res judicata, or claim

preclusion. “The doctrine of res judicata prevents the re-litigation of all claims which

have already been adjudicated, or which could have been adjudicated, between

identical parties or their privies in identical causes of action.” Body of Christ

Overcoming Church of God v. Brinson, 287 Ga. 485, 486 (696 SE2d 667) (2010)

(citation and punctuation omitted; emphasis supplied). By contrast,

      the related doctrine of collateral estoppel precludes the re-adjudication
      of an issue that has previously been litigated and adjudicated on the
      merits in another action between the same parties or their privies. Like
      res judicata, collateral estoppel requires the identity of the parties or
      their privies in both actions. However, unlike res judicata, collateral
      estoppel does not require identity of the claim – so long as the issue was
      determined in the previous action and there is identity of the parties, that
      issue may not be re-litigated, even as part of a different claim.

Id. (citation and punctuation omitted; emphasis supplied). Under Georgia law, the

doctrines of claim and issue preclusion apply to arbitration proceedings. Bennett v.

Cotton, 244 Ga. App. 784, 785 (1) (536 SE2d 802) (2000). A party may therefore be

                                          12
precluded from raising a claim or an issue previously arbitrated “even if some new

factual allegations have been made, some new relief has been requested, or a new

defendant has been added.” Id. (citation and punctuation omitted). To prevail on a

collateral estoppel claim, however, a party “must prove that the contested issues, even

though arising out of a different claim, were actually litigated and decided and were

necessary to the prior decision.” Boozer v. Higdon, 252 Ga. 276, 278 (1) (313 SE2d

100) (1984) (citations omitted).

      Although Etowah asserted a lack of identity between the defendants to its ADS

and Highstar actions as a bar to Highstar’s defense of collateral estoppel, the trial

court held that as co-conspirators against Etowah, ADS and the Highstar defendants

were in privity with each other such that Highstar could assert issue preclusion

against Etowah as to the value of its Federal Road shares. Etowah has not challenged

this part of the trial court’s ruling on appeal, and we pass no judgment on it here.

Rather, Etowah insists that the issue of the “actual purchase price” Etowah should

have been offered and should now receive for its share of Federal Road has never

been litigated, even if the issue of Federal Road’s “fair market value” was decided by

the arbitration panel. We disagree.

                                          13
       No “actual purchase price” can be said to exist for Etowah’s share of Federal

Road because Highstar purchased ADS and Federal Road by means of a single offer,

which did not allocate the value of Federal Road within that offer.4 Further, Etowah

has always sought to recover the value of its property interest in Federal Road, first

lost when Etowah was fraudulently induced to surrender its tag-along rights under

Section 10.6 of the operating agreement, and not recouped when it failed to receive

an appropriate appraisal for the value of its Federal Road shares. In other words, as

the arbitration panel noted at the outset of its ruling, the issue before it was “the value

of Etowah’s minority interest in Federal Road as a result of a merger of Federal Road

into ADS . . . and to decide various tort claims asserted by Etowah against ADS and

Mr. Appleby.” By necessity, then, the arbitrators were charged by both parties with

deciding the issue of Federal Road’s “value” in the specific factual context of the

Highstar acquisition of ADS, including both Etowah’s tortiously induced decision to

decline its tag-along right (the subject of the Forsyth County lawsuit against ADS)

and its remedy of an appraisal of the value of the ADS shares Etowah should have

       4
        We can imagine that had Highstar actually purchased Federal Road
separately, or purchased ADS with a specific amount allocated to Federal Road,
Etowah could conceivably raise the issue of the “actual purchase price” it should have
received for its Federal Road shares. This is not the case before us, however.

                                            14
acquired (the subject of the Delaware action). Whatever evidence may have gone into

the calculation of that value, the fact remains that the arbitrators were required, in the

end, to determine a specific but hypothetical “value” in compensation for the

economic loss Etowah sustained as a result of the undervaluation of its Federal Road

shares. As Etowah itself characterized the matter in its post-hearing brief to the

arbitration panel: “This dispute is over what proportional value Etowah should be

tagging along at.”

      In its efforts to overcome its own characterization of the matter, Etowah first

points to the expert Christopher Mercer, who testified that the issue of Etowah’s

recovery for the value of Federal Road required an “relative allocation of value based

on economic contribution.” Mercer explained that this method was “not a completely

unusual” means of “provid[ing] a value for a company that has subsidiaries,” and of

“allocat[ing] that value between the subsidiaries based upon relative economic

contribution.” Mercer also noted, however, that in identifying this valuation method,

he was “not talking about a purchase price allocation,” but was rather applying an

“interpretation” of the agreement between Highstar and ADS “from business and

valuation perspectives,” including a calculation of the “price increment for the

relative attractiveness of Federal Road as a part of the [Highstar-ADS] Transaction.”

                                           15
      These contentions are contrary to well-established law that a party “‘cannot

avoid issue preclusion simply by offering evidence in the second proceeding that

could have been admitted, but was not, in the first.’” In re Sonus Networks

Shareholder Derivative Litigation, 422 FSupp.2d 281, 293 (III) (3) (D. Mass. 2006),

quoting 18 Moore’s Federal Practice § 132.02 [2] [d] (punctuation omitted); see also

Restatement (Second) of Judgments, § 27, comment c (when a party has litigated an

“ultimate fact,” and when that issue has been decided, “new evidentiary facts may not

be brought forward to obtain a different determination of that ultimate fact.”) Etowah

proffers Mercer’s testimony without explaining why that testimony could not have

been offered in its initial action against ADS. Even with such an explanation,

however, the ultimate factual issue of the value of Etowah’s Federal Road shares as

a factor in the number of ADS shares it should have acquired has been previously

litigated by the parties to the ADS action and decided by the arbitration panel. As a

result, Etowah is barred from raising that issue in this second action against Highstar.

      In short, Etowah’s acceptance of an award of over $20 million in the wake of

the arbitration panel’s decision as to the ultimate issue of Federal Road’s value thus

precludes the re-litigation of that issue in its second action, which features a new

fraud claim against a new defendant (Highstar) based on a new expert’s admittedly

                                          16
“unusual” methodology for calculating the damages Etowah suffered. The

voluminous record before us, including the arguments and decision of the arbitration

panel, authorizes the trial court’s factual determination that Etowah was accorded a

full and fair opportunity to litigate the issue of Federal Road’s value in its action

against ADS, and that the issue of how much Etowah should have received for its

share of Federal Road was actually decided in the arbitration. Because the issue of

Federal Road’s value “may not be re-litigated, even as part of [Etowah’s new fraud]

claim” against Highstar, the trial court did not err when it granted Highstar summary

judgment on that issue. Body of Christ Overcoming Church of God, supra, 287 Ga.

at 487-488 (affirming grant of summary judgment on the ground of collateral estoppel

rather than res judicata when the issue raised in plaintiff’s new action “had been

resolved on the merits in prior litigation”); see also Corey v. New York Stock

Exchange, 691 F2d 1205, 1213 (II) (6th Cir. 1982) (imposing collateral estoppel to

bar plaintiff’s reasserted claims as to an issue already decided in arbitration with

another defendant; plaintiff “may not transform what would ordinarily constitute an

impermissible collateral attack into a proper independent direct action by changing

defendants and altering the relief sought”).

                                         17
      2. Etowah also argues that the trial court erred when it granted summary

judgment as to Etowah’s claims against Highstar because the issue of attorney fees

and expenses incurred by Etowah due to Highstar’s concealment of its role in the

fraud on Etowah was not decided in the arbitration. We agree.

      (a) Pointing to the arbitration panel’s denial of Etowah’s request for fees,

Highstar argues that the issue of all fees arising from the ADS acquisition was

determined in the earlier suit such that Etowah is estopped from seeking them against

Highstar. But the doctrine of collateral estoppel precludes only “the re-adjudication

of an issue that has previously been litigated and adjudicated on the merits in another

action between the same parties or their privies.” Body of Christ, 287 Ga. at 486. But

Highstar was not a party to Etowah’s suit against ADS and Appleby, and could not

have been made a party to the arbitration that followed, even after evidence as to

Highstar’s role in deceiving Etowah was discovered. See OCGA §§ 9-9-2 (c)

(Georgia Arbitration Code “shall apply to all disputes in which the parties thereto

have agreed in writing to arbitrate,” with certain exceptions not applicable here), 9-9-

6 (b) (1) (“a party who has not participated in [an] arbitration . . . may apply to stay

arbitration” on grounds including that “(1) [n]o valid agreement to submit to

arbitration was made”); see also Tillman Park, LLC v. Dabbs-Williams Gen.

                                          18
Contractors, 298 Ga. App. 27, 32 (679 SE2d 67) (2009) (owner of LLC who was not

a party to the LLC’s contract with plaintiff could not move to compel arbitration

under OCGA § 9-9-6 (a)). Further, the issue of the attorney fees and costs incurred

by Etowah investigating Highstar’s role in the fraudulent acquisition of ADS was not

actually settled by the arbitration panel, which decided not to award Etowah its fees

and costs as against ADS under OCGA § 13-6-11. The panel noted that a decision to

award fees under OCGA § 13-6-11 is “discretionary even when there is bad faith”;

registered its concern “about Etowah’s delay in attempting to circumvent arbitration”;

and noted that any allocation of “expenses between successful and unsuccessful

claims asserted and those tainted by bad faith” would be “impossible in this case.”

      It is true that Highstar cannot be liable for any damages, including attorney

fees, that were not proximately caused by its own conduct in concealing its fraud

from Etowah. See Whiteside v. Decker, Hallman, Barber, & Briggs, 310 Ga. App. 16,

18-19 (1) (712 SE2d 87) (2011) (“To establish proximate cause, a [tort] plaintiff must

show a legally attributable causal connection between the defendant’s conduct and

the alleged injury[, and] must introduce evidence which affords a reasonable basis for

the conclusion that it is more likely than not that the conduct of the defendant was a

cause in fact of the result.”) (citation and punctuation omitted). As a general rule,

                                         19
moreover, “[a]ttorney fees [and expenses of litigation] are recoverable only where

authorized by some statutory provision or by contract.” Glynn County Fed.

Employees Credit Union v. Peagler, 256 Ga. 342, 344 (3) (348 SE2d 628) (1986)

(citation and punctuation omitted).

      But this Court has repeatedly recognized an exception to this general rule

against the recovery of attorney fees and costs: “‘attorney fees and expenses of

litigation in an underlying action are recoverable as real damages incurred as the

result of defendants’ malfeasance or misfeasance.’” Atlanta Woman’s Club v.

Washburne, 215 Ga. App. 201, 202 (1) (450 SE2d 239) (1994) (emphasis supplied;

citations and punctuation omitted), quoting Marcoux v. Fields, 195 Ga. App. 573, 574

(1) (394 SE2d 361) (1990).

      The effect of this exception is to put a plaintiff in the same position he
      would have occupied had the plaintiff not been forced to litigate with a
      third party[, and] permits a plaintiff to recover all losses flowing from
      a defendant’s alleged misfeasance or malfeasance, except in cases where
      expenses accrued in the cause of action where recovery is sought.

Atlanta Woman’s Club, 195 Ga. App. at 202 (citation omitted); see also Restatement,

Second, Torts § 914 (2) (“One who through the tort of another has been required to

act in the protection of his interests by bringing or defending an action against a third

                                           20
person is entitled to recover reasonable compensation for loss of time, attorney fees

and other expenditures thereby suffered or incurred in the earlier action”).

      To avoid summary judgment on its fraud claim against Highstar, then, Etowah

needed only to show that it might be able to prove a single dollar of actual damages

arising from Highstar’s concealment of its fraud which is not precluded by our

holding in Division 1. Zieve v. Hairston, 266 Ga. App. 753, 759 (2) (c) (598 SE2d 25)

(2004) (a fraud plaintiff must prove that actual damages resulting from the fraud,

including any damages “which the law presumes to flow from any tortious act”)

(citation and punctuation omitted). Here, Etowah has pointed to some evidence that

it incurred a “substantial amount” of attorney fees and costs in arbitration as a result

of Highstar’s failure to produce evidence of its role in the negotiations between

Etowah and ADS. Because the issue of Highstar’s concealment of its role in the fraud

on Etowah was not litigated before the arbitration panel, the decision by the

arbitrators not to award Etowah attorney fees as against ADS “is not a bar against the

recovery of legal fees and expenses of litigation incurred . . . as a proximate result”

of Highstar’s own tortious conduct. Marcoux, 195 Ga. App. at 576 (authorizing

plaintiff to recover attorney fees incurred in plaintiff’s first action on the note of the

                                           21
purchasers of plaintiff’s condominium as damages in a second action against realtors

who counseled plaintiff to accept the note).

      (b) Because the trial court erred when it granted Highstar summary judgment

on the issue of damages incurred by Etowah in the course of discovering Highstar’s

participation in its fraudulent acquisition of ADS, the trial court also erred when it

concluded that Etowah was not authorized as a matter of law to recover punitive

damages pursuant to that claim. Bedsole v. Action Outdoor Advertising JV, 325 Ga.

App. 194, 202 (4), n. 28 (750 SE2d 445) (2013) (reversing grant of summary

judgment as to claim for punitive damages when grant of summary judgment as to

breach of fiduciary duty was also reversed); see also PenneCom B.V. v. Merrill Lynch

& Co., 372 F3d 488, 494 (2) (2d Cir. 2004) (plaintiff who prevailed in arbitration

with first fraudster may seek punitive damages against second fraudster in a new

action; “even if collateral estoppel bars [plaintiff] from relitigating the amount of its

loss against [the first fraudster], such a determination should not necessarily preclude

punitive damages” against the second fraudster) (emphasis supplied).

      3. Etowah also argues that the trial court erred when it denied Etowah’s motion

to compel the production of over 1800 documents written by or addressed to

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“consultants” to Highstar on the ground that the documents were protected by the

attorney-client privilege. We disagree.

      We review a trial court’s decision as to discovery matters, including the

application of the attorney-client privilege, only for an abuse of discretion. De Castro

v. Durrell, 295 Ga. App. 194, 204-205 (3) (671 SE2d 244) (2008) (trial court did not

err in denying motion to compel the production of 77 documents as protected by the

attorney-client privilege or not reasonably calculated to lead to admissible evidence).

      Although Etowah argued below and repeats on appeal that some of the

documents could yield evidence of what Highstar actually paid for Federal Road,

Highstar’s counsel submitted affidavits attesting that the documents in question were

generated by counsel’s agents in the course of the representation. The trial court held

that these documents were privileged because Highstar’s communications to the

outside consultants were “sufficiently connected to the provision of legal advice” to

render the documents part of a “network of agents and employees of both the attorney

and the client” used “to facilitate [Highstar’s] legal representation.” See St. Simons

Waterfront, LLC v. Hunter, MacLean, Exley & Dunn, P.C., 293 Ga. 419, 422 (1) (746

SE2d 98) (2013) (“once an attorney-client relationship has been duly established

between an attorney and his corporate client, the legal advice confidentially

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communicated to the authorized agents of the client is by statute protected from

discovery”) (citation and punctuation omitted).

      Although Etowah asserts that the trial court erred in failing to hold an in

camera hearing concerning the documents, it has failed to cite any specific page of

the record showing that it requested such a hearing, and has also failed to cite to any

part of Highstar’s privilege log, which presumably details the authors and recipients

of some of the documents described in counsel’s affidavits. Because Etowah has thus

failed to show error by the record as required by Rule 25 (c) (2), we deem this

assertion of error abandoned. See Rice v. Lost Mountain Homeowners Assn., 288 Ga.

App. 714, 716-717 (4) (655 SE2d 214) (2007).

      Judgment affirmed in part and reversed in part. Andrews, P. J., concurs.

Miller, J., concurs in judgment only.

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