Court Opinion

ID: 9765785
Source: CourtListenerOpinion
Date Created: 2023-08-29 04:19:22.437396+00
Date Added: 2024-06-11T07:30:15.688128
License: Public Domain

CARLEY, Presiding Justice.
When Bradley and Lori Schorr (named plaintiffs) financed the purchase of their home in Georgia, they executed a security deed which was subsequently assigned to Countrywide Home Loans, Inc. Upon full repayment of the underlying loan in 2003, the named plaintiffs demanded in writing that Countrywide cancel the security deed pursuant to OCGA § 44-14-3. The version of that statute which was in effect at the time, prior to its amendment in 2008, provided in relevant part that, upon the failure of the grantee or holder of a security deed or other instrument
to transmit properly a legally sufficient satisfaction or cancellation as provided in this Code section, the grantee or holder shall, upon written demand, be liable to the grantor for the sum of $500.00 as liquidated damages and, in addition thereto, for such additional sums for any loss caused to the grantor plus reasonable attorney’s fees. . . . [T]he grantee or holder shall not be liable to the grantor unless and until a written demand for the liquidated damages is made. No other provision of this Code section shall be construed so as to affect the obligation of the grantee or holder to pay the liquidated damages provided for in this subsection.
Former OCGA § 44-14-3 (c) (Ga. L. 1999, pp. 862, 865, § 2). Compare current OCGA § 44-14-3 (c) (Ga. L. 2008, pp. 352, 353, § 1). When Countrywide allegedly failed to cancel the security deed within the 60-day period set forth in former OCGA § 44-14-3 (b) (1), the named plaintiffs made a written demand for $500 in liquidated damages. Upon Countrywide’s failure to pay such liquidated damages, the *571named plaintiffs filed a class action in the United States District Court for the Middle District of Georgia on behalf of Countrywide customers whose security deeds had not been cancelled as required by former OCGA § 44-14-3. Countrywide filed a motion to dismiss the claims of putative class members on the ground that the complaint failed to allege that they had individually made written demands for liquidated damages. The district court certified the following question to this Court:
Whether named plaintiffs in a class action may, pursuant to OCGA § 44-14-3, satisfy the pre-suit written demand requirement for liquidated damages on behalf of putative class action members by the named plaintiffs’ satisfaction of the written demand requirement.
See Ga. Const, of 1983, Art. VI, Sec. VI, Par. IV; OCGA § 15-2-9 (a); Supreme Court Rules 46-48.
The district court correctly noted that we have already determined that exhaustion of administrative remedies by named plaintiffs satisfies that pre-suit requirement for all class members. Barnes v. City of Atlanta, 281 Ga. 256, 257 (1) (637 SE2d 4) (2006) (Barnes II). The particular pre-litigation requirement involved in Barnes II was the demand for a tax refund contemplated by OCGA § 48-5-380. Like that statute, former OCGA § 44-14-3
does not “provide for the form of action to be utilized. By participating as a plaintiff in a class action that includes a claim for [liquidated damages], a [grantor of a security deed] is unquestionably bringing an action for [liquidated damages], which is what the statute permits.” [Cits.] Thus, any [such grantor] whom the named plaintiffs represent and who does not ultimately opt out of the class action is considered to have brought suit for [liquidated damages] at the same time as the named plaintiffs.
Barnes II, supra. As a result, the named plaintiffs in this case are generally permitted to act as representatives on behalf of the entire class of grantors. Barnes II, supra at 258 (1).
Just one example of such representative action, which Barnes II drew from persuasive authority, is satisfaction of the requirement for exhaustion of administrative remedies. The nature of that example, in light of the general approval of representative actions by named plaintiffs as discussed above, indicates that the satisfaction of any “ ‘precondition for suit... by the class plaintiff normally will avoid the necessity for each class member to satisfy this requirement *572individually.’ [Cit.]” Barnes II, supra. This more general application of Barnes II is also supported by persuasive authority. Where a class action is authorized,
[m]ultiple [pre-suit] demands for relief need not be filed on behalf of all the members of the class. . . . [F]urther demands are not likely to serve any useful purpose and are not required. The modern class action is “designed to avoid, rather than encourage, unnecessary filing of repetitious papers and motions.” [Cits.]
Baldassari v. Public Finance Trust, 337 NE2d 701, 707 (5) (Mass. 1975). See also Duhe v. Texaco, 779 S2d 1070, 1087 (D) (La. App. 2001).
Barnes II does not indicate that a “key” factor that “drove” that decision “was the fact that this Court had previously determined in a prior appeal in that case that the City could not constitutionally collect the tax that had been imposed on the plaintiff attorneys. [Cit.]” (Dissent, p. 576.) Actually, the “most important” factor, as even the dissent acknowledges, was the defendant’s need for early notice of its “potential” liability. Barnes II, supra. That notice was not provided by resolution of the substantive issue, but rather by satisfaction of the precondition for suit and by filing of the lawsuit itself. Barnes II, supra. We gave no indication in Barnes II that the prior substantive determination was even a minor factor in our decision.
Furthermore, contrary to the dissent, we did not causally connect that prior substantive determination to our ruling that recovery was not limited to those taxpayers who individually demanded a refund. (Dissent, p. 577.) Instead, we simply recognized that the applicable substantive law did not discriminate between those who individually satisfied the precondition for suit and those who did not. Barnes II, supra at 259 (1). Thus, it made sense that the named plaintiffs’ satisfaction of the precondition for suit and filing of the actual lawsuit as a class action placed the defendant on notice of both the nature of the suit and the potential number of class members. Barnes II, supra at 258-259 (1).
Likewise, in the present case, the named plaintiffs’ written demand and filing of the lawsuit put Countrywide on notice of a class action which is governed by former OCGA § 44-14-3 and which includes all of its customers whose security deeds had not been cancelled as required by that same substantive law. While this matter may not be of constitutional import as in Barnes II, it does involve clearly applicable statutory law for the protection of all class members.
*573Furthermore, the contrast drawn by the dissent between the liquidated damages demand requirement in former OCGA § 44-14-3 and the administrative procedure at issue in Barnes II is a distinction without a difference. Both preconditions for suit are absolute requirements. The City’s claim in Barnes II that certain class members failed to exhaust their administrative remedies for tax refunds pursuant to OCGA § 48-5-380 pertained to the unwaivable defense of lack of subject matter jurisdiction. Rockdale County v. Finishline Indus., 238 Ga. App. 467, 469-470 (2) (518 SE2d 720) (1999). See also Norman v. United Cities Gas Co., 231 Ga. 788 (204 SE2d 127) (1974); Hooten v. Thomas, 297 Ga. App. 487, 489 (677 SE2d 670) (2009). Thus, the requirement for exhaustion of administrative remedies is no less fundamental than the requirement for a demand of liquidated damages. The failure to fulfill either of these preconditions for suit absolutely bars recovery. More important to this case, fulfillment of each precondition by the named plaintiffs and their subsequent filing of a class action provide notice to the defendant with respect to the nature of the suit, the governing law, and the extent of the class.
In short, there is no reason not to apply in this case the general rule allowing the named plaintiffs in a class action to satisfy preconditions for suit on behalf of the entire class. An exception to that general rule is not mandated by any “ ‘genuinely unique statutory requirements’ ” in former OCGA § 44-14-3, as that statute “neither prohibits utilization of a class action, nor expressly requires individual [satisfaction of the precondition for suit]. [Cits.]” Barnes II, supra at 258 (1). See also Duhe v. Texaco, supra (“The statute does not require that the notice [or demand] be given by each and every [class member] individually. [Cit.]”).
Adoption of the dissent’s position would convert a general rule applicable to class actions into an exceedingly narrow exception by means of an equally narrow reading of Barnes II. The general rule permitting pre-litigation representation of a class would be abrogated, leaving only a single exception to a newly adopted general rule in Georgia forbidding the satisfaction by a named plaintiff of a precondition for suit on behalf of a class. That extremely limited exception would apparently apply only when the particular precondition is exhaustion of administrative remedies, a constitutional challenge is involved and, most remarkably, the issue of liability to the class has already been determined. We decline to overturn a significant area of the law governing class actions in any such manner. Instead, we conclude that the certified question presented by the district court must be answered in the affirmative.

Certified question answered.

All the Justices concur, except Melton, J., who dissents.