In the Supreme Court of Georgia



                                                  Decided: July 6, 2015


      S14G1876. VININGS BANK v. BRASFIELD & GORRIE, LLC.


      MELTON, Justice.

      In Vinings Bank v. Brasfield & Gorrie, LLC, 328 Ga. App. 636 (759 SE2d

886) (2014), the Court of Appeals affirmed, among other rulings, the trial

court’s determination that Vinings Bank (“Bank”) was not entitled to summary

judgment with regard to a counterclaim for conversion brought against the Bank

by Brasfield & Gorrie, LLC (“B&G”). We granted certiorari to determine the

propriety of this decision. For the reasons set forth below, we affirm in part and

reverse in part.

      As summarized below,

      [t]his case arises from a defaulted $1.4 million business loan that
      [the Bank] made to Wagener Enterprises, Inc. (“WEI”). As partial
      collateral for the $1.4 million loan, WEI granted the Bank a security
      interest in all of its accounts and accounts receivable, including
      WEI's contract to provide drywall services work for general
      contractor [B & G] on multiple construction projects. After WEI
      defaulted on the loan, the Bank filed suit against B & G, seeking to
      collect on WEI's accounts receivable and alleging conversion. B &
      G filed a counterclaim for conversion, and the parties subsequently
      filed cross-motions for summary judgment. The Bank appeal[ed to
      the Court of Appeals], contending that the trial court erred in (1)
      denying its motion for summary judgment in its action to recover
      money from B & G, and in granting partial summary judgment to
      B & G; (2) denying its motion for summary judgment on its
      conversion claim; and (3) denying its motion for summary
      judgment on B & G's counterclaim for conversion.

Id. at 636. After considering the case, the Court of Appeals affirmed the trial

court on all counts, and we granted certiorari narrowly to determine whether the

Court of Appeals erred in Division 3 of its opinion when it held that the trial

court correctly denied summary judgment to the Bank on B & G’s counterclaim

for conversion.

      With specific regard to the facts underlying B & G’s counterclaim, the

record shows that WEI opened and maintained a general deposit account with

the Bank.1 As WEI finished work on construction projects for B & G, WEI sent

B & G an invoice which covered WEI’s fees and the fees of subcontractors

employed by WEI. After receiving an invoice, B & G would deposit the

invoiced amount into WEI’s deposit account, and WEI would subsequently

disburse the appropriate amounts to its subcontractors. It is undisputed that


      1
          WEI is not a party to this action.
                                          2
WEI’s account was not a trust account. Following WEI’s default on its loan, the

Bank froze WEI’s general deposit account for approximately four weeks.

During this time, B & G sent the Bank a letter, notifying it that it had been

making construction payments into WEI’s account and that some of the funds

in the account might be due to subcontractors of WEI. B & G did not convey the

names of any potential subcontractors or any amounts that might be owed to

them. At the end of the four-week period, the Bank applied the funds held in

WEI’s account to WEI’s loan indebtedness, and, in order to satisfy or avoid the

imposition of materialmen’s liens on its construction projects, B & G paid all of

WEI’s subcontractors individually.2 Then, as part of the ensuing law suit, B &

G counterclaimed that the Bank had converted funds from WEI’s account,

arguing that, pursuant to OCGA § 16–8–15,3 any amounts due to WEI’s

      As a result, B & G argues that it has, in effect, paid twice for the services
      2


of WEI’s subcontractors.
      3
       This statute provides:
      (a) Any architect, landscape architect, engineer, contractor,
      subcontractor, or other person who with intent to defraud shall use
      the proceeds of any payment made to him on account of improving
      certain real property for any other purpose than to pay for labor or
      service performed on or materials furnished by his order for this
      specific improvement while any amount for which he may be or
      become liable for such labor, services, or materials remains unpaid
                                        3
subcontractors were held in a constructive trust for their benefit. The trial court

denied the Bank’s motion for summary judgment on this counterclaim, finding

that issues of fact remained regarding the extent to which any subcontractors

had been paid and whether any invoices remained. The Court of Appeals

affirmed.

      In doing so, the Court of Appeals did not consider whether B & G had any

right to assert a counterclaim against the Bank for conversion of funds due to

WEI’s subcontractors. It is undisputed that B & G had no direct relationship

with the Bank, B & G was not, itself, a subcontractor of WEI entitled to any of



      commits a felony and, upon conviction thereof, shall be punished
      by imprisonment for not less than one year nor more than five years
      or upon the recommendation of the jury or in the discretion of the
      trial judge, punished for a misdemeanor, provided that, in addition
      to the above sanctions, where a corporation's agent acts within the
      scope of his office or employment and on behalf of the corporation
      and with intent to defraud uses such proceeds for purposes other
      than for property improvements or where a corporation's board of
      directors or managerial official, the latter acting within the scope of
      his employment and on behalf of the corporation recklessly
      tolerates or, with intent to defraud, authorizes, requests, or
      commands the use of such proceeds for purposes other than for
      property improvements, the corporation commits a felony and, upon
      conviction thereof, shall be punished by a fine of not less than
      $1,000.00 nor more than $5,000.00.
                                        4
WEI’s funds, B & G did not have direct contractual relationships with any of

WEI’s subcontractors, and B & G had no fiduciary relationship with any of

WEI’s subcontractors. Furthermore, there is no evidence that WEI or WEI’s

affected subcontractors have assigned B & G any of their rights. Therefore, even

if we assume without deciding that funds in WEI’s account were held in a

constructive trust for the benefit of WEI’s subcontractors, B & G is not the

party to assert those rights and had no standing to do so. See, e.g., Bishop

Contracting Co. v. North Ga. Equip. Co., 203 Ga .App. 655 (4) (417 SE2d 400)

(1992) (corporation that did not own property lacked standing to assert slander

of title claim against lienholder). The fact that B & G voluntarily paid WEI’s

subcontractors individually to avoid the imposition of liens does not change this

result. There has been no assignment of claims against WEI or the Bank

between B & G and WEI’s subcontractors, and B & G’s right to reimbursement,

if any, lies against WEI as the defaulting party.

      Judgment affirmed in part and reversed in part. Thompson, C.J., Benham,

Hunstein, Nahmias, Blackwell, JJ., and Judge James F. Bass, Jr., concur. Hines,

P.J., not participating.



                                       5
