In a significant corporate governance case, the Georgia Court of Appeals officially recognized a claim of aiding and abetting breach of fiduciary duty. Federal courts have recently dismissed such claims because, they believed, Georgia state courts would not recognize such a cause of action. See Official Committee of Unsecured Creditors of PSA, Inc. v. Edwards, 437 F.3d 1145 (11th Cir. January 30, 2006); Laddin v. Edwards, 2006 U.S. Dist. LEXIS 30356 (N.D Ga. 2006) ("The Court of Appeals also held that Georgia courts have not recognized a cause of action for aiding and abetting a breach of fiduciary duties." The Court can say with some confidence that the Defendants are entitled to summary judgment on this claim.")
In Insight Technology, Inc. v. Freightcheck, Inc., No. A06-0710, Ga. App. LEXIS 738, 2006 WL 1679391 (Ga. App. June 20, 2006), the president of the plaintiff (a freight factoring business) and another individual who owned a competing business got together and formed yet another business that competed with the plaintiff. The president used the same software for the new business, used employees of the plaintiff, and even located the new business’ offices in the same building so he could manage both operations. The president also secretly copyrighted the software he developed for the plaintiff’s business and licensed it to plaintiff and the new company. The plaintiff’s majority owner found out, fired the plaintiff and filed a lawsuit against the former president, the competing business, and the other owner of the competing business. The claims included aiding and abetting breach of fiduciary duty.
The Court of Apeals first backed off a prior case in which it appeared to hold that a claim for aiding and abetting was not recognized —
The trial court concluded that Georgia has never recognized a claim for aiding and abetting a breach of fiduciary duty, citing Monroe v. Board of Regents of University System of Georgia, 268 Ga. App. 659, 664-665 (2) (602 SE2d 219) (2004). In opposing Insight’s appeal, Hull, GetLoaded, and FreightCheck contend in addition that, even if Georgia law recognizes such a claim, they cannot be liable because they did not owe any duty to Insight which could form the basis of a tort. In Monroe, we declined to recognize a claim for "aiding and abetting a breach of fiduciary duty" on the record then before us. Id. at 665 (2). Because the plaintiff in Monroe "failed to assert such a claim in either his original complaint or by later amendment," however, our holding did not (and could not) reach the issue of whether such a claim is allowable under Georgia law.
The Court then discussed the basis for, and elements of, the newly recognized claim —
602 S.E.2d 219
602 S.E.2d 219
602 S.E.2d 219
Furthermore, we are mindful that there is "no magic in mere nomenclature" in the designation of causes of action. Guth v. Walker, 92 Ga. App. 490, 494 (88 S.E.2d 821) (1955). We must look beyond the designation "aiding and abetting a breach of fiduciary duty" and determine whether Insight’s complaint stated a claim which is allowable under Georgia law. Unlike in Monroe, we find that Insight’s complaint put the appellees on notice that Insight was asserting a claim that Hull, GetLoaded, and FreightCheck were joint tortfeasors who acted in concert with Brewer in his breach of fiduciary duty. We hold that Insight has stated a viable claim under OCGA § 51-12-30. That Code section provides: "In all cases, a person who maliciously procures an injury to be done to another, whether an actionable wrong or a breach of contract, is a joint wrongdoer and may be subject to an action either alone or jointly with the person who actually committed the injury." (Emphasis added.) By its terms, OCGA § 51-12-30 is inclusive and not limited to particular torts or types of contracts. See Luke v. Du Pree, 158 Ga. 590, 596 (1) (124 SE 13) (1924) (maliciously inducing another to break any type of contract is actionable). Georgia courts have acknowledged a cause of action for procuring an injury or aiding and abetting in a wide array of civil cases, such as an employee’s breach of an employment contract’s requirement that he give a certain notice before terminating the contract,a former employee’s breach of a restrictive covenant in an employment contract, an employer’s breach of an employment contract, such as by wrongfully terminating an employee, a client’s discharge of his attorney and false repudiation of the attorney’s authority to file a suit,a partner’s wrongful dissolution of a partnership, a breach of a contract to exchange real property, battery, and trespass to land.
More to the point, we have explicitly acknowledged a cause of action for procuring a breach of fiduciary duty based on OCGA § 51-12-30. In Rome Industries, Inc. v. Jonsson, the plaintiff corporation alleged that the defendants induced the corporation’s president to breach his fiduciary duty to the corporation. 202 Ga. App. 682, 684 (1) (415 SE2d 651) (1992). We noted the black letter law "that corporate officers and directors occupy a fiduciary relationship to the corporation and its shareholders, and are held to the standard of utmost good faith and loyalty." (Citation and punctuation omitted.) Id. 683 (1). Because "the fiduciary relationship between a corporation and its officer arises out of the contractual or employment relationship between the two parties," we determined that the claim fell within the category of claims for tortious interference with contractual rights and reversed the decision of the trial court granting summary judgment in favor of the defendants. (Citation and punctuation omitted.) Id. at 683-684 (1). n10 As the Supreme Court of Georgia has explained, "[p]arties to a contract have a property right therein with which a third party cannot interfere without legal justification or privilege, and a party injured by another’s wrongful interference may seek compensation in tort" under OCGA § 51-12-30. (Citation omitted.) Atlanta Market Center Mgmt. Co. v. McLane, 269 Ga. 604, 608 (2) (503 SE2d 278) (1998). Such claims do not require proof that the defendant owed a direct contractual duty to the plaintiff. Rather, a claim for tortious interference with contractual relations requires proof that the defendant is a stranger to the contract with which the defendant allegedly interfered and to the business relationship giving rise to the contract. Pruitt Corp. v. Strahley, 270 Ga. 430 (510 SE2d 821) (1999); Atlanta Market Center Mgmt. Co. v. McLane, 269 Ga. at 608-610 (2).
In summary, regardless of whether denominated "aiding and abetting a breach of fiduciary duty," "procuring a breach of fiduciary duty," or "tortious interference with a fiduciary relationship," Georgia law authorizes a plaintiff to recover upon proof of the following elements: (1) through improper action or wrongful conduct and without privilege, the defendant acted to procure n12 a breach of the primary wrongdoer’s fiduciary duty to the plaintiff; (2) with knowledge that the primary wrongdoer owed the plaintiff a fiduciary duty, the defendant acted purposely and with malice and the intent to injure; n13 (3) the defendant’s wrongful conduct procured a breach of the primary wrongdoer’s fiduciary duty; and (4) the defendant’s tortious conduct proximately caused damage to the plaintiff.
(Emphasis added)(footnotes omitted). This case should result in a significant number of amended complaints and motions to add parties in cases filed in state and federal court.