Jireh, Inc. et al v. Champa

Filing 47

ORDER granting 34 Motion to Dismiss terminating James Champa ; denying 38 Motion for Miscellaneous Relief; denying 38 Motion for Garnishment; and referring the case to the next available Magistrate Judge for mediation. Signed by Judge Amy Totenberg on 8/30/2020. (hpc)

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IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
JIREH, INC., MICKEY MOORES, and
STEVEN CHAMPA,
Plaintiffs,
v.
JAMES CHAMPA,
Defendant.

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CIVIL ACTION NO.
1:18-cv-3076-AT

ORDER
This matter is before the Court on Plaintiffs’ Motion for Voluntary Dismissal
[Doc. 34], and Defendant’s Motion for Attachment and Garnishment [Doc. 38].
I.

Background
In 2009, the Parties became co-owners of a company called Jireh, Inc.

(Complaint, Doc. 1 at 5.) Plaintiffs Mickey Moore and Steven Champa each own
one-third of the company, and Defendant James Champa owns most of 1 the final
third. (Id.) In 2012, a dispute arose between the Parties about ownership stakes
and allegedly incomplete payouts that resulted in costly and protracted litigation.
(Id. at 6–8.) Plaintiffs’ Complaint 2 seeks to enforce a buy-out agreement

1 Defendant Champa states in his Amended Answer and Counterclaim that his “interest now
stands at .332% of the Jireh equity, [Defendant Champa] having conveyed three shares of his
1,000 shares to pay certain bills…for services rendered to him and his family.” (Amended Answer
and Counterclaim, Doc. 14 at 6.)
2 The operative Complaint in this matter is the “First Amended Complaint” that was filed in the
State Court of Fulton County (Doc. 1 at 5–11), and removed to this Court by Defendant in June

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negotiated between the parties in 2017 in which Plaintiffs allegedly agreed to pay
$1.5 million to Defendant in exchange for his 1/3 interest in Jireh, Inc. (See
Complaint, Doc. 1 at 8–11.) Plaintiffs alleged that Defendant Champa’s counsel
made a counteroffer as part of the negotiations:
22. On November 6, 2017, counsel for James Champa
sent email correspondence … to undersigned counsel in
response, and with a counteroffer, to a proposed
settlement and buy-out agreement from the Plaintiffs…
23. In this email correspondence, counsel for James
Champa proposed the following: ‘The simplest solution
and one which James now proffers is to pay him the value
of his PTI/shareholder profit in a lump sum [$1,082,00]
and pay $450,00 for the redemption of James’ stock – 20
monthly installments of $22,500 each, as the terms of
your proffered agreement provide …[‘]
(Complaint, Doc. 1 at 8.) Plaintiffs allege that they timely accepted the terms of this
counteroffer and agreed to pay Defendant Champa a total of $1.5 million, which
they suggested be allocated as “$1.1 million to the PTI and $400,000 to the share
purchase, or divide it any other way you choose.” (Complaint, Doc. 1 at 9.) Plaintiffs
told Defendant’s counsel that they would accept his terms only if he sent “an
electronic copy of that agreement fully executed by your client[,]” which would
then be countersigned by the Plaintiffs. (Id.) According to the Complaint, Plaintiffs
never received any further response from Defendant’s counsel.

2018 (See Notice of Removal, Doc. 1). The Court refers to the “First Amended Complaint” as “the
Complaint” throughout this Order.

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In his Amended Answer and Counterclaim, 3 Defendant Champa admits that
such a negotiation took place, but denies that any agreement was ever completed,
citing disputes about proper valuation of company revenues and profits allegedly
due to Defendant Champa. (Answer, Doc. 2 at 4–7.) In his Counterclaim,
Defendant/Counterclaimant

Champa

alleges

that

the

Plaintiffs/Counter

Defendants “have proximately caused James [Champa] damages in the amount of
$1,082,219 plus accumulated interest and penalties by withholding from him his
previously taxed ‘S’ corporation income (‘PTI’) of JIREH for calendar … years 201113 and 2015-16.” (Counterclaim, Doc. 14 at 8–9.) Counterclaimant Champa further
alleges additional damages of $450,000 for “refusing to complete the 2017 Jireh
Tax returns in conjunction with the agreed on (November 2017) purchase of
James’ equity interest in Jireh.” (Id. at 9.) These amounts of money are the same
as were allegedly negotiated by Counterclaimant Champa’s lawyer in 2017 before
the deal fell apart. (Compare Counterclaim, Doc. 14 at 8–9 with Complaint, Doc. 1
at 8.)
II.

Motion for Voluntary Dismissal
In their Motion for Voluntary Dismissal of their claims, Plaintiffs state that

“[i]n the more than two years since Plaintiffs initially made this buy-out offer, Jireh
has seen a decrease in revenues, particularly in this last year.” (Motion to Dismiss,

Defendant Champa incorporated by reference the first 39 paragraphs of his originally-filed
Answer, and amended it only to add the Counterclaim. (See Amended Answer, Doc. 14 at 1.) The
Court will cite to both the originally-filed Answer – available at Docket Entry No. 2 – and the
Amended Answer and Counterclaim (Doc. 14) throughout this Order.
3

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Doc. 34 at 1.) Additionally, according to Plaintiffs, Jireh is involved in some legal
proceedings which may require payment of legal fees and which are expected to
result in decreased enrollment in Jireh, which will negatively affect Jireh’s
revenues. (Doc. 34 at 1–2.) Accordingly, Plaintiffs assert that “Jireh’s offer to
Defendant no longer represents a fair price for his ownership interest.” (Id. at 2.)
Defendant Champa opposes voluntary dismissal, although his opposition
seems mostly premised on whether dismissal of the Complaint would affect his
Counterclaim, as evidenced here, where Defendant Champa writes, “Plaintiffs seek
to have their case and eat it too. FRCP 41 (b) is abundantly clear that a plaintiff’s
request for voluntary dismissal cannot serve to eradicate a defendant’s
counterclaim.” (Response, Doc. 37 at 4.) Defendant Champa claims that, despite
Jireh’s present financial condition, “the stock purchase agreement remains in
force.” (Response, Doc. 37 at 4.) Plaintiffs clarify in their Reply that they
“understand that [Champa’s] counterclaims will not be dismissed along with their
claims.” (Reply, Doc. 40 at 3.) Indeed, Rule 41(a)(2) states,
Except as provided in Rule 41(a)(1), an action may be
dismissed at the plaintiff’s request only by court order, on
terms that the court considers proper. If a defendant has
pleaded a counterclaim before being served with the
plaintiff’s motion to dismiss, the action may be dismissed
over the defendant’s objection only if the counterclaim
can remain pending for independent adjudication.
Unless the order states otherwise, a dismissal under this
paragraph (2) is without prejudice.
Fed. R. Civ. P. 41(a)(2).

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Besides this issue, Defendant argues that dismissal of the Plaintiffs’
Complaint should be with prejudice, because there is no documentary evidence
“for the claim that Jireh is unable to fund the buy out payment at this time.” (Doc.
37 at 6.) Defendant further argues that Plaintiffs have not presented any evidence
that they are involved in the “franchisor [Online Trading Academy]’s regulatory
woes with the FTC,” and that a dismissal with prejudice “will serve to move the
litigation here forward between these parties.” (Doc. 37 at 8.) Plaintiffs reply that
even though they are not named parties, “[Online Trading Academy] has requested
that its franchisees contribute to litigation and operational costs.” (Reply, Doc. 40
at 6.) Plaintiffs also correctly note that this does not really matter one way or the
other, and that the “Plaintiffs are entitled to seek to dismiss their claims against
Defendant.” (Id.) Plaintiffs further reply that they seek dismissal without prejudice
because “Plaintiffs’ defenses to these counterclaims will rely, in part, on the facts
and arguments arising out of the negotiation and agreement between the parties[,]
[and] [i]f Plaintiff’s claims seeking to enforce this no longer viable agreement were
dismissed with prejudice, these defenses would be compromised[,]” and “because
that is the default process under Rule 41(a)(2)[.]” (Reply, Doc. 40 at 5, 6.)
Defendant Champa’s primary concern is the survival of his counterclaim. In
granting the Plaintiffs’ motion however, the counterclaim remains active and
becomes the operable (and only) claim before the Court. The Motion for Voluntary
Dismissal [Doc. 34] is GRANTED, and the Plaintiffs’ Complaint is DISMISSED
without prejudice, pursuant to Rule 41(a)(2).

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III.

Motion for Attachment and Garnishment
Defendant Champa also moves for “attachment against Plaintiffs’ assets and

garnishment of Plaintiff Jireh’s bank accounts to preserve the assets for the stock
redemption.” (Motion for Attachment, Doc. 37 at 2.) “Attachment is an ancillary
remedy by which a plaintiff acquires a lien upon the property of a defendant in
order to obtain satisfaction of a judgment that the plaintiff may ultimately obtain
at the conclusion of the litigation. Mitsubishi Int’l Corp. v. Cardinal Textile Sales,
Inc., 14 F.3d 1507, 1521 (11th Cir. 1994) Rule 64 of the Federal Rules of Civil
Procedure authorizes the prejudgment attachment of property only in certain
situations. Mitsubishi, 14 F.3d 1507, 1521–22 (11th Cir. 1994) (citing Fed. R. Civ.
P. 64). Rule 64 makes available to the Court “all remedies providing for seizure of
person or property for the purpose of securing satisfaction of the judgment
ultimately to be entered in the action” and provides that – unless prohibited by the
Constitution or an applicable federal statute – such remedies “are available under
the circumstances and in the manner provided by the law of the state in which the
district court is held.” Id. Rule 64 specifically lists attachment as one such available
remedy, along with “other corresponding or equivalent remedies, however
designated.” Id. (citing 7 James W. Moore et al., Moore’s Federal Practice ¶
64.04[1] (2d ed. 1993); 11 Wright & Miller, supra, § 2932). Therefore, in all cases
in federal court, “state law is incorporated to determine the availability of
prejudgment remedies for the seizure of person or property to secure satisfaction

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of the judgment ultimately entered.” Granny Goose Foods, Inc. v. Brotherhood of
Teamsters, Local No. 70, 415 U.S. 423, 437 n.10 (1974).
In Georgia, prejudgment attachment is subject to the same conditions as
post judgment attachment in cases making demands in contract or in tort.
Mitsubishi, 14 F.3d at 1522; O.C.G.A. § 18-3-1. Per Georgia law, attachments may
issue when the debtor:
(1) Resides out of the state;
(2) Moves or is about to move his domicile outside the
limits of the county;
(3) Absconds;
(4) Conceals himself;
(5) Resists legal arrest; or
(6) Is causing his property to be removed beyond the
limits of the state.
O.C.G.A. § 18–3–1.
None of the first five grounds of the statute apply here, nor does Defendant
Champa appear to argue they do. Rather, in citing “one of the alternative grounds”
of the statute, Defendant Champa may be making an argument for application of
the sixth ground of O.C.G.A. § 18-3-1, that the Plaintiffs are “causing [their]
property to be removed beyond the limits of the state,” although this is not clear
on the face of the motion. 4 Defendant Champa has not demonstrated that any of
the statutory grounds for attachment apply to the Plaintiffs here, and has not

Defendant Champa appears to argue that the Georgia attachment statute applies because the
Plaintiffs have allegedly misappropriated funds which would otherwise be available to satisfy his
demand. (Motion for Attachment, Doc. 37 at 10 (“The facts [relating to the alleged
misappropriation] and the belief derived from them serve to satisfy one of the alternative grounds
for the issue of a writ of attachment under Georgia law.”).)
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presented any reason to believe that, even if the Plaintiffs are misappropriating
funds from the company, 5 those funds are somehow beyond the reach of the state. 6
Defendant Champa also did not address the attachment statute’s bond
requirement. See O.C.G.A. § 18-3-10. This portion of the statute says that,
No writ of attachment shall issue unless accompanied by
a bond with good security, conditioned to pay the
defendant all costs and damages that he may sustain in
consequence of the issuance of the writ of attachment in
the event that the amount claimed to be due was not due,
that no lawful ground for issuance of the attachment
existed, or that the property sought to be attached was
not subject to attachment. The bond shall be in a sum
equal to twice the amount claimed due in the plaintiff’s
application. The bond shall be presented to the clerk of
the court where the application provided for in Code
Section 18-3-9 is sought to be filed for approval by such
clerk prior to filing of the writ of attachment.
O.C.G.A. § 18-3-10. Defendant Champa seeks a writ of attachment against the
Plaintiffs in the amount of $2,205,021.66. (Motion for Attachment, Doc. 37 at 11.)
Pursuant to the statute, Defendant Champa would therefore have needed to offer
a bond to the Clerk of the Court equal to twice that much, or $4,410,043.32. He
did not do so.
Defendant Champa failed to identify appropriate grounds for attachment
under O.C.G.A. § 18-3-1, and did not offer a bond to the Clerk of the Court.
Cf. In re Fredeman Litig., 843 F.2d 821, 826 (5th Cir. 1988) (“The plaintiffs … contend primarily
that the defendants are scoundrels who will try to escape judgment, an allegation that, even if
true, would not justify the preliminary injunction [including issuing a writ of attachment].”)
6 See O.C.G.A. § 18-3-9(b) (“Upon presentation of plaintiff’s sworn application for a writ of
attachment, it shall be the duty of the judge to inquire into the facts alleged, going beyond mere
conclusions of fact alleged by the plaintiff and clearly setting forth the facts entitling the creditor
to a writ of attachment as set forth in Code Section 18-3-1. Upon consideration of the inquiry, the
judge shall have the discretion to grant or deny the issuance of a writ of attachment.”)
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Therefore, the portion of Defendant Champa’s Motion that seeks a Writ of
Attachment is DENIED. [Doc. 37.]
Defendant Champa also argues for garnishment of the Plaintiffs’ Georgia
bank accounts, claiming that, “[b]ecause it is believed that Defendant Jireh never
actually established a ‘AAA’ account, to the extent that Jireh has assets at Bank of
America or any other financial institution where the undistributed K-1 funds may
have been deposited, such accounts are subject to the right of shareholder
distribution to the Defendant at stock redemption.” (Motion for Garnishment,
Doc. 37 at 11.) However, in 2016 the Georgia General Assembly passed Senate Bill
255, amending the Georgia Code to repeal the portions which previously allowed
for pre-judgment garnishment and pre-judgment garnishment is no longer an
available remedy in Georgia. Accordingly, the portion of Defendant Champa’s
Motion that seeks entry of pre-judgment garnishment is DENIED. [Doc. 37.]
IV.

Conclusion
The Plaintiffs’ Motion for Voluntary Dismissal is GRANTED, and the

Complaint is DISMISSED without prejudice, pursuant to Fed. R. Civ. P. 41.
Accordingly, the operable and sole Complaint before the Court is
Defendant/Counterclaimant Champa’s Counterclaim. [Doc. 14.]
Defendant Champa’s Motion for Attachment and Garnishment is DENIED.
[Doc. 37.]
This case is ripe for mediation, as the dispute at the heart of the matter –
according to the representations from the Parties – is simply how much Defendant

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Champa is due for his shares. Accordingly, this matter is REFERRED to the next
available Magistrate Judge for mediation. Mediation SHALL conclude no later
than October 31, 2020.
If the parties agree to engage a private mediator and are able to agree on a
proposed mediator, they SHALL notify the Court and the assigned Magistrate
Judge within ten (10) days of the date of this Order of their intention to pursue
private mediation and identify in their notice their agreed-up mediator. Such
private mediation shall conclude no later than October 31, 2020.
The parties are DIRECTED to file a status report within three (3) days of
the conclusion of the mediation indicating whether this matter is resolved.

IT IS SO ORDERED this 30th day of August, 2020.
___________________________
AMY TOTENBERG
UNITED STATES DISTRICT JUDGE

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