IN THE SUPERIOR COURT OF FULTON COUNTY
STATE OF GEORGIA
PETER HERLAN,
Plaintiff,
vs.
ALEXANDER PROUDFOOT
COMPANY,
Defendant.
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CIVIL ACTION NO.:
2023CV37701
PLAINTIFF COUNTER-DEFENDANT’S COMBINED MOTION TO DISMISS
COUNT II OF DEFENDANT-COUNTER PLAINTIFF’S COUNTERCLAIMS & STAY
DISCOVERY
Pursuant to O.C.G.A. § 9-11-12(b)(1), (b)(2), and O.C.G.A. § 9-11-12(j) Plaintiff
Counter-Defendant Peter Herlan (“Herlan”) respectfully submits this Brief in Support of its
Motion to Dismiss Defendant Counter-Plaintiff Alexander Proudfoot Company’s (“Proudfoot”)
Counterclaims for Damages and Stay Discovery pending the outcome of the instant motion.
BACKGROUND
Plaintiff Counter-Defendant Herlan originally brought a breach of contract action against
Proudfoot related to an unpaid sum of money that Herlan alleges he is owed pursuant to the bonus
plan he was subject to during his employment with Proudfoot. Herlan was terminated from his
employment in December of 2022, retained counsel in January of 2023, sent a demand letter
January 31, 2023, and then ultimately filed suit March 3, 2023. During the first discovery phase
of this litigation, in September of 2023, Herlan returned his company issued laptop from his
residence in Florida to Proudfoot’s counsel, per the instructions of Proudfoot’s counsel. After the
close of discovery, Proudfoot moved this court for leave to assert counterclaims against Herlan
related to the laptop.
Upon granting Proudfoot’s motion, Proudfoot submitted an Amended Answer in this action
and has alleged two counterclaims against Herlan: (1) Breach of Contract, and (2) violation of the
Georgia Computer Systems Protection Act (GCSPA). Def. Amend. Answer. With respect to Count
II, codified at O.C.G.A. § 16-9-93 et. seq., the GCSPA is fundamentally a criminal statute that also
provides access to civil remedies for injured parties. The statute contains five operative sections,
O.C.G.A. § 16-9-93 (a)-(e), none of which Proudfoot specifically alleges Herlan violated. Notably,
Proudfoot does not actually allege that Herlan committed “computer theft”, “computer trespass”,
“computer invasion of privacy”, “computer forgery”, or “computer password disclosure”. Thus,
as a general matter, Proudfoot has failed to identify which subsection it alleges Herlan violated.
Nevertheless, enforcement of the provisions contained in O.C.G.A. § 16-9-93 et. seq. requires a
court to have both personal and subject matter jurisdiction, neither of which the Court possesses
with respect to this claim. Proudfoot has failed to demonstrate that this Court can exercise
jurisdiction over the GCSPA claim against Herlan. Consequently, Count II of Proudfoot's
counterclaim should be dismissed in their entirety, with prejudice.
ARGUMENT AND CITATION OF AUTHORITIES
I.
Proudfoot’s counterclaim pursuant to O.C.G.A. § 16-9-93 et seq must be
dismissed for lack of personal and subject matter jurisdiction.
The ability of a court to provide the requested relief should be determined at the beginning,
as a preliminary issue, independent of the case's merits. Whitlock v. Barrett, 158 Ga. App. 100,
103, 279 S.E.2d 244, 247 (1981). And “it is an elementary principle of law that the courts of this
state (or of any other state), lack extraterritorial jurisdiction…,” except as specifically expressed
at O.C.G.A. § 9-10-91 et seq. YP, LLC v. Law Office of Jesse Hernandez, PLLC, 2016 Ga. Super.
LEXIS 4560, *2. For O.C.G.A. § 9-10-91 to confer extraterritorial jurisdiction…it is essential that
there has occurred a tortious act in Georgia…” Balmer v. Elan Corp., 261 Ga. App. 543, 546, 583
S.E.2d 131, 134 (2003) (emphasis added).
Count II of Proudfoot’s counterclaims cannot be allowed because the statute under which
Proudfoot has alleged its counterclaim does not apply extraterritorially. “It will not be
assumed…that the [legislature of this state] attempted to enact legislation having an extraterritorial
effect." National Union Fire Ins. Co. v. Marty, 197 Ga. App. 642, 643, 399 S.E.2d 260 (1990)
(emphasis added), citing Rogers v. Atlantic Greyhound Corp., 50 FSupp. 662 (S.D. Ga. 1943).
Assuming arguendo that all of Proudfoot’s allegations are true, none of the conduct, acts
or events that Proudfoot alleges occurred in the State of Georgia. Counter-Defendant Herlan is a
resident of Florida. Affidavit of Peter Herlan, ¶7 (attached hereto as Exhibit A). During the entirety
of Herlan’s employment with Proudfoot, as well as after the termination of his employment, Herlan
was and remains a resident of the State of Florida. Affidavit of Peter Herlan, ¶8. Proudfoot knows
that Herlan is a resident of Florida because Proudfoot hired Herlan as resident of Florida and at all
times employed Herlan as a resident of Florida. Id., ¶10. Further, Proudfoot sent a “prepaid return
label” to Herlan’s residence in Florida for Herlan to return the computer that is the subject of Count
II. Def. Countercl., ¶10. Proudfoot's GCSPA counterclaim is a tort claim. In tort cases, Georgia
adheres to the lex loci delicti principle, which dictates that the substantive law of the state where
the tort occurred governs the action. Bullard v. MRA Holding, 292 Ga. 748, 750 (1) (740 SE2d
622) (2013). Stated differently, this court lacks subject matter jurisdiction over alleged tort actions
that occur outside of Georgia, in other States (i.e. Florida).
Furthermore, “[t]he rule that controls is…that an out-of-state defendant must do certain
acts within the State of Georgia before he can be subjected to personal jurisdiction.”
(citation)(emphasis added). The U.S. District Court for the Northern District of Georgia in Krise
v. Sei/Aaron's, Inc., exercising supplemental jurisdiction over state law claims, dismissed a
plaintiff’s GCSPA claim on the basis that: (1) O.C.G.A. § 16-9-93 does not apply extraterritorially;
and (2) the alleged unlawful acts and injuries occurred outside the state of Georgia…” U.S. Dist.
LEXIS 133818, at *29-30 (N.D. Ga. Aug. 18, 2017). In the instant matter, Proudfoot’s allegations
are void of fact or even the implication that Herlan’s alleged conduct occurred in the State of
Georgia. See also Peterson v. Aaron's, Inc., 108 F. Supp. 3d 1352 (N.D. Ga. 2015) (held that the
plaintiffs could not assert a claim under the GCSPA because none of the alleged injuries or illegal
conduct occurred in Georgia).1 Therefore, because Proudfoot has not and could not possibly
introduce evidence within the framework of its counterclaims to establish that that Herlan’s alleged
conduct occurred in the State of Georgia, this Court cannot exercise jurisdiction over Herlan,
pursuant to the State’s long arm statutes, with respect to Count II of Defendant’s counterclaims
brought under O.C.G.A. § 16-9-93.
II.
The Economic Loss doctrine precludes Proudfoot’s tort claim.
A mere “breach of a contract amounting to no more than a failure to perform in accordance
with its terms does not constitute a tort or authorize the aggrieved party to elect whether he will
proceed ex contractu or ex delicto.” Mauldin v. Sheffer, 113 Ga. App. 874, 877, 150 S.E.2d 150,
153 (1966). Moreover, where a Plaintiff alleges damages solely in the form of economic losses,
such as expenses, recovery in tort is barred by the economic loss rule. GE v. Lowe's Home Ctrs.,
1
Counter-defendant Herlan acknowledges two cases cited in Section A above are opinions from a
federal court in the Northern District of Georgia and cites these cases for persuasive purposes as
the courts were exercising supplemental jurisdiction over claims invoking the exact Georgia statute
at the center of this controversy and addressing the jurisdictional question at hand.
Inc., 279 Ga. 77, 608 S.E.2d 636 (2005). At Count I, Proudfoot alleges that an enforceable contract
between the parties was in place and that Herlan breached said contract. Def. Amend. Answer. ¶
21. In pleading its breach of contract claim, Proudfoot incorporates by reference ¶¶1-14. Def.
Amend. Answer at ¶15. Identically, in Count II incorporates by reference the same underlying
facts as Count I (i.e. ¶¶1-14). Id. at 22. Its unambiguous that Count II mirrors Count I, with no
discernable variance in the allegations. Nowhere does Proudfoot allege Herlan undertook any
actions above and beyond than those actions alleged in Count I. But most notably, in Count II
Proudfoot specifically invokes the same Employment Agreement that Proudfoot alleges Herlan
breached Count I. Id. at 23. Thus, according to the express terms of the Employment Agreement
itself, any disputes or remedies sought after between the parties are subject to the Employment
Agreement – the terms of which “survive any termination of Employee’s employment.” Id. at 3
(the last sentence of Section 8 of Proudfoot’s Employment Agreement expressly states that the
applicable terms survive any termination of employee’s employment). And as for alleged damages,
Proudfoot does not allege any damages other than “expenses associated with a forensic
examination of its laptop, expenses associated with conducting a damage assessment…”
Consequently, based on Proudfoot’s allegations the relief it seeks are confined to the explicit terms
of the Employment Agreement and are also solely economic, thereby barring Proudfoot's tort claim
in Count II. “[I]f there is no liability except that arising out of a breach of the express terms of the
contract, the action must be in contract, and an action in tort cannot be maintained. Mauldin, at
878.
CONCLUSION
Pursuant to O.C.G.A. § 9-11-12(b)(1) and (b)(2) and the economic loss doctrine, Count II
of Counter-Plaintiff’s counterclaims must be dismissed with prejudice. Plaintiff CounterDefendant Herlan respectfully requests the following relief:
(i)
That this Court stay discovery pending the outcome of this Motion pursuant to
O.C.G.A. § 9-11-12(j)(1);
(ii)
This Court grant Plaintiff Counter-Defendant’s Motion and dismiss Count II of
Proudfoot’s Counterclaims;
This 18th day of February 2024.
Respectfully submitted,
Taylor J Bennett
Georgia Bar No.: 664063
Taylor Bennett Law P.C.
11090 Serenbe Ln. Suite #200D
Chattahoochee Hills, GA 30268
Telephone: (404) 400-2370
Facsimile: (404) 806-9223
Email: taylor@taylorbennettlaw.com
Attorneys for Plaintiff PETER HERLAN
/s/ Jason B. Woodside
Jason Woodside, Esq.
Florida Bar No.: 104848
Woodside Law, P.A.
100 South Ashley Drive
Suite 600
Tampa, FL 33602
Direct: (813) 606-4872
Office: (866) 316-0555
Fax: (813) 333-9845
Attorney for Plaintiff PETER HERLAN, admitted Pro
Hac Vice.
IN THE SUPERIOR COURT OF FULTON COUNTY
STATE OF GEORGIA
PETER HERLAN,
Plaintiff,
vs.
ALEXANDER PROUDFOOT COMPANY,
Defendant.
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CIVIL ACTION NO.:
2023CV377001
CERTIFICATE OF SERVICE
In accordance with Uniform Superior Court Rule 5.2 (2) I hereby certify that I have
delivered a copy of the foregoing to Defendant’s counsel of record by electronic service, to
the following:
Layne M. Kamsler
lkamsler@hbilawfirm.com
Attorney for Defendant Alexander Proudfoot Company
HIPES & BELLE ISLE, LLC
178 South Main Street
Suite 250
Alpharetta, Georgia 30009
This 18th day of February 2024.
Respectfully submitted,
Taylor J Bennett
Georgia Bar No.: 664063
Taylor Bennett Law P.C.
11090 Serenbe Ln. Suite #200D
Chattahoochee Hills, GA 30268
Telephone: (404) 400-2370
Facsimile: (404) 806-9223
Email: taylor@taylorbennettlaw.com
Attorneys for Plaintiff PETER HERLAN
EXHIBIT A