NAYYAR Et Al. v. BHATIA.
NAYYAR Et Al. v. BHATIA.
Opinion
This appeal arises from a business dispute between Narinder Bhatia and Kirin Nayyar, who jointly owned and operated a gas station and convenience store through NNayyar, LLC. While Bhatia was out of the country for an extended period, Nayyar unilaterally dissolved NNayyar and created a new entity, P and J Nayyar, LLC ("P&J"), through which he continued to operate the store. Bhatia filed an action against Nayyar and P&J (collectively, "the defendants") asserting that they had violated Georgia's Limited Liability Company Act ( OCGA § 14-11-100 et seq. ), had breached fiduciary duties, and had defrauded him. Subsequently, he petitioned the court to appoint a receiver during the pendency of the litigation. The trial court granted *677 the petition and then ordered the appointment of a receiver over P&J.
The defendants appeal those rulings. They argue that the trial court erred in finding that the statutory requirements for a receivership had been met. This question fell within the trial court's broad discretion and we find no manifest abuse of that discretion. They also argue that, in ruling on the receivership petition, the trial court invaded the province of the jury. We find no ground for reversal, because even if some of the trial court's factual findings unnecessarily extended into ultimate issues that should be decided by the jury in this case, the trial court made those findings in the context of an interlocutory ruling that will not bind the jury in subsequent proceedings. So we affirm.
1. Requirements for receivership.
Georgia law provides for the appointment of a receiver "[w]hen any fund or property is in litigation and the rights of either or both parties cannot otherwise be fully protected[.]" OCGA § 9-8-1. This is an equitable remedy, similar to an interlocutory injunction. See generally
Patel v. State of Ga.
,
The parties in this case offered evidence in the form of documentary exhibits, verified pleadings, and the deposition testimony of Bhatia and Nayyar. While conflicts exist in this evidence - most significantly regarding whether Bhatia sold his interest in NNayyar before leaving the country - when we view the evidence in the light most favorable to the trial court's ruling it shows the following.
Bhatia and Nayyar formed NNayyar, LLC on November 22, 2006 and through that entity they began operating a gas station and convenience store under the name Friendly Express. Bhatia and Nayyar each owned 50% of NNayyar and they agreed to split the profits of Friendly Express equally.
On September 29, 2009, Bhatia left the country for an extended period of time. He and Nayyar agreed that, while he was out of the country, Nayyar would operate Friendly Express and would receive a specified monthly salary. Once that salary was paid, the two would split the business's profits equally. For a period of time, Nayyar sent Bhatia payments and gave him reports about the business.
In August 2011, Nayyar formed P&J. Bhatia had no ownership interest in the new entity. Nayyar began to operate the gas station through P&J, and he stopped sending Bhatia payments. On March 30, 2012, Nayyar filed for a voluntary dissolution of NNayyar, LLC, and the Secretary of State terminated that entity on April 3, 2012. 1 This dissolution occurred without Bhatia's knowledge or consent.
Bhatia alleged in his lawsuit that Nayyar diverted the business's profits to himself or his new entity: P&J. In the course of discovery, he asked the defendants for a full and *678 complete accounting of the business, but the defendants did not provide one. Nayyar deposed that questions about the business's finances could be directed to his accountant. Bhatia contends that the accountant could not provide the requested information.
On February 21, 2017, Bhatia petitioned for the appointment of a receiver. At the hearing on this motion, Bhatia's counsel introduced evidence that P&J had been administratively dissolved on August, 24, 2017, and represented to the court that the defendants had failed to inform Bhatia of this fact. The defendants' counsel stated at the hearing that, notwithstanding the dissolution of P&J, Nayyar continued to operate the gas station and convenience store.
In granting the petition, the trial court determined that Bhatia had an ownership interest in the business that was at risk and that he lacked an adequate remedy at law. The defendants argue that the trial court abused his discretion in these determinations but, as detailed below, we find the trial court was authorized to make the conclusions that authorized the appointment. See
Warner
,
(a) The trial court did not manifestly abuse his discretion in finding that the appointment of a receiver was justified.
"Appointing a receiver under OCGA § 9-8-1 is justified where there is a danger that the assets at issue will be depleted or impaired if they remain in one party's control."
Alstep, Inc.
,
Cases cited by the defendants do not hold to the contrary. It is true, as the defendants assert, that a trial court may not appoint a receiver solely because the defendant in an action for damages "might be poor or even insolvent[.]"
Irwin v. Willis
,
(b) The trial court did not manifestly abuse his discretion in finding that Bhatia lacked an adequate remedy at law.
The evidence that Bhatia was an equal shareholder in NNayyar and a co-owner of property over which the defendants had improperly obtained sole control authorized the trial court to conclude that Bhatia lacked an adequate remedy at law. If NNayyar's "assets were dissipated because no receiver was appointed, any remedy at law would be meaningless."
Fulp
,
Our Supreme Court's decision in
Coe Manufacturing Co. v. Dublin & Laurens Bank
,
2. Province of the jury.
The defendants argue that the trial court erred in making factual findings, based on conflicting evidence, that instead should have been reserved for the jury. We find no basis for reversal.
Without question, a trial court may make factual findings in ruling on a petition for a receiver. See 7 Ga. Proc. Special Remedies and Proceedings § 5:7 (2018) ("Whether or not the appointment of a temporary receiver is justified [is a] question[ ] of fact between the contending parties and must be determined in the first instance in the trial court.") (citations omitted). See also, e.g.,
Popham v. Yancey
,
Simply put, the interlocutory factual findings made by the trial court in deciding whether to appoint a receiver have no bearing on any ultimate decision on the merits of Bhatia's lawsuit. If the case proceeds to a jury, the parties will be free to present evidence that conflicts with the trial court's factual findings on the receivership question, and the jury will be free to make its own factual findings supported by that evidence. Consequently, the defendants' assertion that the trial court improperly made some findings that were unnecessary to decide the receivership question is not a ground for reversal; because the trial court's findings are not conclusive between the parties in this case, there is no reversible error. See
Carter v. Puckett
,
Judgment affirmed.
Rickman and Markle, JJ., concur.
The trial court's order incorrectly states that NNayyar was dissolved in 2011, not 2012.
Case-law data current through December 31, 2025. Source: CourtListener bulk data.