CS-Lakeview at Gwinnett, Inc. v. Simon Property Group, Inc.

659 S.E.2d 359, 283 Ga. 426, 2008 Fulton County D. Rep. 1081, 2008 Ga. LEXIS 295
CourtSupreme Court of Georgia
DecidedMarch 28, 2008
DocketS07G0946
StatusPublished
Cited by34 cases

This text of 659 S.E.2d 359 (CS-Lakeview at Gwinnett, Inc. v. Simon Property Group, Inc.) is published on Counsel Stack Legal Research, covering Supreme Court of Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
CS-Lakeview at Gwinnett, Inc. v. Simon Property Group, Inc., 659 S.E.2d 359, 283 Ga. 426, 2008 Fulton County D. Rep. 1081, 2008 Ga. LEXIS 295 (Ga. 2008).

Opinions

Carley, Justice.

CS-Lakeview at Gwinnett, Inc. (CS-Lakeview) and related entities entered into a joint venture concerning commercial property with Simon Property Group, Inc. and related entities (Simon). Many of the entities involved in the joint venture are Delaware corporations and, when a complex dispute arose, Simon sued CS-Lakeview in Delaware. In a subsequent settlement agreement, the joint venture assets were divided, including a 133-acre tract of land located in Georgia, which was received by Simon. The agreement purported to give CS-Lakeview a right of first refusal with respect to that property. The agreement further provided that it was to be “subject to and construed in accordance with the laws of the state of Delaware.”

When Simon received a third-party offer for the Georgia property, the parties differed as to the required procedures, and Simon eventually sold the land to the third party. CS-Lakeview sued Simon in Georgia, alleging that Simon had not allowed CS-Lakeview to exercise its right of first refusal. The trial court granted summary judgment in favor of Simon on the ground that CS-Lakeview’s right of first refusal was invalid under Delaware’s rule against perpetu-ities.

On appeal, the Court of Appeals affirmed, holding that Delaware law governed the validity of CS-Lakeview’s right of first refusal and that such provision of the settlement agreement was invalid under that state’s rule against perpetuities. CS-Lakeview at Gwinnett v. Simon Property Group, 283 Ga. App. 686, 688 (1) (642 SE2d 393) (2007). The Court of Appeals further ruled that the trial court [427]*427correctly refused to reform the agreement so as to remedy the parties’ mutual mistake in choosing Delaware law, which invalidates the right of first refusal, in favor of Georgia law, which authorizes such a provision. CS-Lakeview at Gwinnett v. Simon Property Group, supra at 690 (2). Having granted certiorari to review this latter ruling, we conclude that mutual mistake is not a valid basis upon which to nullify the parties’ choice of Delaware law in order to uphold the right of first refusal.

The Court of Appeals mistakenly relied on OCGA § 23-2-27, which states that, where the facts are all known and there is no misplaced confidence or fraudulent conduct inducing the mistake or preventing its correction, “ignorance of the law by a party (not a mutual mistake by both) shall not authorize the intervention of equity.... [T]his Code section has no application to a mutual mistake of law by both parties.” (Emphasis in original.) Superior Ins. Co. v. Dawkins, 229 Ga. App. 45,48 (1), fn. 2 (494 SE2d208) (1997). See also A. J. Concrete Pumping v. Richard O’Brien Equip. Sales, 256 Ga. 795, 796 (1) (353 SE2d 496) (1987) (“ ‘(E)quity will reform a written instrument for the unilateral mistake of one party accompanied by fraud or inequitable conduct on behalf of the other party.’ [Cit.]”).

An alleged mutual mistake of law is governed by OCGA § 23-2-22, which applies to “[a]n honest mistake of the law as to the effect of an instrument on the part of both contracting parties, when the mistake operates as a gross injustice to one and gives an unconscionable advantage to the other . . . .” “A mistake relievable in equity is some unintentional act, omission, or error arising from ignorance, surprise, imposition, or misplaced confidence.” OCGA § 23-2-21 (a). “Where reformation is sought on the ground of mutual mistake, it must, of course, be proved to be the mistake of both parties. [Cit.]” A. J. Concrete Pumping v. Richard O’Brien Equip. Sales, supra. “The power to relieve mistakes shall be exercised with caution; to justify it, the evidence shall be clear, unequivocal, and decisive as to the mistake.” OCGA§ 23-2-21 (c). See alsoFulghum v. Kelly, 255 Ga. 652, 654 (340 SE2d 589) (1986).

Relying on the Restatement (Second) of Conflict of Laws § 187 (2) cmt. e and several cases, CS-Lakeview contends that, in choosing a governing law which rendered the right of first refusal invalid, the parties made a mutual mistake and would have chosen Georgia law if they had considered the issue. However, this Court has declined to adopt § 187 (2) of the Restatement (Second) of Conflict of Laws, and continues to adhere to traditional conflicts of law rules. Convergys Corp. v. Keener, 276 Ga. 808, 812 (582 SE2d 84) (2003). Compare Kipin Indus, v. Van Deilen Inti., 182 F3d 490, 493 (II) (6th Cir. 1999) (applying law of Michigan, which follows §§ 187 and 188 of the Second Restatement of Conflict of Laws); Russell J. Weintraub, Commentary [428]*428on the Conflict of Laws, § 7.3C, p. 495 (5th ed. 2006) (advocating adherence to the Second Restatement).

In light of OCGA § 1-3-9, the law of the jurisdiction chosen by parties to a contract to govern their contractual rights will be enforced unless application of the chosen law would be contrary to the public policy or prejudicial to the interests of this state. Convergys Corp. v. Keener, supra at 810.

“ ‘ “[A] contract should not be held unenforceable as being in contravention of public policy except in cases free from substantial doubt where the prejudice to the public interest clearly appears.” ’ (Cit.) . . . ‘Enforcement of a contract or a contract provision which is valid by the law governing the contract will not be denied on the ground of public policy, unless a “strong case” for such action is presented; mere dissimilarity of law is not sufficient for application of the public policy doctrine. . . .’ (Cits.)” [Cit.]

Nationwide General Ins. Co. v. Parnham, 182 Ga. App. 823, 825 (4) (357 SE2d 139) (1987). “The fact that the law of the forum state is different than the law of the foreign state does not mean that the foreign state’s law necessarily is against the public policy of the forum state. [Cit.]” Punzi v. Shaker Advertising Agency, 601 S2d 599, 600 (Fla. App. 1992).

“The policy of giving effect to the parties’ intent to have a binding contract and the general policy of contract validation come into conflict when the law that the parties have chosen would invalidate the whole contract.” (Emphasis in original.) Scoles, Hay, Borchers & Symeonides, Conflict of Laws § 18.11, p. 982 (4th ed. 2000). However, under either the traditional approach or the Restatement, where, as here,

the law chosen by the parties invalidates only a part of the contract, the parties’ expectations of having a binding contract are satisfied. Consequently, in the absence of special circumstances, there is little reason to allow one party to pick the favorable and discard the unfavorable provisions of the chosen law. [Even] [t]he Second Restatement does not support this type of private eclecticism, and most cases have expressly rejected it. [Cits.] (Emphasis in original.)

Scoles, supra at p. 983. See also Symeon C. Symeonides, “Choice of Law in the American Courts,” 48 Am. J. Comp. L.

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Bluebook (online)
659 S.E.2d 359, 283 Ga. 426, 2008 Fulton County D. Rep. 1081, 2008 Ga. LEXIS 295, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cs-lakeview-at-gwinnett-inc-v-simon-property-group-inc-ga-2008.