Interfinancial Midtown, Inc. v. Choate Constr. Co.

806 S.E.2d 255, 343 Ga. App. 793
CourtCourt of Appeals of Georgia
DecidedOctober 20, 2017
DocketA17A1160
StatusPublished
Cited by3 cases

This text of 806 S.E.2d 255 (Interfinancial Midtown, Inc. v. Choate Constr. Co.) is published on Counsel Stack Legal Research, covering Court of Appeals of Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Interfinancial Midtown, Inc. v. Choate Constr. Co., 806 S.E.2d 255, 343 Ga. App. 793 (Ga. Ct. App. 2017).

Opinion

Self, Judge.

*793Following a five-day jury trial, Interfinancial Midtown, Inc. ("I-Midtown"), Piedmont Fountains, LLC ("Piedmont Fountains"), Scott Leventhal, and Interfinancial Properties, Inc. ("I-Properties"), appeal a judgment in favor of Choate Construction Company ("Choate Construction"). Appellants assert the trial court erred by (1) allowing Choate to recover general and punitive damages under Georgia's Uniform Fraudulent Transfers Act ("UFTA"), OCGA § 18-2-70 et seq. ; (2) precluding their defense based upon reconveyance of assets; (3) allowing Choate to recover attorney fees and special master costs and expenses; (4) granting Choate's motion in limine to exclude expert evidence relevant to appellants' intent; and (5) denying their motion for a directed verdict and charging the jury on post-judgment interest. For the reasons explained below, we affirm.

The evidence submitted at trial shows that in October 1999, Leventhal created I-Midtown. As its CEO, president, and a co-owner, he managed the daily business affairs of the company. In 2001, *794I-Midtown purchased property known as 700 Piedmont to develop *25811 town homes through a $920,000 acquisition and pre-development loan with Quantum National Bank ("Quantum").1 I-Midtown then hired Choate to perform construction work on the property.2 I-Midtown's co-owner, Kurt Kaiser, experienced financial difficulties due to the "dotcom" bubble collapse and became insolvent in the middle of 2001.

Sometime after September 11, 2001, a serious recession ensued and construction halted on the project. I-Midtown then began having issues paying its interest on the loan and property taxes. As a result, I-Midtown entered into a series of loan modification agreements with Quantum that extended the due date from 2001 through mid-2004.

In November 2001, Choate contended that I-Midtown owed it approximately $403,000 and demanded payment. In November 2002, Choate filed suit against I-Midtown for this amount ("Choate I"). Between 2002 and 2004, Leventhal attempted to sell the property to several different buyers with no success. He also asked Choate if it would like to become a partner in the project or assist with financing that would allow the project to move forward, but his efforts "[f]ell on deaf ears." Finally, John Williams3 agreed to invest in the project, provided the property was "sold to a new entity of which he was a member."

In May 2004, Leventhal incorporated Piedmont Fountains to purchase and develop the 700 Piedmont property. The organizer of Piedmont Fountains was a separate corporation created by Leventhal in 1999, I-Properties.4 Piedmont Fountains had only two members: John Williams, with a 20 percent interest, and I-Properties, with an 80 percent interest. Piedmont Fountains' operating agreement provided that I-Properties would receive a fee of $16,600 each month for management services for a total sum around $100,000, which was in turn paid to a construction manager required by Williams. In separate indemnity agreements executed before the sale of the property, I-Midtown and I-Properties acknowledged that "the Property [is] subject to" the pending Choate I lawsuit and agreed to indemnify Williams for any loss or damages arising out of the Choate lawsuit. Leventhal explained that "he who holds the gold makes all the rules. Mr. Williams was setting forth various rules for him to be involved in the participation of the development of this project."

*795Williams testified that he wanted the property transferred to a new entity against which no claims were pending, and that he wanted the purchase price to be high enough to protect against fraudulent transfer claims.

On July 29, 2004, Piedmont Fountains purchased 700 Piedmont from I-Midtown for $1.29 million. At the time of the sale, Leventhal was the sole person making decisions on behalf of I-Midtown, as well as Piedmont Fountains. No purchase and sale agreement existed between the two parties, and Leventhal agreed that he made the decision about the purchase price on behalf of both the buyer and the seller based upon "a number of factors." These factors included "appraised value, market value, pro formas, [and] willingness of investors." Leventhal denied that he could have set the purchase price $400,000 higher in order to pay Choate, because it would have meant that Williams would have lost money on his investment. In support of this position, Leventhal asserted that after all of the town homes were sold, the total profit for the development was less than $100,000. A higher sales price sufficient to pay Choate would have "resulted in a loss" for Piedmont Fountains. At the time of the sale, Choate had not filed any liens on the property.

Piedmont Fountains financed the purchase and completed construction of the project through a $3.1 million loan from Regions Bank, along with equity contributed by I-Properties ($145,000) and Williams ($125,000). Leventhal informed both Williams and Regions Bank about Choate's pending lawsuit *259against I-Midtown. Both Leventhal and Williams personally guaranteed the Regions Bank note. According to Leventhal, Regions issued the loan based primarily upon Williams' financial strength; "[t]here was no loan whatsoever to be obtained from Regions Bank without Mr. Williams being a co-guarantor on this loan."

At closing, I-Midtown used the $1.29 million purchase price to pay the balance of the loan to Quantum, recording costs, transfer taxes, various tax liens on the property, the attorney handling the payment of the liens, and ad valorem taxes. After these payments were made, I-Midtown received $300,660.13 at closing. Within nine months, Midtown used all but $1,105 of these funds to pay, among others, Leventhal $175,223, and I-Properties $13,282. With regard to the amount he received, Leventhal explained that he used the majority of it to repay the $145,000 sum he had placed into I-Properties so it could make a capital contribution into Piedmont Fountains. Leventhal admitted that he authorized all of the disbursements made by I-Midtown after the sale of the property.

I-Midtown did not pay Choate with any proceeds from the sale. Leventhal testified that at the time of the sale in 2004, "[I-]Midtown *796did not believe that Choate had a valid right to any money whatsoever." Although money totaling $354,000 was placed back into I-Midtown between 2005 and 2010, it was not used to pay Choate.

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Bluebook (online)
806 S.E.2d 255, 343 Ga. App. 793, Counsel Stack Legal Research, https://law.counselstack.com/opinion/interfinancial-midtown-inc-v-choate-constr-co-gactapp-2017.