Kaufman Development Partners, L.P. v. David Eichenblatt

Opinion

FOURTH DIVISION DOYLE, P. J., MCFADDEN and BOGGS, JJ.

NOTICE: Motions for reconsideration must be physically received in our clerk’s office within ten days of the date of decision to be deemed timely filed. http://www.gaappeals.us/rules/

September 30, 2013

In the Court of Appeals of Georgia A13A1123. KAUFMAN DEVELOPMENT PARTNERS, L. P. v. EICHENBLATT.

MCFADDEN, Judge.

This appeal follows a trial in a business dispute in which the jury awarded

David Eichenblatt compensatory damages on his claim against Kaufman

Development Partners, L. P. (“Kaufman Development”) for breach of the operating

agreement for Piedmont/Maple, L. L. C. (“Piedmont/Maple”), a limited liability

company “formed to acquire, own, operate, redevelop, lease, and sell or otherwise

dispose of certain” real estate. Kaufman Development enumerates as error the trial

court’s summary judgment ruling that Eichenblatt had standing to bring the contract

action against it and the trial court’s post-trial ruling refusing to amend its judgment

to extinguish Eichenblatt’s interest in Piedmont/Maple. As detailed below, we find that Eichenblatt, as a party to the operating agreement, had standing to bring an action

for the breach of that contract. We also find that the trial court properly declined to

amend or clarify its judgment, which was consistent with the jury’s verdict. Finally,

we construe Kaufman Development’s challenge to the trial court’s denial of its

motion for judgment notwithstanding the verdict as a prayer for relief rather than an

additional argument. Accordingly, we affirm.

1. Facts and proceedings below.

On October 23, 1995, Eichenblatt and Kaufman Development entered into an

operating agreement for Piedmont/Maple. Craig Kaufman (“Kaufman”) signed that

agreement on Kaufman Development’s behalf. The operating agreement identified

Eichenblatt and Kaufman Development as the “Members” of Piedmont/Maple and set

forth the operating agreement’s purpose: “to document how the business and affairs

of [Piedmont/Maple] shall be conducted.” Therein, Eichenblatt and Kaufman

Development agreed to terms governing, among other things, Piedmont/Maple’s

membership and management; the withdrawal, removal or transfer of a member’s

interest in Piedmont/Maple; the allocation of profits and losses; the distribution of

cash flow; the dissolution of Piedmont/Maple; the distribution of proceeds upon

dissolution; and accounting and recordkeeping. The operating agreement entitled

2 Eichenblatt to up to 40 percent of Piedmont/Maple’s quarterly cash flow distributions,

depending on the circumstances.

Subsequently, Eichenblatt entered into a “Separation Agreement” with

Kaufman and three other corporations in which the two men were 50 percent

shareholders. That agreement, which was effective January 1, 2000, stated that the

two men had “mutually agreed to cease doing business together, except for their

continued joint ownership in certain entities defined herein.” Regarding

Piedmont/Maple, the separation agreement stated that Eichenblatt and Kaufman

would modify the operating agreement to remove Eichenblatt as a member of

Piedmont/Maple effective December 31, 1999, in accordance with a specific section

of the operating agreement under which Eichenblatt would “continue to have the right

to receive such share of allocations and distributions to which he would otherwise be

entitled, but shall have no other powers, rights or privileges of a Member of

Piedmont[/]Maple.”

Accordingly, on January 1, 2000, Eichenblatt and Kaufman Development

amended the operating agreement to address Eichenblatt’s removal as a member of

Piedmont/Maple. Pertinently, the amendment provided:

3 The parties hereto hereby agree that such removal of Eichenblatt as a Member shall be effective as of the Effective Date [January 1, 2000]. Pursuant to Section 3.1 of the Operating Agreement, Eichenblatt shall have the right to receive such share of allocations and distributions to which he would otherwise be entitled, but shall have no other powers, rights or privileges of a Member of [Piedmont/Maple]. The parties hereto agree that from and after the Effective Date, Eichenblatt shall have no authority to bind [Piedmont/Maple] as a Member and shall have no vote in any matter requiring the approval of the Members either pursuant to the Operating Agreement or in the [Georgia Limited Liability Company] Act except as otherwise provided herein. Notwithstanding the foregoing, Eichenblatt’s consent shall be required to approve any amendment of the Operating Agreement which would reduce the amount that would be paid or distributed to Eichenblatt.

The amendment addressed Eichenblatt’s access to Piedmont/Maple’s records and his

entitlement to continue to receive certain fees. It added a new paragraph to the section

of the operating agreement governing the management of Piedmont/Maple that

specifically addressed transactions between Piedmont/Maple, its members, and

entities affiliated with its members. The amendment provided that it “shall be binding

upon and inure to the benefit of the parties hereto[.]” And it provided that, “[e]xcept

as expressly modified hereby, the Operating Agreement shall remain in full force and

effect.”

4 Subsequently, Eichenblatt brought the instant action against Kaufman,

Kaufman Development, and several entities related to Kaufman. He alleged, among

other things, that Kaufman Development had breached the operating agreement by

failing to comply with certain of its provisions governing the management and

dissolution of Piedmont/Maple, which he claimed led to him receiving diminished

allocations and distributions under the operating agreement. The trial court denied the

parties’ cross-motions for summary judgment. The case went to trial, and the jury

returned a verdict awarding Eichenblatt $625,000 in compensatory damages against

Kaufman Development for breach of the operating agreement. (The jury also found

that Craig Kaufman breached the separation agreement but awarded Eichenblatt no

damages for this breach, and it found in the defendants’ favor on all of the other

claims in Eichenblatt’s complaint. ) After the trial court entered judgment on the jury

verdict, Kaufman Development moved for the trial court to amend or clarify its

judgment to include a finding that Eichenblatt’s interest in Piedmont/Maple had been

extinguished. Alternatively, Kaufman Development moved for a judgment

notwithstanding the jury verdict. The trial court denied both motions.

2. Eichenblatt’s standing to bring the contract action.

5 Kaufman Development argues that the trial court erred in ruling that

Eichenblatt had standing to sue it for breach of the operating agreement. Kaufman

Development raised this issue in connection with the cross-motions for summary

judgment. In denying summary judgment, the trial court determined that Eichenblatt

had standing to bring the action against Kaufman Development because he was a

party to the amended operating agreement with rights thereunder that he claimed had

been infringed upon by Kaufman Development’s breach. The issue of standing was

not presented to the jury.

Generally, a ruling on a motion for summary judgment becomes moot following the verdict and judgment. However, a party may appeal the denial of summary judgment as part of the direct appeal from the final judgment if the legal issues raised and resolved in denying the motion for summary judgment were not considered at trial. Thus, because the issue of [Eichenblatt’s standing to sue for breach of the operating agreement] was not presented to the jury, we will review the trial court’s denial of the motion for summary judgment on this ground.

Smith v. Saulsbury, 286 Ga. App. 322, 323 (1) (a) (649 SE2d 344) (2007) (citations

and punctuation omitted).

Ordinarily, the parties to a contract have standing to sue for a breach of that

contract. See generally OCGA § 9-2-20 (a) (“[a]s a general rule, an action on a

6 contract . . . shall be brought in the name of the party in whom the legal interest in the

contract is vested”); Level One Contact v. BJL Enterprises, 305 Ga. App. 78, 80 (1)

(a) (699 SE2d 89) (2010) (“The doctrine of privity of contract requires that only

parties to a contract may bring suit to enforce it.”) (citation omitted). Kaufman

Development asserts, without citation to authority, that Eichenblatt “is no longer a

party to [the] [o]perating [a]greement” because he is no longer a member of

Piedmont/Maple. The clear and unambiguous language of the operating agreement

and amendment thereto shows otherwise. See City of Baldwin v. Woodard & Curran,

Inc., 293 Ga. 19, 30 (3) (293 SE2d 381) (2013) (where contract’s language is clear

and unambiguous, court must look to contract alone for its meaning and enforce it

according to those clear terms).

Both the operating agreement and the amendment state that the parties are

Eichenblatt and Kaufman Development, and Eichenblatt signed both as a party. The

amendment provides that the operating agreement would remain in full force and

effect except as expressly modified by the amendment. By expressly removing

Eichenblatt as a member of Piedmont/Maple, the amendment modifies the operating

agreement to exclude Eichenblatt from the term “Member” as that term is used in the

operating agreement. But this does not affect Eichenblatt’s identity as a party to the

7 operating agreement. The amendment does not substitute another party for

Eichenblatt or otherwise change the identity of the parties to the operating agreement,

and Eichenblatt remains a party thereto.

Kaufman Development argues that, because Eichenblatt is no longer a member

of Piedmont/Maple, he cannot bring a claim for Kaufman Development’s breach of

provisions of the operating agreement other than those governing allocations and

distributions. We disagree. Again, the amendment unambiguously provides that the

operating agreement remains in full force and effect except as expressly modified by

the amendment. Its provision that Eichenblatt no longer would have “powers, rights

or privileges of a Member of [Piedmont/Maple],” aside from his rights to allocations

and distributions, merely prevents Eichenblatt from claiming other rights reserved for

Piedmont/Maple’s members. Neither the operating agreement nor the amendment

contains language suggesting that the parties intended that standing to enforce their

agreement was a “power, right or privilege” limited only to Piedmont/Maple’s

members. Moreover, to construe the operating agreement and amendment in this

manner would be inconsistent with at least two of the amendment’s provisions – the

provision adding to the operating agreement a new section pertaining to

Piedmont/Maple’s management and the provision stating that the amendment “shall

8 be binding upon and inure to the benefit of the parties hereto [Kaufman Development

and Eichenblatt].” These provisions make clear that Kaufman Development remains

bound by and Eichenblatt continues to benefit from terms other than those

specifically related to Eichenblatt’s rights to allocations and distributions.

3. Motion to amend or clarify the judgment.

Kaufman Development argues that the trial court erred in denying its motion

to amend or clarify the judgment. The judgment was consistent in every respect with

the jury’s responses on the special verdict form – a form to which Kaufman

Development did not object. Nevertheless, Kaufman Development argues that the

trial court should have added to its judgment a ruling that the jury’s award

extinguished Eichenblatt’s ownership interest in Piedmont/Maple. We find no error.

“Judgment and execution shall conform to the verdict,” OCGA § 9-12-9, and

“[a] judgment may be amended by order of the court to conform to the verdict upon

which it is predicated, even after an execution issues.” OCGA § 9-12-14. The

judgment “must conform to the reasonable intendment of the verdict upon which it

is based,” as determined by “an inspection of the record, including the verdict and

pleadings.” Turley v. Turley, 244 Ga. 808, 809 (262 SE2d 112) (1979) (citations

omitted). Consequently, the trial court was required “to examine the record . . . and

9 determine if it . . . plainly appear[ed] upon the face of the record . . . whether the jury

intended [to extinguish Eichenblatt’s interest].” Id. (footnote and punctuation

omitted).

Kaufman Development argues that the jury’s award represented the liquidated

value of Eichenblatt’s interest and, consequently, the extinguishment of that interest

was the only logical legal conclusion to be drawn from the verdict. See Norton Realty

& Loan Co. v. Bd. of Ed. of Hall County, 129 Ga. App. 668, 673 (3) (200 SE2d 461)

(1973) (court has power to amend judgment and execution to conform to legal effect

of verdict). But it does not plainly appear from the face of the record in this case that

the jury intended to make any decision regarding Eichenblatt’s interest in

Piedmont/Maple. Although Eichenblatt’s counsel argued at trial that the jury should

“compensate [Eichenblatt] for his interest,” after which Kaufman Development could

“have 100 percent interest,” neither the special verdict form nor the trial court’s

charge to the jury asked the jury to make any determinations specifically related to

Eichenblatt’s interest in Piedmont/Maple. Notably, the jury awarded Eichenblatt an

amount significantly less than what his counsel argued was the value of his interest.

Consequently, while it is plain from the record that the jury intended to award

Eichenblatt $625,000 for breach of the Piedmont/Maple operating agreement, it is not

10 at all plain that the jury intended either for this amount to represent the full value of

Eichenblatt’s ownership interest in Piedmont/Maple or for Eichenblatt to have no

interest in Piedmont/Maple going forward. See Salvador v. Coppinger, 198 Ga. App.

386, 387-388 (1) (a) (401 SE2d 590) (1991) (the fact that the jury in a personal injury

case awarded exactly the amount of medical expenses claimed by the plaintiff did not

establish that the jury did not include therein an award for pain and suffering; the jury

might have reduced the sum claimed by the plaintiff for special damages, and there

was “no way to determine the weighing and analysis engaged in by the jurors”).

Compare Blevins v. Brown, 267 Ga. App. 665, 668 (2) (600 SE2d 739) (2004) (where

the jury clearly awarded a truck to one party in a divorce action, but the other party

had unlawfully converted the truck, the trial court did not err in entering a judgment

that instead awarded damages for the unlawful conversion, because the judgment

conformed with the reasonable intendment of verdict). Considering the record in this

case, the trial court’s judgment was consistent with all the jury’s findings on the

special verdict form and did not require amendment or clarification.

Although Kaufman Development contends that it did not ask the trial court to

amend the verdict, that is what Kaufman Development is asking – for the trial court

to add to the verdict a new determination, extinguishing Eichenblatt’s interest in

11 Piedmont/Maple, and then for the trial court to conform its judgment to that amended

verdict. But “once the jury has dispersed, the trial judge has no power either to add

to or take from [the jury’s] findings. . . .” Gill Plumbing Co. v. Jimenez, 310 Ga. App.

863, 867 (1) (714 SE2d 342) (2011) (citation and punctuation omitted). See OCGA

§ 9-12-7 (“after a verdict has been received and recorded and the jury has dispersed,

it may not be amended in matter of substance either by what the jurors say they

intended to find or otherwise”); see also Blevins, 267 Ga. App. at 667 (1).

Accordingly, a trial court may not amend a jury verdict in a matter of substance after

the jury has dispersed even when “[i]t is clear that the jury’s verdict did not fully

conform to the law,” Force v. McGeachy, 186 Ga. App. 781, 783-784 (1) (368 SE2d

777) (1988), or the trial court otherwise is not satisfied that the verdict was proper.

See Parrish Bakeries of Georgia v. Wiseman Baking Co., 104 Ga. App. 573, 575 (122

SE2d 260) (1961).

As detailed above, the jury was not asked to make, and did not make, any

findings about Eichenblatt’s interest, and Kaufman Development cannot now,

through a post-trial motion after the jury dispersed, “rewrite the jury’s verdict to

include [such] finding[s].” Quantum Trading Corp. v. Forum Realty Corp., 278 Ga.

App. 485, 489 (1) (629 SE2d 420) (2006) (citing OCGA § 9-12-7). Cf. Thacker

12 Constr. Co. v. A Betterway Rent-a-Car, 186 Ga. App. 660, 662-663 (368 SE2d 178)

(1998) (where an issue raised by the pleadings was not decided by the trier of fact –

in that case, a panel of arbitrators – the trial court erred in entering a judgment that

presupposed a finding on that undecided issue); Dismuke v. Gibson, 174 Ga. App.

546, 547 (2) (330 SE2d 771) (1985) (the trial court lacked authority to add interest

to a judgment without direction to do so in the verdict). Kaufman Development’s

motion to amend the judgment simply was not the proper vehicle to address its

arguments that Eichenblatt no longer has an interest in Piedmont/Maple and is

estopped from asserting such an interest.

4. Motion for judgment notwithstanding the verdict.

Although, at the conclusion of its appellate brief, Kaufman Development states

that we “should reverse the rulings of the trial court on [its] Motion to Clarify, or in

the alternative, on [its] motion for a JNOV,” it does not specifically enumerate as

error the trial court’s denial of the motion for judgment notwithstanding the verdict.

See American Mgmt. Svcs. East v. Fort Benning Family Communities, 318 Ga. App.

827, 830 (2) (734 SE2d 833) (2012) (appellant cannot expand its enumerations of

error through argument or citation in its brief). We therefore construe Kaufman

13 Development’s reference to its motion for judgment notwithstanding the verdict as

a prayer for relief rather than an additional argument.

Judgment affirmed. Doyle, P. J., and Boggs, J., concur.