Richard Bowers & Co. v. Clairmont Place, LLC

Opinion

THIRD DIVISION ANDREWS, P. J., DILLARD and MCMILLIAN, 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/

November 13, 2013

In the Court of Appeals of Georgia A13A1459. RICHARD BOWERS & CO. v. CLAIRMONT PLACE, LLC.

DILLARD, Judge.

Richard Bowers & Co. (“Bowers”), a real estate broker, filed a broker’s lien

against property owned by Clairmont Place, LLC (“Clairmont”), an owner and lessor

of office space in Atlanta, and then sued Clairmont for unpaid commissions arising

out of a leasing commission agreement between Bowers and Clairmont’s predecessor.

Clairmont denied Bowers’s claims and asserted a counterclaim for slander of title.

Bowers moved for summary judgment on its claims for unpaid commissions and on

Clairmont’s counterclaim, which the trial court denied. Bowers then filed an

application for interlocutory appeal (which we granted), arguing that the trial court erred in denying its motion for summary judgment. For the reasons noted infra, we

agree and reverse.

Viewed in the light most favorable to Clairmont (i.e., the non-movant),1 the

evidence shows that Clairmont owns commercial real estate located at 1800 Century

Place in Atlanta (the “Property”). Clairmont is a successor-in-interest to ITT

Commercial Finance Corp. (“ITT”), which previously owned the Property. And while

ITT owned the Property, it entered into a rental agreement on June 6, 1993 (the “1993

Lease”), leasing an approximately 29,000 square foot portion of the Property to the

Georgia Department of Technical & Adult Education (“DTAE”).2

On June 6, 1993, ITT and Bowers also entered into the Leasing Commission

Agreement that gave rise to the instant litigation. As compensation for services

rendered in securing the 1993 Lease, ITT agreed to pay Bowers a commission of “five

percent (5%) of the monthly rental paid by Tenant.” The parties agreed that if the

Property was sold to an “outside party,” ITT would furnish Bowers with “an

1 See, e.g., S. Gen. Ins. Co. v. Wellstar Health Sys., 315 Ga. App. 26, 26 (726 SE2d 488) (2012); see also OCGA § 9-11-56 (c). 2 DTAE was later renamed, effective July 1, 2008, the Technical College System of Georgia. See OCGA § 20-4-14 (a); Coosa Valley Technical Coll. v. West, 299 Ga. App. 171, 172 n.1 (682 SE2d 187) (2009).

2 agreement signed by the Purchaser assuming [ITT’s] obligations to [Bowers] for

payment of the commissions.” The agreement also provided that if the

“Lease”—which is undisputedly a reference to the 1993 Lease—was “renewed or

extended, or if a new, additional, amended, or substituted Lease is entered into

between Landlord and Tenant covering the Premises, or any part thereof,” then the

commission obligation would apply to rental payments by “Tenant under such

renewal or extension, new, additional, amended, or substituted Agreement.”

The term of the 1993 Lease, which was initially for a year, was extended

through a series of amendments and renewal letters through June 2004. And during

this time, CMD Realty Investment Fund II, L. P. (“CMD”) purchased the Property

and became the landlord under the 1993 Lease. In June 2004, the Georgia Building

Authority (the “Building Authority”) entered into an agreement (the “2004 Lease”)

with CMD to rent, through June 30, 2010, approximately 61,000 square feet of office

space on the Property, which included the office space which had been rented to

DTAE under the 1993 Lease.

The record includes the affidavit of Elliot M. Penso, formerly leasing director

for the State Properties Commission, who was personally familiar with the 1993

Lease. According to Penso, because of restrictions on State of Georgia departments,

3 such as the DTAE, in making agreements for longer than a one year,3 the Building

Authority entered into the 2004 Lease with CMD, and the Building Authority in turn

subleased the space to DTAE.4

Consistent with Penso’s affidavit, the 2004 Lease shows that the parties agreed

that the leased premises would be sublet to DTAE and that CMD would accept DTAE

as the Building Authority’s agent for purposes of paying rent and requesting repairs

and maintenance services. In turn, the sublease shows that the DTAE was to occupy

the same (and some additional) suites on the Property as it had leased under the 1993

Lease, and that DTAE would make its rental payments directly to CMD.5

Clairmont contracted to buy the Property in December 2004 from CMD. And

as part of the real estate sale agreement, Clairmont assumed, among other contracts,

the 2004 Lease and the Leasing Commission Agreement.6 Following its purchase of

3 See OCGA §§ 50-5-64, 50-5-77. 4 Penso attached the 2004 Lease and the referenced sublease to his affidavit. 5 The sublease and CMD’s consent thereto did not, however, contemplate that the Building Authority would be relieved of its obligations under the 2004 Lease. 6 The agreement between CMD, as seller, and Clairmont, as purchaser, contemplated that the parties would execute an assignment and assumption agreement, pursuant to which Clairmont would “assume[] all of the obligations of [CMD] under the Assumed Agreements [which included the 2004 Lease and the

4 the Property, Clairmont paid Bowers commissions under the Leasing Commission

Agreement through June 2010. Then, effective July 1, 2010, Clairmont and the

Building Authority entered into the “First Amendment to Rental Agreement” (the

“2010 Lease”) which, inter alia, extended the term of the 2004 Lease an additional

ten years, through June 30, 2020.

In July 2010, Clairmont stopped making commission payments to Bowers,

notwithstanding Bowers’s demand for same. Consequently, Bowers filed a broker’s

lien against the Property on December 21, 2010, and then sued Clairmont to collect

unpaid commissions within 90 days of the lien filing, and thereafter.7 Bowers then

filed a separate claim for unpaid commissions for the months of July, August, and

September 2010, and amended its complaint to assert an alternate claim for breach of

contract. Clairmont answered and counterclaimed for slander of title.

Leasing Commission Agreement] to the extent that such obligations are required to be performed on or after the date of this Assignment.” 7 See OCGA § 44-14-602 (d) (“When payment to a broker is due in installments, all or a portion of which is due only after a conveyance of the commercial real estate, any claim for lien for those payments due after conveyance may be recorded at any time subsequent to the conveyance so long as the claim for lien is recorded within 90 days of the date the payment was due and not paid.”).

5 Thereafter, Bowers moved for summary judgment on its claims for unpaid

commissions and on Clairmont’s counterclaim. The trial court denied Bowers’s

motion for summary judgment, but issued a certificate of immediate review. This

Court granted Bowers’s application for interlocutory review, and Bowers then filed

a timely notice of appeal.

1. The trial court denied Bowers’s motion for summary judgment on its claims

for unpaid commissions because (a) the Building Authority was not the “Tenant” for

purposes of the Leasing Commission Agreement, (b) the 2010 Lease was a new lease

for which Bowers could not claim a commission, and (c) the Leasing Commission

Agreement was indefinite and, thus, unenforceable. Bowers contends that these

conclusions were erroneous and that it was entitled to summary judgment as a matter

of law. We agree.

(a) The Leasing Commission Agreement provides, in pertinent part, for

payment of commissions equal to “five percent (5%) of the monthly rental paid by

Tenant under this Lease.” The trial court concluded that DTAE was the “Tenant”

identified by the Leasing Commission Agreement and, therefore, because the current

tenant was the Building Authority, rather than DTAE, Clairmont was not required to

pay Bowers five percent of the rentals paid to Clairmont by the Building Authority.

6 At the outset of our analysis, we note that, as an initial matter, the construction

of a contract is a matter of law,8 which is subject to de novo review.9 And in

conducting this review, a court is to be “guided by three fundamental principles of

contract construction.”10 First, a court must decide whether the language of the

contract is clear and unambiguous, and if it is, the court simply enforces the

agreement according to its clear terms—put another way, “the contract alone is

looked to for its meaning.”11 Next, if the contract is ambiguous in some respect, “the

court must apply the rules of contract construction to resolve the ambiguity.”12

Finally, if the ambiguity remains after applying the rules of construction, “the issue

8 See Chaudhuri v. Fannin Regional Hosp., Inc., 317 Ga. App. 184, 184-85 (1) (730 SE2d 425) (2012); Schwartz v. Harris Waste Mgmt. Group, 237 Ga. App. 656, 660 (2) (516 SE2d 371) (1999). 9 See Monitronics Int’l Inc. v. Veasley, __ Ga. App. __ (746 SE2d 793, 801) (2013) (physical precedent only); Goody Products, Inc. v. Dev. Auth. of City of Manchester, 320 Ga. App. 530, 535 (2) (740 SE2d 261) (2013). 10 Goody Products, 320 Ga. App. at 535 (2). 11 Chaudhuri, 317 Ga. App. at 184-85 (1) (punctuation omitted); see also Schwartz, 237 Ga. App. at 660 (2) (punctuation omitted). 12 Chaudhuri, 317 Ga. App. at 184-85 (1) (punctuation omitted); see also Goody Products, 320 Ga. App. at 535 (2).

7 of what the ambiguous language means and what the parties intended must be

resolved by a jury.”13

Looking first to the four corners of the contract, we note that “Tenant” is not

a defined term under the Leasing Commission Agreement; and while it is certainly

true that the word “Tenant” is capitalized, the agreement contains several capitalized

words that are not defined. And on appeal, Clairmont maintains that the capitalization

or lack thereof is crucial, arguing that “[t]his case turns completely on the distinction

between lower case and capital letters.” But it is not evident, at least on the face of

the agreement, that the use of the capitalized word, “Tenant,” as opposed to “tenant,”

has any determinative significance for purposes of interpreting the contract.

DTAE is, however, identified in the Leasing Commission Agreement, and it

can certainly be inferred that DTAE is a Tenant, but not that “DTAE” and “Tenant”

are synonymous terms. Rather, the Leasing Commission Agreement speaks to the

“rental paid by Tenant under this Lease,” which suggests a reliance on the 1993 Lease

for purposes of establishing the meaning of “Tenant.” Accordingly, we agree with

13 Chaudhuri, 317 Ga. App. at 184-85 (1) (punctuation omitted); see also Goody Products, 320 Ga. App. at 535 (2).

8 Clairmont that the lack of clarity regarding the meaning of “Tenant” creates an

ambiguity within the Leasing Commission Agreement.

In resolving an ambiguity, a court applies the rules of contract construction.14

In that context, extrinsic evidence is admissible to explain a contract term that is

ambiguous.15 And as the payment obligations under the Leasing Commission

Agreement are calculated from the monthly payments by the “Tenant” under the

“Lease,” it is entirely appropriate to examine the 1993 Lease to explain what the

parties intended by “Tenant.” 16

As the trial court noted, the “Tenant” under the 1993 Lease was identified as

DTAE. However, DTAE was also freely permitted to assign the 1993 Lease, without

consent, to “another agency, department, commission, board or bureau within the

Executive Branch of the State Government of Georgia, or to a State Authority.” Thus,

14 See Woody’s Steaks, LLC v. Pastoria, 261 Ga. App. 815, 817 (1) (584 SE2d 41) (2003); OCGA § 13-2-2. 15 See OCGA § 13-2-2 (1); Archer Western Contractors Ltd. v. Estate of Mack Pitts, 292 Ga. 219, 222 n.4 (1) (735 SE2d 772) (2012) (noting that parol evidence is admissible to explain all ambiguities, both latent and patent). 16 See OCGA § 13-2-2 (1) (providing, inter alia, that “[a]ll the attendant and surrounding circumstances may be proved and, if there is an ambiguity, latent or patent, it may be explained . . . .”).

9 from the outset it was expressly permissible for a State authority, such as the Building

Authority,17 to become the “Tenant.”

Although this might not, in and of itself, resolve the ambiguity contained

within the Leasing Commission Agreement as to the meaning of “Tenant,” “[t]he

construction placed upon a contract by the parties thereto, as shown by their acts and

conduct, is entitled to much weight and may be conclusive upon them.”18 And under

the trial court’s construction of the Leasing Commission Agreement, the landlord’s

obligation to pay commissions thereunder would have ceased when the Building

Authority entered into the 2004 Lease. Nevertheless, ITT’s successor, CMD,

continued to pay commissions while the Building Authority was the tenant, and then

Clairmont assumed the 2004 Lease and the Leasing Commission Agreement, and

likewise continued to pay commissions for years notwithstanding the fact that the

Building Authority, and not DTAE, was the named tenant under the 2004 Lease.

17 The “Georgia Building Authority” is “an instrumentality of the state and a public corporation.” OCGA § 50-9-3. 18 Scruggs v. Purvis, 218 Ga. 40, 42 (126 SE2d 208) (1962); accord Head v. Scanlin, 258 Ga. 212, 214 (1) (367 SE2d 546) (1988); Hiers v. ChoicePoint Servs., 270 Ga. App. 128, 129 (1) (606 SE2d 29) (2004) (finding that, in suit for unpaid commissions, actions of parties in continuing to pay both commissions and consulting fees showed that parties did not intend to “do away with the commission agreement” when consulting fee payments began).

10 Thus, under the parties’ construction of the Leasing Commission Agreement, as

shown by their actions and conduct, the Building Authority could be, and was, a

“Tenant” for purposes of that particular contract. We conclude, therefore, that the trial

court erred in denying summary judgment to Bowers on the ground that Building

Authority was not the “Tenant” contemplated by the Leasing Commission

Agreement.

(b) The trial court also found that in light of the material differences between

the 2004 Lease and the 2010 Lease, the 2010 Lease is a new lease that is not subject

to the Leasing Commission Agreement. In doing so, the trial court relied upon the

rule set forth in Brannen/Goddard Co. v. Sheffield, Inc.,19 for distinguishing between

19 240 Ga. App. 667 (524 SE2d 534) (1999). Under Brannen/Goddard, we noted that:

In deciding whether a succeeding lease is substantially a renewal of a preceding lease or altogether a new lease, the determination can be based on whether the succeeding lease employs drastically different terms, not simply somewhat different considerations, i.e., is the lessee occupying substantially the same space under substantially the same terms? If the succeeding lease employs substantially the same terms as the preceding lease, it may be considered a renewal even though technically a “new” lease.

11 a renewal of a lease and an altogether new lease. But the Leasing Commission

Agreement explicitly provides:

If the term of the Lease is renewed or extended, or if a new, additional, amended, or substituted Lease is entered into between Landlord and Tenant covering the Premises or any part thereof, or covering any other premises as an expansion of, addition to, or substitution for the Premises herein leased, then in any one (1) or more of said events, Landlord agrees to pay to [Bowers] five percent (5%) of all rentals paid to Landlord by Tenant under such renewal or extension, new, additional, amended, or substituted Agreement.

And viewed in light of this provision, the differences between the 2004 Lease

and the 2010 Lease are not such that it would sever Clairmont’s obligation to make

commission payments.20 Moreover, the 2010 Lease is styled as a “First Amendment

to Rental Agreement,” and purports to reflect the parties’ desire to “renew and extend

the Lease Term” and “expand the square footage” of various rented suites. It provides

that, except as set forth therein, the 2004 Lease “shall remain unmodified and in full

Id. at 669 (citation omitted.) 20 See Hunter v. Benamy Realty Co., 115 Ga. App. 829, 831 (2) (156 SE2d 160) (1967) (finding that, “[t]he term ‘new lease,’ used here, would embrace not only a renewal of the original lease on substantially the same terms, but a completely new agreement employing drastically different terms as well, so long as the new lease covered the same ‘premises, or any part thereof.’” (punctuation omitted)).

12 force and effect.” And as in the 2004 Lease, the Building Authority was the named

tenant. The parties acknowledged that the Building Authority subleased the rented

premises to DTAE, and none of the provisions of the 2010 Agreement purported to

change that arrangement.

The trial court noted that the landlord changed from CMD in the 2004 Lease

to Clairmont in the 2010 Lease, but both CMD and Clairmont were successors in

interest to the “Landlord” under the Leasing Commission Agreement, which is

expressly binding on the Landlord’s assigns, and they each assumed the obligations

of the Landlord thereunder.

Another difference noted by the trial court was that the rented space was

expanded to approximately 82,000 square feet in the 2010 Agreement from

approximately 61,000 square feet in the 2004 Agreement.21 The Leasing Commission

Agreement contemplates, however, that the commission obligations would continue

upon an expansion of the leased premises. As such, we simply cannot agree with the

trial court that the 2010 Lease was so materially different from the 2004 Lease that

21 As the trial court noted, the lease term was also increased, the rental rate decreased, the number of parking spaces increased, and the broker (a party unrelated to this litigation) that represented CMD in the 2004 Lease was not the broker (another party unrelated to this litigation) who represented Clairmont in the 2010 Lease.

13 Clairmont had no obligation to make commission payments on account of rent paid

thereunder. Rather, the 2010 Lease constitutes a lease “entered into between Landlord

and Tenant covering the Premises or any part thereof,” and so remains subject to the

commission obligation under the terms of the Leasing Commission Agreement.

(c) The trial court also determined that the Leasing Commission Agreement is

too vague and indefinite to be enforced in that it does not last for a specific period of

time. As the trial court noted, our Court has explained that “[i]t is well-established

that a contract does not exist unless the parties agree on all material terms,” and “[a]

contract cannot be enforced if its terms are incomplete, vague, indefinite or

uncertain.”22 On the other hand, as a general principle, “[t]he law leans against the

destruction of contracts on the ground of uncertainty,”23 and “the objection of

indefiniteness may be obviated by performance and acceptance of performance.”24

22 Burns v. Dees, 252 Ga. App. 598, 601-602 (1) (a) (557 SE2d 32) (2001) (citation and punctuation omitted); See OCGA § 13-3-2 (“The consent of the parties being essential to a contract, until each has assented to all the terms, there is no binding contract; until assented to, each party may withdraw his bid or proposition.”). 23 Pine Valley Apartments Ltd. P’ship v. First State Bank, 143 Ga. App. 242, 245 (2) (237 SE2d 716) (1977) (punctuation omitted). 24 Id. (punctuation omitted).

14 Furthermore, we are unaware of any requirement that a contract for payment of

commissions be for a predetermined period of time.25

Here, the parties agreed on all material terms, and it can be ascertained that

Clairmont, as the landlord, owes commission payments under the agreement. As such,

we conclude that the Leasing Commission Agreement, which had already been

performed for many years, is not so indefinite as to be unenforceable.26

In light of the foregoing, we find that the trial court erred in denying Bowers’s

motion for summary judgment on its claims for unpaid commissions.

2. Finally, the trial court concluded that Bowers was not entitled to summary

judgment on Clairmont’s counterclaim for slander of title because Bowers had not

shown that is was entitled to file a broker’s lien against the Property for unpaid

25 See, e. g., Bd. of Regents of Univ. Sys. of Ga. v. A. B. & E., Inc., 182 Ga. App. 671, 672 (357 SE2d 100) (1987) (finding that trial court properly enforced purchaser’s commitment “to pay commissions to [broker] of 5 percent of all rentals received for periods allocable after the date of the purchase closing, including all renewals and extensions of the tenant lease”). 26 See Sanders v. Commercial Cas. Ins. Co., 226 Ga. App. 119, 121 (1) (485 SE2d 264) (1997) (finding that “[b]ecause the determination of whether a contract contains the requisite certainty must be made at the time enforcement is sought, an objection of indefiniteness may be obviated by performance on the part of one party and the acceptance of the performance by the other”).

15 commissions.27 However, given our conclusions in Division 1, supra, Clairmont

cannot show that the lien filing was “false” or “malicious,” and so Bowers was

entitled to summary judgment on Clairmont’s counterclaim for slander of title as

well.28

Judgment reversed. Andrews, P. J., and McMillian, J., concur.

27 See OCGA § 44-14-602 (a), (d). 28 See Latson v. Boaz, 278 Ga. 113, 114 (598 SE2d 485) (2004) (defining elements of slander of title: “the plaintiff must allege and prove the uttering and publishing of the slanderous words; that they were false; that they were malicious; that he sustained special damage thereby; and that he possessed an estate in the property slandered.” (punctuation omitted)).