Order on Motions for Partial Summary Judgment (RICHARD W. MCWHORTER)
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1 Gergia State University Cllege f Law Reading Rm Gergia Business Curt Opinins Order n Mtins fr Partial Summary Judgment (RICHARD W. MCWHORTER Elizabeth E. Lng Superir Curt f Fultn Cunty Fllw this and additinal wrks at: Institutinal Repsitry Citatin Lng, Elizabeth E., "Order n Mtins fr Partial Summary Judgment (RICHARD W. MCWHORTER" (2007. Gergia Business Curt Opinins This Curt Order is brught t yu fr free and pen access by Reading Rm. It has been accepted fr inclusin in Gergia Business Curt Opinins by an authrized administratr f Reading Rm. Fr mre infrmatin, please cntact mbutler@gsu.edu.
2 IN THE SUPERIOR COURT OF FULTON CO STATE OF GEORGIA RICHARD W. MCWHORTER, v. Plaintiff, J. ROBERT WARD, Defendant. FILED I Y DEC DEPUlY CLERK SUPERIOR COURT FULTON COUNlY GA Civil Actin N.: 2006CVI18867 ORDER ON MOTIONS FOR PARTIAL SUMMARY JUDGMENT Cunsel fr bth parties appeared befre the Curt n December 10,2007, t present ral argument n Defendant's Mtin fr Partial Summary Judgment n Cunts III and Cunts iv f the Cunterclaim, filed September 20,2006; Defendants Mtin fr Summary Judgment n Plaintiffs Claims fr injunctive Relief, Usurpatin f Business Opprtunities, and impsitin f a Cnstructive Trust, filed April 30, 2007; and Plaintiffs Mtin fr Partial Summary Judgment n Cunt II, filed April 30, After reviewing the recrd f the case, the briefs submitted n the mtins, and the parties' arguments, the Curt finds as fllws: FACTS purpse f purchasing Cumberland, Gergia, lts, selling them, and splitting the prfits....,.",..""""" _._.,-,~""""",:<," ~:='~::" ", ::"':::-='" 0;:' ==::. :="~:::'::c' == :_"_"'_'..--_-_-= Plaintiff and Defendant executed Articles f Organizatin, but n Operating Agreement.. ~.'"~..,.,.,-.,..,..'~~-~~-c;"~~::!"'::::' --.::::...:..~_= : On May 19, 2004, FH purchased tw (2 lts (cllectively referred t herein as the "Lts" with a prmissry nte n each frm BB&T Bank ("BB&T". Each nte required a balln principal payment n May 7, _.'.=~_'... "-.:...:::...:-::: 1
3 T btain the lans, Plaintiff and Defendant each signed persnal guarantees n the principal f the lans (individually, the "Guaranty". Each party paid apprximately $20,000 in clsing csts. When BB&T requested additinal cllateral, Plaintiff ffered Lt 66, which he wned individually. Plaintiff alleges that in exchange fr ffering Lt 66 as cllateral, the Defendant agreed t pay all csts assciated with the lans such as the quarterly interest payments, taxes, insurance, etc. Defendant was t be reimbursed fr fifty percent (50% f his utf-pcket, pst-clsing csts frm the sale prceeds n the Lts befre the prfit distributin t the tw members. Defendant acknwledges that he and Plaintiff entered int an ral agreement, but dispute the tenns. Defendant asserts that Plaintiff pledged Lt 66 as cllateral because Plaintiff initiated this investment pprtunity and Defendant did nt want t infuse cash int the deal. Defendant alleges that he and Plaintiff agreed t split all ut-f-pcket, pst-clsing csts n a SO-SO basis. Additinally, Defendant highlights that the security interest granted in Plaintiffs Lt 66 was never perfected due t a cmplicatin arising frm Plaintiffs sale f a fifty percent (50% interest in Lt 66 pst-clsing... _." _.. _.. _ t".. _,... August, 2005, sught a fifty percent (50% cntributin frm Plaintiff. the BB&T lans. In Octber 2005, Plaintiffs cunsel received an cmmunicatin infnning them f Defendant's desire t purchase the BB&T lans and requesting C Plaintiffs signature t cnsent. Plaintiff inquired abut Defendant's intent with regard t the lans/prperty. Thereafter, cmmunicatins went n further between Plaintiff and 2
4 Defendant. Eventually Defendant purchased FH's lans frm BB&T in December 2005, althugh Plaintiff did nt cnsent t the assignment and n ntice f the sale was prvided t him. On May 7,2006, the balln payment n bth FH Lans became due. On May 8, 2006, Defendant sent a demand ntice t Plaintiff requesting payment within ten (10 days. N payment was received and Defendant initiated freclsure prceedings, which were stayed by varius injunctins and finally by a lis pendens filed n the prperties. Plaintiff initiated this suit against Defendant alleging, amng ther things, breach f fiduciary duties and damages related t Defendant's purchase f the FH Lans frm BB&T. STANDARD C T prevail n a mtin fr summary judgment, the mving party must demnstrate that "there is n genuine issue f material facts, viewed in the light mst favrable t the nn-mving party, t warrant judgment as a matter flaw." Lau's Crp. v. Haskins, 261 Ga. 491 (1991. See als, Danfrth v. Bullman, 276 Ga. 531, 532 ( #... '.,.. -" ,--_ 'r-- -"'--0-' '.._'_. _n III (Enfrce the Guaranty that II signed and CuntsIV (Cntributin Defendant urges this Curt t enfrce the Guaranty signed by Plaintiff c...,...,..,.."'"'_ =~~,-,.,.,... "''''''''''''',.,..,_"~..."...,,.,==_... =...""..."..,..,..,....=_.-'"""""..."...,_-r.=,...,..."._._""'",...,~. _~~,~ -~""""'~...""'r.-._"""""''''''.._...,.,.""... Defendant seeks fifty percent (50% f the principal due n the FH lans, plus interest and fees/csts. The issue fthe Guaranty and its enfrceability, hwever, is inextricably intertwined with questins f whether any fiduciary duties were breached in Defendant's acquisitin fthe lans, the cnsequences f such breaches, if any, and damages. ( Therefre, while there is n dispute that Plaintiff signed the Guaranty with Defendant fr -..:.,._-;,--,...,-,--,~_,-..,..-,. 3
5 bth FH Lans, Plaintiff's bligatins thereunder in light f the questins surrunding Defendant's acquisitin fthe FH Lans cannt be detennined at this time. Similarly, Defendant requests summary judgment n its cunterclaim fr Cntributin t recup ne half f his pst-clsing, ut-f-pcket expenses n the FH lans. Plaintiff and Defendant admit t making an ral agreement regarding pstclsing, ut-f-pcket expenses n the FH lans. In exchange fr Plaintiff's prvisin f additinal cllateral (Lt 66, Plaintiff claims that Defendant agreed t pay all csts upfrnt and t be reimbursed ut f sale prceeds. Defendant, hwever, argues that the parties agreed t share all expenses at the time they came due. Defendant als argues, in his briefs submitted n the issue, that if there was an ral agreement, it was invalid under the Statute f Frauds because the tw (2 year tenn f the lan prevented it frm being perfrmed in less than ne (1 year. O.C.O.A While Plaintiff acknwledges that the security interest ffered t BB&T n Lt 66 was never perfected, Plaintiff argues that he perfrmed, r at least has partially Frauds defects in the alleged ral agreement. O.C.O.A (the statute f frauds ther in accrdance with the cntract... " r "where there has been such part perfrmance f the cntract as wuld render it a fraud f the party refusing t cmply if the curt did CJ nt cmpel a perfrmance.". 4
6 n By ffering Lt 66 t secure the FH lans and wrking with BB&T t prvide the additinal cllateral required under the lans, Plaintiff may have partially perfnned sufficient t vercme any Statute f Frauds defect in the alleged ral agreement. Thus, there remains a questin f fact apprpriate fr a jury t detennine. In accrdance with the freging, Defendant's Mtin fr Summary Judgment n Cunterclaim Cunts III (Guaranty and IV (Cntributin is DENIED. II. Defendant's Mtin fr Summary Judgment n Plaintiff's Claims fr Injunctive Relief fr Usurpatin f a Business Opprtunity and Impsitin f a Cnstructive Trust. Plaintiff seeks a pennanent injunctin t prevent Defendant's freclsure n the land and fr the FH lans and guarantees t be placed in a cnstructive trust as a result f the alleged breached fiduciary duties, usurped business pprtunities, and unjust enrichment resulting frm Defendant's acquisitin and enfrcement f the FH lans. First, Defendant petitins the Curt t grant him summary judgment n Cunt IV f Plaintiffs cmplaint seeking a pennanent injunctin n the enfrcement f the FH Lans. As a basis fr such injunctive relief, Plaintiff cites Defendant's allege breach f fiduciary duties wed t FH and breach fthe ral agreement between the members. "'_ <;r. alleged in this case. Plaintiff cunters that because waterfrnt prperty is the subject f =='::~ttre'disp~uteii'trelwcerrtire'7""partics;'ti1ltt-tiieilrrrque:';ifatufe--uflifi11i:lf"ill<'jj{i~t1c;[ijy satt:rififi~==:::-:: -~'- requirements fr an equitable remedy pursuant t O.C.G.A This Curt disagrees. What is fundamentally at issue between the parties is a mnetary investment, C which was nevertheless in the fnn f prperty. Thus, this case is nt autmatically apprpriate fr equitable remedies by virtue f the prperty in questin. 5
7 C Hwever, befre the issue f injunctive relief can be prperly befre this Curt, a detenuinatin must be made n the underlying questins f breach f fiduciary duty and the alleged ral agreement, whatever its tenns were, which are reserved fr detenuinatin by a jury. Secnd, Defendant petitins the Curt fr summary judgment n Cunt III f Plaintiffs Cmplaint fr unjust enrichment and the impsitin f a cnstructive trust. Cnstructive trusts are impsed under O.C.G.A "whenever the circumstances are such that the persn hlding legal title t prperty, either frm fraud r therwise, cannt enjy the beneficial interest in the prperty withut vilating sme established principle f equity." A cnstructive trust may be impsed where ne is unjustly enriched as a result f breaching fiduciary duties wed t anther. See, e.g., Lane C. v. Taylr, 174 Ga. App. 356 (1985. Withut reslving the threshld questin f whether Defendant was unjustly enriched as a result f purchasing the FH lans, hwever, a decisin n the impsitin f a cnstructive trust is premature. Thus, Defendant's Mtin fr Summary Judgment is DENIED. Plaintiff petitins this Curt t grant summary judgment n Cunt V f his "".,...~_."""'~-=~.~~... ~~... _ ~'."""""'"_" _~_'="""'~'-.",".~,..".._. '''''''''''''-.''_'''''''''*T "'_"""''"'''''-. '''='''''''''''_'''_~:_'-_' ' T_' '""",,-.'_r"t.'''-_'-o-'~_ cmplaint seeking a decree f judicial disslutin f FH. Under O.CG.A , a member f, r the LLC itself, may petitin the Curt fr a decree disslving the cmpany "whenever it is nt reasnably practicable t carryn the business in cnfnuity with the articles f rganizatin r a written perating agreement." Plaintiff seeks summary judgment n this Cunt pursuant t O. C.G.A. 14-6
8 (b(5, which states that a persn ceases t be a member f an LLC whenever enumerated events ccur, including an unreslved petitin (after 120 days fr disslutin. After reviewing the statutes implicated and the case law interpreting the limited liability cde f Gergia, it is nt clear t this Curt that these tw statutes may be used as a vehicle t remve a member and disslve the cmpany in a suit where the LLC in questin is nt a party t the actin. In accrdance with the freging reasns, Plaintiffs Mtin fr Summary Judgment n Cunt V is DENIED. CONCLUSION As stated abve, Defendant's Mtin fr Partial Summary Judgment n Cunts III ( and Cunts IV f the Cunterclaim, filed September 20,2006, is hereby DENIED; Defendants Mtin fr Summary Judgment n Plaintiff's Claims fr Injunctive Relief, Usurpatin f Business Opprtunities, and Impsitin f a Cnstructive Trust, filed April 30,2007, is hereby DENIED; and Plaintiffs Mtin fr Partial Summary Judgment n Cunt II, filed April 30, 2007, is hereby DENIED. _, r. '~''::. - =r.-<~--_,..-:-=-,.., """''''-'''''''''''--,"".",-_,-.",,-,.-_~_. -""~~'~-+-''-'-' '<'''''''--;-''''''F.hT 7A~~fr'FH''''F.'':'i'"';~L'3;--:B:ENI0H''iV+A'AP'''' -- u...".,,...,-==~.,...,-"'~ Superir,Curt f Fultn Cunty Atlanta Judicial Circuit 7
9 Cpies t: James Sherrian, Esq. Margaret G. Geer, Esq. RAY & SHERMAN LLC One Securities Centre 3490 Piedmnt Rad, Suite 700 Atlanta, GA Richard Gerakitis, Esq. Lindsay Marks, Esq. TROUTMAN SANDERS LLP 600 Peachtree Street, NE Suite 5200 Atlanta, GA Candace Smith, Esq. Patrick R. Cstell, Esq. Rhnda Patersn, Esq. ALSTON & BIRD LLP 1201 West Peachtree Street Atlanta, Gergia (J 8
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