Gwinnett County v. Old Peachtree Partners, LLC , 329 Ga. App. 540 ( 2014 )

THIRD DIVISION
BARNES, P. J.,
BOGGS and BRANCH, 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/
October 23, 2014
In the Court of Appeals of Georgia
A14A1173. GWINNETT COUNTY v. OLD PEACHTREE
PARTNERS, LLC.
BARNES, Presiding Judge.
This is the second appearance of this case arising out of a settlement in which
Gwinnett County agreed to, among other things, purchase 16.203 acres of property
from Old Peachtree Partners, LLC for the price of $5.2 million. The settlement was
reached to resolve all of the pending litigation between the parties, including a
condemnation action that had been filed by the County. The trial court initially
concluded that the settlement agreement was unenforceable, but this Court reversed
and held that the County was bound by the settlement. See Old Peachtree Partners,
LLC v. Gwinnett County, 315 Ga. App. 342, 345-348 (1) (726 SE2d 437) (2012)
(“Old Peachtree Partners I”). Following remand, the trial court entered an order
enforcing the settlement, and the parties closed on the transaction, with the County
paying Old Peachtree for the purchase of the 16.203 acres. The trial court ultimately
awarded prejudgment interest to Old Peachtree on the purchase price for the 16.203
acres of property and ruled that Old Peachtree was entitled to a trial on its claim for
incidental damages. The County now appeals the trial court’s award of prejudgment
interest and its grant of a trial on Old Peachtree’s claim for incidental damages. For
the reasons discussed below, we affirm.
This case began with Gwinnett County filing two lawsuits seeking to acquire
property owned by Old Peachtree for a public road extension project.1 Old Peachtree
owned two adjacent parcels of property in Gwinnett County located in the area of the
road extension, the first parcel consisting of 1.867 acres and the second parcel
consisting of 16.203 acres. In the first lawsuit filed against Old Peachtree in April
2008, the County asserted claims for specific performance and breach of contract,
seeking to enforce the terms of an option agreement to purchase Old Peachtree’s first
parcel of property for $1,100,000. Old Peachtree answered, alleging that the County
had failed to satisfy a condition precedent to exercising the option. Old Peachtree also
asserted counterclaims for fraud and for inverse condemnation of its second parcel
of property, contending that the County’s installation of a sewer line across its
1
The underlying facts are set out in greater detail in the prior appeal of this
case, Old Peachtree Partners I, 315 Ga. App. at 342-345.
2
property after acquiring the first parcel would destroy Old Peachtree’s ability to
develop the second parcel.
While the first lawsuit was pending, the County filed a second lawsuit against
Old Peachtree. The second suit was a condemnation action instituted for the purpose
of acquiring Old Peachtree’s first parcel of property for the road extension.
In the summer of 2009, the parties began to discuss a settlement to resolve the
pending litigation, including the condemnation action. Old Peachtree presented the
County with a written offer of settlement on May 1, 2009, and on May 5, 2009, the
Gwinnett County Board of Commissioners (the “Board”) met in executive session
and rejected the offer. However, the Board authorized the county attorney to present
Old Peachtree with a counteroffer of settlement to resolve both pending lawsuits, and
the attorney conveyed the counteroffer to Old Peachtree by letter dated May 8, 2009.
The counteroffer included payment by the County of $1,100,000 for the first parcel
that was the subject of the condemnation action, and $5,265,975 for the second parcel
that Old Peachtree argued had been inversely condemned. Under the terms of the
counteroffer, the County offered to settle all pending disputes between the parties in
exchange for Old Peachtree agreeing to the aforementioned prices as payment for the
3
two parcels. On May 12, 2009, Old Peachtree, through its attorney, verbally accepted
the County’s settlement counteroffer.
The parties began preparing the documents that were the subject of the
settlement agreement, including a purchase and sale agreement, a final consent order,
and a mutual general release. Old Peachtree signed and delivered the settlement
documents to the County on June 13, 2009. However, on August 4, 2009, the Board
voted against the purchase of Old Peachtree’s property.
After the County refused to carry out the settlement agreement, Old Peachtree
filed a counterclaim in the first lawsuit for breach of that agreement. In its prayer for
relief, Old Peachtree prayed for damages, prejudgment interest, and “such other and
further relief as the [trial court] deem[ed] just, equitable and proper under the facts,
circumstances, and evidence presented in this case.” The parties then filed cross-
motions for summary judgment relating to the enforceability of the option agreement
and the settlement agreement. The County argued, among other things, that the
settlement agreement was unenforceable because approval of the purchase by the full
Board at a public meeting was a condition precedent to the settlement that had not
been satisfied. The trial court agreed with the County and ruled that the parties were
not bound by the settlement.
4
Old Peachtree appealed the trial court’s ruling on the enforceability of the
settlement to this Court. We reversed the trial court, concluding that approval of the
full Board was not a condition of the settlement agreement and that the county
attorney had authority to extend the settlement counteroffer to Old Peachtree that was
accepted on May 12, 2009. See Old Peachtree Partners I, 315 Ga. App. at 345-348
(1). We therefore concluded that the settlement agreement was binding and
enforceable against the County. See id.
After the Supreme Court of Georgia denied certiorari, Old Peachtree made
written demands to the County on January 14, 2013 and February 1, 2013 seeking
payment for the two parcels of Old Peachtree’s property referenced in the settlement
agreement, plus prejudgment interest and other damages. The Board rejected the
demands on February 5, 2013.
Old Peachtree then filed a motion to enforce the settlement agreement on
February 22, 2013. Old Peachtree sought specific performance of the settlement
agreement and prejudgment interest under OCGA § 7-4-15 on the purchase price
owed by the County for the two parcels of Old Peachtree’s property. Old Peachtree
also requested a trial on the incidental damages it allegedly had incurred as a result
of the County’s refusal to carry through with the settlement agreement. Specifically,
5
Old Peachtree argued that it was entitled to recover the costs (i.e., property taxes,
interest on the property’s mortgage, and property insurance) it had incurred in
continuing to maintain the property since 2009 when the County should have taken
possession of the property pursuant to the settlement agreement.
The County initially opposed the motion, but ultimately consented to the trial
court awarding specific performance. On April 10, 2013, the trial court granted Old
Peachtree’s motion to enforce the settlement agreement. The trial court ordered the
County to tender into the court registry in the condemnation action the full amount
it had agreed to pay for the first parcel of Old Peachtree’s property. The court further
ordered the County to complete its purchase of the second parcel of Old Peachtree’s
property for the agreed upon price of $5,265,975. The trial court reserved ruling on
the issues of prejudgment interest and incidental damages.
Pursuant to the trial court’s enforcement order, on April 24, 2013, the County
tendered the funds into the court registry in the condemnation action for the
acquisition of Old Peachtree’s first parcel of property. On May 7, 2013, the County
complied with the enforcement order and acquired Old Peachtree’s second parcel in
exchange for the agreed-upon purchase price.
6
The trial court addressed the issue of prejudgment interest in a subsequent
order entered on May 15, 2013. The trial court awarded prejudgment interest on the
amount that the County had deposited into the court registry in the condemnation
action for the first parcel of Old Peachtree’s property on April 24, 2013, but not on
the $5,265,975 purchase price that had been paid by the County for the second parcel
on May 7, 2013. The trial court accepted the County’s argument that the County was
not obligated to pay prejudgment interest on the $5,265,975 because interest did not
start to accrue on the purchase price until the County took actual possession of the
second parcel, which did not occur until May 7, 2013, the same day that it made full
payment to Old Peachtree. Consequently, the trial court found that no prejudgment
interest was owed on the purchase price ultimately paid by the County for the second
parcel.
Old Peachtree moved for reconsideration, contending that actual possession by
the County of the second parcel was irrelevant in determining when prejudgment
interest should start to accrue on the purchase price paid by the County. On October
16, 2013, the trial court granted Old Peachtree’s motion for reconsideration, reversed
its prior order, and ruled that Old Peachtree was entitled to $1,458,089.97 in
prejudgment interest on the purchase price that the County had paid for the second
7
parcel pursuant to OCGA § 7-4-15. The trial court also ruled that Old Peachtree was
entitled to a trial to determine the extent of its incidental damages.
Following the entry of its order granting Old Peachtree’s motion for
reconsideration, the trial court issued a certificate of immediate review.
We granted the County’s application for interlocutory appeal, and this appeal
followed in which the County challenges the award of prejudgment interest and the
grant of a trial on incidental damages.
1. The County contends that the trial court erred in granting Old Peachtree’s
motion for reconsideration and awarding prejudgment interest on the purchase price
of Old Peachtree’s second parcel of property under OCGA § 7-4-15. According to the
County, Old Peachtree is prohibited from recovering prejudgment interest for three
separate reasons: (a) interest did not begin to accrue until the County took actual
possession of the second parcel; (b) Old Peachtree delayed requesting specific
performance of the settlement agreement until after its successful appeal of the trial
court’s initial ruling that the agreement was unenforceable; and (c) interest did not
begin to accrue until the County became bound to pay the purchase price of the
second parcel, which did not occur until this Court reversed the trial court regarding
8
the enforceability of the settlement and the closing on the property occurred on
remand. We will address the County’s arguments each in turn.
(a) The County first argues that the trial court erred in awarding prejudgment
interest on the purchase price of the second parcel under OCGA § 7-4-15 because
interest should not have started to accrue until the County took actual possession of
the parcel. We are unpersuaded.
OCGA § 7-4-15 provides in relevant part:
All liquidated demands, where by agreement or otherwise the sum to be
paid is fixed or certain, bear interest from the time the party shall
become liable and bound to pay them; if payable on demand, they shall
bear interest from the time of the demand. . . .
Pursuant to this statutory language, if the amount owed under a contract is “fixed,
certain, and ascertainable under its terms,” the claim is liquidated. Rivergate Corp.
v. Atlanta Indoor Advertising Concepts, 210 Ga. App. 501, 503 (3) (436 SE2d 697)
(1993). See also In re Estate of Miraglia, 290 Ga. App. 28, 31 (2) (658 SE2d 777)
(2008) (“A liquidated claim is an amount certain and fixed, either by the act and
agreement of the parties or by operation of law; a sum which cannot be changed by
the proof. The word ‘liquidated’ as used in OCGA § 7-4-15 means ‘settled,
acknowledged, or agreed.’”) (citation and punctuation omitted). If a claim is
9
liquidated under OCGA § 7-4-15, the award of prejudgment interest is mandatory,
should be awarded by the trial court as a matter of law, and accrues at the rate of
seven percent per annum simple interest if the rate is not established in the parties’
written contract. See OCGA § 7-4-2 (a) (1) (A); Crisler v. Haugabook, 290 Ga. 863,
864 (725 SE2d 318) (2012); Hendricks v. Blake & Pendleton, 221 Ga. App. 651, 653
(2) (472 SE2d 482) (1996). The only prerequisite is that “a demand for prejudgment
interest [be made] prior to the entry of final judgment.” Crisler, 290 Ga. at 864.
There is no dispute regarding the purchase price that the County was required
to pay to Old Peachtree for its second parcel of property under the settlement
agreement – $5,265,975. Hence, the purchase price for the second parcel was fixed,
certain, and ascertainable under the terms of the parties’ contract, such that the debt
owed by the County was liquidated and subject to prejudgment interest under OCGA
§ 7-4-15. See In re Estate of Miraglia, 290 Ga. App. at 31 (2); Rivergate Corp., 210
Ga. App. at 503 (3). The question then becomes at what point prejudgment interest
began to accrue on the purchase price.
Generally speaking, prejudgment interest on an amount owed under a contract
starts to run on the date the amount becomes due and payable. See Turner Constr. Co.
v. Elec. Distrib., 202 Ga. App. 726, 727 (3) (415 SE2d 325) (1992); B&G Sanders &
10
Assoc. v. Castellow, 154 Ga. App. 433, 434-435 (1) (268 SE2d 695) (1980);
Continental Carriers v. Seaboard Coast Line R. Co., 129 Ga. App. 889, 890 (2) (201
SE2d 826) (1973) (physical precedent only). Hence, interest on the purchase price
owed for real estate starts to run when the purchase money becomes due under the
parties’ contract. See Shepard v. Gettys, 206 Ga. 392, 394 (57 SE2d 272) (1950) (“In
the absence of an express agreement, [the] purchase money would not draw interest
until it became due[.]”); Hawkins v. Studdard, 132 Ga. 265, 272 (4) (63 SE 852)
(1909) (noting that interest on purchase money owed for real estate “would begin
when payment should be made under the contract”).
The parties’ settlement agreement is silent as to when the County was required
to pay the purchase price of $5,265,975 to Old Peachtree for the second parcel of
property. When no time for payment of the purchase price is specified in a contract
involving the sale of real estate, it is presumed that payment will be by cash upon
delivery of the deed at closing. See 2 Daniel F. Hinkel, Pindar’s Ga. Real Estate Law
and Procedure, § 18:32 (7th ed. 2013). See also Harrell v. Stovall, 232 Ga. 359, 360
(2) (206 SE2d 493) (1974) (holding that where contract did not specify time for
payment, payment for acreage adjustment had to be made in cash at closing rather
than in form of installment payments). And if no time is specified in the contract for
11
when the closing will occur, the law presumes that a reasonable time was
contemplated by the parties. See Moog v. Palmour, 115 Ga. App. 602, 602-603 (155
SE2d 692) (1967); Teague v. Adair Realty & Loan Co., 92 Ga. App. 463, 466-467 (1)
(88 SE2d 795) (1955). Thus, prejudgment interest on the purchase price for Old
Peachtree’s second parcel began to run on the date by which the closing should have
occurred in this case.2
However, relying upon Adams v. Foster, 141 Ga. 438 (81 SE 438) (1914), and
Lively v. Munday, 201 Ga. 409 (40 SE2d 62) (1946), the County argues that
prejudgment interest did not begin to accrue until it took actual possession of the
second parcel, which occurred pursuant to the trial court’s order granting specific
performance of the settlement agreement, long after the closing should have taken
place if no breach had occurred.3 Notably, under the County’s reasoning predicated
2
The settlement documents signed by Old Peachtree and delivered to the
County on June 13, 2009 in an effort to carry through with the settlement indicated
that the parties contemplated that closing would occur no later than 75 days after the
execution of a purchase and sale agreement for the property.
3
The County also relies heavily on Hampton Island, LLC v. HAOP, LLC, 317
Ga. App. 80 (731 SE2d 71) (2012), Hampton Island, LLC v. HAOP, LLC, 306 Ga.
App. 542 (702 SE2d 770) (2010), and Hughes v. Great Southern Midway Co., 265
Ga. 94 (454 SE2d 130) (1995) to support its argument that Old Peachtree was not
entitled to prejudgment interest. However, neither of the Hampton Island cases
include any discussion of a liquidated demand or the accrual of prejudgment interest,
12
on Adams and Lively, the County would owe no prejudgment interest at all because
it paid Old Peachtree the full purchase price of the second parcel on the same day that
it took actual possession of that parcel. We are unpersuaded by the County’s
argument because it is based upon a misreading of Adams and Lively.
In Adams, 141 Ga. at 439 (1), our Supreme Court stated in dicta that the
“general rule[] in cases for specific performance” is “that a purchaser in possession
of the realty which is the subject-matter of a contract must pay interest on the unpaid
purchase money from the time when his possession commenced,” but then went on
to find the rule inapplicable in that case. Subsequently, in Lively, 201 Ga. at 421 (3),
our Supreme Court addressed the situation where the purchasers “immediately went
into possession” of the property when they entered into the sales contract with the
buyer, and held that, given that circumstance, the purchasers were liable for interest
on the purchase price “from the date of such entry.” Citing to Adams, the Supreme
Court ruled that the purchasers were required to “pay interest at the legal rate from
and thus neither case has any bearing on the outcome here. Hughes, in turn, addressed
only whether a trial court’s order awarding prejudgment interest constituted “an
impermissible modification” of a previously entered final judgment. See Hughes, 265
Ga. at 96 (2). Hughes did not address the accrual period for prejudgment interest
when specific performance of a settlement agreement involving real estate has been
ordered by the trial court.
13
and after the date they acquired possession” of the property. Lively, 201 Ga. at 422(3).
Subsequently, in Shepard v. Gettys, 206 Ga. 392, 394 (57 SE2d 272) (1950),
our Supreme Court clarified when the rule referenced in dicta in Adams and then
applied in Lively should control the awarding of prejudgment interest. Specifically,
the Supreme Court clarified that Lively “does not hold that the mere act of taking
possession created a liability for interest on the purchase-money.” Id. Rather, the
Supreme Court explained, Lively stands for the proposition that when a purchaser
enters “immediately into possession” of the property upon entering into the sales
contract and the contract is intended to be a “cash transaction,” the purchase money
debt matures and becomes due and payable at that point, triggering the accrual of
prejudgment interest. Id. Outside the unique context where the contract is intended
to be a cash transaction and there is no temporal delay between the purchaser entering
into the sales contract and taking possession of the property, the rule is simply that
the “purchase-money would not draw interest until it became due” under the sales
contract. Id.Accordingly, because the County did not enter “immediately into possession”
of Old Peachtree’s second parcel of property, the rule enunciated in Adams and Lively
14
for the awarding of prejudgment interest has no application. Rather, the rule that
applies is that prejudgment interest began to run when the purchase money became
due and payable under the settlement agreement. See Shepard, 206 Ga. at 394. And,
as previously explained, the purchase money for the second parcel would have
become due and payable at the intended closing of the purchase transaction, which
should have occurred within a reasonable time after the parties entered into the
settlement agreement. Thus, prejudgment interest on the purchase price for Old
Peachtree’s second parcel began to run on the date by which the closing should have
occurred, not on the much later date when the County took actual possession of the
parcel. Consequently, we reject the County’s argument that the trial court erred in
awarding prejudgment interest because the accrual period should not have started
until it took actual possession of the second parcel owned by Old Peachtree.
(b) The County next contends that the trial court erred in awarding prejudgment
interest on the purchase price of the second parcel because Old Peachtree delayed
requesting specific performance of the settlement agreement until after its successful
appeal to this Court in Old Peachtree Partners I, 315 Ga. App. 342. But the County
notes in its brief that it ultimately consented to the trial court’s decision to award
specific performance of the settlement agreement despite the delay, and the County
15
does not challenge the trial court’s order granting that relief on appeal. Any challenge
that the County may have had to the timeliness of Old Peachtree’s request for specific
performance therefore has been waived, given the County’s acquiesce to and failure
to challenge the trial court’s grant of that request. See generally Robinson v.
Moonraker Assoc., 205 Ga. App. 597, 598 (423 SE2d 44) (1992) (noting that “a
litigant cannot submit to a ruling, acquiesce in the ruling, and still complain of [the]
same” on appeal).
In any event, the sole prerequisite for an award of prejudgment interest on a
liquidated claim is that a demand be made before the entry of final judgment, so that
the opposing party has an opportunity to contest an award of interest. Crisler, 290 Ga.
at 864. Old Peachtree made written demands to the County on January 14, 2013 and
February 1, 2013, and the County had a full and fair opportunity to contest an award
of prejudgment interest in this case. Because the sole prerequisite for the award of
prejudgment interest on a liquidated claim was satisfied, the County has failed to
articulate a valid basis for reversal on this ground.
(c) The County also contends that the trial court erred in awarding prejudgment
interest on the purchase price of the second parcel because interest did not begin to
accrue until the County became bound to pay the purchase price of the second parcel,
16
which the County asserts did not occur until this Court reversed the trial court
regarding the enforceability of the settlement and the closing on the property took
place on remand.4 Again, under the County’s reasoning, it would owe no prejudgment
interest at all, given that the County made full payment of the purchase price for the
second parcel at the closing that occurred on remand. However, as explained supra
in Division 1 (a), the purchase price for the second parcel became due, and
prejudgment interest started to run, on the date by which the closing on the second
parcel should have occurred if there had been no breach by the County, which would
have been long before the closing actually occurred in this case on remand. The
County’s contention, therefore, is misplaced.
(d) For these combined reasons, we reject the County’s three specific
arguments that it raised in the court below and on appeal for why the trial court
should have awarded no prejudgment interest. We will not consider any additional
4
Relying upon Grange Mut. Cas. Co. v. Kay, 264 Ga. App. 139, 143-144 (4)
(589 SE2d 711) (2003), the County argues that it was not bound to pay the purchase
price under the settlement agreement until after the agreement was held to be
enforceable by the courts. But Grange Mut. Cas. Co. involved the settlement of a
claim asserted on behalf of a minor child, and in that context, the probate court was
required to exercise judicial oversight and approve any settlement. See former OCGA
§ 29-2-16 (1997); Anderson v. Jones, 323 Ga. App. 311, 319-320 (3) (745 SE2d 787)
(2013). In the instant case, no party was a minor, and no court approval was required
for the settlement.
17
arguments regarding the propriety of the trial court’s award of prejudgment interest
that were neither raised nor ruled upon in the court below, given that we do not apply
a “wrong for any reason” rule in evaluating an order on appeal. See, e.g., Lowery v.
Atlanta Heart Assoc., 266 Ga. App. 402, 404-405 (2) (597 SE2d 494) (2004).
2. The County also contends that the trial court erred in concluding that Old
Peachtree was entitled to a trial on incidental damages. According to the County, Old
Peachtree could not recover as incidental damages any of the costs it incurred in
maintaining the second parcel from the time that the closing on the property should
have occurred under the settlement agreement until the time that the actual closing
took place. We disagree.
It is true that if a plaintiff obtains specific performance, he cannot also obtain
“an award of damages which would have resulted from the defendant’s failure to
perform the parties’ contract.” Clayton v. Deverell, 257 Ga. 653, 654-655 (3) (362
SE2d 364) (1987). But “this does not mean that an award of specific performance
automatically precludes an award of any monetary damages.” Id. at 655 (4). Rather,
our Supreme Court, quoting 5A Corbin on Contracts 473, § 1222 (1964), has
explained that
18
specific performance at the end of a protracted litigation under
compulsion is practically never full performance of the contract; instead,
there has been an extensive and injurious partial breach. In such a case,
the court should decree the payment of damages for the partial breach
that has already occurred, even though obedience of the decree will
prevent the commission of further breaches.
Golden v. Frazier, 244 Ga. 685, 688 (3) (261 SE2d 703) (1979). Hence, a trial court
may award “incidental damages” to plaintiffs in addition to specific performance
when necessary “to make them whole.” Id. See Clayton, 257 Ga. at 655 (4). An
example of incidental damages in this context would be the costs of maintaining
insurance coverage on the property that were incurred by a plaintiff-seller from the
time of the intended closing under the contract until the time of the actual closing. See
Golden, 244 Ga. at 687-688 (3).
In light of this precedent, the trial court did not err in ruling that Old Peachtree
was entitled to pursue a claim for incidental damages at trial. At the very least, Old
Peachtree would be entitled to present evidence aimed at proving the costs of
maintaining insurance coverage on the second parcel that it had incurred from the
19
time of the intended closing until the time of the actual closing.5 See Golden, 244 Ga.
at 687-688 (3). Accordingly, we discern no basis for reversal.
Judgment affirmed. Boggs and Branch, JJ., concur.
5
The County argues that the Old Peachtree should not be entitled to recover
as incidental damages “increased tax payments resulting from a change in federal law
effective January 1, 2013.” However, the trial court did not rule on this specific issue,
and thus it would be premature for this Court to address it at this time. “[T]his Court
is empaneled to review rulings by lower courts and will not address issues not ruled
upon below.” (Citation and punctuation omitted.) Messaadi v. Messaadi, 282 Ga.
126, 129 (3) (646 SE2d 230) (2007).
20