One Buckhead Loop Condominium Association, Inc. v. Regent Tower Holdings, LLC

FOURTH DIVISION
ELLINGTON, P. J.,
BRANCH and MERCIER, 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
March 6, 2017
In the Court of Appeals of Georgia
A16A1812. ONE BUCKHEAD LOOP CONDOMINIUM JE-067
ASSOCIATION, INC. v. REGENT TOWER HOLDINGS,
LLC f/k/a REGENT TOWER HOLDINGS, INC.
ELLINGTON, Presiding Judge.
In a complaint filed in 2015, One Buckhead Loop Condominium Association,
Inc. (“the Association”) sued Regent Tower Holdings, LLC f/k/a Regent Tower
Holdings, Inc. (“Regent”) for breach of contract, among other claims, contending that
Regent breached the terms of an easement agreement in which Regent had granted
the Association, subject to certain limitations, a perpetual non-exclusive right to
access Regent’s private road system. The trial court subsequently granted Regent’s
motion for summary judgment on all of the Association’s claims. On appeal, the
Association contends that the trial court erred in finding that it was estopped from
asserting that Regent breached the easement agreement on the ground that, in 2006,
it had executed an estoppel certificate certifying that there were no defaults
thereunder. We reverse for the reasons set forth below.
Under OCGA § 9-11-56 (c),
[s]ummary judgment is warranted if the pleadings, depositions, answers
to interrogatories, and admissions on file, together with the affidavits,
if any, show that there is no genuine issue as to any material fact and
that the moving party is entitled to a judgment as a matter of law. We
review the grant or denial of a motion for summary judgment de novo,
and we view the evidence, and the reasonable inferences drawn
therefrom, in a light most favorable to the nonmovant.
(Punctuation and footnotes omitted.) Assaf v. Cincinnati Ins. Co., 327 Ga. App. 475,
475-476 (759 SE2d 557) (2014).
So viewed, the evidence shows that, in 1995, Regent and Buckhead Station,
LLC entered into an “Easement Agreement for Access and Utilities.” Thereunder,
among other things, Regent granted, for the benefit of Buckhead Station, a perpetual
non-exclusive easement for passenger vehicle and pedestrian egress, ingress, and
access over and through a private roadway system constructed on Regent’s property.
Regent acknowledges that the Association is a successor-in-interest to Buckhead
Station and has a right to enforce the Easement.
2
The Easement contemplates that Regent may close its roadway system, which
is located in the Buckhead area of Atlanta, during rush hour.1 In that respect, the
Easement affords Regent the exclusive right to determine the location and the control
mechanisms used to restrict or prohibit vehicular traffic. The Easement further
provides, however, that, “[t]o the extent any vehicular traffic is allowed through such
control points, [the Association] shall have the same vehicular access through such
control point.”
From the time the road system was constructed in 1996, Regent has closed the
roadway system during rush hour. In 2003, Regent entered into an agreement with
Buckhead Community Improvement District (“BCID”) to allow the District’s shuttle
bus (the “BUC”) to travel over its roadway system. Beginning in 2004, Regent
installed traffic control gates that are lowered during rush hour. The BUC is allowed
to open the traffic gate through the use of a remote electronic device. Security guards
employed on properties contiguous to the roadway system also have the ability to
raise the traffic gate through a remote electronic device.
1
Specifically, Section 5.5 of the Easement provides that “Regent shall have the
right to restrict or prohibit the flow of vehicular traffic on the Regent Roadway
System at such points as it deems necessary or desirable during the periods from 7:00
a. m. to 9:30 a.m. and from 4: 30 p.m. to 6: 30 p.m. daily.”
3
In 2006, in connection with a development project in which Regent was
involved, the Association executed the Estoppel Certificate2 at issue. Therein, the
Association acknowledged, among other things, that “to the best actual knowledge
of the principal officers of the [Association], no default, or event with the passage of
time or the giving of notice, or both, [that] would constitute a default on the part of
[Regent]” had occurred under the Easement. The Estoppel Certificate affirmed that
Regent “may rely upon the statements set forth herein.” The Easement also provides
that “[a]ny . . . entity requesting an . . . Estoppel Certificate concerning this
Agreement shall be entitled to rely on . . . an Estoppel Certificate” from a party
authorized to represent the Association.
In 2015, the Association sued Regent for breach of contract, among other
claims, alleging that Regent had violated the Easement by selectively allowing
vehicular access through the traffic control gate during closure of the roadway
2
An estoppel certificate is a signed statement by a party
certifying for another’s benefit that certain facts are
correct, such as that a lease exists, that there are no
defaults, and that rent is paid to a certain date. A party’s
delivery of this statement estops that party from later
claiming a different state of facts.
(Citation and punctuation omitted.) Fundus America (Atlanta) Ltd. Partnership v.
RHOC Consolidation, 313 Ga. App. 118, 119 n. 7 (720 SE2d 176) (2011).
4
system, including the BUC and private security vehicles, to the exclusion of the
Association. The Association also sought, among other claims, injunctive and
declaratory relief. Regent moved for summary judgment on all claims. The trial court
granted summary judgment to Regent, finding that the Association is estopped from
contending that Regent breached the Easement by permitting the BUC and the
security guards to travel over the roadway system without permitting the Association
to engage in the same known conduct.
1. The Association contends that the trial court erred in finding that Regent was
entitled to judgment as a matter of law. More specifically, the Association argues that
a jury should decide whether Regent reasonably relied on the Estoppel Certificate.
The Association also argues that any estoppel arising from the Estoppel Certificate
did not extend to the alleged breaches of the Easement arising after the date of that
certificate.
(a) The law in Georgia “recognizes, on grounds of public policy and good faith,
that the execution of an estoppel certificate can create an estoppel effect against
future claims for damages.” (Punctuation and footnote omitted.) Fundus America
(Atlanta) Ltd. Partnership v. RHOC Consolidation, 313 Ga. App. 118, 121 (1) (a)
(720 SE2d 176) (2011). In other words, “a party who executes an estoppel certificate
5
should not be allowed to raise claims of which it knew or should have known at the
time the certificate was executed.” (Citation and punctuation omitted.) Id. at 122 (1)
(b).
By executing an estoppel certificate, “a party can agree to be estopped under
circumstances that might not otherwise constitute an estoppel under common law.”
Id. at 121 (1) (a) (rejecting argument that party claiming benefit of estoppel certificate
was required to prove elements of equitable estoppel, including proof of some
concealment or false representation, in order to prevail on summary judgment).
Nevertheless, a party asserting the benefit of an estoppel certificate must show that
it reasonably relied thereon. See Office Depot v. The District at Howell Mill, 309 Ga.
App. 525, 527-529 (1) (710 SE2d 685) (2011) (finding, in affirming grant of
summary judgment to landlord on tenant’s claim that the landlord had violated the
lease, that there remained no issue of material fact as to the landlord’s reasonable
reliance on the tenant’s certificate that landlord was not in default under the lease);
Bibb County v. Ga. Power Co., 241 Ga. App. 131, 137 (4) (525 SE2d 136) (1999)
(“estoppel requires justifiable reliance on the opposing party’s representations or
conduct and a change in position to one’s detriment”).
6
The Estoppel Certificate stated that the Association had been advised that
Regent was transferring a tract of real estate to another party, 3344 Peachtree, LLC,
which was constructing thereon a mixed-use project consisting of approximately
471,000 rentable square feet of office space, 20,000 square feet of retail space, 100
residential condominium units, and associated parking spaces. The Estoppel
Certificate further provided that 3344 Peachtree was obtaining financing for the
project from a lender, and that Regent, 3344 Peachtree, and the lender “require from
[the Association] an estoppel relating to the” Easement. A representative of Regent
testified that, in reliance on the Estoppel Certificate, Regent conveyed property to
3344 Peachtree, which, in turn, borrowed money to finance the project. The
Association suggests that, if it had refused to provide the Estoppel Certificate, Regent
could have terminated the BUC’s license to access its road system, and proceeded
with the transaction. But whatever might have happened, the record shows only that
the Association did give the Estoppel Certificate, and that Regent relied thereon in
conveying its property to 3344 Peachtree.
The Association argues that, even if Regent relied on the Estoppel Certificate,
its reliance was not reasonable or justified because it knew that it was in violation of
the Easement in refusing the Association access through the traffic control gate while
7
allowing third parties unfettered access. In light of the principle that “[h]e who would
have equity must do equity,”3 the Association argues, Regent cannot use an estoppel
certificate as a “trap” to engage in activities it knows are in breach of the Easement.
Here, as of the date of the Estoppel Certificate, both parties were in a position to
assess whether Regent was in breach of the Easement by allowing third parties
through the traffic control gate at rush hour. Generally, “an estoppel cannot result
where both parties have equal knowledge or equal means of knowing the truth.”
(Punctuation and footnote omitted.) Fundus America (Atlanta) Ltd. Partnership v.
RHOC Consolidation, 313 Ga. App. at 122 (1) (b). But, as we have previously found,
the parties “may also contract around this rule of law,” and they may do so, in the
context of an estoppel certificate, by agreeing that a party shall have the right to rely
on representations set forth in the certificate. (Punctuation and footnote omitted.) Id.
Because the Association agreed in the Estoppel Certificate that Regent “may rely
upon the statements set forth herein,” Regent could reasonably do so, notwithstanding
that it was aware that the BUC and security guards had access through the gate at rush
hour. Further, there is no evidence of any inequitable conduct on the part of Regent,
which has consistently denied that the BUC’s passage through the gate during rush
3
OCGA § 23-1-10.
8
hour constitutes a default under Easement, in an attempt to “trap” or deceive the
Association through the Estoppel Certificate. Therefore, the Association does not
show that there remains an issue of material fact as to Regent’s reasonable reliance
on the Estoppel Certificate in its conveyance of its real property to 3344 Peachtree.
(b) The Association argues that, notwithstanding Regent’s reasonable reliance
thereon, the Estoppel Certificate does not bar claims arising after its execution.
Specifically, the Association contends that the expansion of the BUC, which
increased the frequency of passage through the traffic gate, gave rise to a breach of
the Easement outside the scope of the Estoppel Certificate.
In Fundus America, we indicated that claims arising from the alleged breach
of a lease that arose before the execution of an estoppel certificate were estopped
thereby, and that claims for the breach of the lease that arose thereafter would not be
estopped, but that the appellant had failed to come forward with evidence of any such
post-certificate breach notwithstanding the trial court’s specific invitation to do so.
313 Ga. App. at 124 (1) (d). In assessing whether the claims at issue here are
estopped, we find persuasive the observation of the Appellate Court of Illinois that
“[b]y their very nature, estoppel certificates look to the course of performance. In an
estoppel certificate, the signer is certifying the course of performance has not
9
produced any defaults.” K’s Merchandise Mart v. Northgate Ltd. Partnership, 359
Ill. App. 3d. 1137, 1144, (II) (B), 296 Ill. Dec. 612 (835 NE2d 965) (2005).4 In this
case, the BUC and the security guards had been passing through the traffic control
gate on Regent’s roadway system before the Association executed the Estoppel
Certificate certifying that there were no defaults under the Easement. We conclude
that the Association had agreed that the course of performance at the time of
execution of the Estoppel Certificate had not given rise to a default under the
Easement, and the Association is estopped from asserting a claim of default arising
out of the same course of performance.5
Nevertheless, we agree with the Association that evidence of changed
conditions, specifically the change in the frequency in which the BUC passed through
the traffic control gates, preclude the grant of summary judgment. The Association
4
This Court also found K’s Merchandise Mart to be persuasive authority in
Fundus America. 313 Ga. App. at 122 (1) (b).
5
See Payless Shoesource, Inc. v. Joye, No. 2:12-cv-00517-MCE-DAD, 2014
U.S. Dist. LEXIS 14372 (D. C. Calif., February 4, 2014) (Appellant’s argument that
its estoppel certificate could not be considered for conduct extending past its date of
issuance was misplaced because the signer of an estoppel certificate is certifying that
a course of performance has not produced any defaults, and, in that case, “the course
of conduct both before and after the Estoppel Certificate was identical with respect
to [the matter at issue.]”).
10
points to evidence that, after the execution of the Estoppel Certificate, changes in the
operation of the BUC arising out of a new operation agreement between BCID and
a third party in 2012 caused the shuttle bus to pass through the control gate much
more frequently. Specifically, the BUC routes were consolidated, and, the Association
contends, the new schedule shows that the frequency of the buses passing through the
traffic control point changed from between 15 and 30 minutes to between 9 and 12
minutes.
In its final order, the trial court held that “it is unpersuaded that the frequency
of travel has increased, and thus[] invalidated the Estoppel Certificate.” However,
viewing the evidence in the light most favorable to the Association, as the
nonmovant, the Association did come forward with evidence as to a change in the
operation of the BUC and an increased frequency of passage by buses through the
traffic control gate. Regency does not contest the factual basis of the Association’s
argument, but responds that the frequency of passage through the control point is
irrelevant given that the Easement provides that the Association’s right to access to
the road at rush hour is triggered “[t]o the extent any vehicular traffic is allowed
11
through such control points[.]”6 However, by its express terms, the Estoppel
Certificate was a representation that “no default, or event with the passage of time or
the giving of notice, or both, would constitute a default on the part of [Regent] . . .
has occurred” (emphasis supplied), and it did not speak to future events. The
Association points to an issue of fact as to whether Regent, subsequent to the
Estoppel Certificate, altered its course of performance by allowing significant
changes in third party access to its private roadway. It follows that Regent did not
show, for purposes of its motion for summary judgment, that as a matter of law it is
shielded by the Estoppel Certificate from the Association’s breach of contract claim.
2. Regent contends that, even if this Court disagrees with the trial court’s
reasoning as to effect of the Estoppel Certificate, we must affirm its grant of summary
6
The sentence referenced by Regent, provides, in full, that “[t]o the extent any
vehicular traffic is allowed through such control points, the [Association] shall have
the same vehicular access through such control point.” At this time in the litigation,
the Association’s rights under the Easement have not been construed by the trial court
as Regent’s motion for summary judgment was based on estoppel, and, alternatively,
the bar of the statute of limitation, and the trial court granted summary judgment to
Regent on the Association’s claim for declaratory judgment without reaching its
merits. It is premature for this Court to assess whether the BUC’s frequency of travel
through the control point is wholly immaterial to the Association’s rights under the
Easement. For the purposes of addressing Regent’s argument, however, we cannot
conclude that, because the Easement refers to “any vehicular traffic,” the Association
is forever estopped from asserting a claim thereunder.
12
judgment under the principle of “right for any reason” because the Association’s
claims are time barred. Regent’s arguments are premised on the six-year statute of
limitations for breach of a written contract. OCGA § 9-3-24. Regent contends that the
Association’s breach of contract claim accrued in 2004, and that the statute of
limitation for breach of a written contract bars the Association’s breach of contract
claim because it was not asserted until 2015. See Gamble v. Lovett School, 180 Ga.
App. 708 (350 SE2d 311) (1986) (“the true test to determine when the cause of action
accrued is to ascertain the time when the plaintiff could first have maintained his
action to a successful result”) (citation and punctuation omitted).
However, the statute of limitation for an action on an instrument under seal is
20 years, OCGA § 9-3-23, and, pretermitting whether Regent’s limitation argument
would otherwise have merit, it is not applicable to the extent OCGA § 9-3-23 applies.
“The law is clear that to constitute a sealed instrument, there must be both a recital
in the body of the instrument of an intention to use a seal and the affixing of the seal
or scroll after the signature. It is also established that a contract may be under seal as
to some parties and not as to others.” (Citations and punctuation omitted.) McCalla
v. Stuckey, 233 Ga. App. 397, 398 (504 SE2d 269) (1998). The body of the Easement
provides that “the duly authorized representatives of Regent and Buckhead have
13
signed and sealed this Agreement as of the date and year first above written.” Regent
placed its corporate seal, containing the word “SEAL,” adjacent to its signature.
Regent argues that the presence of its corporate seal is insufficient to establish it
signed the Easement under seal because the purpose of a corporate seal is to show
that the individual signing the document on behalf of a corporation has the authority
to do so. Further, Regent maintains, Donalson v. Coca-Cola Co., 164 Ga. App. 712
(298 SE2d 25) (1982) is inconsistent with McCalla. See Donalson, 164 Ga. App. at
713 (“The contract between DHS and Coca-Cola was under both of their corporate
seals. Thus, any action properly brought under the contract could be brought within
20 years. Code Ann. § 3-703 (now O.C.G.A. § 9-3-23).”). We decline Regent’s
implicit invitation to overrule Donalson. Rather, considering both McCalla and
Donalson, we conclude that the Easement was an instrument under seal for purposes
of OCGA § 9-3-23 because Regent’s intent to seal the contract is shown in the body
of the instrument, and, in light of that express intent, the impression of Regent’s
corporate seal is sufficient to constitute the affixing of the seal.
3. The Association contends that the trial court erroneously found that, in
addition to barring its claim for breach of contract, the Estoppel Certificate barred its
remaining claims for breach of the duty of good faith and fair dealing, specific
14
performance, injunctive relief, and declaratory judgment.7 As the trial court erred in
granting summary judgment on the Association’s breach of contract claim, and it did
not reach the merits of the Association’s other claims, those claims remain
outstanding as well.
Judgment reversed. Branch and Mercier, JJ., concur.
7
The Association acknowledges that it informed the trial court at the motion
for summary judgment hearing that it would not be proceeding with its claims for
expenses of litigation and punitive damages.
15