Doll v. Grand Union Co.
| Decision Date | 11 March 1991 |
| Docket Number | No. 89-8682,89-8682 |
| Citation | 925 F.2d 1363 |
| Parties | Mike DOLL, Ronald Elbon and Kent Langworthy, Plaintiffs-Appellants, v. GRAND UNION COMPANY, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
Walter B. Russell, Jr., Russell & Russell, Decatur, Ga., for plaintiffs-appellants.
Michael Smith, Ralph Allen Pitts, King & Spalding, Atlanta, Ga., for defendant-appellee.
Appeal from the United States District Court for the Northern District of Georgia.
Before TJOFLAT, Chief Judge, ANDERSON, Circuit Judge, and ESCHBACH *, Senior Circuit Judge.
The appellants, Mike Doll, Ronald Elbon, and Kent Langworthy, are partners in a real estate development business in Atlanta, Georgia. The Grand Union Company, the appellee, owns and operates a chain of supermarkets, the Big Star Food Stores. The appellants brought this suit against the appellee after it refused to sign a lease for a food store in a shopping center they were trying to develop and the project failed. Advancing several theories of liability, the appellants sought to recoup the money they had spent on the project and lost, and the rent the appellee would have paid them had it signed the lease. The district court found no merit in any of their theories, and granted the appellee summary judgment. We affirm. 1
In 1984, the Grand Union Company (Grand Union) conducted a marketing survey of the greater Atlanta area. Based on this survey, Grand Union concluded that the intersection of Memorial Drive and Hairston Road in Dekalb County offered an ideal location for a new Big Star Food Store. Raymond Ayers, a vice president at Grand Union, asked one of his former employees, Lewis Allen, to contact the developers in the area who might be interested in building a shopping center at that location, with Grand Union as the primary tenant. One of the people Allen contacted was an individual named Frederick Ross. Ross was a friend and former business associate of appellant Mike Doll; at the time, Doll and appellants Ron Elbon and Kent Langworthy, as partners, were operating a real estate development firm, Great South Realty. Ross, Doll, and Doll's partners liked Allen's proposal and decided to join forces, acquire the land at the Memorial Drive and Hairston Road intersection, and build the shopping center; they called themselves, and their venture, the Hairston Run Partners (the partners or the partnership).
The land needed for the shopping center consisted of several parcels. The partners promptly contacted the owners of these parcels and, after a period of several months, obtained options 2 to purchase their land. The partners entered into these contracts without a binding commitment from Grand Union to lease space in the proposed shopping center; in fact, all they had from Grand Union was an "indication of interest" in having a food store there.
Although the two sides differ in their characterizations of the strength of Grand Union's interest in locating at the shopping center, it is clear that at the very least Grand Union indicated a strong desire to lease space in the facility and that the partners regarded Grand Union as their lead or anchor tenant. It is also clear that, until May 1986, the parties' discussions were merely preliminary in nature, dependent on the resolution of several issues, and that, as Ayers informed Ross, who was negotiating the lease for the partnership, Grand Union's real estate board would have to approve the deal before Grand Union could proceed. The key issue to be resolved was access to Grand Union's food store. For the food store to be successful, it was imperative that the store's customers be able to turn left easily from Memorial Drive into the store and from the store onto Memorial. At the time, the Memorial Drive and Hairston Road intersection was not controlled by a traffic signal, making such entry and exit difficult.
On May 22, 1986, Ayers sent a letter to Ross notifying him that Grand Union's real estate board had approved the project. The letter contained some of the basic provisions of the agreement negotiated by the parties up to that point, including the size of the store, the term of the lease and renewal option, and the rent. The letter also noted that the board's approval was subject to three contingencies, one of which concerned the satisfactory resolution of the automobile access issue, and it concluded by stating that "[t]he above is subject to the resolution of a mutually agreeable lease document and its execution by both the partnership and Grand Union."
Grand Union admits that these contingencies were ultimately resolved by the parties. The negotiations over the specifics of the lease agreement, however, bogged down--resulting in considerable delays in the completion of an acceptable draft. As a result, a final draft of the lease agreement could not be completed until early December 1986; on December 4, Neill Thompson, Grand Union's regional real estate manager, mailed his last revisions of the agreement to the partners, stating "I am sure you share my relief in a final resolution on this document."
Before the partners had an opportunity to incorporate these revisions into the lease and sign it, the Georgia Department of Transportation (DOT) announced a plan to build a concrete median down the middle of Memorial Drive, which would block access to the shopping center. The parties learned of the DOT's plan sometime in early December, just after Thompson sent his final revisions to the partners. In the weeks that followed, the partnership attempted to gain DOT approval for a median cut to allow traffic to cross Memorial Drive and enter the shopping center. Meanwhile, Grand Union entered into discussions with another group of developers to secure space in a shopping center they planned to build just across Hairston Road. This site would have access from Hairston Road and thus a food store there would not be as adversely affected by the construction of a median. On January 26, 1987, while the partners were still trying to secure approval for a cut in the median, Ayers sent a letter to the partnership informing it that, because of the problems caused by the DOT's plan, Grand Union could no longer proceed with the deal. The partners, already encountering some financial difficulties, attempted to find another lead tenant to replace Grand Union or, if they were unsuccessful, another developer to take over the project. When these efforts failed, they brought this suit against Grand Union--to recover the losses they had sustained as a result of its refusal to sign a lease.
In their complaint, the partners 3 asserted three theories of recovery. 4 First, in count one, they maintained that, although the parties failed to sign a formal lease agreement, they entered into an agreement to sign a lease, which, under Georgia law, created a binding obligation to abide by the terms of the lease they intended to sign. Second, the partners claimed that Grand Union's repeated indications of interest in making a lease constituted a promise on which they relied to their detriment, a promise which, they suggest, is enforceable under the doctrine of promissory estoppel. Finally, in count three, the partners alleged that, unlike the typical shopping center development project, they prepared this site specifically for Grand Union and that during the course of the nearly year and a half of negotiations a confidential relationship resulted which created a duty of good faith; Grand Union purportedly breached this duty when it backed out of the project. As damages, the partners asked for $550,000 to compensate them for the sums they expended in developing the shopping center site and, in addition, $4.5 million to compensate them for the profits they would have earned under the lease with Grand Union.
Grand Union answered the partners' complaint with a general denial of liability and, as an affirmative defense, asked that the complaint be dismissed for failure to state a claim for relief. Following discovery, Grand Union moved for summary judgment. The district court granted its motion. The court rejected the partners' argument, advanced in support of count one, that Ayers' May 22 letter to Ross constituted an agreement to make a lease; in the court's view, the letter was not meant to serve as a contract in and of itself, but was, instead, designed merely to formalize Grand Union's expression of interest without creating a binding obligation. With respect to count two, the court concluded that Ayers' statement in the letter--that the real estate board's approval of the project was "subject to the resolution of a mutually agreeable lease document and its execution" by the parties--made the partners' reliance on the letter as a promise unreasonable. Finally, as for count three, the court found no merit in the partners' argument that the dealings between the parties and the existence of a common goal created a relationship of mutual confidence and a duty of good faith. Following the entry of final judgment for Grand Union, the partners took this appeal.
In count one of their complaint, the partners alleged that the combination of correspondence and oral communication between the parties resulted in the formation of an agreement to lease the property on the northwest corner of Memorial Drive and Hairston Road. Although they admit that Grand Union never specifically promised to execute a lease, they contend that there was sufficient evidence from which a jury could infer the existence of such an agreement.
The principal piece of evidence relied on by the partners is the May 22, 1986 letter written by Grand Union's vice president, Raymond Ayers. The letter informed them that the real estate board at Grand Union had approved the proposed shopping center site, and it set forth the terms of an acceptable lease. 5 These terms essentially echoed those stated in a May 7, 1986 letter that...
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