Atlanta Apartment Investments, Inc. v. New York Life Ins. Co.

• Decision Date: 12 March 1996
• Docket Number: No. A95A2503,A95A2503
• Citation: 469 S.E.2d 831,220 Ga.App. 595
• Parties: ATLANTA APARTMENT INVESTMENTS, INC. et al. v. NEW YORK LIFE INSURANCE COMPANY et al.
• Court: Georgia Court of Appeals

Page 831

469 S.E.2d 831

220 Ga.App. 595

ATLANTA APARTMENT INVESTMENTS, INC. et al. v. NEW YORK LIFE INSURANCE COMPANY et al.

No. A95A2503.

Court of Appeals of Georgia.

March 12, 1996.

Schreeder, Wheeler & Flint, David H. Flint, Lynn C. Stewart, Atlanta, for appellants.

Alston & Bird, Jay D. Bennett, Candace N. Smith, Morris, Manning & Martin, Warren W. Wills, Jr., Ann R. Schildhammer, Atlanta, for appellees.

McMURRAY, Presiding Judge.

Plaintiffs Atlanta Apartment Investments, Inc. ("AAI") and W. Barton George, Jr. brought this action for a real estate sales commission and damages allegedly owed by defendants New York Life Insurance Company ("New York Life"), Hunter's Landing Apartments Limited Partnership ("Hunter's Landing L.P."), and Hunter's Title Company, Inc. d/b/a Hunter's Landing Apartments Co-Venture for the sale of an apartment complex ("the Co-Venture"). Counts 1 and 2 are asserted against New York Life under breach of contract or quantum meruit. Count 3 alleges the Co-Venture tortiously interfered with plaintiffs' business relations. Count 4 alleges New York Life and the Co-Venture cooperated to deprive plaintiffs of the commission, acting in bad faith and being stubbornly litigious.

According to the amended complaint, AAI is a Georgia commercial real estate broker licensed by the State of Georgia and W. Barton George, Jr., is an employee of AAI, licensed to sell real estate in Georgia. In June 1991, defendant New York Life allegedly "permitted plaintiffs to serve as real estate brokers in the sale of certain real property in Gwinnett County known as Hunters Landing Apartments[; that plaintiffs admittedly] did not have an exclusive contract to sell the property[; but that on] June 18, 1991, ... New York Life (through Sam Conley, an assistant to New York Life's real estate vice president, Michael Towner) authorized plaintiffs to procure a purchaser...." Viewed in the light most favorable to plaintiffs, the evidence would authorize the following chronology: W. Barton George, Jr. knew that the previous owner of Hunter's Landing Apartments had let the property go "into receivership ... [from which circumstance] people in the brokerage community know that there may be a change in ownership, there may be an opportunity for them[.]" W. Barton George, Jr. affirmed that, being "an aggressive broker, [AAI, through himself,] started trying to figure out how [he] could make a deal out of that opportunity[.]" In the spring and early summer of 1991, plaintiff AAI originally tried, without success, to "put together something for its own account to buy ..." the property. The principals of AAI "felt like the price that New York Life wanted for those apartments was a little higher than maybe they were worth at that time in the market[.]" AAI "decided to see if Strand [were] interested in buying Hunter's Landing[.]" In mid-May 1991, W. Barton George, Jr. showed Strand representative John Cassils three or four "apartment properties that were imminent foreclosure properties, properties that were in trouble and it was anticipated would soon be REO [ (Real Estate Owned) ]." On May 29, 1991, W. Barton George, Jr. showed the Hunter's Landing Apartments to James A. Johnston, a vice president of Strand Properties Corporation ("Strand"). On or about June 10, 1991, W. Barton George, Jr. spoke with Sam Conley of New York Life, who related "that the property currently had an NOI of $1,050,000 and that it was 96 percent leased, and the NOI was arrived at by the operating expenses of $2400 a unit." At that time, W. Barton George, Jr. "explained to [Sam Conley] that I work with a group who bought for their own account and served as third-party brokers and I would be interested in receiving information. [Sam Conley] told [W. Barton George, Jr.] that in order to release information that he would need a letter and market areas we were interested in." W. Barton George, Jr. responded with a letter dated June 11, 1991, in which he introduced AAI as an entity that "own[ed] and operate[d] over 2,000 apartment units in Atlanta, [with] plans to acquire an additional 1,000 units before year end." AAI expressed an interest in seeing any foreclosed apartment developments that New York Life might wish to sell, "preferably before you list the properties with a real estate broker." AAI expressed "a very sincere interest in ... Hunter's Landing ... and, would in short, like to own the real estate." This letter closed with the request to be informed of New York Life's future "plans for the property once you have some direction."

On June 26, 1991, plaintiffs allegedly introduced New York Life to the "Strand Properties Corporation, a real estate company operating out of Vancouver, British Columbia." Strand authorized plaintiffs to submit an offer, and on July 8, 1991, "plaintiffs submitted Strand's offer to purchase the property for $12,000,000 to New York Life." This $12,000,000 figure was derived "when [W. Barton George, Jr.] drove Jim [Johnston, of Strand,] to the apartment property itself[.] [Jim Johnston] asked [W. Barton George, Jr.] for [his] opinion as to what the property would be worth in [the current commercial real estate] market.... And [W. Barton George, Jr.] told [Jim Johnston] that [he] felt like the property was worth $12,000,000." The formal $12,000,000 offer consisted of "$2,400,000 to be paid in cash at closing including all deposit monies; ... [and] a first mortgage ... in the amount of $9,600,000 to be provided by [New York Life as] the Seller. The First Mortgage shall be on a non-recourse basis and be [payable] interest only with a 10 year term at an interest rate of 8% in the first year, 8 1/2% in the second year, 9% in the third year, and 9 1/2% thereafter." This offer further specified "Seller and Purchaser agree that Seller shall be responsible for all brokerage commissions payable including a sales commission to [plaintiff, AAI]." By its terms, the offer "shall automatically expire, unless accepted in writing by Seller no later than 5:00 p.m. on July 8th, 1991."

Plaintiff W. Barton George, Jr. submitted this offer to defendant New York Life under a cover letter on AAI stationery, addressed to Michael Towner, a vice president of New York Life. This cover letter makes no reference to any listing agreement whereby defendant New York Life consented to having plaintiff AAI or plaintiff W. Barton George, Jr., act as a seller's real estate agent on behalf of New York Life. On July 11, 1991, Michael W. Towner, real estate vice president for New York Life, replied to plaintiff W. Barton George, Jr. and rejected Strand's offer, advising that New York Life had "received and declined several proposals at [the] price range [offered by Strand]." The present asking price was "$14.5 million but we are only beginning to market this property and this figure is subject to change." This letter does not confirm or ratify any listing agreement among defendant New York Life on the one hand and plaintiffs AAI and W. Barton George, Jr. on the other. Rather, it closes with the formal "appreciat[ion of plaintiffs'] interest and efforts and [urges plaintiffs to] feel free to call me to discuss the matter further." Plaintiff W. Barton George, Jr. does not "recall discussing a commission arrangement with [either Michael Towner or Sam Conley]." But Sam Conley made it absolutely clear to W. Barton George, Jr. "that New York Life was not a distress seller. They were not going to sell real estate on a distress basis. They were far too patient and well capitalized to sell in a bargain basement type situation." William Butler, the 90 percent shareholder in AAI, affirmed that, after this exchange of letters, "[negotiations] broke off, but [AAI was] aware that Jim [Johnston of Strand] kept in contact with New York Life[.]"

Plaintiffs further alleged that Michael Towner's July 11, 1991, letter was a counteroffer, which plaintiffs conveyed to Strand. The $2,500,000 difference between Strand's offer and New York Life's asking price suggested to W. Barton George, Jr. "that there was very little opportunity to make a deal." Although Sam Conley also recognized that $12,000,000 represented the property's fair market value under then-prevailing conditions, nevertheless, New York Life "felt like the units that were overbuilt in the '80s would be absorbed, there was positive growth there [in Gwinnett County, Georgia], that rents would move and that in time the market would come to them, and they were very comfortable with that stance, and they were prepared to wait for the market to come to them." Consequently, it came as no surprise to W. Barton George, Jr. "that negotiations for this Hunter's Landing property were dropped in July of 1991, given where New York Life was and where Strand was[.]" Still, "Strand asked plaintiffs to continue to work with New York Life to see if Strand could purchase the property at a later date." That is, plaintiffs were requested by Jim Johnston of Strand to "track the deal."

In September 1991, plaintiffs were informed by Sam Conley of New York Life that "the sale of Hunters Landing Apartments was on hold for the near future." As W. Barton George, Jr. understood the situation, New York Life "determined internally that the property was not going to bring the price that they wanted in the current market situation, and they were going to push the rents and consider remarketing the property in the middle of 1992." Plaintiffs allegedly "continued negotiations with Strand and acted as intermediary between the seller and the purchaser." The evidence of this is that W. Barton George, Jr. tried to "compile resume information to accompany an[other] offer from Strand on Hunter's Landing, which [he] was led to believe would be forthcoming." However, W. Barton George, Jr. "would have asked them[, i.e., Strand officers,] to put that together for me[, ... because he] couldn't create that [him]self[.]" At the behest of Strand, W....