Atlanta Market Center Management Co. v. McLane

• Decision Date: 13 July 1998
• Docket Number: No. S97G1229, No. S97G1239.
• Citation: 503 S.E.2d 278,269 Ga. 604
• Parties: ATLANTA MARKET CENTER MANAGEMENT COMPANY et al. v. McLANE et al. EQUITABLE REAL ESTATE INVESTMENT MANAGEMENT, INC. et al. v. McLANE et al.
• Court: Georgia Supreme Court

503 S.E.2d 278

269 Ga. 604

ATLANTA MARKET CENTER MANAGEMENT COMPANY et al. v. McLANE et al.

EQUITABLE REAL ESTATE INVESTMENT MANAGEMENT, INC. et al. v. McLANE et al.

Nos. S97G1229, S97G1239.

Supreme Court of Georgia.

July 13, 1998.

Reconsideration Denied July 30, 1998.

C. Wilson DuBose, Mary Anne Hall, Dionna K. Rutkowski, Schnader, Harrison, Segal & Lewis, Atlanta, for Atlanta Market Center Management Company et al.

Douglas A.S. Chalmers, Jr., G. Conley Ingram, William H. Hughes, Jr., Alston & Bird, Atlanta, for Equitable Real Estate Investment Management, Inc., et al.

James L. Ford Sr., Terry D. Jackson, Atlanta, for Laura McLane et al.

Lou Litchfield, Schulten, Ward & Turner, LLP, J. Roy Weathersby, Littler Mendelson, Atlanta, Philip S. Andrews, Huprich & Associates, Don C. Huprich, Tucker, for Amicus Appellant.

BENHAM, Chief Justice.

We granted certiorari to the Court of Appeals to examine its opinion in a case involving a number of contractual relationships wherein the appellate court reversed a portion of the trial court's grant of summary judgment to Atlanta Market Center Management (AMC) and Equitable Real Estate Management and others (Equitable). McLane v. Atlanta Market, etc., 225 Ga.App. 818, 486 S.E.2d 30 (1997).

In 1987, AMC executed a written contract whereby AMC obtained the exclusive right to lease the Inforum, a downtown Atlanta building owned by a partnership, the managing partner of which was the owner of Equitable Real Estate. It was agreed that AMC was to be paid a bonus commission for every square foot of space which a new or existing tenant leased in the Inforum. In 1990, AMC made its at-will employee, appellee Laura McLane, a "leasing director" for the Inforum, assigned several tenant accounts to her, and orally agreed to pay her a bonus commission for each square foot of Inforum space leased to her Inforum tenants. A portion of the bonus was to be paid upon the execution of the lease, and the remainder of the bonus payable upon the tenant's occupation of the space. The AMC—McLane oral agreement had no provision concerning whether the bonus commission would be paid should McLane's at-will employment be terminated before the occurrence of the conditions precedent to payment.

In 1991, the Atlanta Committee for the Olympic Games (ACOG) occupied space in the Inforum through a lease which contained several expansion options. The ACOG account was assigned to McLane who serviced the account through ACOG's exercise of its expansion rights under the 1991 lease and received a bonus commission after each expansion. In July 1992, ACOG notified McLane and AMC that it wished to lease more Inforum space. When Equitable became aware of ACOG's interest in expanding its Inforum presence, Equitable entered into direct negotiations with ACOG concerning the proposed expansion and informed AMC that its Inforum management agreement would not be renewed after it expired on October 11, 1992. Equitable later extended the AMC management agreement through October 1992, and agreed to pay bonus commissions to AMC for those leases with certain specified tenants negotiated during the management agreement so long as the leases went into effect by December 31, 1992. ACOG was not one of the specified tenants and its lease for the expanded area was not executed until February 18, 1993, well after the October 31 expiration of the management agreement extension and the December 31 deadline. No commission was paid to AMC or McLane upon ACOG's execution of the lease expansion or upon its occupation of the newly-leased space.

With the loss of the Inforum management contract, AMC terminated McLane's employment on October 31, 1992. Knowing that McLane had refused a severance package offered by AMC because it had not included payment of a bonus commission for the 1993 ACOG expansion, AMC promised McLane it would pay her a portion of any commission it received from Equitable as a result of ACOG's 1993 expansion. Despite the loss of its Inforum management contract, AMC continued to manage a smaller portion of the Inforum and executed a new management contract with Equitable covering the more limited area on February 26, 1993. In that written agreement, AMC acknowledged that it had been paid all amounts owed it under the old agreement and that it was not entitled to any further payments thereunder. AMC also agreed to indemnify and hold Equitable harmless from any claim asserted against Equitable by any present or former employee of AMC arising out of the earlier management agreement.

Shortly thereafter, McLane filed suit against AMC and Equitable, contending she was entitled to a commission for the 1993 ACOG expansion and that AMC had broken its promise to protect her commission rights and had breached its fiduciary responsibility to her by entering into a deal with Equitable which resolved the commission claim to McLane's detriment. She alleged that Equitable had tortiously interfered with her employment contract with AMC when it violated the Inforum management agreement by negotiating the 1993 ACOG lease expansion itself. McLane also sought punitive damages, attorney fees, and expenses of litigation. The trial court granted the defendants' joint motion for summary judgment. The Court of Appeals reversed that judgment, holding that McLane was entitled, as a matter of law, under her oral agreement with AMC to a commission of $246,618 for the 1993 ACOG lease amendment, and that AMC had breached its fiduciary responsibility to fully compensate McLane and to protect her commission rights during AMC's negotiations with Equitable. The appellate court also found genuine issues of material fact concerning Equitable's liability for allegedly conspiring with AMC to deprive McLane of the commission (225 Ga.App. 818,486 S.E.2d 30, at Div. 4(b)); and found sufficient evidence from which a jury could conclude that Equitable had tortiously interfered with McLane's efforts to procure the 1993 ACOG expansion lease pursuant to the terms of her employment contract with AMC, and that Equitable had interfered with McLane's right to receive compensation under her employment contract for the 1993 ACOG lease. The Court of Appeals rejected Equitable's assertion that it could not be liable for tortious interference with McLane's contract because it was not a stranger to the contract. 225 Ga.App. at 828,486 S.E.2d 30. This court granted the petitions for certiorari filed by AMC and Equitable, and expressed interest in the extent to which an employer owed a terminable-at-will employee a fiduciary duty under Georgia law, and the scope of the "stranger doctrine" in the law of tortious interference with contractual relations.

1. Fiduciary duties and obligations are owed by those in confidential relationships, i.e., relationships "where one party is so situated as to exercise a controlling influence over the will, conduct, and interest of another or where, from a similar relationship of mutual confidence, the law requires the utmost good faith, such as the relationship between partners, principal and agent, etc." OCGA § 23-2-58. The Court of Appeals ruled that AMC, "as a real estate professional and employer, had a fiduciary obligation to compensate McLane and to protect her during the parties' agency relationship" (225 Ga.App. at 825, 486 S.E.2d 30), implicitly finding that AMC and McLane enjoyed a principal-agent relationship or a confidential relationship arising out of their employer-employee relationship. We address each implicit finding seratim.

(a) An agency relationship arises "wherever one person, expressly or by implication, authorizes another to act for him...." OCGA § 10-6-1. In order for McLane to serve as AMC's agent, she had to be more than the employee delegated by AMC to look after certain accounts—she had to be "vested with authority, real or ostensible, to create obligations on behalf of [AMC], bringing third parties into contractual relations with [AMC]." Southeastern Fidelity Ins. Co. v. Heard, 123 Ga.App. 635(3b), 182 S.E.2d 153 (1971). There is no evidence that McLane was authorized to obligate AMC by entering into contracts on behalf of AMC; in fact, she admitted in a deposition that any leasing arrangement she might suggest had to meet with AMC's approval before AMC signed it. Therefore, we conclude that McLane failed to establish that she was AMC's agent.

There remains, however, the question whether AMC took on the role of acting as McLane's agent in its negotiations with Equitable concerning the 1993 ACOG expansion commission. AMC believed McLane's entitlement to a commission for the expansion was conditioned upon AMC's receipt of a commission from Equitable, and promised McLane it would pay her a commission upon the occurrence of that condition precedent. AMC then bargained away the condition precedent, effectively eviscerating McLane's receipt of a commission, in exchange for a written agreement whereby AMC continued to manage a smaller portion of the Inforum. However, there is no evidence that McLane authorized AMC to create obligations on her behalf during AMC's negotiations with Equitable. See id. Since it was not established that McLane acted as AMC's agent or that AMC acted as McLane's agent, there can be no breach of fiduciary relationship arising from a principal-agent relationship between the two.

(b) The Court of Appeals' opinion suggested that AMC might owe McLane a fiduciary obligation as her employer. The employee-employer relationship is not one from which the law will necessarily imply fiduciary obligations; however, the facts of a particular case may establish the existence of a confidential relationship between an employer and an employee concerning a particular transaction, thereby placing upon the parties the fiduciary obligations associated with a principal-agent relationship. Cochran v. Murrah, 235 Ga. 304, 307, 219 S.E.2d 421 (1975); Remediation Services v....