Capitol Infrastructure, LLC v. Plaza Midtown Residential Condo. Ass'n, Inc., A10A1193.

• Citation: 306 Ga.App. 794,702 S.E.2d 910,10 FCDR 3694
• Decision Date: 18 April 2011
• Docket Number: No. A10A1193.,A10A1193.
• Parties: CAPITOL INFRASTRUCTURE, LLC v. The PLAZA MIDTOWN RESIDENTIAL CONDOMINIUM ASSOCIATION, INC.
• Court: United States Court of Appeals (Georgia)

702 S.E.2d 910

306 Ga.App. 794

10 FCDR 3694

CAPITOL INFRASTRUCTURE, LLC

v.The PLAZA MIDTOWN RESIDENTIAL CONDOMINIUM ASSOCIATION, INC.

No. A10A1193.

Court of Appeals of Georgia.

Nov. 16, 2010.

Certiorari Denied April 18, 2011.

Ernest L. Greer and Michael J. King, Atlanta, for appellant.

Lueder, Larkin & Hunter, Brendan R. Hunter and John T. Lueder, for appellee.

PHIPPS, Presiding Judge.

The Plaza Midtown Residential Condominium Association, Inc. petitioned the superior court for a declaratory judgment against Capitol Infrastructure, LLC, on the issue of whether the Association could terminate, pursuant to OCGA § 44-3-101(c), certain telecommunications contracts. That Code provision allows for termination under certain circumstances, but only before the expiration of a specified 12-month period:

...[A]ny management contract, any lease of recreational area or facilities, or any other contract or lease executed by or onbehalf of the association during the period of the declarant's right to control the association pursuant to subsection (a) of this Code section shall be subject to cancellation and termination at any time during the 12 months following the expiration of such control period by the affirmative vote of the unit owners of units to which a majority of the votes in the association pertain...¹

Here, that 12-month period expired without the Association having terminated any such telecommunications contract, rendering the issue moot. Nevertheless, the superior court issued a declaratory judgment that, under that Code provision, those contracts remained subject to termination by the Association. Because the declaratory judgment upon a moot issue was not authorized, we vacate that order and remand the case for proceedings not inconsistent with this opinion.

The relevant facts are not in dispute. On July 13, 2005, the Plaza Midtown Property, LLC, which was developing a residential condominium community named "The Plaza Midtown Residential Condominium," entered into a "Master Community Infrastructure Agreement"(hereinafter, "Agreement") with Capitol Infrastructure, LLC for Capitol to install telecommunications infrastructure "on easements provided" for the condominium community. The anticipated infrastructure included internal and external wiring, conduit, security alarm sensors, and equipment that would enable the community to be served with voice, video, data, internet, security, and other services. Capitol was in the business of installing (at its own cost) infrastructure, but not subsequently providing the telecommunications services. Rather (to recoup its installation costs and make a profit), it would arrange for third parties to furnish such services to the condominium community and lease or license to those third-party providers the infrastructure it had installed.

The Agreement stated in its Term paragraph: "The initial term of this Agreement commences on the date of this Agreement and, subject to OCGA § 44-3-101, continues for 12 years after the date on which the first certificate of occupancy is issued for a residence in the Condominium." ² Accordingly, an "easement and memorandum of [a]greement" was recorded in the county court records, and Capitol installed a telecommunications infrastructure at The Plaza Midtown Residential Condominium.

It is uncontroverted that in December 2005, Plaza Midtown Property, LLC, as declarant, recorded in the county court records a condominium declaration for The Plaza Midtown Residential Condominium.³ That same month, (appellee) Plaza Midtown Residential Condominium Association, Inc. was formed; it was comprised of condominium unit owners and was controlled by Plaza Midtown Property, LLC.⁴

Also that month, several telecommunications agreements were entered into. The Association executed with Capitol a "Service Provider Designation Agreement," which expressly acknowledged the Agreement. The "Service Provider Designation Agreement" allowed Capitol, among other things, to serve as the "exclusive agent" to negotiate and enter into "bulk service agreements" on behalf of the Association with third-party providers of telecommunications services. Capitol, in turn, negotiated such contracts for third parties to provide telecommunications services to members of the Association. And those third-party providers subsequently entered into contracts with the Association for various telecommunications services for its residents.

In early August 2006, Plaza Midtown Property, LLC surrendered its control of the Association.⁵ By that time, condominium unit owners were becoming dissatisfied with aspects of the telecommunications services being provided to them.

In April 2007, the Association filed in superior court a petition seeking a declaratory judgment that the Agreement was subject toOCGA § 44-3-101(c) such that it could be terminated thereunder. Numerous filings ensued, including the following. Both the Association and Capitol filed a motion for summary judgment, each arguing its position regarding whether the Code provision allowed for termination. Thereafter, in October 2007, the Association filed an "amended petition for declaratory judgment," wherein it sought to add to its case: (i) a breach of contract count against Capitol for deficient performance, and (ii) a request for a declaratory judgment that the easement granted to Capitol was "a personal obligation of the [Plaza Midtown Property, LLC] that [did] not transfer to [the Association]." Capitol responded with a motion to strike that pleading. In November 2007, the Association filed a motion to add as defendants third-party providers of telecommunications services. Capitol opposed that motion.

The superior court conducted a hearing in April 2008, at which the parties argued, among other things, their respective positions on whether OCGA § 44-3-101(c) allowed for termination. The Association asserted that the Agreement had been entered into on its behalf and that the plain language within the Term paragraph of the Agreement demonstrated that, as a matter of law, the Agreement was subject to OCGA § 44-3-101(c) and thus could be terminated thereunder. Capitol countered, among its arguments, that the issue of whether the Agreement could be terminated under OCGA § 44-3-101(c) was moot. It asserted that, even if the Association might have once been authorized to terminate the Agreement under that Code provision, it undisputedly had not done so within the statutory 12-month period, which had ended on August 1, 2007.

The Association's counsel acknowledged, "[W]e had until August 1st to terminate this thing. But before we did, we wanted to know does this Code section apply." The Association's counsel further outlined to the court what actions the Association had taken prior to August 1. As the record supports, during May and June 2007, the Association sent to condominium unit owners forms upon which to vote whether to terminate the Agreement, the Service Provider Designation Agreement, and "any and all other related contracts." Then, having received what it determined to be therequisite number of approval votes, the Association informed Capitol and third-party providers of telecommunications services by letters in late July 2007 that it was conditionally terminating the contracts. These actions were taken, the Association's counsel explained, because "we knew that August 1st [2007] was going to come and go." Counsel further pointed out that the Association's bylaws required a final step before a requisite number of procured votes could effect a decision by the Association and that the Association had purposefully not completed that step. The lawyer explained:

Had we [done so], ... that would have terminated the contract.... We would have terminated the contract and been subject to breach and damages and not be able to get our own service providers.... So we conditionally terminated all the agreements and said we'll just wait for the Court to rule on this.

In August 2009, three years after Plaza Midtown Property, LLC surrendered control of the Association, the superior court entered an order in favor of the Association. Therein, the court stated that the plain language of the Agreement showed that it was subject to OCGA § 44-3-101. Further, the court noted, the Association had advised Capitol and third-party service providers of its intent to terminate the Agreement and the related contracts, but had refrained from finalizing the termination procedures prior to obtaining a declaratory judgment that it was entitled to do so under OCGA § 44-3-101. Thus, the court declared that the Agreement and "all contracts flowing from the Agreement, are subject to termination by the Association pursuant to OCGA § 44-3-101." ⁶ It allowedthe Association 30 days within which to send notices of termination of the Agreement and all contracts flowing therefrom. Regarding other outstanding matters, the court ruled that Capitol's motion to strike the Association's amendment was moot; it did not reach the counts alleged in the Association's amendment; nor did it reach the Association's motion to add parties.

1. Capitol contends that the superior court's declaratory judgment that the Association could terminate the Agreement "and all

contracts flowing from it" under OCGA § 44-3-101 was an impermissible advisory opinion. Capitol maintains that the Association did not terminate any such contract within the time period allowed by that statute and that the superior court's effective enlargement of the statutory period was not authorized. We agree.

The purpose of the Declaratory Judgment Act is "to settle and afford relief from uncertainty and insecurity with respect to rights, status, and other legal relations; [it] is to be liberally construed and administered." ⁷ Under the Declaratory Judgment Act,

[t]he superior court is authorized to enter a declaratory judgment upon petition therefor in cases of actual controversy, and to determine and settle by declaration any

...