Cline v. Lee

• Decision Date: 11 March 2003
• Docket Number: No. A02A2181.,A02A2181.
• Citation: 581 S.E.2d 558,260 Ga. App. 164
• Parties: CLINE v. LEE.
• Court: Georgia Court of Appeals

581 S.E.2d 558

260 Ga. App. 164

CLINE v. LEE.

No. A02A2181.

Court of Appeals of Georgia.

March 11, 2003.

Browning & Tanksley, George T. Smith, Marietta, Vickie L. Ford, Cartersville, for appellant.

James F. Ledbetter, for appellee.

ADAMS, Judge.

Bobby Lee filed suit against Charles Cline, Anne Cline, Narda Mullinax, Ray Williams and ReMax Realty Group, Inc. alleging claims for breach of fiduciary duty, breach of contract and fraud in connection with the development and build-out of the Magnolia Ridge subdivision in Bartow County. At trial, the judge granted Ray Williams' motion for directed verdict. The jury subsequently awarded Lee compensatory and punitive damages against Charles Cline in the total amount of $73,750¹ and compensatory damages against ReMax in the amount of $6,000.00. The jury found in favor of Anne Cline and Mullinax. Charles Cline is the only party to appeal. For the reasons set forth below, we affirm in part and reverse in part.

The evidence showed that Charles Cline and his brother, Larry Cline, were longtime friends with Lee. In November 1996, Charles Cline purchased land in Bartow County for development as the Magnolia Ridge subdivision. Lee testified that sometime in 1997 he approached Charles Cline about subcontracting the foundation walls and the grading work for the subdivision. At the time, Charles Cline was looking for builders, and he and his wife, Anne, tried to persuade Lee to become a builder on the project. Although initially reluctant, Lee agreed to become a builder after Charles Cline represented that neither he nor his wife would be acting as builders. Charles Cline agreed that his role would be restricted to that of a developer. Larry Cline also agreed to be a builder based upon this representation. Both Larry Cline and Lee testified that this was an important point because they did not want to compete with a developer, who has an advantage over other builders in owning the land and managing the project.

The parties agreed that Charles Cline would enter into an exclusive listing agreement with ReMax and Donny Ray, as the agent. Both Larry Cline and Lee testified that this was also an important factor in inducing them to become builders on the project. Both men had known Ray for some time and considered him to be honest. They believed that he would treat them fairly.

Larry Cline and Lee each began building on one lot in the subdivision prior to the division of the remaining building lots. The parties agreed that each builder would be assigned five additional lots through a random drawing. On the morning of the drawing, Larry Cline and Lee learned for the first time that Charles's wife, Anne, would be participating in the drawing as a builder. Lee testified that when he saw that Anne Cline was drawing lots with the other builders, he "knew Charles was going to build" because Anne was not experienced as a builder on her own. Prior to the drawing, Lee had purchased and built on only one lot. He acknowledged that he could have walked away from the deal at that point without purchasing additional lots. Nevertheless, Lee decided to go forward based upon three factors: (1) Ray's involvement as real estate agent, (2) Charles Cline's admonishment to Ray to treat everyone fairly or he would be fired, and (3) the fact that he already had his trucks and forms on site.² He said that at that point he already had $150,000 to $160,000 invested in the subdivision, including the house he had built, his equipment and concrete forms.

Nevertheless, Charles Cline continued to maintain that he would not act as a builder. And to allay any concerns about Anne Cline's role as a builder, Charles Cline told Ray on the day of the drawing that Ray had to treat all the builders fairly or he would be fired as the realtor on the property. Despite Charles Cline's contention that he was not acting as a builder, the evidence at trial demonstrated that Anne Cline had never built a "spec house" by herself prior to the Magnolia Ridge subdivision. Moreover, for each property Anne Cline sold in the subdivision, Charles Cline was listed as a co-seller, and shared in any profits. Every check on an Anne Cline house was written on Charles Cline's corporate account. The building materials for the Anne Cline houses were billed to her, but paid for with checks from Charles Cline's corporation.

Three ReMax agents, Ray, Evelyn Goodwin and Mullinax, were initially assigned to show Magnolia Ridge property. Within a short time, Larry Cline and Lee began experiencing what they perceived to be unfair treatment by Mullinax in showing their properties. Larry Cline and Lee testified that Mullinax did not appear interested in showing properties belonging to them, but instead steered buyers toward Anne Cline's properties. Larry Cline also testified that Mullinax misrepresented to Charles Cline events surrounding a proposed sale of one of his lots.

Matters came to a head in October 1997 when Lee overheard Mullinax pointing out negative aspects of one of his properties to a prospective buyer. Lee later confronted Mullinax about the situation, and a heated exchange occurred. Lee testified that Mullinax then quit showing his properties and refused to speak to him. After that, Mullinax did not sell any of Lee's properties, although other ReMax brokers did. Following this confrontation, Lee asked to be released from the exclusive listing agreement, but Charles Cline refused, telling him he would have to talk to ReMax.

In late 1997, the three builders—Anne Cline, Larry Cline and Lee—met with Ray to discuss the situation. Larry Cline and Lee testified that Charles Cline had previously agreed that if any dispute arose regarding the agents, a decision by the majority of the builders would control. Both Larry Cline and Lee wanted Mullinax removed from the subdivision and Ray to stay on as the agent. Anne Cline wanted Goodwin removed. All the builders agreed that Goodwin was not marketing the properties aggressively enough, and she was removed from the listings. But Anne Cline told the others that it would be difficult to remove Mullinax because Charles Cline liked her. So although a majority of the builders wanted Mullinax removed, she remained on the listings. A short time later, Ray was removed from the listings.

Charles Cline testified that he did not believe his brother or Lee when they said that the agents were not showing their properties, even though one Magnolia Ridge property owner told him the same thing. He stated that there was no agreement that the majority would rule as to how the subdivision would be listed and marketed; rather, he controlled those decisions. He said that it was his decision to keep Mullinax.

Lee eventually contacted an attorney in an effort to work out the problems with the realtor. The attorney arranged a meeting between Lee, Charles Cline and Ray Williams on March 6, 1998. Williams is the broker at the ReMax office that handled Magnolia Ridge and is also Mullinax's father. At the meeting, Lee asked to be released from the exclusive listing agreement. Charles Cline and ReMax refused Lee's request. At trial, Lee's attorney testified that it appeared from the conduct of Charles Cline and Williams at the meeting that they were allied together against Lee. A short time later, Lee instructed ReMax to remove their signs from his properties and he hired another real estate agent. By March 25, 1998, ReMax had released Lee from the exclusive listing agreement.

Lee also testified that on the last house ReMax handled for him, a ReMax agent did the final walk-through with the buyers even though they had their own agent. On the evening before the closing on the property, Mullinax handed Lee, without explanation, a 48-item punch list on the house. Lee decided to refund the buyer's escrow money in lieu of making the extensive list of repairs. But when he tendered a check to the buyers, they quickly backed off their requested repairs. Lee learned that the ReMax agent who was purportedly representing him in the transaction, had suggested a number of the punch list items. At trial, the buyer testified that the agent had suggested at least six of the items.

Lee presented evidence of his damages in connection with the Magnolia Ridge development. He was forced to sell some of his property, including equipment and his concrete forms. He said he almost went bankrupt, but was able to honor his obligations to his creditors. He testified that he lost $27,000 to $28,000 in interest while his properties sat unsold, and he was forced to cut the price of his lots by $2,400 to sell them. He also testified that he incurred $22,000 in attorney fees. Lee further presented evidence from his tax preparer regarding lost profits.

Anne Cline testified that Larry Cline and Lee knew all along that she was going to be a builder and that Lee wanted to be a builder in the subdivision and required no persuasion. She also testified that she had primary responsibility for building her houses, although she acknowledged that she and her husband worked together and shared accounts.

Mullinax denied showing preferential treatment to any one builder in the subdivision. At trial, the defense introduced the ReMax "show cards" for Magnolia Ridge, which recorded when properties were shown to prospective purchasers. Although the cards showed that ReMax agents had shown both Larry Cline and Lee properties, they also reflect several instances where a customer expressed an initial interest in a Larry Cline or Lee property, but ReMax suggested an Anne Cline property or a pre-sale on an empty lot instead. On one occasion, Lee hired a private investigator to view homes in Magnolia Ridge. Although the investigator expressed an interest in Lee's homes, he was scheduled to see an Anne Cline home instead.

1. Charles Cline asserts that there was insufficient evidence to support the jury's finding that he had breached any...