Derbyshire v. United Builders Supplies, Inc.

• Decision Date: 13 March 1990
• Docket Number: No. A89A1872,A89A1872
• Citation: 194 Ga.App. 840,392 S.E.2d 37
• Parties: DERBYSHIRE et al. v. UNITED BUILDERS SUPPLIES, INC.
• Court: Georgia Court of Appeals

Page 37

392 S.E.2d 37

194 Ga.App. 840

DERBYSHIRE et al. v. UNITED BUILDERS SUPPLIES, INC.

No. A89A1872.

Court of Appeals of Georgia.

March 13, 1990.

Bradford C. Dodds, John W. Denney, Columbus, for appellants.

Kenneth M. Henson, Jr., Columbus, for appellee.

BEASLEY, Judge.

Consideration of the issues involves the interlocking relationship of appellant John Derbyshire and certain corporations he formed and the extent to which these corporate entities may be disregarded in this case. Derbyshire owns 100 percent of the stock in three corporations, Thermocon International, Inc., and Durlin & Associates, Inc., (d/b/a Weathertite Contracting Company), and Jeslan Enterprises, Inc. In turn Jeslan Enterprises, Inc., completely owns Stanley Steele Company, Inc., (d/b/a Thermocon Southeast) which controls National Boric Acid Corporation.

All were defendants in an action brought by United Builders Supplies, Inc., seeking recovery under a lease agreement and for damages to the premises owned by United Builders. Defendants appeal after a jury verdict in favor of plaintiff.

On February 15, 1984, Stanley Steele Company, then an independent business, leased premises in Columbus from United Builders Supplies. The agreement was for three years ending January 31, 1987, with an option for three three-year additional terms. The lease also contained a provision for assignment and for payment of attorney fees in the event of default.

In 1985 and 1986 Richard Lane, Vice-President of United Builders, met with John Derbyshire who informed him that Derbyshire intended to move his insulation business, under the name Thermocon, into the Columbus area as part of a plan for national expansion. Derbyshire indicated an interest in purchasing Stanley Steele, extending the lease and later buying the property owned by United Builders.

In September 1986 Derbyshire formed a wholly-owned corporation, Jeslan Enterprises, for the purpose of acquiring 100 percent interest in Stanley Steele. On September 25 Jeslan Enterprises purchased all the stock of Stanley Steele.

On October 28, Keith Wright, signing as Secretary-Treasurer under a letterhead styled "Thermocon" with the Columbus leased premises address, informed United Builders' Lane that "we would like to exercise our option to extend the lease for an additional term of three years as indicated in paragraph 25 of the original lease," bringing it to January 31, 1990.

In 1987 lease payments were delinquent and Lane met with certain corporate officers of Thermocon and Stanley Steele and also spoke with Derbyshire over the telephone about bringing the payments current. Lane understood that Derbyshire and Thermocon were responsible for the rent and informed the officials that he was looking to them for payment. He received a letter on May 14 under the name of Thermocon Southeast, signed by Keith Wright, setting forth a payment plan. Subsequently payments stopped and Lane contacted Derbyshire who said he would not be pressured about the rent.

During this time the building was occupied or being used by each of the defendant corporations and several of the officers worked for more than one corporation. Besides his exclusive ownership and control of the three principal corporations, Derbyshire was president of Stanley Steele, Thermocon International and Jeslan Enterprises. Stanley Steele and National Boric Acid issued paychecks out of the Columbus location.

On November 7 the premises were vacated and the lease agreement abandoned. Extensive damages were done to the premises when defendants moved out and two large vats of sulfuric acid were left behind. United Builders expended almost $14,000 in repairs and renovations in order to make the property suitable for leasing. Neither Derbyshire nor his corporations gave any notice to United Builders. Derbyshire refused to respond to any inquiries about the damages or of future intentions with regard to the lease.

United Builders sued in December. Defendants answered; Derbyshire, Thermocon International and Durlin & Associates d/b/a Weathertite moved for summary judgment; Derbyshire and Thermocon moved to dismiss on jurisdictional grounds. Discovery was completed and the motions were denied.

Plaintiff filed an amended and recast complaint naming Derbyshire and the corporations as they appear in the initial paragraph of this opinion. A jury returned a verdict in favor of plaintiff for $125,000. Judgment was entered thereon and appeal was taken. The judgment was then modified to award $72,381.60 in lost rent, $10,857.13 for attorney fees, $5,366.26 for damages to the property and $8,000 for expenses to make the premises rentable. Appeal also from that judgment followed.

1. Derbyshire, Thermocon and Jeslan assign error on the denial of their motions to dismiss for lack of jurisdiction. Jeslan must be eliminated from consideration because it did not file a motion to dismiss on this basis. As to Derbyshire and Thermocon their motions were denied on the grounds, as found by the trial court in separate orders as to each, that "there remain genuine issues as to material facts regarding whether this Court has jurisdiction over this defendant."

This might be a proper ruling to make on motion for summary judgment, but a motion based on lack of jurisdiction targets a matter in abatement, not the merits of a case. Behar v. Aero Med Intl., 185 Ga.App. 845(1), 366 S.E.2d 223 (1988); Ogden Equip. Co. v. Talmadge Farms, 232 Ga. 614, 208 S.E.2d 459 (1974). Summary judgment is appropriate only when ascertaining whether the merits of a case should reach a jury. International Indem. Co. v. Blakey, 161 Ga.App. 99, 101(1), 289 S.E.2d 303 (1982).

When ruling on a motion to dismiss based upon jurisdictional grounds, the trial court must make the determination acting as the trier of fact. Big Canoe Corp. v. Williamson, 168 Ga.App. 179, 180, 308 S.E.2d 440 (1983); Montgomery v. USS Agri-Chem. Div., 155 Ga.App. 189, 190(1), 270 S.E.2d 362 (1980). Its evaluation rests on where the preponderance of evidence lies, not necessarily on whether the issue may be decided as a matter of law. Barrow v. Gen. Motors Corp., 172 Ga.App. 287, 288(2), 322 S.E.2d 900 (1984). A holding that issues of fact remained would necessitate the resolution of those facts and a determination of jurisdiction by the trial court; it would not be cause for submission to a jury.

The effect of the trial court's ruling was to avoid its responsibility to decide the jurisdictional question. OCGA §§ 9-11-12(d) and 9-11-43(b); Ogden Equip. Co., supra; Montgomery, supra 155 Ga.App. at 190, 270 S.E.2d 362; Myers v. McLarty, 150 Ga.App. 432, 433, 258 S.E.2d 56 (1979). We do not construe the ruling as an order that the determination be deferred until trial under OCGA § 9-11-12(d) (Sherwood Mem. Park v. Bryan, 142 Ga.App. 664, 236 S.E.2d 903 (1977)), because no further ruling on the issue was ever made. It was left unresolved. The right for any reason principle does not rise to save the day because a judgment based on an erroneous legal conclusion or theory is reversible error. Universal Scientific v. Wolf, 165 Ga.App. 752, 753(2), 302 S.E.2d 616 (1983); Ayers v. Yancey Bros. Co., 141 Ga.App. 358, 361(2), 233 S.E.2d 471 (1977).

The ruling on the motions must be reversed and remanded for a hearing and judgment predicated on the relevant principles of law. If the court finds no jurisdiction as to Derbyshire and Thermocon, the final judgment rendered against them must fall.

2. (a) Because they were not signatories on the lease, defendants Derbyshire, Thermocon, Jeslan, Durlin and National Boric Acid contend there is no basis for holding them liable.

Evidence that defendant corporations jointly occupied the building gives a sound reason for finding them jointly liable for the physical damages to the building. Whether they all may be liable on the lease is another matter. Their using the premises does not per se impose liability upon them for the rent. A sublessee incurs liability to the lessor for the rent only where he assumes liability not merely because of his status. 49 Am.Jur.2d 488, Landlord & Tenant, § 509, and cases cited. Unless they were joint tenants or cotenants they would not be liable for the rent.

Two reasons would sustain liability here. First, the letter from Thermocon, signed by Keith Wright, indicates that Thermocon and Derbyshire were exercising the right to extend the lease although there was no written assignment of the lease to those two. Performance by one party and acceptance by the other or such part performance as would render it a fraud on the part of the party refusing to comply would establish an enforceable contract even though there was no compliance with the Statute of Frauds. OCGA § 13-5-31(2) & (3). This theory for sustaining the verdict, while viable, was not presented to the jury.

Second, the individual defendant and the corporations, in addition to Stanley Steele, could be impressed with responsibility for complying with the obligations of the lease and...