Eichenblatt v. Piedmont/Maple, LLC

• Decision Date: 29 January 2021
• Docket Number: A20A2052
• Citation: 358 Ga.App. 234,854 S.E.2d 572
• Parties: EICHENBLATT v. PIEDMONT/MAPLE, LLC et al.
• Court: Georgia Court of Appeals

358 Ga.App. 234

854 S.E.2d 572

EICHENBLATT

v.PIEDMONT/MAPLE, LLC et al.

A20A2052

Court of Appeals of Georgia.

January 29, 2021

Keith Samuel Hasson, Atlanta, Michael Francis O'Neill, for Appellant.

Eric Jon Taylor, Laura Thayer Wagner, Atlanta, Ra Olusegun Amen, for Appellee.

Brown, Judge.

This is the fourth time these parties have come before this Court. See Eichenblatt v. Piedmont/Maple, LLC , 350 Ga. App. XXIV (June 24, 2019) (unpublished) (the "Third Appeal"); Eichenblatt v. Piedmont/Maple, LLC , 341 Ga. App. 761, 801 S.E.2d 616 (2017) (the "Second Appeal"); Kaufman Dev. Partners, L. P. v. Eichenblatt , 324 Ga. App. 71, 749 S.E.2d 374 (2013) (the "First Appeal"). In this appearance, David Eichenblatt appeals the trial court's grant of attorney fees in the amount of $837,444.95 to Piedmont/Maple, LLC, Kaufman Development Partners, LP ("KDP"), and Craig S. Kaufman (collectively "appellees"), under Georgia's "offer of settlement statute," OCGA § 9-11-68. We reverse.

A more detailed factual history of this case is found in the three prior opinions issued in this case, but following is a brief summary of the pertinent facts, most of which are culled from the opinion issued in the Third Appeal. In 1995, Eichenblatt and KDP, as its sole members, formed Piedmont/Maple, a real estate investment company that owned and operated a piece of commercial property in Atlanta. Pursuant to the operating agreement, Eichenblatt would receive up to 40 percent of Piedmont/Maple's quarterly cash flow distribution. In accordance with an amended operating agreement executed in 2000, Eichenblatt was removed as a member of Piedmont/Maple, but retained the right to receive his share of distributions. In 2005, Piedmont/Maple refinanced the debt on the commercial property, and then began experiencing financial difficulties. Eichenblatt, suspecting mismanagement by KDP, sued Kaufman, KDP, and other related entities claiming, inter alia, that the defendants had mismanaged Piedmont/Maple, breached the amended operating agreement, and ignored their fiduciary responsibilities. Following a jury trial in 2011, Eichenblatt was awarded $625,000 against KDP for breach of the operating agreement. KDP appealed, and this Court affirmed in the First Appeal.

In September 2012, KDP loaned Piedmont/Maple $3,550,000, allowing Piedmont/Maple to pay off debt on the commercial property which had gone into default. At around the same time, the commercial property, which had been divided into two parcels, was sold in two separate transactions. Following the sale, appellees sought to wind down and terminate Piedmont/Maple. As part of the dissolution, Piedmont/Maple distributed to Eichenblatt $969,609.23, which it had determined to be 40 percent of its total remaining assets, less certain fees and expenses. When Eichenblatt disputed the accuracy of Piedmont/Maple's calculation and refused to cash the final distribution check, appellees filed the instant action for declaratory judgment to establish the proper dissolution payment. Eichenblatt counterclaimed for breach of contract and breach of fiduciary duty, asserting that KDP and Kaufman had manipulated the member loan to KDP's advantage and had reduced the value of the commercial property by selling the two parcels separately instead of as an assemblage. Eichenblatt also alleged that KDP and Kaufman leased space in the commercial property to an affiliate, but did not require the affiliate to make rental payments. Eichenblatt sought 40 percent of the unpaid rent, totaling approximately $422,451.

The Second Appeal arose from appellees’ underlying declaratory judgment action. Appellees moved for summary judgment on Eichenblatt's counterclaims, and the trial court granted the motion in part. Eichenblatt appealed. Shortly before Eichenblatt filed the Second Appeal with this Court, appellees served an offer of settlement pursuant to OCGA § 9-11-68 on him. Eichenblatt made a counteroffer, which appellees rejected; the parties never reached an agreement. In the meantime, this Court reversed the partial grant of summary judgment to appellees and remanded the case back to the trial court. See Eichenblatt , 341 Ga. App. at 765-767 (2), (3), 801 S.E.2d 616.

Following remand from this Court, and various procedural machinations, the matter proceeded to trial. At the start of trial, KDP confessed judgment in the amount of $79,000 on the unpaid rent claim. At the close of the evidence, the trial court granted a directed verdict against Eichenblatt on his claims of breach of contract/breach of fiduciary duty related to appellees’ failure to sell the commercial property as an assemblage. As to the remaining claims, the jury found that Piedmont/Maple had proved that it correctly valued its assets and distributions to Eichenblatt regarding its attempted dissolution. The jury ruled against Eichenblatt on his counterclaims, finding that he failed to prove that Kaufman or KDP breached any contracts or their fiduciary duties.¹ The trial court entered a final judgment on May 18, 2018, concluding that appellees were entitled to a declaratory final judgment that the correct amount of Eichenblatt's final share in the dissolution is $969,609.23 under the Operating Agreement of Piedmont/Maple, LLC, the First Amendment to Operating Agreement, and the Separation Agreement, and entering judgment against "[p]laintiff Craig S. Kaufman and in favor of ... Eichenblatt in the amount of $79,065.60 [for the rent underpayment]."

In the Third Appeal, Eichenblatt challenged various evidentiary rulings by the trial court during the trial, and the trial court's directed verdict on his counterclaim. This Court affirmed the rulings. See Third Appeal, Slip Op. at 8-15. Upon remittitur, appellees moved for attorney fees pursuant to OCGA § 9-11-68. Following a hearing, the trial court granted the motion, awarding to appellees attorney fees in the amount of $837,444.95, pursuant to OCGA § 9-11-68. Eichenblatt appeals this order.

1. Proper resolution of this appeal requires us to consider the trial court's conclusion that "notwithstanding the discussions between the parties/their counsel at the time the Offer of Settlement was pending, by its express terms, the Offer of Settlement was intended to settle only Eichenblatt's ‘counterclaims.’ See OCGA § 9-11-68 (a). "² (Emphasis supplied.) Because we find that the trial court erred in concluding that the offer was enforceable under OCGA § 9-11-68 (a), we reverse the award of attorney fees.

We apply "a de novo standard of review when an appeal presents a question of law regarding whether the trial court correctly interpreted and applied OCGA § 9-11-68 (a)." Tiller v. RJJB Assoc., LLP , 331 Ga. App. 622, 623, 770 S.E.2d 883 (2015). As such, "[w]e owe no deference to a trial court's ruling on questions of law and review such issues de novo under the ‘plain legal error’ standard of review." (Citations and punctuation omitted.) Chadwick v. Brazell , 331 Ga. App. 373, 375 (2), 771 S.E.2d 75 (2015). Moreover, "where it is apparent that a trial court's judgment rests on an erroneous legal theory, an appellate court cannot affirm." (Citation and punctuation omitted.)

Suarez v. Halbert , 246 Ga. App. 822, 824 (1), 543 S.E.2d 733 (2000). See also Imerys Clays, Inc. v. Washington County Bd. of Tax Assessors , 287 Ga. App. 674, 676, 652 S.E.2d 580 (2007).

OCGA § 9-11-68 "is in derogation of common law and it must be strictly construed against the award of [attorney fees and costs]." (Citations and punctuation omitted.) Alessi v. Cornerstone Assoc. , 334 Ga. App. 490, 493, 780 S.E.2d 15 (2015). OCGA § 9-11-68 therefore "must be limited strictly to the meaning of the language employed, and not extended beyond the plain and explicit terms of the statute." (Citation, punctuation, and emphasis omitted.) Harris v. Mahone , 340 Ga. App. 415, 422 (1), 797 S.E.2d 688 (2017).

The offer of settlement provided, in pertinent part, as follows:

Pursuant to OCGA § 9-11-68, Counterclaim-Defendants Piedmont/Maple L.L.C. ("Piedmont/Maple"), Kaufman Development Partners, LP ("KDP"), and Craig S. Kaufman (collectively, the "KDP Parties") hereby offer to settle the counterclaim for breach of fiduciary duty asserted by Counterclaim-Plaintiff David L. Eichenblatt against the KDP Parties in the above-captioned lawsuit according to the terms and conditions set forth below....

1. The KDP Parties shall pay to Mr. Eichenblatt the aggregate sum of One Hundred Twenty-Five Thousand and No/100 Dollars ($125,000.00) (the "Settlement Payment"), in exchange for Mr. Eichenblatt dismissing, with prejudice, all counterclaims asserted by Mr. Eichenblatt against the KDP Parties in the above-referenced lawsuit. No amount of this offer (Zero Dollars [$0]) is proposed to settle any claim and/or counterclaim for punitive damages. To the extent that Mr. Eichenblatt seeks to recover attorney[ ] fees and other expenses, the Settlement Payment includes any and all such attorney[ ] fees and other expenses. The Settlement Payment shall settle and terminate any and all counterclaims asserted by Mr. Eichenblatt in the above-referenced lawsuit.

2. Mr. Eichenblatt shall dismiss with prejudice all counterclaims asserted by Mr. Eichenblatt against the KDP Parties in the above-referenced lawsuit within ten (10) days after the receipt by Mr. Eichenblatt (or counsel for Mr. Eichenblatt) of the Settlement Payment, and the parties shall file a Consent Order of Dismissal of Counterclaims With Prejudice in the form attached hereto as Exhibit A. Mr. Eichenblatt also shall dismiss with prejudice any pending appeals of any issues in this lawsuit.

3. Mr. Eichenblatt shall agree to and execute a full and final release of any and all claims and/or counterclaims, whether known or unknown, that Mr. Eichenblatt (and any assigns, heirs, or successors in interest) may have or may have had at any time in the past against the KDP Parties and their current and former parents, subsidiaries, affiliates,

...