Hampton Island, LLC v. HAOP, LLC

• Decision Date: 07 March 2011
• Docket Number: No. A10A1194.,A10A1194.
• Citation: 702 S.E.2d 770,306 Ga.App. 542,10 FCDR 3404
• Parties: HAMPTON ISLAND, LLC v. HAOP, LLC et al.
• Court: Georgia Court of Appeals

702 S.E.2d 770

306 Ga.App. 542

10 FCDR 3404

HAMPTON ISLAND, LLC

v.HAOP, LLC et al.

No. A10A1194.

Court of Appeals of Georgia.

Oct. 21, 2010.

Certiorari Denied March 7, 2011.

Hunter, Maclean, Exley & Dunn, Christopher W. Phillips, Savannah, for Appellant.

Weiner, Shearouse, Weitz, Greenberg & Shawe, William G. Glass, Anthony R. Casella, Savannah, for Appellees.

POPE, Senior Appellate Judge.

Defendant Hampton Island, LLC appeals from the trial court's order granting summary judgment to the plaintiffs ¹ on their claim for specific performance of a contract for the sale of land. Hampton Island contends that genuine issues of material factexisted as to whether there was adequate consideration for the contract and with respect to its defenses of duress, unclean hands and impossibility. Hampton Island further contends that the trial court lacked equitable jurisdiction to grant specific performance because the plaintiffs had an adequate remedy at law in the form of monetary damages. After reviewing the record in its entirety, we conclude that the trial court correctly granted summary judgment to the plaintiffs and affirm.

When reviewing the grant or denial of a motion for summary judgment, this Court conducts a de novo review of the law and the evidence. To prevail at summary judgment, the moving party must demonstrate that there is no genuine issue of material fact and that the undisputed facts, viewed in the light most favorable to the nonmoving party, warrant judgment as a matter of law. Where the movant is the plaintiff, she has the burden of presenting evidence to support her claim and the burden of piercing the defendant's affirmative defenses.

(Footnotes omitted.) Smith v. Gordon, 266 Ga.App. 814(1), 598 S.E.2d 92 (2004). See OCGA § 9-11-56(c). Guided by these principles, we turn to the record here.

The dispute in this case centers on two parcels of land located within the Hampton Island Preserve in Liberty County (the "Property"). The plaintiffs originally purchased the Property in 2005 from South Hampton Island Preservation Properties, LLC ("South Hampton"). Although South Hampton agreed to make certain improvements to the Property following the sale to the plaintiffs, South Hampton failed to make the improvements. South Hampton then joined with three other business entities to form Hampton Island Founders, LLC ("Founders"). Founders, in turn, joined another business entity to form defendant Hampton Island, LLC ("Hampton Island"). Hampton Island was managed by a separate company owned and operated solely by Ron Leventhal, who hadseveral decades of experience in real estate investment and development.

A dispute arose between the plaintiffs and Hampton Island as to whether Hampton Island could be held liable for South Hampton's breach of its obligation to make improvements to the Property and for certain alleged violations of the federal Interstate Land Sales Full Disclosure Act, 15 USC § 1701 et seq. The plaintiffs informed Leventhal that they planned to sue Hampton Island in federal court if the dispute could not be resolved.

In June 2007, Hampton Island entered into a purchase and sale agreement with the plaintiffs "in order to resolve all of [the plaintiffs'] claims against [Hampton Island] (if any) with respect to the Hampton Island Preserve" (the "Agreement"). Leventhal executed the Agreement on behalf of Hampton Island. It is uncontroverted that Leventhal consulted with legal counsel concerning the potential for litigation with the plaintiffs and in connection with the decision to execute the Agreement. It is likewise uncontroverted that the Agreement was drafted in part by Hampton Island's legal counsel.

Under the terms of the Agreement, Hampton Island agreed to pay $1,000,000 to the plaintiffs in return for title to the Property and relinquishment of the plaintiffs' potential state and federal claims. If Hampton Island defaulted on its payment obligation, the Agreement provided that the plaintiffs had "the right to seek specific performance and damages."

After extending the closing date by payment of certain consideration, Hampton Island failed to purchase the Property. The plaintiffs then commenced this action against Hampton Island seeking specific performance of the Agreement, or alternatively, monetary damages for breach of contract. Hampton Island answered and maintained that the Agreement could not be specifically enforced based upon a lack of adequate consideration, duress, unclean hands, impossibility of performance, and the availability of an adequate remedy at law.² The parties cross-moved for summary judgment on the plaintiffs' claim for specific performance. The trial court granted summary judgment infavor of the plaintiffs and against Hampton Island, resulting in this appeal.

1. Hampton Island contends that summary judgment was improper because genuine issues of material fact existed as to whether there was a lack of adequate consideration for the Agreement. See Saine v. Clark, 235 Ga. 279, 281(2), 219 S.E.2d 407 (1975) (the party seeking specific performance must demonstrate that the considerationfor the contract was adequate). This argument is without merit. Even if one ignores the plaintiffs' promise to forbear suing Hampton Island,³ it is clear from the record that there was adequate consideration for the Agreement in light of the plaintiffs' promise to convey the Property to Hampton Island. See Anziano v. Appalachee Enterprises, 208 Ga.App. 760, 762(3), 432 S.E.2d 117 (1993) (conveyance of warranty deed to lots clearly constituted sufficient consideration). The trial court, therefore, committed no error in granting summary judgment in favor of the plaintiffs on the issue of adequate consideration for the Agreement.

2. Hampton Island next contends that summary judgment was improper because genuine issues of material fact existed as to whether the Agreement was procured through duress. According to Hampton Island, the plaintiffs threatened to "smear" its reputation by filing a federal lawsuit that lacked legal merit in order to pressure it into purchasing the Property.⁴ Hampton Island claims that word of such a lawsuit would have rapidly spread over the Internet and would have had a drastic economic impact on Hampton Island's other real estate investments, causing a "downward spiral" ultimately resulting in loan defaults and the collapse of those investments. As such, Hampton Island maintains that it was coerced by the plaintiffs into executing the Agreement in order to prevent damaging frivolous litigation that would have caused "economic disaster" to the company by destroying its reputation among investors.

We conclude that, as a matter of law, Hampton Island did not enter into the Agreement as a result of duress.

Under Georgia law, duress consists of imprisonment, threats, or other acts, by which the free will of the party is restrained and his consent induced. Business compulsion or economic duress involves the taking of undue or unjust advantage of a person's economic necessity or distress to coerce him into making a contract and is recognized as a contractual defense. A duress claim must be based on acts or conduct of the opposing party which are wrongful orunlawful. Georgia courts are reluctant to void contracts, and we have found no Georgia decision voiding a contract on the theory of economic duress. And, in any event, when the signer of an agreement is sophisticated in business matters and has access to and in fact obtains advice of counsel, the defense of duress is not available to void the contract.

(Punctuation and footnotes omitted; emphasis supplied.) Cooperative Resource Center v. Southeast Rural Assistance Project, 256 Ga.App. 719, 720-721, 569 S.E.2d 545 (2002).⁵ Accordingly, inCompris Technologies v. Techwerks, Inc., 274 Ga.App. 673, 682(7), 618 S.E.2d 664 (2005), we held that the uncontroverted evidence showed that a settlement agreement was not procured by duress, even though there was unequal bargaining power between the parties and some unfairness in the negotiations, where the defendants were sophisticated businessmen and made an informed decision to settle rather than pursue other legal remedies based upon the advice of legal counsel.

The present case is similar to Compris Technologies. Here, the uncontroverted evidence shows that Leventhal was a sophisticated businessman who consulted with legal counsel before executing the Agreement on behalf of Hampton Island. Leventhal made an informed decision on the advice of counsel to settle any potential claims by the plaintiffs and procure the Property, rather than defend against those claims in court and seek the alternative remedy of attorney fees to the extent that those claims were deemed frivolous. Moreover, legal counsel of both parties participated in the drafting of the Agreement. Given these undisputed facts, Hampton Island could not rely on its defense of duress to void the Agreement. See Compris Technologies, 274 Ga.App. at 682(7), 618 S.E.2d 664; Cooperative Resource Center, 256 Ga.App. at 720-722, 569 S.E.2d 545; Ackerman v. First Nat. Bank of Grady County, 239 Ga.App. 304, 305(2), 521 S.E.2d 221 (1999); Frame v. Booth, Wade & Campbell, 238 Ga.App. 428, 430(2), 519 S.E.2d 237 (1999). See also Holtzendorf v. Seckinger, 195 Ga.App. 177, 183(1), 393 S.E.2d 13 (1990) (threat of legal action did not constitute duress); Anziano, 208 Ga.App. at 762(3), 432 S.E.2d 117 (no duress where defendants "could have pursued other legal remedies, even though they may have seemed unattractive," rather than go forward with thesale contract). As we have repeatedly emphasized,

[H]ard bargaining, by itself, cannot support a duress defense. One may not void a contract on the grounds of duress merely because he entered into it with reluctance, the contract was very disadvantageous to him, the bargaining power of the parties was unequal, or there was some unfairness in the negotiations preceding the agreement.

(Footnotes omitted.)...