Health Service Centers, Inc. v. Boddy

• Decision Date: 09 September 1987
• Docket Number: 44664,Nos. 44663,s. 44663
• Citation: 257 Ga. 378,359 S.E.2d 659
• Parties: HEALTH SERVICE CENTERS, INC. v. BODDY. BODDY v. HEALTH SERVICE CENTERS, INC.
• Court: Georgia Supreme Court

Page 659

359 S.E.2d 659

257 Ga. 378

HEALTH SERVICE CENTERS, INC. v. BODDY.

BODDY v. HEALTH SERVICE CENTERS, INC.

Nos. 44663, 44664.

Supreme Court of Georgia.

Sept. 9, 1987.

J. Marbury Rainer, Thomas D. Watry, Parker, Hudson, Rainer & Dobbs, Atlanta, for A. Evan Boddy.

Ann S. Infinger, Allen I. Hirsch, Arnall, Golden & Gregory, Atlanta, for Health Service Centers, Inc.

GREGORY, Justice.

Health Service Centers, Inc. (HSC) is in the business of operating nursing homes. In mid-1980 HSC began negotiating with Evan Boddy, owner of the nursing home involved in this litigation, to lease the nursing home from Boddy. On July 29, 1980, the parties entered into an "Agreement to Lease and Option." This agreement provided that HSC would use its best efforts to help Boddy obtain a loan in the amount of $150,000; in consideration for this loan Boddy agreed to "execute such agreements as necessary to secure the loan." The agreement provided that Boddy would cause his management corporation to enter into a management agreement with HSC whereby HSC would undertake to manage the home; that the parties would execute a lease agreement whereby HSC would lease the home for a period not less than 10 years at the highest rental rate which the Department of Medical Assistance would approve; and that "HSC ... will have the option to purchase all of the assets constituting the [home] including, but not limited to the real property described on Exhibit 'A' hereto, which option shall extend for a period of five years after the $150,000 loan.... is tendered, at a purchase price, payable in cash, less applicable indebtedness, or such other terms as may be agreed between the parties, which price shall be fair market value at the time of purchase as determined by an appraisal which is acceptable to the Georgia Department of Medical Assistance for the purposes of reimbursement under the Georgia Medicaid Program, but not less than $1,350,000 less applicable indebtedness."

Paragraph five of this agreement provided, "It is contemplated that the parties will execute definitive agreements, namely a lease, option to purchase and management agreement, together with such documents and instruments as may be necessary to reflect the $150,000 loan or advance. HSC shall have 10 days within which to provide the $150,000 loan or advance. Upon the tender of such amount by or on behalf of HSC, the five year option to purchase shall commence." (Emphasis supplied.)

On August 8, 1980, HSC tendered $150,000 to Boddy. Simultaneously the parties entered into a number of agreements, including a "Long Term Care Facility Management Agreement"; an "Agreement to Lease"; and a "Lease Agreement." Paragraph two of the Lease Agreement provided that the term of the lease would be 10 years. Paragraph twenty-five of the Lease Agreement provided that the lease shall create a usufruct only. It further provided that "during the term of this lease, prior to any sale of the leased premises ... [Boddy] shall give [HSC] written notice specifying the specific terms on which it will sell the leased premises ... whether resulting from an offer to purchase the leased premises.... received by [Boddy] or otherwise, and [HSC] shall have 30 days within which to purchase the leased premises.... on the same terms and conditions as set forth in such written notice. Upon [HSC's] failure to purchase the leased premises.... within 30 days, [Boddy] shall be free to sell the leased premises ... but if [Boddy] does not sell the leased premises ... within 90 days after so notifying [HSC], then [HSC] shall again have the right to receive notice of any contemplated sale of the leased premises ... and to purchase the same."

Paragraph twenty-seven of the Lease Agreement provided, "This lease contains the entire agreement between the parties and supercedes all prior discussions and agreements between the parties. Any such prior agreements shall, from and after the date hereof, be null and void."

It is undisputed that the parties did not negotiate further or enter into an additional agreement concerning the option to purchase.

On February 20, 1985, HSC attempted to exercise the option to purchase the...