Kaufman Dev. Partners, L.P. v. Eichenblatt, A13A1123.

• Decision Date: 30 September 2013
• Docket Number: No. A13A1123.,A13A1123.
• Citation: 324 Ga.App. 71,749 S.E.2d 374
• Parties: KAUFMAN DEVELOPMENT PARTNERS, L.P. v. EICHENBLATT.
• Court: Georgia Court of Appeals

324 Ga.App. 71

749 S.E.2d 374

KAUFMAN DEVELOPMENT PARTNERS, L.P.

v.EICHENBLATT.

No. A13A1123.

Court of Appeals of Georgia.

Sept. 30, 2013.

Rebeccah Lynn Bower, Eric Jon Taylor, Adam McGowan Marlowe, Atlanta, for Appellant.

Jason Alloy, Richard L. Robbins, Atlanta, for Appellee.

McFADDEN, Judge.

This appeal follows a trial in a business dispute in which the jury awarded David Eichenblatt compensatory damages on his claim against Kaufman Development Partners, L.P. (“Kaufman Development”) for breach of the operating agreement for Piedmont/Maple, L.L.C. (“Piedmont/Maple”), a limited liability company “formed to acquire, own, operate, redevelop, lease, and sell or otherwise dispose of certain” real estate. Kaufman Development enumerates as error the trial court's summary judgment ruling that Eichenblatt had standing to bring the contract action against it and the trial court's post-trial ruling refusing to amend its judgment to extinguish Eichenblatt's interest in Piedmont/Maple. As detailed below, we find that Eichenblatt, as a party to the operating agreement, had standing to bring an action for the breach of that contract. We also find that the trial court properly declined to amend or clarify its judgment, which was consistent with the jury's verdict. Finally, we construe Kaufman Development's challenge to the trial court's denial of its motion for judgment notwithstanding the verdict as a prayer for relief rather than an additional argument. Accordingly, we affirm.

1. Facts and proceedings below.

On October 23, 1995, Eichenblatt and Kaufman Development entered into an operating agreement for Piedmont/Maple. Craig Kaufman (“Kaufman”) signed that agreement on Kaufman Development's behalf. The operating agreement identified Eichenblatt and Kaufman Development as the “Members” of Piedmont/Maple and set forth the operating agreement's purpose: “to document how the business and affairs of [Piedmont/Maple] shall be conducted.” Therein, Eichenblatt and Kaufman Development agreed to terms governing, among other things, Piedmont/Maple's membership and management; the withdrawal, removal or transfer of a member's interest in Piedmont/Maple; the allocation of profits and losses; the distribution of cash flow; the dissolution of Piedmont/Maple; the distribution of proceeds upon dissolution; and accounting and recordkeeping. The operating agreement entitled Eichenblatt to up to 40 percent of Piedmont/Maple's quarterly cash flow distributions, depending on the circumstances.

Subsequently, Eichenblatt entered into a “Separation Agreement” with Kaufman and three other corporations in which the two men were 50 percent shareholders. That agreement, which was effective January 1, 2000, stated that the two men had “mutually agreed to cease doing business together, except for their continued joint ownership in certain entities defined herein.” Regarding Piedmont/Maple, the separation agreement stated that Eichenblatt and Kaufman would modify the operating agreement to remove Eichenblatt as a member of Piedmont/Maple effective December 31, 1999, in accordance with a specific section of the operating agreement under which Eichenblatt would “continue to have the right to receive such share of allocations and distributions to which he would otherwise be entitled, but shall have no other powers, rights or privileges of a Member of Piedmont[/]Maple.”

Accordingly, on January 1, 2000, Eichenblatt and Kaufman Development amended the operating agreement to address Eichenblatt's removal as a member of Piedmont/Maple. Pertinently, the amendment provided:

The parties hereto hereby agree that such removal of Eichenblatt as a Member shall be effective as of the Effective Date [January 1, 2000]. Pursuant to Section 3.1 of the Operating Agreement, Eichenblatt shall have the right to receive such share of allocations and distributions to which he would otherwise be entitled, but shall have no other powers, rights or privileges of a Member of [Piedmont/Maple]. The parties hereto agree that from and after the Effective Date, Eichenblatt shall have no authority to bind [Piedmont/Maple] as a Member and shall have no vote in any matter requiring the approval of the Members either pursuant to the Operating Agreement or in the [Georgia Limited Liability Company] Act except as otherwise provided herein. Notwithstanding the foregoing, Eichenblatt's consent shall be required to approve any amendment of the Operating Agreement which would reduce the amount that would be paid or distributed to Eichenblatt.

The amendment addressed Eichenblatt's access to Piedmont/Maple's records and his entitlement to continue to receive certain fees. It added a new paragraph to the section of the operating agreement governing the management of Piedmont/Maple that specifically addressed transactions between Piedmont/Maple, its members, and entities affiliated with its members. The amendment provided that it “shall be binding upon and inure to the benefit of the parties hereto[.]” And it provided that, “[e]xcept as expressly modified hereby, the Operating Agreement shall remain in full force and effect.”

Subsequently, Eichenblatt brought the instant action against Kaufman, Kaufman Development, and several entities related to Kaufman. He alleged, among other things, that Kaufman Development had breached the operating agreement by failing to comply with certain of its provisions governing the management and dissolution of Piedmont/Maple, which he claimed led to him receiving diminished allocations and distributions under the operating agreement. The trial court denied the parties' cross-motions for summary judgment. The case went to trial, and the jury returned a verdict awarding Eichenblatt $625,000 in compensatory damages against Kaufman Development for breach of the operating agreement. (The jury also found that Craig Kaufman breached the separation agreement but awarded Eichenblatt no damages for this breach, and it found in the defendants' favor on all of the other claims in Eichenblatt's complaint.) After the trial court entered judgment on the jury verdict, Kaufman Development moved for the trial court to amend or clarify its judgment to include a finding that Eichenblatt's interest in Piedmont/Maple had been extinguished. Alternatively, Kaufman Development moved for a judgment notwithstanding the jury verdict. The trial court denied both motions.

2. Eichenblatt's standing to bring the contract action.

Kaufman Development argues that the trial court erred in ruling that Eichenblatt had standing to sue it for breach of the operating agreement. Kaufman Development raised this issue in connection with the cross-motions for summary judgment. In denying summary judgment, the trial court determined that Eichenblatt had standing to bring the action against Kaufman Development because he was a party to the amended operating agreement with rights thereunder that he claimed had been infringed upon by Kaufman Development's breach. The issue of standing was not presented to the jury.

Generally, a ruling on a motion for summary judgment becomes moot following the verdict and judgment. However, a party may appeal the denial of summary judgment as part of the direct appeal from the final judgment if the legal issues raised and resolved in denying the motion for summary judgment were not considered at trial. Thus, because the issue of [Eichenblatt's standing to sue for breach of the operating agreement] was not presented to the jury, we will review the trial court's denial of the motion for summary judgment on this ground.

Smith v. Saulsbury, 286 Ga.App. 322, 323(1)(a), 649 S.E.2d 344 (2007) (citations and punctuation omitted).

Ordinarily, the parties to a contract have standing to sue for a breach of that contract. See generally OCGA § 9–2–20(a) (“[a]s a general rule, an action on a contract ... shall be brought in the name of the party in whom the legal interest in the contract is vested”); Level One Contact v. BJL Enterprises, 305 Ga.App. 78, 80(1)(a), 699 S.E.2d 89 (2010) (“The doctrine of privity of contract requires that only parties to a contract may bring suit to enforce it.”) (citation omitted). Kaufman Development asserts, without citation to authority, that Eichenblatt “is no longer a party to [the] [o]perating [a]greement” because he is no longer a member of Piedmont/Maple. The clear and unambiguous language of the operating agreement and amendment thereto shows otherwise. See City of Baldwin v. Woodard & Curran, Inc., 293 Ga. 19, 30(3), 743 S.E.2d 381 (2013) (where contract's language is clear and unambiguous, court must look to contract alone for its meaning and enforce it according to those clear terms).

Both the operating agreement and the amendment state that the parties are Eichenblatt and Kaufman Development, and Eichenblatt signed both as a party. The amendment provides that the operating agreement would remain in full force and effect except as expressly modified by the amendment. By expressly removing Eichenblatt as a member of Piedmont/Maple, the amendment modifies the operating agreement to exclude Eichenblatt from the term “Member” as that term is used in the operating agreement. But this does not affect Eichenblatt's identity as a party to the operating agreement. The amendment does not substitute another party for Eichenblatt or otherwise change the identity of the parties to the operating agreement, and Eichenblatt remains a party thereto.

Kaufman Development argues that, because Eichenblatt is no longer a member of Piedmont/Maple, he cannot bring a claim for Kaufman Development's breach of provisions of the operating agreement other than those governing allocations and distributions. We disagree. Again, the amendment unambiguously provides that the operating agreement remains in full force and effect except as expressly modified by the amendment. Its provision...