Officemax, Inc. v. Sapp

• Decision Date: 13 February 2001
• Docket Number: No. 7:99-cv-27 (WDO).,7:99-cv-27 (WDO).
• Citation: 132 F.Supp.2d 1079
• Parties: OFFICEMAX, INC. Plaintiff, v. Gerald L. SAPP, d/b/a G.S. Properties, Defendant.
• Court: U.S. District Court — Middle District of Georgia

132 F.Supp.2d 1079

OFFICEMAX, INC. Plaintiff, v. Gerald L. SAPP, d/b/a G.S. Properties, Defendant.

No. 7:99-cv-27 (WDO).

United States District Court, M.D. Georgia, Valdosta Division.

February 13, 2001.

COPYRIGHT MATERIAL OMITTED

John Reid Bennett, Valdosta, GA, for plaintiff.

John T. McGoldrick, Jr., Macon, GA, Carlton A. Fleming, Jr., Tifton, GA, for defendant.

ORDER

OWENS, District Judge.

Before the Court is Defendant's Motion For Summary Judgment Or, In The Alternative, To Dismiss For Lack Of Subject Matter Jurisdiction.

I. Background

Defendant Gerald Sapp owns approximately 12 acres of land located east of Interstate Highway 75 in Tifton, Georgia. In the Spring of 1998, Defendant began to build a shopping center on the land. At the same time, an agent of OfficeMax, Inc. (herein after "OfficeMax" or the "Plaintiff") approached Defendant to discuss the possibility of OfficeMax leasing a portion of the property for use as a retail store.

In May 1998, a real estate broker and Gerald Sapp met to discuss an agreement to build and lease retail space to OfficeMax. After the meeting, Sapp proposed a build to suit lease offer to OfficeMax, and requested that OfficeMax forward a letter of intent for execution. A letter of intent was signed by an agent of OfficeMax, and the letter was then signed by Defendant on July 1, 1998.

The letter anticipated a 15 year lease between the parties with a provision for four options, each five years in duration. The size of space to be leased would be 23,500 square feet "with the exact configuration subject to OfficeMax's review. The location of the space was not set forth in the letter. It appears that a proposed site plan was included with the letter of intent." See Victoria Johnson Aff. ¶ 6. This site plan was "[s]ubject to[r]eview by Tenant." Letter to Gerald Sapp from Julie Solomon of June 22, 1998 at 1.

Included in the signed letter of intent signed by the parties, was a clause entitled "Non Shop" that provided:

The Landlord and its principal shareholders or partners, employees, agents and representatives a) will not initiate the with third parties or respond to solicitations by third parties relating to the lease of the referenced premises in whole or in part, b) will immediately notify Tenant if any third party attempts to initiate any such solicitation, discussion or negotiations with Landlord and c) will not enter into agreement with respect thereto with any third party. The Landlord hereby agrees that it shall be legally bound by the provisions of this paragraph and Landlord's violation of this paragraph will cause irreparable injury to Tenant. discussion, or negotiations

Id. at 3.

Plaintiff's attorney submitted the first draft of the lease agreement to Defendant on July 31, 1998. This draft contained certain restrictions on the use of surrounding property. These restrictions were of three types: 1) restrictions on direct competition; 2) restrictions on the use of property within a certain proximity to the proposed store for the use of offices and restaurants; and 3) restrictions on the use of the entire shopping center for uses such as day care facilities, bars, and entertainment facilities. See Def.'s Ex. 7 ¶ 21. There was some discussion between the parties regarding the scope of the restrictions and how much of the shopping center they applied to. This resulted in Defendant forwarding comments and changes to OfficeMax on August 24, 1998. See Letter to Victoria Johnson from Carlton Flemming of Aug. 24, 1998. OfficerMax sent execution counterparts of the lease agreement to Defendant on October 13, 1998.

At the same time Defendant was negotiating with OfficeMax, Defendant also began to negotiate with Staples, a competitor of Plaintiff, to build and lease space at the same mall contemplated by the letter of intent. On December 16, 1998, Defendant and Staples signed a lease agreement covering a portion of the mall. Consequently, OfficeMax and Defendant ceased all negotiations.

Plaintiff claims that Defendant breached the agreement to lease and seeks to recover damages under theories of breach of contract and promissory estoppel.

II. Discussion

A. Summary Judgment Standard

Federal Rule of Civil Procedure 56(c) provides that summary judgment may be entered in favor of the movant where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is (1) no genuine issue as to any material fact and that (2) the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Irby v. Bittick, 44 F.3d 949, 953 (11th Cir.1995).

The evidence and all reasonable factual inferences arising from it must be viewed in the light most favorable to the plaintiff, the non-moving party. See Welch v. Celotex Corp., 951 F.2d 1235, 1237 (11th Cir. 1992). The movant's entitlement to judgment as a matter of law is satisfied where "the nonmoving party has failed to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once a party has moved for summary judgment and properly supported its motion, the burden shifts to the nonmovant to create, through the evidentiary forms listed in Fed.R.Civ.P. 56(c), genuine issues of material fact necessitating a trial. See id. at 324, 106 S.Ct. 2548. "The evidence presented cannot consist of conclusory allegations or legal conclusions." Avirgan v. Hull, 932 F.2d 1572, 1577 (11th Cir.1991) (citing First Nat'l Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 289, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968)). The mere presence of an alleged factual dispute between the parties does not make summary judgment improper; a genuine issue of material fact must exist for a court to deny summary judgment. See Anderson, 477 U.S. at 248, 106 S.Ct. 2505.

B. Letter Of Intent

Plaintiff argues that the letter of intent represented an agreement to lease space at Defendant's proposed strip mall.

Defendant argues that the parties never reached an agreement on all of the essential terms of the lease. Specifically, Defendant notes that the letter fails to mention anything about restrictions that would be imposed on the property adjacent to that which Plaintiff would lease. Therefore, Defendant argues that there was no binding agreement to lease and that the Non-Shop clause was not binding as part of the letter of intent.

Plaintiff suggests that an agreement was reached on the essential terms of the contract. As evidence of such, Plaintiff notes that its attorney sent execution copies of the lease agreement to Defendant on October 13, 1998. See Johnson Dep. at 55. Plaintiff argues that such copies are not sent unless an agreement has been reached. See id. at 57. Plaintiff also proffers the fact that Defendant's attorney stated that he was ready to finalize the contract after the final draft was sent, and that Defendant was "ready to sign." See Pl.'s Brief (citing Flemming Dep. Ex. 6).

Georgia courts have held that agreements to execute a lease may be enforceable despite the parties' failure to sign an actual lease. See Doll v. Grand Union Co., 925 F.2d 1363, 1368 (11th Cir. 1991). "As long as the court can extract the essential terms of the lease from the contract to sign the lease, the contract will be enforced." Id.

Georgia courts will not hold that agreements to execute a lease are enforceable if the parties have not agreed to all of the essential terms and conditions of the lease. See American Viking Contractors v. Scribner Equip. Co., 745 F.2d 1365, 1369-70 (11th Cir.1984) (noting that "[t]he law of Georgia is clear that unless all terms and conditions are agreed upon and nothing is left to future negotiations, a contract to enter into a contract in the future is a nullity"). See also Hartrampf v. Citizens & Southern Realty Investors, 157 Ga.App. 879, 278 S.E.2d 750, 752 (1981) ("Unless an agreement is reached as to all terms and conditions and nothing is left to future negotiations, a contract to enter into a contract in the future is of no effect"); Poulos v. Home Fed. Savings & Loan Assn., 192 Ga.App. 501, 385 S.E.2d 135, 137 (1989) ("agreement to reach an agreement is a contradiction in terms and imposes no obligation on the parties thereto").

The letter of intent did not memorialize an agreement on many of the essential terms of the lease.¹ There is no mention of the restrictions that Plaintiff sought to have placed upon the surrounding property. It is unclear whether the parties ever reach an agreement on the issue of restriction, but, even when viewing the facts in a light most favorable to Plaintiff, it is clear that this issue was not resolved when the parties signed the letter of intent. Negotiations on this issue continued for months after the signing of the letter of intent. See, e.g., Flemming Dep. Ex. 8 ¶ 21; Flemming Dep. Ex. 10.

On September 29, 1998, Defendant may have communicated to Plaintiff that he was ready to sign, but the Court must determine if an agreement on all essential terms was reached on June 22, 1998, the date the letter of intent was signed. See Warner Robins Supply Co. v. Malone, 143 Ga.App. 332, 238 S.E.2d 709, 712 (1977).

The Court concludes that the parties never reached an agreement on all essential terms of the lease. The letter of intent did not represent a lease agreement nor an agreement to sign a lease.

C. Non-Shop Clause

Defendant argues that the Non-Shop clause is unenforceable as a separate covenant. In support of this notion, Defendant argues that: (1) the clause is not supported by independent consideration; and (2) the Non-Shop clause is not sufficiently definite at to all of its essential terms to be enforced. Defendant suggests that any implied promise that Plaintiff would...