Oran v. Canada Life Assur. Co., A89A2274

• Court: United States Court of Appeals (Georgia)
• Citation: 194 Ga.App. 518,390 S.E.2d 879
• Docket Number: No. A89A2274,A89A2274
• Parties: ORAN v. CANADA LIFE ASSURANCE COMPANY.
• Decision Date: 02 February 1990

Page 879

390 S.E.2d 879 194 Ga.App. 518 ORAN
v.
CANADA LIFE ASSURANCE COMPANY. No. A89A2274. Court of Appeals of Georgia. Feb. 2, 1990.
Rehearing Denied Feb. 14, 1990.
Certiorari Denied March 13, 1990.

Page 880

[194 Ga.App. 522] Sexton, Turner & Moody, Lee Sexton, Jonesboro, for appellant.

Hansell & Post, Jule W. Felton, Jr., Atlanta, for appellee.

[194 Ga.App. 518] BANKE, Presiding Judge.

Acting on his own behalf and as a partner of Cobb Medical [194 Ga.App. 519] Center Partners, Ltd., Dr. Erdogan Oran brought this action against the Canada Life Assurance Company seeking the return of a $37,000 "standby" (or commitment) fee which had been paid to Canada Life in return for a loan commitment. He brings this appeal from an order awarding summary judgment to Canada Life.

The commitment was for a $1,850,000 permanent financing loan on a medical office building developed by Cobb Medical Center Partners ("CMCP"). Under the terms of the written agreement between the parties, the borrower was required upon acceptance of the commitment to pay a 2 percent fee, which was to be refunded "upon the satisfactory delivery of the loan." However, the agreement specified that "if upon the expiry of the commitment, the loan has not been delivered and the commitment not extended, the 2 percent fee shall become the property of the lender as payment on account of liquidated damages which the lender estimates it will suffer as a result of such non-delivery of the loan."

The commitment expired by its terms on September 18, 1986. Ten days earlier, CMCP's attorney wrote Canada Life's attorney a letter listing certain "tasks prerequisite to closing" which had not yet been completed. Among these was the procurement of a lender's title policy which, the letter stated, was expected to be "forthcoming during the day." The letter also made reference to an unresolved claim being asserted against the appellant and CMCP by the project's construction lender for approximately $300,000 in attorney fees and back interest. Canada Life was asked to "acknowledge and approve the subordination of [this] approximately $300,000 in additional claims" by the construction lender, so as to permit compliance with a court order directing "that such claims be secured by the property until such time as resolved before the court."

The construction lender was pursuing the claims in question as counterclaims in a suit filed against it and the project's contractor by the appellant and CMCP. The complaint in that action alleged that the office building "was not of good quality, is not free from faults and defects, is not in substantial conformance with the contract documents and is defective." In an affidavit executed on August 28, 1986, in support of an application for a temporary restraining order to prevent the construction lender from foreclosing on the construction loan, the appellant testified that "[t]he building remains deficient, and in desperate need of repair, renovation and rehabilitation." In a subsequent affidavit, he added that "at least one tenant ha[d] vacated the project" due to the construction defects and that "at least one tenant ha[d] refused to move into the project by reason of the fact that the building was not substantially complete on its stipulated completion date."

Among the documents which Canada Life would have required at [194 Ga.App. 520] closing were a letter certifying that the project had been completed in...