Peachtree On Peachtree Investors, Ltd. v. Reed Drug Co.

• Court: Georgia Supreme Court
• Writing for the Court: CLARKE
• Citation: Peachtree On Peachtree Investors, Ltd. v. Reed Drug Co., 251 Ga. 692, 308 S.E.2d 825 (Ga. 1983)
• Decision Date: 16 November 1983
• Docket Number: 40102,Nos. 40100,40101,s. 40100
• Parties: PEACHTREE ON PEACHTREE INVESTORS, LTD. et al. v. The REED DRUG COMPANY. The REED DRUG COMPANY v. PEACHTREE ON PEACHTREE INVESTORS, LTD. et al. PEACHTREE ON PEACHTREE INVESTORS, LTD. et al. v. The REED DRUG COMPANY.

Page 825

308 S.E.2d 825

251 Ga. 692

PEACHTREE ON PEACHTREE INVESTORS, LTD. et al. v. The REED DRUG COMPANY.

The REED DRUG COMPANY v. PEACHTREE ON PEACHTREE INVESTORS, LTD. et al.

PEACHTREE ON PEACHTREE INVESTORS, LTD. et al. v. The REED DRUG COMPANY.

Nos. 40100, 40101, 40102.

Supreme Court of Georgia.

Nov. 16, 1983.

Rehearing Denied Dec. 5, 1983.

Richard N. Hubert, Mark J. Clark, Arnall, Golden & Gregory, Atlanta, for Peachtree on Peachtree Investors, Ltd., et al., in Nos. 40100, 40102.

Kirk W. Watkins, Ware, Parker, Johnson, Cook & Dunlevie, Atlanta, for the Reed Drug Co., in all cases.

Joseph B. Gellman, Kilpatrick & Cody, Elizabeth Crosby, Hansel, Post, Brandon & Dorsey, Wray Eckl, Drew, Eckl & Farnum, Atlanta, for Reed Drug Co. in Nos. 40100 and 40102, and Peachtree on Peachtree Investors, Ltd., et al., in No. 40101.

Mark J. Clark, Arnall, Golden & Gregory, Atlanta, for Peachtree on Peachtree Investors, Ltd., et al., in No. 40101.

CLARKE, Justice.

These cases involve the interpretation of provisions in a lease agreement, whether the lessor has breached the agreement and, if a breach has occurred, whether the trial court was correct in finding equitable relief is inappropriate. We agree with the court below that the agreement was breached and hold that monetary damages are appropriate.

The lease was executed between the Reed Drug Company (Reed) and Georgia Baptist Homes, Inc., as lessor, for spaces known as 174 and 178 Peachtree Street which are located on the first floor of the Winecoff Hotel Building. In May of 1981 the building was sold to Ackerman & Company, subject to Reed's lease. Ackerman & Company later transferred its interest to Peachtree on Peachtree Investors, Inc., a limited partnership of which Ackerman & Company is the general partner. These entities were named along with others as defendants below in the suit brought by Reed and will be referred to collectively as "Ackerman" for purposes of this opinion.

The provisions of the lease which are at issue and controlling in this case are as follows:

"Notwithstanding anything in this Lease to the contrary, if either the present Lessor, or a purchaser of the property and Lease from Georgia Baptist Homes, Incorporated, Lessor [Ackerman's predecessor in interest], wishes to demolish the building in which the leased premises are located, this Lease shall terminate nine (9) months after a written notice has been given Lessee by either Lessor or such Purchaser, stating its intent to demolish or substantially demolish said building.

In the event, even after such notice is given, Lessor or the Purchaser fails to begin said demolition within a reasonable time after the expiration of the nine (9) months period, Lessor shall not be entitled to rent the premises to any third party without first giving Lessee an option to re-occupy said premises at the same rental rate and under the same terms and conditions as provided by the Lease, said right extending to the termination of the Lease on February 28, 1985.

The intent and purpose of the foregoing provisions are to enable Lessor to demolish its building at any time or to sell said premises and building to a purchaser who wishes to demolish same for purpose of development."

Reed had sublet the 174 Peachtree space since 1975 and had sublet the 178 Peachtree space since 1979. On June 25, 1981, Ackerman gave notice by letter to Reed that Ackerman "has a present intent to demolish" the building and was invoking the termination provisions of the leases requiring Reed to vacate the premises within nine months. Reed in turn notified its subtenants, Jim Lee, who sublet the 174 space, and Georgia Pacific Corporation, which sublet 178, that their leases would terminate in March of 1981. The 178 space was sublet by Georgia Pacific Corporation to Bank of the South.

In October of 1981 an article appeared in the Atlanta newspapers stating that Ackerman's plan for the Winecoff Hotel was to renovate the building and convert the hotel into an office building. Reed notified Ackerman by letter that the notice of termination was invalid since there was no intent to demolish the building and that Reed expected compliance with the original lease terms to terminate in February of 1985. Through its counsel, Ackerman replied to Reed stating the intention had been and continued to be to "demolish or substantially demolish the building." A separate agreement was reached between Ackerman and Georgia Pacific and its sublessee, Bank of the South, to allow Bank of the South to occupy the Winecoff from April until October of 1982 for three times the rental amount which was required under Reed's lease. Jim Lee was permitted by Ackerman to remain in 174 until August of 1982.

In February of 1982 Reed filed this action against Ackerman and others alleging the provisions of its lease had been violated and seeking monetary damages, a specific performance of the lease and other equitable relief. Reed then moved for a partial summary judgment against Ackerman on the issue of breach of the lease and also moved for a decree in equity. Specifically Reed sought specific performance of the lease entitling Reed to reoccupy the premises under the original lease term for the time period when occupation was wrongfully denied. The effect of this relief would be to allow Reed to occupy the premises beyond the original termination date of February, 1985.

On March 7, 1983, the trial court granted Reed's motion for partial summary judgment holding that demolition had not occurred within a reasonable time and that Ackerman had wrongfully leased the premises to a third party without first offering the premises to Reed for reoccupation. The court reserved ruling on the terms of a decree in equity until further information in terms of reoccupation could be considered. Subsequently on April 8, 1983, the court entered another order stating it would reconsider its March 7 order and, pending reconsideration, Ackerman was restrained from beginning demolition of the Winecoff Hotel. On April 14, 1983, the court reaffirmed the grant of partial summary judgment to Reed. This judgment dissolved the restraining order and the court found and concluded after a consideration of all issues that the most appropriate relief was money damages.

Ackerman is appealing the grant of partial summary judgment on the issue of its violation of the lease. Reed is appealing from the denial of equitable relief.

1. Ackerman contends the court erred in granting summary judgment because there are issues of fact on the meaning of demolish or substantially demolish, the intent of Ackerman, what constitutes a reasonable time to begin demolition and whether the lease entered into allowing the Bank of the South to occupy the building until October of 1982 violated the original lease terms. Reed argues the trial court properly construed the lease and contends there are no factual issues remaining on whether the lease was breached by Ackerman.

The construction of the provisions of this lease, as with other contracts, is generally one for the court to determine as a matter of law. OCGA § 13-2-1 (Code Ann. § 20-701). It is contended that since acquiring the building, Ackerman has continuously intended to develop the area, either by remodeling and renovation of the present building or demolishing the structure and erecting a new building. The record reflects from June of 1981 until at least January of 1983 Ackerman was considering the options of renovation and demolition with respect to its plans for the Winecoff. Ackerman contends that substantial renovation of the presently existing building is contemplated by the terms demolish or, in particular, ...