Richard Bowers & Co. v. Clairmont Place, LLC.
| Decision Date | 13 November 2013 |
| Docket Number | No. A13A1459.,A13A1459. |
| Citation | 324 Ga.App. 673,751 S.E.2d 481 |
| Court | Georgia Court of Appeals |
| Parties | RICHARD BOWERS & CO. v. CLAIRMONT PLACE, LLC. |
OPINION TEXT STARTS HERE
Eric T. Johnson, for Appellant.
Bloom, Sugarman & Everett, Simon Howard Bloom, Stephen Merritt Parham, Amanda Schlager Wick, Ariel Denbo Zion, for Appellee.
Richard Bowers & Co. (“Bowers”), a real estate broker, filed a broker's lien against property owned by Clairmont Place, LLC (“Clairmont”), an owner and lessor of office space in Atlanta, and then sued Clairmont for unpaid commissions arising out of a leasing commission agreement between Bowers and Clairmont's predecessor. Clairmont denied Bowers's claims and asserted a counterclaim for slander of title. Bowers moved for summary judgment on its claims for unpaid commissions and on Clairmont's counterclaim, which the trial court denied. Bowers then filed an application for interlocutory appeal (which we granted), arguing that the trial court erred in denying its motion for summary judgment. For the reasons noted infra, we agree and reverse.
Viewed in the light most favorable to Clairmont ( i.e., the non-movant), 1 the evidence shows that Clairmont owns commercial real estate located at 1800 Century Place in Atlanta (the “Property”). Clairmont is a successor-in-interest to ITT Commercial Finance Corporation (“ITT”), which previously owned the Property. And while ITT owned the Property, it entered into a rental agreement on June 6, 1993 (the “1993 Lease”), leasing an approximately 29,000 square foot portion of the Property to the Georgia Department of Technical & Adult Education (“DTAE”).2
On June 6, 1993, ITT and Bowers also entered into the Leasing Commission Agreement that gave rise to the instant litigation. As compensation for services rendered in securing the 1993 Lease, ITT agreed to pay Bowers a commission of “five percent (5%) of the monthly rental paid by Tenant.” The parties agreed that if the Property was sold to an “outside party,” ITT would furnish Bowers with “an agreement signed by the Purchaser assuming [ITT's] obligations to [Bowers] for payment of the commissions.” The agreement also provided that if the “Lease”—which is undisputedly a reference to the 1993 Lease—was “renewed or extended, or if a new, additional, amended, or substituted Lease is entered into between Landlord and Tenant covering the Premises, or any part thereof,” then the commission obligation would apply to rental payments by “Tenant under such renewal or extension, new, additional, amended, or substituted Agreement.”
The term of the 1993 Lease, which was initially for a year, was extended through a series of amendments and renewal letters through June 2004. And during this time, CMD Realty Investment Fund II, L.P. (“CMD”) purchased the Property and became the landlord under the 1993 Lease. In June 2004, the Georgia Building Authority (the “Building Authority”) entered into an agreement (the “2004 Lease”) with CMD to rent, through June 30, 2010, approximately 61,000 square feet of office space on the Property, which included the office space which had been rented to DTAE under the 1993 Lease.
The record includes the affidavit of Elliot M. Penso, formerly leasing director for the State Properties Commission, who was personally familiar with the 1993 Lease. According to Penso, because of restrictions on State of Georgia departments, such as the DTAE, in making agreements for longer than a one year,3 the Building Authority entered into the 2004 Lease with CMD, and the Building Authority in turn subleased the space to DTAE.4
Consistent with Penso's affidavit, the 2004 Lease shows that the parties agreed that the leased premises would be sublet to DTAE and that CMD would accept DTAE as the Building Authority's agent for purposes of paying rent and requesting repairs and maintenance services. In turn, the sublease shows that the DTAE was to occupy the same (and some additional) suites on the Property as it had leased under the 1993 Lease, and that DTAE would make its rental payments directly to CMD.5
Clairmont contracted to buy the Property in December 2004 from CMD. And as part of the real estate sale agreement, Clairmont assumed, among other contracts, the 2004 Lease and the Leasing Commission Agreement.6 Following its purchase of the Property, Clairmont paid Bowers commissions under the Leasing Commission Agreement through June 2010. Then, effective July 1, 2010, Clairmont and the Building Authority entered into the “First Amendment to Rental Agreement” (the “2010 Lease”) which, inter alia, extended the term of the 2004 Lease an additional ten years, through June 30, 2020.
In July 2010, Clairmont stopped making commission payments to Bowers, notwithstanding Bowers's demand for same. Consequently, Bowers filed a broker's lien against the Property on December 21, 2010, and then sued Clairmont to collect unpaid commissions within 90 days of the lien filing, and thereafter.7 Bowers then filed a separate claim for unpaid commissions for the months of July, August, and September 2010, and amended its complaint to assert an alternate claim for breach of contract. Clairmont answered and counterclaimed for slander of title.
Thereafter, Bowers moved for summary judgment on its claims for unpaid commissions and on Clairmont's counterclaim. The trial court denied Bowers's motion for summary judgment, but issued a certificate of immediate review. This Court granted Bowers's application for interlocutory review, and Bowers then filed a timely notice of appeal.
1. The trial court denied Bowers's motion for summary judgment on its claims for unpaid commissions because (a) the Building Authority was not the “Tenant” for purposes of the Leasing Commission Agreement, (b) the 2010 Lease was a new lease for which Bowers could not claim a commission, and (c) the Leasing Commission Agreement was indefinite and, thus, unenforceable. Bowers contends that these conclusions were erroneous and that it was entitled to summary judgment as a matter of law. We agree.
(a) The Leasing Commission Agreement provides, in pertinent part, for payment of commissions equal to “five percent (5%) of the monthly rental paid by Tenant under this Lease.” The trial court concluded that DTAE was the “Tenant” identified by the Leasing Commission Agreement and, therefore, because the current tenant was the Building Authority, rather than DTAE, Clairmont was not required to pay Bowers five percent of the rentals paid to Clairmont by the Building Authority.
At the outset of our analysis, we note that, as an initial matter, the construction of a contract is a matter of law,8 which is subject to de novo review.9 And in conducting this review, a court is to be “guided by three fundamental principles of contract construction.” 10 First, a court must decide whether the language of the contract is clear and unambiguous, and if it is, the court simply enforces the agreement according to its clear terms—put another way, “the contract alone is looked to for its meaning.” 11 Next, if the contract is ambiguous in some respect, “the court must apply the rules of contract construction to resolve the ambiguity.” 12 Finally, if the ambiguity remains after applying the rules of construction, “the issue of what the ambiguous language means and what the parties intended must be resolved by a jury.” 13
Looking first to the four corners of the contract, we note that “Tenant” is not a defined term under the Leasing Commission Agreement; and while it is certainly true that the word “Tenant” is capitalized, the agreement contains several capitalized words that are not defined. And on appeal, Clairmont maintains that the capitalization or lack thereof is crucial, arguing that “[t]his case turns completely on the distinction between lower case and capital letters.” But it is not evident, at least on the face of the agreement, that the use of the capitalized word, “Tenant,” as opposed to “tenant,” has any determinative significance for purposes of interpreting the contract.
DTAE is, however, identified in the Leasing Commission Agreement, and it can certainly be inferred that DTAE is a Tenant, but not that “DTAE” and “Tenant” are synonymous terms. Rather, the Leasing Commission Agreement speaks to the “rental paid by Tenant under this Lease,” which suggests a reliance on the 1993 Lease for purposes of establishing the meaning of “Tenant.” Accordingly, we agree with Clairmont that the lack of clarity regarding the meaning of “Tenant” creates an ambiguity within the Leasing Commission Agreement.
In resolving an ambiguity, a court applies the rules of contract construction.14 In that context, extrinsic evidence is admissibleto explain a contract term that is ambiguous.15 And as the payment obligations under the Leasing Commission Agreement are calculated from the monthly payments by the “Tenant” under the “Lease,” it is entirely appropriate to examine the 1993 Lease to explain what the parties intended by “Tenant.” 16
As the trial court noted, the “Tenant” under the 1993 Lease was identified as DTAE. However, DTAE was also freely permitted to assign the 1993 Lease, without consent, to “another agency, department, commission, board or bureau within the Executive Branch of the State Government of Georgia, or to a State Authority.” Thus, from the outset it was expressly permissible for a State authority, such as the Building Authority,17 to become the “Tenant.”
Although this might not, in and of itself, resolve the ambiguity contained within the Leasing Commission Agreement as to the meaning of “Tenant,” “[t]he construction placed upon a contract by the parties thereto, as shown by their acts and conduct, is entitled to much weight and may be conclusive upon them.” 18 And under the trial court's construction of the Leasing Commission Agreement, the landlord's obligation to pay commissions thereunder would have ceased when the Building Authority entered into the 2004 Lease. Nevertheless,...
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...a contract is a matter of law, which is subject to de novo review.” (Footnotes omitted.) Richard Bowers & Co. v. Clairmont Place, LLC, 324 Ga.App. 673, 676(a), 751 S.E.2d 481 (2013).2 Whether the clause at issue is characterized as a limitation-of-liability clause or an exculpatory clause i......