Seals v. Major
| Decision Date | 09 June 2022 |
| Docket Number | A22A0493 |
| Citation | 364 Ga.App. 239,874 S.E.2d 423 |
| Parties | SEALS v. MAJOR et al. |
| Court | Georgia Court of Appeals |
Baker Donelson Bearman Caldwell & Berkowitz, Steven Gordon Hall, John Hinton IV, Atlanta, for Appellant.
Taylor English Duma, Reginald L. Snyder, Michael D. Johnson ; Bryan Cave Leighton Paisner, Luke A. Lantta, Aiten Musaeva McPherson, for Appellee.
In this action stemming from an alleged partnership agreement, Plaintiff E. Lamar Seals, Jr. (through his power of attorney Lorri Swords), appeals from the grant of summary judgment to defendants Donata Russell Major, Herman Jerome Russell, Jr., Joia Mishaaron Johnson, and Eddie B. Bradford (as executors of the estate of Herman J. Russell); H. J. Russell & Company ("the Russell Company"); and Russell Realty Limited Partnership (collectively "Russell Defendants").
Because the trial court erred by ruling that the record contains no genuine issue of material fact with respect to the formation of a partnership between Seals and the Russell Defendants, we reverse.
"On appeal from the grant of summary judgment this Court conducts a de novo review of the evidence to determine whether there is a genuine issue of material fact and whether the undisputed facts, viewed in the light most favorable to the nonmoving party, warrant judgment as a matter of law."1
The factual history is largely undisputed and shows that in October 1980, Herman Russell, Jr., and the Russell Company entered into a written agreement with Seals, a former regional administrator for the U. S. Department of Housing and Urban Development. That agreement ("Seals Agreement") provided:
This sets forth our entire agreement concerning the captioned project.
On or about the same day, the Russell Agreement was executed by Herman J. Russell, the Russell Company, and Sulgrave Realty Corp. In relevant part, the Russell Agreement provided that the purpose of the partnership was to "acquire, own and hold certain real property ... and to build and develop ... and to own and operate an apartment project ["Bedford Towers"] ... in which 100 [percent] of the apartment units will be eligible for housing assistance payments pursuant to the provisions of Section 8 of the U. S. Housing Act of 1937."2 With respect to the parties to the Russell Agreement, Russell and the Russell Company were named as general partners and were solely responsible for managing the business and the Bedford Towers project. The agreement further provided for certain capital contributions by various classes of partners3 and certain allocations of money to the partners: Russell and the Russell Company (as general partners) would collectively receive 40 percent of the cash flow4 (Section 6.2); proceeds of a sale would be allocated under a certain formula (Section 6.5); and proceeds of refinancing would be allocated under a certain formula (Section 6.6). Net profits were allocated to the executing partners in Article 5 of the Russell Agreement.
It is undisputed that after Seals and Russell executed the Seals Agreement, Seals received regular payments pursuant to the Seals Agreement. In December 1993, Russell formed Russell Realty Limited Partnership that was capitalized in part by Russell's interest in the Russell Agreement. Thereafter, in 2014, Russell died.
In March 2018, the Bedford Towers apartments were sold to an entity called The Residences at Maggie Capitol, LLC, which was owned by companies controlled by Russell and/or his family. No disbursement from the sale was made to Seals in 2018, and Seals was not informed of the sale until he inquired about the status of his distributions in January 2019. Seals was then informed of the sale and presented with a check for $856,403.21 on the condition that he sign a proposed release of further obligations with respect to the project.
Seals declined to sign the proposed release without an accounting and more information; he later accepted the $856,403.21 payment but remained unsatisfied without a full accounting and understanding of the financial history and status of the project. Accordingly, Seals filed the present action in December 2019, asserting claims (as amended) for declaratory judgment (later withdrawn), accounting, and damages for breach of fiduciary duty, breach of contract, monies had and received, and attorney fees. Following discovery, Seals moved for partial summary judgment, and the defendants moved for summary judgment on all claims.
The trial court denied Seals's motion and granted the defendants’ motion.5 In relevant part, the trial court ruled that: (a) there was no genuine factual issue as to whether Seals and Russell and the Russell Company had entered into a partnership, (b) the parties otherwise lacked a fiduciary relationship, (c) Seals's money had and received claim failed based on the undisputed evidence, and (d) Seals's breach of contract claim failed based on the undisputed evidence and contractual language.
1. Seals first contends that the trial court erred by ruling as a matter of law that there was no partnership between Seals and the Russell Companies. We agree.
Determining the existence of a partnership "is generally a mixed question of law and fact, and can not be resolved as a matter of law unless the verdict one way or the other is demanded by the evidence."6
Although the question of what will constitute a partnership is a matter of law for the court, in the absence of an unambiguous contract of partnership or of any written articles of partnership, it is a question of fact for the jury to decide, under proper instruction from the court, whether the intention of the parties was to become partners and whether a partnership existed as to third parties at the times in question.7
Under OCGA § 14-8-6 (a), "[a] partnership is an association of two or more persons to carry on as co-owners a business for profit...." More specifically, OCGA § 14-8-7 provides:
Thus, it is the intention of Seals and Russell that must be ascertained.
It is undisputed that Seals, who is elderly, is incompetent to testify, and Russell is deceased. The evidence of the parties’ intent is primarily the Seals Agreement, which refers to the Russell Agreement; these documents and their context inform the analysis regarding whether the parties intended to enter into a partnership.10 The context includes the undisputed facts that Seals was a former regional administrator for HUD, and the project sought to comply with HUD regulations regarding a Section 8 low income housing development.
Under the Russell Agreement, Russell and his company were general partners in the original Bedford Tower Apartments development project. Under the Seals Agreement, Russell entered into a separate agreement with Seals, sharing the profit and liability of the general partners as outlined in the Russell Agreement. Notably, the liability Russell shared with Seals extended to "[a]ny liability accruing as a result of the project or as a result of [Russell] being a General Partner of the project." Essentially, in exchange for 50 percent of net profits due to Russell and his company, Seals was accepting half of the liability for the project, explicitly including Russell's liability as a general partner in the Russell Agreement.
As noted above, OCGA § 14-8-7 (4) states that sharing in net profits is prima facie evidence of...
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