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Marvin Hewatt Enters. v. Butler Capital Corp.

Court of Appeals of Georgia

July 15, 2014

MARVIN HEWATT ENTERPRISES, INC.
v.
BUTLER CAPITAL CORPORATION; and vice versa

Page 858

Contract, etc. Gwinnett State Court. Before Judge South.

Mahaffey Pickens Tucker, Gerald Davidson, Jr., Andrew D. Stancil, Mills & Hoopes, Steven M. Mills, Timothy S. Walls, for appellant.

Stephen H. DeBaun, for appellee.

MCFADDEN, Judge. Andrews, P. J., concurs; Ray, J., concurs fully in Divisions 4, 6 and 7, and in judgment only in Divisions 1, 2, 3, and 5.

OPINION

Page 859

McFadden, Judge.

This dispute between a secured lender and a landlord arose after the entity that had borrowed from the former and rented from the latter in order to operate a convenience store went out of business. The lender and landlord had entered into a written agreement with one another. Under the terms of that agreement the lender had certain rights and the landlord certain duties upon termination of the lease. As to the lender's claim of breach of that agreement, the central question is whether a termination occurred. We find the evidence -- which establishes without dispute that the landlord facilitated a sale of the business to another of its tenants -- sufficient to send that question to a jury. We likewise find the evidence of that facilitation sufficient to authorize a finding that the landlord participated in an exercise of dominion or control over the secured property inconsistent with the lender's rights and therefore sufficient to send the lender's conversion claim to a jury. But the landlord was entitled to summary judgment on the claim founded on the equitable theory of unjust enrichment because the parties had a contract. As to the counterclaim, we find no abuse of discretion in the trial court's denial of the lender's

Page 860

motions for discovery sanctions and to strike an affidavit.

Case No. A14A0592

1. Facts.

A trial court may grant summary judgment when there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law. OCGA § 9-11-56 (c). " We review a grant or denial of summary judgment de novo and construe the evidence in the light most favorable to the nonmovant." Citifinancial Svcs. v. Varner, 320 Ga.App. 170 (739 S.E.2d 477) (2013) (citation omitted).

Viewed in the light most favorable to the lender, Butler Capital Corporation, as the nonmovant, the record shows that the landlord, [328 Ga.App. 318] Marvin Hewatt Enterprises, is the owner of a commercial property on which sits a convenience store/gas station. In 1999, the landlord entered into a multi-year lease of the property, and in 2007, Hamilton Mill Food & Gas, Inc. (hereinafter " the tenant" ) assumed that lease. At that time, the tenant borrowed $250,000 from the lender and gave the lender a security interest in the store's assets as collateral for the loan. In connection with that loan transaction, the lender and the landlord negotiated the landlord agreement at issue in these appeals. The landlord agreement provided, among other things, that upon termination of the lease, the lender would have the option of stepping into the tenant's shoes:

That Landlord hereby agrees that, if the Lease is terminated for any reason, ... the Landlord shall enter into a new lease of the Premises with the Lender at the option of the Lender. All provisions of the new lease between Landlord and Lender ... shall be commensurate with those provisions of the Lease as if the Lease were not then terminated.

In April 2011, the tenant informed the landlord that it " wanted out" of the convenience store, and the landlord agreed to " let [it] go." As part of that agreement, the tenant paid all of the rent it owed the landlord through April 2011. Not wanting the store to stop operating, the landlord instructed the tenant of another of its properties (the " successor tenant" ) to " buy" and take over the store. The successor tenant met with the tenant's owners at the store; an employee of the landlord and an outside auditor also were present. The auditor estimated the value of the inventory, and the successor tenant gave the tenant's owners a check to buy the inventory. The successor tenant began operating the store under a monthly oral lease with the landlord.

In July 2011, the tenant defaulted on its loan with the lender, and the lender learned that the tenant was no longer operating the store. The lender then demanded money damages from the landlord. In an October 2011 letter, the landlord's counsel responded that the tenant had " unilaterally abandoned" the premises and it offered to let the lender assume the lease, " provided all damages from the ...


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