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Cheeley Invs., L.P. v. Zambetti

Court of Appeals of Georgia, First Division

March 30, 2015

CHEELEY INVESTMENTS, L.P. et al.
v.
ZAMBETTI

Editorial Note:

This opinion is uncorrected and subject to revision by the court.

ELLINGTON, Presiding Judge. Phipps, C. J., concurs. McMillian, J., concurs in judgment only as to Division 3, and fully in all other divisions.

OPINION

Ellington, Presiding Judge.

Cheeley Investments, L.P., Edward Breedlove, and SMC Properties, L.P. (collectively " Cheeley Investments" ), brought this action in the Superior Court of Forsyth County against John Zambetti, seeking damages for breach of contract or, in the alternative, promissory estoppel. After a hearing, the trial court granted Zambetti's two motions for summary judgment. Cheeley Investments appeals, and, for the reasons explained below, we reverse.

Under OCGA § 9-11-56 (c), a party is entitled to summary judgment " if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law[.]"

On appeal from the grant of summary judgment, we construe the evidence most favorably towards the nonmoving party, who is given the benefit of all reasonable doubts and possible inferences. The party opposing summary judgment is not required to produce evidence demanding judgment for it, but is only required to present evidence that raises a genuine issue of material fact. Our review of the grant or denial of a motion for summary judgment is de novo.

( Citations and punctuation omitted.) Johnson v. Omondi, 294 Ga. 74, 75-76 (751 S.E.2d 288) (2013).

Viewed in the light most favorable to Cheeley Investments, as the non-movant, the evidence showed the following. JR Real Estate Development, LLC (" JRD" ) entered into an agreement to buy a certain tract of land in Gwinnett County from Cheeley Investments, L.P., a trust designated as the " SMC Family Trust U/A Dated May 18, 1998," and Genevieve Breedlove (the wife of the appellant, Edward Breedlove). Zambetti executed the agreement as the manager of JRD, and Robert Cheeley executed the agreement on behalf of Cheeley Investments, L.P. and as trustee of the family trust. The agreement became binding by its express terms on May 12, 2008.

The agreement provided several options for closing dates, the last being September 30, 2008. On that date, however, the parties executed an amendment to the agreement, waiving the escrow closing requirement and extending the closing date to November 14, 2008; JRD agreed to wire additional earnest money to the holder of the escrow funds. JRD was unable to close on November 14, 2008. The parties discussed a possible reinstatement and extension of the expired agreement, but were unable to reach an agreement. On December 4, 2008, JRD filed in Gwinnett County an action for declaratory judgment, against Cheeley Investments, L.P., SMC Properties, L.P., and Genevieve Breedlove.

Cheeley deposed[1] that, after learning about the declaratory judgment action, he called Zambetti that day and asked him why he was filing a lawsuit about the disbursement of the escrow funds, given that the parties were still trying to close the land deal. Cheeley testified that Zambetti told him that his (Zambetti's) attorneys had advised him to file the lawsuit " in order to buy him some more time." According to Cheeley, Zambetti told him that he had the money needed to close, and still planned to close, and said that he did not know why his attorneys believed it was necessary to file the lawsuit. Cheeley deposed that Zambetti said, " I will pay your attorneys' fees" because Cheeley and Breedlove had been " honorable men" and held up their end of the bargain, and he " was not faulting [them] in any way." Cheeley deposed that he accepted Zambetti's offer. That same day, Cheeley wrote an email to the escrow attorney, saying that he had spoken with Zambetti, who had apologized for JRD's lawsuit, and he relayed Zambetti's statement they were trying to buy some time to close the land deal and they would " cover our $," referring to Cheeley Investments' legal expenses from the lawsuit.

In addition, Cheeley testified that Zambetti reiterated the promise to him twice, including at a meeting on December 19, 2008, in the presence of Edward Breedlove and several others. In addition, Breedlove deposed that he heard Zambetti say at that meeting that he was buying time to get the land deal closed and that he would pay whatever legal fees Cheeley Investments incurred.[2]

1. Cheeley Investments contends that the trial court erred in concluding that the alleged oral agreement was unenforceable, specifically in that it was too uncertain as to the price term, and in granting on this basis Zambetti's motion for summary judgment on Cheeley Investments' breach of contract claim.

In this case, the record contains evidence that Zambetti admitted to Robert Cheeley that JRD filed its declaratory judgment action merely as a delaying tactic, to buy time and delay disbursement of the escrowed funds in the hopes of salvaging the Gwinnett land deal involving Cheeley Investments L.P. and the other sellers. The record also contains evidence that Zambetti promised to pay the litigation expenses including attorney fees incurred by Cheeley Investments in responding to the action. Generally, contracts concerning the payment of attorney fees and expenses of litigation are enforceable. See Sylar v. Hodges, 250 Ga.App. 42, 43-44 (550 S.E.2d 438) (2001) (" Parties may establish contract terms on any subject matter in which they have an interest so long as their agreement is not prohibited by statute or public policy. There is no public policy against contracting for the recovery of attorney fees." ) (footnotes omitted); Hope & Assocs., Inc. v. Marvin M. Black Co., 205 Ga.App. 561 (1) (422 S.E.2d 918) (1992) (accord).[3] In addition, there is evidence that, on behalf of Cheeley Investments, Robert Cheeley accepted Zambetti's promise and that the promise accomplished Zambetti's purpose in making it, that is, Cheeley Investments continued to negotiate the land deal despite JRD's failure to close by the extended deadline. Thus, there is evidence from which a jury could find that Zambetti's oral promise to pay Cheeley's Investments' legal expenses was supported by consideration. Evans v. Merrill Lynch Business Fin. Svcs., 213 Ga.App. 808, 810 (3) (446 S.E.2d 215) (1994) (A lender's agreement to forbear enforcement of its rights under a guaranty was sufficient consideration for a new financing agreement by the guarantor for repayment of the borrower's debt.); Mann Electric Co. v. Webco Southern Corp., 194 Ga.App. 541, 542 (2) (390 S.E.2d 905) (1990) (Evidence presented a question of fact regarding consideration, where there was evidence that a general contractor was in material breach of a construction subcontract so as to excuse a subcontractor from further performance, as well as evidence that the subcontractor forbore exercising its remedies and elected to complete its performance in reliance upon the owner's promise to pay the general contractor and the subcontractor jointly.).[4]

With regard to the lack of " definiteness" as to " the price term," we are guided by the general principle that Georgia law leans against destroying contracts on the basis of uncertainty. Triple Eagle Assocs. v. PBK, Inc., 307 Ga.App. 17, 20 (2) (704 S.E.2d 189) (2010); Sanders v. Commercial Cas. Ins. Co., 226 Ga.App. 119, 121 (1) (485 S.E.2d 264) (1997); John K. Larkins, Jr., Ga. Contracts: Law and Litigation, § 5:1 (2d ed., updated September 2014). Moreover, the determination whether a contract contains the requisite certainty is made at the time enforcement is sought. Arrow Exterminators, Inc. v. Gates Condominium Homeowners Assn., 294 Ga.App. 620, 622 (1) (669 S.E.2d 421) (2008); Sanders v. Commercial Cas. Ins. Co., 226 Ga.App. at 121 (1). Our courts routinely enforce contractual provisions for attorney fees and expenses of litigation even when, at the time of the agreement, the triggering event (such as a legal proceeding to collect a debt by a creditor or the arbitration of a dispute arising out of a contract) has not and may never occur and where the agreed upon " price term" is no more definite than " reasonable attorney fees and expenses of litigation." [5] In this case, there is evidence from which a jury could find that Zambetti promised to pay the attorney fees and other expenses that Cheeley Investments would ultimately incur in responding to the declaratory judgment action, as discussed above, and that exact amount is susceptible of proof at the time of enforcement. Jones v. White, 311 Ga.App. at 827 (1) (a) (A mutual promise that a golf course developer would split consulting fees equally among several consultants was specific enough to be definitely and objectively ascertainable so as to form the basis of a contract.).[6] To the extent the trial court was concerned that the agreement provided no cap on the obligation Zambetti undertook, the subject agreement, like contracts generally, is subject to the implied term of the duty of good faith and fair dealing. See John K. Larkins, Jr., Ga. Contracts: Law and Litigation, § 5:6 (2d ed., updated September 2014). Moreover, a jury could find that, although Zambetti may have expected the legal expenses to be less than Cheeley Investments ultimately demanded, Zambetti could have capped the legal expenses by having JRD close on the land deal and dismiss its declaratory judgment action. For these reasons, the trial court erred in granting Zambetti's motion for summary judgment on Cheeley Investments' breach of contract claim.

2. Cheeley Investments contends that genuine issues of material fact remain regarding whether Zambetti's promise was communicated with sufficient particularity to be enforced under the doctrine of promissory estoppel and that the trial court therefore erred in granting summary judgment in favor of Zambetti on Cheeley Investments' promissory estoppel claim.

Even when a promise is unenforceable as a contract, a promisee may recover under a theory of promissory estoppel because " [a] promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee ... and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise." OCGA § 13-3-44 (a).[7] Although " [p]romissory estoppel does not apply to vague, indefinite promises[,]" a trier of fact could conclude that Zambetti's promise to pay Cheeley Investments' attorney fees and legal expenses in responding to JRD's declaratory judgment action was sufficiently definite to be enforced, as discussed in Division 1, supra. (Citations and punctuation omitted.) Jones v. White, 311 Ga.App. at 830 (1) (b) (In light of a consultant's testimony that a golf course developer promised to pay the consultant 10 percent of the net developer's fee if a bid was successful, and an email sent by an agent of the developer to the company's attorney instructing the attorney to draft an agreement reflecting that the consultant would receive such a share of the developer's fee, a trier of fact could conclude that the developer made the promise and the amount was sufficiently definite to be enforced under the doctrine of promissory estoppel.). In this case, there is some evidence that Cheeley Investments relied on Zambetti's promise and continued negotiating the land deal, all the while incurring legal expenses and losing the value of obtaining the return of the escrowed funds and the opportunity to seek another buyer. Whether the promise acted as a catalyst that induced Cheeley Investments to incur legal expenses, and whether such reliance was reasonable under the circumstances, are questions for the jury. Brown v. Rader, 299 Ga.App. 606, 611-612 (2) (a) (683 S.E.2d 16) (2009); Folks, Inc. v. Dobbs, 181 Ga.App. 311, 313-314 (2) (352 S.E.2d 212) (1986). See Ambrose v. Sheppard, 241 Ga.App. 835, 837 (528 S.E.2d 282) (2000) (" Questions of reasonable reliance are usually for the jury to resolve." ) (citation omitted). For these reasons, the trial court erred in granting Zambetti's motion for summary judgment on Cheeley Investments' promissory estoppel claim.

3. Zambetti contends that Cheeley Investments' claims are precluded under the doctrines of res judicata and collateral estoppel and that the trial court's summary judgment order must therefore be affirmed because the ruling is " right for any reason." [8]

First, Zambetti's invocation of the right-for-any-reason rule is misplaced. In this case, the trial court did expressly rule on Zambetti's argument that Cheeley Investments' claims against him are barred by the doctrines of res judicata and collateral estoppel -- and rejected it.

Furthermore, as the trial court correctly concluded, the record shows that, when the defendants in JRD's earlier action (Cheeley Investments, L.P., SMC Properties, L.P., and Genevieve Breedlove) sought to add Zambetti as a party to that action, Zambetti opposed his joinder and the trial court ruled in his favor. Because Zambetti personally was not a party to the earlier litigation, identity of parties is absent, and the issue of his personal and contractual liability for Cheeley Investments' legal expenses has not been previously litigated and determined.[9] Accordingly, this argument presents no basis for affirming the trial court's summary judgment order. A. R. Hudson Realty, Inc. v. Hood, 151 Ga.App. 778, 780 (1) (262 S.E.2d 189) (1979), disapproved of on other grounds, Merrill Lynch, & c. v. Zimmerman, 248 Ga. 580 (285 S.E.2d 181) (1981).

Judgment reversed.

Phipps, C. J., concurs. McMillian, J., concurs in judgment only as to Division 3, and fully in all other divisions.


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