MEDICAL CENTER OF CENTRAL GEORGIA, INC.
MACON HEALTH CENTER, INC. et al.
BARNES, P. J., MCMILLIAN and REESE, JJ.
Center of Central Georgia, Inc. (the "Hospital")
appeals the trial court's denial of its motion for
summary judgment in this action against Macon Health Center,
Inc. ("Center") and Macon Health Club, Inc.
("Club") in connection with Center's and
Club's right to exercise an option to lease a gym
facility that the Hospital decided to close. The Hospital
also appeals the trial court's partial grant of a motion
for interlocutory injunction filed by Center and Club.
Because we find no genuine issues of material fact preventing
the grant of summary judgment and because the issues
regarding the now-expired interlocutory injunction are moot,
judgment is appropriate when the moving party can "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 [.]" OCGA § 9-11-56 (c). "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."
(Citation omitted.) Examination Mgmt. Svcs. v.
Steed, 340 Ga.App. 51, 51-52 (794 S.E.2d 678) (2016).
"We review a grant or denial of summary judgment de novo
and construe the evidence in the light most favorable to the
nonmovant." (Citation omitted.) Matson v. Bayview
Loan Servicing, LLC, 339 Ga.App. 890, 890 (795 S.E.2d
viewed, the evidence shows that under the terms of an
agreement dated March 5, 1991 (the "Agreement"),
the Macon-Bibb County Hospital Authority, d/b/a Medical
Center of Central Georgia, a public, not-for-profit hospital
(the "Authority"), bought the building containing
the gym and the gym's equipment from Center, which, at
the time, was doing business as the Macon Health Club. The
Agreement granted the Authority the right to the name
"Macon Health Club" and contemplated that the
Authority would continue to operate a gym facility on the
premises "so long as it can feasibly do so." The
Agreement further provided that in the event the Authority
failed to meet its obligations to maintain the gym or
announced its intention to close the facility prior to
December 1, 2020, Center had the right to exercise a lease
option for the gym property (the "Lease Option").
However, the Agreement also contained the following provision
requiring that Center maintain its legal corporate standing
(the "Good Standing Requirement") in connection
with its exercise of the Lease Option:
The parties recognize that the option hereby granted to
[Center] to lease the premises up to December 13, 2020,
contemplates that [Center] will remain a corporation in good
standing under the laws of the State of Georgia. [Center],
therefore, represents that it will take such action as is
necessary through the form of annual filings with the
Secretary of State or otherwise to maintain the corporate
existence in good standing of [Center].
1995, the Authority assigned the Hospital title to the gym
property and all of the Authority's rights and
responsibilities under the Agreement pursuant to a lease
transfer agreement. From that point, therefore, the Hospital
and Center were the two parties to the Agreement. However, in
2001, Center, which was first incorporated in 1887, was
administratively dissolved by the Georgia Secretary of State.
years later, in August 2008, the Hospital, prompted by
declining gym membership, began a financial and operational
analysis of the gym and on October 1, 2008, made the
administrative decision to close the facility. The Hospital
sent a letter to Center's board members announcing this
decision in October 2008. On January 30, 2009, Club was
incorporated as a new entity under the same name as Center,
i.e., Macon Health Center, Inc. Shortly thereafter, on February
5, 2009, Donald J. Cornett, the president of Club, signed a
letter as "Chairman, Macon Health Center, Inc."
responding to the Hospital's October 2008 letter
informing Center's board about its decision to close the
gym. In the letter, Cornett explained that
[t]he purpose of this letter is to respond to your letter of
October 7, 2008, to the Macon Health Center, Inc. Board
announcing the intention of [the Hospital] to cease operating
the Macon Health Club. Pursuant to the terms of Paragraph
11.04 of that Agreement dated March 5, 1991, between the . .
. Authority. . . and Macon Health Center, Inc.
("MHC"), MHC hereby gives written notice to [the
Hospital] of its intent to lease the space described . . . in
the Agreement for a term ending December 13, 2020.
the language of the letter purports to exercise the Lease
Option on behalf of the entity the letter identified as a
party to the Agreement, i.e., "Macon Health Center,
Inc., ('MHC'), " Cornett avers in this
litigation that he sent the letter in his capacity as
president of Club, which was not a party to the Agreement. On
March 11, 2009, Cornett, on behalf of "MHC, " and
the Hospital jointly notified the gym's members of the
Hospital's decision to cease gym operations and
Club's intention to exercise the Lease Option. The
Hospital and Club continued to negotiate over the future of
the gym, and on September 27, 2009, the Hospital and Cornett,
again on behalf of "MHC, " entered into a
Memorandum of Understanding (the "Memorandum"),
under which the Hospital agreed to continue operating the gym
and Club agreed to assist in finding additional financing and
increasing membership. Both Cornett and another witness
averred that Cornett also signed that document in his
capacity as an officer of Club, because, as Cornett
explained, he "had no authority to sign for any other
entity." Then, in 2012, Club, too, was dissolved by the
Secretary of State for failure to file its annual
years later, on September 13, 2016, the Hospital again
announced its intention to close the gym. In response, Club
successfully applied and received reinstatement of its
corporate status as of September 26, 2016. Club also
requested, and the Hospital agreed to, an extension of the
date of the gym's closing to March 12, 2017. Negotiations
continued regarding the possibility of a new lease, and Club
made the decision to exercise the Lease Option. And on
December 7, 2016, an attorney sent the Hospital a letter on
behalf of "MHC" to notify it of this decision. The
Hospital acknowledged receipt of this notice on December 9,
2016, expressing "hope for a resolution agreeable to the
parties which serves the interest of the Community[.]"
However, the Hospital asserts that it believed it was
negotiating with Center and only discovered for the first
time in February 2017 that Center had been administratively
dissolved in 2001 and that Club was a separate corporate
entity. Shortly thereafter, the Hospital filed its Complaint
for Declaratory Judgment in this action, asking the trial
court to declare and affirm that:
(a) because CENTER materially breached the Good Standing
Requirement and is now a permanently defunct entity, CENTER
lost the Option to Lease; (b) as a permanently defunct
entity, CENTER may not assign the Agreement to CLUB; and (c)
CLUB has no standing to exercise the Option to Lease.
and Club filed a timely answer, counterclaim, and verified
petition for injunction to keep the gym in operation pending
the litigation. Within a week and prior to any discovery, the
Hospital filed its motion for summary judgment. The parties
subsequently entered into a consent order in which the
Hospital agreed to make its general counsel available for a
deposition "on subject areas that relate to
Defendants' claim of standing to enforce the 1991
agreement" and to keep the gym open through March 30,
a hearing, the trial court issued its order denying the
Hospital's motion for summary judgment and granting
Club's petition for an interlocutory injunction to
preserve the status quo until April 30, 2017. In reaching
this decision, the trial court found that Center was
administratively dissolved and was time-barred ...