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Sage Atlanta Properties, Ltd. v. Hawxhurst

Court of Appeals of Georgia, Fourth Division

March 6, 2019

SAGE ATLANTA PROPERTIES, LTD.
v.
HAWXHURST

          BARNES, P. J., DOYLE, P. J. and MERCIER, J.

          BARNES, PRESIDING JUDGE.

         Sage Atlanta Properties, LTD (hereinafter "Sage") appeals the trial court's grant of summary judgment to George Hawxhurst.

         Summary judgment is proper when the record reveals no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. OGCA § 9-11-56 (c). We review the trial court's grant of summary judgment de novo, construing the evidence and all reasonable inferences in favor of the nonmoving party. Touchton v. Bramble, 284 Ga.App. 164 (643 S.E.2d 541) (2007). Additionally, to prevail at summary judgment a movant who does not bear the burden of proof need only show an absence of evidence to support an essential element of the nonmoving party's case. Lau's Corp v. Haskins, 261 Ga. 491 (405 S.E.2d 474) (1991). Absent evidence sufficient to create a genuine issue as to any essential element of the respondent's claim, summary judgment is proper regardless of any factual issues regarding nonessential elements. Id.

         So viewed, the record shows that on November 1, 2014, Sage and The Diner Group of Georgia, LLC entered into a 24-month lease of property to be used as a restaurant. Hawxhurst and Christopher Murphy were guarantors for the Diner Group on the lease.[1] The lease contained a provision for four two-year renewal options. On June 28, 2016, Tammi Duncan signed a notice of intent to exercise the option to renew and faxed the notice to Sage. On the document, Duncan was identified as the owner/president of the Diner Group. Because she was not familiar with Duncan, Sage's general counsel contacted the general counsel for the Diner Group and was informed that Duncan now owned Hawxhurst's shares in the company. Based on the explanation, Sage accepted the renewal.

         During the renewal period, the Diner Group defaulted on the lease terms and Sage filed a complaint for breach of lease and an action on a personal guaranty against The Diner Group, Duncan, Hawxhurst, and Murphy.[2] Sage alleged that The Diner Group had breached the lease by failing to pay rent, taxes, late fees and other obligations under the lease, and that Hawxhurst and Murphy had personally guaranteed the performance of the lease obligations and thus Sage was entitled to a judgment for those monies from the guarantors. Hawxhurst answered and subsequently filed a motion for summary judgment in which he asserted that the renewal was void and unenforceable because both the lease renewal and the authority of an agent to execute the renewal on behalf of the tenant must be in writing.[3] The trial court granted the motion and held that although Duncan was an authorized agent of the Diner Group for purposes of signing the renewal lease, because it was a contract for a lease for a period in excess of one year, "[t]he absence of proper written evidence authorizing an agent to bind a principal to such a lease renders the contract void and unenforceable." The trial court also found that Duncan failed to provide notice of the extension per the express terms of the lease because the notice documents were faxed to Sage rather than, per the terms of the lease, "serve[d] [it] by registered or certified mail." .

When a motion for summary judgment is made and supported as provided in this Code section, an adverse party may not rest upon the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided in this Code section, must set forth specific facts showing that there is a genuine issue for trial. If he does not so respond, summary judgment, if appropriate, shall be entered against him.

OCGA § 9-11-56 (e).

         On appeal, Sage contends that the trial court erred in granting summary judgment to Hawxhurst because the evidence demonstrated Duncan's apparent authority to execute the lease extension on behalf of the Diner Group and its guarantors. Sage further asserts that a jury question remains as to Duncan's actual authority to act on their behalf, and Sage's reliance on her apparent agency.

         "To satisfy the statute of frauds, a contract creating the relation of landlord and tenant for a period in excess of one year must be in writing." (Punctuation and footnote omitted.) Nacoochee Corp. v. Suwanee Inv. Partners, 275 Ga.App. 444, 446 (1) (620 S.E.2d 641) (2005). See OCGA § 44-7-2 (a). And, when a contract required by the statute of frauds to be in writing is executed by an agent, the authority of the agent to execute the agreement must also be in writing. Brookhill Mgmt. Corp. v. Shah, 197 Ga.App. 305, 306 (398 S.E.2d 290) (1990).

         Here, the record includes a series of emails inquiring into Duncan's relationship with the Diner Group after Sage's general counsel received the lease extension signed by Duncan. Murphy, the other guarantor of the lease, emailed the attorney verifying Duncan's relationship with the Diner Group, informing Sage that he had transferred Hawxhurst's shares to Duncan, and that he had been "looking for a new partner as we still had eleven months remaining on the lease." The email also detailed Duncan's experience as a restauranteur and noted that business had been improving with her involvement.

         As to the sufficiency of the email to satisfy that the agency authorization be in writing,

[t]he "equal dignity" rule, codified at OCGA § 10-6-2, provides in part, "The act creating the agency shall be executed with the same formality (and need have no more) as the law prescribes for the execution of the act for which the agency shall be created." Accordingly, it has been held that since a contract creating the relation of landlord and tenant for a period in excess of one year must be in writing, the authority of an agent to execute such a contract likewise must be in writing. However, it is also the law in this state that while a written instrument may have been executed by an agent not having any authority in writing to do so or not having been ratified by an act of comparable dignity, the principal may nevertheless be estopped by his acts from denying the authority of his agent.

(Citations and punctuation omitted; emphasis supplied.) 20/20 Vision Center v.Hudgens, 256 Ga. 129, 133-134 (3) (4) ...


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