THI RD DI VI SI ON

ELLI NGTON, P. J.

, DI LLA RD and M C FA DDEN, JJ.

N O T IC E : M otions for r e c ons i de r a tion m us t be

ph y sic a l ly r e ce iv ed i n our c le r k ’s offic e w ithin te n

da y s of the da te of de c is ion to be de e m ed tim e ly file d.

http://w w w .ga a ppe a ls .us /r ule s /

Jul y 9, 2015



# I n th e Co u r t o f

A p p eals o f

G eo r g ia

A1 5 A0 27 1

. 2 0 1 0

- 1 S F G VENTURE L LC et al

. v

. LEE BANK &

TRUST COM PANY.

E LLI N G T O N , Pres i d i n g J ud g e.

Pu rs uan t t o a g ran t ed ap p l icat i o n fo r an i n t erl o cu t o ry ap p ea l

, 2 0 1 0 -1 SFG

V e ntur e L L C a nd M ilw a

u kee Ho t el Own er LLC (co l lect i v el y “ Ven t ure”) co n t en d t ha t

t h e Su p eri o r Co u rt o f Fu l to n Co u n t y erred i n d en y i n g t h ei r m o ti o n fo r s u m m ar y

ju d g m en t o n L ee Ban k & Tru s t Co m p an y ’ s (“ Lee Ban k’ s ”) cl ai m s

. Fo r t h e fo l l o wi n g

reas on s

, we rev ers e t h e co u rt ’ s o rd er in p art

, v acat e i t i n p a r t

, an d rem an d wi th

d i rect i o n

.

Su m m ary ju d g m en t i s pro p er wh en t here i s n o g en u i ne i s s ue o f m at eri al

fact an d t h e m o v an t i s en t i t l ed t o ju dg m en t as a m at t er o f l aw. A d e n o v o

s t an dard o f rev i e w a p p l i es t o an ap p eal fro m a [g ran t o r] d en i al o f

s u m m ary ju d g m en t

, an d we v i ew t h e ev i d en ce, an d al l re a s o n ab l eco n cl u s i o n s an d i n feren ces d rawn fro m i t

, i n t he l i g h t m os t fav o rab l e t o

t h e n o n m ov an t

.

(Ci t at i o n s an d fo o tn o t e o m i t t ed .) GEICO Gen

. In s

. Co

. v. W r i g h t

, 2 9 9 Ga. Ap p

. 2 8 0,

2 8 1 (6 82 SE2 d 3 6 9 ) (2 0 0 9 ). So v i ewed

, t h e reco rd s h o ws t h e fo l lo wi n g

.

Th i s cas e ari s es o u t o f a co m m erci al real es tat e l oan fo r ap p ro xi m a t el y $ 1 5

m i l l io n

, wh i ch was o ri g in at ed b y n o n -p art y Sp eci al t y

Fi n an ce Gro u p LLC (“ SFG”)

i n 20 0 8 t o DOC M il wau k ee LP (“ t h e b o rro w er”) t o fu n d t h e co n s tru ct i o n o f a h o t el

i n M il wau k ee, W i s co n s i n. Th e h o t el w as p art o f t he co l lat eral fo r t h e lo an

. Aft er SFG

o ri g i nat ed t h e Lo an

, Lee Ban k b o u g ht a 3.3 6 % i n t eres t in t he l o an fo r $ 5 00 ,0 0 0

, t h e

s al e o f wh i c h was m em ori al i zed i n a “ Part i ci p at io n Ag reem en t” s i g n ed b y t h e

p res i den t an d CEO o f Lee Ban k

.

Pu rs uan t t o t he part i ci p at i on ag reem en t, Lee Ban k

, i n ex ch an g e fo r i t s

p u rch as ed i n t eres t, was en t i t l ed t o recei v e i t s p r o r at a s h are of th e p ay m en t s t h e

b o rro wer m ad e o n t h e l o an

. T h e ag reem en t al s o o b li g at ed L ee Ban k t o p ay i t s p ro rat a

s h are o f an y l o ss es an d ex p en s es s u s t ai n ed i n co n n ect i o n wi t h t h e l o an

. SFG, as t h e

h o l d er o f th e l a r g e s t p ercen t ag e i nt eres t i n th e Lo an (ab o u t 4 7 %) ret ai n ed t h e

“ reas o nab l e d i s cret io n ” to m ak e d eci s i o n s co n cern i n g t h e ad m in i s t rat i o n of t h e l o an

.

Ho wev er, i t al so req u i red SFG t o “ ex erci s e t he sam e d eg ree o f care i n ad m i n i s t eri n g

2t h e l o an t h at SFG cu s t o m ari l y ex erci s es i n ad m i n i s t e r i n g s i m i l ar l o an s fo r i t s o wn

acco u n t

. ” Th e ag reem en t p ro v id ed t h at Lee Ba n k p u r c h as ed i t s i n t eres t “ o n a n o n

n o t i fi cat i o n

, al l s erv i ci n g ri g h t s ret ai n ed b y SFG b as i s

. ” Al t h ou g h SFG ag reed to

m a ke “ reas o nab l e effo rt s u nd er t h e ci rcu m s t an ces t h en ap p l i cab l e” t o co ns u l t wi th

Lee Ban k co n c e rn i n g an y act i o n s t ak en wi t h res p ect to t h e l oan

, t h e ag reem en t

p ro v id ed t h at “ i n al l ev en ts t h e d eci s i o n o f SFG s h al l co nt ro l .” Fu rt her, al t h o u g h t h e

ag reem en t p ro vi d ed t h at SFG wo u l d i n fo rm Lee Ban k o f an y d efau l t b y t h e b o rro wer,

SFG ret ai n ed t h e ri g h t “ t o sel l o r o t h erwi s e d i s p o s e o f t h e [h o t el ] w it ho u t t h e p ri o r

ap p ro v al o f [ L e e B a n k ] an d t h e co m m erci al l y reas o n ab l e d eci s i o n o f SFG s h al l b e

b i n d i n g as t o t h e bes t m an n er i n wh i ch t o p ro ceed wi t h res p ect to t h e co m p l et i o n o r

co n st ru ct i o n , o p erat i o n, m an ag em en t an d d is po s i ti o n o f t h e [h o t el ] .”

Th e ag reem en t al so co n tai n ed s p eci fi c p ro v i s i o n s go v ern i n g an y b reach es o f

t h e p art ici p at i on ag reem en t b y SFG o r b y Lee Ban k. W i t h res p ect t o an al l eg ed b reach

b y SFG, t h e ag reem en t p ro v i d ed t h at

, “ [i ] f SFG s hal l fai l t o cu re an y m at eri al d efau l t

b y SFG u n d er t hi s ag reem en t ” wi t h i n 3 0 d ay s

, Lee Ban k wo u l d h av e, i n ad d i t i o n to

i t s ri gh t s at l aw an d eq u i t y

, a ri g h t to req u i re SFG t o rep u rch as e i t s p art i ci p at i o n

i n t eres t , l es s cert ai n co s t s an d s u b ject t o an y

reg u lat o ry

l i m i t at i on s

.

3Th e ag reem en t al s o l im i t ed SFG’ s l i ab i l i t y fo r an y act i on t ak en wi th res p ect to

t h e l o an o r p art ici pat i o n ag reem en t as fo l l o ws :

1 7

. Li m i t at i o n o n L i a b i l

i t y o f SFG

. SFG s h al l n o t b e l i ab l e fo r an y

act i o n t ak en o r o m i t t e d t o b e t ak en b y i t o r b y an y o f i ts em pl oy ees

,

m em b ers

, o ffi cers

, m an ag ers

, co n t ract o rs o r ag en t s, o r an y o f t h em

, fo r

an y erro rs o f ju d g m en t u n d er, o r i n co nn ect i o n wi th t h i s Ag reem en t, o r

an y o f t h e Lo an Do cu m en t s

, ex cep t i n t h e cas e o f g ro s s n eg l i g en ce o r

wi l l fu l m is co n d u ct

.

Th e reco rd s h o ws t h at t h e b o rro wer i n i t i al l y m ad e r e g u l ar p ay m en t s o n t h e

l o an

, t h at SFG m ad e reg u l ar rem i t t an ces t o Lee Ban k o f i t s 3 .3 6 % s h are of t h o s e l o an

p ay m en t s, an d t h at Lee Ban k accep t ed an d ret ai n ed th o s e rem it t an ces

. Th e b o rro wer,

h o wev er, ev en t u al l y

d efau l t ed o n t h e l o an b y fai l i ng t o m ak e l o an p ay m en t s an d b y

h al t i n g co n s t ru ct i o n o f t h e h o t el

. Sh o rt l y t h ereaft er, t h e l oan gu aran t o rs d ecl ared

b an kru p t cy . In M ay 2 00 9, SFG’ s p aren t co m p an y

, Si l v ert o n Ban k

, was cl os ed an d,

a y ear l at er, th e FDIC was ap p oi n t ed recei v er fo r Si l v ert o n an d SFG. Th e FDIC s o ld

SFG’ s l o an po rt fo l i o

, in cl u d in g SFG’ s i nt eres t i n t h e i n s tan t l o an

, t o an affi l i at e o f

Ven tu re.

Fo l l owi n g it s p u rch as e o f t h e l o an fro m t h e FDIC, Ven t u re as s u m ed SFG’ s ro l e

as l ead l en d er u n der t h e pu rch as e ag reem en t

. V en t u re t o o k co n t ro l o f t h e h o t el an d,

4o v er a t h ree an d a h al f y ear p eri o d

, m ad e rep ai rs t o i t

, p ai d in s u ran ce an d real es t at e

t ax es

, p u rs u ed l eg al a c t i o n ag ai n st t h e b orro wer, an d n eg o t i at ed s et tl em en t s wi th

co n tract ors wh o h ad p laced li en s ag ai n s t th e p ro p ert y . In i t s effo rt s t o s ecu re an d t o

m ai n t ai n t h e v a l u e o f th e h o tel

, V en t u re i n cu rred o v er $ 6 m i l l i o n i n ex p en s es

.

Ven tu re i s s u ed reg ul ar d em an d s t o t h e p art i ci p an t b an k s fo r t h ei r p ro rat a s h ares o f

t h es e ex pen s es

. Fo r ex am pl e, i n 2 0 1 0 an d 2 0 1 1

, it d em an d ed o f L ee Ban k p ay m en t s

o f $ 2 0,2 4 3 .2 7

, $ 9

, 0 7 0

. 2 7 , $ 1 1

, 5 0 4.9 9 , an d $ 3 ,4 2 4

. 2 7.

By l e t t e r dat ed Jan uary 3

, 2 0 1 3

, Lee Ban k in fo rm ed Ven t u re t h at it b el i ev ed

t h at t h e ex pen s es i n cu rred i n co n n ect i o n wi t h t h e l oan were g ro s sl y u n reas o n ab l e. It

co n si d ered Ven tu re t o be i n b reach o f t h e p art i ci p at i o n ag reem en t b y fai l i n g t o n o t i fy

i t o f “ m at eri al ad v ers e i n fo rm at i o n .” L ee Ban k d em an d ed t h at “ Ven t u re ack n o wl ed g e

t h at t h e Part i ci p at i on Ag reem en t [ h a s ] b een t erm i n at ed an d to res t o re [Lee Ban k ’ s ]

co n si d erat io n by rep u rch as in g [i t s ] p art i ci p at i o n i n t eres t [] wi t h i n t h i rt y (3 0 ) d ay s ” o f

t h e d at e o f t h e l et t er. Lee Ban k al s o d em an d ed t h at Ven t ure rem i t to i t i t s p ro -rat a

s h are o f an y p ro ceed s o f t h e s al e o f an y co l l at eral “ w i t ho u t o ffs et o r d i m i n u t i o n .” On

J an u ary 3 1

, 2 01 3

, Ven t u re s u e d L e e B an k fo r b reach i n g i t s ob l i g at io n u n d er t h e

p art i ci p at i o n ag reem en t

. Lee an s wered

, d en y i n g res p on s ib i l i t y fo r t h e ex pen s es

, an d

b ro u gh t co u n t ercl ai m s fo r b reach o f co nt ract an d res ci s si o n

.

5W h i l e th e l aws u i t was pen d in g

, Ven t u re ret ai n ed a co m m erci al real es t at e fi rm

t o s el l t h e re n o v a t ed h o t el

. Ven t u re’ s i n t en ti o n t o s el l t he h o t el w as pu b l i s h ed t o a

web si t e t h at i t h ad creat ed t o k eep p art i ci p an t ban k s i nfo rm ed o f i t s l o an m an ag em en t

act i vi t i es

. Th e real es tat e ag en t p ro cu red s i x o ffers

, t h e h ig h es t o f wh i ch was fo r $ 1 2

m i l l io n

. Th e $ 1 2 m i l l i on o ffer an d t h e as s o ci at ed co n tract d o cu m en t s were s h ared

wi t h th e p art ici p an t b an k s ; n o n e o f t h e b an ks ob ject ed t o t h e s al e p ri ce. Th e h o t el was

s o l d i n Oct o b e r o f 2 0 1 3 ; t hereaft er, Ven tu re di s t ri b u ted $1 4 1 ,1 63 .9 4 t o Lee Ban k.

Acco rd in g t o V en t u r e

, t h i s am o u n t rep res en t ed Lee Ban k ’ s s h are o f t h e p ro ceed s

($ 3 4 7,6 9 5 .6 9 ) l es s t h at p o rt i o n o f ex p en s es d u e V en t u re fro m Lee Ban k

($ 2 0 6,5 3 1 .7 5 ).

In earl y Au g us t 2 0 1 3

, an At l an ta-b as ed co n s u l t i n g fi rm i n s p ect ed t h e p ro p ert y

at t he req u es t of co u ns el fo r Lee Ban k , an d i t ap p rai s ed t h e h o tel i n t h e co n d i t i on i t

h ad b een o n M ay 12

, 2 01 2

, b efo re t h e ren o vat i o n was co m p l et e. Th e fi rm op i n ed t h at

t h e ap p rai s ed v al u e o f t h e h o t el as o f t h at d at e was $ 1 7 .1 m il l io n

.

O n J an u ary 3 1

, 20 1 4

, Ven t u re m o ved fo r s u m m ary ju d g m en t o n Lee B a n k ’s

co u nt ercl ai m s fo r b reach o f co n tract an d fo r res ci s si o n arg u i n g, i n t er al i a, t h at

Parag rap h 1 7 o f t he p art i ci p at i o n ag reem en t l i m i t ed SFG’ s (an d h en ce V e n t u r e’ s )

l i ab i l i t y o n l y t o t h o s e act s o r o m i s s i o n s t h at am o u n t ed t o g ro s s n eg l i g en ce o r wi l lfu l

6m i s co n du ct

. Th e t ri al co urt d en i ed t h e m o ti o n

. In i t s o rd er, t h e co u rt d et erm i n ed t h at

t h e l i m i t at i o n o f l i ab i l i t y p ro v i s i o n i n t h e p art i ci pat i o n ag reem en t w as u n en fo rceab l e

b ecau s e t h e p ro vi si o n was n o t p ro m i nen t l y di s p l ay ed i n t h e ag reem en t

. Ad d it i o n al l y

,

wi t h res pect to Lee Ban k ’ s b reach o f co n t ract cl ai m s

, t h e tri al co u rt ru l ed t h at L ee

Ban k co u l d p u rs ue a b reach o f co n t ract cl a i m b a s e d o n Ven tu re’ s fai l u re to

rep u rch as e Lee Ban k ’ s p art i ci p at i o n i n t eres t

. An d

, wi t h res p ect to L ee Ban k ’ s

res ci ss i o n cl ai m

, t h e tri al co u rt fo u nd t h at q u es ti o n s of fact rem ai n as t o wh et h er Lee

Ban k’ s o ffer t o res t o re t h e co n s i d erat i o n i t recei v ed u nd er t he a g r e e m e n t was

reas on ab l e u n d er t h e ci rcu m s t an ces . It i s fro m t h es e ru l i n g s t h at Ven tu re ap p eal s.

1

. (a) Ven t u re co n t en d s t h at t h e t ri al co u rt erred i n co ncl u d i n g t h at Parag rap h

1 7 of th e p art i ci pat i o n ag reem en t

, a cl au se th at l i m i ted SFG’ s (an d h en ce Ven t u re’ s )

l i ab i l i t y t o act s o r om i s s i o n s t h at am o u nt ed t o g ro s s neg l i g en ce o r wi l l fu l m i sco n d u ct

,

was u n en fo rceab l e becau se i t was no t s u ffi ci en t l y pro m i n en t i n t h e ag reem en t

. Ou r

rev i ew of t hi s cl ai m o f erro r i s d e n o v o

. 1 Fo r t h e fo ll o w i n g reas on s

, t h e l i m i t at i o n o f

1 “ [T] h e co n st ru ct i on o f a co n t ract i s a m at t er of l aw, wh i c h i s s u b ject t o d e

n o v o rev i ew.” (Fo o t n o t es o m i tt ed .) Ri ch a r d Bo wer s & Co

. v. Cl a i r mo n t Pl a ce, LLC

, 3 2 4 Ga. Ap p . 6 7 3 , 6 7 6 (a) (7 51 SE2 d 4 8 1 ) (2 0 1 3 ).

7l i ab i l i t y cl au s e 2 at i s s ue was v al i d an d en fo rceab l e an d th e t ri al co u r t e r r ed in

co n cl u d in g t o t h e co n t rary

.

It i s t h e p aram o u n t pu b l i c p o l icy o f t h i s st at e t h at co u rt s wi l l n o t l i g ht l y

i n t erfere wi th t he freed om o f p art i es t o co nt ract

. A co n t ract i n g p art y m ay

wai v e o r ren o u nce t hat wh i ch t h e l aw h as es t ab l is h ed i n h i s o r her fav o r,

wh en it d o es n o t t hereb y i n ju re o th ers o r affect t h e p ub l i c i n teres t

.

Ex cu l p at o ry cl au s es i n Geo rg i a are v al id an d b i n d i n g

, an d are n o t v o i d

as ag ai n s t p u b l i c p ol i cy wh en a b u s i n e s s rel i ev es i t s el f fro m i t s o wn

n eg l ig en ce.

( C i t at io n o m i t t ed .) Nei

g h b o r h o o d As si s ta n ce Co r p

. of Amer i ca v. Di

xo n

, 2 6 5 Ga

.

Ap p

. 2 5 5

, 2 5 6 (1 ) (5 9 3 SE2 d 7 1 7 ) (2 0 0 4). 3 Gi v en t hi s p aram o u n t pu b li c p o l i cy

,

2 W h et h er t h e cl au s e at i s s u e i s ch aract eri zed as a l im it at i o n -o f-l i ab i l i ty cl au s e

o r an ex cu l p at o ry cl au s e i s im m at eri al b ecau s e “ Geo rg i a cas e l aw d o es n o t ap p ear to

t reat s u ch cl au ses d i fferen tl y fo r p u rp o s es o f rev i ew.” Mo n i t r o n i cs In t ’l

, In c. v.

Vea sl ey

, 3 2 3 Ga. Ap p

. 1 2 6, 1 3 5 (2 ) n

. 2 0 (7 4 6 SE2 d 7 9 3 ) (2 0 1 3 ) (p h y s i cal p reced en t

o n l y as t o Di v i s i o n 2 ).

3 See al s o

, La n i er a t M

cEver v. Pl a n n er

s & En g in eer

s Co l l a b o r a ti ve

, 2 8 4 Ga.

2 0 4 , 2 0 5 (1 ) (6 6 3 SE2 d 2 4 0 ) (2 0 0 8 ) (“ As a g en eral ru l e, a p art y m ay co n t ract away

l i ab i l i t y t o t h e o th er p art y fo r t h e co ns eq u en ces o f h i s o w n n eg li g en ce wi t h o ut

co n trav en i n g p u b li c p o l i cy

, ex cep t wh en s u ch an ag reem en t is p ro h i b i ted b y st at u t e.”)

(ci t at i o n an d p u n ct u at i o n o m i t t e d ); Pi ed mo n t Ar b o r

s Co nd o mi n i u m As sn

. v. BPI

Co n s t r

. Co

. , 1 97 Ga. A p p. 1 4 1

, 1 4 2 (3 97 SE2 d 6 1 1 ) (1 9 9 0 ) (“ A b s en t a pu b l i c p o l i cy

i n t eres t

, co n t ract i n g p art i es are free t o co n t ract to wai v e n u m ero u s an d s u b s t an t i al

ri gh t s, i ncl u d i n g th e ri g h t t o s eek reco u rs e i n th e ev en t o f a breach b y t h e o t h er

p art y .”) (ci t at i o n s an d pu n ct u at i o n o m i t t ed ); co m p are Peck v. Ro l l i n s Pr o t ect i ve

S er vi ces

, In c

., 1 8 9 G a

. A p p

. 3 8 1

, 3 8 3 (2 ) (3 7 5 SE2 d 4 9 4 ) (1 9 8 8 ) (co n t ract cl au s e

8co u rt s “ ex erci s e ex t rem e cau t io n i n d ecl ari n g a co n t ract v o i d as ag ai ns t p u bl i c p o l i cy

,

a n d s h o u l d d o s o on l y wh en t h e cas e i s free fro m d o u b t an d an i n ju ry to th e p u b l i c

i n t eres t cl earl y

ap p ears .” Pi ed

mo n t Ar b o r

s Co n d o mi n iu m As s n . v. B

PI Co n s t r

. Co

. ,

1 9 7 Ga. Ap p . at 1 42

.

In d e t e r m i n i n g wh et h er Parag rap h 1 7 o f th e ag reem en t i s en fo rceab l e u n d er

Geo rg i a l aw, we n o te t h at “ b ecau s e ex cu lp at ory cl au s es m ay am o u n t t o an acco rd an d

s at i s fact i o n o f fu t ure c l a i m s an d wai v e s u b s t an t i al ri gh t s

, t h ey req u i re a m eet i n g o f

t h e m in d s o n t h e s u bject m at t er an d m us t b e ex pl i c i t

, p r o m i nen t

, cl ear an d

u n am b i g u o u s .” (Ci t at i o n an d p u n ct u at i o n om i t ted .) Ho l m es v. Cl ea r Ch a n n el

Ou t do o r

, 2 8 4 Ga. Ap p. 4 74

, 4 7 7 (2 ) (6 44 SE2 d 31 1 ) (2 0 0 7 ). In t h i s cas e, t h e t ri al

co u rt d et erm i n ed th at t he l im i tat i o n o f l i ab i l i t y cl au s e was n o t s uffi ci en t l y p ro m i n en t

,

fo cu s i n g o n t h e fact t h at t he cl au s e w as “ wri t t en i n t h e sam e seri f fo nt [as t h e res t o f

t h e co n t ract ]

, wi t h t h e sam e h ead i n g st y l e, an d th ere are n o bo l d ed or i t al i ci zed wo rd s

wi t h i n [t h e cl au s e.] ”

In d et erm i n i n g wh et h er a l i m i tat i o n o f l i ab i l i t y cl au s e o r an ex cu l p at o ry cl au s e

i s s u ffi ci en t l y pro m i n en t

, co u rt s m ay co n s i der a n u m ber o f fact o rs

, i n cl u d i n g wh et h er

l i m i ti n g li ab i l i t y fo r n eg l i g en t act s d o es n ot s erv e t o l i m i t l i ab i l i t y fo r wi l fu l an d

wan to n co n d u ct ).

9t h e cl au s e i s co nt ai n ed i n a s ep arat e p arag rap h ; w h e t h er t he cl au s e h as a s ep arat e

h ead in g ; an d wh et h er th e cl au se i s d i s t i n g ui s h ed b y feat u res su ch as fo n t s i ze. See,

e.g

., P a r ks i d e Cen t er

. v. Ch ica g o l a n d Ven d i ng

, 2 5 0 Ga. Ap p

. 6 0 7, 61 1 -6 1 2 (2 ) (5 2 2

SE2 d 5 57 ) (2 0 0 1 ) (cl au s e h el d u n en fo rceab le b ecau se i t was co n t ai ned at t h e en d o f

a p arag rap h , wh i ch d i d n o t h av e i t s own h ead i n g

, b ut was o n e o f m an y l is t ed u n d er

t h e h ead i n g “ Mi s cel l an eo u s

, ” an d w as p ri n t ed i n t h e sam e fo n t s i ze as t h e su rro u n d i n g

p ro v is i o n s ); Ima g i n g S

ys

. In t l. v. Ma g net i c Res on a nce P lu s

, 22 7 Ga. Ap p

. 6 4 1

, 6 4 4

-

6 4 5 (1 ) (4 9 0 SE2 d 1 2 4 ) (1 9 9 7 ) (an ex cu l p at o ry cl au s e w a s h e l d en fo rceab l e wh ere

i t w as co n t ai n ed i n i t s o w n p arag rap h

, wi t h t h e cap i t al i zed h ead i n g “ LIM ITATION

OF LIABILITY”).

W h i l e fo n t s ize i s o n e o f m a n y i m po rt an t fact o rs

, i t i s n o t d et erm i n at i v e o f

wh et h er an ex cu l p at o ry o r l im i t at i o n o f l i ab i l i t y cl au s e i s s u ffi ci en t l y pro m i n en t

. Fo r

ex am p l e, i n Gr a ce v. Go l d

en

, 2 0 6 Ga. A p p

. 4 1 6

, 4 1 7

- 4 1 8 ( 1 ) (b ) (4 2 5 SE2 d 3 6 3 )

(1 9 9 2), an ex cu l p at o ry cl au se was p laced aft er t h e l eg al d es cri p t i o n i n a s ecu ri t y d eed

an d was i n t h e s am e t y

p eface as t h e l eg al d es cri p t i on . W e h el d t h at t h e ex cu l p at o ry

cl au s e was n ev ert h el es s p ro m i n en t en o u gh t o b e en fo rceab l e i n l i gh t o f t he fact t h at

t h e d eed was o n l y t wo p ag es lo n g an d t he cl au s e was l o cat ed i n a p l ace wh e r e t h e

p art y s i gn i n g t h e d o cu m en t

, wh o h ad a d u ty t o rev i ew t h e do cu m en t

, wo u ld h av e s een

10i t

. Un d er t h o s e ci rcu m s tan ces

, we co ncl u d ed t h e draft ers o f t h e d o cu m en t h ad n ot

i n t en d ed t o “ cam o u fl a g e ” t h e p ro v i s i o n s o as t o prev en t i t fro m b ei ng d et ect ed at

cl o s i ng . Id

.

In t h i s cas e, t h e l i m i t at i o n o f l i ab il i ty cl au se was co n t ai n ed en t i rel y wi t h i n i t s

o wn p arag rap h

. It was an n o u nced

, i n b o ld fo n t an d u nd erl i n ed t ex t

, b y a h ead i n g t h at

cl earl y i n fo rm ed t h e read er of t h e cl au s e’ s co n t en t : “ Li m i t a ti o n o n Li ab i l

i t y o f SFG .”

Th e cl au s e was t h e s ev en t een t h o f t h i rt y p arag rap h s i n a twel v e pag e d o cu m en t

. Th e

p arag rap h was part o f a co l l ect i o n of l ik e p arag rap h s p e r t a i n i n g t o th e ri g ht s

,

res p o n s i b i l i t ies

, rep res en t at i o n s

, an d warran t i es o f SFG an d t h e p art i ci p at i n g b an k s

.

Th e l im i t at i o n o f l i ab i l i t y cl au s e w as n o t h id d en i n t he m i n u t i ae o f u n rel at ed

p ro v is i o n s

.

M o reo v er, t h e p art ici pat i o n ag reem en t i t sel f rev eal s t h at Lee Ban k h ad h el p ed

d raft t h e ag reem en t an d, th erefo re, sh o ul d h av e b een aware of it s co n ten t s

. Th e p art i es

av erred i n t h e p art i ci p at i on ag reem en t t h at t h e ag reem en t w as “ n eg o t i at e d b y b o th

p art i es w i t h th e rep res en t at i o n an d ad v i ce of th ei r l eg al co u ns el .” A s a co ns eq u en ce,

t h e p art i es ag reed t o wai v e th e ri g h t t o h av e t h e co n t r a c t co n s t ru ed “ ag ai n s t t h e

d raft sm an o f an y p ro vi s i on ” o f t h e ag reem en t

. Ad d i t i o n al l y

, t h e ag r e e m en t was

s i gn ed o n b eh al f o f Lee Ban k b y i ts p res i d en t an d CEO, a p ers on wi t h th ree d ecad es

11o f ex p eri en ce in t he b an k i n g in d u s t ry an d wi t h “ ex t en s i ve ex p eri en ce i n co m m erci al

l en d i n g

, b an k i n g s t an d ard s

, an d b an k i ng o p erat io n s

. ” Th e CEO g av e an affi d av i t

s t at i n g t h at h e was fam i l i ar wi t h l o an p art i ci p at i o n ag reem en t s

, t h at h e u n d ers t o o d

t h ei r ri s k s, an d t h at h e h ad read t h e co n t ract

. He ev en ad m it t ed t h at h e was aware o f

t h e l i m it at i o n o f l i ab i l i t y cl au s e. Th i s co n t ract w a s a co m m erci al co n t ract b et ween

s o p h is t i cat ed b u s i n es s en t i t i es wi t h eq u al barg ai n i n g p o wer, n o t a co ns u m er co n t ract

o r a co n tract o f ad h es i o n. T h u s

, t h e l i m i t at i o n o f l iab i li t y p ro v i s i o n

, wh en v i ewed in

t h i s co n t ex t

, h ad al l t h e h al l m ark s o f “ a reas o n ab l e al l o cat i o n o f ri sk s i n an

arm s -l en g t h b u s i n es s t ran s act i on .” RS N Pr o p er t ies

, In c. v. En g i n eer i n g Co n s u l t i n g

S er vs

. , L t d

. , 3 0 1 Ga. Ap p

. 5 2

, 5 4 -5 5 (6 86 SE2 d 8 5 3) (2 0 0 9) (h ol d i n g t h at a

l i m i tat i on -o f-l i ab i l i t y cl au s e i n a co n t ract fo r p r o f e s si on al en g i neeri n g serv i ces d id

n o t v i o l at e p u b l i c p o l i cy ).

Gi v en t h es e ci rcu m s tan ces

, we h o l d t h at t h e l i m it at i o n o f l i ab i l i t y cl au s e was

s u ffi ci en t l y p ro m i n en t an d t h at Lee Ban k h as n o t d em o n s t r a t ed th at d ecl ari n g t h e

cl au s e u n en fo rceab l e cl earl y serv es t h e pu b l i c i nt eres t

. See, e.g

., RS N Pr o p er t i es

, In c.

v. En g i neer i n g Co n s u l t i ng S er vs

., Lt d

. , 3 0 1 Ga. Ap p. 5 2

, 5 4 -5 5; Ima g i ng S ys

. In t ’l v.

Ma g n et i c Res o n a n ce Pl u s

, 2 2 7 Ga. Ap p

. at 6 4 4-6 4 5 (1 ); Gr a ce v. Go l d e n

, 2 0 6 Ga.

12A p p

. at 4 1 7-4 18 (1 ) (4 2 5 SE2 d 3 6 3 ) (1 99 2 ). Co n s eq u en tl y

, t h e t ri al co u r t e r r e d i n

ru l i n g t h at t h e cl au s e was u nen fo rceab le.

(b ) Lee Ban k arg u es th at

, i n th e ev en t t h i s Co u rt fi n d s t he l i m it at i o n of l i ab i l i t y

cl au s e su ffi ci en tl y p ro m i n en t

, as we h av e d on e, See Di vi s i o n 1 (a) s u p ra, we s h o u ld

n ev ert h el es s affi rm t h e t ri al co u rt ’ s ru l i n g u n d er th e “ ri g h t fo r an y reas o n ” ru l e

b ecau s e t h e l i m i t at i o n of l i ab i l i t y cl au s e i s am b i g u o u s as t o wh et h er i t ap p l i e s t o

b reach o f co n t ract c l ai m s

. Lee Ban k h as fai l ed

, h owev er, to i den t i fy an y s u ch

am bi g ui t y

.

Th e cl au s e ex p res s ly l i m i t ed SFG’ s l i ab il i t y fo r “ an y act i o n t ak en or o m i t t ed

t o b e t ak en

. . . i n co n n ect i o n w i t h t h i s Ag reem en t, o r an y o f t h e L o an Do cu m en t s

,

ex cep t i n t h e cas e o f g ro s s n eg l i g en ce or wi l l fu l m i s co nd u ct [.] ” 4 “ [A] n y act i o n t ak en

o r o m i t t e d t o b e t a k en ” i s b ro ad en o u g h t o i n cl u de co n d u ct wh i ch m ay g i v e ri s e to

ei t h er a t o rt o r t o a b reach o f co n t ract

. See Ima g i n g S ys

. In t l. v. Ma g n et i c R es o n a nce

Pl u s

, 2 2 7 Ga. Ap p

. at 6 44 (1 ) (“ Th e m ean i n g o f ‘ an y ’ i n co n t ex t i s ‘ al l .’ ”). 5 Fu rt h er,

4 If t h e l a n g uag e of a co n t ract i s cl ear an d u n am b i g u o u s

, we en fo rce t h e

co n tract acco rd i n g t o i t s term s. Lo s to cco v. D ’Er a m o

, 2 3 8 G a. Ap p

. 26 9

, 27 5 (d ) (5 1 8

SE2 d 6 9 0) (1 9 9 9).

5 W e n o t e th at t h e l i m i t at i o n o f l i ab i l i t y cl au s e d oes n o t co n t ai n an y “ s el fl i m i ti n g ” l an g uag e; t h at i s

, i t d o es n o t l i m i t i t s ap p li cat i o n t o co n d u ct o r act i on s

p erfo rm ed “ i n acco rd an ce wi t h ” t h e t erm s o f t h e p art i ci p at i o n ag reem en t

, b u t o n l y “ in

13i t i s ax io m at i c t h at “ a s i n g l e act o r co u rs e o f co n d u ct m ay co n s t i t u t e n o t o n l y a b reach

o f co n t ract b u t an i n dep en den t t o rt as wel l [.] ” Or ki n Ext e r m i n a t i n g Co

. v. S t even s

,

1 3 0 Ga. Ap p

. 36 3 , 3 6 5 (2 03 SE2 d 5 8 7 ) (1 9 7 3 ). Th u s , we h o l d t h at t h e l i m i t at i o n o f

lia bility c la use s p eci fi cal l y l i m i t ed SFG’ s (an d h en ce s u cces s o r-i n-i n t eres t Ven t u r e ’ s)

p o t en t i al l i ab i li t y fo r breach es o f t h e ag reem en t t o t h o se b reach es ari s i n g fro m a

s p eci fi c t y

p e of co n d u ct

– gro ss n eg li g e nce o r w i ll fu l m i s co n d u ct

. See Ch emi ca l Ba n k

v. S ecu r i t y Pa ci f i c N a t

. Ba nk

, 2 0 F3 d 3 7 5

, 3 7 8 (9 t h Ci r. Cal

. 1 9 9 4 ) (A cred i t

ag reem en t t h at s peci fi cal l y l i m i t ed t h e ag en t b an k ’ s p o t en t i al li ab il i ty fo r b reach es o f

t h e ag reem en t to “ it s o wn g ro ss n eg l i g en ce o r w i l lfu l m i s co n d u ct ” was en fo rceab l e.);

F i r s t a r Met r o

p o l it a n Ba n k & Tr u s t v. FDIC

, 9 6 4 FSu p p

. 1 35 3

, 1 35 6 -1 3 57 (I ) ( D

.

Ari z. 1 9 9 7 ) (A p art y

t o a co n t ract can s p eci fi cal l y l i m i t i t s l i ab i l i t y u n d er a co n t ract

fo r cl ai m s s o u nd i n g i n b reach o f co n t ract ari s in g fro m i t s “ o wn g ro ss n eg l ig en ce o r

wi l l fu l m i s co n d uct .”); Fed er a t ed Pr o

j ect & Tr a d

e Fi n

. Co r e Fu n d v

. A m e r r a Ag r i

Fu n d, LP

, 2 0 1 4 N.Y. M i s c. LEXIS 15 9 6 (No

. 6 5 19 8 6 / 1 2 N.Y. Su p. Ct

. d eci d ed Ap ri l

.

co n nect io n ” w i t h i t. See U.S

. Ba nk Na t

. A ss n

. v. Bu i l d er s B a n k

, (2 0 1 1 U.S. Di s t

. LEXIS 3 1 5 9 7 ) (No

. 0 8 C5 6 4 8 N.D. Il l

. d eci d ed M arch 2 5, 20 1 1) (W h en a b an k ’ s

u n i l at eral d eci s i o n t o ex t en d a l o an ’ s m at u ri t y d at e an d red u ce t h e in t eres t rat e

v i o l at ed t h e p art ici p at io n ag reem en t , t h e p ro v i s i o n l i m it i ng l i ab i l it y t o act s o f g ro ss

n eg l i g e n c e o r wi l l fu l m i s co n du ct d i d n o t p ro t ect i t fro m a b reach o f co n t ract cl ai m

b ecau s e t h e b an k ’ s act i o n s were n o t “ i n acco rd an ce wi t h ” t h e p art i ci p at i o n ag reem en t

as s p eci fi ed i n t h e l im i t at i o n o f l i ab i l i t y cl au s e.).

144

, 2 0 1 4 ) (Th e d efen d an t was en t i t l ed t o s u m m ary ju d g m en t o n t h e p l ai n ti f f s ’ cau s e

o f act i o n fo r breach o f co n t ract

, g i v en th e ex i s t en ce o f t h e l i m i t at i o n -o f-l i ab i l i t y

cl au s e an d t h e fact th at t h e d efen d an t ’ s co n d u ct d i d n ot am ou n t t o g ro s s n eg l i g en ce

o r wi l fu l m i s co n d uct as a m at t er o f l aw.). T h e cas es ci t ed b y Le e Ban k are

d i s t i n gu i sh ab l e. 6

(c) Lee Ban k al s o arg u es t h at t h e l i m i t at i o n of l iab i l i t y c l au s e co nfl i ct s wi th

o t h er pro vi s i o n s o f t h e ag reem en t defi n i ng wh at ci rcu m st an ces co n s t i t ut e a b reach o f

t h e ag reem en t an d

, b ecau s e t h o s e p ro v i s io n s d o no t referen ce o r s peci fi cal l y

6 Lee Ban k ci t es Dep t

. o

f Tr a n s p

. v. Ar ap a ho Co n s t r

. , 1 8 0 Ga. A p p

. 34 1

, 3 4 3

(1 ) (3 49 SE2 d 1 9 6) (1 9 8 6 ) an d C& S / S o vr a n Co r

p . v. Fi r st Fed . S a v. Ba n k , 2 6 6 Ga.

1 0 4

, 1 05 (1 ) (4 6 3 SE2 d 8 9 2 ) (1 9 9 5 ). In Ar a p a h o

, a co n t ract t erm i n at i o n p ro v i s i o n

(wh ich was rev i ewed as an ex cu l p at o ry cl au se) al l o wed t he Dep art m en t t o t erm i n at e

i t s co n t ract

, wi th o u t p en al t y

, u n d er cert ai n l i s t ed ci rcu m st an ces

. Th e cl au s e, h o wev er,

d i d n o t ex p l i ci t l y m en t io n wh et h er t h e Dep art m en t co ul d t erm i n at e t h e co n t ract wh en

i t was i n b reach o f t he co n tract

. Th e cl ai m at is s u e i n Ar a p a h o di d n ot in v ol v e o n e o f

t h e ci rcu m s t an ces s p eci fi cal l y l i s t e d i n t he t erm i nat i o n p ro v i s i o n; acco rd in g l y

, t h i s

Co u rt co n cl u d ed th at t h e p ro v i si o n co u l d n ot be co n st ru ed as l i m i t i n g t h e

Dep art m en t ’ s l i ab i li t y fo r t h e b reach at i s s u e. See Dep t

. o f Tr a ns p

. v. Ar a p a h o

Co n s t r

. , 1 8 0 Ga. A p p

. at 3 4 3 -3 4 4 (1 ). In C& S /S o vr a n Co r p

. , a t erm i n at i o n p ro v i s i o n

was l i k ewi s e co n s tru ed as an ex cu l pat o ry cl au s e. Th e Co u rt co n cl ud ed t hat

, b ecau s e

t h e t er m i n a t i o n p ro v i s i o n d i d no t m en t i o n wh et h er t he d raft er of t h e co n t ract co u ld

t erm i n at e t h e co n t ract wh en it was i n b reach o f t h e co n t ract

, t h e d raft er wo u l d n o t b e

p erm i t t ed t o i n v ok e t h e pro v i si o n i n o rd er t o av oi d al l l i ab i l i t y

– an d t o av o i d s p eci fi c

p erfo rm an ce, as co n t em

p l at ed el s ewh ere i n t h e ag reem en t

– i n l i g h t o f i ts b reach

. See

C& S / So vr a n Co r

p

. v. Fi r s t F ed

. S a v. Ba n k

, 2 6 6 Ga. at 1 0 6 -1 0 7 (1 ). N ei t h er o f t h es e

cas es i s fact u al l y

an al o g o u s t o t h e i n s t an t cas e.

15i n co rp o rat e t h e l i m i t at i on of l i ab i l i t y

, t h e l i m i t at i o n o f l i ab i l i t y cl au s e s h o u l d b e

s t ri ck en

. W e h av e fo u n d n o G eo rg i a l aw, n o r has Lee Ban k ci t ed t o an y

, t h at req u i res

ev ery co n t ract p ro v i s i o n t h at m ay b e affect ed b y a co n t ract ’ s l i m i t at i o n -o f-l i ab i l i t y

cl au s e o r an ex cu l p at o ry cl au s e t o referen ce t h e cl au s e. M o reo v er, u n der G eo rg i a l aw,

“ [a] co n t ract m

u s t b e co ns t ru ed s o as t o reco n ci l e i t s d i fferen t p ro v is io n s an d t o reject

a co n s t ru ct i o n t h at l ead s t o a co n trad i ct i o n .” (Ci t at i o n om i t t ed .) A nd er s o n v.

An d er s o n , 2 7 4 Ga. 2 2 4, 2 28 (3 ) (5 5 2 SE2 d 8 0 1 ) (2 0 0 1).

In t h i s cas e, al th o u g h cert ai n cl au s es o f t h e p art i c i p at i on ag reem en t s et fo rt h

ci rcu m s t an ces wh i ch wo u ld co n s ti t u t e a b reach o f t he p art i ci p at i o n ag reem en t

, t h ey

m u st b e read i n co n

ju n ct io n w i t h t h e l i m i t at io n o f l i ab i l i t y cl au se. W h en read in

co n j u n ct i o n w i t h th e l i m i t at i on -o f-l i ab i l i t y cl au s e, i t i s ap p aren t t h at a b reach o f t h e

p art i ci p at i o n a g reem en t d o es n o t res u l t i n l i ab i l i t y – t h at i s

, it i s n o t a co mp en s a b l e

b reach

– u n l es s i t i s t h e res u l t o f co n d u ct t h at co n st i tu t es gro s s n eg l i g en ce o r wi l lfu l

m i s co n du ct

. L e e B a n k h as no t d em o n s trat ed an y al tern at e b as i s fo r h o l d i n g t h e

l i m i tat i on o f l i ab il i ty

cl au s e u nen fo rceab l e.

2

. (a) Gi ven o u r ho l d i n g t h at t h e l i m i t at i o n o f l i ab il i t y cl au se i s en fo rceab l e, s ee

Di v is i o n 1

, s u p ra, wh et h er Lee Ban k ’ s co u n t ercl ai m s fo r b reach o f c o n t r a c t an d

16res ci ss i o n 7 m ay p ro ceed t o a ju ry d ep en d o n wh et h er t he ev i d en ce i s s u f f i c i en t to

creat e a ju ry q u es t i o n as t o wh et h er Ven t u re’ s co n d u ct (wh i ch fo rm s t h e b as i s o f t h e

al l eg ed m at eri al d efau l t s o r b reach es o f co n t ract ) ri s es t o t h e l ev el o f wi l l f u l

m i s co n du ct or g r o s s n eg li g en ce u n d er t h e ci rcu m s t an ces p res en t ed h ere. Fo r t h e

fo l l o wi n g r e as o n s

, we v acat e t h e co u rt ’ s o rd er d en y in g Ven t u re’ s m o t i o n fo r

s u m m ary ju d g m en t o n Lee Ban k’ s c ou n t ercl ai m s fo r b reach o f co n t ract an d res ci s s i o n

an d rem an d wi t h d i rect i o n

.

“ Gro s s n eg li g en ce i s d efi n ed as t h e fai lu re t o ex erci s e t h at d eg ree o f care t h at

ev ery m an o f co m

m o n s en s e, h o w ev er i n at t en t i v e h e m ay b e, ex erci ses u n d er t h e

s am e o r si m i lar ci rcu m s t an ces ; o r l ack of t h e d i l i g en ce t h a t ev en carel es s m en are

accu s t o m ed t o ex erci s e.

. . . W i l fu l m i s co n d u ct i s b as ed o n an act u al i n ten t i o n t o d o

h arm o r i n fl i ct i n

ju ry .” (Ci t at i o n s

, fo o t n o t e, an d p un ct u at i o n o m i t t ed .) Cu r r i d v.

DeKa l b S t a t e Co u r t Pr o b a t i o n Dep t

. , 2 7 4 Ga. Ap p

. 7 0 4, 7 0 7 (2 ) (6 1 8 SE2 d 6 2 1 )

(2 0 0 5). See al s o O CGA § 5 1 -1 -4 (d efi n i n g “ s l i g ht dilige nc e ” a nd “ gr o ss n eg l i g en ce”).

“ In o t h er wo rd s

, gro ss n eg li g en ce h a s b e e n d efi n ed as eq u i v al en t t o t h e fai l u re to

7 Lee Ban k av erred t h at Ven t u re h ad b reach ed “ Sect io n s 4

, 7

, 9

, 1 0, 1 5

, an d 2 6 ”

o f t h e p art i ci p at i on ag reem en t

. It al s o av err e d t h at i t h ad t h e ri g h t t o res ci n d t h e

p art i ci p at i o n ag reem en t “ [a] s a res u l t o f Ven t u re’ s breach es ” o f “ Sect i o ns 4

, 7

, 9

, 1 0,

1 5

, an d 2 6 ” o f t h e p art ici p at i o n ag reem en t an d t h at Ven t u re sh o ul d be o rd ered t o p ay

i t $5 0 0 ,0 0 0 p l u s i n teres t , at t orn ey s ’ fees , an d ex p en s es

.

17ex erci s e ev en a sl i g ht d eg ree o f care.” (Ci tat i o n an d p u n ct u at i o n o m i tt ed .) Hea rd v.

Ci t y of Vi l l a Ri ca

, 3 0 6 Ga. Ap p

. 2 9 1

, 29 4 (1 ) (7 0 1 SE2 d 9 1 5 ) (2 0 10 ). “ Q u es t i o n s o f

n eg li g en ce an d d i l i g en ce, ev en o f g ro ss n eg l i g en ce an d s l i g ht d i l i g en ce, u s u al l y are

m at t ers t o b e d et erm i n ed b y t h e ju ry

, b u t i n p l ai n an d i n d i s pu t ab le cas es t h e co u rt m ay

s o l v e t h e q ues ti o n as a m at t er o f l aw.” (Ci t at i o n an d p u n ct u at i o n o m i t t ed .) Id

. at 2 9 5

(1 ). See al s o M

o r g a n v. Ho rt o n

, 3 0 8 Ga. Ap p

. 1 92

, 1 9 8 (3 ) ( 7 0 7 SE2 d 1 4 4 ) (2 0 1 1 )

(acco rd ).

Lee Ban k av erred t h at Ven t u re was i n b reach o f th e p a r t ici p at io n ag reem en t

b as ed u p o n t he fo l l o wi n g: (1 ) Ven t ure fai l ed t o n o ti fy Lee Ban k of m at eri al l y ad v ers e

ch an ges t o t h e l o an an d t h e ho t el ; (2 ) fai l ed t o co n s u l t w it h Lee Ban k co n cern i n g t h e

m an ag em en t an d d i s p o s i t i o n o f t h e ho t el ; (3 ) fai l ed t o d i s b urs e cert ai n fu n d s t o Lee

Ban k; an d (4 ) fai l ed t o m an ag e, rep ai r, an d s el l t h e h o t el i n a co m m erci al ly reas o n ab l e

m an n er.

Sp eci fi cal l y

, wi t h res p ect t o Ven t u re’ s m an ag em en t d eci s i o n s, L e e Ban k

o b ject s t o Ven t u re’ s d eci s i o n t o i n cu r i n ex ces s of $ 6 m i l l i o n d o l l ars i n ex pen s es o n

a $ 15 m i l l i o n do l l ar l o an

, i t s d e c i s i o n to s et tl e w i t h a ti tl e i ns u ran ce co m p an y

, i t s

fai l u re to o b t ai n an ap p rai sal of t h e h o t el befo re s el l i n g it

, an d i t s d eci s i o n t o s el l t h e

h o t el fo r l es s t h an w h at Le e B a n k co n ten d ed was i t s fai r m ark et v al u e. Lee Ban k

18av erred t h at th es e act s

, u nd er t h e ci rcu m s t an ces

, co ns t i t u t ed “ g ro s s n eg li g en ce an d / o r

wi l l fu l m i s co n d u ct

. ”

Gi v en i t s ru l i n g t hat t he l i m i t at io n -o f-l i ab i l i t y cl au se was un en fo rceab l e, t h e

t ri al co u rt d i d n o t ad d res s wh et h er t h e ev i d en ce ad d u ced p res en ted a ju ry q ues t i o n as

t o wh et h er Ven t u re’ s co nd u ct co u ld b e co n s i d ered wi l l fu l m i s co nd u ct o r g ro ss

n eg li g en ce. A n d

, b ecau s e t he reco rd o n t h i s i s s u e h as y et to b e fu l ly d ev el o p e d

, as

ex p lai n ed i n Di vi si o n 2 (b ) b el o w, we rem an d t h e cas e t o t h e t ri al co u rt t o co n s i d er

wh et h er s u ch a ju ry

q u es ti o n ex i s ts

.

(b ) Lee Ban k arg u es t hat

, al t h o u g h Ven t u re’ s d eci s io n s m ay h av e b een

co m m erci al l y reas o nab l e fo r Ven t u re i n l i gh t o f t h e fact it p u rch as ed SFG’ s i n t eres t

i n t h e l oan at a c o n s i d e r a b l e d i s co u n t

, i t s d eci s i on s wi t h res p ect t o th e p art i ci p an t

b an ks were g ro s s ly

u n reas o n ab l e an d t an t am o u n t t o wi l l fu l m i s co nd u ct :

Had Ven t u re t reat e d t h i s Lo an as o n e m ad e fro m i t s o wn m o n ey

,

Ven t u re wo u l d h av e so u g h t t o m ax im i ze i t s ret u rn b y s el l i n g th e

Pro p ert y at o r near i t s m ark et v al u e. Ho wev er, bec a u s e V en t u re’ s

i n v es t m en t was d i s co u n t ed

, Ven t ure co u l d s el l t h e co ll at eral fo r $ 5 .1

m i l l i o n b el o w m ark et v al ue an d s ti l l m ak e a p ro fi t

, w h ereas th e

p art i ci pan t s s u ffered h u g e l o ss es

.

19Le e B a n k m o v ed t h e co u rt fo r an o rd er co m p el li n g Ven tu re t o p ro d uce

fi nan ci al d o cu m en t s wh ich wo u l d rev eal Ven t u re’ s m o t i v at i o n s fo r b u y i ng t h e l o an

fro m t h e FDIC, i t s d i s co u n t on t h e l o an

, i t s rat io n al e fo r m a k i n g o v er $ 6 m i l l i o n in

rep ai rs t o t h e h o t el

, an d th e reas o n i n g b eh in d s el li n g t h e p ro p ert y at au ct io n fo r $ 1 2

m i l l io n

. Gi v en i t s ru l i n g on t he l i m i t at i o n o f l i ab i l i t y cl au s e, t he co u r t d e n i ed t h e

m o ti o n t o co m

p el

, s t at i n g th at wh et h er Ven t ure was m o t i vat ed t o m ak e a q u i ck ret u rn

at Lee Ban k ’ s ex p en s e was i rrel ev an t

. H o wev er, gi v en o u r r u l i ng i n D i vi s i o n 1,

wh et h er Ven t u re was m o t i v at ed t o m ak e a q u i ck pro f i t a t t h e ex p en s e o f t h e

p art i ci p an t b an k s i s rel ev an t

. In d eed

, i t i s t h e cru x o f t h e m at t er. An u n ders t an d i n g o f

V e n t u re’ s i n ves t m en t p o si t i on i n t he l o an al l o ws t h e fact fi n d er to i n fer wh e t h e r

Ven tu re was m ak i n g d eci s i o n s t o m ax i m i ze i t s o wn p ro fi t at t h e ex pen s e o f t h e

p art i ci p at i n g b an k s o r wh et h er i t was ex erci s i n g t hat s am e d eg re e o f c a r e in

ad m i n is t eri n g th e l o an t h at SFG (an d h en ce Ven t u re) was req u i red b y t h e ag reem en t

t o ex erci s e, t h at i s

, th e d eg ree o f care th at i t wo u l d u s e i n ad m i n i s teri n g s i m i l ar l o an s

fo r i t s o wn acco u n t

. A co m p let e u n d ers tan d i n g o f wh at Ven tu re h ad t o g ai n o r l o s e

as a res u l t o f it s m an a g e m e n t d eci s io n s co n cern i n g t h e ho t el i s rel ev an t t o a

c o n s i d erat i o n o f wh et h er Ven t u re’ s act i o n s, v is à v is t he p art i ci p an t b an k s

, were

co m m erci al l y reas o n ab l e o r g r o s s ly n eg l ig en t

. Co n s eq u en tl y

, we al s o v acat e t h at

20p o rt i on o f t h e co urt ’ s o rd er den y i n g Lee Ban k ’ s m o t i o n t o co m pel an d d i rect t h e co u rt

t o reco n s i d er t h e m o t i on i n l i g h t o f t h i s o p i n io n

.

3

. Ven tu re arg u es th at i t was al s o en ti t led t o s u m m ary ju d g m en t o n Lee Ban k ’ s

res ci ss i o n an d breach o f co n t ract cl ai m s o n al t ern at e b as es

. Fo r th e fo l l o wi n g reas o n s

,

we fi n d t h es e arg u m en t s wi t h o ut m eri t

.

(a) Res ci s s i o n

. Ven t u re arg u es t h at Lee Ban k fai l ed t o ret u rn t h e p ay m en t s i t

recei v ed u n d er t h e a g r eem en t ; t h erefo re, i t arg ues

, Lee Ban k ’ s cl ai m fo r res ci s s i o n

m u st fai l. Th e reco rd s ho ws

, h o wev er, t h at Lee Ban k o f f e r e d t o res t o re t h e

co n si d erat io n i t recei v ed i n i t s i n i t i al an s wer an d co u n t ercl ai m s an d rep eat ed t h e o ffer

i n i ts am en d ed pl ead i n g s. It al s o m ad e th e o ffer d u ri n g o ral arg u m en t o n i t s m o t i o n

fo r s u m m ary ju d g m en t

.

A co n tract m ay b e res c inde d f or substa ntia l nonpe r fo rm an ce or m at eri al b reach

.

Cu t cl i f f e v. Ch es n u t

, 1 22 Ga. Ap p

. 1 9 5

, 2 0 1 (2 ) (1 7 6 SE2 d 6 0 7 ) (1 97 0 ). OCGA § 1 3

-

4 -6 2 p ro v i d es t h at “ [a] p art y m ay res c i n d a c o n tract wi t h o u t th e co n s en t o f t h e

o p p o s i t e p art y o n t h e g ro u n d o f n o n p erfo rm an ce b y t h at p art y b u t o n ly wh en b o th

p art i es can b e res t o red t o t h e co n d it i o n i n w h i ch t h ey were b efo re th e co nt r a c t was

m ad e.” Th i s m ean s t h a t “ [ t ] h e p art i es m u s t b e ret u rn ed as n earl y as po s si bl e t o t h e

s t at u s q u o an t e.” (Ci t at i o n s o m i t t ed .) S o u t h er n Pr es ti

g e Ho mes v. Mo s co s o

, 2 4 3 Ga.

21Ap p

. 4 1 2

, 4 1 7 ( 4 ) ( 5 3 2 SE2 d 12 2 ) (2 0 0 0 ). It do es n o t m ean

, h o w ev er, t hat t h e l aw

req u i res i n al l ci rcu m s t an ces t h at t h e res ci n d i n g p art y ret u rn t h e co n s i d erat i o n

recei v ed u n d er t h e co n t ract as a c o n d i t i o n p reced en t t o p u rs u i n g a cl ai m fo r

res ci ss i o n . Th e fai l u re t o o ffer res t orat i o n

d o e s n o t d efeat [a] res ci s s i o n cl ai m as a m at ter o f l aw. Th ere are

ci rcu m s t an ces u nd er w h ich a p art y n eed n o t o ffer res t o rat i o n i n o rd er t o

res ci n d a co n t ract

, s u ch as wh ere n ot h i n g o f an y v al u e i s recei v ed b y th e

p art y s eek i n g t o res ci n d; an d w h e re t h e am ou n t recei v ed u n d er th e

co n t ract s ou g h t to b e res ci n d ed m ay b e l es s t h an t h e am o u n t act u al l y d ue

t h e p art y seek i n g t o res ci n d

. Mo reo v er, th e ru l e t h at h e wh o d e s i r e s t o

res ci n d a co n t ract m

u s t res t o re wh at ev er h e h as recei v ed u n d er i t i s o ne

o f ju s t i ce an d eq u i t y an d m u s t b e reas o n ab l y co n s t ru ed an d ap p l i ed

. T he

o b ject o f t h e ru l e i s th eo ret i cal l y t o p l ace th e p art i es in s tat u q u o ; b u t th e

ru l e i s eq u i tab l e, n o t t ech n i cal

, an d d oes n o t req ui re m o re t han t h at s u ch

res t o rat i o n b e m ad e as i s reas o n ab ly p o s s i b l e an d s u ch as t he m eri t s o f

t h e cas e d em an d.

(Ci t at i o n s an d p un ct u at i o n o m i t t ed .) Ra d i o Per ry, In c. v. Co x Co m m u n ica t io n s

., In c

.,

3 2 3 Ga. Ap p

. 6 0 4

, 6 0 9 (1 ) (b ) (7 4 6 SE2 d 6 7 0 ) (2 01 3 ). See al so S mi t h v. McW

h o r t er

,

1 7 3 Ga. 2 5 5

, 2 7 3 (1 6 0 SE 2 5 0 ) (1 9 3 1 ) (“ On e res ci n d i n g [a] co n t ract i s no t req u i red

t o ret u rn co n s i d erat i o n

, w h en t o d o s o wo ul d b e u n reas o nab le o r i m p o s s i b l e.”)

(ci t at i o n s an d p un ct u at i on o m i t t ed ); Remed i a t i on S er vi ces

, In c. v. Geo r

gi a -Pa ci f i c

22Co r

p

., 2 09 Ga. Ap p

. 4 2 7

, 43 3 (1 ) (4 3 3 SE2 d 6 3 1 ) (1 9 9 3 ) (“ No ten d er i s req u i red

wh ere t h e p a r t y s eek i n g t o res ci n d h as recei v ed n ot h i n g o f v al u e, o r wh ere an y

am ou n t recei v ed u nd er th e c o n t r a c t m ay b e l es s t h an t h e am o un t d u e t o th e p art y

s eek i n g t o res ci nd .”) (ci t at i o n s o m i t ted ).

In t h i s cas e, t h e ev i den ce s h o w s t h at Lee Ban k , i n ex ch an g e fo r p u rch as i n g a

$ 5 0 0 ,0 0 0 p art i ci p at i o n i n t eres t fro m SFG, recei v ed i ts 3

. 3 6% s h are o f t h e l o an

p ay m en t s fo r ab o ut a y ear b efo re t h e b o rro wer d efau l ted

. As a res u l t o f t h e d efau l t

,

t h e b a n k h a d t o ch arg e o ff $ 2 0 0 ,0 0 0 o f t h e lo an as a l o s s. Th e b an k was al s o l at er

a s s e s s ed $ 2 4 7 ,0 00 i n ex p en s es as s o ci at ed wi t h Ven t u re’ s s erv i ci n g o f t h e l o a n a n d

m an ag em en t o f th e co ll at eral

. Acco rd i n g t o Ven t ure, i t rem i t t ed $1 4 1 ,1 63 .9 4 t o Lee

Ban k. Th i s am o u nt rep res en t ed Lee Ban k ’ s s h are o f th e pro c e e d s o f t h e s al e o f t h e

h o t el ($ 3 4 7 ,6 9 5 .6 9 ) l es s t hat p o rt io n o f ex p en ses d u e V e n t u re fro m Lee Ban k

($ 2 0 6,5 3 1 .7 5 ). T h u s

, wh il e Lee Ban k re c e i ved “ b en efi t s ” u n der t h e co n t ract

, t h o s e

b en efi t s o n l y m arg i n al l y o ffs et i t s l o s s es

. Ven t u r e

, o n t h e o t h er h an d

, ret ai n ed t h e

b en efi t o f Lee Ban k ’ s p art i ci pat i o n i n t eres t (wh ich i t o b t ai n ed b y p u rch as i n g t h e l o an

at a d i s co u n t ); m o reo v er, i t h as r e c o v e r e d fro m Lee Ban k t h e s erv i ci n g ex p en s es

o w ed it u n d er t h e p art i ci p at i o n ag reem en t b y d ed uct i n g t h em fro m th e s al e o f t h e

h o t el

. Un d er th es e ci rcu m s t an ces

, req u i ri n g L ee Ban k t o rem it a ch eck t o V en t u re fo r

23t h e fu n d s i t h ad recei v ed p u rs u an t t o t h e p art i ci p at i o n ag reem en t p ri o r t o res ci n d i n g

t h e co n t ract wo u l d n o t res t o re t h e “ st at u s q u o ” b et ween th e p art i es t o t h e ag reem en t

– i n fact

, Ven t u re was nev er a p art o f t h e o ri g i n al s t at u s q u o

. Arg u ab l y

, i t wo u l d p ut

Ven tu re i n a s u p eri o r p o s i t i o n

. Un d er s u ch ci rcu m s t an ces

, we can n o t s ay t hat t h e t ri al

co u rt erred i n fi n d i n g t h at a ju ry q u es t i o n rem ai ned co n cern i n g wh et her Lee Ban k ’ s

o ffer t o res t o re t o V en t u re an y ben efi t s t hat i t m ay h av e recei v ed u n d er t h e ag reem en t

was reas o n ab l e. See In tl. Softw a r e S o l u t io n s

, In c. v. At l a n t a Pr es s ur e Tr ea t ed Lu mb er

Co

. , 19 4 G a. Ap p

. 4 4 1 (3 9 0 SE2 d 6 5 9 ) (1 9 9 0 ) (“ Res t o rat i o n d o es no t req ui re t h at t h e

o p p o s i t e p art y b e p l aced i n ex act s t at u s q u o

, b ut o n l y t hat h e b e p l aced su b s t an t i al l y

i n h is o ri g i nal p o si t i o n

, an d t h at t h e res ci n d i n g p art y s h al l deri v e n o u n co n sci o n ab l e

ad v an t ag e fro m t he res ci s si o n. W e are s at i s fi ed th e reco rd befo re u s s h ows t h at

ap p el l ees ’ i n -co u rt o ffer o f res t o r a t i o n o f ap p el l an t ’ s [p ro p ert y ] m et t h es e t es t s .”)

(ci t at i o n an d em

p has is o m i t t ed .)

(b ) Br ea ch o

f Co nt r act

. Ven t u re arg u es t h at Lee Ban k ’ s b reach o f c o n t ract

cl ai m s fai l s b ecau s e (i ) Lee Ban k fai l ed t o p ro v e “ act ual d am ag es ” an d (i i ) b ecau s e

Sect i o n 1 0 o f t he p art i ci p at i on ag reem en t

, wh ich req u i res Ven t ure to rep urch as e Lee

Ban k’ s i n teres t i n t h e l o an i n t h e ev en t o f a m at eri al d efau lt

, co n s t i t u t es an

u n en fo rceab l e l i q u i d at ed d am a g es p ro v i si o n

. W e fi n d n o m eri t t o t h es e arg u m en t s

.

24Lee Ban k h as as sert ed t h at i t s act u al d am ag es are $5 0 0 ,0 0 0

– t h e am o u n t o f i t s

p art i ci p at i o n i n t eres t

– p l u s i n t eres t

, ex p en s es

, an d at t o rn ey fees

. Lee Ban k as s ert s a

r i g h t t o t h i s am o u n t by v irt u e o f Sect i o n 1 0 o f t h e o f t h e p art i ci p at i o n ag reem en t

,

wh i ch req u i red Ven t u re t o rep urch as e L ee Ban k ’ s part i ci pat i o n in t eres t in t h e ev en t

o f an u n cu red m at eri al d efau l t u n d er t h e ag ree m e n t

. W h il e th i s am o u n t m ay b e

“ l i q u i d at ed ” i n th e s en s e t h at i t i s es t ab l is h ed b o t h by t h e am o u n t o f L ee Ban k ’ s

i n t eres t i n t h e l o an an d b y th e ter m s o f t he ri g h t -t o -rep u rch as e cl au s e, th i s ri g h t -t o

rep u rch as e cl au s e is no t a l i q u i d a t e d d a m ag es p ro v is i on u n d er Geo rg i a l aw. A

l i qu i dat ed dam ag es p ro v i si o n i s an ag reem en t b et ween t h e p art i es to l i m i t reco v ery

fo r a b reach o f t h e co n tra c t t o a s p eci fi ed am o un t

. 8 Sect i o n 1 0 o f t h e ag reem en t

,

h o wev er, d o es n o t s o l i m it t h e a m o u n t of d am ag es reco v erab l e fo r a b reach o f t h e

ag reem e n t

. R a t h er, b y i t s p l ai n l an g u ag e, it g iv es Lee Ban k t h e “ o pt i o n ,” n o t t h e

o b l i g at i o n or t h e s o l e rem ed y

, t o d em an d t h at Ven t u re rep u rch as e i t s i n t eres t i n t h e

ev en t o f an u n cu red m at eri al d efau l t

. Th is o p t i o n is ex pres s l y “ i n ad d i t io n to al l o t h er

rem ed ies av ai l ab l e t o i t at l aw o r i n eq u i t y .”

8 OCGA § 1 3-6 -7 p ro v id es : “ If t h e p art i es ag ree i n t hei r co n t ract wh a t t h e

d am ag es fo r a b reach sh al l b e, t h ey are s ai d t o b e l iq u i d at ed an d

, u n l es s t h e ag reem en t

v i o l at es s o m e p ri nci p l e o f l aw, t h e p art ies are b o un d t hereb y .”

25Ven t u re arg u ed bel o w t h at Sect i o n 1 0 o f t h e ag reem e nt p ro v i d es t he p art i ci p an t

b an k wi t h an o p ti o n t o s eek a rem ed y t h at i s in t he n at u re o f a sp eci fi c p erfo rm an ce. 9

An d Lee Ban k arg ued t h at it had ex erci s ed t h at o pt i o n

, an d t hat Ven t u re was in

m at eri al d efau l t o f t h e ag reem en t wh en i t di d n o t rep u rch as e. Bas ed u p on t h o s e

al l eg at i o n s

, Lee Ban k av erred i n i t s co u n t ercl ai m t h at V en t u re h ad b reach ed i t s

o b l i g at i o n t o rep u rch as e.

Ul t i m at el y

, u n der t hes e ci rcu m s t an ces

, we co ncl u d e t h at i t d o es no t m at t er h o w

we ch aract eri ze th e rep u rch as e cl au s e. In th i s cas e, we h ol d th at t he fai l u re t o t i m el y

rep u rch as e t h e p art ici p at i o n in t eres t u p o n p ro of o f a m at eri al d e f a u l t co n s t i t u t es an

i n d ep en den t b reach o f th e p art ici p at io n ag reem en t t hat

, i f pro v en

, wo ul d en t i t l e Lee

Ban k t o p u rs u e m o n ey d am ag es fo r t h e al l eg ed fai l u re t o rep urch as e. 1 0 See S u n Am.

9 Sp eci fi c p erfo rm an ce i s g en eral l y av a i l a b l e “ wh en ev er t h e d am ag es

reco v erab l e at l a w wo u l d n o t b e an ad eq uat e co m pen s at i o n fo r n o n p erfo rm an ce.”

OCGA § 2 3 -2 -1 3 0

.

1 0 Geo rg i a’ s ap pel l at e co u rt s h av e n ev er d irect l y d et erm i n ed w h e t h e r a

rep u rch as e cl au se i n a l o an p art i ci p at i o n ag reem en t am o u n ts t o s p eci fi c p erfo rm an ce

o r i s i n t h e n at u re o f l i qu i d at ed d am ag es p ro v i s i o n. Rat h er, t h i s Co u rt has en fo rced

rep u rch as e cl au ses s i m i l ar to th e cl au s e at is su e i n t h i s cas e, treat i n g t h e fai l u r e to

rep u rch as e as a b reach o f co n t ract i n it s o w n ri g h t

. In Cl evel a n d Mo t o r Ca r s

, In c. v.

B a n k o f Amer i ca

, 2 95 Ga. Ap p

. 10 0 (6 70 SE2 d 8 92 ) (2 0 0 8 ), a b an k b ro u g h t s u i t

ag ai n s t a car d eal er fo r fai l in g t o rep u rch as e l o an s i t h ad so l d t o t h e b an k

. In t h e s al e

ag reem en t

, t h e d eal er “ ex p res s l y p ro m i s ed t o rep u rch as e t h e l o an i f a b uy er’ s i d en t i t y

was frau d u l en t .” Id

. at 10 2

. W e affi rm ed t h e gran t o f s u m m ary ju d g m en t t o t h e b an k,

26Ba n k v. Fa i r f i el d Fi n a n ci a l S

vcs

. , 69 0 FSu pp 2 d 1 3 4 2, 1 3 6 8 (M .D. G a. 2 0 1 0 )

(“ [W ] h et h er [t h e] rep urch as e [cl au s e] i s co n s t ru ed as li q u id at ed d am ag es o r s p eci fi c

p erfo rm an ce, i t is a reas o n a b le rem ed y fo r a s eri o u s b reach wi t h co n s eq u en ces t h at

can n ot b e m eas u r e d

. ” ) ; ORIX Rea l Es t a t e Ca p i t a l Ma rket

s

, LLC v. S

u p er i or Ba nk,

FS B, 1 2 7 F. Su p p. 2d 9 81

, 9 8 3 (II) (A) (N.D. I l l

. 2 0 0 0 ) (“ T he p ay m en t o f t h e

l i qu i dat i o n p ri ce of a l o an i s p ay m en t o f an am o u n t o f m o ney

, wh i c h i s c o m p l et el y

fu n g ib l e

. . . Th ere i s [t h us ] n o pract i cal d i fferen ce b et w een t h is ‘ rep u rch as e’ rem ed y

an d co m p en s at o ry d am ag es .”).

Ju d g men t r ever

s ed i n p a r t

, va ca t ed i n p ar t

, a n d r ema n d

ed w i t h d i r ect i o n.

Di l l a r d a n d McFa d d en

, JJ., co n cu r

.

fi nd i ng t h at t h e d eal er h ad b reach ed t h e co n t ract b y fai l i n g t o rep u rch as e. In an earl i er

cas e, Ro d ’s Au t o Fi n a n ce, In c. v. Fi n a n c e C o

. , 2 11 Ga. Ap p. 6 3 (4 3 8 SE2 d 1 7 5 )

(1 9 9 3), a fi n an ce co m

p an y p u rch as ed au t o l o an s fro m two car d eal ers

, u n d er an

ag reem en t t h at req u ired th e d eal ers t o rep urch as e t h e l o a n s i f t h e deb t o r d i d n ot

p ro m p t ly co m m en ce m ak i n g ti m el y p ay m en t s

. W e rem an d ed t h e cas e t o th e t ri al co u rt

wi t h i n s t ru ct i o n s t o d et erm i n e wh et h er t h ere rem ai n ed a g en u in e i s s u e o f m at eri al fact

co n cern in g wh et h er an y d eb t o r fai l ed to m ak e a ti m el y fi rs t p ay m en t

. In t he ab s en ce

o f a fact i s s u e, t h e fi n an ce co m p an y wo u ld b e “ en t it l ed to s u m m ary ju d g m en t o n i t s

cl ai m t h at t h e s el l er o f t h at acco u n t m u s t rep u rch as e i t .” Id

. at 6 4 (2 ). In b o t h cas es

,

we h el d t h at a rep u rch as e was req u i red u po n b reach o f cert ai n t erm s of t he ag reem en t

. Th erefo re, t h e s u b s eq u en t fai l u re t o rep u rch as e u p o n n o ti ce o f th e b reach was i t s el f

fo u n d t o b e a b reach

.

27