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Jul y 17, 2024



# In t he C ourt o f A ppe a ls o f G e o r g ia

A 24A 0 6 1 8. B E OUR GUEST IN V ESTM EN TS, LLC v. PI ED MON T PA RK CON SERV A N CY, I N C.
M E R C I E R , Chief

J ud ge. B e Ou r Gu est I nv estments, LLC (“ B OG” ) a p p eals f r o m the t r ial c ou rt’ s o rd er granting p a rtial su mmary j u d g m en t to Pied mo nt Park Co nserv anc y, I nc . (“ the
Co nserv a nc y” ) in t his c ontrac t d isp u te. Fo r reaso ns that f o llo w , we v ac ate the grant

o f p artial su mmary j u d gment and remand f o r f u rther p ro c eed ings.
Su mmary j u d gment is ap p ro p r iate w hen no genu ine issu es o f mat e r i al f a ct remain and the mo v ing party is entitled t o ju d gment a s a matter o f law

. See Jo hn s o n C o u n ty S cho o l D is t. v . Grea ter S a v a n n ah La wn C a re , 27 8 Ga. A p p . 1 1 0, 1 11 (6 29 SE2d
27 1 ) ( 2 0 0 6 ). W e rev iew t he grant o f su mmary j u d gment d e no v o , c o nstru ing theev id enc e and all reaso nable inf erenc es d raw n f

ro m it in the light mo st f

av o rable to the

no n- m o ving p arty. See id

. So v iew ed , t he ev id enc e s ho w s that at t he time o f this d isp u te, the Co nserv anc y

o w ned the Pied mo nt Park Co m mu nity Center, a bu ild ing at the entranc e t o Pied mo nt Park that ho u sed the Co nserv anc y’ s env iro nmental ed u c atio n c amp and sev eral

restau rants. Thro u gh a n entity k no w n as G&M A c qu isitio n Gro u p , LLC (“ GM A ” ),
K atherine D ro lett and D av id D u ley, v ia ind iv id u al limited liabil i t y c o rp o ratio ns,

o w ned The N o o k , a p o pu lar and su c c essf u l restau rant that had been in o peratio n sinc e
2008. 1 The N o o k w as lo c a ted ac ro ss the s treet f ro m Pied m o nt Park , ap pro ximat ely

tw o blo c k s f

ro m the Co mmu nity Center.
W hen tw o Co mmu nity Center restau rant sp ac es bec ame av ailable in 201 4, the
Co nserv a nc y ask ed The N o o k ’ s management team to su bmit a lease p ro p o sal f o r the
sp ac es. The t eam p rep ared a p ro p o sal and w as o ne o f the f inal f o u r cand id ates, bu t the
Co nserv a nc y initially selec ted ano ther o p tio n f o r the restau rant sp ac es. T hat o p tio n

u ltimately fell thro u gh, and t he Co nserv anc y requ ested t hat The N o o k team resu b mit

1 A third ind iv id u a l, G eo rge Egerto n, w as also a p ro f i t s h a r i n g o w ner o f the N o o k

. 2its p r o p o s al in A u gu st 201 6. A f ter c o nsid ering sev eral su bmissio ns, the Co nserv anc y

aw ard ed the lease o p p ortu nity to The N o o k team in early 201 7

. The team’ s p ro p o sal c a lled f o r o p eratio n o f tw o restau rants in the Co mmu nity
Center: a f

u ll s erv ic e , A m e r i c an bistro

- style restau rant c a lled W alk er’ s 1 834, and a grab- and

- go c o nc ep t to be c alled S o u l s h i n e. A c co rd ing to D ro lett, the p lan w as f o r W alk er’ s 1 834 and So u lshine to “ share th e sa m e su c c essf u l o w nership and management team a s The N o o k ,” sell similar p ro d u c ts as The N o o k , and o f f er so me

o f the same menu items o riginally d ev elo p ed f o r The N oo k

. Partic u larly with resp ec t

to W a lk er’ s 1 834, the p ro p o sal d esc ribed t he new v entu re as an “ e xp ansio n” by The
N o o k ’s management team.
W ith D r o lett as the ma n a g i n g m e m ber and D u ley as a mino rity ow ner, B OG

w as established a s a single- pu rp ose entity to d ev e lo p , ow n, a nd op erate W alk er’ s 1 834 and So u lshine. On J une 1 5, 201 7 , B OG a nd the Co nserv a nc y entered int o a l e a se agreement f

o r BOG to r e nt t he sp ac es a t the Co mmu nity Center fo r the new

restau rants. The Co nserv a nc y d eliv ered the leased p ro p erty to B OG in “ a s is,” “ base
bu ild ing” c o nd itio n, w ith B OG hav ing resp o nsibility fo r designing a nd f inishing o u t the sp a c es as nec essary su bj e c t to the Co nserv anc y’ s d esign a pp ro val. The lease

3requ ired B OG to su bstantially c o m p l e t e c o nstru c tio n “ o n o r bef ore three hu nd red (300) d ays af

ter [ the Co nserv anc y] ap p ro v es [B OG’ s] Plans a nd Sp ec if ic atio ns. ” The
lease f u rther pro v id ed t hat B OG w o u ld be in def au lt if it f ailed to co mp lete t he w o rk
and begin restau rant o p eratio ns “ w ithin three hu nd red sixty ( 36 0) days (as extend ed by any d el a y a t t ribu table to an Ev ent o f Fo r c e Maj e u re)” af ter the Co nserv anc y
ap p ro v ed the design. Und er the lease, the Co nserv anc y w as c harged with k eep ing

“ t he exterio r w alls

. . . , t he f o u nd atio ns and r o o f o f the B uild ing in go o d and
tenantable rep a ir, p ro v id ed that [B OG] shall giv e [the Co nserv anc y] w ritten no tic e o f
the nec essity f

o r su c h rep airs[. ] ”
Co nstru c tio n c ommenc ed in J u ne 201 8, w ith an antic ip ated d u r atio n o f 1 6

w eek s to bu ild o u t bo th restau rants. On J u ly 1 1 , 201 8, B OG’ s general c o ntrac to r, J M
W illiams (“ JM W ” ), c u t into the c o nc rete slab f o u nd atio n o f the So u lshine lo c atio n

to install new p lu m b ing A s J M W c o ntinu ed its w o rk , the slab c o llap sed and f ell into

a large sink ho le beneath the f lo o r. B OG inf

o rmed the Co nserv anc y abo u t the sink ho le
and also c o ntac ted the p ro j e c t’ s geo tec hnic al engineering f irm, w hic h ev alu ated the

s i t u a t i o n a n d r e co m m e n d e d f u r t h e r i n v e s t i g a t io n. The p ro j e ct’ s s t r u c t u r a l e n g i n e e r i n g f irm also rec ommend ed a d d itio nal inv estigatio n to d etermine the c au se and extent o f

4the sink ho le, no t ing that v o id s c o u ld exist u nd er o ther p o r tio ns o f the b u ild ing slab,

p o te ntially imp ac t ing t he stru c tu ral integrity of the entire bu ild ing and its systems.
B OG p ro v id ed the geo tec hnic al and stru c t ural e n g i n e e ring r ep o rts to the
Co nserv a nc y. A l t h o u g h BO G requ ested that J M W lead the sink ho le inqu iry, the Co nserv anc y ask ed the City of A tlanta to inv estigate whether the v o id resu lted f ro m issu es w ith an

o l d sew er line ru nning beneath the Co mmu nity Center. The Co nserv a n cy a n d t h e C i t y

to ok o v e r the inv estigatio n, and B OG u nd ersto o d that it sho u ld no t inv estigate f u rther

o r c o nd u c t any r ep a irs in th e S o u l sh i ne sp ac e. BOG co ntinu ed c o nstru c tio n o n the
W alk er’ s 1 834 sp ac e, w hic h w as lo c ated o n the o ther sid e of the Co mmu nity Center,

aw ay f ro m the sink ho le, w ith the c a v e at t h a t it w o u ld sto p c o nstru c tio n if its team

c o nc lu d ed that the site w as u nsaf e. On Sep tember 7 , 201 8, J MW inf o rmed B OG that the sink ho le w as “ d ef initely
gro wing. ” B OG rep o rted th e g ro w th to the Co nserv anc y, no ting J M W ’ s c o nc ern regard ing the stru c t ural integrity o f the Co mmu nity C e n t e r and f e a r that the City might c o nd emn the bu ild ing. B OG also ad v ised the Co nserv anc y that its lend er and
insu ranc e agent had instru c ted B OG “ to st o p c o nstru c tio n immed iately, p end ing

5rep air o f the sink ho le and c e rtif ic a tio n f ro m the City that the bu ild ing is stru c tu rally

so u nd

. ”
Later that mo nth, the Co nserv anc y to ld B OG that “ the City [had ] co mp leted
rep air o f the v o id und er [the] slab” u sing a sp ec ializ ed gro u t bac k

- f ill m ixtu re. W hen
B OG requ ested the City’ s engineering r ep o rts, the Co nserv anc y p ro v id ed a

memo rand u m p r ep a red by t he City that d esc ribed the rep air w o rk , bu t c o ntained no engineering analysis and d id no t id entif y the c a u se of the sink ho le. On Oc to ber 22,
201 8, the Co nserv anc y’ s atto rneys sent B OG a letter demand ing that B OG resu me

co n s tru c tio n. A f

t e r c o nsu lting w ith its e ng i n e e r s a n d co n t r a ct o r s , BO G r e s p o n d e d t h a t it w o u ld o nly resu me w ork if the c au se o f the s ink ho le w as d etermined , the sink ho le

w as rep aired u nd er the su perv isio n o f a geo tec hnic al engineer, and the geo tec hnic al engineer c ertif

i e d that the af

f ec ted area a nd t he Co mmu nity Center w ere saf e. The
Co nserv a nc y nev e r p r o v id ed B OG with an e ngineering rep ort id entif ying the c au se

o f the sink ho le o r c ertif

ying the area as saf

e, a n d w o r k d i d no t rec o mmenc e. Citing
B OG’ s f ailu re to co mp lete c o nstru c tio n and o pen the restau rants w ithin the requ ired time p e rio d , the Co nserv anc y terminated the lease o n M ay 31 201 9

.

6B OG initiated this litigatio n in M arc h 2020, alleging that the Co nserv anc y had

no t ad e qu ately ad d ressed issu es c au s ed by the sink ho le and raising claims f o r breac h

o f c o ntrac t, u nj u st enric hment, qu a ntu m meru it, and litigatio n exp enses The
Co nserv a nc y answ ered and c o unterc laimed f or breac h o f

c ontrac t against B OG and
D ro lett. The p a rties f

iled c ro ss- mo tio ns f

o r su mmary j u d gment, w hic h the trial c o urt d enied af ter f ind ing that material issu es o f f ac t remained f

or trial.
A s the trial d ate ap p ro ac hed , the Co nserv anc y m o ved in limine to exc lu d e

ev id enc e o f lo s t p r of

its t hat BOG alleged ly su f fered when So u lshin e a nd W alk er’ s
1 834 d id no t o p en. A fter rev iew ing that mo tio n, the t rial c ou rt rev isited the
Co nserv a nc y’ s su mmary j u d gment requ est, co nc lu d ing that, w ith resp ec t to d amages f o r lo st p ro f

its, the Co nserv a nc y w as entitled to p artial su mmary j u d gment based o n the “ new bu s iness ru le. ” A s exp lained by the t r ial c o u rt: “B ec a u se these restau rants

w ere new bu sines ses that nev er o p ened their d oo rs, the [c ]o u rt is c o mp elled to f ind

as a m atter o f law that no ev id enc e e xists t o satisf y a ‘ pro ven t r ac k rec o rd o f
p r o f i t ab ility’ and to p ro v id e a basis f o r the c o m p u tatio n o f damages as a matter o f
law

. ” I t thu s granted the Co nserv anc y partial su mmary j ud gment as to any c laim f o r

7lo st p ro fits d amages and , as requ ested in the mo tio n in limine, exc lu d e d ev i d e nc e

regard ing su ch d amages. This ap p eal f o llo w ed

. T h e new bu siness ru le “ p ro vid es that, as a matter o f law , a new o r

u nestablished bu siness c anno t rec o v er lo st p ro f its b e c au s e absent a histo ry o f p ast
p ro f its, f utu re p ro f

its are to o u n c e rtain, co ntingent, and sp e cu lativ e. ” O’ To o l v . Gen ma r Ho ldi

ngs , 387 F. 3d 1 1 88, 1 204 (I I I ) (1 0th Cir. 2004) (c itatio n and p u nc tu atio n

o mitted )

. The t rial c o u rt f o u nd this ru le a p p lic able here, c iting its belief that “c u rrent law bars c o nsid eratio n o f lo st p ro f its f o r an u no p e ned bu siness[. ]” A s the trial c o urt

rec o gniz ed , “ [t]he trend in m o s t states
. . . has b een aw ay f ro m s tric t ap plic atio n o f the

new b u siness ru le. ” I d

. N ev ertheless, bec au s e it lo c ated no Geo r gia p rec ed ent rej ec ting stric t a p p lic atio n o f the new bu siness r ule, the trial c o u rt c o nc lu d ed that any

rec o v ery f

o r lo st p ro f

its w a s nec essarily barred

. Geo r gia has nev er exp lic itly ad o p ted the new bu siness ru le, and it is mentio ned by name o nly o ne time in a p rio r a p p e l l a t e dec isio n — w hen o u r Su p reme Co urt d ec lined to ad d ress w hether the ru le pro hibited the r e c o v e r y o f lo st p ro f its in a
p artic u lar c ase. See Gen era l Electri c C o . v . L o w e ’

s Ho me C en ters , 27 9 Ga. 7 7, 80 (2) (6 08 SE2d 6 36 ) (2005). W e hav e exp lained , ho w ev er, that “[a]ltho u gh rec o v ery f o r

8lo st p r o f

its is no t nec essarily p r ec lu d ed in a to rt ac tio n, su c h lo ss mu st be c ap able o f

reaso nably ac c urate c o mp u tatio n. ” Mo lly Pi tcher C an n in g C o . v . C en tra l o f Ga

. R. C o . , 1 49 Ga. A p p . 5, 1 1 ( 4) (253 SE2d 39 2) (1 9 7 9) ( c i t a t io n o mitted ). Thu s, “ u nless the
antic ip ated p ro f

its are c ap a ble o f asc ertainment, and t h e l o s s o f them trac eable d irec tly

t o the d ef

end ant’ s w ro ngf

u l ac t, they are to o sp ec ulativ e to a f f o rd a basis f

o r the

c o mp utatio n o f

d amages. ” I d. at 1 0- 1 1 (4).
A p p l ying these p rinc ip les, w e hav e d etermined in v ario u s c irc umstanc es that

new bu sinesses w e re u nable to p resent su f f ic ient ev id enc e to su p p o rt an aw ard o f lo st
p ro f its. See, e. g. , Jo hn s on Co u n ty S cho o l D i s t
. , 27 8 Ga. A p p . at 1 1 3 (“ The rec o rd
bef o re u s is v o id of any c o mp etent ev id enc e f ro m w hic h a j u ry c o u ld calc u late

. . . lo st
p ro f its [o f a new ly established law n c are bu s iness] w ith r e a s o n a b l e certainty. ” );
Ma rket P la ce S h o ppi n g C en ter v . Ba s i

c Bu s i n es s A ltern a ti

v es , 227 Ga. A p p . 41 9 , 422- 423 (2) ( 489 SE2d 1 6 2) ( 1 9 9 7) (no gro und s f o r asc ertaining lo s t pro f

it d amages w ith

r easo nable c ertainty w here exp ert testif ied that “ his c alc u latio ns w ere based o n
exp ec tatio ns and a ssu mp tio ns a n d that he w as requ ired to mak e these assu mp tio ns bec au se the new bu siness d id no t p ro v id e him w ith a su ff ic ient ‘ d atabase’ ” ); Mo lly
Pi t cher C a n n i ng C o. , 1 49 Ga. A p p . at 1 1- 1 2 ( 4) (no basis f o r reaso nably calc u lating lo st

9p ro f

its fo r new c anning b usiness). A n d w e hav e no ted that “ gen era l ly s pea ki n g , lo st
p ro f its may be rec o v ered by a bu siness o nly if the bu siness has a p ro ven trac k rec o rd

o f p ro f itability. ” E

Z Gree n A s

s o c. v . Geo rgi

a - Pa ci fi c C o rp. , 331 Ga. A pp . 1 83, 1 88 (2) (7 7 0 SE2d 27 7 ) (201 5 ) (c itatio n and p u nc tu a tio n o mitted ; emp hasis su p p lied ).
This d o es n o t m e a n, ho w ev er, that G eo rgia law bars a new bu siness f ro m

rec o v ering lo st p ro f

its as a matter o f law in a ll cases. T o the c o ntra r y, “ the new bu siness ru le is simp ly an extensio n o f the general r u le that lo st p r o f its are o nly

rec o v erable if p ro ved to a reaso nable d egree o f certainty. ” Ja cked U p , LLC v . S a ra Lee
C o rp. , 854 F. 3d 7 9 7 , 81 7 (I I I) (C) (5th Cir. 201 7 ) (c itatio n and p u nc tu atio n omitted );

see also Jo h n s o n C

o u n ty S cho o l D i

s t
. , 27 8 Ga. A p p . at 1 1 2 (“ T o r ec ov er lo st p ro f its, a
p arty mu st sho w w ith great sp ec i f ic ity the p ro bable gain a s w ell as the exp enses inc u rred in realiz ing su c h gain. ” ). W itho u t a histo ry o f p ro f itability , a n ew bu siness
f ac es d if f ic u lty p resenting the p ro o f nec essary to su p p o r t a lo st p ro f its c laim. See
Ra dlo o f Ga

. v. Li ttle , 129 Ga. A p p . 530, 534 (2) (1 9 9 SE2d 835) (1 9 7 3) ( “The general

ru le is that ev id enc e o f exp ec ted p ro f its f ro m a new b u siness is to o s p ec u lativ e,

u n c e rtain, and remo te to be c o nsid ered , and d o e s no t meet the legal stand ar d o f

reaso nable c ertainty. ” ) (c itatio n and p u nc tu a t io n o mitted ). B u t w e c anno t f o rec lo se

10the p o s sibility that, u nd er so me c irc u m stanc e s, a new bu siness might be able to o f f er reliable p r o o f o f p ro s p ec tiv e p ro f its. See, e . g. , O’ To o l , 387 F. 3d a t 1 204 (I II ) (“ I nstead

o f a stric t bar on su c h c laims, many c o u rts n o w h o ld that, regard less of w hether a bu siness is new o r is established , lo st p ro fits c an be rec o v e red if it is p o ssible to sho w by co mp etent e v id enc e and w ith reaso nable c ertainty that p ro f its wo u ld hav e been
mad e and the amo u nt o f tho se p ro f its. ” ) ; E lj er Mfg. v . Ko wi

n D e velo pme n t C o r p
. , 1 4
F. 3d 1 250, 1 256 (I V ) (B ) ( 2 ) ( 7 t h Cir. 1 9 9 4) ( “ The p remise o f the so - c alled ‘ new bu siness’ ru le is that the su c c ess o f a new enterp rise is o rd inarily u nc ertain. W here,
ho w ev er, the enterp rise is simp ly an abso rp tio n o r extensio n o f a p r e v i o u sly
established su cce s s fu l o p eratio n and the v entu re’ s f u tu re is less in d o u bt, t he aw ard ing

o f f u t u re lo st p ro f

its is no t, as a matter o f

law , f o rbid d en. ” ).
The k ey inqu iry is w hether lo st p ro f its are cap able o f reaso nably ac c u rate

c o mp utatio n. See Jo hn so n C o u n ty Sch. D is t

. , 27 8 Ga. A p p . at 1 1 2. B OG argu e d belo w that W alk er’ s 1834 and So u lshine w ere to be e xtensio ns o f The N o o k , a p re- existing
bu siness w ith a lengthy histo ry o f p r o f i tability that p ro v id es a reaso nable basis f o r

c alc u lating l o s t pro f

its. I t also su bmitted an exp ert af f id av it f ro m a c ertif

ied p u blic

ac c ou ntant, w ho a v erred t hat in her p ro f essio nal o p inio n, lo s t p r o f i t s f o r W alk er’ s

111 834 and So u lshine co u ld be c alc u lated w ith a reaso nable d egree o f c ertainty. The trial

c o u r t , ho w ev er, did no t c o nsid er the p artic u lar f ac t s here o r assess w hether c o mp etent

ev id enc e o f

f ered a su f f ic ient basis f

o r d etermining lo st p ro f

its. I nstead , it ap p lied an abso lu te ru le o f exc lu sio n, c o nc lu d ing that B OG c o uld no t rec o ver s u c h pro f its so lely
bec au se the restau rants w ere “ new bu sinesses” that nev er o p ened

. W e c anno t agree w ith this mec hanic al, b right- line ap p ro ac h. Ou r c ase law
requ ires c o nsid eratio n of w hether ev id enc e exists to p ermit a c a l c u latio n o f lo st
p ro f its. See, e. g. , Jo hn s on Cou n t y S cho o l Di

s t
. , 27 8 Ga. A p p . at 1 1 3 (ref

erenc ing a “ v o id

o f any c o mp etent ev id enc e ” ); Ma rket Pla ce S ho ppi n g Cen ter , 227 Ga. A p p . at 422 (2) (the “ ev id enc e d id no t p ro v id e a basis f o r asc ertaining lo st p ro f

it d a mages w ith

reaso nable c ertainty” ); In ters ta te D e v . Sv cs . o f La ke Pa rk, G

a. v. Pa tel , 21 8 Ga. A p p . 89 8, 89 9 (46 3 SE2d 51 6 ) (1 9 9 5) (“ W here, as here, the ev id enc e sho w s the c l a i mant

w as a new bu siness w ith no histo ry o f pro f its and , in f

a c t, w as o p erating at a lo ss, the
lo ss of p ro s p e c tiv e p ro f

its is t o o r e mo te and sp ec u lativ e to su p p o r t a rec o v ery o f
d amages. ” ) (c itatio n and pu nc tu atio n o mitted ). A d ec isio n t hat au to matic ally bars a

new b u siness f

ro m rec ov ering lo st p r o f

it e ro d es this f

a c t- based inqu iry. A c c ord ingly,

12w e v ac ate the t rial c o urt’ s su mmary j u d gment ru ling and r e m a n d f o r f u rther
p ro c eed ings c o nsistent w ith this o p inio n. 2
Ju dgmen t v a ca ted a n d c

a s e rema n ded wi th di

rect i o n . McFa dden

, P. J. , a n d
Ri ckma n, J. , co n cu r .

2 W e exp ress no o pinio n as to w hether c omp e t e nt ev id enc e o f f e rs a su f f ic ient basis f o r d etermining lo st p ro fits in this c ase. Rather, we remand f o r the trial c o u rt to c o nsid er the issu e.
13