Court Opinion

ID: 2815333
Source: CourtListenerOpinion
Date Created: 2015-07-08 16:14:02.83709+00
Date Added: 2024-06-11T12:25:02.496850
License: Public Domain

FIRST DIVISION
                               DOYLE, C. J.,
                         PHIPPS, P. J, and BOGGS, J.

                   NOTICE: Motions for reconsideration must be
                   physically received in our clerk’s office within ten
                   days of the date of decision to be deemed timely filed.
                              http://www.gaappeals.us/rules/

                                                                       July 6, 2015

In the Court of Appeals of Georgia
 A15A0715. ON LINE, INC. v. WRIGHTSBORO WALK, LLC.                            DO-035

      DOYLE, Chief Judge.

      This appeal arises from a contract dispute over the purchase of commercial real

estate. After On Line, Inc. (“On Line”), failed to complete the purchase of the

property, Wrightsboro Walk, LLC (“Wrightsboro”), filed the instant action against

On Line, alleging that On Line breached the parties’ contract and acted in bad faith

by failing to deposit into escrow the proper amount of earnest money and asking for

attorney fees and costs. Wrightsboro moved for summary judgment, which the trial

court granted. On Line appeals, arguing that the trial court erred by (1) finding that

the inspection period began on August 23, 2013, rendering On Line’s termination

untimely; (2) failing to find missing conditions precedent to the obligation; and (3)

failing to find a question of fact existed as to whether Wrightsboro was estopped from
asserting that termination was untimely. Because there is a genuine issue of material

fact as to whether On Line was able to obtain financing as a contractual condition

precedent to payment of the earnest money and completion of the sale, we reverse.

               Summary judgment is proper when there is no genuine issue of
      material fact and the movant is entitled to judgment as a matter of law.
      A defendant moving for summary judgment may put forth evidence to
      show that there is no issue of fact as to one or more elements of the
      plaintiff’s causes of action or demonstrate that the record lacks sufficient
      evidence to support one or more of the plaintiff’s causes of action. We
      review the grant or denial of summary judgment de novo, construing the
      evidence in favor of the nonmovant.1

      On Line entered into a purchase and sale agreement (“the Agreement”) for

commercial real estate from Wrightsboro for $3,600,000. The contract provided that

upon execution of the Agreement, On Line would deposit into escrow $25,000 in

earnest money, which On Line did. Within three days of the expiration of the due

diligence period,2 On Line was required to deposit an additional $25,000 into escrow.

This deposit never occurred, however, because On Line terminated the Agreement.

      1
       (Punctuation omitted.) Campbell v. Landings Assn., 311 Ga. App. 476, 477
(716 SE2d 543) (2011), quoting Koncul Enterprises v. Fleet Finance, 279 Ga. App.
39 (630 SE2d 567) (2006).
      2
          The due diligence period is elsewhere referred to as the Inspection Period.

                                           2
      Had the sale been completed, the earnest money would have been applied to

the purchase price, but in the event that On Line failed to close

      the transaction for reasons other than a [Wrightsboro] default or the
      inability to have the Loan with Morgan Stanley Mortgage Capital
      Holdings, LLC,3 . . . transferred to [On Line, which occurrences would
      result in the return of the Earnest Money to On Line,] then the Earnest
      Money shall be paid to and retained by [Wrightsboro] as
      [Wrightsboro’s] sole remedy . . . .

On Line was required to diligently seek from Morgan Stanley a transfer of the Loan,

but the Agreement was contingent on this method of financing and would otherwise

terminate.

      The Agreement provided in paragraph 8.1 that On Line had the right to a 30-

day Inspection Period that would begin on “the Effective Date,” which was the date

upon which On Line

      ha[d] received from [Wrightsboro] copies of [Wrightsboro’s] title policy
      for the Property including all exhibits and schedules (and including the
      legal description of the Land), (ii) any surveys of the Land in
      [Wrightsboro’s] possession; (iii) any environmental reports of the
      Property in [Wrightsboro’s] possession; (iv) income and expense reports

      3
       The parties intended for On Line to assume the $2,000,000 loan between
Wrightsboro and Morgan Stanley as part of the purchase price of the property.

                                            3
      for the calendar years 2010, 2011, and 2012, and monthly reports for
      calendar year 2013; and (v) copy of the Billboard easement . . . .

On Line had the right to terminate the sales contract at any time during the 30-day

period “by delivering written notice to [Wrightsboro] on or before the last day of the

Inspection Period, in which event this Agreement shall terminate and all Earnest

Money shall be immediately refunded to” On Line. The contract also provided that

      [e]ach notice or document (collectively referred to in this Section as
      “notice”) required or permitted to be given hereunder must comply with
      the requirements of this Section. Each such notice shall be in writing
      and shall be delivered either by personal delivery, by delivery utilizing
      Federal Express, UPS or other national or local courier service, or by
      depositing it with the United States Postal Service or any official
      successor thereto, certified mail, return receipt requested, with adequate
      postage prepaid, addressed to the appropriate party . . . Such notice shall
      be deemed delivered at, the date of personal delivery, the date of receipt
      for delivery with a courier, or, if mailed, when it is received or refused,
      but the time period in which a response to any such notice must be given
      or any action taken with respect thereto shall commence to run from the
      date it is actually received by the addressee thereof, as evidenced by
      telecopy transmission confirmation, receipt for personal or courier
      delivery, or certified mail return receipt.

                                          4
      In adddition, in paragraph 9.17, Wrightsboro “warrant[ed] that it ha[d] no

knowledge of any material inaccuracy in any report, data, lease, books, records,

accounting or other documentation whatsoever. . . .” Finally, the contract provided

that any modification of the agreement was not effective unless made in writing and

executed by the parties.

      It is undisputed that Wrightsboro uploaded numerous document files to the

internet-based storage website known as Dropbox and sent an email with a hyperlink

to access these documents to On Line’s representative, Frank Salvati, on August 23,

2013. On August 26, 2013, a representative for Wrightsboro sent an email to a

commercial real estate agent working with On Line, David A. Reece, which contained

a “Receipt of Documents” that Wrightsboro failed to send to Salvati on August 23;

the Receipt consisted of a single document listing 21 other documents and a separate

boxed notation stating that the 21 documents were sent on August 23, 2013, and

“[t]herefore, per Paragraph 8.1 of the [Agreement], the Inspection Period shall end

[September 23, 2013].” The Wrightsboro representative asked Reece to “please have

your Buyer initial and sign and send back to us at your earliest convenience.” Salvati

initialed this box separately from signing the Receipt, dating the Receipt August 27,

2013. Reece returned the Receipt to Wrightsboro representatives via email, stating

                                          5
therein “[h]ere is the signed and initialed Receipt of Documents. It is duly noted that

Inspection period started [August 23, 2013] and ends [September 23, 2013]. I will

notify buyer and legal counsel of this date.”4

      Thereafter, the parties exchanged numerous emails, On Line had inspectors

investigate the property, and On Line requested of Wrightsboro additional documents

regarding the physical state of the property as well as the earnings and losses.

Additionally, although Wrightsboro had claimed that the property was built in 2006,

Reece averred that after On Line’s inspectors noticed that many of the HVAC systems

were from 1989, Wrightsboro sent amended documentation listing a 1989 build date

and 2006 renovation date. By September 23, 2013, Wrightsboro had provided

numerous documents as requested by On Line, but some accounting statements were

still under review; however, on September 24, 2013, On Line forwarded to

Wrightsboro a letter of termination of the Agreement. Wrightsboro brought suit

thereafter.

      After a hearing, a transcript for which does not appear in the record, the trial

court determined that there were no issues of material fact as to when the Inspection

      4
       Thirty days from August 23, 2013, actually would have been September 22,
2013. The contract does not specify a particular method of calculation.

                                          6
Period began or whether all the necessary documents had been received by On Line

in order to allow On Line’s termination during the Inspection Period. The trial court’s

order, however, does not address the issues raised concerning lack of financing or

repair issues.

      “Because our review is at the summary judgment stage and the interpretation

of a contract, including the existence or nonexistence of any ambiguities in the

contract, usually involves a question of law for the court to resolve, our review is de

novo.”5

      1. On Line argues that the trial court erred by failing to find material issues of

fact existed as to whether Wrightsboro made material misrepresentations to On Line

and whether On Line was unable to assume the loan, which issues would have

allowed termination of the agreement without penalty to On Line. We agree and

reverse the grant of summary judgment.

      In his affidavit, Salvati contended that Wrightsboro had “unexplained

discrepancies and inconsistencies in the income and expense reports . . . [, and a]s a

result, On Line could not provide necessary documentation to Morgan Stanley

      5
       (Citations and punctuation omitted.) Sheperd v. Greer, Klosic & Daugherty,
325 Ga. App. 188, 189 (750 SE2d 463) (2013).

                                          7
Mortgage Capital Holdings, LLC, sufficient to allow the loan assumption

contemplated by the Agreement.” Moreover, the issue of financing was not governed

by the Inspection Period time limit for termination, which governed other reasons for

termination, and therefore, any failure on the part of On Line to terminate on this

basis prior to September 23, 2013, was inconsequential. Although the record contains

a dearth of other evidence to support On Line’s argument that it was unable to assume

the loan as contemplated under the agreement, Salvati’s sworn statement avers that

he had personal knowledge of this matter. Such statements are sufficient to create a

fact question, and therefore, the trial court erred by granting summary judgment to

Wrightsboro.6

      On Line also contends that Wrightsboro made material misrepresentations —

the fact that the property was built in 2006 rather than 1989, the lack of complete

financial documentation or inaccuracies therein, and various repair issues — allowing

On Line to terminate the Agreement outside the Inspection Period. Again, we agree

with On Line that issues of fact exist as to whether Wrightsboro violated paragraph

9.17 of the Agreement thereby allowing for termination outside the Inspection Period.

      6
        See, e.g., Timeless Architectural Homes, Inc. v. Jones, 270 Ga. App. 406, 408
(3) (606 SE2d 635) (2004). See also OCGA § 9-11-56 (c) & (e).

                                         8
Accordingly, we reverse the trial court’s grant of summary judgment to Wrightsboro

on these issues.

      2. On Line also argues that the trial court erred by finding that the Inspection

Period began on August 23, 2013, because Wrightsboro did not tender all the required

documents at that time or deliver them in a method required by the contract. We

disagree.

      The contract language regarding the Inspection Period and the Notice provision

is clear that the time period should not begin until Wrightsboro effected delivery of

all the documents necessary under paragraph 8.1 via the accepted methods of

delivery. Nevertheless, Wrightsboro provided a written receipt proposing that the

Inspection Period be considered August 23 to September 23, 2013. On Line’s

representative, Salvati, signed the Receipt and initialed a box on the receipt noting

that the Inspection Period began on August 23, 2013, thus completing a modification

of the contract.7 Salvati was under no obligation to sign it, initial the box, or agree

with the statement. Salvati could have changed the date to reflect that he could not

open the Dropbox materials until August 27 or that Wrightsboro failed to tender all

      7
        See Thomas v. Garrett, 265 Ga. 395, 396 (1) (456 SE2d 573) (1995) (“parties
to a contract can, by subsequent mutual agreement, modify a written contract”).

                                          9
required documents. Instead Salvati acknowledged the statement, thus completing a

written modification of the contract to the extent that paragraph 8.1 otherwise would

have required more precise compliance with the Notice and Inspection Period

provisions of the Agreement.

      Accordingly, the trial court did not err by finding that the termination did not

occur during the Inspection Period.

      3. On Line also argues that Wrightsboro is estopped from arguing that the

notification of termination was untimely because it failed to provide all the necessary

documents by August 23, 2013. Because this Court concluded in Division 2 that the

signed Receipt constituted a modification of the Inspection Period clause, and

because On Line at no time attempted to further modify the clause based on the

alleged failure of Wrightsboro to fully comply with the terms of paragraph 8.1,

Wrightsboro was not estopped from arguing that On Line had made an untimely

attempt to terminate the contract during the Inspection Period.

      Judgment reversed. Phipps, P. J., and Boggs, J., concur.

                                          10