Court Opinion

ID: 4583238
Source: CourtListenerOpinion
Date Created: 2020-11-03 17:03:01.568909+00
Date Added: 2024-06-11T08:48:10.584447
License: Public Domain

SECOND DIVISION
                              MILLER, P. J.,
                         MERCIER and COOMER, JJ.

                   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.
                              https://www.gaappeals.us/rules

                   DEADLINES ARE NO LONGER TOLLED IN THIS
                   COURT. ALL FILINGS MUST BE SUBMITTED WITHIN
                   THE TIMES SET BY OUR COURT RULES.

                                                                  November 2, 2020

In the Court of Appeals of Georgia
 A20A1474. TRICO ENVIRONMENTAL SERVICES, INC. v.
     KNIGHT PETROLEUM COMPANY et al.

      MILLER, Presiding Judge.

      In this dispute involving real property located in Meriwether County, Georgia,

Trico Environmental Services, Inc. (“Trico Environmental”) appeals from the trial

court’s grant of summary judgment in favor of Knight Petroleum Company and JP

Capital and Insurance, Inc. (“the Defendants”). On appeal, Trico Environmental

argues that the trial court erred in granting summary judgment because genuine issues

of material fact remain on its breach of warranty, negligent misrepresentation, breach

of contract, and tortious interference with business relations claims. For the reasons

that follow, we reverse the trial court’s order granting summary judgment on Trico

Environmental’s breach of warranty claim, but we affirm the trial court’s order
granting summary judgment on Trico Environmental’s breach of contract, negligent

misrepresentation, and tortious interference with business relations claims.

      Summary judgment is proper if the pleadings and evidence show that
      there is no genuine issue as to any material fact and that the moving
      party is entitled to a judgment as a matter of law. On appeal from a trial
      court’s grant of summary judgment, we conduct a de novo review,
      construing all reasonable inferences in the light most favorable to the
      nonmoving party.

(Citation omitted.) Performance Food Group, Inc. v. Davis, 346 Ga. App. 487, 488

(816 SE2d 468) (2018).

      So viewed, the record shows that during the 1970s, the City of Woodbury was

constructing a sewer system along the boundaries of certain property located in

Woodbury, Georgia, that was owned by Billy Knight. According to the City of

Woodbury, Knight had requested that the city install the sewer line to prevent the

construction of the sewer line from disturbing his gas station, which was located on

the property. In 1992, Knight Petroleum acquired the property from Billy Knight via

warranty deed.1 Prior to closing on the property, Knight Petroleum obtained a plat

survey of the property, and the survey did not show the existence of a sewer line, nor

      1
          Billy Knight had also acquired the property via warranty deed in 1967.

                                          2
did it make any reference to any utility easement. The warranty deed conveyed by

Billy Knight also did not reference a sewer line or a utility easement.

      On September 9, 2005, Trico Environmental purchased the property from

Knight Petroleum via warranty deed. At the time of the purchase, Henry Anderson,

Knight Petroleum’s president, provided an affidavit to Trico Environmental averring

that “said real estate, the improvements, equipment, appliances, or fixtures attached

thereto are free and clear of all liens, encumbrances, restrictions, assessments,

encroachments, leases, tenancies and occupancies. . . .” Trico Environmental obtained

a loan from JP Capital to finance the purchase, granted JP Capital a security deed in

the amount of $200,000, and used the property to operate a fruit stand.

      Trico Environmental eventually fell behind in its payments on the loan, and,

via a letter dated January 26, 2016, JP Capital notified Trico Environmental that it

would initiate foreclosure proceedings unless Trico Environmental paid within 10

days a total debt of $122,511.55 plus attorney fees. On February 9, 2016, Trico

Environmental paid JP Capital $4,125. Charles Hudson, Trico Environmental’s

owner, contacted William “Bill” Jones,” JP Capital’s president, and asked whether

JP Capital would continue servicing the loan, and Jones told Hudson “no” and that

he would prefer for Hudson to obtain financing elsewhere.

                                          3
      Hudson then contacted John Barker from First Bank of Pike (“Pike”) to seek

refinancing of the loan. In a letter dated February 24, 2016, Jones told Barker that JP

Capital would not foreclose on the property if payment was tendered by February 29,

2016, in the amount of $119,092.05. Hudson subsequently provided a check to JP

Capital in the amount of $119,092.05 on February 29, 2016. According to Christina

Stephens, an accountant, the check was received but she informed Hudson that the

check was insufficient because the attorney fees and costs associated with the

foreclosure proceedings were still owed and were mistakenly left out of the payoff

amount. JP Capital later stopped its foreclosure proceedings, but it notified Pike and

Trico Environmental in separate letters that it would have to pay a balance of $820

for the attorney fees and foreclosure costs for it to release its lien.

      In January 2017, Trico Environmental sought to redevelop the property to

construct a restaurant and gift shop through an additional loan from Pike. Pike,

however, declined to provide the financing unless JP Capital released its lien.

Additionally, Trico Environmental also discovered the existence of a force main

sewer line on the property belonging to the City of Woodbury. The City of Woodbury

would not consent to Trico Environmental building on top of the sewer line, but it

was willing to move the sewer to another location on the property if Trico

                                            4
Environmental gave it an easement to access and maintain the sewer line.

Construction for the new sewer was put on hold, however, due to JP Capital’s

unwillingness to release its lien. JP Capital later released its lien in May 2018.

      Trico Environmental filed the instant suit against the City of Woodbury, Knight

Petroleum, and JP Capital and asserted claims for trespass or inverse condemnation

against the City of Woodbury, breach of warranty deed and failure to disclose against

Knight Petroleum, and breach of contract against JP Capital.2 In an amended

complaint, Trico Environmental asserted additional claims for negligent

misrepresentation against Knight Petroleum and interference with business relations

against JP Capital.3 Knight Petroleum and JP Capital answered the complaint, and JP

Capital filed a counterclaim against Trico Environmental for breach of contract and

attorney fees. Knight Petroleum and JP Capital later filed motions for summary

judgment, which the trial court later granted. This appeal followed.4

      2
          Trico Environmental later dismissed its claims against the City of Woodbury.
      3
       Trico Environmental later filed a second amended complaint, pleading that
the sewer line is an encumbrance that interferes with its use and enjoyment of the
property.
      4
      Trico Environmental conceded below that Knight Petroleum was entitled to
summary judgment on its failure to disclose claim.

                                           5
      1. First, Trico Environmental argues that the trial court erred in granting

summary judgment on its breach of warranty claim. Specifically, Trico Environmental

argues that Knight Petroleum gave it a warranty that the property was free of

encumbrances when, in fact, a force main sewer line belonging to the City of

Woodbury traversed the property. We agree and conclude that the trial court erred in

granting summary judgment on this claim.

      Under OCGA § 44-5-62, “[a] general warranty of title against the claims of all

persons includes covenants of a right to sell, of quiet enjoyment, and of freedom from

encumbrances.” Also, “a general warranty of title against the claims of all persons

covers defects in the title even if they are known to the purchaser at the time he takes

the deed.” OCGA § 44-5-63. Thus,

      [i]n an action for the breach of a covenant of warranty of title, the
      burden is upon the plaintiff to show eviction under a paramount
      outstanding title. The rule seems to be everywhere recognized that to
      constitute a breach of the covenant of warranty, an eviction or
      equivalent disturbance by title paramount must occur, and that the mere
      existence of an outstanding paramount title will not constitute a breach.

(Citation and punctuation omitted.) Lafontaine v. Alexander, 343 Ga. App. 672, 678-

679 (3) (808 SE2d 50) (2017). Additionally, as Trico Environmental correctly argues,

                                           6
“a general warranty of title includes the warranty of freedom from encumbrances, and

it is not necessary to show actual eviction.” (Citation omitted.) McMurray v.

Housworth, 282 Ga. App. 280, 286 (2) (638 SE2d 421) (2006); see also Weiss v. Old

Republic Nat. Title Ins. Co., 262 Ga. App. 120, 122 (1) (584 SE2d 710) (2003) (“In

a suit for breach of warranty of title, the burden is on the plaintiff to show eviction

or that which amounts to an eviction or an outstanding paramount title which he was

obliged to yield to a third person.”) (citations omitted).

      In McMurray, supra, for instance, the plaintiffs purchased 12-acre parcels and

also received general warranties of title in connection with their purchase. McMurray,

supra, 282 Ga. App. at 281. In the chain of title to the property, however, was a

“floodwater retarding structure” easement which had been granted to the district. Id.

The easement was for the construction of a structure or dam, and it gave the grantor

and the successors the right to use the easement. Id. In reversing the trial court’s

denial of the plaintiffs’ breach of warranty claim, we first noted that the plaintiffs

were complaining of a breach of the covenant of freedom from encumbrances, such

as the claim in the instant case. Id. at 286 (2). We noted that “an easement is an

assertion of a paramount qualified interest in the land, [and] its effect may cause an

eviction of the owner of the property burdened by the easement insofar as [its]

                                           7
exclusive use of the easement area was concerned.” (Citation omitted.) Id. We

therefore held that “[b]ecause the evidence show[ed] without dispute that the

[defendants] breached their general warranties of title, the superior court erred in

awarding summary judgment to the [defendants]. . . .” Id.

      Here, the record shows that at the time of the purchase, Knight Petroleum

provided an affidavit and averred that the property was “free and clear of all liens,

encumbrances, restrictions, assessments, encroachments, leases, tenancies and

occupancies. . . .” Knight Petroleum also provided a warranty deed in connection with

the purchase that said that it would “warrant and forever defend the right and title to

the . . . property, unto the said Grantee against the claims of all persons whomsoever.”

When Trico Environmental sought to develop the property, it discovered the presence

of a sewer line, and the City of Woodbury would not consent to Trico Environmental

building on top of the sewer line. The City did, however, consent to move the sewer

line to another location on the property on the condition that Trico Environmental

grant it an easement to access and maintain the sewer line. Thus, there appears to be

evidence in the record that the City is asserting or attempting to assert its easement

rights in the property against Trico Environmental. Therefore, we conclude that this

                                           8
evidence shows that genuine issues of material fact remain on Trico Environmental’s

breach of warranty claim.

      To support its argument that the trial court correctly granted summary judgment

on the breach of warranty claim, Knight Petroleum relies on our decision in Roberts

v. Malu Constr., Inc., 217 Ga. App. 551 (458 SE2d 146) (1995). There, the plaintiff

had entered into a contract with the defendant to purchase a certain lot of real

property. Id. The defendant executed a warranty deed that provided that the lot “was

suitable for the construction of a single family dwelling, and that the lots conveyed

were lots upon which the authorities of [the county] would permit the construction

of single family dwellings.” Id. While developing the property, the plaintiff

discovered wet soil had begun to accumulate on the land. Id. The county health

department informed the plaintiff that the authority to install a septic tank on the lot

had been revoked due to the discovery of a drainage easement that had directed water

through the center of the lot. Id. In affirming the trial court’s grant of a directed

verdict on the plaintiff’s breach of warranty claim, we held that, on a covenant for

quiet possession, loss of possession had to be shown and there was no evidence of an

actual or constructive eviction. Id. at 552 (2).

                                           9
      After a close analysis of Roberts and McMurray, we conclude that the facts of

this case are more similar to those in McMurray than in Roberts, and therefore we

apply the holding of McMurray to the facts of this case. Knight Petroleum’s attempt

to distinguish this case from our decision in McMurray, supra, also fails. Specifically,

Knight Petroleum attempts to distinguish McMurray based on the nature of the

encumbrance and its view that McMurray should not extend to cases where the seller

had no knowledge of the easement at the time of the sale. Both arguments are

unavailing. First, Knight fails to fully explain the difference between a floodwater

retarding structure and a force main sewer line for purposes of the analysis for a

breach of warranty claim. Second, Knight Petroleum fails to identify any case where

a court has held that a seller must have prior knowledge of an encumbrance or

easement at the time of the sale of property in order to be liable on a breach of

warranty claim. Accordingly, we conclude that genuine issues of fact remain on Trico

Environmental’s breach of warranty claim and that the trial court therefore erred in

granting summary judgment on this claim.

      2. Second, Trico Environmental argues that the trial court erred in granting

summary judgment on its claim that Knight Petroleum negligently misrepresented

that there were no encumbrances on the property by construing the evidence in the

                                          10
record against it and by presuming facts that were not in evidence. We conclude that

the trial court properly granted summary judgment on this claim.

      “The essential elements of a claim of negligent misrepresentation are: (1) the

defendant’s negligent supply of false information to foreseeable persons, known or

unknown; (2) such persons’ reasonable reliance upon that false information; and (3)

economic injury proximately resulting from such reliance.” (Citation and punctuation

omitted.) Home Depot U. S. A., Inc. v. Wabash Nat. Corp., 314 Ga. App. 360, 367 (3)

(724 SE2d 53) (2012). “The same principles apply to both fraud and negligent

misrepresentation cases and the only real distinction between negligent

misrepresentation and fraud is the absence of the element of knowledge of the falsity

of the information disclosed.” (Citation and punctuation omitted.) Bowden v. Medical

Center, Inc., ___ Ga. ___, (2) (b) n. 11 (845 SE2d 555) (2020). Under this construct,

we have held that “the law in Georgia is well-settled that in the purchase and sale of

real estate there is an underlying principle of law to the effect that one cannot be

permitted to claim that he has been deceived by false representations about which he

could have learned the truth of the matter and could have avoided damage.” (Citation

omitted.) Hanlon v. Thornton, 218 Ga. App. 500, 501-502 (1) (462 SE2d 154) (1995).

Therefore, “a failure to obtain and supply information does not state a claim for

                                         11
negligent misrepresentation.” Futch v. Lowndes County, 297 Ga. App. 308, 312 (4)

(676 SE2d 892) (2009).

      Here, Knight Petroleum’s president testified in his deposition that he first

learned of the sewer line’s presence on the property during the course of the instant

action. Moreover, the record shows that Trico Environmental had equal opportunity

to discover the sewer’s presence. Trico Environmental leased the property from

Knight Petroleum Company for approximately six months prior to purchasing it, and

its owner testified in his deposition that, in preparation for the purchase, he inspected

the property and that his attorney “checked the courthouse” records.

      Thus, we conclude that the trial court did not err in granting summary judgment

on this claim. Trico Environmental’s negligent misrepresentation claim is based

simply on Knight Petroleum’s failure to obtain and supply information, which is

insufficient to show an entitlement to relief on a negligent misrepresentation claim.

Futch, supra, 297 Ga. App. at 312 (4). Consequently, Trico Environmental’s

negligent misrepresentation claim fails.

      Furthermore, to the extent that Trico Environmental argues that the trial court

presumed facts outside of the record in ruling on the motion, this claim also fails. To

support this claim, Trico Environmental relies upon language in the trial court’s order

                                           12
that states, “[p]resumably a check of City Hall records would have indicated the

presence of the sewer line.” This statement does not support the contention that the

trial court relied upon evidence outside of the record in ruling on the motion. The trial

court’s remarks were merely a part of its larger ruling that Trico Enviromental failed

to exercise due diligence. Such a statement, however, does not entitle Trico

Environmental to a reversal of the trial court’s summary judgment order on this claim.

Accordingly, the trial court did not err in granting summary judgment on this claim.

      3. Next, Trico Environmental argues that the trial court erred in granting

summary judgment on its breach of contract claim. Specifically, Trico Environmental

argues that JP Capital breached the agreement that it made in its February 24, 2016

letter to Pike wherein JP Capital “guaranteed” that it would not foreclose on the

property if payment was made within a certain time period. We disagree and conclude

that the trial court properly granted summary judgment on this claim.

      “The elements for a breach of contract claim in Georgia are the (1) breach and

the (2) resultant damages (3) to the party who has the right to complain about the

contract being broken.” (Citation omitted.) Norton v. Budget Rent A Car System, Inc.,

307 Ga. App. 501, 502 (705 SE2d 305) (2010). Here, as it did below, Trico

Environmental bases its breach of contract claim on the law of accord and

                                           13
satisfaction. Assuming, without deciding, that Trico Environmental was a third-party

beneficiary to the letter between JP Capital and Pike such that it could seek its

enforcement, Trico Environmental would still not prevail on the theory of accord and

satisfaction.

      An accord and satisfaction occurs when the parties to an agreement, by
      a subsequent agreement, have satisfied the former agreement, and the
      latter agreement has been executed. An accord and satisfaction is a
      contract, which requires a meeting of the minds to render it valid and
      binding. A definite offer and complete acceptance, for consideration,
      create a binding contract.

(Citations and punctuation omitted.) USA Mfg. Corp., v. Perfection-Schwank, Inc.,

271 Ga. App. 636, 638 (1) (610 SE2d 600) (2005). And, under OCGA § 13-3-1, an

essential element to contract formation is “the assent of the parties to the terms of the

contract, and a subject matter upon which the contract can operate.” “[A]s a general

rule, whether there is an accord and satisfaction is a question for the jury. However,

there are cases where the issue of accord and satisfaction has been properly decided

on summary judgment.” (Citations and punctuation omitted.) USA Mfg. Corp., supra,
271 Ga. App. at 638 (1).

                                           14
      Here, in the letter from JP Capital to the president of First Bank of Pike, JP

Capital “guarantee[d]” that it would not pursue foreclosure on the property provided

that it received payment in the amount of $119,092.05. At no point in the letter,

however, did JP Capital promise that it would also release its lien on the property if

payment was received in the amount referenced above. Indeed, the letter makes no

mention whatsoever as to the lien and what action would be taken with regard to the

lien if payment in the above-stated amount was received. Furthermore, the record is

clear that JP Capital informed Trico Environmental and First Bank of Pike that

additional steps were required to release the lien, and Trico Environmental makes no

argument that it satisfied the additional conditions for the lien to be released. Nor is

there any evidence in the record that Trico Environmental conditioned the acceptance

of the check on the release of the lien. Accordingly, the February 24, 2016 letter

shows no meeting of the minds between the parties as to the release of the lien.

Consequently, there was no accord and satisfaction in this case, and all of Trico

Environmental’s arguments in this respect necessarily fail. See USA Mfg. Corp.,

supra, 271 Ga. App. at 638-639 (1) (holding that summary judgment was proper on

breach of contract claim based upon accord and satisfaction, where, although creditor

negotiated two check payments on the debt owed, there was no evidence

                                          15
demonstrating that the debtor conditioned the acceptance of its payment on the

satisfaction of the note and the creditor stated that the contract would not be

considered executed unless additional terms were satisfied); see also Isbell v. Credit

Nation Lending Svc., LLC, 319 Ga. App. 19, 25 (2) (b) (735 SE2d 46) (2012) (stating

the general rule that on review of a trial court’s grant of summary judgment, “we may

still affirm the trial court’s judgment if it is right for any reason”).

      4. Lastly, Trico Environmental argues that the trial court erred in granting

summary judgment on its claim that JP Capital interfered with its business relations

with Pike when it refused to release its lien on the property. We conclude that the trial

court properly granted summary judgment on this claim.

      The elements of tortious interference with contractual relations, business
      relations, or potential business relations are: (1) improper action or
      wrongful conduct by the defendant without privilege; (2) the defendant
      acted purposely and with malice with the intent to injure; (3) the
      defendant induced a breach of contractual obligations or caused a party
      or third parties to discontinue or fail to enter into an anticipated business
      relationship with the plaintiff; and (4) the defendant’s tortious conduct
      proximately caused damage to the plaintiff.

(Citation omitted.) Dalton v. Diversified, Inc. v. AmSouth Bank, 270 Ga. App. 203,

208-209 (4) (a) (605 SE2d 892) (2004). We have been clear that

                                            16
      [t]he exercise of an absolute legal right is not and cannot be considered
      an interference with a contractual or potential contractual relationship,
      because privilege means legitimate economic interests of the defendant
      or a legitimate relationship of the alleged interloper or meddler to the
      contract. Thus, if the defendant has a legitimate economic interest in
      either the contract or a party to the contract, then the defendant is not a
      stranger to the contract and acts with privilege. The actions by a secured
      creditor exercising its contractual rights does not constitute the wrongful
      improper conduct necessary for this tort action; for liability, the
      defendant must have acted improperly and without privilege. The
      defendant must be a stranger to both the contract and the business
      relationship giving rise to and underpinning the contract for the conduct
      to be tortious interference. Where a defendant has a financial interest in
      one of the parties to the contract or in the contract, the defendant is not
      a stranger to the contract or business relationship, even though it is not
      a signatory to the contract.

(Citations and punctuation omitted.) Id. at 209 (4) (a).

      Here, Trico Environmental argues that after the accord and satisfaction, JP

Capital interfered in its business relationship with Pike by failing to release the lien

so that Pike could finance the construction of the restaurant and gift shop. For the

reasons stated in Division 3, however, there was no accord and satisfaction in this

case. Hence, JP Capital “had the right to retain [its] security interest until all debts

owed to it were paid or compromised[,]” and JP Capital’s “actions or inactions

                                          17
regarding its security interest did not as a matter of law, constitute a tortious

interference.” See Dalton Diversified, Inc., supra, 270 Ga. App. at 209 (4) (a)

(holding that the defendant was not entitled to a j. n. o. v. on its claim against secured

creditor for tortious interference where the creditor had a security interest in the loan

agreement to which the defendant had an outstanding debt).

      Furthermore, contrary to its claim, Trico Environmental cannot prove malice.

In the context of a tortious interference claim, “[m]alice, . . . is a term to be given a

liberal meaning; malicious or maliciously means any unauthorized interference, or

any interference without legal justification or excuse.” (Citation omitted.) Renden,

Inc. v. Liberty Real Estate Ltd. Partnership III, 213 Ga. App. 333, 334 (2) (444 SE2d

814) (1994). As stated above, JP Capital possessed a security interest in the property

at issue, Trico Environmental owed it an outstanding debt for fees associated with the

foreclosure process, and JP Capital refused to release its interest until the debt had

been paid. This “evidence failed to create a triable issue as to the element of malice

with intent to injure.” Id. at 335 (2) (a) (holding that the trial court did not err in

granting summary judgment on a tortious interference claim where the defendant

landlord had a legal right to compete for the rental space at issue).

                                           18
      To the extent that Trico Environmental argues that Knight Petroleum was

obligated to release its lien on the property because no balance was owed after the

loan payoff, this claim fails. “When a creditor receives and retains a sum of money

from his debtor less than the amount actually due him with the understanding, either

express or implied, that it is received by him in satisfaction of his claim or demand,

he cannot thereafter treat it as a nullity and recover the balance.”) (Citation and

punctuation omitted; Emphasis in the original). McGlaun v. Southwest Ga.

Production Credit Assn., 256 Ga. 648, 650 (2) (352 SE2d 558) (1987). Here, as stated

above, JP Capital informed Hudson at the time that he tendered the check that the

amount was insufficient to pay off the total debt owed, and thus there was no

understanding, either express or implied, that the money tendered satisfied JP

Capital’s claim. Consequently, the trial court properly granted summary judgment on

this claim.

      Accordingly, for the aforementioned reasons, we reverse the trial court’s order

granting summary judgment on Trico Environmental’s breach of warranty claim, but

we affirm the trial court’s order granting summary judgment on Trico

Environmental’s breach of contract, negligent misrepresentation, and tortious

interference with business relations claims.

                                         19
     Judgment affirmed in part and reversed in part. Mercier and Coomer, JJ.,

concur.

                                    20