Court Opinion

ID: 9850424
Source: CourtListenerOpinion
Date Created: 2023-09-24 04:56:59.056011+00
Date Added: 2024-06-11T09:20:36.973234
License: Public Domain

Adams, Judge,
concurring in part and dissenting in part.
In Case No. A04A2108,1 concur with the result in Division 1 of the majority opinion but disagree with the reasoning, and I respectfully dissent to Divisions 2 and 3.1 fully concur in Case No. A04A2109.
1. In Count 3 of their restated complaint, Stoker and his company claim that Casa Cajeo, Inc., the primary owner of the real estate intended for commercial development, was unjustly enriched when Westbury Properties refused to allow Stoker to participate in the development of the commercial property. One intended result of developing the residential property was to enhance the value of the commercial property; and, according to Stoker, Westbury promised that Stoker would participate in the future development of the commercial property if he agreed to enter into a series of joint ventures with Westbury to develop the residential property. Stoker argues that because Westbury reneged on that agreement, Casa, an entity related by ownership to — and largely controlled by — West-bury,4 was unjustly enriched to the extent that Stoker’s contribution to the development of the residential property enhanced the value of Casa’s property, a fact about which there is no dispute.5
The majority opinion concludes that the Stokers have presented no basis to conclude that it would be unjust for Casa to retain the benefit of the appreciation in the value of the land. The majority bases its conclusion on one factual statement and citations to two cases and the Restatement of Restitution. None of these grounds is proper authority for denial of the Stokers’ claim for unjust enrichment, and *832one of the cases is improperly cited for a general proposition of law. Nevertheless, the Stokers’ claim fails for different reasons.
First, the majority states that the Stokers “do not contend they were not fairly compensated” for their participation in the development of the residential property, and therefore “the benefit conferred by the work did not unjustly enrich Casa Cajco at the Stokers’ expense.” But in many cases, “[t]he measure of damages under quantum meruit or unjust enrichment is based upon the benefit conferred upon the defendant and not upon the cost to render the service or cost of the goods.” Zampatti v. Tradebank Intl. Franchising Corp., 235 Ga. App. 333, 340 (5) (508 SE2d 750) (1998), and cases cited therein. A comment to the Restatement of Restitution (First) regarding circumstances where benefit and loss do not coincide is instructive:
In other situations, a benefit has been received by the defendant but the plaintiff has not suffered a corresponding loss or, in some cases, any loss, but nevertheless the enrichment of the defendant would be unjust. In such cases, the defendant may be under a duty to give to the plaintiff the amount by which he has been enriched.
Restatement of Restitution, § 1, Unjust Enrichment, cmt. e (1937). Thus, the simple fact that Stoker may have been reasonably compensated for his work on the residential property is not controlling on the question of whether Casa was unjustly enriched.
Second, the majority relies on the obvious principle that no person is unjustly enriched as a result of services provided by the claimant where the claimant was hired and fully compensated for precisely the work performed. This is the point of Comment c of the Restatement, quoted by the majority, in which the authors explain that something more is needed for enrichment to be considered unjust.6 (Scott v. Mamari Corp., 242 Ga. App. 455, 458 (2) (530 SE2d 208) (2000), makes essentially the same point, and is therefore *833distinguishable.) In this case, Stoker alleges more. He contends the unjust element is that Westbury and related parties, possibly including Casa, breached their oral promise to let him participate on a 50/50 basis in the development of the commercial property and that he would not have helped develop the residential property (which enhanced Casa’s property value) without that promise.
Third, the case of Rodriguez v. Vision Correction Group, 260 Ga. App. 478 (580 SE2d 266) (2003), upon which the majority relies, should not be cited for a general proposition of law. The majority cited it for the proposition that because Stoker was reasonably compensated for the work actually performed, any benefit conferred on another party as a result of that work is not unjust. As shown above, there are situations where a claim of unjust enrichment is allowed even though the claimant has suffered no loss, and the measure of damages can be the benefit conferred upon the defendant. The ultimate question is not necessarily whether the claimant has been reasonably compensated but whether someone else has been unjustly enriched.
Nevertheless, Stoker’s claim for unjust enrichment fails on the facts for the following reasons: (1) all parties intended that Casa would receive the benefit of the appreciation in the value of its land, (2) someone besides Stoker could have developed the residential property, (3) the alleged agreement or agreements about commercial property did not become finalized, if at all, until after the residential development had begun, and (4) the commercial property has not yet been developed. Accordingly, no person or party has been unjustly enriched.
With regard to development of the residential property, West-bury and Casa had agreed to a price at which all future residential parcels would be sold to the Stoker/Benjh, LLCs, and therefore Stoker may have had an interest in the future appreciation of that property. But with regard to the commercial property, Stoker admits both that there was no such agreement and that when Casa ultimately sold the property to developers all parties understood that it would get “market value.” Thus, all parties intended that Casa would be the party “enriched” by the enhanced value resulting from development of the residential property. Second, there is no evidence that the *834commercial property appreciated because Stoker was the residential developer, rather than that it appreciated because the residential property was developed, regardless of who did it. Thus, Stoker had no reason to directly benefit by the appreciation of the commercial property. Third, by his own testimony, the alleged oral agreement that he could participate in the development of the commercial property was being discussed for some period of time well beyond the commencement of the residential development. In fact, at a point in time when the parties were “running out of the residential,” Stoker wás still discussing participation with the appellees in the commercial development. And, at the earliest discussion of the topic, Stoker testified that the appellees said that they did not have a problem with Stoker participating in the commercial property but that it had to be discussed: “it was always everything had to be discussed with [Bouverie] or [Volk].” Thus, the suggestion that Stoker refused to participate in the residential development on a 50/50 basis with the appellees without a promise about the commercial property has been undermined by Stoker’s own testimony. Finally, the commercial property has yet to be developed, and no party has been enriched by that effort. So, although Stoker may have indirectly conferred an advantage upon Casa, he has not demonstrated that Casa’s retention of the benefit without compensating Stoker is unjustified. In summary there is no evidence by which one could conclude that Casa was unjustly enriched as a result of the alleged broken promise. Summary judgment is proper when there is an absence of evidence to support a claim of unjust enrichment. See, e.g., Engram v. Engram, 265 Ga. 804, 807 (463 SE2d 12) (1995).
For the above reasons, I agree with the result in Division 1 of the majority opinion but not the reasoning.
2. In Count 1 of the restated complaint, Stoker alleges that the defendants breached two separate oral agreements providing that Stoker would jointly develop all of the residential portions of the Sandy Creek and Willis Creek properties, respectively; the agreements were allegedly breached when, near the completion of the development of the residential property, Stoker was informed that he could no longer participate in the remaining parcels. At the time of the alleged breach, several residential subdivisions of the larger properties remained to be developed. The majority held that any such agreement was barred by the Statute of Frauds.
(a) Stoker claims an exemption to the Statute of Frauds based on partial performance, in that he had already developed many of the residential tracts that make up Sandy Creek and work had commenced on almost all phases of Sandy Creek. The majority concluded that there was nothing contained in the individual written LLC agreements that was inconsistent with the lack of an overarching *835contract and therefore there was insufficient evidence of partial performance to take the agreement outside of the Statute of Frauds. See Studdard v. George D. Warthen Bank, 207 Ga. App. 80 (427 SE2d 58) (1993).7 But the majority’s focus on the individual LLC agreements is too narrow and there are aspects of the partial performance that are inconsistent with the lack of a broader contract.8
The majority relies on the rule, correctly stated, that in order to remove the alleged oral contract from the Statute of Frauds, “the part performance shown must be consistent with the presence of a contract and inconsistent with the lack of a contract.” (Emphasis supplied.) Majority opinion at 821. The majority concludes that Stoker’s part performance is consistent with the presence of a contract; but then, with regard to the second part of the test, the majority focuses too narrowly on the individual agreements rather than Stoker’s performance:
The Stokers’ joint development of some parcels pursuant to the written LLC agreements may be consistent with an oral agreement to develop the larger tract, but there is nothing in the LLC agreements which is inconsistent with the lack of such an oral agreement. [Cit.] The written LLC agreements in which the Stokers participated referred only to the development of the specific parcels acquired and developed under those agreements and did not tend to prove that the West-bury group agreed to the oral contract the Stokers seek to enforce.
(Emphasis supplied.) Id. This is not the proper test. For this reason alone, the majority’s result is not sound.
Moreover, there are several aspects of Stoker’s part performance that are inconsistent with the lack of an overarching agreement. The first aspect is demonstrated by the manner in which the parties operated, as stated in the appellees’ brief.
Stoker initially developed a portion of land controlled by the defendants by purchasing it himself, not as a part of any joint venture with the defendants. On this tract, Stoker received 100 percent of the *836profits. Afterward, as admitted by Bouverie, the president of West-bury, the defendants discussed inviting Stoker to co-develop the residential properties with them:
So it said to me, well, you know, okay, Mr. Stoker is a good salesman, but we’re very good at the planning and the organizing and getting all the permissions. So I discussed with Ed [Faircloth, vice president of Westbury] the fact that maybe we should approach Mr. Stoker about going into partnership where we played to our strengths, he played to his, and we moved forward on that basis.
The parties then co-developed a portion of the residential property known as Bellemeade I under Bellemeade, LLC. As the appellees state, the Bellemeade development became the template for those that followed:
The Bellemeade Joint Venture Agreement established structure by which the parties developed Bellemeade I subdivision and formed a template for future joint venture development projects, as they were agreed upon. . . .
The template had four parts: “(1) the parties formed a limited liability company to acquire the property in phases; (2) the property was acquired and developed by the limited liability company; (3) the property was sold by the limited liability company; and (4) the profits were divided by the members 50/50.” The parties used this template at least seven times over a greater than three-year period to develop portions of the two large tracts:
Between June 1999 and September 24, 2002, the parties entered into a series of development projects for development of additional distinct areas of residential property. In each case, the project was documented in similar written agreements and the method of development was the same.
Tellingly, however, at the time they were signed, the LLC agreements did not identify the property to which they were applicable, and, moreover, not all parcels of the overall property were handled in the same manner or as described in the above four-step process. As the appellees admit, a new joint venture/LLC was not created for each newly identified portion of the overall tract. Rather, if a newly identified area was considered “an additional phase” of an existing development, it was added to the existing joint venture/LLC. As stated in the appellees’ brief,
*837Property to be added to an existing Joint Venture as an additional phase was taken down by the existing Joint Venture. When property was to be in a new development, a new joint venture was formed.
The parties had “partially performed” in this manner for more than three years until the dispute arose.
For instance, Stoker participated in the development of “Bellemeade,” through the Bellemeade, LLC, by co-developing six individual portions of a larger parcel with individual names such as Oxton Plantation Sections 3, 4, and 5, and Bellemeade Section 1, Section 2, and Section 3-Phase 1. Indeed, Bellemeade, LLC was formed on June 21, 1999, and, when signed, the Bellemeade LLC agreements did not even identify the specific parcel to be developed first. But the parties did identify the entire tract available and the LLC purchased and developed the six individual parcels of that tract over the course of three years: in August 1999, May 2001, November 2001, February 2002, May 2002, and June 2002.9 This “part performance” is inconsistent with the lack of an overarching agreement as to what properties were intended for development under the Bellemeade, LLC. The other LLCs were treated in a similar manner.
Second, also admitted by the appellees, is the fact that the parties proceeded with a lack of complete formality with regard to the individual joint venture/LLCs, which suggests the parties had an overarching agreement. As stated in appellees’ brief, in some instances the parties proceeded regardless of whether individual agreements were signed and possibly, in one case, with no joint venture agreement at all:
[Wjhile not all of the agreements were signed and no one has located a Bousto Venture Agreement, it is undisputed that the parties entered into virtually identical agreements for each of the residential developments, that each of the residential subdivisions was developed under the umbrella of one or another of the Joint Ventures, and that the Parties went by the written agreements regardless of whether they were signed.
As illustrated above, in many other instances, the parties proceeded with development of individual parcels without including a descrip*838tion of the applicable land in their agreements. In fact, the appellees concede that:
when a tract of land was identified for development by an LLC to be formed, some of the Defendant parties and the Plaintiffs would enter into a Joint Venture Agreement which referenced as Exhibit “A” the tract to be developed. No Exhibit “A” was initially attached to any of the Joint Venture Agreements. . . .
That the parties continued to develop parcel after parcel without signing documents and without even formally referencing which tract pertained to each agreement is circumstantial evidence inconsistent with the lack of an agreement between the parties controlling the overall development of the residential property.
Third, Bellemeade, LLC, and therefore Stoker, had participated in development activity with regard to some of the remaining parcels. Bellemeade, LLC paid invoices for the development of Section 3-Phase 2 before the dispute between the parties developed. Bellemeade, LLC had only one checking account and the money deposited therein was not segregated to distinguish between money intended for the two different phases. After the dispute arose, the appellees took steps to remove from the Bellemeade, LLC checking account money that they considered belonged to Cochran on the grounds that it was slated for use in developing Phase 2, from which Stoker was now excluded.
Finally, the change in how Stoker participated in the residential development must be considered. Stoker developed the first parcel by himself: he purchased it, developed it, and kept 100 percent of the profits. Despite the fact that there is evidence that the appellees claim that they did not prohibit Stoker from continuing to develop the properties on his own, the parties, thereafter, developed the properties as joint ventures with Stoker now receiving 50 percent of the profits. Also, Westbury and Casa admit they never considered using anyone other than Stoker as a partner in the development of the residential property for the more than three-year span, until Stoker alleged that Westbury was reporting excessive costs.
Taken together, the above facts present circumstantial evidence that the parties had an overarching agreement that provided how individual properties would be handled depending on whether they were considered part of an existing development, that the parties would always use the same template for managing each project, and that Stoker was the sole joint venturer identified for the residential *839development. As such there is at least some evidence of part performance inconsistent with the lack of an agreement between the parties controlling the overall development of the entire residential property sufficient to take that question and all related questions regarding the alleged agreements to the jury.
(b) The appellees argue that two clauses found in the individual LLC agreements preclude the existence of an overall agreement between the parties. Each joint venture agreement includes a merger clause that provides that the agreement contains the entire agreement of the parties “relating to the matters provided herein, and no representation or warranty not expressly contained or incorporated by reference herein shall be binding on any party hereto.” Each operating agreement includes a clause that provides that the parties are free to compete in any “other” business or activity:
[N] othing in this Agreement shall be deemed to restrict in any way the rights of any Member, or of any Affiliate of any Member, to conduct any other business or activity whatsoever, and no Member shall be accountable to the Company or to any other Member with respect to that business or activity even if the business or activity competes with the Company’s business. The organization of the business shall be without prejudice to the Members’ respective rights (or the rights of their respective Affiliates) to maintain, expand, or diversify such other interests and activities and to receive and enjoy profits or compensation therefor[ ]. Each Member waives any rights the Member might otherwise have to share or participate in such other interests or activities of any other Member or the Member’s Affiliates.
But, as shown above, there is an issue of fact as to whether the parties entered into an overarching agreement and, therefore, as to whether the parties intended that the two clauses in the individual LLC agreements pertained to the overarching agreement. See Center State Farms v. Campbell Soup Co., 58 F3d 1030 (4th Cir. 1995) (applying South Carolina law). In that case, Center State Farms alleged an indefinite oral agreement under which it would raise turkeys for Campbell Soup. One of Campbell Soup’s defenses was that each of a series of individual written contracts — signed separately for each flock of turkeys — contained an integration clause in which the parties agreed that the contract comprised “the entire agreement between the parties.” The Fourth Circuit held that there was evidence from which a jury could conclude that the individual contracts did not constitute the entire arrangement between the *840parties, “and thus each integration clause of these individual contracts did not preclude evidence of an overarching oral agreement between the parties.” Id. at 1033. The same holds true here.
Thus, the question of whether the parties entered into an overarching agreement regarding the development of the residential property, as well as what the terms were and whether any such agreement was breached, should be submitted to the jury.
3. In Count 6 of the restated complaint, Stoker alleges that “[a]s parties to the joint venture agreements,” and “[a]s members of the Development LLCs,” the defendants Bouverie, Westbury and Benjh owed him a fiduciary duty and breached it. The specific allegations at issue on appeal are that the defendants usurped individual LLC opportunities by developing portions of land slated for development by the individual LLCs, converted LLC assets, and improperly excluded Stoker from LLC affairs. The majority concludes that the above-quoted clause regarding “other business or activity” found in each LLC operating agreement freed the defendants from any duty they might otherwise have had to the LLC not to compete against it. But this conclusion fails to take into account the facts presented.10
In the above-quoted provision that allows the members of the LLCs to compete in “other” business or activities, the obvious question is what constitutes “other” business and activities. The question is difficult to answer given that when an LLC was formed, the parties did not indicate the individual parcels to which it applied although they budgeted for the development of an entire identifiable tract of land. The parties added parcels to individual LLCs, as shown in an example above, for several years after the LLC agreements were signed. Thus, the meaning of “other” in the clause quoted above is ambiguous at best, creating a jury issue.
For example, applying the majority’s reasoning, the-members of Bellemeade, LLC were free to develop a parcel known as Bellemeade “Section 3-Phase 2,” despite the fact that the parcel was part of a parcel that was being developed by the LLC, and despite the fact that Phase 2 was already slated to be developed by Bellemeade, LLC before the parties developed a disagreement. As already explained, there is evidence to show that at the time Bellemeade, LLC was initially formed, it was slated to include all three sections of Bellemeade Plantation, and that a budget was drawn up at that time for all of that property. Under the majority’s holding, any member of any of the LLCs could at any time take any of the business that the LLC *841was already engaged in doing, and take money out of LLC accounts if it decided it wanted to develop the property itself.
Moreover, the same LLC operating agreement provides that the purpose of the Bellemeade, LLC was, among other things, to “accomplish any lawful business whatsoever which at any time appears to the Manager conducive to or expedient for the protection or benefit of the Company and its property,” a very broad definition of the “business and activity" of the LLC. The term of the agreement was through July 1, 2096, unless sooner terminated pursuant to the agreement. And the parties identified the entire Bellemeade area on a plat before the first parcel was purchased. The broad definition, lengthy term, and comprehensive plat would appear to reflect the parties’ intent that Bellemeade, LLC should develop all properties deemed by the parties as related to the Bellemeade development whenever they should be determined to be ripe for development.
A member of an LLC is an agent of the entity unless managers are appointed. OCGA § 14-11-301. Amember or manager must act “in a manner he or she believes in good faith to be in the best interests of the limited liability company....” OCGA § 14-11-305. And a member may have other fiduciary duties as provided “at law or in equity” to the LLC or other members. OCGA § 14-11-305 (4).11
As interpreted by the Supreme Court of Georgia, the business opportunity principle “precludes acquisition by corporate officers of the property of a business opportunity in which the corporation has a beachhead in the sense of a legal or equitable interest or expectancy growing out of a preexisting right or relationship.” (Citation and punctuation omitted.) Southeast Consultants v. McCrary Engineering Corp., 246 Ga. 503, 508 (2) (273 SE2d 112) (1980) (an inchoate opportunity to bid on a public works contract was a business opportunity where it was within scope of former employer’s business and employer had done a preliminary study of the project and had been invited to bid on the project).
Jenkins v. Smith, 244 Ga. App. 541, 542 (535 SE2d 521) (2000).
Thus there is an issue of fact as to whether the defendant/appellees breached their duties to the individual LLCs pursuant to the duties owed to each under the applicable LLC agreement or as otherwise provided by law or in equity.
I am authorized to state that Judge Barnes joins in this dissent.
*842Decided February 16, 2005
Reconsiderations denied April 14, 2005
Martin, Snow, Grant & Napier, John T. McGoldrick, Jr., Michael M. Smith, William H. Larsen, Walter E. Harrington, Jr., Shirley R. Watson, for appellants.
Walker, Hulbert, Gray, Byrd & Christy, John G. Walker, Charles W. Byrd, Gambrell & Stolz, Robert G. Brazier, Steven G. Hall, Seaton D. Purdom, for appellees.

 Casa is a corporation owned by Susan P. Cochran and a related trust and principally controlled by Cochran. Cochran is also a co-owner of Westbury Properties, along with James Pleydell-Bouverie (“Bouverie”), Cochran’s cousin, and Norman Volk. Volk is also the executive officer of Casa and an acknowledged agent of Cochran, and Cochran has given him control of development of Casa’s land. Bouverie is the president of Westhury Properties, and Edward Faircloth is the vice president. Westbury Properties manages Casa’s property. Volk and Bouverie are the controlling owners of Benjh, LLC, the entity that entered into a series of joint ventures with Stoker to develop the residential property.

 Stoker acknowledges that the oral agreement was not enforceable because the parties failed to agree to several details about Stoker’s participation in the commercial development; accordingly, Stoker dropped his related claims of breach of contract and fraud.

 Both comments “c” and “e” quoted above are comments to Topic 1 of the Restatement, an introductory topic describing the general principles underlying most claims of restitution, unjust enrichment being the primary one, but the rules for determining the circumstances under which one is allowed to recover fill up the remainder of the treatise:
The rules stated in the Restatement of this Subject depend for their validity upon certain basic assumptions in regard to what is required by justice in the various situations. In this Topic, these are stated in the form of principles. They cannot be stated as rules since either they are too indefinite to he of value in a specific case or, for historical or other reasons, they are not universally applied. They are distinguished from rules in that they are intended only as general guides for the *833conduct of the courts and are not intended to express that universality of application to particular cases which is characteristic of the statements made in subsequent chapters.
Restatement of Restitution, Ch. 1, Topic 1-Underlying Principles. Thus, the specific rules for determining when, under the Restatement, restitution is allowed are provided in the subsequent chapters. Id.

 The majority also found no fraud sufficient to remove the agreement from the Statute of Frauds. See OCGA § 13-5-31 (3).

 “The provisions of Code Section 13-5-30[, the Statute of Frauds,] do not extend to . . . cases: . . . [w]here there has been such part performance of the contract as would render it a fraud of the party refusing to comply if the court did not compel a performance.” OCGA § 13-5-31 (3). “Performance” means of the contract, not just acts taken in preparation of performance. Smith v. Davidson, 198 Ga. 231, 232 (3) (31 SE2d 477) (1944). Part performance need only be established by a preponderance of the evidence. Tidwell v. Garrick, 149 Ga. 290, 291 (2) (a) (99 SE 872) (1919); R. T. Patterson Funeral Home v. Head, 215 Ga. App. 578, 584 (1) (451 SE2d 812) (1994).

 But, after the dispute arose, Westbury refused to allow Bellemeade, LLC to participate in the development of Bellemeade “Section 3-Phase 2.”

 I agree with the majority’s analysis and conclusion regarding the Stoker member’s right of a direct action in this case.

 A nonmanager member does not have any duty to the LLC. OCGA § 14-11-305 (1).