Court Opinion

ID: 3202887
Source: CourtListenerOpinion
Date Created: 2016-05-12 14:01:11.205897+00
Date Added: 2024-06-11T14:01:42.167541
License: Public Domain

Case: 15-14289    Date Filed: 05/12/2016   Page: 1 of 14

                                                           [DO NOT PUBLISH]

              IN THE UNITED STATES COURT OF APPEALS

                       FOR THE ELEVENTH CIRCUIT
                         ________________________

                               No. 15-14289
                           Non-Argument Calendar
                         ________________________

                     D.C. Docket No. 1:13-cv-03831-TWT

ND PROPERTIES,

                                                                 Plaintiff-Appellee,

                                      versus

BLRG RESTAURANT GROUP, INC.,

                                                            Defendant-Appellant.

                         ________________________

                  Appeal from the United States District Court
                     for the Northern District of Georgia
                        ________________________

                                (May 12, 2016)

Before MARCUS, WILSON, and ROSENBAUM, Circuit Judges.

PER CURIAM:

     Buckhead Life Restaurant Group, Inc. (“BLRG”) appeals the district court’s

grant of summary judgment in favor of ND Properties, on ND Properties’

complaint, which sought damages for breach of guaranty and attorneys’ fees. On
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appeal, BLRG argues that: (1) the district court erred in concluding BLRG had

waived any defenses to liability pursuant to the terms of the guaranty agreement;

(2) ND Properties failed to establish with competent evidence its claimed amounts

of unpaid rent, re-letting costs, and interest; and (3) ND Properties failed to satisfy

the notice requirement for attorneys’ fees under Ga. Code Ann. § 13-1-11(a)(3),

and, even if the notice requirement was satisfied, the district court’s attorneys’ fees

calculation was erroneous. After careful review, we affirm in part, reverse in part,

and remand the case for further proceedings.

                                          A.

      The relevant background is this. In June 1998, ND Properties’ predecessor-

in-interest, as lessee, entered into a commercial lease agreement with 3455, LLC

(“3455”), under which 3455 leased space in the lower floors of an office building,

called the Pinnacle, in the Buckhead neighborhood of Atlanta, Georgia. 3455 used

the space to operate a restaurant. The lease was to expire on October 31, 2014.

      In the lease, 3455 agreed to pay annual rent in the amount of $264,000,

payable in 12 equal installments on the first day of each calendar month. The lease

provided that, in the event 3455 defaulted on its rent payments:

      Landlord may terminate Tenant’s right of possession (but not this
      Lease) . . . without thereby releasing Tenant from any liability
      hereunder, [and] without terminating this Lease . . . and, if Landlord
      so elects, make such commercially reasonable alterations, decorations
      and repairs as, in Landlord’s judgment, may be necessary to relet the
      Demised Premises, and Landlord may, but shall be under no
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      obligation to do so, relet the Demised Premises or any portion thereof
      in Landlord’s or Tenant’s name . . . at such rental or rentals and upon
      such other terms as Landlord reasonably may deem advisable . . . and
      receive the rent therefor, Tenant hereby agreeing to pay to Landlord
      the deficiency, if any, between all Rent reserved hereunder and the
      total rental applicable to the Lease Term hereof obtained by Landlord
      re-letting, and Tenant shall be liable for Landlord’s reasonable
      expenses in redecorating and restoring the Demised Premises and all
      reasonable costs incident to such re-letting, including broker’s
      commissions and lease assumptions . . . .

BLRG,     pursuant   to   a   separate   guaranty   agreement,    “absolutely   and

unconditionally” guaranteed 3455’s “full and prompt payment of [rent] . . . and all

other charges and sums (including, without limitations, Landlord’s legal expenses

and attorneys’ fees and disbursements) payable by [3455] under the Lease.”

      Beginning in late 2008, 3455 failed to make its monthly rent payment on

several occasions. In November 2009, ND Properties commenced a series of

dispossessory actions in Georgia state court. During court-ordered mediation in

August 2011, 3455 and ND Properties entered into a consent agreement, in which

ND Properties agreed not to evict 3455 before 11:59 p.m. on November 30, 2011,

and 3455 agreed to pay rent in advance through November 30, 2011. 3455 also

agreed that its “right to possess the premises (but not the Lease) shall immediately

terminate” at 11:59 p.m. on November 30, 2011. 3455 vacated the premises by

November 30, 2011, and made no further rent payments. ND Properties then filed

the instant complaint against BLRG, seeking inter alia, the rent payments due

under the lease from the time 3455 vacated until ND Properties found a new

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tenant, re-letting costs, accrued interest, and attorneys’ fees. 1 The district court

granted ND Properties’ motion for summary judgment, holding BLRG liable for

$464,079.49 in unpaid rent; $222,884.28 in re-letting costs; $48,627.01 in accrued

interest; and $73,633.57 in attorneys’ fees.

                                           B.

      We review a district court’s order granting summary judgment de novo,

applying the same legal standard as the district court. Nat’l Parks Conservation

Ass’n v. Norton, 324 F.3d 1229, 1236 (11th Cir. 2003). We view the material

presented and draw all factual inferences in the light most favorable to the

non-movant. Carter v. City of Melbourne, 731 F.3d 1161, 1166 (11th Cir. 2013).

Summary judgment is appropriate when “the movant shows that there is no

genuine dispute as to any material fact and the movant is entitled to judgment as a

matter of law.” Fed. R. Civ. P. 56(a). When the moving party has the burden of

proof at trial, it must affirmatively show the absence of any genuine issue of

material fact by pointing to competent evidence in the record, which, if

uncontroverted, would entitle the moving party to a directed verdict at trial. Rich

v. Sec’y, Fla. Dep’t of Corr., 716 F.3d 525, 530 (11th Cir. 2013). “If the moving

party makes such an affirmative showing, it is entitled to summary judgment

      1
          While the instant complaint was pending, ND Properties obtained a separate
federal-court judgment against 3455. Under Georgia law, that judgment created a rebuttable
presumption of Buckhead Life’s liability under the guaranty agreement. See Noorani v.
Sugarloaf Mills Ltd. P’ship of Ga., 708 S.E.2d 685, 690-92 (Ga. Ct. App. 2011).
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unless the nonmoving party, in response, comes forward with significant, probative

evidence demonstrating the existence of a triable issue of fact.” Id. (quotation

omitted). To discharge their respective burdens, the parties may rely on affidavits

or declarations that are “made on personal knowledge, set out facts that would be

admissible in evidence, and show that the affiant or declarant is competent to

testify on the matters stated.” Fed. R. Civ. P. 56(c)(4).

                                          C.

      First, we reject BLRG’s claim that the district court erred in holding that

BLRG had waived its defenses to liability pursuant to the terms of the guaranty

agreement. In Georgia, a plaintiff who produces an executed guaranty agreement

is entitled to judgment as a matter of law on a claim against the guarantor for

liability under the guaranty, unless the guarantor establishes a defense. See Ameris

Bank v. Alliance Inv. & Mgmt Co., LLC, 739 S.E.2d 481, 485 (Ga. Ct. App.

2013). BLRG has argued that it is not liable for 3455’s unpaid obligations under

the lease because certain actions ND Properties took during the lease term --

including irrationally rejecting 3455’s rent payments and filing unwarranted

dispossessory actions -- helped cause 3455 to default, thus exposing BLRG to

more risk. The Georgia Code provides that “[a]ny act of the creditor, either before

or after judgment against the principal, which injures the surety or increases his

risk or exposes him to greater liability shall discharge him.” Ga. Code. Ann. § 10-

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7-22. However, the protections of § 10-7-22 are waivable. See Builders Dev.

Corp. v. Hughes Supply, Inc., 529 S.E.2d 388, 389 (Ga. Ct. App. 2000).

      Here, the district court found that, in the following provisions of the

guaranty agreement, BLRG had waived the defense it was attempting to assert:

      Guarantor hereby expressly agrees that the validity of this Guaranty
      and the obligations of Guarantor hereunder shall in no way be
      terminated, affected, diminished or impaired by reason of . . . any
      non-liability of Tenant under the Lease, whether by insolvency,
      discharge in bankruptcy, or any other defect or defense which may
      now or hereafter exist in favor of Tenant.

      This Guaranty shall be a continuing guaranty, and the liability of
      Guarantor hereunder shall in no way be affected, modified or
      diminished by reason of . . . any dealings or transactions or matter or
      thing occurring between Landlord and Tenant.

      On appeal, BLRG claims that it did not waive any defenses in this guaranty

agreement, which the district court erroneously construed against it. BLRG relies

on House Hasson Hardware Co., Inc. v. Lawson’s Home Ctr., Inc., 772 S.E.2d 389

(Ga. Ct. App. 2015), which held, in a case involving a guarantor’s statute-of-frauds

defense, that “a court must strictly construe an alleged guaranty contract in favor of

the guarantor.” Id. at 392 (quotation omitted, emphasis added). Other Georgia

cases hold otherwise -- that is, that “contracts of guarantee should be construed

strongly against the guarantor, and if the construction is doubtful, that which goes

most strongly against the party undertaking the obligation is generally to be

preferred.”   Ameris Bank, 739 S.E.2d at 486 (quotation omitted).           But even

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assuming, arguendo, that House Hasson would apply to this case -- which does not

involve an “alleged” guaranty contract or a guarantor’s statute-of-fraud’s defense -

- BLRG has pointed to no ambiguities in the guaranty agreement.

      Rather, as the district court found, BLRG explicitly waived in the guaranty

agreement any defenses to its liability related to any “defense which may now or

hereafter exist in favor of [3455]” and “any dealings or transactions or matter or

thing occurring between [ND Properties] and [3455].” ND Properties’ actions with

regard to 3455 during the lease term, which allegedly helped cause 3455 to default,

unambiguously qualify as dealings, transactions, matters, or things, occurring

between ND Properties and 3455. Thus, the district court did not err in holding, on

summary judgment, that BLRG had waived its defenses based on that conduct.

                                        D.

      There is merit, however, to BLRG’s claim that ND Properties failed to

establish with competent evidence its claimed amount of re-letting costs (and the

associated amount of interest), although we find no error concerning the unpaid

rent amount or the interest rate. In providing evidence of these amounts -- unpaid

rent, re-letting costs, and interest -- ND Properties relied on the lease, consent

agreement, and guaranty. It also relied on a declaration by Linda Beauchamp, who

was employed from June 1994 through October 2012 as a Senior Property

Manager with the management company ND Properties hired to manage the

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Pinnacle building. In her declaration, Beauchamp testified that neither 3455 nor

BLRG made any rent payments after 3455 vacated the premises on November 30,

2011. Beauchamp added that, in December 2012, ND Properties executed a lease

with a new tenant, who began paying rent on October 1, 2013. She calculated that,

pursuant to the terms of the lease, 3455 owed $464,074.49 in unpaid rent for the

period from December 1, 2011, through September 30, 2013.

      We are unconvinced by BLRG’s challenges to ND Properties’ claimed

amount of past-due rent. It is true that Beauchamp only worked for ND Properties’

management company through October 2012, so she could not have had personal

knowledge of 3455 or BLRG’s nonpayment from the time she left until September

2013. Nevertheless, BLRG does not dispute that neither 3455 nor it paid rent

during the 22-month period from December 1, 2011, through September 30, 2013.

      Nor has BLRG specifically disputed Beauchamp’s calculation of the total

unpaid rent amount for the relevant 22-month period, which she testified was

$464,074.49. As the district court noted, the lease provided an annual rental rate of

$264,000, which yielded a monthly rental rate of $22,000. Simple arithmetic

shows the total rent for 22 months would be $484,000. The figure Beauchamp

calculated ($464,074.49) was lower than that amount, and, other than challenging

Beauchamp’s competence, generally, BLRG has not claimed that the total she

calculated overstated 3455’s liability under the lease. Accordingly, there was no

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genuine dispute as to the amount of unpaid rent due under the lease, and the district

court did not err in granting summary judgment for ND Properties on that issue.

      We agree with BLRG, however, that Beauchamp’s declaration was

insufficient to support ND Properties’ motion for summary judgment on its

claimed amount of re-letting costs. In her declaration, Beauchamp testified that, in

December 2012, ND Properties executed a ten-year lease with a new tenant, who

began paying rent on October 1, 2013. She reported that ND Properties expended

a total of $2,228,843 in re-letting costs, which included $26,000 in legal costs,

$258,780 in commissions, $25,000 in construction management, and a $1,919,063

tenant improvement allowance. Beauchamp testified that ND Properties was only

seeking to recover $222,884.28 from BLRG, which amount:

      was calculated by taking the total cost to re-let the Premises
      ($2,228,843.00), dividing that amount by 120 months (the term of the
      new tenant’s lease (the “New Lease Term”)) and then multiplying that
      amount ($18,573.69) by 12, which represents the number of months
      (November 1, 2013 to October 31, 2014) in the New Lease Term that
      were supposed to have been covered by the Lease at issue in this case.

      But this declaration was insufficient to discharge ND Properties’ burden at

summary judgment to show no genuine issue of material fact as to the amount and

reasonableness of its re-letting costs. For starters, Beauchamp’s own declaration

makes clear that she was no longer working for ND Properties’ management

company at the time ND Properties secured a new tenant; thus Beauchamp could

not have had personal knowledge of ND Properties’ re-letting costs. See Fed. R.
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Civ. P. 56(c)(4) (“A[] . . . declaration used to support . . . a motion [for summary

judgment] must be made on personal knowledge . . . and show that the . . .

declarant is competent to testify on the matters stated.”).        Any information

Beauchamp learned from the management company’s current employees would be

hearsay inadmissible at trial and could not be used to discharge ND Properties’

burden at summary judgment. See Jones v. UPS Ground Freight, 683 F.3d 1283,

1293-94 (11th Cir. 2012) (“[I]nadmissible hearsay cannot be considered on a

motion for summary judgment . . . [unless it] could be reduced to admissible

evidence at trial or reduced to admissible form.”) (quotations omitted).

      Further, under the lease, 3455 (and BLRG as guarantor) was obligated to

reimburse ND Properties only for “reasonable” re-letting costs, and the

reasonableness of the re-letting costs is disputed by the declaration of 3455’s Chief

Financial Officer, Christo Makrides. Makrides testified that the premises were in

good condition at the time 3455 vacated and that ND Properties could have re-let

them without performing any construction work.           Makrides also said (and

ND Properties admitted in its summary-judgment reply) that ND Properties’ lease

with the new tenant covered a larger rental area than 3455’s lease, so some of the

tenant improvement costs were attributable to the new space, and not to 3455’s

breach.   ND Properties did not address, through Beauchamp’s declaration or

otherwise, how the re-letting costs it incurred were reasonable; in particular, it

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offered no argument in its summary-judgment reply to refute Makrides’s testimony

that the premises could have been re-let without remodeling.2

       The district court concluded that BLRG failed to establish a genuine factual

dispute on the issue of reasonableness because ND Properties only sought about

10% of its total re-letting costs. But ND Properties did not explain why it sought

10% of the re-letting costs, nor what percentage of the re-letting costs was

appropriate. Moreover, as noted above, ND Properties failed to establish any of its

re-letting costs with competent evidence, given Beauchamp’s incompetency to

testify on that issue. Thus, the district court erred by granting ND Properties’

motion for summary judgment on its claim for $222,884.28 in re-letting costs.

       BLRG also claims that Beauchamp’s affidavit was insufficient to establish

the interest rate applicable to the amounts due under the lease and the total amount

of interest that had accrued ($48,627.01). But BLRG has not specifically disputed,

or pointed to any evidence that contradicts, Beauchamp’s testimony that the prime

rate during the relevant time period was 3.25%, and that an interest rate of 5.25%

applied under the lease’s terms. The lease provided that an interest rate equal to

“the then Prime Rate in effect from time to time plus two percentage points” would

       2
           ND Properties contends that Makrides’s testimony was not properly before the
district court because it constituted expert testimony and BLRG failed to follow the notice
requirements for expert witnesses under the local district court rules. The district court made no
finding as to whether Makrides was offered as an expert witness, or whether BLRG complied
with the local rules. In any event, we are not persuaded by ND Properties’ argument that
Makrides’s testimony about the state of the premises at the time 3455 vacated and the size of the
rental area in 3455’s and the new tenant’s leases constituted expert testimony.
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apply to unpaid amounts due under the lease. Thus, the district court correctly

granted summary judgment for ND Properties on the applicable interest rate.

      We agree with BLRG, however, that ND Properties failed to discharge its

summary-judgment burden with regard to the amount of interest that had accrued.

Beauchamp’s declaration did not include any interest calculations, and failed to

specify which unpaid balances had accrued interest and when interest began

accruing.    Presumably, the total she cited included interest assessed on

ND Properties’ claims for certain parking and utilities charges, which claims

ND Properties later voluntarily dismissed, and on ND Properties’ claimed

re-letting costs, on which the district court erroneously granted summary judgment.

While ND Properties has established, at the summary-judgment stage, that it is

entitled to interest at an annual rate of 5.25% on the $464,074.49 of unpaid rent,

the record does not establish the amount of interest that has accrued on that sum.

Accordingly, the district court erred in granting summary judgment for ND

Properties on the amount of interest that accrued on 3455’s unpaid obligations.

                                         E.

      Next, we reject BLRG’s claim that the district court erred in holding that

ND Properties had satisfied the notice requirements for attorneys’ fees set out in

Ga. Code Ann. § 13-1-11(a)(3). Section 13-1-11(a)(3) provides:

      The holder of the note or other evidence of indebtedness or his or her
      attorney at law shall, after maturity of the obligation, notify in writing
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      the maker, endorser, or party sought to be held on said obligation that
      the provisions relative to payment of attorney’s fees in addition to the
      principal and interest shall be enforced and that such maker, endorser,
      or party sought to be held on said obligation has ten days from the
      receipt of such notice to pay the principal and interest without the
      attorney’s fees.

Ga. Code Ann. § 13-1-11(a)(3). A plaintiff’s complaint may satisfy the notice

requirement of § 13-1-11(a)(3). See, e.g. Logan v. Hogan, 656 S.E.2d 868, 869

(Ga. Ct. App. 2008) (“Hogan in the complaint gave the ten-day notice required by

[] § 13-1-11(a)(3)); Upshaw v. S. Wholesale Flooring Co., 398 S.E.2d 749, 752

(Ga. Ct. App. 1990) (“The complaint and the attachments thereto gave sufficient

notice to appellant of appellee’s intent to collect attorney’s fees.”).

      Here, ND Properties’ complaint contained a separate count for attorneys’

fees under § 13-1-11. It also provided that BLRG had ten days from the date of

service of the complaint to pay the unpaid amounts due under the lease and

guaranty to avoid paying attorneys’ fees. Based on this complaint, which the

district court was permitted to consider on summary judgment, Celotex Corp. v.

Catrett, 477 U.S. 317, 323 (1986) (noting the moving party may satisfy its

summary-judgment burden by relying on, among other things, “the pleadings,

depositions, answers to interrogatories, and admissions on file”) (emphasis added,

quotation omitted), the district court did not err in concluding that ND Properties

had met the notice requirement provided by § 13-1-11(a)(3).

                                           F.

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      Lastly, we agree with BLRG that the district court should recalculate

attorneys’ fees on remand. By statute, attorneys’ fees are limited to “15 percent of

the first $500.00 of principal and interest owing on such note or other evidence of

indebtedness and 10 percent of the amount of principal and interest owing thereon

in excess of $500.00.” Ga. Code Ann. § 13-1-11(a)(2). Because we are reversing

the district court’s grant of summary judgment on the amount of re-letting costs

and interest BLRG owes under the lease and guaranty, we vacate the district

court’s award of attorneys’ fees.     On remand, after BLRG’s total liability is

determined, the district court should recalculate the attorneys’ fees to which

ND Properties is entitled, pursuant to the formula set forth in § 13-1-11(a)(2).

      Accordingly, we: (1) affirm the district court’s grant of summary judgment

for ND Properties on its claim for $464,047.49 in unpaid rent, on the applicable

interest rate, and on ND Properties’ entitlement to attorneys’ fees; (2) reverse the

district court’s grant of summary judgment for ND Properties on the issue of re-

letting costs and the amount of interest accrued; (3) vacate the award of attorneys’

fees; and (4) remand the case for further proceedings consistent with this opinion.

AFFIRMED IN PART, REVERSED AND REMANDED IN PART.

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