Am. Mgmt. Servs. E., LLC v. Fort Benning Family Cmtys., LLC

333 Ga.App. 664

774 S.E.2d 233

AMERICAN MANAGEMENT SERVICES EAST, LLC, et al.

v.FORT BENNING FAMILY COMMUNITIES, LLC, et al.

No. A15A0125.

Court of Appeals of Georgia.

July 15, 2015.

Reconsideration Denied July 31, 2015.

Greenberg Traurig, Michael J. King, Stephanie O. Mitchell, Page, SCrantom, Sprouse, Tucker & Ford, William L. Tucker, Marcus B. Calhoun, Jr., Thomas F. Gristina, for Appellants.

Buchanan and Land, Jerry A. Buchanan, Lori M. Leonardo, Bondurant, Mixson & Elmore, Michael B. Terry, Bret R. Hobson ; The Finley Firm, James B. Finley, Andrew M. Gibson, Austin J. Hemmer, R. Walker Garrett, for Appellees.

Opinion

PHIPPS, Presiding Judge.

This appeal from two summary judgment orders is the third appearance of this case before this court.¹ In American Management I, the court stated the facts as follows.

Appellees Fort Benning Family Communities, LLC (“FBFC”) and Fort Belvoir Residential Communities, LLC (“BRC”) are owners of military housing projects at Fort Benning, Georgia and Fort Belvoir, Virginia. On May 20, 2010, they filed a complaint in Muscogee County Superior Court seeking a declaratory judgment that their property management agreements with appellant American Management Services East LLC (“AMSE”), their property manager, automatically terminated for cause because of AMSE's misconduct. They also alleged breach of fiduciary duty, fraud, conspiracy to commit fraud, and unjust enrichment, and sought an accounting.² The parent company, American Management Services LLC d/b/a Pinnacle (“AMS”), was also named in the action.³

AMS, a property management firm ..., and Clark Realty, a national general building contractor, entered into a joint venture known as “Clark Pinnacle,” to bid on military housing privatization projects. Clark Pinnacle won four bids to establish private military housing facilities, including projects at Fort Benning and Fort Belvoir. Clark Pinnacle created limited liability companies (“Clark Pinnacle LLCs”) to manage each project, which were 70 percent owned by Clark and 30 percent owned by Pinnacle. It formed Clark Pinnacle Belvoir, LLC to operate the Fort Belvoir facility and Clark Pinnacle Benning, LLC to operate the Fort Benning facility. In addition, each LLC had a Clark manager and Pinnacle manager, whose duties were defined by the LLC's operating agreement.⁴

Clark Pinnacle Benning LLC and the United States Army thereafter entered into a limited liability company operating agreement to form FBFC whose purpose was to develop and operate the Fort Benning location. Likewise, BRC was formed under a similar agreement between Clark Pinnacle Belvoir, LLC and the Army to develop and operate the Fort Belvoir facility. FBFC and BRC entered into property management agreements with AMSE for the Fort Benning and Fort Belvoir facilities.⁵

In American Management I, AMS and AMSE (hereinafter collectively “Pinnacle”) appealed the trial court's grant of Fort Benning Family Communities LLC (hereinafter “FBFC”) and Fort Belvoir Residential Communities, LLC's (hereinafter “FBRC”) motion to enjoin Pinnacle from pursuing a Virginia action, which action it filed after it had filed in the instant (Georgia) suit an answer, counterclaim, motion to dismiss the action, and motion to dismiss the declaratory judgment claim related to the termination of the Fort Belvoir property management agreement (“PMA”) under the doctrine of forum non conveniens. Pinnacle also appealed the trial court's denial of its motion to dismiss the declaratory judgment claim for forum non conveniens.⁶ This court affirmed the judgment of the trial court.⁷

In American Management II, Pinnacle appealed the trial court's order (entered October 2011) which lifted the restriction in an earlier injunction that had prohibited FBRC from removing Pinnacle as property manager at the Fort Belvoir facility.⁸ This court affirmed that judgment, too.⁹

While American Management II was on appeal, Pinnacle filed in the instant action an amended counterclaim, adding, inter alia, a claim against FBFC alleging breach of contract for wrongful termination; Pinnacle asserted that in June 2010, it was “physically ... forced out ... as the property manager,” and “others” were installed to perform its duties. Pinnacle later filed a “Second Amended Counterclaim,” wherein it, among other things, added a claim against FBRC for breach of contract for wrongful termination.

FBFC and FBRC (hereinafter, collectively “the Owners”) amended their complaint seven times, ultimately dropping their claims for declaratory judgment as to whether their PMAs with Pinnacle automatically terminated for cause, adding a claim for violation of Georgia's RICO statute, and maintaining their initial claims for breach of fiduciary duty, aiding and abetting breach of fiduciary duty, fraud, conspiracy to commit fraud, and unjust enrichment.

On January 17, 2014, the Owners filed a motion for summary judgment, which they later amended after Pinnacle filed its second amended counterclaim; in an amended brief the Owners asserted that they were entitled to judgment as a matter of law on four counts of Pinnacle's second amended counterclaim, which counts alleged a breach of contract for wrongful termination of both PMAs (two counts), the failure to pay AMSE for reimbursable expenses, and the failure to pay AMSE a certain fee for supervising a mold abatement project to completion and under budget. On January 24, 2014, Pinnacle filed a motion for partial summary judgment as to claims alleged in the Owners' seventh amended complaint, including those for breach of fiduciary duty, aiding and abetting breach of fiduciary duty, fraud, conspiracy to commit fraud, RICO, and unjust enrichment.

On March 20, 2014, the trial court entered an order granting the Owners' motion for summary judgment as to Pinnacle's two wrongful termination claims, and denying the Owners' motion with regard to Pinnacle's claims based on the failure to pay AMSE the expenses and fee (as set out above). On the same day, in a separate order, the trial court denied Pinnacle's motion for partial summary judgment with regard to the Owners' complaint. It is from these two orders that Pinnacle appeals.

On appeal, Pinnacle contends that the trial court erred by: (1) granting summary judgment in favor of the Owners as to AMSE's counterclaim for wrongful termination of the PMAs; (2) failing to apply Virginia's economic loss rule to bar FBRC's tort claims; (3) denying Pinnacle's motion for summary judgment as to the Owners' claim for breach of fiduciary duty; (4) denying Pinnacle's motion for summary judgment as to the Owners' claim for aiding and abetting a breach of fiduciary duty; (5) denying Pinnacle's motion for summary judgment as to FBRC's claims under Georgia's RICO statute; and (6) denying Pinnacle's motion for summary judgment as to the Owners' unjust enrichment claim.

Appeal of Order Partially Granting the Owners' Motion for Summary Judgment

1. To support its contention that the trial court erred by granting summary judgment in favor of the Owners on Pinnacle's counterclaim alleging breach of contract for wrongful termination of the PMAs, Pinnacle advances several arguments. Pinnacle argues that: (a) statements in affidavits upon which the trial court relied “raised myriad issues of disputed facts”; (b) the Owners failed to give Pinnacle notice of an alleged default and an opportunity to cure any default, as required by the PMAs; (c) the Owners' termination of the PMAs was based on an allegation of fraud, rather than on a determination of fraud (which determination was for a jury to make); and to the extent that the trial court relied on “misconduct” as a basis to terminate the PMAs, that term is not defined in the PMAs and could not serve as a basis for the trial court's summary judgment ruling; (d) because the Owners “had discretion over whether to terminate the PMAs in the event of fraud; that is, they could elect the remedy or waive it,” the default provision was not automatically triggered in the event of fraud; (e) it was for the jury to decide whether the Owners had complied with an “implied covenant of good faith and fair dealing” in their termination of AMSE, and the evidence showed that the Owners did not act in good faith in that regard; (f) the Owners' removal of Pinnacle violated “Project Operating Agreements”; and (g) the PMAs' “insurance clause precludes automatic termination.”

To prevail at summary judgment ... the moving party must demonstrate that there is no genuine issue of material fact and that the undisputed facts, viewed in the light most favorable to the nonmoving party, warrant judgment as a matter of law. A defendant may do this by showing the court that the documents, affidavits, depositions and other evidence in the record reveal that there is no evidence sufficient to create a jury issue on at least one essential element of plaintiff's case. If there is no evidence sufficient to create a genuine issue as to any essential element of plaintiff's claim, that claim tumbles like a house of cards. All of the other disputes of fact are rendered immaterial.... If the moving party discharges this burden, the nonmoving party cannot rest on its pleadings, but rather must point to specific evidence giving rise to a triable issue.¹⁰

(a) Pinnacle argues that statements in affidavits upon which the trial court relied “raised myriad issues of disputed facts,” precluding summary judgment.

The PMAs provided that AMSE would receive an annual base fee (plus reimbursement of certain expenses) as well as the opportunity to earn a property management incentive fee. AMSE's incentive fee was based on various factors, including its timeliness (evaluated on a “pass/fail” basis) in responding to resident requests for maintenance; the requests were entered by Pinnacle as “work orders” into a certain database utilized by Pinnacle. An investigation undertaken at Pinnacle's behest revealed that although managers at Fort Belvoir did not direct...