Hatchett Firm, P. C. v. Atlanta Life Fin. Grp., Inc.

358 Ga.App. 607

856 S.E.2d 1

The HATCHETT FIRM, P. C. et al.

v.ATLANTA LIFE FINANCIAL GROUP, INC.

A20A1723

Court of Appeals of Georgia.

March 1, 2021

Roy Amit Banerjee, Angelina Kim Whitaker, Atlanta, for Appellant.

Lisa McVicker Wolgast, Talia B. Wagner, Atlanta, for Appellee.

Mercier, Judge.

Beginning in 2014, Atlanta Life Financial Group, Inc. ("Atlanta Life") subleased office space to The Hatchett Firm, P. C. and Durham Law Group, P. C. ("subtenants"). Following the subtenants’ failure to pay rent, Atlanta Life filed suit against them, their managing director and principal claiming breach of contract. Atlanta Life filed a motion for summary judgment on its claims and the subtenants’ counterclaims for breach of contract, recoupment, and attorneys fees, which the trial court granted. The subtenants appeal, claiming that Atlanta Life waived its right to collect rent and breached the sublease.¹ For the following reasons, we affirm in part and reverse in part.

Summary judgment is proper if the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving part is entitled to a judgment as a matter of law[.]" OCGA § 9-11-56 (c). "In our de novo review of the grant of a motion for summary judgment, we must view the evidence, and all reasonable inferences drawn therefrom, in the light most favorable to the nonmovant." Circle K Stores v. T. O. H. Assoc. , 318 Ga. App. 753, 754, 734 S.E.2d 752 (2012) (citation and punctuation omitted).

So viewed, the evidence showed the following. In 2012, Atlanta Life leased office space, located at 191 Peachtree Street in Atlanta, from 191 Peachtree Project LLC ("landlord")² , pursuant to a "master lease." On November 15, 2014, Atlanta Life and The Hatchett Firm entered into a sublease, which was subsequently amended on June 29, 2016, to add The Durham Law Group.

Beginning in January 2018, the subtenants admittedly failed to pay the full amount of rent required by the sublease to Atlanta Life. Furthermore, beginning in November 2018, they ceased paying any rent to Atlanta Life. On April 12, 2019, Atlanta Life sent a demand letter to the subtenants demanding, inter alia, the unpaid rent.

On May 17, 2019, the subtenants entered into a lease agreement for the subleased premises directly with the landlord. On the same day, the landlord and Atlanta Life entered into an amended lease agreement that terminated the subleased portion.

Atlanta Life filed the underlying lawsuit against the subtenants on May 31, 2019, alleging that the subtenants breached the sublease by failing to pay past due rent. The subtenants filed an answer and counterclaim, seeking damages for breach of contract, recoupment, and attorneys fees, claiming that Atlanta Life terminated the master lease without their consent, which breached the sublease.

1. The subtenants do not contend that they paid the full amount of rent from January 2018 to April 2019. Instead they admit to submitting only partial rent payments to Atlanta Life for ten months, and then failing to pay any rent to Atlanta Life for six months. However, the subtenants claim that the trial court erred by granting Atlanta Life's motion for summary judgment because a genuine issue of material fact remains as to whether Atlanta Life waived the terms of the sublease by not issuing a demand for the unpaid rent until its April 12, 2019 letter.

A mutual departure from the terms of an agreement results in a quasi-new agreement suspending the original terms of the agreement until one party has given the other reasonable notice of its intent to rely on the original terms. The question whether the parties’ mutual conduct caused a waiver and effected a quasi-new agreement ordinarily is a question for the jury.

Circle K Stores , supra at 754-755 (1), 734 S.E.2d 752 (citation and punctuation omitted). See also OCGA § 13-4-4. "The burden of proof lies with the party asserting waiver[.]" Miller v. Hiawassee Allen Family, LLC , 357 Ga. App. 770, 849 S.E.2d 500 (2020) (citation and punctuation omitted).

In 1979, our Supreme Court answered the following question in the affirmative: "does the evidence of repeated late, irregular payments accepted by the seller create a factual dispute as to whether a quasi new agreement was created"?³ Smith v. Gen. Finance Corp. of Ga. , 243 Ga. 500, 255 S.E.2d 14 (1979) ; See also Ga. Const. of 1983, Art. VI, Sec. VI, Par. VI ("The decisions of the Supreme Court shall bind all other courts as precedents."). While the Smith case discussed the sale of an automobile and dealt with late, irregular payments, rather than partial or non-existent rent payments, the underlying logic is identical to the issue at hand. See id. at 500, 255 S.E.2d 14. By repeatedly accepting payment (or nonpayment) in deviation from the terms stipulated in the sublease, a factual dispute arose as to whether a quasi-new agreement was created. See id. at 501, 255 S.E.2d 14. Atlanta Life did not object to the partial payment or nonpayment until 16 months after the subtenants first failed to pay the rent in full. Furthermore, the existence of an anti-waiver provision in the sublease does not preclude waiver, as acceptance of irregular payments raises a jury question as to whether the anti-waiver provision in the sublease was waived. Id. ; see also Yash Solutions v. New York Global Consultants , 352 Ga. App. 127, 136 (1) (a), 834 S.E.2d 126 (2019) ("under Georgia law, a no-waiver or anti-waiver provision in a contract may itself be waived.")

There is no dispute in the present matter that Atlanta Life accepted partial rent payment or no rent payment at all from the subtenants for 16 months, and Atlanta Life does not claim that it notified the subtenants of its desire to adhere to the sublease's terms until 16 months after the first partial rent payment. As such, pursuant to Smith , an issue of material fact exists as to whether that acceptance created a quasi-new agreement. See also Jaraysi v. Sebastian , 318 Ga. App. 469, 475-476 (1) (c), 733 S.E.2d 785 (2012) (disapproved of on other grounds by George v. Hercules Real Estate Svcs. , 339 Ga. App. 843, 851 (2) (a) (ii), 795 S.E.2d 81 (2016) ; Shalom Farms v. Columbus Bank & Trust , 169 Ga. App. 145, 147 (2), 312 S.E.2d 138 (1983) (physical precedent only) (whether a party's failure to make payments created the existence of a quasi-new agreement was a question for the jury); Baxter v. Ga. Fed. S & L. , 152 Ga. App. 753, 753-754 (1), 264 S.E.2d 242 (1979). Accordingly, the trial court erred by granting summary judgment to Atlanta Life on its breach of contract claim, and the ruling is reversed. See Smith , supra ; compare Circle K , supra at 755 (1), 734 S.E.2d 752 (where landlord did not accept the partial rent payments "without identifying to the tenant that he's underpaying his rent" there was no fact issue as to waiver); Duncan v. Lagunas , 253 Ga. 61, 62-63 (1), 316 S.E.2d 747 (1984) (no mutual departure from contract when three late payments were accepted because the accepting party gave an "expression of displeasure," which conveyed that he did not intend to waive the terms of the contract).

2. The subtenants claim that the trial court erred by granting summary judgment to Atlanta Life on their counterclaim for breach of contract, recoupment, and attorneys fees. In support of their claim, the subtenants state: "Atlanta Life did not dispute that it breached the Master Lease by failing to pay rent to [the landlord]. Atlanta Life did not dispute that [the landlord] filed an eviction proceeding against Atlanta Life." However, the subtenants fail to support these statements with any citations to the record, contrary to the requirements in Court of Appeals Rule 25 (a) (1) and (c) (2) (i). "We remind counsel that it is not the job of the Court of Appeals to cull the record on behalf of a party, and that a lack of proper citations greatly hinders our consideration of the issues on appeal." Bulgin v. Ga. Dept. of Transp. , 292 Ga. App. 1, 2 (1), 663 S.E.2d 730 (2008) (citation and punctuation omitted). Furthermore, "the burden is on the party alleging error to show it affirmatively by the...