Lamar Co. v. Goshen Springs Prop. III, LLC

634 F.Supp.3d 1327

The LAMAR COMPANY, LLC, Plaintiff, v. GOSHEN SPRINGS PROPERTY III, LLC, Defendant/Third-Party Plaintiff, v. Goshen Springs United, LLC, Third-Party Defendant.

Civil Action No. 1:20-cv-04246-VMC

United States District Court, N.D. Georgia, Atlanta Division

Signed October 5, 2022

Joe P. Reynolds, John P. Jett, Kilpatrick Townsend & Stockton, LLP, Atlanta, GA, for Plaintiff.

Bryan M. Knight, Sherri G. Buda, Knight Palmer, LLC, Atlanta, GA, for Defendant/Third-Party Plaintiff.

ORDER

Victoria Marie Calvert, United States District Judge

The matter is before the Court on Plaintiff The Lamar Company, LLC ("Lamar") and Defendant Goshen Springs Property III, LLC's ("Goshen III") cross-Motions for Summary Judgment. (Docs. 75, 76). For the reasons that follow, the Court will deny Plaintiff's Motion for Summary Judgment and grant Defendant's Motion for Summary Judgment in part.

I. Background

A. The 1995 Lease of the Property

This case arises out of a dispute over the leasehold rights to a billboard located in Norcross, Georgia. (Doc. 79 ¶¶ 1, 4; Doc. 81 ¶¶ 1-2). Frank Ferris and Carter Crittenden initially owned the land on which that billboard now sits (the "Property"). (Doc. 81 ¶ 1). In 1995, Mr. Farris and Mr. Crittenden signed a 25-year lease with a predecessor of Lamar, 3M Media, to allow 3M to build and operate the billboard (the "1995 Lease"). (Doc. 79 ¶¶ 1-2, 4; Doc. 81 ¶ 2). The 1995 Lease was set to expire on November 1, 2020. (Doc. 79 ¶ 2). Under the Lease, the annual rent for years 11-25 was the greater of $27,000 or 30% of the gross income generated by the billboard on the Property. (Doc. 79 ¶ 3; Doc. 81 ¶ 3).

B. Formation of Goshen Springs United, LLC

In July 2000, Messrs. Farris and Crittenden formed a Georgia limited liability company called "Goshen Springs United, LLC" ("United"). (Doc. 79 ¶ 5; Doc. 81 ¶ 5). They were the only two members and managers of United; Mr. Farris held a 55% interest and Mr. Crittenden a 45% interest. (Doc. 79 ¶ 5; Doc. 76-7 §§ 1.1; 2.12). United's Articles of Organization provide that "Management of the Company shall be vested in one or more managers." (Doc. 76-7 at 7). United's Operating Agreement contains the following provisions relevant to this dispute:

2.12. Manager shall mean one or more managers. Specifically, Manager shall mean Frank F. Farris and Carter Crittenden or any Person or Persons who succeeds them in that capacity . . . In the event there is more than one Manager, any action to be taken by the Manager under this Company Agreement may be taken with the consent of a majority of the Managers.

(Doc. 76-7 at 15 (italics added)).

6.1 Management Rights. Subject to subsection 6.2 of this Article, all decisions to be made or actions to be taken on behalf of the Company shall be performed by the Managers.

6.2. Certain Powers of Managers and Restrictions on Authority of Managers. Notwithstanding subsection 6.1 of this Article, unless the Members shall unanimously consent in writing, the Managers shall not take any of the following actions:

. . .

6.2.11.Enter into agreements or contracts, execute any instruments, drafts, notes and other negotiable instruments, and to give receipts, releases, and discharges;

. . .

6.2.13.Execute and modify leases with respect to any part or all of the assets of the Company.

(Doc. 76-7 at 17-18 (italics added)).

6.6. Authority of Manager To Bind the Company. Upon the unanimous consent of the Members, the Manager and agents of the Company authorized by the Manager shall have the authority to bind the Company.

(Id. at 20 (italics added)).

Shortly after forming United, Messrs. Farris and Crittenden executed a quitclaim deed to transfer the Property from themselves to United. (Doc. 79 ¶ 5; Doc. 81 ¶ 7).

C. Subsequent Transfers of Control

In 2017, United sold the Property to Goshen Springs Property, LLC,¹ but retained the billboard leasing rights (and the 1995 Lease) through a limited warranty deed. (Doc. 81 ¶¶ 8-9; Doc. 76-7; Doc. 76-9 at 4). After the sale, United notified Lamar's real estate manager, Tim Adrien, that it had sold the Property, and sent him a copy of the 2017 limited warranty deed. (Doc. 81 ¶ 13; Doc. 76-9 at 2-4).

Since that 2017 sale of the Property, both Mr. Farris and Mr. Crittenden have died. (Doc. 79 ¶ 8). After his death, Mr. Farris's interest in United passed to the Farris Family Revocable Trust (the "Trust"), and in 2019, Christopher Tierney was appointed receiver ("Receiver") over the Trust's interest in United. (Doc. 79 ¶¶ 9-11; Doc. 75-9 at 1). Mr. Tierney was assisted in managing the Trust by a team at Moore Colson, including Amanda Levesque and Rusty Lane, both certified public accountants (together, the "CPAs," and collectively with the Receiver, the "Receiver's Team"). (Doc. 81 ¶ 21). Upon Mr. Crittenden's death in 2018, his interest in United became part of his estate, which was administered by his wife, Marjorie Crittenden.² (Doc. 79 ¶ 10; Doc. 81 ¶ 28).

D. The Proposed Lease Renewal

At some point, the Receiver's Team came under the mistaken impression that the 1995 Lease was set to expire in November 2019, not November 2020, and they began corresponding with Lamar about the 1995 Lease.³ The initial communication from CPA Lane to Mr. Adrien on March 1, 2019, stated, "I work for . . . the Receiver for the Farris Family Revocable Trust and the assets of Frank F. Farris III [ ]. Frank Farris was the 55% owner in the Goshen Springs Property, LLC which hold the 34012B and 34013B leases. Attached is a copy of the Receivership Order." (Doc. 76-22 at 2). On March 25, 2019, CPA Lane sent Lamar a W-9 form on behalf of Farris Family Revocable Trust that was signed by the Receiver. The W-9 referred to "Goshen Springs United, LLC" in Box 7, for which the instructions state, "List account number(s) here (optional)."⁴ (Doc. 76-24 at 3-5).

In April 2019, the Receiver's Team asked Lamar for a proposal to renew the lease. (Doc. 81 ¶¶ 25, 32). Lamar, through Mr. Adrien, provided a form entitled "Sign Location Lease" to the Receiver and the CPAs. (Doc. 81 ¶ 33). That form included a right of first refusal for Lamar, a provision which was not included in the 1995 Lease. (Doc. 81 ¶¶ 33-36; 43). The form also included increased rent of $30,000, "payable annually in advance in equal installments of [$30,000] each or [30%] of gross whichever is greater, with the first installment due on the first day of the month following commencement for the guaranteed payments and the percentage balance within [60] days of the end of each respective lease year." (Doc. 75-9 at 26). The Receiver's Team proposed some edits to the form. (Doc. 81 ¶¶ 33-37). Lamar accepted the revisions and then sent a new proposed lease (the "Proposed Lease"), which stated that the Lessors were "Farris Family Revocable Trust and Marjorie Crittenden," and included signature lines for both of them. (Doc. 79 ¶ 29; Doc. 76-31 at 12-13). Neither the form Sign Location Lease nor the Proposed Lease mentions United by name. (Doc. 76-31 at 12-13).

On or about May 1, 2019, Mr. Tierney signed the Proposed Lease "as receiver" for the Farris Family Revocable Trust. (Doc. 79 ¶¶ 28-29; Doc. 75-9 at 27). CPA Levesque then emailed the Proposed Lease containing Mr. Tierney's signature to Mr. Adrien, and asked in her email, "Are you planning on reaching out to Marjorie [Crittenden] to get her signature, or is that something you'd rather [the Receiver's firm] handle? We're hoping to get this finalized sooner rather than later so we don't have to worry about it when November rolls around." (Doc. 81 ¶ 38; Doc. 75-11 at 13). Lamar never responded to that question, and neither Lamar nor the Receiver asked Ms. Crittenden to sign the Proposed Lease at that time. (Doc. 81 ¶ 38; Doc. 79 ¶ 34).

The Proposed Lease was then signed by Lamar though Nick Brown, "Vice-President/General Manager" on or about June 4, 2019, at which time Mr. Adrien emailed a copy with Mr. Brown's signature to CPA Levesque. (Doc. 79 ¶ 28; Doc. 81 ¶ 40; Doc. 75-9 at 27; Doc. 76-35 at 2). The Proposed Lease's term was set to begin on November 1, 2019. (Doc. 79 ¶ 20; Doc. 75-9 at 26). Ms. Crittenden, despite being listed as one of the Lessors and having a signature line on the Proposed Lease, never signed the Proposed Lease. (Doc. 79 ¶ 34; Doc. 75-9). In June 2019, Mr. Adrien told Ms. Crittenden on a phone call that "the lease had been renewed." (Doc. 81 ¶ 44; Doc. 79 ¶ 35). Ms. Crittenden followed up with a letter to Mr. Adrien dated June 17, 2019, which stated, in part, "Thank you for letting me know that as of this November 2019 the lease for Goshen Springs Properties, LLC has been renewed . . . [w]ill you kindly send or email me a copy of the lease?" (Doc. 75-9 at 24). Mr. Adrien then sent her a copy of the Proposed Lease. (Doc. 79 ¶ 35).

It is unclear from the record what happened in the interim;⁵ but on July 16, 2019, Ms. Crittenden and her accountant sent CPA Levesque a number of edits and comments on the Proposed Lease, telling CPA Levesque that "[o]nce the Lease and Addendum have been finalized," she should "email or mail [Ms. Crittenden] a copy to sign, which [Ms. Crittenden] will then forward to [Mr. Adrien] to sign." (Doc. 75-9 at 29-34). But according to the record, no further action was taken for several months.

E. Goshen III Offers to Purchase the Leasing Rights from United

In early October 2019, Defendant Goshen III made an offer to buy the 1995 Lease from United. (Doc. 81 ¶ 50). The offer was made to the Receiver's Team. (Doc. 81 ¶ 50). On October 17, 2019, the Receiver's Team sought a waiver from Lamar of its right of first refusal.⁶ (Doc. 81 ¶¶ 56-57). On October 21, 2019, CPA Levesque sent Goshen III an edited version of the Proposed Lease⁷ stating that it was a "draft of the new lease terms, although it is pretty close to what will be the final executed version" and requesting that Goshen III "send a re-priced offer based on these new terms and let me know there are anything [sic] you would like...