One Buckhead Loop Condo. JE-067 Ass'n, Inc. v. Regent Tower Holdings, LLC

341 Ga.App. 5

798 S.E.2d 633

ONE BUCKHEAD LOOP CONDOMINIUM JE-067 ASSOCIATION, INC.

v.REGENT TOWER HOLDINGS, LLC f/k/a Regent Tower Holdings, Inc.

A16A1812

Court of Appeals of Georgia.

March 6, 2017

Raymond Kyle Williams, Christopher Lee Collier, Atlanta, for Appellant.

John A. Lockett III, for Appellee.

Ellington, Presiding Judge.

In a complaint filed in 2015, One Buckhead Loop Condominium Association, Inc. ("the Association") sued Regent Tower Holdings, LLC f/k/a Regent Tower Holdings, Inc. ("Regent") for breach of contract, among other claims, contending that Regent breached the terms of an easement agreement in which Regent had granted the Association, subject to certain limitations, a perpetual non-exclusive right to access Regent's private road system. The trial court subsequently granted Regent's motion for summary judgment on all of the Association's claims. On appeal, the Association contends that the trial court erred in finding that it was estopped from asserting that Regent breached the easement agreement on the ground that, in 2006, it had executed an estoppel certificate certifying that there were no defaults thereunder. We reverse for the reasons set forth below.

Under OCGA § 9-11-56 (c),

[s]ummary judgment is warranted 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 party is entitled to a judgment as a matter of law. We review the grant or denial of a motion for summary judgment de novo, and we view the evidence, and the reasonable inferences drawn therefrom, in a light most favorable to the nonmovant.

(Punctuation and footnotes omitted.) Assaf v. Cincinnati Ins. Co. , 327 Ga.App. 475, 475-476, 759 S.E.2d 557 (2014).

So viewed, the evidence shows that, in 1995, Regent and Buckhead Station, LLC entered into an "Easement Agreement for Access and Utilities." Thereunder, among other things, Regent granted, for the benefit of Buckhead Station, a perpetual non-exclusive easement for passenger vehicle and pedestrian egress, ingress, and access over and through a private roadway system constructed on Regent's property. Regent acknowledges that the Association is a successor-in-interest to Buckhead Station and has a right to enforce the Easement.

The Easement contemplates that Regent may close its roadway system, which is located in the Buckhead area of Atlanta, during rush hour.¹ In that respect, the Easement affords Regent the exclusive right to determine the location and the control mechanisms used to restrict or prohibit vehicular traffic. The Easement further provides, however, that, "[t]o the extent any vehicular traffic is allowed through such control points, [the Association] shall have the same vehicular access through such control point."

From the time the road system was constructed in 1996, Regent has closed the roadway system during rush hour. In 2003, Regent entered into an agreement with Buckhead Community Improvement District ("BCID") to allow the District's shuttle bus (the "BUC") to travel over its roadway system. Beginning in 2004, Regent installed traffic control gates that are lowered during rush hour. The BUC is allowed to open the traffic gate through the use of a remote electronic device. Security guards employed on properties contiguous to the roadway system also have the ability to raise the traffic gate through a remote electronic device.

In 2006, in connection with a development project in which Regent was involved, the Association executed the Estoppel Certificate² at issue. Therein, the Association acknowledged, among other things, that "to the best actual knowledge of the principal officers of the [Association], no default, or event with the passage of time or the giving of notice, or both, [that] would constitute a default on the part of [Regent]" had occurred under the Easement. The Estoppel Certificate affirmed that Regent "may rely upon the statements set forth herein." The Easement also provides that "[a]ny ... entity requesting an ... Estoppel Certificate concerning this Agreement shall be entitled to rely on ... an Estoppel Certificate" from a party authorized to represent the Association.

In 2015, the Association sued Regent for breach of contract, among other claims, alleging that Regent had violated the Easement by selectively allowing vehicular access through the traffic control gate during closure of the roadway system, including the BUC and private security vehicles, to the exclusion of the Association. The Association also sought, among other claims, injunctive and declaratory relief. Regent moved for summary judgment on all claims. The trial court granted summary judgment to Regent, finding that the Association is estopped from contending that Regent breached the Easement by permitting the BUC and the security guards to travel over the roadway system without permitting the Association to engage in the same known conduct.

1. The Association contends that the trial court erred in finding that Regent was entitled to judgment as a matter of law. More specifically, the Association argues that a jury should decide whether Regent reasonably relied on the Estoppel Certificate. The Association also argues that any estoppel arising from the Estoppel Certificate did not extend to the alleged breaches of the Easement arising after the date of that certificate.

(a) The law in Georgia "recognizes, on grounds of public policy and good faith, that the execution of an estoppel certificate can create an estoppel effect against future claims for damages." (Punctuation and footnote omitted.) Fundus America (Atlanta) Ltd. Partnership v. RHOC Consolidation , 313 Ga.App. 118, 121 (1) (a), 720 S.E.2d 176 (2011). In other words, "a party who executes an estoppel certificate should not be allowed to raise claims of which it knew or should have known at the time the certificate was executed." (Citation and punctuation omitted.) Id. at 122 (1) (b), 720 S.E.2d 176.

By executing an estoppel certificate, "a party can agree to be estopped under circumstances that might not otherwise constitute an estoppel under common law." Id. at 121 (1) (a), 720 S.E.2d 176 (rejecting argument that party claiming benefit of estoppel certificate was required to prove elements of equitable estoppel, including proof of some concealment or false representation, in order to prevail on summary judgment). Nevertheless, a party asserting the benefit of an estoppel certificate must show that it reasonably relied thereon. See Office Depot v. The District at Howell Mill , 309 Ga.App. 525, 527-529 (1), 710 S.E.2d 685 (2011) (finding, in affirming grant of summary judgment to landlord on tenant's claim that the landlord had violated the lease, that there remained no issue of material fact as to the landlord's reasonable reliance on the tenant's certificate that landlord was not in default under the lease); Bibb County v. Ga. Power Co. , 241 Ga.App. 131, 137 (4), 525 S.E.2d 136 (1999) ("estoppel requires justifiable reliance on the opposing party's representations or conduct and a change in position to one's detriment").

The Estoppel Certificate stated that the Association had been advised that Regent was transferring a tract of real estate to another party, 3344 Peachtree, LLC, which was constructing thereon a mixed-use project consisting of approximately 471,000 rentable square feet of office space, 20,000 square feet of retail space, 100 residential condominium units, and associated parking spaces. The Estoppel Certificate further provided that 3344 Peachtree was obtaining financing for the project from a lender, and that Regent, 3344 Peachtree, and the lender "require from [the Association] an estoppel relating to the" Easement. A representative of Regent testified that, in reliance on the Estoppel Certificate, Regent conveyed property to 3344 Peachtree, which, in turn, borrowed money to finance the project. The Association suggests that, if it had refused to provide the Estoppel Certificate, Regent could have terminated the BUC's license to access its road system, and proceeded with the transaction. But whatever might have happened, the record shows only that the Association did give the Estoppel Certificate, and that Regent relied thereon in conveying its property to 3344 Peachtree.

The Association argues that, even if Regent relied on the Estoppel Certificate, its reliance was not reasonable or justified because it knew that it was in violation of the Easement in refusing the Association access through the traffic control gate while allowing third parties unfettered access. In light of the principle that "[h]e who would have equity must do equity,"³ the Association argues, Regent cannot use an estoppel certificate as a "trap" to engage in activities it knows are in breach of the Easement. Here, as of the date of the Estoppel Certificate, both parties were in a position to assess whether Regent was in breach of the Easement by allowing third parties through the traffic control gate at rush hour. Generally, "an estoppel cannot result where both parties have equal knowledge or equal means of knowing the truth." (Punctuation and footnote omitted.) Fundus America (Atlanta) Ltd. Partnership v. RHOC Consolidation , 313 Ga.App. at 122 (1) (b), 720 S.E.2d 176. But, as we have previously found, the parties "may also contract around this rule of law," and they may do so, in the context of an estoppel certificate, by agreeing that a party shall have the right to rely on representations set forth in the certificate. (Punctuation and footnote omitted.) Id. Because the Association agreed in the Estoppel Certificate that Regent "may rely upon the statements set forth herein," Regent could reasonably do so, notwithstanding that it was aware that the BUC and security guards had access through the gate at rush hour. Further, there is no evidence of any inequitable conduct on the part of...