Powell Company v. McGarey Group, LLC

508 F.Supp.2d 1202

The POWELL COMPANY, Plaintiff, v. The McGAREY GROUP, LLC, Denver McGarey and Chris McGarey, Defendants.

Civil Action No. 1:05-CV-2614-JEC.

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

March 28, 2007.

COPYRIGHT MATERIAL OMITTED

David S. Fried, Fleming Fried Bonder, Atlanta, GA, for Plaintiff.

Matthew P. Moseley, Paul J. Kiernan, Holland & Knight, LLP, Washington, DC, Susan Eichler Edlein, Holland & Knight, Atlanta, GA, for Defendants.

ORDER OPINION

JULIE E. CARNES, District Judge.

This case is presently before the Court on defendants' Motion for Summary Judgment [49]; defendants' Motions to File an Amended Answer to the Second Amended Complaint [45, 46]; and plaintiffs Motion to File and Substitute Original Depositions in Place of Filed Certified Copies [59]. The Court has reviewed the record and the arguments of the parties and, for the reasons set out below, concludes that defendants' Motion for Summary Judgment [49] should be GRANTED in part and DENIED in part, defendants' Motions to File an Amended Answer to the Second Amended Complaint [45, 46] should be GRANTED, and plaintiffs Motion to File and Substitute Original Depositions in Place of Filed Certified Copies [59] should be DENIED and, in the alternative, as requested by plaintiff, the Court will accept the certified copies previously filed.

BACKGROUND

I. Procedural History

Plaintiff, the Powell Company, Inc. ("plaintiff' or "Powell"), filed its initial complaint on September 13, 2005 in the Superior Court of Fulton County, alleging breach of contract, unjust enrichment, quantum meruit and attorney's fees against the McGarey Group ("defendant" or "McGarey") to seek recovery allegedly due under a valid contract. ("Compl." [1].) On October 11, 2005, McGarey removed the case to this Court ("Mot. to Remove" [1]), and filed a Motion to Dismiss on October 18, 2005. ("Mot. to Dismiss" [2].)

Plaintiff then filed a Motion for Leave to File a First Amended Complaint on November 4, 2005 ("Mot. to File First Am. Compl." [4]), along with its Opposition to Defendant's Motion to Dismiss. ("Opp'n to Mot. to Dismiss [3]. On November 29, 2005, this Court granted plaintiffs Motion to File an Amended Complaint and denied defendant's Motion to Dismiss.") ("November 29, 2005 Order" [11].) Thereafter, McGarey moved to transfer the action to California on November 14, 2005 ("Mot. to Transfer" [6] ) and filed a Motion to Dismiss Plaintiffs First Amended Complaint on December 16, 2005. ("Mot. to Dismiss First Am. Compl." [14].) This Court denied both motions on January 24, 2006 ("January 24, 2006 Order" [21].)

During discovery, plaintiff filed an unopposed Motion to File a Second Amended Complaint, adding Denver McGarey and Chris McGarey, the owners of McGarey, to the Complaint as individual defendants. ("Mot. to File Sec. Am. Compl." [30].) The Court granted plaintiffs Motion to File a Second Amended Complaint on March 27, 2006 ("March 27, 2006 Order" [37].) On July 5, 2006, as discovery proceeded, defendants filed a Motion to Amend Answer to assert the affirmative defense of accord and satisfaction ("Mot. to Amend Ans." [45].) The defendants filed what appears to be the same Motion to Amend Answer the following day, July 6, 2006 ("Mot. to Amend Ans." [46] ). This motion is now pending before the Court. Defendants later filed a motion for summary judgment on August 1, 2006. ("Mot: for Summ. J." [49] ), which is also pending before this Court.

II. Factual Background

Plaintiff Powell, filed an action against McGarey and its two officers and shareholders, Denver McGarey ("Mr.McGarey") and Chris McGarey ("Ms.McGarey"), seeking damages allegedly due under a valid contract, to recover costs of litigation, to seek an accounting of all monies due under the contract, to recover damages for fraud, deceit, and misrepresentation/concealment of fact, to pierce the corporate veil of McGarey, and to recover punitive damages. ("Sec. Am. Compl." at 1-3; Defendants' Statement of Undisputed Facts "DSMF" [49] at ¶ 2.)

McGarey operates as a California company, engaged in the business of leasing space at retail projects. (DSMF at ¶ 1.) Ms. McGarey and her husband, Mr. McGarey, serve, respectively, as the Chief Officer and President of McGarey. (DSMF at ¶ 2.) In 2001, McGarey began working as a leasing agent for what is now known as the Atlantic Station project in Atlanta (the "Project"). (DSMF at ¶ 4.) McGarey entered into a leasing agreement (the "Leasing Agreement") with the owners of the Project ("Owners") that commenced on March 1, 2001, and was set to expire in two years. (DSMF at ¶ 6; "Leasing Agreement" attach. as Ex. A to Mot. for Summ. J.)

According to the terms of the Leasing Agreement, McGarey was to receive base pay of $20,000 for the first month, and $35,000 per month for each additional month. (DSMF at ¶ 7; Leasing Agreement at 3.) McGarey's compensation under the Leasing Agreement also included Additional Compensation of $3.00 per square foot leased. (PSMF at ¶ 4; Leasing Agreement at 4). The Leasing Agreement also contained a provision requiring 60% of the base fee to be applied as a credit against the square footage commission due McGarey. (DSMF at ¶ 8; Leasing Agreement at 3.)

McGarey called upon Robert K. Powell ("Mr.Powell"), the sole officer, shareholder, and employee of Powell, to help McGarey meet the leasing objectives of the Project. (PSMF at ¶ 7; DSMF at ¶¶ 9, 11.) On March 16, 2001, McGarey and Powell entered into a one-year contract, renewable for an additional 12 months, which defined the parties' working relationship with respect to the Project. ("Contract" attach. as Ex. C to Mot. for Summ. J.) According to the Contract, Powell would assist McGarey in the leasing and marketing of the Project and would also act as Vice — President of McGarey. (DSMF at ¶ 3; Contract at 1.) Part of Powell's responsibilities included generating leasing reports for the Project. (DSMF at ¶ 14; Contract at 1.).

Plaintiffs compensation under the Contract included "Base Compensation," ("Base Compensation") defined as "Five Thousand Dollars ($5,000.00) per month, payable on the first day of each month or upon receipt of the monthly retainer due TMG, whichever shall last occur." (Contract at 1.; DSMF at ¶ 16.) The Contract also provided for "Additional Compensation" ("Additional Compensation") according to the following schedule:

At 25% lease-up — 425,000

At 50% lease-up — $25,000

At 75% lease-up — $50,000

At 95% lease-up — $50,000

(Contract at 2.)

The term "lease-up" in the Contract refers to leases fully executed by the Project Owner and the tenants. (DSMF at ¶ 18.) The Contract also required that Powell receive "lease-up" credit for any unmet threshold completed within sixty days of the termination of the Contract. (DSMF at ¶ 51; Contract at 2.)

Both the Leasing Agreement and the Contract between plaintiff and defendants expired according to their terms in March 2003. (DSMF at ¶ 20). However, all parties continued to work on the Project past March 2003. (Id.) Nevertheless, in 2004, payments by the Owners began to fall into arrears. (DSMF at ¶ 21.) Defendants' payments to plaintiff thereupon began to dwindle, as well. (PSMF at ¶ 21.) Plaintiff agreed to wait until the close of the construction loan to receive payment, at which time defendants were set to receive the balance of their compensation from defendants. (PSMF at ¶ 21.) Defendants and Owners closed on the construction loan in late 2004 or early 2005. (PSMF at ¶ 24; DSMF at ¶ 25.) By this time, the Owners owed defendants.$890,000 in back payments. (DSMF at ¶ 28.)

In response to the late payments, on January 20, 2005, the Owners' representative, John Whitaker, sent a letter to McGarey with a check in the amount of $483,933 as final' payment of all sums. (DSMF at ¶ 29; "January 20, 2005 Letter" attach. as Ex. B to Mot. for Summ. J.) According to this letter, McGarey received a monthly retainer through October 2004. (January 20, 2005 Letter.) However, the Owners applied an increased credit-back (from 60% to 80%) to some of defendants' monthly payments. (Id. at 2.) The Letter also indicated that the settlement figured represented McGarey's payment for Additional Compensation. (Id. at 1.)

On February 10, 2005, McGarey tendered to Powell two checks — one for $6108.21 for the balance due on the monthly retainer and one for $50,000 for the Additional Compensation — along with a letter explaining the calculation of final payments. (DSMF at ¶ 35; "February 10, 2005 Letter" attach. as Ex. D to Mot. for Summ. J.) Powell cashed both of these checks without any indication that the payments were incorrect, partial, or inadequate under the Contract. (DSMF at ¶ 49.)

McGarey based its payment of Base Compensation to Powell upon the final compensation it had received from the Owners. Specifically, McGarey only paid Powell a monthly retainer through the beginning of July due to the Owners' increase in the credit-back provision. (Id. at ¶¶ 30, 32.) McGarey explained in its February 10, 2005 Letter that the increased credit-back provision "results in an effective compensation ending with a partial (20%) payment of July 2004; thus [plaintiffs] compensation reflects the same." (February 10, 2005 Letter).

McGarey also paid Powell $50,000 in Additional Compensation based on the percentage of square feet leased up as of December 2004. The December 2004 Leasing Status Report indicated that 63.49% of the Project's Retail space had been leased and that 8.68% of square footage was out for execution. (DSMF at ¶¶ 34, 37 "December 2004 Leasing Status. Report" attach. as Ex. G to Mot. for Summ. J.) McGarey reasoned that, because more than 50% of the space had been leased out, plaintiff was entitled to $50,000 in Additional Compensation. (Supra at 5.)

Powell, however, alleges that the "leaseup" percentages in the written agreement refer to percentages of a fixed square footage of 500,000 square feet....