Properties v. BLRG Rest. Grp., Inc., 15-14289

ND PROPERTIES, Plaintiff-Appellee, v. BLRG RESTAURANT GROUP, INC., Defendant-Appellant.

No. 15-14289

UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT

May 12, 2016

[DO NOT PUBLISH]

Non-Argument Calendar

D.C. Docket No. 1:13-cv-03831-TWT

Appeal from the United States District Court for the Northern District of Georgia

Before MARCUS, WILSON, and ROSENBAUM, Circuit Judges.

PER CURIAM:

Buckhead Life Restaurant Group, Inc. ("BLRG") appeals the district court's grant of summary judgment in favor of ND Properties, on ND Properties' complaint, which sought damages for breach of guaranty and attorneys' fees. On appeal, BLRG argues that: (1) the district court erred in concluding BLRG had waived any defenses to liability pursuant to the terms of the guaranty agreement; (2) ND Properties failed to establish with competent evidence its claimed amounts of unpaid rent, re-letting costs, and interest; and (3) ND Properties failed to satisfy the notice requirement for attorneys' fees under Ga. Code Ann. § 13-1-11(a)(3), and, even if the notice requirement was satisfied, the district court's attorneys' fees calculation was erroneous. After careful review, we affirm in part, reverse in part, and remand the case for further proceedings.

A.

The relevant background is this. In June 1998, ND Properties' predecessor-in-interest, as lessee, entered into a commercial lease agreement with 3455, LLC ("3455"), under which 3455 leased space in the lower floors of an office building, called the Pinnacle, in the Buckhead neighborhood of Atlanta, Georgia. 3455 used the space to operate a restaurant. The lease was to expire on October 31, 2014.

In the lease, 3455 agreed to pay annual rent in the amount of $264,000, payable in 12 equal installments on the first day of each calendar month. The lease provided that, in the event 3455 defaulted on its rent payments:

Landlord may terminate Tenant's right of possession (but not this Lease) . . . without thereby releasing Tenant from any liability hereunder, [and] without terminating this Lease . . . and, if Landlord so elects, make such commercially reasonable alterations, decorations and repairs as, in Landlord's judgment, may be necessary to relet the Demised Premises, and Landlord may, but shall be under noobligation to do so, relet the Demised Premises or any portion thereof in Landlord's or Tenant's name . . . at such rental or rentals and upon such other terms as Landlord reasonably may deem advisable . . . and receive the rent therefor, Tenant hereby agreeing to pay to Landlord the deficiency, if any, between all Rent reserved hereunder and the total rental applicable to the Lease Term hereof obtained by Landlord re-letting, and Tenant shall be liable for Landlord's reasonable expenses in redecorating and restoring the Demised Premises and all reasonable costs incident to such re-letting, including broker's commissions and lease assumptions . . . .

BLRG, pursuant to a separate guaranty agreement, "absolutely and unconditionally" guaranteed 3455's "full and prompt payment of [rent] . . . and all other charges and sums (including, without limitations, Landlord's legal expenses and attorneys' fees and disbursements) payable by [3455] under the Lease."

Beginning in late 2008, 3455 failed to make its monthly rent payment on several occasions. In November 2009, ND Properties commenced a series of dispossessory actions in Georgia state court. During court-ordered mediation in August 2011, 3455 and ND Properties entered into a consent agreement, in which ND Properties agreed not to evict 3455 before 11:59 p.m. on November 30, 2011, and 3455 agreed to pay rent in advance through November 30, 2011. 3455 also agreed that its "right to possess the premises (but not the Lease) shall immediately terminate" at 11:59 p.m. on November 30, 2011. 3455 vacated the premises by November 30, 2011, and made no further rent payments. ND Properties then filed the instant complaint against BLRG, seeking inter alia, the rent payments due under the lease from the time 3455 vacated until ND Properties found a newtenant, re-letting costs, accrued interest, and attorneys' fees.¹ The district court granted ND Properties' motion for summary judgment, holding BLRG liable for $464,079.49 in unpaid rent; $222,884.28 in re-letting costs; $48,627.01 in accrued interest; and $73,633.57 in attorneys' fees.

B.

We review a district court's order granting summary judgment de novo, applying the same legal standard as the district court. Nat'l Parks Conservation Ass'n v. Norton, 324 F.3d 1229, 1236 (11th Cir. 2003). We view the material presented and draw all factual inferences in the light most favorable to the non-movant. Carter v. City of Melbourne, 731 F.3d 1161, 1166 (11th Cir. 2013). Summary judgment is appropriate when "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). When the moving party has the burden of proof at trial, it must affirmatively show the absence of any genuine issue of material fact by pointing to competent evidence in the record, which, if uncontroverted, would entitle the moving party to a directed verdict at trial. Rich v. Sec'y, Fla. Dep't of Corr., 716 F.3d 525, 530 (11th Cir. 2013). "If the moving party makes such an affirmative showing, it is entitled to summary judgmentunless the nonmoving party, in response, comes forward with significant, probative evidence demonstrating the existence of a triable issue of fact." Id. (quotation omitted). To discharge their respective burdens, the parties may rely on affidavits or declarations that are "made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant or declarant is competent to testify on the matters stated." Fed. R. Civ. P. 56(c)(4).

C.

First, we reject BLRG's claim that the district court erred in holding that BLRG had waived its defenses to liability pursuant to the terms of the guaranty agreement. In Georgia, a plaintiff who produces an executed guaranty agreement is entitled to judgment as a matter of law on a claim against the guarantor for liability under the guaranty, unless the guarantor establishes a defense. See Ameris Bank v. Alliance Inv. & Mgmt Co., LLC, 739 S.E.2d 481, 485 (Ga. Ct. App. 2013). BLRG has argued that it is not liable for 3455's unpaid obligations under the lease because certain actions ND Properties took during the lease term -- including irrationally rejecting 3455's rent payments and filing unwarranted dispossessory actions -- helped cause 3455 to default, thus exposing BLRG to more risk. The Georgia Code provides that "[a]ny act of the creditor, either before or after judgment against the principal, which injures the surety or increases his risk or exposes him to greater liability shall discharge him." Ga. Code. Ann. § 10-7-22. However, the protections of § 10-7-22 are waivable. See Builders Dev. Corp. v. Hughes Supply, Inc., 529 S.E.2d 388, 389 (Ga. Ct. App. 2000).

Here, the district court found that, in the following provisions of the guaranty agreement, BLRG had waived the defense it was attempting to assert:

Guarantor hereby expressly agrees that the validity of this Guaranty and the obligations of Guarantor hereunder shall in no way be terminated, affected, diminished or impaired by reason of . . . any non-liability of Tenant under the Lease, whether by insolvency, discharge in bankruptcy, or any other defect or defense which may now or hereafter exist in favor of Tenant.

This Guaranty shall be a continuing guaranty, and the liability of Guarantor hereunder shall in no way be affected, modified or diminished by reason of . . . any dealings or transactions or matter or thing occurring between Landlord and Tenant.

On appeal, BLRG claims that it did not waive any defenses in this guaranty agreement, which the district court erroneously construed against it. BLRG relies on House Hasson Hardware Co., Inc. v. Lawson's Home Ctr., Inc., 772 S.E.2d 389 (Ga. Ct. App. 2015), which held, in a case involving a guarantor's statute-of-frauds defense, that "a court must strictly construe an alleged guaranty contract in favor of the guarantor." Id. at 392 (quotation omitted, emphasis added). Other Georgia cases hold otherwise -- that is, that "contracts of guarantee should be construed strongly against the guarantor, and if the construction is doubtful, that which goes most strongly against the party undertaking the obligation is generally to be preferred." Ameris Bank, 739 S.E.2d at 486 (quotation omitted). But evenassuming, arguendo, that House Hasson would apply to this case -- which does not involve an "alleged" guaranty contract or a guarantor's statute-of-fraud's defense -- BLRG has pointed to no ambiguities in the guaranty agreement.

Rather, as the district court found, BLRG explicitly waived in the guaranty agreement any defenses to its liability related to any "defense which may now or hereafter exist in favor of [3455]" and "any dealings or transactions or matter or thing occurring between [ND Properties] and [3455]." ND Properties' actions with regard to 3455 during the lease term, which allegedly helped cause 3455 to default, unambiguously qualify as dealings, transactions, matters, or things, occurring between ND Properties and 3455. Thus, the district court did not err in holding, on summary judgment, that BLRG had waived its defenses based on that conduct.

D.

There is merit, however, to BLRG's claim that ND Properties failed to establish with competent evidence its claimed amount of re-letting costs (and the associated amount of interest), although we find no error concerning the unpaid rent amount or the interest rate. In providing evidence of these amounts -- unpaid rent, re-letting costs, and interest -- ND Properties relied on the lease, consent agreement, and guaranty. It also relied on a declaration by Linda Beauchamp, who was employed from June 1994 through October 2012...