Bask McDonough Hotel, LLC v. American Hotel Development Partners, LLC et al

Filing 52

ORDER AND OPINION granting plaintiff's 33 Motion for Summary Judgment. Plaintiff shall submit a proposed judgment by SEPTEMBER 7, 2012. Should defendants wish to contest these figures, defendants must do so by explaining why plaintiff's figures are not accurate and what the correct calculation should be by September 21, 2012. Signed by Judge Julie E. Carnes on 8/24/12. (ekb)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION

BASK MCDONOUGH HOTEL, LLC,
Plaintiff,
CIVIL ACTION NO.
v.

1:10-cv-1883-JEC

AMERICAN HOTEL DEVELOPMENT
PARTNERS, LLC, ALESSANDRO A.
GIANNINI, and CLYDE J. HARRIS,
Defendants.

ORDER AND OPINION
This case is before the Court on plaintiff Bask McDonough Hotel,
LLC’s Motion for Summary Judgment [33].

The Court has reviewed the

record and the arguments of the parties and, for the reasons set out
below, concludes that plaintiff’s Motion for Summary Judgment [33]
should be GRANTED.
BACKGROUND
Plaintiff seeks enforcement of a promissory note obligating
defendants

to

pay

plaintiff

$180,000.00

attached to Jetha Aff. [33] at Ex. 1.)

(the

“Note”).

(Note,

Defendants do not dispute

that they have defaulted on the Note, but instead claim that they owe
plaintiff nothing because the parties cancelled the Note in exchange
for plaintiff taking a partial ownership in a development venture.

AO 72A
(Rev.8/82)

In the alternative, they argue that plaintiff cannot recover because
of waiver or estoppel.
out

a

lengthy

In support of these defenses, defendants set

series

of

communications

between

the

parties.

Plaintiff does not dispute these facts,1 but disagrees with their
legal implications.
I.

THE NOTE
In

or

around

April

2007,

hotelier

Salim

Jetha

(“Jetha”)2

contacted Clyde J. Harris (“Harris”) regarding an opportunity for the
joint

development

of

“new

construction”

complexes.

(Defs.’ Statement

¶¶

At

5-6.)

that

time,

of

hotels

Material Facts

Jetha

had

never

and

apartment

(“DSMF”) [39]

participated

in

at
the

construction of a new hotel, having only owned and managed existing
hotels.

(Id. at ¶ 7.)

Jetha wanted defendant Harris and his

1

Plaintiff contends that defendants have offered “selfcontradictory” explanations for why they have not paid the debt.
Plaintiff asks the Court to construe defendants’ contradictory
testimony against them pursuant to Prophecy Corp. v. Charles
Rossignol, Inc., 256 Ga. 27, 28 (1986)(“if on motion for summary
judgment a party offer[s] self-contradictory testimony on the
dispositive issue in the case, and the more favorable portion of his
testimony was the only evidence of his right to a verdict in his
favor, the trial court must construe the contradictory testimony
against him.”).
Rather than weigh in on the genuineness of
defendants’ testimony, the Court will rule on the merits of the
position as presented by defendants in their response to summary
judgment.
2

Defendants contend that Jetha and Bask are one and the same.
Plaintiff does not dispute this point and, for the purposes of
summary judgment, the Court treats them as one.
2

AO 72A
(Rev.8/82)

American Hotel Development Partners, LLC (“American Hotel”) coprincipal,

defendant

Alessandro

meaningfully involved in any deal.

Giannini

(“Giannini”),

to

be

(Id. at ¶¶ 8-9.)

Jetha and defendant Harris ultimately agreed that a lot owned by
Lake Dow, North Corporation (“Lake Dow”) situated in McDonough,
Georgia, was the most suitable location for the proposed hotel
development (the “Property”).
Material Facts [33] at ¶ 2.)

(Id. at ¶ 14; Pl.’s Statement of
Thereafter, in or around July 2007,

Jetha formed his holding company, plaintiff Bask McDonough Holding,
LLC (“plaintiff” or “Bask”), which paid Lake Dow $50,000.00 in
exchange for an option to purchase the Lake Dow Property at a sales
price of $500,000.00 (the “Option Purchase Agreement”).

(DSMF [39]

at ¶ 15.)
Plaintiff

Bask

and

defendant

American

Hotel

executed

an

“Assignment Agreement” conveying the option on the Property to
American Hotel.

(Id. at ¶ 21.)

In connection with that agreement,

American Hotel paid Bask $57,045.00 in reimbursements for expenses to
date and executed a note providing that defendants would pay Bask the
sum of $180,000.00 on or before June 2, 2008 (the “Note”). (Id. at
¶ 22.)

The Note’s operation was expressly conditioned on Lake Dow’s

consent to the assignment of the Option Purchase Agreement from Bask
to American Hotel.

(Note, attached to Jetha Aff. [33] at Ex. 1.)

3

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(Rev.8/82)

Both the Assignment Agreement and the Note were signed by the parties
on February 21, 2008.

(DSMF [39] at ¶ 23.)3

Promptly after executing the Assignment Agreement and Note,
American Hotel commenced its efforts to obtain financing for the
development through its primary lending source.

(Id. at ¶ 26.)

Jetha remained in contact with defendant American Hotel during this
time and his expressions of interest conveyed a sense of ownership in
the project.

(Id. at ¶ 27.)

Moreover, Jetha interacted with third

parties on behalf of the venture, and gave the impression that he was
in a partnership with American Hotel.

(Id. at ¶¶ 28-29.)

In or around April 2008, the proposed loan to defendant American
Hotel’s favored lender fell through, and it became necessary to look
at other financing options for the construction of the development.
(Id. at ¶ 30.)

At that point, Jetha attempted to obtain financing

through some of his own contacts, referring to Harris and American
Hotel as his “development partners.”

3

(DSMF [39] at ¶ 31.)

When

According to defendants, the parties had long contemplated
that plaintiff would have an equity stake in the development. (DSMF
[39] at ¶¶ 16-17.) Rather than establish an equity interest at the
outset, the parties agreed to assign the Property to help simplify
the loan process. (Id. at ¶¶ 18-19.) Once this loan was obtained,
American Hotel anticipated that it would convey an equity interest in
the development to Jetha, Bask, or one of Jetha’s other entities.
(Id. at ¶ 20.)
The parties also apparently anticipated that a
construction loan would be obtained before the Note matured, and once
this loan closed, there would be sufficient funds to close on the
Property. (Id. at ¶¶ 24-25.) None of these intentions appear to
have been reduced to any sort of writing.
4

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(Rev.8/82)

these

sources

of

financing

fell

through,

Jetha

negotiated

extension on the Option Purchase Agreement with Lake Dow.

an

(Id. at

¶¶ 32-33.)
II.

THE “MODIFICATION”
Given the unanticipated delay in procuring the construction

loan,

in

May

2008,

Jetha

and

defendant

American

Hotel

began

discussing the prospect of moving forward with the purchase of the
Property, as hefty extension fees for the Option Purchase Agreement
could be avoided by buying the land.

(Id. at ¶ 34.)

The parties

recognized that plaintiff Bask could help facilitate this purchase by
cancelling the Note and converting the $180,000.00 due to it from
defendant into an equity interest in the development venture.
at ¶ 35.)

(Id.

Accordingly, Jetha and defendants began discussing terms

by which Bask’s equity conversion could be accomplished.

(Id.

at

¶ 36.) Those discussions continued as the June 2, 2008 maturity date
for the Note came and went.

(DSMF [39] at ¶ 37.)

not demand payment of the Note at that time.

Plaintiff Bask did

(Id. at ¶ 38.)

To the

contrary, Jetha told defendants that they could hold off on paying
the Note while they negotiated terms of his equity participation.
(Id. at ¶ 39.)
On June 3, 2008, Jetha proposed that he travel to American
Hotel’s corporate offices in Sarasota, Florida to discuss his equity
participation in the project.

(Id. at ¶ 40.)
5

AO 72A
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At a June 11, 2006

meeting, the parties discussed the basic terms of Jetha’s equity
participation in detail.

After the meeting concluded, a series of

phone calls and emails were exchanged to finalize the deal.

(Id. at

¶¶ 41-42.) In the wake of those communications, defendants aver that
the Assignment Agreement had been modified as of June 27, 2008 to
cancel

defendants’

obligations

under

the

Note

in

exchange

for

American Hotel’s immediate conveyance to Bask of (1) $180,000.00
imputed equity in the development venture, to be paid on a “pari
passu”4 basis with American Hotel or its principals, and (2) the right
to receive one financing point (subject to the condition that the
lender allow it).

(DSMF [39] at ¶¶ 43-49.)

In purported reliance on Jetha’s promises and representations,
defendant American Hotel considered Jetha its “equity partner” in the
development venture and authorized Jetha to continue his activities
on the venture’s behalf.

(Id. at ¶¶ 53-54.)

At this point, American

Hotel contends that it would not have authorized Bask to continue to
participate in the venture absent Jetha’s assurance that the Note had
been cancelled.

(Id. at ¶ 54.)

4

Although neither party defines this phrase, the Court assumes
that it means that plaintiff’s equity interest would be on equal
footing with American Hotel.
BLACK’S LAW DICTIONARY (9th ed.
2009)(“Proportionally; act on equal pace; without preference.”).
6

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III. POST-“MODIFICATION” CONDUCT
From June 27, 2008 forward, Jetha’s actions were consistent with
that of an equity partner in the venture.

(Id. at ¶ 63.)

He

continued to seek financing for the development and referred to
defendants as his “partners,” when speaking with third parties. (Id.
at ¶¶ 64-68.)

In August 2008, it became apparent that Jetha’s and

American Hotel’s efforts to obtain financing through traditional bank
sources were increasingly futile, given the state of the economy.
(DSMF [39] at ¶ 69.)
of

the

Property

Their focus shifted to finalizing the purchase

so

as

to

avoid

incurring

additional

connection with the Option Purchase Agreement extensions.

fees

in

(Id. at

¶ 70.) They reached a tentative agreement with Lake Dow wherein Lake
Dow would finance the purchase of the land in exchange for a
preferred
¶¶

equity

71-72.)

To

interest

and

facilitate

a 12% APR rate of return.
this

deal,

Jetha

(Id.

contacted

at
his

transactional attorney Bob Ercole via email and requested assistance
in setting up a structure to accomplish this arrangement.
¶ 73.)

(Id. at

In that email, Jetha provided Ercole with a summary of facts

to assist with that task, stating, among other things, that “Bask
McDonough has agreed to restructure the Assignment Contract and to
convert the $180,000 promissory note into imputed equity for Salim
Jetha on a ‘pari passu’ basis with the principals of [American
Hotel].”

(Id. at ¶ 74.)
7

AO 72A
(Rev.8/82)

The email containing this statement was forwarded to defendant
Giannini and non-party Yanez, whereupon Giannini and Yanez promptly
reviewed the email and shared it with defendant Harris.
¶ 75.)

(Id.

at

Defendants all found Jetha’s summary of the facts in the

email to be consistent with their understanding of the parties’ thenexisting relationship.

(Id. at ¶ 76.)

They assert that, had they

disagreed with the contents of Jetha’s email, they would have
addressed it with him immediately.

(DSMF [39] at ¶ 77.)

In August or September 2008, defendant Giannini formed a limited
liability company in anticipation of Lake Dow’s participation in the
venture, along with American Hotel and Bask as fellow members.
at ¶¶ 78, 80.)

(Id.

Jetha had his attorney draft an operating agreement

for the new company, but Lake Dow proposed some changes and the
agreement

was

never

signed.

(Id.

at

¶¶

79,

81-82.)

While

negotiations continued, Jetha actively pursued construction financing
for

the

project

along

with

Harris

and

Giannini.

In

his

communications with others, Jetha continued to reference himself as
one of the principals of the project.

(DSMF [39] at ¶¶ 83-88, 90,

92-102.)
On June 2, 2009, exactly one year after the Note had matured,
Jetha attended a meeting with Lake Dow and Harris to further discuss
the

alternatives

extension fees.

for

payment

(Id. at ¶ 103.)

of

Option

Purchase

Agreement

This meeting did not go as well as
8

AO 72A
(Rev.8/82)

the

planned, and Jetha thought defendants Harris, Giannini, and American
Hotel were walking away from the deal.

(Id. at ¶¶ 104-07.)

Jetha

then sent an email stating that:
I don’t want to send the wrong message here but legally
speaking, I don’t want my input or action at anytime to be
construed as a waiver or amendment to the contract [sic] of
assignment from Bask [] to [American Hotel]. Those rights
and obligations can only be changed by a specific written
agreement. If that is not your understanding then please
advise at once.
(Id. at ¶¶ 108-109.)
The email did not specifically reference the Note, and defendants
Harris and Giannini aver that they did not understand it to mean that
Jetha was attempting to preserve his ability to collect under the
Note,

which

they

understood

had

already

been

canceled.

(Id.

at ¶¶ 110-11.)
The Option Purchase Agreement with Lake Dow was extended, and
business continued as usual.

(Id. at ¶¶ 113-14.)

From July to

August 2009, Jetha continued to seek financing and sometimes referred
to himself as a “partner” of defendants.

(DSMF [39] at ¶¶ 115-18.)

As the possibility of financing waned, defendant Giannini suggested
that Jetha hire defendant American Hotel to develop the Property.
(Id. at ¶ 119.)

Jetha responded that the best he could do was keep

his $180,000.00 proceeds from the option assignment in the deal as an
equity contribution.

(Id. at ¶ 120.)

9

AO 72A
(Rev.8/82)

Defendants claim that they

relied on Jetha’s representations in electing to continue pushing
forward with the development venture.

(Id. at ¶ 121.)

The search for investors continued and the Option Purchase
Agreement with Lake Dow was extended once more on January 14, 2010.
(Id. at ¶¶ 122-126.)

“Deal fatigue” set in and little progress was

made in the early part of 2010.

(DSMF [39] at ¶¶ 130-36.)

Jetha was

also talking to his collection attorneys during that same time frame,
as his attorneys served the first and only demand for payment of the
Note on May 21, 2010.

(Id. at ¶ 137.)

At that point in time, the

development was still a “going concern.” (Id. at ¶ 138.) Defendants
Harris

and

Giannini

were

shocked

to

discover

that

Jetha

was

attempting to collect on the Note, which they understood had been
previously cancelled in exchange for equity in the venture.
¶ 139.)

(Id. at

According to defendant American Hotel, it would not have

admitted Bask to an equity position in the venture had Jetha’s
promises, statements, and actions not led defendants to believe that
the Note was cancelled as of June 27, 2008.

(Id. at ¶ 140.)

American Hotel also would not have continued to pay all the various
extension fees to Lake Dow, nor would it have continued to dedicate
man

hours

¶¶ 141-42.)

and

other

resources

during

time.

(DSMF [39] at

Defendants rejected plaintiff’s demand, and the present

lawsuit was filed.

(Id. at ¶ 143.)

10

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(Rev.8/82)

this

ANALYSIS
I.

SUMMARY JUDGMENT STANDARD
Rule 56 of the Federal Rules of Civil Procedure provides that a

motion for summary judgment shall be granted “if 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.”
56(a).

FED. R. CIV. P.

Where the moving party bears the burden of proof at trial, it

must show affirmatively the absence of a genuine issue of material
fact on all the essential elements of its case.
of Atlanta, 2 F.3d 1112, 1114 (1993).

Fitzpatrick v. City

An issue is material if,

“under the applicable substantive law, it might affect the outcome of
the case.”

LeBlanc v. Unifund CCR Partners, 601 F.3d 1185, 1189

(11th Cir. 2010).

An issue is genuine when the evidence is such that

a reasonable jury could return a verdict for the non-moving party.
See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50 (1986).
The court must view all evidence and draw all reasonable
inferences in the light most favorable to the non-moving party.

See

Patton v. Triad Guar. Ins., Corp., 277 F.3d 1294, 1296 (11th Cir.
2002).

Nonetheless, “[w]here the record taken as a whole could not

lead a rational trier of fact to find for the non-moving party,”
there is no genuine issue for trial.
F.3d 642, 646 (11th Cir. 1997).

11

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(Rev.8/82)

Allen v. Tyson Foods, Inc., 121

II.

THE NOTE
Plaintiff seeks judgment on the Note.

A creditor in possession

of a valid and signed promissory note has a prima facie right of
repayment, unless the debtor can establish a valid defense.

City of

Bremen v. Regions Bank, 274 Ga. 733, 740 (2002); O.C.G.A. § 11-3308(b)5.

An admission of indebtedness under a promissory note is

sufficient to establish a prima facie case for recovery, and carries
a plaintiff’s initial burden of showing the absence of any material
fact and of entitlement to judgment on the note.

Pollard v. First

Nat’l Bank of Albany, 169 Ga. App. 598, 598 (1984), disapproved on
other grounds by Branan v. Equico Lessors, Inc., 255 Ga. 718 (1986);
City of Bremen, 274 Ga. at 739 (granting summary judgment where note
was properly executed and valid on its face, and no legitimate
affirmative defense to right to recover was asserted); Smith v.
Gordon, 266 Ga. App. 814, 814 (2004)(same).
A

debtor’s

denial

of

the

debt

for

general

reasons

is

insufficient to overcome the above-described prima facie right to
repayment.

City of Bremen, 274 Ga. at 739.

Only a valid affirmative

defense, such as estoppel, illegality, accord and satisfaction,

5

“If the validity of signatures is admitted or proved and there
is compliance with subsection (a) of this Code section, a plaintiff
producing the instrument is entitled to payment if the plaintiff
proves entitlement to enforce the instrument under Code Section 11-3301, unless the defense proves a defense or claim in recoupment.”
12

AO 72A
(Rev.8/82)

failure of consideration, and the like will suffice. Id. (relying on
Freezamatic Corp. v. Brigadier Indus., Corp., 125 Ga. App. 767, 768
(1972)).
Defendants admit that they executed the Note and have not paid
the debt under the terms of the Note.

Because they are in default of

the Note as a result of failing to pay all amounts owed thereunder
when due, plaintiff has made its prima facie case. Plaintiff will be
entitled to summary judgment, unless defendants assert and provide
evidence in support of a legitimate affirmative defense.

Defendants

raise three affirmative defenses in an effort to defeat summary
judgment: modification, waiver, and estoppel.
III. AFFIRMATIVE DEFENSES
A.

Modification

Defendants argue that the Assignment Agreement was modified to
cancel defendants’ obligations under the Note.

Although defendants

contend that the parties “modified” the agreement, it appears that
they are actually arguing a defense of accord and satisfaction.

An

accord and satisfaction is an agreement between two parties to give
and accept something in satisfaction of a right of action which one
has against the other, which when performed is a bar to all actions
on this account.

Woodstock Road Inv. Prop. v. Lacy, 149 Ga. App.

593, 593-4 (1979); O.C.G.A. § 13-4-101 (accord and satisfaction
occurs where the parties to an agreement, by a subsequent agreement,
13

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have satisfied the former agreement, and the latter agreement has
been executed).

Even if the accord and satisfaction is oral,

defendants must still show that a “meeting of the minds” took place.
Wood v. Yancey Bros. Co., 135 Ga. App. 720, 721 (1975)(“There is
nothing to prevent an accord and satisfaction resulting from an oral
transaction.”). King Indus. Realty, Inc. v. Rich, 224 Ga. App. 629,
632 (1997)(“As with any contract, establishment of an accord and
satisfaction requires a showing that a meeting of the minds took
place.”).
Whether
defendants

arguing

a

modification

or

an

accord

and

satisfy,

essentially contend that the parties entered into a new

contract in which plaintiff passed on its right to collect on the
Note, in exchange for an equity interest in the potential hotel
development and one financing point.

Because defendants are arguing

that the original contract was modified, or perhaps a new contract
was formed, they must demonstrate that the change in obligations was
the result of a “meeting of the minds.”

Ga. Farm Bureau Mut. Ins.

Co. v. Croley, 263 Ga. App. 659, 661 (2003)(first requirement of a
contract is that “there must be a meeting of the minds of the
parties”).

In this regard, Georgia law holds that:

It is well established that no contract exists until all
essential terms have been agreed to, and the failure to
agree to even one essential term means that there is no
agreement to be enforced. If a contract fails to establish
an essential term, and leaves the settling of that term to
14

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be agreed upon later by the parties to the contract, the
contract is deemed an unenforceable “agreement to agree.”
[A]s a rule, the consent of the parties being essential to
a contract, until each has assented to all the terms, there
is no binding contract; until assented to, each party may
withdraw his bid or proposition. Finally, a promise must
be sufficiently definite as to both time and subject matter
to be enforceable.
Harmon v. Innomed Tech., Inc., 309 Ga. App. 265, 266-67 (2011)
(citations omitted).
Defendants support their claim that plaintiff forsook his rights
under the Note by relying on their own understanding of the modified
agreement, on email exchanges that support their understanding, and
plaintiff’s long-term conduct that was allegedly consistent with the
purported modification.

A close review of defendants’ “evidence,”

however, indicates that, with respect to converting defendants’
$180,000.00 loan obligation into some form of equity interest for
Jetha, the parties merely had an unenforceable “agreement to agree.”
See Sierra Assoc., Ltd. v. Cont’l Ill. Nat’l Bank & Trust Co., 169
Ga. App. 784, 788 (1984)(“Unless an agreement is reached as to all
terms and conditions and nothing is left to future negotiations, a
contract to enter into a contract in the future is of no effect.”).
As such, even accepting defendants’ version of the events as true,
the Court concludes that plaintiff is entitled to summary judgment.
There is no question that plaintiff Bask, through Jetha, was
interested in developing the Property with American Hotel.

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Even

before the Note was executed, the parties floated the idea that Bask
might eventually assume an equity position in a joint development
venture with American Hotel.

(DSMF [39] at ¶¶ 16-20.)

As set out

above, however, the inability to obtain financing led the parties to
contemplate converting the $180,000.00 proceeds from the assignment
into an equity interest in the development venture.

These ongoing

negotiations culminated in a June 2008 meeting where the basic terms
of Jetha’s equity participation were discussed in detail, but none of
these discussions were ever memorialized in writing.6

(DSMF [39] at

¶¶ 40-42; American Hotel Dep. [47] at 55.)
After this meeting concluded, a series of phone calls and emails
were exchanged to finalize a deal between defendant American Hotel
and Jetha.

(DSMF [39] at ¶ 42.)

Defendants contend that an email

exchange in June 2008 gave rise to an enforceable agreement to cancel
the Note.

Specifically, on June 25, 2008, defendant Giannini asked

Jetha to let American Hotel know his position on the proposed deal,
stating “[i]t would...help if we knew one way or the other where you
stood with us. We would like you to come in. Let us know your

6

These negotiations extended past the Note’s maturity date
without any demand from plaintiff for payment, and plaintiff
allegedly told defendants that they could hold off on paying the Note
while they negotiated terms on his equity participation. (DSMF [39]
at ¶ 39.)
16

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decision?”

(Id. at ¶ 43.)

Jetha sent an email to Harris and

Giannini responding as follows:
My discussion with Clyde [Harris] at a very early point in
the transaction was that I would contribute the $180,000
which would be treated as ‘pari passu’ with the balance of
the equity. That is still okay with me today...If I will
be required to execute a personal guarantee then the risk
level will not make it worth my while to do anything other
than on a pari passu basis with credit for the efforts to
bringing [sic] the construction financing to the table. I
am not suggesting cash but an increase in “imputed”
equity...If this works for you then I am fine with leaving
my $180,000 in the deal as long as you guys are in the deal
at risk along with me.
(Id. at ¶ 45.)
The next day, Giannini emailed Jetha as follows: “Do we have a
deal with you yet?” Jetha replied:
I understood from my conversation with Clyde [Harris] this
morning that he was going to discuss with you my proposal
to have the $180,000 equity be “pari passu” with the
balance of the equity. My impression is that you are okay
with this. The second issue is compensation to me for the
value in place my personal guarantee and for bringing a
lender to the table. I feel that I should get credit for
one point of the financing...which can be added to the
equity contribution or paid in cash. That is where I left
it with Clyde [Harris].
(Id. at ¶ 46.)
Giannini responded:
“I was not aware of the second issue as you describe it. Do
you think Omni Bank would allow this expense off the
development budget to you for that one financing point if
you end up being a guarantor on the debt as well?” (Id. at
¶ 47.)
Jetha then stated:
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“If the bank was not willing to do this we can work
something out. You will [not] be disappointed in my efforts
to be an agreeable partner.” (Id. at ¶ 48.)
Based on these exchanges, defendants contend that the Assignment
Agreement had been modified as of June 27, 2008 to cancel defendants’
obligations under the Note in exchange for American Hotel’s immediate
conveyance

to

Bask

of

(1)

$180,000.00

imputed

equity

in

the

development venture, to be paid on a “pari passu” basis with American
Hotel or its principals, and (2) the right to receive one financing
point, subject to the condition that the lender allow it.

(Id. at

¶ 49.)
To the contrary, the email exchanges demonstrate that the
parties had yet to reach a final agreement.
defendant

Giannini’s

overtures

are

Jetha’s responses to

conditional.

He

never

affirmatively states that they have a deal and he merely suggests he
receive one financing point as part of the transaction. With respect
to the financing point proposal, he leaves the situation open by
expressing a willingness to “work something out,” depending on how a
lender responds.
my

efforts

to

negotiations.

His remark that “[y]ou will not be disappointed in
be

an

agreeable

partner”

also

looks

to

future

Under the putative modification, the parties would

still have had to finalize an operating agreement for the development

18

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of the venture7, convey $180,000.00 worth of imputed equity from
defendants’ venture to plaintiff, and perhaps give plaintiff a
financing point from an as yet undetermined lender.
exchange

hardly

displays

a

“meeting

of

cancellation of the $180,000.00 obligation.

the

This email

minds”

over

the

At best, it is an

“agreement to agree,” as terms that were allegedly specified within
the modification are “tempered by alternative and otherwise subject
to unspecified future changes.”

Harmon, 309 Ga. App. at 267.8

The alleged modification also lacks essential terms.
the

proposed

modification

contemplates

plaintiff

Although

Bask’s

equity

participation in the venture, this modification is silent about the
percentage of his ownership, how the entity would be structured, and
when the equity conversion would occur.

The absence of these

7

While the parties did craft an operating agreement for this
tentative venture, which would have made Bask a partner with American
Hotel and Lake Dow, the agreement was never finalized or signed.
8

As further evidence that the parties’ agreement was
indefinite, plaintiff points out that American Hotel did not notify
a hotel group franchisor that plaintiff was a part-owner of the
development entity, as it would have been obligated to do so in a
franchise agreement. (Reply Br. [47] at 13-14.) Defendants argue
that the delay in claiming plaintiff as a part-owner in the franchise
agreement was to avoid costly amendments.
(Resp. Br. [37] at 10
n.2.)
Because the final deal might involve additional owners,
defendants indicate that they only wanted to amend the franchise
agreement once, after the development entity was finalized. (DSMF
[39] at ¶¶ 55-62.) Of course, this explanation confirms that the
deal with plaintiff was not nailed down, and could change, depending
on the later addition of third parties.
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essential terms renders the “modification” unenforceable. See Massih
v. Mulling, 271 Ga. App. 685, 686-87 (2005)(oral agreement to serve
as

president

of

new

company

in

exchange

for

20%

ownership

unenforceable where parties did not decide when president would
receive her ownership interest or how company would be structured);
Burns v. Dees, 252 Ga. App. 598, 602-03 (2001)(finding no enforceable
contract for sale of venture where agreement did not define when sale
would take place, how costs or losses would be allocated, or how
proceeds would be calculated or distributed); Lemming v. Morgan, 228
Ga. App. 763 (1998)(finding oral agreement to purchase, develop, and
resell property unenforceable because it had no specific provisions
regarding when transfer of title, division of proceeds, or sale of
property would take place, how costs would be allocated, and how
proceeds would be calculated).
Defendants acknowledge the uncertainties in the agreement, as
they contend that, around the time the alleged modification occurred,
“it was understood that additional investors and/or lenders would
later become affiliated with the venture, thus requiring the various
participants to finalize the profit sharing and control arrangements
in a separate syndication agreement once all investors and lenders
were in the deal.”

(DSMF [39] at ¶ 51.)

Of course, the addition of

later investors would require changes to an essential term of the
proposed venture—the percentage of ownership—which the parties had
20

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not yet even defined.

Despite defendants’ contention that this

“modification” would “allow[ American Hotel] and [Bask] to have an
understanding as to their rights and obligations with respect to each
other

as

they

related

to

the

venture

in

the

interim[,]” (id.

at ¶ 52), it does not delineate the essential terms necessary to form
an enforceable contract.
Defendants argue that, even if the agreement lacks enough
definite

terms

to

be

enforceable,

such

agreements

may

become

enforceable due to the subsequent actions of the parties.

Part

performance of the terms of a contract can be evidence of the
acceptance of the terms of an otherwise indefinite contract.

See

Sanders v. Commercial Cas. Ins. Co., 226 Ga. App. 119, 121 (1997)(“an
objection of indefiniteness may be obviated by performance on the
part of one party and the acceptance of the performance by the
other.”).

Defendants do not make clear exactly what portion of the

“modified” agreement they, or plaintiff, performed.

No operating

agreement setting forth Bask’s ownership interest in the venture was
ever finalized and Bask never cancelled the Note.
Moreover, Bask’s delay in seeking payment was well within its
rights under the Note itself, which provides that “[e]ach obligor
hereby expressly consents to any and all extensions, modifications,
and renewals, in whole or in part, including but not limited to...all
delays in time of payment or other performance which holder may grant
21

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or permit at any time and from time to time without limitation and
without any notice to or further consent of any obligor.”

(Note,

attached to Jetha Aff. [33] at Ex. 1.) While Jetha certainly behaved
as if he was an active part of the effort to complete the deal, such
behavior was not inconsistent with his long-standing efforts to help
obtain financing for the development, which would hopefully have
brought the venture enough money to pay off the $180,000.00 Note.
Indeed, when it appeared that the potential deal was going south, he
asserted that he had no intention of waiving any rights he held under
the Assignment Agreement.

In sum, there was no “part performance”

that requires disregard of the indefiniteness and incompleteness of
the alleged agreement.

Defendants have therefore not raised a

triable issue of fact to defeat plaintiff’s Motion for Summary
Judgment on this Ground.
B.

Waiver

Defendants’ argument that plaintiff waived his right to collect
on the Note is also without merit.

They contend that Jetha’s course

of conduct--presumably offering support and advice, as would a
partner, and his failure to demand the Note in a timely fashion-creates a jury question as to whether plaintiff waived its right to
collect. Georgia law recognizes that a party to a contract may waive
a contractual right by acting in a manner inconsistent with such
right.

See O.C.G.A. § 13-4-4; Crawford v. First Nat’l Bank, 137 Ga.
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App. 294, 295 (1976)(“provisions of a written contract may be waived
by acts or conduct which justify the other party to believe the
express provisions are waived, and even a contractual provision
against waiver may be waived by conduct.”).

This waiver, however,

must be evidenced by a “mutual[] depart[ure] from the terms of the
original agreement.”

Prudential Ins. Co. v. Nessmith, 174 Ga. App.

39, 40 (1985). This “modification, when taken in connection with the
original contract, will provide a new and distinct agreement complete
in its terms.”
471 (1985)).

Eaves v. J.C. Bradford & Co., Inc., 173 Ga. App. 470,
An “agreement” requires a meeting of the minds.

Id.

Plaintiff never behaved as if it was definitely and irrevocably
foregoing its right to collect the $180,000.00.

At most, the

attempted modification was an effort to convert the debt into another
form of value.

While defendants might have thought plaintiff

intended to waive the debt, the intention was not mutual.

See

Crawford, 137 Ga. App. at 296 (debtor’s intention to treat time of
payment schedule as waived where bank accepted late payments did not
reflect mutual intention to waive).
Moreover, under the Note, defendants expressly consented to
delays in the payment. As such, the fact that plaintiff delayed over
two years in seeking payment is no basis for claiming that plaintiff
waived any right under the Note.

Trendmark Homes, Inc. v. Bank of N.

Ga., 314 Ga. App. 886 (2012)(noting clauses in promissory note that
23

AO 72A
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waived debtor’s right to object in concluding that creditor did not
waive right to collect on note).
C.

Estoppel

“In order for an equitable estoppel to arise, there must
generally be some intended deception in the conduct or declarations
of the party to be estopped, or such gross negligence as to amount to
constructive fraud, by which another has been misled to his injury.”
Griffin v. State Bank of Cochran, 312 Ga. App. 87, 94 (2011).
Similarly, under the doctrine of promissory estoppel, “[a] promise
which the promisor should reasonably expect to induce action or
forbearance on the part of the promisee or a third person and which
does induce such action or forbearance is binding if injustice can be
avoided only by enforcement of the promise.”

Ga. Inv. Int’l, Inc. v.

Branch Banking & Trust Co., 305 Ga. App. 673, 675 (2010).
Defendants are not entitled to equitable estoppel as they put
forth no evidence that plaintiff deceived them.

Morever, promissory

estoppel does not apply to vague or indefinite promises, promises of
uncertain duration, or promises concerning unenforceably vague future
acts.

Id.; Bridges v. Reliance Trust Co., 205 Ga. App. 400, 402

(1992)(“estoppel applies to representations of past or present facts
and not to promises concerning the future, especially where those
promises concern unenforceably vague future acts”).

As explained

above, the alleged “modification” is too vague and indefinite to
24

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create an enforceable promise.
defense fails.

Accordingly, defendants’ estoppel

See Secured Realty & Inv., Inc. v. Bank of N. Ga.,

314 Ga. App. 628 (2012)(rejecting estoppel defense where debtor
offered no evidence of deception and there was no evidence of
specific terms and conditions of any promise to renew loan); Bridges,
205 Ga. App. 400 (rejecting promissory estoppel where bank promised
to work something out regarding future additional loans).
II.

AMOUNT DUE UNDER THE NOTE
Plaintiff avers that as of November 4, 2011, the amount owed

pursuant to the Note was $180,000.00 plus accrued interest of
$31,482.74 and costs of collection, including, without limitation,
attorney’s fees.

(Jetha Aff. [33] at ¶ 16.)

Per the terms of the

Note, interest continues to accrue at the default rate of 12%.
(Note, attached to Jetha Aff. [33].)

This Order is being issued on

August 24, 2012. Plaintiff shall provide its proposed judgment, with
accompanying explanation of its methodology for calculation, by
September 7, 2012.
contest

any

Defendants will have until September 21, 2012 to

calculations.

Assuming

no

challenges

to

the

calculations, the Court intends to issue its judgment by September
30, 2012.

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AO 72A
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III. ATTORNEY’S FEES
Plaintiff also seeks attorney’s fees.

Under O.C.G.A. § 13-1-

11(a), “[o]bligations to pay attorney’s fees upon any note or other
evidence of indebtedness, in addition to the rate of interest
specified therein, shall be valid and enforceable and collectable as
a part of such debt if such note or other evidence of indebtedness is
collected by or through an attorney after maturity.”

The Note

provides that the obligors “agree that if this Note becomes in
default and is placed in the hand of an attorney for collection, to
pay reasonable attorney’s fees for negotiations, trial, appellate
proceedings or other legal services, and all costs of collection.”
(Note,

attached

to

Jetha

Aff.

[33].)

attorney’s fees is enforceable.

This

agreement

to

pay

Plaintiff’s Motion for Summary

Judgment [33] as to attorney’s fees is therefore GRANTED.
Plaintiff has not submitted a proposed award of attorney’s fees,
nor a proposed judgment.

The Court notes, however, that Georgia law

imposes limitations on the award of attorney’s fees in collection
cases. Under O.C.G.A. § 13-1-11(a)(2), if the note “provides for the
payment of reasonable attorney's fees without specifying any specific
percent, such provision shall be construed to mean 15 percent of the
first $500.00 of principal and interest owing on such note or other
evidence of indebtedness and 10 percent of the amount of principal
and interest owing thereon in excess of $500.00.”
26

AO 72A
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The Note only

specifies recovery of reasonable attorney’s fees.

It follows that

plaintiff’s proposed judgment for an award of attorney’s fees should
adhere to the above subsection.
CONCLUSION
For

the

foregoing

Judgment [33] is GRANTED.

reasons,

plaintiff’s

Motion

for

Summary

As set out above, plaintiff shall submit

a proposed judgment by September 7, 2012.

Should defendants contest

these figures, defendants must do so by explaining why plaintiff’s
figures are not accurate and what the correct calculation should be,
by September 21, 2012.

SO ORDERED, this 24th day of AUGUST, 2012.

/s/ Julie E. Carnes
JULIE E. CARNES
CHIEF UNITED STATES DISTRICT JUDGE

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