McDonald Georgia Commerce Center 400, LLC v. F & C Logistics, Inc. et al

Filing 18

ORDER granting 16 Motion for Reconsideration. The Court vacates only the portion of its January 2 Order declining to order payment to McDonald of rent received by the Court from F&C. The Clerk is Ordered to pay McDonald the $459,182.55-$ 129,573.55 for November 2012; $122,591.00 for December 2012; and $103,509.00 for January 2013-that F&C has paid into the Court's registry to date. The Court also Orders the Clerk to disburse to McDonald all future payments of base rent F&C makes pursuant to the Court's January 2 Order. Signed by Judge B. Avant Edenfield on 2/19/13. (bcw)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF GEORGIA
SAVANNAH DIVISION
McDONALD GEORGIA COMMERCE
CENTER 400, LLC,
Plaintiff,
4:12-cv-299

V.

F & C LOGISTICS, INC., and NESOR,
INC.,
Defendants.
ORDER
I. INTRODUCTION
Before the Court is McDonald Georgia
Commerce's Motion to Reconsider Order
Declining the Forwarding of Rent Payment to
Plaintiff. ECF No. 16. At bottom, McDonald
asks the Court to release the rent payments
F&C has paid into the Court's registry
because, as McDonald sees it, there is no
controversy as to the amount of rent due
McDonald. See ECF No. 16 at 2. The Court
agrees and GRANTS the motion.
i(tii1Jli"
On June 8, 2007, F&C and McDonald
executed a lease, guaranteed by Nesor for a
piece of commercial property. See ECF No.
10-1 at 7, 29. F&C agreed "to pay
[McDonald] rent for the Premises. . . without
demand, deduction, or set off." ECF No. 10-1
at 7.
Last year, McDonald brought this
dispossessory proceeding alleging that F&C
breached the lease by not paying rent for
November of 2012. ECF No. 10 at 6-7. F&C
counterclaimed "for damages owed to them

due to [McDonald]'s fraudulent inducement
and breach of the Lease for failure to deliver
on promises of railroad access among other
things." ECF No. 17 at 3.
In response to McDonald's motion for
writ of possession, ECF No. 10, and in
compliance with O.C.G.A. § 44-5-74(a),' this
Court ordered F&C to pay into the Court's
registry rent for November and December
2012, as well as base rent in the amount of
$103,509 per month as it comes due until the
termination of the lease on May 31, 2013.
See ECF No. 12 at 2-3. The Court, however,
found the rent funds to be in dispute and
pursuant to O.C.G.A. § 44-7-54(c) 2 declined
to order payment of the money to McDonald.
Id. at 2. To date, F&C has fully complied
with the Court's Order.
III. ANALYSIS
Federal Rule of Civil Procedure 60(b)(6) 3
provides that "[o]n motion and just terms, the
court may relieve a party . . . from a final
judgment, order, or proceeding. . . for any...
reason that justifies relief." But "[f]ederal
courts grant relief under Rule 60(b)(6) only
for extraordinary circumstances." Popham v.
Cobb County, 392 Fed. App'x 677, 680 (11th
Cir. 2010) (quoting Frederick v. Kirby

'Section 44-7-54(a) states that "[i]n any case where the
issue of the right of possession cannot be finally
determined within two weeks from the date of service
of the copy of the summons . . . [a]il rent and utility
payments . . . allegedly owed prior to the issuance of
the dispossessory warrant" shall be paid into court.
2
Section 44-7-54(c) provides that "if the tenant claims
that he or she is entitled to all or any part of the funds
and such claim is an issue of controversy in the
litigation. . . [t]hat part of the funds which is a matter
of controversy in the litigation shall remain in the
registry of the court until a determination of the issues
by the trial court."
McDonald does not seek reconsideration under any of
Rule 60's five other grounds. See ECF No. 16 at I.

controversy" and must remain with the Court
"until a determination of the issues."
O.C.G.A. § 44-7-54(c); ECF No. 17 at 9.

Tankships, Inc., 205 F.3d 1277, 1288 (11th
Cir. 2000)). Indeed, a movant "must show
grounds in his motion so compelling that the
district court [is] required to grant the Rule
60(b) motion." Watson v. Lake County, 2012
WL 5273273, Nos. 12-10592, 12-11573, at *3
(11th Cir. Oct 25, 2012) (citing Rice v. Ford
Motor Co., 88 F.3d 914, 919 (11th Cir.
1996)). Ultimately, however, Rule 60(b)(6)
enables courts to vacate orders "whenever
such action is appropriate to accomplish
justice." Klapprott v. United States, 335 U.S.
601, 615 (1949).

McDonald has the better argument. As a
threshold matter, the Court finds that F&C is
estopped from denying the existence of a valid
contract with McDonald. As McDonald
correctly points out, F&C certified to
JPMorgan Chase Bank in December 2011 that
(1) F&C "is the lessee" under a lease with
McDonald; (2) "the Lease is in full force and
effect"; and (3) "[a]ll of the improvements
contemplated by the Lease have been
completed." ECF No. 10-1 at 83. F&C
cannot now claim—in direct contradiction to
its prior representations—that no valid
contract ever existed, that it therefore had no
obligation to pay rent, and thus that the rent
money it paid into the Court's registry is a
"matter of controversy." O.C.G.A. 44-754(c); see, e.g., Ferguson v. Carter, 208 Ga.
143, 145 (1951) (holding that acceptance of
defendant's performance estopped plaintiff
from denying the validity of a contract, even
though the plaintiffs agent entered into the
contract without authority).

McDonald argues that (1) payment of rent
is an independent obligation under a lease
whose existence F&C cannot dispute and thus
the amount of rent is not a "matter of
controversy" for purposes of O.C.G.A. § 44-754(c), ECF No. 16 at 2; and (2) public
policy—in this case, the hardship of
McDonald paying its mortgage on the
property leased to F&C without the funds held
in the Court's registry—compels
reconsideration of the Court's Order. ECF
No. 16-1 at 9-11.
F&C, on the other hand, asserts that (1) it
does not owe rent because McDonald
fraudulently induced F&C to execute the
lease, ECF No. 17 at 9-10; and (2) its various
counterclaims are in essence claims to the
funds in the Court's registry. 4 Id. at 10-12.
Therefore, F&C argues, the money it paid into
the Court's registry is a "matter in

McDonald also is correct that payment of
rent is an independent obligation under
Georgia contract law. See, e.g., Lewis & Co.
v. Chisholm, 68 Ga. 40, 46 (1881) (holding
that a landlord's failure to repair does not
impair his claim for unpaid rent). So, F&C's
obligation to pay rent exists wholly apart from
any right to damages that may have accrued
from McDonald's alleged breach.

'

F&C argues that the doctrines of setoff and
recoupment ensure the interdependency of the damages
it and McDonald claim. ECF No. 17 at 10. Although
the Court more fully addresses the underlying
substance of this argument infra, the doctrines of setoff
and recoupment simply do not apply. Both are
counterclaims and must be plead as such. See Hill v.
Green Tree Servicing, LLC, 280 Ga. App. 151, 154
(2006). F&C pleaded neither.

Regardless, the lease itself expressly
provides that base rent must be paid "without
demand, deduction or set off." ECF 10-1 at 7;
see also Hardwick, Cook & Co. v. 3379
Peachtree, Ltd., 184 Ga. App. 822, 824 (1987)
2

IV. CONCLUSION

(affirming grant of possession to landlord
because a no setoff lease provision prohibited
tenant from withholding rent to compensate
for debts landlord owed tenant). F&C
therefore had no right to withhold rent because
of a perceived breach by McDonald.
Certainly the amount of damages F&C alleges
McDonald caused may be a "matter of
controversy," but that dispute, by virtue of
contract law and the lease's own language,
does not create a dispute as to the funds held
by the Court. O.C.G.A. § 44-7-54(c).

F&C is estopped from denying the
existence of a valid contract. And under that
contract, F&C owes McDonald rent without
setoff. No breach by McDonald changes that.
See Chisholm, 68 Ga. at 46. The rent due is
not a "matter in controversy" for purposes of
O.C.G.A. § 44-7-54(c).
The Court, in an exercise of its discretion
under Rule 60(b)(6), GRANTS McDonald's
motion for reconsideration. The Court
VACATES only the portion of its January 2
Order declining to order payment to
McDonald of rent received by the Court from
F&C.

Lastly, the Court also notes that retaining
F&C's rent payments places McDonald "in a
very difficult position because the Premises
are financed through a lender." ECF No. 16-1
at 10. McDonald is being "forced to satisfy its
mortgage obligation without the use of the
income stream provided by the Base Rent
Id.
That alone is
under the Lease."
insufficient to warrant vacating the Court's
January 2 Order. But in light of the Court
finding the validity of the lease a non-issue,
the negative impact on McDonald's mortgage
of the Court retaining F&C's rent payments
does make reconsideration contribute to
"accomplish[ing] justice." Klapprot, 335 U.S.
at 615.

The Clerk is ORDERED to pay to
McDonald the $459,1 82.55—$ 129,573.55 for
November 2012; $122,591.00 for December
2012; and $103,509 for January 2013—that
F&C has paid into the Court's registry to date.
the Clerk to
The Court also ORDERS
disburse to McDonald all future payments of
base rent F&C makes pursuant to the Court's
January 2 Order.

This fday of February 2013.

McDonald has also demonstrated clear
legal error in the Court's January 2 Order
declining to forward F&C's rent payments to
McDonald. As discussed above, the funds
held in the Court's registry are not, as a matter
of law, a "matter of controversy" for purposes
of O.C.G.A. § 44-7-54(c). The Court finds
that error, in combination with the negative
implications of its January 2 Order for
McDonald's mortgage, to constitute an
extraordinary circumstance warranting
reconsideration. See Popham, 392 Fed. App'x
at 680.

V
B. AVANT EDENFIELD, J)DGE
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF GEORGIA

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