Atlanta Business Litigation Attorneys Blog

Published on: October 10, 2018

Procedural Errors Can Be Fatal to Your Georgia Commercial Litigation Action

In a commercial litigation situation, there may be multiple different ways to achieve success. There can also be a variety of ways to damage or destroy your case. One of these is failing to complete various procedural necessities, or failing to do them on time. Procedural compliance, even though it is often completely independent of the facts of your case, can still make all of the difference between a favorable and an unfavorable outcome. To be sure your case doesn’t get tripped up by these types of problems, make sure that you retain skilled Georgia business litigation counsel.

A recent lawsuit between a contractor and a financier of commercial equipment was an example of this risk. The finance company asked for, and received, a summary judgment in its favor. The trial court’s summary judgment order effectively ended the case.

Not satisfied, the contractor sought to appeal the summary judgment in favor of the finance company. The contractor filed its notice of appeal in a timely manner. Unfortunately for it, it fell short with regard to several other procedural requirements. When you are seeking to appeal a court order that went in favor of your opponent, several things need to be done. A notice of appeal must be filed within the time period allotted by the law. Additionally, you must also make a timely request to the trial court to have a transcript created of the hearing that produced the order you are appealing. Furthermore, there may be certain court costs that you must pay and pay within a specific deadline.

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Published on: October 4, 2018

Georgia Supreme Court Sends Stock Buyout Dispute Involving Family-Owned Electrical Business Back to the Trial Court

By Poole Huffman, LLC

Ideally, in a perfect world, corporate shareholders of a family-owned business would always get along and cooperate effectively. Unfortunately, the real world is not a perfect world, and sometimes shareholder disputes arise and end up in litigation. That is when you need to be sure you have experienced Georgia business attorneys on your side. One such shareholder dispute recently went all the way to the Georgia Supreme Court earlier this year, with that court reversing a trial judge’s decision and sending the case back for more action.

The corporate entity at the center of this dispute demonstrates the issues that can arise when family relationships and business relationships collide. The business, an electric services contractor, had been in existence since 1937 and incorporated since 1959. In 1988, the incorporator decided to award ownership interests to each of his three sons, all of whom were working for the company at the time. (The bylaws restricted stockholders to employees of the entity.) Two sons, Gary and Phillip, got 25% each. A third son, Doss, received 16.67%. (The father retained 33.33% himself.)

The sons moved in different directions. Doss ended his employment at the family business in 1994. Gary and Phillip went on to become the company’s CEO and CFO, respectively. By 2011, the brothers were in court. Doss alleged that he had not received a payment that the business owed him for his stock. All sides agreed that only employees of the business could be stockholders and that Doss ceased being an employee in 1994. Doss, in his complaint, contended that the entity’s bylaws required the company to buy out his stock and to pay him for his ownership interest based upon the book value of the stock. This buyout and payment, Doss alleged, never took place.

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Published on: September 26, 2018

What Happens When the Terms of Your Georgia Entity’s Operating Agreement Are Ambiguous?

By Poole Huffman, LLC

Whenever any business person or entity decides to create a new joint venture, the people behind that venture likely hope for great success. Sometimes these joint ventures do go on to yield positive results. Other times, however, the venture doesn’t work out. When joint ventures fail and break up, that can sometimes lead to litigation. When they do, the exact language that was contained in your operating agreement may prove to be the key to resolving the case. Whether your joint venture has failed and entered into the court system, or you are at the beginning phase and are fleshing out the terms of an operating agreement, it is important to make sure you have experienced Georgia business attorneys handling your case.

An example of a joint venture that didn’t meet with success and did trigger litigation was an Athens-based LLC formed to develop medical technology. Ownership of the joint venture was split equally between a holding company and another LLC, Healthy-IT, that was formed expressly for the purpose of entering into the joint venture. Specifically, the venture’s goal was to develop electronic medical record software.

Eventually, the venture devolved into a dispute, and the joint venture LLC, along with the holding company and others, sued Healthy and related entities for, among other things, breach of contract, breach of fiduciary duty, and misappropriation of trade secrets. The defendants filed a counterclaim that accused the plaintiff of breach of contract, among other things.

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Published on: September 19, 2018

What Does It Take to Evict a Commercial Tenant in Georgia?

By Poole Huffman, LLC

GreenvilleOnline.com recently reported on the closure of several fast-food chicken restaurants in that area. The restaurant chain, headquartered in Atlanta, indicated that the 24 locations in Georgia and South Carolina were closed after the landlords of those properties evicted the fast-food tenants. Fortunately for Atlanta-area fans of the chain’s chicken, there are still many locations open in north Georgia. The sudden closure of these restaurants may lead one to wonder, though: what is required for a landlord in Georgia to evict its commercial tenant? The reality is that there are multiple steps required by the law, and they must be carried out with precision to ensure that the court will grant the eviction order, which is why a Georgia commercial landlord should make sure to work with an experienced Georgia landlord-tenant attorney when it comes time to pursue an eviction.

Of course, the first thing that must happen for a landlord to seek an eviction is that the tenant must be in default. The commercial lease agreement between the landlord and tenant will typically state the actions or inactions that will lead to the tenant being in default. These can be things like non-payment of rent, late payment of rent, continuing to occupy the property after the end of the lease term, or using the property for a purpose expressly forbidden by the lease.

Once one or more of these things happens, the landlord must follow the rules laid out in the Georgia Code. First, the landlord must submit to the tenant a “demand for possession” letter. This letter informs the tenant that it is in default and that the landlord intends to begin legal proceedings to evict the tenant. That letter will also tell the tenant that it must vacate the property and return possession to the landlord.

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Published on: September 12, 2018

A Contractor’s Lack of Licensure Proves to Be a Big Problem in Its Breach of Contract Lawsuit

By Poole Huffman, LLC

When you decide to pursue a breach of contract lawsuit, it is very important to make sure that all T’s are crossed and I’s dotted. Even seemingly small imperfections may do grave damage to your case. In one recent case, the lack of a contractor’s license proved to be a major problem for the plaintiff who sought damages for an alleged breach. Whether you are pursuing or defending a breach of contract action, you need to make sure you have an experienced Georgia commercial litigation attorney on your side.

The plaintiff in the lawsuit was a home building company that signed a contract for the construction of a residence in Cumming. After the builder had partially constructed the house, disputes arose between the owner and the builder. The owner terminated the contract before the job was completed. The sole owner of the building company, who had signed the contract on behalf of the building company, did not have a Georgia builder’s or contractor’s license when the builder did its work on the house.

After the owner terminated the agreement, the builder sued for breach of contract. The owner, in opposition, filed a motion with the court asking the judge to grant summary judgment, which would end the builder’s case before it even got to trial. The owner’s argument was that the owner of the building company was not properly licensed in Georgia, and Georgia law prohibits unlicensed contractors from enforcing a contract “or the performance of work for which a license is required.”

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Published on: September 5, 2018

Federal Courts Decide that a ‘Resolution Fee’ Provision in a Commercial Contract Wasn’t a Liquidated Damages Provision and Was Enforceable

By Poole Huffman, LLC

In any commercial contract, there are likely several things you desire to get from the arrangement, which is why the agreement you sign hopefully has been carefully negotiated prior to execution. To make sure that you get the benefit for which you negotiated, it is important to understand what types of clauses are, and which are not, enforceable under Georgia law. To be sure your contract or any of its clauses won’t be thrown out as unenforceable, ensure you’re relying on representation from a knowledgeable Georgia commercial contracts attorney.

A recent case decided by the federal 11th Circuit Court of Appeals was one that looked at what type of fee provisions could, or could not, be enforced under Georgia law. The underlying deal was one between a chain of “quick service” Mexican restaurants and a supplier of tortillas. The deal called for the tortilla company to supply the restaurant’s tortilla needs. The deal had a provision in it for the imposition of something called a “resolution fee.” In this agreement, the obligation to pay a resolution fee was triggered only if the restaurant didn’t order at least $2.5 million worth of products from the supplier over the span of contract term.

So, if the restaurant cleared $2.5 million, the resolution fee was $0. If it fell short of $2.5 million, the resolution was equal to 5% of the difference between $2.5 million and the value of the products that the restaurant actually ordered and accepted. The deal called for the restaurant to pay the fee within 30 days, if one was owed.

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Published on: August 31, 2018

Federal Courts Affirm Atlanta Arbitrator’s Decision in Dispute Between Georgia Real Estate Developer and Israeli Equity Company

By Poole Huffman, LLC

Winning your commercial litigation matter is about more than just making sure that you have the facts on your side. It is about having the law on your side and also making sure that you have cleared all of the necessary procedural hurdles, like pursuing your case in the correct venue. These are all areas in which knowledgeable Georgia business litigation counsel can help you ensure that you are equipped to succeed.

One recent case in which venue was an issue was an action pitting against each other two former business partners whose relationship had definitely deteriorated. The defendant was a Norcross-based real estate developer. The plaintiff was an Israeli company that raises capital for real estate investments. In 2008, the two businesses consummated a Solicitation Agreement. The agreement came with an arbitration clause. That provision said that the parties agreed to arbitrate their disputes. If the capital company brought the case, the arbitration would proceed in Atlanta. If the developer brought the case, it would be arbitrated in Tel Aviv.

Some time later, once the relationship had soured, the capital company brought a breach of contract claim. In that same action, which was handled in Atlanta, the developer brought a counterclaim that accused the capital company of defaming the developer in statements made to other Israeli investors.

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Published on: August 29, 2018

Achieving Success in Your Business Litigation Case, Even When Some of the Entities are International

By Poole Huffman, LLC

In your complex business litigation case, there may be several points in the process at which you could find yourself in a “courtroom battle” situation with the other side. Obviously, the trial is one. Before that, though, you may have to litigate disputes over things like the disclosure of certain information. In business, much information can be material that is kept hidden and whose disclosure could be harmful to that entity’s business interests. To that end, it may be important to take any steps available to avoid making that disclosure. On the other hand, obtaining certain disclosures may be the key to achieving success in your business litigation lawsuit. For these and other adversarial battles, it pays to have experienced Georgia business litigation counsel on your side.

A recent case from the federal courts provided an example of this and the processes that can be involved in certain complex business litigation actions. The plaintiffs in the case were a finance company and an individual. The pair were both minority shareholders in a Luxembourg-based entity that was in the life insurance settlements business. The minority shareholders planned to bring a legal action in Luxembourg against one of the company’s board of directors for his undisclosed ownership interest in another third-party life settlement management entity.

The minority shareholders brought their 28 USC 1782 action in the Southern District of Florida federal court because the undisclosed life settlement company, which they sought to compel to produce certain documents for the Luxembourg case, was based in Pompano Beach. The trial court sided with the minority shareholders and ordered the Pompano Beach-based company to give the minority shareholders the information they sought.

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Published on: August 24, 2018

Commercial Landlord Secures $6.2M Judgment After Federal Litigation and Appeal

By Poole Huffman, LLC

As a commercial landlord, you have certain risks you face whenever a tenant’s lease comes to an end. One of these is that the tenant will not have maintained the property in accordance with the terms of the lease agreement. When that happens, you may need to litigate to recover damages for the harm you suffered. Whether your relationship with your tenant is a successful one or not, it pays to have experienced Georgia landlord-tenant counsel on your side to protect your interests.

One example of a relationship that did not end well was a pharmacy benefits management company’s lease of a “Class A-plus” space from a commercial landlord. The lease placed the obligation for many maintenance-related issues on the tenant. The two sides’ first dispute regarded the roof of the property. The landlord demanded installation of a two-ply roof, but the tenant instead sought to install a one-ply roof. A Florida court concluded that the landlord was entitled to reimbursement for the costs of the roof upgrade.

After the lease term expired, the landlord filed a second lawsuit, this one in federal court. The crux of the landlord’s federal case was that the tenant had returned the property in inferior condition. The landlord’s lawsuit listed 26 deficiencies, including problems with both the property and the equipment within it. The landlord argued that this was a breach of the lease agreement, which contained a paragraph that required the tenant to “at all times, at Tenant’s sole cost and expense, put, keep and maintain the Leased Premises (including, without limitation, the parking areas, roof, footings, foundations, interior and exterior walls and structural components of the Leased Premises) and the Equipment in a first class condition and order of repair.”

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Published on: August 24, 2018

Negotiating, and Then Enforcing, Exclusivity Provisions in Your Georgia Commercial Lease

By Poole Huffman, LLC

One of the types of provisions that you might negotiate to include in your commercial lease is an exclusivity term. Many commercial leases contain exclusive use clauses, particularly in situations in which the space is located in a larger shopping center that contains numerous tenants. What an exclusive use provision does for you, as a tenant, is allow you to use your leased space to operate your specific type of business (such as a clothing store, grocery store, electronics store, or restaurant) and to restrict or bar other tenants from operating a similar or identical type of business in that same shopping center.

Obtaining these provisions, and then making sure that they are enforced, can be vital for your business. The chances are that the calculations you made regarding whether or not a particular space’s lease terms made business sense for you included assumptions that you would have a certain zone where you were free from direct competition. If you end up facing competition within that zone, you aren’t getting the benefit of the bargain for which you negotiated. Effectively negotiating lease terms, and then aggressively working to enforce those terms, are areas where it pays to have experienced Georgia business counsel.

As an example, consider the federal litigation undertaken recently by a Florida-based supermarket that has several locations here in Georgia. The supermarket had negotiated and signed certain leases in Florida that included exclusivity provisions regarding groceries and pharmacies. The problem came after certain other stores, including a “closeout” retailer and a dollar store, opened locations in the same shopping centers and began selling food. This, according to the supermarket, was a violation of the exclusivity clause.

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