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Forehand v. Perlis Realty Co.
Citations: 400 S.E.2d 644; 198 Ga. App. 165; 1990 Ga. App. LEXIS 1583Docket: A90A0959, A90A1213
Court: Court of Appeals of Georgia; November 21, 1990; Georgia; State Appellate Court
W. F. Forehand, Jr. is the successor in title to a shopping center where Belk-Hagins Company is the principal tenant under a 20-year lease established in 1975, requiring an annual rent of $40,000 plus 2.5% of gross sales exceeding $1.6 million. In summer 1986, Larry Perlis of Perlis Realty Company approached Belk-Hagins about relocating to a shopping center he owned. After negotiations, Belk-Hagins executed a lease with Perlis in May 1987 and moved, while continuing to pay Forehand the minimum rent but failing to pay the percentage rent. In February 1989, Forehand filed a ten-count complaint against Belk-Hagins for breach of contract, claiming they abandoned the lease and assigned it to Perlis, as well as alleging tortious interference by Perlis and BSS. Belk-Hagins countered that Forehand breached the lease. Forehand amended his complaint seeking damages and attorney fees. The trial court denied motions for summary judgment from Belk-Hagins on Forehand's original complaint but granted it for Perlis and BSS regarding the tortious interference claims. Belk-Hagins later sought summary judgment on Forehand's amended complaint and its counterclaim, which the trial court denied, instead granting Forehand's motion. Forehand appeals the summary judgment granted to Perlis and BSS on the tortious interference claim, while Belk-Hagins appeals the denial of its summary judgment motions and the grant of summary judgment to Forehand on its counterclaim. In Case No. A90A0959, Forehand asserts that the trial court's grant of summary judgment on the tortious interference with contract claim was incorrect, as questions of fact regarding the breach of contract claim warranted jury determination. Forehand mistakenly contends that a finding of no breach was necessary for summary judgment on the tortious interference claim. The law establishes that intentional, non-privileged interference by a third party with existing contractual rights constitutes tortious conduct, and such interference is actionable even if it does not result in a breach, as long as it hampers contract performance. To succeed in a claim for wrongful interference, the plaintiff must demonstrate malicious intent, characterized as unauthorized interference without legal justification. However, no liability arises when a breach is due to exercising an absolute right. In reviewing the actions of Perlis and BSS, the court found them to be neither non-privileged nor malicious. Perlis's actions involved promoting Belk-Hagins to relocate their business, which was competitive but not intended to harm Forehand, indicating a lack of malice. Consequently, the trial court's summary judgment on the tortious interference claim was upheld. In a related cross-appeal (Case No. A90A1213), Belk-Hagins challenged the denial of summary judgment regarding the breach of contract claims, arguing no breach occurred since there was no lease assignment to Perlis and the original lease did not mandate Belk-Hagins to operate at Forehand's location. Forehand countered that the Perlis lease assumed obligations under the 1975 lease, claiming Belk-Hagins violated a provision prohibiting assignment or subletting without Forehand's consent. Belk-Hagins contends that no prohibited assignment occurred, asserting that Perlis only took on Belk-Hagins' obligations under the lease. Assignment is defined as the transfer of property rights, while assumption refers to taking on another's debt or obligation. The court rejects Belk-Hagins' argument, noting that Perlis not only assumed the duty to pay rent but also agreed to take on Belk-Hagins' rights under the lease. Evidence suggests that Perlis believed it acquired these rights while collaborating with Forehand to find a new tenant, indicating a material question regarding whether Belk-Hagins essentially assigned the lease to Perlis. Although the 1975 lease does not explicitly require Belk-Hagins to continue operations, Forehand argues for an implied covenant of continued operation. Belk-Hagins submitted affidavits from two negotiators of the lease, asserting that there was no understood obligation to maintain operations or a prohibition against ceasing them. Previous cases, such as Kroger Co. v. Bonny Corp. and Fifth Ave. Shopping Center v. Grand Union Co., emphasized that determining the presence of an implied covenant of continuous occupancy depends on the intent of the parties, which is a factual question. Thus, the court finds that the intent of the parties regarding the lease remains uncertain and cannot be resolved as a matter of law. The court found that there was no evidence of the parties' intentions concerning the lease in question, similar to the prior cases of Kroger and Fifth Ave. Affidavit testimony from the lease negotiators indicated that neither party believed the lease required the tenant to occupy the premises for its entire duration. However, issues remained regarding whether the minimum rental amount negated an implied covenant of operation and whether such a covenant was necessary to uphold the agreement. The trial court's denial of summary judgment to Belk-Hagins on Forehand's breach of contract claims was upheld. Belk-Hagins claimed that Forehand breached the 1975 lease by not including required covenants in deeds during property transactions in 1982, 1983, and 1985, and by failing to maintain the premises and comply with lease provisions regarding use and parking. The lease mandated that any sale of the shopping center include the covenant requiring consent for leases over 25,000 square feet, which Belk-Hagins did not dispute was not recorded in subsequent deeds. Despite being aware of the sale and alleged breaches as early as 1985, Belk-Hagins took no action until Forehand filed a lawsuit, at which point it sought to terminate the lease. The court emphasized that forfeitures under valid contracts are disfavored, and the right to rescind must be asserted promptly. Since Belk-Hagins did not timely assert any breach, it was deemed to have waived its right to cancel the contract or seek damages. Consequently, the trial court's rulings were affirmed, including the denial of summary judgment to Belk-Hagins and the granting of summary judgment to Forehand on the counterclaim.