David Eichenblatt v. piedmont/maple, LLC
341 Ga. App. 761
| Ga. Ct. App. | 2017Background
- In 1995 Eichenblatt and Kaufman Development Partners (KDP) formed Piedmont/Maple, LLC; an amended 2000 agreement removed Eichenblatt as a managing member but preserved his right to allocations and distributions.
- KDP managed the venture and in 2005 split ownership into single-asset subsidiaries (Piedmont Road, LLC and Maple Drive, LLC) and later refinanced debt.
- After financial trouble, KDP loaned Piedmont/Maple $3,550,000 in 2012 via a member loan and promissory note with a 15% interest rate and fees to KDP-related entities; Maple Drive sold in April 2013 and Piedmont Road sold in November 2013.
- Piedmont/Maple distributed $969,609.23 to Eichenblatt as a dissolution payment; Eichenblatt disputed the calculation and refused the checks.
- Plaintiffs (KDP, Kaufman, Piedmont/Maple) sued for declaratory judgment regarding distribution; Eichenblatt counterclaimed for breach of contract and breach of fiduciary duty, alleging mismanagement in both the timing/structure of the sales (should have sold as an assemblage) and the 2012 member loan terms.
- The trial court granted plaintiffs partial summary judgment on the counterclaims; the Court of Appeals reversed, finding material factual disputes precluded summary judgment.
Issues
| Issue | Eichenblatt's Argument | Plaintiffs' Argument | Held |
|---|---|---|---|
| Whether res judicata precluded sale-related breach/fiduciary claims | Prior judgment did not cover post-trial mismanagement; new facts (2013 sales) gave rise to new claims | Prior litigation already addressed damages tied to failure to sell as assemblage; res judicata bars relitigation | Reversed: res judicata did not bar claims because operative facts differed and the alleged misconduct occurred after the prior suit |
| Whether collateral estoppel bars sale-related claims | Not applicable because sales and market conditions occurred after prior trial; issue not actually litigated | Issue decided previously; cannot be relitigated | Reversed: collateral estoppel inapplicable—issue was not litigated or necessarily decided previously |
| Whether evidence shows no breach as a matter of law re: sale strategy/value | Expert appraisals show combined assemblage value > $18M; factual dispute whether sale as assemblage was feasible and would have maximized value | Only reasonable inference is selling separately in 2013 was sensible; no breach shown | Reversed: material factual disputes exist; summary judgment inappropriate |
| Whether terms of 2012 member loan breached operating agreement or fiduciary duty | Loan terms (higher principal, 15% interest, fees) were unfair compared to market rates and benefited KDP; Section 2.10 required fair terms | Operating agreement permitted member loans; evidence shows terms were reasonable | Reversed: sufficient evidence for a jury to find terms were unfair and unfavorable to Piedmont/Maple; summary judgment improper |
Key Cases Cited
- Humphrey v. JP Morgan Chase Bank, 337 Ga. App. 331 (2016) (summary judgment review and evidence construed for nonmovant)
- Kaufman Dev. Partners v. Eichenblatt, 324 Ga. App. 71 (2013) (prior litigation between parties; judgment did not extinguish Eichenblatt’s ongoing ownership interest)
- Haley v. Regions Bank, 277 Ga. 85 (2003) (res judicata requires identical causes of action; cause of action = entire set of operative facts)
- Morrison v. Morrison, 284 Ga. 112 (2008) (linkage of subject matter across suits does not alone establish same cause)
- Glen Oak, Inc. v. Henderson, 258 Ga. 455 (1988) (prior action did not bar claims arising after judgment)
- Waldroup v. Greene County Hosp. Auth., 265 Ga. 864 (1995) (collateral estoppel bars re-litigation of issues actually litigated and decided)
- Dalton v. City of Marietta, 280 Ga. App. 202 (2006) (even slight evidence suffices to defeat summary judgment)
- An v. Active Pest Control South, 313 Ga. App. 110 (2011) (appellate courts generally do not decide evidentiary objections raised but not ruled on below; consider whether record suffices to survive summary judgment)
- Cushing v. Cohen, 323 Ga. App. 497 (2013) (facts may create jury question whether fiduciary duty existed between controlling manager and investors)