Osprey Cove Real Estate, LLC v. Towerview Construction, LLC
343 Ga. App. 436
| Ga. Ct. App. | 2017Background
- Towerview Construction, LLC (Towerview) entered four construction loan agreements with Osprey Cove Real Estate, LLC (Osprey Cove) to develop and sell four residential lots; contracts purported to deed lots to Towerview while Osprey Cove financed construction and retained sale-control rights.
- Towerview alleges Osprey Cove interfered with subcontractors, issued conflicting instructions, refused to list or approve sales unless Osprey acted as listing agent, used lots as models, and withheld sale proceeds—part of an alleged scheme to prevent Towerview from receiving payment and to force loan defaults.
- Towerview sued asserting 14 causes of action including breach of contract, fraud (various theories), tortious interference, unjust enrichment, slander of title, wrongful foreclosure, and intentional infliction of emotional distress; Osprey Cove moved to dismiss or for a more definite statement as to eight counts.
- The trial court denied Osprey Cove’s motion in full; Osprey Cove obtained discretionary review by the Court of Appeals of Georgia.
- The Court of Appeals affirmed in part and reversed in part: it dismissed the emotional-distress claim (LLC cannot recover), ordered a more definite statement on fraud-related claims for lack of particularity, dismissed the wrongful-foreclosure claim (no sale yet), and otherwise affirmed denial of dismissal for remaining tort and contract claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a business entity may recover for intentional infliction of emotional distress | Towerview alleged severe interference caused emotional harm warranting recovery | Osprey Cove argued a business cannot suffer emotional distress and thus no claim lies | Held: Business entities (including LLCs) cannot recover for intentional or negligent infliction of emotional distress — claim dismissed |
| Sufficiency/particularity of fraud claims (fraud, fraud in inducement, fraudulent misrepresentation, negligent misrepresentation) | Towerview relied on contract terms and alleged a scheme to defraud by withholding payments and control over sales | Osprey Cove argued Towerview failed to plead any specific fraudulent statements or particular facts as required by OCGA § 9-11-9(b) | Held: Fraud claims lack required particularity; trial court erred — ordered a more definite statement (dismissal not appropriate if plaintiff can amend) |
| Wrongful foreclosure (claim to cancel upcoming sale) | Towerview sought cancellation of an alleged impending nonjudicial foreclosure sale | Osprey Cove argued no foreclosure sale had occurred when complaint was filed, precluding a wrongful-foreclosure cause of action | Held: Where no foreclosure sale occurred at filing, wrongful-foreclosure claim fails — dismissal affirmed (plaintiff may supplement if sale later occurred) |
| Unjust enrichment and other tort/contract claims (slander of title, breach of contract, tortious interference, breach of fiduciary duty, covenant of good faith) | Towerview pleaded alternate theories, alleging Osprey benefited improperly and interfered with business relationships | Osprey Cove argued valid contracts preclude unjust enrichment and many tort claims should be dismissed on the pleadings | Held: Pleadings gave fair notice under OCGA § 9-11-8(a)(2)(A); factual issues remain and dismissal was improper for these claims — denial of dismissal affirmed |
Key Cases Cited
- State v. Singh, 291 Ga. 525 (Georgia Supreme Court) (motion to dismiss standard under OCGA § 9-11-12(b)(6))
- Lampliter Dinner Theater v. Liberty Mut. Ins. Co., 792 F.2d 1036 (11th Cir.) (businesses cannot recover for emotional distress)
- FDIC v. Hulsey, 22 F.3d 1472 (10th Cir.) (corporation lacks ability to experience emotions; no emotional-distress recovery)
- Oglethorpe Power Co. v. Estate of Forrister, 332 Ga. App. 693 (Ga. Ct. App.) (distinguishing ‘‘discomfort and annoyance’’ damages from emotional distress for LLCs)
- Humphrey v. JP Morgan Chase Bank, 337 Ga. App. 331 (Ga. Ct. App.) (wrongful-foreclosure claim requires a foreclosure sale)
- Campbell v. Ailion, 338 Ga. App. 382 (Ga. Ct. App.) (more definite statement vs. dismissal when pleadings defective)
- Dillingham v. Doctors Clinic, 236 Ga. 302 (Ga. Sup. Ct.) (notice pleading objective of Civil Practice Act)