Pinnacle Benning, LLC v. Clark Realty Capital, LLC
314 Ga. App. 609
| Ga. Ct. App. | 2012Background
- CPB is the managing member of FBFC; Pinnacle (30%) and Clark Benning (70%) are members of CPB; Pinnacle is the Pinnacle Manager and Clark Realty is the Clark Manager.
- Pinnacle filed suit in Sep. 2010 against Clark Realty and Clark Benning alleging governance conflicts and improper actions in Fort Benning housing venture.
- Pinnacle claimed Clark controlled CPB/FBFC and acted to terminate Pinnacle’s property-management agreement, audit Pinnacle’s operations, and fund litigation favorable to Clark.
- Pinnacle sought to audit Clark’s books under CPB’s operating agreement (Section 3.11) and alleged Clark’s limited production of documents violated that right.
- Pinnacle asserted two counts: (1) declaratory judgment on the audit right; (2) breach of loyalty and good-faith duties, seeking accounting and refunds; a third count was dismissed and not at issue.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Declaratory judgment appropriate for audit right? | Pinnacle seeks declaration of audit rights. | Clark argues no future action needed; issue is advisory. | Dismissal upheld; declaratory judgment improper for already accrued rights. |
| Derivative action require demand? | Pinnacle argues futility of demand and cure by later letters. | Statute requires ante litem demand with no futility exception. | Derivative action dismissed for lack of prior demand; futility exception rejected. |
| Direct vs. derivative action; amendability? | Pinnacle contends its claims could be direct or amended. | Court did not address as moot; dismissal upheld for lack of jurisdiction. | |
| Remand for dismissal without prejudice? | Remanded to enter order dismissing counts without prejudice. |
Key Cases Cited
- Dunn v. Ceccarelli, 227 Ga.App. 505 (1997) (derivative-demand requirements; futility not implied by statute)
- McGregor v. Stachel, 200 Ga.App. 324 (1991) (demand requirement is procedural, not merits issue)
- Empire Fire & Marine Ins. Co. v. Metro Courier Corp., 234 Ga.App. 670 (1998) (declaratory judgments are improper where no future action to guide is needed)
- Capitol Infrastructure, LLC v. Plaza Midtown Residential Condo. Ass'n, 306 Ga.App. 794 (2010) (declaratory relief proper only to guide future conduct; not advisory)