City Commercial Real Estate (“City”) brought this action in the Superior Court of Gwinnett County against ASC Construction Equipment USA, Inc. (“ASC”), alleging, ill various contract and tort claims, that ASC acted improperly to deprive City of its commission on the construction of a building for ASC by a contractor City introduced to ASC. A jury found in favor of City on its claim for tortious interference with business relationships, as well as two alternative claims for compensatory damages. In addition to compensatory damages, the jury awarded City punitive damages, based on its finding of a specific intent to harm. In Case No. A10A0733, ASC appeals the denial of its motions for a directed verdict and for judgment notwithstanding the verdict, contending, inter alia, that it was not a stranger to any business relationship City had with the contractor and, therefore, it cannot be held liable for interfering with that relationship. ASC further contends that, absent a valid claim for tortious interference with business relationships, it cannot be held liable for punitive damages in any amount. In Case No. A10A0734, City cross-appeals, contending the trial court erred in granting ASC’s motion for a directed verdict on City’s claim for fraud. For the reasons explained below, we reverse in part and remand.
[O]n appeal from a trial court’s rulings оn motions for directed verdict and judgment notwithstanding the verdict, we review and resolve the evidence and any doubts or ambiguities in favor of the verdict; directed verdicts and judgments notwithstanding the verdict are not proper unless there is no conflict in the evidence as to any material issue and the evidence introduced, with all reasonable deductions therefrom, demands a certain verdict.
(Citation and punctuation omitted.)
Fertility Technology Resources v. Lifetek Med.,
Viewed in this light, thе record shows the following. In August 2005, ASC engaged City to serve as ASC’s exclusive real estate agent in the Atlanta metropolitan area. At the time, ASC needed two new *310 showrooms in the Atlanta area for its construction equipment sales. In the likely event that suitable existing buildings were not available, one option was to find raw land for “build to suit to own” deals, in which a developer would take title to a parcel, construct the building or supervise its chosen contractor in constructing the building, and then sell the improved property to ASC. Because ASC’s parent company, Volvo Construction Equipment, had agreed to subsidize a lease, however, ASC preferred “build to suit to lease” deals, in which a developer would take title to a parcel, construct or supervise the construction of the building, and then lease the improved property to ASC.
City and ASC did not execute a written contract providing for City’s compensation. 1 Instead, ASC’s representative verbally agreed to pay what City’s president, Rick Lackey, described as “normal and customary” commissions for the industry, depending on how each deal was ultimately structured. City’s commission would be factored into each deal, as a line item, and paid directly by the developer. City and ASC both understood that, even if indirectly, ASC would ultimately pay City’s commissions, because it was paying for the use or ownership of the buildings. In the case of a build-to-suit-to-lease. deal, City’s commission would be the first month’s rent plus four percent of the remaining lease payments. In the case of a build-to-suit-to-own deal, City’s commission would be five percent of the costs of construction, in addition to five percent of the purchase price of the land.
As expected, City was unable to locate suitable existing buildings. Because of the need for new construction and ASC’s preference for build-to-suit-to-lease deals, City’s initial tasks were to locate fitting parcels and to issue Requests for Proposal to developers. Within two weeks of being engaged, City procured contracts on two parcels that fit ASC’s requirements; City received a five percent commission on the sales. City sent Requests for Proposal to 11 developers, including Seefried Properties. As a condition of submitting a proposal, each of the developers executed an agreement with City, promising to pay City’s commission if selected by ASC to build and lease the property to ASC.
In response to the Requests for Proposal, City received five proposals; City’s representatives evaluated the proposals and selected four developers to attend a pitch meeting with ASC on March 28, 2006. City asked each developer to bring someone to the meeting *311 who could answer any construction questions. Three of the developers also provided construction services and brought someоne from the construction side of their own companies. The one developer that did not have an in-house contractor, Seefried, brought a partner from Catamount Constructors, a contractor that had made an attractive bid on the project. Before the March 28 meeting, neither City nor ASC had had any contact with Catamount. Although Seefried anticipated hiring Catamount if Seefried won the contract, because Catamount’s bid was the lowest Seefried had received, Seefried and Catamount did not have a contract regarding the ASC proposal, and so it was not obligated to do so. According to Seefried’s representative, Catamount was for the same reason free to contract directly with ASC without involving Seefried.
One week before the March 28 meeting, ASC’s board of directors voted to abandon the earlier plan for build-to-suit-to-lease deals and had decided instead to pursue constructing buildings to own without using á developer. No one from ASC informed City before the meeting of this change in direction. Because City’s efforts were still focused on the build-to-suit-to-lease option, which would necessarily involve a developer that would bill ASC for City’s commission, City did not ask anyone from Catamount to sign a commission agreement before the meeting.
After the March 28 meeting, ASC told City that the lease terms being offered were unaffordable and that ASC wanted to explore a build-to-suit-to-own deal. According to Lackey, ASC directed City to secure construction estimates from two of the developers, including Seefried. ASC’s representative, Nuno Colaco, suggested that ASC would not owe City any commission on a building contract if ASC engaged the contractor directly, rather than contracting with one of the developers City had presented. According to Lackey, when he protested being denied a commission on any building contract, Colaco promised that City would receive its commission on any build-to-suit-to-own deal. 2
At the beginning of City’s representation, ASC had agreed that it would not cоmmunicate directly with any of the developer teams that were being considered; rather, all communications about the deals were to be channeled through City. Despite this agreement, without involving City, Colaco contacted the partner from Cata-mount, Scott Reynolds, whom Seefried had brought to the March 28 meeting, and asked for a quote for a direct building contract that did not involve a developer. As requested, Catamount sent ASC a detailed price quote. A Seefried executive cautioned Reynolds to *312 remember that City had represented ASC as its broker and would expect to be paid even if ASC did not hire Seefried or one of the other developers. As he predicted, City asked Catamount to sign a commission agreement. Reynolds contacted ASC’s representative, who tоld Reynolds that ASC was working to resolve the issue with City and that Catamount should not sign any agreement with City. Reynolds agreed to move forward only if ASC would indemnify Catamount for any claims by City; ASC agreed to do so. Reynolds never signed City’s commission agreement. On April 24, 2006, ASC formally terminated City’s engagement. ASC then contracted with Catamount to build one of ASC’s buildings for a total cost of $5.2 million; City received no commission on the contract.
In this suit, City assertеd claims for breach of contract, promissory estoppel, quantum meruit, tortious interference with contract and business relationships, fraud and negligent misrepresentation, punitive damages for a specific intent to cause harm, and attorney fees pursuant to OCGA § 13-6-11. 3 At the close of City’s evidence, the trial court granted ASC’s motion for a directed verdict as to City’s claim for fraud, but denied ASC’s motions fоr a directed verdict as to City’s claims for breach of contract, tortious interference with business relationships, and punitive damages. The trial court ruled that the punitive damages claim could only be sustained under the tortious interference claim. The jury found in City’s favor on its claims for promissory estoppel, quantum meruit, and tortious interference with business relationships. The jury awarded City $260,000 in compensatory damages, $27,350 in prejudgment interest, and $180,323.89 in attorney fees on each of these alternative claims. The jury also found that ASC specifically intended to harm City and awarded City $1.25 million in punitive damages. After the court entered judgment in accordance with the jury’s verdict, ASC moved for judgment notwithstanding the verdict as to City’s claim for tortious interference with business relationships and the associated punitive damages and аttorney fee awards. The trial court denied ASC’s motion.
Case No. A10A0733
1. ASC contends that, as a matter of law, it was not a stranger to any business relationship between City and Catamount and, therefore, that the trial court erred in denying ASC’s motion for a directed *313 verdict as to City’s claim for tortious interference with business relationships.
Georgia law recognizes a claim by a person or business entity that is injured by another’s wrongful interference with prospective or inchoate property rights that the plaintiff has, or at least hopes to have, as a result of the pursuit of the plaintiffs occupation or business. Charles R. Adams, Ga. Law of Torts § 33-3 (2009-2010 ed.).
To recover under a theory of tortious interference with business relations, a plaintiff must show [that the] defendant: (1) acted improperly and without privilege, (2) acted purposely and with mаlice with the intent to injure, (3) induced a third party or parties not to enter into or continue a business relationship with the plaintiff, and (4) caused [the] plaintiff financial injury.
(Citation and punctuation omitted.)
Roofing Supply of Atlanta v. Forrest Homes,
In this case, City claimed that ASC tortiously interfered with its business relations when it induced Catamount not to enter into a commission agreement with City. As a result, City was required to show thаt ASC was a stranger to the prospective commission agreement. It is undisputed, however, that City’s purpose in seeking the commission agreement with Catamount was to have Catamount act as a conduit for the commission City claimed (and the jury found) it had earned from ASC for the work it did for ASC during the nine months it served as ASC’s exclusive broker. The object of ASC’s interference, that is, the prospective commission agreement between City and Catamount, was a mechanism for effectuating the verbal agreement between City and ASC regarding City’s compensation. Based on this, we conclude that the evidence presented no basis for the jury to find that ASC was a stranger to the City’s business *314 relationship with Catamount. 4 Consequently, the trial court erred in denying ASC’s motion for a directed verdict as to Count 4 of City’s complaint, its claim for tortious interference with contract and business relationships. As noted above, City’s claims for promissory estoppel and quantum meruit were alternative bases for the jury’s award of compensatory damages. ASC raised no claim of error regarding these claims, Counts 2 and 3, and, therefore, this appeal presents no basis for reversing the jury’s award of compensatory damages in the amount of $467,673.89.
2. ASC further contends that, absent a valid сlaim for tortious interference with business relationships, it cannot be held liable for punitive damages in any amount. Because we have determined that the trial court erred in denying ASC’s motion for a directed verdict on tortious interference, see Division 1, supra, and because that claim was the only claim submitted to the jury which could support an award of punitive damages, the punitive damages awаrd cannot stand.
5
OCGA § 13-6-10 (“Unless otherwise provided by law, exemplary damages shall never be allowed in cases arising on contracts.”);
Hardwick v. Williams,
*315 Case No. A10A0734
3. City contends the trial court erred in granting ASC’s motion for a directed verdict as to Count 9 of City’s complaint, its claim for fraud. 6 We agree.
In order to recover for fraud, a plaintiff is required to show
(1) a false representation or omission of a material fact; (2) scienter; (3) intention to induce the party claiming fraud to act or refrain from acting; (4) justifiable reliance; and (5) damages. In all cases of fraud involving a concealment of a material fact, scienter, or knowledge of the alleged falsehood, is an essential element of the tort.
(Punctuation and footnotes omitted.)
Argentum Intl. v. Woods,
City contends that ASC omitted a material fact when it failed to disclose before the March 28 meeting that ASC’s bоard of directors had decided to own the buildings and to engage a contractor directly without using a developer. City contends that it justifiably relied to its detriment on this omission when it failed to require Catamount to sign a commission agreement before being allowed to attend the meeting with ASC. We conclude that there was evidence from which the jury could infer that ASC, through its representatives, failed to disclosе a material fact, that it had decided to directly engage a
*316
contractor to construct buildings for ASC to own. The jury was authorized to find that ASC had an obligation to communicate that fact, given the compensation scheme that was in place. The jury was also authorized to find that ASC intended, by failing to disclose this fact to City before the March 28 meeting, to induce City not to secure the agreement оf any independent contractors City might bring to the table to include a commission for City in any building contract the contractor entered into with ASC. Finally, the jury was authorized to find that City justifiably relied on ASC’s omission and suffered the loss of the commission that would have resulted from such an agreement. Accordingly, the trial court erred in granting ASC’s motion for a directed verdict on Count 9, City’s claim for fraud.
First Union Nat. Bank v. Davies-Elliott, Inc.,
We reject ASC’s argument that, becаuse City suffered a purely economic loss, that is, the loss of its expected commission, the “economic loss rule” bars City’s fraud claim.
The purpose of the economic loss rule is to distinguish between those actions cognizable in tort and those that may be brought only in contract. . . . The economic loss rule generally provides that a contracting party who suffers purely economic lossеs must seek his remedy in contract and not in tort.
(Punctuation and footnotes omitted.)
City of Cairo v. Hightower Consulting Engineers,
one who supplies information ... in any transaction in which [that person] has a pecuniary interest has a duty of reasonable care and competence to parties who rely upon the information in cirсumstances in which the maker was manifestly aware of the use to which the information was to be put and intended that it be so used. This liability is limited to a foreseeable person or limited class of persons for whom the information was intended, either directly or indirectly.
(Punctuation and footnote omitted.) Id. at 729 (4). Given the nature of City’s claim for fraud, the economic loss rule does not limit City to its contractual remedies. Id.
4. In light of our holdings in Divisions 1 and 3, supra, this case *317 is remanded for additional proceedings consistent with this opinion.
Judgment affirmed in part and reversed in part, and case remanded.
Notes
ASC’s representative signed a letter that confirmed City’s exclusive engagement, but which did not address compensation. The purpose of the letter was to notify the marketplace that City represented ASC, because ASC had рreviously been represented by another firm.
Colaco denied agreeing to this.
In addition, City asserted claims for conversion and breach of the duty of good faith and fair dealing. The trial court granted ASC’s motion for a directed verdict as to these counts. City does not raise any claim of error with regard to that ruling.
See Atlanta Market Center Mgmt. Co. v. McLane,
Because punitive damages were not available in any amount, ASC’s argument that there was no evidence that it had a specific intent to harm City and, therefore, that the trial court erred in not reducing the punitive damages award to $250,000 pursuant to OCGA § 51-12-5.1 (g) is moot.
City filed its cross-appeal conditioned on a ruling favorable to ASC in the main appeal, Case No. A10A0733. Because we have ruled in ASC’s favor in the main appeal, we consider City’s cross-appeal on the merits. Cf.
SAKS Assocs. v. Southeast Culvert, 282
Ga. App. 359, 365-366 (4) (
See also OCGA § 51-6-2 (a) (“Mere concealment of a material fact [if] done in such a manner as to deceive and mislead will.. . support an action” for fraud.) (punctuation omitted).