Crossing Park Properties, LLC and Joan and Glen Hammer
In Georgia, defendants filing a motion to dismiss based upon a lack of personal jurisdiction bear the burden of proof. Home Depot Supply v. Hunter Mgmt.,
Where as here, the motion was decided on the basis of written submissions alone, any disputes of fact in the written submissions suрporting and opposing the motion to dismiss are resolved in favor of the party asserting the existence of personal jurisdiction, and the appellate standard of review is nondeferential.
(Citations, punctuation and footnotes omitted.) Id.
In 2005, Condominium Ventures of America, Inc. (“Condominium Ventures”), a Georgia corporation, and its associates
[Condominium Ventures and its associates] proposed thаt Glen Hammer participate in the transaction by arranging the loans used to purchase and refurbish the Florida Property. In exchange, [Condominium Ventures and its associates] proposed that Glen Hammer would be paid a fee.
In April 2006, 2000 Ocean Drive, LLC (“2000 Ocean”), a Florida limited liаbility company, was created “for the purpose of being the purchaser of the Florida Property and the primary borrower of funds needed for the purpose of purchasing and refurbishing of the Florida Property.” 2000 Ocean was formed by the Schmitts, Harris, Condominium Ventures, and TKW, a Geоrgia limited liability company.
Bank of America provided an initial loan of $13,500,000 for the down payment on the purchase of the Florida property and other expenses associated with the project. It was an interim loan designed to be replaced by additional finanсing to be obtained in December 2006 to complete the purchase of the property as well as the condominium conversion. Glen Hammer guaranteed the Bank of America loan in exchange for a promise by 2000 Ocean to pay him a fee. 2000 Ocean’s promisе was guaranteed by Condominium Ventures and its associates.
In October 2006, Mark Rowell, a broker with offices in Alpharetta, Georgia, began exchanging e-mails with JDI’s senior vice president seeking a loan to complete the purchase of the Florida property. In one of thеse exchanges, Rowell mentioned that Glen Hammer would be willing to sign “if needed,” but the other participants in the deal would prefer to do it without him because “his signature costs them $1M.” According to JDI’s vice president, “JDI did not initiate contact with
On December 1, 2006, JDI entered into a $40 million loan with 2000 Ocean for the purchase price of the property. The primary collateral for the loan was the Florida property. On the same day, Archer Capital Fund, L.P. gave a second priority $11 million loan to 2000 Ocean. All of the documents in connection with these loans were signed in Florida except those executed by the Hammers and Crossing Park in Georgia. The JDI loan guaranty and the JDI subordination agreement documents were sent to Hammer in Georgia from JDI’s counsel in Florida, and the record includes e-mail exchanges between Hammer and JDI’s Florida counsel. The guaranty document drafted by JDI provides that notices shall be provided to Glen Hammer at his Norcross, Georgia address.
According to JDI’s vice president, the loan guaranty signed by Hammer “terminated by its terms shortly after the closing”
The obligors on the Archer second priority loan included 2000 Ocean, Crossing Park Properties, Joan Hammer, and TKW. Collateral for this loan included the Florida property, condominiums owned by Joan Hammer located in Georgia, an office park owned by Crossing Park located in Georgia, and Glen Hammer’s interest in Crossing Park.
On the same day that the Hammers and Crossing Park executed their documents in connection with the JDI and Archer loans, JDI, Archer, and 2000 Ocean signed an additional subordination agreement (“Undisclosed Agreement”). The Hammers and Crossing Park contend that they were not informed of the Undisclosed Agreement which “altered the landscape of the deal” and “drastically and materially increased” their personal risk in the event of default. It is undisputed that this document was executed in Florida.
In December 2007, both the JDI and Archer loans were in default. In July 2008, JDI, 2000 Ocean, Condominium Ventures and its associates entered into an agreement to give JDI a deed to the
On April 29, 2009, Glen Hammer filed suit in Florida against JDI, as well as other parties, and initially asserted only conversion and accounting claims against JDI in connection with three condominium units owned by Glen Hammer. On July 2,2009, the Hammers and Crossing Park filed a suit in Georgia against JDI, Archer, 2000 Ocean, Condominium Ventures, TKW, the Schmitts, and the estate of Kenneth Harris in connection with the December 1, 2006 transaction, asserting that the defendants had committed fraud by failing to tell them about the Undisclosed Agreement. In a later amended complaint to the Georgia action, the Hammers and Crossing Park sought to rescind all documents executed by them in connection with the trаnsaction based upon fraud, including all documents executed in connection with the JDI loan. They also asserted that they were entitled to damages based upon JDI’s constructive fraud and breach of implied duty of good faith and fair dealing. On January 7, 2010, Glen Hammer amended his Florida complaint to add Archer as a defendant and also asserted for the first time a fraudulent inducement claim against JDI in connection with the Undisclosed Agreement.
JDI moved to dismiss the Georgia action based upon its contention that it does not have sufficient minimum contacts in Georgia for a Georgia court to exercise personal jurisdiction over it. The trial court granted the motion based upon its conclusion “that the fortuitous nature of where Plaintiffs executed the documents is not sufficient to confer ‘minimum contacts’ over JDI. There is no evidence thаt the location of Plaintiffs’ execution of the documents in Georgia was directed or initiated by JDI.” It also found that the documents executed by Glen Hammer in Georgia were “at best only tangentially related to the Plaintiffs’ core claim, which concerns the JDI-Archer forbearanсe agreement. Neither party is claiming a breach of the above agreements.” Finally, the trial court found that because Glen Hammer had already initiated a suit in Florida against JDI asserting similar allegations, “it would not work a hardship upon him or the affiliated plaintiffs to pursue any remaining claims in the Florida litigation should they wish to do so.”
Georgia’s Long Arm Statute provides that a court mаy exercise jurisdiction over a nonresident if he personally, or through an agent, “[tjransacts any business within this state.” OCGA § 9-10-91 (1); Paxton v. Citizens Bank &c.,
[Jjurisdiction exists on the basis of transacting business in this state if (1) the nonrеsident defendant has purposefully done some act or consummated some transaction in this state, (2) if the cause of action arises from or is connected with such act or transaction, and (3) if the exercise of jurisdiction by the courts of this state does not offend traditional fairness and substantial justice.
(Citations and punctuation omitted) Amerireach.com v. Walker,
the first two factors to determine whether a defendant has established the minimum contacts with the forum state necessary for the exercise of jurisdiction. If such minimum contacts are found, we move to the third prong of the test to consider whether the exerсise of jurisdiction is reasonable — that is, to ensure that it does not result solely from random, fortuitous or attenuated contacts.
(Citation and punctuation omitted.) Paxton, supra,
With regard to the first prong of the test, our Supreme Court has held that “nothing in subsection (1) [of the Long Arm Statute] requires the physical presence of the nonresident in Georgia or minimizes the import of a nonresident’s intangible contacts with the State. [Cit.]” Innovative Clinical &c. Svcs.,
our inquiry is not limited to the execution of the guaranty contracts alone, as the contract is ordinarily but an intermediate step serving to tie up prior business negotiations with future consequences which themselves are the real object of the business transaction. It is these factors — prior negotiations and contemplated future consequences, along with thе terms of the contract and the parties’ actual course of dealing — that must be evaluated in determining whether the defendant purposefully established minimum contacts within the forum.
(Citation, punctuation and footnotes omitted.) Id. at 761.
In this case, the record shows that JDI negotiated the transaction through a broker in Georgia, decidеd to require a guaranty from a Georgia resident, and sent loan documents to Glen Hammer in Georgia for the purpose of availing itself of his financial resources in Georgia to consummate the closing of the underlying transaction. Significantly, its decision to send closing documents tо Georgia without including the Undisclosed Agreement lies at the heart of Hammer’s claims against JDI. Hammer contends he would not have entered into the transaction had he known about the Undisclosed Agreement, making the effect of JDI’s conduct in sending incomplete documents to Glen Hammer in Georgia substantial, particularly when one of the consequences of the transaction as a whole was the foreclosure of real property in Georgia. And Hammer also seeks in his complaint to set aside the documents he executed in Georgia. Basеd upon all of these facts, we conclude that the first two prongs of the minimum contacts test have been fulfilled. First Nat. Bank, supra,
Our final step in the application of the three-part test is to determine whether the exercise of jurisdiction by a Georgia court in this case comports with traditiоnal notions of fairness and substantial justice. Due process requires that*477 individuals have fair warning that a particular activity may subject them to the jurisdiction of a foreign sovereign.
(Citations and punctuation omitted.) Noorani v. Sugarloaf Mills &c.,
Based upon our conclusion that the trial court had personal jurisdiction over JDI pursuant to OCGA § 9-10-91 (1), we reverse its order granting JDI’s motion to dismiss.
Judgment reversed.
Notes
This is not the first appearance of these parties before this court. In Crossing Park Properties v. Archer Capital Fund,
Georgia residents William Schmitt, Thomas Schmitt, and the late Kenneth Harris owned and operated Condominium Ventures.
The guaranty provided thаt “if no Event of Default has occurred and at such time the guaranteed debt (as defined below) is less than the product of (A) the number of Unsold Units (as defined [in the Loan Agreement]) multiplied by (B) $315,000, then this Guaranty shall be terminated and the undersigned shall he released from all obligations hereunder.”
Joan Hammer and Crossing Park are not parties to the Florida action.