MIKELL, Judge.
Commercial landlord, Fundus America (Atlanta) Limited Partnership ("Fundus"), sued tenants, RHOC Consolidation LLC ("RHOC") and its parent company Marriott International, Inc. ("Marriott") (collectively "appellees"), for a writ of possession, breach of contract, and attorney fees, arising from the assignment of a lease for a hotel in downtown Atlanta. Appellees filed counterclaims for a declaratory judgment that appellees were not in violation of the lease, breach of lease, negligent misrepresentation and attorney fees. Both parties moved for summary judgment after discovery. Following a hearing, the trial court granted the motions in favor of appellees, and Fundus appeals. Finding no error, we affirm.
Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law."
So viewed, the evidence shows that Fundus is the owner of a hotel property located in downtown Atlanta (the "Hotel"). After acquiring the property in 1990, Fundus completed a multi-million dollar renovation of the Hotel. In October 1990, Fundus leased the Hotel to Penta Hotels Georgia, Inc. ("Penta"), pursuant to a lease with a 20-year term (the "Lease"). Penta had
Less than two years after the assignment, the parties began to negotiate for an early termination of the Lease. During these negotiations, Fundus commissioned an inspection of the Hotel by Herbert Mascha and Michael Regner ("M & R Report") to determine the condition of the Hotel. The M & R Report identified $35 million worth of repairs, improvements and renovations needed to bring the Hotel up to the status of a "first class hotel," as required by the Lease. Fundus sent a Notice of Default under the Lease to Marriott based on the M & R Report outlining the alleged breaches, and Marriott rejected these findings. Fundus then terminated the Lease, demanded that Marriott vacate the Hotel, and filed this lawsuit. The trial court granted summary judgment in favor of appellees, holding that Fundus's claims were barred by the execution of the estoppel certificate and that the term "first class hotel" was unenforceable as a matter of law.
1. Fundus argues that the trial court erred in granting summary judgment to appellees on the theory that Fundus's breach of contract claims against appellees were foreclosed by the execution of the estoppel certificate. Finding no error, we affirm.
The contract memorializing the assignment is comprised of several contemporaneous documents signed by Fundus and appellees, including a Consent to Assignment, the Assignment and Assumption of Lease, the Marriott Guaranty, and the Estoppel Certificate.
In the Marriott Guaranty, Marriott replaced Penta as the guarantor of the lessee's performance under the Lease. Marriott guaranteed "the full and prompt performance of any and all obligations of Assignor and Assignee to Lessor under the Lease" and agreed that its liability extended to "all Obligations of either Assignor or Assignee, as `Lessee' under the Lease, whether such Obligations arose to [sic], on or after, the Effective Date hereof."
In exchange for the Guaranty, Marriott asked Fundus to execute an Estoppel Certificate assuring that there was no breach or default of the Lease at the time of assignment.
(a) Fundus argues that estoppels are disfavored under Georgia law, and that appellees are required to prove the elements of equitable estoppel, including proof of some concealment or false representation, in order to prevail on a motion for summary judgment.
Accordingly, it follows that a party can agree to be estopped under circumstances that might not otherwise constitute an estoppel under common law, as Fundus has in this case by executing the Consent to Assignment, which incorporated the Estoppel Certificate as part of its contractual terms.
(b) Fundus argues that the Estoppel Certificate does not preclude its claims because appellees were in a better position to know that the Lease had been breached at the time of assignment, and so they could not reasonably rely upon it.
Fundus is a Georgia limited partnership, but almost all of Fundus's limited partners and decision-making representatives reside in Europe. Fundus argues that it had limited knowledge of the Hotel's condition through infrequent visits to the Hotel from Europe and from the annual reports provided by its asset manager, Prudential Real Estate Investors, and that Marriott, who was currently providing the Hotel's management services, was in a better position to know the condition of the Hotel. However, Marriott does not dispute that it had knowledge of the Hotel's condition at the time of assignment. Instead, Marriott argues that it was that very knowledge that led them to insist upon the Estoppel Certificate before it would assume any liability for the Lease. Marriott's representative testified that "[w]e were being asked to step into a tenant position, we simply would not do it, period, without getting an estoppel certificate that said the lease was
Although it is a general rule of law that an estoppel cannot result "where both parties have equal knowledge or equal means of knowing the truth[,]"
Further, in evaluating whether the Estoppel Certificate can preclude Fundus's claims, we are persuaded by the holding of the Appellate Court of Illinois that "[a] party who executes an estoppel certificate should not be allowed to raise claims of which it knew or should have known at the time the certificate was executed"
(c) Fundus contends that the trial court erred in granting summary judgment to appellees because the representations it made in the estoppel certificate were "limited and qualified," and thus appellees' reliance upon these admissions was unreasonable.
In support of this argument, Fundus notes that it refused to sign a draft of the estoppel certificate containing proposed Paragraph 6, which stated that Fundus was satisfied with improvements made to the Hotel and that the property complied with operating requirements contained in the Lease. Fundus argues that its refusal to sign an assignment with this language is sufficient evidence to put appellees on notice that they
(d) Based upon the above, we find that although Fundus's claims arising from alleged breaches of the Lease that arose prior to the June 22, 2005 assignment are barred by the Estoppel Certificate, claims for breach of the Lease that arose after June 22, 2005 are not barred by the Estoppel Certificate. However, Fundus pointed to no evidence of a post-assignment breach. The trial court concluded the motion for summary judgment hearing by specifically inviting Fundus to identify evidence of any breach that might survive the legal rulings now on appeal, but Fundus failed to do so.
2. Many of Fundus's claims arose from an alleged breach of the Lease requirement that appellees maintain the Hotel as a "first class hotel." Fundus contends that the trial court erred in holding that the phrase "first class hotel" is not an enforceable contract term. Since, however, as we held in Division 1, Fundus's claims for breach of the Lease are precluded by the Estoppel Certificate, this issue has been rendered moot.
Judgment affirmed.
SMITH, P.J., and DILLARD, J., concur.