In a recent Court of Appeals opinion, Personal Concierge MD, LLC
(the “Tenant”) appealed the grant of summary judgment to
SG Echo, LLC (the “Landlord”) on various claims. These
claims included breach of contract, negligence, negligence per se,
nuisance, trespass, attorney fees, and punitive damages.

The case involved a dispute arising from water leaks and mold
issues in medical office space leased by Tenant from Landlord. The
Court of Appeals rejected the tort claims brought by the Tenant. It
found Tenant’s remedies were limited to breach of contract
claims stemming from the terms of the Lease.

Let’s delve into the key details and the Court’s
decision on each claim.

BACKGROUND

In 2018, Tenant and Landlord entered into a lease for office
space in a mixed-use development in Alpharetta, Georgia. Tenant
intended to operate a medical office in the premises, which was the
only permitted use under the Lease. The unfinished space was the
Tenant’s responsibility, with an agreed-upon construction
allowance from Landlord, to build out the premises.

The issues began in November 2018. During this time, Tenant
noticed water leaks and efforts to fix the leaks led to the
discovery of mold. Despite attempts to address the issue, Tenant
claimed the mold issue persisted, rendering the premises unusable
for a medical practice. Landlord claimed it had fully remediated
any mold issues.

After the Landlord refused to perform additional repairs, the
Tenant performed the work and sued the Landlord for the cost of the
work. The Tenant sought reimbursement for rent paid during the
period Tenant contended the premises were unusable due to mold.

SUMMARY OF THE COURT’S DECISION

1. Breach of Contract Claim

The Lease outlined the respective responsibilities of Landlord
and Tenant for maintenance and repairs. The Court determined that
the Lease obligated Landlord to repair and maintain areas outside the
premises. Therefore, Landlord was responsible for repairing leaks
from pipes in the ceiling above the premises.

Consistent with its obligations, Landlord completed the initial
repairs and mold remediation. However, at a certain point, the
Landlord denied the need for any additional work.

The Court concluded there was an issue of material fact as to
whether the additional mold remediation measures sought by Tenant
were necessary. Therefore, the grant of summary judgment in favor
of Landlord on this claim was reversed. The case was remanded for
further proceedings.

2. Negligence and Negligence Per Se Claims

The Court affirmed the trial court’s grant of summary
judgment in favor of Landlord on Tenant’s negligence and
negligence per se claims. These claims were deemed alternative to
the breach of contract claims. Because the Court found that the
Landlord had a general duty under the Lease to perform certain
repairs and remediation, if necessary, it affirmed the grant of
summary judgment in favor of Landlord on Tenant’s alternative
tort claims.

3. Nuisance Claim

The court upheld the trial court’s grant of summary judgment
in favor of Landlord on Tenant’s nuisance claim. The Court
found:

(1) that the leaks were not continuous or persistent; and

(2) Landlord was not responsible for creating the leaks.

Instead, the Landlord fixed all leaks when reported by the
Tenant, and the leaks unquestionably originated from the apartments
above Tenant’s premises. As both elements are required to
maintain a nuisance claim in Georgia, the Court affirmed the grant
of summary judgment in favor of Landlord.

4. Trespass Claim

The court also affirmed the trial court’s grant of summary
judgment in favor of Landlord on Tenant’s trespass claim. A
trespass requires an intentional act, and the court found that
Landlord did not intend to maintain or promote mold growth.

5. Punitive Damages and Attorney Fees Claims

The court upheld the trial court’s grant of summary judgment
on Tenant’s claim for punitive damages. It remanded the
attorney fees claim for a jury determination. The court clarified
that punitive damages are not allowed in breach of contract cases,
and the attorney fees claim requires a separate determination by
the jury.

CONCLUSION

The Court of Appeals’ opinion highlighted the complex
interplay between the duties of a landlord and tenant in a commercial lease agreement.

In this case the parties agreed on the legal issue of
responsibility for repairs, but disagreed whether Landlord
completed all necessary repairs.

The Court of Appeals found that the determination as to the
adequacy of Landlord’s repairs was a disputed issue of fact for
the jury to decide. The case is a reminder to parties in commercial
lease agreements to be clear about their respective
responsibilities and to seek legal advice in case of disputes.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.