Background
Hans Klein controlled eighteen limited liability companies that owned and operated residential rental properties in Atlanta. Each LLC executed a property management agreement (“PMA”) with Atlanta Real Estate Specialty Group, LLC (“ARESG”), operated by Robert Taylor. Under the PMAs, ARESG collected rents, deposited them into trust accounts, paid expenses, and remitted remaining balances to the property owners monthly. Taylor used a software platform called Buildium to document income, expenses, and disbursements, and granted Klein access to view the data through an owner’s portal.
For several years the arrangement worked smoothly, with Klein receiving consistent monthly disbursements of approximately $30,000. When Klein decided to terminate ARESG’s services due to alleged maintenance failures, he requested a final accounting and distribution. Taylor never provided either. Klein’s access to Buildium was cut off, and despite months of demands, Taylor refused to return what Klein calculated to be approximately $58,000 in undistributed funds, bank cash, security deposits, and prepaid rent. The Plaintiffs sued for breach of contract, promissory estoppel, unjust enrichment, and attorney fees under OCGA § 13-6-11.
At bench trial, ARESG objected on hearsay grounds to three Buildium reports that Klein had obtained through his portal access — reports that Taylor himself had prepared. The trial court excluded the reports and then granted ARESG’s motion for involuntary dismissal under OCGA § 9-11-41(b), finding insufficient evidence of damages without the excluded exhibits.
The Court’s Holding
The Court of Appeals reversed on all three grounds raised by the Plaintiffs. First, the court held that Klein’s own testimony — identifying specific amounts owed including $34,000 in undistributed income, $15,000 in cash, $7,000 in security deposits, and $2,000 in prepaid rent — provided sufficient evidence of damages to survive involuntary dismissal, even without the excluded Buildium exhibits. The court emphasized that Georgia law does not require exact figures; damages need only be shown with reasonable certainty, and Klein’s personal knowledge of his properties’ finances provided an adequate foundation.
Second, the court ruled the excluded Buildium reports were admissible on two independent bases. As business records under OCGA § 24-8-803(6), the reports qualified because Taylor had a business duty to maintain them as part of ARESG’s regularly conducted activity, and Klein’s testimony established the necessary foundation. Separately, the reports were admissible as admissions by a party opponent under OCGA § 24-8-801(d)(2), because Taylor prepared them in his capacity as ARESG’s agent within the scope of his management duties.
Third, the court clarified the scope of recoverable attorney fees under OCGA § 13-6-11. While the predicate showing of bad faith or stubborn litigiousness must arise from conduct in the underlying transaction — not litigation conduct — the trial court erred by excluding evidence of fees incurred during litigation when measuring the amount of a potential recovery. The court remanded for further proceedings, including ARESG’s opportunity to present evidence.
Key Takeaways
- A property owner’s personal testimony about amounts owed can provide a sufficient damages foundation to survive involuntary dismissal, even without documentary exhibits — exact figures are not required under Georgia law.
- Records created by a property manager using management software qualify as business records and as admissions by a party opponent when the manager prepared them in the scope of the management relationship.
- Under OCGA § 13-6-11, while the threshold showing of bad faith must come from pre-litigation conduct, the amount of recoverable fees can include those incurred during litigation itself.
Why It Matters
This decision is significant for Georgia landlords and property managers alike. It reinforces that property owners who are denied access to their own financial records by a departing manager are not left without recourse — their personal knowledge of property income and disbursement patterns can sustain a damages claim. The dual admissibility ruling on management software records (as both business records and party admissions) provides a clear framework for litigators in property management disputes, where the party controlling the records is often the very party accused of mismanagement.
The attorney fees ruling is also notable. It clarifies a nuance of OCGA § 13-6-11 that practitioners should keep in mind: the bad-faith predicate and the fee amount are distinct inquiries with different evidentiary requirements. A manager who refuses to provide final accountings or return funds engages in exactly the kind of pre-litigation conduct that can open the door to fee recovery — and those fees can encompass the full cost of the ensuing litigation.