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Check Back on That
by Ron Davis

A disputed $32,584 payment that a tenant sent in error to the former owners of a Georgia shopping center must go back to the tenant.

The shopping center is Covington Square in suburban Atlanta, and the dispute over the $32,584 arose after the former owners received a check for the amount after they sold the facility.

The former owners kept the payment, explaining that when they sold the property, the tenant—Ingles Markets, Inc.—still owed for unpaid security-guard costs. The $32,584, they added, was merely a payment toward those costs.

In fact, the payment went to the former owners when an Ingles clerk mistakenly sent the payment to them rather than the current owners. The clerk had intended to pay the current owners of the center for Ingles’ portion of county property taxes.

Ingles subsequently sued the former owners of the center to regain the payment. Ingles also asked the court to rule that the former owners must pay for “unjust enrichment” and the serious offense of taking personal property that doesn’t belong to them.

In response, the former owners pointed out that they had previously sued Ingles for certain obligations they claimed Ingles owed them. Specifically, they said, Ingles had reneged on fully paying rent owed them when they owned the center. And then, they added, there were those unpaid security-guard charges.

A Georgia court ruled in favor of Ingles, determining that the former owners not only must return the $32,584 that Ingles had sent them in error, but also must pay for “wrongfully asserting dominion over Ingles’ property” and for “punitive damages.”

The former owners appealed that ruling, contending that the payment they received from Ingles was previously spelled out by their lease agreement. At most, they added, they are guilty of simply failing to refund an overpayment, rather than the unlawful taking of property of someone else.

A Georgia appellate court agreed with the lower court, explaining, “We find the previous owners’ arguments on this issue disingenuous. [They sued] specifically because the ‘common area’ costs for security charges were in dispute and because Ingles refused to pay the costs…. It strains credulity for them to argue that they are guilty of merely failing to refund an overpayment.”

The appellate court did rule, however, that any award owed to Ingles in punitive damages must be left for a jury to decide. (Covington Square Associates, LLC v. Ingles Markets, Inc., 2009 WL 3592395 [Ga.App.])

Decision: November 2009
Published: November 2009



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