Contract Furniture Refinishing & Maintenance Corp. of Ga. v. Remanufacturing & Design Grp., LLC

• Decision Date: 16 July 2012
• Docket Number: No. A12A0527.,A12A0527.
• Citation: Contract Furniture Refinishing & Maintenance Corp. of Ga. v. Remanufacturing & Design Grp., LLC, 317 Ga.App. 47, 730 S.E.2d 708 (Ga. App. 2012)
• Court: Georgia Court of Appeals
• Parties: CONTRACT FURNITURE REFINISHING & MAINTENANCE CORP. OF GEORGIA v. REMANUFACTURING & DESIGN GROUP, LLC et al.

317 Ga.App. 47

730 S.E.2d 708

CONTRACT FURNITURE REFINISHING & MAINTENANCE CORP. OF GEORGIA

v.REMANUFACTURING & DESIGN GROUP, LLC et al.

No. A12A0527.

Court of Appeals of Georgia.

July 16, 2012.

Richard James Dreger, Alpharetta, for appellant.

Morris, Manning & Martin, Lawrence Hugh Kunin, Reginald Lynn Carver, Alpharetta, Shannan Freeman Oliver, and John A. Ferguson, Atlanta, for appellees.

BARNES, Presiding Judge.

Contract Furniture Refinishing & Maintenance Corp. of Georgia d/b/a The Refinishing Touch ("TRT") sued former employee Scott Deutsch for numerous claims, including misappropriation of trade secrets and unfair competition, and Deutsch counterclaimed for fraud and breach of contract. The trial court granted partial summary judgment to Deutsch, denied summary judgment to TRT on Deutsch's counterclaim, and granted Deutsch's motion to compel discovery. For the reasons explained below, we affirm in part and reverse in part.

Summary judgment is appropriate when there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law. OCGA § 9–11–56(c). On appeal from the grant or denial of summary judgment, we apply a de novo standard of review, and view the evidence, and all reasonable conclusions and inferences drawn from it, in the light most favorable to the nonmovant. Benton v. Benton, 280 Ga. 468, 470, 629 S.E.2d 204 (2006).

So viewed, the record shows that in about 1984, Deutsch began working as a subcontractor for Contract Furniture Refinishing & Maintenance Corp., a furniture refinishing business incorporated in Ohio and run by Mario Insenga. In 1989, Insenga gave Deutsch 50 shares of stock in the company, which represented ten percent of the outstanding stock. Deutsch testified that Insenga "volunteered" to give him ten percent of the Ohio company "out of the blue" and "out of gratitude" because Deutsch sold a $900,000 project. He admitted that he made no specific promise to do anything in exchange for the interest, explaining, "He knew I was gonna do something. I did something every day. I didn't have to be asked to do it." Deutsch acknowledged that he knew the stock certificate was for the Ohio corporation, and that afterward Insenga incorporated TRT in Georgia.

After eight years as a subcontractor, in 1992, Deutsch entered into an employment agreement with TRT, under which he was paid 30 percent of the "gross proceeds" from any project he directed. "Two or three" years later, before the mid–1990s, his compensation changed to a base salary plus ten percent of any project he sold, and a year or two after that he began receiving only a base salary with no sales commissions. After he began receiving only a base salary, Deutsch began "pressing for an agreement, for a contract, something for that," because he wanted "[a] legal document showing ownership in the company," but Insenga refused to give him any kind of written document. Deutsch asserted that Insenga told him that his ten percent was still valid for the Georgia corporation and repeatedly told him for twenty years that he had "a ten percent interest in this company," which is why he "stuck around for 20 years." Deutsch admitted that he did nothing specific in exchange for an ownership interest, stating he "had already earned it and I continued to earn it every day." According to Deutsch, Insenga "wanted to keep [him] in the company. That was the bait. It worked."

Although Deutsch continued to ask Insenga to put their agreement in writing, Insenga refused. Deutsch acknowledged that he "didn't discuss shares" of the Georgia corporation with Insenga because "[a]t that point it was just a straight 10 percent of the entire company, which at that point was a lot bigger than he and I and a one-room thing." Insenga never denied the agreement; instead, "[h]e would just get into a rage and storm off, yelling and screaming, and then the next time you saw him he would act like nothing happened."¹ According to Deutsch, Insenga said he did not want any written agreements for "banking reasons," because Deutsch's credit would hinder Insenga's ability to get a line of credit. Deutsch testified that Insenga would also become "mad because I didn't trust him" by asking for the agreement in writing.

In September 2008, John Ferguson suggested to Deutsch that they form their own business, and shortly thereafter, Deutsch met with an investor, Richard Craven, to discuss creating the business. On October 17, 2008, while Deutsch was still employed by TRT, Deutsch, Craven, and Ferguson signed an operating agreement for Remanufacturing & Design Group, LLC ("RDG") Under this agreement, Deutsch, Craven, and Ferguson each owned one-third of the company. Deutsch admitted that he did not immediately resign from his employment with TRT or inform Insenga about the new company. Deutsch's role in the new company was to run operations beginning on October 17, 2008, and Ferguson was to handle sales. Four months later, on February 18, 2009, Deutsch resigned from his employment with TRT and left his company-issued truck, cellphone, laptop, and resignation letter, at the home of TRT's operations manager.

On April 7, 2009, TRT filed suit against Deutsch, raising multiple claims, and Deutsch counterclaimed, seeking damages for fraud, breach of contract, punitive damages, and attorney fees. Both parties subsequently moved for summary judgment. The trial court granted partial summary judgment to Deutsch on TRT's claims related to trade secrets, and denied summary judgment to TRT on Deutsch's counterclaims. Numerous claims against Deutsch remain pending.

1. TRT contends that the trial court should have granted it summary judgment on Deutsch's fraud and breach of contract claims because the terms of any agreement under which Deutsch would receive ten percent of the company were too indefinite to constitute a binding contract, and because the statute of limitation had run.

"Under Georgia law, a contract does not exist unless the parties agree on all material terms. A contract cannot be enforced if its terms are incomplete, vague, indefinite or uncertain. Thus, a court will not enforce an agreement where it is left to ascertain the intention of the parties by conjecture."

(Citation, punctuation and footnote omitted.) Kitchen v. Insuramerica Corp., 296 Ga.App. 739, 743(1), 675 S.E.2d 598 (2009). In this case, TRT argues, the parties did not discuss the form of Deutsch's ownership, such as a percentage of profits or shares of stock. If his ownership was to consist of stock shares, TRT argues, the parties did not agree on the number and class of shares he would receive, whether they would come from the company or from Insenga, or address when the shares would be issued to Deutsch.

Regarding ownership interest in a corporation, this court has held that an oral promise to give a certain percentage of ownership interest in a company may be too indefinite to be enforced, such as when the corporate structure has not been determined or the source of the stock was not specified. Massih v. Mulling, 271 Ga.App. 685, 687(1), 610 S.E.2d 657 (2005) ; Key v. Naylor, 268 Ga.App. 419, 425–426(3), 602 S.E.2d 192 (2004). On the other hand, we have held that a written agreement to transfer a 25 percent equity interest in two subsidiary companies in exchange for the employee performing a specific job at a specific salary was sufficiently detailed to obligate the parent company to issue 25 percent of the subsidiaries' outstanding stock to the employee. Kitchen, 296 Ga.App. at 745(1), 675 S.E.2d 598.

Assuming without deciding that Insenga's promise to give Deutsch ten percent of the company was definite and enforceable, however, Deutsch's counterclaim is foreclosed by the running of the statute of limitation.

The applicable statute of limitation for an oral contract is four years. OCGA § 9–3–25. Deutsch testified that Insenga's promise of an interest in the company was "the bait" that kept him working for TRT for 20 years. He argues that "the stock was to be issued each time promised" and that the statute began running anew with each promise. Because Insenga had repeated his latest promise less than four years before Deutsch brought his counterclaim, Deutsch argues, the statute of limitation on his claim has not run.

"In determining whether the statute of limitation provides a bar to this action the court must decide when the statutory period began to run. [Deutsch's counterclaim] makes no reference to a date by which [Deutsch] was to receive such stock and ... a corporation can issue stock at any time." Palmer v. Neal, 602 F.Supp. 882, 886 (N.D.Ga.1984).

It has been long recognized and is well established that a statute of limitation begins to run on the date a cause of action on a claim accrues. In other words, the period within which a suit may be brought is measured from the date upon which the plaintiff could have successfully maintained the action.

(Citation and punctuation omitted.) Jankowski v. Taylor, Bishop & Lee, 246 Ga. 804, 805, 273 S.E.2d 16 (1980) ; see also Kueffer Crane & Hoist Serv. v. Passarella, 247 Ga.App. 327, 329(2), 543 S.E.2d 113 (2000) ; Leathers v. Timex Corp., 174 Ga.App. 430, 431(2), 330 S.E.2d 102 (1985) (suit by former employee who alleged entitlement to certain retirement benefits under oral agreement barred by statute of limitation).

In Kueffer Crane, a former employee sought a declaratory judgment that he was a five percent owner of his former employer, contending that the company had induced him to come work for it seven years earlier by promising him the ownership. 247 Ga.App. at 329, 543 S.E.2d 113. The company paid him five percent of its profits for five years, but the next year the owner denied that the employee had any ownership interest and refused to pay him five percent of the profits. Id. In response to the employee's petition, the company argued that the statute of limitations began to run when it first refused the employee's...