Arford v. Blalock

Decision Date14 March 1991
Docket NumberNos. A90A1886-A90A1890,s. A90A1886-A90A1890
Citation405 S.E.2d 698,199 Ga.App. 434
PartiesARFORD v. BLALOCK; BLALOCK v. ARFORD. BLALOCK v. WILENSKY. GULF STATES MORTGAGE COMPANY, INC. v. BLALOCK; BLALOCK v. GULF STATES MORTGAGE COMPANY, INC.
CourtGeorgia Court of Appeals

Chilivis & Grindler, Gary G. Grindler, Daniel P. Griffin, Atlanta, for Arford.

Decker & Hallman, Richard P. Decker, Peter V. Hasbrouck, Atlanta, for Blalock.

Gingold, Kaufman & Chaiken, Robert J. Kaufman, Fredric Chaiken, Atlanta, for Wilensky.

Kilpatrick & Cody, Laurel J. Lucey, A. Stephens Clay, Caroline W. Spangenberg, Atlanta, for Gulf States Mortg.

POPE, Judge.

In 1982 Eulas Blalock and Anthony Arford commenced a mortgage banking business operating under the name of Gulf States Mortgage Company. Conflicting evidence was presented concerning whether Blalock and Arford established a partnership which was engaged as an independent contractor by the corporation Gulf States Mortgage Company, Inc., pursuant to an oral franchise agreement, or whether Blalock and Arford were hired by oral agreement as employees to serve as co-managers of a branch office of the corporation. In either circumstance, the record reflects that Blalock and Arford jointly owned the building and office furniture which were leased from them by the corporation. The verdict shows the jury found a partnership existed between Blalock and Arford and that the partnership was an independent contractor of the corporation.

Blalock and Arford were financially successful and the enterprise continued to grow until early 1987, when the two had some disagreements and discussed severing their business relationship. On February 11, 1987, Robert Wilensky, president of the corporation, informed Blalock his relationship with Gulf States was terminated but the corporation continued conducting business with Arford. The locks on the building were changed so that Blalock no longer had unsupervised access to it, but from the time his business relationship with the corporation was terminated to the date of the trial of this case, Blalock regularly received his portion of the lease payments for the building and furniture, as lessor.

Blalock filed an action against Arford, Wilensky and Gulf States Mortgage Company, Inc. The case was tried and judgment was entered on the jury verdict against Arford in the amount of $800,000 for breach of the partnership contract and $80,000 for attorney fees and against Gulf States in the amount of $200,000 for breach of its contract with the partnership and $80,000 for attorney fees. The jury also returned a verdict against Wilensky, individually, in the amount of $200,000 for tortious interference with business relations and one million dollars punitive damages, but the trial court granted Wilensky's motion for judgment notwithstanding the verdict. Several appeals have been filed from the judgments in this case, and we have consolidated them for review.

Case No. A90A1888

This appeal was brought by Gulf States, which asserts the trial court erred in denying its motion for judgment notwithstanding the verdict on Blalock's claim that he was entitled to damages for Gulf States' alleged breach of contract with the Blalock-Arford partnership.

1. Gulf States argues Blalock is precluded from recovering for breach of contract with the partnership because an action on behalf of a partnership can only be brought by the partnership as a whole and not by one partner, individually. "A real-party-in-interest objection is similar to the defense of failure to join an indispensable party under OCGA § 9-11-19 and may be made at any time up to and including a trial on the merits." (Citation and punctuation omitted.) Rome Housing Auth. v. Allied Bldg. Materials, 182 Ga.App. 233, 237 (2), 355 S.E.2d 747 (1987). The issue is waived where, as here, it is raised for the first time in a post-trial motion. Id.

2. However, we agree Blalock, suing for the partnership, had no cause of action against Gulf States for breach of contract. "An indefinite hiring may be terminated at will by either party." OCGA § 34-7-1. Even a "franchised contractual relationship," when it consists of an oral agreement for an indefinite period, is terminable at will. Atlanta Dairies Co-op. v. Grindle, 182 Ga.App. 409(1), 356 S.E.2d 42 (1987). See also Richard A. Naso & Assoc. v. Diffusion, 194 Ga.App. 201, 390 S.E.2d 106 (1990). Thus, the trial court erred in denying the motion for judgment notwithstanding the verdict.

3. Although Blalock had no claim for wrongful termination of either himself, individually, or the partnership, he did have a claim for unpaid compensation due him, as one of the partners, for services actually performed up to the time of his discharge. See Atlanta Dairies Co-op. v. Grindle, supra at (2). However, the only competent evidence of damages presented by Blalock was the testimony of an expert witness concerning his evaluation of the partnership as an on-going concern, including his projection of future earnings of the partnership. Because a hiring for an indefinite period is terminable at will it creates no executory obligations. Murphine v. Hosp. Auth. of Floyd County, 151 Ga.App. 722, 261 S.E.2d 457 (1979). Thus, Blalock is not entitled to recover an award for future earnings.

Blalock's compensation was based on origination fees earned by the partnership for mortgage applications solicited by the partnership and accepted and closed by Gulf States. The record reflects that mortgage applications were "in the pipeline," that is, in the process of being approved and closed, at the time Blalock was terminated. Blalock could recover the income due him from the origination fees for these mortgages. However, the only evidence of the value of those mortgages was the estimate Blalock testified he made at the time of his termination based on the record of previous months. No evidence was presented at trial to show how many mortgage applications were actually "in the pipeline" at the time of termination nor the value of those mortgages which eventually closed. Where no competent evidence is presented on the only true measure of damages to the plaintiff, then the verdict is unsupported by the evidence and the judgment must be reversed. Department of Transp. v. Kirk, 138 Ga.App. 180 (2 & 3), 225 S.E.2d 781 (1976). This is not a case in which the verdict and judgment can be upheld by the general rule that, on appeal, every inference and presumption is in favor of sustaining the verdict (see, e.g., Perfect Image, Inc. v. M & M Elec. Constructors, 191 Ga.App. 605(3), 382 S.E.2d 405 (1989)), because here no evidence was presented on the only proper measure of damages available for plaintiff's cause of action.

4. Gulf States was also entitled to judgment in its favor on the award of attorney fees. "Expenses of litigation are not recoverable pursuant to OCGA § 13-6-11 unless other elements of damages are recoverable. [Cits.] Since [Gulf States is entitled to judgment] on ... the ... substantive [count] of [plaintiff's] complaint, it necessarily follows [it] is also entitled to ... judgment on the claim for attorney fees." Connell v. Houser, 189 Ga.App. 158, 160(5), 375 S.E.2d 136 (1988). In light of our holding that Gulf States was entitled to judgment notwithstanding the verdict, we need not address its remaining enumeration of error in which it argues it is entitled to new trial because of an asserted error in the jury instructions.

Case No. A90A1889

5. We have reviewed the enumerations of error raised by Blalock on cross-appeal of Gulf States' appeal and find no ground for reversible error which would require a new trial instead of judgment notwithstanding the verdict, as held above.

Case No. A90A1886

This appeal is brought by Arford who asserts the trial court erred in denying his motion for judgment notwithstanding the verdict on Blalock's claim that he is entitled to damages for the alleged breach of the partnership agreement between the two men.

6. The evidence presented in support of Blalock's contention that Blalock and Arford conducted the business in question as a partnership shows the agreement was oral and for an indefinite duration and was, therefore, terminable at will. A partnership may be dissolved by the express will or withdrawal of any partner. OCGA § 14-8-31(a)(2). Arford argues he had a right to terminate the partnership and cannot be liable for breach of contract. Blalock argues Arford's termination of the partnership was a breach of contract but, curiously, cites as authority the Uniform Commercial Code, which we hold has no application to this case, and cites no authority from the Georgia Uniform Partnership Act which governs the rights of partners in the dissolution of a partnership.

Although Blalock does not refer to it as such, his cause of action is essentially one for wrongful dissolution of the otherwise terminable-at-will partnership. OCGA § 14-8-38(b) refers to wrongful dissolution as a dissolution made "either in contravention of the partnership agreement or as a result of other wrongful conduct of a partner...." Any partnership agreement includes, as a matter of law, an agreement for each partner to act in "the utmost good faith" toward the other partner. See OCGA § 23-2-58; Allen v. Sanders, 176 Ga.App. 647(1), 337 S.E.2d 428 (1985). The power of a partner to dissOlve the partnership at will, "like any other power held by a fiduciary, must be exercised in good faith.... A partner may not ... 'freeze out' a co-partner and appropriate the business to his own use. A partner may not dissolve a partnership to gain the benefits of the business for himself, unless he fully compensates his co-partner for his share of the prospective business opportunity.... [Even though a partner has a right to dissolve the partnership, i]f, however, it is proved that [the partner] acted in bad faith and violated...

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