Bearoff v. Craton
| Decision Date | 24 June 2019 |
| Docket Number | A19A0549,A19A0548 |
| Citation | 350 Ga.App. 826,830 S.E.2d 362 |
| Parties | Janet BEAROFF, et al. v. Charles Thomas CRATON, III, et al. Charles Thomas Craton, III, et al. v. Janet Bearoff, et al. |
| Court | Georgia Court of Appeals |
350 Ga.App. 826
830 S.E.2d 362
Janet BEAROFF, et al.
v.
Charles Thomas CRATON, III, et al.
Charles Thomas Craton, III, et al.
v.
Janet Bearoff, et al.
A19A0548
A19A0549
Court of Appeals of Georgia.
June 24, 2019
Bryan Johnson, Rome, Justin Edward Proper, Christopher Paul Twyman, Rome, for Bearoff.
Zachary Justin Burkhalter, Rome, Michael Douglas Robl, Decatur, for Craton.
Gobeil, Judge.
These companion appeals arise out of a lawsuit filed in the Superior Court of Floyd County by Janet Bearoff, JBear, LLC, and JDream, LLC, d/b/a Frisky Biscuit Couples Boutique (collectively, "Plaintiffs") against Charles Thomas Craton, III and Craton Entertainment, LLC, d/b/a The Love Library (collectively, "Defendants").1 The complaint asserted claims for breach of a non-compete agreement, aiding and abetting the breach of that agreement, conversion and misappropriation, and violations of Georgia’s Uniform Deceptive Trade Practices Act ("UDTPA") ( OCGA § 10-1-370, et seq. )2 The relief sought by the Plaintiffs included compensatory and punitive damages, injunctive relief, attorney fees, and an equitable extension of the expiration
date of the non-compete agreement at issue. Following a hearing on the Plaintiffs’ request for a preliminary injunction, the trial court entered an order granting that relief and enjoining the Defendants from operating The Love Library. The Defendants appealed that order and while the appeal was pending, the non-competition period expired. This Court then dismissed the appeal for lack of jurisdiction.
Following remittitur, the Defendants moved for summary judgment. The trial court granted that motion in part, finding that as a matter of law, it could not equitably extend the non-compete period. The case thereafter proceeded to a bench trial on the Plaintiffs’ remaining claims, with the court finding in the Plaintiffs’ favor. The trial court awarded the Plaintiffs injunctive relief and nominal and punitive damages. The court declined to award attorney fees to either party, finding that neither had presented any evidence at trial as to the amount or reasonableness of any fees they were seeking.
In Case No. A19A0548, the Plaintiffs appeal the trial court’s grant of summary judgment in favor of the Defendants on the Plaintiffs’ claim seeking an equitable extension of the non-compete agreement. They also appeal the order of judgment, arguing that the trial court erred in declining to award them compensatory damages and in failing to hold a post-judgment hearing on their request for attorney fees under the UDTPA. In Case No. A19A0549, the
Defendants appeal the order of judgment, asserting that the trial court erred in finding for the Plaintiffs on their conversion claim, in awarding damages to Bearoff in her individual capacity, and in awarding damages for misappropriation of a trade name. The Defendants also challenge the trial court’s punitive damages award.
For reasons explained more fully below, in Case No. A19A0548, we affirm both the grant of partial summary judgment in favor of the Defendants and the award of nominal damages. We find, however, that the Plaintiffs were entitled to a post-judgment hearing on their claim for attorney fees under the UDTPA. Accordingly, we vacate that part of the judgment finding that the Plaintiffs were not entitled to recover attorney fees, and remand for a hearing on the question of attorney fees under the UDTPA. Additionally, we find no merit in any of the claims of error asserted by the Defendants in Case No. A19A0549. We therefore affirm the order of judgment against Charles Craton and Craton Entertainment.
On an appeal from a judgment entered following a bench trial, we view the evidence in the light most favorable to the judgment, giving due deference to the trial court’s credibility determinations. Gibson v. Gibson , 301 Ga. 622, 624, 801 S.E.2d 40 (2017). We will not disturb the trial court’s factual findings if there is any evidence to support them, but we review de novo any questions of law decided by that court. Champion Windows of Chattanooga v. Edwards , 326 Ga. App. 232, 233, 756 S.E.2d 314 (2014).
Viewed in the light most favorable to the judgment, the record shows that in 2005, Bearoff, Kenneth Gabler (who at the time was married to Bearoff), and Susan Craton (who at the time was married to Charles Craton) formed two companies: High Five Investments, LLC ("High Five") and Shannon Video, Inc. Bearoff and Gabler each owned 25% of the common stock in both corporations, and Susan Craton owned the remaining 50% of stock in each company. High Five purchased a commercial property in Rome (the "Property") and then leased the Property to Shannon Video, which opened a retail business thereon in May 2006. The business, Entice Couple’s Boutique ("Entice"), was an "adult store," meaning it sold lingerie, tobacco, adult movies, sexual aids, and other adult-themed, sexually-oriented products.
In 2009, Bearoff and Gabler agreed to sell their interests in High Five and Shannon Video to Susan Craton. On December 10, 2009, the parties executed a Stock/Membership Unit Redemption Agreement (the "Redemption Agreement"), under which Susan Craton agreed to purchase Bearoff’s and Gabler’s interests in both companies for $ 505,000.00. At the time of the sale, Susan Craton paid Bearoff and Gabler $ 55,000 in cash and provided them with a non-negotiable promissory note (the "Promissory Note") executed
by Shannon Video
and High Five. The Promissory Note provided that High Five and Shannon Video would pay Bearoff and Gabler $ 450,000 plus interest in equal monthly installments of approximately $ 6,000 for a period of 81 months. The Promissory Note was secured by a deed to secure debt and an assignment of leases and rents executed by High Five3 ; a commercial security agreement (the "Security Agreement") executed by Shannon Video4 ; and an Unconditional Guaranty of Payment and Performance executed by both Susan and Charles Craton (the "Guaranty").5 (Collectively, these documents are referred to as the "Security Documents.")
The Redemption Agreement incorporated a separate, non-competition agreement (the "Non-Compete"), to which Bearoff, Gabler, Shannon Video, High Five, and Charles and Susan Craton were all parties. The Non-Compete stated that the necessity for the agreement arose from "the fact that the financed portion of the purchase price under the [Redemption Agreement] [was to] be paid from revenues generated by the sales of adult novelties by Shannon Video," and the competitive activities would impair Shannon Video’s ability to make the required payments. The Non-Compete prohibited both Charles and Susan from engaging in any activity that competed with the business of Shannon Video or High Five.6 Specifically, under the terms of the Non-Compete, both Charles and Susan, together with Shannon Video and High Five, agreed "[f]or a period of eighty-one (81) months following the date of execution of this Agreement ... not to engage in any Competitive Activity[7 ] within
Floyd County, Georgia or any of the counties located in the States of Georgia and Alabama contiguous to Floyd County, Georgia."
In early 2012, at the request of the Cratons, the parties entered into two additional agreements, one of which modified the Promissory Note and the other of which modified the Redemption Agreement. Charles Craton signed both of these modification agreements. The modification agreements increased the interest on the balance due to 5% annually; extended the term of the Promissory Note and other Security Documents for a period of 96 months, beginning January 1, 2012 (meaning those documents now had a maturity date of January 1, 2020); reduced the monthly payments by approximately
$ 2,000; and provided that Gabler had the right to transfer and assign his interest in the Promissory Note and other Security Documents to Bearoff.8 Gabler thereafter assigned to Bearoff his interest in all Security Documents in October, 2012.
In April 2013, the Cratons filed a voluntary joint petition under Chapter 7 of the Bankruptcy Code. Two months later, the Cratons were divorced and, as part of the divorce settlement, Susan Craton transferred all of her interests in High Five and Shannon Video to Charles.9 On November 5, 2013, the Cratons received a discharge in their bankruptcy case.
Shortly after the Cratons’ personal bankruptcy discharge, the payments due under the Promissory Note ceased, leaving an outstanding principal balance of approximately $ 250,000. After failing to make payments for December 2013 and January and February 2014, Charles Craton emailed Bearoff that Entice (and therefore High Five and Shannon Video) was experiencing significant financial difficulties and asked her to forgive the balance owed under the Promissory Note. Bearoff thereafter issued a formal...
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