Goldsmith v. Peterson

• Decision Date: 23 November 2010
• Docket Number: No. A10A0989.,A10A0989.
• Citation: 307 Ga.App. 26,703 S.E.2d 694
• Parties: GOLDSMITH et al.v.PETERSON et al.
• Court: Georgia Court of Appeals

307 Ga.App. 26

703 S.E.2d 694

10 FCDR 3849

GOLDSMITH et al.

v.PETERSON et al.

No. A10A0989.

Court of Appeals of Georgia.

Nov. 23, 2010.

Begner & Begner, Alan I. Begner, Cory G. Begner, Atlanta, for appellants.Emory A. Schwall, Atlanta, for appellees.ADAMS, Judge.

Robert H. and Carolyn E. Goldsmith filed suit against John R. and Yvonne Peterson on March 1, 2007, seeking reimbursement of their escrow deposit, interest and attorney fees, arising out of a Purchase and Sales Agreement signed by the parties in connection with the sale of the Petersons' property. The Petersons filed a counterclaim seeking $93,000 in damages and attorney fees. Following a jury trial, the trial court entered a judgment in favor of the Petersons on their counterclaim in the amount of $3,000 plus $28,388.45 in attorney fees. The Goldsmiths subsequently filed a “ Motion for and Brief in Support of a Judgment Notwithstanding the Verdict or in the Alternative for a New Trial.” The trial court denied the motion, and the Goldsmiths appeal.

The parties entered into the Purchase and Sales Agreement on May 23, 2006. The Agreement set a purchase price of $469,000 for the property and required the Goldsmiths to pay earnest money of $7,500. It further provided that the transaction was conditioned upon the Goldsmiths' “ability to obtain a loan” for 90 percent of the purchase price at 6.5 percent per annum. The Agreement defined the phrase “ability to obtain a loan” to mean that the Goldsmiths are “qualified to receive the loan ... based upon the lender's customary and standard underwriting criteria.” Under the Agreement, the Goldsmiths were expressly “obligated to close this transaction if [they have] the ability to obtain a loan with [the same terms] and/or any other loan for which [the Goldsmiths have] applied and been approved.”

The Goldsmiths took the position that they could not obtain a loan pursuant to the terms set forth in the Agreement, and because this precondition was not met, the contract was invalid, entitling them to a return of their earnest money. Nevertheless, the evidence at trial showed that within two days of the Agreement's execution, on May 25, 2006, SunTrust Mortgage, Inc. preapproved the Goldsmiths for a loan complying with the terms of the Agreement. The preapproval letter states that the Goldsmiths had a choice of a number of different options but elected to pursue a loan structure involving two loans for 80 percent and 10 percent respectively. A SunTrust senior mortgage consultant testified that the Goldsmiths' preapproval would have covered a 30–year fixed rate mortgage at 6.5 percent with either 10 or 20 percent down, but they chose the two-loan structure in order to avoid paying mortgage insurance, a savings of approximately $200 per month. At some point, however, the Goldsmiths decided not to purchase the property, and the transaction never closed.

1. The Goldsmiths argue that the trial court erred in submitting the Petersons' claim for damages to the jury because their recovery was limited under the Agreement to the amount of the earnest money. The Agreement provided that in the event of a breach by the Goldsmiths, the earnest money would be paid to the Petersons by check, which if accepted and deposited by them “shall constitute liquidated damages in full settlement of all” of the Petersons' claims. The Petersons argue, however, that they are entitled to the additional damages awarded by the jury because the Goldsmiths waived the liquidated damages provision when they brought suit for a return of the escrow, plus attorney fees. They note that the Goldsmiths took the position the Agreement was invalid and sought additional recovery over and above the escrow amount.

“It is well established that a party to a contract may waive a contractual provision for his or her benefit.” (Citation omitted.) Forsyth County v. Waterscape Svcs., 303 Ga.App. 623, 630(2)(a), 694 S.E.2d 102 (2010).

A waiver may be express, or may be inferred from actions, conduct, or a course of dealing. Waiver of a contract right may result from a party's conduct showing his election between two inconsistent rights.... However, all the attendant facts, taken together, must amount to an intentional relinquishment of a known right, in order that a waiver may exist.

(Citation omitted.) Forsyth County, 303 Ga.App. at 630(2)(a), 694 S.E.2d 102.

We find no evidence in this case to support a finding that the Goldsmiths intentionally relinquished their right to enforce the liquidated damage provision. Thus the trial court erred in submitting the issue of waiver to the jury. “While normally the question of waiver is a matter for the jury, where, as here, the facts and circumstances essential to the waiver issue are clearly established, waiver becomes a question of law.” (Citation and punctuation omitted.) Id. Here, there was no action, conduct or course of dealing by the Goldsmiths that can be construed as a waiver. Although the Goldsmiths' complaint asserted that the Agreement was invalid, thus entitling them to a return of the escrow and the recovery of attorney fees, that position does not amount to a waiver. The Goldsmiths simply disputed the Petersons' right to recover such damages and sought to recover their own. They were still entitled to argue that if the Agreement were deemed valid, the Petersons would be limited to recovering liquidated damages on their counterclaim. The liquidated damage provision, by its own terms, applies only to the Petersons' damages for a breach of contract and does not address the amount the Goldsmiths could recover for any breach.

Moreover, by seeking damages for breach of contract, the Petersons affirmed the Agreement and bound themselves to its terms. “Under the contract that [they] affirmed, [the Petersons] agreed to accept liquidated damages of the [escrow] in lieu of any other contract damages that were provable. This bars further recovery for the same damages, in either contract or tort.” Woodhull Corp. v. Saibaba Corp., 234 Ga.App. 707, 713(2), 507 S.E.2d 493 (1998). Accordingly, we reverse the portion of the judgment awarding the Petersons $3,000 over and above the escrow amount.

2. The Goldsmiths next assert that the trial court erred in submitting the issue of attorney fees to the jury under any theory of recovery. The jury was charged on the issue of attorney fees under both OCGA § 13–6–11 and the abusive litigation provisions of OCGA § 51–7–81 et seq.¹

The Goldsmiths argue that the trial court erred in charging the jury under OCGA § 13–6–11 because the Petersons failed to properly plead and make a prayer to recover such fees in their counterclaim and further failed to give notice of their intent to pursue such fees. We find no merit to this argument. An award of attorney fees is authorized under OCGA § 13–6–11 “where a plaintiff specifically prays for attorney fees and refers either to the Code section or to the criteria set forth therein, by alleging the defendant acted in bad faith in the underlying transaction, was stubbornly litigious, or caused the plaintiff unnecessary trouble and expense.” (Citation omitted.) Joyner v. Raymond James Financial Svcs., 268 Ga.App. 835, 839(2), 602 S.E.2d 871 (2004). The Petersons' counterclaim tracked the language of OCGA § 13–6–11 by alleging that the Goldsmiths “have acted in extreme bad faith, have been stubbornly litigious and have caused [the Petersons] to incur unnecessary trouble and expenses” and also made a specific prayer to recover their attorney fees. Thus, the issue was properly raised for trial, and the defendants re-asserted their claim for fees under OCGA § 13–6–11 in their proposed pre-trial order. Accordingly, this issue was properly submitted to the jury.

The Goldsmiths further assert that the trial court erred in charging the jury on attorney fees for abusive litigation under OCGA § 51–7–81 because it was improper to seek such damages by way of a counterclaim in the original action. We agree. The law is clear that a counterclaim for abusive litigation pursuant to OCGA § 51–7–81 is premature if it is brought before the final termination of the underlying proceedings. Hagemann v. City of Marietta, 287 Ga.App. 1, 7(1), 650 S.E.2d 363 (2007); State Soil & etc. Comm. v. Stricklett, 252 Ga.App. 430, 438(4)(c), 555 S.E.2d 800 (2001); OCGA § 51–7–84(b) (“An action or claim under [OCGA § 51–7–80 et seq.] requires the final termination of the proceeding in which the alleged abusive litigation occurred....”) Thus, the Petersons' claim for attorney fees under OCGA § 51–7–81 was premature, and the trial court erred in charging the jury under that provision.²

Although the jury's verdict did not specify the basis for its attorney fee award of $28,388.45, the jury awarded attorney fees against the Goldsmiths and their counsel. Such an award is authorized under the language of OCGA § 51–7–81, but not under OCGA § 13–6–11. See Kirsch v. Meredith, 211 Ga.App. 823, 824, 440 S.E.2d 702 (1994) (plain language of OCGA § 51–7–81 demonstrates that claim for abusive litigation not confined to a party to the prior action). Accordingly, because the jury may have based its award of attorney fees on an improper theory of recovery, we reverse that portion of the judgment and remand for a new trial on the issue of attorney fees. Cf. Constr. Lender v. Sutter, 228 Ga.App. 405, 410(3), 491 S.E.2d 853 (1997) (general verdict returned on improper theory of liability must be reversed); Strickland v. Howard, 214 Ga.App. 307, 310(2), 447 S.E.2d 637 (1994) (same).³

3. The Goldsmiths next assert that the trial court erred by admitting hearsay during the direct examination of Jeanette Holloway, a SunTrust Mortgage employee, who testified about a telephone conversation she overheard between Carolyn Goldsmith and Teresa Mitchell, another SunTrust Mortgage employee. The trial court allowed such testimony over the hearsay objection of the Goldsmiths' counsel.⁴ Holloway...