Harvey v. JH Harvey Co.

• Decision Date: 03 July 2002
• Docket Number: No. A02A0453., No. A02A0452
• Citation: 256 Ga. App. 333,568 S.E.2d 553
• Parties: HARVEY v. J.H. HARVEY COMPANY (Two Cases).
• Court: Georgia Court of Appeals

568 S.E.2d 553

256 Ga. App. 333

HARVEY v. J.H. HARVEY COMPANY (Two Cases).

Nos. A02A0452, A02A0453.

Court of Appeals of Georgia.

July 3, 2002.

Certiorari Denied September 6, 2002.

Alston & Bird, Jay D. Bennett, Dow N. Kirkpatrick II, Heather R. Peoples, Atlanta, J. Reese Franklin, W. Daniel Knight, Jr., Nashville, for appellant.

King & Spalding, Frank C. Jones, Benjamin F. Easterlin IV, Rance L. Craft, Atlanta, for appellee.

Troutman Sanders, Robert H. Buckler, amicus curiae.

ANDREWS, Presiding Judge.

Joseph H. Harvey III (hereinafter Harvey III) is the son of Joseph H. Harvey, Jr. (hereinafter Harvey, Jr.) and grandson of the founder of J.H. Harvey Company (hereinafter the Company), a closely held family business operating a regional chain of supermarkets in south Georgia and north Florida. Harvey III appeals from the trial court's grants of partial summary judgment to the Company in his two suits¹ resulting from the termination of his employment agreement which, as amended, provided he would serve as the chief operating officer of the Company until the age of 65 or his death. In Case No. A02A0452, Harvey III also appeals from the trial court's denial of his motion for partial summary judgment regarding mitigation of damages.

In reviewing the grant or denial of a motion for summary judgment, we apply a de novo standard of review and consider the evidence with all reasonable inferences therefrom in favor of the party opposing summary judgment. Birnbrey, Minsk & Minsk LLC v. Yirga, 244 Ga.App. 726, 535 S.E.2d 792 (2000).

Case No. A02A0452

Harvey III, on August 27, 1989, entered into an agreement with the Company employing him as president and chief operating officer. The agreement provided that Harvey III would receive a base salary at the annual rate of $150,000 payable monthly in arrears, plus a percentage of net profits on a quarterly basis. Originally, the agreement stated that it "shall continue until the death of the Employee." By amendment of March 23, 1993, the term of employment was changed to the "earlier of: (a) May 26, 2020, the 65th birthday of Employee, or (b) the death of the Employee." Both the agreement and the amendment were signed for the Company by Harvey, Jr. as chairman of the board of directors.

In the years prior to 2000, Harvey, Jr. began negotiations with Harvey III in an effort to sell his shares in the Company and resign his employment. In July 1999, Harvey, Jr. offered to sell his shares to Harvey III and resign from the Company in exchange for $25,000,000. In the spring of 2000, disputes about Harvey III's running of the Company resulted in a number of employees expressing their concerns for the Company to Harvey, Jr.

Because of the continuing disagreement over the value of Harvey, Jr.'s interest in the Company and Harvey III's running of the Company, Harvey, Jr. attempted to place Harvey III on administrative leave from the Company and changed the Company's reporting system so key employees reported directly to him instead of to Harvey III. Harvey III continued to receive his compensation. On September 6, 2000, the board of directors of the Company reorganized the Company so that Harvey III was no longer in charge of its day-to-day operations. On September 7, 2000, Harvey III withdrew his personal guarantee of the Company's line of credit at First Union Bank, resulting in a fiscal crisis for the Company.

On November 7, 2000, Harvey III filed the shareholder litigation which is the subject of Case No. A02A0453, addressed infra. On December 1, 2000, the Board terminated Harvey III's employment, but agreed to pay his salary until December 31, 2000.

Harvey III then filed this suit for breach of his employment contract. In response, the Company filed a counterclaim on numerous grounds, including the breach of the duty of good faith and fair dealing, as well as its motion for partial summary judgment. The trial court granted the Company's motion for partial summary judgment, limiting Harvey III's potential damages to the amount of wages, bonuses, and benefits he would have earned up to the date of trial.² The trial court also denied Harvey III's motion for partial summary judgment which sought a mandatory injunction requiring the Company to continue paying him his salary and benefits because it was impossible to mitigate his damages.

1. Harvey III, relying on City Council of Augusta v. Hydrick, 126 Ga.App. 611, 614(3), 191 S.E.2d 563 (1972), contends that the trial court erred in limiting his damages to those accrued up to the time of trial, contending that OCGA § 10-6-37 is not applicable to his contract because it was for more than one year.

That section provides that:

When the contract is for a year, and the principal wrongfully discharges the agent before the end of the year, the agent may either sue immediately for any special injury from the breach of the contract, or, treating the contract as rescinded, may sue for the value of the services rendered, or he may wait until the expiration of the year and sue for and recover his entire wages.

City Council of Augusta v. Hydrick, supra, is inapplicable to Harvey III's situation, however, because it dealt with a government employee who had, by virtue of a State statute dealing with City of Augusta employees, permanent employment. The City appealed, contending that the trial court erred in giving a charge to the jury that Hydrick would be entitled to recover the value of her contract to her, that is the amount of money which would put her in the same position as if her contract of employment had not been breached. The City relied upon then Code § 4-215 (now OCGA § 10-6-37), as well as a number of pre- and post-1861 cases dealing with constructive service, including Rosenstock v. Congregation Agudath Achim, 118 Ga.App. 443, 164 S.E.2d 283 (1968), in an attempt to limit Hydrick's damages to those accrued up to the time of trial. This Court correctly concluded that neither the statute nor the cases applied to Hydrick's situation which involved permanent tenure as a matter of statute. City Council of Augusta v. Hydrick, supra at 614, 191 S.E.2d 563.

An analysis of the history of the evolution of the concept of constructive service in Georgia shows the concept applicable to Harvey III's situation, though not under the provisions of OCGA § 10-6-37. Therefore, the trial court's grant of partial summary judgment to the Company was correct, but not on the grounds argued by the Company. A summary judgment right for any reason will be affirmed. Kaylor v. Atwell, 251 Ga. App. 270, 272(2), 553 S.E.2d 868 (2001).

Prior to the adoption of Georgia's Original Code of 1863 (enacted as the Code of 1861, but made effective January 1, 1863), the common law doctrine of constructive service, set out as the last option in OCGA § 10-6-37 ("wait until the expiration of the year and sue for and recover his entire wages"), was adopted by the Supreme Court of Georgia in Rogers v. Parham, 8 Ga. 190 (1850). Parham had been retained by Rogers as overseer for the year 1847 and was to receive a portion of the crops grown for his service. Prior to the expiration of the year, a dispute arose and Parham filed suit. Rogers contended that the suit was premature, the year not having ended. The Supreme Court found that:

When the overseer or agent is wrongfully dismissed from the service of his employer, he has his election of three remedies. 1st. He may bring an action, immediately, for any special injury which he may have sustained, in consequence of a breach of the contract.2d. He may wait until the termination of the period for which he was employed, and then sue upon the contract and recover his whole wages.3d. He may treat the contract as rescinded, and may immediately sue, on a quantum meruit, for the work and labor he actually performed.

(Citation omitted; emphasis in original and supplied.) Id. at 193.

The Original Code of 1863 contained Title III (Of Relations Arising From Other Contracts), Chapter 5 (Of Principal and Agent), Article 4 (Overseers). Section 2196 of Article 4, the predecessor of OCGA § 10-6-37, referred only to employers who "wrongfully discharge[d] the overseer ... ," a term with a particularized meaning as reflected by preceding Title II dealing with Domestic Relations. Title II included Chapter 4, Article 1, "Of Master and Servant" and Chapter 5, Article 2, "Of Master and Slave." See also Spencer v. State of Ga., 77 Ga. 155, 3 S.E. 661 (1887); Clayton v. Daniel, 88 Ga. 300, 14 S.E. 470 (1892).

Although codified only as to overseers, the common law principle of constructive service continued to be applied to other occupations. In Isaacs v. Davies, 68 Ga. 169 (1881), Davies was employed by Isaacs as a clerk for five months, payable monthly. Isaacs discharged Davies before the end of the first month. Davies sued for his first month's wage, recovered, and was paid. He then sued for the second month's wage, but Isaacs pled the first judgment as bar to this suit. Finding no bar, the Supreme Court held that:

Had Isaacs continued Davies in his service and failed or refused to pay him at the end of each month, no one would question his liability to suit and judgment. If, then, he discharged him wrongfully, he did not, and could not thereby discharge himself from liability. If Davies kept his part of the contract, or offered to keep it, and was not permitted to do so by the acts of Isaacs, the latter cannot set up his own breach of the contract to discharge himself from its performance. See Code [of 1873], § 2939; Blun & Sterne v. Holitzer, 53 Ga. 82 [(1874)]; 1st Story on Con. §§ 25(d.), 29.

Id. at 170.

Although the Company argues that this case supports its position that OCGA § 10-6-37 applies to contracts for a length other than one year, i.e., five months in Isaacs v. Davies, supra, or the remaining eighteen years of Harvey III's contract, Code § 2939, cited in Isaacs v. Davies, supra, is now...