James E. Warren v. Weber & Warren

• Decision Date: 17 March 2005
• Docket Number: No. A04A1698.,No. A04A1699.,A04A1698.,A04A1699.
• Court: Georgia Court of Appeals
• Parties: JAMES E. WARREN, M.D., P.C. v. WEBER & WARREN ANESTHESIA SERVICES, LLC, et al. WEBER & WARREN Anesthesia Services, L.L.C., et al. v. James E. Warren, M.D., P.C.

612 S.E.2d 17

272 Ga. App. 232

JAMES E. WARREN, M.D., P.C. v. WEBER & WARREN ANESTHESIA SERVICES, LLC, et al.

WEBER & WARREN Anesthesia Services, L.L.C., et al. v. James E. Warren, M.D., P.C.

No. A04A1698.

No. A04A1699.

Court of Appeals of Georgia.

February 23, 2005.

Reconsideration Denied March 17, 2005.

J. Humphries III, Steven Cooper, Paul Pontrelli, Stites & Harbison, PLLC, McGuire Woods, Timothy H. Kratz LLP, Atlanta, for Appellant.

Michael Weinstock, John Levy, Elizabeth M. Jaffe, Weinstock & Scavo, P.C., Atlanta, for Appellees.

MIKELL, Judge.

These related appeals arise from a dispute involving Weber & Warren Anesthesiology Services, LLC (the "LLC"), and its current and former members. At the relevant time, the LLC was composed of three members, all of whom were professional corporations: (1) James E. Warren, M.D., P.C. ("Warren"), with Dr. Warren as principal; (2) Jonathan Weber, M.D., P.C. ("Weber"), with Dr. Weber as principal; and (3) Samson Anesthesia, P.C. ("Samson"), with Dr. James D. Ellner as principal. On April 1, 2001, the LLC entered into a contract with Marietta Surgical Center ("MSC"), a surgical outpatient facility, giving the LLC exclusive rights to perform general anesthesia services at the center. Pursuant to the Operating Agreement for the LLC, net income was distributed equally to the members. The Operating Agreement provided that upon resignation, a former member would be entitled to:

the total accounts receivable of the Company as of the date of ... resignation ... multiplied by a percentage equal to the Ex-Member's percentage for distributions.... This amount shall be paid on a monthly basis as the accounts receivable in existence at the time of ... resignation are collected by the Company.

In December 2001, Dr. Ellner, the principal of Samson, lost his privileges at MSC. As a result, Warren and Weber resigned from the LLC effective January 14, 2002. Samson elected to continue the LLC. MSC terminated its contract with the LLC on January 17, 2002, and Weber and Warren joined another practice which was later awarded the MSC contract.

The LLC initially filed suit against Warren, Weber, and MSC, alleging numerous claims including breach of contract, conspiracy, breach of fiduciary duty, intentional interference with contractual relations, usurpation of business opportunity, and conversion, as well as seeking injunctive relief and a declaratory judgment regarding the LLC's obligation to distribute collected funds to the Weber and Warren defendants. Warren brought counterclaims. Samson was added as a party and brought its own claims. Before trial, due to a settlement that resulted in the dismissal of Weber, the parties were realigned because some of the claims were transferred to a different forum. Thus, at trial, Warren proceeded as plaintiff against the LLC, with claims of breach of contract, quantum meruit, and for attorney fees. Samson proceeded on its counterclaim for breach of fiduciary duty against Warren.¹ After Warren rested its case, the LLC moved for a directed verdict, and the trial court granted the motion as to the quantum meruit claim only. The breach of contract and attorney fees claims went to the jury, along with Samson's claim of breach of fiduciary duty.

The jury returned a special verdict in favor of Warren on the breach of contract claim, and awarded $91,851 in damages. It also awarded Warren $66,000 in attorney fees under OCGA § 13-6-11 and made a specific finding that the LLC had caused Warren "unnecessary time, trouble and legal expense." The jury found in Warren's favor on Samson's claim for breach of fiduciary duty. Thereafter, the LLC moved for judgment notwithstanding the verdict (j.n.o.v.), or in the alternative for a new trial, arguing that Warren did not satisfy its evidentiary burden with respect to damages for breach of contract; that it failed to establish the LLC's liability for attorney fees; and that it failed to present evidence apportioning the amount of legal fees and expenses related to the breach of contract claim. Samson filed a motion for a new trial on the general grounds.

The trial court granted the LLC's motion for j.n.o.v. on the issue of attorney fees, finding that the evidence presented by Warren did not enable the jury to apportion the amount of fees and expenses related to the breach of contract claim. Warren appeals this judgment in Case No. A04A1698. The trial court denied the LLC's motion for j.n.o.v. on the breach of contract claim, finding that Warren met its burden of proving that it was entitled to one-third of the LLC's accounts receivable in existence at the time of its resignation, and also denied Samson's motion for a new trial. It is from this order that the LLC and Samson appeal in Case No. A04A1699.

Case No. A04A1698

1. In its first enumerated error, Warren argues that the trial court erred in granting a j.n.o.v. to the LLC on the issue of attorney fees, because the LLC failed to raise Warren's alleged failure to apportion the fees in its motion for a directed verdict. We agree. It is clear from the trial court's order on the motions for j.n.o.v. and for new trial that it based its grant of j.n.o.v. as to the award of attorney fees solely on the issue of the amount awarded. In fact, the court expressly found that the jury was properly allowed to determine the LLC's liability for fees. The trial court held that Warren's failure to present sufficient evidence apportioning the amount of fees and expenses related to the successful breach of contract claim required a j.n.o.v. on that issue.

Significantly, however, the LLC failed to raise the issue of the apportionment of fees in its motion for a directed verdict. In fact, the only argument raised on the issue of attorney fees was that Warren had failed to prove liability. The LLC contends that it preserved the issue of apportionment when its counsel stated during Warren's case-in-chief that there had been no "break out" of the lawyers' time in connection with Warren's claim for attorney fees. However, this statement did not appear to have been made in connection with a motion, nor was it raised in the motion for a directed verdict or even at the close of Warren's evidence. In fact, after the above statement was made, Warren called its counsel as a witness to testify about the fees it incurred. The LLC has failed to point to any further mention in the record of this ground for a j.n.o.v.

Georgia law is clear that a motion for j.n.o.v. must be based on grounds raised in the motion for directed verdict. Morrison Homes of Florida v. Wade, 266 Ga.App. 598, 601(3), 598 S.E.2d 358 (2004); Famiglietti v. Brevard Medical Investors, 197 Ga.App. 164, 166(2), 397 S.E.2d 720 (1990); Brantley Co. v. Simmons, 196 Ga.App. 233, 234, 395 S.E.2d 656 (1990).

OCGA § 9-11-50(b) allows the device of a motion for judgment notwithstanding the verdict to be used when a motion for directed verdict does not end a trial and it proceeds to verdict. It is narrow, however, and does not permit reopening the case for new legal issues which are thought of retrospectively, with hindsight. It provides, however, a post-verdict opportunity for a determination of the legal questions raised by the motion for a directed verdict. If upon reflection the trial judge determines that the motion for directed verdict was valid, the judge is to set aside the verdict and the original judgment and enter a new judgment in accordance with the motion for directed verdict. It is patent, then, that the j.n.o.v. must be based on grounds raised in the motion for directed verdict initially, for it is in effect only a new ruling on a renewed motion.... The point is that a motion for j.n.o.v. is simply a reasserted motion for directed verdict, with a second opportunity for the trial court to rule on it before time and expenses are incurred and appellate judicial resources are expended.

(Citation and punctuation omitted.) Famiglietti, supra at 166-167(2), 397 S.E.2d 720. Accord Lincoln v. Tyler, 258 Ga.App. 374, 378(3), 574 S.E.2d 440 (2002). See also Nationwide Mut. Fire Ins. Co. v. Rhee, 160 Ga.App. 468, 469-470(1), 287 S.E.2d 257 (1981) (trial court "without authority" to entertain motion for j.n.o.v. based on ground not raised in motion for directed verdict). Accordingly, the trial court erred in granting a j.n.o.v. on the issue of attorney fees, and its judgment is hereby reversed in part.

Furthermore, arguments asserted in a motion for j.n.o.v. but not raised in the motion for directed verdict cannot be considered on appeal. Famiglietti, supra; Wehunt v. ITT Business Communications Corp., 183 Ga.App. 560, 560-561(1), 359 S.E.2d 383 (1987). Based on our holding in this division, we need not consider the remaining errors asserted in this appeal.²

Case No. A04A1699

2. In its first enumerated error, the LLC argues that the trial court erred in denying its motion for j.n.o.v. on Warren's breach of contract claim. It contends that Warren failed to establish the value of the accounts receivable as set out in the Operating Agreement and therefore did not prove its damages with reasonable certainty.

On appeal from a trial court's rulings on motions for directed verdict and j.n.o.v., we review and resolve the evidence and any doubts or ambiguities in favor of the verdict; directed verdicts and judgments n.o.v. are not proper unless there is no conflict in the evidence as to any material issue and the evidence introduced, with all reasonable deductions therefrom, demands a certain verdict.

(Footnote omitted.) Sims v. Heath, 258 Ga.App. 681, 685(6), 577 S.E.2d 789 (2002). "In considering a motion for a j.n.o.v. ...., we review the evidence in the light most favorable to the party who won and who opposed the motion. [Cit.] If any evidence supports the verdict, we will affirm the trial court's denial of the motion[]." Phillips v. Blankenship, 251 Ga.App. 235, 235-236(1), 554 S.E.2d 231 (2001), citing Crosby v....