Lager's LLC v. Palace Laundry, Inc., A00A2076.
| Decision Date | 11 December 2000 |
| Docket Number | No. A00A2076.,A00A2076. |
| Citation | 543 S.E.2d 773,247 Ga. App. 260 |
| Parties | LAGER'S, LLC v. PALACE LAUNDRY, INC. |
| Court | Georgia Court of Appeals |
OPINION TEXT STARTS HERE
Long, Aldridge & Norman, Steven P. Smith, Thomas B. Bosch, O. Jackson Cook, Atlanta, for appellant.
Smith, Gambrell & Russell, Shannan L. Freeman, Stephan M. Forte, Cele Ogawa, Atlanta, for appellee.
Plaintiff Palace Laundry Inc. d/b/a Linens of the Week ("Linens") brought a breach of contract and open account action against defendant Lager's, LLC ("Lager"). On summary judgment, Linens argued that as a matter of law, it was entitled to recover liquidated damages, damages on an open account, and attorney fees, as a result of Lager's premature termination of the contract. The trial court agreed. Lager appeals. For reasons fully stated below, we affirm the trial court's grant of summary judgment to Linens as to Lager's breach of contract, but reverse as to Linens' remaining claims and remand the case for a trial on damages.
"In reviewing a grant or denial of summary judgment, this Court conducts a de novo review of the evidence."1 To prevail at summary judgment under OCGA § 9-11-56(c), the moving party must demonstrate that there is no genuine issue of material fact and that the undisputed facts, viewed in the light most favorable to the nonmovant, warrant judgment as a matter of law.2
Viewed most favorably to Lager, the evidence shows that Linens is in the business of renting and laundering linens, uniforms, and other related goods. On December 8, 1997, Lager, owner of Max Lager's American Grill & Brewery, entered a three-year contract with Linens to utilize its services for Lager's restaurant. The cost to Lager for each delivery depended upon the number and the type of items ordered. Linens made its first delivery to Lager on March 2, 1998, in preparation for Lager's opening three days later. After several weeks of deliveries, Lager terminated the contract. In its letter dated June 29, 1998, Lager stated, Linens made its last delivery to Lager on August 10, 1998.
Linens filed this lawsuit on September 21, 1998. Lager filed its answer and counterclaim alleging that Linens deliberately overcharged Lager and falsified accounts. Linens moved for summary judgment on the grounds that Lager's premature termination triggered the liquidated damages provision. Linens also sought judgment on an open account. The trial court agreed and entered judgment against Lager for $33,117 in liquidated damages, $8,818.11 on an open account, attorney fees equal to 15 percent of the sum total of both amounts, and pre-judgment interest.
1. Lager argues that genuine issues of fact exist as to whether its cancellation of the contract was excused by Linens' alleged deficient service. Lager's argument is without merit.
The Supreme Court of Georgia has stated, "The court will take the contract by its four corners, and determine its meaning from its language, and, having ascertained from the arrangement of its words what its meaning is, will construe it accordingly."3 Further, "[i]f the language of a contract is clear and unambiguous, the terms of the agreement are controlling and an appellate court should look no further to determine the intention of the parties."4 Finally, the general rule in determining contract compliance is substantial compliance, not strict compliance.5 It is with these mandates from our Supreme Court that we examine the terms of the contract.
As to Linens' deficient performance, the contract provides:
13. Deficiencies in Service. The Customer expressly waives the right to terminate this agreement during the term hereof or any extensions hereto for deficiencies in service and/or quality of goods unless and until: (1) A written complaint is made promptly to supplier stating the precise nature of the deficiencies in service and/or quality of goods; and (2) Supplier is afforded a thirty (30) day period from the date the written notice is received to correct the deficiencies; and (3) Supplier fails to take action to correct those deficiencies within the thirty (30) day period.
Lager argues that its cancellation letter substantially complied with the contract's notice provision. The cancellation letter followed Lager's repeated verbal complaints during the first few months of the contract. These complaints, Lager contends, provided Linens notice of the deficiencies and the opportunity to cure them as required by the contract. Thus, in light of Lager's previous verbal complaints, the letter substantially complied with the notice provision of the contract. We disagree.
Although it is undisputed that Lager repeatedly complained about Linens' performance, Lager's verbal complaints do not abrogate its obligation to comply with the contract's unambiguous notice provision. 6
The contract provides that before termination due to Linens' deficient service, Lager was required to provide Linens a prompt, written complaint stating the precise nature of the deficiencies. Lager did not do so, as evidenced by Alan LeBlanc's affidavit.7 It states that Linens' service was deficient from its first delivery. The first delivery was made on March 2, 1998. Yet, the first written complaint was made on June 29, 1998. According to the contract, after receiving the written complaint, Linens had 30 days to correct the deficiency. Lager's June 29 letter cancelled the contract without giving Linens the opportunity to cure the deficiencies. Because Lager did not take the steps necessary to terminate prematurely the contract for deficient service, we find that there is no genuine issue of fact as to its breach of the contract's notice provision.
Lager next argues that it was excused from complying with this provision because of Linens' deficient service, which Lager contends constituted a material breach. We rejected a similar argument in Mayor &c. of Douglasville v. Hildebrand.8 The Hildebrand defendant prematurely terminated the plaintiff's employment contract without giving him the notice the contract required. In its defense, the defendant argued that it was excused from complying with the contract's notice provision because the plaintiff did not perform all of the services enumerated in the contract. We held:
Assuming the [defendant] could repudiate the contract without giving ninety days notice, the requirement for such termination must be based on a material breach, a substantial failure to perform. A breach which is incidental and subordinate to the main purpose of the contract ... does not warrant ... termination nor does a mere breach of contract not so substantial and fundamental as to defeat the object of the parties in making the agreement.9
In this case, we find that Linens' alleged deficient performance was not a material breach. The object of the contract was the delivery of linen items to Lager's restaurant so that they could be used in its operation. The object was not defeated by Linens' alleged deficient service. There is no allegation in LeBlanc's affidavit that Lager was unable to use the goods delivered by Linen or that Linens' deficient service impeded or prevented the operation of the restaurant. Thus, Lager's argument that the affidavit creates genuine issues of fact as to Linens' material breach is without merit. At most, the affidavit's allegations about deficient service are evidence of a breach which was incidental to the purpose of the contract.
Lager cites several cases in support of its argument that its performance should be excused due to Linens' alleged material breach. All of them, however, are inapposite to this case. In Powers Ferry Constr. v. Commerce Builders10 and Corrosion Control v. William Armstrong Smith Co.,11 this Court excused one party's performance where the other party completely failed to perform. In this case, Linens did not completely fail to perform.
In Taliafaro, Inc. v. Rose,12 this Court found that evidence that one party prevented the other from performing its obligations under the contract created a jury question. Here, in LeBlanc's affidavit, Lager alleges that Linens' promises to remedy the deficiencies induced Lager to remain in the relationship. This, however, is not evidence that Linens prevented Lager from submitting its complaints in writing as the contract required. Finally, in Foote & Davies Co. v. Houchin Mfg. Co.,13 we held that the trial court should have permitted evidence as to the quality of materials used in a novel, custom-ordered machine to determine whether the buyer was excused from payment of the seller's expenses. Foote has no application here, as the trial court considered all of the evidence when it ruled on Linens' motion for summary judgment. Accordingly, we agree with the trial court's conclusion that Linens did not materially breach the contract. Thus, Lager was required to comply with the contract's notice provision.
2. In its second enumeration of error, Lager contends that the trial court erred in granting summary judgment on Linens' open account claim.
A suit on open account is available as a simplified procedure to the provider of goods and services where the price of such goods or services has been agreed upon and where it appears that the plaintiff has fully performed its part of the agreement and nothing remains to be done except for the other party to make payment. However, when there is a dispute that goes to either assent to the services, terms of the contract, what work was performed, the quality of performance, or cost, then suit on account is not...
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