Manderson & Associates, Inc. v. Gore, s. A89A1294

Citation193 Ga.App. 723,389 S.E.2d 251
Decision Date17 November 1989
Docket NumberA89A1295,Nos. A89A1294,s. A89A1294
PartiesMANDERSON & ASSOCIATES, INC., et al. v. GORE. GORE v. MANDERSON & ASSOCIATES, INC., et al.
CourtUnited States Court of Appeals (Georgia)

Arnall, Golden & Gregory, Charles L. Gregory, Karen S. Riddell, Atlanta, for appellants.

Alston & Bird, Oscar N. Persons, Atlanta, Walter G. Elliott II, for appellee.

BIRDSONG, Judge.

Case No. A89A1294 is an appeal by Manderson & Associates et al. asserting two enumerations of error of the trial court's final order and judgment. Case No. A89A1295 is an appeal by James W. Gore, asserting six enumerations of error, of the same final order and judgment, the subsequent order correcting the final order and judgment, and of orders granting defendants' motion to dismiss jury demand and denying plaintiff's motion for summary judgment.

Lewis M. Manderson, Jr., and James W. Gore became business associates in an outdoor advertising business. Manderson, the principal owner and primary shareholder, sold the business at a profit. Gore shared in these profits, as he held company stock under a profit sharing plan. Manderson, Gore and another Manderson employee, named Hubbert, subsequently entered a new business venture to acquire interest in three other outdoor advertising businesses. Three limited partnerships were organized to own, operate and eventually sell each of the three businesses. Manderson & Associates, Inc. (M & A) was formed to be the general partner of each of the three limited partnerships. Apparently, the parties contemplated that M & A would serve as general partner for investment limited partnerships engaged in the outdoor advertising business. Manderson, Gore, and Hubbert also purchased limited partnership interests in one of the businesses.

As they apparently intended to invest in other business ventures, the men formed a second corporation, MGH Management, Inc. (MGH). The primary business purpose of MGH was to provide management services for all limited partnerships for which M & A served as general partner.

Manderson was the president and majority stockholder of each corporation. Gore and Hubbert were employees of MGH, as M & A apparently had no employees. Gore also was an officer and director for MGH and M & A. Gore was vice-president in charge of finance and accounting; he was the top financial officer, and also was in charge of finding further business ventures.

To preserve the closely-held nature of the companies, each shareholder executed certain employment agreements and stock transfer agreements. The stock transfer agreements required each man to transfer his share back to the corporation upon termination of his employment. Each stock transfer agreement contained a formula for computation of the stock's purchase price. According to trial testimony, Manderson became concerned that Gore did not have the organization's best interests at heart. In January of 1986, two of the three outdoor advertising plants were sold and Gore had located no other ventures. In the early summer of 1986, Gore located a potential investment in a plastic jug manufacturing company. Gore then proposed, contrary to the parties' prior agreement, that he and Manderson be vested with equal ownership in the jug company. Manderson rejected this proposal. Manderson subsequently heard a rumor that Gore was planning to leave. He then asked Gore to present his plan for staying with the company, and repeated this request during subsequent meetings. On September 19, 1986 Manderson officially terminated Gore's employment with the company, in part asserting that Gore refused to provide such a plan. Gore contests this assertion, claiming that he provided a general plan to Manderson, and that he merely wanted to "slow down." Appellants demanded that Gore present his stock for sale to the company. Gore did not do so, and disputed the stock price due and owing him.

Gore subsequently brought suit asserting a breach of fiduciary duty by the majority stockholders and requesting declaratory judgment of the parties' rights and obligations under the agreements. Assuming the agreements are enforceable, which Gore contests, he seeks the amount due under the agreements in addition to damages caused by Manderson's alleged breach of fiduciary duty. The case was tried without jury. The trial court denied Gore's fiduciary duty claim, construed paragraph 8(A)(1) of the stock transfer agreements in a manner more favorable to Gore, and awarded pre-judgment interest to Gore.

I. Case Nos. A89A1294
& A89A1295

1. All employment agreements and stock transfer agreements were executed in Alabama and the agreements each contained an Alabama choice of law provision. As a general principle of Georgia conflicts law, "[t]he rule of lex loci contractus controls all substantive matters, such as 'the nature, construction and interpretation of contracts.' " Menendez v. Perishable Distrib., 254 Ga. 300, 302, 329 S.E.2d 149. In the absence of contrary public policy, our courts normally will enforce a contractual choice of law provision, Carr v. Kupfer, 250 Ga. 106(1), 296 S.E.2d 560, as the parties by contract may stipulate that the laws of another jurisdiction will govern the transaction. Wallace v. Harrison, 166 Ga.App. 461, 463, 304 S.E.2d 487; see OCGA § 11-1-105.

II. Case No. A89A1294

2. Appellants Manderson et al. assert the trial court erred by awarding pre-judgment interest where there was no tort or breach of contract and where the pre-condition to payment was not met by Gore.

The trial court, citing C.E. Sawyer's Indus., etc., Fabricators v. Central Rigging, etc., Corp., 653 F.2d 956 (5th Cir.), found that Gore was entitled to pre-judgment interest under Alabama law. The trial court further found that fairness dictates the award, because appellants have enjoyed the appreciation and time value of the amount to which Gore was entitled for his stock since 60 days after his termination date (the date stock transfer should have been consummated under the stock transfer agreement). (The parties neither argue nor cite authority to contest the issue of nonapplicability of Alabama law to the award of pre-judgment interest. Accordingly, this issue has not been raised on appeal. Court of Appeals Rule 15(c)).

The issues raised by this enumeration of error will be examined in light of this court's rule of appellate procedure that on appeal we must construe the evidence most strongly to support the verdict and judgment. McLarty v. Kushner, 173 Ga.App. 432(1), 326 S.E.2d 777.

Under Alabama Code § 8-8-8, pre-judgment interest runs only on such sums as are certain or are capable of being made certain. See generally Wood v. Central Bank of the South, 435 So.2d 1287 (10-12) (Ala.Civ.App.); State Farm Mut. Auto. Ins. Co. v. Fox, 541 So.2d 1070 (Ala.). Compare Shook, etc., Co. v. Central Rigging, etc., Corp., 684 F.2d 1383 (11th Cir.) and C.E. Sawyer's Indus., etc., Fabricators v. Central Rigging, etc., Corp., supra, with Eastern Air Lines v. Atlantic Richfield Co., 712 F.2d 1402 (TECA) and Roe v. Baggett Transp. Co., 326 F.2d 298 (5th Cir.). As appellant has not enumerated as error the issue of whether the pre-judgment award met the requisite degree of certainty under Alabama law, this question is not before us on appellate review. Roberts v. Cotton States, etc., Ins. Co., 186 Ga.App. 371, 373, 367 S.E.2d 272; City of College Park v. Ga. Power Co., 188 Ga.App. 223, 372 S.E.2d 493.

Assuming without deciding that Alabama Code § 8-8-8 requires a breach of contract as a prerequisite to the award of pre-judgment interest in cases sounding in contract (see Miller & Co. v. McCown, 531 So.2d 888, 889 (Ala.); Lapeyrouse Grain Corp. v. Tallant, 439 So.2d 105, 111 (Ala.); Alabama Terminix Co. v. Howell, 276 Ala. 59, 158 So.2d 915(5)) we find that the record would support a determination by the trial court that appellant Manderson breached the stock transfer agreements.

Appellant Manderson further asserts that Gore also was in breach of the agreements, and that Gore failed to tender his stock as required. We disagree. Under Alabama law, "[h]e who seeks equity must do equity; and he who would put another in default for failing to comply with a contract must show that he has not breached his part of said contract, or else give an excuse for a failure to perform." Keener v. Moslander, 171 Ala. 533, 54 So. 881(1); accord Walker v. Harris, 235 Ala. 384, 179 So. 213(6). Moreover, "one who seeks equitable relief must come into court with 'clean hands' and ... the application of this doctrine is peculiarly within the discretion of the trial court. [Cit.] More specifically, a party to a contract who has caused a failure of performance by the other party cannot take advantage of that failure." (Emphasis supplied.) Dixson v. C & G Excavating, 364 So.2d 1160, 1162 (Ala.); see Denver-Albuquerque, etc. Transport v. Green, 57 Ala.App. 709, 331 So.2d 719(1).

In Health Care Mgmt. Corp. v. Rubenstein, 540 So.2d 77, 78 (Ala.Civ.App.), the court stated: "A defendant breaches its contract and the plaintiff's right of action is complete upon the defendant's failure to do the particular thing that it agreed to do.... Because of the defendant's material breach of the contract, the plaintiff's future performance of the contract was excused and the plaintiff had an immediate cause of action for that breach. [Cit.] Since the plaintiff was not required to further perform under the contract, he did not breach it...." We are satisfied that the record would support a conclusion that Manderson so materially breached the contract that Gore was excused from further performance thereunder, and that pre-judgment interest was authorized under Alabama Code § 8-8-8. Appellant Manderson's arguments in support of this specific enumeration of error are without merit.

3. Appellant Manderson asserts the trial court erred by...

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