U.S. Anchor Mfg., Inc. v. Rule Industries, Inc.

• Decision Date: 16 May 1994
• Docket Number: No. S94Q0409,S94Q0409
• Citation: 443 S.E.2d 833,264 Ga. 295
• Parties: , 1994-1 Trade Cases P 70,664 U.S. ANCHOR MANUFACTURING, INC. v. RULE INDUSTRIES, INC. et al.
• Court: Georgia Supreme Court

Page 833

443 S.E.2d 833

264 Ga. 295, 1994-1 Trade Cases P 70,664

U.S. ANCHOR MANUFACTURING, INC. v. RULE INDUSTRIES, INC. et al.

No. S94Q0409.

Supreme Court of Georgia.

May 16, 1994.

Reconsideration Denied June 24, 1994.

J. Alexander Porter, Simuel F. Doster, Jr., Sidney R. Barrett, Jr., Porter & Doster, Atlanta, for U.S. Anchor Mfg., Inc.

Charles M. Shaffer, Jr., J. Kevin Buster, Sean R. Smith, King & Spalding, Harold T. Daniel, Jr., Laurie Webb Daniel, Webb & Daniel, Atlanta, for Rule Industries, Inc., et al.

CARLEY, Justice.

In November 1985, Rule Industries, Inc. (Rule) brought suit against U.S. Anchor Manufacturing, Inc. (U.S. Anchor), alleging infringement of certain trademarks and copyrights. On March 19, 1986, the parties executed a settlement agreement, providing, in part, that each party released the other

from any and all actions, demands, claims or causes of action whatsoever, which now exist or which may arise in the future, as a result of events which occurred prior to the execution of [this] Settlement Agreement, including, without limitation, any claims which were or could have been presented by way of complaint or counterclaim in [the trademark action].

In November 1986, U.S. Anchor brought the instant suit in federal court against Rule and Tie Down Engineering, Inc. (Tie Down), alleging, among other things, that they violated federal law by attempting and conspiring to monopolize the U.S. market for light weight fluke-style anchors for small boats by means of below-cost pricing intended to drive out competition. U.S. Anchor also asserted state law claims. The trial court denied cross-motions for summary judgment. U.S. Anchor Mfg., Inc. v. Rule Industries, Inc., 717 F.Supp. 1565 (N.D.Ga.1989). The trial court later granted Rule's and Tie Down's motions for directed verdict on the state law claims and entered judgment on the jury's verdict in favor of U.S. Anchor for the attempted monopolization and conspiracy counts. Rule and Tie Down appealed the denial of their motions for j.n.o.v. and new trial, and U.S. Anchor cross-appealed the directed verdict on its state law tort claims.

The United States Court of Appeals for the Eleventh Circuit reversed on the federal law claims, holding that there was no dangerous probability of success in any attempt to achieve monopoly power, U.S. Anchor Mfg., Inc. v. Rule Industries, Inc., 7 F.3d 986, 1001 (11th Cir.1993), and that there was insufficient evidence to support a finding of conspiracy under federal law, which requires evidence excluding the possibility that the defendants acted independently or legitimately. U.S. Anchor, 7 F.3d at 1002.

As to the state law claims, the U.S. Court of Appeals held that U.S. Anchor adequately raised tort claims for both conspiracy in restraint of trade and intentional interference with business relations. U.S. Anchor, 7 F.3d at 1002-1003. The U.S. Court of Appeals declared that the

novel questions presented are whether below-cost pricing can satisfy the improper action element of [intentional interference with business relations] and whether low prices, standing alone, can constitute a prohibited inducement of the plaintiff's customers. [Cit.]

U.S. Anchor, supra at 1003. Expressing "some doubt as to whether intentional interference with business relations is a distinct cause of action from the tort of conspiracy in restraint of trade," the U.S. Court of Appeals stated that, "while it appears settled that predatory pricing by a group or conspiracy is actionable, we have found no Georgia authority addressing predation by a single defendant acting unilaterally." U.S. Anchor, 7 F.3d at 1004. The U.S. Court of Appeals retained pendent jurisdiction over the state law claims, but certified the following four questions of law to this court:

1. Does a general release under Georgia law discharge liability for injury caused by subsequent acts in the course of a scheme or conspiracy that was ongoing at the time the release was executed but unknown to the releasing party?

2. Does a general release under Georgia law discharge liability for injury caused by tortious conduct already committed that was unknown to the releasing party at the time the release was executed?

3. Does the tort of intentional interference with business relations encompass predatory pricing below some measure of the defendant's costs?

4. If the answer to Question 3 is yes, then in a case of actionable predatory pricing below some measure of cost by a conspiracy or a single defendant, what is the appropriate measure of the defendant's costs?

U.S. Anchor, 7 F.3d at 1005-1006.

1. The first question focuses on a conspiracy which continues beyond the execution of a general release and which causes injury, not by the continuing effect of pre-release acts, but rather by new post-release acts.

"A conspiracy is a combination of two or more persons to accomplish an unlawful end or to accomplish a lawful end by unlawful means. [Cit.] ' "Accurately speaking, there is no such thing as a civil action for conspiracy. There is an action for damages caused by acts pursuant to a formed conspiracy, but none for the conspiracy alone. While the crime of conspiracy may be committed without doing any overt act in pursuit of the combination, no civil liability is incurred for the conspiracy, but only for the overt acts of the conspirators." [Cit.] "Where civil liability for a conspiracy is sought to be imposed, the conspiracy of itself furnishes no cause of action...." (Cits.)' [Cits.]" [Cit.] (Emphasis in original.)

First Fed. Sav. Bank v. Hart, 185 Ga.App. 304, 305(2), 363 S.E.2d 832 (1987). See also Brown & Allen v. Jacobs' Pharmacy Co., 115 Ga. 429, 433, 41 S.E. 553 (1902).

It follows that a document containing language which is construed to discharge liability for injury caused only by previously occurring acts does not, by its terms, discharge liability for injury caused by subsequent acts merely because those acts resulted from a previously existing scheme or conspiracy. See Eatonton Oil & Auto Co. v. Greene County, 53 Ga.App. 145(2), 185 S.E. 296 (1936). Compare Lewis v. Schlenz, 161 Ga.App. 222, 224(1), 291 S.E.2d 55 (1982); Ivey v. Ivey, 234 Ga. 532(1), 216 S.E.2d 827 (1975). Therefore, in answer to the first question, we hold that a general release under Georgia law does not discharge liability for injury caused by subsequent acts in the course of a scheme or conspiracy that was ongoing at the time the release was executed.

2. The second question addresses tortious conduct which had already been committed, but which was unknown to the releasing party at the time a general release was executed.

A release is subject to the same rules of construction as govern ordinary contracts in writing. Thomaston v. Fort Wayne Pools, Inc., 181 Ga.App. 541(1), 352 S.E.2d 794 (1987). Thus, "[a] release is to be construed according to the intent of the parties." Central Ga. Power Co. v. Pope, 144 Ga. 130, 134(3), 86 S.E. 322 (1915).

Ordinarily, a general release does not discharge liability for injury caused by unknown tortious conduct which has already been committed. " '[A]lthough the terms of a release are general, their operation will be limited to those things...