CAG Food Services, LLC v. Shaver Foods, LLC
Filing
134
OPINION and ORDER granting 107 Shaver's Motion for Summary Judgment and denying as moot its 102 Motion to Strike 22 Amended Complaint. Denying 129 CAG's motion for leave to file surreply. Counts I and IV of the Amended Complaint are DISMISSED. The stay entered pursuant to the Courts September 24, 2020 121 order is LIFTED. A fact question remains as to the proper measure of damages on CAG's Count II and the dependent Count VII, for breach of the covenant of good f aith and fair dealing. Count VIII, for attorney's fees and expenses, also remains viable as to the surviving claims. Within 30 days of entry of this Order, the parties shall file a proposed Consolidated Pretrial Order. Signed by Judge Steven D. Grimberg on 03/17/2021. (bdb)
Case 1:18-cv-02753-SDG Document 134 Filed 03/17/21 Page 1 of 22
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
CAG FOOD SERVICES, LLC, f/k/a
CORRECTIONAL ADVISOR’S GROUP, LLC,
Civil Action No.
1:18-cv-02753-SDG
Plaintiff,
v.
SHAVER FOODS, LLC,
Defendant.
OPINION AND ORDER
This matter is before the Court on Defendant Shaver Foods, LLC’s motions
to strike Count I of Plaintiff CAG Food Services, LLC’s Amended Complaint
[ECF 102] and for summary judgment [ECF 107], and Plaintiff CAG Food Services,
LLC’s motion for leave to file surreply [ECF 129]. After careful consideration of
the parties’ briefing, and with the benefit of oral argument, the Court GRANTS
Defendant’s motion for summary judgment, DENIES Plaintiff’s motion for leave
to file a surreply, and DENIES as moot Defendant’s motion to strike.
I.
BACKGROUND
A.
Undisputed Facts
The following facts are undisputed. Defendant Shaver Foods, LLC (Shaver)
is a low-cost, institutional food distributor servicer that provides food to
customers, including correctional facilities, schools, healthcare providers, senior
Case 1:18-cv-02753-SDG Document 134 Filed 03/17/21 Page 2 of 22
feeders, distributors, and manufactures.1 In 2007, Shaver and Plaintiff CAG Food
Services, LLC (CAG) entered into a supply agreement through which Shaver
would supply CAG customers with food services.2 In July 2008, the parties
amended the agreement to make Shaver the primary food supplier to CAG’s
clients in exchange for CAG receiving a five percent commission “of the total
amount paid” to Shaver for each future invoice of a client managed by CAG.3 The
agreement allowed the parties to create separate supply agreements with different
terms for individual clients “based on various circumstances to be determined as
they arise.”4 The agreement also prohibited Shaver from soliciting CAG clients or
entertaining solicitations from CAG clients.5
On May 2, 2018, Ashley White, the President and CEO of Shaver, sent an
email to CAG purporting to terminate the amended supply agreement “effective
immediately.”6 Rich Adams, the President and CEO of CAG, responded on behalf
of CAG, asserting that the amended supply agreement was “rock solid and
1
ECF 116, ¶ 2.
2
ECF 121, at 1; ECF 116, ¶ 2.
3
ECF 116, ¶ 4.
4
Id. ¶ 5.
5
Id. ¶ 6.
6
ECF 121, at 2; ECF 116, ¶ 9.
Case 1:18-cv-02753-SDG Document 134 Filed 03/17/21 Page 3 of 22
binding” and a “long term contract,” which included Shaver sales to customers
“past, present, and future.”7
B.
Procedural History
On May 16, 2018, CAG filed suit in Superior Court of Cobb County,
Georgia.8 Shaver timely removed.9 CAG initially sought a preliminary injunction,
claiming that Shaver was in breach of the restrictive covenants of the amended
agreement.10 The Court denied CAG’s motion for a preliminary injunction.11 CAG
subsequently amended its Complaint, asserting claims for (I) Breach of Contract
(Past Commission); (II) Breach of Contract (April 2018 Commissions); (III) Breach
of Contract (Commissions for May 2018 Forward); (IV) Unjust Enrichment (in the
Alternative): (V) Tortious Interference with Contractual and Business Relations;
7
ECF 116, ¶ 10; ECF 107-6.
8
ECF 1-1.
9
ECF 1.
10
ECF 116, ¶¶ 11–13.
11
ECF 20.
Case 1:18-cv-02753-SDG Document 134 Filed 03/17/21 Page 4 of 22
(VI) Unfair Competition Under the Lanham Act; (VII) Breach of the Covenant of
Good Faith and Fair Dealing;12 and (VIII) Attorney’s Fees and Expenses.13
Shaver moved to dismiss Counts I, III, IV, V, VI, and VIII of the Amended
Complaint, arguing, as relevant here, that (1) Count I, alleging breach of contract
for past commissions, should be dismissed because CAG was bound by its sworn
admissions in its initial complaint and in moving for preliminary injunction that
Shaver made monthly commission payments to CAG in accordance with the
agreement;14 (2) the contract terms entitling CAG to future commissions were
unenforceable;15 and (3) CAG cannot assert a claim for unjust enrichment when
the parties were governed by a valid contract.16 The Court granted the motion in
part, dismissing Counts III and V.17
12
Due to a typographical error, the claim for breach of the covenant of good faith
and fair dealing is labeled as “Count VIII.” The Court will refer to it as Count
VII, the order in which it is listed in the Amended Complaint, to avoid
confusion. ECF 22, at 16.
13
ECF 22, ¶¶ 28–73.
14
ECF 24-1, at 10–11.
15
Id. at 11–15.
16
ECF 29, at 12.
17
ECF 31.
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Following the Court’s order, Shaver moved for reconsideration “to amplify
points that Shaver made only briefly (and without robust supporting legal
authority) in its Motion to Dismiss” with respect to the Court’s ruling on CAG’s
unjust enrichment claim.18 Specifically, Shaver sought to emphasize Georgia case
law, which, according to Shaver, show that a party cannot enforce an illegal
restrictive covenant or contravene Georgia public policy favoring fair trade
through a claim for unjust enrichment.19 The Court denied the motion because
Shaver had not met the legal standard for reconsideration.20
CAG moved for partial summary judgment on Count II, for April 2018
commissions owed but not paid by Shaver.21 The Court granted CAG’s motion as
to liability, but found that an issue of material fact existed as to what amount
Shaver owed CAG for the April 2018 commissions.22 Shaver has a pending motion
for summary judgment as to the counts remaining in this case,23 which include
Count I for breach of contract for past commissions, Count VI for unjust
18
ECF 40, at 6.
19
ECF 32-1.
20
ECF 67.
21
ECF 68.
22
ECF 121.
23
ECF 107.
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enrichment, Count VII for breach of the covenant of good faith and fair dealing,
and Count VIII for attorney’s fees and expenses,24 as well as a pending motion to
strike Count I as a sanction for discovery abuses.25 The parties have briefed both
motions.26
II.
ANALYSIS
On its motion for summary judgment, Shaver first asserts that a party
cannot inhibit trade or enforce an otherwise unenforceable restrictive covenant
through a claim for unjust enrichment. Shaver also argues that CAG’s unjust
enrichment claim fails because it is premised on client contracts that do not exist
and because CAG cannot prove its damages. As to CAG’s breach of contract
claims, Shaver argues that the entire amended supply agreement is void because
of the overbroad restrictive covenants and because CAG failed to present evidence
in support of these claims.
24
The parties stipulated to the dismissal of Count VI, unfair competition under
the Lanham Act. ECF 101. Shaver brought three counterclaims, one of which
was voluntarily withdrawn, ECF 41, one of which was dismissed by the Court,
ECF 88, and one of which the parties dismissed by stipulation. ECF 101. No
counterclaims remain.
25
ECF 102.
26
ECF 102; ECF 104; ECF 106; ECF 107; ECF 108; ECF 115; ECF 116; ECF 119;
ECF 128.
Case 1:18-cv-02753-SDG Document 134 Filed 03/17/21 Page 7 of 22
A.
Legal Standard
Summary judgment is appropriate when “there is no genuine dispute as to
any material fact and the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a). A fact is “material” only if it can affect the outcome of the
lawsuit under the governing legal principles. Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986). A factual dispute is “genuine . . . if the evidence is such
that a reasonable jury could return a verdict for the nonmoving party.” Id.
A party seeking summary judgment has the burden of informing the district
court of the basis for its motion and identifying those portions of the record that
demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett,
477 U.S. 317, 323 (1986). If a movant meets its burden, the party opposing summary
judgment must present evidence showing either (1) a genuine issue of material
fact or (2) that the movant is not entitled to judgment as a matter of law. Id. at 324.
In determining whether a genuine issue of material fact exists, the evidence
is viewed in the light most favorable to the party opposing summary judgment,
“and all justifiable inferences are to be drawn” in favor of that party. Anderson, 477
U.S. at 255; see also Herzog v. Castle Rock Entm’t, 193 F.3d 1241, 1246 (11th Cir. 1999).
“Credibility determinations, the weighing of the evidence, and the drawing of
legitimate inferences from the facts are jury functions,” and cannot be made by the
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court in evaluating summary judgment. Anderson, 477 U.S. at 255. See also Graham
v. State Farm Mut. Ins. Co., 193 F.3d 1274, 1282 (11th Cir. 1999). Summary judgment
for the moving party is proper “[w]here the record taken as a whole could not lead
a rational trier of fact to find for the non-moving party.” Matsushita Elec. Indus. Co.
v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
B.
Discussion
1.
Unjust Enrichment
Shaver argues that summary judgment is appropriate for CAG’s unjust
enrichment claim because (1) it is premised on client contracts that never existed;
(2) an unjust enrichment claim cannot be used to enforce an otherwise
unenforceable contract; and (3) CAG’s damage calculation is speculative. While
the Court finds that there is a question of fact as to whether the client contracts
exist, it agrees with Shaver that CAG is improperly attempting to enforce the
invalid restrictive covenants in the amended supply agreement through the unjust
enrichment claim and that CAG’s damage calculation is entirely speculative.
Summary judgment is therefore warranted.
“Unjust enrichment is an equitable concept and applies when as a matter of
fact there is no legal contract, but when the party sought to be charged has been
conferred a benefit by the party contending an unjust enrichment which the
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benefitted party equitably ought to return or compensate for.” Sitterli v. Csachi, 344
Ga. App. 671, 673 (2018). CAG claims that Shaver was unjustly enriched when it
took over CAG’s client contracts and continued to supply food to these clients
without paying CAG a commission.
Shaver first argues that no “client contracts” exist as alleged in the Amended
Complaint. The Amended Complaint defines “client contracts” as written
agreements CAG entered into with its various clients to whom it provided food
management services.27 Shaver asserts that there is no evidence that CAG entered
into client contracts prior to Shaver’s and CAG’s business relationship and that
CAG is improperly broadening the scope of what is included in the client
contracts. However, whether and when CAG entered into contracts with these
clients and whether Shaver had independent relationships with those clients are
questions of material fact, and CAG has come forward with evidence sufficient to
create a dispute as to these facts.28 In particular, CAG presented evidence that
Shaver assigned CAG customers to Shaver’s sale managers after the two entities
entered into the supply agreement and that Shaver internally labeled certain
27
ECF 22, ¶¶ 6–7.
28
ECF 115, at 6–11.
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clients as CAG’s.29 Because the Court finds that a question of fact exists regarding
CAG’s client contracts, CAG’s proposed surreply is unnecessary to the extent it
seeks to reinforce this position.30
Shaver’s next argument is more compelling. It contends, citing JR
Construction/Electric, LLC v. Ordner Construction Co., 294 Ga. App. 453, 455 (2008),
that Georgia case law and public policy prohibit enforcement of void restrictive
covenants through claims for unjust enrichment. In JR Construction, the Georgia
Court of Appeals affirmed summary judgment against a contractor on its claims
for breach of contract and unjust enrichment because the underlying contract
violated public policy and the unjust enrichment claim was brought to enforce the
same terms. Id. at 455–56. In particular, the court held that the contractor could not
“recover the value of goods and services provided under a theory of unjust
enrichment or quantum meruit” because “[i]f, as in this case, an express agreement
is unenforceable because it violates public policy, the agreement ‘[cannot] be made
legal and binding as an implied contract, by merely praying for a recovery on
quantum meruit of a portion of the amount expressly agreed upon. If the express
29
ECF 115, at 10.
30
ECF 129, at 3–4.
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contract was void because contrary to public policy, the implied promise was void
in its inception.’” Id. at 455. (quoting Sapp v. Davids, 176 Ga. 265, 267–68 (1933)).
For example, as in Hilb, Rogal & Hamilton Co. of Atlanta v. Holley, 295 Ga.
App. 54, 56 (2008), disapproved of on other grounds by Rockdale Hospital, LLC v. Evans,
306 Ga. 847, 834 (2019), an employer cannot claim that an employee was unjustly
enriched “by the separate consideration paid to him in exchange for the
unenforceable covenant not to compete,” particularly where the equitable relief is
sought by the employer seeking to benefit from the illegal restraint of trade. 295
Ga. App. at 56. This reasoning prohibits recovering not only past consideration,
but also future commissions, as Georgia law prohibits royalty or commission
payments extending beyond the life of the contract where it acts as a restraint on
trade. Smith Adcock & Co. v. Rosenbohm, 238 Ga. App. 281, 282 (1999) (affirming
holding that royalty provision in employment contract was invalid because it had
no territorial limit and therefore violated Georgia law).
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CAG concedes that the restrictive covenants in the amended supply
agreement are invalid.31 Indeed, the restrictions provide no temporal or territorial
limitation and would prohibit Shaver from ever soliciting or accepting solicitations
from CAG’s clients.32 CAG argues, however, that the claim for unjust enrichment
is entirely separate from the contract and stems from Shaver “stepping into”
CAG’s place and continuing relationships with CAG’s clients.33 Yet this is entirely
what the restrictive covenants sought to prevent, and so CAG is improperly
attempting to enforce an implied promise that “was void in its inception.” JR
Constr., 294 Ga. App. at 455. In fact, CAG stated at oral argument that the damages
31
At oral argument, counsel for CAG stated that the Court previously concluded
that the covenants are invalid and that CAG will accept this determination for
purposes of this litigation, but the Court did not make this determination on
CAG’s motion for preliminary injunction or on Shaver’s motion to dismiss.
ECF 20 (order on preliminary injunction); ECF 23 (transcript of preliminary
injunction hearing); ECF 31 (order on motion to dismiss). The Court,
nevertheless, takes counsel’s statement as a concession.
32
ECF 107-2.
33
CAG claims that the Court has already ruled that the unjust enrichment claim
can stand on its own. This is inaccurate. On Shaver’s motion to dismiss, the
Court found that an unjust enrichment claim can proceed in the alternative
where a breach of contract claim fails a matter of law, which it did here because
the contract was terminable at will. ECF 31, at 10. Shaver did not argue that the
illegality of the restrictive covenants negates the unjust enrichment claim on
its motion to dismiss. The Court also did not reach the merits of this argument
on Shaver’s motion for reconsideration because Shaver failed to meet the
standard for reconsideration. ECF 67.
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it seeks, the five percent commission to which it believes it is entitled from Shaver
in perpetuity, is what Shaver bargained for, further demonstrating that CAG’s
unjust enrichment claim is an end-run around the void restrictive covenants.
Worse still, as counsel for Shaver noted at oral argument, if CAG’s unjust
enrichment goes forward as is, the Court would be permitting CAG to recover on
restrictions without temporal or territorial limits—in other words, more than it
would be allowed if it had a valid restrictive covenant in its contract with Shaver.
The Court cannot allow this perverse incentive to stand.
The Court also agrees with Shaver that CAG has failed to present a legally
sufficient calculation of damages. CAG admits that it has not determined a
damages amount that it will present to the jury because “damages are ongoing,”
but has stated that its damages would be five percent of the amounts invoiced by
Shaver to clients procured through CAG for as long as those clients are served by
Shaver.34 The five percent calculation comes from the five percent commission
contemplated in the amended supply agreement.35
CAG improperly calculates its damages on the amount it would have made
under the amended supply agreement. “The measure of damages under quantum
34
ECF 115, at 16–17.
35
ECF 107-2.
Case 1:18-cv-02753-SDG Document 134 Filed 03/17/21 Page 14 of 22
meruit or unjust enrichment is based upon the benefit conferred upon the
defendant and not upon the cost to render the service or cost of the goods.”
Zampatti v. Tradebank Int’l Franchising Corp., 235 Ga. App. 333, 340 (1998). Indeed,
the “[v]alue of services is not to be determined from the perspective of the party
rendering the services and materials, but must be determined from the perspective
of the recipient to determine to what extent the party was benefited or enriched by
such services; otherwise, ineffective, defective, or worthless services could create
liability for the recipient.” Watson v. Sierra Contracting Corp., 226 Ga. App. 21, 28
(1997). Thus, the value CAG placed on its efforts to foster relationships with these
clients is inapposite. The fact finder must determine the value, if any, of the benefit
conferred on Shaver. CAG has not presented any evidence of this value.36
While “[t]he value of services from the perspective of the recipient is
uniquely that of opinion and is for jury determination,” id., it would be error to
submit a question of damages to the jury “if, to make an award, the jury must
36
CAG makes much of the fact that Shaver has in its possession all the
information and data needed to calculate damages. As the Court emphasized
at oral argument, it is CAG’s burden, not Shaver’s, to prove damages. Lay Bros.
v. Golden Pantry Food Stores, Inc., 273 Ga. App. 870, 874 (2005) (“The party
claiming damages carries not only the burden of proving the damages, but also
furnishing the jury with sufficient data to estimate the damages with
reasonable certainty.”).
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engage in sheer speculation.” Hendrix v. Raybestos-Manhattan, Inc., 776 F.2d 1492,
1507 (11th Cir. 1985). “Where a party sues for damages, he has the burden of proof
of showing the amount of loss in a manner in which the jury or the trial judge in
nonjury cases can calculate the amount of the loss with a reasonable degree of
certainty.” Accessory Overhaul Grp., Inc. v. Mesa Airlines, Inc., 994 F. Supp. 2d 1296,
1306 (N.D. Ga. 2014) (quoting Big Builder, Inc. v. Evans, 126 Ga. App. 457, 458
(1972)). Particularly as to claims for equitable damages “[t]he mere fact that a party
failed to perform as required or expected standing alone does not furnish a basis
upon which the amount of the loss can be calculated. An allowance for damages
cannot be based on guess work.” Id. (internal citations and punctuation omitted).
“Thus, at the summary-judgment stage, reasonable inferences to be drawn from
[the claimant’s] evidence of damages ‘cannot be based on mere conjecture or
possibility or upon evidence which is too uncertain or speculative.’ The plaintiff
must furnish sufficient data to estimate its damages with reasonable certainty.” Id.
(internal citations omitted) (quoting Hoffman v. AC & S, Inc., 248 Ga. App. 608, 610
(2001) and Moultrie Farm Ctr. v. Sparkman, 171 Ga. App. 736, 740 (1984)).
Accessory Overhaul is analogous to this case. There, the plaintiff, in
calculating its damages for quantum meruit and unjust enrichment, relied on a
provision in an unenforceable contract. Id. at 1307. The Court found that the
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contract provision did “not represent the benefit conferred upon Defendants,” but
instead focused on “the cost” to the plaintiffs and, because the plaintiffs failed to
present another more accurate measure of damages, it failed to “carr[y] its burden
of providing evidence sufficient to calculate its equitable damages with reasonable
certainty,” and summary judgment was warranted. See also Prose Fin. Servs., LLC
v. Welding Techs., Inc., No. 1:06-CV-501-ODE, 2007 WL 9701670, at *7 (N.D. Ga.
Aug. 3, 2007) (granting summary judgment where the plaintiff failed to provide
any value of services beyond bare assertions). The same is true here. CAG failed
to present an accurate measure of the value of the benefit conferred on Shaver.
Projecting a five percent commission for an unspecified number of clients for an
undetermined period is also pure conjecture. For this additional reason, summary
judgment is warranted on CAG’s unjust enrichment claim.
2.
Breach of Contract
Shaver argues that it is entitled to summary judgment on CAG’s remaining
breach of contract claims (Counts I, II, VIII) because CAG has failed to present
evidence of a breach; the amended supply agreement contains an illegal restrictive
covenant that voids the entire agreement; and CAG has not proven damages. The
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Court has already found summary judgment proper as to Count II in favor of
CAG,37 and so this motion is only appropriate as to Counts I and VIII.
First, the Court finds that the restrictive covenant terms are severable. In
determining whether a contract is severable, the Court considers the parties’
intent, which “may be expressed directly, through a severability clause, or
indirectly, as when the contract contains promises to do several things based upon
multiple considerations.” Grayhawk Homes, Inc. v. Addison, 355 Ga. App. 612, 616
(2020). The amended supply agreement contains multiple promises and multiple
considerations. Specifically, the provision giving CAG a five-percent commission
on sales from Shaver to CAG’s clients was in exchange for Shaver being “the
primary supplier of all foodservice food and food related products.”38 In addition
to this exchange of promises, Shaver agreed to “protect the relationship of CAG
and its clients” in exchange for being CAG’s primary supplier, and in doing so
agreed to the restrictive covenants.39 The agreement also provides that “[n]o
change to any part of this agreement shall invalidate other parts of this agreement
37
ECF 121.
38
ECF 107-2.
39
Id.
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not specifically addressed,” which evidences the parties’ intent to make the
provisions severable.40
CAG has not, however, presented evidence in support of its breach of
contract claim for past commissions. In particular, CAG has not shown what
amount Shaver was paid by CAG’s clients and that Shaver failed to pay CAG five
percent of that amount. CAG has only presented records showing the amount
Shaver invoiced to its clients and claims that it was owed five percent on each
amount invoiced.41 Any amount less than that five percent, according to CAG, is
in breach of the contract. But that is not what the contract says. The amended
supply agreement provides that CAG “will receive a commission of 5% of the total
amount paid for each future invoice by a client managed by [CAG].”42 To recover
on a breach of contract claim, therefore, CAG must show that Shaver failed to pay
40
Id.
41
ECF 115, at 18 (“In support of Count I for these past commissions, CAG
produced to Shaver six hundred and ninety-two (692) pages of supporting
documentation and calculations which demonstrate to the penny the total
amount CAG has been damaged ($590,216.72). These calculations include the
customer name, order ID, order date, order total, invoice ID, type of invoice,
invoice total, commission paid, and contractual commission owed.”) (emphasis
added).
42
ECF 107-2, at 2.
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CAG five percent on the amounts Shaver was paid by the clients, not that Shaver
failed to pay five percent on the amounts Shaver invoiced.
Instead of offering evidence in support of Shaver failing to pay five percent
on the amount it was paid, CAG argues that the parties’ course of dealing shows
that they interpreted the contract term to mean amount invoiced. To consider the
parties’ course of dealing, the Court must first determine whether the amended
supply agreement is ambiguous. Under Georgia law,
[t]he construction of contracts involves three steps. At
least initially, construction is a matter of law for the
court. First, the trial court must decide whether the
language is clear and unambiguous. If it is, the court
simply enforces the contract according to its clear terms;
the contract alone is looked to for its meaning. Next, if
the contract is ambiguous in some respect, the court must
apply the rules of contract construction to resolve the
ambiguity. Finally, if the ambiguity remains after
applying the rules of construction, the issue of what the
ambiguous language means and what the parties
intended must be resolved by a jury. The existence or
nonexistence of an ambiguity is a question of law for the
court. If the court determines that an ambiguity exists,
however, a jury question does not automatically arise,
but rather the court must first attempt to resolve the
ambiguity by applying the rules of construction in
O.C.G.A. § 13–2–2.
Gates v. TF Final Mile, LLC, No. 1:16-CV-0341-RWS, 2020 WL 2026987, at *6
(N.D. Ga. Apr. 27, 2020) (quoting Barrett v. Britt, 319 Ga. App. 118, 122 (2012)).
Only after determining that an ambiguity exists, may a court consider “the parties’
Case 1:18-cv-02753-SDG Document 134 Filed 03/17/21 Page 20 of 22
subjective intent, or of a prior course of dealings.” Kleiner v. First Nat. Bank of
Atlanta, 97 F.R.D. 683, 693 (N.D. Ga. 1983).
Neither party has suggested that the amended supply agreement is
ambiguous, and, indeed, the plain meaning is clear—Shaver owed CAG fivepercent commission on the amount CAG customers paid to Shaver. This is also
clear from the pleadings. The Amended Complaint states that Shaver “was
required to pay [CAG] five percent (5%) of the total amount paid for ‘each future
invoice’ for [CAG]’s Clients” and alleges breach of contract because Shaver failed
to pay “the full amount of commissions due and owing.”43 Nowhere in the
Amended Complaint does CAG claim that the parties understood the contract to
mean Shaver owed CAG five percent on the amount invoiced. Further, CAG has
admitted that the proper construction of the amended supply agreement is the
commission owed on amounts actually paid.44
Interpreting the contract as written, CAG has not presented evidence that
Shaver failed to pay CAG a five-percent commission on amounts paid to Shaver
by CAG clients. Therefore, summary judgment is warranted on Count I of CAG’s
amended complaint, alleging breach of contract for past commissions.
43
ECF 22, ¶¶ 15, 30.
44
ECF 116, ¶ 31.
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CAG’s proposed surreply would not alter this finding. In its motion for
leave to file surreply, CAG argues the reason it relied on the commission reports
in calculating its damages, which show the invoiced amount, is because that is
what Shaver produced in response to CAG’s damages discovery requests. But the
email correspondence attached to CAG’s motion plainly shows that Shaver
produced all of its records, including what it was paid by clients, and Shaver tells
CAG that the invoice amount is irrelevant, stating that “Shaver has produced
thousands and thousands of pages containing exactly the information you have
required, which include credit, payment, and billing information . . . the actual
‘invoices’ sent to customers often vary substantially.”45 Even so, whatever Shaver
told CAG in discovery regarding the calculation of damages doesn’t change what
the contract says. For this reason, and for the reason noted above regarding the
client contract evidence, the Court denies CAG’s motion for leave to file a surreply.
Since dismissal is appropriate on Count I, Shaver’s motion to strike this
claim is moot. At oral argument, Shaver suggested it would seek attorneys’ fees
on the same grounds if the Court granted summary judgment. If Shaver wishes to
seek attorneys’ fees as a sanction, it may file a separate motion making this request.
45
ECF 129-1, at 2.
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The Court takes no position at this time on whether such a motion, if filed, will be
granted.
III.
CONCLUSION
Shaver’s motion for summary judgment [ECF 107] is GRANTED and its
motion to strike [ECF 102] is DENIED as moot. CAG’s motion for leave to file
surreply [ECF 129] is DENIED. Counts I and IV of the Amended Complaint are
DISMISSED. The stay entered pursuant to the Courts September 24, 2020 order
is LIFTED. A fact question remains as to the proper measure of damages on CAG’s
Count II and the dependent Count VII, for breach of the covenant of good faith
and fair dealing. Count VIII, for attorney’s fees and expenses, also remains viable
as to the surviving claims. Within 30 days of entry of this Order, the parties shall
file a proposed Consolidated Pretrial Order.
SO ORDERED this the 17th day of March 2021.
Steven D. Grimberg
United States District Court Judge
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