Justia Georgia Supreme Court Opinion SummariesArticles Posted in Contracts
Motorsports of Conyers, LLC, et al. v. Burbach
The petitioners here—two motorcycle dealerships who sought to enforce restrictive covenants against a former employee under Florida law— asked the Georgia Supreme Court to reconsider the application of a public-policy exception, citing recent changes in Georgia law that required a more flexible and permissive approach to enforcing restrictive covenants. When contracting parties choose the law of a jurisdiction other than Georgia to govern their contractual relations, Georgia courts generally honored that choice unless applying the foreign law would violate Georgia's public policy. Having taken a fresh look, the Supreme Court concluded that Georgia law remained "the touchstone for determining whether a given restrictive covenant is enforceable in our courts, even where the contract says another state’s law applies." After a careful review of Georgia decisional law and statutory history in this space, the Court found the Georgia legislature has codified this view, including with the recent enactment of the Georgia Restrictive Covenants Act. In this case, the trial court accepted the parties’ choice of Florida law to govern the employment contracts at issue without first determining whether the restrictive covenants in the contracts complied with the GRCA. The Court of Appeals reversed, and in doing so, correctly identified application of the GRCA as the first step in the analysis of whether the public-policy exception overrides the parties’ choice of foreign law. But because the Supreme Court set out a clear framework for that analysis in this opinion, it left it for the trial court to apply that framework in the first instance. The Court therefore vacated the decisions below for further review by the trial court. View "Motorsports of Conyers, LLC, et al. v. Burbach" on Justia Law
Efficiency Lodge, Inc. v. Neason, et al.
The three plaintiffs in this case had each rented rooms at an extended-stay motel for some time. They fell behind on their rent and were threatened with immediate eviction. They sued to stop that from happening, claiming that they were in a landlord-tenant relationship with the motel and could not be evicted without dispossessory proceedings in court. The motel argued that it had signed agreements with the plaintiffs that foreclosed their claims because, among other things, the agreement stated that their relationship was one of “Innkeeper and Guest,” and “not . . . Landlord and Tenant.” The trial court agreed with plaintiffs, and the Court of Appeals affirmed. After its review, the Georgia Supreme Court vacated the appellate court's opinion and remanded with direction for the trial court to determine the parties' relationship under the proper legal framework. View "Efficiency Lodge, Inc. v. Neason, et al." on Justia Law
Southern States Chemical, Inc. et al. v. Tampa Tank & Welding, Inc.
In 2012, Southern States Chemical, Inc. and Southern States Phosphate and Fertilizer Company (collectively, “Southern States”) sued Tampa Tank & Welding, Inc. (“Tampa Tank”) and Corrosion Control, Inc. (“CCI”), claiming damages from a faulty, leaky storage tank that Tampa Tank had installed in 2002. After a decade of litigation and multiple appeals, the trial court dismissed Southern States’s claims with prejudice, concluding that the claims were barred by the applicable statute of repose. Southern States appealed, but finding no reversible error in the trial court's judgment, the Georgia Supreme Court affirmed dismissal. View "Southern States Chemical, Inc. et al. v. Tampa Tank & Welding, Inc." on Justia Law
Crum v. Jackson National Life Ins. Co.
The United States Court of Appeals for the Eleventh Circuit certified questions of Georgia law to the Georgia Supreme Court about life-insurance law. The basic question for the Supreme Court was whether a person could legally take out an insurance policy on his own life with the intent to turn around and sell that policy to a third party who had no “insurable interest” in the policyholder’s life. The person seeking to recover on the life-insurance policy in this case said that such a policy was legal if a third party was not involved in causing the policy to be procured. The insurance company says that with or without such third-party involvement, such a policy was an illegal wagering contract and therefore void, relying on some Georgia case law. But as it turned out, that case law was interpreting and applying old statutes. In 1960, the Georgia General Assembly repealed those statutes and replaced them with new statutory language that codified some, but not all, of the old decisional law, and the new language did not even hint at the unilateral-intent-based limitation that the insurance company advanced. So the Supreme Court answered the certified questions: under Georgia law, a life-insurance policy taken out by the insured on his own life with the intent to sell the policy to a third party with no insurable interest, but without a third party’s involvement when the policy was procured, was not void as an illegal wagering contract. View "Crum v. Jackson National Life Ins. Co." on Justia Law
Adventure Motorsports Reinsurance, Ltd., et al. v. Interstate National Dealer Services, Inc.
The Georgia Supreme Court granted certiorari review to consider whether the Court of Appeals erred in reversing a trial court’s order confirming an arbitration award against Interstate National Dealer Services, Inc. (“INDS”), in favor of Southern Mountain Adventures, LLC (“Dealer”), and Adventure Motorsports Reinsurance Ltd. (“Reinsurer”). The dispute arose from the parties’ contractual relationship pursuant to which Dealer sold motorsports vehicle service contracts, which were underwritten and administered by INDS, to Dealer’s retail customers, and Reinsurer held funds in reserve to pay covered repair claims. The Supreme Court concluded the Court of Appeals erred in reversing the confirmation of the award because the arbitrator manifestly disregarded the law in rendering the award. In Case No. S21G0015, the Supreme Court reversed the Court of Appeals’ decision reversing the order confirming the arbitration award on that basis, and remanded for resolution of INDS’s argument that the arbitrator overstepped his authority in making the award. In Case No. S21G0008, the Supreme Court vacated the Court of Appeals’ decision dismissing as moot Dealer and Reinsurer’s appeal of the trial court’s failure to enforce a delayed-payment penalty provided in the arbitration award, and remanded for reconsideration of that issue. View "Adventure Motorsports Reinsurance, Ltd., et al. v. Interstate National Dealer Services, Inc." on Justia Law
GEICO Indemnity Co. v. Whiteside
The United States Court of Appeals for the Eleventh Circuit certified to three questions of law to the Georgia Supreme Court relating to a lawsuit brought in federal district court by Fife Whiteside, the trustee of the bankruptcy estate of Bonnie Winslett. Whiteside sued GEICO to recover the value of Winslett’s failure-to-settle tort claim against GEICO so that the bankruptcy estate could pay creditor Terry Guthrie, who was injured in an accident caused by Winslett. The certified questions certified asked the Supreme Court to analyze how Georgia law applied to an unusual set of circumstances that implicated both Winslett’s duty to give GEICO notice of suit and GEICO’s duty to settle the claim brought against Winslett. The Supreme Court was unable to give unqualified “yes” or “no” answers to two of the certified questions as they were posed; rather, the Court answered the questions only in the context of the circumstances of this particular case. "Winslett remains liable to Guthrie, even if her bankruptcy trustee succeeds on the failure-to-settle claim against GEICO; therefore, if the bankruptcy estate does not recover enough from GEICO to satisfy Guthrie’s judgment, the estate would not be fully compensated for Winslett’s damages, and GEICO would escape responsibility for breaching its settlement duty to Winslett. Such an outcome would deny Winslett the full measure of compensatory damages allowed under Georgia law." View "GEICO Indemnity Co. v. Whiteside" on Justia Law
Massey et al. v. Duke Builders, Inc.
Property owners and the contractors they hired to build a house had a dispute. The Georgia Supreme Court granted the owners' request for review to consider: (1) whether anticipated profits could be included in a materialmen’s lien; and (2) if so, whether the improper inclusion of such profits rendered the entire lien void. Because the Court of Appeals correctly held that anticipated profits could not be included in a lien and that their inclusion does not invalidate the entire lien, the Supreme Court affirmed. View "Massey et al. v. Duke Builders, Inc." on Justia Law
Innovative Images, LLC v. Summerville et al.
Innovative Images, LLC sued its former attorney James Summerville, Summerville Moore, P.C., and The Summerville Firm, LLC (collectively, the “Summerville Defendants”) for legal malpractice. In response, the Summerville Defendants moved to dismiss the suit and to compel arbitration in accordance with the parties’ engagement agreement, which included a clause mandating arbitration for any dispute arising under the agreement. The trial court denied the motion, ruling that the arbitration clause was “unconscionable” and thus unenforceable because it had been entered into in violation of Rule 1.4 (b) of the Georgia Rules of Professional Conduct (“GRPC”) for attorneys found in Georgia Bar Rule 4-102 (d). The Court of Appeals reversed, holding that the arbitration clause was not void as against public policy or unconscionable. The Georgia Supreme Court concluded after review that regardless of whether the Summerville Defendants violated GRPC Rule 1.4 (b) by entering into the mandatory arbitration clause in the engagement agreement without first apprising Innovative of the advantages and disadvantages of arbitration, the clause was not void as against public policy because Innovative did not argue, and no court has held, that such an arbitration clause could never lawfully be included in an attorney-client contract. For similar reasons, the Supreme Court held the arbitration clause was not substantively unconscionable, and on the limited record before it, Innovative did not show the clause was procedurally unconscionable. Accordingly, the Court affirmed the appellate court's judgment. View "Innovative Images, LLC v. Summerville et al." on Justia Law
San Miguel Produce, Inc. v. L.G. Herndon, Jr. Farms, Inc.
The United States District Court for the Southern District of Georgia certified three questions to the Georgia Supreme Court regarding the scope of the Georgia Dealers in Agricultural Products Act, Ga. L. 1956, p. 617 (codified as amended at OCGA sections 2-9-1 to 2-9-16) (“the Act”). At issue was the effect of the Act’s provisions upon contracts entered into by an agricultural products dealer that failed to obtain a license from the Georgia Commissioner of Agriculture: in this case, a contract entered into between San Miguel Produce, Inc. (“San Miguel”), a California corporation, and L. G. Herndon Jr. Farms, Inc. (“Herndon Farms”), a Georgia corporation. The Supreme Court concluded: (1) an entity as described by the district court did qualify as a dealer in agricultural products under the Act and was not exempt under OCGA 2-9-15 (a) (1), with the limited exception of specific transactions “in the sale of agricultural products grown by [itself];” (2) the Act’s licensing requirements were part of a comprehensive regulatory scheme in the public interest and not merely a revenue measure; and (3) if a dealer has failed to obtain a license as required by OCGA 2-9-2, it may not recover under a contract to the extent that the contract relates to business coming within the terms of the Act. View "San Miguel Produce, Inc. v. L.G. Herndon, Jr. Farms, Inc." on Justia Law
SRM Group, Inc. v. Travelers Property Cas. Co. of America
Travelers Property Casualty Company of America (“Travelers”) filed suit against SRM Group, Inc. (“SRM”), seeking to recover unpaid premiums due under a workers’ compensation insurance policy. In response, SRM asserted counterclaims against Travelers for breach of contract, breach of duty of good faith and fair dealing, and attorney fees based on Travelers’ audit of SRM’s employee risk classifications and subsequent refusal to reclassify those employees, which resulted in a substantial retroactive increase in the premium. A jury awarded Travelers damages based on SRM's failure to pay some of the alleged increased premium due under the policy. However, the jury found that Travelers had also breached the contract and acted in bad faith in conducting the audit and failing to reclassify certain SRM employees. The issue this case presented for the Georgia Supreme Court's review centered on whether a counterclaimant asserting an independent compulsory counterclaim could seek attorney fees and litigation expenses under Georgia case law. The Supreme Court overruled Byers v. McGuire Properties, Inc, 679 SE2d 1 (2009), and Sponsler v. Sponsler, 699 SE2d 22 (2010). "Thus, a plaintiff-in-counterclaim asserting an independent claim may seek, along with that claim, attorney fees and litigation expenses under OCGA 13-6-11, regardless of whether the independent claim is permissive or compulsory." In this case, the Court reversed that part of the Court of Appeals' opinion that followed Byers. View "SRM Group, Inc. v. Travelers Property Cas. Co. of America" on Justia Law