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Sovereign Healthcare, LLC v. Mariner Health Care Mgmt. Co.

Court of Appeals of Georgia

November 19, 2014

SOVEREIGN HEALTHCARE, LLC et al.
v.
MARINER HEALTH CARE MANAGEMENT COMPANY

Page 173

Contract. Cobb Superior Court. Before Judge Robinson.

Judgment affirmed in part and reversed in part.

Bondurant, Mixson & Elmore, H. Lamar Mixson, Christopher T. Giovinazzo, Gregory, Doyle, Calhoun & Rogers, Charles M. Dalziel, Jr., for appellants.

King & Spalding, Meghan Magruder, Merritt E. McAlister, Zachary A. McEntyre, Dwight J. Davis, Dupree & Kimbrough, Hylton B. Dupree, for appellee.

BRANCH, Judge. Miller and Dillard, JJ., concur.

OPINION

Page 174

Branch, Judge.

This case is before us for the second time. The first time, we ruled that three of the four appellant healthcare companies were liable to Mariner Health Care Management Company (" Mariner" ) for prematurely [329 Ga.App. 783] terminating an administrative services contract, and that the contract's liquidated damages provision was enforceable. Mariner Health Care Management Co. v. Sovereign Healthcare, LLC, 306 Ga.App. 873 (703 S.E.2d 687) (2010) (" Mariner I " ). This time, the appellants challenge the trial court's judgment that all signatories to the contract must pay liquidated damages, instead of just the one signatory specifically mentioned in the liquidated damages clause. They also protest the trial court's award of prejudgment interest and its ruling that Mariner is entitled to attorney fees. For reasons that follow, we reverse in part the court's liquidated damages judgment, but affirm the remainder.

Although many of the relevant facts were set out in Mariner I, a fuller account is needed here. In October 2003, Mariner entered into an administrative services agreement (" ASA" ) with three related entities -- Sovereign Healthcare, LLC (" Sovereign" ), Sovereign Healthcare Holdings, LLC (" Holdings" ), and Southern Healthcare Management, LLC (" Southern" ). Holdings was the sole member of Sovereign, which in turn was the sole member of 19 limited liability companies that operated nursing homes in Florida. Southern provided management services to those 19 companies.

Under the ASA, Mariner agreed to provide Sovereign with a wide variety of administrative services, including accounting, accounts receivable, information technology, payroll, and benefits. Mariner also agreed to provide Holdings and Southern with more limited administrative services. The ASA provided that Sovereign would pay Mariner a monthly fee for the services rendered to all three entities, and Holdings guaranteed payment of that fee. The term of the ASA was five years, and it included the following liquidated damages provision:

In the event Sovereign terminates this Agreement prior to the expiration of the [five-year] Term for any reason whatsoever, ... Sovereign shall pay [Mariner], in a lump sum, as liquidated damages, an early termination fee equivalent to fifty percent (50%) of the total Fee that would have been paid to [Mariner] through the expiration of the [five-year] Term ("Note Repayment Early Termination Fee" ).

(Emphasis in original.) The ASA also contained an attorney fees provision:

In the event any proceeding or suit is brought to enforce this Agreement, the prevailing party shall be entitled to all reasonable costs and expenses (including reasonable attorneys' [329 Ga.App. 784] fees) actually incurred by such party in connection with any action, suit ...

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