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Legacy Acad., Inc. v. JLK, Inc.

Court of Appeals of Georgia

November 20, 2014

LEGACY ACADEMY, INC.
v.
JLK, INC

Reconsideration denied December 15, 2014.

Contract. Gwinnett Superior Court. Before Judge W. Davis.

Gregory, Doyle, Calhoun & Rogers, Charles L. Bachman, Jr., Stuart L. Sims, for appellant.

Ichter Thomas, Cary Ichter, W. Daniel Davis, for appellee.

RAY, Judge. Andrews, P. J., and McFadden, J., concur.

OPINION

Page 473

Ray, Judge.

Legacy Academy, a franchisor of childcare centers, sued one of its franchisees, JLK, Inc., alleging breach of contract. The trial court granted summary judgment to Legacy,[1] reserving for trial its decision on the amount of damages due, if any. After a bench trial, the lower court entered a final judgment in favor of Legacy for $9,729 in royalty fees for the months of November and December 2010, in addition to pre- and post-judgment interest and attorney fees. Legacy

Page 474

appeals from the final judgment, arguing that the amount awarded is insufficient and that the trial court erred in finding that Legacy could not recover damages after December 2010, or any advertising fees either before or after that date. Legacy also claims the trial court erred in determining that it failed to provide sufficient proof quantifying its damages and in finding that OCGA § 51-12-13 does not apply as a basis to discount future royalty fees. We reverse the trial court's findings as to advertising fees. Further, while we find that lost future royalties may properly be an item of damages, we affirm the court's determination as to the insufficiency of proof of future royalty fee damages. We remand the case for further proceedings not inconsistent with this opinion.

[W]hile we apply a de novo standard of review to any questions of law decided by the trial court, factual findings made after a bench trial shall not be set aside unless clearly [330 Ga.App. 398] erroneous, and due regard shall be given to the opportunity of the trial court to judge the credibility of witnesses. Indeed, because the clearly-erroneous test in effect employs the same standard as the any evidence rule, appellate courts will not disturb fact findings of a trial court if there is any evidence to sustain them.

(Punctuation and footnotes omitted.) God's Hope Builders v. Mount Zion Baptist Church of Oxford, Ga., 321 Ga.App. 435, 439 (741 S.E.2d 185) (2013). Accord Alday v. Decatur Consolidated Water Svcs., 289 Ga.App. 902, 903 (1) (658 S.E.2d 476) (2008) (" Regardless of whether evidence supports an opposite finding, we construe the evidence in favor of the trial court's finding and affirm if there is any evidence to support it" ) (footnote omitted).

On July 22, 2002, JLK and Legacy entered into a franchise agreement that Legacy drafted. In pertinent part, the contract provided that JLK pay Legacy five percent of its gross monthly revenue as royalty fees and, under certain circumstances, one percent of its gross monthly revenue as advertising fees. The franchise agreement was to last for 20 years. Approximately 8 ½ years into the term, on December 13, 2010, JLK sent a letter to Legacy stating that JLK intended to " terminate all of their relationship with Legacy effective January 1, 2011[,]" and would remove all indicia of Legacy affiliation by that date. After the date of the letter, Legacy never communicated with, sent correspondence to, or otherwise provided assistance to JLK. JLK continued to use Legacy's name and trademarks until December 31, 2010, and after that date, continued its daycare operations at the same location under the name Old Peachtree Academy. JLK last paid its royalty and advertising fees due under the contract in October 2010, approximately two months prior to sending the letter. Legacy sued in December 2010, seeking accrued royalty and advertising fees through that time as well as future, unaccrued royalty and advertising fees through the contract's full term, July 2022. The trial court awarded only royalty fees for November and December 2010, the time period when JLK still used Legacy's name and marks; it awarded no royalties pertaining to what would have been the remainder of the contract term. It also awarded no advertising fees.

1. Legacy first argues that the trial court erred in concluding that it could not recover future royalty fees. The trial court determined that the contract " did not vest the right of unilateral termination in JLK[,]" but that Legacy could not recover future royalty fees between January 2011 and July 2022 because it " admitted the termination of the contract upon filing of the complaint on December 29, 2010." The [330 Ga.App. 399] trial court reasoned that because the royalty fee was defined by the contract as consideration for JLK's use of Legacy's name and trademarks, and that there was no requirement in the contract that JLK actually exercise its ...


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