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EZ Green Assocs., LLC v. Georgia-Pacific Corp.

Court of Appeals of Georgia

March 16, 2015

EZ GREEN ASSOCIATES, LLC
v.
GEORGIA-PACIFIC CORPORATION et al

Cert. applied for.

Contract. Fulton Superior Court. Before Judge Goger.

Stuart & Johnston, Andrew H. Stuart, Matthew A. Hood, for appellant.

King & Spalding, Elizabeth V. Tanis, Merritt E. McAlister, Xavier O. Carter, Goodwin Proctor, Joseph P. Rockers, for appellees.

DILLARD, Judge. Doyle, P. J., and Miller, J., concur.

OPINION

Page 274

Dillard, Judge.

This litigation arises from a contractual dispute between the parties regarding a proprietary system for applying grass seed.[1] EZ Green Associates, LLC (" EZ Green" ) brought this action for breach of contract and a covenant of fair dealing against Georgia-Pacific Corporation, its assignee, GP Cellulose, LLC (f/k/a Koch Cellulose, LLC), and BlueYellow, LLC, a GP Cellulose subsidiary (collectively " Georgia-Pacific" ). In a prior appeal, we reversed the trial court's grant of summary judgment in favor of Georgia-Pacific, finding that conflicts in the evidence required EZ Green's claims to be resolved by a jury.[2] Upon remand to the trial court, EZ Green proposed three methods for calculating its damages, and Georgia-Pacific filed a pretrial motion to [331 Ga.App. 184] exclude those methods. The trial court granted the motion as to the first two methods and granted it, in part, as to the third method. In this interlocutory appeal, EZ Green argues that the trial court erred in finding that it failed to present evidence that its track record of sales had been tainted by Georgia-Pacific's misconduct; by excluding the " commercially reasonable" benchmarks set forth in the contract for damages purposes; and by excluding Georgia-Pacific's own projections of expected sales. EZ Green also argues that the trial court's order contravenes public policy.[3] For the reasons set forth infra, we affirm.

The record reveals that EZ Green and Georgia-Pacific originally entered into an agreement in 2003 regarding the sale of a product developed by EZ Green, which the parties revised on April 30, 2004.[4] The contract provided that, for a period of five years, EZ Green would license its product to Georgia-Pacific, and in exchange, Georgia-Pacific agreed to make " commercially reasonable efforts" to market and sell the product. To that end, Section 7.3 (a) of the contract set forth specific benchmarks for the volume of sales that the parties expected to achieve each year. And if Georgia-Pacific achieved these goals, it would be deemed to have fulfilled its obligations under the agreement.[5]

Page 275

In 2006, a large national retailer agreed to test the product in its stores, but there was a substantial delay in placing the product with the retailer.[6] In 2005, before the product was sold in these stores, Georgia-Pacific compiled a PowerPoint presentation, detailing its sales projections with the large retailer, which were based on the amount of sales that EZ Green's product had previously generated in a smaller market. Eventually, the product was sold by the large retailer, but in the summer of 2007, executives from that retailer advised Georgia-Pacific that sales of the product were well below [331 Ga.App. 185] their expectations, and accordingly, EZ Green would have to requalify to have its product sold in their stores.

Subsequently, EZ Green sued Georgia-Pacific for breach of contract and the covenant of fair dealing, alleging that Georgia-Pacific breached the agreement by ceasing production of the product and by failing to market it.[7] Discovery ensued, and prior to trial, EZ Green supplemented its response to Georgia-Pacific's first set of interrogatories. In doing so, EZ Green proposed three methods for calculating damages in the event that the jury ruled in its favor. Specifically, EZ Green proposed to base its calculations on (1) the difference between the actual track record of performance and the anticipated amount of sales as measured by the benchmarks set forth in the contract; (2) the difference between the actual track record of sales and Georgia-Pacific's projections of expected sales as set forth in Georgia-Pacific's PowerPoint presentation; and (3) EZ Green's " tainted" track record of sales with the major retailer over an 18-month period.

In response, Georgia-Pacific filed a motion to exclude EZ Green's proposed calculation methods, arguing that they were not based on any actual track record of sales, as required by Georgia law. The trial court granted the motion as to the first two methods, finding that they were too speculative and unreliable, and that they failed to account for market realities. Further, the court granted the motion, in part, as to the third method, finding that EZ Green could use the method, but that it must reduce the amount of its lost royalties by any expenses that it would have incurred had the lost profits been realized.

EZ Green then filed a request for a certificate of immediate review, which the trial court granted. Thereafter, EZ Green filed in this Court an application for an interlocutory ...


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