ESTATE OF CALLAWAY et al.
GARNER et al
Certiorari to the Court of Appeals of Georgia -- 327 Ga.App. 67.
Bondurant, Mixson & Elmore, Emmet J. Bondurant II, Alison B. Prout, Michael B. Terry; Hatcher Stubbs Land Hollis Rothschild, Gregory S. Ellington, for appellants.
Waldrep Mullin & Callahan, Joseph L. Waldrep, Clarence M. Mullin, for appellees.
We granted certiorari to determine whether OCGA § 13-6-13 authorizes the award of prejudgment interest on a judgment granting relief only in the form of specific performance. For the reasons set forth below, we answer this question in the negative. We therefore reverse the judgment below to the extent it awarded prejudgment interest under OCGA § 13-6-13, but we also remand for a determination as to whether prejudgment interest may nonetheless be awarded in this case under OCGA § 7-4-15.
Appellees Larry Garner, Sr., and Larry Garner, Jr., were minority shareholders in the Callaway Blue Springs Water Company (CBSW), a closely held corporation formed in 2001 by the Garners and majority shareholder Cason Callaway, Jr. In 2007, the Garners sued Callaway and his son and attorney-in-fact, Kenneth Callaway, for specific performance of an oral stock purchase agreement. The Garners alleged that the Callaways had reneged on an oral contract under which Cason Callaway, Jr., had agreed to purchase the Garners' 7,500 shares of CBSW stock. Following a bench trial, the trial court entered a detailed final order directing Callaway's estate to perform under the agreement by purchasing the stock at the agreed price of $160 per share, for a total purchase price of $1.2 million. The trial court also awarded prejudgment interest pursuant to OCGA § 13-6-13 on the $1.2 million purchase price, running from the date of breach through the date of judgment, totaling $462,000. On appeal, the Court of Appeals affirmed both the grant of specific performance and the award of prejudgment interest. Callaway v. Garner, 327 Ga.App. 67 (755 S.E.2d 526) (2014).
1. The sole question before this Court is whether OCGA § 13-6-13 authorizes the award of prejudgment interest on an award of specific [297 Ga. 53] performance. Situated within the chapter of the Georgia Code addressing contract damages, the statute provides:
In all cases where an amount ascertained would be the damages at the time of the
breach, it may be increased by the addition of legal interest from that time until the recovery.
OCGA § 13-6-13. The statute thus permits " the damages" sustained as the result of a breach of contract to be " increased by the addition of legal interest."
Specific performance is not a form of damages. See generally PMS Constr. Co. v. DeKalb County, 243 Ga. 870 (2) (257 S.E.2d 285) (1979) (enumerating specific performance and damages as distinct remedies for breach of contract). To the contrary, specific performance is an equitable remedy that generally is appropriate only where an award of damages would be insufficient to compensate the injured party for the other's breach. OCGA § 23-2-130 (specific performance generally proper where " the damages recoverable at law would not be an adequate compensation for nonperformance" ); see also OCGA § 23-1-4 (equitable relief not available " where an adequate and complete remedy is provided by law" ). One who is injured by another's breach is in fact required to elect between these two distinct remedies. Clayton v. Deverell, 257 Ga. 653 (3) (362 S.E.2d 364) (1987).
Indeed, an award of contract damages in this case would have looked very different than the award of specific performance. As applied to the breach of a stock purchase agreement, " the proper measure of damages ... is the difference between the contract price and the market value of the stock at the time of the breach." Brown v. Reeves, 164 Ga.App. 89, 91 (296 S.E.2d 393) (1982) (Sognier, J., concurring specially); see also generally OCGA § 13-6-1 (contract damages are intended to " compensat[e] for the injury sustained as a result of the breach of a contract" ). Thus, the measure of contract damages here would have been the difference between the value of the CBSW stock on the date the Callaways should have consummated the purchase and the $160 per share contract price. ...