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Spirits, Inc. v. Patel

Court of Appeals of Georgia, First Division

May 14, 2019

PATEL et al.

          BARNES, P. J., MERCIER and BROWN, JJ.

          Mercier, Judge.

         Spirits, Inc. filed an action for breach of contract against Nataraj Enterprises, Inc. and Nataraj's owner, Rashmikant Patel (collectively, Nataraj), alleging Nataraj failed to make payments due on a promissory note. In its counterclaim, Nataraj alleged Spirits breached the parties' agreement and that Spirits was liable for damages and attorney fees. The trial court granted summary judgment to Nataraj on Spirits's claims as to liability and on Nataraj's counterclaim, and left the issue of damages for trial. Spirits appealed the grant of partial summary judgment, and this Court affirmed. Case No. A15A1489 (November 17, 2015) (unpublished). On remand, the trial court conducted a bench trial and entered a final order and judgment awarding Nataraj damages and attorney fees. Spirits filed this appeal from that judgment. Finding no grounds for reversal, we affirm.

         Following a bench trial, appellate courts view the evidence in the light most favorable to the trial court's rulings. See Smi th v. Northside Hosp., 302 Ga. 517, 520 (807 S.E.2d 909) (2017). We review questions of law de novo. Gateway Community Svc. Bd. v. Bonati, 346 Ga.App. 653 (816 S.E.2d 743) (2018). The issue of damages is a matter for the finder of fact, and a reviewing court should not interfere with the damages award unless it is so small or excessive that it justifies an inference of gross mistake or undue bias. See Green v. Proffitt, 248 Ga.App. 477, 478 (1) (545 S.E.2d 623) (2001); see generally Adamson Co. v. Owens-Illinois Dev. Corp., 168 Ga.App. 654, 656-657 (309 S.E.2d 913) (1983) (in a bench trial, the trial court acts as finder of fact to determine amount of damages for breach of contract).

         Construed in favor of the judgment, the evidence shows that Spirits owned property that Nataraj leased and operated as a gas station and convenience store. Spirits offered to sell the property to Nataraj for $435, 000, but Nataraj rejected the offer because Spirits had paid only $308, 000 for the property and the gas pumps needed to be replaced. Nataraj offered to pay the additional $127, 000 if Spirits would install three new functional multi-product gas dispensing ("MPD") pumps on the property. Spirits agreed, and in February 2011 the parties executed a sales agreement. The sales agreement incorporates by reference an attached promissory note for $127, 000, which Patel executed. (Nataraj paid the $308, 000 via a bank loan.)

         In March 2011, Spirits and Patel executed an amendment to the promissory note. The amendment provides that it is part of the promissory note; that Patel promises to pay Spirits $127, 000 in monthly installments; that Spirits promises to install MPD pumps on the property on or before July 1, 2011, and to make all necessary changes to the property to ensure full functionality of the pumps; that if Spirits fails to do so, Patel can have the work completed and deduct the cost from the promissory note; and that all other terms and conditions of the original note shall remain the same.

         Spirits failed to install functional pumps by July 1, 2011, and Nataraj stopped making payments on the promissory note. After taking bids for the work, Nataraj hired Bryco Enterprises to install the pumps at a cost of $128, 023. The installation was completed in August 2012, 13 months later than the agreement provided.

         Spirits filed the underlying complaint against Nataraj, seeking the amounts allegedly due under the original note and seeking a declaration that the amendment was invalid. In its order granting Nataraj's motion for summary judgment as to liability, the trial court found there was no genuine issue of fact regarding the following: the parties intended to be bound by the terms of the amendment to the promissory note; Spirits breached the agreement by failing to install three new functional MPD pumps before July 1, 2011; and, after Spirits's breach, Nataraj was authorized pursuant to the amendment to undertake the task of installing functional MPD pumps and to deduct the costs from the amount of the promissory note.[1] The trial court found that genuine issues of material fact remained as to damages.

         On remand, the trial court conducted a bench trial on the issue of damages. In its final order and judgment, the trial court found that Spirits was responsible for most - but not all - of Bryco's installation charges (specifically, $110, 523 of the $128, 023 costs). In calculating Nataraj's damages, the court deducted from the original amount of the promissory note the payments Nataraj made on the promissory note ($28, 154) and the allowable costs of installation ($110, 523), for a net damage award to Nataraj of $11, 678. In addition, the court found that Nataraj was entitled to recover lost profits for the 13-month period during which the improvements were not completed, in the amount of $28, 383. The court also awarded Nataraj damages for unpaid commissions, [2] attorney fees and costs. The judgment totaled $83, 984.

         1. Spirits contends that the trial court erred in awarding damages that exceed the amount of the promissory note, and in awarding attorney fees. According to Spirits, the amendment to the promissory note limits the damages to "loss of all or a portion of the promissory note amount," and "the worst that could happen was [Spirits's] exposure of losing [the] promissory note." We disagree.

The first rule that courts must apply when construing contracts is to look to the plain meaning of the words of the contract, and it is a cardinal rule of contract construction that a court should, if possible, construe a contract so as not to render any of its provisions meaningless and in a manner that gives effect to all of the contractual terms. Words generally bear their usual and common signification; but technical words, words of art, or words used in a particular trade or business will be construed, generally, to be used in reference to this peculiar meaning.

Rivers v. Revington Glen Investments, 346 Ga.App. 440, 442 (816 S.E.2d 406) (2018) (citation omitted).

         (a) Damages. "Damages are given as compensation for the injury sustained as a result of the breach of a contract." OCGA § 13-6-1. "Damages recoverable for a breach of contract are such as arise naturally and according to the usual course of things from such breach and such as the parties contemplated when the contract was made, as the probable result of its breach." OCGA § 13-6-2. The question of damages is for the finder of fact. OCGA § 13-6-4. See generally Hart v. Walker, 347 Ga.App. 582, 583-584 (1) (820 S.E.2d 206) (2018) (in a bench trial, the trial court acts as the finder of fact).

         The trial court construed the amendment to the promissory note according to the plain meaning of its words, deducting the costs of installing MPD pumps from the amount of the promissory note. Notably, the court found that some of the improvements performed by Bryco were not the obligation of Spirits and so did not order Spirits to reimburse Nataraj for those improvements. Spirits conceded at trial that Nataraj was "probably entitled to $60, 000" (presumably the installation costs per bids Spirits obtained); Spirits also argued that "[t]he worst that could happen" under the terms of the agreement was that ...

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