Callaway v. Garner
327 Ga. App. 67
| Ga. Ct. App. | 2014Background
- Bench trial; Callaway Estate sued Garners for specific performance of a stock sale for $1.2 million, prejudgment interest, and attorney fees; 2001 and 2004 Shareholders’ Agreements restricted transfers and granted option rights; January 31, 2007 handshake formed an unconditional contract to buy all remaining Garners’ stock for $1.2 million; February 1, 2007 letter framed terms but without conditions precedent language; Ken Callaway pursued alternative family acquisition structures; March 28, 2007 cancellation due to a restatement error was asserted; trial court ordered specific performance and prejudgment interest but denied or reduced fees; Callaway Estate appealed.
- Garners testified the January 31, 2007 handshake was unconditional and real estate discussions were timing accommodations, not conditions; Ken Callaway sought alternatives within and outside the 2004 Agreement; Callaway family did not object to the transfer as impermissible and instead pursued a separate deal; evidence supported waiver of 2004 Agreement transfer provisions; the stock sale proceeded as an oral contract.
- The trial court found a binding, unconditional contract at January 31, 2007 and that real estate discussions were timing, not a condition precedent; the transfer provisions were waived by conduct; prejudgment interest was authorized under OCGA 13-6-13; attorney fees under OCGA 13-6-11 were improper because the bad-faith conduct lay with Callaway family, not Callaway.
- The Callaway Estate argues there was a condition precedent (sale of real estate) and lack of meeting of minds; the court rejected this, finding no conditionality and that real estate timing did not bar enforcement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether specific performance was proper despite a claimed condition precedent. | Estate: real estate sale was a condition precedent. | Garners: no condition precedent; handshake binding regardless of real estate. | Yes; contract deemed unconditional; real estate timing not a condition precedent. |
| Whether the 2004 Shareholders’ Agreement imposed enforceable transfer restrictions and notices. | Estate: transfer was impermissible and required notice/exercise of option rights. | Garners/Waiver: shareholders had actual notice and waived rights by pursuing alternative deal. | Waiver of transfer provisions supported specific performance. |
| Whether prejudgment interest was available in a specific performance action. | Estate argues no prejudgment interest in specific performance. | Horne v. Drachman permits prejudgment interest claim. | Prejudgment interest authorized. |
| Whether attorney fees under OCGA 13-6-11 were properly awarded for bad faith. | Garners awarded fees due to bad faith by Callaway family. | Bad faith conduct by other family members; defendant not liable. | Reversed; bad-faith conduct by nonparty/other members cannot support fees against estate. |
Key Cases Cited
- Eaton v. Yarborough, 19 Ga. 82 (1855) (distinguishes condition precedent from timing of payment)
- Leming v. Morgan, 228 Ga. App. 763 (1997) (indefiniteness of a condition precedent can render contract unenforceable)
- Dale’s Shoe Store v. Dale, 104 Ga. App. 371 (1961) (conditions precedent and contract enforceability under uncertainty)
- L. Gregg Ivey, Inc. v. Land, 148 Ga. App. 667 (1979) (distinction between condition precedent and time of payment)
- Rome v. Polyidus Partners LP, 322 Ga. App. 175 (2013) (conflicting evidence on existence/terms of oral contract; jury’s role)