Cost Management Group, Inc. v. Bommer
327 Ga. App. 164
| Ga. Ct. App. | 2014Background
- In 2006 Telesis (Bommer) merged with Partnertel and Telcentrex (Gareleck and Reynolds) to form Cost Management Group (CMG); a Stockholders’ Agreement and a Securities Exchange Agreement (SEA) accompanied the merger. Bommer retained a separate company, Enhanced Billing Services (EBS), which handled hospital billing and was not part of the merger.
- A Special Purchase Notice (SPN) buy-sell offer paid Bommer $1,728,000 on closing and an additional $192,000 conditioned on his entering and not violating two-year noncompetition and nonsolicitation agreements.
- Bommer resigned, tendered shares (seeking the $1,728,000), and later sued Gareleck and Reynolds in federal court to enforce the SPN when payment was withheld. The district court awarded the $1,728,000 but denied the $192,000 because it found Bommer never agreed to the SPN’s ‘‘additional terms.’’ The Eleventh Circuit affirmed, calling the restrictive-covenant terms ‘‘executory in part’’ but noting the parties had agreed essential terms.
- Separately CMG sued Bommer in Fulton County alleging claims tied to his EBS activities (breach of fiduciary duty, usurpation of corporate opportunity, conversion, fraud, breach of the SEA). CMG’s state complaint did not rely on the SPN.
- The superior court granted Bommer partial summary judgment, holding CMG’s EBS-related claims were collaterally estopped by the federal action and alternatively were compulsory counterclaims in the federal suit. CMG appealed.
Issues
| Issue | Plaintiff's Argument (Bommer) | Defendant's Argument (CMG) | Held |
|---|---|---|---|
| Whether CMG’s EBS-related claims are barred by collateral estoppel because the federal court decided related noncompetition issues | Federal decision determined Bommer did not recover the $192,000 because he never complied with the SPN restrictive covenants; therefore CMG is estopped from relitigating related claims | Federal court only decided that the SPN’s additional restrictive-covenant terms remained executory/unagreed; it did not decide whether Bommer actually breached any noncompetition covenant or duties tied to EBS | Reversed: collateral estoppel does not bar CMG—federal courts did not actually decide the EBS/noncompetition breach issues |
| Whether CMG’s EBS-related claims were compulsory counterclaims in the federal action under Fed. R. Civ. P. 13(a) | CMG should have asserted EBS/noncompetition claims in federal litigation and is barred now | CMG was not a ‘‘pleader’’ or ‘‘opposing party’’ in the federal suit (which named Gareleck and Reynolds individually), so it was not required to plead those counterclaims there | Reversed: CMG’s claims were not compulsory counterclaims because CMG was not a party in the federal action |
| Whether federal procedural law or state law governs the compulsory-counterclaim analysis | Bommer implicitly argues state law; outcome should bar CMG | Federal procedural law (Rule 13) governs whether a claim is compulsory in a federal action; state court’s characterization of substantive vs procedural is binding on federal courts | Court applied federal Rule 13 analysis and concluded CMG was not bound |
| Whether the federal court’s comments (e.g., ‘‘strongly doubt that Bommer was free to compete’’) amount to a decision on the merits | Such statements show the federal court ruled against Bommer on noncompetition | Such remarks were non-decisional dicta and did not actually adjudicate breach of noncompetition or SEA/common-law duties | Court held the Eleventh Circuit’s remarks did not decide the substantive EBS breach issues; dicta insufficient for collateral estoppel |
Key Cases Cited
- Coffee Iron Works v. QORE, Inc., 322 Ga. App. 137 (discusses summary judgment standard and appellate review)
- Karan, Inc. v. Auto-Owners Ins. Co., 280 Ga. 545 (explains collateral estoppel requires issues actually litigated and identity of parties or privies)
- QoS Networks Ltd. v. Warburg, Pincus & Co., 294 Ga. App. 528 (explains that a court deciding multiple grounds may be authoritative as to each point actually decided)
- Hinely v. Alliance Metals, Inc. of Atlanta, 285 Ga. App. 230 (federal court’s implicit remarks do not necessarily collaterally estop state claims not actually decided)
- Ga. Neurology & Rehabilitation v. Hiller, 310 Ga. App. 202 (party must have had full opportunity to litigate issue for collateral estoppel to apply)
- Esfeld v. Costa Crociere, S.P.A., 289 F.3d 1300 (federal courts in diversity apply state substantive and federal procedural law)
- Shaps v. Provident Life & Accident Ins. Co., 244 F.3d 876 (state court’s substantive/procedural determinations bind federal courts for choice-of-law)
- Harper v. Harper, 267 Ga. App. 553 (OCGA § 9-11-13(a) treated as procedural for choice-of-law)
- Martin v. Wilks, 490 U.S. 755 (a plaintiff cannot force nonparties to intervene to be bound; joinder required)
- Montgomery Ward Dev. Corp. v. Juster, 932 F.2d 1378 (a successor-in-interest not joined in prior action cannot be treated as a pleader for compulsory-counterclaim bar)