331 Ga. App. 183
Ga. Ct. App.2015Background
- EZ Green licensed a proprietary grass-seed application product to Georgia‑Pacific under a 2004 five‑year agreement; Georgia‑Pacific promised to use “commercially reasonable efforts” to market and sell the product and the contract set annual sales benchmarks (Section 7.3(a)).
- A national retailer agreed to test the product in 2006; placement was delayed and eventual sales to that retailer were far below expectations, requiring requalification in 2007.
- EZ Green sued Georgia‑Pacific for breach of contract and covenant of good faith and fair dealing, alleging Georgia‑Pacific ceased production and failed to market the product.
- On remand from a prior appeal reversing summary judgment, EZ Green proposed three lost‑profits calculation methods: (1) gap between actual sales and contract benchmarks; (2) gap between actual sales and Georgia‑Pacific’s 2005 sales projections (PowerPoint); and (3) lost royalties based on a “tainted” 18‑month sales track record with the major retailer.
- The trial court excluded methods (1) and (2) as speculative and unreliable under Georgia law and partially excluded (3), allowing it only if expenses that would have been incurred are deducted. EZ Green obtained interlocutory review; this appeal concerns the exclusion rulings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether EZ Green presented evidence its sales track record was "tainted" by Georgia‑Pacific so as to justify using projections | EZ Green: Georgia‑Pacific’s misconduct so thoroughly disrupted sales that the track record is unreliable, permitting projected profits | Georgia‑Pacific: No record evidence shows the track record was tainted; projections would be speculative | Court: No evidence in record cited by EZ Green; burden is on appellant to show error—claim fails |
| Admissibility of contract "commercially reasonable" benchmarks and Georgia‑Pacific’s internal sales projections to calculate lost profits | EZ Green: Benchmarks and projections are reasonable measures of anticipated profits caused by breach | Georgia‑Pacific: Benchmarks and pre‑sale projections are anticipated profits not grounded in an actual track record and thus speculative | Court: Excluded both methods—anticipated profits pre‑placement are too speculative absent an established track record of profitability |
| Use of EZ Green’s 18‑month sales with the major retailer ("tainted" record) to compute damages | EZ Green: May rely on the retailer sales record (adjusted or via projections) because defendant’s conduct prevented a precise calculation | Georgia‑Pacific: Any recovery must be tied to actual, provable profits reduced by expenses | Court: Allowed use of the actual retailer sales track record only if lost royalties are reduced by expenses that would have been incurred (i.e., must show gross profits minus expenses) |
| Whether exclusion contravenes public policy and lets large companies breach with impunity | EZ Green: Applying the rule bars recovery when defendant’s misconduct prevents exact calculation; public policy disfavors that outcome | Georgia‑Pacific: Must follow settled precedent requiring reasonable certainty; policy supports guarding against speculative awards | Court: Declined to overturn precedent; reasonable‑certainty rule stands and public‑policy argument is unavailing |
Key Cases Cited
- EZ Green Assocs., LLC v. Georgia‑Pacific Corp., 318 Ga. App. 655 (reversing summary judgment and establishing factual posture)
- Johnson County Sch. Dist. v. Greater Savannah Lawn Care, 278 Ga. App. 110 (lost profits from commercial ventures are recoverable only when calculation is reasonably ascertainable)
- Shaw v. Ruiz, 207 Ga. App. 299 (proof of a proven track record of profitability required to recover lost profits)
- Triad Drywall, LLC v. Building Materials Wholesale, Inc., 300 Ga. App. 745 (lost profits must be shown with reasonable certainty)
- McMillian v. McMillian, 310 Ga. App. 735 (difficulty in calculation due to defendant’s conduct does not eliminate requirement of reasonable certainty)
- Lejeune v. McLaughlin, 296 Ga. 281 (discussion of stare decisis and adherence to precedent)