346 Ga. App. 598
Ga. Ct. App.2018Background
- Four registered representatives (Bhandari, Austin, Schiffer, Wynne) resigned from HA&W Capital and immediately joined Morgan Stanley without providing the 60/90 days prior written notice required by their employment agreements.
- HA&W had been a signatory to the Protocol for Broker Recruiting and sent a withdrawal letter purportedly effective April 5, 2014; HA&W later sought to make that withdrawal retroactive.
- The departing RRs took client information permitted by the Protocol and HA&W obtained an ex parte TRO preventing contact with HA&W clients; the TRO was dissolved five days later.
- HA&W sued the former employees for breach of the notice provisions in their employment agreements; the former employees counterclaimed that HA&W breached the Protocol and asserted other claims (wrongful injunction, deferred compensation, conversion, attorney fees).
- The trial court granted and denied various cross-motions for summary judgment, concluding the Protocol precluded enforcement of the notice provisions; HA&W appealed.
Issues
| Issue | Plaintiff's Argument (HA&W) | Defendant's Argument (Former Employees) | Held |
|---|---|---|---|
| Whether the Protocol invalidates employment-contract notice provisions | The Protocol does not negate HA&W's contractual right to 60/90 days prior written notice; HA&W may enforce those provisions | The Protocol precludes liability for actions arising from a move between Protocol firms, including notice requirements | The Protocol's unambiguous language does not categorically invalidate notice provisions; trial court erred in holding otherwise (reversed as to HA&W breach claim) |
| Whether HA&W was entitled to summary judgment on its breach claim | HA&W argued no genuine issue of material fact once Protocol found inapplicable | Former employees argued Protocol barred liability and raised factual defenses | The appellate court vacated the trial court's denial of HA&W's summary judgment motion and remanded for factual development on liability/damages |
| Whether former employees' counterclaim that HA&W breached the Protocol was ripe for summary adjudication | HA&W contended counterclaim fails as Protocol defenses apply | Former employees contended HA&W breached the Protocol (withdrawal timing/TRO) | Court vacated summary rulings on the counterclaim and remanded for factual determination; trial court had not addressed factual disputes |
| Whether former employees can recover attorney fees under OCGA § 13-6-11 and contractual fee clause | HA&W argued fees under OCGA § 13-6-11 are unavailable to defendants-in-counterclaim and contractual-fee recovery is premature if employees haven’t incurred fees | Former employees argued some counterclaims were non-compulsory and sought statutory and contractual fees; said employer was not shown to have assumed fees | OCGA § 13-6-11 fees unavailable for compulsory counterclaims (summary judgment reversed for HA&W on that point). Genuine fact issues exist on contractual-fee entitlement, so denial of summary judgment as to contractual fees affirmed |
Key Cases Cited
- Credit Suisse Securities (USA) LLC v. Tracy, 812 F.3d 249 (2d Cir. 2016) (describing Protocol for Broker Recruiting and its purpose)
- Y. C. Dev. v. Norton, 344 Ga. App. 69 (Ga. Ct. App. 2017) (contract construction is ordinarily a matter of law; unambiguous contracts enforced as written)
- Ayers v. Assn. of County Commrs. of Georgia-Interlocal Risk Mgmt. Agency, 332 Ga. App. 230 (Ga. Ct. App. 2015) (courts may not strain to find ambiguity in clear contract language)
- Capricorn Systems v. Pednekar, 248 Ga. App. 424 (Ga. Ct. App. 2001) (enforceability of employee notice provisions and availability of nominal damages)
- Graybill v. Attaway Constr. & Assoc., 341 Ga. App. 805 (Ga. Ct. App. 2017) (statutory attorney fees under OCGA § 13-6-11 limited to plaintiffs; limits on plaintiff-in-counterclaim recovery)
- Byers v. McGuire Properties, 285 Ga. 530 (Ga. 2009) (plaintiff-in-counterclaim may not recover OCGA § 13-6-11 fees for compulsory counterclaims)