Primary Investments, LLC v. Wee Tender Care III, Inc.
323 Ga. App. 196
| Ga. Ct. App. | 2013Background
- In 2008, the APA sold Primary, LLC’s assets to N & N Holdings with a three-year noncompetition clause.
- Marguerite O’Brien signed the APA for Primary, LLC; Milz and Fleishman did not sign; the O’Briens were not named parties.
- After closing, Primary Prep Academy continued under Wee Tender Care; in 2010 the O’Briens formed East Cobb and opened a new facility within ten miles.
- Plaintiffs sued for breach of contract and equitable relief; Defendants counterclaimed for rescission.
- The trial court granted partial summary judgment against Defendants on noncompetition liability but granted rescission in Defendants’ favor; on appeal, liability is reversed while rescission is affirmed; the court holds the noncompete could not bind the O’Briens individually and that the letters to the regulator were not incorporated into the APA.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the noncompetition clause bind the O’Briens individually? | N & N Holdings argues ‘its agents’ includes the O’Briens. | O’Briens argue they are not parties to the APA and not bound. | No; O’Briens not bound; only Primary, LLC bound. |
| Do the letters to the regulator alter the APA to bind the O’Briens? | Letters were part of the process to transfer license under the APA. | Letters were not incorporated into the APA and not intended to make O’Briens parties. | Letters did not alter the APA; no incorporation. |
| Was there fraud or mutual mistake to support rescission of the APA? | Change to ten-mile radius misled plaintiffs; created flaw in contract. | O’Brien had opportunity to read; unilateral mistake. | No mutual mistake; rescission not supported on fraud/mistake basis. |
Key Cases Cited
- Schwartz v. Harris Waste Mgmt. Group, 237 Ga. App. 656 (Ga. Ct. App. 1999) (contract construction; enforce clear terms when unambiguous)
- Schafer Props. v. Tara State Bank, 220 Ga. App. 378 (Ga. Ct. App. 1996) (look to entire instrument and surrounding circumstances; favored interpretation)
- Milk v. Total Pay & HR Solutions, Inc., 280 Ga. App. 449 (Ga. Ct. App. 2006) (LLC member not personally liable for LLC contract unless personal participation)
- Ocga. v. Sun Nurseries, Inc. v. Lake Erma, LLC, 316 Ga. App. 832 (Ga. Ct. App. 2012) (limits on piercing corporate veil; separate LLC identity preserved)
- Megel v. Donaldson, 288 Ga. App. 510 (Ga. Ct. App. 2007) (reading contracts; unilateral vs mutual mistake)
- Brewer v. Royal Ins. Co. of America, 283 Ga. App. 312 (Ga. Ct. App. 2007) (duty to understand contract contents before signing)
- Yukon Partners, Inc. v. The Lodge Keeper Group, Inc., 258 Ga. App. 1 (Ga. Ct. App. 2002) (corporate identity preserved; separate entities treated separately)
- Magnetic Resonance Plus, Inc. v. Imaging Systems Intl., 273 Ga. 525 (Ga. 2001) (contract interpretation; laws in effect at contract execution form part of contract)
- Ready Trucking, Inc. v. BP Exploration & Oil Co., 248 Ga. App. 701 (Ga. Ct. App. 2001) (integration of contract terms with contract law principles)
- Fox v. Washburn, 264 Ga. 617 (Ga. 1974) (cases involving misalignment between deeds/agreements and subsequent terms)
- Hall v. Hall, 303 Ga. App. 434 (Ga. Ct. App. 2010) (mutual mistake distinctions in contract context)