Jay Cohen, the sole stockholder in the T-Shirtery, Inc., and Steve Radford, the sole stockholder in Hightower Corporation, the holding company of All-Star Imprinting, Inc., entered into negotiations to sell the stock of the T-Shirtery and All-Star to William Goldberg & Company, Inc. (WGC), whose sole stockholder was Bill Goldberg, in exchange for Jay Cohen and Radford receiving, inter alia, 37.5 and 25 percent, respectively, of WGC’s stock, executive positions in WGC, and, in Jay Cohen’s case, certain additional remuneration for the TShirtery’s stock. The deal collapsed, and Jay Cohen filed suit seeking a declaration that the negotiations had failed to produce an enforceable contract, the breach of which would entitle any party to damages. Jay Cohen’s father, Joe Cohen, was allowed to intervene as a plaintiff. 1 Numerous counterclaims were filed by Goldberg, WGC, Radford, Hightower, and All-Star. This opinion consolidates four appeals brought by Jay Cohen (who we will hereinafter refer to as “Cohen”) and Joe Cohen from various rulings entered in the Superior Court of Fulton County.
1. The main issue in the appeals is the propriety of the trial court’s ruling that genuine issues of material fact exist regarding the enforceability of the sale contract negotiated by Cohen and appellees. The pertinent facts as revealed by the record are that the T-Shirtery and All-Star were two t-shirt imprinting businesses experiencing financial difficulties. Goldberg was a business broker providing financial advice to both companies. A proposal was made in late 1985 to combine the T-Shirtery and WGC, with All-Star entering into the negotiations shortly afterwards, so that the basic concept of the proposal was that the two imprinting companies would sell some or all of their stock to WGC in exchange for a percentage of WGC stock, and
The record is clear that when the parties and counsel met in April, the documents prepared by Goldberg/WGC’s attorney, Steve Merlin, set forth terms different from those originally contemplated by the parties, especially regarding the additional remuneration Cohen was to receive for his T-Shirtery stock. By the April 23, 1986 meeting, it was agreed Cohen would receive payment for his stock in the form of deferred compensation, and that meeting concluded with Cohen’s attorney, Bob Hippie, stating he would draft another version of the agreement regarding Cohen’s deferred compensation for the meeting the following day.
The April 24 meeting lies at the core of this dispute. Hippie was not able to attend that meeting in person, and the parties did not review any deferred compensation documents drafted by him. The parties present at the meeting, Cohen, Goldberg (with his attorney, Merlin), and Radford (with his attorney) signed numerous documents including a shareholders’ agreement, a stock exchange agreement, a management agreement, and an employment agreement between Cohen and WGC, which provided that Cohen would forfeit all remaining unpaid deferred compensation if he were fired for cause. It is uncontroverted that Cohen also signed a deferred compensation agreement (“DCA”). The copy of the DCA in the record is a typewritten document with certain handwritten interlineations. The handwritten terms provide for compensation terms less favorable to Cohen. Only Goldberg’s initials appear beside the most significant handwritten changes. It is uncontroverted that Cohen signed the DCA without the handwritten interlineations.
Cohen also signed an escrow and modification agreement at the April 24 meeting. That agreement first witnessed that the parties had executed certain documents, specifically including the DCA. It then provided that the documents would be held in escrow by Merlin’s firm; that the stock exchange agreement would be modified in numerous particulars; and that the parties stated that certain agreements, including the DCA, “shall become effective immediately” with the proviso that all the agreements “shall. . . terminate in the event that all of the conditions of this escrow are not satisfied.” Under the caption “Additional Conditions Precedent to Release of the Escrow” were conditions requiring the delivery of: letters of opinion of counsel in form and substance satisfactory to the parties; lenders’ consents; and deliveries required under Article 6 of the Stock Exchange Agreement such as the delivery of stock certificates, corporate seals, and stock record books, certifications that warranties and representations
Cohen moved for summary judgment on the ground that the evidence of record established as a matter of law that no enforceable contract was executed on April 24. We do not agree, and accordingly we affirm the trial court’s denial of his motion for summary judgment on this issue.
(a) First, we do not agree with Cohen that the evidence conclusively established that there was no meeting of the minds of the parties on the terms of the DCA, a material part of the sale contract, so that under OCGA §§ 13-3-1, 13-3-2 no valid contract was created. Cohen uncontrovertedly signed the typewritten agreement. Although Hippie was not present at the meeting, Cohen conferred with him by telephone during the meeting, and the evidence is clear that Goldberg insisted on maintaining an arm’s length relationship with Cohen during the meeting. Although Cohen deposed that he has difficulty understanding legal documents, he does not contend that he was prevented from reading the DCA or from consulting with Hippie regarding its terms. See generally
Fore v. Parnell-Martin Cos.,
Although parol evidence may be used to show no valid agreement ever went into existence,
Citizens &c. Nat. Bank v. Williams,
(b) Second, a clear question of material fact exists whether Goldberg assented to the terms of the typewritten DCA.
2
The evi
The conflicting evidence raises the possibility that while Cohen, by signing the typewritten agreement, accepted the offer on the terms set forth, Goldberg responded by inserting the material handwritten changes in the terms, thereby constituting a counteroffer. See
State of Ga. v. U. S. Oil Co.,
(c) The parties place great emphasis on the actions of the parties regarding the DCA after the April 24th meeting. Basically, this evidence reflects that while Cohen accepted the unaltered typewritten agreement (which, together with the employment agreement, provided that his deferred compensation, payable in four years with no limitations based on net profits, would be forfeited should he be fired for cause), he rejected the handwritten proposals in the DCA as well as other subsequently proffered terms made by Goldberg (which provided that payment for his deferred compensation would be spread over a minimum of ten years or longer because of net profit requirements), unless the clause authorizing forfeiture of the payments upon his discharge for cause was eliminated. While other aspects of the transaction were modified by written agreement of the parties after April 24, the record establishes that no subsequent proposal concerning the DCA was accepted by both Cohen and Goldberg/WGC. Accordingly, the evidence establishes that the typewritten DCA, without its interlineations, was the only version of that document that possibly could have been executed by the parties. Although the actions of Cohen and Hippie after April 24 appear consistent with Cohen’s claim that no DCA was executed, that does not control the issue whether any issues of fact exist. Rather, it appears that the actions of the parties after April 24 regarding the DCA were either proposed modifications of an existing agreement or continued negotiations toward executing a first DCA, language in the escrow agreement notwithstanding.
(e) We do not agree with Cohen that there was no valid sale contract until the escrow closed. The argument Cohen raises is basically that even assuming, arguendo, that the unaltered, typewritten DCA was executed and Cohen then informed appellees he would not abide by the terms of that agreement, his actions did not constitute a “breach of contract” as alleged in appellees’ counterclaims because no contract had been formed and would not be formed until all the documents required for the transaction were in the escrow file within the time specified. We do not agree with Cohen that he could repudiate a promise he made in a contract and then use that repudiated promise as the basis for asserting that no contract had ever been created. A party cannot promise to sell a car for $50 and then claim, upon his failure to deliver the car to the purchaser at the agreed place and time, that his own nonperformance of his duty under that promise meant no agreement had been made in the first place. The “conditions” to be fulfilled at the closing of the escrow — i.e., the delivery of corporate seals, stock, and papers verifying the truth of what the parties had already promised, etc. — were not conditions of the duties the parties had assumed but were the first steps in performing those duties as promised. See
First Nat. Bank v. Nat. Bank of Ga.,
(f) However, given the uncontroverted evidence that the escrow file, which contained all documents compiled by the escrow agent, did
2. We agree with appellant Joe Cohen that no question of fact exists whether he was a contracting party to the April 24 agreements allegedly executed by his son, Cohen, and appellees. It is uncontroverted that Joe Cohen signed none of the agreements and that no party at the April 24 meeting had actual or apparent authority to act on Joe Cohen’s behalf. Since the agreements signed included a transfer of real property and matters which were not to be performed within one year from the making of the agreements, any attempt by appellees to include Joe Cohen as a contracting party to the transaction must fail under OCGA § 13-5-30 (4) and (5). Thus, to the extent the trial court’s order on Joe Cohen’s motion for summary judgment addressed appellees’ claim that Joe Cohen was obligated under the contract, the denial of the motion on this issue was error.
3. The trial court denied the motion for summary judgment by Joe Cohen made on the ground that he was not liable for tortious interference in the sale contract. We disagree and reverse. In doing so, we do not rely on Joe Cohen’s argument that appellees cannot recover for the alleged • interference because the underlying contract was unenforceable, see, e.g.,
Shanco Intl., Ltd.
v.
Digital Controls,
The record reveals that Joe Cohen had executed a letter of credit to the T-Shirtery’s lender in January 1986 in order to help his son, Cohen, obtain the financial backing necessary to keep the T-Shirtery in business. Although a security agreement was thereafter executed entitling Joe Cohen to recover the principal and interest on the letter of credit plus $5,000 upon certain conditions of default, it does not appear that Joe Cohen received any payment from his son or the TShirtery merely for extending the letter of credit. The result of the contract between Cohen and appellees, however, was that instead of extending a letter of credit to a corporation wholly owned by his son,
The record establishes that the parties to the sale contract intended that Joe Cohen should be the direct beneficiary of this provision, a position which granted Joe Cohen the standing to enforce the contract under OCGA § 9-2-20 (b). Compare
Bartley v. Augusta Country Club,
4. Joe Cohen enumerates as error the trial court’s denial of his motion in limine. Although there are 7,900 pages of record in this five-year litigation, Joe Cohen does not provide a record reference to any court order denying this motion as required by Court of Appeals Rule 15 (c) (3). The trial court’s December 5, 1990 order denying Joe Cohen’s motion for summary judgment does not reference any motion in limine. However, the arguments in his brief indicate that the trial court’s ruling denying Joe Cohen’s motion for summary judgment on the tortious interference claim implicitly denied his motion to limit introduction of evidence of damages suffered as a result of the alleged tortious interference. Thus, it appears that our holding in Division 3 that Joe Cohen was entitled to summary judgment on the tortious
5. The trial court in its December 12, 1990 order granted cross motions for partial summary judgment that eliminated from the litigation all claims arising out of alleged violations of federal and state securities laws. The order addressed only these securities claims; we note that the judgments on the pleadings entered against appellants on December 5, 1990 did not encompass these claims.
Pretermitting all questions regarding the validity and consummation of the sale contract, we find no error in the trial court’s grant of appellees’ motion for summary judgment on the securities claims. To determine whether the WGC stock contemplated under the sale contract constituted a “security” under either the Georgia Securities Act of 1973, OCGA § 10-5-1 et seq., or the federal securities acts, we apply the test in
Landreth Timber Co. v. Landreth,
A stock not meeting the definition of a security under the test in
Landreth Timber Co.,
supra, may otherwise come within the Georgia or federal securities acts if the stock qualifies as one of the “unusual instruments” not easily characterized as “securities.” Id. at 690;
Henderson,
supra. To make this determination, we apply the economic reality test in
Securities &c. Comm. v. W. J. Howey Co.,
Given that the underlying transaction did not qualify as a securities transaction, we need not determine whether Joe Cohen was a party to that transaction so as to have standing to assert violations of the state and federal securities laws against appellees.
6. The other major issue in the appeals is the effect of the dismissal with prejudice of all claims by and against the T-Shirtery (based on the bankruptcy court’s settlement of the T-Shirtery’s estate) on appellants’ remaining claims. However, the procedural status of the trial court’s rulings on this issue (in the form of judgments on the pleadings and grants of summary judgment) precludes us from reaching the heart of the parties’ arguments.
(a) Both Cohen and Joe Cohen appeal from judgment on the pleadings entered against each of them on December 5, 1990. In the December 5th judgments the trial court, after referencing requests by appellees for judgment as a matter of law dismissing both appellants’ claims, entered judgment on the pleadings pursuant to OCGA § 9-11-12 (c) in favor of appellees and against Cohen on his claims of mismanagement, breach of fiduciary duty, fraud, conspiracy, intentional infliction of emotional distress, attorney fees under OCGA § 13-6-11, and damages, and against Joe Cohen on his claims arising out of the enforceability of his security agreement in property of the T-Shirtery, ownership of T-Shirtery stock, fraud, breach of fiduciary duty, and damages. We note that these judgments were expressly included in
Appellants contend that the trial court’s entry of the December 5th judgments on the pleadings was error. There was no motion filed by appellees expressly requesting judgment on the pleadings, although it does not appear that the trial court was acting ex mero muto because of language in the judgments that the rulings were in response to requests by appellees. Thus, we need not decide whether, as with summary judgment, a judgment on the pleadings may be granted to a party who has not even moved for it.
McKay v. Natty,
First, the record presents the possibility that the December 5th judgments were in response to motions made in appellees’ responsive pleadings requesting the trial court to dismiss appellants’ complaints based on appellees’ defenses of failure to state a cause of action upon which the relief sought could be granted. See OCGA § 9-11-12 (b) (6). Such motions were properly a part of appellees’ responsive pleadings.
Henderson v. Fulton County Bd. of Registration &c.,
It is apparent that appellants had no advance notice that the
Second, it is possible, as the parties assert, that the judgments on the pleadings were in response to the November 21st motion for summary judgment, filed only two weeks before the December 5th judgments were entered. There is no statutory authority for a trial court to treat a motion for summary judgment as one for judgment on the pleadings merely by excluding from consideration all matters outside the pleadings. Compare OCGA § 9-11-12 (b), (c) (motions to dismiss or for judgment on pleadings treated as summary judgment motions where matters outside pleadings are presented to and considered by court). However, even if the parties’ supposition is correct that the trial court did convert the motion for summary judgment into judgments on the pleadings and assuming, arguendo, such a conversion was proper, we find that the judgments nevertheless must be reversed.
Appellants contend that the trial court’s conversion of the summary judgment motion into OCGA § 9-11-12 (c) judgments was improper because the judgments on the pleadings were rendered less than 30 days after the motion was filed, see OCGA § 9-11-56 (c); USCR 6.2, thereby depriving appellants of their right to respond. See generally
Leverich v. Roddenberry Farms,
(b) We next consider the same trial judge’s grant of summary judgment to appellees
3
in two orders, dated December 21, 1990 and filed January 3, 1991, on the identical grounds as those set forth in the December 5th judgments on the pleadings. We note that although appellants’ notices of appeal in Case Nos. A91A1424 and A91A1427 (see Division 6 (a), supra) were filed December 14, 1990, it is not necessary to determine whether the express inclusion of the December 5th judgments as among those orders being included in the appeals meant that the filing of those notices acted as supersedeas to prevent the trial court from entering the January 3rd orders, see generally
Aetna Cas.
&c.
Co. v. Bullington,
It does not appear that the January 3rd orders were in response to any motion to reconsider or revise the December 5th judgments. Compare
MARTA v. Gould Investors Trust,
“ ‘Where jurisdiction exists both of the subject matter and of the parties, as well as jurisdiction to make the particular order in question, an order is not void, but voidable, however erroneous or irregular it may be.’ [Cit.] Thus, the court’s [December 5th judgments on the pleadings were] not void, but merely voidable. [Cit.] A voidable or erroneous order cannot be disregarded; it is valid and enforceable until set aside. [Cit.] Moreover, unlike a void order, a merely erroneous order will support rights, remedies and proceedings predicated thereon. [Cit.]”
Golden Key &c. Lounge v. Key &c. Corp.,
Therefore, because the December 5th judgments on the pleadings are reversed and the January 3rd orders are vacated, the viability of appellants’ remaining claims remains for adjudication by the trial court.
7. Cohen contends error in the trial court’s order realigning appellants as the defendants in this case. We note that although Cohen’s notices of appeal were filed prior to the entry of the March 1991 realignment order, the appeals were docketed in this court in May 1991 and the error addressing the March 1991 order was raised on appeal of the appealable order. Accordingly, we have jurisdiction to address this enumeration. See
Vowell v. Carmichael,
A trial court has the discretion to realign the parties at any stage of the action and on such terms as are just.
Cawthon v. Waco Fire &c. Co.,
Judgments affirmed in part and reversed in part in Case Nos. A91A1424 and A91A1427. Judgments vacated in Case Nos. A91A1425 and A91A1426.
Notes
We will refer to this party as “Joe Cohen” in this opinion although we are aware that Joe Cohen died shortly after this litigation began and his interests are now represented by the executors of his estate.
We reject Jay Cohen’s argument that Goldberg admitted in responsive pleadings that he was seeking to enforce the DCA
with the interlineations
merely because Goldberg referred in his pleadings to the DCA in the escrow file. He later clarified it was the unaltered
Cohen and Joe Cohen appeal from the January 3rd orders in Case Nos. A91A1425 and A91A1426.