Appellee Baber Rathur, M.D. brought two separate actions against Pablo Quintanilla, M.D., seeking recovery on a promissory note in one action and on a lease agreement in the second. After consolidation, the parties filed cross-motions for summary judgment, and Rathur prevailed. The trial court then calculated damages and entered judgment in favor of Rathur.
Quintanilla appeals, contending that he was insulated from liability by a default provision in a contemporaneously executed sale agreement, that the transaction as a whole was modified by the parties’ mutual departure, that a dispute of fact remained as to the amount of damages owing under the agreements, and that attorney fees were improperly awarded. Quintanilla’s arguments concerning the contract terms are without merit, but we agree that the amount of damages remains in dispute and that insufficient notice was given of
This action arose out of an agreement between two longtime friends and business associates. In late 1990, Rathur approached Quintanilla for the first time with a proposal that Quintanilla purchase a medical practice from Rathur. Quintanilla was cautiously receptive, because of Rathur’s representations that the practice was historically profitable and growth-oriented. Rathur enlisted his financial advisor to explain to Quintanilla the medical office’s secure financial condition. Quintanilla contends by affidavit that he was influenced by Rathur’s position as his friend and employer and that he relied on Rathur’s representations and those of Rathur’s financial advisor in deciding to purchase the practice.
On December 14, 1990, the parties executed three documents: (1) a sale and purchase agreement, providing for the sale of all office
The default provision in the sale and purchase agreement provided: “If this agreement is not consummated in accordance with the terms and conditions of this agreement on account of default by either party, the non-defaulting party may, at his option: (a) terminate this agreement by giving written notice of such termination to the other, whereupon all rights, duties and obligations of all parties hereunder shall expire and this agreement shall in all respects become null and void, or (b) exercise such rights and remedies as may be provided for or allowed by law or in equity, including, without limitation, the right to seek and obtain specific performance of this agreement; provided, however, neither seller nor purchaser shall have right to seek or obtain damages from the other, except attorney fees for bringing any action under this provision.” (Emphasis supplied.) Quintanilla’s affidavit recites that he was shown the default provision in the sale and purchase agreement by Rathur and that he understood it to mean that “neither party would sue the other for money damages if the agreement was breached.” He further understood this clause to mean that he could return the practice at any time to Rathur without suit being filed and without penalty “if our agreement did not work out.” 1 The promissory note, however, contained an acceleration clause, and the lease provided for a number of remedies upon default, including acceleration of the amounts due.
The practice was unsuccessful from the start. Over the first three years, Quintanilla made only sporadic payments on the promissory note and never paid more than the base rent due under the lease. Quintanilla claims that during this time Rathur assured him that the financial problems could be “worked out.” But on September 13, 1993, Rathur’s attorney sent a letter informing Quintanilla that, without immediate payment of all outstanding arrearages, she “would advise Rathur to take action.” Ultimately, Rathur filed these claims.
1. Quintanilla first argues that the restrictive default provision in the sale agreement and Rathur’s oral assurances regarding its effect supersede the default provisions in the promissory note and lease agreement. The trial court found that “an ambiguity exists” with regard to the default provision in the sale agreement, observed that “to the extent there is any genuine conflict between these provisions . . . the first provision prevails,” but found that the two provisions are not contradictory. Observing that “in seeking to determine the true intent of the parties, the court should consider the entirety of the agreement and not reach a conclusion which would render the parties’ actions an absurdity,” the trial court concluded that the parties’ true intention was to prohibit the collection of consequential damages other than attorney fees. While we agree with the trial court’s ultimate conclusion that summary judgment on the issue of liability was proper, we do so on a slightly different basis.
A court may not declare a contract provision ambiguous until it applies the relevant rules of construction.
Richard Haney Ford v. Ford Dealer Computer Svcs.,
First, we note that an agreement may consist of multiple documents, and when instruments are executed at the same time in the course of a single transaction, they should be read and construed together. OCGA § 24-6-3 (a);
All three documents at issue here were executed during the September meeting consummating the sale between the two parties, and each refers to the others. As a result, they must be construed together in a manner that avoids surplusage and gives effect to all relevant provisions.
Interpreting the three relevant documents together reveals no ambiguity or conflict. The separate default provisions contained in the documents do not conflict because each provision, by its terms, applies only to the document in which it appears. A strict reading of the sale agreement reveals that a default under its terms occurs only where the actions necessary to consummate the sale itself are not undertaken. The sale agreement recites simply that it requires a purchase, sale, and execution of a promissory note containing certain terms. It provides for the maintenance of records and the proration of expenses until “the day of closing.” Default occurs only “if [the] agreement is not consummated in accordance with [its] terms and conditions.” Rathur, as the “non-defaulting party” under the default provision in the sale agreement, had the option of bringing an action “under this provision” which would have invoked the damages limitation. But Rathur never sought enforcement of the sale agreement; he sought only recovery on the promissory note and on the lease agreement.
When the language of a contract is plain and unambiguous, the court must afford it its literal meaning, despite a party’s contention that he had a different understanding of its meaning.
Cotton States Mut. Ins. Co. v. Smelcer,
Because no ambiguity exists, it was unnecessary for the trial court to reach the issue of admissibility of parol evidence, as urged by Quintanilla, to show Quintanilla’s understanding of the default provisions. Because it is undisputed that the sale itself was consummated, the trial court correctly held that the default provision in the sale agreement did not govern a default under the promissory note or lease. A grant of summary judgment will be affirmed if it is right for any reason.
Precise v. City of Rossville,
2. Quintanilla also contends that the parties’ subsequent conduct amounted to a mutual departure from the payment terms of the promissory note and lease agreement. Rathur acknowledges continually accepting lower and sporadic payments contrary to the terms of both agreements. We conclude, however, that no mutual departure occurred under the facts presented here.
While the law generally prevents one party from waiving a binding provision in a contract for the benefit of another, the conduct of the parties may be sufficient to alter the terms of an original agreement when there is evidence of a mutual, rather than
This issue was addressed in
Lewis v. C & S Nat. Bank,
In the case at bar, it is undisputed that, while Quintanilla made a number of late and partial payments which were accepted by Rathur, he failed to make approximately 20 payments under the promissory note and failed altogether to pay the “additional rent” due under the lease. While Rathur apparently told Quintanilla that the financial problems could be “worked out,” nowhere does the record suggest that Rathur meant to forego payment of any monthly installment altogether. Given the lack of evidence supporting Quintanilla’s contention that Rathur agreed to non-payment, as opposed to late payment, we find that Quintanilla failed to show a subsequent mutual departure from the terms of the agreements, and the trial court properly concluded that Quintanilla was obligated for the sums due.
3. Quintanilla next asserts that Rathur’s acceptance of lesser payments over the life of the lease agreement constituted an accord and satisfaction. The facts of this case, however, do not satisfy the requisite elements of an accord and satisfaction.
An accord and satisfaction exists where (1) there is a
bona fide
dispute as to the amount due under the agreement; (2) the dispute is between the parties and
not
limited to the mind of the debtor; and (3) the dispute existed
prior
to the debtor’s tender of any amount less than that due under the agreement. OCGA § 13-4-103 (b) (1);
Treadwell v. Treadwell,
The record reveals no evidence of a bona fide dispute as to the debt owed in this case. Quintanilla has made no effort below or on
Nor does the record contain evidence suggesting that Rathur and Quintanilla ever reached an “independent agreement” to pay a lesser sum under the lease. In this context, an accord and satisfaction is a de novo contract valid only where there is a “meeting of the minds” as to the release of the debtor’s liability.
Derosa v. Shiah,
4. Despite our conclusion that the default provisions in the promissory note and lease are valid and enforceable, this case must be reversed because of an improper determination of damages. The trial judge, over Quintanilla’s objection, entered judgment based on a schedule presented by Rathur summarizing the amount due under the promissory note and the lease agreement. Quintanilla asserts that his affidavit created a dispute of fact as to the actual amounts owed on both the note and the lease, and therefore summary judgment for Rathur on the issue of damages was improper. We agree for two reasons.
First, while the amount due under the promissory note was liq uidated, 3 there is a genuine dispute of fact as to the number of payments made by Quintanilla over the life of the agreement. Quintanilla claims to have made two payments during the first year of the promissory note, and it appears that the calculations supporting the trial court’s judgment reflect only one. On .summary judgment, statements not amounting to legal conclusions made by a party with personal knowledge of the facts are not conclusory and are admissible to create a genuine issue for trial. See OCGA § 9-11-56 (e).
Second, the parties agree that the award of damages under the lease agreement was inaccurate. The provisions in the lease required payment of a “base rental” and an “additional rent” to be calculated during the life of the lease. Under the terms of the agreement this amount is, as conceded by the parties, equal to $26,255, not $26,828.81 as the trial court found. 4 While the trial court correctly granted partial summary judgment on the issue of liability, summary judgment on the issue of damages was improper.
5. Finally, Quintanilla correctly argues that Rathur failed to meet the statutory notice requirement for an award of attorney fees. OCGA § 13-1-11 (a) (3) provides that a party seeking attorney fees in any action must provide the opposing party with at least ten days’ notice of the intent to do so. Quintanilla correctly notes that Rathur’s demand letter contained no mention of attorney fees.
The Supreme Court of Georgia in
Gen. Elec. Credit Corp. v. Brooks,
Judgment affirmed in part and reversed in part.
Notes
But no evidence appears on the record that Quintanilla ever attempted to rescind the sale agreement, tender back the practice assets, or otherwise “return” the medical practice during the three years he operated it.
We note that Rathur provided notice in the form of a demand letter stating his intention to rely on the exact terms of the agreement.
As the total amount of the debt due under the contracts was fixed, certain and ascertainable, the claims are not rendered unliquidated by our holding that the amount allegedly paid to set off the total is factually in dispute.
Gold Kist Peanuts v. Alberson,
Since the issue may be reached on remand, we note that the trial judge’s assessment of prejudgment interest at a rate of 7 1/2 percent per annum was improper. Generally speaking, a claimant is entitled to an award of prejudgment interest at a rate of 7 percent per annum from the date due until the date of recovery on any liquidated debt. OCGA §§ 7-4-2; 7-4-15;
Eastern Air Lines v. Fulton County,