HUGH LAWSON, SENIOR JUDGE.
Plaintiff HessMorganHouse, LLC, d/b/a HMH Consulting ("HMH") entered into a series of written letter agreements with Defendant The Kingdom Group of Companies, LLC, d/b/a The Kingdom Group ("The Kingdom Group")
Currently pending before the Court are the parties' cross-motions for summary judgment. After reviewing the briefs, and with the benefit of oral argument, the Court DENIES Plaintiff's Motion for Partial Summary Judgment (Doc. 21) and GRANTS Defendants' Motion for Summary Judgment (Doc. 22).
HMH is a life insurance consulting company. In June 2013, HMH entered into the first of a series of letter agreements with The Kingdom Group to provide consulting, organizational, and administrative services relating to the development and management of a group life insurance plan for the benefit of the National Hispanic Christian Leadership Conference. The first two agreements, dated June 27, 2013 and September 17, 2013, outlined the initial services HMH agreed to perform and the associated payment schedule. The fourth letter agreement, dated January 12, 2014, modified the payment schedule contemplated by the September 17, 2013 agreement. With the exception of The Kingdom Group asserting that it overpaid HMH by $5,000.00, the parties do not dispute that HMH performed the services contracted for under these three agreements or that The Kingdom Group paid for the services rendered in full.
This case arises out of a dispute concerning the language contained in the third letter agreement, which the parties entered into on December 24, 2013. The December 2013 letter agreement sets out two phases for work to be performed by HMH. The first phase pertains to "pre-rollout services," and the second phase addresses "post-rollout services." The contract establishes a fee schedule for the pre-rollout services and further indicates that payment for those services shall be deferred in consideration of The Kingdom Group agreeing to retain HMH's services for the ongoing administration of the group term life insurance contract.
HMH completed the pre-rollout phase, and in late 2015, the life insurance plan was launched and policies became available through Prudential, the selected insurer for the plan. Only three policies were sold, producing total commissions for The Kingdom Group of $262.80. On January 26, 2017, Prudential terminated its participation in the plan effective March 21, 2017. No additional policies were sold. Consequently, HMH provided no further services under the December 2013 agreement. HMH alleges that The Kingdom Group owes $113,818.00 plus other associated damages for the pre-rollout services performed under the December 2013 contract.
A court "shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a);
The party seeking summary judgment "always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which it believes demonstrate the absence of a genuine issue of a material fact."
HMH moves for partial summary judgment, arguing that under the plain language of the contract in dispute, The Kingdom Group owes a total of $113,818.00 for pre-rollout services performed. In its cross-motion for summary judgment, The Kingdom Group relies on a separate contractual term that it contends unambiguously limits any payment due to HMH. Based on its assertion that there is a valid contract and that there has been no breach of the contract, The Kingdom Group also moves for summary judgment on HMH's remaining claims for breach of the covenant of good faith and fair dealing, quantum meruit, account, and attorney's fees.
The sole dispute before the Court for resolution is whether under the terms of the December 24, 2013 letter agreement The Kingdom Group owes HMH for the pre-rollout Services performed under the contract. HMH maintains that it agreed to defer any payment for pre-rollout services conditioned upon The Kingdom Group retaining HMH for post-rollout services. Once the need for post-rollout services was eliminated by the termination of the life insurance plan, the condition could no longer be satisfied, and payment became due in full. The Kingdom Group argues that the agreement to retain HMH was a specific contractual term and not a condition and that the agreement regarding post-rollout services does not otherwise eliminate a separate term which The Kingdom Group points out clearly limits payment to a percentage of the total commissions received from the sale of the life insurance policies.
Under Georgia law, "[i]t is the function of the court to construe the contract as written and not make a new contract for the parties."
"Ambiguity exists where the words used in the contract leave the intent of the parties in question — i.e., that intent is uncertain, unclear, or is open to various interpretations."
Under the terms of the December 24, 2013 letter agreement, the parties agreed that payment for pre-rollout services would be made according to a particular schedule:
The parties further agreed to postpone any payment until such time as the plan started generating income for The Kingdom Group with the understanding that The Kingdom Group would retain HMH to perform post-rollout services:
HMH's position is that The Kingdom Group agreed to compensate HMH for pre-rollout services at an hourly rate of $300.00. HMH performed the promised services and provided regular invoices to The Kingdom Group, documenting the services rendered and the number of hours worked, to which The Kingdom Group never objected. HMH further explains that under the contract HMH consented to defer payment of these invoices in exchange for The Kingdom Group retaining HMH to perform post-rollout plan administration services. HMH contends that it agreed to defer compensation for the pre-rollout services subject to the condition subsequent that The Kingdom Group would continue working with HMH through the post-rollout phase. And, because Prudential terminated its involvement and caused the demise of the plan, post-rollout services were no longer necessitated. Thus, the condition subsequent failed and HMH's obligation to defer payment further was negated.
"Where a contract has a condition subsequent, the occurrence may excuse performance or otherwise allow the contract to be modified."
Additionally, Georgia courts draw a distinction "between conditions regarding the creation of an obligation and a condition only as to the time of performance."
There is no language in the contract indicating that payment by The Kingdom Group to HMH for any services rendered was conditioned upon HMH's future performance of post-rollout services.
According to HMH, based on the agreed upon hourly rate of $300.00, The Kingdom Group presently owes a total of $113,818.00. Awarding HMH this sum would require the Court to read the following provision out of the contract: "Notwithstanding the foregoing, no payment shall be made to HMH in excess of 20% of any commission payment." But the Court is not at liberty to eliminate contractual terms; rather, the Court may only construe the contract as written.
Giving the words used in the contract their plain and ordinary meaning, the paragraph beginning with "notwithstanding" unambiguously places a limitation on any payment based on a percentage of the commissions received. The ordinary meaning of "notwithstanding" is "in spite of," or "without prevention or obstruction from or by." Webster's Third New International Dictionary 1545 (1993); Black's Law Dictionary 1091 (7th ed. 1999) ("Despite; in spite of");
HMH argues that any reading of the contract that would make payment contingent upon receipt of commissions from the sale of the insurance product would illegally place HMH in the position of sharing in the commissions. (Doc. 21-1, p. 10-12);
The Court is under no illusion that the parties never anticipated this result. Undoubtedly, both parties planned on profiting from the sale of many insurance policies. Alas, only three policies were ever sold, and that profit was never realized. At the same time, it is also clear that the parties are experienced at contract negotiation and drafting and knew how to account for contingencies, such as the plan failing.
The Kingdom Group moves for summary judgment as to HMH's remaining claims for (1) breach of the covenant of good faith and fair dealing; (2) quantum meruit; (3) account; and (4) attorney's fees.
Generally, under Georgia law, "every contract imposes upon each party a duty of good faith and fair dealing in its performance and enforcement."
HMH concedes that without a viable breach of contract claim, there can be no breach of the covenant of good faith and fair dealing. (Doc. 24, p. 17). Having determined that The Kingdom Group did not breach the terms of the December 24, 2013 contract, the Court likewise finds that The Kingdom Group is entitled to summary judgment as to HMH's claim for an alleged breach of the covenant of good faith and fair dealing.
In Count Three of the Complaint, HMH raises a claim for recovery under a theory of quantum meruit, alleging that The Kingdom Group has refused to tender payment for the value of services rendered by HMH and that it would be inequitable to permit The Kingdom Group to accept those services without payment. (Doc. 1 ¶¶ 43-47). But "[i]t is well established that recovery in quantum meruit is not authorized when, as here, the claim is based on an express contract."
The parties here have stipulated that the December 24, 2013 letter agreement was a valid, written contract, and the Court has not found otherwise. (Doc. 20, ¶¶ 6, 17, 18). Accordingly, because HMH's claims are based on an express contract, HMH may not recover in quantum meruit, and The Kingdom Group is entitled to summary judgment.
HMH asserts a claim in Count Four of the Complaint for an account, alleging that based on the statements remitted by HMH to the Kingdom Group detailing the work it performed and the corresponding fee, The Kingdom Group defaulted on its account and owes HMH $113,818.00 plus interest and costs. (Doc. 1, ¶¶ 48-50). "An action on an open account is a simplified pleading procedure where a party can recover what he was justly and equitably entitled to without regard to a special agreement to pay such amount for goods or services as they were reasonably worth when there exists no dispute as the amount due or the goods or services received."
Open account is not a proper theory of recovery in this case because there is a clear dispute about any amount purportedly owed by The Kingdom Group to HMH. The parties stipulated to the fact that HMH sent The Kingdom Group regular statements detailing the hours worked in preparation for the rollout of the life insurance plan. (Doc. 20, ¶¶ 21, 24). While the statements include a running tally for amounts HMH contends will be due at a future date, the statements do not otherwise take into account the parties' agreement that payment ultimately would be restricted to 20% of any commissions received by The Kingdom Group. The dispute between the parties about how that limitation impacts the total amount due to HMH for the pre-rollout services it performed takes this case out of the purview of an open account claim.
Finally, HMH asserts a claim for attorney's fees pursuant to O.C.G.A. § 13-6-11. (Doc. 1, ¶ 52). Section 13-6-11 authorizes an award of attorney's fees "where the plaintiff has specially pleaded and has made prayer therefor and where the defendant has acted in bad faith, has been stubbornly litigious, or has caused the plaintiff unnecessary trouble and expense." Recovery of attorney's fees "in a contract action must be based upon evidence which shows more than a mere breach of contract."
Based on the Court's conclusion that under the unambiguous terms of the contract The Kingdom Group has not breached the agreement between the parties, HMH is not entitled to an award of attorney's fees as a matter of law, and summary judgment is appropriate.
For the reasons discussed herein, the Court DENIES Plaintiff's Motion for Partial Summary Judgment (Doc. 21) and GRANTS Defendants' Motion for Summary Judgment (Doc. 22). This case is hereby dismissed with prejudice.