Estate of Cason J. Callaway, Jr. v. Garner , 297 Ga. 52 ( 2015 )

In the Supreme Court of Georgia
Decided: May 11, 2015
S14G1184. ESTATE OF CALLAWAY et al. v. GARNER et al.
HUNSTEIN, Justice.
We granted certiorari to determine whether OCGA § 13-6-13 authorizes
the award of prejudgment interest on a judgment granting relief only in the form
of specific performance. For the reasons set forth below, we answer this
question in the negative. We therefore reverse the judgment below to the extent
it awarded prejudgment interest under OCGA § 13-6-13, but we also remand for
a determination as to whether prejudgment interest may nonetheless be awarded
in this case under OCGA § 7-4-15.
Appellees Larry Garner, Sr. and Larry Garner, Jr. were minority
shareholders in the Callaway Blue Springs Water Company (CBSW), a closely
held corporation formed in 2001 by the Garners and majority shareholder Cason
Callaway, Jr. In 2007, the Garners sued Callaway1 and his son and attorney-in-
Cason Callaway, Jr. died during the pendency of the litigation, after which the
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executors of his estate were substituted as defendants.
fact, Kenneth Callaway, for specific performance of an oral stock purchase
agreement. The Garners alleged that the Callaways had reneged on an oral
contract under which Cason Callaway, Jr. had agreed to purchase the Garners’
7,500 shares of CBSW stock. Following a bench trial, the trial court entered a
detailed final order directing Callaway’s estate to perform under the agreement
by purchasing the stock at the agreed price of $160 per share, for a total
purchase price of $1.2 million. The trial court also awarded prejudgment
interest pursuant to OCGA § 13-6-13 on the $1.2 million purchase price,
running from the date of breach through the date of judgment, totaling
$462,000. On appeal, the Court of Appeals affirmed both the grant of specific
performance and the award of prejudgment interest. Callaway v. Garner, 327
Ga. App. 67 (755 SE2d 526) (2014).
1. The sole question before this Court is whether OCGA § 13-6-13
authorizes the award of prejudgment interest on an award of specific
performance. Situated within the chapter of the Georgia Code addressing
contract damages, the statute provides:
In all cases where an amount ascertained would be the damages at
the time of the breach, it may be increased by the addition of legal
interest from that time until the recovery.
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OCGA § 13-6-13. The statute thus permits “the damages” sustained as the
result of a breach of contract to be “increased by the addition of legal interest.”
Specific performance is not a form of damages. See generally PMS Const.
Co. v. DeKalb County, 243 Ga. 870 (2) (257 SE2d 285) (1979) (enumerating
specific performance and damages as distinct remedies for breach of contract).
To the contrary, specific performance is an equitable remedy that generally is
appropriate only where an award of damages would be insufficient to
compensate the injured party for the other’s breach. OCGA § 23-2-130 (specific
performance generally proper where “the damages recoverable at law would not
be an adequate compensation for nonperformance”); see also OCGA § 23-1-4
(equitable relief not available “where an adequate and complete remedy is
provided by law”). One who is injured by another’s breach is in fact required
to elect between these two distinct remedies. Clayton v. Deverell, 257 Ga. 653(3) (362 SE2d 364) (1987).2
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However, as we noted in Clayton, the fact that a plaintiff must elect between
contract damages and specific performance does not mean that other types of
damages, such as attorney fees, consequential damages, and punitive damages, are not
available to a plaintiff who is awarded specific performance. 257 Ga. at 655-656.
Contrary to the Garners’ argument, the fact that specific performance may coexist
with these other remedies in a proper case does not render specific performance –
even in the form of an order to pay a fixed dollar amount – a form of damages within
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Indeed, an award of contract damages in this case would have looked very
different than the award of specific performance. As applied to the breach of a
stock purchase agreement, “the proper measure of damages . . . is the difference
between the contract price and the market value of the stock at the time of the
breach.” Brown v. Reeves, 164 Ga. App. 89, 90 (296 SE2d 393) (1982)
(Sognier, J., concurring specially); see also generally OCGA § 13-6-1 (contract
damages are intended to “compensat[e] for the injury sustained as the result of
the breach of contract”). Thus, the measure of contract damages here would
have been the difference between the value of the CBSW stock on the date the
Callaways should have consummated the purchase and the $160 per share
contract price. Whatever amount may have been yielded by this calculation is
vastly different from the amount – the total purchase price – that was awarded
as specific performance.
In short, “the damages” as contemplated in OCGA § 13-6-13 simply does
not include the remedy of specific performance. Prejudgment interest under
OCGA § 13-6-13 is therefore not available on an award of specific
the scope of OCGA § 13-6-13.
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performance.3 In relying on OCGA § 13-6-13 as the basis for its award of
prejudgment interest, the trial court erred, and the Court of Appeals likewise
erred in affirming this portion of the judgment below.
2. Prejudgment interest may yet be authorized, however, under OCGA §
7-4-15. See Gwinnett County v. Old Peachtree Partners, LLC, 329 Ga. App.
540 (764 SE2d 193) (2014) (affirming award of prejudgment interest under
OCGA § 7-4-15 on purchase money owed as the result of award of specific
performance). OCGA § 7-4-15 provides for the award of interest on “[a]ll
liquidated demands, where by agreement or otherwise the sum to be paid is
fixed or certain,” running from the date such fixed sum becomes due.
Under this statute, prejudgment interest–which flows automatically
from a liquidated demand–is to be awarded upon a judgment for a
liquidated amount. Thus, as long as there is a demand for
prejudgment interest prior to the entry of final judgment, a trial
court should award it.
3
Horne v. Drachman, 247 Ga. 802 (4) (280 SE2d 338) (1981), relied on by the
Court of Appeals, does not demand a different result. The issue presented to this
Court in Horne was not whether prejudgment interest was authorized, but rather only
whether the trial court had selected the correct date on which such interest had begun
to accrue. 247 Ga. at 806-807. To the extent any dicta in Horne may be construed
as expressly approving the award of prejudgment interest under OCGA § 13-6-13 on
the purchase price under a contract as to which specific performance has been
ordered, we disavow such a construction.
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Crisler v. Haugabook, 290 Ga. 863, 864 (725 SE2d 318) (2012). A demand is
liquidated when the sum owed is fixed and certain, meaning “there [is] no bona
fide controversy over the amount.” Those Certain Underwriters at Lloyds
London v. DTI Logistics, Inc., 300 Ga. App. 715, 722 (4) (686 SE2d 333)
(2009). See also Hughes v. Great Southern Midway, Inc., 265 Ga. 94, 95 (2)
(454 SE2d 130) (1995) (prejudgment interest may have been authorized where
“the measure of damages from breach [of the contract] was ascertainable”). The
record reflects that the Garners expressly referenced OCGA § 7-4-15 as the
basis for an award of prejudgment interest in their proposed conclusions of law
submitted after trial but before the entry of judgment. Whether the Garners
made a sufficient demand for prejudgment interest, see Crisler, 290 Ga. at 864,
and are otherwise entitled to recover under OCGA § 7-4-15, are questions to be
resolved by the trial court on remand.
Judgment affirmed in part and reversed in part and case remanded with
direction. All the Justices concur.
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