Cobb Beauty College, Inc. v. Scamihorn

SECOND DIVISION
BARNES, P. J.,
BOGGS and RICKMAN, JJ.
NOTICE: Motions for reconsideration must be
physically received in our clerk’s office within ten
days of the date of decision to be deemed timely filed.
http://www.gaappeals.us/rules
November 15, 2016
In the Court of Appeals of Georgia
A16A1459. COBB BEAUTY COLLEGE, INC. v. SCAMIHORN.
RICKMAN, Judge.
Randall “Randy” Scamihorn, former Director of Cobb Beauty College, Inc.
(“CBC”), filed a breach of contract action against CBC after the college released him
within his first year of employment and informed him that it did not intend to renew
his contract. The trial court granted summary judgment to Scamihorn after concluding
that CBC breached a provision of the employment agreement governing contract
renewal, which the court held unambiguously provided that Scamihorn’s initial term
of employment was three years, and that CBC’s right of renewal (or nonrenewal) did
not accrue until that time. On appeal, CBC contends that the trial court erred in its
interpretation of the paragraph governing renewal, and further argues that it was
entitled to terminate Scamihorn for cause under a separate provision of the
employment agreement.
We agree with the trial court that the renewal provision of the contract
unambiguously sets forth an initial three-year term, and therefore affirm the trial
court’s ruling as to that issue. We nevertheless conclude that a genuine issue of
material fact remains as to whether CBC was entitled to terminate Scamihorn’s
employment for cause, and therefore reverse the trial court’s grant of summary
judgment in favor of Scamihorn on his breach of contract claim. We remand for
proceedings consistent with this opinion.
To prevail at summary judgment, the moving party must
demonstrate that there is no genuine issue of material fact and that the
evidence and all reasonable inferences and conclusions drawn
therefrom, viewed in the nonmovant’s favor, warrant judgment as a
matter of law. We review de novo the trial court’s ruling on a motion for
summary judgment.
(Citation and punctuation omitted.) Hart v. Sirmans, 336 Ga. App. 212 (784 SE2d 67)
(2016).
So viewed, the evidence shows that Scamihorn and CBC entered into an
employment agreement on May 11, 2010. The employment agreement contained two
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provisions relevant to this action, one in paragraph three and one in paragraph five.
These provisions provided that:
3. Term of Employment. This Agreement shall remain in
effect for 3 years from the effective date, renewed automatically
on a year-to-year basis unless either party gives the other party
60 days’ prior written notice before the anniversary date of
the initial term or any one-year renewal term. Employee shall
begin said term of employment on the 1st day of July 2010.
5. Termination of Employment. This Agreement and the
employment by CBC of Employee hereunder shall terminate
upon the occurrence of any of the following events: . . . (c) upon
written notice of termination of employment for cause given
by CBC. “Cause” shall mean (i) theft; or wrongful appropriation
by Employee; (ii) falsification of records by Employee; (iii)
dishonest acts by Employee; (iv) negligence of Employee; (v)
incompetence of Employee; (vi) insubordination of Employee; (vii)
disloyalty of Employee to CBC; (viii) breach of Employee’s duty
of care or duty of loyalty to CBC, (ix) Employee’s willful neglect;
or (x) Employee’s violation of any law, rule or regulation. In
the event of a proposed termination for cause, CBC will give
Employee notice of the facts and circumstances surrounding
the alleged cause and provide Employee with an opportunity to
present his response to the alleged reason for cause. . . .
On March 31, 2011, approximately nine months into his employment,
Scamihorn was given a letter drafted by counsel for CBC informing him that CBC did
not intend to renew his contract. The letter requested that Scamihorn remove all of
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his personal belongings the same day or no later than two days later. Scamihorn was
given 60-days severance pay and asked not to return to CBC. The letter did not detail
any reason CBC was releasing Scamihorn from its employment, and Scamihorn
subsequently retained counsel who sent CBC’s counsel a letter asserting that CBC
breached the employment agreement by its effort not to renew it within the initial
three-year term, and demanding that Scamihorn be paid the remainder of his three-
year salary and additional damages. The letter from Scamihorn’s counsel also rejected
CBC’s position that the release from employment was for cause.
In requests for admission filed by Scamihorn and answered by CBC, CBC
admitted that it did not provide written notice of cause relating to Scamihorn’s release
from employment. However, CBC denied that it had failed to provide any facts and
circumstances surrounding the alleged cause; denied that it had failed to give
Scamihorn an opportunity to respond to the alleged cause before terminating the
employment agreement; and denied that CBC did not have cause to terminate the
employment agreement. CBC also filed a motion to relieve the parties of the
mediation requirement, in which it also set forth various allegations against
Scamihorn that it asserted gave it cause to terminate Scamihorn’s employment. CBC
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further argued that Scamihorn was terminated for cause in a pleading titled “pre-trial
brief.”
In response to Scamihorn’s motion for summary judgment, CBC submitted the
affidavit of CBC’s owner,1 who had executed the agreement with Scamihorn on
behalf of CBC. The owner’s affidavit detailed many ways in which she alleged that
Scamihorn breached paragraph five of the employment agreement, thus authorizing
his termination for cause.2
1
Scamihorn alleges that this affidavit and the documents attached to it are
inadmissable.
However, even if these complaints had merit, [Scamihorn] made no such
arguments about the affidavit below, either in an objection to the
affidavit, in a motion to strike the affidavit, or in his summary judgment
brief. Objections to affidavits such as an objection to the affiants’
lacking personal knowledge will not be entertained for the first time on
appeal where such affidavits were considered by the trial judge, without
objection, in ruling on motions for summary judgment.
(Citation, punctuation, and footnote omitted). Formaro v. Suntrust Bank, 306 Ga.
App. 398, 399-400 (1) (702 SE2d 443) (2010).
2
No deposition transcripts, if such exist, are in the record on appeal. However,
we may look to the pleadings, documents, and affidavits in the record in order to
determine if issues of fact were raised. See Collins v. Byrd, 204 Ga. App. 893, 894
(420 SE2d 785) (1992).
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Focusing on CBC’s initial letter in which it stated its intention not to renew
Scamihorn’s contract, the trial court granted summary judgment to Scamihorn.
Specifically, it held that paragraph three of the employment agreement
unambiguously set forth an initial three year term, and the option not to renew did not
arise until 60 days prior to that three year date. CBC contends that the trial court’s
interpretation of the renewal provision contained in paragraph three of the
employment agreement was erroneous and, further, that it had an independent right
to terminate Scamihorn for cause under paragraph five. We agree with the trial court’s
interpretation of paragraph three of the employment agreement and, therefore, affirm
its ruling on that issue. Nevertheless, because there is a genuine issue of material fact
as to whether CBC had cause to terminate Scamihorn’s employment, we reverse the
grant of summary judgment to Scamihorn.
1. CBC contends that the trial court’s interpretation of the renewal provision
contained in paragraph three of the employment agreement was erroneous.
Construction of a contract, at the outset, is a question of law for
the court. And such construction involves three steps: first, the trial
court must decide whether the language is clear and unambiguous. If it
is, the court simply enforces the contract according to its clear terms; the
contract alone is looked to for its meaning. Next, if the contract is
ambiguous in some respect, the court must apply the rules of contract
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construction to resolve the ambiguity. Finally, if the ambiguity remains
after applying the rules of construction, the issue of what the ambiguous
language means and what the parties intended must be resolved by a
jury.
(Punctuation and footnotes omitted.) Holcim (US), Inc. v. AMDG, Inc., 265 Ga. App.
818, 820 (596 SE2d 197) (2004).
The trial court correctly held that the language in paragraph three of the
employment agreement that it “shall remain in effect for 3 years from the effective
date” and would renew automatically unless notice was given 60 days before the
“anniversary date of the initial term” unambiguously set forth an initial three-year
term before CBC had the option of nonrenewing. As noted by the trial court, CBC’s
interpretation of the employment agreement–that it was subject to annual renewal
even within the first three years–would render meaningless the language providing
for an initial three year term. See Brazeal v. Newpoint Media Group, LLC, 331 Ga.
App. 49, 53 (769 SE2d 763) (2015) (“[A] contract should not be construed in a
manner that would render any of its provisions meaningless or mere surplusage.”)
(citation and punctuation omitted).
Citing Wheeler v. Rebel Truck Rental Inc., 125 Ga. App. 431 (188 SE2d 155)
(1972), CBC argues that the term “anniversary date” in paragraph three of the
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agreement must be construed to mean that CBC had the option to not renew
Scamihorn’s contract every year. In Wheeler, however, the contract at issue provided
that the “[c]ustomer may cancel this agreement . . . on any anniversary of the effective
date.” Id. at 431; emphasis supplied. Here, on the other hand, the contract at issue
does not refer to “any” anniversary date, but to the anniversary date of the initial
three-year term. Such language is capable of only one reasonable interpretation, and
CBC’s attempt to create an ambiguity where none otherwise exists must fail. See
Wilson v. Southern General Ins. Co., 180 Ga. App. 589, 590 (349 SE2d 544) (1986)
(“We cannot permit appellant to create ambiguity by lifting a clause or portion of the
contract out of context. The natural, obvious meaning is to be preferred over any
curious, hidden meaning which nothing but the exigency of a hard case and the
ingenuity of a trained and acute mind would discover.”) (citation and punctuation
omitted).
(2) Nevertheless, our inquiry does not end there. Scamihorn was not entitled
to summary judgment on his claim for breach of contract if, as CBC contends, there
is a genuine issue of material fact as to whether CBC was authorized to terminate him
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for cause under paragraph five of the employment agreement.3 See Odem v. Pace
Academy, 235 Ga. App. 648, 654 (1) (510 SE2d 326) (1998).
In Savannah College of Art & Design v. Nulph, 265 Ga. 662- 663 (1) (460
SE2d 792) (1995), the Georgia Supreme Court explained that
An employer’s failure to follow contract procedures in dismissing
an employee does not “cause” the termination. If the employer were
justified in terminating the employee under the contract, then the
termination would have occurred even if the employer had followed the
proper procedures. Thus, procedural flaws in the manner in which the
termination was carried out will not warrant damages to compensate for
losses that naturally result from a justified termination. On the other
hand, when an employment contract requires that termination be ‘for
cause’ only, and the employer fires the employee without cause, a
substantive breach occurs, and the employee would be entitled to seek
full compensatory damages.
(Footnotes omitted).
3
We disagree with Scamihorn that CBC failed to preserve its argument that
genuine issues of material fact exist as to whether it had cause to terminate
Scamihorn. In pleadings and at least one motion filed in the trial court, CBC made
numerous references to its having cause to terminate Scamihorn. Further, during the
hearing on Scamihorn’s motion for summary judgment, CBC maintained that it had
cause to terminate Scamihorn.
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Here, if the finder of fact determined that CBC had cause to terminate
Scamihorn, then CBC would not be liable for damages to him. See Odem, 235 Ga. at
654 (1) (“[T]he elements for a breach of contract claim in Georgia are merely the
breach and the resultant damages to the party who has the right to complain about the
contract being broken. . . . [W]here we have determined that [the employer] had
authority under the contract to terminate [the employee’s] employment, no breach of
contract occurred . . .”) (citation and punctuation omitted). This is true, even if CBC
failed to follow the procedural requirements of the contract.
[P]rocedural flaws in the manner in which the termination was carried
out will not warrant damages to compensate for losses that naturally
result from a justified termination. On the other hand, when an
employment contract requires that termination be “for cause” only, and
the employer fires the employee without cause, a substantive breach
occurs, and the employee would be entitled to seek full compensatory
damages.
(footnotes omitted) Savannah College of Art & Design, 265 Ga. at 662-663 (1).
Because CBC raised an issue of material fact as to whether or not it had cause
to terminate Scamihorn, both by affidavit and by factual disputes in the pleadings, the
trial court erred in granting judgment as a matter of law to Scamihorn. See Savannah
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College of Art & Design, 265 Ga. at 662 (3); see also Botterbush v. Preussag Intl.
Steep Corp., 271 Ga. App. 190, 194 (1) (b) (609 SE2d 141) (2004).
Judgment affirmed in part and reversed in part and case remanded. Barnes,
P. J., and Boggs, J., concur.
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