DocketNumber: A19A0548; A19A0549
Judges: Gobeil
Filed Date: 6/24/2019
Status: Precedential
Modified Date: 10/19/2024
*826These companion appeals arise out of a lawsuit filed in the Superior Court of Floyd County by Janet Bearoff, JBear, LLC, and JDream, LLC, d/b/a Frisky Biscuit Couples Boutique (collectively, "Plaintiffs") against Charles Thomas Craton, III and Craton Entertainment, LLC, d/b/a The Love Library (collectively, "Defendants").
Following remittitur, the Defendants moved for summary judgment. The trial court granted that motion in part, finding that as a matter of law, it could not equitably extend the non-compete period. The case thereafter proceeded to a bench trial on the Plaintiffs' remaining claims, with the court finding in the Plaintiffs' favor. The trial court awarded the Plaintiffs injunctive relief and nominal and punitive damages. The court declined to award attorney fees to either party, finding that neither had presented any evidence at trial as to the amount or reasonableness of any fees they were seeking.
In Case No. A19A0548, the Plaintiffs appeal the trial court's grant of summary judgment in favor of the Defendants on the Plaintiffs' claim seeking an equitable extension of the non-compete agreement. They also appeal the order of judgment, arguing that the trial court erred in declining to award them compensatory damages and in failing to hold a post-judgment hearing on their request for attorney fees under the UDTPA. In Case No. A19A0549, the *827Defendants appeal the order of judgment, asserting that the trial court erred in finding for the Plaintiffs on their conversion claim, in awarding damages to Bearoff in her individual capacity, and in awarding damages for misappropriation of a trade name. The Defendants also challenge the trial court's punitive damages award.
For reasons explained more fully below, in Case No. A19A0548, we affirm both the grant of partial summary judgment in favor of the Defendants and the award of nominal damages. We find, however, that the Plaintiffs were entitled to a post-judgment hearing on their claim for attorney fees under the UDTPA. Accordingly, we vacate that part of the judgment finding that the Plaintiffs were not entitled to recover attorney fees, and remand for a hearing on the question of attorney fees under the UDTPA. Additionally, we find no merit in any of the claims of error asserted by the Defendants in Case No. A19A0549. We therefore affirm the order of judgment against Charles Craton and Craton Entertainment.
On an appeal from a judgment entered following a bench trial, we view the evidence in the light most favorable to the judgment, giving due deference to the trial court's credibility determinations. Gibson v. Gibson ,
Viewed in the light most favorable to the judgment, the record shows that in 2005, Bearoff, Kenneth Gabler (who at the time was married to Bearoff), and Susan Craton (who at the time was married to Charles Craton) formed two companies: High Five Investments, LLC ("High Five") and Shannon Video, Inc. Bearoff and Gabler each owned 25% of the common stock in both corporations, and Susan Craton owned the remaining 50% of stock in each company. High Five purchased a commercial property in Rome (the "Property") and then leased the Property to Shannon Video, which opened a retail business thereon in May 2006. The business, Entice Couple's Boutique ("Entice"), was an "adult store," meaning it sold lingerie, tobacco, adult movies, sexual aids, and other adult-themed, sexually-oriented products.
In 2009, Bearoff and Gabler agreed to sell their interests in High Five and Shannon Video to Susan Craton. On December 10, 2009, the parties executed a Stock/Membership Unit Redemption Agreement (the "Redemption Agreement"), under which Susan Craton agreed to purchase Bearoff's and Gabler's interests in both companies for $ 505,000.00. At the time of the sale, Susan Craton paid Bearoff and Gabler $ 55,000 in cash and provided them with a non-negotiable promissory note (the "Promissory Note") executed *368by Shannon Video *828and High Five. The Promissory Note provided that High Five and Shannon Video would pay Bearoff and Gabler $ 450,000 plus interest in equal monthly installments of approximately $ 6,000 for a period of 81 months. The Promissory Note was secured by a deed to secure debt and an assignment of leases and rents executed by High Five
The Redemption Agreement incorporated a separate, non-competition agreement (the "Non-Compete"), to which Bearoff, Gabler, Shannon Video, High Five, and Charles and Susan Craton were all parties. The Non-Compete stated that the necessity for the agreement arose from "the fact that the financed portion of the purchase price under the [Redemption Agreement] [was to] be paid from revenues generated by the sales of adult novelties by Shannon Video," and the competitive activities would impair Shannon Video's ability to make the required payments. The Non-Compete prohibited both Charles and Susan from engaging in any activity that competed with the business of Shannon Video or High Five.
In early 2012, at the request of the Cratons, the parties entered into two additional agreements, one of which modified the Promissory Note and the other of which modified the Redemption Agreement. Charles Craton signed both of these modification agreements. The modification agreements increased the interest on the balance due to 5% annually; extended the term of the Promissory Note and other Security Documents for a period of 96 months, beginning January 1, 2012 (meaning those documents now had a maturity date of January 1, 2020); reduced the monthly payments by approximately *369$ 2,000; and provided that Gabler had the right to transfer and assign his interest in the Promissory Note and other Security Documents to Bearoff.
In April 2013, the Cratons filed a voluntary joint petition under Chapter 7 of the Bankruptcy Code. Two months later, the Cratons were divorced and, as part of the divorce settlement, Susan Craton transferred all of her interests in High Five and Shannon Video to Charles.
Shortly after the Cratons' personal bankruptcy discharge, the payments due under the Promissory Note ceased, leaving an outstanding principal balance of approximately $ 250,000. After failing to make payments for December 2013 and January and February 2014, Charles Craton emailed Bearoff that Entice (and therefore High Five and Shannon Video) was experiencing significant financial difficulties and asked her to forgive the balance owed under the Promissory Note. Bearoff thereafter issued a formal notice of default in which she demanded full payment of the principal and *830interest owed under the Promissory Note, as well as attorney fees. Craton made no further payments on the amount owed Bearoff.
On December 29, 2014, Shannon Video filed a voluntary Chapter 11 bankruptcy petition, and that proceeding subsequently was converted to a Chapter 7 bankruptcy liquidation. Craton closed the Entice Boutique in July of 2015. Following the bankruptcy filing, and in preparation for foreclosing on her security interests in High Five and Shannon Video, Bearoff formed JBear, LLC and JDream, LLC.
Approximately five months after Entice closed, Bearoff learned that Craton was planning to open a new adult store within the area covered by the Non-Compete and that he was using Entice's social media accounts to advertise the new business. On December 8, 2015, Bearoff sent Craton a cease-and-desist letter, notifying him that opening his planned store would be a violation of the Non-Compete. In response, Craton sent his own cease-and-desist letter to Bearoff, alleging that her planned opening of The Frisky Biscuit violated the Non-Compete. Two days later, on December 16, 2015, High Five (represented by Craton's attorneys) filed a lawsuit against Bearoff, JBear, and JDream, asserting claims for ejectment from and trespass upon the Property and a breach of the Non-Compete. The complaint sought injunctive relief, punitive damages, and attorney fees.
Despite the cease-and-desist letter and the existence of the Non-Compete, Craton *370opened his new business, The Love Library, on December 18, 2015. The Love Library is owned by Craton *831Entertainment, LLC, which was formed in 2013 and whose sole member is Craton's daughter, Calley Craton. The evidence at trial showed that Charles Craton is the registered agent for Craton Entertainment, that he negotiated the retail lease for the space housing The Love Library, and that he personally guaranteed that lease. Additionally, Craton negotiated with vendors on behalf of Craton Entertainment and he serves as the President and CEO of The Love Library. Craton also provided Calley with a small business loan to allow The Love Library to open, and at all times he has been the sole signatory on the Craton Entertainment bank accounts.
Both Craton and his daughter promoted The Love Library on social media accounts belonging to Shannon Video/Entice, and Calley Craton testified that she converted the Entice Facebook page to a Facebook page for The Love Library. The evidence also showed that another employee of The Love Library converted the Entice twitter account to an account for The Love Library. Dozens of social media posts promoting The Love Library included the Entice store logo and for some length of time, The Love Library displayed on its property, next to its own sign, a sign featuring the Entice store logo. And on December 14, 2015, Charles Craton filed a trademark application for Entice Couple's Boutique, representing that the mark was owned by Craton Entertainment.
In January 2016, the Plaintiffs initiated the current lawsuit. Two years later, the case proceeded to a bench trial and, after hearing the evidence, the court found in favor of the Plaintiffs. In its order of judgment, the trial court found that the Non-Compete is valid and enforceable and survived Craton's bankruptcy discharge; Craton's opening of The Love Library violated the Non-Compete; the breach of the Non-Compete was aided and abetted by Craton Entertainment; the Defendants misappropriated the Entice and Entice Couple's Boutique trade names; the Defendants unlawfully converted Shannon Video's social media accounts;
Following the entry of judgment, the Plaintiffs filed a motion to amend or modify that order to reflect that they were entitled to attorney fees under the UDTPA. The Plaintiffs also sought a post-judgment hearing as to the amount of fees to which they were entitled. Before the trial court ruled on that motion, both the Plaintiffs and the Defendants filed their respective notices of appeal.
Case No. A19A0548
1. Bearoff
In support of this argument, Bearoff relies on the well-established principle that when interpreting a contract, "the cardinal rule of ... construction is to ascertain the intent of the parties." Miller v. GGNSC Atlanta ,
We first note that the Georgia Supreme Court has rejected - at least implicitly - the idea that equity permits a court to extend the period of a non-compete agreement. See Elec. Data Systems Corp. v. Heinemann ,
More than 25 years after deciding Coffee Systems , the Georgia Supreme Court declined an express invitation to overrule the case and again rejected the argument that where a party sues to enforce a non-compete agreement, the litigation should toll the running of the agreement's term. Elec. Data Systems ,
Both Coffee Systems and Electric Data Systems reflect Georgia's rules of contract *372interpretation. Specifically, while Georgia courts look for the intent of the parties when enforcing a contract, they also presume that the intent is reflected in the contractual language. Miller ,
Here, the terms of the Non-Compete are clear and capable of only one construction: the Agreement was effective "[f]or a period of eighty-one (81) months following the date of execution of [the Non-Compete]." Thus, the non-compete period began on December 16, 2009 and ended on September 16, 2016. Moreover, although the parties subsequently amended the Redemption Agreement and the Promissory Note to reflect a maturity date of January 1, 2020, the parties did not amend the Non-Compete so as to extend its term. Accordingly, given the general rules of contract construction we are obligated to apply, the relevant precedent related to non-compete agreements, and the parties' failure to extend the non-compete term at the time they extended the maturity date on the purchase alone, we find no error by the trial court in refusing to grant an equitable extension of the time period covered by the Non-Compete.
2. The Plaintiffs assert that the trial court erred in refusing to award them compensatory damages. Again, we disagree.
*835Although the Plaintiffs sought to recover as damages their lost profits, the only evidence of damages they presented at trial showed The Love Library's gross profit from its opening on December 18, 2015 until the expiration of the Non-Compete on September 16, 2016. The trial court interpreted this evidence as meaning that the Plaintiffs were seeking disgorgement of The Love Library's profits and noted that because the Plaintiffs had not asserted a breach of fiduciary duty claim, they were not entitled to disgorgement. See Jennette v. Nat. Community Dev. Svcs. ,
Lost profits are the measure of what the plaintiff lost as a result of the defendant's conduct. McMillian v. McMillian ,
*373As we have explained before, "[t]he profits of a commercial business are dependent on so many hazards and chances, that unless the anticipated profits are capable of ascertainment, and the loss of them traceable directly to the defendant's wrongful act, they are too speculative to afford a basis for the computation of damages." Johnson County School Dist. v. Greater Savannah Lawn Care ,
*836Pounds v. Hospital Auth. of Gwinnett County ,
In this case, the Plaintiffs failed to present evidence showing that The Frisky Biscuit had a track record of profitability. Nor did they provide figures showing the store's anticipated revenues and expenses for the time period between December 18, 2015 and September 16, 2016. In the absence of such evidence, the gross profits of The Love Library during the relevant time frame failed to provide a sufficient basis for the trial court to calculate the Plaintiffs lost profits with reasonable certainty. See Johnson County ,
3. The Plaintiffs assert that the trial court erred in ruling on their claim for attorney fees under the UDTPA in the order of judgment, as they were entitled to a post-judgment hearing on that issue. In response, the Defendants assert that no legal authority supports the Plaintiffs' claim that they are entitled to a post-judgment hearing and therefore the trial court found correctly that the Plaintiffs' failure to present evidence of their fees at trial precluded them from recovering the same. The Defendants further contend that the Plaintiffs' failure to include the issue of attorney fees under the UDTPA in their portion of the consolidated pretrial order means they have waived their right to seek such fees.
The question of whether a party is entitled to a post-judgment hearing on the issue of attorney fees under the UDTPA appears to be one of first impression in Georgia. To decide this question, therefore, we begin with the language of the UDTPA. See Deal v. Coleman ,
While only a trial court can grant relief for a violation of the UDTPA, nothing in the statute prohibits the trier of fact from deciding the question of whether such a violation occurred. Indeed, our decisions have addressed the situation where a jury found a violation of the UDTPA and the trial court thereafter decided relief, based on the jury's factual findings. See Trotman v. Velociteach Project Mgmt. ,
As the foregoing establishes, the UDTPA allows either the plaintiff or the defendant an opportunity to recover their attorney fees, depending on which of those parties is the "prevailing party." Although a fact finder may decide the issue of culpability under the statute (i.e., the question of which party prevails), only the trial court may award attorney fees. Given these facts, we find that, especially in situations such as this, where an alleged UDTPA violation is one of several claims being tried, the statute contemplates a bifurcated proceeding. In other words, the statute anticipates that the fact finder will first determine the prevailing party before the trial court makes a decision as to whether an award of attorney fees is warranted. Logically, therefore, neither party would expect to present evidence as to their attorney fees during the trial.
In an effort to avoid any further proceedings, the Defendants argue that to be entitled to a bifurcated proceeding, where the question of attorney fees is the subject of a post-trial hearing, the Plaintiffs were required to reference in the pretrial order the fact that: (1) if they prevailed on their UDTPA claim, they would be seeking attorney fees under that statute; and (2) in that event, they wished to present evidence of their fees at a post-trial hearing. We find no support for this argument in the law. As OCGA § 9-11-16 makes clear, a pretrial order frames and "limits the issues for trial ." OCGA § 9-11-16 (b) (emphasis supplied). Where a claim for attorney fees is to be determined by the trial court, rather than a jury, however, attorney fees are not an issue for trial. McClure ,
In light of the foregoing, we vacate that portion of the trial court's order declining to award attorney fees and remand for a hearing on whether the Plaintiffs are entitled to recover attorney fees for their UDTPA claim, and, if so, the amount of such fees.
*375Case No. A19A0549
4. The Defendants assert that the trial court erred in awarding damages to Bearoff in her individual capacity for breach of the Non-Compete, because the violation of that agreement did not damage Bearoff individually. Instead, any damages resulting from Craton's breach of the Non-Compete (and Craton Entertainment's aiding and abetting of that breach) damaged Bearoff's business *839entities, JBear and JDream. As evidenced by the fact that the Defendants offer no legal authority to support this claim of error, their argument is without merit.
First, we note that as a party to the Non-Compete, Bearoff was entitled to recover for breach of that contract even in the absence of evidence showing that she suffered actual damages. See HA & W Capital Partners v. Bhandari ,
5. The Defendants contend that the trial court erred in finding that they had converted social media accounts belonging to Shannon Video/Entice because: (a) the Plaintiffs failed to prove the necessary elements of that claim; and (b) the claim was barred under the doctrine of res judicata. We find no merit in either of these arguments.
(a) Under Georgia law, conversion is defined as
an unauthorized assumption and exercise of the right of ownership over personal property belonging to another, in hostility to his rights; an act of dominion over the personal property of another inconsistent with his rights; or an *840unauthorized appropriation. Any distinct act of dominion wrongfully asserted over another's property in denial of his right, or inconsistent with it, is a conversion.
Qenkor Constr. v. Everett ,
Here, the trial court viewed the Plaintiffs' claim as one for "traditional" conversion, which requires a plaintiff to show: "(1) title to the property or the right of possession[;] (2) actual possession in the other party[;] (3) demand for return of the property[;] and (4) refusal by the other party to return the property." Capital Financial Svcs. Group v. Hummel ,
The Security Agreement gave the Plaintiffs a security interest in, inter alia, all of Shannon Video's intangible property. And the Defendants do not dispute that Shannon Video's trade name ("Entice") and the social media accounts it operated under that trade name constitute part of the company's intangible property and therefore constituted collateral under the Security Agreement. See OCGA § 11-9-102 (a) (43) (defining "general intangibles" that may be the subject of a security interest as "any personal property, ... other than accounts, chattel paper, commercial tort claims, deposit accounts, documents, goods, instruments, investment property, letter of credit rights, letters of credit, money, and oil, gas, or other minerals before extraction"). The Plaintiffs foreclosed on the collateral covered by the Security Agreement and provided the Defendants with notice of that foreclosure. Instead of providing the Plaintiffs with the intangible property included in the collateral (i.e., the social media accounts), however, the Defendants began to use those items to promote The Love Library. Thus, some evidence existed to support the trial court's *841finding that the Plaintiffs had demanded the return of the intangible property and that the Defendants had declined to relinquish control of that property. See Lifestyle Home Rentals, LLC v. Rahman ,
Moreover, under Georgia law,
a secured creditor has a right of action for conversion if property subject to its security interest is disposed of without the creditor's authorization. The elements of such a claim include the showing of a valid security interest in the debtor's property, disposition of that property, absence of the creditor's authorization for the disposition, and resulting damage to the creditor.
All Bus. Corp. ,
(b) In Shannon Video's bankruptcy case, Bearoff filed a motion seeking relief from the automatic stay to allow her to secure the physical and cash collateral covered by the Security Agreement. Bearoff's motion also objected to any further orders allowing Craton to use any of Shannon Video's cash collateral. On July 21, 2015, the Bankruptcy Court granted that motion and entered an order barring the Defendants from removing any collateral located in Entice Couples Boutique. The order also required Craton to provide Bearoff with physical access to the Entice Boutique; an accounting of any collateral removed from the store before certain, specified dates; an accounting for the use of all cash collateral between certain dates; an accounting of certain allowances or payments made on Entice's behalf; and all remaining cash collateral belonging to Shannon Video except for that in segregated tax accounts.
In early 2016, Bearoff brought a motion for contempt in the Bankruptcy Court, asserting that Craton had failed to comply with *377*842the July 2015 turnover order. The Bankruptcy Court granted that motion in part, and found Craton in contempt for using cash belonging to Shannon Video to purchase over $ 6,000 worth of inventory that he had delivered to a second adult store he owned and which was located in Athens. The court further found Craton in contempt for failing to turn over almost $ 7,000 in cash collateral.
At trial, the Defendants asserted that under the doctrine of res judicata, the Bankruptcy Court's contempt order barred the Plaintiffs' current claim for conversion. The trial court rejected this argument, and the Defendants challenge that ruling on appeal. We agree with the trial court.
"[T]he doctrine of res judicata forbids the litigation of a dispute that already has been litigated by the same parties and decided." Bates v. Bates ,
With respect to "identity of the cause of action," the Defendants argue that the contempt motion alleged conversion of collateral by Craton, and that Bearoff could have - but failed - to assert conversion of the intangible collateral. This argument misconstrues the scope of both the contempt proceeding and the Bankruptcy Court's order of contempt. The question in the contempt proceeding was not whether Craton had converted any property belonging to Shannon Video. Rather, the question was whether Craton had failed to comply with the Bankruptcy Court's July 2015 order to provide Bearoff with certain, specified items, including the cash collateral. And the Bankruptcy Court found that Craton had failed to turn over approximately $ 13,000 in collateral, and ordered him to pay that amount to Bearoff. Thus, despite the Defendants' assertions to the contrary, Bearoff did not assert, and the Bankruptcy Court did not adjudicate, any claim of civil conversion. More importantly, given the *843limited scope of a contempt proceeding, Bearoff could not have asserted a claim for conversion of the intangible collateral in her motion for contempt. See Jacob-Hopkins v. Jacob ,
In light of the foregoing, the Defendants failed to carry their burden of showing either that the bankruptcy proceeding involved claims for civil conversion, that the Bankruptcy Court adjudicated any conversion claim on the merits, or that Bearoff could have asserted such a claim in the contempt proceeding. The trial court, therefore, correctly found that res judicata did not bar the Plaintiffs' claim for conversion of Shannon Video/Entice's social media accounts.
6. As noted above, in dozens of social media posts advertising The Love Library, the Defendants used the Entice trade name. Additionally, when The Love Library first opened, the Defendants placed a sign of bearing the Entice store logo in front of their store, next to their own sign. Based on this evidence, the trial court found that the Defendants had misappropriated a trade name (Entice) belonging to the Plaintiffs. The Defendants *378challenge this finding on appeal, relying on the fact that Bearoff never assumed ownership of Shannon Video and therefore was not entitled to ownership of Shannon Video's trade name. As again demonstrated by the Defendants' failure to cite a single legal authority to support this claim of error, their argument finds no support in the law.
A trade name constitutes a company's intangible property and can therefore be pledged as collateral and subject to a security interest. Reis v. Ralls ,
7. In their final enumeration of error, the Defendants challenge the trial court's award of $ 50,000 in punitive damages, arguing that the amount was disproportionate to the other damages awarded.
Under the abuse of discretion standard, a reviewing court lacks " 'the broad discretionary powers vested in trial courts to set aside verdicts.' " Time Warner ,
Georgia law recognizes that the purpose of punitive damages is not to compensate the plaintiff, but instead is "solely to punish, penalize, or deter" certain tortious conduct. OCGA § 51-12-5.1 (c). Thus, because the purpose of punitive damages "is based on factors other than the actual harm caused," our Supreme Court has unequivocally "rejected the notion that punitive damages must necessarily bear some relationship to the actual damages awarded[.]" Hospital Auth. of Gwinnett County v. Jones ,
Thus, in a case such as this, where only nominal damages were awarded, we determine whether the punitive damages award was excessive by first asking whether there is any "direct proof of *846prejudice or bias" by the finder of fact.
The evidence further showed that the Defendants opened and operated The Love Library despite knowing that this conduct violated the Non-Compete. And Craton's testimony indicated that this violation of the Non-Compete was both knowing and deliberate, with Craton explaining that, "as far as I was concerned, the Non-Compete agreement was over when the store closed and [Bearoff] got everything." Furthermore, after being served with a cease-and-desist letter warning Craton that opening The Love Library would be a violation of the Non-Compete, Craton responded with what could be *847considered an effort to harass and intimidate Bearoff. Specifically, Craton sent Bearoff a cease-and-desist letter asserting that her operation of The Frisky Biscuit constituted a violation of the Non-Compete. He then, acting through High Five, initiated a lawsuit against the Plaintiffs alleging both trespass on the Property and a violation of the Non-Compete. Finally, instead of turning over the intangible collateral Plaintiffs were entitled to under the Security Agreement, the Defendants retained control of the social media accounts and used them to promote their new business venture, which was in direct competition with the Plaintiffs. The Defendants also used the Entice trade name in an effort to lure Shannon Video/Entice's customers to The Love Library. Finally, although the trade name "Entice Couple's Boutique" belonged to Shannon Video, the Defendants attempted to trademark the name, claiming that it was owned by Craton Entertainment.
In light of this evidence, we find no abuse of discretion by the trial court in awarding the Plaintiffs $ 50,000 in punitive damages. See Lawrence v. Direct Mtg. Lenders Corp. ,
For the reasons set forth above, in Case No. A19A0548, we affirm the trial court's grant of summary judgment in favor of the Defendants on the Plaintiffs' claim for an equitable extension of the non-compete. We also vacate that part of the order of judgment declining to award attorney fees, and remand for further proceedings on the question of whether the Plaintiffs are entitled to recover the attorney fees associated with their claim under the UDTPA. In Case No. A19A0549, we affirm the order of judgment against Charles Craton and Craton Entertainment.
Judgment affirmed in part and vacated in part. Case remanded with direction.
Dillard, C. J., and Hodges, J., concur.
Also named as defendants in the complaint were Shannon Video, d/b/a Entice Couple's Boutique, and High Five Investments, LLC. The case did not proceed to trial against those defendants, and they are not parties to this appeal.
The Plaintiffs also asserted a claim for tortious interference with contractual relations, but did not pursue that claim at trial.
The deed to secure debt conveyed and transferred to Bearoff and Gabler all of High Five's rights, title, and interest in and to the Property; the assignment of leases and rents assigned to Bearoff and Gabler all of High Five's rights, title, and interest in and to the leases and rents generated by the Property.
The Security Agreement granted to Bearoff and Gabler a lien and security interest in all inventory, business records, data, and general intangibles owned by Shannon Video, d/b/a Entice Couples Boutique.
Under the Guaranty, Charles and Susan Craton guaranteed the payment and performance of the obligations under the Redemption Agreement, the Promissory Note, the deed to secure debt, the assignment of leases and rents, and the Security Agreement.
The Non-Compete defined the business of Shannon Video and High Five to be that of "market[ing] and sell[ing] adult novelties to residents of [the counties]" covered by the Non-Compete.
The Agreement defines "competitive activity" as:
(i) doing business, opening one or more retail outlets or businesses in the Non-Compete Area or providing products or services substantially similar to those provided by the business of Shannon Video and High Five ... or soliciting any [c]ustomers of Shannon Video or High Five in the Non-Compete Area for the purpose of providing products or services substantially similar to those provided by Shannon Video and High Five ... ; (ii) serving as an officer, director, member, manager, consultant, advisor, agent[,] or representative of any person, corporation, partnership, limited liability company, sole proprietorship, association, or other business enterprise engaged in the same or similar business as Shannon Video and High Five (each a "Competitive Enterprise"); (iii) owning or acquiring, directly or indirectly, any interest in any Competitive Enterprise; (iv) soliciting or inducing any partner, stockholder, principal, director, officer, employee, agent or other representative of Shannon Video and High Five to leave the employ or retention of Shannon Video or High Five[;] or (v) requesting or advising, explicitly or implicitly, either individually or through any other person or entity, any [c]ustomer of Shannon Video or High Five ... to withdraw, curtail or cancel its business relationship with Shannon Video or High Five.
While the Non-Compete had been drafted to run for the original payment period of 81 months, the parties did not seek to extend that period, even though they were extending the terms of the Promissory Note and other Security Documents.
Although the relevant documents required that the Cratons obtain Bearoff's permission before effectuating this transfer, they did not do so.
Bearoff testified that although she was entitled to foreclose on the stock of Shannon Video and High Five, she elected not to do so because of the existing debt carried by those companies.
Some of the items sold at The Frisky Biscuit were part of the Shannon Video/Entice inventory foreclosed upon by Bearoff.
The record does not show the outcome of this lawsuit, but it appears that none of High Five's claims proceeded to trial, and we assume that the case is no longer pending.
As discussed more fully below, on appeal, the Defendants challenge only the findings that they misappropriated the Entice trade name and that they unlawfully converted the social media accounts.
On appeal, the Plaintiffs challenge only the trial court's refusal to award them fees under the UDTPA.
As noted above, the trial court held that because neither JBear nor JDream was a party to the Non-Compete, neither could seek to enforce that agreement or recover for breach thereof. The Plaintiffs have not challenged that finding on appeal.
In their brief, the Defendants contend that Bearoff has waived her right to challenge this ruling on appeal because she failed to appeal the summary judgment order at the time it was entered and because she failed to request at trial an equitable extension of the Non-Compete. This argument reflects a misunderstanding of Georgia law. After the trial court granted summary judgment against Bearoff on this claim for relief, she could not thereafter seek that relief at trial. See Smith v. Lockridge ,
This statute became effective on May 11, 2011, after the initial Redemption Agreement and relevant Security Documents were executed, but before the parties executed the amendments to those agreements.
In the event of a bench trial, the trial court, in its discretion, could request that such evidence be submitted at trial. It seems to us, however, that the more efficient approach would be to hear attorney fee evidence only after the court has determined the prevailing party on the UDTPA claim.
The Defendants' failure to cite any legal authority in their opening brief to support this enumeration of error arguably means they have abandoned this claim. See de Castro v. Durell ,
The Defendants further contend that the trial court should have heard evidence of Craton's financial circumstances before making an award of punitive damages. The Defendants, however, offered no citation of legal authority or reasoned legal argument to support this statement. Accordingly, we deem this argument abandoned pursuant to Court of Appeals Rule 25 (c).
Our Supreme Court's recognition of this fact is in accord with that of both the United States Supreme Court and at least six of the federal circuits. In State Farm , the United States Supreme Court indicated that ratios greater than a single digit of compensatory damages to punitive damages will not necessarily violate due process when reprehensible conduct results " 'in only a small amount of economic damages.' "
Such evidence could include the improper introduction of inflammatory evidence, inappropriate or inflammatory remarks or argument by counsel, or inappropriate or prejudicial statements made by the trial court. And in cases where significant compensatory damages were awarded, "an appellate court may look to the ratio of compensatory to punitive damages for some evidence that the punitive damages award is infected by bias or prejudice." Time Warner , 254 Ga. App. at 604 (2) (b),