Pangborn, LLC v. Stonecipher

368 Ga.App. 800

890 S.E.2d 369

PANGBORN, LLC et al. v. STONECIPHER.

A23A0490

Court of Appeals of Georgia.

June 27, 2023

Reconsideration Denied July 17, 2023

John Timothy McDonald, Jason Richard Carruthers, Atlanta, for Appellant.

Andrew M. Beal, Atlanta, Milinda Lynn Brown, for Appellee.

McFadden, Presiding Judge.

This case calls upon us to administer Illinois contract construction law. And, as a preliminary matter, it calls upon us to reiterate that the duty of clerks of court to file pleadings is ministerial and does not entail exercises of discretion.

This is a contract dispute between Roger Stonecipher and his former employers, Pangborn, LLC and Pangborn's owner, United Generations, LLC. The parties disagree about the amount of a long-term incentive award that Pangborn owes Stonecipher.

Upon Stonecipher's termination, the parties entered a separation agreement under which he is entitled to receive an award in a specified amount "subject to audited financials."

The agreement does not elaborate. The parties disagree about the circumstances under which the audited financials alter the award and about how such an alteration is to be calculated.

There had been provisions for such an award and for a method calculating it in a pre-existing long-term incentive plan that had governed Stonecipher's award during his employment, and the award specified in the separation agreement is the maximum award that would have been available under that plan. But the separation agreement contains a merger clause that explicitly supersedes that plan.

Nevertheless, relying on that plan's method of calculation, Pangborn paid Stonecipher about a third of the amount specified in the separation agreement. Stonecipher brought this action against Pangborn and United Generations (collectively, the defendants). He alleged breach of the separation agreement, breach of the duty of good faith and fair dealing implied in that agreement, and sought attorney fees under OCGA § 13-6-11.

The trial court granted Stonecipher partial summary judgment on his breach of contract claim, holding that as a matter of law Stonecipher was entitled to the full amount of long-term incentive award specified in that agreement. The trial court held that the agreement's merger clause prevented him from considering the terms of the long-term incentive plan in construing the contract. And the trial court held that "the amount and results of the audited financials are inapplicable" to a ruling on Stonecipher's summary judgment claim. The trial court also denied the defendants’ cross-motion for summary judgment on all of the claims.

The defendants appeal. ¹ As to the breach of contract claim, they argue that the trial court erred in refusing to consider either the long-term incentive plan or Pangborn's audited financial statements when construing the separation agreement. And they argue that, construed in light of those documents, the separation agreement unambiguously permitted them to pay Stonecipher less than the full amount of the long-term incentive award.

As detailed below, we find that the long-term incentive plan cannot be considered when construing the separation agreement. The audited financial statements are to be considered, but the separation agreement is ambiguous as to how the audited financial statements are to affect the amount of long-term incentive award that Pangborn is required to pay Stonecipher.

Under Illinois law, which governs this agreement, extrinsic evidence must be considered in resolving that ambiguity. Because both sides argued to the trial court that the agreement was unambiguous, the impact of any extrinsic evidence in construing the agreement was not raised or ruled upon below. So we reverse the grant of partial summary judgment to Stonecipher and affirm the denial of summary judgment to the defendants on the claim for breach of contract.

On the other hand, we also find genuine issues of material fact as to whether the defendants acted in bad faith, so we affirm the trial court's denial of summary judgment to them on Stonecipher's claims for a breach of the duty of good faith and fair dealing and for attorney fees.

1. The defendants’ notice of appeal.

Before turning to the merits of this appeal, we note that an issue arose regarding whether the defendants timely filed their notice of appeal. It appears that the clerk of the trial court initially rejected the filing because its caption identified the parties as "Appellants-Defendants" and "Appellee-Plaintiff" rather than "Defendants" and "Plaintiffs."

The defendants corrected this perceived imperfection as soon as they learned of the rejection. But as a consequence of that rejection, the notice of appeal was initially deemed filed a day late, so Stonecipher moved to dismiss the appeal. The trial court granted the defendants’ motion to relate the filing of the notice of appeal to the date of the defendants’ initial, timely submission. And Stonecipher, to his credit, then withdrew his motion.

Nevertheless, we take this opportunity to reiterate that clerks of court "have the legal duty to file pleadings, not to ascertain their legal effect. These duties of the clerk relating to the filing of pleadings are ministerial in nature and do not involve the exercise of discretion." Alexander v. Gibson , 300 Ga. 394, 395, 794 S.E.2d 597 (2016) (citations and punctuation omitted). Accord Ford v. Hanna , 292 Ga. 500, 501 n. 2, 739 S.E.2d 309 (2013) ; Hood v. State , 282 Ga. 462, 464, 651 S.E.2d 88 (2007).

More particularly, there is no authority for the proposition that a notice of appeal must denominate the parties in the way the trial court clerk undertook to require. On the contrary, under our Appellate Practice Act, the form of a notice of appeal is sufficient so long as it substantially complies with the template set forth in OCGA § 5-6-51. A technically deficient notice of appeal can confer jurisdiction upon an appellate court so long as it is "sufficient to notify the opposing party that an appeal [is] being taken [and is] not so defective as to mislead or prejudice him." Steele v. Cincinnati Ins. Co. , 252 Ga. 58, 60, 311 S.E.2d 470 (1984).

Where, as here, a timely submitted notice of appeal is sufficient to confer jurisdiction, the clerk of the trial court does not have the authority to act in a way that would render the filing of the notice untimely and divest the appellate court of jurisdiction. See generally Hughes v. Sikes , 273 Ga. 804, 805 (1), 546 S.E.2d 518 (2001) ("Although the notice of appeal must be filed in the court below, [the appellate court] alone has the authority to determine whether such filing is sufficient to invoke its jurisdiction.").

2. Facts and procedural history.

"Summary judgment is appropriate when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. We apply a de novo standard of appellate review and view the evidence, and all reasonable conclusions and inferences drawn from it, in the light most favorable to the nonmovant." Siarah Atlanta Hwy v. New Era Ventures , 350 Ga. App. 59, 60-61 (1), 828 S.E.2d 4 (2019) (citation and punctuation omitted).

So viewed, the evidence shows that from June 2017 to February 2020, Pangborn employed Stonecipher as its president. Stonecipher's compensation included a long-term incentive award that was calculated based on the company's audited financial statements under the terms of a long-term incentive plan.

In February 2020, United Generations and Stonecipher entered into the separation agreement at issue in this case. They agreed that Illinois law would govern the interpretation of the agreement.

Among other things, the agreement provides that "[s]ubject to audited financials, the Company [Pangborn] will pay [Stonecipher his] Long-Term Incentive in [a specified amount] over the next twenty-four months in [a specified amount] each month less applicable taxes." The agreement provides for those payments to begin "on the first regular Company pay date that occurs at least five (5) business days following expiration of [a] Revocation Period" defined in the agreement.

The agreement also provides that it "constitutes the complete understanding between [the parties] concerning all matters affecting [Stonecipher's] employment with [Pangborn] and the termination thereof" and that it "supersedes all prior agreements, understandings, and practices concerning such matters, including ... any ... incentive or bonus plans or programs[.]"

After Pangborn's 2018/2019 audited financial statements were completed in June 2020, the defendants refused to pay Stonecipher a long-term incentive award in the amount specified in the separation agreement. Instead, they took the position that Stonecipher is entitled to only about one-third of that amount. The defendants relied on a method of calculation set out in the long-term incentive plan.

Stonecipher maintains that he is entitled to the full amount of the long-term incentive award specified in the separation agreement. He sued the defendants for breach of contract, breach of the implied duty of good faith and fair dealing, and attorney fees.

On the parties’ cross-motions for summary judgment, the trial court granted partial summary judgment to Stonecipher on the breach of contract claim. The trial court held that the agreement unambiguously required the defendants to pay the full specified amount of long-term incentive award to Stonecipher; that the agreement did not incorporate by reference the long-term incentive plan but, to the contrary, expressly superseded that plan; and that "all documents concerning the parties’ negotiations, calculations, or the documents related to the [long-term incentive plan] should be excluded as a matter of law." The trial court also found that "the amount and results of the audited financials are inapplicable" because they cannot be interpreted without reference to material that is barred...