Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-07-08044/USCOURTS-ca10-07-08044-0/pdf.json

Parties Involved:
Market Street Mortgage
Appellant
Robert McBride
Appellee

Document Text:

UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT 

ROBERT MCBRIDE, 

 Plaintiff - Appellee, 

v. 

MARKET STREET MORTGAGE, a 

Florida corporation, 

 Defendant - Appellant.

No. 07-8044 

(D. Wyo.) 

(D.C. No. 2:06-CV-00057-ABJ) 

ORDER AND JUDGMENT*

Before HENRY, O’BRIEN, and TYMKOVICH, Circuit Judges.

Robert McBride entered into a three-year Employment Agreement with Market 

Street Mortgage Company (Market Street) in which it agreed to pay him $230,000 in 

Annual Base Salary. Approximately seven months into the Agreement, Market Street 

sent McBride a letter informing him his salary was being reduced to $85,000. Believing 

he had suffered a “reduction by the Company in [his] Annual Base Salary” which would 

allow him to terminate the Agreement for cause, McBride gave notice and sought 

 *

 This order and judgment is an unpublished decision, not binding precedent. 10th 

Cir. R. 32.1(A). Citation to unpublished decisions is not prohibited. Fed. R. App. 32.1. 

It is appropriate as it relates to law of the case, issue preclusion and claim preclusion. 

Unpublished decisions may also be cited for their persuasive value. 10th Cir. R. 32.1(A). 

Citation to an order and judgment must be accompanied by an appropriate parenthetical 

notation B (unpublished). Id. 

FILED 

United States Court of Appeals 

Tenth Circuit 

June 2, 2010

Elisabeth A. Shumaker 

Clerk of Court

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“Termination Payments” under the Agreement. Claiming the letter was a mistake,

Market Street refused to remit the “Termination Payments.” McBride sued. The critical 

issue is whether the letter constituted “a reduction by the Company in [McBride’s] 

Annual Base Salary.” McBride claimed it did; Market Street argued it did not because 

McBride never received a paycheck at the reduced level. The district court submitted the 

issue to a jury which found in favor of McBride. It awarded $894,000 in total damages—

$242,000 on McBride’s termination for cause claim and an additional $652,000 in 

damages for breach of the Agreement. The court also entered a declaratory judgment 

relieving McBride of his contractual obligations not to compete with Market Street. 

Market Street appeals from the jury’s verdicts and the declaratory judgment. We 

affirm the jury’s liability verdicts and the declaratory relief but reverse the damages 

awards and remand for further proceedings. 

I. FACTUAL BACKGROUND 

A. Market Street’s Purchase of Major Mortgage

In 1995, WERCS, a Wyoming company, approached McBride about starting a 

mortgage banking company on its behalf. McBride agreed and started Major Mortgage 

in 1996. Eight years later, WERCS decided to sell Major Mortgage, which at that time 

had thirty-five offices in ten states and was originating $800 million in loans annually. 

Market Street submitted a letter of intent to purchase Major Mortgage, which also 

offered employment to Major Mortgage’s existing management team—McBride, Terry 

Mott, Kip Clark, Steve Carver and Julie Zeiler. Market Street agreed to pay a total of 

$1.5 million in bonuses to these individuals within the first year of the acquisition. 

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WERCS sold Major Mortgage to Market Street in July 2005. 

B. The Employment Agreement

On July 9, 2005, Market Street entered into a three-year Employment Agreement1

 

with McBride under which he would serve as Market Street’s Western Division 

manager.

2

 Section 4 of the Agreement relates to compensation. Section 4.1 provides: 

“During the Term, [McBride] shall be compensated at an annual rate equal to the Annual 

Base Salary.” It also provides for an annual salary review and possible raises. Section 

4.2 reads: “[McBride] shall be eligible for an annual incentive bonus determined from 

time to time in accordance with Annex C hereto.” It also mentions his participation in 

stock options, a matter not relevant here. Section 4.3 provides for other benefits available 

to all employees, such as insurance, reimbursement for business expenses and paid time 

off. Annex C to the Agreement outlines the specifics of McBride’s compensation 

package: (1) he “will receive a yearly salary of $230,000 [paid bi-weekly]”; (2) he will 

receive a “Signing Bonus” (the signing bonus is not mentioned in the body of the 

Agreement), consisting of an initial $415,000 payment (which he received upon signing 

the Agreement) and a contingent $474,000 payment one year later (for ease of reference 

the $474,000 is referred to as the “contingent payment”);3

 and (3) he will receive an 

 1

 The Agreement appears in Market Street’s Appendix, Volume IV at 670-684. 

Section 3.1 provides: “This Agreement shall remain in effect for the Term.” “‘Term’ 

means the period commencing on the date hereof and ending on the third anniversary of 

such date.” 

2

 The Western Division included the branches Market Street acquired from Major 

Mortgage as well as Market Street’s offices in Denver and Longmont, Colorado. 

3

 The “Signing Bonus” provision provides: 

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annual “Net Contribution Incentive” (specifically referenced in the body of the 

Agreement) if the Western Division is profitable.4

 

The Agreement allows either party to terminate prior to its expiration (1) for cause 

without giving notice or (2) without cause if the terminating party gives thirty days 

written notice. As to McBride, cause (for Market Street to terminate) consists of his 

dishonesty, incompetency, willful misconduct, breach of fiduciary duty involving 

personal profit, intentional failure to perform his duties, willful violation of any law, rule 

or regulation, material breach of any provision of the Agreement, or continued failure to 

substantially perform his duties after written notice identifying shortcomings. As to 

Market Street, cause (for McBride to terminate) is more detailed: 

(a) a reduction by the Company in [McBride’s] Annual Base Salary; 

(b) a material diminution in powers, responsibilities or duties of [McBride] 

that occurs within one year after a Change in Control; 

(c) the Company requiring [McBride] to be based at a location more than 

 

You will receive a signing bonus of $415,000 to be paid on the 1st official payday 

applicable to start date. In addition, you will receive an additional $474,000, 

assuming that $600,000,000 in volume is originated and closed within 12 months 

from the date of the acquisition by Market Street Mortgage Corporation. This 

payment would be paid in July, 2006. 

This provision implemented Market Street’s agreement with WERCS (set forth in Market 

Street’s letter of intent) to pay a total of $1.5 million to McBride, Mott, Clark, Carver and 

Zeiler within the first year of Market Street’s acquisition of Major Mortgage. McBride 

was permitted to determine how that $1.5 million would be divided among the five 

recipients. 

4

 Under the net contribution incentive plan, for every dollar of profit earned by the 

Western Division, Market Street would place thirty percent of it into a pool. After the 

branch managers were paid their incentives from the pooled funds, McBride would 

receive forty percent of the remainder. 

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100 miles from the Business Location; 

(d) the failure by the Company to pay [McBride] any portion of [his] 

current compensation within seven days of the date such compensation is 

due, other than an isolated, insubstantial and inadvertent failure not 

occurring in bad faith and which is remedied by the Company promptly 

after receipt of notice thereof given by [McBride]; 

(e) the failure by the Company to continue any material benefit plan in 

which [McBride] participates immediately prior to the Effective Date 

(unless (i) the discontinued plan is replaced by the Company with another 

plan that . . . is reasonably equivalent to the discontinued plan or (ii) the 

failure did not occur in bad faith and is remedied by the Company . . .); or 

(f) any termination by the Company of [McBride’s] employment other than 

as expressly permitted by this Agreement. 

Under Section 3.3 of the Agreement, “Effect of Termination,” if McBride’s 

employment is terminated by Market Street for cause or by McBride without cause, 

Market Street’s only obligation is to pay McBride any amounts due and owing to him on 

the date of termination. However, if Market Street terminates without cause or McBride 

terminates for cause, Market Street is required to meet its obligations under Section 3.4. 

That section, titled “Termination Payments,” states in relevant part: 

In the event [McBride’s] employment is terminated [by Market Street 

without cause or by McBride for cause] prior to the expiration of the Term . 

. ., the Company shall pay to [McBride] as severance pay and liquidated 

damages a lump sum amount equal to the sum of the (a) Annual Base 

Salary and (b) Incentive Compensation . . . . In addition, for a period of 

twelve months following the effective date of the termination . . ., the 

Company shall continue to provide to [McBride] . . . [his] benefits . . .; 

provided, however, that in lieu of providing health benefits, the Company 

shall pay [McBride] an amount equal to the difference between (x) the cost 

of COBRA health continuation coverage . . . and (y) the amount for which 

[McBride] would have been responsible to pay under the health benefit 

plans in effect . . . immediately prior to his termination . . . . 

Additionally, if Market Street terminates without cause or McBride terminates for cause, 

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McBride is relieved from the Agreement’s non-solicitation and non-competition 

provisions. 

C. The February 15 Meeting - Reduction in Salary

The Western Division was profitable the first month after Market Street’s 

acquisition of Major Mortgage. Thereafter, its branches began incurring expenses they 

had not incurred prior to the acquisition. As a result, the Western Division’s profitability 

declined and by year-end it had a net loss. 

On February 15, 2006, McBride and Mott met with a number of Market Street 

executives—Randy Johnson (President and Chief Executive Officer (CEO)), Donnell 

Smith (Executive Vice President), Steven Joyce (Senior Vice President of Strategic 

Planning and Development) and Deborah Renner (Vice President of Financial 

Operations)—to discuss the Western Division’s lack of profitability. Smith said the 

salaries in the Western Division were too high and needed to be reduced.5

 Johnson 

agreed but said the salaries should be structured so they could be earned back if the 

Western Division met identified profit goals. Two days later, on the morning of February 

17, Johnson and Smith agreed to reduce McBride and Mott’s salaries and discussed the 

level of reduction, settling on $85,000 for McBride. Johnson directed Smith to talk with 

McBride and Mott and to check their employment agreements for compliance before 

sending letters notifying them of the reduction.6

 

 5

 It is contested whether or not Smith specifically mentioned reducing McBride 

and Mott’s salaries. 

6

 According to Smith’s testimony, Johnson instructed him to check with the 

Human Resources Department to ensure compliance with employment agreements prior 

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D. Smith’s Letter to McBride 

After his discussion with Johnson, Smith drafted letters to McBride and Mott. The 

letter to McBride, dated February 17, 2006, stated: 

As we discussed in our meeting on February 15th, your annual 

compensation will be reduced from $230,000 to $85,000, effective March 

1, 2006. However, if the Western Division net branch contribution is 35 

[basis points] by year-end, you will receive your normal year-end incentive 

based on your incentive plan. 

In addition, if you achieve these results the difference between your initial 

salary and the reduced salary as of March 1, 2006 will be paid to you. I 

hope you believe this is a fair plan and something you and [Mott] can work 

towards to make 2006 a successful year for the Western Division. 

(R. Vol. IV at 685.)7

 He also drafted a similar letter to Mott and showed copies of both 

letters to Joyce and Renner. He then gave the letters to his assistant to mail as he was 

scheduled to be out of the office for a period of time. Smith neither spoke to McBride (or 

Mott) nor checked employment agreements prior to directing the letters to be sent. 

McBride received Smith’s letter in his Cheyenne office on February 24, 2006. He 

was “absolutely shocked” because no one had discussed it with him. (R. Vol. III at 413.) 

He believed it indicated Market Street “wanted [him] gone.” (Id.) On February 27, 

Johnson signed an “Associate Status Change Form” indicating McBride’s salary was 

being adjusted to $85,000 effective March 1, 2006. (R. Vol. IV at 701.) The form was 

 

to sending the letters reducing McBride and Mott’s salaries. He did not recall Johnson 

telling him to speak with McBride and Mott before sending the letters but conceded he 

knew he should have done so. 

7

 In addition to informing McBride of a reduction in his Annual Base Salary, the 

letter’s reference to “35 [basis points]” made it more difficult for McBride to earn the 

“Net Contribution Incentive.” 

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also signed by Renner and file stamped: “ENTERED FEB 27 2006 Human Resources.” 

(Id.) 

E. McBride’s Notice of Termination for Cause

The next day, February 28, McBride faxed and mailed a letter to Johnson stating: 

This is to provide notice of termination of my Employment Agreement with 

Market Street Mortgage Corporation for cause pursuant to section 3.2.2(a) 

of the Agreement. The cause is a reduction by the Company in my annual 

base salary. I was notified in writing dated February 17, 2006 that my 

annual compensation would be reduced, effective March 1, 2006. Such 

action breaches the terms of my contract and constitutes “cause” for 

termination by me provided in section 1.5.2 of the Agreement. 

I am providing notice that my employment with Market Street Mortgage 

Corporation is effectively terminated as of 5:00 pm MST on February 28, 

2006. 

(R. Vol. IV at 687.) He also sought immediate payment of the “Termination Payments” 

under Section 3.4 of the Agreement. On that same day, he had his assistant remove his 

personal property from his Market Street office. 

After receiving McBride’s letter, Johnson called McBride twice and sent him an email requesting a return call. McBride did not receive Johnson’s calls because he was 

traveling but did receive the e-mail and called Johnson that night. Johnson told McBride 

he believed Smith had talked to him prior to sending the February 17 letter and asked 

McBride to call him back the next day, March 1. 

F. The Mistake

McBride called Johnson on March 1. Johnson told McBride the February 17 letter 

was a mistake, his salary had not been reduced and he wanted to talk with McBride about 

moving the Western Division forward. Johnson admitted he was aware McBride would 

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be receiving a notice of salary reduction but Smith was directed to talk to McBride before 

sending the notice. McBride said he would be happy to talk with Johnson but informed 

him he had trust issues with Smith and did not feel he could return to Market Street. 

Johnson asked McBride to think about returning and said McBride could report directly 

to him, rather than Smith, were he to return. McBride did not believe that arrangement 

would work because Johnson and Smith had worked together for over twenty years and 

he told Johnson so; nevertheless, he agreed to consider it and to contact Johnson on 

March 3. 

On March 1, Johnson also sent McBride a letter stating the February 17 letter, 

“which outlined a reduction in your salary, was sent in error. No change in your 

compensation has been made.” (R. Vol. IV at 688.) Additionally, he informed the 

Human Resources Department not to process the “Associate Status Change Form.” The 

Human Resources Department wrote on the form “Per Randy [Johnson]—Done in 

error—should not be processed. Deleted from system.” (Id. at 701.) 

G. McBride Decides Not to Return to Market Street

On March 3, McBride called Johnson saying he would not return to Market Street. 

He told Johnson about a conversation he had with Mott, who said before the February 15 

meeting Smith had asked Kip Clark if he would be willing to take over the Western 

Division should McBride and Mott be gone. Johnson said he was not aware of Smith’s 

conversation with Clark. He did indicate, however, that McBride and Mott had higher 

salaries than any other regional managers and admitted he had agreed with Smith their 

salaries needed to be brought more in line with the other managers. McBride followed up 

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this conversation with a letter to Johnson reiterating that he was not willing to rejoin 

Market Street. McBride’s letter explained he did not believe the February 17 letter was a 

“mistake” because (1) it was sent by Smith, to whom he reported; (2) Smith had 

approached Clark about replacing McBride before sending the letter; and (3) at the 

February 15 meeting Smith said (and Johnson agreed) McBride’s salary needed to be 

reduced. (R. Vol. IV at 689.) McBride stated: “It appears the only mistake is that 

apparently no one bothered to read the Employment Agreement regarding my right to 

terminate the contract and receive the severance payment and liquidated damages set 

forth in the contract.” (Id. at 689-90.) He again requested payment of Section 3.4’s 

“Termination Payments.” 

On March 3, Johnson sent McBride a letter confirming his March 1 telephone 

statement that the February 17 letter had been sent in error and there had been no change 

in McBride’s Annual Base Salary. Therefore, Johnson claimed, there was no cause for 

McBride to terminate the Agreement and Market Street considered McBride’s 

termination to be without cause. Johnson also referred McBride to the non-solicitation 

and non-competition clauses of the Agreement. 

On March 31, McBride began working for Freedom Mortgage for $190,000 per 

year. He left two months later. In July 2006, he began working for Republic Mortgage 

for $60,000 per year. 

II. PROCEDURAL BACKGROUND 

McBride filed suit against Market Street making four claims: (1) entitlement to the 

“Termination Payments” under Section 3.4 of the Agreement based on his termination of 

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the Agreement for cause (the termination for cause claim); (2) a declaration that he 

terminated the Agreement for cause and therefore was not bound by its non-solicitation 

and non-competition provisions; (3) breach of the Agreement based on Market Street’s 

unilateral reduction of his salary and incentive compensation as well as breach of the 

implied covenant of good faith and fair dealing; and (4) tortious interference with a 

prospective economic advantage based on Market Street’s attempt to enforce the 

Agreement’s non-solicitation and non-competition provisions (as evidenced by Johnson’s 

March 3 letter referring to those provisions). Market Street answered and asserted 

several counterclaims against McBride including breach of the Agreement’s noncompetition provisions because of McBride’s post-termination employment with 

Freedom Mortgage. Two months later, Market Street voluntarily dismissed its 

counterclaims. 

Market Street moved for summary judgment on several grounds. The district 

court granted the motion on McBride’s tortious interference claim. The remaining issues 

proceeded to trial. The breach of good faith and fair dealing claim was dismissed at the 

close of McBride’s evidence upon Market Street’s oral motion for judgment as a matter 

of law under Rule 50(a) of the Federal Rules of Civil Procedure. The court determined 

Wyoming did not recognize such a claim in the employment law context. 

The jury returned a verdict in favor of McBride. It found “the actions of 

Defendant Market Street constituted a ‘reduction by the Company in [McBride’s] Annual 

Base Salary’”; “McBride was entitled to terminate his employment for cause”; and 

“Defendant Market Street Mortgage Corporation breached the Employment Agreement 

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with [McBride].” (R. Vol. IV at 802.) The jury awarded McBride $242,000 on the 

termination for cause claim and $652,000 on the breach of contract claim. Based on the 

jury’s verdict, the court relieved McBride of any non-competition and non-solicitation 

obligations. It denied Market Street’s post-verdict motion for judgment as a matter of 

law or in the alternative for new trial or remittitur under Rules 50(b) and 59 of the 

Federal Rules of Civil Procedure. 

III. CHOICE OF LAW 

The Agreement contains a choice-of-law provision: “This Agreement shall be 

construed and enforced under and in accordance with Federal law, where applicable, and 

then with the laws of the State of Georgia.” (R. Vol. IV at 678.) Because this is a 

diversity case, we apply Wyoming law to determine whether to enforce the Agreement’s 

choice-of-law provision. See Vitkus v. Beatrice Co., 127 F.3d 936, 941 (10th Cir. 1997) 

(“A federal court sitting in diversity . . . must apply the substantive law of the forum 

state, including its choice of law rules.”). Wyoming will enforce a contractual choice-oflaw provision unless (1) the parties’ chosen state has no reasonable relationship to the 

parties or transaction or (2) application of the foreign state’s law would be contrary to 

Wyoming’s law, public policy or the general interests of its citizens. Res. Tech. Corp. v. 

Fisher Scientific Co., 924 P.2d 972, 975 (Wyo. 1996). 

Georgia has a reasonable relationship to the parties and transaction in this case. 

Market Street’s parent corporation, NetBank Inc., is headquartered in Georgia and the 

Agreement was derived from a form created and used by NetBank. Moreover, because 

the contract laws of Georgia and Wyoming are similar, application of Georgia law in this 

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case would not offend the law or public policy of Wyoming or the general interests of its 

citizens. Consequently, Wyoming would likely enforce the parties’ choice-of-law 

provision; neither party contends otherwise. See id. (enforcing choice-of-law provision 

where defendant was headquartered in the chosen state and chosen state’s laws similar to 

Wyoming’s). 

While the district court enforced the Agreement’s choice-of-law provision, it only 

applied Georgia law to McBride’s termination for cause claim; it applied Wyoming law 

to the breach of contract claim and applied both Wyoming and Georgia law in 

determining the propriety of the jury’s damages award. The court apparently believed the 

choice-of-law provision only applied to the termination for cause claim because only that 

claim involved the “constru[ction] and enforce[ment]” of the Agreement. (R. Vol. IV at 

678.) It was mistaken. Georgia law should have been applied not only to the termination 

for cause claim but also to the breach of contract claim and to the review of the jury’s 

damages award because they too were premised on the Agreement. See Pepsi-Cola 

Bottling Co. of Pittsburg, Inc. v. PepsiCo., Inc., 431 F.3d 1241, 1255 (10th Cir. 2005) 

(applying New York law to plaintiff’s breach of contract and third-party beneficiary 

claims where choice-of-law provision stated terms and conditions of contract shall be 

governed and interpreted by New York law); Century 21 Real Estate Corp. v. Meraj Int’l 

Inv. Corp., 315 F.3d 1271, 1281 (10th Cir. 2003) (applying New Jersey law to claim that 

jury’s breach of contract damages award was excessive where choice-of-law provision 

stated New Jersey law would govern the “construction” of the contract). We apply 

Georgia law. 

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IV. DISCUSSION 

Market Street challenges the jury’s liability and damages verdicts and the district 

court’s entry of a declaratory judgment. 

A. Jury Liability Verdicts and Declaratory Judgment

In its motion for summary judgment, Market Street argued, inter alia, McBride’s 

termination of the Agreement was without “cause” because he never suffered a 

“reduction by the Company in [his] Annual Base Salary” as his salary was never reduced. 

The district court concluded the term “reduction” was ambiguous because it was unclear 

whether the parties intended it to require the actual receipt of a reduced paycheck or mere 

notice of a reduction. It determined this ambiguity needed to be resolved by the jury. At 

the close of McBride’s trial evidence, Market Street orally moved for judgment as a 

matter of law pursuant to Rule 50(a) of the Federal Rules of Civil Procedure, again 

arguing the interpretation of “reduction” was for the court, not the jury, and “under any 

reasonable interpretation of the reduction language . . . simply receiving a letter, without 

more, [does not] constitute[] a reduction.” (R. Vol. III at 542.) The court denied the 

motion. Repeating the arguments made to the district court, Market Street contends its 

Rule 50(a) motion should have been granted and the court improperly sent the 

interpretation of the phrase “reduction by the Company in [McBride’s] Annual Base 

Salary” to the jury. 

 We review the denial of a motion for judgment as a matter of law de novo. 

Bayless v. Christie, Manson & Woods Int’l, Inc., 2 F.3d 347, 351 (10th Cir. 1993). 

Contract interpretation is a question of law in Georgia, see Mon Ami Int’l., Inc. v. Gale, 

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592 S.E.2d 83, 86 (Ga. Ct. App. 2003), which is also reviewed de novo. Kaw Nation v. 

Springer, 341 F.3d 1186, 1189 (10th Cir. 2003). 

Georgia applies a three-step analysis in construing a contract. First, a court must 

decide whether the contract’s language is clear and unambiguous. Covington Square 

Assocs., LLC v. Ingles Mkts., Inc., 641 S.E.2d 266, 268 (Ga. Ct. App. 2007). “Contract 

language is unambiguous if it is capable of only one reasonable interpretation.” Pipkin v. 

Cora Bett Thomas Realty Co., 650 S.E.2d 394, 395 (Ga. Ct. App. 2007) (quotations 

omitted); see also Ben Farmer Realty, Inc. v. Owens, 649 S.E.2d 771, 774 (Ga. Ct. App. 

2007) (“Ambiguity exists when a contract is uncertain of meaning, duplicitous, and 

indistinct, or when a word or phrase may be fairly understood in more than one way.”) 

(quotations omitted). If the language is unambiguous, no construction is required and the 

court simply enforces the contract according to its terms. Covington Square Assocs., 641 

S.E.2d at 268. Second, if the contract is ambiguous, the court applies the rules of 

contract construction to resolve the ambiguity. Id. (“If the court determines that an 

ambiguity exists, . . . a jury question does not automatically arise, but rather the court 

must first attempt to resolve the ambiguity by applying the rules of construction . . . .”). 

Finally, if the contract remains ambiguous after applying the rules of construction, the 

meaning of ambiguous language and the intent of the parties are jury questions. Id.

The Agreement does not define “a reduction by the Company in [McBride’s] 

Annual Base Salary,” in particular, the word “reduction.” The plain and ordinary 

meaning of “reduction” is “the act or process of reducing: the state of being reduced.” 

See www.merriam-webster.com. “[R]educe” means “to diminish in size, amount, extent, 

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or number.” Id. These definitions are not helpful because they do not define the “act” or 

“process.” As the parties’ arguments illustrate, the act or process could reasonably mean 

(1) the decision to reduce, (2) the decision to reduce and notification thereof, or (3) the 

decision to reduce and the actual receipt of a paycheck at the lower rate. Because it is 

susceptible to more than one reasonable meaning, the language is ambiguous. But, 

contrary to the district court’s conclusion, the rules of contract construction resolve the 

ambiguity. 

The cardinal rule is to ascertain the parties’ intent. Covington Square Assocs., 641 

S.E.2d at 269. To determine that intent, “all the contract terms must be considered 

together in arriving at the construction of any part, and a construction upholding the 

contract in whole and every part is preferred.” DBL, Inc. v. Carson, 645 S.E.2d 56, 62 

(Ga. Ct. App. 2007). “[A] court should, if possible, construe a contract so as not to 

render any of its provisions meaningless and in a manner that gives effect to all of the 

contractual terms.” Pomerance v. Berkshire Life Ins. Co. of Am., 654 S.E.2d 638, 641 

(Ga. Ct. App. 2007) (quotations omitted). A contract’s words are to be given their usual 

and common significance and a contract will be strictly construed against its drafter. 

Eastside Gardens of Snellville, LLC v. Sims, 547 S.E.2d 383, 385 (Ga. Ct. App. 2001). 

Both parties point to provisions in the Agreement supporting their respective 

interpretations of “reduction.” Market Street points to Annex C, which outlines 

McBride’s compensation package and uses the term “receive” several times. It alleges 

these references demonstrate McBride must receive a salary less than $230,000 annually 

in order to experience a “reduction.” Market Street also points to the other situations 

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besides “a reduction by the Company in [McBride’s] Annual Base Salary” in which the 

Agreement allows McBride to terminate for cause. Two of those situations are “a 

material diminution in [McBride’s] powers, responsibilities or duties” occurring within 

one year from the date of acquisition and “the failure by the Company to pay [McBride] 

any portion of [his] current compensation within seven days of the date such 

compensation is due.” (Id. at 671.) It alleges these situations require an actual

diminution in powers or failure to pay, not merely a notice. Consequently, Market Street 

asserts “a reduction by the Company in [McBride’s] Annual Base Salary” also requires 

an actual reduction. 

Not surprisingly, McBride contends Market Street’s interpretation is inconsistent 

with other provisions of the Agreement, namely, the provision allowing McBride to 

terminate the Agreement for cause for “the failure by the Company to pay [McBride] any 

portion of [his] current compensation within seven days of the date such compensation is 

due.” If Market Street’s interpretation of a “reduction by the Company in [McBride’s] 

Annual Base Salary” is adopted, this provision would be rendered meaningless. In order 

to give effect to both provisions, McBride asserts, a “reduction by the Company in 

[McBride’s] Annual Base Salary” must address a decision to reduce the contract salary 

whereas “the failure by the Company to pay [McBride] any portion of [his] current 

compensation within seven days of the date such compensation is due” addresses the 

situation where there is no decision or notice of reduction but Market Street simply fails 

to actually pay the agreed salary. 

We agree with McBride. Construing the Agreement as a whole, the term 

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“reduction” does not require actual receipt of a reduced paycheck—a decision to reduce 

and notice thereof is sufficient. Among the six situations entitling McBride to terminate 

for cause are subsection (a)—“a reduction by the Company in [McBride’s] Annual Base 

Salary”—and subsection (d)—“the failure by the Company to pay [McBride] any portion

of [his] current compensation within seven days of the date such compensation is due.” 

(Emphasis added.) By separately listing these two provisions in the same section, the 

parties necessarily intended for disparate meaning, i.e., to constitute distinct “causes” 

permitting McBride to terminate. Were we to adopt Market Street’s interpretation of 

subsection (a), the two clauses would overlap and subsection (d) would be rendered 

superfluous. Not only does that interpretation contradict the parties’ obvious intent, it 

violates a fundamental rule of contract construction—a contract should be construed so as 

not to render any of its provisions meaningless. See Vaughn, Coltrane & Assocs. v. Van 

Horn Constr., Inc., 563 S.E.2d 548, 550 (Ga. Ct. App. 2002). McBride’s interpretation 

of subsection (a), on the other hand, is faithful to the language of the Agreement by 

giving effect to both subsection (a) and subsection (d). 

Section 4 of the Agreement also supports McBride’s interpretation. It states 

McBride’s Annual Base Salary shall be reviewed annually by Market Street’s CEO and 

McBride “shall be entitled to receive annually an increase in such amount, if any, as may 

be determined by the [CEO]. Such salary shall be payable in accordance with the 

Company=s normal payroll practices.” Under Section 4, all that is required to increase 

McBride’s Annual Base Salary is a determination by the CEO (Johnson). While that 

“determination” will be implemented in McBride’s paychecks, a paycheck is not a 

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prerequisite for that “determination.” Logically, if all that is required to increase 

McBride’s Annual Base Salary is an official “determination,” then an official 

“determination” or decision is all that is required to reduce it. 

Moreover, the Agreement was derived from a form created by Market Street’s 

parent corporation which Market Street adapted for its managers. While McBride 

negotiated the terms and Annual Base Salary and decided how to divide the bonuses 

among Major Mortgage’s five-member management team, he had no role in drafting the 

Agreement. Therefore, any ambiguity must be construed against Market Street. Eastside 

Gardens of Snellville, LLC, 547 S.E.2d at 385. 

Because any ambiguity in the contested language can be resolved by the rules of 

contract construction, the issue should not have been sent to the jury.8

 Nevertheless, the 

district court correctly denied Market Street’s Rule 50(a) motion because it was based on 

an improper interpretation of the term “reduction” as requiring more than a decision and 

notification. Moreover, the jury’s verdict is consistent with the proper contract 

interpretation and there was more than sufficient evidence at trial demonstrating a 

decision to reduce and notification thereof.9

 The reduction in McBride’s salary may have 

 8

 Market Street argues that even assuming the district court correctly sent the 

interpretation of “reduction by the Company in [McBride’s] Annual Base Salary” to the 

jury, the court erred in refusing to tender its proposed jury instruction providing the 

dictionary meaning of “reduction.” Because the court should not have sent the issue to 

the jury, this argument is moot. In any event, there was no error. As explained 

previously, the dictionary definition of “reduction” is not helpful and the jury reached the 

correct result. 

9

 Smith and Johnson agreed McBride’s salary should be reduced to $85,000. 

Johnson knew Smith would be drafting a letter informing McBride of the decision to 

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been ill-advised, but it was not a “mistake.” The real “mistake,” failing to appreciate 

consequences, is not excusable, as a simple clerical error might be. 

As a final attempt to set aside the jury’s verdicts, Market Street contends that even 

if McBride suffered a reduction in his Annual Base Salary, his breach of contract claim 

fails because such a reduction does not constitute a breach of the Agreement. It claims 

the Agreement clearly contemplates that a reduction in the Annual Base Salary may 

occur. Because it had a right to reduce McBride’s salary, the fact it did so is not a breach. 

Market Street raised this argument in its oral Rule 50(a) motion. The district court did 

not specifically address that argument in denying the motion but did so implicitly by 

erroneously allowing the issue to go to the jury.10 

Market Street had a duty under the Agreement to pay McBride $230,000 a year for 

three years11 unless the parties agreed in writing to a different amount12 or the CEO 

 

reduce. Smith did in fact draft a letter to McBride notifying him of that decision and 

Johnson signed an “Associate Status Change Form” implementing that decision with 

Market Street’s payroll department. Smith mailed the letter to McBride who received it. 

10 Interpreting the Agreement is a question of law for the court. Mon Ami Int=l., 

Inc., 592 S.E.2d at 86. 

11 Section 4 of the Agreement provides: 

[McBride] shall receive the following salary and benefits: 

4.1 Annual Base Salary. During the Term, [McBride] shall be compensated at an 

annual rate equal to the Annual Base Salary. The Annual Base Salary and 

performance shall be reviewed by the Chief Executive Officer annually, and 

[McBride] shall be entitled to receive annually an increase in such amount, if any, 

as may be determined by the Chief Executive Officer . . . . 

(Emphasis added.) Under “Annual Base Salary,” Annex C says “[McBride] will receive

a yearly salary of $230,000.” (Emphasis added.) 

12 The Agreement states: “No amendment or modification of this Agreement shall 

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determined at the annual review that McBride was entitled to a salary increase.13 Market 

Street may have breached this duty by unilaterally reducing McBride’s Annual Base 

Salary.14 But we see no reason to engage in such analysis. Whether it was a breach of 

the Agreement or cause for McBride to terminate the Agreement, the measure of 

damages flowing from such a reduction is the same, dictated by Section 3.4 of the 

Agreement—his Annual Base Salary, Incentive Compensation and his health benefits for 

one year or the difference between the cost of COBRA benefits and the amount McBride 

paid for benefits at Market Street at the time of his termination for one year. 

In addition to the salary reduction, McBride’s breach of contract claim was based 

on Market Street changing the terms of his net contribution incentive compensation and 

failing to pay him Section 3.4’s “Termination Payments.”15 The evidence showed 

 

be valid or binding upon [Market Street] or [McBride] unless made in writing and signed 

by both parties.” 

13 Notably, McBride’s annual review could only result in an increase in the Annual 

Base Salary, not a reduction. Under the maxim expressio unius est exclusio alterius—

“[t]he express mention of one thing implies the exclusion of another”—we may presume 

the omission of allowing a reduction in salary after an annual review was deliberate. See 

Krogh v. Pargar, LLC, 625 S.E.2d 435, 439 (Ga. Ct. App. 2005). 

14 The United States District Court for the Northern District of Texas reached a 

different result in Mott’s lawsuit against Market Street based on the reduction of his 

salary. See Mott v. Mkt. St. Mortgage Corp., No. 3:06-CV-0423-M, 2007 WL 2457609 

(N.D. Tex. Aug. 29, 2007). It concluded “the reduction in Mott’s salary was not a breach 

of the Employment Agreement [because] the agreement specifically contemplated that 

Market Street might reduce Mott’s salary and provided for that contingency in § 3.4.” Id.

at *4. Of course we are not bound by that decision, but at the end of the day the result we 

reach is not substantially different. 

15 McBride also alleged Market Street breached the Agreement because the 

February 17 letter placed conditions on his ability to earn his Annual Base Salary. We do 

not consider this a separate breach from the reduction in his Annual Base Salary. At oral 

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Smith’s letter changed the terms of McBride’s net contribution incentive compensation, 

making it more difficult to earn. And it was undisputed Market Street never paid 

McBride the “Termination Payments.” These actions may have breached the Agreement, 

but, as we explain below, any resulting damages were not proved or are limited to 

interest. Accordingly, the jury’s damages awards are excessive. 

B. Damages

Market Street complains the jury’s damages awards are excessive because they 

exceed the “Termination Payments” provided for in the Agreement, which it claims 

amounted to $242,000 —McBride’s Annual Base Salary ($230,000) plus the difference 

in the cost of his insurance ($12,000).16 We agree. 

1. Termination for Cause Claim 

Under the Agreement, Market Street was obligated to pay McBride the 

“Termination Payments” if he terminated for cause. “Termination Payments” is defined 

in the Agreement as the sum of (1) the Annual Base Salary, (2) the Incentive 

Compensation and (3) health benefits for one year or the difference between the cost of 

COBRA benefits and the amount McBride paid for benefits at Market Street at the time 

of his termination for one year. The Agreement provides McBride’s Annual Base Salary 

is $230,000. It defines “Incentive Compensation” as “the highest annual incentive bonus 

 

argument, McBride argued for the first time that Market Street breached the Agreement 

by attempting to enforce its non-solicitation and non-competition provisions. We will not 

consider this argument. Fed. Ins. Co. v. Tri-State Ins. Co., 157 F.3d 800, 805 (10th Cir. 

1998) (“Issues raised for the first time at oral argument are considered waived.”). 

16 Market Street also alleges McBride received an impermissible double recovery. 

Because we conclude the damages awards are excessive, we need not address this issue. 

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paid or payable to [McBride] . . . for any of the two fiscal years . . . immediately prior to 

the fiscal year in which the date of termination of employment occurs.” (R. Vol. IV at 

671.) The only “annual incentive bonus” is the “Net Contribution Incentive” which 

McBride was only entitled to if the Western Division was profitable.17 The evidence was 

clear the Western Division was not profitable. Finally, the evidence demonstrated 

McBride was paying $400 per month for benefits at Market Street at the time of his 

termination for cause and had paid $1,400 in COBRA benefits for one month after his 

 17 McBride argues the contingent part of his signing bonus is part of his “Incentive 

Compensation.” Market Street contends McBride would only be entitled to the $474,000 

contingent payment if the Western Division originated and closed $600 million in volume 

and he remained in Market Street’s employ until the contingent payment was earned and 

paid. 

The evidence at trial demonstrated the Western Division reached the July 2005 to 

July 2006 volume goal, but McBride terminated his involvement with Market Street on 

March 1, 2006, and was thus gone for at least four of the relevant twelve months. In 

retrospect it is clear that had he stayed with Market Street for a few more months, 

applying his shoulder to the wheel, he would have been entitled to the contingent portion 

of the signing bonus. But he did not. While the signing bonus language does not 

specifically require McBride to be employed by Market Street in July 2006 or to have 

contributed one year’s effort in order to qualify for the one time/one year contingent 

bonus payment, it is fairly implied. 

In any event, the $474,000 contingent payments does not meet the definition of 

“Incentive Compensation” contained at Section 4.2 of the Agreement, which provides: 

Incentive Compensation. [McBride] shall be eligible for an annual incentive 

bonus determined from time to time in accordance with Annex C hereto. In 

addition, [McBride] shall be entitled to participate in such stock option programs 

as are made available to similarly situated executives of [Market Street] from time 

to time. Any options granted will comply in all respects with the terms of the 

NetBank, Inc. Stock Incentive Plan. 

The signing bonus (initial payment or contingent payment) does not satisfy the 

Agreement’s definition of “Incentive Compensation” as the described payments are not 

an “annual incentive bonus.” The only annual bonus mentioned in Annex C is the “Net 

Contribution Incentive Plan,” for which, as we will discuss, McBride did not qualify. 

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termination. Therefore, the difference in these monthly amounts ($1,000) for one year is 

$12,000. Consequently, the “Termination Payments” totaled $242,000 ($230,000 plus 

$12,000)—the amount awarded by the jury on the termination for cause claim. 

2. Breach of Contract Claims 

In its oral Rule 50(a) motion and its written motion for remittitur or in the 

alternative a new trial, Market Street argued McBride’s breach of contract damages were 

limited to the liquidated damages specified in the Agreement, i.e., Section 3.4’s 

“Termination Payments.” The district court denied Market Street’s Rule 50(a) motion on 

this basis believing the matter should go to the jury. It also rejected Market Street’s 

motion for new trial and remittitur. It concluded Section 3.4 is not a liquidated damages 

provision for all breaches of the Agreement but instead provides payment only when one 

of the situations allowing McBride to terminate for cause occurs. Therefore, Section 3.4 

did not prevent McBride from being awarded damages on his other alleged breaches, i.e.,

Market Street’s changing the terms of his incentive compensation and failing to pay him 

Section 3.4’s “Termination Payments,” because they were not situations by which 

McBride could terminate for cause. The court also concluded the jury award was not 

excessive, finding McBride’s full lost salary,18 the $474,000 contingent signing bonus 

payment and other incidental damages, could “easily add up” to the jury’s awards. (R. 

Vol. IV at 880.) 

We review for an abuse of discretion a court’s denial of a motion for new trial or 

 18 $230,000 per year for the remainder of the Agreement’s three-year term, less 

mitigation—his actual and projected earnings for that period. 

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remittitur grounded on a claim the jury’s damages award was excessive. Blanke v. 

Alexander, 152 F.3d 1224, 1236 (10th Cir. 1998). To the extent Market Street’s 

excessiveness argument challenges the district court’s interpretation of the Agreement, 

our review is de novo. Kaw Nation, 341 F.3d at 1189; Mon Ami Int=l., Inc., 592 S.E.2d at 

86. “The determination of whether a specified sum is enforceable as liquidated damages 

is a question of law” which we review de novo. Kaw Nation, 341 F.3d at 1189; Antonios 

v. Gwinnett Clinic, Ltd., 668 S.E.2d 531, 532 (Ga. Ct. App. 2008). 

We agree with Market Street. Analyzing the damages resulting from each breach 

separately, the jury’s $652,000 breach of contract damages must be set aside. 

a) Reduction in Annual Base Salary 

We have already concluded Market Street’s reduction in McBride’s Annual Base 

Salary allowed McBride to terminate the Agreement for cause and may have constituted 

a breach of the Agreement. Section 3.4 of the Agreement provides that in the event 

McBride terminates the Agreement for cause, Market Street shall pay McBride 

as severance pay and liquidated damages a lump sum amount equal to the 

sum of the (a) Annual Base Salary and (b) Incentive Compensation . . . . In 

addition, for a period of twelve months following the effective date of the 

termination . . ., the Company shall continue to provide to [McBride] . . . 

[his] benefits . . . ; provided, however, that in lieu of providing health 

benefits, the Company shall pay [McBride] an amount equal to the 

difference between (x) the cost of COBRA health continuation coverage . . . 

and (y) the amount for which [McBride] would have been responsible to 

pay under the health benefits plans in effect . . . immediately prior to his 

termination . . . . 

(Emphasis added.) The question is whether this provision is an enforceable liquidated 

damages clause under Georgia law, thereby limiting Market Street’s liability for reducing 

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McBride’s salary to the “Termination Payments” provided by Section 3.4. We believe it 

is. 

Georgia allows parties to agree “in their contract to a sum to liquidate their 

damages.” S.E. Land Fund, Inc. v. Real Estate World, Inc., 227 S.E.2d 340, 343 (Ga. 

1976). “If the parties agree in their contract what the damages for a breach shall be, they 

are said to be liquidated and, unless the agreement violates some principle of law, the 

parties are bound thereby.” Ga. Code Ann. § 13-6-7. A liquidated damages provision is 

enforceable if: “(1) the injury caused by the breach of the contract is difficult or 

impossible to accurately estimate; (2) the parties intended to provide for damages rather 

than a penalty; and (3) the sum stipulated upon by the parties is a reasonable pre-estimate 

of the probable loss.” Caincare, Inc. v. Ellison, 612 S.E.2d 47, 50 (Ga. Ct. App. 2005). 

Where a designated sum is inserted into a contract for the purpose of deterring one or 

both of the parties from breaching it or where it plainly has no reasonable relation to any 

probable actual damage which may follow a breach, the contractual provision will be 

construed as an unenforceable penalty. Id.; see also Lager’s, LLC v. Palace Laundry, 

Inc., 543 S.E.2d 773, 778-79 (Ga. Ct. App. 2000). 

Here, the injury caused to McBride by the reduction in his Annual Base Salary is 

difficult or impossible to estimate accurately. The scope of his injury would depend on 

when in the three-year term of the Agreement the reduction occurred and his ability to 

mitigate his damages by obtaining a new position. See Ga. Code Ann. § 13-6-5 (“Where 

by a breach of contract a party is injured, he is bound to lessen the damages as far as is 

practicable by the use of ordinary care and diligence.”); see also Boone v. Atlanta Ind. 

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Sch. Sys., 619 S.E.2d 708, 712 (Ga. Ct. App. 2005). It also would depend on whether he 

would have been entitled to his “Net Contribution Incentive,” which in turn would 

depend on whether Market Street would have been profitable at the end of the year had 

McBride not terminated for cause. 

It is also clear the parties intended Section 3.4 to provide for damages rather than a 

penalty. Section 3.4 expressly states Market Street will pay McBride the “Termination 

Payments” as “liquidated damages.” This contractual language is indicative of the 

parties’ intent for the damages to be liquidated. See Caincare, Inc. 612 S.E.2d at 50; see 

also Liberty Life Ins. Co. v. Thomas B. Hartley Constr. Co., 375 S.E.2d 222, 223 (Ga. 

1989) (“[T]here is no question the parties intended to provide for liquidated damages—

the damages clause was denominated as liquidated by the parties . . . .”); Nat’l 

Emergency Servs., Inc. v. Wetherby, 456 S.E.2d 639, 641 (Ga. Ct. App. 1995) (although 

employee’s uncontradicted affidavit stated he and the employer never discussed any 

figure which would represent the employer’s damages in the event of a breach, the 

language of the employment contract itself uses the phrase “liquidated damages” to 

describe the amount; court “must first look to the language of the contract to determine 

whether the parties intended the provision in question to be a penalty or a legally 

cognizable liquidated damages clause”).19 

 19 In S.E. Land Fund, Inc., the Georgia Supreme Court said the label prescribed to 

a provision is not determinative of whether it is a liquidated damages or penalty 

provision. 227 S.E.2d at 342. However, in diversity jurisdiction cases, we are obligated 

to follow the most recent pronouncement of the state’s highest court—in this case, 

Liberty Life Ins. Co. See Otis Elevator Co. v. Midland Red Oak Realty, Inc., 483 F.3d 

1095, 1102 n.10 (10th Cir. 2007). 

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Finally, the “Termination Payments,” which is defined as McBride’s Annual Base 

Salary, his Incentive Compensation and his health benefits for one year or the difference 

between the cost of COBRA benefits and the amount McBride paid for benefits at Market 

Street at the time of his termination for one year, is a reasonable pre-estimate of 

McBride’s probable loss. Although there was no testimony as to how the parties arrived 

at the “Termination Payments,” it is clear they generally represent one-year’s worth of 

McBride’s compensation package at Market Street. Obviously, the parties believed one 

year would be a reasonable time for McBride to obtain new employment. We cannot say 

the “Termination Payments” bear no reasonable relation to any probable actual damage 

McBride would suffer.20

It may appear unfair to limit McBride to one year’s salary and benefits when he 

was terminated within the first year of his three-year employment term. Most likely, 

allowing McBride to recover breach of contract damages (even considering his mitigation 

of those damages by obtaining new employment) would result in a larger recovery. 

However, it only seems unfair due to the timing of the termination. Had the reduction in 

salary and subsequent termination for cause occurred three months before the end of the 

three-year employment term, allowing McBride the “Termination Payments” would 

appear to be a windfall.21 But (absent a claim of unconscionability) it is not our 

 20 The district court determined Section 3.4 was not a liquidated damages 

provision because it only accounted for some breaches of the Agreement. But a 

liquidated damages provision need not apply to all breaches. See Fortune Bridge Co. v. 

Dep’t of Transp., 250 S.E.2d 401, 402 (Ga. 1978).

21 Another benefit to the “Termination Payments” provision is that McBride has 

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responsibility to measure fairness. We are bound by the terms of the parties’ Agreement: 

Another feature implicit in the concept of liquidated damages . . . is that both 

parties are bound by their agreement. A non-breaching party who has agreed to 

accept liquidated damages cannot elect after a breach to take actual damages 

should they prove greater than the sum specified. The breaching party cannot 

complain that the actual damages are less than those specified as liquidated 

damages. The liquidated damages become the maximum as well as the minimum 

sum that can be collected. 

S.E. Land Fund, Inc., 227 S.E.2d at 343 (citations and quotations omitted) (emphasis 

added); see also Jefferson Randolph Corp. v. Progressive Data Sys., Inc., 553 S.E.2d 

304, 308 (Ga. Ct. App. 2001) (stating that “[i]f liquidated damages are recoverable, then 

the parties cannot elect between liquidated and actual damages”) (emphasis added), rev’d 

on other grounds, 568 S.E.2d 474 (Ga. 2002). Here, McBride elected to terminate the 

Agreement for cause upon receiving a reduction in his Annual Base Salary, which 

entitled him to the liquidated damages provided by Section 3.4. 

b) Change in the Terms of Net Contribution Incentive 

McBride was only entitled to the net contribution incentive if the Western 

Division was profitable. The evidence demonstrated the Western Division was not 

profitable in 2005. It also showed that at the time of trial in December 2006, it was 

unknown whether the Western Division would be profitable for 2006 because the yearend numbers would not be determined until early 2007. No evidence projected the 

Western Division’s profitability for 2007. Thus, McBride failed to show he suffered any 

 

no duty to mitigate them. See Royal Crown Cos. v. McMahon, 359 S.E.2d 379, 382 (Ga. 

Ct. App. 1987) (“Because under the contract plaintiff’s right to severance pay was 

absolute . . . we find no merit in Royal Crown’s additional argument that plaintiff’s 

damages should have been reduced under the ‘mitigation theory.’”) (quotations omitted). 

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actual damage as a result of Market Street changing the terms of his net contribution 

incentive compensation. McBride was entitled to at most nominal damages as a result of 

this breach. See Belcher v. Thomson Newspapers, Inc., 379 S.E.2d 204, 205 (Ga. Ct. 

App. 1989) (“‘In every case of breach of contract the injured party has a right to 

damages, but if there has been no actual damage, the injured party may recover nominal 

damages sufficient to cover the costs of bringing the action.’”) (quoting Ga. Code. Ann. § 

13-6-6). 

Contrary to McBride’s arguments to the jury and this Court, he is not entitled to 

his compensation and benefits for the remaining term of the Agreement (reduced by any 

mitigation) or his $474,000 contingent signing bonus as a result of Market Street 

changing the terms of his net contribution incentive. An injured party is entitled to 

recover only the “compensatory damages that he suffered by reason of the breach of his 

contract; in other words, . . . the proper measure of damages arising from [a] breach of [a] 

contract of employment [is the] actual loss sustained by the breach, and not the gross 

amount of wages and expenses under the contract.” Rodgers v. Georgia Tech Athletic 

Ass’n, 303 S.E.2d 467, 472 (Ga. Ct. App. 1983) (quotations omitted). McBride’s 

damages are limited to those caused by the alleged breach, i.e., the net contribution 

incentive he would have earned had Market Street not changed the terms. He failed to 

prove he would have earned any incentive even had the terms not been changed, as 

earning that incentive was always conditioned upon the Western Division being 

profitable. As explained above, he failed to prove profitability. 

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c) Failure to Pay the “Termination Payments” 

As a matter of law, the only damages arising from Market Street’s failure to pay 

McBride the “Termination Payments” are the payments themselves. See Bauer, 527 

S.E.2d at 244-45. Those payments total $242,000. The fact Market Street did not 

immediately remit that amount to McBride upon his termination for cause is compensated 

by the payment of interest. Under Georgia law, prejudgment interest may be awarded 

when a plaintiff seeks a liquidated sum.22 See Ga. Code. Ann. § 7-4-15 (“All liquidated 

demands, where by agreement or otherwise the sum to be paid is fixed or certain, bear 

interest from the time the party shall become liable and bound to pay them; if payable on 

demand, they shall bear interest from the time of the demand.”). Here, the district court 

awarded post-judgment interest under 28 U.S.C. § 1961 but not pre-judgment interest.23 

Given our determination above that McBride’s damages for a reduction in his Annual 

Base Salary are a liquidated amount and because he requested an award of “interest on 

the unpaid liquidated damages and severance benefits” in his complaint, on remand the 

district court should award pre-judgment interest. (R. Vol. I at 20.) 

d) Summary of Breach of Contract Damages 

McBride is entitled, as a matter of law, to the “Termination Payments” ($242,000) 

 22 Here, Market Street contests McBride’s entitlement to damages but concedes 

$242,000 is the correct amount. 

23 “A federal court sitting in diversity applies state law, not federal law, regarding 

the issue of prejudgment interest.” See Strickland Tower Maint., Inc. v. AT & T 

Commc’ns, Inc., 128 F.3d 1422, 1429 (10th Cir. 1997). “But even in cases founded on 

diversity jurisdiction, the post-judgment interest rate on a federal court judgment is 

established by federal law, not state law.” In re Riebesell, 586 F.3d 782, 794 n.11 (10th 

Cir. 2009). 

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plus pre-judgment interest as a result of the reduction in his salary and failure to timely 

remit those payments. However, because McBride is entitled to receive the “Termination 

Payments” on the termination for cause claim, he is not entitled to receive them again 

under the breach of contract claim. See Ga. Ne. R.R., Inc., v. Lusk, 587 S.E.2d 643, 644 

(Ga. 2003) (“Georgia, as part of its common law and public policy, has always prohibited 

a plaintiff from a double recovery of damages; the plaintiff is entitled to only one 

recovery and satisfaction of damages, because such recovery and satisfaction is deemed 

to make the plaintiff whole.”). Nor is he entitled to receive more for the reduction in his 

salary (i.e., his actual damages) than that provided for by the liquidated damages clause. 

See S.E. Land Fund, Inc., 227 S.E.2d at 343 (“A non-breaching party who has agreed to 

accept liquidated damages cannot elect after a breach to take actual damages should they 

prove greater than the sum specified.”). 

With regard to the change in the terms of the net contribution incentive, McBride 

is only entitled to an award of nominal damages as there was no evidence of actual 

damages. 

V. CONCLUSION 

We AFFIRM the jury’s liability verdicts as well as the district court’s entry of a 

declaratory judgment. However, we REVERSE the damages awards and REMAND to 

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the district court to enter a damages award of $242,000 plus any pre-and post-judgment 

interest to which he may be entitled. 

Entered by the Court: 

Terrence L. O’Brien 

United States Circuit Judge 

Appellate Case: 07-8044 Document: 01018433003 Date Filed: 06/02/2010 Page: 33