Court Opinion

ID: 7802879
Source: CourtListenerOpinion
Date Created: 2022-08-23 18:02:25.032505+00
Date Added: 2024-06-11T16:29:32.144448
License: Public Domain

THIRD DIVISION
                             DOYLE, P. J.,
           REESE, J., and SENIOR APPELLATE JUDGE PHIPPS

                   NOTICE: Motions for reconsideration must be
                   physically received in our clerk’s office within ten
                   days of the date of decision to be deemed timely filed.
                              https://www.gaappeals.us/rules

                                                                   August 23, 2022

In the Court of Appeals of Georgia
 A22A1031. ATWOOD SERVICES, INC. v. VFH CAPTIVE
     INSURANCE COMPANY et al.

      PHIPPS, Senior Appellate Judge.

      Following our grant of its application for interlocutory review, plaintiff

Atwood Services, Inc. (“Atwood”) appeals from a trial court order dismissing a

breach of contract count in Atwood’s second amended complaint against defendants

VFH Captive Insurance Company and Crown Captive Insurance Company of the

District of Columbia, Inc. (collectively, “VFH”). For the following reasons, we

reverse.

      The record shows that in 2001, The Strategies Company (“Strategies”)

executed a contract with VFH providing that Strategies would furnish “advice,

counsel[,] and related services in matters of communications and marketing strategy”
to VFH. In exchange, VFH agreed to pay Strategies a monthly fee. The 2001 contract

had a one-year term and renewed automatically unless either party gave written notice

of nonrenewal within 90 days of the renewal date. According to Atwood’s second

amended complaint, Strategies and VFH each performed their contractual obligations

from 2001 to 2010, and the 2001 contract automatically renewed on December 31 of

every year. In 2010, Atwood acquired the business of Strategies. According to the

second amended complaint, Atwood and VFH thereafter continued to perform their

contractual obligations, and the 2001 contract continued to automatically renew each

year.

        In 2012, the parties purported to enter into a new agreement. Although this

agreement did not specify what services Atwood would perform, it provided for

additional fees and a ten-year term.

        Atwood’s second amended complaint asserts that from 2010 to 2018, it

continued to provide business consulting services to VFH on a wide range of matters,

including capitalization, rating, underwriting, budgeting, business planning, and

general corporate strategy, and that VFH continued making monthly payments to

Atwood until 2018. After 2018, Atwood maintains, no further payments were made.

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      Atwood filed suit, alleging several claims, including that VFH breached the

2012 agreement. VFH moved to dismiss the breach of contract claim on the basis that

the 2012 agreement was unenforceable. Before the trial court ruled on the motion,

Atwood filed an amended complaint, asserting, as relevant here, that VFH had

breached the 2001 contract as extended by the 2012 agreement. VFH moved to

dismiss several counts in the amended complaint, including Atwood’s new breach of

contract claim, arguing, in relevant part, that the 2012 agreement was not an

extension, but rather was a new contract that was invalid because of lack of mutuality

and consideration. The trial court granted the motion, finding that the 2012 agreement

lacked both consideration and mutuality.1

      Atwood then filed a second amended complaint alleging, among other claims,

a breach of the 2001 contract.2 VFH moved to dismiss the breach of contract count,

arguing that, under the rules of contract construction, the 2012 agreement was a new

contract intended to replace the 2001 contract. According to VFH, because the 2001

      1
        The trial court also dismissed additional claims that are not germane to this
appeal. The propriety of the trial court’s ruling that the 2012 agreement is invalid is
not raised by either party in this appeal, as a result of which we express no opinion
on that question.
      2
        This complaint also alleged claims for promissory estoppel, unjust
enrichment, and quantum meruit, which remain pending.

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contract had been replaced, it could not be the basis of Atwood’s breach of contract

claim. Atwood opposed VFH’s motion, contending, as relevant here, that the 2012

agreement did not extinguish the 2001 contract for purposes of the motion to dismiss

because the trial court previously ruled that the 2012 agreement is invalid for want

of consideration and mutuality. The trial court granted VFH’s motion to dismiss on

the ground that the 2001 agreement had been superseded by the 2012 agreement.

      After obtaining a certificate of immediate review, Atwood filed an application

for interlocutory appeal, which was granted. This appeal followed.

            On appeal, this Court conducts a de novo review of a trial court’s
      ruling on a motion to dismiss. In doing so, our role is to determine
      whether the allegations of the complaint, when construed in the light
      most favorable to the plaintiff, and with all doubts resolved in the
      plaintiff’s favor, disclose with certainty that the plaintiff would not be
      entitled to relief under any state of provable facts; however we need not
      adopt a party’s legal conclusions based on these facts.

Small v. Chatham County, 360 Ga. App. 500, 500-501 (861 SE2d 437) (2021)

(citation and punctuation omitted).

      1. Atwood contends that the trial court erred in granting VFH’s motion to

dismiss because the 2012 agreement fails as a novation or an accord and satisfaction

and did not terminate the 2001 contract. We agree.

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      “An existing contract is superseded and discharged whenever the parties

subsequently enter upon a valid and inconsistent agreement, completely covering the

subject-matter which was embraced by the original contract.” Hennessy v. Woodruff,

210 Ga. 742, 744 (1) (82 SE2d 859) (1954) (citation and punctuation omitted);

Powell v. Norman Elec. Galaxy, 229 Ga. App. 99, 101 (1) (493 SE2d 205) (1997)

(same); Chewning v. Huebner, 142 Ga. App. 112, 113 (235 SE2d 573) (1977) (same).

“To discharge an existing contract, the subsequent, inconsistent agreement covering

the same subject-matter must be a valid contract[.]” Carter v. Rich’s, Inc., 83 Ga.

App. 188, 192 (4) (63 SE2d 241) (1951). Furthermore, “to constitute a novation[,]

four essential requisites must exist: (1) a previous valid obligation, (2) the agreement

of the parties to a new contract, (3) a mutual intention by the parties to substitute the

new contract for the old one, and (4) the validity of the new contract. If any of the

essential elements is lacking, there is no novation.” Pritchett v. Afzal, 293 Ga. App.

302, 304 (2) (666 SE2d 641) (2008) (citation and punctuation omitted); see also

Brannen/Goddard Co. v. Sheffield, Inc., 240 Ga. App. 667, 670 (524 SE2d 534)

(1999) (a new lease containing material terms different from those in the original

lease constituted a novation that extinguished the original lease). Similarly, to prove

the defense of accord and satisfaction, a party must show: “(1) a previous valid

                                           5
obligation, (2) the agreement of the parties to the new contract, (3) a mutual intention

by the parties to substitute the new contract for the old one, and (4) the validity of the

new contract.” Stewart v. Johnson, 269 Ga. App. 698, 699 (605 SE2d 111) (2004)

(citation and punctuation omitted).

      Here, the trial court granted VFH’s motion to dismiss on the ground that the

2012 agreement superseded the 2001 contract, reasoning that “the parties plainly

intended to replace the 2001 [a]greement with a new agreement” based on the

language of the 2012 agreement and that “Atwood’s intention to replace the 2001

[contract] and enter into a new agreement is also shown by its conduct after entering

into the 2012 [a]greement.” However, when it granted VFH’s motion to dismiss, the

court had already determined that the 2012 agreement was unenforceable due to a

lack of consideration and mutuality. Atwood argues that because the trial court

previously concluded that the 2012 agreement is not a valid contract, the 2012

agreement fails as a novation or an accord and satisfaction and could not have

terminated the 2001 contract.3 VFH, for its part, does not contend that the 2012

      3
         Although VFH contends that the 2001 contract is no longer in effect, the
parties do not dispute the validity of the 2001 contract. And neither party contends
that the 2012 agreement constitutes “written notice of nonrenewal within ninety (90)
days of renewal” as specified in the automatic renewal provision of the 2001 contract.

                                            6
agreement was a novation or an accord and satisfaction. Instead, VFH asserts that

because the parties attempted to enter into a new agreement but failed to do so in a

legally binding way, the 2012 agreement is invalid and Atwood is left to recover, if

at all, in quantum meruit. VFH argues that the invalidity of the 2012 agreement does

not mean that the 2001 contract continued in effect. However, VFH has cited no

authority, and we have found none, to support the argument that a subsequent invalid

contract can supersede an existing contract. On the contrary, long-standing Georgia

authority establishes that to supersede an existing contract, a subsequent contract

must be valid. Hennessy, 210 Ga. at 744 (1); Powell, 229 Ga. App. at 101 (1);

Chewning, 142 Ga. App. at 113; Carter, 83 Ga. App. at 192 (4). Having determined

that the 2012 agreement was invalid, the trial court erred by ruling that the 2012

agreement superseded the 2001 contract and dismissing Atwood’s breach of contract

claim (based on the 2001 contract) on this basis. See Hennessy, 210 Ga. at 744 (1);

Powell, 229 Ga. App. at 101 (1); Chewning, 142 Ga. App. at 113; Carter, 83 Ga.

App. at 192 (4).

      2. Given our conclusion in Division 1, we need not address Atwood’s

alternative arguments that the parties intended for the 2012 agreement to serve as a

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modification of the 2001 contract or that the trial court erred by considering parol

evidence to determine the parties’ intent as to the effect of the 2012 agreement.

      Judgment reversed. Doyle, P. J., and Reese, J., concur.

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