EZ Green Associates, LLC v. Georgia-Pacific Corp.

734 S.E.2d 485, 318 Ga. App. 655, 2012 Fulton County D. Rep. 3737, 2012 Ga. App. LEXIS 980
CourtCourt of Appeals of Georgia
DecidedNovember 20, 2012
DocketA12A0919
StatusPublished
Cited by8 cases

This text of 734 S.E.2d 485 (EZ Green Associates, LLC v. Georgia-Pacific Corp.) is published on Counsel Stack Legal Research, covering Court of Appeals of Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
EZ Green Associates, LLC v. Georgia-Pacific Corp., 734 S.E.2d 485, 318 Ga. App. 655, 2012 Fulton County D. Rep. 3737, 2012 Ga. App. LEXIS 980 (Ga. Ct. App. 2012).

Opinion

Boggs, Judge.

This litigation arises from a contract between the parties regarding a proprietary system for applying grass seed.1 EZ Green Associates, LLC (“EZ Green”) brought this action for breach of contract and the covenant of fair dealing against Georgia-Pacific Corporation, its assignee, GP Cellulose, LLC (formerly Koch Cellulose, LLC), and BlueYellow LLC, a GP Cellulose subsidiary (collectively, “Georgia-Pacific”). Asserting that Georgia-Pacific breached the agreement by ceasing production and by failing to market the product, EZ Green sought damages as well as bad faith penalties and attorney fees under OCGA § 13-6-11. Georgia-Pacific filed an initial motion for summary judgment, which was denied, then renewed its motion for summary judgment on additional grounds. EZ Green filed a motion for partial summary judgment on Georgia-Pacific’s liability for breach of contract. The trial court denied EZ Green’s motion and granted summary judgment in favor of Georgia-Pacific, finding no issue of material fact regarding (1) whether Georgia-Pacific made commercially reasonable efforts to sell the product, and (2) whether Georgia-Pacific had the right under the contract to cease production.

Because the record shows conflicts in the evidence regarding these issues, the grant of summary judgment in favor of Georgia-Pacific was error, and we therefore reverse. For the same reason, EZ Green was not entitled to partial summary judgment in its favor, and we therefore affirm that portion of the trial court’s order. EZ Green also appeals the trial court’s order denying its request for a privilege log. Because EZ Green has failed to demonstrate from the record that the trial court abused its discretion, we affirm that order.

The contract was originally entered into in 2003 between EZ Green and Georgia-Pacific and ultimately revised as of April 30, 2004. The contract provided that, for a period of five years, EZ Green would license its product to Georgia-Pacific, which would develop, manufacture, market, and sell the product. In May 2004, Koch [656]*656Cellulose, LLC purchased Georgia-Pacific’s pulp division and acquired all of its assets, including the EZ Green agreement.

1. (a) EZ Green alleged that Georgia-Pacific breached the agreement when it failed to “act in a commercially reasonable manner” or use “commercially reasonable efforts” to develop, manufacture, market, sell, and distribute the product. The contract provided that Georgia-Pacific would make “a commercially reasonable effort” to sell the product, and further provided: “For purposes of this paragraph, EZ G[reen] agrees that [Georgia-Pacific] shall have been deemed to have met ‘commercially reasonable efforts’ if [Georgia-Pacific] sells the following product volumes,” providing a yearly target volume in acres.

In its order granting summary judgment, the trial court found that “[EZ Green] has not pointed to any evidence from which a jury could conclude that [Georgia-Pacific’s] efforts to sell the product were inconsistent with the efforts a reasonable business entity would have made under similar circumstances.” It therefore granted summary judgment on EZ Green’s claims.

We first note that the trial court found that “[t]he commercially reasonable standard applicable in this case has not been addressed by Georgia courts” and therefore relied upon Kansas law, citing a federal district court decision, Kansas Penn Gaming v. HV Properties, 727 FSupp.2d 1100, 1111 (IV) (C) (D.Kan. 2010), and South Carolina law, citing a Fourth Circuit decision, Valtrol, Inc. v. General Connectors Corp., 884 F2d 149 (I) (4th Cir. 1989). According to the trial court, these decisions define “commercially reasonable efforts” as “an objective standard requiring that a business use the efforts that a reasonable business entity would have made under similar circumstances.” (Punctuation omitted.) Kansas Penn, supra, 727 FSupp.2d at 1111.

While our courts may not have addressed the application of “commercially reasonable” in this precise context, Georgia has long-established standards for evaluating commercial reasonability. The Uniform Commercial Code and the cases interpreting its provisions repeatedly look to and construe “reasonable commercial standards.” See, e.g., OCGA §§ 11-2-103 (1) (b) (“ ‘Good faith’ in the case of a merchant means honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade.”), 11-3-103 (a) (4) (“ ‘Good faith’ means honesty in fact and the observance of reasonable commercial standards of fair dealing.”), 11-4A-105 (a) (6) (“ ‘Good faith’ means honesty in fact and the observance of reasonable commercial standards of fair dealing.”); Hansford v. Burns, 241 Ga.App. 407, 410-411 (2) (526 SE2d 896) (1999) (disposition of collateral under OCGA § 11-9-504, now OCGA § 11-9-610); Tifton Bank & Trust Co. v. Knight’s Furniture Co., 215 Ga. App. 471, 474 (1) (b) (452 SE2d 219) [657]*657(1994) (banking practice under former OCGA § 11-3-419 with respect to depositor’s account). The federal district court decision relied upon by the trial court likewise looked to the Kansas Commercial Code for interpretation of “commercially reasonable efforts.” See Kansas Penn, supra, 727 FSupp.2d at lili (IV) (C).

Georgia courts have not held that interpretations of commercial reasonability are limited to cases brought under the Commercial Code. See, e.g., Pakwood Indus. v. John Galt Assoc., 219 Ga.App. 527, 529-530 (1) (466 SE2d 226) (1995) (assignment of lease).

Good faith is, if anything, a minimum standard of conduct in any contract. While this particular agreement does not come within the UCC, it is a commercial transaction in the broad sense and the legislature has specifically declared that good faith is a basic obligation in all such transactions. [OCGA § 11-1-203]. See also [OCGA § 13-4-20] which calls for “substantial compliance with the spirit, and not the letter only, of the contract” in its performance. “Good faith” is merely a shorter way of saying the same thing.

Crooks v. Chapman Co., 124 Ga.App. 718, 719-720 (3) (185 SE2d 787) (1971) (contract action to recover earnest money on sale of radio station).

But even under the foreign law test applied by the trial court, to determine commercial reasonableness the “court should consider all relevant factors together as part of single transaction with ultimate test to be whether parties acted toward each other in good faith and in a reasonable manner.” (Citation and punctuation omitted.) Kansas Penn, supra, 727 FSupp.2d at 1111 (C). And Georgia law is clear that “[w]hether reasonable commercial standards have been met is a question of fact to be resolved by the jury.” (Citations omitted.) Tifton Bank & Trust Co., supra, 215 Ga.App. at 474 (1) (b).

Free access — add to your briefcase to read the full text and ask questions with AI

Related

PAMELA L. COLEMAN v. ARTHUR L PHILLIPS
Court of Appeals of Georgia, 2023
EZ Green Associates, LLC v. Georgia-Pacific Corp.
770 S.E.2d 273 (Court of Appeals of Georgia, 2015)
Suntrust Robinson Humphrey v. Morton P. Levine
Court of Appeals of Georgia, 2013
Morton P. Levine v. Suntrust Robinson Humphrey
Court of Appeals of Georgia, 2013
Levine v. SunTrust Robinson Humphrey
740 S.E.2d 672 (Court of Appeals of Georgia, 2013)

Cite This Page — Counsel Stack

Bluebook (online)
734 S.E.2d 485, 318 Ga. App. 655, 2012 Fulton County D. Rep. 3737, 2012 Ga. App. LEXIS 980, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ez-green-associates-llc-v-georgia-pacific-corp-gactapp-2012.