EUDALY v. VALMET AUTOMATION

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Docket Number

A91A1447.

Attorney(S)

Arthur F. Millard, for appellant. Glass, McCullough, Sherrill Harrold, R. Philip Shinall III, L. James Weil, Jr., James E. Dearing, Jr., for appellee.

Judges

BIRDSONG, Presiding Judge.

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Smart Summary

Factual and Procedural Background

James F. Eudaly filed suit in February 1990 against his former employer, Valmet Automation (USA), Inc., alleging failure to pay sales commissions. Valmet defended by relying on a release executed by Eudaly in July 1989 upon termination, which purported to release Valmet from all claims including commissions. The trial court denied Valmet's motion for summary judgment on the release due to a genuine issue of fraudulent inducement. After discovery closed on October 1, 1990, Valmet sought leave to file counterclaims for overpayment of commissions and breach of the release, which the trial court allowed on November 7, 1990. Eudaly moved for reconsideration and sought to reopen discovery, but these motions were not ruled on. At trial, Eudaly requested a continuance to allow discovery on the counterclaims, which was denied. The jury found for Valmet on Eudaly's claims and awarded damages on Valmet's counterclaims against Eudaly.

Legal Issues Presented

Whether the trial court abused its discretion in allowing Valmet to file late counterclaims after the deadline for motions and discovery had expired.
Whether the trial court erred in denying Eudaly additional discovery and a continuance after allowing late counterclaims.
Whether the trial court erred in admitting the release into evidence.
Whether the trial court erred in excluding evidence offered by Eudaly to prove fraud.
Whether the directed verdict for Valmet on punitive damages was erroneous.

Arguments of the Parties

Appellant's Arguments

Eudaly argued the trial court abused its discretion by allowing Valmet to file counterclaims after the deadline and then denying discovery and a continuance related to those counterclaims.
He contended the release was fraudulently induced and that certain excluded evidence (Exhibit 10) would prove intentional misrepresentation concerning a sale and related commissions.
Eudaly challenged the sufficiency of evidence supporting Valmet's counterclaims.
He claimed error in exclusion of evidence and in the denial of punitive damages.

Appellee's Arguments

Valmet asserted the release barred Eudaly's claims.
Valmet argued the late filing of counterclaims was permissible and that Eudaly had sufficient time for discovery after the motion to amend was filed.
Valmet challenged the admissibility of Exhibit 10 as not properly authenticated and irrelevant.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
White v. Fidelity Nat. Bank, 188 Ga. App. 539, 373 S.E.2d 640	Trial court's discretion to allow late filing of counterclaims under OCGA § 9-11-13(f)	Referenced to explain the general discretion but held the trial court abused discretion here by allowing late counterclaims after deadlines.
Swim Dixie Pool Corp. v. Kraemer, 157 Ga. App. 748, 278 S.E.2d 448	Requirement that compulsory counterclaims be filed in original answer or timely amended pleadings under OCGA § 9-11-13(a)	Used to support that Valmet's counterclaims were compulsory and should have been filed timely.
Clairmont Foods v. Huddle House, 142 Ga. App. 171, 235 S.E.2d 635	Standards for allowing late amendments to pleadings	Cited to emphasize the necessity for showing grounds under OCGA § 9-11-13(f) for late filing, which was lacking.
Morton v. Gardner, 242 Ga. 852, 252 S.E.2d 413	Liberal discovery principles and trial court discretion	Applied to hold that denial of discovery and continuance was an abuse of discretion once late counterclaims were allowed.
Bridges v. Twentieth Century Travel, 149 Ga. App. 837, 256 S.E.2d 102	Liberal construction of discovery rules	Supported the requirement to allow discovery on newly allowed counterclaims.
Howard Schultz Assoc. v. Broniec, 239 Ga. 181, 236 S.E.2d 265	Validity of release agreements and restraint of trade	Applied to uphold the release as not void for restraint of trade, supporting admission of the release.
Armech Svc. Co. v. Rose Elec. Co., 192 Ga. App. 829, 386 S.E.2d 709	Standard for admissibility of evidence and burden to show error	Referenced to explain that appellant failed to meet burden to show error in exclusion of evidence.
Floyd v. State, 156 Ga. App. 741, 275 S.E.2d 786	Requirement to show harmful error to warrant new trial	Used to affirm that appellant did not show harm from exclusion of evidence.

Court's Reasoning and Analysis

The court analyzed the timing and procedural propriety of Valmet's late filing of counterclaims after the expiration of the discovery period and the court's own imposed deadline for motions and pre-trial orders. It held that while trial courts generally have discretion to allow late amendments under OCGA § 9-11-13(f), the trial court here abused that discretion by permitting counterclaims nine months after the answer and after discovery had closed, without a showing of necessity or justice. Moreover, having allowed the late counterclaims, the trial court erred in refusing Eudaly additional discovery and a continuance, as liberal discovery principles apply once such amendments are permitted.

Regarding the release, the court found no error in admitting it, as it was not void for restraint of trade under applicable precedent. On the fraud claim, the court rejected appellant's argument due to lack of clarity and failure to properly authenticate evidence, emphasizing the appellant's burden to affirmatively show error and harm. Finally, the court held that since the jury found no liability on Eudaly's claims, the issue of punitive damages was not reached and thus the directed verdict was proper.

Holding and Implications

The court affirmed in part and reversed in part the trial court's judgment. Specifically, it reversed the judgment against Eudaly on Valmet's counterclaims due to the trial court's abuse of discretion in allowing late counterclaims without proper justification and denying discovery and a continuance. The court affirmed the admission of the release, the exclusion of certain evidence, and the directed verdict on punitive damages. The direct effect is that the counterclaims verdict was set aside and the case must be reconsidered with appropriate discovery and procedural fairness concerning the counterclaims. No new precedent was established beyond the application of existing procedural and evidentiary standards.

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EUDALY v. VALMET AUTOMATION (USA), INC.

BIRDSONG, Presiding Judge.

James F. Eudaly filed suit in February 1990 against his former employer Valmet Automation (USA), Inc., for failure to pay sales commissions. Valmet asserted in defense a "Release," executed by Eudaly in July 1989 upon his termination from employment, and in which, on receipt of certain sums, he released Valmet for "all manner of actions, causes of action, suits, debts, duties, accounts, contracts, claims and demands whatsoever . . . including . . . all claims and demands for or with respect to salary, remuneration, commission, advances on commission, fringe benefits, vacation pay, severance allowance, [etc.]. . . ." Valmet's motion for summary judgment on grounds of this release was denied by the trial court in August 1990, on a finding of a genuine issue of fact as to fraudulent inducement to enter the release.

Time for discovery expired October 1, 1990. On October 12, 1990, Valmet moved for leave to file a counterclaim for overpayment of commissions and sought damages for breach of the release, occasioned by the suit itself filed by Eudaly. Eudaly opposed Valmet's motion to amend as untimely and sought an enlargement of time to file a pre-trial order. The trial court did not rule on those motions, but on November 7, 1990, issued an order allowing Valmet to file its counterclaims.

On November 19, 1990, Eudaly moved for reconsideration of the order allowing Valmet to file counterclaims and sought to exclude admission of the release at trial. On December 6, 1990, Eudaly moved to reopen discovery relative to Valmet's counterclaims and filed an affidavit showing the necessity for discovery. None of these motions was ruled on by the trial court. On January 14, 1991, the case was called for trial. Eudaly requested a continuance to allow discovery as to Valmet's counterclaims, and asked for a ruling on the several pending motions, but the trial court denied a continuance and denied Eudaly's motion to reopen discovery, saying "I set a September deadline for motions, those motions were filed after that date."

The jury returned a verdict for the defendant Valmet on Eudaly's claims, and on Valmet's counterclaims rendered a verdict against Eudaly in the amount of $15,115.38. Eudaly enumerates seven errors below. Held:

1. Generally it is a matter of the trial court's discretion whether to allow the late filing of counterclaims pursuant to OCGA § 9-11-13 (f) (see White v. Fidelity Nat. Bank, 188 Ga. App. 539, 540 ( 373 S.E.2d 640)), but according to its own statement at trial, the trial court had set a September 1990 deadline for motions and for the filing of a pre-trial order in this case and for that reason denied appellant Eudaly's motion to reopen discovery as to Valmet's counterclaims. That being the case, the trial court abused its discretion in entering an order on November 7 granting Valmet's motion for leave to file counterclaims some nine months after Valmet had filed its answer, and after the "September deadline for motions," in fact virtually on the eve of trial. The counterclaims were compulsory, going to the heart of plaintiff's claims as a set-off or recoupment, and were required to be filed in Valmet's original answer (OCGA § 9-11-13 (a); Swim Dixie Pool Corp. v. Kraemer, 157 Ga. App. 748, 749 ( 278 S.E.2d 448)) or only upon a demonstrated showing of the grounds required to be shown by OCGA § 9-11-13 (f). Clairmont Foods v. Huddle House, 142 Ga. App. 171 ( 235 S.E.2d 635). It was, on the face of things, neither fair nor expeditious to allow Valmet to file late counterclaims after time for discovery expired October 1, 1990, and after the court's "September deadline for motions," while at the same time using the fact of the "September deadline for motions" as the basis for denying Eudaly an opportunity to make any discovery as to those late counterclaims. Valmet argues on appeal that Eudaly had three months to make discovery after Valmet filed its motion for leave to file counterclaims, but this is patently not so, because the time for discovery had already expired when Valmet sought leave to file counterclaims, and the trial court, although allowing Valmet to file counterclaims on November 7, refused to rule on Eudaly's motion to reopen discovery because that motion was filed after the "September deadline," and for the same reason refused Eudaly a continuance at trial.

Accordingly, we rule that on the face of its statement that it had imposed a September deadline for motions and for a pre-trial order, the trial court abused its discretion in allowing Valmet to file late counterclaims after this deadline without a showing of necessity or justice pursuant to OCGA § 9-11-13 (f); and, having allowed Valmet to file late counterclaims, the trial court prima facie abused its discretion in refusing Eudaly time for discovery and for denying a continuance. Once the trial court allowed the late filing of counterclaims, it was without discretion to deny Eudaly all discovery, and the principles allowing liberal discovery applied. See generally Morton v. Gardner, 242 Ga. 852 ( 252 S.E.2d 413); Bridges v. Twentieth Century Travel, 149 Ga. App. 837 ( 256 S.E.2d 102). The judgment against Eudaly on Valmet's counterclaims is reversed.

2. In view of the reversal of the verdict on Valmet's counterclaims for the reasons given in Division 1, it is unnecessary to consider appellant's contention that that verdict was not supported by sufficient evidence.

3. The trial court did not err in admitting in evidence the release. The document, neither in part nor in whole, is not void for being in restraint of trade according to Howard Schultz Assoc. v. Broniec, 239 Ga. 181 ( 236 S.E.2d 265). Appellant is not entitled to a new trial on this ground.

4. Appellant contends the trial court erred in rejecting his evidence of fraud, but in his brief merely argues that the trial court erred in excluding Exhibit 10 "as evidence of [Valmet's] intentional misrepresentation of the FSC sale and his commission thereon." Since appellant provides no clue as to what "the FSC sale" is and what Exhibit 10 is and what it would tend to prove, this allusion is too obscure to form the basis for a finding of harmful error on appeal; the error alleged is not self evident, nor is appellee's objection to the evidence as being not properly authenticated and "absolutely irrelevant." Admissibility of evidence is largely a matter of discretion for the trial court, and the burden is on the party alleging error to show it affirmatively by the record. Armech Svc. Co. v. Rose Elec. Co., 192 Ga. App. 829, 830 ( 386 S.E.2d 709). Appellant has not borne his burden to show error affirmatively by the record, and moreover to show harm. See Floyd v. State, 156 Ga. App. 741 (1) ( 275 S.E.2d 786). Appellant is not entitled to a new trial on this ground.

5. Inasmuch as the jury determined that Valmet was not liable on Eudaly's claims, the jury could not have reached a question of punitive damages, and grant of directed verdict to Valmet on the issue of punitive damages cannot have been error. Appellant is not entitled to a new trial on this ground.

Judgment affirmed in part and reversed in part. Pope and Cooper, JJ., concur.

DECIDED SEPTEMBER 16, 1991 — RECONSIDERATION DENIED OCTOBER 15, 1991 — CERT. APPLIED FOR.