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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
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No. 18-10638
Non-Argument Calendar
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D.C. Docket No. 1:17-cv-00649-TCB
LATINO ENTERPRISES, INC.,
d.b.a. La Chiquita Tortilla Manufacturer,
Plaintiff-Counter Defendant-Appellee,
versus
THE TACO MAKER, INC.,
Defendant-Counter Claimant-Appellant.
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Appeal from the United States District Court
for the Northern District of Georgia
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(August 14, 2018)
Before TJOFLAT, NEWSOM, and ANDERSON, Circuit Judges.
PER CURIAM:
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The Taco Maker, Inc. (“Taco Maker”) appeals the district court’s grant of
judgment on the pleadings to Latino Enterprises, Inc. (“Latino Enterprises”). Taco
Maker and Latino Enterprises entered into a contract whereby Latino Enterprises
would provide tortillas for Taco Maker. In the agreement, the parties included a
“Resolution Fee.” The provision regarding the resolution fee stated that if “Taco
Maker has not ordered and accepted delivery of at least $2.5 million worth of
Products during the course of this agreement, Taco Maker will pay [Latino
Enterprises] a ‘Resolution Fee.’ Such Resolution Fee shall equal 5% of the
difference between $2.5 million and the value of the Products ordered and accepted
by Taco Maker during the course of this agreement.” If owed, Taco Maker was
required to pay the Resolution Fee within 30 days of the expiration of the contract.
Throughout the contract, Taco Maker ordered and accepted delivery of $2,088
worth of tortilla shells. At the conclusion of the contract, the Resolution Fee, in
accordance with the contract, was $124,895.60. Taco Maker did not pay the
Resolution Fee within 30 days.
Latino Enterprises brought suit in the Northern District of Georgia to recover
the Resolution Fee, along with interest and attorney fees, in accordance with the
contract. Taco Maker admitted the underlying facts in the complaint, but raised a
defense that the Resolution Fee was a liquidated damages provision and
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unenforceable under Georgia law. Taco Maker further argued that Latino
Enterprises was not entitled to either attorney’s fees or interest.
The district court concluded that the relevant facts were not in dispute and
that Latino Enterprises was entitled to judgment on the pleadings. Specifically, the
court concluded that the Resolution Fee was not a liquidated damages provision
because it did not address an underlying breach of contract. Rather, the breach
Latino Enterprises sought to have redressed was Taco Maker’s failure to pay the
fee itself. The district court further awarded prejudgment interest and attorney’s
fees to Latino Enterprises based on the contract. Taco Maker appealed.
Taco Maker raises two issues on appeal: 1) that the Resolution Fee is a
liquidated damages provision and the district court erred by not conducting the
tripartite inquiry as to its enforceability under Georgia law; and 2) that the district
court erred in awarding prejudgment interest and attorney’s fees to Latino
Enterprises. For the reasons stated below, we reject both of these arguments. We
will address each argument in turn.
We review a district court’s order granting judgment on the pleadings de
novo. Perez v. Wells Fargo N.A., 774 F.3d 1329, 1335 (11th Cir. 2014). “Judgment
on the pleadings is appropriate where there are no material facts in dispute and the
moving party is entitled to judgment as a matter of law.” Id. (internal quotation
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omitted). We accept as true all facts in the non-moving party’s pleading, and view
all facts in the light most favorable to the non-moving party. See id.
Liquidated damages are where “the parties agree, in their contract, what the
damages for a breach shall be.” Thorne v. Lee Timber Prods., Inc., 279 S.E.2d 521,
522 (Ga. Ct. App. 1981). Under Georgia law, parties may contract for liquidated
damages; however, the amount must not be a penalty and must satisfy a three part
test: “[t]he injury must be difficult to estimate accurately, the parties must intend to
provide damages instead of a penalty, and the sum must be a reasonable estimate
of the probable loss.” Aflac, Inc. v. Williams, 444 S.E.2d 314, 317 (Ga. 1994). In
cases of doubt, Georgia courts will construe a contract to constitute a penalty,
rather than a valid liquidated damages provision. See Thorne, 279 S.E.2d at 523.
In this case, the district court held that the provision in the contract was not,
in fact, a liquidated damages provision, and so the tripartite test was unnecessary.
We agree. A liquidated damages provision is an agreement as to the measure of
damages in case of a breach. However, in this case, the Resolution Fee was not an
amount payable in case of breach. Indeed, Taco Maker was not required to
purchase any tortillas whatsoever, and it did not breach the contract when it failed
to purchase $2.5 million worth of tortilla shells. The only breach occurred when
Taco Maker failed to pay the Resolution Fee as stipulated in the contract. Because
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the provision was not a liquidated damages provision, the district court did not err
in failing to evaluate the provision under the tripartite test.
Taco Maker’s first argument that the district court erred in awarding Latino
Enterprises prejudgment interest and attorney’s fees 1 is that Latino Enterprise’s
pleadings did not adequately put them on notice of the claims being asserted
against them. However, Latino Enterprises clearly stated in its complaint that it
was seeking prejudgment interest and attorney’s fees pursuant to the terms in the
contract. The district court awarded both prejudgment interest and attorney’s fees
based on the terms in the contract; therefore, Taco Maker was provided with
adequate notice as to the grounds for each claim.
Taco Maker further argues that the section of the contract referencing
interest refers only to the purchase of tortillas. However, the contract says “The
Taco Maker will be charged interest at the rate of 1% per month for any balance
that remains due for more than 30 days” (emphasis added)2. The district court did
not err in awarding prejudgment interest based on this provision.
1
Taco Maker also argues that any attorney’s fees are limited by a statutory cap. O.C.G.A. § 13-
1-11. However, Taco Maker also asserts (and Latino Enterprises agrees) that § 13-1-11 is not
applicable in this case. Because attorney’s fees were awarded pursuant to the contract, and both
parties agree § 13-1-11 is inapplicable, we reject this argument.
2
Moreover, as the district court noted, O.C.G.A. § 7-4-15 provides: “All liquidated demands,
where . . . the sum to be paid is fixed or certain, bear interest from the time the party shall
become liable.”
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Because the Resolution Fee was not a liquidated damages provision and
prejudgment interest and attorney’s fees were warranted under the contract, the
district court’s grant of judgment on the pleadings is
AFFIRMED.
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