Sovereign Healthcare LLC v. Mariner Health Care Mgmt. Co.

The trial court erred in ruling that all signatories to the administrative services agreement must pay liquidated damages to the company that provided the administrative services after they prematurely terminated the contract, since the liquidated damages clause bound only one of the signatories.

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This case is before us for the second time. The first time, we ruled that three of the four appellant healthcare companies were liable to Mariner Health Care Management Company “Mariner” for prematurely terminating an administrative services contract, and that the contract’s liquidated damages provision was enforceable. Mariner Health Care Management Co. v. Sovereign Healthcare, LLC, 306 Ga. App. 873 703 SE2d 687 2010 “Mariner I”. This time, the appellants challenge the trial court’s judgment that all signatories to the contract must pay liquidated damages, instead of just the one signatory specifically mentioned in the liquidated damages clause. They also protest the trial court’s award of prejudgment interest and its ruling that Mariner is entitled to attorneys’ fees. For reasons that follow, we reverse in part the court’s liquidated damages judgment, but affirm the remainder.

Although many of the relevant facts were set out in Mariner I, a fuller account is needed here. In October 2003, Mariner entered into an administrative services agreement “ASA” with three related entities—Sovereign Healthcare, LLC “Sovereign”, Sovereign Healthcare Holdings, LLC “Holdings”, and Southern Healthcare Management, LLC “Southern”. Holdings was the sole member of Sovereign, which in turn was the sole member of 19 limited liability companies that operated nursing homes in Florida. Southern provided management services to those 19 companies.

Sovereign Healthcare LLC v. Mariner Health Care Mgmt. Co.

The trial court erred in ruling that all signatories to the administrative services agreement must pay liquidated damages to the company that provided the administrative services after they prematurely terminated the contract, since the liquidated damages clause bound only one of the signatories.

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