In 2003, Mariner Health Care Management Company entered into a contract with Sovereign Healthcare, LLC, Sovereign Healthcare Holdings, LLC and Southern Healthcare Management, LLC collectively “Sovereign”, whereby Mariner agreed to provide certain administrative services to Sovereign for a period of five years. In 2005, after more than two years of performance under the contract, Sovereign filed the instant lawsuit, claiming that the parties had reached an oral agreement to terminate the contract early, but Mariner subsequently refused to abide by that oral agreement to terminate. Mariner filed a counterclaim for breach of contract, seeking liquidated damages for Sovereign’s premature termination of the administrative services contract. Sovereign moved for summary judgment as to Mariner’s claim for liquidated damages, and Mariner filed an opposing motion for summary judgment. After a hearing, the trial court granted summary judgment to Mariner on the issue of liability for Sovereign’s early termination of the administrative services contract, but denied its motion for summary judgment as to liquidated damages. Instead, the court granted summary judgment to Sovereign as to Mariner’s claim for liquidated damages, finding that the liquidated damages provision in the contract is an unenforceable penalty. Mariner appeals in Case No. A10A1642, and Sovereign cross-appeals in Case No. A10A1679. A10A1642
1. Mariner asserts that the trial court erred in finding that the liquidated damages provision in the administrative services contract is unenforceable. The contract provides: In the event Sovereign terminates this Agreement prior to the expiration of the Initial Term for any reason whatsoever, other than those specified in Sections 4 a i through iii or 4 c hereof concerning certain failures or misconduct by Mariner, Sovereign shall pay Mariner, in a lump sum, as liquidated damages, an early termination fee equivalent to fifty percent 50 of the total Fee that would have been paid to Mariner through the expiration of the Initial Term. . . . Georgia law allows parties to provide for liquidated damages in their contracts, and unless the provision violates some principle of law, the parties are bound by their agreement.1 Such provisions are enforceable if 1 the injury caused by the breach is difficult or impossible to estimate accurately; 2 the parties intended to provide for damages rather than a penalty; and 3 the sum stipulated is a reasonable pre-estimate of the probable loss.2
