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Termnet Merchant Servs. Inc. v. Phillips

The trial court lacked discretion to deny an award of attorneys' fees under O.C.G.A. § 13-1-11 where the plaintiff clearly satisfied all of the statutory conditions.

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We granted certiorari to consider whether a trial court has discretion to deny a claim for attorney fees brought pursuant to OCGA § 13-1-11, despite undisputed compliance with the requirements of that statute. Based upon the statute’s language and legislative history, we conclude that attorney fees sought under OCGA § 13-1-11 are mandatory where the statute’s conditions have been clearly satisfied. Therefore, we reverse. In 1996, appellee Andrew Phillips entered into both an employment agreement and a stock purchase agreement with appellant TermNet Merchant Services, Inc. “TermNet”. At roughly the same time, Phillips executed a promissory note payable to TermNet in the principal amount of $150,000, with interest set at 11.5 per year. The note provided that if the creditor brought suit to collect an unpaid balance, it was entitled to receive all reasonable costs, including attorney fees. Pursuant to the note, Phillips received $150,000 from TermNet. Disputes then arose between Phillips and TermNet relating to both the employment contract and the stock purchase agreement, and Phillips’s employment was terminated.

TermNet made a demand on Phillips to pay the balance of the note and put Phillips on notice that if the note was not paid in full within 10 days of the demand letter’s receipt, TermNet would enforce the note’s attorney fees provision. When its demand was not satisfied, TermNet sued Phillips for, among other things, contract breach and failure to make payments under the note. The trial court bifurcated the case, and ordered that all claims arising from the employment contract and stock purchase agreement —both of which contained arbitration provisions —be submitted to binding arbitration. At the same time, the trial court retained jurisdiction over the claims pertaining to the note, which contained no arbitration provision.

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