Background
Ultra Group of Companies, Inc. (“Ultra”) and Daljeet Singh are participants in Georgia’s coin-operated amusement machine (COAM) industry — a heavily regulated sector governed by extensive statutory provisions and overseen by the Georgia Lottery Corporation (GLC). COAMs, as defined under OCGA section 50-27-70, are coin- or card-operated skill-based entertainment machines commonly found in convenience stores. In 2016, the parties settled a Gwinnett County lawsuit, with Singh agreeing to provide Ultra eight-year COAM contracts at two identified locations (6201 Memorial Drive and 1317 Columbia Drive in Decatur) and two unidentified locations, or pay $200,000 in liquidated damages for the unidentified sites.
Singh never delivered any contracts. He had already sold the Memorial Drive location in 2015 and sold the Decatur location just one week after signing the settlement agreement. Ultra pursued breach claims, which were eventually heard by a GLC-appointed hearing officer. The hearing officer found that Singh was not in breach as to the Memorial Drive location because he “had no legal relationship” to the property at the time of the agreement. However, Singh was found in breach for the Decatur and unidentified locations, and was ordered to pay $100,000 in nominal damages for the Decatur site, $200,000 in liquidated damages for the unidentified locations, and $118,600 in attorney fees and expenses for acting in bad faith. The GLC affirmed by operation of law, and the superior court upheld the decision. Both parties appealed.
The case had already been before the Court of Appeals multiple times, including a prior vacatur and remand because the superior court failed to explain its reasoning for dismissing the parties’ petitions for review.
The Court’s Holding
In a detailed opinion by Judge Hodges, the Court of Appeals affirmed in part, reversed in part, and remanded with direction. On Ultra’s central claim, the court held that the hearing officer committed legal error in concluding that Singh could not be liable for breach of the settlement agreement regarding the Memorial Drive location simply because he lacked ownership or control of the property at the time of the agreement. Citing long-settled Georgia precedent including Sackett v. Wilson, 258 Ga. 612 (1988), the court reaffirmed that a party may contract to convey rights in property it does not own. If that party “contracts absolutely” and cannot deliver by the consummation date, the party is liable for breach and damages. The court remanded for a determination of whether Singh in fact breached, whether Ultra is entitled to damages, and the extent of those damages.
However, the court affirmed the hearing officer’s denial of Ultra’s claim for lost-revenue damages at the Columbia Drive location, finding that Ultra failed to prove its lost profits with reasonable certainty. Ultra’s damage calculations relied on average revenue data from machines that other licensees had installed at the location, without establishing that those machines were comparable in type or popularity. The court also found that Ultra failed to credit any revenue from re-renting the machines removed from the location, consistent with its prior ruling in Ultra Group v. S & A 1488 Mgmt. On Singh’s cross-appeal, the court rejected arguments that the hearing officer’s findings were arbitrary and capricious and upheld the attorney fees award, finding Singh acted in bad faith.
Key Takeaways
- Under Georgia law, a party who unconditionally promises to convey rights in property — even property the party does not own or control — assumes the risk of its own inability to perform and is liable for breach if it cannot deliver by the consummation date.
- Lost-profits damages in COAM disputes must be proven with reasonable certainty, including evidence from comparable machines and credit for any savings from re-renting displaced equipment.
- GLC hearing officer decisions are reviewed under a deferential standard: fact findings are sustained if supported by any evidence, and legal conclusions are set aside only for clear error. But legal errors — such as applying an incorrect rule of contract law — will be reversed.
- A subsequently enacted GLC regulation cannot be applied retroactively to invalidate obligations under a settlement agreement that predates the regulation.
Why It Matters
This opinion provides critical guidance for the Georgia COAM bar and commercial litigators handling settlement agreements involving real property or commercial locations. The court’s firm restatement that parties may bind themselves to deliver property rights they do not yet hold is significant for any deal structure in which a party promises access to a location controlled by a third party. Practitioners negotiating such agreements should ensure their clients either secure the underlying property rights or condition performance accordingly. The decision also reinforces the importance of proving lost profits with specificity in COAM-industry arbitrations, particularly the requirement to account for mitigation and present comparable-machine data.