                               FIRST DIVISION
                                BARNES, P. J.,
                           MCMILLIAN and REESE, JJ.

                    NOTICE: Motions for reconsideration must be
                    physically received in our clerk’s office within ten
                    days of the date of decision to be deemed timely filed.
                                http://www.gaappeals.us/rules


                                                                     March 13, 2019




In the Court of Appeals of Georgia
 A18A2117. WARREN AVERETT, LLC v. LANDCASTLE
     ACQUISITION CORPORATION.

      REESE, Judge.

      The Appellant, Warren Averett, LLC, an accounting firm, appeals from the

grant of partial summary judgment to the Appellee, Landcastle Acquisition

Corporation. According to the Appellant, the trial court erred in finding, as a matter

of law, that a contract provision limiting the amount of damages the Appellee could

recover was unenforceable. For the reasons set forth, infra, we affirm.

      Viewed in the light most favorable to the Appellant,1 the record shows the

following facts. From 2010 through 2014, Morris Hardwick Schneider, P.C.,

(“MHS”) was a large, multi-state law firm that conducted real estate closings and


      1
          See Benton v. Benton, 280 Ga. 468, 470 (629 SE2d 204) (2006).
other mortgage-related services. As a result of the nature and size of its business,

MHS had “billions of dollars flowing in and out of its [title] escrow accounts[,]” as

well as “millions of dollars flowing in and out” of its trust accounts, during that time

period.

      In December 2012, the managing partner of MHS,2 Nathan E. Hardwick, IV,

hired the accounting firm of Gifford Hillegass & Ingwersen, LLP, (“GH&I”) to

conduct an audit for the prior three years. GH&I drafted an engagement letter that

memorialized the scope of the audit and the terms of its contract (“2012 Contract”)

and sent it to MHS. According to the 2012 Contract, GH&I was going to “audit the

consolidated balance sheets of [MHS] as of January 1, 2010, December 31, 2010,

2011[,] and 2012 and the related consolidated statements of income, comprehensive

income, members’ equity, and cash flow for the years then ended.” The objective of

the audit was to enable GH&I to express “an opinion about whether [MHS’s]

financial statements [were] fairly presented, in all material respects, in conformity


      2
        Although the Appellee emphasizes that MSH was a subsidiary of a holding
company, MHSLaw, P.C. (later MHSLaw, Inc.), and that it was the holding company,
not MHS, that arranged for the audits, the distinction does not affect this Court’s
analysis in the instant appeals. Thus, for the sake of simplicity and clarity, we will
address the audits as if MHS had initiated them and an officer signed the applicable
contracts on behalf of MHS.

                                           2
with U. S. generally accepted accounting principles.”3 Hardwick signed the 2012

Contract and returned it to GH&I.

      Shortly thereafter, the Appellant, an accounting firm, acquired GH&I, effective

January 1, 2013, and the Appellant took over the performance of MHS’s audit. The

Appellant sent a letter to MHS notifying the law firm of the acquisition and asking

that a corporate official confirm that the ongoing audit would still be subject to the

2012 Contract. On February 4, 2013, a partner of MHS signed the letter and returned

it to the Appellant.




      3
        In the 2012 Contract, GH&I agreed to
      perform the audits to obtain reasonable assurance about whether the
      financial statements [were] free of material misstatement[s], whether
      from (1) errors, (2) fraudulent financial reporting, (3) misappropriation
      of assets, or (4) violations of laws or governmental regulations that
      [were] attributable to the entity or to acts by management or employees
      acting on behalf of the entity. [W]e will inform [MHS] of any material
      errors that come to our attention, and we will inform [MHS] of any
      fraudulent financial reporting or misappropriation of assets that comes
      to our attention. We will also inform [MHS] of any violations of laws or
      governmental regulations that come to our attention, unless clearly
      inconsequential. . . . Our audits will include obtaining an understanding
      of the entity and its environment, including internal control, sufficient
      to assess the risks of material misstatement of the financial statements[.]

                                          3
       In October 2013, Hardwick hired the Appellant to conduct an audit of MHS’s4

financial statements for the year ending on December 31, 2013. The Appellant

memorialized the terms of the audit in a second engagement letter (“2013 Contract”),

which contained essentially the same terms as the 2012 Contract. Hardwick signed

the contract and returned it to the Appellant.

       In the meantime, in early 2013, the Appellant issued to MHS Independent

Auditors’ Reports for 2010/2011 and 2011/2012. The Appellant subsequently issued

its Independent Auditors’ Report for 2012/2013 on April 18, 2014. Each of the

reports stated that it “present[ed] fairly . . . the assets, liabilities, and stockholders’

deficit of [MHS]” for the applicable years, as well as the revenues, expenses, and cash

flows for those years. However, none of the audit reports addressed or even

acknowledged the assets, liabilities, or cash flows for MHS’s trust or title escrow

accounts.

       In the summer of 2014, MHS discovered that Hardwick, MHS’s managing

partner, had embezzled at least $20 million from MHS’s trust and title escrow

       4
         At some point after December 2012, Morris Hardwick Schneider, P.C.,
changed its corporate form and became Morris Hardwick Schneider, LLC. The firm
subsequently changed its name to Morris Schneider Wittstadt, LLC. Because these
changes are not relevant to the issues on appeal, and to avoid confusion, we will refer
to the law firm as “MHS” throughout this opinion.

                                            4
accounts.5 And, according to the Appellee, Hardwick embezzled at least $11 million

of that total after the Appellant had issued its 2010/2011 Independent Auditors’

Report on January 11, 2013.

      In January 2017, the Appellee6 filed suit against the Appellant for breach of

contract, professional negligence,7 and gross negligence, seeking at least $17.5

million in damages.8 The Appellant filed a motion for partial summary judgment,

contending that a provision in both the 2012 and 2013 Contracts expressly limited the

amount of damages that the Appellee could recover on any claim to the amount of

professional fees MHS had paid to the Appellant, which totaled about $87,000. The




      5
       Hardwick became the subject of both criminal and civil actions as a result of
the embezzlement.
      6
          MHS had assigned its claims against the Appellant to the Appellee.
      7
        The Appellee attached an expert’s affidavit in support of its claim for
professional negligence, pursuant to OCGA § 9-11-9.1.
      8
        In August 2014, during the investigation into the missing funds, Hardwick
returned $2 million to MHS, and the funds were deposited back into the title escrow
accounts.

                                          5
record shows that both four-page contracts9 contained the following provision

(“Provision”) near the bottom of the third page:

      Issue Resolution:
      In the event we are required to respond to a subpoena, court order or
      other legal process for the production of documents and/or testimony
      relative to information we obtained and/or prepared during the course
      of this engagement, you agree to compensate us at our hourly rates, as
      set forth above, for the time we expend in connection with such
      response, and to reimburse us for all of our out-of-pocket expenses
      incurred in that regard.

      Should you become dissatisfied with our services at any time, we ask
      that you bring your dissatisfaction to our attention promptly. If you
      remain dissatisfied, it is agreed that you will participate in non-binding
      mediation under the commercial mediation rules of the American
      Arbitration Association before you assert any claim. In any event, no
      claim shall be asserted which is in excess of the lesser of actual damages
      incurred or professional fees paid to us for the engagement.




      9
         The other sections in the contracts included: “Audit Objective”; “Audit
Procedures”; “Management Responsibilities”; “Engagement Administration, Fees,
and Other”; and “Conclusion.” The 2013 Contract included an additional provision,
entitled “Termination.” None of these sections addressed damages for breach of
contract or negligence, limited the amount of damages recoverable, or referred to the
provision at issue on appeal.

                                          6
      In response to the Appellant’s motion, the Appellee filed a cross-motion for

partial summary judgment, arguing that the Provision was unenforceable as a matter

of law because (1) it was not sufficiently prominent to provide notice; (2) it was

ambiguous and insufficiently explicit as to whether it applied to the Appellee’s claims

for professional negligence and gross negligence; and (3) even if the Provision was

otherwise enforceable, it was still invalid and unenforceable under Georgia law to the

extent it purported to limit the amount of recoverable damages for the Appellee’s

gross negligence claim.

      The trial court conducted a hearing on the motions, during which it ruled that

the Provision was unenforceable due to its lack of prominence among the surrounding

contract terms, the ambiguous scope of the provision, and its invalidity as to the

Appellee’s claim for gross negligence. Based on this finding, the court granted the

Appellee’s cross-motion for partial summary judgment and denied the Appellant’s

motion. This appeal followed.

             In order to prevail on a motion for summary judgment under
      OCGA § 9-11-56, the moving party must show that there exists no
      genuine issue of material fact, and that the undisputed facts, viewed in
      the light most favorable to the nonmoving party, demand judgment as
      a matter of law. Moreover, on appeal from the denial or grant of
      summary judgment[,] the appellate court is to conduct a de novo review

                                          7
       of the evidence to determine whether there exists a genuine issue of
       material fact, and whether the undisputed facts, viewed in the light most
       favorable to the nonmoving party, warrant judgment as a matter of law.10


In addition, because this case involves a contract, we note that

       an issue of contract construction is usually a question of law for the
       court to resolve and, as such, it is subject to de novo review. This review
       is guided by three fundamental principles of contract construction: (1)
       If the agreement is unambiguous, the court will look to the contract
       alone to find the intention of the parties; (2) the existence or
       nonexistence of an ambiguity is a question of law for the court; and (3)
       the issue of interpretation becomes a jury question only when there
       appears to be an ambiguity in the contract which cannot be negated by
       the court’s application of the statutory rules of construction.11


With these guiding principles in mind, we turn now to the Appellant’s specific claims

of error.

       1. In several related arguments, the Appellant contends that the trial court erred

in holding that the Provision in both contracts was unenforceable as a matter of law

and in granting partial summary judgment to the Appellee on that basis. According


       10
            Benton, 280 Ga. at 470 (citations omitted).
       11
        Monitronics Intl. v. Veasley, 323 Ga. App. 126, 133 (2) (746 SE2d 793)
(2013) (physical precedent only) (punctuation and footnotes omitted).

                                            8
to the Appellant, at the very least, questions of fact existed on this issue for a jury to

resolve. We disagree.

             It is the paramount public policy of this state that courts will not
      lightly interfere with the freedom of parties to contract. A contracting
      party may waive or renounce that which the law has established in his
      or her favor, when it does not thereby injure others or affect the public
      interest. Exculpatory clauses[12] in Georgia are valid and binding, and
      are not void as against public policy when a business relieves itself from
      its own negligence. Given this paramount public policy, courts exercise
      extreme caution in declaring a contract void as against public policy,
      and should do so only when the case is free from doubt and an injury to
      the public interest clearly appears.13


Nevertheless, “because exculpatory clauses may amount to an accord and satisfaction

of future claims and waive substantial rights, they require a meeting of the minds on


      12
          See 2010-1 SFG Venture LLC v. Lee Bank & Trust Co., 332 Ga. App. 894,
897 (1) (a), n. 2 (775 SE2d 243) (2015) (This Court noted that, “[w]hether the clause
at issue [was] characterized as a limitation of liability clause or an exculpatory clause
[was] immaterial because Georgia case law [did] not appear to treat such clauses
differently for purposes of review.”) (citation and punctuation omitted); see also T.S.
KAO, Inc. v. North American Bancard, LLC, 2017 U.S. Dist. LEXIS 219819, * 4 (II)
(A) (N.D. Ga. 2017) (“Under Georgia Law, an exculpatory clause is a provision in a
contract that severely restricts remedies or waives substantial rights.”) (citations and
punctuation omitted).
      13
        2010-1 SFG Venture LLC, 332 Ga. App. at 897-898 (1) (a) (citations,
punctuation, and footnote omitted).

                                            9
the subject matter and must be explicit, prominent, clear[,] and unambiguous.”14

These are “strict requirements for [the] enforceability of [an exculpatory] clause.”15

      (a) As an initial matter, the Appellant contends that the Provision was not

prohibited by statute and did not violate public policy and, therefore, the trial court

erred in finding the Provision to be unenforceable.16 However, pretermitting whether

the Provision in this case was the type of standard exculpatory clause that generally

did not violate public policy, the trial court was still authorized to rule that it was

unenforceable as a matter of law if the undisputed evidence of record17 showed that



      14
        Id. at 898 (1) (a) (citation and punctuation omitted). See Dept. of Transp. v.
Arapaho Constr., 180 Ga. App. 341, 343 (1) (349 SE2d 196) (1986) (“Exculpatory
clauses must be clear and unambiguous[;] they must be specific in what they purport
to cover[;] and any ambiguity will be construed against the drafter of the
instrument.”) (citation and punctuation omitted).
      15
           Arapaho Constr., 180 Ga. App. at 343 (1).
      16
         See generally TSG Water Resources v. D’Alba & Donovan Certified Public
Accountants, P.C., 260 Fed. Appx. 191, 204 (V) (11th Cir. 2007) (per curiam) (noting
that the appellants had cited no Georgia case law holding that an accounting firm’s
contract’s exculpatory clause – which did not limit the firm’s duty of care or preclude
legal action against the firm, but simply limited the type of damages that could be
sought – violated public policy).
      17
        See Benton, 280 Ga. at 470 (The moving party is entitled to summary
judgment if it shows “that the undisputed facts, viewed in the light most favorable to
the nonmoving party, demand judgment as a matter of law.”) (citation omitted).

                                          10
the Provision was not explicit, prominent, clear, and unambiguous.18 Thus, this

argument presents no reversible error.

      (b) The record in this case supports the trial court’s ruling that the Provision

was insufficiently prominent among the surrounding text to be enforced. “In

determining whether a limitation of liability clause or an exculpatory clause is

sufficiently prominent, courts may consider a number of factors, including whether

the clause is contained in a separate paragraph; whether the clause has a separate

heading; and whether the clause is distinguished by features such as font size.”19

      The record clearly shows that the Provision is the same font size as that used

throughout the entirety of the 2012 and 2013 Contracts, and the Provision is not

capitalized, italicized, or set in bold type for emphasis.20 Further, the Provision is not


      18
          See 2010-1 SFG Venture LLC, 332 Ga. App. at 898 (1) (a); Monotronics
Intl., 323 Ga. App. at 133 (2) (physical precedent only); see also T.S. KAO, Inc., 2017
U.S. Dist. LEXIS 219819, at * 4 (II) (A) (Exclusionary clauses “are not unenforceable
per se, but in order to be enforceable[, they] must be explicit, prominent, clear and
unambiguous.”) (citations, punctuation, and emphasis omitted).
      19
           2010-1 SFG Venture LLC, 332 Ga. App. at 898 (1) (a) (citations omitted).
      20
        See, e.g., Monitronics Intl., 323 Ga. App. at 133-135 (2) (physical precedent
only) (The provision was not “capitalized or set off in any unique or prominent way.
To the contrary, this important language is written in the same small, single-spaced
typeface as the majority of the contract.”); Parkside Center v. Chicagoland Vending,
250 Ga. App. 607, 611 (2) (552 SE2d 557) (2001) (The clause at issue had no

                                           11
set off in a separate section that specifically addressed liability or recoverable

damages,21 with a bold, underlined, capitalized, or italicized specific heading, such

as “Limitation on Liability”22 or “DAMAGES.”23 Nor is the Provision in a

prominent place within the contracts to emphasize the importance of the Provision’s

limitation on recoverable damages, such as being adjacent to another similarly

significant provision or being next to the parties’ signature lines.24

separate paragraph heading, and the typeface was the same size as in the surrounding
paragraphs.); see also T.S. KAO, Inc., 2017 U.S. Dist. LEXIS 219819, at * 3 (II) (The
court ruled that, if the class-action waiver at issue was an exculpatory clause, “there
[could] be no doubt that it would be unenforceable,” given that the clause was in a
paragraph with other provisions, the paragraph had no separate heading, and the
typeface of the clause was the same size as in the surrounding paragraphs.) (citation
omitted).
      21
         See, e.g., Parkside Center, 250 Ga. App. at 611-612 (2) (provision was in a
section under the general heading of “Miscellaneous”); see also T.S. KAO, Inc., 2017
U.S. Dist. LEXIS 219819, at * 3 (II) (clause was in a paragraph with other provisions,
and paragraph had no specific heading that called attention to the clause).
      22
        See, e.g., 2010-1 SFG Venture LLC, 332 Ga. App. at 899 (1) (a) (“Limitation
on Liability of SFG”); Holmes v. Clear Channel Outdoor, 284 Ga. App. 474, 476-
477 (2) (644 SE2d 311) (2007) (“Hold Harmless/Indemnification[ ]”); Imaging
System Intl. v. Magnetic Resonance Plus, 227 Ga. App. 641, 645 (1) (490 SE2d 124)
(1997) (“LIMITATION OF LIABILITY”).
      23
     See, e.g., Monitronics Intl., 323 Ga. App. at 133 (2) (physical precedent only)
(“DAMAGES”).
      24
        See, e.g., Grace v. Golden, 206 Ga. App. 416, 418 (1) (b) (425 SE2d 363)
(1992) (The provision was immediately above and adjacent to the signature line for

                                          12
      Instead, the Provision is included in a section, generically entitled “Issue

Resolution,” near the bottom of the third page. The single-sentence Provision appears

at the very end of the section, which also contains several unrelated provisions

regarding, inter alia, MHS’s responsibility to compensate the Appellant if it should

be required to respond to court orders, subpoenas, etc., related to the audit and to

reimburse the Appellant for associated expenses; directing MHS to contact the

Appellant if it became dissatisfied with its services; and requiring MHS to participate

in mediation to resolve any issues before it filed a claim against the Appellant.25




the opposing party.).
      25
          See, e.g., Monotronics Intl., 323 Ga. App. at 133-136 (2) (physical precedent
only) (Although the provision was in a section entitled “DAMAGES,” it was in
subsection (e), following several long provisions addressing unrelated issues, and
was, as a result, “far removed” from the title that indicated the section’s subject
matter. This Court concluded that the provision was not explicit and lacked the
requisite indicia of prominence and was, therefore, unenforceable.); Parkside Center,
250 Ga. App. at 611-612 (2) (The provision was on the last page of a form lease, at
the end of a paragraph in a section with the general heading of “Miscellaneous” that
also included several paragraphs before and after the provision. This Court concluded
that the trial court did not err in finding that the provision was unenforceable because
it failed to satisfy the prominence requirement.).

                                          13
      Under the totality of these circumstances, we conclude that the trial court was

authorized to find that the provision failed to meet the prominence requirement and,

thus, was unenforceable as a matter of law.26

      (c) Given our decisions in the preceding subsections, the Appellant’s remaining

arguments are moot.


      26
          See Monitronics Intl., 323 Ga. App. at 133 (2) (physical precedent only);
Parkside Center, 250 Ga. App. at 612 (2); see also Allstate Ins. Co. v. ADT, 2015 U.S.
Dist. LEXIS 133258 (N.D. Ga. 2015) (The provision was printed on the back of a
single-page document, in “extremely small print.” Even though the provision was
capitalized, it was not prominent because most of the surrounding text was also
capitalized. The provision was in a section with the heading, “LIMITATION OF
LIABILITY,” but the section contained several paragraphs, none of which had a
subheading, and the provision was in the middle of the section – “far removed” from
the heading. The court concluded that the provision did not meet the prominence
requirement and, therefore, was unenforceable.); cf. 2010-1 SFG Venture LLC, 332
Ga. App. at 899 (1) (a) (The provision was set off in its own paragraph with the bold,
underlined heading “Limitation on Liability of SFG.” The provision was part of a
collection of similar paragraphs pertaining to the rights and responsibilities of the
parties. In addition, the parties negotiated the agreement, and the opposing party
helped draft the agreement. In fact, the CEO of the opposing party admitted that he
was aware of the limitation of liability provision. This Court held that the trial court
erred in ruling that the provision was unenforceable.); Imaging System Intl., 227 Ga.
App. at 642-645 (1) (The limitation of liability provision was set off in its own
paragraph with the heading “LIMITATION OF LIABILITY” and all of the key
language was capitalized; therefore, the provision was prominent and enforceable.);
Grace, 206 Ga. App. at 417-418 (1) (b) (The provision was on the second page of a
two-page deed, next to the signature line of the opposing party, and the typeface used
was larger and bolder than the preprinted portions of the deed. Thus, the provision
was sufficiently prominent to be enforceable.).

                                          14
         2. The Appellant argues that the trial court erred in denying his motion for

partial summary judgment, which was based on his contention that the limitation of

damages provisions were enforceable and, as a result, the Appellee was limited in the

amount of damages it could seek from the Appellant. Given our decision in Division

1, supra, this claim of error is moot.

         Judgment affirmed. Barnes, P. J., concurs. McMillian, J., concurs in judgment

only.*



*THIS OPINION IS PHYSICAL PRECEDENT ONLY. COURT OF APPEALS

RULE 33.2 (a).




                                           15
