           Case: 19-13723   Date Filed: 06/24/2020   Page: 1 of 14



                                                         [DO NOT PUBLISH]


            IN THE UNITED STATES COURT OF APPEALS

                    FOR THE ELEVENTH CIRCUIT
                      ________________________

                            No. 19-13723
                        Non-Argument Calendar
                      ________________________

                   D.C. Docket No. 7:18-cv-00069-HL



HESSMORGANHOUSE, LLC,

                                                           Plaintiff-Appellant,

                                   versus


THE KINGDOM GROUP OF COMPANIES, LLC, et al.,

                                                        Defendants-Appellees.

                      ________________________

               Appeal from the United States District Court
                   for the Middle District of Georgia
                     ________________________

                             (June 24, 2020)

Before MARTIN, ROSENBAUM, and TJOFLAT, Circuit Judges.

PER CURIAM:
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      The Kingdom Group hired HessMorganHouse, LLC (“HMH”) to provide

consulting services related to the development of a group-term life-insurance plan

(the “Plan”). The parties agreed that The Kingdom Group could defer payments

owed for certain Pre-Rollout Services “until such time as The Kingdom Group

receives compensation” from commission payments. “Notwithstanding” that

deferral agreement, the parties agreed that “no payment shall be made to HMH in

excess of 20% of any commission payment.” Unfortunately for both parties, only

three policies were sold before the insurer canceled the Plan for lack of

participation. The Kingdom Group received a total of $262.80 in commission

payments.

      HMH sued for breach of contract, seeking $113,818 plus other damages for

the services performed during the Pre-Rollout phase. HMH argues that the

deferred-payment scheme functions as a condition on timing and does not relieve

The Kingdom Group of its obligation to pay HMH for “Pre-Rollout Services.”

The Kingdom Group, invoking the 20% clause, claims that it owes HMH only

$52.56 for these services, and that such amount was already accounted for in an

earlier payment. The District Court determined that the “[n]otwithstanding” clause

was a limitation, rather than a condition on timing, and granted summary judgment

to The Kingdom Group. We affirm.



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                                              I.

       The facts—as outlined in the parties’ joint stipulation below—are not in

dispute. HMH is a life insurance consulting company. The Kingdom Group 1

retained HMH to help it develop a group-term life-insurance plan for the National

Hispanic Christian Leadership Conference. The parties entered into a series of

letter agreements during this process.2 After the Prudential Insurance Company of

America was selected as the insurer for the Plan, HMH and The Kingdom Group

entered into a letter agreement dated December 24, 2013. Pursuant to that

agreement, the Kingdom Group retained HMH to provide Pre-Rollout Services and

Post-Rollout Services.

       Pre-Rollout Services included reviewing and negotiating the terms of the

draft contract and the guarantee letter with Prudential and, if such was deemed

necessary, establishing a trust. The agreement specified that The Kingdom Group




       1
         The Appellees are The Kingdom Group of Companies, LLC, d/b/a The Kingdom
Group; Kingdom Insurance Group, LLC, d/b/a The Kingdom Group; and Nicholas J. Lewis,
Individually and d/b/a The Kingdom Group. We refer to Appellees collectively as “The
Kingdom Group.”
       2
         HMH and The Kingdom Group entered into letter agreements on June 27, 2013;
September 17, 2013; December 24, 2013; and January 7, 2014. The parties agree that HMH
performed and was fully paid for the services under the June 27, 2013 and September 17, 2013
agreements. The January 7, 2014 letter agreement amended the payment schedule contained in
the September 17, 2013 agreement. The only dispute on appeal pertains to the December 24,
2013 agreement.
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shall pay HMH an hourly rate of $300 for “Pre-Rollout Services,” subject to the

following payment schedule:

      • The lesser of total HMH invoices or $15,000 upon receipt by The
        Kingdom Group of the initial commission payment from Prudential.
      • The lesser of any remaining unpaid HMH invoices or $20,000 upon
        receipt by The Kingdom Group of the second commission payment from
        Prudential.
      • The lesser of any remaining unpaid HMH invoices or $30,000 upon
        receipt by The Kingdom Group of a third commission payment from
        Prudential.
      • Up to $30,000 on the same basis as set forth above upon receipt by the
        Kingdom Group of each subsequent commission payment from
        Prudential until such time as all outstanding HMH invoices have been
        paid in full.

      The next provision in the agreement states that “Notwithstanding the

foregoing, no payment shall be made to HMH in excess of 20% of any commission

payment, taking into account amounts payable to HMH that have been deferred

and remain outstanding from all letter agreements, including this one.”

      In addition, the parties agreed that The Kingdom Group would retain HMH

for ongoing Post-Rollout Services, such as auditing retention charges and

reviewing premium rates, “in consideration of our agreement to defer

compensation for Pre-Rollout Services until such time as The Kingdom Group

receives compensation from the product.” Post-Rollout Services were to be billed

at a quarterly rate of $20,000. Those fees were to be aggregated with fees for Pre-

Rollout services, and “payable upon receipt by the Kingdom Group of subsequent
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commission payments from Prudential, but collectively subject to the 20%

limitation applicable to Pre-Rollout Services.”

      HMH performed Pre-Rollout Services and sent The Kingdom Group ten

letters summarizing the hours worked each month. According to the letters,

HMH’s hourly charges for Pre-Rollout Services totaled $118,818. The Plan was

launched in late 2015. Three insurance policies were sold under the Plan and The

Kingdom Group earned $262.80 in commissions from the sales. On January 26,

2017, Prudential terminated the Plan for lack of participation.

      After the insurer terminated the Plan, HMH sought to recover amounts owed

for services performed during the Pre-Rollout phase. HMH filed a complaint in

the Middle District of Georgia alleging that The Kingdom Group refused to pay

HMH for the value of services provided and demanding damages in the amount of

$113,818 (representing the amount billed for hourly services less a $5,000

payment), interest, and attorneys’ fees. The parties stipulated to certain facts and

cross-moved for summary judgment. The District Court granted summary

judgment in favor of The Kingdom Group, holding that there was no breach of

contract as the “[n]otwithstanding” clause unambiguously limits any payment to

HMH to 20% of the commission payment received by The Kingdom Group. The

District Court dismissed HMH’s remaining claims for breach of the covenant of

good faith and fair dealing, quantum meruit, account, and attorneys’ fees as a
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matter of law. HMH appeals the District Court’s grant of summary judgment on

the breach of contract claim.

                                         II.

      HMH argues that the payment deferral scheme established a condition

subsequent, and that Prudential’s cancellation negates The Kingdom Group’s right

to defer payments on the Pre-Rollout invoices. HMH also asserts that the deferred

invoice amounts are due “within a reasonable amount of time” and points to L.

Gregg Ivey, Inc., v. Land, 252 S.E.2d 88 (Ga. Ct. App. 1979) and Powell Co. v.

McGarey Group, LLC, 508 F. Supp. 2d 1202 (N.D. Ga. 2007) to support its

argument. On the other hand, The Kingdom Group argues that the

“[n]otwithstanding” clause makes the collection of sufficient commission a

condition precedent to payment and that its failure to occur excuses The Kingdom

Group’s obligation to pay HMH. We uphold summary judgment in favor of The

Kingdom Group as we determine that the “[n]otwithstanding” clause is an

independent covenant limiting the terms of performance due.

                                         A.

      Georgia law defines a condition subsequent as “a term of the contract within

the intent of the parties that the happening or non-occurrence of an event after the

contract becomes binding upon the parties, which, by pre-agreement of the parties,

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causes the contract to terminate without further duties and obligations on any

party.” Sheridan v. Crown Capital Corp., 554 S.E.2d 296, 300 (Ga. Ct. App.

2001). We need not decide whether the parties pre-agreed that failure of the Plan

would terminate the contract as the only alleged breach is failure to pay for

services that have already been performed.3

       Therefore, we must determine whether the collection of commissions

created a condition precedent for payment or whether the deferral scheme simply

specified a time for payment and the effect, if any, that the “[n]otwithstanding”

clause has on The Kingdom Group’s obligations to pay HMH.

                                              B.

                                              1.

       “Georgia courts have long recognized a material distinction between a

condition precedent and a mere accommodation between the parties over the

timing of payment.” Callaway v. Garner, 755 S.E.2d 526, 532 (Ga. Ct. App.

2014) (collecting cases), aff'd in part, rev’d on other grounds, 776 S.E.2d 829 (Ga.

Ct. App. 2015).4 “While the distinction may be subtle, it is crucial; if the parties’


       3
         HMH did not sue The Kingdom Group for breaching its obligation to retain HMH to
provide Post-Rollout Services. HMH’s complaint alleges only that The Kingdom Group failed
to pay HMH for services rendered during the Pre-Rollout phase.
       4
         A contingency can be described as a condition precedent to the existence of a valid
contract or as a condition precedent to performance under an existing contract. Yi v. Li, 721
S.E.2d 144, 148 (Ga. Ct. App. 2011). The parties do not argue that the receipt of commissions
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understanding was merely to specify a time of payment based on the happening of

a particular event, if the event ‘does not happen,’ the payor is still obligated to pay

and must do so ‘within a reasonable time.’” Id. at 533 (quoting MacLeod v.

Belvedale, Inc., 154 S.E.2d 756, 759 (Ga. Ct. App. 1967)). In MacLeod, for

example, the Georgia Court of Appeals determined that language in a loan

document that $9,500 was to be repaid “upon the closing of a construction loan”

specified a time of payment, not a condition of payment. 154 S.E.2d at 759.

“When the existence of a debt is conditional on the happening of some event,

payment cannot be enforced until the event happens; but when payment of an

existing liability is postponed until the happening of an event which does not

happen, payment must be made within a reasonable time.” Id. Because the

promise to repay the loan created an absolute liability, payment was due within a

reasonable time. Id.

       L. Gregg Ivey provides another example of a timing provision. There, a

promissory note contained language that the note was payable at the time that

thirty of the thirty-two lots in a subdivision had been sold. 252 S.E.2d at 89. The

parties disputed whether a foreclosure sale on the underlying property made this an

impossible condition and thus extinguished the debt. Id. The Georgia Court of



was necessary to the formation of the contract, nor do they dispute that a binding contract exists.
Thus, we use the term in the latter sense.
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Appeals determined that the conditional language related to the timing of the

repayment. Id. at 89–90. The promise to repay, however, was still an absolute

liability. Id. at 90 (citing MacLeod, 154 S.E.2d at 759). Therefore, the

impossibility of the sale did not extinguish the debt and a jury could decide a

reasonable time for repayment. Id.

        Likewise, in Powell Co., the Northern District of Georgia determined that

contract language stating that the Powell Company shall receive $5,000 per month,

“payable on the first day of each month or upon receipt of the monthly retainer due

[owners], whichever shall last occur” created an absolute liability. 508 F. Supp. 2d

at 1202. The provision established a “timing for payment, rather than a condition

precedent.” Id.

        HMH is correct that the “upon receipt” of commission payment language in

the schedule refers to the timing for payment and is not a condition for payment.

But the schedule is not the only relevant provision. Prudential’s cancellation of the

Plan does not absolve The Kingdom Group of its liability to pay HMH for the

services performed; however, the “[n]otwithstanding” clause does limit the amount

owed.




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                                          2.

      The policy provides that “[n]otwithstanding” the preceding payment

schedule, “no payment shall be made to HMH in excess of 20% of any commission

payment, taking into account amounts payable to HMH that have been deferred

and remain outstanding from all letter agreements, including this one.”

      “Notwithstanding” means “without prevention or obstruction from” or “in

spite of.” Webster’s Third New International Dictionary (1976); see also Black’s

Law Dictionary (2019). Such qualifying language means that the parties’ agreed-

to deferral schedule does not alter the terms of the limitation. See Brazeal v.

Newpoint Media Grp., LLC, 769 S.E.2d 763, 769 (2015) (“Inclusion of the phrase

‘notwithstanding Section 1’ . . . simply means that the right of the parties to decline

to renew Brazeal’s employment . . . does not alter the right of NewPoint to

‘terminate’ Brazeal ‘with or without Cause’ during the course of that term.”);

Record Town, Inc. v. Sugarloaf Mills Ltd. P’ship of Ga., 687 S.E.2d 640, 643 (Ga.

Ct. App. 2009) (“[T]he ‘notwithstanding’ provision in the amendment means that

these requirements from the original lease do not alter the terms of the second

amendment.”). The limitation is clear and without conditions.

      Unlike the payment deferral schedule, the “[n]otwithstanding” clause does

not use timing language, such as “upon receipt.” It provides that “no payment”—


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whether made according to the payment schedule or “within a reasonable time”—

shall exceed 20% of any commission payment. This limitation applies to all

amounts payable, including those that have been deferred and remain outstanding

from other agreements. The agreement itself calls this clause a limitation, when it

makes the aggregation of amounts outstanding for Post-Rollout Services,

“collectively subject to the 20% limitation applicable to Pre-Rollout Services.”

The “[n]otwithstanding” clause unambiguously places a limitation on the amounts

payable to HMH.

      HMH argues that the limitation is inapplicable because Prudential cancelled

the Plan, thus making the collection of sufficient commissions and the provision of

Post-Rollout Services impossible. As explained above, the impossibility of an

event that was specified to be the source of funds for repayment does not ordinarily

excuse the underlying debt. See MacLeod, 154 S.E.2d at 759; L. Gregg Ivey, 252

S.E.2d at 89; see also Scott v. Hussmann Refrigeration, Inc., 357 S.E.2d 860, 861

(Ga. Ct. App. 1987). A party’s inability to obtain money, “whether due to his

poverty, a financial panic, or failure of a third party on whom he relies for

furnishing the money, will not ordinarily excuse nonperformance, in the absence of

a contract provision in that regard.” Bright v. Stubbs Properties, Inc., 210 S.E.2d

379, 380 (Ga. Ct. App. 1974).



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       But here, there is a contract provision that relates to The Kingdom Group’s

performance. No payment shall exceed 20% of any commission payment. This

independent covenant limits the performance due. In interpreting these as “words

of covenant” rather than “words of condition,” 5 the remedy is an action for

damages. Fulton Cty. v. Collum Properties, Inc., 388 S.E.2d 916, 919 (1989). No

action for damages lies here; however, as the parties agree that The Kingdom

Group earned $262.80 in commissions from the sales and that 20% of this amount

was already paid to HMH.

       Thus, while the failure of the Plan and the subsequent lack of commissions

does not excuse The Kingdom Group from paying HMH for its Pre-Rollout

Services, the amount due under the contract is limited by the very terms the two

parties agreed to. The “[n]otwithstanding” clause does not excuse performance by

The Kingdom Group—it is a limitation on the performance. Payment is still due.


       5
         The Kingdom Group points to St. Paul Fire & Marine Insurance Co. v. Georgia
Interstate Electric Co., 370 S.E.2d 829, 830 (Ga. Ct. App. 1988), for its characterization that the
“[n]otwithstanding” clause makes the collection of sufficient commissions a condition precedent
to payment. In St. Paul Fire & Marine Insurance, the Georgia Court of Appeals held that
language that “provided that no payment shall be due Subcontractor . . . until Contractor has
received payment from the Owner for said changed or extra work performed by Subcontractor”
created a condition precedent for payment. There, the word “provided” indicated the parties
expressly intended to make payment from a third party a condition precedent. Id.; see also
Collum Properties, 388 S.E.2d at 918 (“Words such as ‘on condition that,’ ‘if,’ and ‘provided,’
are words of condition, and in the absence of indication to the contrary, the employment of such
words in a contract creates conditions precedent.”). Here, the limitation is not conditional. The
notwithstanding clause does not create a condition for payment—it limits an obligation that
already exists.

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The amount is just limited by the terms of the contract. “That it may be unwise or

disadvantageous or place a hardship” on HMH “furnishes no reason for not

enforcing the contract as made.” Bright, 210 S.E.2d at 380.

                                         3.

      Separately, HMH argues that our interpretation of the “[n]otwithstanding”

clause runs afoul of the Georgia prohibition on commission payments to persons

not licensed to sell insurance products. See O.C.G.A § 33-23-4 (“No person other

than a duly licensed adjuster, agent, limited subagent, or counselor shall pay or

accept any commission or other valuable consideration except as provided in

subsections (b) and (c) of this Code section.”). It is undisputed that HMH is not

licensed to sell insurance.

      Georgia case law regarding what constitutes an illegal commission under

O.C.G.A § 33-23-4 is sparse. In Seals v. Hygrade Distribution & Delivery System,

Inc., 549 S.E.2d 412, 415 (Ga. Ct. App. 2001), the Georgia Court of Appeals

determined that when Hygrade—who was not a licensed agent—charged a flat

administrative fee to act as an intermediary between Seals and an insurance broker,

it did not violate O.C.G.A § 33-23-4 because Hygrade “did not charge [Seals] a

percentage of [Seal’s] gross commissions to administer the insurance program.”

Here, HMH did not charge The Kingdom Group for its services based on a


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percentage of the commissions received by The Kingdom Group. It charged $300

per hour for Pre-Rollout Services and the parties agreed to a $20,000 quarterly fee

for Post-Rollout Services. Separately, the parties agreed to a limitation on the

amount that HMH would be able to recover—no payment would exceed 20% of

any received commission payment. We conclude that this arrangement does not

violate the Georgia statute against sharing commissions because the receipt of

commission payments is not a condition precedent to the payment of outstanding

balances.

      AFFIRMED.




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