337 Ga. App. 525
Ga. Ct. App.2016Background
- In the 1990s Perry Golf, Columbia, and Brock Built formed Perry Homes Redevelopment, LLC (PHR) and executed a 2002 operating agreement governing redevelopment roles; the agreement included a broad binding arbitration clause covering disputes related to the agreement or Project Documents.
- PHR also had a revitalization agreement with the Atlanta Housing Authority (AHA) governing the redevelopment project.
- In 2005 Perry Golf arbitrated against Brock Built (First Arbitration); the arbitrator found the operating agreement’s substantive project obligations unenforceable between Perry Golf and Brock Built for lack of mutuality but held the arbitration clause valid and binding.
- The parties thereafter operated under the Georgia LLC Act while continuing project performance; in 2006 the revitalization agreement was amended to remove the golf course, prompting Perry Golf to sue AHA, Brock Built, and Columbia alleging breach and breach of fiduciary duty.
- Columbia moved to compel arbitration; the trial court ordered arbitration, the arbitrator issued an award for Columbia (Second Arbitration), and the trial court confirmed that award. Perry Golf appealed the confirmation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the arbitration clause is unenforceable because the operating agreement was found unenforceable in the First Arbitration | The First Arbitration ruled the operating agreement unenforceable between Perry Golf and Brock Built, so the arbitration clause in that agreement cannot be enforced against Perry Golf here | The First Arbitration did not include Columbia, the arbitrator expressly upheld the arbitration clause, and the severability clause preserves the arbitration provision even if some substantive provisions are unenforceable | Arbitration clause enforceable; First Arbitration does not bind Columbia and did not render the arbitration clause unenforceable; severability preserves clause |
| Whether parties abandoned the operating agreement (so arbitration clause no longer applies) | Parties adopted the Georgia LLC Act and thus abandoned the operating agreement and its arbitration provision | The parties continued to perform project roles, the arbitration clause covers disputes connected to Project Documents (including the revitalization agreement), and broadly worded arbitration clauses apply to post-termination conduct | No abandonment; the broad arbitration clause covers the dispute (including post-termination conduct) and arbitration was properly compelled |
Key Cases Cited
- AAA Restoration Co. v. Peek, 333 Ga. App. 152 (standards for reviewing orders on motions to compel arbitration)
- Pickle v. Rayonier Forest Resources, L.P., 282 Ga. App. 295 (arbitrability and interpretation of arbitration clauses)
- McKean v. GGNSC Atlanta, LLC, 329 Ga. App. 507 (validity of arbitration agreements governed by state contract law)
- Nolde Bros. v. Bakery & Confectionery Workers Union, 430 U.S. 243 (broad arbitration clauses can cover post-termination disputes)
- Pike County v. Callaway-Ingram, 292 Ga. 828 (collateral estoppel requires same parties or privies)