A&M Hospitalities LLC v. Alimchandani

• Decision Date: 16 March 2022
• Docket Number: A21A1576
• Citation: 871 S.E.2d 290
• Parties: A & M HOSPITALITIES LLC et al. v. ALIMCHANDANI.
• Court: Georgia Court of Appeals

871 S.E.2d 290

A & M HOSPITALITIES LLC et al.

v.ALIMCHANDANI.

A21A1576

Court of Appeals of Georgia.

March 16, 2022

Reconsideration Denied March 30, 2022

J. Converse Bright, Valdosta, John E. Floyd, Atlanta, James Adams Garland, John Flanders Kennedy, George R. Lilly II, Thomasville, Jennifer Lauren Peterson, Justin Stuart Scott, Timothy Marzine Tanner, Kamal Ghali, Atlanta, for Appellant.

Henry Pearce Scott, Valdosta, Vineet Roney, Daniel R. Lombard, David Lakin, Jonathan Bunge, Daniel Scwartz, Sanford I. Weisburst, K. David Cooke Jr., for Appellee.

Doyle, Presiding Judge.

In the third appearance of this case before this Court,¹ A & M Hospitalities, LLC; JDS&J Enterprises, LP; David B. Motley; Jane P. Motley; MotManco, Inc.; MotManco, LLC; JPM Advertising, Inc.; and DJ Land & Development, LLC, (collectively, "the defendants") appeal the trial court's orders: granting Prenita Alimchandani ("the plaintiff") leave to file a second amended complaint ("SAC") instead of dismissing the case based on res judicata; denying the defendants’ motion to stay litigation and granting the plaintiff's motion to stay the 2020 arbitration; denying the defendants’ motion to recuse; and granting the plaintiff's motion to appoint a receiver. For the reasons that follow, we reverse and remand the case.

This case has a protracted procedural history as relayed in Alimchandani I :

The record shows that Alimchandani and Jane and David Motley jointly created A&M in 1998 to develop and operate a Hampton Inn in Lake Park, Georgia. Originally, Jane Motley owned a 75 percent interest in A&M and Alimchandani owned 25 percent. From the beginning, operational control and decision making for A&M was vested with Jane Motley, who was designated A&M's manager. In 2006, half of Jane Motley's 75 percent interest was transferred to David Motley, and then the interests of Jane and David Motley were both transferred to JDS&J Enterprises, LP, a limited partnership comprising of Jane and David Motley and their children. At the same time, David Motley was made a co-manager of A&M with Jane Motley.

In October 2017, Alimchandani filed the instant lawsuit against ... the defendants[ ], seeking the judicial dissolution of A&M and raising claims of breach of fiduciary duties and violations of Georgia's Racketeer Influenced and Corrupt Organizations Act ("RICO"), OCGA § 16-14-1 et seq. In her complaint, Alimchandani alleged that between 2008 and 2014, the Motleys misappropriated, wasted, and abused A&M's assets, failed to make required distributions to her as a partner of A&M, failed to provide her with notice of the transfer of Jane Motley's interest to David Motley and JDS&J Enterprises, LP, failed to provide her with required financial information, threatened the employment of Alimchandani's husband (a hotel operations manager at A&M), failed to hold annual meetings, and failed to communicate with her or deal in good faith. Alimchandani alleged that this conduct occurred in an apparent effort to freeze her out of A&M and to transfer business away from A&M to other companies owned by the Motleys and in which Alimchandani did not have an ownership interest.

At the same time that she filed the complaint, Alimchandani also filed a motion for the appointment of a receiver and related injunctive relief, alleging that she would be "subjected to immediate and irreparable injury, loss and damage" if A&M was not placed in a receivership.²

On November 22, 2017, the defendants moved to compel arbitration pursuant to the arbitration clause in the parties’ Operating Agreement. The plaintiff opposed the motion, and the trial court denied it without explanation in July 2018. On January 17, 2018, while her opposition to the defendant's motion to compel arbitration remained pending, the plaintiff switched gears and filed a demand for arbitration with AAA.

In July 2018, the trial court appointed Christopher Cohilas as "receiver" "for the purposes of audit and discovery,"³ ordering "that Cohilas was to receive ‘reasonable compensation’ for his services, paid by A&M."⁴ Following the August 2018 AAA arbitration, the arbitrator issued a final award on September 28, 2018, finding in favor of the defendants on all claims and awarding them damages in the amount of $95,093.52, which included $70,800 for attorney fees.⁵ On October 1, 2018, the defendants moved to confirm the award, and on December 28, 2018, the plaintiff moved to vacate it.⁶

On November 30, 2018, the plaintiff filed an amended complaint seeking judicial dissolution of the company, appointment of a receiver, and other equitable relief. Meanwhile, the defendants had appealed the limited receiver order, and on May 15, 2019, this Court affirmed the appointment, "concluding that based on the language of the order, the trial court had actually appointed Cohilas as an auditor, not a receiver, and that the appointment was not an abuse of discretion."⁷

During the pendency of the appeal, the defendants filed a motion to clarify the appointment order.⁸ Upon remand on June 14, 2019, the defendants moved for summary judgment, arguing that all of the plaintiff's claims were or could have been asserted in the arbitration. The record does not reflect a ruling on the defendants’ summary judgment motion.

On October 7, 2019, the trial court issued an order ("the special master/auditor order") clarifying Cohilas's appointment, explaining that Cohilas

was appointed as an auditor and special master as those terms are contemplated and authorized by OCGA §§ 9-7-1, 9-7-2, 9-7-3, and Uniform Superior Court Rule 46. Specifically, the court vested Cohilas with authority to, among other things: conduct an accounting of A&M hear motions, allow amendments, and pass upon all questions of law and fact; address all pretrial and discovery matters; monitor implementation of and compliance with all orders of the court, and he is permitted to impose upon a party any non-contempt sanction provided by OCGA §§ 9-11-37 and 9-11-45 ; conduct all trial proceedings and make and recommend findings of fact on all issues to be decided by the court without a jury; and engage in ex parte communications with the parties, counsel, and the trial court for certain purposes. The special master/auditor order also restated the payment provision in the initial order, with minor changes.⁹

Thereafter, on October 23, 2019, the plaintiff moved for leave to file the SAC adding several causes of action against the then-existing defendants and adding as parties MotManCo., Inc.; MotManCo, LLC; JPM Advertising, LLP; and DJ Land Development, Inc. On December 6, 2019, after the defendants filed a mandamus petition in superior court, and more than a year after the defendants moved for confirmation of the award, the trial court confirmed the arbitration award.¹⁰ The defendants appealed the special master/auditor appointment order on December 6, 2019, and the plaintiff appealed the confirmation on December 17, 2019.¹¹

On February 17, 2020, Cohilas entered an order granting the plaintiff's motion for leave to file the SAC.¹² On June 1, 2020, the defendants filed an arbitration demand with AAA demanding that the plaintiff arbitrate the claims raised in her SAC and moved to stay the litigation pending arbitration. On June 17, 2020, the plaintiff moved to stay arbitration. On August 13, 2020, the trial court entered an order staying arbitration and denying the defendants’ motion to stay the litigation, finding that defendant A&M had waived its purported right to compel arbitration by "faili[ng] to challenge the portion of the [c]ourt's 2018 [o]rder [d]enying [a]rbitration on appeal."

On October 1, 2020, the defendants filed a motion to disqualify and recuse the trial judge, alleging that he had directed the superior court clerk to not transmit the record to this Court even though the record in Alimchandani II was ready. On November 13, 2020, the trial court denied the motion without assigning the recusal motion to another judge.

On January 26, 2021, the trial court appointed a receiver "to oversee ... A&M's assets, accounts, and all other interests currently owned by ... A&M, including all of its subsidiaries" and to turn over to him

all assets, wherever located, in their entirety and unaltered, including but not limited to A&M's hotels, properties, assets, M3 accounting software, documents, books and records, checks, certificates of deposit, financial statements, bank accounts, financial instruments, money, receivables, keys to any and all security boxes and the exact location of said security boxes, and equipment.

In the order, the trial court concluded that "there is a clear and urgent need for a receiver because ... there is a significant risk that A&M's corporate assets, which are 25 [percent] owned by [the p]laintiff will be dissipated," noting a prior $6 million transfer from A&M to defendants MotManCo. and JDS&J. The defendants filed the notice of appeal in the instant case on January 29, 2021.

On March 16, 2021, this Court issued its opinion in Alimchandani II , affirming the arbitration confirmation order¹³ but reversing the appointment order, holding that Cohilas was disqualified as a special master for a multitude of reasons and that he was performing "fundamentally incompatible duties ... at odds with the role of a special master."¹⁴ This Court also held that the trial court erred by requiring the defendants to pay Cohilas's auditor fees prior to final judgment.¹⁵

On May 6, 2021, before the remittitur in Alimchandani II was issued, the trial court entered a sua sponte order to "address" this Court's March 16, 2021 opinion and "provide guidance to the parties."¹⁶ Therein, the trial court "formally remove[d]" from Cohilas any special master responsibilities in light of the appointment of a receiver, noting that the court would perform any additional judicial functions going forward. The court also addressed the auditor fees, stating that contrary to this Court's holding, the defendants had not...