Brookfield Club v. St. James-Brookfield

• Decision Date: 16 July 2009
• Docket Number: No. A09A1408.,A09A1408.
• Citation: Brookfield Club v. St. James-Brookfield, 683 S.E.2d 40, 299 Ga. App. 614 (Ga. App. 2009)
• Parties: BROOKFIELD COUNTRY CLUB, INC. v. ST. JAMES-BROOKFIELD, LLC.
• Court: Georgia Court of Appeals

683 S.E.2d 40

299 Ga. App. 614

BROOKFIELD COUNTRY CLUB, INC. v. ST. JAMES-BROOKFIELD, LLC.

No. A09A1408.

Court of Appeals of Georgia.

July 16, 2009.

Reconsideration Denied August 7, 2009.

Certiorari Granted November 2, 2009.

Bryan, Cave, Powell & Goldstein, William V. Custer IV, Jennifer B. Dempsey, Atlanta, for appellant.

Rogers & Hardin, John J. Almond, Joshua P. Gunnemann, Atlanta, for appellee.

ELLINGTON, Judge.

Brookfield Country Club, Inc. ("Brookfield") filed this appeal from the order of the Superior Court of Fulton County that granted the motion of St. James-Brookfield, LLC ("St. James"), to confirm an arbitrator's award in which the arbitrator determined that Brookfield had breached a lease agreement between the parties. The same order also denied Brookfield's application to partially vacate the arbitrator's award. On appeal Brookfield contends that the trial court erred in confirming the award over its objections, arguing that the arbitrator issued an award that was inconsistent with the applicable law, overstepped her authority, and manifestly disregarded the law. Because Brookfield failed to carry its burden on appeal of demonstrating error in the confirmation proceeding, as we have explained below, we affirm the trial court's order confirming the arbitrator's award.

The record shows the following undisputed facts. Brookfield is a non-profit corporation established in 1991 to own and operate a country club in Roswell. During its first nine years, Brookfield operated the club's golf course, drawing water to irrigate the golf course from a man-made lake on the property. The Georgia Water Quality Control Act, OCGA § 12-5-20 et seq., which governs the use of Georgia's surface waters, requires a permit from the Environmental Protection Division of the Department of Natural Resources before any withdrawal or diversion of surface waters, including the lake on Brookfield's property. OCGA § 12-5-31(a). Although OCGA § 12-5-31(a)(1)(A) provides an exception to the permit requirement for withdrawals that do not involve more than 100,000 gallons per day on a monthly average, the amount of water required to maintain Brookfield's golf course far exceeds that limit. Brookfield never obtained the required permit.

In 2000, Brookfield leased the property to St. James; pursuant to the long-term lease and an associated management agreement, St. James agreed to renovate the facilities and to operate the country club, including the golf course. Specifically, St. James agreed to "operate the premises as a first-class private country club and golf facility in accordance with ... the required standards," which were defined as

the average of the standards for maintenance and operation established by other upscale first class private country club facilities in the greater north Atlanta metropolitan area (including the counties of Fulton, Cobb and Gwinnett), or other private country and golf clubs owned or operated by [St. James], that charge similar dues and fees and have comparable facilities.

In the lease, Brookfield warranted that it owned the premises, including the "water, water courses, water rights and powers ... [then] located on, under or above all or any portion of the land or appurtenant thereto." In addition, Brookfield warranted that it owned the premises in fee simple and had not conveyed an interest in the premises except for specified "permitted exceptions." In a covenant for quiet enjoyment, Brookfield promised to defend St. James's possession of the premises against all parties claiming by, through, or under Brookfield. In a suitability of premises provision, St. James accepted the premises in their present condition as being suitable to its needs.

In the lease, the parties agreed to submit all disputes "concerning ... the terms of [the] lease or its construction, meaning or enforceability ... to negotiation and, if necessary, mediation and arbitration" pursuant to the terms of the section of the lease pertaining to dispute resolution and the Arbitration Code, as applicable. The dispute resolution section provided, "[i]n making [an] award, the arbitrator shall be bound by the strict terms of the lease and management agreement, as applicable[.]" Further,

[t]he arbitrator's award may be vacated by a court of competent jurisdiction if the court finds the arbitrator's award is not consistent with applicable law or not supported by a preponderance of the evidence and testimony adduced by the arbitrator[ ] at the arbitration hearing(s), or for a failure to follow the procedures set forth [in the lease] or in the AAA Commercial Arbitration Rules, all in addition to the grounds for vacation of an award as set forth in the Georgia Arbitration Code.

St. James initiated an arbitration proceeding in 2008, after learning about the permit that was required for it to withdraw water from the lake in quantities sufficient to irrigate the golf course. In its arbitration demand, St. James claimed that Brookfield is liable for all costs associated with obtaining the required permit and complying with the permit so as to supply the golf course with as much irrigation water as necessary to maintain the golf course. Brookfield is liable for these expenses, St. James argued, either because Brookfield promised to indemnify St. James from losses resulting from Brookfield's use of the property before the effective date of the lease or because Brookfield breached the lease, specifically the warranties of title and the covenant for quiet enjoyment, by failing to obtain the permit.

After a hearing, the arbitrator determined that the relevant contract terms were unambiguous. Applying the plain meaning of the contract terms, the arbitrator determined that Brookfield breached its warranty that it owned all "water rights and powers" appurtenant to the premises, except the listed permitted exceptions. The arbitrator based this conclusion, in part, on the undisputed facts that Brookfield did not have the surface-water-use permit required to adequately irrigate the golf course, that St. James could fulfill its obligations under the management agreement only if it could adequately irrigate the golf course, and that Brookfield failed to include among the permitted exceptions to its fee simple interest the regulatory limitations on water use. In terms of relief, the arbitrator ordered Brookfield to pay the costs attendant to the permit application process, including compiling an associated low-flow-protection plan.¹ The arbitrator ruled that St. James would have to bear all other expenses associated with fulfilling its obligations under the lease and management agreement.

St. James moved to confirm the arbitrator's decision, and, on the same bases it asserts in this appeal, Brookfield moved to partially vacate it. The trial court denied Brookfield's motion and confirmed the award.

1. Brookfield contends that, for various reasons, the arbitrator's award is not consistent with Georgia law. Brookfield concedes that this is not one of the statutory bases for vacatur² but contends that the trial was nonetheless authorized to vacate the award on this basis because the arbitration provision in the subject contract provides for vacatur if the reviewing court finds that the arbitrator's award is not consistent with applicable law. We conclude, however, that the Arbitration Code does not permit contracting parties who provide for arbitration of disputes to contractually expand the scope of judicial review that is authorized by statute.

"By its enactment, the Arbitration Code repealed common law arbitration in its entirety, and it must, therefore, be strictly construed." (Footnotes omitted.) Greene v. Hundley, 266 Ga. 592, 594(1), 468 S.E.2d 350 (1996). In order to achieve the legislative purpose of allowing contracting parties to obtain an "expeditious and final resolution of disputes by means that circumvent the time and expense associated with civil litigation," the Arbitration Code places strict limits on the scope of a trial court's review of an arbitrator's award and on any subsequent review by an appellate court. Id. at 597(3), 468 S.E.2d 350. Thus, the Arbitration Code requires courts to give extraordinary deference to arbitration awards³ and commands that a trial court "shall confirm an award upon application of a party made within one year after its delivery to [the party], unless the award is vacated or modified by the court as provided in [the Arbitration Code]." OCGA § 9-9-12. The Arbitration Code lists five grounds for vacating arbitration awards,⁴ and these statutory grounds provide the exclusive bases for vacatur. Greene v. Hundley, 266 Ga. at 594-595(1), 468 S.E.2d 350; Johnson Real Estate Investments v. Aqua Industrials, 282 Ga.App. 638, 639-640(1), 639 S.E.2d 589 (2006).

In deciding whether to confirm or vacate an arbitration award, a trial court's role is severely curtailed so as not to frustrate the purpose of avoiding litigation. Unless one of the statutory grounds for vacating an award as set forth in OCGA § 9-9-13(b) is found to exist, a trial court in reviewing an award is bound to confirm it.

(Citations omitted.) Gilbert v. Montlick, 232 Ga.App. 91, 93(1), 499 S.E.2d 731 (1998). "In reviewing a trial court's order confirming an arbitration award, this Court will affirm unless the trial court's ruling was clearly erroneous." (Footnote omitted.) Universal Mgmt. Concepts v. Noferi, 270 Ga.App. 212, 214(1), 605 S.E.2d 899 (2004).

Against the backdrop of these strict limits on the scope of judicial review of arbitrators' awards, these parties attempted to add to the grounds for vacatur provided in the Arbitration Code. By providing for vacatur where the reviewing court finds that the arbitrator's award "is not consistent with applicable law or not supported by a preponderance of the evidence," the lease purported to authorize a court to vacate an arbitrator's award for any legal error and to review the...