Galindo v. Lanier Worldwide, Inc.

• Decision Date: 23 November 1999
• Docket Number: No. A99A1357.,A99A1357.
• Citation: 241 Ga. App. 78,526 S.E.2d 141
• Parties: GALINDO v. LANIER WORLDWIDE, INC.
• Court: Georgia Court of Appeals

526 S.E.2d 141

241 Ga. App. 78

GALINDO v. LANIER WORLDWIDE, INC.

No. A99A1357.

Court of Appeals of Georgia.

November 23, 1999.

Lamar, Archer & Cofrin, David W. Davenport, Richard W. Feeley, Atlanta, for appellant.

Altman, Kritzer & Levick, Joseph D. Wargo, Jeanine L. Gibbs, Atlanta, for appellee.

POPE, Presiding Judge.

Alexis Galindo, d/b/a Law Offices of A. Galindo, appeals the decision of the Superior Court of DeKalb County confirming an arbitration award in favor of Lanier Worldwide, Inc. Galindo's primary argument is that the arbitrator exceeded her authority because he never agreed to arbitrate in the first place. Galindo also raises several procedural issues that are interrelated with this question. We conclude that the trial court used the wrong standard to review the arbitrator's decision finding that there was an agreement between the parties, and therefore we remand the case to the DeKalb Superior Court.

Lanier alleged that the "Law Office of A. Galindo" of Downey, California ("Law Office") entered into two agreements to lease copier equipment and that the agreements included an arbitration clause and an agreement to arbitrate in "Atlanta, Georgia."¹ Lanier filed a petition with the American Arbitration Association ("AAA") claiming that the Law Office breached the leases. Galindo responded on behalf of the Law Office, denied that there was an agreement between the parties, and suggested that an unauthorized person signed the agreements and that Lanier had already recovered from another company.

A hearing was held in Atlanta, but Galindo did not attend. Two days later, Galindo sent the arbitrator a letter and three affidavits. In his letter, the full body of which is quoted here, Galindo disputed the entire arbitration clause:

The Law Office of A. Galindo contends that the Lanier lease agreement was never authorized by Alexis Galindo, the owner. The Lanier agreement requires that any dispute be resolved by way of arbitration. Since the Respondent disputes the validity of the lease agreement the entire arbitration clause is in dispute. However, should AAA wish to proceed and render a decision then I must ask that the attached declarations be admitted into evidence.

(Emphasis supplied.) In his attached affidavit, Galindo swore that his Law Office had never entered into the agreements or agreed to purchase any equipment and that he did not sign the agreements. In the other two affidavits, third parties stated that a different company located at the same address as Galindo's Law Office had entered into the copier lease agreements with Lanier and that they knew where the copiers were.

Shortly thereafter, the arbitrator entered an award entitled "Ex Parte Award of Arbitrator." The arbitrator began the award by saying, "having duly heard the proofs and allegations of [Lanier] and Law Office of A. Galindo having failed to appear after due notice by mail...." She awarded Lanier all requested damages.

Lanier then filed a petition in DeKalb Superior Court to confirm the award. Galindo answered, raised several defenses, including lack of personal jurisdiction, and moved the court to either dismiss the case or vacate the arbitration award. The court held a hearing and eventually entered an order confirming the arbitrator's award, awarding attorney fees in Lanier's favor, and substituting Galindo as the proper party in place of his trade name.

1. Standard of Review. The trial court found that the transaction at issue involved interstate commerce and that therefore the arbitration was governed by the Federal Arbitration Act ("FAA"), 9 USC § 1 et seq. Galindo does not challenge this ruling and therefore we will apply the federal substantive law of arbitrability to the agreement. Hilton Constr. Co. v. Martin Mechanical Contractors, 251 Ga. 701, 703, 308 S.E.2d 830 (1983), following Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). And under that body of law, an appellate court reviewing a lower court's decision confirming an arbitration award should accept findings of fact that are not "clearly erroneous" but decide questions of law de novo. First Options of Chicago v. Kaplan, 514 U.S. 938, 947-948(III), 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995).

2. Motion to Dismiss. Before reaching the validity of the arbitrator's award, we must first address several procedural grounds which Galindo argues compelled the dismissal of Lanier's confirmation action.

(a) Service of Process. Galindo first challenges service of process in the superior court action. He raised this defense in his answer and motion to dismiss. Lanier filed the petition on January 14, 1998, and Galindo received a copy via regular mail. On February 3, a deputy sheriff of Los Angeles County, California, served a secretary at Galindo's office who claimed she was authorized to accept process on behalf of "Law Office of A. Galindo" and routinely had done so. It is this service that Galindo challenges. But on June 24, Galindo was served personally, and he has not challenged this service on appeal. Therefore the issue is abandoned. Court of Appeals Rule 27(c)(2).

(b) Personal Jurisdiction. Galindo contends that DeKalb Superior Court did not have personal jurisdiction over him. He does not challenge subject matter jurisdiction of the DeKalb court. We note that state courts have subject matter jurisdiction over confirmation of arbitration awards. Hilton Constr. Co., 251 Ga. at 702-703, 308 S.E.2d 830.

Jurisdiction of the person is the power of a court to render a personal judgment, or to subject the parties in a particular case to the decisions and rulings made by it in such a case, and is obtained by appearance or by serving the proper process in the manner required by law on persons or parties subject to be sued in a particular action.

(Citations and punctuation omitted.) Williams v. Fuller, 244 Ga. 846, 849(3), 262 S.E.2d 135 (1979). The Georgia Long Arm Statute provides in part: "A court of this state may exercise personal jurisdiction over any nonresident ... if in person or through an agent, he[ ] transacts any business within this state...." OCGA § 9-10-91. "[T]he policy of our Long Arm Statute is to exercise jurisdiction over nonresident defendants to the maximum extent permitted by procedural due process." (Citation omitted.) Bradlee Mgmt. Svcs. v. Cassells, 249 Ga. 614, 617, 292 S.E.2d 717 (1982).

For the purposes of the Long Arm Statute, someone transacts business within the state,

if the nonresident has purposefully done some act or consummated some transaction in this state, if the cause of action arises from or is connected with such act or transaction, and if the exercise of jurisdiction by the courts of this state does not offend traditional fairness and substantial justice.

Davis Metals v. Allen, 230 Ga. 623, 625, 198 S.E.2d 285 (1973). Thus, we must examine Galindo's actions vis-a-vis Georgia.

There are only three actions allegedly taken by Galindo that could confer personal jurisdiction: (i) mailing a response to the notice of arbitration and a letter to the arbitrator in Georgia, (ii) allegedly agreeing to arbitrate before a Georgia arbitrator even though he disputed that he entered into the agreements, and (iii) allegedly entering into agreements that contained a Georgia choice of forum and arbitration clause.

It is well settled under Georgia law that Galindo's actions in mailing a response to the arbitration notice and a letter to the arbitrator, standing alone, are not sufficient to confer personal jurisdiction. See ETS Payphone v. TK Indus., 236 Ga.App. 713, 715(1), 513 S.E.2d 257 (1999) and cases cited therein ("an out-of-state defendant will not be deemed to have engaged in purposeful business activity in this state on the basis of telephone or mail contact").

We turn therefore to a consideration of whether the DeKalb court has personal jurisdiction over Galindo as a result of the arbitration agreements themselves or as a result of Galindo's alleged agreement to arbitrate the issue of whether he ever entered into an arbitration agreement in the first place.

The agreements specify that the parties agreed to arbitrate any disputes in Atlanta. And, under the FAA, a confirmation hearing on an arbitration award is held in the district or jurisdiction where the arbitration was held.² 9 USC § 9. If Galindo entered into the agreements, then he consented to arbitrate in Atlanta, and he further consented to personal jurisdiction in a state or federal court in the same district reviewing the arbitrator's decision. See 9 USC § 9; see also Weststar Assoc. v. Tin Metals Co., 752 F.2d 5, 7 (1st Cir.1985) (Section 9 enables court for the district within which the award was made to exercise personal jurisdiction over the parties to the award). If Galindo never entered into the leases, then the DeKalb court had personal jurisdiction only if Galindo waived objection to it. OCGA § 15-1-2 (a party may waive personal jurisdiction). Based on the facts of this case, he waived personal jurisdiction only if he agreed to allow the arbitrator to decide whether he entered into the leases in the first place. In awarding Lanier damages, the arbitrator necessarily decided the arbitration issues in favor of Lanier, i.e., (1) Galindo agreed to allow the arbitrator to decide whether he entered into arbitration agreements, and (2) Galindo entered into the arbitration agreements. Reviewing the arbitrator's decision under these circumstances requires application of a special standard of review.

As explained by the U.S. Supreme Court, the answer of who was authorized to decide the question of arbitrability determines what standard of review applies to the arbitrator's decision about arbitrability. First Options, 514 U.S. at 942-945(II), 115 S.Ct. 1920. If the parties agreed that the arbitrator should decide the issue, the reviewing court "should give considerable leeway...