Gilbert v. Montlick
| Decision Date | 12 March 1998 |
| Docket Number | No. A98A0168.,A98A0168. |
| Citation | 499 S.E.2d 731,232 Ga. App. 91 |
| Parties | GILBERT v. MONTLICK et al. |
| Court | Georgia Court of Appeals |
OPINION TEXT STARTS HERE
Erck, Dever & Merlin, Atlanta, Theodore A. Erck, Jr., Gilbert & Russell, Atlanta, Fred A. Gilbert, for appellant.
Nelson, Mullins, Riley & Scarborough, Kenneth L. Millwood, B. Shane Clanton, Atlanta, for appellees.
HAROLD R. BANKE, Senior Appellate Judge.
In November 1995, David R. Montlick and Gilbert & Montlick, P. C., (the "Firm") initiated an arbitration proceeding against Fred A. Gilbert. The mutually selected arbitrator conducted an evidentiary hearing which spanned several days and included the testimony of more than 20 witnesses and a multitude of documents. The arbitrator's detailed final award set forth the terms by which Montlick would buy out Gilbert's interest in the Firm; provided for a closing of the Firm as of June 30, 1996; specified details on the conclusion of their law practice; and, inter alia, provided for the closing of the corporate books and records and for Gilbert's final compensation.
Dissatisfied with the results of arbitration, Gilbert filed a motion to vacate the award. Gilbert alleged that the arbitrator overstepped his authority and exceeded his powers by disregarding the parties' shareholder agreement, by ruling on matters not properly before him, and by allowing Montlick to bring the arbitration on behalf of the Firm without authorization by the Firm's Board of Directors. Gilbert asserted that the award had been procured by "corruption, fraud, or misconduct," and should be set aside pursuant to OCGA § 9-9-13(b)(1)(3). Gilbert further claimed that Montlick, the Firm, and its certified public accountant understated the Firm's earnings by using unrecognized and improper accounting methods, resulting in a decreased payment to him of more than $500,000.
After Montlick and Montlick & Associates, P.C. moved to confirm the award, the superior court conducted a hearing. In rejecting Gilbert's claim that the award had been procured by corruption, fraud, and misconduct, the court determined that Gilbert did not establish the essential elements of a fraud claim. The court observed that the same accounting practices had been utilized for 12 years and that Gilbert failed to offer any evidence that the accounting practices were designed to mislead the arbitrator. The court decided that because Gilbert and his experts had reviewed and audited the Firm's financial statements, "[t]he alleged misrepresentations should have been discovered during the arbitration process and raised with the arbitrator." The court concluded that Gilbert failed to show that the alleged misrepresentations were not discoverable prior to arbitration upon the exercise of due diligence.
In analyzing whether the arbitrator exceeded his authority, the court construed Gilbert and Montlick's 1984 shareholders agreement which contained two arbitration provisions.1 Although the court found some ambiguity in the document regarding the authority of an arbitrator, it declined to find that the arbitrator had overstepped his authority. The court concluded that the arbitrator was within his authority in determining that Montlick should purchase the Firm for a particular price, notwithstanding the fact that Montlick never made a buy-sell offer. Finally, the court decided that Gilbert failed to show that he was prejudiced by the inclusion of the Firm as a party to the arbitration.
The court refused to vacate the award, finding that Gilbert failed to establish the necessary prejudice and to satisfy the requisite evidentiary burden for setting aside the award under any of the four grounds specified in OCGA § 9-9-13(b). Enumerating two errors, Gilbert challenges that disposition. Held:
1. Gilbert contends that the trial court erred in its application and interpretation of OCGA § 9-9-13(b)(3). This subsection permits a trial court to vacate an...
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...§ 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 cou......
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