Greene v. Hundley

• Decision Date: 08 April 1996
• Docket Number: No. S95G1866,S95G1866
• Citation: Greene v. Hundley, 266 Ga. 592, 468 S.E.2d 350 (Ga. 1996)
• Parties: GREENE et al. v. HUNDLEY et al.
• Court: Georgia Supreme Court

Page 350

468 S.E.2d 350

266 Ga. 592

GREENE et al. v. HUNDLEY et al.

No. S95G1866.

Supreme Court of Georgia.

April 8, 1996.

Reconsideration Denied April 29, 1996.

Clarke County Superior Trial Judge: Hon. James Barrow, No. SU93CV1009B.

Edward D. Tolley, Ronald E. Houser, Cook, Noell, Tolley & Wiggins, Athens, Roland H. Stroberg, Husby, Myers & Stroberg, Gainesville, for Greene.

Eugene D. Butt, Athens, pro se.

David R. Hendrick, Hendrick, Phillips, Schemm & Salzman, Atlanta, Victoria H. Tobin, Hendrick, Spanos & Phillips, Atlanta, C. Wilson DuBose, Schnader, Harrison, Segal & Lewis, Atlanta, James P. Groton, Sutherland, Asbill & Brennan, Atlanta, Robert B. Ansley, Jr., Smith, Currie & Hancock, Atlanta Frank E. Riggs, Smith Currie & Hancock, Atlanta, amici curiae.

SEARS, Justice.

We granted certiorari in order to determine whether OCGA section 9-9-13(b) of the Georgia Arbitration Code provides the exclusive grounds for vacating an arbitration award, or whether an award may be vacated upon a reviewing court's determination that there is no evidence to support the award. Relying upon principles associated with the appellate review of judicial and administrative decisions, the Court of Appeals ruled that an arbitration award may be vacated if it is determined that no evidence supports it. ¹ Our consideration of the Georgia Arbitration Code and the general purpose of arbitration leads us to conclude that an arbitration award may be vacated only if one or more of the four statutory grounds set forth in section 9-9-13(b) is found to exist. We therefore reverse.

Appellees Hundley and Butt (hereafter "homeowners") entered into a contract with appellant Stephen C. Greene, in which Greene agreed to construct a residence for the homeowners. The contract stated that:

[a]ny controversy relating to the construction of the residence or any other matter arising out of the terms of this contract shall be settled by binding arbitration. The cost incurred and the fees of the arbitrators shall be assessed between the parties as determined by the arbitrators. A hearing shall be conducted pursuant to the Rules of the American Arbitration Association with regard to the Construction Industry Arbitration Rules. Notice of intention to arbitrate with the American Arbitration Association shall be sent by certified mail to the respective parties.

Disputes over the construction of the residence arose between the homeowners and Greene, and were submitted for arbitration before the Arbitration Tribunal of the American Arbitration Association, as required by the contract. At the arbitration proceeding, the parties agreed that all disputes regarding the construction of the residence should be arbitrated and ruled upon, including a determination of which party would be responsible for discharging certain liens that had been filed by non-party subcontractors who had performed work on the residence.

An extensive two-day hearing was held before the arbitrator, at which numerous witnesses testified and considerable documentary evidence was introduced, generating a transcript several hundred pages long. The arbitration award made findings in favor of both parties, and awarded $17,000 to the homeowners and $20,400 to Greene. The arbitration award did not set forth any findings of fact. The homeowners filed an application to vacate the arbitration award with the superior court, which denied the application and entered an order confirming the award. The superior court based its ruling upon its finding that the homeowners had failed to establish the existence of any of the four statutory grounds set forth in OCGA § 9-9-13(b) for vacating an arbitration award. Thereafter, the homeowners appealed to the Court of Appeals.

In its ruling, the Court of Appeals recognized that arbitration awards are controlled exclusively by the Arbitration Code, but ruled that such awards are still subject to the judicial requirement that they be based upon findings of fact supported by the evidence of record. The appellate court noted that in ruling on a motion to vacate an arbitration award, a court may not weigh evidence that has already been considered by an arbitrator, but concluded that that rule applies only so long as "there [is] evidence to support the [award] in the first place." ² In reaching that conclusion, the Court of Appeals reasoned that because the legislature made arbitration awards subject to limited judicial review, "arbitration is part of the 'judicial process.' " ³ The appellate court based its review of the award in this case upon: (1) case law allowing appellate reversal of "lower judicatory findings ... not supported by 'any evidence' "; (2) statutory authority granting appellate courts the authority to review and reverse administrative decisions that are clearly erroneous in light of the evidence of record; and (3) statutory authority that sets a "substantial error" standard for the superior court's certiorari review of "any inferior judicatory." ⁴ After finding that the arbitrator had not set forth findings of fact in support of the award, and that Greene had failed to establish on appeal that the award was supported by any evidence, the Court of Appeals ruled that the award was "completely irrational," and directed that it be vacated. ⁵

1. The Georgia Arbitration Code ⁶ "shall apply to all disputes in which the parties thereto have agreed in writing to arbitrate and shall provide the exclusive means by which agreements to arbitrate can be enforced." ⁷ By its enactment, the Arbitration Code repealed common law arbitration in its entirety, ⁸ and it must, therefore, be strictly construed. ⁹

The Arbitration Code sets forth four statutory grounds for vacating an arbitration award upon the application of a party subject to the award. The arbitration award shall be vacated if the court finds that the rights of the applying party

were prejudiced by: (1) Corruption, fraud, or misconduct in procuring the award; (2) Partiality of an arbitrator appointed as a neutral; (3) An overstepping of the arbitrators of their authority or such imperfect execution of it that a final and definite award upon the subject matter submitted was not made; or (4) A failure to follow the procedure of this [Code], unless the party applying to vacate the award continued with the arbitration with notice of this failure and without objection. ¹⁰

Relevant case law states that these four bases are the exclusive grounds for vacating an arbitration award. ¹¹ The Arbitration Code requires a trial court to confirm an award upon the timely application of a party to the award, unless one of the statutory grounds for vacating or modifying the award is established. ¹² The Code specifically states that merely because the relief granted in the arbitration award "could not or would not be granted by a court of law or equity is not ground for vacating or refusing to confirm an award." ¹³ In this regard, the power to vacate an arbitration award "should be severely limited in order not to frustrate the purpose of avoiding litigation by resorting to arbitration." ¹⁴

2. Rights that are cognizable in a court of law are not necessarily dispositive of an arbitrated dispute. Rather, arbitrating parties agree to waive certain such rights in favor of a quick resolution of their dispute by extralegal means. Indeed, we have recently held that by electing arbitration, the parties can agree to waive certain constitutional and procedural rights to which they would be entitled in a judicial forum, such as the right to trial by a jury. ¹⁵ The Code entitles parties to an arbitration proceeding the opportunity to be heard, to present evidence, and to cross examine witnesses. ¹⁶ The Code also requires that arbitrators maintain a record of all pleadings, documents and testimony introduced at the hearing, and permits the transcription of the hearing by a court reporter. ¹⁷ However, the Arbitration Code does not require that an arbitrator enter written findings of fact in support of an award; nor does the Code require an arbitrator to explain the reasoning behind an award. ¹⁸ The authority of an arbitrator gives her the "inherent power to fashion a remedy as long as the award draws its essence from the contract or statute." ¹⁹

3. These principles require us to reverse the Court of Appeals' ruling in this case. As explained, (1) The Arbitration Code provides the exclusive means by which a contractual agreement to arbitrate will be enforced; (2) The Arbitration Code expressly states that an arbitration award must be confirmed unless it is vacated or modified in accordance with the Code; and (3) Unless one of the four statutory grounds set forth in section 9-9-13(b) for vacating an arbitration award is found to exist, a reviewing court is bound to confirm the award.

It cannot be said that any of the four statutory grounds for vacating an arbitration award exist in this case. Nothing on the face of the arbitration award appears to be the result of corruption, fraud, or misconduct, or evidences partiality on the part of the arbitrator. Accordingly, we find no evidence of the first two statutory grounds for vacating an arbitration award. ²⁰

Moreover, both parties expressly agreed that the arbitrator would resolve all existing disputes between them. Hence, we find that the arbitrator in this case did not overstep his authority. In this regard, the Court of Appeals incorrectly ruled that the arbitrator erred "in entering findings and an award in favor of non-parties"--the subcontractors who filed liens against the property. ²¹ As noted above, the arbitrator did not make awards to the subcontractors, but rather merely determined whether Greene or the homeowners would be responsible for discharging the liens filed by the subcontractors. As the arbitrator made this determination in accordance with the express instruction and agreement of the parties, the third statutory ground for vacating an award...