GS Cleantech Corp. v. Cantor Colburn, LLP.

• Decision Date: 16 June 2022
• Docket Number: A22A0387
• Citation: 364 Ga.App. 354,874 S.E.2d 859
• Parties: GS CLEANTECH CORPORATION et al. v. CANTOR COLBURN, LLP.
• Court: Georgia Court of Appeals

364 Ga.App. 354

874 S.E.2d 859

GS CLEANTECH CORPORATION et al.

v.CANTOR COLBURN, LLP.

A22A0387

Court of Appeals of Georgia.

June 16, 2022

J. Carole Thompson Hord, Mary Ellen Archer Lighthiser, Atlanta, for Appellant.

John Patterson Brumbaugh, Lawrence Albert Slovensky, Brian Avery White, Billie Barker Pritchard, Carson Whiteley Bennett, Atlanta, for Appellee.

Doyle, Presiding Judge.

After GS CleanTech Corporation and GreenShift Corporation (collectively, "the Client") threatened to seek arbitration in Georgia of legal malpractice claims against their former lawyers, Cantor Colburn ("the Firm"), the Firm filed in the Superior Court of Fulton County a petition for declaratory judgment and accompanying motion to stay arbitration under OCGA §§ 9-9-5 and 9-9-6 on statute of limitation grounds. The Client moved to dismiss the Firm's petition. Following a hearing, the trial court entered a final order denying the Client's motion to dismiss, declining to rule on a statute of limitation issue, and referring the case to arbitration in Georgia. The Client appeals, arguing that (1) the trial court erred by holding that the parties’ engagement letter requiring arbitration in Atlanta controls because a subsequent fee agreement, which "supersedes all prior agreements," includes an arbitration provision requiring arbitration in Connecticut; (2) the trial court lacked subject matter jurisdiction; and (3) the trial court erred by referring the parties to arbitration in Atlanta because neither party sought a Georgia arbitration, and the claims were pending before an arbitration forum in Connecticut. For the reasons that follow, we reverse.

The record shows that in 2008, the Client engaged the Firm for representation in certain intellectual property matters. The parties memorialized their agreement in a 2008 Engagement Letter, which required them to submit any dispute arising out of the agreement to binding arbitration in Atlanta before a retired Georgia superior court judge. In August 2011, the parties executed a Fee Agreement, which amended the payment provisions of the Engagement Letter and required that all disputes between the parties relating to the Engagement Letter be resolved by binding arbitration in Hartford, Connecticut.

In 2009, the Firm commenced patent infringement litigation against various defendants on behalf of the Client. In 2014, the United States District Court for the Southern District of Indiana issued an order invalidating the patents.¹ In September 15, 2016, the district court held that the patents were unenforceable based on the Client's deceptive practices, finding that the Client actively withheld pertinent information from the Firm during prosecution of the patents and that the Firm ignored "red flags" about the veracity of the story provided by the Client's inventors.²

On July 26, 2017, the Client sent a letter to the Firm's attorneys indicating for the first time that it intended to bring legal malpractice claims against the Firm arising out of its representation of the Client in the patent prosecutions. The Client did not mention arbitration in the letter, but instead requested that the Firm consent to tolling the statute of limitation on the claims.³ On July 2, 2020, the Client sent an email to the Firm confirming a telephone conversation and stating that the Client "wanted to proceed with the arbitration of the legal malpractice claims of [the Client] against the Firm," reiterating that the parties’ Engagement Letter included a provision requiring mandatory arbitration in Atlanta. On December 24, 2020, the Client sent another email to the Firm stating that it wanted to set a tentative schedule for the arbitration in Atlanta for March or April 2021 and requesting a response regarding the Firm's availability, again invoking the Engagement Letter.

On January 26, 2021, the Firm filed the instant petition under OCGA §§ 9-9-5 and 9-9-6 and an accompanying motion to stay arbitration, seeking an order staying the Client's threatened arbitration on statute of limitation grounds. The Client filed a verified answer in which it admitted that venue was proper (specifically admitting that "personal jurisdiction and venue are proper as set forth in Paragraph 11 of the Petition, but expressly deny[ing] any implication that Georgia law applies to their claims against Petitioner, or to the procedure for arbitrating those claims"), admitted that the parties executed the Engagement Letter to govern their relationship, and admitted that it sought to arbitrate claims against the Firm.

On February 24, 2021, the Client served a demand letter seeking arbitration of its malpractice claims with JAMS in Atlanta, noting that it brought its claims under the Engagement Letter. At a July 19, 2021 status hearing, however, the Client argued that the arbitration provision in the Engagement Letter was superceded by the 2011 Fee Agreement, claiming therefore that any arbitration of its claims must be conducted in Connecticut. On April 30, 2021, the Client moved to withdraw its admission that venue was proper in Georgia,⁴ moved to dismiss the petition for lack of subject matter jurisdiction, and noted that it had withdrawn its Georgia arbitration petition and instituted an arbitration in Connecticut to adjudicate its legal malpractice claims against the Firm.

On May 7, 2021, pursuant to order of the trial court, the parties submitted a stipulated list of legal issues, which included: whether the court had subject matter jurisdiction; whether venue was proper; whether the court had authority to grant the relief sought in the petition; which agreement applied – the Engagement Letter or the Fee Agreement; whether the Client's claims were time-barred; and whether the court should exercise its discretion to find that the claims were time-barred.⁵

On August 31, 2021, the trial court issued its "Final Order Denying the Respondents’ Motion to Dismiss Verified Petition for Lack of Subject Matter Jurisdiction," finding that the Client had waived venue and that the Engagement Letter governed the parties’ dispute. The court also declined to exercise its discretion to rule on the issue of the timeliness of the Client's malpractice claims, instead deferring the issue to the arbitrator and referring the case to arbitration in Atlanta. This appeal followed.

1. Appellate jurisdiction. In its brief, the Firm argues that this appeal should be dismissed because the trial court's order was interlocutory, and the Client filed a direct appeal instead of filing an application under OCGA § 5-6-34 (b). We disagree.

First, we note that the Firm did not file a separate motion to dismiss as required by Court of Appeals Rule 41 (b).⁶ Nevertheless,

it is the duty of this Court to inquire into its jurisdiction in any case in which there may be a doubt about the existence of such jurisdiction. We must consider, then, whether we have jurisdiction to consider [this case as a] direct appeal[ ] or whether [an] application[ ] for discretionary appeal [was] necessary. And in doing so, we conclude [this] case[ ] [was] properly brought as [a] direct appeal[ ].⁷

The Firm argues that an order denying a motion to dismiss is interlocutory, as is an order compelling parties to arbitration. Pretermitting the validity of this contention as applied to this case, OCGA § 5-6-34 (a) (1) authorizes direct appeals from "[a]ll final judgments, that is to say, where the case is no longer pending in the court below...."

In this case, the order appealed is styled "Final Order Denying Respondents’ Motion to Dismiss Verified Petition for Lack of Subject Matter Jurisdiction." But " ‘[u]nder our rules of pleading, it is substance and not mere nomenclature that controls.’ "⁸ "An order is considered a final judgment within the meaning of OCGA § 5-6-34 (a) (1) where it leaves no issues remaining to be resolved, constitutes the court's final ruling on the merits of the action, and leaves the parties with no further recourse in the trial court."⁹

Here, "us[ing] the [m]otion to [d]ismiss as the vehicle by which to resolve all of the outstanding issues in [the] case," the trial court denied the Client's motion to dismiss, declined to rule on the timeliness of the Client's claims and stay arbitration under OCGA § 9-9-5, and referred the matter for arbitration in Georgia. The trial court decided all of the matters raised in the petition and the parties’ stipulated list of issues, leaving no other issues to be resolved in the trial court, and therefore, the order was final as to the proceeding in the superior court. Accordingly, this case was properly brought as a direct appeal, and the Firm's request for dismissal is denied.¹⁰

2. Which agreement controls. The Client argues that the trial court erred by finding that the parties’ Engagement Letter arbitration provision controls the resolution of its legal malpractice claims because the entire Engagement Letter was superseded by the Fee Agreement. We agree.

"Arbitration in Georgia is a matter of contract. As such, the construction of an arbitration clause in a contract is subject to the ordinary rules of contract construction."¹¹ We review the trial court's construction of the parties’ agreements de novo.¹² Contract construction involves three steps:

First, the trial court must decide whether the language is clear and unambiguous. If it is, the court simply enforces the contract according to its clear terms; the contract alone is looked to for its meaning. Next, if the contract is ambiguous in some respect, the court must apply the rules of contract construction to resolve the ambiguity. Finally, if the ambiguity remains after applying the rules of construction, the issue of what the ambiguous language means and what the parties intended must be resolved by a jury.¹³

The cardinal rule of contract construction is to ascertain the intention of the parties. When the terms of a contract are clear and unambiguous, the reviewing court looks only to the contract

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