Rushing v. Gold Kist, Inc., A02A0522.
| Decision Date | 25 June 2002 |
| Docket Number | No. A02A0522.,A02A0522. |
| Parties | RUSHING v. GOLD KIST, INC. et al. |
| Court | Georgia Court of Appeals |
OPINION TEXT STARTS HERE
Edenfield, Cox, Bruce & Classens, Gerald M. Edenfield, Marc M. Bruce, Statesboro, William R. Bryant, Lawrenceville, for appellant.
John A. Dana, Sandersville, for appellees.
Robert Rushing appeals from the trial court's order compelling him to arbitrate a dispute he has with Gold Kist, Inc. and AgraTrade Financing, Inc. ("AgraTrade"). Finding no error, we affirm.
The facts are largely undisputed. Rushing was a member of Gold Kist, an agricultural cooperative. On August 12, 1985, Rushing executed a membership agreement with Gold Kist, which provided that the agreement was "subject to and include[d] all of the applicable provisions contained in Gold Kist's charter and By-Laws now or hereafter in effect." On October 28, 1993, Gold Kist's board of directors adopted an "Arbitration Policy," declaring that, effective January 1, 1994, the following matters shall be subject to arbitration:
All disputes of fact or law between Gold Kist and members arising during the period of a member's membership, even if resolution of the dispute is attempted after termination of the member's membership, and even if the facts or events alleged in the dispute arose or existed prior to the disputing party's becoming a member. This arbitration policy is intended to cover all types of disputes to the maximum extent permissible by the law in effect at the time a dispute arises, whether the dispute arises under federal or state statutes or common law, except that this arbitration policy shall not include, nor shall it permit any arbitrator to decide, disputes relating to matters in the discretion of management or the Board of Directors, disputes concerning what matters fall within the discretion of management or the Board of Directors, nor patronage or corporate power or governance matters since they could involve questions affecting the membership as a whole. Neither shall it apply to any purchases or sales between Gold Kist and members, or contracts for such purchases or sales, if the transactions were completed or the contracts executed prior to the effective date of this policy.
The Arbitration Policy also provided that, "[u]nless otherwise agreed to by the parties, all arbitrations hereunder shall be subject to and governed by the Federal Arbitration Act."
Consistent with its arbitration policy, Gold Kist's Amended and Restated By-Laws, dated October 25, 1996 ("By-Laws"), include an arbitration clause providing:
Gold Kist and members will submit to binding arbitration all disputes between the parties, whether governed by federal, state, or international contract law, tort law, statute, or treaty, and irrespective of the form of relief sought, relating to or arising out of matters of a type declared by Gold Kist's Board of Directors before the dispute arises to be of a type covered by Gold Kist's arbitration policy. All such arbitrations shall be according to rules and procedures adopted from time to time by Gold Kist's Board of Directors.... This section shall continue to govern all disputes that arise during or relate to the member's period of membership in Gold Kist, even after such membership might be terminated for any reason.
On August 28, 1997, Rushing executed a promissory note in favor of Gold Kist, which the company assigned to AgraTrade. Claiming that Rushing had defaulted on his obligations under the note, Gold Kist sent Rushing a certified letter on May 3, 2000, demanding that the parties submit the matter to arbitration. Rushing failed to respond to the demand, and Gold Kist and AgraTrade filed a motion to compel arbitration. Rushing opposed the motion, arguing that he had never agreed to the arbitration clause, that it was unenforceable because it lacked mutuality, and that the Georgia Arbitration Code does not apply. The trial court granted the motion, concluding that, because Rushing had not timely moved to stay arbitration proceedings after receiving the certified demand letter, he was precluded from denying the validity of the agreement under OCGA § 9-9-6(d) (Supp.2001).1 This appeal ensued.
On appeal, Rushing contends that the court erred in relying on the Georgia Arbitration Code in precluding him from challenging the validity of the agreement because it is not governed by the state Act but by the Federal Arbitration Act ("FAA").2 Rushing also argues that the agreement is unenforceable because the parties never agreed to arbitrate and because it is unsupported by consideration and lacks mutuality.
1. In addressing Rushing's contention that the agreement is governed by the FAA, we must determine the import of the arbitration policy adopted by Gold Kist's board, which purports to subject all arbitrations to the federal Act. The parties do not contend that the board was without authority to adopt the provision, and the By-Laws clearly grant the board such rule-making power.
Where the bylaws of a corporation, regularly adopted at a meeting of the stockholders, not shown to be inconsistent with the corporation's charter or contrary to law, confer the management of the corporation's business upon a board of directors, that body is vested with the authority and charged with the responsibility of managing the corporation for the benefit of the stockholders, and becomes the governing authority of the corporation.... The members of a corporation are as a general rule conclusively presumed to have knowledge of its bylaws and cannot escape a liability arising thereunder, or otherwise avoid their operation, on a plea of ignorance of them.... Further, the bylaws of a corporation are binding on the parties who enact them as contracts and must be construed according to the principles of the law of contracts.3
The cardinal rule of contract construction is to ascertain the parties' intent.4 "A contract must be enforced if that intention is clear and it contravenes no rule of law and sufficient words are used to arrive at the intention." 5
In this case, the record shows that Rushing intended to be bound by the rules and regulations adopted by Gold Kist's board. Rushing's membership agreement expressly provided that his membership was subject to the By-Laws, which gave the board rule-making authority. Moreover, although Gold Kist now argues that the FAA does not control the agreement, the company's own board of directors expressly determined that the agreement was controlled by the FAA, and it is self-evident that Gold Kist consented to being governed and bound by the determinations of its board.6 "Thus, as with any other contract, the parties' intentions control."7
Gold Kist argues that, even if the FAA generally controls the arbitration agreement, such did not preclude the trial court from relying on OCGA § 9-9-6(d) in ruling that Rushing could not challenge its enforceability. According to Gold Kist, OCGA § 9-9-6(d) still applies in this case because it is a procedural rule, and "a state may apply its own procedural rules in its own courts, if those procedures do not defeat the objectives of the federal law."8 Pretermitting whether OCGA § 9-9-6(d) is such a procedural rule, Rushing had the opportunity to challenge the validity of the arbitration agreement on appeal, and for reasons discussed in Divisions 2 and 3, we conclude that his challenges are without merit.
2. Rushing contends that the agreement is unenforceable because he never agreed to be subject to the clause. Considering the authority we addressed in Division 1, however, it is obvious that he did agree. Again, the arbitration clause is contained in the By-Laws, and Rushing expressly consented to be bound by the By-Laws. It is inconsequential that the By-Laws did not contain the arbitration clause when Rushing signed his membership agreement—he agreed to be subject not only to existing By-Laws, but also to By-Laws "hereafter in effect." Such is consistent with a provision in the By Laws that specifically authorized the membership to amend provisions and adopt new ones. Thus, Gold Kist, through its members, was permitted to amend its By-Laws to require Rushing to arbitrate disputes even though no arbitration clause existed when Rushing joined the cooperative. 9
And, contrary to Rushing's argument, this does not mean that the arbitration clause was "unilaterally imposed by Gold Kist." Rather, it was enacted under a governing scheme to which Rushing voluntarily subjected himself when he joined Gold Kist. Inasmuch as the arbitration clause was adopted well before Rushing executed his promissory note to Gold Kist, he presumably entered the latter transaction with notice that any dispute arising out of the note would be subject to arbitration.10...
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...result of that disparity. Indeed, Georgia courts have enforced standard-form arbitration agreements in employment relationships. Rushing, 567 S.E.2d at 388-89. Under Georgia law, "[p]rocedural unconscionability addresses the process of making the contract, while substantive unconscionabilit......
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...See Atlanta Six Flags Partnership v. Hughes , 191 Ga. App. 404, 407 (1), 381 S.E.2d 605 (1989). See also Rushing v. Gold Kist , 256 Ga. App. 115, 119 (3), 567 S.E.2d 384 (2002). Here, the Arbitration Agreement demonstrated mutuality of obligation, as it required both parties to submit any a......
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...to modify or terminate the DRP upon thirty days notice. Plaintiffs' arguments on these points are foreclosed by Rushing v. Gold Kist, Inc., 256 Ga.App. 115, 567 S.E.2d 384 (2002). In Rushing, the court held that sufficient consideration existed to support an arbitration agreement which the ......
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...See Atlanta Six Flags Partnership v. Hughes, 191 Ga.App. 404, 407(1), 381 S.E.2d 605 (1989). See also Rushing v. Gold Kist, 256 Ga.App. 115, 119(3), 567 S.E.2d 384 (2002). Here, the Arbitration Agreement demonstrated mutuality of obligation, as it required both parties to submit any and all......