Salinas v. Atlanta Gas Light Co.

• Decision Date: 03 October 2018
• Docket Number: A18A0886,A18A0887
• Citation: 347 Ga.App. 480,819 S.E.2d 903
• Parties: SALINAS et al. v. ATLANTA GAS LIGHT COMPANY. Atlanta Gas Light Company v. Salinas et al.
• Court: Georgia Court of Appeals

347 Ga.App. 480

819 S.E.2d 903

SALINAS et al.

v.ATLANTA GAS LIGHT COMPANY.

Atlanta Gas Light Company

v.Salinas et al.

A18A0886

A18A0887

Court of Appeals of Georgia.

October 3, 2018

W. Winston Briggs, for Appellant.

Daryl Glenn Clarida, Peter Graves Golden, for Appellee.

Rickman, Judge.

John Salinas and his co-appellants (referred to collectively herein as "Salinas") appeal from a trial court order dismissing with prejudice their lawsuit against Atlanta Gas Light Company ("AGLC") and ordering the matter be resolved in arbitration. AGLC cross-appeals, arguing that although the trial court correctly dismissed the lawsuit, it erred by sending the matter to arbitration. For the reasons that follow, we reverse the dismissal of Salinas’s suit.

"The arbitrability of disputes under the arbitration provision of a contract is a legal question, and the trial court was authorized to look at the entire record to make this determination." (Citations and punctuation omitted.) Odion v. Avesis, Inc. , 327 Ga. App. 443, 446 (3) (b), 759 S.E.2d 538 (2014).

The record shows that Salinas contracted with SouthStar Energy Services LLC, d/b/a Georgia Natural Gas ("GNG"), a natural gas marketing company,¹ to provide natural gas service at certain real property pursuant to written terms of service. The terms of service included a clause requiring "Disputes" to be resolved in binding arbitration by the American Arbitration Association.

"Dispute" was defined in the contract as "any dispute, claim, or controversy between you and GNG regarding any aspect of your relationship with GNG." For the purposes of the arbitration provision, "GNG" was defined as "SouthStar Energy Services LLC and its officers, directors, employees, members, affiliates and agents and any other party that you may contend is jointly or severally liable with any of the foregoing parties[.]" (Emphasis supplied.)

In January 2016, Salinas and other parties associated with the relevant property sued GNG and AGLC, a utility regulated by the Public Service Commission, in the State Court of Clayton County, alleging that GNG and AGLC improperly and without notice shut off the natural gas supply to the property, which eventually caused a loss of heat, thereby causing water pipes to burst, resulting in significant damage to Salinas’s real and personal property. GNG and AGLC jointly responded with a motion to compel arbitration in accordance with the terms of service. Consequently, Salinas voluntarily dismissed the action without prejudice and filed a demand for arbitration with AAA against both GNG and AGLC.

The arbitration proceeded with discovery, and a final hearing was set for April 2017. Meanwhile, GNG filed a motion for summary judgment on the ground that under the terms of service, it was not legally responsible for the conduct of AGLC, which had turned off the natural gas at the property. The arbitrator agreed and granted GNG summary judgment on the grounds that (1) GNG, the marketing company, had no part in turning off the gas; (2) AGLC was not acting as GNG’s agent at the time; (3) GNG did not ratify AGLC’s action; (4) GNG and AGLC were not in a joint venture under Georgia law; and (5) the terms of service specifically barred claims against GNG for acts or omissions of AGLC. In so doing, the arbitrator found that "[AGLC] and GNG are separate entities with separate functions and requirements."

Only weeks from the scheduled final hearing, Salinas responded by filing a notice of withdrawal of the demand for arbitration and by filing the present action in Superior Court of Clayton County against AGLC alone, seeking a trial by jury and a temporary restraining order ("TRO") and preliminary injunction to prevent the arbitrator from taking further action. The trial court denied the application for a TRO. Given these developments, however, the arbitrator stayed the final arbitration hearing pending a ruling by the superior court.

Once back in court, Salinas argued that because he had contracted for natural gas only with GNG, AGLC had no contractual right to compel arbitration of the claims and the arbitrator therefore lost jurisdiction of the matter once it dismissed GNG. In addition to answering the complaint, AGLC filed a motion to dismiss the action on the ground that all of the claims raised in the complaint "were, and are, subject to binding arbitration and there are no claims left for the Court to resolve." Following a hearing, the superior court found that although GNG and AGLC may not have been joint venturers for the purpose of providing natural gas to Salinas, they were affiliates; thus Salinas was bound by the arbitration clause that mandated binding arbitration for claims against GNG and its "affiliates." Accordingly, the trial court dismissed the court action with prejudice and ordered that the matter be returned to mandatory arbitration. This appeal and cross-appeal followed.

1. In two enumerations of error, Salinas contends the trial court erred by concluding that AGLC was an affiliate of GNG and, consequently, erred by concluding that Salinas was bound to arbitrate the claims against AGLC.

"[A]rbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit." (Citations and punctuation omitted.) Howsam v. Dean Witter Reynolds , 537 U.S. 79, 83 (II), 123 S.Ct. 588, 154 L.Ed.2d 491 (2002). "The question whether the parties have submitted a particular dispute to arbitration, i.e., the ‘question of arbitrability,’ is an issue for judicial determination unless the parties clearly and unmistakably provide otherwise."² (Citation and emphasis omitted.) Id. at 83 (II), 123 S.Ct. 588 ; see also AT & T Tech.v. Communications Workers , 475 U.S. 643, 649 (II), 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986) ("[T]he question of arbitrability ... is undeniably an issue for judicial determination."); Primerica Financial Svcs. v. Wise , 217 Ga. App. 36, 40 (5), 456 S.E.2d 631 (1995) ("[T]he first task of a court asked to compel arbitration of a dispute is to determine whether the parties agreed to arbitrate that dispute.") (citation and punctuation omitted).

As for the governing law, the relevant arbitration agreement provides that "[t]he Federal Arbitration Act ("FAA"), not state arbitration law, will govern the arbitrability of all Disputes." Nevertheless, nothing in the FAA "purports to alter background principles of state contract law regarding the scope of agreements (including the question of who is bound by them)." Arthur Andersen LLP v. Carlisle , 556 U.S. 624, 630 (III), 129 S.Ct. 1896, 173 L.Ed.2d 832 (2009).

Under Georgia law, "the construction of an arbitration agreement, like any contract, is a question of law, subject to de novo review." Helms v. Franklin Builders, Inc. , 305 Ga. App. 863, 864, 700 S.E.2d 609 (2010). The usual rules of contract construction apply:

First, we must determine if the contract language is ambiguous, and, if so, then we apply the appropriate rules of construction set forth in OCGA § 13-2-2. Where the language of a contract is plain and unambiguous, however, no construction is required or permissible and the terms of the contract must be given an interpretation of ordinary significance.

(Citation and punctuation omitted). Wedemeyer v. Gulfstream Aerospace Corp. , 324 Ga. App. 47, 50 (1), 749 S.E.2d 241 (2013) (applying rules of contract construction to arbitration agreement). But "[w]here a contractual term is ambiguous, ... the contract must be construed against the party undertaking the contractual obligations." Pate v. Pate , 280 Ga. 796, 797 (1), 631 S.E.2d 103 (2006), citing OCGA § 13-2-2 (5) ; see also Anderson v. Southeastern Fidelity Ins. Co. , 251 Ga. 556, 557, 307 S.E.2d 499 (1983) ("an ambiguity in a document should be construed against its draftsman.").³

As shown above, the arbitration clause at issue expressly applied to GNG and its "affiliates," but affiliate is not defined therein. We therefore look for the "usual and common signification" of the word. See OCGA § 13-2-2 (2).

The term "affiliate" is defined over 20 times in the Georgia Code, and the definitions vary. See, e.g., OCGA §§ 7-1-4 (a corporation or similar organization is an "affiliate" of a financial institution if, inter alia, the financial institution controls the election of a majority of directors, trustees, or other persons exercising similar functions at the corporation, or where the financial institution or its shareholders own or control 50 percent of the shares of the corporation, or where the corporation owns or controls 50 percent of the financial institution); 14-2-1110 (1) (" ‘Affiliate’ means a person that directly, or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a specified person"); 18-2-71 (1) (B) ("Affiliate" has multiple definitions, including "[a] corporation 20 percent or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held with power to vote by the debtor or a person who directly or indirectly owns, controls, or holds with power to vote 20 percent or more of the outstanding voting securities of the debtor ...").

Second, "dictionaries may supply the plain and ordinary meaning of a word." Harkins v. CA 14th Inv’rs, Ltd. , 247 Ga. App. 549, 550, 544 S.E.2d 744 (2001). The current edition of Black’s Law Dictionary defines "affiliate" as "[a] corporation that is related to another corporation by shareholdings or other means of control; a subsidiary, parent, or sibling corporation ." (Emphasis supplied.) Black’s Law Dictionary (10th ed. 2014). Black’s defines "sibling" as "[a] brother or sister." Id. According to AGLC, a company named AGL Resources Inc. owns 100 percent of both AGLC and Georgia Natural Gas Company ("GNGC"); GNGC, in turn, owns 85 percent of GNG. Thus, the two entities are not siblings, and therefore not affiliates, under these definitions.

Further, courts from other jurisdictions...