Waffle House, Inc. v. Pavesi

• Decision Date: 04 October 2017
• Docket Number: A17A1281
• Citation: 343 Ga.App. 102,806 S.E.2d 204
• Parties: WAFFLE HOUSE, INC. v. PAVESI.
• Court: Georgia Court of Appeals

343 Ga.App. 102

806 S.E.2d 204

WAFFLE HOUSE, INC.

v.PAVESI.

A17A1281

Court of Appeals of Georgia.

October 4, 2017

Moore Ingram Johnson & Steele, Robert D. Ingram, Ryan M. Ingram, Leslie S. Neubauer, for appellant.

Deitch & Rogers, Gilbert H. Deitch, Andrew T. Rogers, Kara E. Phillips, W. Michael D'Antignac; Ashenden & Associates, T homas J. Ashenden, Laura S. Maki, for appellee.

Bethel, Judge.

Waffle House, Inc., brings this interlocutory appeal from the trial court's denial of its motion to compel arbitration. Because the trial court erred in determining that the relevant arbitration agreement did not require arbitration of the underlying claims in this case, we reverse.

"The standard of review from the denial of a motion to compel arbitration is whether the trial court was correct as a matter of law." D.S. Ameri Constr. Corp. v. Simpson, 271 Ga. App. 825, 826, 611 S.E.2d 103 (2005). Moreover, as this case involves the interpretation of an agreement between the parties, we note that "the construction of a contract is a question of law for the court that is subject to de novo review." Id.

This appeal arises from a lawsuit filed against Waffle House by Pamela Pavesi, the court-appointed guardian and custodian of Brian Mikeals. The record before us¹ indicates that in July 2010, Mikeals began working at a Waffle House restaurant which was then run by a franchisee of Waffle House. In October 2015, the restaurant where Mikeals worked was re-purchased from the franchisee by Waffle House. That day, all employees of that restaurant, including Mikeals, were notified that their employment with the franchisee had ended and that they had been hired by Waffle House on a probationary basis. Mikeals and the other employees were also notified that in order to obtain regular, non-probationary employment with Waffle House, they would be required to re-apply for employment and complete and agree to the terms of a variety of documents, including an arbitration agreement. Mikeals completed and submitted an electronic version of the documents, which included his assent to the arbitration agreement, on November 6, 2015.

At the time, Waffle House's electronic document system was encountering a number of difficulties such that Waffle House could not contemporaneously confirm that Mikeals and others had completed the electronic paperwork, including their assent to the arbitration agreement.² As a result, Mikeals and others were asked to complete and sign paper versions of employment application materials, which included an arbitration agreement. Mikeals did so on November 14, 2015.

On December 23, 2015, while at work, one of Mikeals' co-workers placed an illegal substance in his drink which caused him to suffer severe injuries. Pavesi, his court-appointed guardian and custodian, brought suit on Mikeals' behalf against Waffle House alleging claims for negligent hiring, supervision, and retention of Mikeals' co-worker who attacked him. Pavesi's lawsuit also alleged that Waffle House had been negligent in its training of its employees and managers and that it had negligently failed to keep the work premises safe. Pavesi's suit sought damages and demanded a jury trial.

Waffle House answered the complaint and filed an emergency motion to compel arbitration. In support of its motion, Waffle House argued that the arbitration agreements signed by Mikeals on November 6 and November 14 required the claims alleged in Pavesi's suit to be handled through mandatory binding arbitration.

Following a hearing, the trial court denied this motion. In its ruling, the trial court found that the November 14 agreement superseded the November 6 agreement because the two agreements contained materially different terms while addressing the same subject matter. Specifically, the trial court noted that the "choice of law" provisions in the two agreements were materially different.

The November 6 agreement contained a clause providing that "[t]his Arbitration Program shall be governed by and interpreted in accordance with the Federal Arbitration Act and any federal common law interpreting that Act." In contrast, the November 14 agreement contained a clause providing that the "agreement should be construed in a manner consistent with the principles and provisions of the Federal Arbitration Act ... [T]his Agreement shall be governed by and interpreted in accordance with the laws of the State of Georgia[.]"

The November 14 agreement also provided that it was to apply to claims "arising out of any aspect of or pertaining in any way to [Mikeals'] employment [.]" The agreement further provided that "claims that are arbitrable ... include, but are not limited to ... tort claims[.]" The November 14 agreement also contained a merger clause, indicating that it was the "complete agreement of [Mikeals and Waffle House] on the subject of arbitration disputes[.]"

Interpreting the choice of law provision in the November 14 agreement, the trial court determined that by providing that the agreement was to be "governed by and interpreted in accordance with the laws of the State of Georgia," the parties had agreed that any arbitration of Mikeals' claims against Waffle House was governed by Georgia law, and that accordingly the Georgia Arbitration Code, not the Federal Arbitration Act, would apply. Further, the trial court determined that because the Georgia Arbitration Code had been interpreted to exclude personal bodily injury claims from its coverage, Mikeals could not be compelled to arbitrate his claims against Waffle House pursuant to the November 14 agreement. The trial court further ruled that Mikeals' claims were not subject to mandatory arbitration because his injuries were not the result of his employment relationship with Waffle House, and were thus not covered by the November 14 agreement.

Following its order, the trial court filed a certificate of immediate review authorizing Waffle House to seek an interlocutory appeal. Waffle House filed an application seeking such review with this Court, which we granted.³ This appeal followed.

1. Waffle House first argues that the trial court erred by finding that the November 6 and November 14 agreements contained materially different terms, such that the agreements merged, with the terms of the November 14 agreement controlling. We find no error in the trial court's determination.

In this case, the November 6 and November 14 agreements clearly dealt comprehensively with the same subject matter—the circumstances and conditions under which claims between Mikeals and Waffle House would be subject to arbitration. Because the two agreements had different terms, the agreement entered into later in time controls. See Atlanta Integrity Mortg., Inc. v. Ben Hill UnitedMethodist Church, Inc., 286 Ga. App. 795, 797, 650 S.E.2d 359 (2007) ("Under the merger rule, an existing contract is superseded and discharged whenever the parties subsequently enter upon a valid and inconsistent agreement completely covering the subject-matter embraced by the original contract.") (citation and punctuation omitted). Moreover, through the merger clause in the November 14 agreement, providing that it contained the "complete agreement of [Mikeals and Waffle House] on the subject of arbitration disputes," the parties expressed their intention that the November 14 agreement would supersede and replace any prior agreements on that subject matter. See MAPEI Corp. v. Prosser, 328 Ga. App. 81, 86 (4), 761 S.E.2d 500 (2014). Thus, the trial court was correct in determining that the provisions of the November 14 agreement superseded those of the November 6 agreement.

2. Waffle House next argues that the trial court erred when it determined that the choice-of-law provision in the November 14 agreement did not require application of the Federal Arbitration Act ("FAA") to the parties' dispute. We agree with Waffle House.

The choice-of-law provision in the November 14 agreement provides, in relevant part, that "this agreement should be construed in a manner consistent with the principles and provisions of the Federal Arbitration Act ... [T]his Agreement shall be governed by and interpreted in accordance with the laws of the State of Georgia[.]" On the basis of this language, the trial court determined that the provisions of Georgia law (and thus, the provisions of the Georgia Arbitration Code) govern the agreement and that the FAA would not apply to the parties' dispute. This was in error.

The trial court's reading of the choice-of-law provision violates a core principle of contractual interpretation in that it renders the provision's express reference to the FAA surplusage. As the General Assembly has instructed with regard to contract interpretation, "[t]he construction which will uphold a contract in whole and in every part is to be preferred[.]" OCGA § 13-2-2 (4). Moreover, "it is a cardinal rule of contract construction that a court should, if possible, construe a contract so as not to render any of its provisions meaningless and in a manner that gives effect to all of the contractual terms." Forsyth Cty. v. Waterscape Serv., LLC, 303 Ga. App. 623, 631 (2) (a), 694 S.E.2d 102 (2010) (citation and punctuation omitted).

In this case, it strains credulity to believe that the parties' express reference to the FAA in the choice-of-law provision evinced something other than their intention that the FAA govern any arbitration proceedings between them.⁴ Moreover, the provision's reference to Georgia law does not require a different conclusion. As this Court has previously discussed "even when there is a choice of law provision, if the intent of the parties indicates that arbitration would be governed by the FAA, this Court will enforce the intentions of the parties." Results Oriented, Inc. v. Crawford, 245 Ga. App. 432, 436-37 (1) (a), 538 S.E.2d 73 (2000) (citation and punctuation omitted). In Crawford, the arbitration agreement at issue contained separate clauses that provided both that...