Wells v. Wells-Wilson. Magwell, LLC
| Decision Date | 30 June 2021 |
| Docket Number | A21A0199,A21A0229,A21A0198 |
| Parties | WELLS v. WELLS-WILSON. MAGWELL, LLC v. WELLS-WILSON. FIRST NOLIA ENTERPRISES, INC. v. WELLS-WILSON. |
| Court | Georgia Court of Appeals |
THIRD DIVISION
NOTICE: Motions for reconsideration must be physically received in our clerk's office within ten days of the date of decision to be deemed timely filed.
DEADLINES ARE NO LONGER TOLLED IN THIS COURT. ALL FILINGS MUST BE SUBMITTED WITHIN THE TIMES SET BY OUR COURT RULES.
In these related appeals, D. Richard Wells, Magwell, LLC, and First Nolia Enterprises, Inc. separately appeal from a trial court's order vacating an arbitration award and returning the case to the arbitrator for a limited rehearing.[1] Each appellant asserts altogether different enumerations of error, while also incorporating by reference each of the enumerations of the other two appellants. We will therefore combine the arguments and enumerations of error set forth in Case Nos. A21A0198, A21A0199, and A21A0229 and address them as a whole below. The appellants collectively assert ten enumerations of error regarding the arbitrator overstepping his authority and manifestly disregarding the law in a variety of ways and alleged errors in the trial court's order for rehearing. For the reasons explained below, we affirm in part, vacate in part, and remand these cases with direction.
The fact that the relief was such that it could not or would not be granted by a court of law or equity is not ground for vacating or refusing to confirm the award.
The authority of courts to review an award, pursuant to a motion to vacate, is very limited; courts cannot inquire into the merits of an arbitrable controversy; arbitrators are free to award on the basis of broad principles of fairness and equity; and an arbitrator need not make findings or state the reasons in support of the award. [When] reviewing a motion to vacate, appellate courts cannot make determinations as to the sufficiency of the evidence, as such judicial intervention would only frustrate the purpose of arbitration. The prohibition against considering the sufficiency of the evidence as grounds for vacating an arbitration award is unconditional. Therefore, a reviewing court is prohibited from weighing the evidence submitted before the arbitrator, regardless of whether the court believes there to be sufficient evidence, or even any evidence, to support the award.
(Citations, punctuation, and footnote omitted.) A&M Hospitalities v. Alimchandani, Ga. App. (3) (856 SE2d 704) (2021). "In reviewing a trial court's order confirming an arbitration award, this Court will affirm unless the trial court's ruling was clearly erroneous." (Citation and punctuation omitted.) First Option Mtg. v. S&S Financial Mtg. Corp., 322 Ga. App. 14 (743 SE2d 574) (2013). Our research revealed no Georgia decision outlining a specific standard of appellate review of a trial court's order vacating an arbitrator's award and ordering a rehearing under OCGA § 9-9-13 (e). The Eleventh Circuit Court of Appeals has stated generally with regard to the standard of review: "On an appeal of a district court's decision to confirm or vacate an arbitration award, we review the district court's resolution of questions of law de novo and its findings of fact for clear error." (Citation and punctuation omitted.) EGI-VSR v. Mitjans, 963 F3d 1112, 1121 (III) (11th Cir. 2020). As this Eleventh Circuit standard comports with numerous Georgia decisions that appear to apply a de novo standard of review on questions of law without so stating,[2] and clarifies the specific circumstance under which we will reverse the trial court on the ground that it has clearly erred,[3] we will apply this standard of review in this case.
As the relevant facts are complicated and the proceedings below convoluted,[4] we will provide a brief, initial overview before providing more detailed facts in our analysis of each enumerated error. Richard Wells, Susan Wells-Wilson, and Linda Palmer are siblings; their parents, now deceased, formed Magnolia Advanced Materials, Inc. ("Magnolia") which manufactures epoxies. Until 2008, the majority of Magnolia's stock was owned by non-party Nolia Enterprises, L.L.L.P. ("Nolia Partnership"); its general partner was First Nolia Enterprises, Inc. ("First Nolia"). As Richard Wells owned 100 percent of First Nolia's stock, he "was able to control the manner in which the Magnolia stock held by [the] Nolia [Partnership] was voted."
In anticipation of a 2008 sale of Magnolia, the parties finalized an "Operating Agreement" creating a new entity, Magwell, LLC, ("Magwell") and naming First Nolia as the initial manager of Magwell. On the same day, Nolia Partnership's stock was transferred to Magwell. The Operating Agreement provided for arbitration pursuant to the "commercial arbitration rules then in effect of the American Arbitration Association" and stated that the Operating "Agreement and the application or interpretation hereof shall be governed exclusively by the laws of the State of Georgia, without regard to its conflicts of law principles." It was agreed to by the Nolia Partnership as the "Initial Member" through First Nolia, the General Partner of Nolia Partnership, and signed by Richard Wells, in his capacity as the chief executive officer of First Nolia. The plan was for Magwell to be completely dissolved after the sale and distribution of money. The sale never took place.
After the arbitrator issued a Final Award on February 12, 2020, Susan Wells-Wilson asked the Superior Court of Fulton County to confirm the arbitration award, and Richard Wells, Magwell, and First Nolia counterclaimed with requests to vacate the final award, as well as previous awards issued by the arbitrator.[5] The Business Case Division of the Superior Court of Fulton County subsequently issued a ten-page order concluding that no statutory ground existed to vacate the arbitrator's decision regarding the contract issues presented by the parties. But, based upon its decision to vacate that portion of the award which "effectively enjoins Magwell from retaining and paying legal counsel to represent it in this matter," as well as the portion that "fails to identify the amount of fees and expenses incurred on behalf of each of the Respondents," the trial court vacated the entire arbitration award and ordered the arbitrator to rehear only specific issues related to attorney fees and expenses that will be discussed in more detail below. Richard Wells, First Nolia, and Magwell have appealed from this order; Susan Wells-Wilson and Linda Palmer have filed separate appellee briefs.
1. Alleged Untimeliness of Successive Awards. First Nolia contends that "[t]he trial court erred when it did not specifically vacate successive arbitration awards issued more than thirty days after the hearing closed." It asserts that both the Georgia Arbitration Code, OCGA § 9-9-1 et seq., and the American Arbitration Association ("AAA") Commercial Rules require an arbitrator to issue an award within 30 days after a hearing closes.
The Georgia Arbitration Code "was designed to preserve and ensure the efficacy and expediency of arbitration awards." ABCO Builders v. Progressive Plumbing, 282 Ga. 308 (647 SE2d 574) (2007). Except for certain exceptions not applicable here, it applies 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 disputes can be enforced." OCGA § 9-9-2 (c). Conmac Corp. v. Southern Diversified Dev., 245 Ga....
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