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BDO USA, LLP v. Coe

Court of Appeals of Georgia

September 16, 2014

BDO USA, LLP et al.
v.
COE et al

Page 743

Arbitration. Fulton Superior Court. Before Judge Glanville.

DLA Piper, Paul N. Monnin, James M. Rusert, for appellants.

Caldwell & Watson, Harmon W. Caldwell, Jr., Harry W. MacDougald, Loewinsohn Flegle Deary, Jeven R. Sloan, for appellees.

Andrews, P. J., and McFadden, J., concur.

OPINION

Page 744

Ray, Judge.

BDO USA, LLP, f/k/a BDO Seidman, LLP, and Michael Whitacre (collectively, " BDO" ) filed a petition in the Superior Court of Fulton County to compel arbitration of their disputes with Douglas Coe, Jacqueline Coe, GFLIRB, LLC, DBICHA, LLC, and ALAKE, LLC (collectively, " Coe" ). Following a hearing on Coe's motion to dismiss, the trial court found that the issues that BDO claimed to be arbitrable were then pending before an Illinois court which had jurisdiction to hear a motion to compel arbitration and, therefore, in light of OCGA § 9-9-6 (a), it lacked subject matter jurisdiction to consider the merits of BDO's petition. Accordingly, the trial court dismissed BDO's petition without prejudice. On appeal, BDO contends that the trial court had jurisdiction to consider BDO's petition to compel arbitration under the Federal Arbitration Act, 9 USC § 1 et seq. (" FAA" ), which it claims preempted OCGA § 9-9-6 (a). For the reasons that follow, we affirm.

BDO's petition, in pertinent part, alleges that BDO provided tax consulting services to Douglas Coe pursuant to (at least) four written consulting agreements. In 2001 and 2002, Coe entered into a " distressed debt" tax shelter and then claimed deductions on 2001-2007 tax returns for artificial losses generated by the tax shelter. The Internal Revenue Service disallowed the deductions and imposed back taxes, interest, and penalties against Coe.

In the consulting agreements, Coe and BDO agreed to arbitrate any dispute, controversy, or claim arising in connection with the performance or breach of the respective agreements in the city " in which the BDO office providing the relevant Services exists, unless the parties agree to a different locale." BDO alleged that the office providing those relevant services is located in Atlanta, Georgia, but that in contravention of their agreements to arbitrate, Coe sued BDO in the Circuit Court of Cook County, Illinois, asserting various claims [329 Ga.App. 80] arising in connection with the services provided by BDO to Coe under their written agreements. In its petition, BDO asked the trial court to order Coe to arbitrate each of the claims asserted against BDO in the Illinois complaint before an arbitration panel venued in Atlanta and, further, to enjoin Coe from prosecuting the Illinois complaint against BDO and from initiating judicial proceedings against BDO in any other forum. BDO alleged that venue for its action was proper in the Superior Court of Fulton County under both OCGA § 9-9-4 and § 4 of the FAA, 9 USC § 4.

Coe moved to dismiss BDO's petition, contending that under Georgia law the court presiding over the Illinois action, not the Georgia superior court, was the only court that could decide BDO's arbitrability defense to Coe's Illinois claims. Relying on OCGA § 9-9-6 (a), the trial court determined that it lacked jurisdiction over BDO's petition because the issues which BDO claimed to be arbitrable were before the Illinois court, which had had jurisdiction to consider a motion to compel arbitration. The trial court granted Coe's motion and dismissed BDO's petition without prejudice. " The dismissal of an action for lack of subject matter jurisdiction is a question of law that we review de novo." Babb v. Babb, 293 Ga.App. 140, 140 (1) (666 S.E.2d 396) (2008). See Goddard v. City of Albany, 285 Ga. 882, 883 (1) (684 S.E.2d 635) (2009).

1. At issue is whether the trial court erred in dismissing BDO's petition to compel arbitration under authority of OCGA § 9-9-6 (a). BDO contends that the trial court erred in relying on OCGA § 9-9-6 (a) because Georgia courts have jurisdiction to consider a claim filed under § 4 of the FAA, 9 USC § 4 and that, in any event, OCGA § 9-9-6 (a) is preempted by the federal law.

Section 2 of the FAA provides that arbitration agreements " shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 USC ยง 2. Further, " [t]he FAA applies in state ...


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