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Careminders Home Care, Inc. v. Sandifer

United States District Court, N.D. Georgia, Atlanta Division

June 29, 2015



WILLIAM S. DUFFEY, Jr., District Judge.

This matter is before the Court on Petitioner CareMinders Home Care, Inc.'s ("Petitioner" or "CareMinders") Petition to Confirm the Arbitration Award [1], and Respondents Raven J. Sandifer's and Ravenous Enterprises Inc.'s (collectively, "Respondents") Cross-Petition to Vacate the Arbitration Award [9].


A. Facts

Petitioner is an Alpharetta, Georgia based provider of non-medical assistance for pediatric and geriatric clients. On January 31, 2011, Petitioner and Respondents entered into a Franchise Agreement that granted Respondents the right to operate Petitioner's franchise in Wisconsin. Section 14 of the Franchise Agreement provides that Petitioner and Respondents agreed that disputes arising under the Agreement would be submitted to arbitration. Section 18.4 of the Franchise Agreement provides that "... [the] [a]rbitration shall be conducted under and governed by the Commercial Arbitration Rules... of the American Arbitration Association [AAA'] and Title 9 of the U.S. Code." See Franchise Agreement, § 18.4, Pet.'s Ex. A [11.1] at 44.

On October 3, 2013, Respondents initiated an arbitration proceeding against CareMinders before the AAA in Atlanta, Georgia. Respondents alleged that CareMinders caused them damage as a result of CareMinders' violation of the Franchise Agreement by, including, failing to (i) provide Respondents with assistance in advertising and marketing the CareMinders brand, (ii) obtain operating licenses, and (iii) assist with several other operational functions. Respondents also asserted claims for fraud in the inducement, breach of fiduciary duty under Georgia law, and several provisions of the Wisconsin Franchise Investment statute. Respondents' Detailed Statement of Claim and Demand for Relief, and Petitioner's Answering Statement requested the Arbitrator to include an award for attorneys' fees to the prevailing party. See Pet.'s Ex. B [11.2] at 36-37 & Ex. C [11.3] at 73.

The Arbitrator held a hearing in Atlanta, Georgia during the period September 22, 2014 to September 24, 2014. On October 30, 2014, the Arbitrator issued an Arbitration Award ("Award"). In it, the Arbitrator rejected Respondents' claims, and awarded Petitioner attorneys' fees and expenses of the litigation in the amount of $243, 766.78. The Arbitrator found that Petitioner "is entitled to recover its attorneys' fees under one or more of Section 18.3 of the Franchise Agreement, O.C.G.A. § 13-6-11 and O.C.G.A. § 9-15-14." See Final Award, Ex. A. [1.1] at 9. Section 18.3 provides:

18.3 Attorneys' Fees. If Franchisor secured any declaration, injunction or order of specific performance pursuant to Section 18.2 hereof, if any provision of this Agreement is enforced at any time by Franchisor, or if any amounts due from Franchisee to Franchisor are, at any time, collected by or through an attorney at law or collection agency, Franchisee shall be liable to Franchisor for all costs and expenses of enforcement and collection including, but not limited to, court costs and reasonable attorneys' fees (including attorneys' fees incurred for appellate level legal services), and any arbitration fees or expenses for proceedings instituted pursuant to Section 18.4.

See Franchise Agreement, § 18.3, Pet.'s Ex. A at 44.

O.C.G.A. § 13-6-11 provides for the award of litigation expenses where a "plaintiff has specially pleaded and has made prayer thereof and where the defendant has acted in bad faith, has been stubbornly litigious, or has caused the plaintiff unnecessary trouble and expense." See O.C.G.A. § 13-6-1. O.C.G.A. § 9-15-14 allows the Court to assess reasonable attorneys fees if it finds that a party asserted claims or defenses that lacked substantial justification, were asserted for the purpose of delay or harassment, or the claims "unnecessarily expanded the proceeding by other improper conduct." See O.C.G.A. § 9-15-14.

B. Procedural History

On November 5, 2014, CareMinders moved to confirm the Award. CareMinders also requested the Court to award Petitioner pre- and post-judgment interest under 28 U.S.C. § 1961, and the fees and costs associated with prosecuting this action.

On January 12, 2015, Respondents answered the Petition and cross-moved to vacate the Award. Respondents argue that the Arbitrator's decision to award attorneys' fees to CareMinders is required to be vacated because attorneys' fees are not recoverable under Section 18.3 of the Franchise Agreement. Respondents argue that Section 18.3 of the Franchise Agreement allows attorneys' fees only under three circumstances: (i) injunctive or declaratory relief was awarded, (ii) a provision of the Agreement was enforced or (iii) an amount due from Respondents was collected through an attorney or a collection agency. Respondents claim none of these three reasons apply here.

Respondents also contend that the Arbitrator wrongfully awarded attorneys' fees under O.C.G.A. § 13-6-11 because (i) Petitioner did not specially plead or pray for relief under this statute, (ii) relief is not available under O.C.G.A. § 13-6-11 unless the requesting party asserts an independent claim, and (iii) attorneys' fees cannot be recovered under the section to deter conduct that occurs during litigation. Respondents finally argue that O.C.G.A. § 9-15-14 does not apply to Arbitration proceedings, that Respondents were not ...

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