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Ultra Group of Companies, Inc. v. Alli

Court of Appeals of Georgia, Second Division

September 25, 2019

ULTRA GROUP OF COMPANIES, INC.
v.
ALLI.

          MILLER, P. J., RICKMAN and REESE, JJ.

          REESE, JUDGE.

         Ultra Group of Companies, Inc. ("Ultra") appeals from a final order issued by the Superior Court of Fulton County vacating part of an arbitration award entered pursuant to proceedings conducted under OCGA § 50-27-102 (d).[1] The arbitration proceedings concerned allegations of breach of contract and failure to pay revenue that Citgo Food Mart, Inc. ("Citgo")[2] and Mumtaz Alli ("Alli") allegedly owed to Ultra under a Location Agreement ("Agreement")[3] for the lease of coin operated amusement machines ("COAMs") that were located in a convenience store operated by Citgo. The arbitrator awarded Ultra monetary damages against Citgo and Alli (in her personal capacity), jointly and severally. In the instant appeal, Ultra challenges the trial court's order vacating the award against Alli in her personal capacity based on its finding that the arbitrator lacked personal jurisdiction over Alli. For the reasons set forth infra, we affirm.

         The record shows the following, undisputed facts. On May 11, 2011, Ultra entered into the Agreement with Citgo, a "corporation[, ]" and Alli, an "individual[.]"[4]After a dispute arose under the Agreement, Ultra obtained an "Arbitration Referral"[5]from the Georgia Lottery Corporation ("GLC") in July 2015; the arbitration referral identified Citgo as the sole "Location Licensee" involved in the dispute. Based on the referral, in October 2015, Ultra filed an arbitration demand, identifying Citgo as the "Respondent[, ]"[6] i.e., the "Name of the Party on whom Demand for Arbitration is made"; the demand did not refer to Alli at all. In the demand, Ultra described the dispute to be arbitrated as follows: "While under contractual obligation and balance owed, location licensee demanded removal of Ultra machines during temporary closure, then installed competitor's machines." Ultra subsequently amended the arbitration demand, still identifying Citgo as the sole "Respondent[, ]" but also naming Alli as the "Representative/Attorney of the Party on whom Demand for Arbitration is made[.]" There are no documents in the record showing that Ultra served Alli with either the arbitration referral or the arbitration demand.[7]

         In March 2016, an arbitration hearing was conducted. The arbitrator issued a partial arbitration award on July 18, 2016, and, on July 29, 2016, the arbitrator issued a final monetary award to Ultra against Alli and Citgo, jointly and severally. The certificates of service attached to the partial and final awards showed that the awards were served on the attorney representing "Citgo Food Mart, Inc." There are no documents in the record showing that Alli, or an attorney representing her, was served with either the partial or final arbitration award.

         In September 2016, Ultra filed a motion to confirm the arbitration award in the Superior Court of Fulton County.[8] Alli and Citgo responded to the motion and moved to vacate the arbitration award as to Alli in her personal capacity, [9] arguing that the arbitrator lacked personal jurisdiction over her because she was not named as a party in the arbitration referral or the arbitration demand, nor was she served with either document. After conducting a hearing, the trial court issued an order confirming the arbitrator's final award. Alli and Citgo appealed the trial court's order to this Court, and the case was docketed as Case No. A17A1638.

         In a November 14, 2017 order in Case No. A71A1638, this Court vacated the trial court's confirmation of the arbitration award and remanded the case so that the parties could complete the appellate record. This Court's order stated, in relevant part, as follows:

During the confirmation proceedings and now on appeal, [Alli] contends that the arbitrator lacked personal jurisdiction over her because she was not named as a respondent in the demand for arbitration or served the demand as a respondent, and the demand and service filings show that she participated in the proceedings only as a representative of Citgo. However, Ultra argues the "correct" demand for arbitration shows that Alli was named as a respondent, that this demand was served upon her, the same attorney who represented Citgo made an appearance on Alli's behalf, and that her attorney filed a response and counterclaim specifically on her behalf. Further, Ultra argues that Alli did not raise the issue of personal jurisdiction at [any time] during the arbitration proceedings, although she appeared at the hearing and challenged subject matter jurisdiction.
[Alli] filed a reply brief, pointing out that Ultra has failed to include in the record on appeal any evidence that would support its contentions about Alli being included on any arbitration demand filed in these proceedings and being served. Further, Alli continues to insist that she was not listed in any arbitration demands, and that she was never personally served.
Obviously, both set[s] of facts cannot be true – Alli was either listed on an arbitration demand, albeit on one we do not have in the record before us, served with that demand, and represented and participated in the arbitration proceedings as a party, or she was not.
Further, while Ultra's failing to perfect the record might be fatal to its contentions, Alli has also failed to point to anything in the record to show that she preserved these arguments during the arbitration proceedings. And it is well established that[, ] unlike subject matter jurisdiction, challenges to personal jurisdiction, including challenges to service, may be waived. However, while failure to raise this issue before the arbitrator might be fatal to Alli's claim and render Ultra's failure to perfect the record irrelevant, the record is not clear on the matter. . . .
This Court is thus faced with the untenable situation of attempting to render a decision in this case based on an incomplete and possibly inaccurate record. Accordingly, in light of the deficiencies by both parties in presenting their arguments to this Court, the judgment of the superior court is vacated, and the case remanded to give the parties an opportunity to remedy these appellate record deficits by supplementing the record with all the documents in the record before the arbitrator that pertain to the personal jurisdiction issue and preservation of this error for our consideration. Upon completion of the record, the superior court may re-enter its original order or enter a different order as it deems appropriate. Any appeal from that order by either party must be filed within 30 days, at which time any issues raised in the present appeal may be reasserted.[10]

         Following remand of the case, the trial court reopened the case and conducted a hearing specifically to allow the parties to present evidence that supported their arguments regarding the personal jurisdiction issue. After allowing the parties some time to discuss this Court's remand order off the record, the trial court began the hearing by asking Ultra's counsel, Paul Oliver, whether Alli was a named party to the arbitration demand and whether she was served with the demand. Oliver, however, did not answer the question; instead, he gave a long, disjointed statement about what the parties' attorneys allegedly had said to one another and had filed during the litigation, including his claim that Citgo's former attorney had admitted, during a conference call and an unrecorded preliminary hearing, that Alli and Citgo were both parties to the arbitration.[11] Eventually, the trial court simply asked Oliver if a certificate of service existed that showed Alli had been served with the arbitration demand. Oliver responded that "[t]here would be a document that showed that the demand was served on her initially. The issue would be whether [the demand] included her as a defendant or only because she was a corporate person. I can provide you with that document. I think I do have that. I don't have it with me, but I can have it down here later today or tomorrow."

         Even though the trial court allowed the parties an additional two weeks following the hearing to supplement the record with any documents that supported their arguments, Oliver never filed the allegedly "correct" demand and/or proof of service in the trial court. In fact, there is no certificate of service or other document in the record that shows Ultra served the arbitration demand on anyone at all. Thus, the record supports the trial court's finding that Ultra "did not submit as documentary evidence a 'correct' demand for arbitration which listed Alli as a respondent and was served on Alli[, ] as represented by [Ultra] on appeal and to [the trial court] at the July 27, 2018 hearing [following remand]."

         In other words, this Court remanded the case, and the trial court conducted a hearing, for the sole purpose of giving the parties a chance to prove their conflicting assertions on two specific issues: whether Alli had been named as a party in her personal capacity in the arbitration demand, and whether she had been served with that demand. Yet, Ultra's counsel failed to produce a copy of any document that supported the statements that he had made to both this Court and the trial court and that would have been dispositive on the issues presented.[12]

         Following the hearing, the trial court ruled that

to be a party to an arbitration[, ] you must . . . first be identified as such in a demand for arbitration in the same manner a defendant must be identified in a complaint to be a party to the complaint. If an individual is not identified as a defendant, there is no requirement he be served[, ] and serving the individual without identifying him as a defendant would not make him a party to the suit, even if the individual mistakenly filed an answer.

         The court found that, based on the evidence in the record of the arbitration proceedings, Ultra did not identify Alli as a respondent in the arbitration demand, nor did it amend the demand to add her as a respondent, so she was never made a party to the arbitration.[13] The court also found that Ultra's failure to name Alli as a party or to amend the demand to add her as a party "eliminated the need to serve her. Indeed, there was nothing with which to serve her[ because] Alli was not a respondent in the arbitration action." In addition, the trial court ruled that Alli was not required to respond to the arbitration demand because she was not a party to the proceeding and had never been served with the arbitration demand.[14] Although Ultra argued that Alli waived her personal jurisdiction defense because, inter alia, Citgo's attorney filed responsive documents in the arbitration proceedings that referred to Alli as a "Respondent, " the trial court rejected that argument, ruling that such references did not make Alli a party to the proceedings when Ultra had not named her as a respondent in its arbitration demand, had not amended the demand to add her as a respondent, and had never served her with the demand.

         Consequently, the trial court ruled that personal jurisdiction over Alli was lacking in the arbitration proceedings, that the arbitrator had overstepped his authority in issuing an award against Alli in her personal capacity, and that the evidence established the arbitrator's manifest disregard of the law.[15] Thus, pursuant to OCGA §§ 9-9-12 and 9-9-13 (c), the court vacated the arbitrator's award to the extent the arbitrator ruled that Alli was personally liable for Ultra's damages claim. This appeal followed.

         On appeal from a trial court's ruling on whether an arbitration award should be confirmed or vacated, this Court should not disturb the ruling if there is any evidence to support it.[16] With this guiding ...


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