FIRST DIVISION BARNES, P. J., GOBEIL and PIPKIN, JJ.
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. https://www.gaappeals.us/rules
March 12, 2025
In the Court of Appeals of Georgia A24A1797. BURKE MOORE LAW GROUP, LLP v. DREW ECKL & FARNHAM, LLP A24A1798. DREW ECKL & FARNHAM, LLP v. BURKE MOORE LAW GROUP, LLP.
BARNES, Presiding Judge.
These appeals arise out of a dispute between Drew, Eckl & Farnham, LLP
(“DEF” or “the firm”) and two of its former partners, Paul Burke and Brian Moore.
That dispute, which is currently pending before the American Arbitration Association
(“AAA”), concerns certain contingency fees received by Burke and Moore that the
firm claims it was owed under the DEF Partnership Agreement. After the arbitration
panel granted DEF’s motion to add Burke Moore Law Group, LLP (“BMLG”) as a
party to the arbitration, BMLG filed suit in superior court seeking, inter alia, a
declaration that it had no obligations under the DEF Partnership Agreement and could not be required to participate in the arbitration. BMLG moved for summary judgment
on its claim for declaratory relief, and the trial court denied that motion and compelled
BMLG to arbitrate.
After this Court granted BMLG’s application for an interlocutory appeal,
BMLG filed the appeal in Case No. A24A1797, asserting that the trial court erred in
holding that equitable estoppel barred BMLG’s objection to being joined as a party to
the arbitration; in denying BMLG’s motion for partial summary judgment; and in
finding that BMLG voluntarily submitted to the arbitration panel the threshold
question of whether DEF’s claims against it were arbitrable. DEF filed a cross-appeal
in Case No. A24A1798, arguing that while the trial court reached the correct result,
it erred as a matter of law in conducting a de novo review of the arbitrator’s decision.
Instead, DEF claims that relevant law required the court to find that BMLG was
bound by the arbitrators’ decision.
For reasons explained more fully below, we find that the trial court committed
legal error in holding that the doctrine of equitable estoppel required BMLG to
arbitrate DEF’s claims against it. Accordingly, in Case No. A24A1797, we vacate that
part of the trial court’s order and remand the case for further proceedings consistent
2 with this opinion. We further find that the trial court had the authority to review the
arbitrators’ decision de novo and therefore conclude that the appeal in Case No.
A24A1798 is without merit.
“Similar to our review of the grant of summary judgment, which involves the
elimination of all genuine issues of material fact, the standard of review from the grant
of a motion to compel arbitration is whether the trial court was correct as a matter of
law.” (Citation and punctuation omitted.) Losey v. Prieto, 320 Ga. App. 390, 390 (739
SE2d 834) (2013). See also Brooks v. Brooks, 366 Ga. App. 650, 650 (883 SE2d 880)
(2023) (an appellate court reviews de novo a trial court’s order requiring a party to
submit to arbitration); Webb IV, LLC v. Samples Constr., LLC, 349 Ga. App. 607, 607
(824 SE2d 107) (2019) (“[T]he construction of an arbitration agreement, like any
other contract, presents a question of law, which is subject to de novo review.”)
(citation and punctuation omitted); Bryant v. Optima Intl., 339 Ga. App. 696, 696 (792
SE2d 489) (2016) (“In reviewing a grant or denial of summary judgment, we owe no
deference to the trial court’s ruling and we review de novo both the evidence and the
trial court’s legal conclusions.”) (citation and punctuation omitted).
3 Here, the relevant facts appear to be undisputed and show that for many years,
Burke and Moore were equity partners at DEF, where they engaged in a commercial
collections practice. Burke and Moore handled these collections matters on a
contingency-fee basis. In February 2022, Burke and Moore notified DEF of their
intent to resign from the partnership. They then began the process of forming BMLG
with Burke, Moore, and four other attorneys as equity partners.1
At the time Burke and Moore resigned from the firm, they were signatories to
the DEF Partnership Agreement. Article XVIII of the Partnership Agreement
provided, in relevant part:
If payment for services in any matter handled for any client who elects to continue an attorney/client relationship with a departing Partner is contingent upon results, the departing Partner shall be obligated to immediately pay the Firm for one-third (1/3) of any contingency fee when the contingency fee is received by the departing Partner, together with all client reimbursable expenses incurred as of the effective date of withdrawal.
1 None of the other attorneys who joined BMLG as equity partners were members of DEF. 4 Article XXIV of the Partnership Agreement addressed the resolution of any
disputes between the firm and a departing partner. Specifically, that provision stated,
[a]ny dispute between the Partnership and a . . . withdrawing Equity Partner . . . regarding their respective rights and liabilities under this Partnership Agreement shall be submitted to the American Arbitration Association or other mutually agreeable arbitrators for binding arbitration and resolution.
After they provided notice to DEF, Burke, Moore, and the firm entered into
negotiations about the terms of Burke and Moore’s departure. Those negotiations
culminated in a written “Statement of Agreement” (the “Transition Agreement”).
The Transition Agreement states that it was “made . . . by and among the following
parties: Drew, Eckl & Farnham, LLC (“DEF”) and two partners of DEF, Paul Burke
and Brian Moore.” The agreement further provides that Burke and Moore and/or
“BMLG[,] as needed,” would assume all ongoing obligations, including leases,
contracts, and licenses that were entered into, incurred, or acquired, to support Burke
and Moore’s commercial collections practice. Additionally, the Transition Agreement
states, in relevant part:
5 14. Paul Burke and Brian Moore will cooperate reasonably with DEF to provide meaningful access to complete and accurate information regarding the current status of all contingency fee matters assigned to DEF through the effective date of their withdrawal, . . . .
15. This agreement shall have no impact on any term of the DEF Partnership Agreement . . . including but not limited to the provisions regarding contingency fee arrangements contained in Article XVIII of the Partnership Agreement.
The Transition Agreement was executed by the parties’ respective attorneys,
with those signatures appearing underneath the following statement: “Undersigned
attorneys for the parties are fully vested to bind each party to the terms of this
agreement this 30th day of March, 2022.” The first signatory is identified as
“Attorney for Paul Burke, Brian Moore, and Burke Moore Law Group.”
Following execution of the Transition Agreement, DEF sent a letter to all
collections clients, informing them of Burke and Moore’s decision to leave the firm.
The letters further informed the clients that following the departure of Burke and
Moore, DEF would “no longer have the capacity to handle” their cases. Therefore,
the clients were instructed to inform DEF of the outside lawyer or firm to which their
6 files should be transferred. A number of clients ultimately transferred their cases to
BMLG.
Burke’s and Moore’s withdrawal from DEF became effective on April 30,
2022. In October 2022, DEF filed an arbitration demand and statement of claim
against Burke and Moore with the AAA. DEF asserted claims for breach of contract
and breach of fiduciary duty, conversion, money had and received, and unjust
enrichment. Each of these claims was premised on Burke’s and Moore’s alleged
refusal to pay DEF certain contingency fees the firm alleged it was owed pursuant to
the Partnership Agreement. Burke and Moore filed a counterclaim against DEF,
alleging that the firm had breached the Partnership Agreement with respect to the
compensation it paid them. They also named as counterclaim defendants the members
of DEF’s compensation committee, asserting claims against them for breach of
fiduciary duty and unjust enrichment.
In April 2023, DEF moved to add BMLG as a party to the arbitration. The
motion alleged that Burke and Moore had transferred their rights and interests in the
contingency fee cases (subject to DEF’s interest) to BMLG; that as a result of this
transfer, DEF had claims against BMLG for money had and received, conversion, and
7 unjust enrichment; and that BMLG might also be liable “as the successor-in-interest
and/or alter-ego of Burke and Moore.” DEF further claimed that BMLG could be
made a party to the arbitration because its claims against BMLG were significantly
intertwined with the firm’s claims against Burke and Moore. Additionally, DEF
asserted that BMLG was a party to the Transition Agreement, which in turn
incorporated the DEF Partnership Agreement. Thus, DEF claimed that by entering
the Transition Agreement, BMLG agreed that the DEF Partnership Agreement would
govern the resolution of issues related to the payment of contingency fees.
BMLG, Burke, and Moore filed a joint response and objection to DEF’s
motion. The arbitration panel granted the motion and ordered that BMLG be added
as a party. In support of its decision, the panel found that BMLG had “agreed” to the
Transition Agreement, which incorporated by reference the DEF Partnership
Agreement. The Partnership Agreement, in turn, provided that disputes over
contingency fees would be settled by arbitration. The panel further noted that there
was “privity and an identity of interest between [Burke and Moore] and BMLG” and
that “BMLG presumably accepted the [c]ontingency [c]ases with express knowledge
that any dispute between [DEF] and [Burke and Moore] over any money due to [DEF]
8 for the contingency cases was to be resolved by arbitration and, therefore, took the
[c]ontingency [c]ases subject to that same obligation.”
BMLG, Burke, and Moore moved for reconsideration of the arbitrators’
decision, and the panel denied that motion. BMLG then filed the current lawsuit,
seeking a declaratory judgment that it had no obligations under the DEF Partnership
Agreement and that it should not be required to arbitrate DEF’s claims against it.
BMLG also sought injunctive relief and a stay of the arbitration proceedings as they
related to it. DEF filed an answer and counterclaim seeking a confirmation of the
arbitration panel’s decision adding BMLG as a party; a declaratory judgment that
BMLG took the contingency cases subject to DEF’s rights; breach of contract;
conversion; money had and received; and unjust enrichment.
BMLG filed a motion for partial summary judgment on its claim for a
declaratory judgment that it should not be added as a party to the arbitration and on
DEF’s counterclaim seeking confirmation of the arbitrators’ decision. DEF
subsequently filed a motion seeking an order confirming the arbitration panel’s
decision. The trial court denied both of the motions, but ultimately compelled BMLG
to arbitrate.
9 The court concluded that because the arbitrators’ decision was interlocutory,
the court could not grant DEF’s request to confirm that decision as an “arbitration
award.” With respect to BMLG’s summary judgment motion, the court first found
that there was no “clear and unmistakable evidence” that BMLG agreed to have the
question of arbitrability decided by the arbitrators, and therefore the court had to
review that question de novo. The court then concluded that BMLG was subject to
arbitration under the doctrine of equitable estoppel because: (1) it “participated in
substantially interdependent and concerted conduct” with Burke and Moore when it
“accepted [DEF’s] contingency cases with the knowledge that any dispute over them
is to be resolved by arbitration”; and (2) DEF’s claim for recovering “the contingency
fees against [BMLG] is based on the same operative facts and [is] inherently
inseparable from the claims against” Burke and Moore. Relying on these conclusions,
the court denied BMLG’s motion for partial summary judgment and compelled it to
participate in the arbitration (which, the court acknowledged, was the same “overall
relief” sought by DEF in its motion to confirm the arbitrators’ decision).
10 Following entry of the trial court’s order, BMLG sought a certificate of
immediate review, which the court granted. This Court subsequently granted
BMLG’s application for an interlocutory appeal, and these appeals followed.
Case No. A24A1797
1. In its first enumeration of error, BMLG asserts that the trial court committed
legal error by relying on the doctrine of equitable estoppel to compel it to arbitrate the
claims at issue. We agree.
“As a general rule, only those signatories to an arbitration agreement may be
compelled to arbitrate.” (Citation and punctuation omitted.) SCSJ Enterprises v.
Hansen & Hansen Enterprises, 319 Ga. App. 210, 213 (2) (a) (734 SE2d 214) (2012)
(physical precedent only). See also Wedemeyer v. Gulfstream Aerospace Corp., 324 Ga.
App. 47, 49 (1) (749 SE2d 241) (2013) (“[a]rbitration is a matter of consent, not
coercion”) (citation and punctuation omitted); Helms v. Franklin Builders, 305 Ga.
App. 863, 865 (700 SE2d 609) (2010) (a party “who has not consented to an
arbitration agreement cannot be compelled to arbitrate claims”). Here, the trial court
acknowledged that the arbitration agreement at issue is contained in the DEF
Partnership Agreement and that BMLG was not a signatory to that agreement.
11 Nevertheless, the court relied on a line of state and federal cases holding that, under
certain circumstances, the doctrine “of equitable estoppel provides a means of
bringing a non-signatory within the terms of an arbitration agreement.” Helms, 305
Ga. App. at 866. As a general rule, courts have applied the doctrine of equitable
estoppel where a non-signatory who had been sued under the contract containing the
arbitration agreement sought to require the plaintiff, who was a signatory to that
agreement, to abide by the same. As we have explained:
[N]on-signatories to an agreement may have a right to compel arbitration under the doctrine of equitable estoppel, which applies under two circumstances . . . . First, equitable estoppel applies when the signatory to a written agreement containing an arbitration clause must rely on the terms of the written agreement in asserting its claims against the non- signatory. . . . Second, application of equitable estoppel is warranted when the signatory to the contract containing the arbitration clause raises allegations of substantially interdependent and concerted misconduct by both the non-signatory and one or more of the signatories to the contract.
(Citation and punctuation omitted; emphasis supplied). Order Homes LLC v. Iverson,
300 Ga. App. 332, 338-339 (2) (685 SE2d 304) (2009). See also Usme v. CMI Leisure
Mgmt., 106 F4th 1079, 1087-1088 (III) (B) (11th Cir. 2024) (noting that under limited
circumstances, “[e]quitable estoppel allows a non-party” to a contract containing an
12 arbitration agreement “to enforce the [arbitration] provisions of [that] contract against
a signatory”) (emphasis supplied); Kroma Makeup EU, LLC v. Boldface Licensing +
Branding, 845 F3d 1351, 1354 (II) (11th Cir. 2017) (under the doctrine of equitable
estoppel, “a defendant who is a non-signatory to an agreement containing an
arbitration clause can force arbitration of a signatory’s claims when the signatory must
rely on the terms of the written agreement in asserting its claims against the non-
signatory”) (citation and punctuation omitted) (applying Florida law).
By way of example, the plaintiffs in Order Homes had entered into a new
construction purchase-and-sale agreement with Order Homes which contained an
arbitration clause. 300 Ga. App. at 333. Shortly after closing on their purchase and
moving into the home, the plaintiffs filed suit against Order Homes and 13 other
defendants claiming that, as a result of construction defects, the home was
uninhabitable. Id. at 333-334. Order Homes and four other named defendants (none
of whom were signatories to the purchase-and-sale agreement) filed a motion to
compel arbitration. Id. at 334. The trial court denied the motion as to the four
non-signatory defendants, and they appealed. Id. This Court reversed, finding that the
claims at issue “ar[o]se out of and relate[d] directly to” the purchase-and-sale
13 agreement and that the claims against all defendants alleged “substantially
interdependent and concerted misconduct by both the non-signatory defendants and
one of the signatories to the agreement.” (Citation and punctuation omitted.) Id. at
339 (2). Thus, we concluded that the non-signatory defendants could rely on the
doctrine of equitable estoppel to require the plaintiffs to arbitrate their claims against
those defendants. Id. Specifically, we noted that equitable estoppel was applicable
because the plaintiffs were “attempting to sue non-signatories for claims arising out
of the [a]greement on one hand, while avoiding the arbitration clause pertaining to
those same claims on the other hand.” Id.
We have applied similar reasoning in a number of cases to conclude that a
non-signatory defendant may compel a signatory plaintiff to arbitrate claims arising
from a contract containing an arbitration clause. See Price v. Ernst & Young, LLP, 274
Ga. App. 172, 175-176 (2) (617 SE2d 156) (2005) (affirming the grant of non-signatory
defendants’ motions to stay the proceedings pending arbitration and finding that the
signatory plaintiffs were equitably estopped from denying that the arbitration clause
applied to their claims); Lankford v. Orkin Exterminating Co., 266 Ga. App. 228, 231-
232 (3) (597 SE2d 470) (2004) (relying on equitable estoppel to affirm the grant of a
14 motion to stay and compel arbitration filed by signatory and non-signatory defendants
against plaintiffs, each of whom was a signatory or third-party beneficiary of the
contract giving rise to the claims); AutoNation Financial Svcs. Corp. v. Arain, 264 Ga.
App. 755, 762 (3) (592 SE2d 96) (2003) (reversing the denial of the non-signatory
defendant’s motion to compel arbitration and finding that equitable estoppel barred
the signatory plaintiff from objecting to arbitration).
We have also relied on equitable estoppel to allow a signatory defendant to
enforce an arbitration clause against a nonsignatory plaintiff where suit was brought
on a contract containing an arbitration clause and where a second plaintiff was a
signatory to the agreement. For example, in Helms, supra, we found that the non-
signatory plaintiff could be required to arbitrate her claims concerning alleged
construction defects in a home she owned with her husband (who was also her
co-plaintiff). In so doing, we noted that although the plaintiff-wife had not signed the
purchase-and-sale agreement containing an arbitration clause, her husband had. 305
Ga. App. at 865. Given that fact, and because her claims “[were] so intertwined with
her husband’s claims,” we found that equitable estoppel required that the wife’s
claims be subject to arbitration. Id. at 866 (noting that “[a] party cannot rely on the
15 contract when it works to its advantage and then repute [that contract] when it works
to its disadvantage”) (citation and punctuation omitted). See also LaSonde v.
CitiFinancial Mtg. Co., 273 Ga. App. 113, 114-115 (1) (614 SE2d 224) (2005)
(concluding that a non-signatory plaintiff was equitably estopped from avoiding
arbitration of a claim she brought with her co-plaintiff husband based on a promissory
note signed by the husband and containing an arbitration clause).
As the foregoing cases demonstrate, Georgia courts have only allowed a
defendant to rely on equitable estoppel to force arbitration of claims by a plaintiff
where the plaintff’s claims arose out of a contract containing an arbitration clause.
The parties have cited to no case — and we are aware of none — in which a non-
signatory defendant has been compelled to arbitrate claims brought against it by a
signatory to the arbitration agreement, even where the signatory plaintiff is also
asserting claims against a signatory defendant. See generally Order Homes, 300 Ga.
App. at 339 (3) (indicating that nonsignatory defendants who had not participated in
the motion to compel arbitration could not be ordered to participate in an arbitration
proceeding). Under such circumstances — including the circumstances that exist in
this case — the rationale for applying equitable estoppel does not exist.
16 As noted above, the purpose of applying equitable estoppel to compel a plaintiff
to arbitrate his claims is to prevent the plaintiff from relying on the contract when it
works to his advantage (i.e., to establish his claim), and repudiating it when it works
to his disadvantage (i.e. to avoid arbitration). See Helms, 305 Ga. App. at 865-866;
Order Homes, 300 Ga. App. at 339 (2). See also Lawson v. Life of the South Insurance
Co., 648 F3d 1166, 1172 (II) (B) (11th Cir. 2011) (applying Georgia law to hold that
“[i]n all cases, the lynchpin for equitable estoppel is equity, and the point of applying
it to compel arbitration is to prevent a situation that would fly in the face of fairness”)
(citation and punctuation omitted). Here, given that BMLG did not rely on the DEF
Partnership Agreement to assert a claim against DEF, the doctrine of equitable
estoppel may not be used to compel BMLG to participate in the underlying litigation.
Put another way, “[t]he equitable estoppel exception simply does not apply in this
context, and cannot be used to require a nonsignatory [defendant] to arbitrate a
dispute where” that defendant was not a party to the underlying arbitration
agreement. Leevers v.Bilberry, No. 4:04-CV-34 (COL), 2007 WL 315344 at *4 (II) (C)
(M. D. Ga. January 31, 2007) (applying federal law and holding that while equitable
estoppel can be used to “to estop a signatory [plaintiff] from avoiding an agreement
17 to arbitrate,” it cannot be used to require a non-signatory defendant to participate in
the arbitration) (emphasis onitted). See also Thompson-CSF, S. A. v. American
Arbitration Assoc., 64 F3d 773, 779 (I) (E) (2d Cir. 1995) (same); Citigroup Global
Markets v Berggren, No. 1:06-CV-1075-WSD, 2007 WL 9701710 at *10 (N. D. Ga.
March 23, 2007) (holding that although non-signatory plaintiffs were intended
beneficiaries of the contract at issue, they could not use the doctrine of equitable
estoppel “offensively,” to require a signatory defendant to arbitrate the claims
asserted by plaintiffs).
Given that equitable estoppel cannot apply under the circumstances of this case,
we find that the trial court erred in relying on that doctrine to compel BMLG to
arbitrate the claims against it. We therefore vacate that portion of the trial court’s
order compelling arbitration and remand for further proceedings consistent with this
opinion.
2. DEF argued in the court below, as it does in its appellate brief, that in
addition to equitable estoppel, two more distinct legal theories required BMLG to
arbitrate the claims at issue. Specifically, DEF asserts that BMLG can be required to
arbitrate because it was a party to the Transition Agreement and that agreement, in
18 turn, incorporated the DEF Partnership Agreement by reference. DEF further argues
that the contract law concepts of identity of interest and successor liability require that
BMLG be compelled to arbitrate. In its brief, BMLG argues that neither of these
additional legal doctrines apply to this case. Given that fact, and given the trial court’s
error in applying the doctrine of equitable estoppel, BMLG further asserts that the
trial court erred in denying its motion for summary judgment. We address each of
DEF’s alternate legal theories below.
(a) With respect to the first alternate theory raised by DEF, we note that the
trial court rejected the argument that BMLG was subject to the arbitration clause
found in the Partnership Agreement. We agree with the trial court on this issue.
Assuming arguendo that BMLG could be considered a party to the Transition
Agreement, we find that the agreement did not incorporate the DEF Partnership
Agreement. In support of its incorporation by reference argument, DEF relies on
paragraph 15 of the Transition Agreement. As noted above, that paragraph provides,
in relevant part, that the Transition Agreement “shall have no impact on any term of
the DEF Partnership Agreement . . . including but not limited to the provisions
19 regarding contingency fee arrangements contained in Article XVIII of the Partnership
Agreement.”
In determining whether this paragraph operates to incorporate the DEF
Partnership Agreement by reference, we are cognizant that “[t]he cardinal rule of
[contract] construction is to ascertain the intention of the parties.” (Citation and
punctuation omitted.) Freeman Capital Group, LLC v. Drury, 367 Ga. App. 843, 847
(1) (887 SE2d 812) (2023). We presume, however, “that the [parties’] intent is
reflected in the contractual language.” Bearoff v. Craton, 350 Ga. App. 826, 834 (1)
(830 SE2d 362) (2019). Thus, our first step in construing the contractual language at
issue is to determine whether, viewed in the context of the Transition Agreement as
a whole, the language of paragraph 15 “is clear and unambiguous. If it is, [we] simply
enforce[] the contract according to its clear terms; the contract alone is looked to for
its meaning.” (Citation and punctuation omitted.) Freeman Capital Group, 367 Ga.
App. at 847 (1). See also Dean v. Dean, 361 Ga. App. 698, 700-701 (1) (865 SE2d 292)
(2021) (“where the terms of a written contract are clear and unambiguous, the courts
will look to the contract alone to find the intention of the parties”) (citation and
punctuation omitted).
20 When reading paragraph 15 in the context of the entire Transition Agreement,
we find no ambiguity — the paragraph simply says that nothing in the Transition
Agreement may be interpreted so as to amend or otherwise impact the DEF
Partnership Agreement. Put another way, this language states that nothing in the
Transition Agreement changes the current rights and obligations that DEF, Burke,
and Moore have under the Partnership Agreement. It does not say, either explicitly
or implicitly, that the Partnership Agreement is incorporated by reference.
In reaching this conclusion, we note that DEF, Burke, and Moore are all
sophisticated parties, each of whom was represented by counsel with respect to the
Transition Agreement. Thus, had the parties wished to incorporate all or part of the
DEF Partnership Agreement by reference, they could have done so. As written,
however, paragraph 15 does not accomplish such an incorporation. And in arguing that
we should hold otherwise, DEF is, in essence, asking us to “revise [the Transition
Agreement] under the guise of construing it.” (Citations and punctuation omitted.)
Bearoff, 350 Ga. App. at 834 (1). It is, however, “the function of the court to construe
the contract as written and not to make a new contract for the parties.” (Citation and
punctuation omitted.) Roquemore v. Burgess, 281 Ga. 593, 595 (642 SE2d 41) (2007).
21 (b) As BMLG acknowledges in its reply brief, the trial court did not make any
rulings on DEF’s argument that BMLG could be compelled to arbitrate under the
theories of identity of interest and successor liability. As a court of review, however,
this Court “is for the correction of errors of law” made by the trial courts. Trident
Wholesale v. Brown, 370 Ga. App. 505, 511 (1) (897 SE2d 610) (2024). “An error of law
has as its basis a specific ruling made by the trial court.” (Citation and punctuation
omitted.) Felix v. State, 271 Ga. 534, 539 (523 SE2d 1) (1999). Thus, when “the trial
court has not ruled on an issue, we will not address it.” (Punctuation and footnote
omitted.) Trident Wholesale, 370 Ga. App. at 511 (1). See also Waters v. Glynn County,
237 Ga. App. 438, 441 (4) (514 SE2d 680) (1999) (“Where a trial court does not rule
on an issue, it remains outside the jurisdiction of this Court and we cannot consider
it.”) Accordingly, we vacate the trial court’s denial of summary judgment and remand
for the lower court to address, in the first instance, the merits of DEF’s arguments on
this alternate basis for compelling arbitration.
3. In its final enumeration of error, BMLG asserts that the trial court erred in
finding that BMLG voluntarily submitted the question of arbitrability to the arbitration
22 panel. We agree with BMLG, and we address this enumeration of error more fully
below, in conjunction with the cross-appeal in Case No. A24A1798.2
Case No. A24A1798
4. In its cross-appeal, DEF contends that even if BMLG was not otherwise
bound by the arbitration agreement, the trial court erred in allowing BMLG to
relitigate the issue of arbitrability de novo. More specifically, DEF contends that
because BMLG voluntarily submitted to the arbitrators the question of whether it
could be made a party to the arbitration, BMLG was bound by the arbitrators’ decision
on that issue. Thus, DEF argues that BMLG “could only challenge the [arbitrators’
decision] on the limited statutory bases for vacating [arbitration] awards,” and the trial
court therefore erred in conducting a de novo review of the arbitrators’ decision. We
find no error.
As one federal court has observed, “[t]here are three types of disputes
concerning arbitration: (1) the merits of the dispute; (2) whether the parties agreed to
2 As the discussion infra in Division 4 makes clear, the trial court’s finding on this issue is inconsistent with its finding that DEF failed to come forward with “clear and unmistakable evidence” that BMLG agreed to have the question of arbitrability decided by the arbitrators, and that the arbitrators’ decision was therefore subject to de novo review. 23 arbitrate the merits; and (3) who has the primary power to decide whether the parties
agreed to arbitrate the merits.” (Citation, punctuation, and emphasis omitted.)
ConocoPhillips v. Local 13-0555 Steelworkers Intl. Union, 741 F3d 627, 630 (5th Cir.
2014). In First Options of Chicago v. Kaplan, 514 U. S. 938 (115 SCt 1920, 131 LEd2d
985) (1995), the United States Supreme Court held that the answer to the “who”
question dictates the standard of review to be applied by a court reviewing an
arbitrator’s decision as to whether a party can be compelled to arbitrate. The Court
explained:
Just as the arbitrability of the merits of the dispute depends upon whether the parties agreed to arbitrate that dispute, so the question “who has the primary power to decide arbitrability” turns upon what the parties agreed about that matter. Did the parties agree to submit the arbitrability question itself to arbitration? If so, then the court’s standard for reviewing the arbitrator’s decision about that matter should not differ from the standard courts apply when they review any other matter that parties have agreed to arbitrate. That is to say, the court should give considerable leeway to the arbitrator, setting aside his or her decision only in certain narrow circumstances. If, on the other hand, the parties did not agree to submit the arbitrability question itself to arbitration, then the court should decide that question just as it would decide any other question that the parties did not submit to arbitration, namely, independently.
24 (Citations and emphasis omitted.) 514 U. S. at 943 (II).
The Supreme Court further cautioned that in determining whether parties
agreed to have an arbitrator decide if a particular claim was subject to arbitration,
“[c]ourts should not assume that the parties agreed to arbitrate arbitrability unless
there is clear and unmistakable evidence that they did so.” (Citation and punctuation
omitted.) First Options, 514 U. S. at 944 (II). This is because “the law treats silence
or ambiguity about the question ‘who (primarily) should decide arbitrability’
differently from the way it treats silence or ambiguity about the question ‘whether a
particular merits -related dispute is arbitrable because it is within the scope of a valid
arbitration agreement[.]’” (Citations and emphasis omitted.) Id. at 944-945 (II).
Applying First Options, courts have held that “clear and unmistakable
evidence” of an agreement to submit the threshold question of arbitrability can be
found in one of two circumstances. First, the parties’ arbitration agreement may
delegate that question to the arbitrators. See Brown v. RAC Acceptance East, LLC, 303
Ga. 172, 175-176 (2) (a) (809 SE2d 801) (2018). Additionally, at least two federal
appellate courts have held that a party’s conduct may constitute clear and
unmistakable evidence of its consent to have the arbitrator decide whether a particular
25 claim is arbitrable. See Cleveland Elec. Illuminating Co. v. Utility Workers Union of
America, 440 F3d 809, 813 (II) (B) (1) (6th Cir. 2006) (holding that a party agreed to
allow the arbitrators to decide the scope of the arbitration clause where the party did
not question the arbitrators’ authority to do so until after arbitration was complete and
the award was appealed to the district court); Rock-Tenn Co. v. United Paperworkers
Intl. Union AFL-CIO, 184 F3d 330, 334 (III) (4th Cir. 1999) (party consented to
having arbitrators decide issue of arbitrability where it “vigorous[ly] participat[ed] on
the merits debate during the arbitration proceedings, and . . . utter[ly] fail[ed] during
those proceedings to challenge the arbitrator’s authority to determine the dispute, or
even to preserve the issue for resolution by the court”). Finally, on one occasion, this
Court has found conduct-based waiver of a party’s right to have a court, rather than
an arbitrator, decide the question of arbitrability. See Palaio v. Letson, 272 Ga. App.
119, 121 (611 SE2d 787) (2005) (affirming a trial court’s holding that by submitting the
arbitrability question to the arbitrator and obtaining a ruling on the same, a party
“‘implicitly agreed’ to arbitrate the issue of the arbitrator’s jurisdiction”).
Relying on the foregoing line of cases, DEF argues that BMLG waived its right
to have a court decide whether it could be subject to arbitration by: (i) responding to
26 the motion to add BMLG as a party to the arbitration without reserving its right to
have the issue decided by a court; and (ii) subsequently moving for reconsideration of
the arbitrators’ initial decision. DEF further contends that, given this evidence of
BMLG’s agreement to have the arbitrators decide the arbitrability question, the trial
court erred in reviewing de novo the question of whether BMLG could be made a
party to the arbitration. We disagree.
Notably, all of the cases relied on by DEF involved a situation where the dispute
centered on the scope of an arbitration agreement to which all parties were signatories.
Indeed, First Options is the only case we have found addressing the question of
whether defendants who were not otherwise parties to the arbitration agreement could
be compelled to arbitrate. First Options arose out of debts owed by Manuel Kaplan, his
wife, and his wholly-owned investment firm, MK Investments, Inc. (“MKI”). First
Options, 514 U. S. at 940. The workout agreement consisted of four documents, only
one of which contained an arbitration clause. Id. at 940-941. Although MKI had signed
the document containing the arbitration clause, neither of the Kaplans had. Id. at 941.
After the Kaplans and MKI failed to pay the debts owed it, First Options filed
arbitration claims against all three. Id. at 940. Arguing that First Options’s claims
27 against them were not subject to the arbitration agreement, the Kaplans filed
objections with the panel. Id. at 941. The arbitrators overruled the objections, finding
that even though the Kaplans were not signatories to the arbitration agreement, the
panel had the power to rule on the merits of the dispute. Id. The panel found in favor
of First Options, and the Kaplans appealed. Id. The district court confirmed the
arbitration award, but the Third Circuit reversed, finding that under the workout
agreement, the claims against the Kaplans were not subject to arbitration. Kaplan v.
First Options Chicago, 19 F3d 1503, 1513-1516 (V) (A) (3d Cir. 1994).
The Supreme Court affirmed both the Third Circuit’s de novo review of the
district court’s order as well as its conclusion that the claims against the Kaplans were
not subject to arbitration. In doing so, the Court rejected First Options’s argument
that “the Kaplans’ filing with the arbitrators a written memo objecting to the
arbitrators’ jurisdiction” evidenced their agreement to have the arbitrators decide the
question of arbitrability. 514 U. S. at 946 (II). Specifically, the Court held that
merely arguing the arbitrability issue to an arbitrator does not indicate a clear willingness to arbitrate that issue, i.e., a willingness to be effectively bound by the arbitrator’s decision on that point. To the contrary, insofar as the Kaplans were forcefully objecting to the arbitrators deciding their
28 dispute with First Options, one naturally would think that they did not want the arbitrators to have binding authority over them.
(Emphasis omitted.) Id. The Supreme Court further held that a party disputing an
arbitrator’s jurisdiction is not required “to get an independent court decision on the
question of arbitrability without arguing the issue to the arbitrators.” Id. And the
Court noted that under the circumstances, there was “no strong arbitration-related
policy favoring [arbitration]. After all, the basic objective in this area is not to resolve
disputes in the quickest manner possible, no matter what the parties’ wishes, but to
ensure that commercial arbitration agreements, like other contracts, are enforced
according to their terms, and according to the intentions of the parties.” (Citations
and punctuation omitted.) Id. at 947 (II).
Turning to the case at hand, the record shows that from the outset, BMLG took
the position that the claims against them were not subject to arbitration, and
strenuously objected to being added as parties. Nor did BMLG’s motion for
reconsideration of the arbitrators’ initial decision indicate an intent to be bound by
that decision. Instead, that motion reiterated BMLG’s position that it was not a party
to the arbitration agreement and that the question of arbitrability was for the court.
29 Given the evidence of record, and applying the rationale of First Options, we
find that the trial court did not err in conducting a de novo review of the arbitrators’
decision. See First Options, 514 U. S. at 946-947 (II). We further find that BMLG did
not agree to be bound by the arbitrators’ decision as to whether the claims against it
were subject to arbitration. See Lynn v. Lowndes Co. Health Svcs., LLC, 354 Ga. App.
242, 244 (1) (840 SE2d 623) (2020) (where a party challenged jurisdiction of the
arbitrator at the outset of the arbitration proceeding, she could appeal the arbitrator’s
decision even though the award favored her). See also Ribadeneira v. New Balance
Athletics, 65 F4th 1, 17 (II) (B) (2) (1st Cir. 2023) (“A jurisdictional objection, once
stated, remains preserved for judicial review absent a clear and unequivocal waiver.
An objection to [arbitration] therefore will not be deemed abandoned unless and until
the party making the objection clearly indicates its willingness to forego judicial
review.”) (citations and punctuation omitted); Lucey v. FedEx Ground Package
Systems, 305 Fed. Appx. 875, 878 (3d Cir. 2009) (“where a party objects to
arbitrability but nevertheless voluntarily participates in the arbitration proceedings,
waiver of the challenge to arbitral jurisdiction will not be inferred”) (citation and
30 For the reasons set forth above, we affirm the trial court’s application of a de
novo standard of review to the arbitration panel’s decision. We also affirm the trial
court’s holding that BMLG was not bound by the arbitrators’ decision on the question
of arbitrability. We vacate those portions of the trial court’s order applying equitable
estoppel to compel BMLG to arbitrate the underlying claims and denying BMLG’s
motion for summary judgment, and we remand the case for further proceedings
consistent with this opinion.
Judgment vacated and remanded in Case No. A24A1797; affirmed in Case No.
A24A1798. Gobeil and Pipkin, JJ., concur.