RICHARD JACKSON v. MARK STEVENSON

• Court: Court of Appeals of Georgia
• Decided: March 10, 2025
• Docket: A24A1853
• Status: Published

Opinion

FIFTH DIVISION MERCIER, C. J., MCFADDEN, P. J., and RICKMAN, P. J.

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 10, 2025

In the Court of Appeals of Georgia A24A1853. JACKSON et al. v. STEVENSON et al.

MCFADDEN, Presiding Judge.

Respondents Richard Jackson and several of his companies appeal the superior

court order confirming an arbitration award and entering judgment in favor of

claimants Mark Stevenson and his companies. The dispositive question before us is

whether RICSHA Real Estate LLC, an entity wholly owned and controlled by Jackson,

was properly added as a party to the arbitration.

The arbitrator found that claimant Stevenson’s “conspiracy claims against the

Respondents and RICSHA are based on the same general facts and circumstances,

arise from the same essential transaction or occurrence, are based on the same

operative facts, and are inherently intertwined with the other pending claims in this case” and so held that “RICSHA should be added as a party to afford complete relief

between all of these parties for the claims and counterclaims involved in this

arbitration.” We hold that the arbitrator’s findings are sustainable under evidence of

record, that his holding is sustainable under the controlling law, and so that the

superior court did not err in confirming the award. So we affirm.1

1. Background

The record shows that respondent Jackson and claimant Stevenson, through

various companies that each owned, were members of a real estate development joint

venture. The Jackson entities owned 70 percent of the venture and the Stevenson

entities owned 30 percent.

The venture was governed by two operating agreements that contained identical

sections requiring arbitration under the Federal Arbitration Act (“FAA”) of “[a]ny

dispute, controversy or claim arising out of or relating to” the agreements. Under a

separate consulting agreement, claimant Stevenson managed the operations of the

venture.

1 Oral argument was held in this case on October 15, 2024, and is archived on the court’s website. See Court of Appeals of Georgia, Oral Argument, Case No. A24A1853 (Oct. 15, 2024), available at https://vimeo.com/1020555896. 2 In 2022, the Jackson entities sought to terminate the venture. The operating

agreements provided that the member who wanted to end the relationship could

present a “Buy/Sell Notice” to the other member to buy them out or, at the other

member’s election, to sell their ownership interest to the other member. The

operating agreements required the transaction to close within 90 days after the right

to buy or sell had been exercised.

The Jackson entities offered to buy out the Stevenson entities’ interest for $3

million or to sell their own interest to the Stevenson entities for $7 million, along with

the Stevenson entities paying debt owed by the venture. The Stevenson entities opted

to buy out the Jackson entities. Less than a week later, Jackson informed Stevenson

that he was terminating the consulting agreement for cause.

The Stevenson entities (“claimants”) filed a demand for arbitration with the

American Arbitration Association under the arbitration clauses in the two operating

agreements. The claimants named Jackson and his companies as respondents.

Initially, the claimants sought the arbitrator’s supervision of the closing, but

once the deadline for the closing had expired, they amended their statement of claim

to allege that the respondents had engaged in misconduct to foil the closing. The

3 claimants asserted claims for, among other things, breach of contract, breach of

fiduciary duty, and aiding and abetting breaches of fiduciary duty. The respondents

filed a counterclaim seeking a declaration that their termination of the consulting

agreement was for cause because of the claimants’ mismanagement and fraud.

Eventually, the claimants sought to include RICSHA, another Jackson-owned

company, as a respondent. The claimants alleged that the respondents and RICSHA

had conspired to deprive the venture of valuable assets that were part of the venture

when the claimants agreed to buy the respondents’ interest for $7 million and that the

value of the the venture would be reduced by removal of those assets. The arbitrator

ordered RICSHA to be added.

After a six-day evidentiary hearing, the arbitrator issued a final award ruling

partly in favor of the claimants and partly in favor of the respondents. The arbitrator

found that the claimants’ management of the venture resulted in material financial

loss, authorizing termination of the consulting agreement.

The arbitrator also found, however, that the respondents breached the buy-sell

provision in the operating agreements in two ways. First, the arbitrator found that the

respondents improperly adjusted the venture’s finances by increasing the debt the

4 venture owed to a Jackson-owned company, which increased the amount the claimants

would have to pay at closing. Second, the arbitrator found that, after the claimants had

exercised the right to buy, the respondents improperly removed from the venture’s

balance sheet certain assets, specifically parcels and options to purchase parcels of

property, including one that was technically owned by now-respondent RICSHA but

which had always been recognized as an asset of the venture.

The net result was an award to the claimants. The arbitrator awarded the

claimants as compensatory damages $3,752,700 plus interest against the respondents

and RICSHA.

The claimants filed an application in superior court to confirm the award. Now-

respondent RICSHA filed an application to vacate the award and, 11 days later, a

separate motion to vacate the award. The other respondents answered the

confirmation application. More than two months later, the other respondents filed a

“notice of joinder” in RICSHA’s motion to vacate.

The superior court found that the respondents other than RICSHA “did not

file a timely and sufficient motion to vacate, so their purported opposition to

confirmation [was] barred by the FAA’s statute of limitation[ ].” The court found that

5 the arbitrator did not exceed his powers by including RICSHA as a party to the

arbitration, and so denied its motion to vacate the award. The court granted the

application to confirm the award, and RICSHA and the other respondents filed this

appeal.

2. Applicable law

The FAA, 9 USC § 1 et seq., applies to the arbitration at issue in this appeal.

The arbitration clauses in the operating agreements “provided — and the parties [to

the appeal] do not question — that [the] arbitration would proceed pursuant to the

[FAA]. . . .” Wells Fargo Clearing Svcs. v. Leggett, 365 Ga. App. 8, 9 (876 SE2d 888)

(2022). “When the FAA applies, as it does here, it must be applied using federal

substantive law.”SunTrust Bank v. Lilliston, 302 Ga. 840, 842 (809 SE2d 819) (2018)

(citation and punctuation omitted).

“On appeal, we review the superior court’s conclusions of law de novo and its

factual findings for clear error.” Wells Fargo, 365 Ga. App. at 10-11. See also Adventure

Motorsports Reinsurance v. Interstate Nat. Dealer Svcs., 313 Ga. 19, 25 (1) (867 SE2d

115) (2021) (“In reviewing a trial court’s order confirming or vacating an arbitration

6 award, the appellate court reviews de novo the trial court’s resolution of questions of

law.”).

The trial court’s review of an arbitration award in a confirmation proceeding

is strictly limited. “It is well established under both federal and Georgia law that

judicial review of an arbitration is among the narrowest known to the law.”Berger v.

Welsh, 326 Ga. App. 290, 291 (1) (756 SE2d 545) (2014) (citations and punctuation

omitted). The FAA does not allow courts “to conduct general review for an

arbitrator’s legal errors in deciding whether to enforce an arbitration award[.]” Brown

v. RAC Acceptance East, 303 Ga. 172, 177 (2) (c) (809 SE2d 801) (2018) (citation and

punctuation omitted). “Under the FAA, courts may vacate an arbitrator’s decision

only in very unusual circumstances.” Oxford Health Plans v. Sutter, 569 U. S. 564, 568

(II) (133 SCt 2064, 186 LE2d 113) (2013) (citation and punctuation omitted).

“When presented with a petition to confirm an arbitration award, a trial court

may not inquire into the merits of the dispute or consider the sufficiency of the

evidence. A confirmation proceeding does not create a forum for relitigating arbitrated

issues.” Lanier Worldwide v. BridgeCenters at Park Meadows, 279 Ga. App. 879, 881 (1)

(633 SE2d 49) (2006) (citations and punctuation omitted). See generally Johnson v.

7 Directory Assistants, 797 F3d 1294, 1302 (III) (D) (11th Cir. 2015) (“mere

disagreement with an arbitrator’s legal or factual determinations does not justify

vacatur under [9 USC] § 10 (a) (4)”). See also Major League Baseball Players Assn. v.

Garvey, 532 U. S. 504, 509 (121 SCt 1724, 149 LE2d 740) (2001) (“the arbitrator’s

improvident, even silly, factfinding does not provide a basis for a reviewing court to

refuse to enforce the award”) (citation and punctuation omitted).

We reject the respondents’ and RICSHA’s argument that we review de novo

the arbitrator’s decision to include RICSHA in the arbitration. They cite Waddell v.

Holiday Isle, No. CIV. A. 09-0040-WS-M, 2009 WL 2413668, at *8 (II) (A) (1) (S.D.

Ala. Aug. 4, 2009), an unpublished opinion from the United States District Court for

the Southern District of Alabama. That case involved the resolution of a claim that the

arbitrator exceeded his powers by including two individuals who were not parties to

the arbitration agreement. But the district court was not considering the arbitrator’s

ruling on the issue, because the arbitrator did not rule on the issue: the individuals

never raised the issue in the arbitration proceedings, they consented to arbitrate, they

participated in the arbitration, and they never suggested opposition to arbitration. Id.

8 at *8-9. So, unlike here, there was no fact finding or reasoning of the arbitrator to defer

to and the district court was deciding the issue in the first instance.

3. Inclusion of RICSHA in the arbitration

RICSHA and the other respondents argue that the superior court erred in

confirming the award because the arbitrator exceeded his powers by including

RICSHA in the arbitration. We hold that the superior court did not err in confirming

the award.

The FAA provides four grounds for vacating an arbitration award, including the

ground at issue here: “where the arbitrators exceeded their powers, or so imperfectly

executed them that a mutual, final, and definite award upon the subject matter

submitted was not made[.]” 9 USC § 10 (a) (4).

In light of the federal policy favoring arbitration at work here, the [c]ourt’s task is to resolve all doubt in favor of the arbitrator’s authority to award a particular remedy. This approach is fully consistent with the presumption of correctness afforded arbitration awards and the summary nature of court confirmation of such awards. In fact, the 9 USC[ ] § 10 (a) (4) prohibition against arbitrators’ exceeding their powers is to be accorded the narrowest of readings.

9 Hilliard v. J. C. Bradford & Co., 229 Ga. App. 336, 342-343 (4) (citations and

punctuation omitted). “Our inquiry focuses on whether the arbitrator[ ] had the

power based on the parties’ submissions or the arbitration agreement, to reach a

certain issue, not whether the arbitrator[ ] correctly decided that issue.”Banco de

Seguros del Estado v. Mut. Marine Office, 344 F3d 255, 262 (IV) (A) (2d Cir. 2003)

(citation and punctuation omitted). Indeed, an arbitration award should be confirmed

“despite a court’s disagreement with it on the merits, if there is a barely colorable

justification for the outcome reached.” Id. at 260 (I) (citation and punctuation

omitted). See generally Johnson, 797 F3d at 1302 (III) (D) (11th Cir. 2015)

(disagreement with an arbitrator’s factual and legal conclusions does not justify

vacatur under 9 USC § 10 (a) (4)).

RICSHA and the other respondents argue that the arbitrator exceeded his

powers in forcing RICSHA to arbitrate since RICSHA did not sign either operating

agreement containing the arbitration clause. As the superior court found in confirming

the award, the law allowed the arbitrator to join RICSHA.

“[N]othing in the FAA purports to alter background principles of state contract

law regarding the scope of agreements (including the question of who is bound by

10 them).” Salinas v. Atlanta Gas Light Co., 347 Ga. App. 480, 482-483 (1) (819 SE2d

903) (2018) (citation and punctuation omitted) (quoting Arthur Andersen LLP v.

Carlisle, 556 U. S. 624, 630 (III) (129 SCt 1896, 173 LE2d 832) (2009)). See also

Lawson v. Life of the South Ins. Co., 648 F3d 1166, 1170-1171 (II) (11th Cir. 2011) (“the

applicable state law provides the rule of decision for that question”). Those

“traditional principles of state law allow a contract to be enforced by or against

nonparties to the contract through assumption, piercing the corporate veil, alter ego,

incorporation by reference, third-party beneficiary theories, waiver and estoppel.”

Arthur Anderson, 556 U. S. at 631 (III) (citation and punctuation omitted; emphasis

added).

RICSHA and the other respondents argue that the arbitrator based his decision

to add RICSHA on only two grounds: 1) because RICSHA is wholly owned and

controlled by Jackson; and 2) because the claimants’ claims against RICSHA were

inherently intertwined with their claims against the signatory respondents. So, they

argue, the arbitrator did not find that any of the limited, traditional principles of state

law had been met. On the contrary, the arbitrator applied principles of estoppel, a legal

theory raised by the claimants in the arbitration, although he did not use that word,

11 and the superior court confirmed the award based on those principles. See Hilliard,

229 Ga. App. at 340 (2) (“as a general rule, arbitrators are free to apply broad

principles of justice and good conscience and decide according to their concept or

notion of justice”).

The arbitrator found the following regarding adding RICSHA:

[T]here has been good cause shown that RICSHA should be added as a party to this arbitration. RICSHA, the entity that held the option for the Real Estate Venture to buy [one of the parcels] at cost, which option Respondents now contend is invalid, is wholly owned and controlled by Respondent Jackson. . . . Claimants’ conspiracy claims against the Respondents and RICSHA are based on the same general facts and circumstances, arise from the same essential transaction or occurrence, are based on the same operative facts, and are inherently intertwined with the other pending claims in this case, and . . . RICSHA should be added as a party to afford complete relief between all of these parties for the claims and counterclaims involved in this arbitration.

The superior court, in turn, found that the arbitrator had considered allegations

and evidence of collusion between RICSHA and the other respondents and that the

claims arising from RICSHA’s concerted misconduct were intertwined with the other

respondents’.

12 “[A]pplication 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 nonsignatory and one or more

of the signatories to the contract.” Order Homes, LLC v. Iverson, 300 Ga. App. 332,

338–339 (2) (685 SE2d 304) (2009) (citation and punctuation omitted). See also SCSJ

Enterprises v. Hansen & Hansen Enterprises, 319 Ga. App. 210, 213 (2) (a) (734 SE2d

214) (2012) (physical precedent only) (rejecting argument that arbitrator exceeded his

authority by issuing an award against a nonparty to the arbitration agreement and

holding that “under both the Georgia Arbitration Code and federal law, in certain

circumstances, the theory of equitable estoppel provides a means of bringing a

nonsignatory within the terms of an arbitration agreement”) (citation and punctuation

omitted); Helms v. Franklin Builders, 305 Ga. App. 863, 866 (700 SE2d 609) (2010)

(“[U]nder both the [Georgia Arbitration Code] and federal law, in certain

circumstances, the theory of equitable estoppel provides a means of bringing a

nonsignatory within the terms of an arbitration agreement.”). Equitable estoppel

“applie[s] when there is a tight relatedness of the parties, contracts, and

controversies.” 21 Williston on Contracts § 57:19 (4th ed.).

13 The principles of this kind of estoppel have been applied in the context of

arbitration in Georgia. For example, in Order Homes, 300 Ga. App. 332, we held that

nonsignatories to the arbitration agreement could compel the signatory claimants to

arbitrate their claims against the other signatory as well as nonsignatories when the

claimants alleged interdependent claims and concerted misconduct between a

signatory and the nonsignatories. Id. at 339 (2). See also Price v. Ernst & Young, LLP,

274 Ga. App. 172, 176 (2) (617 SE2d 156) (2005); Lankford v. Orkin Exterminating Co.,

266 Ga. App. 228, 231-232 (3) (597 SE2d 470) (2004); Autonation Financial Svcs.

Corp. v. Arain, 264 Ga. App. 755, 759 (3) (592 SE2d 96) (2003) (physical precedent

only). “Otherwise, the arbitration proceedings between the two signatories would be

rendered meaningless and the federal policy in favor of arbitration effectively

thwarted.” Autonation, 264 Ga. App. at 759 (3) (physical precedent only) (citation and

punctuation omitted).

Although these cited cases involved nonsignatories seeking to compel

signatories to arbitrate, the courts did not confine their holdings to those

circumstances. And, as noted above, in Salinas, 347 Ga. App. 480, we held that

“[e]ven where an arbitration agreement is governed by federal law, traditional

14 principles of state law allow a contract to be enforced . . . against nonparties to the

contract through . . . estoppel.” Id. at 485–486 (2) (citation and punctuation omitted;

emphasis added).

Other courts have applied these principles to compel arbitration against a

nonsignatory to the contract containing the arbitration provision. See Romney v.

Franciscan Med. Group, 349 P3d 32, 42 (Wash. Ct. App. 2015) (“Where claims are

based on the same set of facts and inherently inseparable, the court may order

arbitration of claims against the party even if that party is not a party to the arbitration

agreement.”). And the Eleventh United States Circuit Court of Appeals has

acknowledged that Georgia law allows it. Lawson, 648 F3d at 1172 (II) (B) (holding

that under Georgia law, “[e]quitable estoppel allows a nonsignatory to an arbitration

agreement . . . to be compelled by a signatory to arbitrate under certain circumstances

in which fairness requires doing so”). See also Developers Sur. & Indem. Co. v.

Carothers Constr., No. 1:17-CV-1979-SCJ, 2018 WL 8996378, at *1 (N.D. Ga. Feb. 27,

2018) (same).

15 We conclude that the respondents and RICSHA have not shown that the

arbitrator exceeded his powers, 9 USC § 10 (a) (4), or that the superior court’s ruling

confirming the award is erroneous. Hilliard, 229 Ga. App. at 341 (2).

3. Other issues

Because we hold that the superior court did not err in confirming the award, we

do not reach the other issues raised in this appeal. RICSHA and the other respondents

argue that the award is indivisible and so that, because the award against RICSHA was

erroneous, the entire award, not just the erroneous award against RICSHA, must be

vacated. But since we conclude that the award against RICSHA was not erroneous,

this argument is moot. The respondents other than RICSHA argue that the superior

court erred by finding that they had waived appellate review and that only RICSHA

had timely challenged the award. Since those respondents’ claims on appeal are the

same as RICSHA’s, and we have considered those claims, rejected them, and affirm

the confirmation of the award, we do not reach these issues.

We deny the claimants’ motion to dismiss this appeal and their “motion for

delay damages.”

Judgment affirmed. Mercer, C. J., and Rickman, P. J., concur.