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A Publication of the Georgia Office of Dispute Resolution

  
 
Case Watch For Arbitrators:

Under GAC, Court Authority to Modify Awards is Limited

In a dispute between a client and her attorney, the client sought return of her retainer. She had engaged the attorney to handle a business dispute, and the engagement was between her and the attorney’s professional corporation.  In an arbitration conducted under the State Bar of Georgia’s Fee Arbitration Rules, the claimant was awarded her retainer of $2,500.  But when she filed to confirm the award, the trial court modified it by awarding against the attorney individually, instead of the professional corporation. The Court of Appeals reversed, holding in part that the trial court’s modification was not a change supported by O.C.G.A. § 9-9-12 and was not in conformity with the arbitration award.  Kent v. Mitchell, A12A1144 (11/30/2012).  Rather, the appeals court said that the trial court did not have the authority to change the party against whom the award was made.

The Court of Appeals noted that the attorney whom the client had dealt with may have been the individual attorney, but for purposes of the arbitration the court claim distinguished the legal entity with whom the fee agreement had been contracted from the individual attorney.  “[A] claim against his professional corporation is not automatically a claim against him too,” the court wrote.

Next the appellate court directed that while trial courts may modify arbitration awards under the statute, the substantive terms of the arbitrator’s award apply and that “judgment must be entered in conformity with the award”:
 

 

Changing parties to the award is a substantive modification. … When the trial court entered  judgment against Kent individually, it substantively modified the arbitration award.

  

 

The record before the Court of Appeals did not provide any rationale for the trial court’s change in the confirmation order.  Further the Court stated that the client had failed to provide any additional materials to supplement the record that would permit the trial court to change the arbitration award’s identified parties:
 

 

In every case, the appellee has ample opportunity to designate anything in the record or the transcript of the evidence that has not been designated by the appellant.

  

A dissenting opinion noted that the attorney had admitted in his answer that he had presented evidence at the fee hearing and found that the record in fact did support confirmation of the award against the attorney individually.  In addition, the dissent quoted an earlier case stating that lawyers practicing as a professional corporation “still owe a duty to client and remain personally liable to them for acts of professional negligence.”  The dissent said the state bar defines “lawyer” as a person authorized to practice law in the state of Georgia, and thus the attorney should remain bound by his agreement and personally liable.

NOTE TO GEORGIA ARBITRATORS: This is a case brought under the fee arbitration rules of the State Bar, but it does provide an interpretation of the GAC provision dealing with the authority of a court to “modify” awards.  Implicit in the decision is that the term “modified” under O.C.G.A. § 9-9-12 contemplates a very limited act; O.C.G.A. § 9-9-14 states that such modifications are only valid if they do not affect the merits of the decision.  Accordingly, in fee awards, arbitrators probably should provide a reasoned award naming the attorney as well as the LLC if the intent is that both are subject to the enforcement actions.
 













 

John Allgood is of counsel at Ford & Harrison.  For more than 20 years he has arbitrated and mediated cases in commercial, employment, construction and securities law, as well as in real estate and anti-trust matters.  An adjunct professor of ADR at Emory University School of Law, he was a member of the U.S. Olympic Committee panel of arbitrators during the 1996 and 1998 Olympic Games.

Phone: 404-888-3832; fax: 404-888-3863;