Court Opinion

ID: 4016453
Source: CourtListenerOpinion
Date Created: 2016-07-18 07:05:01.88807+00
Date Added: 2024-06-11T12:17:42.841161
License: Public Domain

THIRD DIVISION
                           MILLER, P. J.,
                     MCFADDEN and MCMILLIAN, 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.
                              http://www.gaappeals.us/rules

                                                                     July 12, 2016

In the Court of Appeals of Georgia
 A16A0632. ABDALLA v. ATLANTA                            NEPHROLOGY
     REFERRAL CENTER, LLC et al.

      MILLER, Presiding Judge.

      Mazen Abdalla is a physician and former member of the Atlanta Nephrology

Referral Center (“ANRC”). In 2006, Abdalla’s membership in ANRC was terminated,

and he filed suit for breach of contract and fraud against ANRC and its remaining

members, Drs. Karen Muro, Ze’ev Sharon, Hesun Han, and Dinesh Chatoth

(collectively “ANRC”). Abdalla’s breach-of-contract claim was transferred to

arbitration, while his fraud claims went to a jury trial where ANRC prevailed. The

trial court later awarded attorney fees to ANRC in the amount of $236,686.64 under

the offer-of-settlement statute, OCGA § 9-11-68. Abdalla now appeals from that
order. For the reasons that follow, we vacate the fee awards under § 9-11-68 and

remand this case for further proceedings consistent with this opinion.

      As relevant to this appeal, the record shows that Abdalla joined ANRC in 1996.

In 1998, he became a member pursuant to an agreement dictating the operating terms

of ANRC’s practice (“the 98 Agreement”).

      In 2006, the ANRC members entered into a new agreement (“the Amended

Agreement”). Abdalla received a copy of the Amended Agreement and signed it in

March 2006. On May 9, 2006, the members of ANRC held a meeting and terminated

Abdalla’s membership under the Amended Agreement due to “ongoing patterns of

misconduct . . . and the ill effects of such behavior on [ANRC’s] medical practice.”

      Four years later, Abdalla filed his complaint for the inter-related claims of

fraud and breach of contract against ANRC, alleging that he was improperly

terminated under the terms of the 98 Agreement. ANRC filed a counter-claim for

breach of fiduciary duty, and moved to compel arbitration on all claims. Abdalla

agreed that the contract claim was subject to arbitration, but he contended that he

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could not be compelled to arbitrate his fraud claim. The trial court agreed and allowed

the fraud claim to proceed to a jury trial.1

         In May 2013, ANRC offered Abdalla $600,000 under the offer-of-settlement

statute, OCGA § 9-11-68, to settle all claims arising out of his termination, but

Abdalla rejected this offer. Following a nine-day trial, the jury returned a verdict in

favor of ANRC on Abdalla’s fraud claims and awarded $10 to ANRC on its counter-

claim.

         Thereafter, ANRC moved for attorney fees in the amount of $236,686.64 under

OCGA § 9-11-68 based on Abdalla’s rejection of its pretrial settlement offer. The

trial court granted ANRC’s motion for fees under § 9-11-68 and awarded the

requested amount because Abdalla recovered nothing at trial.

         In his sole enumeration of error in this appeal, Abdalla argues that the trial

court erred in prematurely awarding attorney fees under OCGA § 9-11-68, the offer-

         1
         After ordering the contract claims to arbitration, the trial court issued a
certificate of immediate review, and this Court granted interlocutory review. In
October 2011, this Court determined that interlocutory review was improvidently
granted, and dismissed the appeal, stating, “While we make no ruling on the merits,
we observe that the potential for inconsistent results can be avoided if the trial court
rules on the merits of Abdalla’s fraud claim before an arbitrator considers the breach
of contract claim.” Essentially, this is what transpired because the jury returned a
verdict for ANRC and the trial court awarded fees for bad faith and pursuant to an
offer of settlement that was rejected by Abdalla.

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of-settlement statute, while the arbitration portion of his case is currently

outstanding.2 As an initial matter, we note that we need not decide whether a

defendant can recover fees under § 9-11-68 based on a settlement offer that

encompasses both litigated tort claims and claims subject to arbitration because the

only issue Abdalla raises on appeal is that the award is premature.3 Although Abdalla

rejected ANRC’s settlement offer, and the jury found in ANRC’s favor, given the

unique circumstances of this case, we are constrained to agree that the award of fees

under § 9-11-68 is premature.

      “We apply a de novo standard of review when an appeal presents a question

of law regarding whether the trial court correctly interpreted and applied” the statute.

(Citation omitted.) Tiller v. RJJB Assoc., LLP, 331 Ga. App. 622, 623 (770 SE2d 883)

(2015).

      2
        Notably, it does not appear from the record that Abdalla has arbitrated his
contract claim.
      3
        Abdalla argued in the trial court that ANRC’s offer to settle litigated tort
claims and arbitrable contract claims did not qualify as an offer made under OCGA
§ 9-11-68, however, he did not raise that argument on appeal and thus it is deemed
abandoned and not preserved for review. See 134 Baker St., Inc. v. State, 172 Ga.
App. 738, 741 (5) (324 SE2d 575) (1984) (“grounds raised at trial but not argued
before this court are deemed abandoned”); Court of Appeals Rule 25.

                                           4
      This case involves multiple statutory provisions which are intended to expedite

dispute resolution and reduce the burden on the courts of this state: the Arbitration

Code, codified at OCGA § 9-9-1, et. seq., and the offer-of-settlement statute, codified

at OCGA § 9-11-68. Unfortunately, Abdalla has frustrated the purpose of these two

important laws and, due to the unusual procedural posture of this case, we are without

power to fully remedy the situation at this juncture. We are placed in this untenable

position because the trial court decided to bifurcate Abdalla’s claims, despite their

interrelated nature, and to conduct a jury trial on his fraud claim prior to arbitration

of his contract claim without taking steps to ensure prompt arbitration. Indeed, on

November 10, 2010, the trial court ordered that Abdalla’s contract claim be arbitrated,

however, it appears that as of today Abdalla has still taken no steps to comply with

that order and has done so without consequence. As a result, we are now confronted

with a case which has maximized, rather than minimized, judicial resources, and we

are confronted with a litigant – Abdalla – who has been all too willing to take

advantage of the situation. With the benefit of hindsight as to the manner in which

Abdalla would conduct himself during the course of this dispute, we likely could have

avoided this dilemma had this Court ruled on the merits of the first appeal so that the

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fraud and interrelated contract claim could have been arbitrated together. See fn 1,

supra.

         As our Supreme Court has recognized, “the purpose of arbitration is to avoid

the courts for dispute resolution.” Hardin Const. Group., Inc. v. Fuller Enterprises,

Inc., 265 Ga. 770, 771 (462 SE2d 130) (1995). Further, Georgia has a “strong public

policy of encouraging negotiations and settlements.” Georgia Dept. of Corrections

v. Couch, 295 Ga. 469, 471 (1) (b) (759 SE2d 804) (2014). Moreover, the “clear

purpose of OCGA § 9-11-68 is to encourage litigants in tort cases to make and accept

good faith settlement proposals in order to avoid unnecessary litigation.” (Citation

and punctuation omitted.) Canton Plaza, Inc. v. Regions Bank, Inc., 325 Ga. App.

361, 363 (2) (749 SE2d 825) (2013); see also OCGA § 9-11-68 (a). Although the

Arbitration Code and the offer-of-settlement statute have similar purposes of

minimizing litigation, they operate at cross-purposes in this litigation and serve to

undermine the good will intended in each statute. It does not appear that the

legislature contemplated this interaction.

         Faced with bifurcated proceedings, ANRC made a purported OCGA § 9-11-68

offer of settlement to resolve all potential claims by Abdalla. Accordingly, we are

now forced to determine whether ANRC is entitled to fees under the statute at the

                                             6
conclusion of the tort trial, or if the award is premature while the contract claim

remains to be arbitrated.

      Under § 9-11-68, where an offer of settlement is made by the defendant and

rejected by the plaintiff,

      the defendant shall be entitled to recover reasonable attorney’s fees and
      expenses of litigation incurred by the defendant or on the defendant’s
      behalf from the date of the rejection of the offer of settlement through
      the entry of judgment if the final judgment is one of no liability or the
      final judgment obtained by the plaintiff is less than 75 percent of such
      offer of settlement.

OCGA § 9-11-68 (b) (1).

      We fail to see how Abdalla could prevail on his contract claim in light of the

jury’s outright rejection of his fraud claim. The jury’s verdict stands. Nevertheless,

as long as the arbitration claim remains pending we cannot say unequivocally that

Abdalla will fail to recover at least 75 percent of ANRC’s offer of settlement. Under

OCGA § 9-11-68 (d) (1) “[t]he court shall order the payment of attorney’s fees and

expenses of litigation upon receipt of proof that the judgment is one to which . . . this

Code section appl[ies].” Until we know the outcome of the arbitration proceeding

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with a judgment certain, we do not have proof that the code section applies, thus any

award at this stage is premature.

      We are cognizant of the amount of time and effort expended in this litigation

and how Abdalla and his counsel’s conduct have frustrated the purposes of both the

Arbitration Code and the offer-of-settlement statute. Our conclusion here should not

be taken as approval of such delay tactics. In fact, we do not condone these tactics

and wish to prevent any future litigants, to the extent possible, from proceeding in

this manner. On remand we encourage the parties and the trial court to swiftly bring

this matter to a conclusion.

      Accordingly, we vacate the award of fees under the offer-of-settlement statute,

OCGA § 9-11-68, as premature, and remand for further proceedings.

      Judgment vacated and remanded. McFadden and McMillian, JJ., concur.

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