Court Opinion

ID: 3148765
Source: CourtListenerOpinion
Date Created: 2015-10-22 20:06:00.570849+00
Date Added: 2024-06-11T12:47:11.007557
License: Public Domain

SECOND DIVISION
                               ANDREWS, P. J.,
                           MILLER and BRANCH, 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

                                                                   October 21, 2015

In the Court of Appeals of Georgia
 A15A1062. BILBO v. FIVE STAR ATHLETE MANAGEMENT,
     INC.

      MILLER, Judge.

      Damarius Bilbo filed a petition to confirm an arbitration award he obtained

against Five Star Athlete Management (“Five Star”) and to arbitrate the issue of

allegedly unpaid attorney fees. Five Star filed an untimely answer and moved to

dismiss Bilbo’s petition and to stay arbitration. After Five Star’s ability to open

default as a matter of right extinguished, Bilbo moved for a default judgment. Five

Star subsequently moved to open the default. Following a hearing, the trial court

granted Five Star’s motion to open default, denied Bilbo’s motion for default

judgment, and granted Five Star’s motion
to dismiss and stay arbitration. Bilbo appeals, contending that the trial court erred in

denying his motion for default judgment and granting Five Star’s motion to open

default and in dismissing his petition. For the reasons that follow, we conclude that

the trial court was correct in opening the default. The trial court erred in granting Five

Star’s motion to dismiss Bilbo’s petition to the extent Bilbo sought to confirm the

arbitration award, however, the trial court did not err in granting Five Star’s motion

to dismiss to the extent Bilbo sought additional attorney fees because the additional

fees were not awarded by the arbitrator. Consequently, we affirm in part and reverse

in part.

       “In ruling on a motion to dismiss, the trial court must accept as true all well-

pled material allegations in the complaint and must resolve any doubts in favor of the

plaintiff. We review the trial court’s ruling de novo.” (Citations omitted.) Roberson

v. Northrup, 302 Ga. App. 405 (691 SE2d 547) (2010).

       So viewed, the petition shows that Bilbo and Five Star, his former employer,

had a dispute about a non-compete agreement executed by Bilbo. The parties entered

into a settlement agreement (the “Agreement”), which contained a provision

(“Paragraph 3”) that required Bilbo to, among other things, not make disparaging

remarks about Five Star and to keep the terms of the Agreement confidential. The

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parties agreed that the sole and exclusive method for resolving any dispute under

Paragraph 3 would be through an alternative dispute procedure.

      In August 2013, Five Star initiated an arbitration, claiming Bilbo had breached

the confidentiality and non-disparagement provisions of the Agreement. The

arbitrator held a hearing and asked both parties to submit affidavits regarding their

attorney fees. Bilbo’s attorney averred that Bilbo had incurred a total of $121,927 in

attorney fees and approximately $8,807 in other legal costs, and that he expected

additional expenses before arbitration was complete.

      Thereafter, on December 12, 2013, the arbitrator entered a final arbitration

order, ruling in Bilbo’s favor and ordering Five Star to pay amounts due under the

Agreement, as well as the attorney fees and litigation costs in the amount listed in

Bilbo’s counsel’s affidavit.

      On January 6, 2014, Five Star sent a letter to the arbitrator asking him to stay

the arbitration award based on newly discovered evidence and to recuse from the case

because of alleged bias (“Motion to Stay Arbitration Award”). The arbitrator denied

Five Star’s Motion to Stay Arbitration Award, but granted its request that he recuse.

Thereafter, in April 2014, Bilbo asked the arbitrator to order Five Star to pay attorney

fees he incurred by responding to Five Star’s Motion to Stay Arbitration Award and

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for attorney fees he incurred during arbitration that were not previously awarded.

Citing his recusal, the arbitrator declined to rule on Bilbo’s motion for additional

attorney fees.

       Bilbo then filed the current petition in the trial court on May 2, 2014, and

served the petition on Five Star on May 5, 2014. In his petition, Bilbo conceded that

Five Star made the final payment under the Agreement and paid “most” of his

attorney fees. Bilbo, however, claimed that he was entitled to recover additional

attorney fees he incurred in responding to Five Star’s Motion to Stay Arbitration

Award and fees incurred during arbitration that had been contemplated in counsel’s

affidavit. Bilbo asked the trial court to confirm the arbitration award and to compel

arbitration on the unpaid attorney fees incurred during arbitration.

      Five Star filed its answer on June 5, 2014, one day late, automatically placing

the case in default. That same day, Five Star filed its motion to dismiss Bilbo’s

petition and to stay arbitration. Bilbo subsequently filed his motion for default

judgment after Five Star’s time to open default as a matter of right expired, and Five

Star responded by moving to open default. Following a hearing, the trial court granted

Five Star’s motion to open default, denied Bilbo’s motion for default judgment and

granted Five Star’s motion to dismiss Bilbo’s petition.

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         1. On appeal, Bilbo contends that the trial court erred in denying his motion for

default judgment and in granting Five Star’s motion to open default. We discern no

error.

                OCGA § 9-11-55 (b) authorizes a trial court, in its discretion, to
         open a prejudgment default at any time before final judgment on one of
         three grounds, so long as four conditions are met. The three grounds are
         providential cause, excusable neglect, and proper case. The four
         required conditions are (a) a showing made under oath; (b) an offer to
         plead instanter; (c) an announcement of ready to proceed to trial; and (d)
         the setting up of a meritorious defense.

(Citations and punctuation omitted.) ABA 241 Peachtree, LLC v. Brooken &

McGlothen, LLC, 302 Ga. App. 208, 210 (1) (690 SE2d 514) (2010). “Compliance

with the four conditions, including the necessity of setting up a meritorious defense,

however, is a condition precedent; absent the showing of a meritorious defense, a trial

court has no discretion to open a default.” (Citations omitted.) Butterworth v. Safelite

Glass Corp., 287 Ga. App. 848, 849 (1) (652 SE2d 877) (2007). On appeal, this

Court’s sole function in reviewing a trial court’s grant of a motion to open default is

to determine whether all the conditions set forth in OCGA § 9-11-55 have been

satisfied and, if so, whether the trial court abused its discretion based on the facts in

the case. See ABA 241 Peachtree, supra, 302 Ga. App. at 210 (1).

         (a) Conditions Precedent

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      With respect to the four conditions precedent, Bilbo argues only that Five Star

failed to assert a meritorious defense to his petition to confirm the arbitration award

because a trial court must confirm an arbitration award upon application filed within

one year of the award unless the award is vacated of modified. We disagree.

      A defendant can establish a meritorious defense “by showing that if relief from

default is granted, the outcome of the suit may be different from the result if the

default stands.” Exxon Corp. v. Thomason, 269 Ga. 761 (504 SE2d 676) (1998). This

test does not require a showing that the defendant will completely defeat the

plaintiff’s claim and is consistent with the strong public policy of deciding cases on

their merits. See Legacy Hills Residential Assn. Inc. v. Colonial Bank, 255 Ga. App.

144, 145 (564 SE2d 550) (2002).

      Here, in support of its motion to open default, Five Star asserted that Bilbo’s

petition to confirm the award was really a petition to modify the arbitration award

because Bilbo was seeking additional attorney fees not awarded by the arbitrator; and

his petition to modify was untimely. Indeed, in his petition, Bilbo not only sought to

confirm the arbitration award, but also sought additional attorney fees under the

Agreement. As correctly determined by the trial court, Bilbo was attempting, at least

in part, to modify the arbitration award, and his petition in this respect was untimely

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because it was filed nearly five months after the arbitration award was delivered to

him. OCGA § 9-9-14 (“An application to modify the award shall be made to the court

within three months after delivery of a copy of the award to the applicant”); see also

Fulton County v. Lord, 323 Ga. App. 384, 391 (2) (746 SE2d 188) (2013). Thus, the

trial court did not err in finding that Five Star established a meritorious defense to the

petition.

        (b) Grounds to Open Prejudgment Default

        As explained above, if the four conditions precedent are met, a trial court may

open a prejudgment default for providential cause or excusable neglect, or in a proper

case. OCGA § 9-11-55 (b). Bilbo contends that the trial court erred because it did not

specifically determine whether Five Star established excusable neglect or a proper

case.

        It is true that the trial court’s order does not specify the ground on which

opened the default. Contrary to Bilbo’s assertion, this omission does not require

reversal. Georgia appellate courts will affirm a trial court’s decision to open the

default if the record sustains that decision under any of the three statutory grounds.

See Henderson v. Quadramed Corp., 260 Ga. App. 680, 682 (2) (580 SE2d 542)

(2003). Where the trial court’s order is silent on the issue, we may presume that the

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trial court’s decision to open default was based on the “proper case” ground, which

is the broadest of the three grounds. Johnson v. American Nat. Red Cross, 253 Ga.

App. 587, 590 (1) (569 SE2d 242) (2002). This ground is designed to “reach[] out to

take in every conceivable case where injustice might result if the default were not

opened[.]” (Citation omitted.) Henderson, supra, 260 Ga. App. at 682 (2).

      Here, the record shows, and the trial court specifically found, that Five Star

filed its answer one day late, and promptly moved to open the default after

discovering its error in calculating the due date. Under these circumstances, we

cannot say that the trial court abused its discretion by opening the default and

allowing the case to proceed on the merits. See ABA 241 Peachtree, supra, 302 Ga.

App. at 211 (1) (trial court did not abuse its discretion in opening default based on

proper case ground where, like here, the default was the result, not of failing to file

an answer, but of a one-day miscalculation of the due date); Albee v. Krasnoff, 255

Ga. App. 738, 740-741 (1) (566 SE2d 455) (2002) (trial court did not abuse its

discretion in opening default where defendant promptly filed materials necessary to

open default, plaintiff failed to raise default issue until defendant’s time to open

default as a matter of right expired, and defendant had a reasonable excuse for failing

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to file answer). Therefore, the trial court did not err in granting Five Star’s motion to

open default and denying Bilbo’s motion for default judgment.

       2. Bilbo also contends that the trial court erred in denying his petition to

confirm and in granting Five Star’s motion to dismiss and stay arbitration. We agree,

in part.

       Under the Georgia Arbitration Code (“GAC”), OCGA § 9-9-1 et seq., a

reviewing court “shall confirm an award upon application of a party made within one

year after its delivery to [the party], unless the award is vacated or modified by the

court as provided in [the GAC].” OCGA § 9-9-12. Thus, a trial court is bound to

confirm an arbitration award unless one of the statutory grounds for vacating an

award as set forth in OCGA § 9-9-13 (b) is found to exist.1 See Greene v. Hundley,

       1
           The grounds for vacating an arbitration award are:

       (1) Corruption, fraud, or misconduct in procuring the award; (2)
       Partiality of an arbitrator appointed as a neutral; (3) An overstepping by
       the arbitrators of their authority or such imperfect execution of it that a
       final and definite award upon the subject matter submitted was not
       made; (4) A failure to follow the procedure of this part, unless the party
       applying to vacate the award continued with the arbitration with notice
       of this failure and without objection; or (5) The arbitrator’s manifest
       disregard of the law.

OCGA § 9-9-13 (b).

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266 Ga. 592, 596 (3) (468 SE2d 350) (1996); Brookfield Country Club, Inc. v. St.

James-Brookfield, LLC, 299 Ga. App. 614, 619 (1) (683 SE2d 40) (2009) (“There is

nothing malleable about the trial court’s obligation to confirm an arbitration award

absent a statutory ground to vacate it.”).

      Here, Bilbo filed his petition in May 2014, within one year of the December

2013 arbitration award. In his petition, Bilbo not only sought to confirm the award,

but also sought additional attorney fees. To the extent Bilbo was seeking to confirm

the award, the trial court was required to confirm it. The trial court ruled that Bilbo

was not entitled to confirm the award because Five Star had already complied with

its terms. That Five Star may have satisfied the trial court’s order, however, is not a

statutory ground found within OCGA § 9-9-13 that precludes confirmation.

Therefore, the trial court was required to grant Bilbo’s petition to the extent he

wanted to confirm the award. See Greene, supra, 266 Ga. at 596 (3); Brookfield

Country Club, supra, 299 Ga. App. at 619 (1).

      As noted above, however, Bilbo also sought to modify the award by seeking

attorney fees that were not included in the award. Since Bilbo’s petition was filed in

May 2014, more than three months after the December 2013 arbitration award, his

petition was untimely to the extent he attempted to modify the award.

                                             10
      Not only was Bilbo precluded from modifying the award to include additional

attorney fees, he also could not compel arbitration on the issue. Under Paragraph 3

of the Agreement, the parties agreed to arbitrate only any dispute as to whether Bilbo

violated the confidentiality and non-disparagement requirements of the Agreement.

There is no agreement to arbitrate any disputed attorney fees.

Therefore, the trial court correctly dismissed the portion of Bilbo’s petition seeking

to modify the award for additional attorney fees and correctly stayed arbitration on

the issue. See Krut v. Whitecap Housing Group, LLC, 268 Ga. App. 436, 442 (2) (c)

(602 SE2d 201) (2004) (“Arbitration is a matter of contract and a party cannot be

required to submit to arbitration any dispute which he has not agreed so to submit.”)

(citation omitted).

      Accordingly, we affirm the trial court’s grant of Five Star’s motion to open

default and denial of Bilbo’s motion for default judgment. We affirm in part and

reverse in part its grant of Five Star’s motion to dismiss and stay arbitration, reversing

only as to the trial court’s refusal to confirm the December 2013 arbitration award.

      Judgment affirmed in part and reversed in part. Andrews, P. J., and Branch,

J., concur.

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