X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

Mercier, Judge. In this employment agreement dispute, Viren Vasudeva appeals from a trial court order dismissing his civil action against Elias Dagnew and Georgia Brain & Spine Center, P.C., (“GBC”) and compelling arbitration. Because the arbitration clause in the employment agreement is unenforceable, we reverse. The record reveals that in June 2018, Vasudeva, a physician, entered into an employment agreement to provide neurosurgery and spine surgery services to patients at GBC. Dagnew, the owner and president of GBC, signed the agreement on behalf of GBC. In August 2019, Vasudeva notified Dagnew that GBC was in breach of the employment agreement. In the notice, Vasudeva asserted, among other things, that he had not received his full salary, had often been paid several weeks late, and had not been provided adequate office space, equipment, and support staff. In late September 2019, Vasudeva received a letter from Dagnew that GBC was terminating the employment agreement “without cause” effective December 27, 2019. However, in October, Vasudeva sent a notice to Dagnew that he was terminating the agreement for “Good Cause.” Vasudeva demanded all amounts owed to him under the employment agreement and an audit of records related to his compensation and expenses. In March 2020, Vasudeva filed a complaint naming as defendants GBC, Dagnew, and a third party later dismissed from the action. His complaint set forth multiple causes of action, including claims for fraud, negligent misrepresentation, indemnification, fraudulent transfer, and breach of the employment agreement. Vasudeva requested attorney fees, and he sought more than $1 million in damages and $2 million in punitive damages. He subsequently moved for partial summary judgment on some counts of the complaint and requested an accounting. The defendants answered the complaint and filed a motion to dismiss Vasudeva’s action and compel arbitration. They asserted that pursuant to Section 9.19 of the employment agreement (“Dispute Resolution; Waiver of Jury Trial”),[1] Vasudeva was required to arbitrate his dispute. Vasudeva responded that the arbitration clause in the employment agreement is unenforceable because it was not initialed by the signatories as required by OCGA § 9-9-2 (c) (9) of the Georgia Arbitration Code. Vasudeva also asserted that his termination of the employment agreement nullified the arbitration clause. Following a hearing on the parties’ motions, the trial court granted the defendants’ motion to dismiss Vasudeva’s complaint and compel arbitration.[2] With regard to the requirement in OCGA § 9-9-2 (c) (9) that the arbitration clause be initialed, the court found: The Arbitration Provision begins at the bottom of Page 21 [of the employment agreement] and continues onto Page 22. Each page is separately initialed. The initials on Page 21 are immediately adjacent to the Arbitration Provision. The only substantive language on Page 22 is the remaining portion of the Arbitration Provision. The Court finds these initials sufficient to meet the requirements of OCGA § 9-9-2 (c) (9). The court found further that termination of the agreement by either Vasudeva or GBC did not invalidate the arbitration provision. On appeal, Vasudeva argues that the trial court erred in finding that the arbitration clause complied with OCGA § 9-9-2 (c) (9), that he and Dagnew (on behalf of GBC) separately initialed the arbitration clause, and that Vasudeva’s termination of the employment agreement did not nullify application of the arbitration clause. Vasudeva also asserts that the trial court erred in dismissing his claims against Dagnew because Dagnew was not a signatory (signing only on behalf of GBC) and therefore not subject to the arbitration clause. 1. We first consider whether the arbitration clause satisfied the requirements of OCGA § 9-9-2 (c) (9).[3] Whether a valid and enforceable arbitration agreement exists is a question of law. On appeal from the grant or denial of a motion to compel arbitration, the standard of review is whether the trial court was correct as a matter of law. The construction of an arbitration agreement, like any other contract, presents a question of law, which is subject to de novo review. And the validity of an arbitration agreement is generally governed by state law principles of contract formation. As the [parties] seeking arbitration, [the defendants] bear the burden of proving the existence of a valid and enforceable agreement to arbitrate. West v. Bowser, ___ Ga. App. ___, slip op. at 4-5 (1) (Case No. A21A0055; decided June 25, 2021) (citations and punctuation omitted). The Georgia Arbitration Code applies to all disputes in which the parties thereto have agreed in writing to arbitrate and shall provide the exclusive means by which agreements to arbitrate disputes can be enforced, except the following, to which this part shall not apply . . . Any contract relating to terms and conditions of employment unless the clause agreeing to arbitrate is initialed by all signatories at the time of the execution of the agreement. OCGA § 9-9-2 (c) (9) (emphasis supplied). See also ISS Intl. Svc. Systems v. Widmer, 264 Ga. App. 55, 61 (3) (589 SE2d 820) (2003) (“Under OCGA § 992 (c) (9), an arbitration clause in an employment contract is unenforceable unless the clause is initialed by all signatories at the time of the execution of the agreement.”) (citation and punctuation omitted). As this Court explained in Pinnacle Constr. Co. v. Osborne, 218 Ga. App. 366, 368 (3) (460 SE2d 880) (1995), with regard to OCGA § 9-9-2 (c) (8) (arbitration clause in agreements to purchase real estate must be initialed by all signatories), “the purpose of the requirement is to ensure that [signatories] are not compelled to give up their common law right of access to the courts unless they specifically acknowledge the intent to do so by initialing the arbitration clause.” The employment agreement was signed by Vasudeva and Dagnew (on behalf of GBC). At the bottom left of each page of the 26-page agreement, in the footer margin, is a blank line under which the words “Physician’s Initials” are typed. Vasudeva initialed each page on the blank line, and Dagnew initialed next to “Physician’s Initials.” The arbitration clause begins at the bottom of page 21 of the agreement and continues at the top of page 22 with six lines of text, followed by “[SIGNATURES ON FOLLOWING PAGE].” The remainder of page 22 is blank, and just as with all other pages of the agreement, Vasudeva and Dagnew’s initials appear at the bottom left of the page. The trial court concluded that the initials at the bottom of pages 21 and 22 were sufficient to meet the requirements of OCGA § 9-9-2 (c) (9), because they were just below the clause on page 21, and the only substantive text on page 22 was the remainder of the clause. We disagree. “[T]he Georgia Arbitration Code is in derogation of the common law and must be strictly construed.” Progressive Data Systems v. Jefferson Randolph Corp., 275 Ga. 420, 420 (568 SE2d 474) (2002). Subsection (c) (9) specifically requires that the arbitration clause be initialed, not the bottom of the pages on which the clause appears. And “[u]nder Georgia law, the cardinal rule of contract construction is to ascertain the intent of the parties, as evidenced by the language of the contract.” Miller v. GGNSC Atlanta, 323 Ga. App. 114, 118 (2) (746 SE2d 680) (2013). Here, the initials are at the bottom left of every page of the agreement, including the addendum and exhibit pages following the signature page, indicating an acknowledgment of each page generally, not the arbitration clause specifically.[4] Strictly construing OCGA § 9-9-2 (c) (9), as we must, we conclude that the arbitration clause was not initialed and therefore cannot be enforced. See, e.g., Columbus Anesthesia Group v. Kutzner, 218 Ga. App. 51, 53-54 (2) (459 SE2d 422) (1995) (non-initialed arbitration provision in employment contract unenforceable under the Georgia Arbitration Code); Laird v. Risbergs, 266 Ga. App. 107, 108 (596 SE2d 412) (2004) (arbitration provision in sales contract could not be enforced where signatories did not initial provision as required by OCGA § 9-9-2 (c) (8)). Thus, the trial court erred in dismissing Vasudeva’s complaint and compelling arbitration. 2. In light of our holding in Division 1, we need not address Vasudeva’s remaining claims of error. Judgment reversed. Rickman, C. J. and Dillard, P. J., concur.

 
Reprints & Licensing
Mentioned in a Law.com story?

License our industry-leading legal content to extend your thought leadership and build your brand.

More From ALM

With this subscription you will receive unlimited access to high quality, online, on-demand premium content from well-respected faculty in the legal industry. This is perfect for attorneys licensed in multiple jurisdictions or for attorneys that have fulfilled their CLE requirement but need to access resourceful information for their practice areas.
View Now
Our Team Account subscription service is for legal teams of four or more attorneys. Each attorney is granted unlimited access to high quality, on-demand premium content from well-respected faculty in the legal industry along with administrative access to easily manage CLE for the entire team.
View Now
Gain access to some of the most knowledgeable and experienced attorneys with our 2 bundle options! Our Compliance bundles are curated by CLE Counselors and include current legal topics and challenges within the industry. Our second option allows you to build your bundle and strategically select the content that pertains to your needs. Both options are priced the same.
View Now
June 20, 2024
Atlanta, GA

The Daily Report is honoring those attorneys and judges who have made a remarkable difference in the legal profession.


Learn More
April 29, 2024 - May 01, 2024
Aurora, CO

The premier educational and networking event for employee benefits brokers and agents.


Learn More
May 15, 2024
Philadelphia, PA

The Legal Intelligencer honors lawyers leaving a mark on the legal community in Pennsylvania and Delaware.


Learn More

A large and well-established Tampa company is seeking a contracts administrator to support the company's in-house attorney and manage a wide...


Apply Now ›

We are seeking an attorney to join our commercial finance practice in either our Stamford, Hartford or New Haven offices. Candidates should ...


Apply Now ›

We are seeking an attorney to join our corporate and transactional practice. Candidates should have a minimum of 8 years of general corporat...


Apply Now ›
04/15/2024
Connecticut Law Tribune

MELICK & PORTER, LLP PROMOTES CONNECTICUT PARTNERS HOLLY ROGERS, STEVEN BANKS, and ALEXANDER AHRENS


View Announcement ›
04/11/2024
New Jersey Law Journal

Professional Announcement


View Announcement ›
04/08/2024
Daily Report

Daily Report 1/2 Page Professional Announcement 60 Days


View Announcement ›