ABDALLA v. ATLANTA NEPHROLOGY REFERRAL CENTER, LLC Et Al.

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
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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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