VIREN S. VASUDEVA v. ELIAS DAGNEW.

FOURTH DIVISION
RICKMAN, C. J.,
DILLARD, P. J., and MERCIER, J.
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.
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August 5, 2021
In the Court of Appeals of Georgia
A21A0866. VASUDEVA v. DAGNEW et al.
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
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of the employment agreement (“Dispute Resolution; Waiver of Jury Trial”),1
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This clause provides:
Practice and Physician agree that any controversy or claim arising from
or relating to this Agreement, or the breach hereof, shall be settled by
mandatory binding arbitration in accordance with the rules and
procedures of alternative dispute resolution and arbitration established
by the Alternative Dispute Resolution Service of the American Health
Lawyers Association (“AHLA”) or, upon agreement of the Parties . . .
by the Commercial Arbitration Rules of the American Arbitration
Association (“AAA”); provided, however, that as a pre-requisite to
requesting arbitration, the Parties agree to endeavor first to settle the
dispute by mediation administered by JAMS Mediation and Arbitration
Services based in Atlanta, with the cost of the mediator to be shared
equally by the Parties. If the dispute proceeds to arbitration, such
arbitration shall be conducted before a single arbitrator selected jointly
by the Parties, or in the event the Parties are unable to agree, designated
by the AHLA or AAA. The award of the arbitrator shall be final and
binding upon the Parties. The party requesting the arbitration must do
so within twelve (12) months from the action which is the basis for the
arbitration request. The arbitration shall take place in Atlanta, Georgia.
Mediation shall not extend or toll the deadline to arbitration [sic] be
entitled to award punitive, consequential, exemplary, or similar
damages. The costs of such arbitration (excluding the attorneys’ fees and
costs of each of the Parties) shall be shared equally by the Parties. The
award of the arbitrator may be enforced by any court having proper
jurisdiction thereof, and in any proceeding to confirm, vacate or modify
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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:
an arbitral award, the prevailing Party shall be entitled to recover from
the other Party costs and expenses, including reasonable attorneys’ fees.
To the extent permitted by law, the Parties hereby jointly and severally
waive any and all right to trial by jury in any action or proceeding
arising out of or relating to this Agreement, or the obligations hereunder.
The Parties each represent to the other that this Waiver is knowingly,
willingly and voluntarily given.
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The court denied as moot other pending motions, including Vasudeva’s
motion for partial summary judgment.
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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
3
The parties do not dispute that the Georgia Arbitration Code applies here. See
OCGA § 9-9-1 et seq. The “Governing Law” provision in the agreement provides that
the agreement shall be construed in accordance with Georgia law, and the arbitration
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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
clause does not reference the Federal Arbitration Act (FAA). Compare Primerica
Financial Svcs. v. Wise, 217 Ga. App. 36, 36-37 (1) (456 SE2d 631) (1995)
(arbitration clause made two references to the FAA). The agreement governs
Vasudeva’s employment at GBS as a physician and does not involve interstate
commerce. See, e.g., Columbus Anethesia Group v. Kutzner, 218 Ga. App. 51, 52-53
(1) (459 SE2d 422) (1995) (federal act did not apply to contract establishing terms
of physician’s membership in Georgia corporation providing medical services in
Georgia; “If the agreement involves interstate commerce, the federal law applies to
enforce its arbitration provision.”); see also BDO USA v. Coe, 329 Ga. App. 79, 80
(1) (763 SE2d 742) (2014) (FAA applies to contracts containing an arbitration clause
that involves or affects interstate commerce).
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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 § 9-9-2 (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
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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
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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.
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The trial court found that the only substantive language appearing on page 22
is the remainder of the arbitration clause, suggesting that the initials at the bottom of
the page acknowledge the remaining six lines of the arbitration agreement at the top
of the page. But other text (“[SIGNATURES ON FOLLOWING PAGE]”),
substantive or not, appears between the rest of the clause and the initials at the
bottom, further supporting our conclusion here that those initials do not acknowledge
the arbitration clause, but rather acknowledge that particular page of the agreement.
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