SAMACA, LLC v. CELLAIRIS FRANCHISE, INC. , 813 S.E.2d 416 ( 2018 )

FIRST DIVISION
BARNES, P. J.,
MCMILLIAN and MERCIER, 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
February 28, 2018
In the Court of Appeals of Georgia
A17A1715. SAMACA, LLC. v. CELLAIRIS FRANCHISE, INC. et
al.
BARNES, Presiding Judge.
The appellant is Samaca, LLC (“Samaca”), a Florida limited liability company.
The appellees are Cellairis Franchise, Inc. (“Cellairis”) and Global Cellular, Inc.
(“Global”), Georgia corporations, and Cell Phone Mania, LLC (“CPM”), a Florida
limited liability company (collectively “appellees”). Samaca appeals from the trial
court’s order granting the appellees, motion to dismiss the complaint and to compel
arbitration. Samaca contends that the trial court erred in denying its motion to strike,
making certain factual findings as to the purchase and renewal of the franchise leases,
and in finding that the arbitration agreements were not superceded and inconsistent
with a forum selection clause. Following our review, we affirm.
“The standard of review from the [grant] of a motion to compel arbitration is
whether the trial court was correct as a matter of law. Further, the construction of a
contract is a question of law for the court that is subject to de novo review.”
(Footnotes omitted.) D. S. Ameri Constr. Corp. v. Simpson, 271 Ga. App. 825, 826
(611 SE2d 103) (2005). “The [appellees], as the parties seeking arbitration, bear the
burden of proving the existence of a valid and enforceable agreement to arbitrate.
And the validity of an arbitration agreement is generally governed by state law
principles of contract formation.” (Citations and punctuation omitted.) McKean v.
GGNSC Atlanta, 329 Ga. App. 507, 509 (1) (765 SE2d 681) (2014).
The facts pertinent to this appeal demonstrate that Cell Phone Mania operated
four franchises located at the Dolphin Mall in Miami, Florida, under franchise
agreements with Cellairis. Global, an affiliate of Cellairis, licensed the spaces from
the operator of the Dolphin Mall, and Cell Phone Mania sub-licensed the spaces to
operate the franchises in Dolphin Mall from Global. On June 30, 2014, Cell Phone
Mania and Samaca reached an agreement for Samaca to purchase Cell Phone Mania’s
four franchises , and in conjunction with the sale, Samaca entered into four new
franchise agreements (the “Franchise Agreement”) with Cellairis. The Franchise
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Agreements contained an arbitration clause, whereby Samaca and Cellairis agreed to
arbitrate:
all controversies, claims, or disputes between Company and
FRANCHISEE arising out of or relating to: a. This agreement or any
other agreement between Company and FRANCHISEE; b. The
relationship between FRANCHISEE and Company; c. The scope and
validity of this Agreement or any other agreement between Company
and FRANCHISEE, specifically including whether any specific claim
is subject to arbitration at all (arbitrability questions) and/or d. The offer
or sale of the franchise opportunity .... Any claims by or against any
affiliate of the Company may be joined, in the Company’s sole
discretion, in the arbitration.
Sanaca also entered into four new sub-license agreements (the “Sub-License
Agreements”) with Global to acquire Cell Phone Mania’s sub-licenses to operate the
franchises in the mall. The Sub-License Agreements, also effective June 30, 2014,
contained a similar agreement, whereby Samaca and Global agreed to arbitrate:
all controversies, claims, or disputes between Company and
Sub-licensee arising out of or relating to: a. This Agreement or any other
agreement between Company and Sub-licensee; b. The relationship
between Sub-licensee and Company; c. The scope and validity of this
Agreement or any other agreement between Company and Sub-licensee,
specifically including whether any specific claim is subject to arbitration
at all (arbitrability questions); and/or d. Any agreement relating to the
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purchase of products or services by Sub-licensee from Company .... Any
claims by or against any affiliate of the Company may be joined, in the
Company’s sole discretion in the arbitration.
Either on the same day or within the same time period, Cell Phone Mania,
Samaca, and Cellairis executed an Assignment and Assumption Agreement (the “AA
Agreement”), effective September 1, 2014, reflecting the parties’ various assignments
and assumptions related to the purchase of the franchises and sub-licensing of the
mall spaces. The AA Agreement also stated that Samaca was required to sign new
franchise and sub-license agreements which were “attached to this Agreement” and
“incorporated herein by this reference,” and that it would abide by all of the “terms,
conditions, and requirements” of the Franchise and Sub-License Agreements.
However, those new agreements within the AA Agreement were not signed. The AA
Agreement contained a choice of law provision stating, in pertinent part, that:
This Agreement shall be governed by and construed under the laws of
the State of Georgia, without regard to its conflicts of laws provisions.
The parties acknowledge and agree that the Georgia State Courts for
Fulton County, Georgia, or if such court lacks jurisdiction, the U.S.
District for the Northern District of Georgia, shall be the sole and
exclusive venue and sole and exclusive proper forum in which to
adjudicate any case or controversy arising either, directly or indirectly,
under or in connection with this Agreement and the parties further agree
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that, in the event of litigation arising out of or in connection with this
Agreement in these courts, they will not contest or challenge the
jurisdiction or venue of these courts. The parties expressly consent and
submit to the jurisdiction and venue of these courts, and the parties
waive any defenses of lack of personal jurisdiction, improper venue and
forum non conveniens.
It further provided that, the “Agreement may be executed in several counterparts,
each of which shall be deemed as an original, but all of which together shall
constitute one and the same instrument.”
Samaca took possession of the four franchise units on October 1, 2014 and
began operating the franchise units. However, later in 2014, Cellairis, Global, and
Samaca learned that Dolphin Mall would not renew the licenses for the franchise
locations at Dolphin Mall. In March 2015, Samaca sued Cellaris and Global in state
court in Florida seeking to rescind the Franchise Agreement and Sub-License
Agreements. Cellairis and Global moved to dismiss that action based on the
arbitration clauses and because the complaint failed to state a claim. Before the Court
ruled on that motion, Samaca voluntarily dismissed its suit, and subsequently initiated
the underlying complaint in Georgia state court.
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The appellees filed a motion to dismiss and compel arbitration based on the
arbitration agreements in the Franchise Agreements and the Sub-License Agreements.
In response, Samaca amended its complaint to allege that the AA Agreement and
attendant choice of law provision superseded the Franchise Agreements and Sub-
License Agreements and their attendant arbitration clauses. The trial court granted the
appellees motion to dismiss and to compel arbitration, finding that, contrary to
Samaca’s contention, the arbitration agreements contained in the Franchise and Sub-
licensing Agreements were not superceded by the AA Agreement.
1. Initially we note that, as is the case here, “the [Federal Arbitration Act] FAA
applies in state and federal courts to all contracts containing an arbitration clause that
involves or affects interstate commerce.” (Citation omitted.) American Gen. Financial
Svcs. v. Jape, 291 Ga. 637, 638 (1) (732 SE2d 746) (2012).1 “[T]he first task of a
court asked to compel arbitration of a dispute is to determine whether the parties
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9 USC § 2 of the FAA provides that:
A written provision in any … contract evidencing a transaction
involving commerce to settle by arbitration a controversy thereafter
arising out of such contract or transaction … shall be valid, irrevocable,
and enforceable, save upon such grounds as exist at law or in equity for
the revocation of any contract.
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agreed to arbitrate that dispute.”(Citation, punctuation, and emphasis omitted.)
Primerica Financial Svcs. v. Wise, 217 Ga. App. 36, 40 (5) (456 SE2d 631) (1995).
And as a matter of contract, “a party cannot be required to submit to arbitration any
dispute which he has not agreed so to submit.” (Citation and punctuation omitted.)
AT&T Technologies v. Communications Workers of America, 475 U. S. 643, 648 (106
SCt. 1415, 89 LE2d 648) (1986).
[T]he federal policy favoring arbitration is taken into consideration even
in applying ordinary [s]tate law. The federal policy favoring arbitration
is not, however, the same as applying a presumption of arbitrability. We
only apply the presumption of arbitrability to the interpretation of
contracts if we have already determined that, under [s]tate law, the
parties formed a valid agreement to arbitrate.
(Punctuation omitted.) Bickerstaff v. SunTrust Bank, 332 Ga. App. 121, 128-129 (2)
(a) (770 SE2d 903) (2015), reversed on other grounds, 299 Ga. 459 (788 SE2d 787)
(2016). Thus, “[t]he threshold determination of whether a subsequent agreement
entirely superseded a prior agreement is made under state law, without applying the
FAA’s presumption.” Dasher v. RBC Bank (USA), 745 F3d 1111, 1122 (II) (B) (11th
Cir. 2014). See Stewart v. Favors, 264 Ga. App. 156, 159 (1) (590 SE2d 186) (2003)
(“[W]hen deciding whether the parties agreed to arbitrate a certain matter including
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arbitrability, courts generally should apply ordinary state-law principles governing
the formation of contracts.”) (citation and punctuation omitted.). Further, in
considering arbitrability a court “is not to rule on the potential merits of the
underlying claims. Even if it appears to the reviewing court that the claims asserted
are meritless or even frivolous, it must not allow those considerations to interfere with
its determination of arbitrability.” (Footnotes and punctuation omitted.) BellSouth
Corp. v. Forsee, 265 Ga. App. 589 (595 SE2d 99) (2004).
With these principles in mind, to determine if an existing contract has been
superseded and discharged, the parties must “subsequently enter upon a valid and
inconsistent agreement completely covering the subject-matter embraced by the
original contract.” (Citation and punctuation omitted.) Hennessy v. Woodruff, 210 Ga.
742, 744 (1) (82 SE2d 859) (1954). Thus, “the terms of those contracts must
completely cover the same subject matter and be inconsistent.” Wallace v. Bock, 279
Ga. 744, 745-746 (1) (620 SE2d 820) (2005) (“where the parties execute two
successive agreements embodying completed negotiations ‘on the same subject,’ the
doctrine of merger applies, and the second agreement supersedes the first.”). See
Atlanta Integrity Mtg. v. Ben Hill United Methodist Church, 286 Ga. App. 795, 797
(650 SE2d 359) (2007) (“Under the merger rule, an existing contract is superseded
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and discharged whenever the parties subsequently enter upon a valid and inconsistent
agreement completely covering the subject-matter embraced by the original
contract.”) (citation and punctuation omitted.)
Here, the AA Agreement is not a successive or inconsistent agreement, but
rather part of a series of documents to effect the purchase and transfer of the Cell
Phone Maniea franchises. It does not completely subsume the subject matter
embodied in the Franchise and Sub-license Agreements, and in fact, instead
specifically incorporated those documents by reference. According to the terms of the
AA Agreement, its separate parts “together shall constitute one and the same
instrument.” Moreover, the terms of the AA Agreement are not inconsistent with the
Franchise and Sub-license Agreements and thus it does not reflect that the parties
intended that the choice of law provision in AA Agreement would supersede
arbitration clauses. See Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52,
59, (115 SCt 1212, 131 LE2d 76) (1995) (“The choice-of-law provision, when viewed
in isolation, may reasonably be read as merely a substitute for the conflict-of-laws
analysis that otherwise would determine what law to apply to disputes arising out of
the contractual relationship.”) Morever, “when a court interprets such provisions in
an agreement covered by the FAA, [as are the agreements in this case] due regard
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must be given to the federal policy favoring arbitration, and ambiguities as to the
scope of the arbitration clause itself resolved in favor of arbitration.” Id. at 62.
With that being so, the arbitration agreements at issue in this case include a
“delegation provision” e.g., an agreement to arbitrate threshold issues concerning the
arbitration agreement. The delegation provision clearly assigns responsibility for
resolving “whether any specific claim is subject to arbitration at all (arbitrability
questions)” to the arbitrator. “[J]ust as the arbitrability of the merits of a dispute
depends upon whether the parties agreed to arbitrate that dispute, so the question who
has the primary power to decide arbitrability turns upon what the parties agreed about
that matter.” (Emphasis omitted.) Losey v. Prieto, 320 Ga. App. 390, 393 (739 SE2d
834) (2013). Here, the arbitration agreements clearly delegated that responsibility to
the arbitrator.
Accordingly,
[t]he trial court did not err by compelling arbitration according to the
terms of the agreement. Moreover, since all of the issues in the
underlying suit were compelled to arbitration, there was nothing left for
the trial court to resolve, and it was not error to dismiss the suit with
prejudice[.] The dismissal with prejudice has no effect on a subsequent
challenge to the arbitration ruling, which would be a separate action.
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(Citations omitted.) Simmons Co. v. Deutsche Fin. Svcs. Corp., 243 Ga. App. 85, 90
(2) (532 SE2d 436) (2000).
2. Having so held in Division 1, we need not consider Samaca’s remaining
enumerations concerning what it contends were erroneous factual findings by the trial
court and its failure to strike a reply brief.
Judgment affirmed. Mercier, J. concurs. McMillian, J., concurs in judgment
only.*
* THIS OPINION IS PHYSICAL PRECEDENT ONLY. COURT OF APPEALS
RULE 33.2(a).
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