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The Georgia Court of Appeals held that an arbitration clause in a timber contract remained in force more than two years after harvesting of the timber was over.
In Pickle v. Rayonier Forest Resources, L.P., No. A06A1196, 2006 WL 2873642 (Ga. Ct. App. Oct. 11, 2006), Pickle and Rayonier entered into a contract giving Pickle the right to harvest timber from Rayonier’s property until March 27, 2003. The contract contained an arbitration clause that applied to “[a]ny disputes arising under” the contract.
In May 2005, more than two years after the harvesting period, Rayonier sent Pickle an arbitration demand letter alleging that Pickle harvested and sold timber without paying for it. Three months later, Rayonier filed a motion to compel arbitration.
Pickle opposed the motion to compel arbitration on two grounds. First, he argued that the arbitration clause was no longer in force because the underlying contract had expired. Second, he argued that Rayonier was alleging a tort outside of the arbitration clause. The trial court granted the motion.
On appeal, the Court first addressed Pickle’s argument that the arbitration clause was no longer valid because the underlying contract had expired. The Court disagreed that the contract had expired because the contract had no expiration date, and some of the duties would be performed after the end of the harvesting period. For instance, under the contract, Pickle gave Rayonier a $5,000 deposit to be returned “upon the satisfactory completion of all harvesting operations.”
Having determined that the underlying contract had not expired, the Court held that the passage of time did not foreclose Rayonier’s right to demand arbitration.
Pickle also argued that Rayonier was alleging a tort claim not within the arbitration clause and, in any event, not arbitrable under the Georgia Arbitration Code, which precludes pre-dispute agreements to arbitrate personal injury claims. In rejecting this argument, the Court found that Rayonier’s claim did not sound in tort because the controversy pertained to the subject matter of the contract – namely, the cutting and selling of timber.
Given this finding, the Court had no occasion to address the applicability of the Georgia Arbitration Code. Assuming the timber contract involved interstate commerce, the Federal Arbitration Act would have preempted any Georgia law limiting the scope of the arbitration clause. See Pest Management, Inc. v. Langer, No. CA05-1387, 2006 WL 2741921 (Ark. Ct. App. Sep. 27, 2006); Rodriguez v. American Technologies, Inc., 39 Cal. Rptr. 3d 437 (Cal. Ct. App. 2006).
Parties can avoid any unintended limitations on the duration of an arbitration clause by expressly providing that the clause survives the termination of the underlying contract.
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