Trial Court Cannot Substitute Its Judgment for an Arbitrator’s

The Georgia Court of Appeals held that a trial court erred in modifying an arbitration award because the trial court improperly reviewed the sufficiency of the evidence supporting the award.

In Lanier Worldwide, Inc. v. BridgeCenters at Park Meadows, LLC, 2006 WL 1653323 (Ga. Ct. App. June 16, 2006), Lanier leased office equipment to BridgeCenters under a lease agreement containing an arbitration provision.

Lanier repossessed the equipment when BridgeCenters failed to make monthly payments required under the lease. The parties disagreed over BridgeCenters’ liability and submitted the dispute to arbitration.

The arbitrator awarded Lanier $674,163.50. In making this award, the arbitrator found that Lanier was entitled to recover future lease payments. But under Georgia law, an equipment lessor may recover future lease payments only if the lessor is unable to dispose of the equipment after reasonable effort.

On Lanier’s motion to confirm the arbitration award, the trial court modified the award by reducing Lanier’s damages from $674,163.50 to $60,306.24. The trial court reasoned that Lanier was not entitled to recover future lease payments because it had “not shown the [c]ourt” that it was unable to dispose of the equipment after reasonable effort.

The Court found that the trial court’s ruling was not founded on any of the limited grounds for modifying an award under the Federal Arbitration Act. Instead, the trial court “substituted its judgment for that of the arbitrator as to whether Lanier had shown an inability to reasonably dispose of the equipment, and it penalized Lanier for not relitigating the issue at the trial court level.”