Georgia Arbitration Award Not Vacated in Motorcycle Accident Case

Two 2013 companion appeals arose out of a products liability arbitration. The arbitrator in the cases had found the buyer of a defective motor trike had $750,000 worth of damages because of a rollover accident. He also found that because of her own conduct, she was only allowed to recover 25% of that amount.

The buyer asked the court to modify the arbitration award. The court declined to modify the award. Instead the judge vacated the awards, finding that the arbitrator ignored the rules of strict liability by reducing the buyer’s damages according to contributory and comparative negligence principles.

The case arose when a woman was driving a three-wheeled motor trike. It rolled over onto her and caused severe injuries. Though it had been manufactured as a motorcycle, it had been converted into a trike by a body shop owner. The shop owner had sold it to someone named Holly Fowler who resold it to the plaintiff.
The woman sued the body shop owner for damages arising from the accident. They agreed to arbitrate and the arbitration was split into two hearings, one for liability and the other for damages.

The arbitrator issued an order with findings after hearing only the liability portion. He didn’t use the words “strict liability” or “negligence,” nor did he lay out any law he was applying. He found that the body shop owner had converted the motorcycle so much that he became a manufacturer of goods sold as new to Ms. Fowler. He also found it was defective because it could withstand lateral acceleration, such that it was more likely to rollover than similar trikes.

The arbitrator also found that the plaintiff was intoxicated and inexperienced and that she was turning too fast. The arbitrator concluded the parties were both responsible to differing extents, but that the plaintiff’s actions were 75% the cause of the accident and the defect was only 25%.

The arbitrator also heard the evidence on damages. He found that she had permanent injuries (including multiple fractures and a head injury), the full value of which was $750,000. The arbitrator reduced her award to $187,500 stating the plaintiff was a major contributing factor of her accident.

The plaintiff filed a motion to modify the orders, arguing the arbitrator had disregarded the law and miscalculated. The trial court agreed the arbitrator had not followed the strict liability laws, but vacated rather than modified the award.

The body shop owner appealed, arguing that there was not enough to show the arbitrator had manifestly disregarded strict liability laws and that there wasn’t enough in the record to show that strict liability rather than negligence was controlling in this case.

The appellate court explained that a court has very limited powers to vacate an arbitration award. Under OCGA § 9-9-13(b)(5), it is only appropriate to vacate the award if a party’s rights are prejudiced by an arbitrator’s manifest disregard of the law. This is subject to a 2-part test. First, the appellate court must look at whether the law that was allegedly disregarded was well defined, explicit and clearly applied to the facts. Second, the appellate court must look at what knowledge the arbitrator actually possesses.

The party hoping to vacate an award bears the burden of showing that both parts of this test are satisfied. With respect to the first prong of the test, the appellate court explained that products liability law in Georgia is well-defined and explicit. Recovery can be based on either strict liability or negligence, but if the former is applied, comparative negligence principles (looking at plaintiff fault), is inapplicable.

The parties disagreed about whether strict liability clearly applied. However, the appellate court found that the plaintiff hadn’t carried her burden of showing that the second part of the test was satisfied. She had to show the arbitrator purposefully intended to disregard the law. Here, the arbitrator did not indicate actually knowing of the law and deliberately ignoring it. The plaintiff pointed to some emails that she believed showed the arbitrator’s awareness that strict liability applied. The appellate court found that the emails were ambiguous and confusing.

Accordingly, the superior court’s ruling was to vacate the second arbitration order. In the other case, the plaintiff appealed the superior court’s decision to vacate rather than modify the award. The appellate court explained modification cannot be so substantive the merits of the case are impacted. Increasing the amount of damages would be a substantive change in the award. Accordingly, the appellate court found that the lower court had made no error in refusing to modify the award.

If you are seriously injured because of a defect in your motor vehicle, you may have grounds for a lawsuit. Experienced Atlanta personal injury attorney Terrence R. Bethune can evaluate your case and fight for any compensation you may deserve. Contact us at 404-875-7800 or via our online form.