RUMBAUGH v. BRUMBELOW (2026)

Roger Rumbaugh appeals from the trial court's order requiring him to arbitrate his claims against certain defendants in his breach of contract and negligence action. On appeal, he argues that the trial court erred in enforcing an arbitration provision that is unenforceable under Georgia law and does not implicate interstate commerce such that it is not preempted by federal law. For the reasons set forth below, we reverse the trial court's order.

The record here shows that on May 2, 2025, Rumbaugh sued Meridian Restoration, Inc.; two of its agents, Ronald Keith Brumbelow and Henry Shugart; and his homeowners insurance carrier, United Services Automobile Association (“USAA”). In the complaint, Rumbaugh alleged that after his home suffered substantial water damage in a storm, he notified USAA, which gave him a list of approved vendors to make the necessary repairs and promised to warrant the work of those vendors. Rumbaugh contracted with Meridian, an approved vendor that was specifically recommended by USAA, to remediate the water damage. Despite making several attempts to repair his home, Meridian failed to fix the problems to Rumbaugh's satisfaction and instead “attempted to abandon their customer ․ as well as their duties and obligations” to him. The complaint asserted claims against Meridian for breach of contract, negligent construction, and negligence per se. It also asserted claims against Brumbelow and Shugart for negligent supervision, claims against USAA for negligence and vicarious liability, and claims against all defendants for punitive damages and attorney fees.

Meridian counterclaimed for breach of contract, quantum meruit, and attorney fees. Additionally, Meridian, Brumbelow, and Shugart (“the Meridian defendants”) filed a motion to dismiss or, in the alternative, to stay the proceedings and compel Rumbaugh to arbitrate his claims against them.¹ The Meridian defendants pointed to the following arbitration clause in Rumbaugh's remediation contract with Meridian:

Any controversy or claim arising out of or related to this contract or the breach thereof, shall be resolved by binding arbitration according to the Rules of the American Arbitration Association, and judgment upon the award rendered may be entered in any court having jurisdiction thereof except for the following types of actions: (a) lien foreclosures and collections matters which shall be resolved by court action; and (b) claims within the monetary limits of the small claims court may be litigated in such court.

Notably, although Meridian was the party seeking to compel arbitration, its motion did not invoke the Federal Arbitration Act (the “FAA”) nor assert that the contract involved interstate commerce.

Rumbaugh opposed the motion, arguing as relevant here that the arbitration clause was unenforceable under Georgia law because it fell within the “consumer transaction exception” of OCGA § 9-9-2(c)(7), and no evidence supported the application of the FAA. In response, the Meridian defendants argued that the arbitration clause at issue was preempted by the FAA because the contract “involves interstate commerce,” bringing it within the federal statute's purview. Specifically, the Meridian defendants stated that interstate commerce was involved because “a Toyota Tundra was used to transport lumber to [Rumbaugh's] residence”; the Meridian defendants “contracted with Sherwin Williams, a paint supplier incorporated in Ohio for materials and supplies used to repair [Rumbaugh's] home”; and other materials used at Rumbaugh's residence are of the type “that are commonly manufactured out of state or in other countries.” Approximately two-and-a-half weeks later, the Meridian defendants filed a “Notice of Filing” to provide the court with exhibits related to their reply brief. Discussed further below, the exhibits consisted of invoices and receipts for materials and subcontractors used at Rumbaugh's home.

The trial court granted the Meridian defendants’ motion “[f]or the reasons outlined in [their] briefing.” It ordered Rumbaugh to arbitrate his claims against those defendants and stayed the proceedings pending arbitration. At Rumbaugh's request, the court certified its order for immediate review, and we granted Rumbaugh's application for interlocutory review. Case No. A26I0061. This appeal followed.

We review de novo a trial court's order compelling arbitration. C. R. of Thomasville, LLC v. Hannaford, 363 Ga. App. 581, 582, 871 S.E.2d 679 (2022). “The factual findings on which the ruling is based, however, will not be overturned unless clearly erroneous.” Id. “The party seeking arbitration bears the burden of proving the existence of a valid and enforceable agreement to arbitrate.” Id.

On appeal, Rumbaugh argues that the arbitration clause at issue is unenforceable under the Georgia Arbitration Code (“GAC”), which excludes from its purview “[a]ny contract involving ․ consumer transactions” as that term is defined by Georgia's Fair Business Practices Act (“FBPA”). OCGA § 9-9-2(c)(7). And under the FBPA, “consumer transactions” include the sale or purchase of “services ․ primarily for ․ household purposes.” OCGA § 10-1-392(10).

The Meridian defendants do not dispute this part of Rumbaugh's argument, but rather argue that the trial court correctly concluded that the FAA preempts Georgia law in this case. Indeed, “the FAA preempts any state law that conflicts with its provisions or undermines the enforcement of private arbitration agreements.” Langfitt v. Jackson, 284 Ga. App. 628, 634– 35(3), 644 S.E.2d 460 (2007). In particular, the FAA overrides state laws “requiring a judicial forum for the resolution of disputes pertaining to a particular subject matter,” such as consumer transactions. Am. Gen. Fin. Svcs. v. Jape, 291 Ga. 637, 640(2), 732 S.E.2d 746 (2012).

The contract between Rumbaugh and Meridian did not invoke the FAA, but the FAA applies nonetheless to “an arbitration clause that involves or affects interstate commerce.” SunTrust Bank v. Lilliston, 302 Ga. 840, 842, 809 S.E.2d 819 (2018) (quotation marks omitted); 9 USC § 2. See also Allied-Bruce Terminix Companies v. Dobson, 513 U.S. 265, 281(IV), 115 S.Ct. 834, 130 L.Ed.2d 753 (1995) (holding that the FAA applies to contracts involving or affecting interstate commerce “even if the parties did not contemplate an interstate commerce connection”). The FAA's use of the broad term “involving” to explain the required connection to interstate commerce “signals an intent to exercise Congress’ commerce power to the full.” Triad Mgmt. of Ga., III v. Johnson, 298 Ga. App. 204, 205(1), 679 S.E.2d 785 (2009).

Rumbaugh's argument centers on the fact that the burden to establish the applicability of an enforceable arbitration agreement lies with the Meridian defendants as the ones seeking to compel arbitration, and they did not invoke the FAA in their original motion to compel arbitration. Further, even in their reply brief, which came only after Rumbaugh raised the issue of preemption in an abundance of caution, the Meridian defendants failed to put forward any proof to support their argument that the contract involved interstate commerce. Rumbaugh argues that the contract at issue was between himself, a Georgia resident, Meridian, a Georgia corporation, and its agents, both Georgia residents, to repair his home located in Georgia. And he argues that the invoices and receipts the Meridian defendants filed separately were not admissible, as they were not attached as exhibits to any pleading, and they were not authenticated. Further, even if properly considered, Rumbaugh asserts that the documents themselves show only that the Meridian defendants contracted with other Georgia subcontractors and purchased materials at Georgia stores.

As argued by the Meridian defendants, the trial court is not so restricted in what evidence it may consider in ruling on a motion to compel arbitration. See S. Telecom, Inc. v. Level 3 Communications, 295 Ga. App. 268, 271(1)(a), 671 S.E.2d 283 (2008) (“A Georgia court reserves the power to examine the entire record, not to reach the underlying merits of the dispute, but to fulfill its gatekeeping role to determine whether any arbitrable claim has been presented in the current action.” (quotation marks omitted)). But, even keeping in mind the broad definition of contracts that “involve” or “affect” interstate commerce, the documents provided by the Meridian defendants do not substantiate a case for federal preemption of an arbitration agreement that is unenforceable under Georgia law.

Despite having access to the information about the alleged interstate nature of the contract at issue, the Meridian defendants have failed to produce evidence sufficient to invoke FAA preemption. More specifically, their supporting documents show that a variety of building materials were used at the job site, and although these might be the types of materials that often originate out of state, not one invoice or receipt provided by the Meridian defendants shows that any of the materials used at Rumbaugh's job site actually did originate out of state. Sherwin Williams, from whom the Meridian defendants purchased materials, is an Ohio corporation, but the stores from which the defendants purchased paint for this project were all located in Georgia. All of the subcontractors mentioned in the documents appear to be Georgia businesses, and there is no indication – via receipts, affidavits, or otherwise – of any specific contractor or even laborer that came from out of state to work on this project. And although the Meridian defendants stated that they could “provide more than an affidavit stating that a Toyota Tundra was used to transport lumber to [Rumbaugh's] residence,” they did not in fact provide such an affidavit, much less provide proof that any vehicles used to transport materials to Rumbaugh's home were manufactured out of state. Compare Krut v. Whitecap Housing Group, 268 Ga. App. 436, 439–40(1), 602 S.E.2d 201 (2004) (finding arbitration agreement within construction contract to sufficiently involve interstate commerce to invoke the FAA where the defendant provided an affidavit that it used materials manufactured outside Georgia, where subcontractors employed laborers who were not from Georgia, and used vehicles manufactured outside Georgia) and McCormick-Morgan, Inc. v. Whitehead Elec. Co., 179 Ga. App. 10, 12, 345 S.E.2d 53 (1986) (finding arbitration agreement within construction contract to sufficiently involve interstate commerce where one contractor and materials used were from out of state).

The Meridian defendants all but acknowledge this lack of proof of interstate commerce on appeal, arguing that the materials used at Rumbaugh's job site “almost certainly originat[ed] outside the State of Georgia,” and “undoubtedly were not all placed into the stream of commerce in Georgia alone.” Indeed, there is a strong possibility that in fact, that is the case. But strong possibilities are not enough.

The Meridian defendants rely heavily on our previous recognition that “[h]ome construction generally involves interstate commerce.” Wise v. Tidal Constr. Co., 261 Ga. App. 670, 673(1), 583 S.E.2d 466 (2003).² True, but unlike the record in this case, our precedent points to evidence in the record showing that some part of the construction project — be it materials, or an insurance provider, or a worker, or a vehicle — implicated interstate commerce. See, e.g., Krut, 268 Ga. App. at 439–40(1), 602 S.E.2d 201; McCormick-Morgan, 179 Ga. App. at 12, 345 S.E.2d 53; Brockett Pointe Shopping Ctr. v. Dev. Contractors, 193 Ga. App. 854, 856, 389 S.E.2d 374 (1989) (contract involved interstate commerce where “undisputed evidence show[ed] that out-of-state goods, services, materials and financing were supplied during execution of the construction contract”); ADC Const. v. McDaniel Grading, 177 Ga. App. 223, 225(1), 338 S.E.2d 733 (1985) (contract involved interstate commerce where defendant supplied affidavit stating that he used equipment manufactured and purchased abroad and in other states, subcontractors were from out of state, and subcontractors purchased materials in other states). Compare Rhodes v. Inland-Rome, 195 Ga. App. 39, 40(2), 392 S.E.2d 270 (1990) (no interstate commerce was shown in contract related solely to the sale of timber located within Georgia; only evidence of effect on another state came from defendant's unilateral actions after the transaction was completed).

Here, where the contract's effect on another state is supported by mere speculation, we cannot agree with the trial court that the contract between the parties “evidenc[es] a transaction involving interstate commerce” to implicate the FAA. 9 USC § 2; see Columbus Anesthesia Grp., P.C. v. Kutzner, 218 Ga. App. 51, 52–53(1), 459 S.E.2d 422 (1995) (FAA did not preempt employment contract where the contract contemplated actions that all took place within Georgia; no interstate commerce was established to invoke federal preemption). Our Commerce Clause jurisprudence — for better or worse — sets the bar very low. But, the bar is not nonexistent and we decline to assume facts not in the record to clear it.

Accordingly, “[t]here being no evidence to authorize a finding of the applicability of the [FAA] in the instant case, the trial court erred in finding that arbitration was mandated thereunder.” Rhodes, 195 Ga. App. at 40(2), 392 S.E.2d 270.

Judgment reversed.

FOOTNOTES

1.   USAA did not oppose the court entering an order compelling arbitration between Rumbaugh and Meridian, but it did not agree to participate in any arbitration, as it was not a party to the arbitration agreement between Rumbaugh and Meridian.

2.   In Wise, we reversed the trial court's order compelling arbitration between the plaintiffs and the company that constructed their home, holding that the construction company's actions were inconsistent with arbitration, thereby waiving their right to seek arbitration. 261 Ga. App. at 674–75(2), 583 S.E.2d 466. We noted, however, that we disagreed with the plaintiffs’ argument that the contract did not involve interstate commerce, stating “[v]irtually any activity related to building and construction involves interstate commerce, because materials flow across state lines and internationally.” Id. at 676(3), 583 S.E.2d . As this statement was made in a part of our opinion that was not essential to the decision, it is arguably dicta. However, even taking such an observation as true, it still does not eliminate the necessity that we examine the record to determine “whether the transaction in question turns out, in fact, to have involved interstate commerce.” Jenkins v. First Am. Cash Advance of Georgia, LLC, 400 F.3d 868, 875 n. 6 (III)(A) (11th Cir. 2005).

Gobeil, Judge.

Dillard, P. J., and Pipkin, J., concur.