Buyer's First Realty, Inc. v. Cleveland Area Bd. of Realtors

• Decision Date: 14 August 2000
• Docket Number: No. 75804 and 75805.,75804 and 75805.
• Citation: 745 NE 2d 1069,139 Ohio App.3d 772
• Parties: BUYER'S FIRST REALTY, INC., Appellant, v. CLEVELAND AREA BOARD OF REALTORS et al., Appellees.
• Court: Ohio Court of Appeals

139 Ohio App.3d 772

745 NE 2d 1069

BUYER'S FIRST REALTY, INC., Appellant, v. CLEVELAND AREA BOARD OF REALTORS et al., Appellees.

Nos. 75804 and 75805.

Court of Appeals of Ohio, Eighth District, Cuyahoga County.

Decided August 14, 2000.

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Louis A. Turi, for appellant.

Matthew B. Kall; Baker & Hostetler, LLP, and John H. Burtich, for appellees.

Jon F. Deegan and Terrence J. Burke, for Realty One, Inc.

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ANNE L. KILBANE, Judge.

This is a consolidated appeal from an order of Judge Daniel O. Corrigan. Plaintiff-appellant Buyer's First Realty, Inc. ("Buyer's First") claims that the judge erred when he granted two motions for summary judgment and confirmed the two arbitration awards against it in favor of appellee Realty One, Inc. It alleges that appellee Cleveland Area Board of Realtors ("CABOR") lacked the authority to impose arbitration on its dispute with Realty One and agents, appellees Laura Rigney and Marilyn Lupi ("Realty One"), because the funds in dispute did not result from a real estate agent's commission. We disagree and affirm the order confirming the arbitration awards in favor of Realty One.

From the record we glean the following: Both Buyer's First and Realty One are members of CABOR, whose purpose is, in part, "to promote and maintain high standards of conduct in the real estate profession as expressed in the Code of Ethics of the National Association of REALTORS®."¹ Members are required, pursuant to CABOR bylaws, to arbitrate disputes between each other in accordance with the Code of Ethics and Arbitration Manual of the National Association of REALTORS® and R.C. 2711.01 et seq. (Id., Bylaws, Sections 1 and 2, Article 7). Through CABOR, Realty One requested arbitration with Buyer's First on disputes regarding the commissions on two separate real estate transactions. The arbitrators found in favor of Realty One on both disputes, and Buyer's First filed the following complaints.

On August 28, 1997, Buyer's First filed its first complaint in Cuyahoga County Common Pleas Court case No. 339578 against Realty One, Rigney and CABOR, alleging that it acted as the agent for Trevor and Rhonda Collis, who had purchased the home of Robert and Dianna Gronski. It claimed that, according to the Purchase Agreement attached to the complaint, both the Collises and the Gronskis had agreed that Buyer's First should receive a brokerage fee of 3.5 percent of the $117,000 purchase price for services rendered to the Collises. Buyer's First further alleged that Realty One was entitled to a commission from the Gronskis on the sale of the property. It further claimed that on April 17, 1997, after a CABOR arbitration hearing, the arbitrators awarded Realty One the full $3,925 that Buyer's First had received upon the closing of the Collis/Gronski sale, which award the CABOR Board of Directors confirmed on August 14, 1997. Buyer's First did not attach to the complaint copies of the CABOR rules that provide for arbitration of disputes, the arbitration agreement, the arbitration award, or the award confirmation as required by R.C. 2711.14.

On December 29, 1997, Buyer's First filed a second complaint in Cuyahoga County Common Pleas Court, case No. 346010, against Realty One, Lupi, and CABOR, alleging that it had acted as an agent for Martino Rossi and Lisa Aveton in the purchase of a home from Richard A. Favazzo and/or John Kobal. It further alleged that the buyers and sellers agreed in writing to pay Buyer's First $3,443.75 as a brokerage fee from the $105,750 purchase price and that on December 8, 1997, the CABOR hearing panel awarded Realty One the $3,443.75 paid to Buyer's First. Again, Buyer's First did not attach to the complaint a copy of the purchase agreement or either the CABOR rules or the arbitration agreement. It did, however, attach a copy of the arbitration award.

In both complaints, Buyer's First alleged in its first cause of action that the award was "outside its CABOR's scope of authority in that no rule in the By-Laws or other regulations of CABOR authorized the making of an award of funds which were paid to Buyer's First as a result of and as consideration for its service and which was not in the nature of a real estate agent's commission." It further contended, "The award was entirely ultra vires and manifestly mistaken in that by the rules of CABOR, the arbitration must be the subject of a contract between the complainant and the respondent. No such contract existed." Buyer's First also claimed that Realty One and Rigney were "guilty of laches" because of their negligence "in failing to raise their claim for said commission prior to and during the time the sales contract was finalized." Finally, Buyer's First requested that the judge "reverse" the arbitration award and grant judgment in its favor because Realty One would be "unjustly enriched."

In its answers, CABOR asserted, inter alia, that it was an improper party to the suit. Realty One denied the various allegations in its answers, asserted in its counterclaims for entry of judgment in its favor on the arbitration awards, and attached all documentation required under R.C. 2711.14.

On March 27, 1998, the judge granted the defendants' joint motion to consolidate both actions upon his docket. On September 18, 1998, CABOR filed its motion for summary judgment, arguing that Buyer's First asserted no facts to support a cause of action against it and that it was completely immune from liability for its act of handling the arbitration. Later, on October 4, 1998, Realty One, Rigney, and Lupi filed a motion for summary judgment on both Buyer's First's claims and Realty One's counterclaims. Realty One argued that the remedy sought by Buyer's First—a "reversal" of the arbitration award after a de novo review—was not allowed under R.C. Chapter 2711. Moreover, it argued, Buyer's First could not show any specific grounds under the statute that would authorize the judge to vacate the arbitration award. Realty One then asked the judge to grant summary judgment in its favor on its counterclaims and confirm the two arbitration awards because Buyer's First failed to show grounds for the vacation or modification of the award.

In response to both motions for summary judgment, Buyer's First asserted that the CABOR arbitrators acted outside their authority, arguing that they had authority to consider only the division of commissions where there is an agreement between its members to share commissions. Buyer's First attached as exhibit "C" a document titled "Appendix I to Part Ten, Arbitrable Issues." It also attached an affidavit of James L. Restina, an officer of Buyer's First and a member of its board of directors, and copies of both the Collis and the Rossi/Averton Purchase Agreements.

In his affidavit, Restina claimed that Realty One sought "to obtain funds from Plaintiff which were earned by Plaintiff pursuant to contracts between other parties, and of which contracts Plaintiff, was a third-party beneficiary." He asserted that neither the by-laws, rules of governance, rules of arbitration, nor membership conditions authorize CABOR arbitrators to award damages or other compensation to a member "claiming funds earned by and paid to another member via a specific contract for services rendered." He also claimed that the sellers may have had separate contracts obligating them to pay Realty One commissions greater than those called for under the Buyer's First purchase agreements and which were, in fact, paid to Realty One by the sellers.

On December 8, 1998, the judge entered the following order:

"Defendant, Cleveland Area Board of Realtors' motion for summary judgment is granted. Motion of Defendants, Realty One Inc., Laura Rigney, and Marilyn Lupi for summary judgment on Plaintiffs complaints is hereby granted. Motion for summary judgment on the counterclaims of Realty One is granted. Pursuant to R.C. 2711.09, the Court hereby confirms the two arbitration awards. FINAL."

It is from this journal entry Buyer's First appealed.

It is clear that the order confirms the arbitration award but does not enter judgment on the award and, therefore, we are required to consider whether the order is final and appealable before addressing the merits of the Buyer's First appeal. We look to the following to answer that question: the rules announced in Stewart v. Midwestern Indem. Co (1989), 45 Ohio St.3d 124, 543 N.E.2d 1200, as reaffirmed on July 29, 1998 in Cleveland Police Patrolmen's Assn. v. Cleveland (1998), 82 Ohio St.3d 393, 696 N.E.2d 571; (2) the amended final order statute, R.C. 2505.02 (eff. July 21, 1998); (3) the Arbitration Act, R.C. 2711.01, et seq.; and (4) the origins of statutory arbitration.

While arbitration was recognized at common law, a judge would "not force the specific performance of an agreement to refer any matter in controversy between adverse parties to arbitrators. Nor would they compel arbitrators to make an award * * *. The reason given for this rule is that the courts will not aid parties in ousting, by their agreements, the jurisdiction of the ordinary tribunals of the country, established for the trial of causes." Conner v. Drake (1853), 1 Ohio St. 166, 168-169, 1853 WL 12; see Guider v. LCI Communications Holdings Co. (1993), 87 Ohio App.3d 412, 417, 622 N.E.2d 415, 418-419. In addition, a party engaged in common-law arbitration had the right to revoke an agreement to submit to arbitration at any time prior to the announcement of the award. Shafer v. Metro-Goldwyn-Mayer Distrib. Corp. (1929), 36 Ohio App. 31, 42, 172 N.E. 689, 693; Carey v. Commissioners of Montgomery Cty. (1850), 19 Ohio 245, 247, 1850 WL 83.²

In contrast to common-law arbitration, courts construing the early examples of statutory arbitration recognized that "it is capable of becoming extensively useful in its operation" as "it settles controversies speedily * * *," Carey, 19 Ohio at 28...