Champion Chrysler v. Dimension Serv. Corp.

• Decision Date: 27 December 2018
• Docket Number: No. 17AP-860,17AP-860
• Citation: 118 N.E.3d 490,2018 Ohio 5248
• Parties: CHAMPION CHRYSLER, Plymouth Jeep, and Ed Parker et al., Plaintiffs-Appellees, v. DIMENSION SERVICE CORPORATION, Defendant-Appellant.
• Court: Ohio Court of Appeals

118 N.E.3d 490

2018 Ohio 5248

CHAMPION CHRYSLER, Plymouth Jeep, and Ed Parker et al., Plaintiffs-Appellees,

v.DIMENSION SERVICE CORPORATION, Defendant-Appellant.

No. 17AP-860

Court of Appeals of Ohio, Tenth District, Franklin County.

Rendered on December 27, 2018

On brief: Kegler Brown Hill + Ritter Co. LPA, Thomas W. Hill, and Robert G. Schuler, Columbus, for appellees. Argued: Thomas W. Hill.

On brief: Nardone Limited, Vincent J. Nardone, and Christopher W. Tackett, Columbus, for appellant. Argued: Christopher W. Tackett.

DECISION

HORTON, J.

{¶ 1} Defendant-appellant, Dimension Service Corporation ("Dimension"), appeals from a judgment of the Franklin County Court of Common Pleas that granted the plaintiffs-appellees' motion to confirm a final arbitration award and overruled Dimension's motion to vacate the final arbitration award. For the following reasons, we affirm the judgment.

I. FACTUAL AND PROCEDURAL HISTORY

{¶ 2} Dimension administers vehicle service contracts to automobile purchasers. Each of the appellees, Champion Chrysler, Plymouth Jeep and Ed Parker, Bert Ogden Dealer Group, Ferguson Dealer Group, Allen Tillery Chevrolet and Great Lakes Insurance Agency, Inc., entered into a Profit Share Agreement ("PSA") with Dimension.¹ All of the appellees, except Great Lakes Insurance Agency, Inc., were car dealers and offered consumers a Dimension vehicle service contract at the point of sale. On July 28, 2014, appellees and Darryl Hickman (collectively "claimants") served a joint arbitration demand on Dimension pursuant to the mandatory arbitration provisions in the PSAs, arguing that Dimension failed to make payments in violation of its obligation to do so under the PSAs. Claimants filed a single demand for consolidated arbitration because they were each pursuing claims for additional profit share payments pursuant to identical PSAs. The arbitration demand nominated Kirk Borchardt to serve as the claimants' selected arbitrator. Dimension nominated Frank A. Ray as its selected arbitrator. The final arbitrator, Richard Neville was selected. On January 12, 2015, Dimension objected to the consolidated arbitration.

{¶ 3} After briefing, on March 16, 2015, the arbitration panel held that the claims of the six claimants would be consolidated for discovery and motion practice purposes. The panel examined the PSAs finding the same language in each granted the panel broad authority. The consolidation decision set forth that, "[t]he Panel, having been granted this broad authority, finds that this is a proper case for consolidated discovery and motion practice based in part on the principle that arbitration is intended to be an efficient, timely, and cost-effective alternative to litigation." (Mar. 16, 2015 Decision.) The decision set forth that consolidation for discovery and motion practice purposes would "not prevent separate, individual evidentiary presentations as to defenses or claims," and Dimension was free to petition the arbitration panel to request a separate hearing for any individual claimant and the panel would consider the request. (Decision.)

{¶ 4} In August 2015, Arbitrator Borchardt resigned from the arbitration panel. Borchardt had accepted a job as a consultant for Innovative Aftermarket Systems, Inc., the parent company of First Dealer Resources, LLC, the entity that served as Dimension's marketing representative. Borchardt acknowledged that he was resigning because of the conflict of interest.

{¶ 5} Subsequently, claimants appointed Jason Dubner to replace Borchardt. Dimension objected to Dubner on September 18, 2015 because Dubner had previously served as an arbitrator in a separate arbitration proceeding between Dimension and two of the present claimants and because Dubner had previously represented clients of Frank Klaus, an individual with business relationships with claimants. The arbitration panel denied Dimension's request to disqualify Dubner.

{¶ 6} The arbitration panel issued an interim award on October 19, 2016, granting relief to each of the appellees, but denying relief to Darryl Hickman. Dimension filed a motion for reconsideration alleging calculation errors. The arbitration panel issued a final award on December 27, 2016.

{¶ 7} Appellees filed an application for an order confirming the final arbitration award in the Franklin County Court of Common Pleas and Dimension filed a motion to vacate the final arbitration award. The trial court granted the motion to affirm and denied the motion to vacate.

II. ASSIGNMENTS OF ERROR

{¶ 8} Dimension filed a timely notice of appeal and asserts the following assignments of error:

[I.] By holding that the arbitration panel had authority to consolidate six separate bilateral arbitration claim[s], the Trial Court erred in its legal conclusion and ruled in conflict with the U.S. Supreme Court ruling in Stolt-Nielsen v. AnimalFeeds International , by failing to recognize that parties must expressly consent to authorize consolidation of separate claims.

[II.] The Trial Court erred in finding that the arbitration panel did not exceed its authority under R.C. 2711.10(D), while failing to consider the language of the arbitration agreements, which did not grant the panel authority to consider the request to consolidate or authority to order consolidation.

[III.] The Trial Court erred in finding that the arbitration panel had authority to consider consolidation regarding Appellees' six separate claims against the Appellant Dimension, because R.C. 2712.52 specifically provides that a petition, along with proof of unanimous consent to consolidation, must be filed with the courts to consolidate separate arbitration claims.

[IV.] The Trial Court Erred in finding that the arbitration panel had authority to consolidate any two of the appellees' six separate claims against Dimension because the consolidation question is a threshold arbitrability question that was reserved for the Courts, as expressed in Shakoor v. VXI Glob. Solutions , 2015-Ohio-2587, 35 N.E.3d 539, ¶ 48 (7th Dist.) and Stolt-Nielsen .

[V.] The Trial Court erred in failing to consider that Arbitrator Borchardt resigned from the arbitration panel for a conflict of interest with Claimants' agent, and had participated in the improper consolidation ruling, which further tainted the consolidation ruling and amounted to evident partiality.

[VI.] The Trial Court erred in failing to consider the nature and extent of involvement that Claimants' agent had in Claimants' disputes with Appellant Dimension, when the Trial Court incorrectly ruled that the agent's prior financial relationship with Arbitrator Dubner did not amount to evident partiality, requiring the arbitration award to be vacated under R.C. 2711.10.

[VII.] The Trial Court erred in ruling that the arbitration panel did not exceed its authority when the arbitration panel failed to consider the express language of all six agreements, which stated that Allstate was required to calculate the amount of any profit share payments due under the agreements.

[VIII.] The Trial Court erred in failing to consider direct evidence of double-counting to award more than $69,000 that Dimension had already paid to satisfy a 2012 arbitration award, and erred in incorrectly finding that the double-counting was within the panel's interpretive discretion.

III. ANALYSIS

{¶ 9} Ohio has a well-established public policy that favors arbitration. State v. Ohio Civ. Serv. Emps. Assn., Local 11 AFSCME AFL-CIO , 10th Dist., 2016-Ohio-5899, 71 N.E.3d 622, ¶ 12. Arbitration awards are presumed valid, and a reviewing court may not merely substitute its judgment for that of the arbitrator. Id.

{¶ 10} "Once an arbitration is completed, a court has no jurisdiction except to confirm and enter judgment ( R.C. 2711.09 and 2711.12 ), vacate ( R.C. 2711.10 and 2711.13 ), modify ( R.C. 2711.11 and 2711.13 ), correct ( R.C. 2711.11 and 2711.13 ), or enforce the judgment ( R.C. 2711.14 )." State ex rel. R.W. Sidley, Inc. v. Crawford , 100 Ohio St.3d 113, 2003-Ohio-5101, 796 N.E.2d 929, ¶ 22. "A trial court may not evaluate the actual merits of an award and must limit its review to determining whether the appealing party has established that the award is defective within the confines of R.C. Chapter 2711." Telle v. Estate of William Soroka , 10th Dist. No. 08AP-272, 2008-Ohio-4902, 2008 WL 4368567, ¶ 9. Since R.C. Chapter 2711 is the method to challenge an arbitration award, "[t]he jurisdiction of the courts to review arbitration awards is thus statutorily restricted; it is narrow and it is limited." Warren Edn. Assn. v. Warren City Bd. of Edn. , 18 Ohio St.3d 170, 173, 480 N.E.2d 456 (1985).

{¶ 11} R.C. 2711.10 provides that a court may vacate an award "upon the application of any party," for any of the following reasons: (1) the award was procured by corruption, fraud, or undue means; (2) there was evident partiality or corruption on the part of the arbitrators; (3) the arbitrators are guilty of misconduct in refusing to postpone the hearing, or refusing to hear pertinent and material evidence; or (4) the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made. R.C. 2711.10 thus "limits judicial review of arbitration to claims of fraud, corruption, misconduct, an imperfect award, or that the arbitrator exceeded his authority." Goodyear Tire & Rubber Co. v. Local Union No. 200, United Rubber, Cork, Linoleum & Plastic Workers of Am. , 42 Ohio St.2d 516, 330 N.E.2d 703 (1975), paragraph two of the syllabus.

{¶ 12} R.C. 2711.09 provides that when a party applies to the court for an order confirming an arbitration award, the court "shall grant such an order and enter judgment thereon, unless the award is vacated, modified, or corrected as prescribed in sections 2711.10 and 2711.11 of the Revised Code." "The language of R.C. 2711.09 is mandatory. If no motion to vacate or modify an award is filed, the court must...