Church v. Fleishour Homes, Inc.

• Decision Date: 16 April 2007
• Docket Number: No. 2006-CA-00233.,2006-CA-00233.
• Citation: 874 N.E.2d 795,172 Ohio App.3d 205,2007 Ohio 1806
• Parties: CHURCH et al., Appellees, v. FLEISHOUR HOMES, INC., et al., Appellants.
• Court: Ohio Court of Appeals

874 N.E.2d 795

172 Ohio App.3d 205

2007-Ohio-1806

CHURCH et al., Appellees, v. FLEISHOUR HOMES, INC., et al., Appellants.

No. 2006-CA-00233.

Court of Appeals of Ohio, Fifth District, Stark County.

Decided April 16, 2007.

Robert E. Soles Jr. and Kevin C. Cox, North Canton, for appellees.

Martin H. Sitler, Akron, for appellants.

GWIN, Presiding Judge.

{¶ 1} Appellant Detective Homes Inspections, Ltd. ("DHI") appeals the decision of the Stark County Court of Common Pleas that denied its motion to dismiss the trial court's proceedings. DHI argues that since the parties signed a contract that included an arbitration agreement, the dispute should be submitted to binding arbitration. Appellees Mark, Catherine D., and Catherine S. Church contend that they did not sign, nor did they authorize their real estate agent to sign the contract containing the arbitration clause, thus rendering the arbitration clause unenforceable.

STATEMENT OF THE FACTS AND CASE

{¶ 2} On August 9, 2003, Jeff Desjardins, a representative of DHI, presented a one-page home-inspection agreement to JoAnn Grisak, the real estate agent of the Churches. The written agreement set forth the terms and conditions of the visual/nondestructive home inspection that Desjardins was to perform at the future home of the Churches located at 7100 Deer Trail NW, in North Canton, Ohio. The inspection was requested by the Churches through their real estate agent Grisak and was done as part of their purchase of the Deer Trail residence.

{¶ 3} On the day and scheduled time of the home inspection, Desjardins met Grisak at the residence. He confirmed with her that he was to conduct the home inspection for the Churches. Before beginning his inspection, he provided Grisak with the home-inspection agreement that set forth the terms of the home inspection. After reviewing the one-page document, Grisak signed the agreement on behalf of the Churches, indicating their agreement to the terms and conditions set forth therein by signing the document as follows: "JoAnn Grisak for Mark and Cathy Church."

{¶ 4} Upon Grisak's signing the document, Desjardins conducted the home inspection for consideration of $300. Upon Desjardins's completing his inspection, Grisak again signed the agreement for Mark and Cathy Church, indicating that the home inspection was completed in accordance with the terms of the agreement. Within the agreed-to period, Desjardins prepared a 14-page report recording his findings, which he sent directly to Mark and Cathy Church. However, it is alleged that Desjardins failed to discover and disclose significant defects in the home to the Churches. Among the significant defects in the home is mold growth that has adversely affected the health of Mark and Catherine D. Church and their seven-year-old daughter, Catherine S. Church.

{¶ 5} On February 1, 2006, the Churches filed a complaint against Ronald and Diane Marsilio (the sellers), Fleishour Homes, Inc. (the builder), and DHI. The Churches' claims against DHI initially included breach of contract, negligent misrepresentation, and violation of the Consumers Sales Practices Act ("CSPA"), and the Churches sought a declaratory judgment from the court with regard to a liquidated-damages provision contained in the home-inspection agreement.

{¶ 6} On March 8, 2006, DHI answered the Churches' complaint, denying the allegations against it and asserting various affirmative defenses, including that the claims were barred by a contractual arbitration provision.

{¶ 7} On March 22, 2006, DHI filed a motion for partial judgment on the pleadings on the grounds that the Churches had failed to support their contract claim by attaching the written instrument upon which their claims were based, as required by Ohio Civ.R. 10(D)(1). DHI also asserted that the CSPA claim was time-barred.

{¶ 8} On April 10, 2006, the Churches filed an opposition brief to DHI's motion. In their brief, the Churches stated that "[p]ursuant to a contingency in their purchase agreement with the Marsilios, Plaintiffs contracted with Defendant, Detective Homes Inspections, Ltd. (`Defendant') to perform an inspection of the home. This inspection was completed on August 9, 2003, and a written report was submitted to Plaintiffs shortly thereafter." The Churches attached a copy of the written report and home-inspection agreement to their brief as an exhibit, and requested leave of the trial court to amend their complaint by attaching the contract to the complaint.

{¶ 9} On April 13, 2006, the trial court dismissed the CSPA claim against DHI as being time-barred, and ruled that the exhibit attached to the Churches opposition brief of the inspection report and inspection agreement would be attached to the pleadings to satisfy Civ.R. 10(D)(1). Of particular relevance to this appeal is the arbitration provision directly above the acknowledgement and acceptance section that states: "ARBITRATION PROVISION — Any dispute between the parties shall be settled by arbitration before the Better Business Bureau."

{¶ 10} On June 13, 2006, DHI filed a motion seeking to enforce the arbitration provision contained in the home-inspection agreement. Accompanying DHI's motion was an affidavit from Desjardins, the home inspector that performed the general home inspection on behalf of DHI.

{¶ 11} On June 19, 2006, the Churches field a brief in opposition to DHI's motion to enforce the arbitration provision contained in the home-inspection agreement. The Churches did not challenge the evidence DHI attached to its motion. Moreover, the Churches did not submit any evidence in support of their contentions with their opposition brief.

{¶ 12} On June 19, 2006, the Churches also filed an amended complaint. As background, the Churches requested leave of the trial court to file an amended complaint so that they could include allegations of injuries to Mark Church. On May 22, 2006, the trial court granted the Churches' request to file their amended complaint, which they filed on June 19, 2006.

{¶ 13} On June 28, 2006, DHI filed its answer to the Churches' first amended complaint. Consistent with its first answer, DHI denied the allegations against it and again asserted various affirmative defenses, including enforcement of the contractual arbitration provision.

{¶ 14} On June 30, 2006, DHI filed a reply brief to the Churches' memorandum in opposition to the motion to enforce the arbitration provision.

{¶ 15} On July 6, 2006, the Churches filed a response to DHI's reply brief.

{¶ 16} Finally, on July 11, 2006, the trial court denied DHI's motion to enforce the arbitration provision. In its judgment entry, the trial court noted that "there is no proof before the Court that the individuals signing the alleged arbitration provision, in fact, had the authority to bind the parties to this lawsuit to arbitration. The Court finds that there is no proof from an affirmative nature or negative nature concerning this issue." Further, the trial court found that "any cause of action filed by the minor child would not be subject to any arbitration provision based on the evidence presently before the court."

{¶ 17} It is from the trial court's ruling that DHI has filed the instant appeal, raising the following assignment of error:

{¶ 18} "I. The trial court erred in denying the appellant's motion to enforce the arbitration provision contained in the home inspection agreement."

Standard of Review

{¶ 19} In Stinger v. Ultimate Warranty Corp., this court held that "`[t]he issue of whether a controversy is arbitrable under an arbitration provision of a contract is a question of law for the court to decide'; therefore, our standard of review is de novo. Gaffney v. Powell (1995), 107 Ohio App.3d 315, 319, 668 N.E.2d 951." 161 Ohio App.3d 122, 2005-Ohio-2595, 829 N.E.2d 735, ¶ 9.

{¶ 20} R.C. 2711.01(A) provides that a provision in a written contract "to settle by arbitration a controversy that subsequently arises out of the contract, or out of the refusal to perform the whole or any part of the contract * * * shall be valid, irrevocable, and enforceable, except upon grounds that exist at law or in equity for the revocation of any contract." In general, a clause providing for arbitration "should not be denied effect unless it may be said with positive assurance that the subject arbitration clause is not susceptible to an interpretation that covers the asserted dispute." Duryee v. Pie Mut. Ins. Co. (Sept. 23, 1999), 10th Dist. Nos. 98AP-1255 and 98AP-1256, 1999 WL 744341.

{¶ 21} DHI did not file a petition to stay the trial court proceedings under R.C. 2711.02. It did seek an order compelling arbitration under R.C. 2711.03. These two statutes provide for separate and distinct remedies for enforcement of an arbitration agreement. Brumm v. McDonald & Co. Secs., Inc. (1992), 78 Ohio App.3d 96, 100, 603 N.E.2d 1141.

{¶ 22} R.C. 2711.02 provides for indirect enforcement of an arbitration agreement by staying pending trial court proceedings on an issue that is subject to arbitration. R.C. 2711.03 provides:

{¶ 23} "The party aggrieved by the alleged failure of another to perform under a written agreement for arbitration may petition any court of common pleas * * * for an order directing that the arbitration proceed in the manner provided for in the written agreement. The court shall hear the parties, and, upon being satisfied that the making of the agreement for arbitration or the failure to comply with the agreement is not in issue, the court shall make an order directing the parties to proceed to arbitration * * *." (Emphasis added.)

{¶ 24} R.C. 2711.03 provides for direct enforcement by a petition to a trial court for an order compelling arbitration. Brumm v. McDonald & Co. Secs., Inc. In either type of proceeding, the very existence of an agreement to arbitrate can be an issue that the court must resolve. Under R.C. 2711.03, either party has the right to a jury trial if the existence of an...