General Elec. Supply Co. v. Warden Elec., Inc.
| Decision Date | 14 September 1988 |
| Docket Number | No. 87-1407,87-1407 |
| Parties | GENERAL ELECTRIC SUPPLY COMPANY v. WARDEN ELECTRIC, INC., Appellant; Trumbull Memorial Hospital, Appellee. |
| Court | Ohio Supreme Court |
Syllabus by the Court
An order of a trial court which denies a stay of litigation pending arbitration and grants a motion to dismiss the arbitration between parties that have contracted to arbitrate is not a final, appealable order pursuant to R.C. 2505.02 when it does not, in effect, determine the action and prevent a judgment.
In May 1983, appellant, Warden Electric, Inc. (hereinafter "Warden"), entered into an agreement with Trumbull Memorial Hospital (hereinafter "TMH"), appellee herein. Under the terms of the agreement, Warden was to perform the electrical work for a construction project at the hospital. It is undisputed the agreement contained an arbitration clause which provided in pertinent part that:
"All claims, disputes and other matters in question between the Contractor and the Owner arising out of or relating to the Contract Documents or the breach thereof * * * shall be decided by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association then obtaining unless the parties mutually agree otherwise * * *."
Upon being awarded the TMH electrical contract, Warden entered into an agreement with General Electric Supply Company (hereinafter "GESCO"). Pursuant to such agreement, GESCO was to supply the electrical component parts required by the plans and specifications submitted for the project. Subsequently, a dispute arose between Warden and GESCO concerning the suitability of the component parts delivered for the job. When Warden refused to pay for the parts, GESCO filed an action for non-payment.
On October 11, 1985, Warden filed its answer to the GESCO complaint and a cross-claim against TMH. In the cross-claim, Warden demanded that (1) its dispute with TMH be referred to arbitration pursuant to the agreement; (2) the action filed by GESCO be stayed pending the outcome of the arbitration; (3) it be awarded damages in the amount of $917,136 for direct expenses and $1 million for loss of bonding capacity; and (4) it be awarded attorney fees and costs. On that same date, Warden filed a separate third-party complaint against TMH alleging that any liability owed to GESCO by Warden was due to certain acts or omissions of TMH. Warden demanded that the dispute averred in such third-party complaint be stayed and referred to arbitration pursuant to the aforementioned agreement. TMH then filed its answer and counterclaim along with third-party complaints against the project architect and the construction manager. In March 1986, Warden filed a demand for arbitration with the American Arbitration Association.
On June 2, 1986, the trial court issued several rulings. Among those rulings, the trial court ordered that any arbitration between Warden and TMH be stayed pending further order of the court. Essentially, the trial court ordered that all associated actions be stayed pending the outcome of the suit between GESCO and Warden. On February 3, 1987, GESCO and Warden settled their dispute. On February 9, 1987, Warden filed a motion for stay of the litigation with TMH pending the outcome of arbitration. Subsequently, TMH renewed a previously filed motion to dismiss the arbitration.
On March 25, 1987, the trial court denied Warden's motion to stay further action pending arbitration and granted the motion of TMH to dismiss the arbitration. The court of appeals dismissed Warden's appeal of that ruling for lack of a final, appealable order.
The cause is now before this court pursuant to the allowance of a motion to certify the record.
Arter & Hadden and Michael W. Currie, Columbus, for appellant.
Hoppe, Frey, Hewitt & Milligan and William L. Hawley, Warren, for appellee.
The primary issue presented in this action is whether the trial court's order which denied a stay of proceedings pending arbitration and also dismissed the arbitration is a final, appealable order pursuant to R.C. 2505.02. 1 We hold in the negative and affirm the judgment of the court of appeals.
Section 3(B)(2), Article IV of the Ohio Constitution provides:
"Courts of appeals shall have such jurisdiction as may be provided by law to review and affirm, modify, or reverse judgments or final orders of the courts of record inferior to the court of appeals within the district * * *."
R.C. 2505.02 defines a "final, appealable order":
"An order that affects a substantial right in an action which in effect determines the action and prevents a judgment, an order that affects a substantial right made in a special proceeding or upon a summary application in an action after judgment, or an order that vacates or sets aside a judgment or grants a new trial is a final order that may be reviewed, affirmed, modified, or reversed, with or without retrial."
Warden contends that the trial court's order in the instant action is: (1) an order that affects a substantial right in an action which in effect determines the action and prevents a judgment; and (2) an order that affects a substantial right made in a special proceeding. TMH concedes that the order affects a substantial right. 2 However, TMH maintains that the order does not meet the remaining criteria contained in R.C. 2505.02.
This particular action presents a significant challenge because while we have long favored enforcement of written arbitration clauses, we have also favored the avoidance of interlocutory appeals. Bellaire Bd. of Edn. v. Paxton (1979), 59 Ohio St.2d 65, 13 O.O.3d 58, 391 N.E.2d 1021. "This court has always been reluctant to allow immediate review of rulings made during the pendency of an action." Columbus v. Adams (1984), 10 Ohio St.3d 57, 60, 10 OBR 348, 350, 461 N.E.2d 887, 890. This reluctance is based upon the principle that "[t]he prompt and orderly disposal of litigation is an object much to be desired, and the entertainment of appeals from various orders made by the trial court during the progress of the main action is not in pursuance of such object." Squire v. Guardian Trust Co. (1946), 147 Ohio St. 1, 5, 33 O.O. 179, 181, 68 N.E.2d 312, 314.
We begin our analysis of the cause sub judice by addressing Warden's contention that the trial court's order determines the action and prevents a judgment. A review of the proceedings below reveals that none of the issues, other than arbitration, pertaining to the controversy brought to the trial court by Warden in its cross-claim and third-party complaint, has been determined. By denying a stay of proceedings and dismissing the arbitration, the trial court has not determined whether TMH breached its contract with Warden. Nor has it determined whether TMH required Warden to perform extra work beyond that called for by such contract. A judgment for Warden has not been prevented. No judgments have been rendered for or against any of the parties and the trial court has retained jurisdiction over all concerned. The court action will proceed to determine the exact issues raised by Warden when it brought this case into the courts. The trial court simply determined that Warden waived its right to arbitration; this determination has no permanent effect of any kind. Therefore, we dismiss Warden's contention that the trial court's order determines the action and prevents a judgment.
Warden further contends that the trial court's order is an order that affects a substantial right made in a special proceeding. We disagree. The instant action is no more than an ordinary civil action filed in accord with the Civil Rules, in which contractual rights are in dispute. Therefore, it by no means involves a special proceeding.
Warden contends that this action involves a special proceeding pursuant to Amato v. General Motors Corp. (1981), 67 Ohio St.2d 253, 21 O.O.3d 158, 423 N.E.2d 452. Amato arrived at the following balancing test for determining whether an order is made in a special proceeding: "This test weighs the harm to the 'prompt and orderly disposition of litigation,' and the consequent waste of judicial resources, resulting from the allowance of an appeal, with the need for immediate review because appeal after final judgment is not practicable." Id. at 258, 21 O.O.3d at 161, 423 N.E.2d at 456.
Even under the Amato balancing test, it is unquestionably clear that an appeal after final judgment is practicable. Warden has not forever lost its potential right to arbitrate. The waiver issue can be brought on appeal after final judgment by the trial court on the underlying action. Moreover, this ordinary breach of contract action may be resolved in Warden's favor and any further attempts to enforce the arbitration clause may be unnecessary. Warden also contends that the waste of judicial resources and cost of duplicative litigation will be great if an appeal cannot be brought at this time. We are mindful that some delay may occur by requiring this litigation to proceed. However, we find merit in the statement cited by TMH from Pewter Mug v. M.U.G. Enterprises (1975), 46 Ohio App.2d 93, 95, 75 O.O.2d 78, 79, 345 N.E.2d 426, 428, wherein the Court of Appeals for Franklin County considered a similar issue:
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