Glenmoore Builders, Inc. v. Jack Kennedy
| Decision Date | 07 December 2001 |
| Docket Number | 2001-P-0007,01-LW-5025 |
| Citation | 2001 Ohio 8777 |
| Parties | GLENMOORE BUILDERS, INC., Plaintiff-Appellee v. JACK KENNEDY, Defendant-Appellant DOORS, INC., et al., Defendant-Appellee CASE |
| Court | Ohio Court of Appeals |
Civil Appeal from the Court of Common Pleas Case No. 00 CV 0906
HON WILLIAM M. O'NEILL, P.J., HON. JUDITH A. CHRISTLEY, J HON. DIANE V. GRENDELL, J.
ATTY PETER C. KRATCOSKI, WILLIAMS, WELSER & KRATCOSKI, 11 South River Street, P.O. Box 396, Kent, OH 44240 (For Plaintiff-Appellee)
ATTY KARL R. RISSLAND, 9233 State Route 14, #100, Streetsboro, OH 44241 (For Defendant-Appellant)
ATTY. ANDREW S. McILVAINE, 200 Smokerise Drive, #200, Wadsworth, OH 44281 (For Defendant-Appellee)
This is an accelerated appeal submitted on the record and briefs of the parties. Jack Kennedy ("appellant") appeals the December 27, 2000 judgment entry by the Portage County Court of Common Pleas, denying his motion to dismiss the complaint, or, in the alternative, to stay the proceedings pending arbitration. For the foregoing reasons, we reverse the decision of the lower court and remand the matter for further proceedings consistent with this opinion.
Briefly, appellant's arguments in the instant appeal concern only the aspect of his motion to stay the proceedings pending arbitration. The underlying factual allegations of the instant case are not before us. Furthermore, as a result of the numerous claims, counterclaims, and cross-claims filed by the various parties, the factual and procedural posture of this case will be limited to that which involves the parties of the instant appeal.
On August 16, 1999, appellant and Glenmoore Builders, Inc. ("Glenmoore") entered into a purchase agreement where it was agreed that Glenmoore would build and appellant would buy a house that would be constructed on appellant's lot. Subsequently, the parties entered into an addendum to the purchase agreement for the construction of a finished basement. The purchase agreement included an arbitration clause.
On September 22, 2000, Glenmoore filed a complaint for foreclosure against defendants: appellant, Thelma K. Kennedy, Ravenna Savings Bank, Fairway Homes, Inc. ("Fairway"), Doors, Inc. ("Doors"), Streetsboro Sales and Services, Inc. ("Streetsboro Sales"), and the Portage County Treasurer. Glenmoore alleged that appellant breached the purchase agreement and addendum by not paying the balance of $34,514.27. Glenmoore also claimed that it detrimentally relied on appellant's promise to pay and that appellant was unjustly enriched. Glenmoore added that it recorded a mechanic's lien on appellant's property and that the named defendants have or claim to have an interest in appellant's property.[1]
Thereafter, on October 24, 2000, Doors filed an answer to Glenmoore's complaint. Doors also filed a counterclaim against Glenmoore, alleging, among other things, that Glenmoore breached their contract by not paying. Additionally, Doors filed cross-claims against appellant and the other defendants, asserting that it perfected a mechanic's lien on appellant's property. On November 8, 2000, Glenmoore filed an answer to Doors' counterclaim and cross-claims, asserting various defenses.
Subsequently, on November 16, 2000, appellant filed an answer to Glenmoore's complaint and to Doors' cross-claim. Appellant also filed cross-claims against Doors, Fairway, and Streetsboro Sales and a counterclaim against Glenmoore. Specifically, in his answer to Glenmoore's complaint, appellant asserted, among other things, that Glenmoore's complaint must be dismissed pursuant to the binding arbitration clause in the purchase agreement. In appellant's answer to Doors' cross-claim, appellant contended that Doors was barred by the absence of privity of contract.
Next, as to appellant's counterclaim against Glenmoore, appellant set forth various arguments. First, appellant alleged Glenmoore breached the purchase agreement because there were significant defects in the house. Appellant also claimed Glenmoore failed to secure lien waivers from subcontractors and failed to submit to binding arbitration. Appellant further alleged that Glenmoore slandered his title. Appellant requested contribution and indemnification if he were found liable for any part of the claims of Doors and Fairway. Finally, as to appellant's cross-claim against Doors, appellant alleged that some of the charges incurred by Doors were for Glenmoore's other projects and that the charges incurred in connection to the construction of his house were attributable to Glenmoore's negligence and incompetence.
That same day, November 16, 2000, appellant filed a motion to dismiss or, in the alternative, a motion to stay the proceedings pending arbitration. Specifically, appellant moved to dismiss Glenmoore's complaint as being prematurely filed because Glenmoore failed to refer its claims to binding arbitration as required under their purchase agreement. Alternatively, appellant moved to stay the proceedings pending the arbitration of Glenmoore's claims. Additionally, appellant filed a demand for a jury trial that same day.
Subsequently, on December 4, 2000, Doors filed an answer to appellant's cross-claim. That same day, Doors filed objections to appellant's motion to dismiss or stay the proceedings. Doors objected to any dismissal because its claims against Glenmoore and the other defendants were wholly independent of the claims between Glenmoore and appellant. Doors emphasized that it was not a party to the arbitration agreement between Glenmoore and appellant. Doors further contended that its claim for foreclosure on its mechanic's lien required all interested parties. Doors added that appellant filed a counterclaim and cross-claims which raised an issue as to his waiver of arbitration.
On December 20, 2000, Glenmoore filed a reply to appellant's counterclaim, asserting, among other things, that appellant breached the contract and that appellant's claims were barred by the doctrine of waiver, acquiescence, ratification, and laches.
In a judgment entry filed on December 27, 2000, the trial court denied appellant's motion without explanation. Thereafter, on January 24, 2001, appellant filed a timely appeal, asserting one assignment of error.[2]
In his sole assignment of error, appellant contends the trial court erred when it denied his motion to stay the proceedings pending arbitration. Appellant argues that no one has asserted that the arbitration clause in the purchase agreement was fraudulently induced. Appellant argues the disputed issues in this case are properly resolved through binding arbitration as set forth in the purchase agreement.
We begin with the appropriate standard of review. When reviewing the grant or denial of a motion to stay the proceedings pending arbitration, pursuant to R.C. 2711.02, an abuse of discretion standard is applied. McGuffey v. LensCrafters, Inc. (2001), 141 Ohio App.3d 44, 49; Harsco Corp. v. Crane Carrier Co. (1997), 122 Ohio App.3d 406, 410. Abuse of discretion connotes more than mere error of law or judgment; rather, it implies that the trial court's attitude was unreasonable, arbitrary, or unconscionable. Blakemore v. Blakemore (1983), 5 Ohio St.3d 217, 219.
In the instant case, the purchase agreement between Glenmoore and appellant contained the following arbitration clause, which states, in pertinent part:
Generally, public policy in Ohio encourages the resolution of disputes through arbitration. Smith v. Whitlatch & Co. (2000), 137 Ohio App.3d 682, 684. R.C. 2711.02 provides that, upon the motion of a party, a trial court is authorized to stay an action and refer it to arbitration once the court is satisfied that the disputed issue is referable to arbitration under a written agreement for arbitration. Any uncertainties regarding the applicability of an arbitration clause should be resolved in favor of coverage. Stehli v. Action Custom Homes, Inc. (Sept. 24, 1999), Geauga App. No. 98-G-2189, unreported, 1999 Ohio App. LEXIS 4464. The effect of an arbitration clause should not be denied unless it can be determined to a high degree of certainty that the clause does not cover the dispute at issue. Owens Flooring Co. v. Hummel Constr. Co. (2000), 140 Ohio App.3d 825, 829-830. To defeat a motion to stay the proceedings pending arbitration, a party must show that the arbitration clause itself, and not merely the contract in general, was fraudulently induced. ABM Farms, Inc. v. Woods (1998), 81 Ohio St.3d 498, syllabus.
Despite the strong public policy encouraging enforcement of arbitration clauses, a trial court may refuse to enforce an arbitration clause if a party waives his right to arbitration. Farrow Builders, Inc. v. Slodov (June 29, 2001), Geauga App. No. 2000-G-2288, unreported, 2001 Ohio App. LEXIS 2952, citing Griffith v. Linton (1998), 130 Ohio App.3d 746, 750. A party can waive his right to arbitrate under an arbitration clause by filing a complaint. Rock v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1992), 79 Ohio App.3d 126, 128. When an opposing party is confronted with a lawsuit, the right to arbitrate can be saved by seeking enforcement of the arbitration clause. Harsco...
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