Independence Bank v. Erin Mechanical

• Decision Date: 20 June 1988
• Docket Number: No. 53914,53914
• Citation: 550 N.E.2d 198,49 Ohio App.3d 17
• Parties: INDEPENDENCE BANK et al., Appellees, v. ERIN MECHANICAL, Appellee, et al.; Lakewood Hospital et al., Appellants.
• Court: Ohio Court of Appeals

Page 17

49 Ohio App.3d 17

550 N.E.2d 198

INDEPENDENCE BANK et al., Appellees, v. ERIN MECHANICAL, Appellee, et al.;

Lakewood Hospital et al., Appellants.

No. 53914.

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

June 20, 1988.

Syllabus by the Court

Because Ohio policy favors arbitration a clause in a contract providing for dispute resolution by arbitration will be judicially enforced unless the court is firmly convinced that the clause is inapplicable to the dispute in question. Any doubts will be resolved in favor of arbitration.

Michael Occhionero, for appellees Independence Bank et al.

Michael Peterson and Clark B. Weaver, Cleveland, for appellee Erin Mechanical.

Cavitch, Familo & Durkin Co., L.P.A., E. John Brzytwa, Jr., Cleveland, and Kerin Lyn Kaminski, for appellants Lakewood Hospital and city of Lakewood.

NAHRA, Chief Judge.

Lakewood Hospital and the city of Lakewood, appellants, are appealing the judgment rendered against them and in favor of Erin Mechanical ("Erin"), appellee, in the amount of $141,750.51 plus interest following a trial to the court.

On February 23, 1983, the parties entered into a contract for the installation of a fire protection sprinkler system at Lakewood Hospital. In late March 1984, Erin experienced financial difficulties and was unable to complete the contract. After walking off the job, Erin returned to remove its equipment and tools. While in the process of removal, an agent of appellant asked the Erin employees to stop until he found out what was going on. The Erin employees left and did not return for the tools and equipment. Erin then arranged for a completion contractor, and Erin permitted the completion contractor to use its manpower, papers, records, tools, equipment and materials. The completion contractor discovered that the tools, equipment and materials were missing prior to commencing its work in April 1984. The tool boxes had been broken into, the locks on the gangboxes were cut and the gangboxes stripped, chains had been snapped and the back door to the trailer was pried open and much of the material was gone. The theft was reported to Erin and later to the police.

On June 19, 1984, Independence Bank obtained a cognovit judgment against Erin and others individually, and the court appointed a receiver for appellee. On May 20, 1985, Erin moved for leave to file a third-party complaint against appellants for the loss of its tools, equipment and materials, which was granted on May 24. Prior to answering, appellants moved to stay the trial court proceedings and demanded arbitration pursuant to the terms of the contract. The court denied appellants' motion.

Following a trial to the court, the court concluded that appellants had seized Erin's tools, equipment and material pursuant to the contract between the parties and that the seizure constituted delivery of the goods to appellants and created a mutual benefit bailment. The court found that appellants "displayed an apathetic attitude as to the security and care of Erin Mechanical's tools, equipment and material * * *," and inferred that appellants were negligent when the goods were not returned to Erin. The court rendered judgment for Erin and appellants timely appealed.

I

Appellants' third assigned error, which will be addressed first since it is dispositive of this appeal, is that:

"The trial court erred in denying Lakewood's motion to arbitrate the dispute between it and Erin and as a result was without jurisdiction to try the third-party complaint."

It has long been the policy of the law to favor and encourage arbitration. Campbell v. Automatic Die & Products Co. (1954), 162 Ohio St. 321, 329, 55 O.O. 195, 198, 123 N.E.2d 401, 405. Ohio law provides that a court must stay trial proceedings to allow arbitration as follows:

"If any suit or proceeding is brought upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceedings is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the agreement * * *." R.C. 2711.02.

Because of the policy favoring arbitration, this court has opined that a clause in a contract providing for dispute resolution by arbitration should not be denied effect " 'unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. * * *' " Gibbons-Grable Co. v. Gilbane Bldg. Co. (1986), 34 Ohio App.3d 170, 173, 517 N.E.2d 559, 562 (quoting from Siam Feather & Forest Products Co. v. Midwest Feather Co. [S.D.Ohio 1980], 503 F.Supp. 239, 241, affirmed [C.A.6, 1981], 663 F.2d 1073). Any doubts should be resolved in favor of coverage under the contract's arbitration clause. Id.

The arbitration clause in this case, which is contained in Article 7, Section 7.9.1, provides, in relevant 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." (Emphasis added.)

This language is broad and clearly includes all claims involving the contract documents and breaches thereof.

According to Article 1, Section 1.1.1 of the parties' contract, the "Contract Documents" include the "General Conditions of the Contract for Construction."...