James F. Sexton v. Kidder Peabody & Co., Inc., 96-LW-0953
| Decision Date | 07 March 1996 |
| Docket Number | 96-LW-0953,69093 |
| Parties | JAMES F. SEXTON, Plaintiff-appellee v. KIDDER PEABODY & CO., INC., et al, Defendant-appellants |
| Court | Ohio Court of Appeals |
Civil appeal from Court of Common Pleas Case No. 283,154.
For plaintiff-appellee: FRANK C. WHALEN, Attorney at Law, 1150 Leader Building, Cleveland, Ohio 44114 and JAMES F. SEXTON pro se, 2487 Noble Road, Cleveland Heights, Ohio 44121.
For defendant-appellants: ROBERT N. RAPP, Attorney at Law, 1400 McDonald Investment Center, 800 Superior Avenue, Cleveland Ohio 44114.
Defendants-appellants Kidder Peabody & Co. Incorporated and Craig Ross appeal the trial court's denial of their Motion for Stay of Proceeding and to Compel Arbitration.
The within matter arises from a lawsuit in common pleas court brought by plaintiff Sexton to recover damages from the defendants, Kidder Peabody & Co. Incorporated, Craig Ross and two other individual Kidder Peabody employees. Plaintiff Sexton alleged that the defendants either failed or refused to execute plaintiff's orders regarding a securities transaction which the plaintiff claimed that the defendants were obligated to do.
Defendants-appellants Kidder Peabody and Ross moved the trial court for an order staying all further proceedings and compelling arbitration based upon written agreements between Sexton and both Kidder Peabody and its predecessor, Clark, Dodge & Co. Sexton opposed the motion to compel arbitration on the grounds that the written agreements did not control with regard to the specific transaction which is the subject of the complaint. In a decision in which the court did not set forth its reasoning, the trial court, on May 16, 1995, denied the defendants' motion to compel arbitration and stay proceedings. The defendants, Kidder, Peabody & Co. and Ross, timely appealed. For the reasons stated below, we reverse the decision of the trial court and remand the case to the lower court for further proceedings.
The facts giving rise to this appeal are as follows. Plaintiff-appellee Sexton established an account for the purchase and sale of securities and executed a Customers Agreement with Clark, Dodge & Co. in December, 1973. Clark, Dodge & Co. subsequently combined with Kidder Peabody in June, 1974. Kidder Peabody became the successor to Clark, Dodge & Co. and continued to carry Sexton's account. The 1973 agreement remained operative according to its terms, and no new or different agreement was executed. In January, 1986, appellee Sexton and defendant-appellant Kidder Peabody entered into a further written agreement, "The Options Application and Agreement." In 1989, Kidder Peabody provided Sexton with a form of its own Customer's Agreement, which remained unexecuted. Each of these three written agreements contains an arbitration clause which mandates arbitration of matters which are in dispute between the parties. Appellee Sexton conducted transactions throughout the entire course of his relationship with Kidder Peabody up to and including the transaction which gave rise to the underlying complaint, in which appellee Sexton alleged that the appellants' failure to act on an order in January of 1991 caused him financial damage.
Appellants' sole assignment of error is as follows:
THE TRIAL COURT ERRED IN DENYING THE APPELLANT'S MOTION FOR STAY OF PROCEEDINGS AND TO COMPEL ARBITRATION OF ALL CLAIMS AND CONTROVERSIES PRESENTED IN THE COMPLAINT IN ACCORDANCE WITH THE TERMS OF WRITTEN AGREEMENTS FOR ARBITRATION.
Initially, we note for the record that pursuant to Ohio Revised Code 2711.02, an order denying a motion to compel arbitration is a final appealable order and therefore is subject to our review. Stewart v. Shearson Lehman Brothers, Inc. (1992), 71 Ohio App.3d 305.
It is the position of the appellants that each of the two written and executed agreements, both of which contain arbitration clauses, fully encompasses the claim asserted by appellee in the trial court. It is further the position of the appellants that each agreement is fully enforceable in accordance with its terms. Additionally, appellants contend that the unexecuted contract is enforceable between the parties because both parties have been performing consistently with the contract terms. Appellants contend, therefore, that it was error for the trial court to fail to enforce the arbitration clauses according to their terms and to deny the motion to compel arbitration.
The appellee contends that no contract exists between him and Kidder Peabody and, therefore, no arbitration clause exists to be enforced between him and Kidder Peabody. The appellee does not contend, however, that the making of either the 1973 agreement or the 1986 agreement is at issue. Appellee asserts that the 1973 agreement was vitiated by the passage of time and the 1986 agreement does not apply to the type of transaction at issue. Appellee does argue that the unexecuted 1989 written document does not represent a valid contract, thereby placing the "making of" that contract in issue.
It is the position of the appellee that where no contract exists, there can be no arbitration clause to enforce against him. Appellee contends that in the absence of a valid contract with an arbitration clause, the court cannot compel arbitration. This contention is correct as far as it goes.
As our court stated in Stocker v. Castle Inspections Inc. (1995), 99 Ohio App.3d 735 at 737, "Arbitration is a matter of contract and, despite the strong policy in its favor, a party cannot be compelled to arbitrate any dispute which that party has not agreed to submit. Teramar Corp v. Rodier Corp. (1987) 40 Ohio App.3d 39, 40, 531 N.E.2d 721, 722; Divine Constr. Co. v. Ohio American Water Co. (1991), 75 Ohio App.3d 311, 599 N.E. 2d 388; Schroeder v. Shearson, Lehman & Hutton, Inc. (Apr. 25, 1991), Cuyahoga App. No. 60236, unreported, 1991 WL 64318.11
However, in the matter sub judice, the record reflects that appellants have placed before the court two written and executed agreements and one written but unexecuted agreement which form the basis of their claim for a stay and for the court to compel arbitration of the dispute. Copies of each of the two executed agreements and the unsigned agreement were attached as exhibits to the appellants' Motion to Compel Arbitration in the court below. Although the appellee contends that these contracts do not exist as binding contracts enforceable between appellee and appellants, there is no evidence in the record before this court indicating that the executed agreements which form the basis of this appeal were void, null, inoperative, non-existent, procured by fraud or mistake, terminated, or non-applicable to these parties. Appellee does not deny that he executed the 1973 and the 1986 agreements. There is no evidence in the record that appellee made any allegation that either of the two executed agreements was procured by fraud or mistake.
The appellants properly attached each of the contracts upon which they relied to their motion filed in the lower court. The lower court had before it copies of the written agreements when it denied the appellants' motion to compel arbitration. Appellants now appeal the lower court's denial of their motion.
The matter before us is governed by R.C. 2711.01, et seq. In response to appellee's contention that no contract existed to be enforced, we look to R.C. 2711.03. The provision of R.C. 2711.03 states in pertinent part:
The party aggrieved by the failure of another to perform under a written agreement for arbitration may petition any court of common pleas having jurisdiction of the party so failing to perform or an order directing that such arbitration proceed in the manner provided for in such agreement; *** The court shall hear the parties, and upon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the agreement. If the making of the arbitration agreement or the failure to perform it is in issue, the trial court shall proceed summarily to the trial thereof. *** (Emphasis added.)
As our court stated in Bayer v. Mapes (Nov. 17, 1994), Cuyahoga App. No. 66541, unreported, dismissed, motion to certify overruled 71 Ohio St 3d 1500:
In accordance with the foregoing, it is clear that a trial is contemplated when the making of the arbitration agreement or the failure to perform it is in issue. Divine Constr. Co. v. Ohio-American Water Co. (1991), 75 Ohio App.3d 311; Schroeder v. Shearson, Lehman & Hutton, Inc,, April 25, 1991, Cuyahoga App. No. 60236, unreported. Where these issues are not presented, the trial court need only be satisfied that dispute is referable to arbitration before ordering a stay in its proceedings. Brumm v. McDonald & Co. Securities, Inc. (1992), 78 Ohio App.3d 96. (Emphasis added.)
The court in Divine Construction, supra, citing Colegrove v. Handler (1986), 34 Ohio App.3d 142, stated that:
Here there is no question that appellee executed both the 1973 and 1986 agreements. The record before us...
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