Juhasz v. Costanzo

• Decision Date: 14 August 2001
• Docket Number: No. 99-C.A.-294.,99-C.A.-294.
• Citation: Juhasz v. Costanzo, 144 Ohio App.3d 756, 761 N.E.2d 679 (Ohio App. 2001)
• Parties: JUHASZ et al., Appellees, v. COSTANZO, Appellant.
• Court: Ohio Court of Appeals

144 Ohio App.3d 756

761 NE 2d 679

JUHASZ et al., Appellees, v. COSTANZO, Appellant.

No. 99-C.A.-294.

Court of Appeals of Ohio, Seventh District, Mahoning County.

Decided August 14, 2001.

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Mary Jane Stephens, for appellee John B. Juhasz.

Charles L. Richards, for appellee Alan J. Matavich.

Letson, Griffith, Woodall, Lavelle & Rosenberg Co., L.P.A., Daniel B. Letson and Bruce M. Broyles, for appellant.

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WAITE, Judge.

This timely appeal arises from a judgment entry of the Mahoning County Court of Common Pleas denying appellant's motion for a stay of proceedings pending arbitration. Appellant argues that the parties signed an agreement to arbitrate their dispute over appellees' attorney fees, and that appellees' attempts to withdraw from arbitration were not permitted under R.C. 2711.01. For the following reasons, the judgment of the trial court is affirmed in part and reversed in part.

Appellees John B. Juhasz ("Juhasz") and Alan J. Matavich ("Matavich") are licensed Ohio attorneys who represented attorney Maridee L. Costanzo ("appellant") in disciplinary proceedings before the Ohio Supreme Court. The disciplinary proceedings occurred in 1997-1998. Appellees were successful, and all allegations against appellant were dismissed.

Appellees attempted to collect $38,500 in legal fees from appellant for their work in defending her against the ethics charges. The fee arrangement was based on an oral contract. A dispute arose over the attorneys' fees, and the parties brought the matter before the Fee Dispute Committee of the Trumbull County Bar Association for arbitration.

On September 13, 1999, appellees filed a complaint in the Mahoning County Court of Common Pleas for breach of contract and quantum meruit arising out of the attorney fee dispute with appellant. The arbitration action was still pending before the Trumbull County Bar Association when the complaint was filed.

On September 29, 1999, appellant filed a motion to stay proceedings. The motion alleged that the parties had signed written contracts agreeing that the Trumbull County Bar Association Fee Dispute Committee would arbitrate their dispute. The motion argued that under R.C. 2711.01(A) a written contract for arbitration is irrevocable. Appellant argued that arbitration proceedings were already in progress and an arbitration hearing was scheduled for October 14, 1999. Appellant reasoned that under R.C. 2711.02, the trial court was required to stay the proceedings in the Mahoning County Court of Common Pleas until the arbitration proceedings had concluded.

On October 1, 1999, appellant filed a motion for protective order, again requesting a stay of the trial court proceedings and asking for an order precluding appellant from attending a deposition scheduled for October 4, 1999.

On October 4, 1999, the trial court denied appellant's motion for a protective order. Appellant filed a motion for relief from judgment and reconsideration on October 5, 1999. The motion was overruled by judgment entry the same day. The judgment entry also overruled, without explanation, appellant's motion for stay of proceedings. It is this latter judgment entry that appellant has appealed.

On November 10, 1999, appellant filed this timely appeal. Although the notice of appeal was filed more than thirty days after the journalization of the October 5, 1999 judgment entry, the record indicates that appellant was not sent notice of the judgment until October 13, 1999. Under App.R. 4(A) and Civ.R. 58(B), the time for filing an appeal did not begin to run until October 13, 1999. This appeal was properly filed within thirty days of October 13, 1999.

On February 22, 2000, appellees filed a motion to dismiss the appeal for lack of a final appealable order. On April 12, 2000, this court overruled the motion, citing R.C. 2711.02 which specifically states that "an order under this section that grants or denies a stay of a trial of any action pending arbitration * * * is a final order * * *."

Appellant's sole assignment of error states:

"The trial court erred in denying defendant's motion to stay proceedings pending arbitration."

Appellant argues that appellees are bound by written arbitration contracts that do not permit them to unilaterally withdraw from arbitration. Appellant also argues that R.C. 2711.02 requires a court to stay any proceedings that are referable to arbitration under a written contract of arbitration. For appellant to succeed in this appeal she must successfully argue both prongs of her assignment of error: (1) that appellees have entered into valid written arbitration contracts and (2) that R.C. 2711.02 requires the trial court to issue a stay of proceedings with respect to those written contracts.

A. Standard of Review

The denial of a motion to stay proceedings and refer a matter to arbitration is subject to review only for an abuse of discretion. Harsco Corp. v. Crane Carrier Co. (1997), 122 Ohio App.3d 406, 410, 701 N.E.2d 1040, 1043. An abuse of discretion is more than an error of law or judgment; it implies the court's attitude is unreasonable, arbitrary, or unconscionable. Blakemore v. Blakemore (1983), 5 Ohio St.3d 217, 219, 5 OBR 481, 482, 450 N.E.2d 1140, 1142.

B. Power to Withdraw from Arbitration

Appellant maintains that appellees could not withdraw their consent to submit to statutory arbitration. Appellant acknowledges that appellees attempted to withdraw their consent to arbitration but contends that this attempt was a nullity. Appellant argues that a written contract to arbitrate cannot be revoked. Appellant cites R.C. 2711.01, which states:

"(A) A provision in any written contract, except as provided in division (B) of this section, 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, or any agreement in writing between two or more persons to submit to arbitration any controversy existing between them at the time of the agreement to submit, or arising after the agreement to submit, from a relationship then existing between them or that they simultaneously create, shall be valid, irrevocable, and enforceable, except upon grounds that exist at law or in equity for the revocation of any contract." (Emphasis added.)

Appellant argues that Ohio courts have consistently held that a written contract for arbitration is binding on the parties in the same way that any other written contract is binding and that there is no procedure for withdrawing from contractual arbitration. Appellant cites Kelm v. Kelm (1992), 73 Ohio App.3d 395, 401, 597 N.E.2d 535, 539, which held that "at common law, arbitration was enforced, although the submission could be revoked before an award was made. By statute, a contract to arbitrate is binding." Appellant argues that as early as 1850, the Ohio Supreme Court rejected the principle that a statutory agreement to arbitrate could be revoked at will. Carey v. Montgomery Cty. Commrs. (1850), 19 Ohio 245, 281-282, 1850 WL 83. Appellant cites a number of other cases, none of which discusses the issue of how a party may withdraw from a written agreement to arbitrate.

Appellees argue that parties who have consented to common-law arbitration may withdraw their consent at any time prior to announcement of the arbitrator's award. Shafer v. Metro-Goldwyn-Mayer Distrib. Corp. (1929), 36 Ohio App. 31, 42, 172 N.E. 689, 693; Polk v. Cleveland RR. Co. (1925), 20 Ohio App. 317, 324, 151 N.E. 808, 811; Kelm, supra, at 401, 597 N.E.2d at 538-539. Appellees do not explain why the written consent and agreement contracts submitted by appellant would not fall under the control of R.C. 2711.02, which explicitly makes a written contract for arbitration irrevocable.

Ohio courts have long favored the arbitration process as an alternative to litigation in the court system. Schaefer v. Allstate Ins. Co. (1992), 63 Ohio St.3d 708, 711, 590 N.E.2d 1242, 1244-1245. Arbitration provides parties with a "relatively expeditious and economic means of resolving a dispute" and has the additional advantage of unburdening crowded court dockets. Id. at 712, 590 N.E.2d at 1245. Jurisdiction over arbitration derives from both statutes and common law. Davidson v. Bucklew (1992), 90 Ohio App.3d 328, 332, 629 N.E.2d 456, 458-459. R.C. 2711.01 et seq. provides an extensive, but not exclusive, scheme for obtaining relief pursuant to arbitration. Statutory arbitration requires a valid written contract or contractual provision in which the parties agree to settle a dispute by arbitration. R.C. 2711.01(A). Where the parties do not pursue statutory arbitration or do not qualify for statutory arbitration, principles of common-law arbitration continue to apply. Warner v. CTL Eng., Inc. (1983), 9 Ohio App.3d 52, 54, 9 OBR 70, 71-72, 458 N.E.2d 399, 401-402.

The most significant difference between statutory and common-law arbitration is the ability of the parties to unilaterally revoke or withdraw from arbitration prior to the announcement of a final arbitrator's award. Shafer, supra, 36 Ohio App. at 42, 172 N.E. at 693; Kelm, supra, 73 Ohio App.3d at 401, 597 N.E.2d at 538-539. Parties subject to statutory arbitration have no right to withdraw from arbitration except under general principles of contract law. R.C. 2711.01(A); Garlikov v. E.M. Ellman & Assoc. (Aug. 28, 1979), Franklin App. No. 79AP-176, unreported.

To prove the existence of a contract, a party must establish the essential elements of a contract: an offer, an acceptance, a meeting of the minds, an exchange of consideration, and certainty as to the essential terms of the contract. Nilavar v. Osborn (1998), 127 Ohio App.3d 1, 11, 711 N.E.2d 726, 732-733. "In order to declare the existence of a contract, both parties to the contract must consent to its terms * * *; there must be a meeting of the minds of both parties *...