Stewart v. Midwestern Indem. Co.

• Decision Date: 23 August 1989
• Docket Number: No. 88-1083,88-1083
• Citation: 45 Ohio St.3d 124,543 N.E.2d 1200
• Parties: STEWART, f.k.a. McKinley, Appellee, v. MIDWESTERN INDEMNITY COMPANY et al., Appellants.
• Court: Ohio Supreme Court

Page 124

45 Ohio St.3d 124

543 N.E.2d 1200

STEWART, f.k.a. McKinley,

Appellee, v MIDWESTERN INDEMNITY COMPANY et al., Appellants.

No. 88-1083.

Supreme Court of Ohio.

Submitted May 2, 1989.

Decided Aug. 23, 1989.

Syllabus by the Court.

A trial court order which vacates an arbitration award and orders the parties to select new arbitrators and to conduct a new arbitration proceeding is not a "final appealable order" as defined in R.C. 2505.02.

Ella Patricia Stewart, plaintiff-appellee, was injured in an automobile accident with an uninsured motorist on June 12, 1984. At the time, she was covered by an insurance policy issued by defendants-appellants, Midwestern Indemnity Company and Mid-American Fire & Casualty Company, d.b.a. Midwestern Group (hereinafter "Midwestern Indemnity Co." ). There is no dispute that, under the uninsured motorist provision of defendants' policy, Stewart is entitled to compensation as a result of the accident; however, the amount of compensatory damages, if any, is disputed.

Plaintiff filed a complaint in July 1985 in the Court of Common Pleas of Franklin County in which she alleged that she had demanded payment of the policy limit of $50,000 and that defendant insurance companies refused to pay said policy limit. Stewart contended that the companies' actions and inactions constituted bad faith and a willful, wanton and reckless disregard of plaintiff's legal rights. She sought $50,000 in compensatory damages, punitive damages, and attorney fees.

By a letter dated August 16, 1985, defendants notified plaintiff's attorney that defendants were exercising the option pursuant to the insurance policy to demand that any dispute as to the amount of payment be determined by arbitration.

The trial court held that the terms of the policy compelled arbitration on the issue of damages, but that any determination on that issue would have no effect on the bad faith claim, because the bad faith claim was considered to be a separate cause of action that must be tried in the regular course in the court of common pleas.

The arbitration hearing on the issue of damages was conducted on February 6, 1987, and plaintiff Stewart was awarded $45,000 by a vote of two to one.

On May 15, 1987, plaintiff moved to vacate the arbitration award using the same case number as that assigned to her complaint for bad faith filed in 1985. Plaintiff alleged that the arbitrators had failed to address all issues presented--namely, a claim for loss of consortium by plaintiff's husband, Melvin Stewart. In support of her position, Stewart filed the affidavit of the dissenting arbitrator. He averred that Melvin Stewart's claim for loss of consortium was not addressed by the panel although evidence of this claim had been presented during the arbitration proceeding.

In opposition, defendants filed the affidavit of one of the two majority arbitrators, who attested that the panel had considered all such testimony and rendered an award which included consideration of the loss-of-consortium claim.

The trial court set aside the arbitration award and decision with the following order:

"This cause came on for hearing on Application to Vacate Arbitration Decision and Award and Memoranda of Counsel. After due consideration thereof, the Court finds that said application is well taken and should be granted and the parties appoint new arbitrators and proceed to have a new arbitration.

"THEREFORE, the Court Orders that the Arbitration Award and Decision of the 9th day of February, 1987 be set aside and the parties select new arbitrators and proceed to a new arbitration."

The court of appeals sua sponte dismissed defendants' appeal from the trial court order, holding that it was without jurisdiction to hear the appeal as the entry appealed from was not a final appealable order.

The cause is now before this court pursuant to the allowance of a motion to certify the record.

Matan & Smith and Eugene L. Matan, Columbus, for appellee.

Lane, Alton & Horst, Jeffrey W. Hutson and Douglas M. Kennedy, Columbus, for appellants.

MOYER, Chief Justice.

The question presented by this appeal is whether a trial court order vacating an arbitration award and decision which also orders the parties to select new arbitrators and to have a new arbitration is a final appealable order within the meaning of R.C. 2505.02. We hold that it is not.

Section 3(B)(2), Article IV of the Ohio Constitution provides that "[c]ourts 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 * * *." Thus, the jurisdiction of the courts of appeals to review judgments and orders of courts of record is set by statute.

In this respect, R.C. 2505.02 provides in part:

"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."

R.C. 2711.15 provides: "An appeal may be taken from an order confirming, modifying, correcting, or vacating an award made in an arbitration proceeding or from judgment entered upon an award."

Consequently, reading R.C. 2505.02 and 2711.15 in pari materia, it is crucial that an order made pursuant to R.C. 2711.15 must satisfy the requirements of R.C. 2505.02 in order to be a final appealable order if the court of appeals is to have jurisdiction to hear an appeal from such an order.

In Bellaire City Schools Bd. of Edn. v. Paxton (1979), 59 Ohio St.2d 65, 69-70, 13 O.O.3d 58, 60-61, 391 N.E.2d 1021, 1024, we enumerated the requirements to establish an appealable order pursuant to R.C. 2505.02: " 'If * * * [the trial court's order] lacks one of the three qualifications of (a) affecting a substantial right, (b) determining the action, or (c) preventing a judgment, it cannot be a final order, for all three attributes must concur to make it such,' " citing to Pewter Mug, Inc. v. M.U.G. Enterprises, Inc. (1975), 46 Ohio App.2d 93, 94, 75 O.O.2d 78, 78-79, 345 N.E.2d 426, 427. In this instance, we are concerned with whether this appeal is from an order which determines the action or prevents a judgment. See, also, General Electric Supply Co. v. Warden Electric, Inc. (1988), 38 Ohio St.3d 378, 528 N.E.2d 195.

The parties submitted conflicting affidavits from members of the board indicating a dispute whether all the claims for damages had been resolved. The trial court apparently believed that the decision reached by the arbitration panel was incomplete on the issues presented by the parties. See R.C. 2711.10. ¹ Because the trial court order did not vacate only the arbitration award and decision but also provided for a new arbitration proceeding, the order cannot be considered a "determin[ation of] the action" or one which "prevents a judgment" within the meaning of R.C. 2505.02. No final judgment has been entered by the trial court on the merits of the arbitration award and decision.

Thus, we conclude that a trial court order which vacates an arbitration award and orders the parties to select new arbitrators and to conduct a new arbitration proceeding is not a "final appealable order" as defined in R.C. 2505.02.

A secondary issue concerning the applicability of Civ.R. 54(B) has been raised by the parties. Even though it is not a dispositive issue here, in view of our application of R.C. 2505.02, we will discuss it briefly.

We have recently held that an order is final and appealable only if the requirements of R.C. 2505.02 are satisfied and, if applicable, the requirements of Civ.R. 54(B) ² are satisfied. See Noble v. Colwell (1989), 44 Ohio St.3d 92, 540 N.E.2d 1381; General Acc. Ins. Co. v. Insurance Co. of North America (1989), 44 Ohio St.3d 17, 540 N.E.2d 266. Civ.R. 54(B) was adopted to permit appeal when judgment is rendered on fewer than all of the claims or parties present before the court. "However, when a court enters final judgment as to fewer than all of the claims or parties, it must expressly state that there is no just reason to delay an appeal on that judgment. Without such express determination, an order adjudicating fewer than all the claims or parties ' * * * shall not terminate the action as to any of the claims or parties * * *.' " General Acc. Ins. Co., supra, at 20, 540 N.E.2d at 270. As a procedural device, Civ.R. 54(B) cannot affect the finality of an order, see Alexander v. Buckeye Pipe Line Co. (1977), 49 Ohio St.2d 158, 159, 3 O.O.3d 174, 175, 359 N.E.2d 702, 703, and therefore "does not alter the requirement that the order must be final before it is appealable. * * * " Douthitt v. Garrison (1981), 3 Ohio App.3d 254, 255, 3 OBR 286, 287, 444 N.E.2d 1068, 1069-1070.

Even assuming that plaintiff's request for compensation under the bad faith claim and her claim for compensation pursuant to the insurance policy, which was the subject of arbitration, were two separate claims in a single cause of action, the absence of a statement by the trial court, in the entry vacating the arbitration award, that there is no just reason to delay an appeal, causes us to conclude that the trial court was aware that its order was not a final appealable order pursuant to R.C. 2505.02 and that Civ.R. 54(B) is therefore not applicable.

For the foregoing reasons, the judgment of the court of appeals is affirmed.

Judgment affirmed.

SWEENEY, HOLMES, HERBERT R. BROWN and RESNICK, JJ., concur.

DOUGLAS and WRIGHT, JJ., dissent separately.

DOUGLAS, Justice, dissenting.

I respectfully dissent. I do so because my fear that this court, in writing in the field of "final appealable orders," might add further confusion rather than...