Sumber Co. Pte. Ltd. v. Diversey Corp. and Diversey Corp.
| Decision Date | 28 February 1996 |
| Docket Number | 96-LW-0346,C-950360 |
| Parties | SUMBER CO. PTE. LTD., Plaintiff-Appellee, v. DIVERSEY CORPORATION and DIVERSEY CORP., Defendants-Appellants. APPEAL |
| Court | Ohio Court of Appeals |
Civil Appeal From Hamilton County Court of Common Pleas
Graydon Head & Ritchey, John B. Pinney, Esq., No. 0018173, and R. K Wellington, II, Esq., No. 0055540, 1900 Fifth Third Center, P.O. Box 6464, Cincinnati, Ohio 45202, for Plaintiff-Appellee,
Taft, Stettinius & Hollister, Robert G. Stachler, Esq., No. 0001264, and Russell G. Sayre, Esq., No. 0047125, 1800 Star Bank Center, 425 Walnut Street, Cincinnati, Ohio 45202, for Defendants-Appellants.
The defendants-appellants, Diversey Corporation and Diversey Corp. ("Diversey"), appeal from the order of May 11, 1995, in which the trial court, without opinion, overruled their motion to dismiss, or to stay pending arbitration, the law suit filed by plaintiff-appellee, Sumber Co. Pte. Ltd. ("Sumber"). Diversey alleges that all claims by Sumber arise out of the alleged breach of the parties' Technology License Agreement and are, therefore, subject to the arbitration clause located in section 16.08 of the Agreement. In its single assignment of error Diversey contends that Sumber cannot, by characterizing claims as tort claims, avoid the broad requirement of section 16.08 which provides that "[a]ny dispute, controversy or claim arising out of or relating to this contract, or the breach, termination or invalidity thereof, shall be settled by arbitration in accordance with the UNCITRAL (United Nations Commission on International Trade Law) Rules as at present in force," in lieu of litigation. We agree.
The amended complaint alleges that on January 21, 1991, Sumber entered into a Technology License Agreement with DuBois International, Inc., ("DuBois") in which it was granted "the exclusive license for Singapore and Malaysia to use all of DuBois' confidential and/or proprietary formulas, technical marketing information, data and know-how (the "DuBois Technology"), then held or thereafter developed or acquired with the right to license by DuBois." Amended Complaint, t.d. 39, at paragraph 15. Sumber also received a limited license for Indonesia. The term of the license agreement was for ten years, renewable for another ten-year term. On February 25, 1991, Chemed Corporation ("Chemed"), the parent company of DuBois, signed a merger agreement with Diversey in which it sold DuBois to Diversey. The merger, finalized and consummated on April 2, 1991, included the assignment of DuBois' foreign license agreements to Diversey. Sumber's tortious-interference claim relates only to the preassignment period between February 25, 1991, the signing of the merger, and April 2, 1991, the closing. During this preassignment period, Sumber alleges that Diversey "caused DuBois to transfer virtually all of its assets to Diversey or subsidiaries of Diversey, leaving DuBois without sufficient assets to respond to claims by Sumber under the Agreement." T.d. 39, at paragraph 23 (emphasis added). Sumber alleges that Diversey's acts caused DuBois to breach the Technology License Agreement by directing DuBois not to transfer the technology to Sumber.
Sumber challenges the appealability of the order denying the stay of litigation in the trial court pending arbitration. 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." (Emphasis added.) Accordingly, the constitution has delegated to the General Assembly authority to set by statute what judgments or final orders are appealable. Stewart v. Midwestern Indem. Co. (1989), 45 Ohio St.3d 124, 126, 543 N.E.2d 1200, 1202. In R.C. 2711.02, governing contract arbitration, the General Assembly "provided by law" that "[a]n order under this section that grants or denies a stay of a trial of any action pending arbitration * * * is a final order and may be reviewed, affirmed, modified, or reversed on appeal pursuant to the Rules of Appellate Procedure, and to the extent not in conflict with those rules, Chapter 2505 of the Revised Code." (Emphasis added.) Sumber maintains that the license agreement is subject to international commercial arbitration and the appellate provisions of R.C. 2712.73(A)(1). Pursuant to R.C. 2712.02(B), those appellate provisions apply "only if the place of arbitration or conciliation is in this state." Here, Sumber and DuBois agreed that the place of arbitration is to be Brussels, Belgium.
Relying on Stewart v. Midwestern Indem. Co., 45 Ohio St.3d at 126, 543 N.E.2d at 1202, Sumber argues that R.C. 2505.02 and 2711.02 must be read in pari materia for the court of appeals to have jurisdiction. In Stewart the supreme court determined that an order which vacates an arbitration award and orders the parties to select new arbitrators and to conduct a new arbitration proceeding is not appealable pursuant to R.C. 2711.15, which states that "[a]n 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." Interpreting R.C. 2711.15 in the context of R.C. 2505.02, the supreme court, citing Pewter Mug, Inc. v. M.U.G. Enterprises, Inc. (1975), 46 Ohio App.2d 93, 345 N.E.2d 426, concluded that the order vacating the arbitration and ordering the parties to conduct a new arbitration proceeding did not determine the action or prevent judgment, and therefore was not appealable.
We find Stewart distinguishable. A "judgment" is defined by Civ.R. 54(A) as a "decree and any order from which an appeal lies as provided in section 2505.02 of the Revised Code." Unlike R.C. in 2711.15, the General Assembly in R.C. 2711.02 expressly provides that an appeal from the denial of a stay of the litigation pending arbitration is not simply appealable, but is a "final order." We find the General Assembly did not create a conflict with R.C. 2505.02, but merely provided by law express authority to appeal immediately those orders specifically designated in R.C. 2711.02.
We, likewise, find distinguishable General Elec. Supply v. Warden Elec. (1988), 38 Ohio St.3d 378, 528 N.E.2d 195, syllabus, holding that an order which denies a stay of litigation pending arbitration is not a final order pursuant to R.C. 2505.02. In Warden, the supreme court held that by denying the stay of proceedings the trial court did not determine if there was a breach of the contract, but only that Warden waived its right to arbitration without losing its right to arbitrate. Id. at 382, 528 N.E.2d at 197. Warden was decided before the May 31, 1990, amendment to R.C. 2711.02 in which the General Assembly inserted the words "final order." If the stay is not granted, binding contract arbitration, bargained for under the contract's broad arbitration clause, would be irretrievably lost to it should Diversey be required to litigate Sumber's tort claim. The Sixth Appellate District has reached this same result in Stewart v. Shearson Lehman Bros., Inc. (1992), 71 Ohio App.3d 305, 593 N.E.2d 403.
In the alternative, if R.C. 2711.02, when read in pari materia with R.C. 2505.02, is deemed in conflict, then pursuant to R.C. 1.51, absent manifest legislative intent, appealability provided for in R.C. 2711.02, a special statute, still "prevails as an exception to the general provision." See State ex rel. Myers v. Chiaramonte (1976), 46 Ohio St.2d 230, 348 N.E.2d 323, paragraph one of the syllabus. This interpretation also satisfies Justice Wright's concern in Stewart v. Midwestern Indem. Co. that "[t]o me it is anomalous to hold that Midwestern has a right to appeal this order compelled by the clear language of R.C. 2711.15, but then find that there is no court with jurisdiction to hear this appeal because it is not from a 'final order'." 45 Ohio St.3d at 129, 543 N.E.2d at 1205.
An immediate appeal of an order denying a stay of litigation pending an agreement to arbitrate, in reality, saves time and the cost of collateral litigation. Arbitration is an attempt by contract to avoid delay inherent in litigation and is consistent with interests of prompt and orderly disposition and potential waste of judicial resources which is the predicate for the final order rule.
We have not attempted to cast our analysis of this order under R.C. 2505.02 as an appeal from an order affecting a substantial right made at a special proceeding, as defined in Polikoff v. Adam (1993), 67 Ohio St.3d 100, 616 N.E.2d 213. In Polikoff the syllabus states that "[o]rders that are entered in actions that were recognized at common law or in equity and were not specially created by statute are not orders entered in special proceedings pursuant to R.C. 2505.02." Arbitration is specially created by statute, as both dissents in Stewart v. Midwestern Indem. Co., 45 Ohio St.3d at 127, 543 N.E.2d at 1203-1206, suggest, but the focus of the Polikoff test, as we see it, is not on arbitration but on the nature of what was decided in the order appealed from. As we have noted, the supreme court, in Bell v. Mt. Sinai Med. Ctr. (1993), 67 Ohio St.3d 60, 616 N.E.2d 181, "without discussion, looked to the underlying nature of the action, actually a motion for prejudgment...
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