Teramar Corp. v. Rodier Corp.

• Decision Date: 20 April 1987
• Docket Number: No. 51934,51934
• Court: Ohio Court of Appeals
• Parties: TERAMAR CORPORATION; Stakich, Appellant, v. RODIER CORPORATION, Appellee.

Page 39

40 Ohio App.3d 39

531 N.E.2d 721

TERAMAR CORPORATION; Stakich, Appellant, v. RODIER CORPORATION, Appellee.

No. 51934.

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

April 20, 1987.

Syllabus by the Court

1. Arbitration is a matter of contract and, in spite of the strong policy in its favor, a party cannot be compelled to arbitrate a dispute which he has not agreed to submit to arbitration.

2. An arbitration clause in a related document is, unless otherwise agreed to, not applicable to a guaranty agreement.

3. Lack of subject matter jurisdiction of an arbitration board or panel may be raised at any stage in the proceedings, although not previously asserted, including raising the issue for the first time on appeal. (R.C. 2711.13, applied.)

Marshman, Snyder & Corrigan and William F. Snyder, Cleveland, for appellant.

Mazanec, Raskin & Ryder Co., L.P.A., and Todd M. Raskin, Solon, for appellee.

CORRIGAN, Judge.

This appeal is taken from an order of the trial court confirming an arbitration award.

This action was filed on February 12, 1985, by Teramar Corporation to enjoin a scheduled arbitration hearing on a claim by Rodier Corporation and the President of Teramar Corporation, Theresa Stakich. The trial court denied injunction relief and the matter went to arbitration.

Stakich appeared at the arbitration hearing. She challenged the panel's jurisdiction as to her. On August 5, 1985, the panel overruled the jurisdictional challenge and entered an award in favor of Rodier Corporation ("Rodier") against Teramar Corporation ("Teramar") and Stakich. Rodier then applied to the trial court for confirmation of the award on November 20, 1985. Stakich filed an objection to the application contending that the trial court did not have jurisdiction to confirm an award against her. On March 26, 1986, the trial court confirmed the arbitration award against both Teramar and Stakich. Stakich appeals assigning the following error for our review:

"The lower court erred in purporting to confirm an arbitration award that was entered against Theresa Stakich without jurisdiction."

The dispute herein arose out of a franchise agreement entered into by Teramar. The agreement was entered into between Teramar and Promafil Corporation ("Promafil"). The agreement authorized Teramar to sell Rodier merchandise which Promafil was licensed to distribute. The agreement was signed on August 24, 1978, by Theresa Stakich, President of Teramar. The agreement included a provision for arbitration of "any controversy or claim arising out of or relating to this agreement or the breach thereof."

The same date Theresa Stakich signed another document entitled "Guaranty" wherein she agreed to the following pertinent provisions:

"I hereby unconditionally guarantee to you the prompt payment of all monies due and to become due to you by the Franchisee pursuant to the Franchise Agreement, and the prompt performance of all obligations of the Franchisee to you pursuant to the Franchise Agreement.

"Demand of payment, demand of performance, and notice of non-payment and non-performance, are hereby waived. The time of payment or performance, or any of the terms thereof, may be modified[,] any guarantor collateral or security thereto may be released or the terms thereof modified, any composition or settlement relative thereto may be made or accepted, and you may deal in all other respects with the Franchisee as if there were no guarantee, all without notice to or further assent from me, and I shall remain bound notwithstanding. Notice of the acceptance of this guarantee is waived.

"My liability hereunder shall be primary, direct and immediate, and not conditional or contingent upon your pursuit of whatever remedies you may have against the Franchisee or other guarantor collateral or security."

In October 1981, Promafil assigned its interests in the franchise agreement to Rodier Corporation. Teramar fell into default of the payments it was required to make under the franchise agreement. Rodier terminated the franchise and filed a demand for arbitration.

Teramar filed a suit to enjoin the arbitration primarily on the basis that Rodier was not a party to the original agreement containing the arbitration provision. The trial court denied injunctive relief and referred the matter to arbitration. Both documents were placed before the arbitration panel. Stakich objected, contending that she had never agreed to the arbitration provision. The panel held that it had jurisdiction over both Teramar and Stakich and entered an award against both jointly and severally. Stakich appeals.

The appellant's single assignment asserts that the trial court did not have jurisdiction to confirm the arbitration award absent a contract clause between the parties providing for arbitration. Only that portion of the award applicable to Stakich is challenged here. She argues that her personal guaranty contained no provision authorizing arbitration, thus the trial court erred in confirming the award as to her. Her assignment has merit; therefore, we reverse the trial court's decision as to her.

R.C. 2711.01 provides that a provision in a written contract to settle, by arbitration, a controversy arising out of the contract shall be valid, irrevocable and enforceable. The necessity of a written arbitration clause has been deemed by this court as jurisdictional. See Davis v. Cleveland Bd. of Edn. (Dec. 20, 1984), Cuyahoga App. No. 48373, unreported. It is the policy of the law to favor and encourage arbitration. Brennan v. Brennan (1955), 164 Ohio St. 29, 57 O.O. 71, 128 N.E.2d 89, paragraph one of the syllabus; Campbell v. Automatic Die & Products Co. (1954), 162 Ohio St. 321, 329, 55 O.O. 195, 198, 123 N.E.2d 401, 405. Nonetheless, arbitration is a matter of contract and, in spite of the strong policy in its favor, a party cannot be compelled to arbitrate any dispute which he has not agreed to submit. Amalgamated Clothing Workers of America v. Ironall Factories Co. (C.A. 6, 1967), 386 F.2d 586, 590; Retail Clerks Internatl. Assn. v....