Hay v. Summit Funding, Inc.

• Decision Date: 18 October 2017
• Docket Number: Case No. 16CA3577
• Citation: 2017 Ohio 8261
• Parties: DIANNA HAY, Plaintiff-Appellee, v. SUMMIT FUNDING, INC., et al. Defendants-Appellants.
• Court: Ohio Court of Appeals

2017 Ohio 8261

DIANNA HAY, Plaintiff-Appellee, v. SUMMIT FUNDING, INC., et al. Defendants-Appellants.

Case No. 16CA3577

COURT OF APPEALS OF OHIO FOURTH APPELLATE DISTRICT ROSS COUNTY

October 18, 2017

DECISION AND JUDGMENT ENTRY

APPEARANCES:

Steven M. Loewengart and Curtis G. Moore, Fisher & Phillips, LLP, Columbus, Ohio, for Appellants.

Nicholas Kolitsos, Jones Law Group, LLC, Columbus, Ohio, for Appellee.

McFarland, J.

{¶1} Summit Funding, Inc., Eddie Hughes, and John Beasley (collectively, "Appellants") appeal the final judgment of the Ross County Court of Common Pleas entered November 9, 2016. Dianna Hay ("Appellee"), a former employee of Summit Funding, Inc., filed a complaint alleging Appellants engaged in conduct constituting sexual harassment. Appellants filed a Motion to Compel Arbitration, arguing Appellee's claims were subject to arbitration by virtue of an agreement Appellee executed at the time she was hired. In the appealed-from entry, the trial court overruled Appellants' motion. Appellants' sole assignment of error is that the trial court erred in holding that Appellee's claim of sexual harassment did not fall within the scope of the arbitration agreement. Based upon our de novo review in this matter, we find Appellants' argument has merit. As such, we reverse the judgment of the trial court.

FACTS

{¶2} On July 13, 2016, Appellee filed a complaint in the Ross County Court of Common Pleas against Appellants Summit Funding, Inc., Eddie Hughes, and John Beasley, alleging sexual harassment, hostile work environment, termination in violation of public policy, retaliation, intentional and negligent infliction of emotion distress, respondeat superior, defamation, and negligent hiring, training, retention and supervision. The following is a summary of the allegations of her complaint:

1) Upon Appellee's employment in July 2015 as a loan officer for Summit Funding, Inc., a California corporation conducting business in Chillicothe, Ohio, Appellee was required to work alone in a branch office with Appellant Hughes. Appellee and Hughes were employed under the supervision of Appellant Beasley. Additionally, Hughes supervised Appellee's time sheets and directed some job duties.

2) Within the first week of employment, Hughes exhibited unwanted and offensive sexual conduct towards Appellee which included sexually charged comments both verbally and via text and picture messaging; sexual advances; invasion of personal space; and Hughes taking a picture of Appellee's "backside," which he later published to Beasley.

3) Appellee rejected the sexual advances and requested that Hughes desist, but the harassment continued and heightened in severity and frequency. On one occasion, Hughes became physically violent. Appellee alleged she became concerned for her physical safety as well.

4) In August 2015, Beasley advised Appellee not to contact human resources regarding her complaints about Hughes' behavior. In August 2015, Hughes confronted Appellee about her time sheets and other work matters, threatening not to pay her for overtime.

5) On or about August 31, 2015, per Summit Funding's established protocol, Appellee reported the harassment to Summit Funding's human resource director. On or about September 1, 2015, Appellee was directed not to report to work until an investigation into her complaints was completed.

6) On September 16, 2015, Appellee received two letters. In the first letter, Summit Funding advised that its investigation confirmed that Hughes did act inappropriately. In the second letter, Summit Funding advised Appellee that her employment was terminated.

7) Since Appellee's termination, Hughes made and has continued to make defamatory remarks falsely stating Appellee was terminated by Summit Funding due to inability to perform her job.

{¶3} Appellee's complaint demanded judgment against Appellants, jointly and severally, and requested compensatory, special, and punitive damages. Appellee further requested a declaratory finding that Hughes' statements were untrue and defamatory, as well as a retraction from Hughes.

{¶4} On September 16, 2016, Appellants filed a motion to compel arbitration. On September 30, 2016, Appellee filed a memorandum contra the motion to compel arbitration. On November 9, 2016, the trial court filed its decision and judgment entry denying the motion to compel arbitration. This timely appeal followed.

ASSIGNMENT OF ERROR

"I. THE TRIAL COURT ERRED IN HOLDING THAT THE PLAINTIFF-APPELLEE'S CLAIMS DO NOT FALL WITHIN THE SCOPE OF THE PARTIES' ARBITRATION AGREEMENT."

A. STANDARD OF REVIEW

{¶5} The question of whether a party has agreed to submit an issue to arbitration is reviewed under a de novo standard. Arnold v. Burger King, 48 N.E.3d 69, 2015-Ohio-4485, at ¶ 11; Hedeen v. Autos Direct Online, Inc., 8th Dist. Cuyahoga No. 100582, 2014-Ohio-4200, 19 N.E.3d 957, ¶ 9, citing McCaskey v. Sanford-Brown College, 8th Dist. Cuyahoga No. 97261, 2012-Ohio-1543, ¶ 7; and Taylor Bldg. Corp. of Am. v. Benfield, 117 Ohio St.3d 352, 2008-Ohio-938, 884 N.E.2d 12. See also Cales v. Armstrong World Industries, Inc., 4th Dist. Scioto No. 02CA2851, 2003-Ohio-1776, ¶ 16; Intl. Union of Operating Engineers v. Flair Builders, Inc., 406 U.S. 487, 491, 92 S.Ct. 1710 (1972); John Wiley & Sons, Inc. v. Livingston , 376 U.S. 543, 547, 84 S.Ct. 909 (1964).

{¶6} Under a de novo standard of review, we give no deference to a trial court's decision. Hedeen at ¶ 9, citing Brownlee v. Cleveland Clinic Found., 8th Dist. Cuyahoga No. 97707, 2012-Ohio-2212, ¶ 9; Akron v. Frazier, 142 Ohio App.3d 718, 721, 756 N.E.2d 1258 (9th Dist.2001). See Harter v. Chillicothe Long-Term Care, Inc., 4th Dist. Ross No. 11CA3277, 2012-Ohio-2464, ¶ 12 (de novo review in the context of summary judgment motion practice.)

B. LEGAL ANALYSIS

{¶7} When parties to a contract have agreed in writing to arbitration of disputes, the trial court must, upon application of a party and being satisfied that the issue is referable to arbitration, stay its proceedings pending the arbitration. R.C. 2711.02(B). However, arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed to so submit * * *. Ritchie's Food Distributor, Inc., v. Refrigerator Const. Services, Inc., 4th Dist. Pike No. 03CA713, 2004-Ohio-2261, ¶ 9; Council of Smaller Enterprises v. Gates, McDonald Co., 80 Ohio St.3d 661, 666-67, 1998-Ohio-172; Divine Constr. Co. v. Ohio American Water Co., 75 Ohio App.3d 311, 316, 599 N.E.2d 388 (10th Dist.1991). If the party challenging arbitration has not agreed to arbitration by contract, there is a presumption against arbitration. Bell v. Everen Securities, Inc. 9th Dist. Summit No. 19581, 2000 WL 141001, *2, (Feb. 2, 2000), citing Council of Smaller Enterprises at 667, 687 N.E.2d 1352.

{¶8} Appellants' sole assignment of error challenges the trial court's finding that Appellee's claims predicated on sexual harassment were not within the scope of the arbitration agreement Appellee executed with Appellant Summit. Until the existence of an agreement to arbitrate is established, "[o]ur inquiry is ' "strictly confined" * * * to whether the parties agreed to submit disputes * * * to arbitration.' " (First alteration original.) Ritchie's, supra, at ¶ 10, quoting Council of Smaller Enterprises at 668, 687 N.E.2d 1352. General contract principals apply to the determination of whether the parties agreed to an arbitration clause. Id. at 668, 687 N.E.2d 1352; Divine Constr. Co. at 316; Bell, supra.

{¶9} After the existence of an agreement to arbitrate is established, there is a strong presumption in favor of arbitration, and any ambiguities or doubts regarding the scope of the arbitration clause are resolved in favor of arbitration. Sasaki v. McKinnon, 124 Ohio App.3d 613, 616, 707 N.E.2d 9 (8th Dist.1997); Gaffney v. Powell, 107 Ohio App.3d 315, 320, 668 N.E.2d 951 (1st Dist.1995). Generally speaking, Ohio's public policy encourages arbitration as a method to settle disputes. Arnold, supra, at 23; Schaefer v. Allstate Ins. Co., 63 Ohio St.3d 708, 711-712, 590 N.E.2d 1242 (1992); and the Ohio Arbitration Act, R.C. Chapter 2711.¹ As a result of Ohio's pro-arbitration stance, courts indulge a strong presumption in favor of arbitration when the disputed issue falls within the scope of the arbitration agreement. Arnold, supra, at ¶ 24; Williams v. Aetna Fin. Co., 83 Ohio St.3d 464, 471, 700 N.E.2d 859 (1998); Taylor Bldg., 117 Ohio St.3d 352, 2008-Ohio-938, 884 N.E.2d 12, at ¶ 27.

{¶10} In their brief, Appellants emphasize the long-standing federal and state law presumption favoring arbitration. Here, the trial court's decision also recognizes the strong presumption in favor of arbitration. However, the trial court points out the presumption is not unlimited. "Though guided by a strong presumption, Ohio also recognizes that principles of equity and fairness require that greater scrutiny be given to arbitration provisions that do not involve parties of equal sophistication and bargaining power." Arnold, supra, at 25.

A. Appellants argue Appellee's sexual harassment claims are within the agreement's scope because sexual harassment is a form of sex discrimination.

{¶11} When deciding whether parties agreed to arbitrate a certain matter, courts generally apply ordinary state-law principles that govern the formation of contracts. Cales, supra, citing, First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944, 115 S.Ct. 1920 (1995); see also Perry v. Thomas , 482 U.S. 483, 492-493, 107 S.Ct. 2520 (1987), at fn. 9. General contract law holds that a court must interpret a contract so as to carry out the intent of the parties. Ritchie's, supra, at ¶ 11; Foster Wheeler Enviresponse, Inc. v. Franklin Cty. Convention Facilities Auth., 78 Ohio St.3d 353, 678 N.E.2d 519 (1997); Skivolocki v. East Ohio Gas Co., 38 Ohio St.2d 244, 313 N.E.2d 374 (1974), paragraph one of the syllabus. "The intent of the parties to a contract is...