Aljaberi v. Neurocare Ctr., Inc. , 2019 Ohio 2181 ( 2019 )

[Cite as Aljaberi v Neurocare Ctr., Inc., 2019-Ohio-2181.]
COURT OF APPEALS
STARK COUNTY, OHIO
FIFTH APPELLATE DISTRICT
JUDGES:
MOHAMMED M. ALJABERI, M.D. : Hon. W. Scott Gwin, P.J.
: Hon. William B. Hoffman, J.
Plaintiff-Appellee : Hon. Patricia A. Delaney, J.
:
-vs- :
: Case No. 2018CA00154
NEUROCARE CENTER, INC., ET AL. :
:
Defendants-Appellants : OPINION
CHARACTER OF PROCEEDING: Civil appeal from the Stark County Court of
Common Pleas, Case No. 2016CV02671
JUDGMENT: Affirmed
DATE OF JUDGMENT ENTRY: June 3, 2019
APPEARANCES:
For Plaintiff-Appellee For Defendants-Appellants
LEE PLAKAS STACIE ROTH
220 Market Avenue South 235 Third Street S.W.
Eighth Floor Canton, OH 44702
Canton, OH 44702
[Cite as Aljaberi v Neurocare Ctr., Inc., 2019-Ohio-2181.]
Gwin, P.J.
{¶1} Appellants appeal the October 18, 2018 judgment entry of the Stark County
Court of Common Pleas denying their motion to stay all actions and compel arbitration.
Facts & Procedural History
{¶2} On December 8, 2016, Dr. Mohammed Aljaberi (“Aljaberi”) filed a complaint
against appellants Neurocare Center, Inc. (“Neurocare”), Dr. Andrew Stalker (“Stalker”),
and Dr. Ryan Drake (“Drake”) for breach of fiduciary duty, breach of contract, civil
conspiracy, and a declaratory judgment action to declare the covenant not to compete
contained in Aljaberi’s employment contract unenforceable. The complaint alleged
Aljaberi is a shareholder and director of Neurocare, as are Stalker and Drake. Further,
that appellants conspired to terminate Aljaberi’s stock ownership, conducted a secret
meeting of the Neurocare Board to remove Aljaberi as a director, and terminated his
employment with Neurocare. Aljaberi alleged he was not provided notice of the meeting
as required under the Neurocare Shareholders Agreement, which was attached as an
exhibit to the complaint. Aljaberi avers such actions were in violation of the fiduciary
duties owed to him under common law and pursuant to the Shareholders Agreement.
Section 14.8 of the Shareholders Agreement provides, in pertinent part,
* * * All disputes arising directly, indirectly, or otherwise in connection with,
out of, related to, or from this Agreement, or the interpretation, performance,
or breach hereof, including but not limited to alleged violations of state or
federal statutory or common law rights or duties (a “Dispute”) shall be
resolved according to the procedures set forth in this section which shall
constitute the sole dispute mechanism hereunder (except as otherwise
Stark County, Case No. 2018CA00154 3
specifically provided in this Agreement). In the event that the parties are
unable to resolve any Dispute after meeting and attempting in good faith to
reach a negotiated resolution, such Dispute(s) shall be resolved as
hereinafter provided by binding arbitration in accordance with the
procedures of the American Arbitration Association in Canton, Ohio. * * *
{¶3} Appellants filed an answer to the complaint on January 11, 2017. Between
December of 2016 and April of 2017, the parties exchanged several rounds of written
discovery.
{¶4} On May 1, 2017, Aljaberi filed a motion for leave to file an amended
complaint. The trial court granted the motion and permitted Aljaberi to file his amended
complaint instanter. The amended complaint added the following claims against
appellants: conversion of Aljaberi’s stock ownership in Neurocare; production of
corporate records; and production of annual financial statements. Appellants filed their
answer to the amended complaint on May 18, 2017. Appellants propounded discovery
on Aljaberi and the parties agreed to extend the deadline to respond to that discovery
until June 16, 2017. Both parties stipulated to a protective order on July 6, 2017. On
August 9, 2017, the trial court conducted an in-person pre-trial with the parties to set case
management dates and address several outstanding discovery issues. The trial court
ordered Neurocare to produce financial records as requested by Aljaberi in discovery,
and set a briefing schedule as to other discovery issues.
{¶5} Appellants took the deposition of Dr. Charles Zollinger, M.D. on July 26,
2017 and the deposition of Aljaberi on July 27, 2017. The parties engaged in extensive
Stark County, Case No. 2018CA00154 4
discovery disputes and briefing regarding the discoverability of the financial information
of Neurocare. The parties participated in an unsuccessful mediation on August 29, 2017.
{¶6} On September 18, 2017, the trial court issued a judgment entry finding
allegations of misconduct reported to the Ohio State Medical Board by appellants
concerning Aljaberi were discoverable and ordered appellants to turn the discovery over
to counsel for Aljaberi. Appellants filed an appeal of the trial court’s ruling on September
22, 2017. The trial court stayed discovery in this case on January 5, 2018 pending the
appeal. However, on February 20, 2018, appellants issued a subpoena to the Cleveland
Clinic to produce the complete employment file of Aljaberi. Aljaberi filed a motion to quash
the subpoena since the case was on appeal with this Court. The trial court granted the
motion to quash.
{¶7} In Aljaberi v. Neurocare Center, Inc., 5th Dist. Stark No. 2017 CA 00176,
2018-Ohio-1800, this Court held that reports made to the Ohio State Medical Board were
privileged and not subject to discovery. We remanded the case to the trial court on May
7, 2018. After the case was remanded to the trial court, the trial court set a pre-trial on
June 25, 2018. On June 27, 2018, the trial court issued a judgment entry after the pre-
trial, setting the case for trial on October 29, 2018.
{¶8} On July 13, 2018, appellants served their second set of interrogatories to
Aljaberi. The parties had a second unsuccessful mediation on August 21, 2018. Also on
August 21, 2018, counsel for Aljaberi filed a notice of suggestion of death of Aljaberi,
stating Aljaberi passed away on August 15, 2018.
{¶9} Aljaberi filed a motion to dismiss claims on August 27, 2018, requesting the
trial court dismiss all of the claims in its amended complaint except for Count IV, Aljaberi’s
Stark County, Case No. 2018CA00154 5
claim for conversion of his Neurocare stock. On August 29, 2018, the trial court granted
Aljaberi’s motion and dismissed Counts I, II, III, V, VI, and VII of Aljaberi’s amended
complaint, stating the matter would proceed as to Count IV of the amended complaint.
{¶10} On June 19, 2018, Aljaberi filed a motion for partial summary judgment on
the conversion claim. Aljaberi argued that there was no question of fact as to whether
appellants converted his Neurocare shares. Aljaberi argued that, pursuant to the
Shareholder Agreement, Neurocare did not avail itself of the opportunity to purchase
Aljaberi’s shares and allowed the 30-day window to close, depriving Aljaberi of his share
of the business revenue. Appellants filed a memorandum in opposition on July 19, 2018,
arguing that Neurocare was only required to obtain the agreement of the majority of its
directors to purchase Aljaberi’s stock and no more affirmative step, such as notifying
Aljaberi, was necessary. The trial court held an oral hearing on the motion for partial
summary judgment on July 30, 2018. In August of 2018, the parties filed briefs with
regards to the discoverability of Aljaberi’s medical records.
{¶11} The trial court issued a judgment entry granting Aljaberi’s motion for partial
summary judgment on his conversion claim on August 29, 2018. The trial court found
Aljaberi was entitled to a judgment as a matter of law that appellants unlawfully converted
his Neurocare shares. However, the trial court reserved judgment on whether Stalker
and Drake were personally liable.
{¶12} On September 5, 2018, appellants filed a motion to stay all actions and
compel arbitration in accordance with the Shareholders Agreement. Though appellants
acknowledged that the amended complaint contained allegations related to the
Shareholders Agreement, they alleged the primary basis for Aljaberi’s allegations were
Stark County, Case No. 2018CA00154 6
premised on his wrongful termination. Appellants argued that, until the dismissal of the
non-conversion claims, arbitration was not a viable option as it likely would have resulted
in litigating in separate forums. Appellants contended that once Aljaberi dismissed all
causes of action except the conversion claim, the only remaining issue directly related to
the Shareholders Agreement. Further, appellants argued that Aljaberi has violated the
Shareholders Agreement by rejecting appellants’ demand to purchase his shares as a
result of his death.
{¶13} On September 17, 2018, Aljaberi filed a motion to substitute Aida Safar, as
executrix of the estate of Aljaberi, as the plaintiff in this action. The trial court granted the
motion on September 19, 2018. Safar, as the executrix of Aljaberi’s estate, is the appellee
in this case.
{¶14} Appellee filed a response in opposition to the motion to stay and compel
arbitration on September 19, 2018. Appellants filed a reply in support of their motion to
stay all actions and compel arbitration on September 21, 2018. On October 1, 2018, both
appellee and appellants filed multiple motions in limine.
{¶15} On October 18, 2018, the trial court issued a judgment entry denying
appellants’ motion to stay all actions and compel arbitration. The trial court found
appellants’ request to be untimely. Additionally, on October 18, 2018, the trial court
denied appellants’ motion for partial summary judgment and appellee’s renewed motion
for summary judgment against Stalker and Drake on the conversion claim. Prior to
appellants filing their appeal, the parties filed and the trial court ruled on multiple motions
in limine, and the trial court conducted a final pre-trial.
Stark County, Case No. 2018CA00154 7
{¶16} Appellants appeal the October 18, 2018 judgment entry of the Stark County
Court of Common Pleas denying their motion to stay all actions and compel arbitration
and assign the following as error:
{¶17} “I. THE TRIAL COURT ABUSED ITS DISCRETION WHEN IT DENIED
DEFENDANT-APPELLANT’S MOTION TO STAY ACTIONS AND COMPEL
ARBITRATION AS TO PLAINTIFF-APPELLEE’S CONVERSION CAUSE OF ACTION.
{¶18} “II. THE TRIAL COURT ABUSED ITS DISCRETION WHEN IT DENIED
DEFENDANT-APPELLANT’S MOTION TO STAY ALL ACTIONS AND COMPEL
ARBITRATION AS TO PLAINTIFF-APPELLEE’S REFUSAL OF NEUROCARE’S BUY-
BACK OFFER FOLLOWING DR. ALJABERI’S DEATH OFFERED PURSUANT TO
SECTION 8 OF THE SHAREHOLDERS AGREEMENT.”
I.
{¶19} In their first assignment of error, appellants contend the trial court abused
its discretion when it denied their motion to stay action and compel arbitration as to
appellee’s conversion cause of action.
{¶20} “Both the Ohio General Assembly and Ohio courts have expressed a strong
public policy favoring arbitration.” Hayes v. Oakridge Home, 122 Ohio St.3d 63, 2009-
Ohio-2054, 908 N.E.2d 408. R.C. 2711.01(A) provides an arbitration agreement “shall
be valid, irrevocable, and enforceable, except upon grounds that exist at law or in equity
for the revocation of any contract.” R.C. 2711.02 provides for enforcement of an
arbitration agreement. A party to such agreement may obtain a stay of litigation in favor
of arbitration under R.C. 2711.02(B), which states:
Stark County, Case No. 2018CA00154 8
If any action is brought upon any issue referable to arbitration under an
agreement in writing for arbitration, the court in which the action is pending,
upon being satisfied that the issue involved in the action is referable to
arbitration under an agreement in writing for arbitration, shall on application
of one of the parties stay the trial of the action until the arbitration of the
issue has been had in accordance with the agreement, provided the
applicant for the stay is not in default in proceeding with arbitration.
{¶21} Moreover, an order under R.C. 2711.02(B) that grants or denies a stay of a
trial pending arbitration “is a final order and may be reviewed, affirmed, modified, or
reversed on appeal pursuant to the Rules of Appellate Procedure* * *.”
{¶22} Our standard of review for a R.C. 2711.02(B) order depends on the nature
of the issues involved. Here, the issue is whether appellants waived the right to arbitrate.
“The right to arbitration may be waived just like any other contractual right.” Murtha v.
Ravines of McNaughton Condo. Assn., 10th Dist. Franklin No. 09AP-709, 2010-Ohio-
1325. The question of waiver is usually a fact-driven issue and an appellate court will not
reverse the trial court’s decision absent a showing of an abuse of discretion. Craver v.
Tomsic, 5th Dist. Delaware No. 13 CAE 11 0078, 2014-Ohio-2603. An abuse of discretion
means the trial court’s decision is arbitrary, unreasonable, or unconscionable. Blakemore
v. Blakemore, 5 Ohio St.3d 217, 450 N.E.2d 1140 (1983).
{¶23} “A party asserting waiver must prove that the waiving party knew of the
existing right to arbitrate and, based on the totality of the circumstances, acted
inconsistently with that known right.” Craver v. Tomsic, 5th Dist. Delaware No. 13 CAE
11 0078, 2014-Ohio-2603, quoting Murtha v. Ravines of McNaughton Condo. Assn., 10th
Stark County, Case No. 2018CA00154 9
Dist. Franklin No. 09AP-709, 2010-Ohio-1325. In determining whether the totality of the
circumstances supports a finding of waiver, the court may consider such factors as: (1)
whether the party seeking arbitration invoked the court’s jurisdiction by filing a complaint
or claim without first requesting a stay; (2) the delay, if any, by the party seeking arbitration
to request a stay; (3) the extent to which the party seeking arbitration has participated in
the litigation, including a determination of the status of discovery, dispositive motions, and
the trial date; and (4) whether prior inconsistent acts by the party seeking arbitration would
prejudice the non-moving party. Id. “Waiver attaches where there is active participation
in a lawsuit evincing an acquiescence to proceeding in a judicial forum.” Id., citing Tinker
v. Oldaker, 10th Dist. Franklin No. 03AP-671. 2004-Ohio-3316.
{¶24} Appellants contend the totality of the circumstances do not support a finding
of wavier because: appellee only recently dismissed her non-arbitrable claims; appellants
never filed any pleading invoking the jurisdiction of the trial court; much of the discovery
in this case involved non-arbitrable claims; and appellee failed to show prejudice.
{¶25} Upon review, we find, considering the totality of the circumstances, the trial
court did not abuse its discretion in finding appellants waived their right to arbitrate. The
original complaint alleged appellants breached their duties to Aljaberi in his capacity as a
shareholder of Neurocare pursuant to the Shareholders’ Agreement. These claims
contained in the original complaint arose or were related to the Shareholders Agreement.
The Shareholders Agreement was attached as an exhibit to the complaint. Because the
arbitration provision of the Shareholders Agreement provides “all disputes arising directly,
indirectly, or otherwise in connection with, out of, related, or from this Agreement * * *,”
appellants’ right to arbitrate was triggered in December of 2016 when Aljaberi filed his
Stark County, Case No. 2018CA00154 10
complaint. Thus, there was an extensive delay in appellants’ request for arbitration as
they did not file their motion until September of 2018. We find in this case it was not an
abuse of discretion for the trial court to determine this delay was sufficient to establish
waiver of the right to arbitrate.
{¶26} Further, even if we accept appellants’ argument that they could not request
arbitration until Aljaberi filed his amended complaint in May of 2017, there was still a
significant delay before appellants moved to compel arbitration. Though appellants argue
that, up until the point when appellee dismissed the non-arbitrable claims, the case was
not arbitrable, this Court has consistently held that, if there are arbitrable and non-
arbitrable claims, the entire proceeding must be stayed until the issues subject to
arbitration are resolved. Litman v. HCR Manorcare, Inc., 5th Dist. Stark No.
2014CA00224, 2015–Ohio–2637; Garber v. Buckeye Chrysler–Jeep–Dodge of Shelby,
5th Dist. Richland No. 2007–CA–0121, 2008–Ohio–3553, 2008-Ohio-3553. Thus,
appellants did not have to delay in moving to compel arbitration simply because the
complaint and/or amended complaint contained non-arbitrable claims.
{¶27} Additionally, appellants have extensively participated in the litigation in this
case. As detailed in the factual and procedural history above, the parties have engaged
in extensive written discovery, conducted depositions, appeared in front of the trial court
for pre-trial conferences, briefed and received rulings as to multiple discovery issues, and
participated in two mediations. Most significantly, appellants waited until after the trial
court granted appellee’s motion for partial summary judgment that appellants unlawfully
converted Aljaberi’s Neurocare shares and waited until the trial was approximately seven
weeks away.
Stark County, Case No. 2018CA00154 11
{¶28} As to the prejudice to appellee, based upon the ruling by the trial court on
the motion for partial summary judgment, the extensive discovery conducted and
concluded in this case, and the proximity of the motion to compel arbitration to the trial in
this case, we find the trial court did not abuse its discretion in finding appellee would suffer
significant prejudice.
{¶29} We find the trial court did not abuse its discretion in determining appellants
actively participated in the lawsuit evincing an acquiescence to proceeding in a judicial
forum and thus waived their right to arbitrate. Appellants’ first assignment of error is
overruled.
II.
{¶30} In their second assignment of error, appellants contend the trial court
abused its discretion in denying their motion to compel arbitration as to appellee’s refusal
of Neurocare’s buy-back offer following Aljaberi’s death offered pursuant to the
Shareholders Agreement. Appellants argue that once the trial court granted partial
summary judgment and found Aljaberi’s Neurocare shares were converted, the transfer
was deemed null and void pursuant to the Shareholders Agreement and Aljaberi’s estate
was required to sell back his shares to Neurocare, and thus the trial court should have
granted their motion to compel arbitration.
{¶31} As detailed above and upon a review of the totality of the circumstances,
we find the trial court did not abuse its discretion in finding appellants waived their right
to arbitrate in this case. Further, Aljaberi’s death and/or the trial court’s ruling on the
motion for partial summary judgment did not create a new action or create a new or
separate right to arbitration. Upon Aljaberi’s death, appellee was substituted as plaintiff
Stark County, Case No. 2018CA00154 12
and she maintains the same claims against appellants to recover damages for Aljaberi’s
estate.
{¶32} Appellants’ second assignment of error is overruled.
{¶33} Based on the foregoing, appellants’ assignments of error are overruled.
{¶34} The October 18, 2018 judgment entry of the Stark County Court of
Common Pleas denying appellants’ motion to stay all actions and compel arbitration is
affirmed.
By Gwin, P.J.,
Hoffman, J., and
Delaney, J., concur