U.S. Claims OPCO, L.L.C. v. Wells-Niklas , 2023 Ohio 1169 ( 2023 )

[Cite as U.S. Claims OPCO, L.L.C. v. Wells-Niklas, 2023-Ohio-1169.]
COURT OF APPEALS
STARK COUNTY, OHIO
FIFTH APPELLATE DISTRICT
JUDGES:
US CLAIMS OPCO, LLC : Hon. W. Scott Gwin, P.J.
: Hon. William B. Hoffman, J.
Plaintiff-Appellee : Hon. Craig R. Baldwin, J.
:
-vs- :
: Case No. 2022 CA 00097
NATASHA WELLS-NIKLAS :
:
Defendant-Appellant : OPINION
CHARACTER OF PROCEEDING: Civil appeal from the Stark County Court of
Common Pleas, Case No. 2022CV00311
JUDGMENT: Affirmed
DATE OF JUDGMENT ENTRY: April 5, 2023
APPEARANCES:
For Plaintiff-Appellee For Defendant-Appellant
OWEN J. RARRIC JAY KRASOVEC
4775 Munson Street N.W. 405 Rothrock Road #103
Canton, OH 44735-6963 Akron, OH 44321
Stark County, Case No. 2022 CA 00097 2
Gwin, P.J.
{¶1} Appellant Natasha Wells-Niklas appeals the June 21, 2022 judgment entry
of the Stark County Court of Common Pleas denying her motion to vacate and granting
the application of appellee to confirm the arbitration award.
Facts & Procedural History
{¶2} On July 12, 2014, Anquez Campbell drowned while swimming at a business
owned by Baylor Beach Park, Inc., located in Stark County, Ohio. At the time of his death,
he was survived by his mother and next of kin, Ida Campbell (“Campbell”). Campbell
retained appellant as her attorney to represent her legal interests after her son’s death.
{¶3} In 2015, Campbell individually, and as Administratrix/Executor and
beneficiary of the Estate of Anquez Campbell, executed a document entitled, “Purchase,
Sale, Assignment and Equitable Lien Agreement” (“Agreement”) with appellee US Claims
OPO, L.L.C. dba US Claims (“USC”). USC is a limited liability corporation that, pursuant
to a contract, advances money to plaintiffs involved in personal injury litigation in
exchange for purchasing a portion of the potential proceeds of the litigation. The
transaction is called a “non-recourse civil litigation advance.” R.C. 1349.55(A)(1). USC’s
principal place of business is in New Jersey. In the Agreement, Campbell agreed to sell
an interest in her anticipated proceeds from the wrongful death action to appellee.
Appellee paid Campbell $32,459.86, which included fees, costs, and a payoff to a prior
legal funding company.
{¶4} The terms of the Agreement included an arbitration provision which
provided, “USC and I agree that any and all controversies, claims, disputes, suits or
causes of action arising out of, or relating to this Agreement, * * * including the question
Stark County, Case No. 2022 CA 00097 3
of arbitrability of any such Claim, shall be settled by binding arbitration.” Further, “this
agreement to arbitrate is binding upon and inures to the benefit of each of USC’s and my
respective heirs, executors, administrators, successor and assigns, as applicable.” The
Agreement specified the arbitration would be held before a single arbitrator from the New
Jersey Academy of Mediators and Arbitrators.
{¶5} As part of the Agreement, Campbell signed an “Irrevocable Letter of
Instruction to Counsel.” The letter was addressed to appellant and states, in pertinent
part, “[t]his letter, along with a copy of the [Agreement], will confirm that I am irrevocably
assigning an interest in the proceeds from any judgment or settlement of my pending
Case (as described below) to [USC].” The letter instructed appellant to, among other
duties, satisfy appellee’s lien pursuant to the Agreement before disbursing any settlement
or judgment proceeds.
{¶6} Appellant also signed an “Acknowledgment of Counsel”
(“Acknowledgment”), which was made part of the Agreement. The Acknowledgment
provides:
I, Natasha Wells Niklas, Esquire, as your attorney, acknowledge the receipt
of the above Irrevocable Letter of Instruction to Counsel (the “Letter”) and
further acknowledge notice of the fact that you, my client(s) have granted
USC a security interest and lien in the Proceeds of your Case under the
Agreement. I acknowledge that, pursuant to the Agreement, you have
assigned a portion of your Proceeds to USC, and that additional portions of
your Proceeds may be assigned by you to USC through one or more
Addenda subject to the terms of the Agreement. I also acknowledge that I
Stark County, Case No. 2022 CA 00097 4
will follow all of your irrevocable instructions outlined in the Letter and will
honor the terms of your Agreement as it may be amended by one or more
Addenda * * * I further represent that all disbursements of funds in
connection with the Case, including your Proceeds, will be through my
attorney trust account, and that I will take the necessary steps so that all
payments made by the defendant or insurer in connection with the case are
made directly to me or my firm for deposit in my attorney trust account. Prior
to making any distribution to you or anyone else, I will contact USC to
ascertain the amount due and will not pay any portion of your proceeds,
other than the “Permitted Liens,” to you, or on your behalf until USC’s lien
is satisfied in full. * * * In the event of a dispute with USC, I agree that the
only disbursement that will be made from the proceeds will be for Permitted
Liens, that the remainder of the proceeds will be held by me in my attorney
trust account until such dispute is resolved, and that any such dispute would
be subject to arbitration under Section 8 of the Agreement.
***
I certify that I am the attorney of record in the above-captioned case, I
further certify that I received a copy of and reviewed the Agreement, that all
costs and fees have been disclosed by USC, including the annualized rate
of return applied to calculate the amount to be paid by you, that I am being
paid on a contingency basis per a written fee agreement, and that the
representation set forth in the Agreement are true and accurate to the best
Stark County, Case No. 2022 CA 00097 5
of my knowledge. This acknowledgement and certification shall be deemed
a material part with the USC’s Agreement.
{¶7} The miscellaneous terms of Agreement stated that, “together with the
Disclosure and Exhibit, [this] constitutes the entire agreement and understanding of the
parties with respect to the purchase of the specific portion of the Proceeds contemplated
hereby * * *.” If any portion of the Agreement was deemed invalid or unenforceable, “it
would not affect the validity or enforceability of (i) any other part of this Agreement, and
the Agreement shall be modified to the extent legally possible to legally carry out the
intent of this Agreement and (ii) any Agreement between USC and another other party.”
{¶8} Campbell executed a document entitled “Addendum #1” (“Addendum”) on
December 29, 2015. Campbell agreed to sell an additional portion of the proceeds of the
wrongful death action to appellee. Pursuant to the Addendum, appellee paid Campbell
$11,000, including fees and costs. The Addendum contains a provision where, “[p]er the
Agreement (as it may have been amended), the terms and conditions of which are
incorporated by reference and reaffirmed hereby in their entirety, I sold USC a portion of
my Proceeds * * *. This Addendum and the rights and obligations of the parties thereto
related are subject to the terms and conditions of the Agreement.” Appellant signed the
Addendum, stating, “I hereby acknowledge the purchase and sale of the Additional
Property by my client(s), as set forth above.”
{¶9} In 2016, the Stark County Probate Court appointed Campbell the
Administrator of the Estate of Anquez. Campbell then filed a wrongful death action
against Baylor Beach Park in the Stark County Court of Common Pleas. Appellant
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represented Campbell. Campbell passed away in 2018. Campbell’s estate was opened;
however, the USC non-recourse civil litigation advance was not made part of her estate.
{¶10} In 2019, an Application to Approve Settlement and Distribution of Wrongful
Death and Survival Claims was filed in Anquez’s estate. The application stated there had
been an offer of full settlement in the wrongful death action in the amount of $325,000.
The wrongful death beneficiaries listed were Campbell’s estate, and her next of kin. The
application did not provide for any payments to appellee. The Stark County Probate Court
approved the settlement and distribution of the wrongful death claim.
{¶11} On May 20, 2020, appellee notified Campbell’s heirs and appellant by letter
that it was aware the wrongful death action had been settled for $325,000. Appellee
stated it was not notified of the death of Campbell, the settlement, or the probate
proceedings until it received a letter from appellant dated February 17, 2020. The
application to approve the settlement and distribution of the wrongful death proceeds did
not provide for any payment to appellee.
{¶12} Because appellee had not been paid its “Property” as described in the
Agreement, pursuant to the Agreement, appellee initiated a demand for arbitration.
Appellant challenged the jurisdiction of the arbitrator to hear the case. The arbitrator
determined it had jurisdiction over disputes arising out of the Agreement based on the
terms of the Agreement and Acknowledgment. The arbitrator determined that, by signing
the Acknowledgment, appellant was required to participate in the arbitration.
{¶13} In 2021, Campbell’s estate, Campbell’s heirs, and appellant filed a
complaint with the Stark County Court of Common Pleas requesting declaratory judgment
and injunctive relief. They argued that, as non-parties to the USC contract, they had no
Stark County, Case No. 2022 CA 00097 7
obligation to arbitrate with appellee. Campbell and her heirs were dismissed from the
arbitration by appellee because they were not parties to the agreement. Appellee filed a
motion to dismiss appellant’s claims. In appellant’s response to the motion to dismiss,
she argued: she was not a party to the Agreement; pursuant to R.C. 1349.55, the Ohio
Rules of Professional Conduct defined her responsibilities as the attorney for Campbell’s
estate; and a letter of acknowledgment signed by the attorney pursuant to a non-recourse
civil litigation advance did not create a contractual relationship between the non-recourse
lender and the attorney, thereby preventing enforcement of an arbitration clause against
the attorney.
{¶14} The trial court granted appellee’s motion to dismiss, and dismissed the
complaint for declaratory judgment and injunctive relief. The trial court allowed all claims
and issues to be arbitrated in the New Jersey arbitration.
{¶15} Appellant appealed the trial court’s determination to this Court, arguing the
trial court erred when it granted appellee’s motion to dismiss. Appellant made several
arguments to this Court, including: (1) under Ohio law governing non-recourse civil
litigation advances, the liability of the attorney representing the consumer in the civil
action is limited by the jurisdiction of the Ohio Rules of Professional Conduct and (2)
because she executed only the Acknowledgment, she is not bound to the terms of the
Agreement, including the arbitration provisions found in Section 8 of the Agreement.
{¶16} In Estate of Campbell v. US Claims OPO, L.L.C., 5th Dist. Stark No.
2021CA00086, 2022-Ohio-711, (“Campbell I”) we overruled appellant’s assignment of
error. We first cited to the plain language of the Acknowledgement that, by her signature,
appellant agreed to be bound. Next, we found that, by signing the Acknowledgement,
Stark County, Case No. 2022 CA 00097 8
appellant expressly acknowledged receipt of the Agreement and the Irrevocable Letter of
Instruction to Counsel, and she certified she had reviewed the Agreement. We found
appellant, “undeniably agreed to follow all the ‘irrevocable instructions outlined in the
Letter and [would] honor the terms of your Agreement, as it may be amended by one or
more Addenda.’”
{¶17} Further, we held that, by signing the Acknowledgment, appellant was aware
the Acknowledgment was “deemed a material part of USC’s Agreement,” and the plain
language of the Agreement incorporates the Irrevocable Letter of Instruction to Counsel
and Acknowledgment to collectively constitute the Agreement. We noted that Section 8
of the Agreement specifically provides claims shall be settled by binding arbitration. We
found the Acknowledgment itself contains its own express provision for arbitration. We
concluded, “while [appellant] may arguably not be a party to the Agreement, she is
contractually bound to participate in arbitration based on the plain and unambiguous
language of the Acknowledgment.” As to appellant’s argument that the Ohio Rules of
Professional Conduct shield her from liability, we found the Rules of Professional Conduct
did not prevent the arbitration provision from being enforced, and, “in deciding whether
the parties have agreed to submit a particular grievance to arbitration, a court is not to
rule on the potential merits of the underlying claims.”
{¶18} Appellant appealed our decision to the Supreme Court of Ohio and included
one proposed assignment of error, as follows: the appellate court failed to apply the
protections of R.C. 1349.55 and erroneously compelled binding arbitration. The Ohio
Supreme Court declined jurisdiction of appellant’s appeal. Estate of Campbell v. US
Claims OPO, L.L.C., 167 Ohio St.3d 1451, 2022-Ohio-2246, 189 N.E.3d 823.
Stark County, Case No. 2022 CA 00097 9
{¶19} The arbitrator held a hearing on October 19, 2021. On February 9, 2022,
the arbitrator entered a final arbitration award in favor of appellee against appellant for
$121,600, plus attorney fees of $24,654 and costs of $7,980. The arbitrator issued a
thorough and detailed report explaining his arbitration award. Appellant made four
arguments the arbitrator addressed, as follows: (1) appellant was not obligated to
arbitrate the dispute; (2) Campbell lacked authority to bind the estate to the Agreement
because she had not yet been confirmed as administratrix by the probate court; (3)
appellant’s obligation under the Agreement was only to her client, and she is not a party
to the Agreement; and (4) appellant did not have control of the proceeds of the litigation.
{¶20} The arbitrator specifically addressed these arguments. First, the arbitrator
found the issue of whether appellant was obligated to arbitrate was previously
determined, as it was the subject of motion practice, and this Court’s decision in Campbell
I. Second, the arbitrator found the fact that the probate court had a say in the ultimate
distribution of the proceeds from the wrongful death action does not invalidate the
Agreement or change the effect of appellant’s Acknowledgment. The arbitrator noted the
distribution approved by the probate court was done in the manner proposed by appellant,
who was aware of appellee’s interest, but without the court having knowledge of
appellee’s claim. Further, that appellant did not, in her capacity as the attorney for
Anquez’s estate, notify the court of appellee’s claim, or notify appellee of the settlement.
Third, the arbitrator found no inconsistency between the Agreements and the
requirements of the Ohio non-recourse civil litigation contracts law (R.C. 1349.55).
Further, that the Acknowledgment expressly provides it is “deemed a material part of the
Agreement.” Finally, the arbitrator found appellant’s argument that she did not have the
Stark County, Case No. 2022 CA 00097 10
funds in her trust account to be not well-taken, because, in the Agreements, she
represented that she would take the necessary steps so that all payments would be made
to her firm for deposit in her trust account, and no evidence of her doing so was presented
at the hearing. The arbitrator stated, “whether [appellant] or substitute counsel continued
pursuit of the Wrongful Death matter to its conclusion does not alter [appellant’s]
responsibilities under the Agreement to timely notify [USC] of the settlement.”
{¶21} The arbitrator noted that appellant did not contest appellee’s damage
calculation, but she did argue the distribution was under the control of the probate court.
The arbitrator stated,
[N]o evidence was presented on the subject of the likely outcome of the
Probate Court action if [USC] had participated, and any effort to determine
what the Probate Court would have done is speculation. The Wrongful
Death action resulted in a settlement of $325,000, which, after permitted
deductions, would leave sufficient funds to reimburse [USC] in full for the
claimed damages. While [USC] could have no guarantee that the Probate
Court would satisfy the full, amount, [appellant’s] failure to notify [USC] of
the settlement denied [USC] the opportunity to pursue its claims and assert
its property rights in the Probate Court.
{¶22} The arbitrator concluded that, as a result of the actions or inactions of
appellant, appellee was wrongfully denied its property. The arbitrator awarded appellee
$121,006.00, plus attorney’s fees and costs of $25,654.00, and arbitrator compensation
of $7,980.00.
Stark County, Case No. 2022 CA 00097 11
{¶23} On March 2, 2022, appellee filed a complaint against appellant, requesting
an order confirming a final arbitration award in appellee’s favor. Appellant filed a motion
to vacate the arbitration award, on the grounds that the New Jersey arbitrator lacked
subject matter jurisdiction. The trial court held an oral hearing on April 25, 2022.
{¶24} The trial court issued a judgment entry on June 21, 2022, denying
appellant’s motion to vacate, and granting appellee’s application to confirm arbitration.
The trial court found appellant failed to demonstrate the arbitrator exceeded the scope of
his authority or power pursuant to R.C. 2711.10(D) or 9 U.S.C. Section 10(a)(4). The trial
court found the arbitrator was presented with a breach of contract claim and fashioned an
award of contract damages to resolve the claim. The trial court stated, “[appellant] does
not point * * * to any specific aspect of the arbitrator’s award that was in excess of the
arbitrator’s authority or power and instead advances arguments relating to legality and
subject matter jurisdiction. These questions have been answered by the Fifth District
Court of Appeals in [Campbell l.]” The trial court found the parties entered into an
arbitration agreement, the agreement required breach of contract claims to be submitted
to binding arbitration, an arbitration was held, and an award was issued that consisted of
contractual damages. Accordingly, the arbitrator acted sufficiently within the scope of his
authority or power such that the court was required to confirm the arbitration award. As
to appellant’s argument regarding the interplay between R.C. 1349.55 and the Rule of
Professional Conduct 1.15, the trial court cited Campbell I, and determined it was bound
to adhere to our determination in the previous appeal.
{¶25} Appellant appeals the June 21, 2022 judgment entry of the Stark County
Court of Common Pleas, and assigns the following as error:
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{¶26} “THE TRIAL COURT ERRED IN DENYING APPELLANT’S MOTION TO
VACATE ARBITRATION AWARD AND DISMISS, OR ALTERNATIVELY, TO STAY
PROCEEDINGS (THE ‘MOTION TO VACATE’).”
I.
{¶27} Appellant contends the trial court committed error in denying her motion to
vacate the arbitration award and in granting appellee’s application to confirm arbitration
award.
{¶28} The Federal Arbitration Act (“FAA”) expresses a presumption that arbitration
awards will be confirmed. “When courts are called on to review an arbitrator’s decision,
the review is very narrow; one of the narrowest standards of judicial review in all of
American Jurisprudence.” Lattimer-Stevens Co. v. United Steelworkers, 913 F.2d 1166(6th Cir. 1990). “[A]s long as the arbitrator is even arguably construing or applying the
contract and acting within the scope of his authority * * * serious error does not suffice to
overturn his decision.” United Paperworkers Int’l. Union Misco, Inc., 484 U.S. 29, 108
S.Ct. 364, 98 L.Ed.2d 286 (1987). A court may vacate an arbitration award under very
limited circumstances pursuant to 9 U.S.C. Section 10(a), specifically: (1) where the
award was procured by corruption, fraud, or undue means; (2) where there was evidence
of partiality or corruption in the arbitrators, or either of them; (3) where the arbitrators were
guilty of misconduct in refusing to postpone the hearing or in refusing to hear evidence;
or (4) where the arbitrators exceeded their powers, or so imperfectly executed them that
a mutual, final, and definite award upon the subject matter submitted was not made. Id.Absent fraud by the parties or the arbitrator’s dishonesty, reviewing courts are not
Stark County, Case No. 2022 CA 00097 13
authorized to reconsider the merits of an award, since this would undermine the federal
policy of privately settling disputes by arbitration. Id.{¶29} Similarly, in Ohio, arbitration awards are presumed valid. Schaefer v.
Allstate Ins. Co., 63 Ohio St.3d 708, 590 N.E.2d 1242 (1992). The Ohio Supreme Court
observed that, “[t]he whole purpose of arbitration would be undermined if courts had
broad authority to vacate an arbitration award.” Mahoning Cnty. Bd. of Mental
Retardation & Developmental Disabilities v. Mahoning Cnty. Education Assn., 22 Ohio
St.3d 80, 488 N.E.2d 872 (1986). When reviewing a decision of a common pleas court
confirming or vacating an arbitration award, this Court should accept findings of fact that
are not clearly erroneous, but decide questions of law de novo. Portage Cnty. Bd. of
Developmental Disabilities v. Portage Cnty. Educators’ Assn. for Developmental
Disabilities, 153 Ohio St.3d 219, 2018-Ohio-1590, 103 N.E.3d 804. “The substantive
merits of the original arbitration award are not reviewable on appeal absent evidence of
material mistake or extensive impropriety.” Orange Twp. V. IAFF Local 3816, 5th Dist.
Delaware No. 21 CAE 070033, 2022-Ohio-2757, quoting N. Ohio Sewer Contrs., Inc. v.
Bradley Dev. Co., 159 Ohio App.3d 794, 2005-Ohio-1014, 825 N.E.2d 650 (8th Dist).
{¶30} R.C. 2711.10 provides that a court may vacate an award “upon the
application of any party,” for any of the following reasons: (1) the award was procured by
corruption, fraud, or undue means; (2) there was evident partiality or corruption on the
part of the arbitrators; (3) the arbitrators are guilty of misconduct in refusing to postpone
the hearing, or refusing to hear pertinent and material evidence; or (4) the arbitrators
exceeded their powers, or so imperfectly executed them that a mutual, final, and definite
aware upon the subject matter submitted was not made. R.C. 2711.10 thus “limits judicial
Stark County, Case No. 2022 CA 00097 14
review of arbitration to claims of fraud, corruption, misconduct, an imperfect award, or
that the arbitrator exceeded his authority.” Goodyear Tire & Rubber Co. v. Local Union
No. 200, 42 Ohio St.2d 516, 330 N.E.2d 703 (1975).
{¶31} Appellant divides her assignment of error into three separate parts.
Part I.
{¶32} Appellant first argues the arbitration award should be vacated pursuant to
R.C. 2711.10(D) and USC Section 10(a)(4) because the arbitrator exceeded his powers
by ruling on an issue that is within the Ohio Supreme Court’s exclusive subject matter
jurisdiction. Appellant’s argument is essentially the same argument she made in her
previous appeal to this Court. Pursuant to our analysis in Estate of Campbell v. U.S.
Claims OPO, L.L.C., 5th Dist. Stark No. 2021CA00086, 2022-Ohio-711, appeal not
allowed Estate of Campbell v. U.S. Claims OPO, L.L.C., 167 Ohio St.3d 1451, 2022-Ohio-
2246, 189 N.E.3d 823, we find the arbitrator had the subject matter jurisdiction to issue
his opinion.
Part II.
{¶33} In the second part of her argument, appellant contends the New Jersey
arbitrator exceeded his authority because the non-recourse civil litigation loan at issue is
governed by Ohio Revised Code Section 1349.55, which does not make appellant a party
to the contract, but merely requires her to acknowledge the loan and comply with Ohio
Rule of Professional Conduct 1.15(e), the enforcement of which is in the Supreme Court
of Ohio’s exclusive jurisdiction. In her brief, appellant states, “the parties have fully briefed
in Campbell the issue of whether Niklas entered a separate, enforceable contract
guaranteeing her purported client’s payment of non-recourse civil litigation loan * * * or
Stark County, Case No. 2022 CA 00097 15
simply an acknowledgment of the loan triggering her obligations to protect non-client
funds in her possession under Ohio Rule of Professional Conduct 1.15(e), a matter in the
Supreme Court of Ohio’s exclusive jurisdiction.” Appellant does not make any further
argument in this portion of her brief.
{¶34} As this Court has stated in RHDK Oil & Gas, L.L.C. v. Willowbrook Coal Co.,
5th Dist. Tuscarawas No. 2020 AP 08 0017, 2021-Ohio-1362, appeal not allowed RHDK
Oil & Gas, L.L.C. v. Willowbrook Coal Co., 164 Ohio St.3d 1448, 2021-Ohio-3336, 173
N.E.3d 1242, the “Rules of Appellate Procedure do not allow incorporating argument by
reference to other sources.” Further, “if evidence, authority, and arguments exist that can
support an assignment of error, it is not the duty of the appellate court to root it out.”
Sutton v. Ohio Dept. of Edn., 8th Dist. Cuyahoga No. 104476, 2017-Ohio-105.
{¶35} In Campbell I, we held that: appellant is bound by the terms of the
Agreement, including the arbitration agreement; the Acknowledgment signed by appellant
contains its own express provision for arbitration; by signing the Acknowledgment,
appellant expressly agreed to be bound by the arbitration provision; and the Ohio Rules
of Professional Conduct did not prevent the arbitration provision from being enforced.
Estate of Campbell v. U.S. Claims OPO, L.L.C., 5th Dist. Stark No. 2021CA00086, 2022-
Ohio-711, appeal not allowed Estate of Campbell v. U.S. Claims OPO, L.L.C., 167 Ohio
St.3d 1451, 2022-Ohio-2246, 189 N.E.3d 823. To the extent appellant requests this Court
to reverse or modify our previous decision, we decline to do so.
{¶36} We additionally note that appellant appealed our previous decision to the
Ohio Supreme Court, arguing R.C. 1349.55 provides that appellant’s responsibilities are
set forth in the Ohio Rules of Professional Conduct, which the Ohio Supreme Court has
Stark County, Case No. 2022 CA 00097 16
exclusive jurisdiction over. The Ohio Supreme Court declined jurisdiction of appellant’s
appeal. Estate of Campbell v. U.S. Claims OPO, L.L.C., 167 Ohio St.3d 1451, 2022-
Ohio-2246, 189 N.E.3d 823. Accordingly, we overrule the second part of appellant’s
assignment of error.
Part III.
{¶37} In the third portion of her argument, appellant contends the arbitrator was
“intentionally vague” in describing his legal basis for finding appellant personally liable.
{¶38} We first note that, upon our review of the arbitrator’s decision, we find the
arbitrator’s report was not vague. The arbitrator issued a detailed report, specifically
addressed each of appellant’s arguments, and gave his rationale in overruling each of
appellant’s arguments.
{¶39} Further, this Court has previously held, in reviewing an arbitrator’s award,
we must distinguish between “an arbitrator’s act in excess of his powers and an error
merely in the way the arbitrator executed his powers. The former is grounds to vacate,
the latter is not.” Orange Twp. V. IAFF Local 3816, 5th Dist. Delaware No. 21 CAE
070033, 2022-Ohio-2757 see also O.R. Sec., Inc. v. Prof’l Planning Accocs., Inc., 857
F.2d 742 (11th Cir. 1988) (the arbitrator’s reasoning need not be explained). In this case,
appellant argues because of the alleged vagueness of his opinion, the arbitrator
exceeded his powers. As detailed above, we do not find the arbitrator’s opinion vague.
Additionally, this would be an error in the way in which the arbitrator executed his powers,
not an act in excess of his powers.
{¶40} Appellant next contends the arbitrator’s award was unenforceable because
she cannot be the guarantor of her purported client’s debt, and the arbitrator exceed his
Stark County, Case No. 2022 CA 00097 17
authority because, pursuant to R.C. 1349.55, appellant must only fulfill her obligations
under the Ohio Code of Professional Responsibility, which she did in this case. Appellant
also argues the arbitrator ignored clear New York precedent cited by appellant
purportedly holding that an attorney’s mere acknowledgment of a nonrecourse civil
litigation loan contract does not make the attorney a party to the contract or a guarantor
of the contract.
{¶41} A reviewing court’s inquiry into whether the arbitrator exceeded their
authority is limited. City of Cambridge v. AFSCME, 5th Dist. Guernsey No. 1999CA30,
2000 WL 502691 (April 4, 2000). A reviewing court is confined to ascertaining whether
the award draws its essence from the contract. United Paperworks Intern. Union v. AFL-
CIO v. Misco, Inc. 484 U.S. 29, 98 L.Ed.2d 286, 108 S.Ct. 364 (1987). “A mere ambiguity
in the opinion accompanying an arbitration award, which permits the inference that the
arbitrator may have exceeded his authority, is not a reason for vacating the award when
such award draws its essence” from an agreement. Id., quoting Ohio Office of Collective
Bargaining v. Ohio Civil Service Employee Assn., 59 Ohio St.3d 177, 572 N.E.2d 71(1991).
{¶42} An arbitrator’s award departs from the essence of the agreement when: (1)
the award conflicts with the express terms of the agreement, and/or (2) the award is
without rational support or cannot be rationally derived from the terms of the agreement.”
Id. As long as the arbitrator is even arguably construing or applying the contract and
acting within the scope of this authority, the court cannot overturn his decision simply
because it disagrees with his factual findings, contract interpretation, or choice of
remedies. United Paperworks Intern. Union v. AFL-CIO v. Misco, Inc. 484 U.S. 29, 98
Stark County, Case No. 2022 CA 00097 18
L.Ed.2d 286, 108 S.Ct. 364 (1987); Worndle v. Colonnade Medical Group, Ind., 5th Dist.
Fairfield No. 17-CA-24, 2018-Ohio-462 (parties agree to accept the arbitrator’s
determination concerning the issue and agreed to accept the result regardless of its legal
or factual accuracy).
{¶43} “An arbitrator’s improper determination of the facts or misinterpretation of
the contract does not provide a basis for reversal of an award by a reviewing court
because it is not enough to show the arbitrator committed an error – or even a serious
error.” Cedar Fair, L.P. v. Falfas, 140 Ohio St.3d 447, 2014-Ohio-3943, 19 N.E.3d 893;
see also Stolt-Nielsen S.A. v. AnimalFeeds Intl’ Corp., 559 U.S. 662, 130 S.Ct. 1758, 176
L.Ed.2d 605 (2010) (arbitrators do not exceed their powers when they make errors, even
serious errors; have to defer to arbitrator’s contract interpretation of the contract).
{¶44} We find the trial court did not commit error in finding the arbitration award
drew its essence from the Agreement. The arbitration clause contained in the Agreement
is broad, providing that “any and all controversies, claims, disputes, suits, or causes of
action arising out of, or relating” to the Agreement are subject to arbitration. There is a
rational nexus between the award and the Agreement. Appellant made specific promises
and expressly agreed to perform certain duties in the Acknowledgment and Certification
(“prior to making any distribution * * * I will contact USC * * * and will not pay any portion
of your proceeds, other than the “Permitted Liens,” to you, or on your behalf until USC’s
lien is satisfied in full * * *). Appellant affirmed and agreed the Acknowledgment and
Certification were a material part of the Agreement. There is no dispute that appellant
did not notify appellee of the settlement, and did not notify the court of appellee’s claim.
Stark County, Case No. 2022 CA 00097 19
The award issued by the arbitrator is based upon appellant’s lack of notifying appellee of
the settlement and/or failure to notify the court of appellee’s claim.
{¶45} As to appellant’s argument with regard to New York law, we find the case
she cites, Prospect Funding Holdings, LLC v. Paiz, 183 A.D.3d 486, 123 N.Y.S.3d 685(N.Y. App. 2020), is distinguishable from the instant case. In Paiz, the attorney did not
sign an acknowledgment containing an agreement to arbitrate. Id. Further, the attorney’s
acknowledgment only acknowledged “receipt of the letter from his client” and a reiteration
of the attorney’s “agreement to follow his client’s direction.” Id. In this case, appellant
expressly agreed to perform certain duties, including the duty to distribute proceeds of
the litigation in accordance with the Agreement. A more recent New York case found
Paiz distinguishable from a case in which an attorney acknowledgment imposed express
obligations upon the attorney defendants, including the duty to distribute any proceeds of
the litigation in accordance with the terms of the signed agreements. P.S. Finance, LLC
v. Eureka Woodworks, Inc., 2023 WL 2000727, 2023 N.Y. Slip Op. 00877 (Feb. 15, 2023)
(it is significant when attorney acknowledgments expressly agree to distribute proceeds
of the underlying litigation in accordance with the terms of the agreements signed by their
clients and when the litigation funding agreements incorporate the attorney
acknowledgments by reference).
{¶46} Pursuant to our limited review in accordance with both Ohio and federal
law as detailed above, we find the arbitrator’s award does not depart from the essence of
the Agreement. The trial court did not commit error in denying appellant’s motion to
vacate and granting appellee’s application to confirm the arbitration award.
{¶47} Based on the foregoing, appellant’s assignment of error is overruled.
Stark County, Case No. 2022 CA 00097 20
{¶48} The June 21, 2022 judgment entry of the Stark County Court of Common
Pleas is affirmed.
By Gwin, P.J.,
Hoffman, J., and
Baldwin, J., concur