Cuyahoga Supply & Tool, Inc. v. BECDIR Constr. Co. ( 2024 )

[Cite as Cuyahoga Supply & Tool, Inc. v. BECDIR Constr. Co., 2024-Ohio-1375.]
COURT OF APPEALS OF OHIO
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
CUYAHOGA SUPPLY & TOOL, INC., :
Plaintiff-Appellee, :
No. 113096
v. :
BECDIR CONSTRUCTION COMPANY, :
Defendant-Appellant. :
JOURNAL ENTRY AND OPINION
JUDGMENT: REVERSED AND REMANDED
RELEASED AND JOURNALIZED: April 11, 2024
Civil Appeal from the Bedford Municipal Court
Case No. 23CVF00193
Appearances:
Ted S. Friedman, for appellee.
Harrington, Hoppe & Mitchell, Ltd., and Matthew M.
Ries, for appellant.
FRANK DANIEL CELEBREZZE, III, J.:
Appellant BECDIR Construction Company (“BECDIR”) brings this
appeal challenging the trial court’s denial of its motion to dismiss or alternative
motion to compel arbitration and stay proceedings. After a thorough review of the
applicable law and facts, we reverse the judgment of the trial court and remand this
matter for further proceedings.
I. Factual and Procedural History
This matter arises from a suit upon a mechanics lien filed by appellee
Cuyahoga Supply & Tool, Inc. (“Cuyahoga Supply”) against BECDIR. Cuyahoga
Supply provided building supplies and materials for a construction project to
BECDIR pursuant to a purchase order. The purchase order contained an arbitration
provision that applied to “[a]ny dispute, controversy or claim arising out of or
related to this contract * * * .” The purchase order was not signed by anyone for
Cuyahoga Supply or BECDIR; however, it contained a term that stated,
“Performance constitutes acceptance of terms and conditions stated herein.”
When BECDIR failed to pay for the supplies and materials, Cuyahoga
Supply filed a mechanics lien against it. BECDIR then submitted a notice to
commence suit to Cuyahoga Supply, informing it that BECDIR intended to dispute
the lien and asserting that the funds were not owed to Cuyahoga Supply due to its
failure to perform according to the terms of the purchase order and contract.
Cuyahoga Supply subsequently filed suit alleging a claim for breach of
contract and submitted two invoices dated July 8, 2022, and August 11, 2022.
BECDIR moved to dismiss the case or, in the alternative, to compel arbitration and
stay proceedings. With its motion, BECDIR submitted the affidavit of its project
manager, along with a copy of the purchase order containing the arbitration
provision.
The trial court held a hearing where both parties presented arguments.
After the hearing, BECDIR filed a posthearing brief to “provide additional legal
authority and clarification” of issues raised at the hearing. Cuyahoga Supply
submitted the affidavit of its owner, wherein he stated that he had never agreed to
resolve any dispute by way of arbitration and specifically did not sign the purchase
order to convey his opposition to the arbitration clause.
The court denied BECDIR’s motion to dismiss/motion to compel and
stay, finding that no arbitration clause applied to the case. BECDIR then filed the
instant appeal, raising one assignment of error for our review:
The trial court erred in denying appellant’s motion to dismiss or compel
arbitration and stay proceedings pursuant to R.C. 2711.02(B) because
this dispute arises from the parties’ contract, which contains a
mandatory arbitration provision.
II. Law and Analysis
Generally, an appellate court reviews a trial court’s decision to grant or
deny a motion to compel arbitration or stay the proceedings under the abuse-of-
discretion standard. U.S. Bank, N.A. v. Wilkens, 8th Dist. Cuyahoga No. 96617,
2012-Ohio-263, ¶ 13; Milling Away, L.L.C. v. UGP Properties, L.L.C., 8th Dist.
Cuyahoga No. 95751, 2011-Ohio-1103, ¶ 8. The term abuse of discretion “implies
that the court’s attitude is unreasonable, arbitrary or unconscionable.” Blakemore
v. Blakemore, 5 Ohio St.3d 217, 219, 450 N.E.2d 1140 (1983). An abuse of discretion
occurs when a court exercises its judgment in an unwarranted way regarding a
matter over which it has discretionary authority. Johnson v. Abdullah, 166 Ohio
St.3d 427, 2021-Ohio-3304, 187 N.E.3d 463, ¶ 35.
Nevertheless, a trial court’s decision granting or denying a motion to
compel arbitration or a motion to stay is subject to de novo review on appeal because
such cases generally turn on issues of contractual interpretation. McFarren v.
Emeritus at Canton, 2013-Ohio-3900, 997 N.E.2d 1254, ¶ 13 (5th Dist.); Hudson v.
John Hancock Fin. Servs., 10th Dist. Franklin No. 06AP-1284, 2007-Ohio-6997,
¶ 8; McCaskey v. Sanford-Brown College, 8th Dist. Cuyahoga No. 97261, 2012-
Ohio-1543, ¶ 7.
Ohio has a strong public policy favoring arbitration of disputes, and
there is a presumption favoring arbitration that arises when the dispute falls within
the scope of an arbitration provision. Taylor Bldg. Corp. of Am. v. Benfield, 117
Ohio St.3d 352, 2008-Ohio-938, 884 N.E.2d 12, ¶ 25-27. “Any doubts concerning
the scope of arbitrable issues should be resolved in favor of arbitration.” Sebold v.
Latina Design Build Group, L.L.C., 2021-Ohio-124, 166 N.E.3d 688, ¶ 10 (8th Dist.),
citing Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25, 103
S.Ct. 927, 74 L.Ed.2d 765 (1983).
We note, however, that “parties cannot be compelled to arbitrate a
dispute in which they have not agreed to submit to arbitration.” Marks v. Morgan
Stanley Dean Witter Commercial Fin. Servs., 8th Dist. Cuyahoga No. 88948, 2008-
Ohio-1820, ¶ 15, citing Piqua v. Ohio Farmers Ins. Co., 84 Ohio App.3d 619, 621,
617 N.E.2d 780 (2d Dist.1992); St. Vincent Charity Hosp. v. URS Consultants, Inc.,
111 Ohio App.3d 791, 793, 677 N.E.2d 381 (8th Dist.1996); Shumaker v. Saks, Inc.,
163 Ohio App.3d 173, 2005-Ohio-4391, 837 N.E.2d 393 (8th Dist.).
R.C. 2711.02(B) permits the trial court, upon application of one of the
parties, to stay litigation in favor of arbitration pursuant to a written arbitration
agreement. The statute provides as follows:
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.
The trial court did not provide any reasoning or analysis in its entry
denying the motion to dismiss or alternative motion to stay and compel arbitration.
However, as our review is de novo, we conduct our own examination and
interpretation of the contract and arbitration provision. It does appear that at the
hearing, the trial court questioned whether the purchase order, which contained the
arbitration provision, was for the same materials and supplies that were listed on
the invoices submitted by Cuyahoga Supply with its complaint. There is no
arbitration clause reflected on the invoices. According to the affidavit of BECDIR’s
project manager, the purchase order was requested by Cuyahoga Supply before it
would complete the order.
At oral argument, Cuyahoga Supply disputed that the products that
were the subject of the purchase order were the same as those listed on the invoices.
However, in the trial court and in its appellate brief, Cuyahoga Supply only argued
that it did not sign the purchase order and thus, there was no “meeting of the minds”
with regard to the arbitration provision.
We find no merit to Cuyahoga Supply’s argument. This court has
previously held that “a written contract containing an arbitration agreement does
not need to be signed to be enforceable.” Dorgham v. Woods Cove III, 8th Dist.
Cuyahoga No. 106838, 2018-Ohio-4876, ¶ 15, citing PNC Mtge. v. Guenther, 2d
Dist. Montgomery No. 25385, 2013-Ohio-3044, ¶ 15 (signed writing is not necessary
to a settlement contract) and Seyfried v. O’Brien, 2017-Ohio-286, 81 N.E.3d 961,
¶ 19, fn. 3 (8th Dist.) (lack of a signature does not in itself show that the party has
not consented to arbitration). However, Dorgham went on to clarify that “this is
true only when it is the intention of the parties to be bound by the terms and
conditions of the subsequent written agreement, including the arbitration
provision.” Id. The Dorgham Court found that, after reviewing the appellants’
actions and assertions in the case, there was no “meeting of the minds” between the
parties with the intention to be bound by the subsequent written agreement. Id.The invoices attached to Cuyahoga Supply’s complaint are dated
July 8, 2022, and August 11, 2022; these invoices contain no arbitration provision.
The purchase order containing the arbitration clause is originally dated March 16,
2022, but is also labeled “REVISED 8/10/22.” The purchase order contains places
for a representative of BECDIR and a representative of Cuyahoga Supply to sign. It
states, “Please sign both copies and return to our office for signature.” There is no
dispute that the purchase order was never signed.
Cuyahoga Supply asserts that its representative purposely did not sign
the purchase order because it did not agree to the arbitration clause. However,
Cuyahoga Supply took no action to convey its disagreement and instead performed
its end of the contract by supplying the materials and supplies ordered in the
purchase order. Consequently, we cannot find that there was no “meeting of the
minds” between the parties with regard to the intention to be bound by the purchase
order.
Cuyahoga Supply’s performance under the purchase order
constituted its acceptance of the terms contained therein, including the arbitration
clause. Thus, the dispute between the parties, which arose out of the purchase order,
was required to be arbitrated. The trial court therefore erred in denying the motion
to compel arbitration and stay proceedings.
III. Conclusion
The trial court erred in denying BECDIR’s motion to compel
arbitration and stay the proceedings below. BECDIR’s sole assignment of error is
sustained, and the judgment of the trial court is reversed. This matter is remanded
for further proceedings consistent with this opinion.
It is ordered that appellant recover from appellee costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate be sent to said court to carry this judgment
into execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27
of the Rules of Appellate Procedure.
_______________________________________
FRANK DANIEL CELEBREZZE, III, JUDGE
EILEEN A. GALLAGHER, P.J., CONCURS;
SEAN C. GALLAGHER, J., DISSENTS (WITH SEPARATE OPINION)
SEAN C. GALLAGHER, J., DISSENTING:
I respectfully disagree with the majority’s conclusion that an error
occurred. Cuyahoga Supply & Tool, Inc. (“CST”), initiated this small-claims action
seeking to recover $9,120.44 from BECDIR Construction Company based on
BECDIR’s failure to render payments on two invoices. The first, dated July 8, 2022,
indicated a delivery of 178 22-ounce tubes of two-part epoxy valued at $2,604.14
and one duo-epoxy gun valued at $67.50. The order totaled $2,671.64. The second
invoice, dated August 11, 2022, included 651 pieces of #4 fiberglass rebar in 20-foot
sections, representing 13,020 feet of rebar valued at $5,728.80, along with a $720
delivery fee. That invoice totaled $6,448.80. In total, those invoices equaled the
$9,120.44 sought in the complaint.
In response, BECDIR claimed that an unsigned purchase order,
originally dated March 2022 but delivered to CST on August 10, 2022, was the
binding contract between the parties. The unsigned purchase order submitted,
however, required a single delivery in June 2022, a legal impossibility given the
August submission. It is undisputed that neither party signed that agreement, nor
is there any indication that a June delivery occurred for the purpose of
demonstrating “performance constitut[ing] acceptance of [the] terms and
conditions” of the unsigned purchase order. See R.C. 1302.09 (detailing methods of
acceptance in the sale of goods).
In an effort to demonstrate that a binding arbitration agreement
existed over the July and August invoices, BECDIR submitted an email, dated
August 10, 2022, discussing a delivery needed for the next day, August 11
(corresponding to one of the two invoices). The email expressly indicated the
August 11 delivery was based on the terms the parties had discussed. There is no
written agreement memorializing that supposed discussion. Attached to the emails
was a document purporting to be the purchase order dated March 16, 2022, but
noting that a revision occurred on August 10, 2022. That purchase order
purportedly required a June 2022 delivery of a specified quantity of two items: (1)
13,015 feet of Number 4 GFRP deformed bars for a total price of $5,726.60 and (2)
178 22-ounce, two-part cartridges of 1736 EA dowel holes with non-shrink, non-
metallic grout for a price of $2,604.14. The total for the purchase order was
$8,330.74, to which a $720 delivery fee could be added (totaling $9,050.74, but still
an approximate $70 difference in pricing compared to the invoices).
It is undisputed at this point that the August 11 delivery only included
the 13,020 feet of rebar. Thus, the invoices differ from the unsigned purchase order
in pricing, quantity, inclusion of additional goods, and date of required delivery; a
point emphasized by the municipal court during the hearing. Despite all the
material discrepancies, with no accompanying written agreement to alter any of the
material terms with respect to every other contractual condition in the unsigned
purchase order, BECDIR nonetheless seeks to enforce the arbitration provision in
isolation.
Although the purchase order indicates that “performance constitutes
acceptance of the terms and conditions[,]” there is no evidence that the disputed
invoices were in fulfillment of the purchase order, considered an offer to make a
contract that unambiguously required one delivery in June 2022. See R.C. 1302.09
(detailing methods of acceptance in the sale of goods); R.C. 1302.20 (delivery to be
in single lot unless otherwise specified).
The revised purchase order sent in August 2022 cannot apply to the
July invoice based on the timing alone, and in light of the fact that CST never signed
the purchase order predating the June delivery, CST was under no obligation from
the record presented to comply with the original form of the purchase agreement.
Because the purchase order was never signed, the only delivery that would constitute
acceptance of the proposal would be a June delivery in compliance with the purchase
order as drafted by BECDIR, absent evidence of some other agreement. In general,
without a signed purchase order, in the absence of any other binding agreement, the
supplier is under no obligation to proceed. A purchase order is binding only if signed
or if the supplier adheres to all material terms indicated in the purchase order, which
necessarily requires a timely delivery of all the specified goods absent some other
contractual gap-filling provision that has not been discussed in this appeal.
As the purchase order expressly indicates, the document is “the
complete agreement of the parties” and “no other agreements except as mutually
agreed in writing can amend this document.” By not signing the purchase order
before the July delivery, and by failing to deliver the requested goods in June, CST
amply demonstrated its intent to not be bound by the terms presented in the
purchase order and that there was no meeting of the minds. The July invoice has
not been demonstrated to be controlled by the terms of the August 10 purchase
order.
Further, nothing demonstrates that the August 10 purchase order
applied to the goods delivered on August 11 as reflected in that invoice. Although it
may have been BECDIR’s intent to rely on the purchase order, the one submitted
did not reflect the agreement of the parties based on the discrepancies between the
August 11 limited delivery and that requested in the August 10 purchase order
specifying a June 2022 delivery date of all goods.
The revised purchase order submitted to CST in August 2022 cannot
form the agreement for the previous July delivery and does not reflect the invoiced
materials delivered on August 11, which expressly occurred through outside
discussions according to the email provided by BECDIR. The only way BECDIR can
be successful is to apply the purchase order’s arbitration provision to the exclusion
of every other term: the dates of delivery; the number of products ordered; the goods
ordered; and the total billed. Despite none of those terms reflecting the transaction,
BECDIR seeks to enforce the arbitration provision. BECDIR cannot selectively
enforce the parts of the unsigned agreement on which it agrees, while disregarding
the lack of any meeting of the minds as to the remainder of the proposed contract.
It is for this reason that I respectfully dissent. BECDIR bore the
burden of demonstrating error, and it has not demonstrated that the unsigned
purchase agreement applied to the separate invoices underlying the small claims
action. The municipal court did not err in denying the motion to dismiss or compel
arbitration. I would affirm and remand this matter for further proceedings.