Fries v. Greg G. Wright & Sons, L.L.C. ( 2018 )

[Cite as Fries v. Greg G. Wright & Sons, L.L.C., 2018-Ohio-3785.]
IN THE COURT OF APPEALS
FIRST APPELLATE DISTRICT OF OHIO
HAMILTON COUNTY, OHIO
CARL FRIES, : APPEAL NO. C-160818
TRIAL NO. A-1502706
Plaintiff-Appellee, :
O P I N I O N.
vs. :
GREG G. WRIGHT & SONS, LLC, :
CKF OHIO ASSET ACQUISITIONS, :
LLC,
:
MARGARET GROSSMANN,
:
THOMAS E. GROSSMANN,
:
and
:
CHARLES FISCHER,
Defendants-Appellants. :
Civil Appeal From: Hamilton County Court of Common Pleas
Judgment Appealed From Is: Affirmed in Part, Reversed in Part, and Cause
Remanded
Date of Judgment Entry on Appeal: September 21, 2018
Cors & Bassett, Kevin R. Feazell, Susan Bell and Kelly Johnson, for Plaintiff-
Appellee,
Thomas E. Grossmann, for Defendants-Appellants Greg G. Wright & Sons, LLC,
Margaret Grossmann, and Thomas E. Grossmann,
Charles Fischer, for Defendants-Appellants CKF Ohio Asset Acquisitions, LLC, and
Charles Fischer.
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M OCK , Presiding Judge.
{¶1} This court is tasked with determining when causes of action involving
members of a limited liability company and litigation arising from the breach of
several lease agreements fall within the arbitration clause of Greg G. Wright & Sons’s
operating agreement. For the reasons set forth below, we affirm the trial court’s
judgment in part, reverse it in part, and remand the cause for further proceedings.
Member Leaves Company,
Litigation Ensues
{¶2} Defendant-appellant Greg G. Wright & Sons, LLC, is a machine tool,
stamping, engraving, and CNC lathe company that was founded in 1860 by the
grandfather of defendant-appellant Margaret W. Grossmann. In 2003, Margaret
Grossmann purchased the assets of Greg G. Wright & Sons from her father, who had
been the sole owner, and hired plaintiff-appellee Carl A. Fries, III, as the chief
executive officer. When he was hired, Fries was given a 15 percent ownership
interest in Greg G. Wright & Sons. After each year of employment, Fries earned an
additional three percent interest. By the time he left the position in March of 2011,
Fries had accumulated a 36 percent ownership interest in Greg G. Wright & Sons.
{¶3} Section 9.1 of the operating agreement of Greg G. Wright & Sons
contained the following dispute resolution provisions:
(a) Except as provided otherwise in this Agreement, if any dispute or
deadlock has not been resolved by negotiation within thirty (30) days
of either party’s written notification to the other party of the dispute,
the parties shall endeavor to settle such disputes or deadlock by
mediation under the then current Center for Public Resources (“CPR”)
Model Procedure for Mediation of Business Disputes. The neutral
third party required by the procedure shall be a lawyer selected by the
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CPR Panel of Neutrals. If the parties encounter difficulty in agreeing
on a neutral party, they will seek the assistance of CPR in the selection
process with respect thereto.
(b) Except as provided otherwise in this Agreement, if any dispute
regarding the interpretation of this Agreement or the rights of the
Members hereunder (but not as to any business decisions to be made
by the Board of Managers within the scope of this Agreement) has not
been resolved by mediation within sixty (60) days of the initiation of
such procedure, the parties shall finally settle such dispute by binding
arbitration conducted expeditiously in accordance with the CPR-Rules
for Non-Administered Arbitration of Business Disputes by a sole
arbitrator; provided, however, that if one party has requested the other
to participate in negotiations or mediation and the other had failed to
participate the requesting party may initiate arbitration before
expiration of the above period. The sole arbitrator will be a lawyer
selected from the CPR Panel of Neutrals. If the parties encounter
difficulty in agreeing on an arbitrator they will seek the assistance of
CPR in the selection process. The arbitration shall be governed by the
United States Arbitration Act, 9 U.S.C. § 1-16 and judgment upon the
award rendered by the Arbitrator(s) may be entered by any court
having jurisdiction thereof.
(c) The parties shall conduct any mediation or arbitration pursuant to
this § 9.1 in Cincinnati, Ohio, and the arbitrator shall apply the
substantive law of Ohio as applicable to the dispute.
(d) The arbitrator is not empowered to award consequential or
punitive damages under any circumstances, whether statutory or
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common law in nature, and including, but not limited to, treble
damages awarded by any statute. Parties shall make the arbitrator
aware of this provision limiting damages and liabilities before the start
of any arbitration proceedings.
***
(f) The remedies and procedures set forth in this § 9.1 are exclusive,
final, and binding remedies and procedures and shall be in lieu of any
right of the parties to institute proceedings in any court of law.
{¶4} In 2013, two years after Fries had left Greg G. Wright & Sons, a
complaint was filed against Greg G. Wright & Sons and Fries individually alleging
that Greg G. Wright & Sons had failed to make payments on certain equipment
leases—payments for which Fries had made a personal guarantee. The plaintiff, PNC
Equipment Finance, LLC, sought a total of $336,101.79 in damages, jointly and
severally, from Greg G. Wright & Sons and Fries. Defendant-appellant Thomas
Grossmann, an attorney, sought an extension of time to file an answer and
subsequently filed an answer on behalf of only Greg G. Wright & Sons. Fries, who
had been previously represented by Grossmann in other matters relating to Greg G.
Wright & Sons, claimed that he was not informed that Grossmann was filing only on
behalf of Greg G. Wright & Sons, and subsequently failed to file his own answer in
the case.
{¶5} During the course of the litigation, PNC Equipment Finance filed a
motion for a substitution of parties, asserting that the right to collect the money due
had been transferred to defendant-appellant CFK Ohio Asset Acquisitions, LLC.
While the motion was filed on behalf of PNC Equipment Finance, the signature lines
reflect the initials “TEG per telephone authority.” The certificate of service was
signed by Thomas Grossmann.
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{¶6} Fries sought to exercise his rights, as a member of Greg G. Wright &
Sons, to examine its books and records. Greg G. Wright & Sons, through Thomas
Grossmann, refused to allow him to examine the records, claiming that he was no
longer a member of Greg G. Wright & Sons. CFK Ohio Asset Acquisitions sought and
received a judgment against Fries, and dismissed Greg G. Wright & Sons as a party to
the case. Fries filed a motion for relief from judgment, pursuant to Civ.R. 60(B),
asserting that he had believed that Thomas Grossmann had been representing him
as well as Greg G. Wright & Sons. The trial court denied the motion, concluding that
Fries had not established that his belief was reasonable. Fries did not appeal that
decision.
{¶7} On May 19, 2015, Fries filed a verified complaint against Greg G.
Wright & Sons, Thomas Grossmann, Margaret Grossmann, CKF Ohio Asset
Acquisitions, and Charles Fischer (hereinafter collectively “appellants”). Fries’s
verified complaint lists six causes of action: breach of fiduciary duty, unjust
enrichment, conversion, right of reimbursement, fraudulent concealment, and civil
conspiracy. The first three causes of action arose from his status as a member with
Greg G. Wright & Sons, the second set of claims involved his having signed as a
personal guarantor on the lease agreements that resulted in litigation.
{¶8} After the verified complaint was filed, the parties engaged in
significant—and often contentious—litigation. During the course of the proceedings
below, appellants filed a limited number of pleadings before filing a motion to stay
the proceedings in order for the parties to submit to arbitration. After the motion for
a stay was filed, the course of the litigation took a decidedly tortured path, as the trial
court described
[t]his case, due to two appeals and several affidavits of disqualification
and continuance requests from the defendants, has only been active on
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my docket for a short time this year. The appeals have now been
dismissed by the First Appellate District and the Affidavits have been
denied by the Chief Justice of the Ohio Supreme Court. I have been
sued in my official capacity in a Writ of Procedendo which had not had
a final disposition. * * * Paradoxically, all of the failed appeals and
affidavits have had the effect of delaying a ruling on the pending
motions while the Application for Writ of Procedendo decries the lack
of ruling on the motions. Of course, more motions have been filed
while the case was stayed.
***
Mr. Fischer claims that he will not provide discovery because counsel
for other defendants have filed a Motion for Arbitration. There is no
law supporting this position.
***
The defendants have refiled their motions for more definite statement
that were previously overruled.
***
These parties do not agree on much, including whether the case should
go to arbitration. This is not a situation where counsel, working
collegially, have agreed to work together. The attorneys do not discuss
the case. There are lectures but no discussions. In most instances,
procedural problems tend to be worked out. The case at bar is the
polar opposite of cooperation.
{¶9} After conducting a hearing on the motion to stay the proceedings, the
trial court found that appellants had waived their right to seek arbitration, and that
the record had not been sufficiently developed to determine if the claims involved fall
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within the scope of the arbitration clause. Appellants appeal the decisions of the trial
court to deny their motion for a more definite statement and their motion to stay the
proceedings pending arbitration, and to grant Fries’s motion to compel discovery.
Motion For A More Definite Statement
{¶10} In their first assignment of error, appellants claim that the trial court
erred when it denied their motion for a more definite statement for Fries’s failure to
attach documents to his verified complaint. They claim that the decision was a final,
appealable order because it affected “a substantial right in an action and prevent[ed]
a judgment.” See R.C. 2505.02(B)(1).
{¶11} The Ohio Constitution limits an appellate court’s jurisdiction to the
review of final, appealable orders. Hooten v. Safe Auto Ins. Co., 1st Dist. Hamilton
No. C-061065, 2007-Ohio-6090, ¶ 10. “An order of a court is a final appealable
order only if the requirements of both R.C. 2505.02 and, if applicable, Civ.R. 54(B),
are met.” State ex rel. Scruggs v. Sadler, 97 Ohio St.3d 78, 2002-Ohio-5315, 776
N.E.2d 101, ¶ 5. The threshold requirement, therefore, is that the order satisfies the
criteria of R.C. 2505.02. Gehm v. Timberline Post & Frame, 112 Ohio St.3d 514,
2007-Ohio-607, 861 N.E.2d 519, ¶ 15.
{¶12} R.C. 2505.02(B)(1) provides that an order “that affects a substantial
right in an action that in effect determines the action and prevents a judgment” is a
final order. In order to satisfy the statute, the appealing party must show both that
the decision below affected a substantial right and that the decision effectively
determined the action and prevented a judgment.
{¶13} On its face, the trial court’s order does not fall within R.C.
2505.02(B)(1) because it does not determine the action or prevent a judgment. The
fact that, as appellants argue, “[t]he documents setting forth and determining the
parties’ arbitration rights are necessarily connected to determining the merits of stay
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and arbitration issues,” does not change this. The trial court’s entry denying the
motion for a more definite statement did not foreclose the admission of the
documents, and the documents were produced and admitted into the record by
appellants themselves. “ ‘A judgment that leaves issues unresolved and contemplates
that further action must be taken is not a final appealable order.’ ” State ex rel. Keith
v. McMonagle, 103 Ohio St.3d 430, 2004-Ohio-5580, 816 N.E.2d 597, ¶ 4, quoting
Bell v. Horton, 142 Ohio App.3d 694, 696, 756 N.E.2d 1241 (4th Dist.2001).
{¶14} Moreover, the trial court’s order does not affect a substantial right.
R.C. 2505.02(A)(1) defines substantial right as “a right that the United States
Constitution, the Ohio Constitution, a statute, the common law, or a rule of
procedure entitles a person to enforce or protect.” Thus “[a] substantial right is a
legal right that is entitled to enforcement and protection by law.” Browder v. Shea,
10th Dist. Franklin No. 04AP-1217, 2005-Ohio-4782, ¶ 13, citing Chef Italiano Corp.
v. Kent State Univ., 44 Ohio St.3d 86, 541 N.E.2d 64 (1989). An order affecting a
substantial right is “one which, if not immediately appealable, would foreclose
appropriate relief in the future.” Bell v. Mt. Sinai Med. Ctr., 67 Ohio St.3d 60, 63,
616 N.E.2d 181 (1993).
{¶15} The trial court’s order did not affect a substantial right. The trial
court’s decision not to grant the motion for a more definite statement simply
prevented appellants from being able to file a motion to dismiss pursuant to Civ.R.
12(B)(6). Nothing would prevent appellants from producing the documents
themselves—as they have done below—and pursuing an adjudication of the legal
issues involved by way of a motion for summary judgment filed pursuant to Civ.R.
56.
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{¶16} Appellants’ first assignment of error does not attack a final
appealable order under R.C. 2505.02(B)(1). We therefore lack the jurisdiction to
address it.
Arbitration in Ohio
{¶17} In their next three assignments of error, appellants claim that the trial
court erred in refusing to allow the matter to proceed to arbitration. In particular,
appellants argue first that the trial court erred when it determined that appellants
had waived the right to arbitrate the matter by their participation in the litigation.
They then argue that the trial court erred when it denied their motion to compel
arbitration. Finally, they argue that the trial court erred when it denied the motion
to stay the proceedings pursuant to R.C. 2711.02(B).
{¶18} Ohio public policy encourages arbitration as an alternative means of
dispute resolution. See Schaefer v. Allstate Ins. Co., 63 Ohio St.3d 708, 711-712, 590
N.E.2d 1242 (1992); ABM Farms, Inc. v. Woods, 81 Ohio St.3d 498, 500, 692 N.E.2d
574 (1998). That public policy is reflected in R.C. 2711.02(B):
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.
When an action involves both arbitrable and nonarbitrable claims, the entire action
must be stayed until the issues subject to arbitration are resolved. Rippe & Kingston
Co., PSC v. Kruse, 1st Dist. Hamilton No. C-130587, 2014-Ohio-2428, ¶ 21.
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Waiver of Arbitration Rights –
Standard of Review
{¶19} Before we address the question of whether the trial court properly
determined that appellants waived their right to arbitration in this case, we must first
determine the standard of review we apply. The parties have been unable to agree on
the appropriate standard of review. Appellants argue that the standard of review for
enforceability of an arbitration agreement and the waiver of those rights is de novo,
citing our decision in Philpott v. Pride Technologies of Ohio, LLC, 1st Dist. Hamilton
No. C-140730, 2015-Ohio-4341, ¶ 13. In that case, this court said:
[w]here the enforceability of an arbitration agreement raises
questions as to whether a party’s actions constitute a waiver of the
right to arbitrate as a matter of law, or as to whether an agreement
to arbitrate is unconscionable, we review the trial court’s order de
novo.
(Citations omitted.) Id.{¶20} Fries, on the other hand, argues that the standard of review is abuse
of discretion, citing the decision of the Tenth Appellate District in Fravel v.
Columbus Rehab. & Subacute Inst., 2015-Ohio-5125, 53 N.E.3d 953, ¶ 9 (10th Dist.).
In that case, the court said that “[t]he issue whether appellants have waived any right
to arbitration is fact driven and reviewed for an abuse of discretion.” Id.{¶21} Other appellate districts that have addressed the issue have held that
the standard of review is an abuse of discretion. “ ‘[T]he 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.’ ” White v. Smith, 2d Dist. Greene No.
2012-CV-1135, 2015-Ohio-1671, ¶ 23, quoting Murtha v. Ravines of McNaughton
Condominium Assn., 10th Dist. Franklin No. 09AP-709, 2010-Ohio-1325, ¶ 20. The
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Third Appellate District reached the same conclusion, citing another decision from
the Tenth Appellate District. U.S. Bank Natl. Assn. v. Allen, 2016-Ohio-2766, 52
N.E.3d 1237, ¶ 13 (3d Dist.), citing Morris v. Morris, 189 Ohio App.3d 608, 2010-
Ohio-4750, 939 N.E.2d 928, ¶ 17 (10th Dist.). The Fourth Appellate District reached
the same result, again citing Morris. Chrysler Fin. Servs. v. Henderson, 4th Dist.
Athens No. 11CA4, 2011-Ohio-6813, ¶ 24. The Fifth Appellate District reached the
same conclusion, citing dicta from this court in which we noted that the question of
waiver of an arbitration agreement is reviewed under an abuse-of-discretion
standard because those claims involve questions of fact, not law. Pellegrini v.
Codecon, L.L.C., 5th Dist. Stark No. 2015 CA 00001, 2015-Ohio-4266, ¶ 25, citing
Dunkelman v. Cincinnati Bengals, Inc., 158 Ohio App.3d 604, 2004-Ohio-6425, 821
N.E.2d 198, ¶ 18 (1st Dist.). The remaining appellate districts have agreed with this
position. See Buyer v. Long, 6th Dist. Fulton No. F-05-012, 2006-Ohio-472, ¶ 17;
Hoppel v. Feldman, 7th Dist. Columbiana No. 09 CO 34, 2011-Ohio-1183, ¶ 46; Neel
v. A. Perrino Constr., Inc., 8th Dist. Cuyahoga No. 105366, 2018-Ohio-1826, ¶ 32;
Milling Away, L.L.C. v. Infinity Retail Environments, Inc., 9th Dist. Summit No.
24168, 2008-Ohio-4691, ¶ 7; EMCC Invest. Ventures v. Rowe, 11th Dist. Portage No.
2011-P-0053, 2012-Ohio-4462, ¶ 18; Middletown Innkeepers, Inc. v. Spectrum
Interiors, 12th Dist. Butler No. CA2004-01-020, 2004-Ohio-5649, ¶ 12.
{¶22} Having determined that every appellate district in Ohio has held that
the standard of review for deciding if a trial court properly found waiver of an
arbitration right is an abuse of discretion, we return to our decision in Philpott. In
that case, this court said that questions of whether a party’s actions constituted a
waiver of the right to arbitrate or whether the agreement to arbitrate is
unconscionable are reviewed by this court de novo. Philpott, 1st Dist. Hamilton No.
C-140730, 2015-Ohio-4341, at ¶ 13. For that proposition, this court cited Taylor
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Bldg. Corp. of Am. v. Benfield, 117 Ohio St.3d 352, 2008-Ohio-938, 884 N.E.2d 12, ¶
27, and Snider v. S. Forty Homes, Inc., 5th Dist. Muskingum No. CT2007-0027,
2008-Ohio-385, ¶ 8. We will consider each case in turn.
{¶23} In Taylor Bldg. Corp. of Am., the Ohio Supreme Court addressed only
the issue of whether an arbitration clause was unconscionable. The appellant had
argued that the standard of review should be an abuse of discretion because of the
strong policy in favor of arbitration. Taylor at ¶ 36. The court did not agree, noting
that a determination of whether a written contract is unconscionable is an issue of
law. Taylor at ¶ 35, citing Ins. Co. of N. Am. v. Automatic Sprinkler Corp. of Am., 67
Ohio St.2d 91, 98, 423 N.E.2d 151 (1981). The court noted that courts review
questions of law de novo. Taylor at ¶ 35, citing Ignazio v. Clear Channel
Broadcasting, Inc., 113 Ohio St.3d 276, 2007-Ohio-1947, 865 N.E.2d 18, ¶ 9. The
court further noted that federal courts, which Ohio courts may look to for guidance
on issues of arbitration, have also applied de novo review to issues of contract
interpretation and enforceability of an arbitration clause alleged to be
unconscionable. Taylor at ¶ 35, citing Edwards v. HOVENSA, L.L.C., 497 F.3d 355,
362-363 (3d Cir.2007). None of these cases support the proposition that the
decision of a trial court regarding whether a party has waived a right to arbitrate is
reviewed de novo.
{¶24} The second case relied on in Philpott was a decision from the Fifth
Appellate District which did address the issue of waiver. See Snider. In the
paragraph cited in Philpott, the Snider court said that “[a] trial court’s grant or
denial of a stay based solely upon questions of law, however, is reviewed under a de
novo standard.” Snider at ¶ 8, citing Fortune v. Castle Nursing Homes, Inc., 5th
Dist. Holmes No. 05 CA 1, 2005-Ohio-6195. But the Snider court went on in the next
sentence to say, “Whether the contractual right to arbitration has been waived is a
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mixed question of fact and law.” Snider at ¶ 8, citing Buyer, 6th Dist. Fulton No. F-
05-12, 2006-Ohio-472. Notably, the Buyer court utilized an abuse-of-discretion
standard when analyzing the issue of a party’s waiver of an arbitration right. See
Buyer at ¶ 17 (“we cannot say that the trial court abused its discretion in finding that
appellee had not waived his right to arbitration”).
{¶25} After considering the jurisprudence from our sister districts, and
revisiting the analysis the court employed in Philpott, we conclude that the
appropriate standard of review when considering a trial court’s determination that a
contractual right to arbitrate a dispute has been waived is an abuse of discretion. In
a case predating Philpott and cited therein for another proposition, this court had
utilized an abuse-of-discretion standard when considering whether a party had
waived his or her right to arbitrate. Hilton v. Mill Rd. Const. II, Ltd., 1st Dist.
Hamilton No. C-030200, 2003-Ohio-7107, ¶ 5, citing Harsco Corp. v. Crane Carrier
Co., 122 Ohio App.3d 406, 701 N.E.2d 1040 (3d Dist.1997). The court later affirmed,
in dicta, that this was the case. Dunkelman, 158 Ohio App.3d 604, 2004-Ohio-6425,
821 N.E.2d 198, at ¶ 18 (noting that an abuse of discretion is the proper standard of
review when considering waiver or fraud in the factum). To the extent that Philpott
holds otherwise, we overrule that decision.
Waiver of Arbitration Right
{¶26} A contractual arbitration clause “is generally viewed as an expression
that the parties agree to arbitrate disagreements within the scope of the arbitration
clause, and, with limited exceptions, an arbitration clause is to be upheld just as any
other provision in a contract should be respected.” Williams v. Aetna Fin. Co., 83
Ohio St.3d 464, 471, 700 N.E.2d 859 (1998). A waiver of the contractual right to
arbitrate may arise by implication from a party’s active participation in prosecuting
or defending against a claim in litigation or from any acts that are otherwise
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inconsistent with the party’s right to proceed with arbitration. First Fin. Sav. Assn.
v. Hillsmith Const. Co., 1st Dist. Hamilton No. C-880260, 1989 WL 65864, *1 (June
21, 1989).
{¶27} Given Ohio’s public policy favoring arbitration, the party asserting
that the right to arbitrate has been waived bears the burden of proving waiver.
Murtha, 10th Dist. Franklin No. 09AP-709, 2010-Ohio-1325, at ¶ 20.
{¶28} In determining whether the totality of the circumstances supports a
finding of waiver, a court may consider such factors as:
1) any delay in the requesting party’s demand to arbitrate * * *; 2) the
extent of the requesting party’s participation in the litigation prior to
its filing a motion to stay the judicial proceeding, including a
determination of the status of discovery, dispositive motions, and the
trial date; 3) whether the requesting party invoked the jurisdiction of
the court by filing a counterclaim or third-party complaint without
asking for a stay of the proceedings; and 4) whether the non-
requesting party has been prejudiced by the requesting party’s
inconsistent acts.
Philpott, 1st Dist. Hamilton No. C-140730, 2015-Ohio-4341, at ¶ 16, citing Harsco,
122 Ohio App.3d at 414, 701 N.E.2d 1040; see Dispatch Printing Co. v. Recovery Ltd.
Partnership, 10th Dist. Franklin No. 10AP-353, 2011-Ohio-80, ¶ 21; U.S. Bank Natl.
Assn., 2016-Ohio-2766, 52 N.E.3d 1237, at ¶ 14. “Waiver attaches where there is
active participation in a lawsuit evincing an acquiescence to proceeding in a judicial
forum.” Fravel, 2015-Ohio-5125, 53 N.E.3d 953, at ¶ 13, quoting Tinker v. Oldaker,
10th Dist. Franklin No. 03AP-671, 2004-Ohio-3316, ¶ 21.
{¶29} The first factor to consider is whether there was a delay before
seeking arbitration. In this case, 94 days was not a delay sufficient to constitute a
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waiver of the right to arbitrate. See Harsco at 416 (delay of three months was
insufficient to demonstrate that defending party had waived the right to arbitrate);
Milling Away, L.L.C., 9th Dist. Summit No. 24168, 2008-Ohio-4691, at ¶ 14 (six-
month delay before seeking arbitration was insufficient to show waiver where only
minimal discovery was conducted prior to seeking a stay).
{¶30} The second factor to consider is the extent to which the party seeking
arbitration has participated in the litigation prior to seeking arbitration. In this case,
appellants’ participation in the litigation prior to seeking the stay was insufficient to
allow us to conclude that they waived their right to arbitrate. Other than pleadings
seeking additional time to respond to discovery, appellants took only one deposition.
“[E]ngaging in discovery will not necessarily result in waiver of arbitration rights.”
Griffith v. Linton, 130 Ohio App.3d 746, 753, 721 N.E.2d 146 (10th Dist.1998), citing
Williams v. Katten, Muchin & Zavis, 837 F.Supp. 1430, 1442 (N.D.Ill.1993); Harsco
at 416 (no waiver where “very limited discovery took place and a limited number of
depositions were conducted”). Discovery must be extensive to constitute a waiver.
Gavlik Constr. Co. v. H.F. Campbell Co., 526 F.2d 777, 783 (3d Cir.1975).
{¶31} The third factor for the court to consider is whether appellants
invoked the jurisdiction of the trial court by filing a counterclaim or third-party
complaint without asking for a stay of the proceedings. In this case, the verified
complaint was filed on May 19, 2015. Appellants filed their motion to refer the
matter to arbitration 94 days later on August 21. During that time, appellants filed a
motion for an extension of time to answer Fries’s requests for discovery, an
additional pleading relating to that issue, and a motion to stay discovery.
Additionally, Fries’s deposition was taken by Thomas Grossmann. Appellants did
not file a pleading that made a claim invoking the court’s jurisdiction.
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{¶32} The limited discovery conducted in this case was insufficient to
demonstrate waiver of the right to arbitrate. Compare Milling Away, L.L.C., 9th
Dist. Summit No. 24168, 2008-Ohio-4691, at ¶ 7 (although the parties exchanged
several motions with regard to the pleadings, the record reflects that only minimal
discovery occurred before Infinity sought the stay); Harsco, 122 Ohio App.3d at 416,
701 N.E.2d 1040 (very limited discovery took place and a limited number of
depositions were conducted) with Hoxworth v. Blinder, Robinson & Co., Inc., 980
F.2d 912, 925 (3d Cir.1992) (finding waiver after noting that defendants took
depositions of all of the named plaintiffs); United States ex rel. Duo Metal & Iron
Works, Inc. v. S.T.C. Constr. Co., 472 F.Supp. 1023, 1025 (E.D.Pa.1979) (finding
waiver after plaintiff spent considerable effort and expense in discovery for 19
months).
{¶33} Finally, we consider whether the prior inconsistent acts of appellants
would prejudice the nonmoving party. Fries has not shown how the delay of 94 days
has prejudiced him in this litigation. While it is true that there has been significant
litigation after the motion for a stay was filed, we consider prejudice up to the point
when the stay was sought. During the three months before the motion to stay was
filed, Fries sat for a four-hour deposition and had to respond to a few requests for
additional time to respond to the discovery motions that had been filed. This is
insufficient to show that he was prejudiced by the delay.
{¶34} “Because of the strong public policy in favor of arbitration, the heavy
burden of proving waiver of the right to arbitration is on the party asserting waiver.”
Griffith, 130 Ohio App.3d at 751, 721 N.E.2d 146. A court will not lightly infer waiver
of a right to arbitrate. U.S. Bank Natl. Assn., 2016-Ohio-2766, 52 N.E.3d 1237, at ¶
14, citing Harsco, 122 Ohio App.3d at 415, 701 N.E.2d 1040. On the state of this
record, we cannot conclude Fries demonstrated appellants’ actions were inconsistent
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with their right to arbitrate. Thus, we hold that the trial court abused its discretion in
finding that appellants waived their right to arbitrate. We sustain appellant’s second
assignment of error.
Motion to Stay Pending Arbitration –
Standard of Review
{¶35} In their third and fourth assignments of error, appellants claim that
the trial court erred when it denied their request to compel arbitration, finding that it
could not determine whether the allegations in the action fell within the scope of the
arbitration agreement. As with the previous assignment of error, the parties fail to
agree on the standard of review.
{¶36} Appellants argue that our standard of review is de novo, citing our
decision in Rippe, 1st Dist. Hamilton No. C-130587, 2014-Ohio-2428, at ¶ 20. Fries
argues that the standard of review is an abuse of discretion, citing a number of cases
from other appellate districts. See, e.g., Seyfried v. O’Brien, 8th Dist. Cuyahoga No.
104212, 2017-Ohio-286, ¶ 18; Carter Steel & Fabricating Co. v. Danis Bldg. Constr.
Co., 126 Ohio App.3d 251, 254, 710 N.E.2d 299 (3d Dist.1998).
{¶37} Traditionally, when confronted with appeals from decisions on
motions to stay pending arbitration, appellate courts apply an abuse-of-discretion
standard. See Morris, 189 Ohio App.3d 608, 2010-Ohio-4750, 939 N.E.2d 928, at ¶
15; see also Rippe at ¶ 14 (an order granting or denying a stay of trial pending
arbitration is reviewed under an abuse-of-discretion standard). But deciding the
discrete issue of whether a controversy falls within the provisions of an arbitration
clause is another matter. “Whether a controversy is arbitrable under a contract
requires the court to invoke principles of contract interpretation, and this presents a
question of law, which we review de novo.” Rippe at ¶ 20, citing Dunkleman, 158
Ohio App.3d 604, 2004-Ohio-6425, 821 N.E.2d 198, at ¶ 19-20; Hudson v. John
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Hancock Fin. Servs., 10th Dist. Franklin No. 06AP-1284, 2007-Ohio-6997, ¶ 8 (the
decision is subject to de novo review because such cases generally turn on issues of
contractual interpretation).
{¶38} The cases cited by Fries on this point support this conclusion. While
the Eighth Appellate District stated that the decision to grant a stay is generally a
matter within the trial court’s discretion, “when reviewing the scope of an arbitration
agreement, that is, whether a party has agreed to submit a certain issue to
arbitration, a de novo standard applies.” Seyfried at ¶ 18. And the Third Appellate
District has likewise concluded, in another matter, that “[c]ases, such as this, that
involve contractual interpretation or statutory application are reviewed de novo,
giving appropriate deference to the trial court's findings of fact.” Blanchard Valley
Health Sys. v. Canterbury Holdings, Inc., 3d Dist. Hancock No. 5-12-08, 2012-Ohio-
5134, ¶ 12.
Arbitrability of Claims
{¶39} No party has disputed that the membership agreement is a binding,
enforceable contract. Further, no party has argued any basis for invalidating the
arbitration provision. The issue remaining for this court is whether the verified
complaint filed by Fries contains claims that the parties had agreed to submit to
arbitration.
{¶40} When making this determination, we are not limited to the form in
which the causes of action have been pled. As the Ohio Supreme Court noted,
“[a]rbitration is not limited to claims alleging a breach of contract, and creative
pleading of claims as something other than contractual cannot overcome a broad
arbitration provision. The overarching issue is whether the parties agreed to arbitrate
the issue.” Academy of Medicine of Cincinnati v. Aetna Health, Inc., 108 Ohio St.3d
185, 2006-Ohio-657, 842 N.E.2d 488, ¶ 19. “Under this standard, [e]ven real torts
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can be covered by arbitration clauses [i]f the allegations underlying the claims ‘touch
matters' covered by the [agreement].” (Citations omitted.) Alexander v. Wells
Fargo Fin. Ohio 1, Inc., 122 Ohio St.3d 341, 2009-Ohio-2962, 911 N.E.2d 286, ¶ 24.
{¶41} Ohio courts may determine whether a claim is within the scope of an
arbitration agreement by “ ‘ask[ing] if [the claim] could be maintained without
reference to the contract or relationship at issue. If it could, it is likely outside the
scope of the arbitration agreement.’ ” Id., quoting Fazio v. Lehman Bros., Inc., 340
F.3d 386, 395 (6th Cir.2003). “Since courts must sift through pleadings to
determine whether a cause of action labeled as a tort or statutory claim is essentially
a cause of action based upon the contract, we agree with Fazio that ‘a proper method
of analysis * * * is to ask if an action could be maintained without reference to the
contract or relationship at issue.’ ” Academy of Medicine at ¶ 24, quoting Fazio.
{¶42} The arbitration clause in the operating agreement states that the
parties will arbitrate “any dispute regarding the interpretation of this Agreement or
the rights of the Members hereunder (but not as to any business decisions to be
made by the Board of Managers).” Fries’s verified complaint lists six causes of
action: breach of fiduciary duty, unjust enrichment, conversion, right of
reimbursement, fraudulent concealment, and civil conspiracy. In examining the
claims that make up the six causes of action, we find that they revolve around two
sets of core operating facts. The first three causes of action arise from his status as a
member of Greg G. Wright & Sons, the second set of claims revolves around his
having signed as a personal guarantor on the lease agreement that resulted in
litigation. We will consider the allegations of each in turn.
The Membership Claims
{¶43} In his first cause of action, Fries makes a claim for breach of fiduciary
duty. He complains that “[a]s members of GGWS, M. Grossmann, T. Grossmann,
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and any Doe Defendants holding a fiduciary interest in GGWS (collectively, the
“Owner Defendants”) owe a fiduciary duty of loyalty, a duty of care, and an obligation
of good faith and fair dealing to Mr. Fries, who owns a 36% interest in GGWS.” In
the context of that relationship, Fries claims that the Owner Defendants improperly
refused to permit him to examine the books of Greg G. Wright & Sons, refused to
acknowledge his ownership interest in Greg G. Wright & Sons, divested or attempted
to divest him of his ownership interest without notice or compensation, failed to
distribute his corporate earnings, and failed to provide a defense for him in the lease
litigation.
{¶44} In his second cause of action, Fries makes a claim for unjust
enrichment. He claimed that the Owner Defendants divested him of his ownership
interest and unjustly retained that interest for themselves and failed to distribute net
profits to him in proportion to his ownership interest.
{¶45} In his third cause of action, Fries makes a claim for conversion. The
claim likewise relies on his status as a member and the terms of the operating
agreement. His claim for conversion is premised on the same assertion as the unjust
enrichment claim and, in part, the breach-of-fiduciary-duty claim: that the Owner
Defendants divested him of his ownership interest without providing compensation.
{¶46} Each of the claims listed above arises from the fact of Fries’s status as
a member of Greg G. Wright & Sons, his claimed ownership interest therein, and the
rights due to him as a result of his membership. The operating agreement sets forth
that members are entitled to examine “all accounts, books, and other relevant
company documents” upon reasonable request. The claims made by Fries that
constitute his breach-of-fiduciary-duty, unjust-enrichment, and conversion causes of
action relate to his rights as a member and fall within the scope of the agreement’s
arbitration clause.
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The Guarantor-Litigation Claims
{¶47} In his fourth cause of action, Fries claims that he has a right of
reimbursement against appellants. The premise of his argument is that he was a
personal guarantor for Greg G. Wright & Sons in a series of equipment leases, Greg
G. Wright & Sons defaulted on those leases, Greg G. Wright & Sons has retained the
equipment, and he is entitled to be reimbursed by Greg G. Wright & Sons for the
amount of the leases.
{¶48} In his fifth cause of action, Fries claims that Greg G. Wright & Sons
and the Owner Defendants engaged in fraudulent concealment. He claims that Tom
Grossmann entered into a relationship with CFK Ohio Assets Acquisition, the
plaintiff in the lease litigation, “for the purpose of avoiding liability and resolving the
Lease Litigation” by shifting the obligations to Fries as guarantor “without regard to
[Greg G. Wright & Sons’s] co-defendant and member, Mr. Fries.” Fries claims that
Greg G. Wright & Sons and the Owner Defendants had a duty to disclose that
relationship, and concealed it in order to deceive Fries.
{¶49} In his final cause of action, Fries claims that Greg G. Wright & Sons,
the Owner Defendants, and CFK Ohio Assets Acquisition engaged in a civil
conspiracy to shield Greg G. Wright & Sons from liability in the lease litigation, with
the result that liability would be found solely against Fries.
{¶50} These claims represent allegations that do not arise from the
operating agreement. They can be “maintained without reference to the contract or
relationship at issue.” Academy of Medicine, 108 Ohio St.3d 185, 2006-Ohio-657,
842 N.E.2d 488, at ¶ 24.
{¶51} In Academy of Medicine, several managed health-care organizations
(“HMOs”) were sued by numerous physicians for antitrust violations on allegations
that the HMOs had conspired to fix and lower the insurance reimbursement rates
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paid by the HMOs. The HMOs sought to compel arbitration pursuant to an
arbitration agreement found within the provider agreements signed by the
physicians. The court noted that
[t]he allegations that the HMOs, which controlled a majority of the
health-care market in this region, colluded to fix reimbursement rates
to medical practitioners arose out of actions that occurred prior to the
existence of the underlying provider agreements or business
relationships between the doctors and HMOs. The allegations did not
even presume the existence of an underlying provider agreement.
Id. at ¶ 7, quoting Academy of Medicine of Cincinnati v. Aetna Health, Inc., 155 Ohio
App.3d 310, 2003-Ohio-6194, 800 N.E.2d 1185, ¶ 6 (1st Dist.). The Ohio Supreme
Court affirmed this court’s adoption of the Fazio test, determined that it had been
properly applied, and concluded that the dispute fell outside the arbitration
agreement. Id. at ¶ 30.
{¶52} Similarly, the Eighth Appellate District addressed the question of
whether claims arising from the sexual assault of an employee by a manager fell
within the arbitration agreement the employee executed. The court concluded that
the claims “exist[ed] independently of the employment relationship as they may be
maintained without reference to the contract or relationship at issue.” Arnold v.
Burger King, 2015-Ohio-4485, 48 N.E.3d 69, ¶ 65 (8th Dist).
{¶53} The claims made by Fries in his fourth, fifth, and sixth causes of
action do not arise from the operating agreement or Fries’s status as a member.
They arise from his status as a personal guarantor on the lease agreements between
Greg G. Wright & Sons and CFK Ohio Assets Acquisition.
{¶54} On the other hand, it could be said that Fries would not have signed
the leases as a personal guarantor but for his status as a member of Greg G. Wright &
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Sons. But the Fazio test as utilized by this court, and affirmed by the Ohio Supreme
Court, is not a but-for test. In Academy of Medicine, the physicians would not have
been subjected to claimed unfair reimbursement rates but for the fact that they had
entered into the provider agreements with the HMOs. As this court noted, the
“express elements of an antitrust claim do not depend, as a matter of law, on the
provider agreements between the individual doctors and HMOs.” Academy of
Medicine, 155 Ohio App.3d 310, 2003-Ohio-6194, 800 N.E.2d 1185, at ¶ 5.
{¶55} Similarly, in Arnold, the employee who sued was in a position to be
sexually assaulted by her manager because she was an employee and on the
premises. But the court noted that “[a] patron may, for example based on the
asserted facts, pursue an action for sexual harassment per the Ohio Civil Rights Act.”
Arnold at ¶ 66. The fact that the individual, because of the contractual relationship,
is placed in a position to be subjected to conduct for which the law may provide a
remedy does not mean that the claims that arise therefrom are “dependent on the
contract or relationship at issue.” Id. at ¶ 65.
{¶56} Any individual could have signed the lease agreements as guarantor,
as Fries claims to have done. Any individual having done so could then have been
brought into litigation relating to that lease from which the remainder of the claims
arise. As with the physicians in Academy of Medicine, “[t]he allegations did not even
presume the existence of an underlying * * * agreement.” Academy of Medicine at ¶
6. These claims can be maintained without reference to the contract or relationship,
and they do not rely on the relationships or obligations created by the agreement.
Therefore, they fall outside the scope of the arbitration clause in the operating
agreement.
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Ambiguity of Claims
{¶57} In its decision, the trial court stated that it was partially unable to
determine whether the claims involved in this case fell within the arbitration clause
because the record had not been developed through discovery. The trial court stated:
[w]hat portion of the plaintiff’s claims, if any, that [are] subject to
arbitration is unknown. The arbitration clause is narrow and it may be
that the plaintiff’s claims fall under the exclusion from arbitration. No
one knows because almost no discovery from the defendants has been
produced.
***
[D]iscovery must proceed to determine whether this case should go to
arbitration or not. The defendants refuse to give discovery. The
burden on this motion is on the defendants and by failing to cooperate
in the slightest way in terms of giving discovery responses there is
nothing in the record to warrant the granting of the Motion to
Arbitrate.
{¶58} The flaw in the trial court’s analysis on this issue is that the measure
of the arbitrability of the claims is their recitation in the complaint. As the Ohio
Supreme Court noted, “[t]he Fazio test does not act as a detriment to arbitration. * *
* It allows courts to make determinations of arbitrability based upon the factual
allegations in the complaint instead of on the legal theories presented.” Acad. of
Medicine, 108 Ohio St.3d 185, 2006-Ohio-657, 842 N.E.2d 488, at ¶ 29.
{¶59} In this case, the verified complaint is a simple recitation of Fries’s
claims against appellants. The claims are not ambiguous, and their relationship to
the operating agreement and the arbitration provision has been set forth above.
There was no need for additional discovery to determine the application of the
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arbitration clause in this case. See Rippe, 1st Dist. Hamilton No. C-130587, 2014-
Ohio-2428, at ¶ 52 (there is no need for discovery where the enforceability or
applicability of the arbitration provision is discernable).
Lack of Remedy
{¶60} We note that one of the reasons cited by the trial court for refusing to
grant the motion to stay was the trial court’s belief that the arbitration could not
result in the award of damages. The trial court noted that “the arbitration clause in
question * * * expressly provides that the arbitrator shall award no damages.” As a
result, the trial court stated that “[t]he damages trial, which as I have noted will take
place regardless of who prevails at arbitration, will involve the same evidence is in
the liability phase of the trial. It is ridiculous to do that twice.”
{¶61} But the arbitration clause does not preclude the award of all damages.
The clause states that “[t]he arbitrator is not empowered to award consequential or
punitive damages under any circumstances.” A provision in an arbitration
agreement by which parties waive their right to seek punitive damages is
commercially reasonable. Hayes v. Oakridge Home, 122 Ohio St.3d 63, 2009-Ohio-
2054, 908 N.E.2d 408, ¶ 35. The arbitrator is empowered to award contractual
damages for the claims subject to arbitration, and this is the recourse for which the
parties contracted.
Parties to Arbitration
{¶62} Now that we have determined which claims are subject to arbitration,
we must next determine which parties are bound to participate in the arbitration.
Because arbitration is a matter of contract, a party cannot be forced to arbitrate a
dispute that it has not agreed to submit to arbitration. Taylor v. Ernst & Young,
LLP, 130 Ohio St.3d 411, 2011-Ohio-5262, 958 N.E.2d 1203, ¶ 20.
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{¶63} The parties against whom Fries made claims in his first three causes
of action are Margaret Grossmann, Thomas Grossmann, and Greg G. Wright & Sons,
LLC.1 The verified complaint alleges that Margaret Grossmann and Thomas
Grossmann are members and managers of Greg G. Wright & Sons. As signatories to
the operating agreement, it is clear that Fries and Margaret Grossmann have the
right to invoke the arbitration clause.
{¶64} Greg G. Wright & Sons and Thomas Grossmann are not signatories to
the operating agreement. But Ohio courts have recognized that “arbitration may be
compelled by a nonsignatory against a signatory due to the ‘close relationship
between the entities involved, as well as the relationship of the alleged wrongs to the
nonsignatory's obligations and duties in the contract * * * and [the fact that] the
claims were “intimately founded in and intertwined with the underlying contract
obligations.” ’ ” Short v. Resource Title Agency, Inc., 8th Dist. Cuyahoga No. 95839,
2011-Ohio-1577, ¶ 15, quoting I Sports v. IMG Worldwide, Inc., 157 Ohio App.3d
593, 2004-Ohio-3113, 813 N.E.2d 4, ¶ 14 (8th Dist.), quoting Thomson-CSF, S.A. v.
Am. Arbitration Assn., 64 F.3d 773, 776 (2d Cir.1995). Additionally, a nonsignatory
to an arbitration agreement may be bound by the arbitration agreement under a
variety of ordinary contractual and agency related legal theories, including but not
limited to estoppel, incorporation by reference, agency, veil-piercing/alter ego, and
third-party beneficiary. See Javitch v. First Union Secs., Inc., 315 F.3d 619, 629 (6th
Cir.2003), citing Thomson-CSF; Cleveland-Akron-Canton Advertising Coop. v.
1 The remaining appellants—CFK Ohio Asset Acquisitions, LLC, and Charles Fischer—are only
involved in claims relating to causes of action that we have found are not subject to arbitration.
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Physician's Weight Loss Ctrs. of Am., Inc., 184 Ohio App.3d 805, 2009-Ohio-5699,
922 N.E.2d 1012, ¶ 18 (8th Dist.).
{¶65} In this case, both Thomas Grossmann and Greg G. Wright & Sons are
closely tied to the operating agreement. Thomas Grossmann is alleged to be a
member and manager of Greg G. Wright & Sons. Greg G. Wright & Sons itself is an
obvious third-party beneficiary of the operating agreement. Therefore, both Thomas
Grossmann and Greg G. Wright & Sons were entitled to seek relief pursuant to the
arbitration clause in the operating agreement.
{¶66} Fries argues that since appellants claim that he is no longer a member
of Greg G. Wright & Sons, there is at least a question as to whether he is bound by
the arbitration agreement. This position is incorrect as, even if Fries is currently not
a member of Greg G. Wright & Sons, none of the parties dispute that he was a
member. Therefore, he had agreed to be bound by the terms of the operating
agreement, including the agreement to arbitrate disputes arising from membership.
See Cirino v. Christian & Timbers, Inc., 116 Ohio App.3d 818, 820, 689 N.E.2d 583(8th Dist.1996) (termination of former employee's employment did not terminate his
employment agreement with his former employer; therefore subsequent wrongful
and retaliatory-discharge claims were subject to arbitration pursuant to agreement's
arbitration clause).
Claims and Parties Subject to Arbitration
{¶67} In summary, Fries’s claims relating to his first three causes of action—
breach of fiduciary duty, unjust enrichment, and conversion—are claims that arise
from Fries’s status as a member of Greg G. Wright & Sons, his claimed ownership
interest therein, and the rights resulting from his membership. They could not be
made without reference to the operating agreement, and are, in fact, grounded
therein. Those claims are subject to arbitration. Fries, Margaret Grossmann,
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Thomas Grossmann, and Greg G. Wright & Sons, LLC, are entitled to enforce the
arbitration provision.
{¶68} But Fries’s claims relating to his second three causes of action—right
of reimbursement, fraudulent concealment, and civil conspiracy—do not arise from
the operating agreement or Fries’s status as a member. The claims could be
maintained without reference to the contract or relationship at issue. CFK Ohio
Asset Acquisitions, LLC, and Charles Fischer are involved only in claims relating to
those causes of action, which are not subject to arbitration.
{¶69} The result in this case preserves Ohio’s public policy favoring
arbitration as a method to settle disputes, while ensuring that the parties are not
compelled to arbitrate claims for which they had not bargained. See Taylor, 130
Ohio St.3d 411, 2011-Ohio-5262, 958 N.E.2d 1203, at ¶ 20. The claims that are
subject to the arbitration clause in the operating agreement are those that arose from
that agreement involving only the parties directly related to that agreement. Since
the lease-litigation claims are causes of action that do not arise from the operating
agreement and involve parties who are strangers to the operating agreement, they
will be litigated after the arbitration has concluded.
{¶70} We sustain appellants’ third and fourth assignments of error in part
and overrule them in part.
Motion to Compel Discovery
{¶71} In their final assignment of error, appellants claim that the trial court
erred when it granted Fries’s motion to compel discovery. But we lack jurisdiction to
consider that issue.
{¶72} Generally, discovery orders are neither final nor appealable. Grace v.
Mastruserio, 182 Ohio App.3d 243, 2007-Ohio-3942, 912 N.E.2d 608, ¶ 33 (1st
Dist.). An exception exists for some cases in which the discovery sought involves the
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disclosure of privileged material, but even those cases are limited to orders that
satisfy the “provisional remedy” criteria outlined in R.C. 2505.02(A)(3). See
Summitbridge Natl. Invests, L.L.C. v. Ameritek Custom Homes, Inc., 1st Dist.
Hamilton No. C-120476, 2013-Ohio-760, ¶ 6; Dispatch Printing Co. v. Recovery Ltd.
Partnership, 166 Ohio App.3d 118, 2006-Ohio-1347, 849 N.E.2d 297, ¶ 8 (1oth
Dist.). Without such special circumstances
discovery techniques are pretrial procedures used as an adjunct to a
pending lawsuit. They are designed to aid in the final disposition of
the litigation, and are, therefore, to be considered as an integral part of
the action in which they are utilized. They are not “special
proceedings,” as that phrase is used in R.C. 2505.02.
Kennedy v. Chalfin, 38 Ohio St.2d 85, 89, 310 N.E.2d 233 (1974).
{¶73} Appellant’s arguments relating to the order compelling discovery
relate only to the propriety of discovery prior to arbitration. They did not argue that
the discovery in question implicated an exception to the general rule that discovery
rulings are not appealable. Therefore, we lack jurisdiction to address the arguments
presented in the fifth assignment of error, and we do not address them.
Conclusion
{¶74} For the reasons set forth above, we affirm the decision of the trial
court in part, reverse it in part, and remand the cause for further proceedings. On
remand, the trial court shall stay the entire proceedings while the parties arbitrate
the first three causes of action. See Rippe, 1st Dist. Hamilton No. C-130587, 2014-
Ohio-2428, at ¶ 21 (the court must stay the entire proceeding, despite the presence of
nonarbitrable claims); Bright Future Partners, Inc. v. Proctor & Gamble Distrib.,
LLC, 1st Dist. Hamilton No. C-160589, 2017-Ohio-4145, ¶ 22 (claims involving
nonsignatories to the arbitration agreement will be stayed while arbitrable claims are
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resolved). The trial court is free to set a reasonable timeframe in which it can expect
the parties to have completed the arbitration of those claims. If the arbitration has
not concluded after that time has elapsed, the trial court may conduct a hearing to
determine whether the delay in arbitration can be assigned to one or more of the
parties and whether the conduct constitutes a forfeiture of the right to proceed with
arbitration. Once the arbitration is concluded, the trial court shall proceed with the
remaining claims.
{¶75} We remand this cause to the trial court for proceedings consistent
with this opinion.
Judgment affirmed in part, reversed in part, and cause remanded.
CUNNINGHAM and ZAYAS, JJ., concur.
Please note:
The court has recorded its own entry on the date of the release of this opinion.
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