Skerlec v. Ganley Chevrolet, Inc.

[Cite as Skerlec v. Ganley Chevrolet, Inc., 2012-Ohio-5748.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 98247
JAMES E. SKERLEC, JR.
PLAINTIFF-APPELLANT
vs.
GANLEY CHEVROLET, INC., ET AL.
DEFENDANTS-APPELLEES
JUDGMENT:
AFFIRMED IN PART, REVERSED IN PART,
AND REMANDED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-768477
BEFORE: Boyle, P.J., Cooney, J., and Kilbane, J.
RELEASED AND JOURNALIZED: December 6, 2012
ATTORNEYS FOR APPELLANT
Joseph J. Triscaro
Robert P. DeMarco
DeMarco & Triscaro, Ltd.
30505 Bainbridge Road
Suite 225
Solon, Ohio 44139
ATTORNEYS FOR APPELLEES
Gregory A. Gordillo
Michael J. Gordillo
Gordillo & Gordillo, LLC
1370 Ontario Street
Suite 2000
Cleveland, Ohio 44113
A. Steven Dever
Law Offices of A. Steven Dever Co., LPA
13363 Madison Avenue
Lakewood, Ohio 44107
MARY J. BOYLE, P.J.:
{¶1} Plaintiff-appellant, James E. Skerlec, Jr. (“Skerlec”), appeals the
trial court’s granting the motion to stay pending arbitration filed by
defendant-appellees, Ganley Chevrolet, Inc., and Ganley Chevrolet of Aurora,
LLC (collectively referred to as “Ganley”). Finding some merit to the appeal,
we affirm in part and reverse in part.
Procedural History and Facts
{¶2} Ganley hired Skerlec as an automotive technician in August
2009. Shortly thereafter, Skerlec joined the International Association of
Machinists and Aerospace Workers, Local Lodge 163 (“the Union”). On June
28, 2011, following Ganley’s and the Union’s failure to agree to the terms of a
collective bargaining agreement, Ganley called for a vote amongst its
automotive technicians “to determine who was for and against the Union.”
Skerlec was one of five technicians that voted in favor of the Union; three
others voted against it. Two days later, a general manager at Ganley
accused Skerlec of stealing and offered him two options: resign or be
terminated and prosecuted for theft. He refused to resign, and the Portage
County prosecutor’s office charged him. The Portage County Common Pleas
Court later granted a motion to dismiss the charges.
{¶3} As a result of his termination, Skerlec filed suit against Ganley,
alleging wrongful discharge in violation of public policy, malicious
prosecution, abuse of process, intentional infliction of emotional distress,
unlawful wage withholding, and seeking punitive damages. According to
Skerlec’s complaint, it was customary for the automotive technicians to
gather the scrap metal left- over from servicing vehicles, sell the metal to a
scrapping company, and then divide the proceeds between all the technicians.
Skerlec alleged that this practice was known by Ganley and never
discouraged. Skerlec further alleged that another technician, who had also
engaged in the same practice of selling the scrap metal to a scrapping
company, was never prosecuted or terminated. This employee, however, had
voted against keeping the Union.
{¶4} Ganley moved to dismiss the complaint, arguing that the
complaint failed to state sufficient facts to support the claims, which Skerlec
opposed. The trial court denied the motion. Ganley subsequently filed a
motion to stay asserting that, pursuant to the parties’ arbitration agreement,
the American Arbitration Association in Cleveland, Ohio should hear and
decide the dispute. The trial court agreed, and this appeal now follows.
Motion To Stay
{¶5} In his sole assignment of error, Skerlec contends the trial court
erred in granting Ganley’s motion to stay pending arbitration. He raises
several arguments in support of this claim, namely, (1) that the arbitration
provision is not enforceable because it lacks consideration and definite terms,
(2) his intentional torts claims fall outside the scope of the provision, and (3)
Ganley waived arbitration by failing to file a motion to stay prior to its filing
of a motion to dismiss.
Standard of Review
{¶6} The appropriate standard of review depends on “the type of
questions raised challenging the applicability of the arbitration provision.”
McCaskey v. Sanford-Brown College, 8th Dist. No. 97261, 2012-Ohio-1543, ¶
7. Generally, an abuse of discretion standard applies in limited
circumstances, such as a determination that a party has waived its right to
arbitrate a given dispute. Id., citing Milling Away, L.L.C. v. UGP Properties,
L.L.C., 8th Dist. No. 95751, 2011-Ohio-1103, ¶ 8. But the issue of whether a
party has agreed to submit an issue to arbitration or questions of
unconscionability are reviewed under a de novo standard of review. See
Shumaker v. Saks Inc., 163 Ohio App.3d 173, 2005-Ohio-4391, 837 N.E.2d
393 (8th Dist.); Taylor Bldg. Corp. of Am. v. Benfield, 117 Ohio St.3d 352,
2008-Ohio-938, 884 N.E.2d 12.
{¶7} We therefore afford no deference to the trial court’s finding that
a valid contract exists and apply a de novo review to this issue. We likewise
apply a de novo review in determining the scope of the arbitration provision.
As for the trial court’s determination that Ganley did not waive its right to
arbitrate, we apply an abuse of discretion.
Enforceability of the Arbitration Provision
{¶8} An arbitration agreement is an expression that the parties agree
to arbitrate disagreements within the scope of the contract. Williams v.
Aetna Fin. Co., 83 Ohio St.3d 464, 471, 700 N.E.2d 859 (1998). Thus, prior to
making any determination regarding the arbitrability of any issue, a court
must first determine whether the arbitration agreement is enforceable under
basic contract precepts. Council of Smaller Ents. v. Gates, McDonald & Co.,
80 Ohio St.3d 661, 665, 687 N.E.2d 1352 (1998).
{¶9} For a valid contract to exist, there must be an offer, an acceptance
of the offer, and consideration. All Erection & Crane Rental Corp. v. Trispan
Corp., 8th Dist. No. 91471, 2009-Ohio-867, ¶ 10, citing Noroski v. Fallet, 2
Ohio St.3d 77, 79, 442 N.E.2d 1302 (1982). “Consideration may consist of
either a detriment to the promisee or a benefit to the promisor.” Lake Land
Emp. Group of Akron, LLC v. Columber, 101 Ohio St.3d 242, 2004-Ohio-786,
804 N.E.2d 27, ¶ 16, citing Irwin v. Lombard Univ., 56 Ohio St. 9, 19, 46 N.E.
63 (1897). The Ohio Supreme Court has held that giving up a right to trial,
in addition to the corresponding rights of that judicial process, is
consideration. Hayes v. Oakridge Home, 122 Ohio St.3d 63, 2009-Ohio-2054,
908 N.E.2d 408, ¶ 42-43.
{¶10} Skerlec argues the arbitration agreement is not enforceable
because he never agreed to it when he was hired. He implies that because he
signed the agreement the day after he was hired, it lacked consideration and
is unenforceable. In support of this argument, Skerlec relies on Harmon v.
Philip Morris Inc., 120 Ohio App.3d 187, 697 N.E.2d 270 (8th Dist.1997). In
Harmon, this court found that an employee’s signature acknowledging receipt
of the arbitration brochure did not constitute an enforceable arbitration
agreement.
{¶11} However, Harmon is easily distinguished from the instant case.
Although Harmon’s continued employment was contingent on his signing and
acknowledging receipt of the arbitration brochure, the court found there was
not an enforceable agreement because:
[T]he terms of this program require employees to arbitrate their
claims against Philip Morris but do not similarly require Philip
Morris to arbitrate its claims against them; and, since Philip
Morris reserves the right to amend or terminate this program at
any time, it has neither offered a benefit to its employees nor
incurred any detriment by modifying the terms of the
employment relationship. Thus, no consideration flowed from
the employer to the employees to compensate them for
relinquishing their individual and collective rights to present
their claims to a jury in a court of law because they remained
at-will employees following implementation of the program,
subject to termination but without the right to seek redress from
a jury.
{¶12} Here, both parties agreed to submit any unresolved complaint of
“workplace wrongdoing.” The arbitration provision is titled “Arbitration
Agreement” and provides, in pertinent part:
The employee understands that it is the goal of the dealership to
resolve any complaints of workplace wrongdoing. Any such
complaints may be made directly to the department manager or
General Manager or may be made to the independent third party,
Labor Consultants of America, through the Employee Protection
Line. The employee agrees that, if any complaint of workplace
wrongdoing remains unresolved, any resulting legal claim of
wrongdoing shall be submitted by the employee and the
dealership to the American Arbitration Association in
Cleveland, Ohio.
(Emphasis added.)
{¶13} Unlike Harmon, where Philip Morris offered no consideration to
Harmon to accept its offer modifying the terms of employment, Ganley agreed
to waive its right to a jury trial in exchange for Skerlec’s similar promise.
Unlike the arbitration provision at issue in Harmon, there is nothing in the
instant arbitration agreement that would allow Ganley to unilaterally modify
the terms of the arbitration agreement. No consideration is required above
and beyond the mutual agreement to arbitrate. Corl v. Thomas & King, 10th
Dist. No. 05AP-1128, 2006-Ohio-2956, ¶ 20, citing Dantz v. Apple Ohio LLC,
277 F.Supp.2d 794 (N.D.Ohio 2003).
{¶14} Skerlec further argues the arbitration agreement is
unenforceable because it fails to define material terms. He contends the
parties are not identified, and the terms “workplace wrongdoing” and
“dealership” are vague.
{¶15} The parties are obviously Skerlec and Ganley. Although the
terms “workplace wrongdoing” and “dealership” are not defined, they are
easily understood according to their plain, ordinary meaning. Where terms
in a contract are not defined, courts apply the plain and ordinary meaning of
words to determine the parties’ intent. Penn Traffic Co. v. AIU Ins. Co., 99
Ohio St.3d 227, 2003-Ohio-3373, 790 N.E.2d 1199, ¶ 9. The term
“dealership” can only refer to Ganley because no other dealerships were party
to the contract. Webster’s defines “wrongdoing” as “any act or behavior that is
wrong.” Webster’s New World Dictionary 1543 (3d College Ed). It defines
“wrong,” in part as “unlawful, immoral or improper.” Id. The plain language
of the arbitration agreement contemplates that any legal claims arising from
improper behavior between the employee and the employer/dealership in the
workplace should be submitted to arbitration.
{¶16} But while we do not find that the terms of the arbitration
provision are so lacking to render the contract unenforceable, we do find that
by applying the terms in their context, the three alleged intentional torts
clearly fall outside the scope of the provision.
Scope of the Arbitration Provision
{¶17} Skerlec argues that the arbitration agreement is inapplicable to
many of his claims because it does not include intentional torts. He argues
that his claims for malicious prosecution, abuse of process, and intentional
infliction of emotional distress do not fall within the scope of the arbitration
agreement. We agree.
{¶18} While we acknowledge that Skerlec is raising this argument for
the first time on appeal, we find that R.C. 2711.02(B) requires a trial court to
stay a matter for arbitration only upon being satisfied that “the issue involved
in the action is referable to arbitration under an agreement in writing for
arbitration.” Therefore, a trial court has an independent duty to determine
that the claims involved are subject to the arbitration provision before it can
issue a stay. Id. Moreover, an “arbitrator has no authority to decide issues
which, under their agreement, the parties did not submit to review.” State
Farm Mut. Ins. Co. v. Blevins, 49 Ohio St.3d 165, 166, 551 N.E.2d 955 (1990).
{¶19} Here, we agree that the plain language of the arbitration
provision does not cover intentional torts relating to the employer’s alleged
conduct outside the employment relationship. The arbitration provision
specifically limits the scope of the arbitration provision to “workplace
wrongdoing.” The alleged intentional torts of Ganley that occurred outside of
the workplace do not fall within the plain meaning of “workplace
wrongdoing.” Moreover, to the extent that this term is ambiguous, we must
interpret the ambiguity against the drafter of the contract — Ganley. See
Piening v. Ent. Rent-a-Car of Cincinnati, Inc., 1st Dist. No. C-060535,
2007-Ohio-4709.
{¶20} As for Ganley’s claim that the alleged intentional torts flow from
Skerlec’s alleged theft in the workplace, we find this reasoning flawed.
Ganley is not seeking to invoke this arbitration provision to address the
alleged theft, i.e., “the wrongdoing,” by Skerlec. The intentional torts at
issue all relate to Ganley’s alleged conduct outside of the workplace, i.e.,
frivolously seeking a criminal prosecution against Skerlec. And while there
is a nexus between the parties and the claims by virtue of their former
employment relationship, the arbitration provision does not encompass all
claims between the employer and employee under every circumstance.
Instead, the arbitration provision clearly is limited to those claims related to
“workplace wrongdoing.”
{¶21} Despite the strong presumption in favor of arbitration, parties cannot be
compelled to arbitrate a dispute that they have not agreed to submit to arbitration. Council of
Smaller Ents., 80 Ohio St.3d at 665, 687 N.E.2d 1352; see also Marks v. Morgan Stanley Dean
Witter Commercial Fin. Servs., 8th Dist. No. 88948, 2008-Ohio-1820. Based on the plain
language of the arbitration provision, we find that the three intentional torts alleged fall outside
its scope and should not have been stayed. Accordingly, we sustain the first
assignment of error in part.
Waiver
{¶22} Skerlec further argues that Ganley waived its right to
arbitration by filing a motion to dismiss before its motion for stay. He
suggests that by filing the motion to dismiss, Ganley invoked the court’s
jurisdiction. In support of his argument, Skerlec relies on Mauk v.
Washtenaw Mtg. Co., 5th Dist. No. 03CA0019, 2003-Ohio-4394. In Mauk,
the court found that the defendant waived his right to arbitration by filing a
motion to dismiss, engaging in discovery, filing a motion for protective order,
and waiting to raise the issue of arbitration for over seven months after the
complaint was filed. Id. at ¶ 15.
{¶23} In Church v. Fleishour Homes, Inc., 172 Ohio App.3d 205,
2007-Ohio-1806, 874 N.E.2d 795 (5th Dist.), the same court reached the
opposite conclusion and found that the defendant preserved its right to
arbitration under the circumstances presented in that case. In
distinguishing Mauk, the Church court explained that the defendant
promptly asserted the arbitration provision as an affirmative defense in its
answer. Id. at ¶ 82. The Church court further explained that when
determining whether arbitration has been waived: “‘The essential question is
whether, based on the totality of the circumstances, the party seeking
arbitration has acted inconsistently with the right to arbitrate.’” Id. at ¶ 80,
quoting Harsco Corp. v. Crane Carrier Co., 122 Ohio App.3d 406, 410, 701
N.E.2d 1040 (3d Dist.1997).
{¶24} In determining whether a defendant acted inconsistently with
arbitration, this court has held that the trial court should consider:
(1) any delay in the requesting party’s demand to arbitrate via a
motion to stay judicial proceedings and an order compelling
arbitration; (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.
Phillips v. Lee Homes, Inc., 8th Dist. No. 64353, 1994 Ohio App. LEXIS 596(Feb. 17, 1994), citing Rock v. Merrill, Lynch, Pierce, Fenner & Smith, Inc.,
79 Ohio App.3d 126, 606 N.E.2d 1054 (8th Dist.1992); Brumm v. McDonald &
Co. Secs., Inc., 78 Ohio App.3d 96, 603 N.E.2d 1141 (4th Dist.1992).
{¶25} Contrary to Skerlec’s assertion, the mere filing of a motion to
dismiss alone does not operate as a waiver of a party’s right to arbitrate. See
Bayer v. Mapes, 8th Dist. No. 66541, 1994 Ohio App. LEXIS 5156 (Nov. 17,
1994). Indeed, a motion for a stay pending arbitration does not raise any of
the defenses specifically enumerated in Civ.R. 12(B)(1) to (7), and such
motion therefore need not be filed prior to filing a motion to dismiss. Id.{¶26} Skerlec filed the complaint on November 4, 2011. Ganley was
served with the complaint in mid-November. After receiving leave to plead,
Ganley filed a motion to dismiss pursuant to Civ.R. 12(B)(6) on January 13,
2012 , arguing that the complaint failed to state a claim upon which relief
could be granted. Once the motion to dismiss was denied, Ganley promptly
filed the motion for stay, four months after the complaint was filed and four
months before the court’s dispositive motion deadline.
{¶27} Here, the record indicates that Ganley did not participate in the
litigation. Ganley did not engage in discovery or file any counterclaims, but
promptly requested the stay once the court denied the motion to dismiss.
Based on the totality of the circumstances, Ganley acted consistently with its
right to arbitrate, and we cannot say that the trial court abused its discretion
in finding that Ganley had not waived arbitration.
{¶28} In summary, we find some merit to Skerlic’s sole assignment of
error. The three intentional torts fall outside the arbitration provision and
therefore should not have been stayed. His other claims, i.e., wrongful
discharge and wage withholding, however, are subject to a valid and
enforceable arbitration provision, and therefore the trial court properly
granted Ganley’s motion to stay with respect to these claims.
{¶29} Judgment affirmed in part, reversed in part, and remanded to
the lower court for further proceedings consistent with this opinion.
It is ordered that the parties share the costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this court directing the
common pleas 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.
______________________________________________
MARY J. BOYLE, PRESIDING JUDGE
MARY EILEEN KILBANE, J., CONCURS;
COLLEEN CONWAY COONEY, J., CONCURS IN JUDGMENT ONLY
IN PART AND DISSENTS IN PART WITH SEPARATE OPINION
COLLEEN CONWAY COONEY, J., CONCURRING IN JUDGMENT ONLY IN
PART, DISSENTING IN PART:
{¶30} I concur in the judgment to affirm the trial court. I respectfully dissent in the
partial reversal to exclude certain claims from the arbitration process.
{¶31} Skerlec objected to arbitration on three grounds: the agreement was invalid for
lack of consideration, the terms were vague, and Ganley waived its right to arbitrate by filing a
motion to dismiss. His failure to raise in the trial court his current argument that certain
claims are excluded from arbitration constitutes a waiver of his objection.
{¶32} As this court recently found:
A litigant’s failure to raise an argument in the trial court waives the
litigant’s right to raise the issue on appeal. Shover v. Cordis Corp. (1991), 61
Ohio St.3d 213, 220, 574 N.E.2d 457, overruled on other grounds in Collins v.
Sotka (1998), 81 Ohio St.3d 506, 1998-Ohio-331, 692 N.E.2d 581; Maust v.
Meyers Products, Inc. (1989), 64 Ohio App.3d 310, 581 N.E.2d 589 (failure to
raise an issue in the trial court waives a litigant’s right to raise that issue on
appeal). Because Foster failed to raise these claims in the trial court, he has
waived these claims on appeal.
Foster v. Wells Fargo Fin. Ohio, Inc., 195 Ohio App.3d 497, 2011-Ohio-4632,
¶ 24 (8th Dist.).
{¶33} Furthermore, the arbitration agreement is not limited to only
claims of “workplace wrongdoing.” Rather, the agreement states that it
covers any unresolved complaints of “workplace wrongdoing” as well as “any
resulting legal claim of wrongdoing.” In other words, the agreement
encompasses any claims that occur as a result of alleged workplace
wrongdoing.
{¶34} Here, Ganley terminated Skerlec’s employment because of his
alleged theft in the workplace. Skerlec’s claims for wrongful termination,
malicious prosecution, abuse of process, and intentional infliction of
emotional distress arise from prosecuting his alleged “workplace wrongdoing,”
i.e., the alleged theft. They are within the scope of the arbitration agreement
and should be submitted to arbitration because they are “resulting legal
claims” from the wrongdoing.
{¶35} Therefore, I would affirm in toto.