Mascher v. Basement Care, Inc.

[Cite as Mascher v. Basement Care, Inc., 2020-Ohio-3582.]
IN THE COURT OF APPEALS OF OHIO
SEVENTH APPELLATE DISTRICT
COLUMBIANA COUNTY
JOY MASCHER ET AL.,
Plaintiffs-Appellees,
v.
BASEMENT CARE, INC., ET AL.,
Defendants-Appellants.
OPINION AND JUDGMENT ENTRY
Case No. 19 CO 0022Civil Appeal from the
Court of Common Pleas of Columbiana County, Ohio
Case No. 2018 CV 312
BEFORE:
Gene Donofrio, Cheryl L. Waite, David A. D’Apolito, Judges.
JUDGMENT:
Reversed and Remanded
Atty. Nicholas Barborak, Barborak Law Offices, 120 South Market Street, Lisbon,
Ohio 44432, for Plaintiffs-Appellees, and
Atty. Dean Konstand, 106 S. Main Street, Suite 2500, Akron, Ohio 44308, for
Defendants-Appellants.
–2–
Dated:
June 30, 2020
Donofrio, J.
{¶1} Defendant-appellant, Basement Care, Inc., appeals the judgment of the
Columbiana County Common Pleas Court denying its motion to stay proceedings pending
arbitration in favor of plaintiffs-appellees, Joy Mascher and Coy Vlk-Peterson.
{¶2} Neva Heffner resided in a house in Wellsville, Ohio with appellee Mascher.
Both Heffner and appellee Mascher held an ownership interest in the house. On June 8,
2016, Heffner entered into a contract with appellant where appellant agreed to perform
numerous home repair tasks in exchange for $35,000. Heffner made a down payment of
$10,000 and appellant began the repair work on June 29, 2016. Appellees were not
parties to this contract.
{¶3} On July 7, 2016, Heffner paid the remaining balance on the contract. In
late July of 2016, appellant completed the repair tasks.
{¶4} On April 5, 2017, Heffner died testate. The Columbiana County Probate
Court appointed appellee Mascher as fiduciary to Heffner’s estate.
{¶5} On June 29, 2018, appellee Mascher, individually and as fiduciary to
Heffner’s estate, and appellee Vlk-Peterson filed a complaint against appellant and Jim
Lucco. The complaint set forth five causes of action: breach of contract, violation of Ohio’s
Consumer Sales Practices Act, fraud, negligence, and unjust enrichment. The complaint
also set forth a claim for punitive damages.
{¶6} Appellees attached two exhibits to their complaint. Exhibit A is a copy of
the judgment entry from the Columbiana County Probate Court appointing appellee
Mascher as fiduciary to Heffner’s estate. Exhibit B is a copy of the contract between
Heffner and appellant. The contract is one page and two-sided. On the front of the
contract above the signature line reads “THIS AGREEMENT CONTAINS A BINDING
ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.” (Compl.
Ex. B).
{¶7} On the back of the contract are the contract’s terms and conditions. Term
and condition number nine states “[a]ny controversy or claim arising out of or relating to
the contract and/or agreement or breach there of shall be settled by arbitration in
Case No. 19 CO 0022–3–
accordance with the construction industry rules of the American Arbitration Association
and judgements upon the award rendered by the arbitrator(s) may be entered in any court
having jurisdiction thereof.” (Compl. Ex. B).
{¶8} Appellant appeared in this action by filing a motion to dismiss pursuant to
Civ.R. 12(B)(1) and Civ.R. 12(B)(6). Alternatively, appellant’s motion argued that the
matter should be stayed pending arbitration.
{¶9} Appellees filed an opposition to appellant’s motion to dismiss. Appellees
argued that arbitration was inappropriate because: the action had parties who were not
bound by the arbitration clause; the action had claims that were nonarbitrable; the
arbitration clause was unfair, deceptive, and unconscionable; and the arbitration clause
did not apply to issues regarding quality of performance.
{¶10} Appellant filed a supplemental brief in support of its motion to dismiss
raising numerous arguments. Generally, appellant argued that the existence of non-
signatories to an arbitration clause or nonarbitrable claims did not preclude arbitration
and that appellee Mascher was bound by the arbitration clause because she brought this
action, in part, as fiduciary to Heffner’s estate. Appellant also argued that the arbitration
clause was neither procedurally nor substantively unconscionable.
{¶11} On May 21, 2019, the trial court denied appellant’s motion to dismiss. The
trial court held that the arbitration clause was substantively unconscionable because
appellees were not parties to the contract and, therefore, they could not enforce the
arbitration clause, but appellant could. The trial court also held that the arbitration clause
was procedurally unconscionable because appellees were not parties to the original
contract and no meeting of the minds occurred between the parties regarding the
arbitration clause. The trial court held that this judgment was a final appealable order.
{¶12} Appellant timely filed this appeal on June 21, 2019. Appellant now raises
one assignment of error. This appeal is brought solely by appellant as Lucco did not
appear in this action.
{¶13} Appellant’s sole assignment of error states:
THE TRIAL COURT ERRED BY FAILING TO STAY THE WITHIN
ACTION PENDING ARBITRATION.
Case No. 19 CO 0022–4–
{¶14} Appellant argues that the trial court’s judgment denying its motion to stay
pending arbitration is error for several reasons. First, the existence of unrelated parties
or nonarbitrable claims does not preclude arbitration. Second, the arbitration clause is
not unconscionable. Third, appellee Mascher, as fiduciary to Heffner’s estate, is bound
by the arbitration agreement.
{¶15} Generally, courts are to apply an abuse of discretion standard of review to
a trial court’s decision regarding a stay pending arbitration. Carapellotti v. Breisch &
Crowley, 7th Dist. Jefferson No. 18 JE 0002, 2018-Ohio-3977, ¶ 16 citing Featherstone
v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 159 Ohio App.3d 27, 2004-Ohio-5953, 822
N.E.2d 841 (9th Dist.). An abuse of discretion is more than an error of law or judgment;
it implies that the trial court's judgment was unreasonable, arbitrary, or unconscionable.
Blakemore v. Blakemore, 5 Ohio St.3d 217, 219, 450 N.E.2d 1140 (1983).
{¶16} But if the trial court denies a stay pending arbitration based on an issue of
law, reviewing courts apply a de novo standard of review. Villas di Tuscany Condominium
Assn., Inc. v. Villas di Tuscany, 7th Dist. Mahoning No. 12 MA 165, 2014-Ohio-7776, ¶ 9.
See also Reynolds v. Crockett Homes, Inc., 7th Dist. Columbiana No. 08 CO 8, 2009-
Ohio-1020, ¶ 11 (applying de novo standard of review to the issue of whether arbitration
agreement was unconscionable); Carapellotti at ¶ 16 (applying de novo standard of
review to the issue of whether there was a contract to arbitrate).
{¶17} The parties do not dispute the relevant facts set out above. The main
issues appellant raises in this appeal are whether appellees are bound by the arbitration
clause, whether the arbitration clause is unconscionable, and whether the existence of
non-parties to an arbitration clause or nonarbitrable claims preclude arbitration. These
are issues of law and, therefore, this court will apply a de novo standard of review.
{¶18} Beginning with whether appellees are bound by the arbitration clause,
“arbitration is a matter of contract and a party cannot be required to submit to arbitration
any dispute which he has not agreed so to submit.” Council of Smaller Enter. v. Gates,
McDonald & Co., 80 Ohio St.3d 661, 665, 687 N.E.2d 1352 (1998), quoting AT & T
Technologies, Inc. v. Communications Workers of Am., 475 U.S. 643, 648, 106 S.Ct.
1415, 89 L.Ed.2d 648 (1986). “While arbitration is encouraged as a form of dispute
resolution, the policy favoring arbitration does not trump the constitutional right to seek
Case No. 19 CO 0022–5–
redress in court.” Peters v. Columbus Steel Castings Co., 115 Ohio St.3d 134, 2007-
Ohio-4787, 873 N.E.2d 1258, at ¶ 8.
{¶19} While appellees were not parties to the contract, appellee Mascher is a
party to this action individually and as fiduciary to Heffner’s estate. Appellant argues that
appellee Mascher’s role as fiduciary to Heffner’s estate binds her to the arbitration clause.
{¶20} 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, assumption,
agency, veil-piercing/alter ego, and third-party beneficiary. Trinity Health Sys. v. MDX
Corp., 180 Ohio App.3d 815, 2009-Ohio-417, 907 N.E.2d 746, ¶ 22 (7th Dist.). In this
case, appellees brought a breach of contract cause of action against appellant, which is
a contractual related legal theory.
{¶21} Appellees’ breach of contract claim is based on Heffner performing on the
contract by paying the full contract price and appellant breaching the contract by
performing its repairs in an unsatisfactory manner or not completing certain agreed upon
tasks. The only contract attached to the complaint is Exhibit B. The allegations in
appellees’ breach of contract claim all center on breaches of the Exhibit B contract.
{¶22} “Under an estoppel theory, a nonsignatory who knowingly accepts the
benefits of an agreement is estopped from denying a corresponding obligation to
arbitrate.” I Sports v. IMG Worldwide, Inc., 157 Ohio App.3d 593, 2004-Ohio-3113, 813
N.E.2d 4, ¶ 13 (8th Dist.) citing Thomson-CSF, S.A. v. Am. Arbitration Assn., 64 F.3d 773(2d Cir.1995).
{¶23} Moreover, appellee Mascher, as fiduciary to Heffner’s estate, stands in
Heffner’s shoes which includes asserting Heffner’s rights under contracts that existed
prior to her death. LaMusga v. Summit Square Rehab, L.L.C., 2d Dist. Montgomery No.
26641, 2015-Ohio-5305, ¶ 54 citing Cole v. Ottawa Home & Sav. Assn., 18 Ohio St.2d 1,
246 N.E.2d 542 (1969). Based on the above, appellees are bound by the arbitration
clause.
{¶24} We turn now to whether the arbitration clause is unconscionable. The
doctrine of unconscionability includes two concepts: procedural unconscionability (the
absence of meaningful choice on the part of one of the parties) and substantive
Case No. 19 CO 0022–6–
unconscionability (when the contract’s terms unreasonably favor one party). Taylor Bldg.
Corp. of Am. v. Benfield, 117 Ohio St.3d 352, 2008-Ohio-938, 884 N.E.2d 12, ¶ 34. The
party asserting that the contract is unconscionable bears the burden of proving the
agreement is both procedurally and substantively unconscionable. Id.{¶25} The trial court held that the arbitration clause was procedurally
unconscionable because appellees were not signatories to the contract and, therefore,
there was no meeting of the mind between appellees and appellant regarding arbitration.
The trial court held that the arbitration clause was substantively unconscionable because,
as it was written, it could only be enforced by signatories to the contract.
{¶26} Beginning with procedural unconscionability, it “concerns the formation of
the agreement and occurs when no voluntary meeting of the minds is possible.” Christ
Holdings, L.L.C. v. Schleappi, 7th Dist. Noble No. 15 NO 0427, 2016-Ohio-4664, ¶ 37
quoting Porpora v. Gatliff Bldg. Co., 160 Ohio App.3d 843, 2005-Ohio-2410, 828 N.E.2d
1081, ¶ 7 (9th Dist.). “Procedural unconscionability considers the circumstances
surrounding the contracting parties' bargaining.” Taylor Bldg., 117 Ohio St.3d 352 at ¶
43. Courts consider each party's age, education, intelligence, business acumen and
experience, who drafted the contract, and whether alterations in the printed terms were
possible. Id.{¶27} The contract in this case was between Heffner and appellant. As there
has been no discovery in this case, there are almost no facts known about Heffner from
the record. The record only shows Heffner had an ownership interest in the home at
issue, she entered into a contract with appellee, and she died testate on April 5, 2017.
Appellees’ opposition to appellant’s motion to dismiss does not state any facts about
Heffner. Because there are very few facts about Heffner in the record, appellees failed
to meet their burden that the arbitration clause was procedurally unconscionable. On this
basis alone, the arbitration clause is not unconscionable.
{¶28} Appellees have also not met their burden that the arbitration clause is
substantively unconscionable. The contract is only one page and two-sided. On the front
of the contract directly above the signature line reads “THIS AGREEMENT CONTAINS
A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE
PARTIES.” (Compl. Ex. B). On the back of the contract, term and condition number nine
Case No. 19 CO 0022–7–
states “[a]ny controversy or claim arising out of or relating to the contract and/or
agreement or breach there of shall be settled by arbitration in accordance with the
construction industry rules of the American Arbitration Association and judgements upon
the award rendered by the arbitrator(s) may be entered in any court having jurisdiction
thereof.” (Compl. Ex. B).
{¶29} The contract contains a large disclaimer that there is an arbitration
provision. The actual arbitration clause does not unreasonably favor one party over the
other. Thus, the arbitration clause is not substantively unconscionable.
{¶30} Finally, we turn to whether actions involving nonarbitrable claims and non-
parties to an arbitration agreement should be stayed pending arbitration. Appellant
argues that even though there are both arbitrable and nonarbitrable claims in this case,
the entire action should be stayed pending arbitration of the arbitrable claims.
{¶31} In support of this argument, appellant cites Murray v. David Moore
Builders, 9th Dist. Summit No. 23821, 2008-Ohio-2960. In Murray, the Ninth District held
the presence of other parties and claims did not deprive David Moore of its right to
arbitrate qualifying disputes under the contract. Id. at ¶ 11. The Ninth District continued
that “’[t]o the extent that the Murrays' claims against Moore are subject to a valid
arbitration provision, the trial court erred by denying the stay because of the presence of
nonarbitrable claims and parties who cannot be compelled to arbitrate.” Id. at ¶ 11.
{¶32} In its reasoning, the Ninth District cited Cheney v. Sears, Roebuck & Co.,
10th Dist. Franklin No. 04AP-1354, 2005-Ohio-3283, which held “when an action involves
both arbitrable and non-arbitrable claims, the entire proceeding must be stayed until the
issues that are subject to arbitration are resolved.” Murray quoting Cheney at ¶ 12. This
court has adopted this ruling from Cheney. See Riggs v. Patriot Energy Partners, L.L.C.,
7th Dist. Carroll No. 11 CA 877, 2014-Ohio-558, ¶ 26. Based on Murray, Cheney, and
Riggs, because this action contains arbitrable claims, the trial court erred when it denied
appellant’s motion to stay pending arbitration.
{¶33} In conclusion, the trial court erred when it denied appellant’s motion to stay
pending arbitration. The trial court generally held that arbitration was inappropriate
because appellees were not signatories to the contract. As explained above, appellees
are subject to the arbitration clause because they asserted contractually related causes
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of action and because appellee Mascher brought this action, in part, as a representative
of Heffner’s estate. Appellees did not meet their burden to prove that the arbitration
clause was procedurally and substantively unconscionable. Because appellees brought
as least one arbitrable claim, the entire action should have been stayed pending
arbitration of arbitrable claims.
{¶34} Accordingly, appellant’s sole assignment of error has merit and is
sustained.
{¶35} For the reasons stated above, the trial court’s judgment is hereby reversed
and this matter is remanded to the trial court to stay proceedings pending arbitration
pursuant to law and consistent with this opinion.
Waite, P. J., concurs.
D’Apolito, J., concurs.
Case No. 19 CO 0022[Cite as Mascher v. Basement Care, Inc., 2020-Ohio-3582.]
For the reasons stated in the Opinion rendered herein, the sole assignment of
error is sustained and it is the final judgment and order of this Court that the judgment
of the Court of Common Pleas of Columbiana County, Ohio, is reversed. We hereby
remand this matter to the trial court to stay proceedings pending arbitration and
pursuant to law and consistent with this Court’s Opinion. Costs to be taxed against the
Appellees.
A certified copy of this opinion and judgment entry shall constitute the mandate
in this case pursuant to Rule 27 of the Rules of Appellate Procedure. It is ordered that
a certified copy be sent by the clerk to the trial court to carry this judgment into
execution.
NOTICE TO COUNSEL
This document constitutes a final judgment entry.