Brownlee v. Cleveland Clinic Found.

2012 Ohio 2212

• Court: Ohio Court of Appeals
• Decided: May 17, 2012
• Docket: 97707
• Status: Published

Opinion

[Cite as Brownlee v. Cleveland Clinic Found. , 2012-Ohio-2212.]

Court of Appeals of Ohio EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA

JOURNAL ENTRY AND OPINION No. 97707

JOHN D. BROWNLEE, M.D. PLAINTIFF-APPELLANT

vs.

CLEVELAND CLINIC FOUNDATION, ET AL.

DEFENDANTS-APPELLEES

JUDGMENT: AFFIRMED

Civil Appeal from the Cuyahoga County Common Pleas Court Case No. CV-753739

BEFORE: Boyle, J., Stewart, P.J., and Rocco, J.

RELEASED AND JOURNALIZED: May 17, 2012 ATTORNEYS FOR APPELLANT

Caryn M. Groedel Chastity L. Christy Matthew M. Ries Caryn Groedel & Associates Co., LPA 31340 Solon Road Suite 27 Solon, Ohio 44139

ATTORNEYS FOR APPELLEES

Robert I. Koury Robert M. Wolff Littler Mendelson, P.C. 1100 Superior Avenue 20th Floor Cleveland, Ohio 44114 MARY J. BOYLE, J.:

{¶1} This case came to be heard upon the accelerated calendar pursuant to App.R.

11.1 and Loc.R. 11.1.

{¶2} Plaintiff-appellant, John Brownlee, M.D., appeals the trial court’s decision

granting the motion to stay proceedings pending arbitration filed by

defendants-appellees, Cleveland Clinic Foundation and Dr. Gus Kious (collectively

“CCF”). Finding no merit to the appeal, we affirm.

{¶3} In July 2011, Brownlee filed an amended complaint against CCF, asserting

eleven causes of action. The claims arose out of Brownlee’s former employment with

CCF and a Settlement Agreement executed between the parties in August 2010,

following the severing of Brownlee’s relationship with CCF. The Settlement

Agreement contained the following arbitration provision:

In the event of any controversy, dispute, disagreement or claim arising out of, relating to, in connection with or concerning this Agreement, and upon written notice by the party asserting any such controversy, dispute, disagreement or claim, the parties agree to confer in good faith and attempt to resolve the controversy, dispute, disagreement or claim informally. If such controversy, dispute, disagreement or claim is not resolved within thirty (30) days, the controversy, dispute, disagreement or claim shall be submitted to binding arbitration in Cleveland, Ohio under the rules of the American Arbitration Association then in effect. The parties shall appoint a single arbitrator selected mutually or selected according to the procedures of the Cleveland Office of the American Arbitration [sic] then in effect. The arbitrator’s decision is final and binding upon [the] parties. Each party shall pay one-half of the fees and expenses of the arbitrator. Any ambiguity regarding the arbitrability of any dispute shall be resolved in favor of arbitrability * * *. {¶4} Relying on the above arbitration provision contained in the parties’ Settlement

Agreement, CCF filed a motion to stay proceedings pending arbitration pursuant to R.C. 2711.02.

Brownlee opposed the motion, arguing that enforcing the arbitration clause “violates the principles of

equity and conscionability” because the Settlement Agreement was fraudulently induced. According

to Brownlee, the consideration for obtaining his consent to the Settlement Agreement was CCF’s

promise to keep the circumstances surrounding his exit from CCF confidential and to report only what

was required by law — a promise that CCF never kept. He further argued that CCF failed to

establish that it would suffer hardship if the proceedings were not stayed.

{¶5} The trial court subsequently granted CCF’s motion to stay the proceedings pending

arbitration. Brownlee appeals, raising two assignments of error:

{¶6} “[I.] The trial court erred in issuing an order compelling the parties to arbitrate without

first conducting an evidentiary hearing.

{¶7} “[II.] The trial court erred in granting appellees’ motion to stay the

proceedings pending arbitration without affording the parties a reasonable opportunity to

conduct discovery regarding the enforceability of the arbitration clause.”

Standard of Review

{¶8} The parties dispute the applicable standard of review governing this case,

both citing to decisions of this court with varying holdings in the area. This court,

however, has recently addressed this dispute, explaining that 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.

{¶9} In this case, where we are reviewing a trial court’s decision to grant a motion

to stay after finding that the claims are subject to arbitration and there is no issue of

waiver, we apply a de novo standard of review. Indeed, “[t]he abuse of discretion

standard of review has no application in the context of the court deciding to stay

proceedings pending the outcome of arbitration because a stay in such circumstances is

mandatory, not discretionary.” N. Park Retirement Community Ctr., Inc. v. Sovran

Cos., Ltd., 8th Dist. No. 96376, 2011-Ohio-5179, ¶ 7 (recognizing that R.C. 2711.02(B)

imposes a mandatory duty to stay the proceedings, leaving no discretion for the trial

court upon being satisfied that the matter was subject to arbitration); see also McCaskey

at ¶ 9. Under a de novo standard of review, we give no deference to a trial court’s

decision. Akron v. Frazier, 142 Ohio App.3d 718, 721, 756 N.E.2d 1258 (9th

Dist.2001).

Evidentiary Hearing {¶10} In his first assignment of error, Brownlee argues that the trial court erred in

granting CCF’s motion to stay without first holding an evidentiary hearing.

{¶11} The Ohio Arbitration Act, contained within R.C. Chapter 2711, provides

two different mechanisms by which a party may enforce an arbitration provision. In

accordance with R.C. 2711.02, a party may apply to the trial court to “stay the trial of

[an] action [pending before the court] until arbitration of the issue has been had in

accordance with the agreement.” R.C. 2711.02(B). Alternatively, under R.C. 2711.03,

a party may file a motion to compel arbitration, petitioning the court “for an order

directing that the arbitration proceed in the manner provided for in the written

agreement.” R.C. 2711.03(A).

{¶12} Although these provisions each require a trial court to determine whether

an arbitration provision is enforceable, “the statutes are separate and distinct provisions

and serve different purposes.” Maestle v. Best Buy Co., 100 Ohio St.3d 330,

2003-Ohio-6465, 800 N.E.2d 7. And while R.C. 2711.03 contains a requirement for a

hearing, R.C. 2711.02 does not. Id. at ¶ 19. As stated by the Ohio Supreme court in

Maestle:

While it is within a trial court’s discretion to hold a hearing when considering whether a R.C. 2711.02 stay is warranted, that statute does not on its face require a hearing, and it is not appropriate to read an implicit requirement into the statute. Id.

{¶13} Despite acknowledging that CCF filed a motion to stay under R.C. 2711.02,

which does not have an express hearing requirement, Brownlee argues that an

evidentiary hearing was still required because (1) the trial court granted the remedy provided under R.C. 2711.03, ordering the parties to submit the claims to arbitration; and

(2) there was an issue regarding the enforceability of the arbitration provision as being

unconscionable and fraudulently induced, which required the consideration of evidence

to resolve. We find these arguments unpersuasive.

{¶14} Despite his argument on appeal, Brownlee never requested an oral hearing

in opposing CCF’s motion to stay. Further, it is undisputed that CCF’s motion solely

sought an order to stay the proceedings consistent with R.C. 2711.02, which does not

require the trial court to hold a hearing. To the extent that the trial court’s journal entry

granting the motion to stay further stated that “the parties are hereby ordered to

arbitration,” we do not find this grounds for reversal. Indeed, the logical consequence

of CCF obtaining a stay of the proceedings pending arbitration is that the parties will

submit the matter to arbitration.

{¶15} The record further reveals that the Brownlee’s challenge of the arbitration

provision could be resolved as a matter of law. Brownlee never disputed that he

entered into a Settlement Agreement that contains an arbitration provision. Nor did he

dispute that his claims fell within the scope of the arbitration provision. Brownlee

challenged the arbitration provision as being unenforceable because it is contained in a

settlement agreement that was “fraudulently induced” and signed “under duress.”1

1 Although Brownlee made a blanket statement in his brief in opposition to CCF’s motion to stay that “the arbitration clause was fraudulently induced,” his argument was premised on the clause being part of a larger agreement that was fraudulently induced. Indeed, while Brownlee’s amended complaint challenges the Settlement Agreement as a whole, it contains no mention of the arbitration provision. {¶16} But it is well settled that “to defeat a motion to stay brought pursuant to

R.C. 2711.02, a party must demonstrate that the arbitration provision itself * * * and not

merely the contract in general” is invalid. ABM Farms, Inc. v. Woods, 81 Ohio St.3d

498, 502, 692 N.E.2d 574 (1998). “Because the arbitration clause is a separate entity *

* * an alleged failure of the contract in which it is contained does not affect the provision

itself.” Id. Thus, when a party opposing a motion to stay proceedings under R.C.

2711.02 challenges the contract as a whole, the motion to stay should be granted and the

“general challenge to the entire contract, including the arbitration clause, must be

submitted to the arbitrator to determine the validity of the entire contract.” Garber v.

Buckeye Chrysler-Jeep Dodge of Shelby, 5th Dist. No. 2007-CA-0121, 2008-Ohio-3533,

¶ 16. This court has consistently held the same; a challenge to an agreement allegedly

procured by fraud does not defeat a motion to stay proceedings pending arbitration when

there is no separate claim that the arbitration clause itself contained in the agreement was

fraudulent induced. See, e.g., Mak v. Silberman, 8th Dist. No. 95590, 2011-Ohio-854;

Short v. Resources Title Agency, 8th Dist. No. 95839, 2011-Ohio-1577; Coble v. Toyota

of Bedford, 8th Dist. No. 83089, 2004-Ohio-238.

{¶17} Accordingly, we find no error in the trial court granting CCF’s motion to

stay without holding an evidentiary hearing. The first assignment of error is overruled.

Discovery

{¶18} In his second assignment of error, Brownlee argues that the trial court erred

in deciding the motion to stay without affording him a reasonable opportunity to conduct discovery regarding the enforceability of the arbitration provision. But the record

reveals that from the time the lawsuit was filed on April 22, 2011, until the time the trial

court stayed the proceedings on November 18, 2011, Brownlee never once attempted to

conduct discovery regarding the enforceability of the arbitration provision. To the

extent that Brownlee served written discovery requests on CCF on November 7, 2011,

these requests were unrelated to the arbitration provision. Thus, it appears that

Brownlee could have obtained discovery earlier if he wanted.

{¶19} Further, Brownlee’s challenge to the arbitration provision was based on the

Settlement Agreement as a whole, not the arbitration provision itself — an argument that

would not overcome a motion to stay. Thus, because Brownlee’s arguments did not

evidence a need for discovery, the trial court was not required to allow for it. See Melia

v. OfficeMax N. Am., Inc., 8th Dist. No. 87249, 2006-Ohio-4765, ¶ 38.

{¶20} The second assignment of error is overruled.

{¶21} Judgment affirmed.

It is ordered that appellees recover from appellant costs herein taxed.

The court finds there were reasonable grounds for this appeal.

It is ordered that a special mandate be sent to said court to carry this judgment

into execution. A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of

the Rules of Appellate Procedure.

MARY J. BOYLE, JUDGE

KENNETH A. ROCCO, J., CONCURS; MELODY J. STEWART, P.J., CONCURS IN JUDGMENT ONLY