Cuyahoga Supply & Tool, Inc. v. BECDIR Constr. Co.

2024 Ohio 1375

• Court: Ohio Court of Appeals
• Decided: April 11, 2024
• Docket: 113096
• Status: Published

Opinion

[Cite as Cuyahoga Supply & Tool, Inc. v. BECDIR Constr. Co., 2024-Ohio-1375.]

COURT OF APPEALS OF OHIO

EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA

CUYAHOGA SUPPLY & TOOL, INC., :

Plaintiff-Appellee, : No. 113096 v. :

BECDIR CONSTRUCTION COMPANY, :

Defendant-Appellant. :

JOURNAL ENTRY AND OPINION

JUDGMENT: REVERSED AND REMANDED RELEASED AND JOURNALIZED: April 11, 2024

Civil Appeal from the Bedford Municipal Court Case No. 23CVF00193

Appearances:

Ted S. Friedman, for appellee.

Harrington, Hoppe & Mitchell, Ltd., and Matthew M. Ries, for appellant.

FRANK DANIEL CELEBREZZE, III, J.:

Appellant BECDIR Construction Company (“BECDIR”) brings this

appeal challenging the trial court’s denial of its motion to dismiss or alternative

motion to compel arbitration and stay proceedings. After a thorough review of the applicable law and facts, we reverse the judgment of the trial court and remand this

matter for further proceedings.

I. Factual and Procedural History

This matter arises from a suit upon a mechanics lien filed by appellee

Cuyahoga Supply & Tool, Inc. (“Cuyahoga Supply”) against BECDIR. Cuyahoga

Supply provided building supplies and materials for a construction project to

BECDIR pursuant to a purchase order. The purchase order contained an arbitration

provision that applied to “[a]ny dispute, controversy or claim arising out of or

related to this contract * * * .” The purchase order was not signed by anyone for

Cuyahoga Supply or BECDIR; however, it contained a term that stated,

“Performance constitutes acceptance of terms and conditions stated herein.”

When BECDIR failed to pay for the supplies and materials, Cuyahoga

Supply filed a mechanics lien against it. BECDIR then submitted a notice to

commence suit to Cuyahoga Supply, informing it that BECDIR intended to dispute

the lien and asserting that the funds were not owed to Cuyahoga Supply due to its

failure to perform according to the terms of the purchase order and contract.

Cuyahoga Supply subsequently filed suit alleging a claim for breach of

contract and submitted two invoices dated July 8, 2022, and August 11, 2022.

BECDIR moved to dismiss the case or, in the alternative, to compel arbitration and

stay proceedings. With its motion, BECDIR submitted the affidavit of its project

manager, along with a copy of the purchase order containing the arbitration

provision. The trial court held a hearing where both parties presented arguments.

After the hearing, BECDIR filed a posthearing brief to “provide additional legal

authority and clarification” of issues raised at the hearing. Cuyahoga Supply

submitted the affidavit of its owner, wherein he stated that he had never agreed to

resolve any dispute by way of arbitration and specifically did not sign the purchase

order to convey his opposition to the arbitration clause.

The court denied BECDIR’s motion to dismiss/motion to compel and

stay, finding that no arbitration clause applied to the case. BECDIR then filed the

instant appeal, raising one assignment of error for our review:

The trial court erred in denying appellant’s motion to dismiss or compel arbitration and stay proceedings pursuant to R.C. 2711.02(B) because this dispute arises from the parties’ contract, which contains a mandatory arbitration provision.

II. Law and Analysis

Generally, an appellate court reviews a trial court’s decision to grant or

deny a motion to compel arbitration or stay the proceedings under the abuse-of-

discretion standard. U.S. Bank, N.A. v. Wilkens, 8th Dist. Cuyahoga No. 96617,

2012-Ohio-263, ¶ 13; Milling Away, L.L.C. v. UGP Properties, L.L.C., 8th Dist.

Cuyahoga No. 95751, 2011-Ohio-1103, ¶ 8. The term abuse of discretion “implies

that the court’s attitude is unreasonable, arbitrary or unconscionable.” Blakemore

v. Blakemore, 5 Ohio St.3d 217, 219, 450 N.E.2d 1140 (1983). An abuse of discretion

occurs when a court exercises its judgment in an unwarranted way regarding a matter over which it has discretionary authority. Johnson v. Abdullah, 166 Ohio

St.3d 427, 2021-Ohio-3304, 187 N.E.3d 463, ¶ 35.

Nevertheless, a trial court’s decision granting or denying a motion to

compel arbitration or a motion to stay is subject to de novo review on appeal because

such cases generally turn on issues of contractual interpretation. McFarren v.

Emeritus at Canton, 2013-Ohio-3900, 997 N.E.2d 1254, ¶ 13 (5th Dist.); Hudson v.

John Hancock Fin. Servs., 10th Dist. Franklin No. 06AP-1284, 2007-Ohio-6997,

¶ 8; McCaskey v. Sanford-Brown College, 8th Dist. Cuyahoga No. 97261, 2012-

Ohio-1543, ¶ 7.

Ohio has a strong public policy favoring arbitration of disputes, and

there is a presumption favoring arbitration that arises when the dispute falls within

the scope of an arbitration provision. Taylor Bldg. Corp. of Am. v. Benfield, 117

Ohio St.3d 352, 2008-Ohio-938, 884 N.E.2d 12, ¶ 25-27. “Any doubts concerning

the scope of arbitrable issues should be resolved in favor of arbitration.” Sebold v.

Latina Design Build Group, L.L.C., 2021-Ohio-124, 166 N.E.3d 688, ¶ 10 (8th Dist.),

citing Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25, 103

S.Ct. 927, 74 L.Ed.2d 765 (1983).

We note, however, that “parties cannot be compelled to arbitrate a

dispute in which they have not agreed to submit to arbitration.” Marks v. Morgan

Stanley Dean Witter Commercial Fin. Servs., 8th Dist. Cuyahoga No. 88948, 2008-

Ohio-1820, ¶ 15, citing Piqua v. Ohio Farmers Ins. Co., 84 Ohio App.3d 619, 621,

617 N.E.2d 780 (2d Dist.1992); St. Vincent Charity Hosp. v. URS Consultants, Inc., 111 Ohio App.3d 791, 793, 677 N.E.2d 381 (8th Dist.1996); Shumaker v. Saks, Inc.,

163 Ohio App.3d 173, 2005-Ohio-4391, 837 N.E.2d 393 (8th Dist.).

R.C. 2711.02(B) permits the trial court, upon application of one of the

parties, to stay litigation in favor of arbitration pursuant to a written arbitration

agreement. The statute provides as follows:

If any action is brought upon any issue referable to arbitration under an agreement in writing for arbitration, the court in which the action is pending, upon being satisfied that the issue involved in the action is referable to arbitration under an agreement in writing for arbitration, shall on application of one of the parties stay the trial of the action until the arbitration of the issue has been had in accordance with the agreement, provided the applicant for the stay is not in default in proceeding with arbitration.

The trial court did not provide any reasoning or analysis in its entry

denying the motion to dismiss or alternative motion to stay and compel arbitration.

However, as our review is de novo, we conduct our own examination and

interpretation of the contract and arbitration provision. It does appear that at the

hearing, the trial court questioned whether the purchase order, which contained the

arbitration provision, was for the same materials and supplies that were listed on

the invoices submitted by Cuyahoga Supply with its complaint. There is no

arbitration clause reflected on the invoices. According to the affidavit of BECDIR’s

project manager, the purchase order was requested by Cuyahoga Supply before it

would complete the order.

At oral argument, Cuyahoga Supply disputed that the products that

were the subject of the purchase order were the same as those listed on the invoices. However, in the trial court and in its appellate brief, Cuyahoga Supply only argued

that it did not sign the purchase order and thus, there was no “meeting of the minds”

with regard to the arbitration provision.

We find no merit to Cuyahoga Supply’s argument. This court has

previously held that “a written contract containing an arbitration agreement does

not need to be signed to be enforceable.” Dorgham v. Woods Cove III, 8th Dist.

Cuyahoga No. 106838, 2018-Ohio-4876, ¶ 15, citing PNC Mtge. v. Guenther, 2d

Dist. Montgomery No. 25385, 2013-Ohio-3044, ¶ 15 (signed writing is not necessary

to a settlement contract) and Seyfried v. O’Brien, 2017-Ohio-286, 81 N.E.3d 961,

¶ 19, fn. 3 (8th Dist.) (lack of a signature does not in itself show that the party has

not consented to arbitration). However, Dorgham went on to clarify that “this is

true only when it is the intention of the parties to be bound by the terms and

conditions of the subsequent written agreement, including the arbitration

provision.” Id. The Dorgham Court found that, after reviewing the appellants’

actions and assertions in the case, there was no “meeting of the minds” between the

parties with the intention to be bound by the subsequent written agreement. Id.

The invoices attached to Cuyahoga Supply’s complaint are dated

July 8, 2022, and August 11, 2022; these invoices contain no arbitration provision.

The purchase order containing the arbitration clause is originally dated March 16,

2022, but is also labeled “REVISED 8/10/22.” The purchase order contains places

for a representative of BECDIR and a representative of Cuyahoga Supply to sign. It states, “Please sign both copies and return to our office for signature.” There is no

dispute that the purchase order was never signed.

Cuyahoga Supply asserts that its representative purposely did not sign

the purchase order because it did not agree to the arbitration clause. However,

Cuyahoga Supply took no action to convey its disagreement and instead performed

its end of the contract by supplying the materials and supplies ordered in the

purchase order. Consequently, we cannot find that there was no “meeting of the

minds” between the parties with regard to the intention to be bound by the purchase

order.

Cuyahoga Supply’s performance under the purchase order

constituted its acceptance of the terms contained therein, including the arbitration

clause. Thus, the dispute between the parties, which arose out of the purchase order,

was required to be arbitrated. The trial court therefore erred in denying the motion

to compel arbitration and stay proceedings.

III. Conclusion

The trial court erred in denying BECDIR’s motion to compel

arbitration and stay the proceedings below. BECDIR’s sole assignment of error is

sustained, and the judgment of the trial court is reversed. This matter is remanded

for further proceedings consistent with this opinion.

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

The court finds there were reasonable grounds for this appeal. It is ordered that a special mandate be sent to said court to carry this judgment

into execution.

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

of the Rules of Appellate Procedure.

_______________________________________ FRANK DANIEL CELEBREZZE, III, JUDGE

EILEEN A. GALLAGHER, P.J., CONCURS; SEAN C. GALLAGHER, J., DISSENTS (WITH SEPARATE OPINION)

SEAN C. GALLAGHER, J., DISSENTING:

I respectfully disagree with the majority’s conclusion that an error

occurred. Cuyahoga Supply & Tool, Inc. (“CST”), initiated this small-claims action

seeking to recover $9,120.44 from BECDIR Construction Company based on

BECDIR’s failure to render payments on two invoices. The first, dated July 8, 2022,

indicated a delivery of 178 22-ounce tubes of two-part epoxy valued at $2,604.14

and one duo-epoxy gun valued at $67.50. The order totaled $2,671.64. The second

invoice, dated August 11, 2022, included 651 pieces of #4 fiberglass rebar in 20-foot

sections, representing 13,020 feet of rebar valued at $5,728.80, along with a $720

delivery fee. That invoice totaled $6,448.80. In total, those invoices equaled the

$9,120.44 sought in the complaint.

In response, BECDIR claimed that an unsigned purchase order,

originally dated March 2022 but delivered to CST on August 10, 2022, was the

binding contract between the parties. The unsigned purchase order submitted, however, required a single delivery in June 2022, a legal impossibility given the

August submission. It is undisputed that neither party signed that agreement, nor

is there any indication that a June delivery occurred for the purpose of

demonstrating “performance constitut[ing] acceptance of [the] terms and

conditions” of the unsigned purchase order. See R.C. 1302.09 (detailing methods of

acceptance in the sale of goods).

In an effort to demonstrate that a binding arbitration agreement

existed over the July and August invoices, BECDIR submitted an email, dated

August 10, 2022, discussing a delivery needed for the next day, August 11

(corresponding to one of the two invoices). The email expressly indicated the

August 11 delivery was based on the terms the parties had discussed. There is no

written agreement memorializing that supposed discussion. Attached to the emails

was a document purporting to be the purchase order dated March 16, 2022, but

noting that a revision occurred on August 10, 2022. That purchase order

purportedly required a June 2022 delivery of a specified quantity of two items: (1)

13,015 feet of Number 4 GFRP deformed bars for a total price of $5,726.60 and (2)

178 22-ounce, two-part cartridges of 1736 EA dowel holes with non-shrink, non-

metallic grout for a price of $2,604.14. The total for the purchase order was

$8,330.74, to which a $720 delivery fee could be added (totaling $9,050.74, but still

an approximate $70 difference in pricing compared to the invoices).

It is undisputed at this point that the August 11 delivery only included

the 13,020 feet of rebar. Thus, the invoices differ from the unsigned purchase order in pricing, quantity, inclusion of additional goods, and date of required delivery; a

point emphasized by the municipal court during the hearing. Despite all the

material discrepancies, with no accompanying written agreement to alter any of the

material terms with respect to every other contractual condition in the unsigned

purchase order, BECDIR nonetheless seeks to enforce the arbitration provision in

isolation.

Although the purchase order indicates that “performance constitutes

acceptance of the terms and conditions[,]” there is no evidence that the disputed

invoices were in fulfillment of the purchase order, considered an offer to make a

contract that unambiguously required one delivery in June 2022. See R.C. 1302.09

(detailing methods of acceptance in the sale of goods); R.C. 1302.20 (delivery to be

in single lot unless otherwise specified).

The revised purchase order sent in August 2022 cannot apply to the

July invoice based on the timing alone, and in light of the fact that CST never signed

the purchase order predating the June delivery, CST was under no obligation from

the record presented to comply with the original form of the purchase agreement.

Because the purchase order was never signed, the only delivery that would constitute

acceptance of the proposal would be a June delivery in compliance with the purchase

order as drafted by BECDIR, absent evidence of some other agreement. In general,

without a signed purchase order, in the absence of any other binding agreement, the

supplier is under no obligation to proceed. A purchase order is binding only if signed

or if the supplier adheres to all material terms indicated in the purchase order, which necessarily requires a timely delivery of all the specified goods absent some other

contractual gap-filling provision that has not been discussed in this appeal.

As the purchase order expressly indicates, the document is “the

complete agreement of the parties” and “no other agreements except as mutually

agreed in writing can amend this document.” By not signing the purchase order

before the July delivery, and by failing to deliver the requested goods in June, CST

amply demonstrated its intent to not be bound by the terms presented in the

purchase order and that there was no meeting of the minds. The July invoice has

not been demonstrated to be controlled by the terms of the August 10 purchase

Further, nothing demonstrates that the August 10 purchase order

applied to the goods delivered on August 11 as reflected in that invoice. Although it

may have been BECDIR’s intent to rely on the purchase order, the one submitted

did not reflect the agreement of the parties based on the discrepancies between the

August 11 limited delivery and that requested in the August 10 purchase order

specifying a June 2022 delivery date of all goods.

The revised purchase order submitted to CST in August 2022 cannot

form the agreement for the previous July delivery and does not reflect the invoiced

materials delivered on August 11, which expressly occurred through outside

discussions according to the email provided by BECDIR. The only way BECDIR can

be successful is to apply the purchase order’s arbitration provision to the exclusion

of every other term: the dates of delivery; the number of products ordered; the goods ordered; and the total billed. Despite none of those terms reflecting the transaction,

BECDIR seeks to enforce the arbitration provision. BECDIR cannot selectively

enforce the parts of the unsigned agreement on which it agrees, while disregarding

the lack of any meeting of the minds as to the remainder of the proposed contract.

It is for this reason that I respectfully dissent. BECDIR bore the

burden of demonstrating error, and it has not demonstrated that the unsigned

purchase agreement applied to the separate invoices underlying the small claims

action. The municipal court did not err in denying the motion to dismiss or compel

arbitration. I would affirm and remand this matter for further proceedings.