Gustavus, L.L.C. v. Eagle Invests.

2012 Ohio 1433
Ohio Court of Appeals·Decided March 30, 2012·No. 24899·Published·Cited by 1 cases

Opinion

IN THE COURT OF APPEALS OF MONTGOMERY COUNTY, OHIO GUSTAVUS, LLC :

Plaintiff-Appellant : C.A. CASE NO. 24899 vs. : T.C. CASE NO. 11CV03993

EAGLE INVESTMENTS, et al. : (Civil Appeal from Common Pleas Court)

Defendants-Appellees :

. . . . . . . . .

O P I N I O N

Rendered on the 30th day of March, 2012.

. . . . . . . . .

Joseph C. Lucas, Atty. Reg. No. 0081336; Tyler W. Kahler, Atty. Reg. No. 0085932, 7015 Corporate Way, Centerville, OH 45459 Attorneys for Plaintiff-Appellant

J. Steven Justice, Atty. Reg. No. 0063719; Paul H. Shaneyfelt, Atty. Reg. No. 0065629, 210 W. Main Street, Troy, OH 45373

Ray C. Freudiger, 1 S. Main Street, Suite 1800, Dayton, OH 45402

Thomas W. Kendo, Jr., 7925 Paragon Road, Dayton, OH 45459 Attorneys for Defendants-Appellees

. . . . . . . . .

GRADY, P.J.:

{¶ 1} Plaintiff, Gustavus, LLC (“Gustavus”), appeals from a final order entered by the common pleas court pursuant to R.C. 2711.02(B), staying the trial of an action Gustavus commenced against Defendants, Eagle Investments, LLC and several individuals associated

with it (hereinafter “Eagle”), pending arbitration of the issues in the action. Gustavus argues that the trial court erred because the relief it seeks against Eagle under the Ohio Corrupt Activities Act, R.C. 2923.31, et seq., creates a public policy defense against arbitration, and that the trial court abused its discretion in ordering a stay because the terms for arbitration in the arbitration clause of the contract between Gustavus and Eagle are vague and inconsistent.

{¶ 2} We reject those arguments on findings that the arbitration to which the parties agreed does not preclude the relief under the Ohio Corrupt Activities Act that Gustavus seeks, and that the terms of the arbitration clause which Gustavus claims are vague and inconsistent are merely anomalies that do not prevent arbitration of the action and the stay the trial court ordered. We therefore affirm the judgment from which the appeal was taken.

I

STATEMENT OF FACTS

{¶ 3} Gustavus and Eagle are business enterprises that own and operate commercial real properties. In June of 2010, Gustavus agreed to purchase from Eagle the premises consisting of multiple residential rental units located at 1901 Village Drive in Dayton, Ohio. The agreed price was one million, one hundred and twenty thousand dollars. The written Real Estate Purchase and Sale Agreement contains the following arbitration clause at Section (30)(b):

(1) ANY DISPUTE OR CLAIM BETWEEN BUYER AND SELLER ARISING FROM THIS AGREEMENT OR THE TRANSACTION CONTEMPLATED HEREIN SHALL BE SETTLED BY BINDING ARBITRATION UNDER THE COMMERCIAL ARBITRATION RULE OF

THE AMERICAN ARBITRATION ASSOCIATION. JUDGMENT ON THE AWARD RENDERED BY THE ARBITRATOR(S) MAY BE ENTERED IN ANY COURT HAVING JURISDICTION, FILING A COURT ACTION TO OBTAIN PROVISIONAL REMEDIES SHALL NOT CONSTITUTE A WAIVER OF THIS PROVISION.

(2) THE ARBITRATOR(S) SHALL BE A RETIRED JUDGE OR ANY ATTORNEY WITH AT LEAST TEN (10) YEARS OF COMMERCIAL REAL ESTATE LAW EXPERIENCE. THE ARBITRATION SHALL BE DECIDED IN ACCORDANCE WITH SUBSTANTIVE OHIO LAW. THE PARTIES SHALL HAVE THE RIGHT TO CONDUCT DISCOVERY IN ACCORDANCE WITH OHIO CODE OF CIVIL PROCEDURE SECTION 1283.05 AND TO THE SAME EXTENT AS IN A CIVIL ACTION. THE ARBITRATION SHALL OTHERWISE BE CONDUCTED IN ACCORDANCE WITH TITLE 9 PART III, OHIO CODE OF CIVIL PROCEDURE. THIS AGREEMENT TO ARBITRATE SHALL BE INTERPRETED IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT.

{¶ 4} Additionally, the arbitration clause of the Contract provides in section (30)(b)(4) that:

NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE “ARBITRATION OF DISPUTE” PROVISION

DECIDED BY A NEUTRAL ARBITRATION AS PROVIDED BY OHIO LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN COURT OR JURY TRIAL, AND ARE GIVING UP MOST OF YOUR RIGHTS OF APPEAL. BY INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS SUCH RIGHTS ARE SPECIFICALLY INCLUDED IN THE “ARBITRATION OF DISPUTES” PROVISION NOTWITHSTANDING THIS WAIVER OF RIGHTS TO DISCOVERY, IN ANY CASE IN WHICH BROKER SUES FOR AN UNPAID COMMISSION, BROKER SHALL BE ENTITLED TO THE PRODUCTION OF ALL NONPRIVILEGED DOCUMENTS DEMANDED OR SUBPOENAED BY BROKER FROM BUYER AND SELLER, OR ANY THIRD PARTY TO THE ARBITRATION.

{¶ 5} The purchase and sale of the real property closed on October 27, 2010.

Gustavus took possession of the property and has operated it since.

II

PROCEDURAL HISTORY

{¶ 6} On June 3, 2011, Gustavus commenced an action against Eagle, three of its partners, the real estate broker that represented Eagle in the purchase and sale and the broker’s agent, and the individual owners and operators of a property management firm that had managed the property for Eagle.

{¶ 7} As operative facts, Gustavus alleged that Eagle and the individual defendants

misrepresented the rental income the property generated as well as the costs of its operation. Defendants allegedly did so by providing false rent rolls and other verifications of those matters to Gustavus to induce it to purchase the property. Gustavus’s complaint pled claims alleging (1) breach of contract, (2) fraudulent misrepresentation, (3) violations of the Ohio Corrupt Activities Act, R.C. 2923.31, et seq., (4) civil conspiracy, (5) unjust enrichment, and (6) conversion. As relief, Gustavus sought rescission of the contract of sale and an order requiring Eagle to repurchase the property, money damages, and other relief made available by the Ohio Corrupt Activities Act, as well as punitive damages and attorney fees.

{¶ 8} Eagle filed responsive pleadings and a motion to stay the action pending arbitration pursuant to R.C. 2711.021(B). Gustavus opposed the motion, arguing, among other things, that the public policy underlying the Ohio Corrupt Activities Act precludes arbitration of its claims for relief under the Act, and that the arbitration clause in the contract of sale is vague and inconsistent. The trial court rejected those arguments and stayed the action, finding that the arbitration agreement is not sufficiently indefinite or inconsistent to void that agreement, and that Eagle’s public policy defense to arbitration is preempted by Section 2 of the Federal Arbitration Act.

{¶ 9} Gustavus filed a notice of appeal from the order staying its action pending arbitration. The matter is now before us for review on the following assignment of error by Gustavus:

{¶ 10} “THE TRIAL COURT ERRED IN GRANTING DEFENDANTS EAGLE INVESTMENT, WILLIAM HEIDENREICH, ROBERT HEIDENREICH, AND JOSEPH BALOGH’S MOTION TO COMPEL ARBITRATION WHERE (1) THE ARBITRATION

CLAUSE OF THE CONTRACT IS UNENFORCEABLE BECAUSE IT VIOLATES PUBLIC POLICY BY HINDERING THE PURPOSE OF THE OHIO CORRUPT ACTIVITY ACT, AND (2) THE ARBITRATION CLAUSE OF THE CONTRACT IS UNENFORCEABLE BECAUSE IT SETS OUT THE RULES FOR ARBITRATION IN VAGUE TERMS THAT ARE INCONSISTENT WITH OHIO LAW.

III

LEGAL ANALYSIS

{¶ 11} An order entered pursuant to R.C. 2711.02(B) is a final, appealable order.

R.C. 2711.02(C). We therefore have jurisdiction to review the error assigned, and to affirm, reverse, or modify the final judgment from which the appeal was taken.

{¶ 12} When addressing whether a trial court properly granted a motion to stay proceedings and compel arbitration on a finding that the issues are referable to arbitration, our standard of review is the abuse of discretion standard. Carter Steel & Fabricating Company v. Danis Building Construction Company, 126 Ohio App.3d 35, 710 N.E.2d 299 (3d Dist. 1998). However, when an appellate court is presented with purely legal questions, the standard of review to be applied is de novo. Eagle v. Fred Martin Motor Company, 157 Ohio App.3d 150, 2004-Ohio-829, 809 N.E.2d 1161 (9th Dist.), ¶ 11 A.

GUSTAVUS’S PUBLIC POLICY DEFENSE

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Gustavus, L.L.C. v. Eagle Invests., 2012 Ohio 1433 (Ohio Ct. App. 2012).

2012 Ohio 1433 (Gustavus, L.L.C. v. Eagle Invests.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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