Per Curiam.
Delilah King and her mother, Andrea Krajnik, appeal the trial court’s vacation of an arbitration award and entry of declaratory judgment. For the reasons set forth below, we reverse and remand.
In 1986, Delilah King was apparently injured in a pedestrian-automobile accident on the premises of the Lakewood Board of Education. Attorney Howard Schulman filed a complaint on behalf of King and her mother against the Lakewood City School District regarding this accident. Soon thereafter attorney Jeffrey Friedman was substituted as counsel for King and her mother.
In 1987, Delilah King was injured in an accident as a passenger in an automobile operated by Rachel Twining. Twining’s car was rear-ended by a car operated by Richard Paynter, whose insurance was insufficient to compensate for King’s injuries and medical expenses. King and her mother, plaintiffs, filed a complaint against Twining’s insurer, Sentry Claims Service (“Sentry”), defendant, pursuant to Twining’s uninsured/underinsured motorist coverage.
The case was stayed, pending arbitration, pursuant to the Sentry policy. The panel of arbitrators included Howard Schulman, chosen by plaintiffs, another attorney chosen by defendant, and a neutral attorney chosen by the other two arbitrators. In a two-to-one decision, the arbitration panel awarded plaintiffs $120,000.
Defendant filed an application for vacation of the arbitration award pursuant to R.C. 2711.10, and for declaratory judgment. Defendant asserted that the arbitration award was procured as a result of fraud, misconduct and partiality on the part of plaintiffs and their chosen arbitrator, Howard Schulman. Defendant attached the affidavit of its attorney, Michael A. Thomas, who stated that Schulman improperly failed to disclose “that said arbitrator represented the claimant in a proceeding involving a claim directly related to the alleged injuries that were the subject matter of the instant Arbitration Hearing.” Defendant also asked the court for declaratory judgment excluding plaintiffs as insureds under its policy because plaintiffs by their misconduct violated the spirit of the insurance agreement.
In opposition to defendant’s application for vacation of the arbitration award, plaintiffs asserted that the lawsuit against the Lakewood City School District regarding King’s 1986 accident was distinct and separate from the claim against defendant Sentry which arose out of the 1987 accident. Plaintiffs attached five affidavits which state that Schulman signed the complaint arising out of the 1986 accident as a professional courtesy for attorney Jeffrey Friedman, because Friedman’s partner represented other school boards; that Friedman was substituted as counsel for Schulman soon after the complaint was filed; that Friedman informed counsel for Lakewood City School District that he was acting counsel, even though Schulman signed the complaint; that Schulman never met with plaintiffs regarding the 1986 accident; and that Schulman never entered into a representation agreement with plaintiffs, nor had any pecuniary interest in any matter regarding plaintiffs.
In its journal entry vacating the arbitration award, the court of common pleas stated that “although there has been no showing of impropriety, fraud or misconduct as such, in order to avoid the appearance of same, defendant Sentry Claims’ application for vacation of arbitration award and declaratory judgment is granted.” Plaintiffs King and her mother brought this timely appeal of that decision.
All three of appellants’ assignments of error assert that the trial court erred in vacating the arbitration award, and accordingly will be addressed together.
The trial court vacated the arbitration award pursuant to R.C. 2711.10, which states as follows:
“In any of the following cases, the court of common pleas shall make, an order vacating the award upon the application of any party to the arbitration if:
“(A) The award was procured by corruption, fraud, or undue means.
“(B) There was evident partiality or corruption on the part of the arbitrators, or any of them.
“(C) The arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced.
“(D) The arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.
“If an award is vacated and the time within which the agreement required the award to be made has not expired, the court may direct a rehearing by the arbitrators.”
An arbitration award may not be vacated absent a clear showing of fraud, misconduct, or gross procedural improprieties.
Goodyear v. Local Union No. 200
(1975), 42 Ohio St.2d 516, 522, 71 O.O.2d 509, 512, 830 N.E.2d 703, 707, certiorari denied (1975), 423 U.S. 986, 96 S.Ct. 393, 46 L.Ed.2d 303.
“The whole purpose of arbitration would be undermined if courts had broad authority to vacate an arbitrator’s award. Thus, this court has stated, ‘[i]t is the policy of the law to favor and encourage arbitration and every reasonable intendment will be indulged to give effect to such proceedings and to favor the regularity and integrity of the arbitrator’s acts.’ ”
Mahoning Cty. Bd. of Mental Retardation v. Mahoning Cty. TMR Edn. Assn.
(1986), 22 Ohio St.3d 80, 83-84, 22 OBR 95, 97-99, 488 N.E.2d 872, 874-876, quoting
Campbell v. Automatic Die & Products Co.
(1954), 162 Ohio St. 321, 329, 55 O.O. 195, 199, 123 N.E.2d 401, 405.
In
Close v. Motorists Mut. Ins. Co.
(1985), 21 Ohio App.3d 228, 21 OBR 244, 486 N.E.2d 1275, the Franklin County Court of Appeals affirmed the vacation of an arbitration award due to evident partiality of an arbitrator. In
Close,
the arbitrators found in favor of the defendant insurance company regarding
an accident claim. One of the arbitrators was a partner in a law firm which continuously represented the defendant insurance company in accident claims cases. The court concluded that although an appearance of bias alone is insufficient to vacate an arbitration award, “an arbitrator’s partnership in a law firm having a substantial, continuing attorney-client relationship with a party is grounds for vacating an arbitration award under R.C. 2711.10(B).”
Id.
at 230, 21 OBR at 245, 486 N.E.2d at 1278.
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Per Curiam.
Delilah King and her mother, Andrea Krajnik, appeal the trial court’s vacation of an arbitration award and entry of declaratory judgment. For the reasons set forth below, we reverse and remand.
In 1986, Delilah King was apparently injured in a pedestrian-automobile accident on the premises of the Lakewood Board of Education. Attorney Howard Schulman filed a complaint on behalf of King and her mother against the Lakewood City School District regarding this accident. Soon thereafter attorney Jeffrey Friedman was substituted as counsel for King and her mother.
In 1987, Delilah King was injured in an accident as a passenger in an automobile operated by Rachel Twining. Twining’s car was rear-ended by a car operated by Richard Paynter, whose insurance was insufficient to compensate for King’s injuries and medical expenses. King and her mother, plaintiffs, filed a complaint against Twining’s insurer, Sentry Claims Service (“Sentry”), defendant, pursuant to Twining’s uninsured/underinsured motorist coverage.
The case was stayed, pending arbitration, pursuant to the Sentry policy. The panel of arbitrators included Howard Schulman, chosen by plaintiffs, another attorney chosen by defendant, and a neutral attorney chosen by the other two arbitrators. In a two-to-one decision, the arbitration panel awarded plaintiffs $120,000.
Defendant filed an application for vacation of the arbitration award pursuant to R.C. 2711.10, and for declaratory judgment. Defendant asserted that the arbitration award was procured as a result of fraud, misconduct and partiality on the part of plaintiffs and their chosen arbitrator, Howard Schulman. Defendant attached the affidavit of its attorney, Michael A. Thomas, who stated that Schulman improperly failed to disclose “that said arbitrator represented the claimant in a proceeding involving a claim directly related to the alleged injuries that were the subject matter of the instant Arbitration Hearing.” Defendant also asked the court for declaratory judgment excluding plaintiffs as insureds under its policy because plaintiffs by their misconduct violated the spirit of the insurance agreement.
In opposition to defendant’s application for vacation of the arbitration award, plaintiffs asserted that the lawsuit against the Lakewood City School District regarding King’s 1986 accident was distinct and separate from the claim against defendant Sentry which arose out of the 1987 accident. Plaintiffs attached five affidavits which state that Schulman signed the complaint arising out of the 1986 accident as a professional courtesy for attorney Jeffrey Friedman, because Friedman’s partner represented other school boards; that Friedman was substituted as counsel for Schulman soon after the complaint was filed; that Friedman informed counsel for Lakewood City School District that he was acting counsel, even though Schulman signed the complaint; that Schulman never met with plaintiffs regarding the 1986 accident; and that Schulman never entered into a representation agreement with plaintiffs, nor had any pecuniary interest in any matter regarding plaintiffs.
In its journal entry vacating the arbitration award, the court of common pleas stated that “although there has been no showing of impropriety, fraud or misconduct as such, in order to avoid the appearance of same, defendant Sentry Claims’ application for vacation of arbitration award and declaratory judgment is granted.” Plaintiffs King and her mother brought this timely appeal of that decision.
All three of appellants’ assignments of error assert that the trial court erred in vacating the arbitration award, and accordingly will be addressed together.
The trial court vacated the arbitration award pursuant to R.C. 2711.10, which states as follows:
“In any of the following cases, the court of common pleas shall make, an order vacating the award upon the application of any party to the arbitration if:
“(A) The award was procured by corruption, fraud, or undue means.
“(B) There was evident partiality or corruption on the part of the arbitrators, or any of them.
“(C) The arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced.
“(D) The arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.
“If an award is vacated and the time within which the agreement required the award to be made has not expired, the court may direct a rehearing by the arbitrators.”
An arbitration award may not be vacated absent a clear showing of fraud, misconduct, or gross procedural improprieties.
Goodyear v. Local Union No. 200
(1975), 42 Ohio St.2d 516, 522, 71 O.O.2d 509, 512, 830 N.E.2d 703, 707, certiorari denied (1975), 423 U.S. 986, 96 S.Ct. 393, 46 L.Ed.2d 303.
“The whole purpose of arbitration would be undermined if courts had broad authority to vacate an arbitrator’s award. Thus, this court has stated, ‘[i]t is the policy of the law to favor and encourage arbitration and every reasonable intendment will be indulged to give effect to such proceedings and to favor the regularity and integrity of the arbitrator’s acts.’ ”
Mahoning Cty. Bd. of Mental Retardation v. Mahoning Cty. TMR Edn. Assn.
(1986), 22 Ohio St.3d 80, 83-84, 22 OBR 95, 97-99, 488 N.E.2d 872, 874-876, quoting
Campbell v. Automatic Die & Products Co.
(1954), 162 Ohio St. 321, 329, 55 O.O. 195, 199, 123 N.E.2d 401, 405.
In
Close v. Motorists Mut. Ins. Co.
(1985), 21 Ohio App.3d 228, 21 OBR 244, 486 N.E.2d 1275, the Franklin County Court of Appeals affirmed the vacation of an arbitration award due to evident partiality of an arbitrator. In
Close,
the arbitrators found in favor of the defendant insurance company regarding
an accident claim. One of the arbitrators was a partner in a law firm which continuously represented the defendant insurance company in accident claims cases. The court concluded that although an appearance of bias alone is insufficient to vacate an arbitration award, “an arbitrator’s partnership in a law firm having a substantial, continuing attorney-client relationship with a party is grounds for vacating an arbitration award under R.C. 2711.10(B).”
Id.
at 230, 21 OBR at 245, 486 N.E.2d at 1278.
The same court affirmed the confirmation of an arbitration award in favor of the defendant, where the plaintiff had provided “no direct or definite evidence that the arbitrator did not act with complete impartiality,” because “the phrase ‘evident partiality’ connotes more than a mere suspicion or appearance of partiality.”
Furtado v. Hearthstone Condominium Assn.
(May 19, 1987), Franklin App. No. 86AP-1003, unreported, at 4, 1987 WL 11606. In that case, the sole arbitrator was a friend of, rented office space from, and received some referrals from defendant’s counsel, who chose him to be the arbitrator.
In
Beck Suppliers, Inc. v. Dean Witter Reynolds, Inc.
(1988), 53 Ohio App.3d 98, 103, 558 N.E.2d 1187, 1192, the Sandusky County Court of Appeals concluded from
Close
and
Furtado, supra,
that an arbitration award cannot be vacated based on a speculation or appearance of bias without proof of actual bias. In
Beck,
a motion to vacate the arbitrators’ award was based on the fact that one of the arbitrators was a partner in a law firm which represented the parent and sister corporations of Dean Witter. Dean Witter prevailed in the arbitration. The movant’s assertion that the arbitrator’s fiduciary duty to the related corporations required him to be partial to Dean Witter was rejected by the trial court, which found that the arbitrator’s relationship to Dean Witter was “too indirect and remote to substantiate any inference of bias.”
Id.,
53 Ohio App.3d at 103, 558 N.E.2d at 1193.
In
Gerl Constr. Co. v. Medina Cty. Bd. of Commrs.
(1985), 24 Ohio App.3d 59, 24 OBR 113, 493 N.E.2d 270, this court affirmed confirmation of an arbitration award, which favored Medina County, even though one of the arbitrators was president of a company which received a $40,000 subcontract for a Medina County project. This court found that “the interest of the arbitrator was too remote and contingent to induce any reasonable suspicion that it could have influenced his decision,” where the projects were unrelated, there was no directed contractual relationship between the arbitrator’s company and the county, there was no contact between them, and no promise of future contracts.
Id.
at paragraph one of the syllabus and at 61-63, 24 OBR at 114-117, 493 N.E.2d at 273-276.
In this case, appellees provide no evidence of bias, partiality or misconduct in support of their motion to vacate. Relying on
Close, supra,
they argue that the court reasonably inferred bias, because the lawsuits arising out of King’s 1986 and 1987 accidents were directly related, and Schulman, therefore, improperly failed to disclose his representation of appellants regarding the 1986 accident.
Appellees also provide no evidence explaining how the lawsuits arising out of the two different accidents are related, or how the relationship would affect Schulman’s partiality, other than to refer to the complaint. We find no reference to the 1986 accident in the complaint. Furthermore, the
Close
case is distinguishable from this case. In
Close,
the arbitrator’s law firm had handled, and continued to handle, a substantial number of accident claim cases for the insurance company which prevailed in the arbitration. Here, Schulman, among others, swore that he only signed the complaint regarding the 1986 accident as a professional courtesy to appellants’ counsel, that he received no payment, never met appellants, and had no representation agreement with them. Schulman, therefore, did not have a close, substantial or economic relationship with appellants. Since bias cannot reasonably be inferred from this relationship, and since appellees provided no evidence of bias, misconduct or fraud, the trial court erred in vacating the arbitration award and granting declaratory judgment. Accordingly, that judgment is reversed and remanded for further proceedings consistent with this opinion.
Judgment reversed and cause remanded.
Nahra and Ann McManamon, JJ., concur.
David T. Matia, P.J., dissents.