[Cite as Mills v. Lakewood Constr. Assocs., Ltd., 2014-Ohio-4886.]
COURT OF APPEALS LICKING COUNTY, OHIO FIFTH APPELLATE DISTRICT
RYAN E. MILLS, ET AL. JUDGES: Hon. William B. Hoffman, P.J. Defendants-Appellants Hon. Patricia A. Delaney, J. Hon. Craig R. Baldwin, J. -vs- Case No. 14-CA-15 LAKEWOOD CONSTRUCTION ASSOCIATIES, LIMITED OPINION Plaintiff-Appellee
CHARACTER OF PROCEEDING: Appeal from the Licking County Court of Common Pleas, Case No. 2014CV0008
JUDGMENT: Reversed and Remanded
DATE OF JUDGMENT ENTRY: October 30, 2014
APPEARANCES:
For Plaintiff-Appellee For Defendants-Appellants
KERRY T. BOYLE CHARLEY HESS ALICIA E. ZAMBELLI 7211 Sawmill Road JAMES M. YOUNG Suite 200 Isaac, Wiles, Burkholder & Teetor, LLC Dublin, Ohio 43016-5010 2 Miranova Place, Suite 700 Columbus, Ohio 43215 Licking County, Case No. 14-CA-15 2
Hoffman, P.J.
{¶1} Defendants-appellants Ryan and Tamara Mills appeal the February 11,
2014 Judgment Entry entered by the Licking County Court of Common Pleas granting
the motion to stay case and compel arbitration filed by Plaintiff-appellee Lakewood
Construction Associates, Ltd.
STATEMENT OF THE CASE1
{¶2} Appellee Lakewood Construction Associates, Ltd. initiated the within
action pursuant to a mechanic's lien claiming over $79,000.00 due and owing from
Appellants on a cost-plus construction agreement for the construction of Appellants'
home. The written estimated cost to construct the home was $337,200.00. Appellee
joined the construction lender, Park National Bank, in the suit.
{¶3} In October of 2012, the parties entered into an agreement for the
construction of a residence by Appellee on a cost-plus basis on a lot owned by
Appellants located in Granville, Ohio. Appellants claim they were lead to believe a cost-
plus price contract was less expensive than a fixed-price contract based upon
representations made by Appellee. Appellants assert upon occupancy of the residence,
they received numerous billings containing differing amounts due. The final billing
exceeded the contractually estimated price by over $79,000.00. Appellants later
approved a draw request made by Appellee, but for a lesser amount.
{¶4} Appellants filed an eight-count counterclaim against Appellee, and a
cross-claim against Park National Bank. The counterclaims included workmanship
issues. The cross-claim concerned the use of draw money and money owed to a
1 A rendition of the underlying facts is unnecessary for our resolution of this appeal. Licking County, Case No. 14-CA-15 3
landscaping subcontractor. Appellants subsequently settled the cross-claim with Park
National.
{¶5} Subsequent to the initiation of the within action, Appellee was sued in the
Licking County Court of Common Pleas by CMLH Holdings, LLC, a subcontractor of
Appellee, for money owed for work performed on Appellants' home. Appellee moved the
trial court to consolidate the cases. The trial court granted the motion.
{¶6} Appellee then moved the trial court to stay the case and compel
arbitration. The trial court granted the motion without Appellants' having been afforded
an opportunity to respond.
{¶7} Appellants now appeal, and assign as error:
{¶8} "I. THE TRIAL COURT ERRED AS A MATTER OF LAW IN ITS
JUDGMENT ENTRY DATED FEBRUARY 11, 2014, WHEN IT GRANTED APPELLEE'S
MOTION TO STAY THE CASE AND COMPEL ARBITRATION BEFORE THE
EXPIRATION OF THE TIME ALLOWED FOR APPELLANTS TO FILE A TIMELY
RESPONSE OPPOSING THE MOTION IN WHICH APPELLANTS WOULD HAVE
DEMONSTRATED, ON THE RECORD, THE ABSENCE OF INDEPENDENCE AND
IMPARTIALITY IN THE SELECTION OF THE ARBITRATOR.
{¶9} "II. THE TRIAL COURT ERRED AS A MATTER OF LAW IN ITS
JUDGMENT ENTRY DATED FEBRUARY 11, 2014, WHEN IT GRANTED APPELLEE'S
MOTION TO STAY THE CASE AND COMPEL ARBITRATION WHEN, UNDER THE
CIRCUMSTANCES THAT EXIST, THE ARBITRATION PROVISION IS BOTH
SUBSTANTIVELY AND PROCEDURALLY UNCONSCIONABLE. Licking County, Case No. 14-CA-15 4
{¶10} "III. THE TRIAL COURT ERRED AS A MATTER OF LAW IN ITS
JUDGMENT ENTRY DATED FEBRUARY 11, 2014, WHEN IT GRANTED APPELLEE'S
MOTION TO STAY THE CASE AND COMPEL ARBITRATION IMPLICITLY RULING
THAT THE ISSUES RAISED BY APPELLEE IN ITS COMPLAINT ARE ARBITRABLE
AND WITHIN THE SCOPE OF THE ARBITRATION PROVISION THAT IS
CONTAINED IN THE CONSTRUCTION CONTRACT.
{¶11} "IV. THE TRIAL COURT ERRED AS A MATTER OF LAW IN ITS
JUDGMENT ENTRY DATED FEBRUARY 11, 2014, BY IMPLICITLY RULING THAT
APPELLEE'S CLAIM FOR FORECLOSURE IS A PROPER SUBJECT OF
ARBITRATION."
I
{¶12} R.C. 2711.02(B) provides,
{¶13} "(B) 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
{¶14} Section 14 of the parties' Agreement herein, entitled Cost Plus
Construction Agreement, reads:
{¶15} "14. PROCEDURE IN CASE OF DISPUTES. In the event Owner believes
that Contractor has provided Work which does not conform to the Quality Standards Licking County, Case No. 14-CA-15 5
promulgated by the Building Industry Association of Central Ohio or does not
substantially conform to the Plans and Specifications, Owner shall promptly provide
written notice to Contractor of the same specifying with reasonable certainty the nature
and effect of such claims. Thereafter, Contractor shall be afforded a reasonable
opportunity to review and evaluate such claims and, to the extent necessary to
complete such evaluation, Contractor may request additional information and/or a
meeting with Owner and/or architect or engineer (if applicable) at the Premises to
discuss the same. After completion of such review to the extent Contractor agrees with
Owner, Owner shall provide Contractor with a reasonable opportunity to cure any such
agreed upon non-conformity and in this respect Owner agrees not to remove contractor
from the job or order Contractor to stop work so long as contractor diligently undertakes
to cure the same. In the event that after completion of such review by Contractor there
is a claim(s), dispute(s), or other matter in question over which Contractor and Owner
cannot agree to a resolution thereof, or in the event Owner and Contractor cannot agree
to the resolution of any other dispute arising under the terms of this Agreement, Owner
and Contractor agree that a decision as to the disputed term(s) shall be reached
through arbitration based upon the rules ("Rules") promulgated by the American
Arbitration Association which shall be conducted in a prompt and expeditious manner
and in accordance with the following guidelines. Owner and Contractor agree that
notwithstanding the rules, the Chairman of the Professional Standards committee of the
Building Industry Association of Central Ohio shall select an arbitrator to perform the
arbitration. To this end, Owner specifically acknowledges that neither the Professional
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[Cite as Mills v. Lakewood Constr. Assocs., Ltd., 2014-Ohio-4886.]
COURT OF APPEALS LICKING COUNTY, OHIO FIFTH APPELLATE DISTRICT
RYAN E. MILLS, ET AL. JUDGES: Hon. William B. Hoffman, P.J. Defendants-Appellants Hon. Patricia A. Delaney, J. Hon. Craig R. Baldwin, J. -vs- Case No. 14-CA-15 LAKEWOOD CONSTRUCTION ASSOCIATIES, LIMITED OPINION Plaintiff-Appellee
CHARACTER OF PROCEEDING: Appeal from the Licking County Court of Common Pleas, Case No. 2014CV0008
JUDGMENT: Reversed and Remanded
DATE OF JUDGMENT ENTRY: October 30, 2014
APPEARANCES:
For Plaintiff-Appellee For Defendants-Appellants
KERRY T. BOYLE CHARLEY HESS ALICIA E. ZAMBELLI 7211 Sawmill Road JAMES M. YOUNG Suite 200 Isaac, Wiles, Burkholder & Teetor, LLC Dublin, Ohio 43016-5010 2 Miranova Place, Suite 700 Columbus, Ohio 43215 Licking County, Case No. 14-CA-15 2
Hoffman, P.J.
{¶1} Defendants-appellants Ryan and Tamara Mills appeal the February 11,
2014 Judgment Entry entered by the Licking County Court of Common Pleas granting
the motion to stay case and compel arbitration filed by Plaintiff-appellee Lakewood
Construction Associates, Ltd.
STATEMENT OF THE CASE1
{¶2} Appellee Lakewood Construction Associates, Ltd. initiated the within
action pursuant to a mechanic's lien claiming over $79,000.00 due and owing from
Appellants on a cost-plus construction agreement for the construction of Appellants'
home. The written estimated cost to construct the home was $337,200.00. Appellee
joined the construction lender, Park National Bank, in the suit.
{¶3} In October of 2012, the parties entered into an agreement for the
construction of a residence by Appellee on a cost-plus basis on a lot owned by
Appellants located in Granville, Ohio. Appellants claim they were lead to believe a cost-
plus price contract was less expensive than a fixed-price contract based upon
representations made by Appellee. Appellants assert upon occupancy of the residence,
they received numerous billings containing differing amounts due. The final billing
exceeded the contractually estimated price by over $79,000.00. Appellants later
approved a draw request made by Appellee, but for a lesser amount.
{¶4} Appellants filed an eight-count counterclaim against Appellee, and a
cross-claim against Park National Bank. The counterclaims included workmanship
issues. The cross-claim concerned the use of draw money and money owed to a
1 A rendition of the underlying facts is unnecessary for our resolution of this appeal. Licking County, Case No. 14-CA-15 3
landscaping subcontractor. Appellants subsequently settled the cross-claim with Park
National.
{¶5} Subsequent to the initiation of the within action, Appellee was sued in the
Licking County Court of Common Pleas by CMLH Holdings, LLC, a subcontractor of
Appellee, for money owed for work performed on Appellants' home. Appellee moved the
trial court to consolidate the cases. The trial court granted the motion.
{¶6} Appellee then moved the trial court to stay the case and compel
arbitration. The trial court granted the motion without Appellants' having been afforded
an opportunity to respond.
{¶7} Appellants now appeal, and assign as error:
{¶8} "I. THE TRIAL COURT ERRED AS A MATTER OF LAW IN ITS
JUDGMENT ENTRY DATED FEBRUARY 11, 2014, WHEN IT GRANTED APPELLEE'S
MOTION TO STAY THE CASE AND COMPEL ARBITRATION BEFORE THE
EXPIRATION OF THE TIME ALLOWED FOR APPELLANTS TO FILE A TIMELY
RESPONSE OPPOSING THE MOTION IN WHICH APPELLANTS WOULD HAVE
DEMONSTRATED, ON THE RECORD, THE ABSENCE OF INDEPENDENCE AND
IMPARTIALITY IN THE SELECTION OF THE ARBITRATOR.
{¶9} "II. THE TRIAL COURT ERRED AS A MATTER OF LAW IN ITS
JUDGMENT ENTRY DATED FEBRUARY 11, 2014, WHEN IT GRANTED APPELLEE'S
MOTION TO STAY THE CASE AND COMPEL ARBITRATION WHEN, UNDER THE
CIRCUMSTANCES THAT EXIST, THE ARBITRATION PROVISION IS BOTH
SUBSTANTIVELY AND PROCEDURALLY UNCONSCIONABLE. Licking County, Case No. 14-CA-15 4
{¶10} "III. THE TRIAL COURT ERRED AS A MATTER OF LAW IN ITS
JUDGMENT ENTRY DATED FEBRUARY 11, 2014, WHEN IT GRANTED APPELLEE'S
MOTION TO STAY THE CASE AND COMPEL ARBITRATION IMPLICITLY RULING
THAT THE ISSUES RAISED BY APPELLEE IN ITS COMPLAINT ARE ARBITRABLE
AND WITHIN THE SCOPE OF THE ARBITRATION PROVISION THAT IS
CONTAINED IN THE CONSTRUCTION CONTRACT.
{¶11} "IV. THE TRIAL COURT ERRED AS A MATTER OF LAW IN ITS
JUDGMENT ENTRY DATED FEBRUARY 11, 2014, BY IMPLICITLY RULING THAT
APPELLEE'S CLAIM FOR FORECLOSURE IS A PROPER SUBJECT OF
ARBITRATION."
I
{¶12} R.C. 2711.02(B) provides,
{¶13} "(B) 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
{¶14} Section 14 of the parties' Agreement herein, entitled Cost Plus
Construction Agreement, reads:
{¶15} "14. PROCEDURE IN CASE OF DISPUTES. In the event Owner believes
that Contractor has provided Work which does not conform to the Quality Standards Licking County, Case No. 14-CA-15 5
promulgated by the Building Industry Association of Central Ohio or does not
substantially conform to the Plans and Specifications, Owner shall promptly provide
written notice to Contractor of the same specifying with reasonable certainty the nature
and effect of such claims. Thereafter, Contractor shall be afforded a reasonable
opportunity to review and evaluate such claims and, to the extent necessary to
complete such evaluation, Contractor may request additional information and/or a
meeting with Owner and/or architect or engineer (if applicable) at the Premises to
discuss the same. After completion of such review to the extent Contractor agrees with
Owner, Owner shall provide Contractor with a reasonable opportunity to cure any such
agreed upon non-conformity and in this respect Owner agrees not to remove contractor
from the job or order Contractor to stop work so long as contractor diligently undertakes
to cure the same. In the event that after completion of such review by Contractor there
is a claim(s), dispute(s), or other matter in question over which Contractor and Owner
cannot agree to a resolution thereof, or in the event Owner and Contractor cannot agree
to the resolution of any other dispute arising under the terms of this Agreement, Owner
and Contractor agree that a decision as to the disputed term(s) shall be reached
through arbitration based upon the rules ("Rules") promulgated by the American
Arbitration Association which shall be conducted in a prompt and expeditious manner
and in accordance with the following guidelines. Owner and Contractor agree that
notwithstanding the rules, the Chairman of the Professional Standards committee of the
Building Industry Association of Central Ohio shall select an arbitrator to perform the
arbitration. To this end, Owner specifically acknowledges that neither the Professional
Standards Association Committee of the Building Industry Association of Central Ohio Licking County, Case No. 14-CA-15 6
nor the Building Industry Association of Central Ohio itself will actually be requested to
conduct the arbitration. Rather, they will only assist in naming the arbitrator. The fees
of the arbitrator shall be split by Owner and Contractor. Thereafter, a hearing shall be
held. The decision of the arbitrator at such hearing shall be final and binding upon the
parties. Owner and Contractor additionally agree that in the case of such a claim or
dispute, time is of the essence and that the most expeditious reasonable method of
arbitration as set forth above shall be used, and further, that all of the parties shall be
bound by the outcome of such arbitration." (Emphasis added.)
{¶16} Appellants argue the above provision is unconscionable, and had the trial
court waited until they had timely filed a response to the motion to stay and compel
arbitration, Appellants would have submitted admissible evidence of the unfairness of
the provision.
{¶17} Appellee filed its Motion to Stay on February 3, 2014, accompanied by its
Certificate of Service reflecting regular U.S. Mail service issued on that same date.
Appellee did not submit to the trial court an order or notice of hearing scheduling an oral
or non-oral hearing upon the motion as required by the Licking County Court of
Common Pleas General Division Rule of Civil Practice 5(B). Ohio Rule of Civil
Procedure 6(C) provides, "A written motion, …, and notice of the hearing thereof shall
be served not later than seven days before the time fixed for hearing…" Ohio Civ.R
6(D) provides the non-moving party an additional three days to respond when served by
regular mail.
{¶18} Without notice of hearing, the trial court granted Appellee's Motion to Stay
via Order and Entry filed February 11, 2014. Such entry was filed on the eighth day Licking County, Case No. 14-CA-15 7
after the motion to stay was filed and five days after service upon Appellants. We find
Appellants were not afforded adequate time to respond and were never given notice or
an opportunity to be heard in opposition to the motion before the trial court issued its
order.
{¶19} Appellants' first assignment of error is sustained.
II, III, & IV
{¶20} In light of our disposition of Appellants' first assignment of error, we find
the remainder of their assignments of error premature.
{¶21} The February 11, 2014 Judgment Entry entered by the Licking County
Court of Common Pleas is reversed and the matter remanded for further proceedings.
By: Hoffman, P.J.
Delaney, J. and
Baldwin, J. concur