Murfey v. Muth

2025 Ohio 1184

• Court: Ohio Court of Appeals
• Decided: April 3, 2025
• Docket: 114212
• Status: Published

Opinion

[Cite as Murfey v. Muth, 2025-Ohio-1184.]

COURT OF APPEALS OF OHIO

EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA

SPENCER L. MURFEY, III, ET AL., :

Plaintiffs-Appellants, : No. 114212 v. :

MARIA G. MUTH, ET AL., :

Defendants-Appellees. :

JOURNAL ENTRY AND OPINION

JUDGMENT: AFFIRMED RELEASED AND JOURNALIZED: April 3, 2025

Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-23-983128

Appearances:

Pierson Ferdinand, LLP, and Daniel Messeloff, for appellants.

McDonald Hopkins, LLC, Jeffrey P. Consolo, and Franklin C. Malemud, for appellees Maria G. Muth as Co-trustee and Individually and Mary V. Murfey.

Ciano & Goldwasser, L.L.P., Phillip A. Ciano, Brent S. Silverman, and Anastasia J. Wade, for appellees WHC Ventures, LLC, and Peter W. Nordell, Jr. SEAN C. GALLAGHER, J.:

Spencer L. Murfey, III and Cynthia H. Murfey, individually and as co-

trustees of trusts formed by Spencer L. Murfey, Jr., and Louise T. Murfey (through

her attorney in fact) (collectively “appellants”) sued Peter W. Nordell, Jr., and WHC

Ventures, LLC (“Nordell appellees”), and Maria Muth and Mary Murfey based on

the belief that the appellees diminished appellants’ ownership in family investment

opportunities beginning in 2003. The trial court granted the appellees’ separate

motions to compel arbitration and stay the case. For the following reasons, we

affirm that decision.

The parties are relatives of Warren H. Corning, a successful investor

and philanthropist who passed away in 1975. The family eventually split themselves

into factions, all vying for additional investment opportunities in Greylock Partners,

a venture capital company Corning had been involved with since its inception in

1965. To make these investments, the family used what are known as “Family

Investment Vehicles,” which created certain partnerships, WHC Ventures 2009-1,

LP, WHC Ventures 2013, LP, and WHC Ventures 2016, LP (collectively “WHC

Partnerships”). The appellants claim that their share of investments into Greylock

were diminished in those partnerships, and wholly excluded in two later-formed

partnerships, WHC 2020 and WHC 2023, because they were the adopted children

of Spencer Murfey, Jr. In order to participate in these partnerships, and thus avail

themselves of the lucrative investment opportunities in Greylock, the appellants

were required to sign Limited Partnership Agreements (“LPAs”) to each partnership. The appellants do not dispute signing the agreements. All of the LPAs

contained mandatory arbitration clauses. These arbitration clauses specify that any

disputes related to the partnership or investments must be resolved through

arbitration, not through court litigation.

Over time, the appellants initiated several legal disputes related to these

partnerships. In 2018, appellants filed a complaint in the Delaware Court of

Chancery seeking to inspect the WHC Partnerships’ records, including individual

tax forms for the other limited partners. Two years later, appellants filed another

lawsuit in Delaware, this time including Nordell as an individually named

defendant. In the second case, appellants raised issues such as the withholding of

distributions, failure to meet capital calls, and irregularities with amendments to the

LPAs. The appellants argued that these actions violated the agreements governing

the partnerships. The case was ultimately settled.

In 2020, appellants commenced an action in a Florida state court

against Homer Chisholm in his capacity as co-trustee of the appellants’ respective

trusts, through which their ownership interests in the WHC Partnerships were

managed, seeking damages for his part in the alleged diminution of the appellants’

allotted ownership. That action was amended to include Muth who was the co-

trustee of appellants’ trusts until 2015. Spencer Murfey, III filed a second action in

2021 on behalf of his mother, Louise, against Muth and Chisholm advancing the

same claims. Appellants do not dispute that the claims against Muth are nearly

identical to the ones raised in the underlying case. That case appears to be ongoing. In 2021, appellants initiated a third legal action in Ohio, asserting

claims against the appellees for breach of contract, tortious interference, and civil

conspiracy. They also sought a declaratory judgment to assert their right to invest

in Greylock funds on the same terms as other family members. However, after the

responses were filed, the appellants voluntarily dismissed the case based on joint

discussions to entertain settlement negotiations. Apparently, those negotiations

were not successful.

In the underlying case, a refiled action following the earlier dismissal,

the appellants are pursuing claims against the same appellees, alleging breach of

contract, tortious interference, civil conspiracy, spoliation of evidence, unjust

enrichment, and a declaratory judgment for their purported right to invest equally

with other family members in Greylock funds. In response to the amended

complaint, appellees filed a motion to compel arbitration, arguing that the claims

brought by the appellants are subject to the arbitration clauses in the LPAs.

Appellants did not challenge the validity of these arbitration provisions or request

an oral hearing on the motion.

Instead, the appellants maintain that appellees waived their right to

assert the contractual right to arbitration through litigating the various claims in

several forums over the past seven years. The trial court disagreed, granted the

motions to compel arbitration and stayed the case pending the outcome of that

proceeding. This timely appeal followed. In the first assignment of error, the appellants claim the trial court

erred by ruling on the motions to compel arbitration without first conducting an oral

hearing. The appellants, however, failed to request a hearing on the matter.

There is a conflict of authority on whether R.C. 2711.03 requires a trial

court to sua sponte hold oral argument on a motion to compel arbitration. See, e.g.,

Mattox v. Dillard’s, Inc., 2008-Ohio-6488, ¶ 15 (8th Dist.) (“While a party’s request

for an oral hearing shall be granted pursuant to R.C. 2711.03, an oral hearing is not

mandatory absent a request.”); Snyder v. Old World Classics, 2023-Ohio-4019, ¶ 6-

10 (9th Dist.) (holding that the trial court erred by not sua sponte holding an oral

hearing on the motion to stay and compel arbitration). That conflict is currently

before the Ohio Supreme Court. Snyder v. Old World Classics, L.L.C., 2024-Ohio-

880. But the resolution of that conflict is of little benefit to the appellants in this

case. Importantly, the appellants have not identified any evidence not contained in

the record necessitating an evidentiary hearing.

But regardless, at the time the appellants filed their opposition brief

to the motions to compel, the law in this district was settled: absent a request for an

oral hearing, at the least, the trial court is permitted to rule on the pending motions.

See Blue Technologies Smart Solutions, L.L.C. v. Ohio Collaborative Learning

Solutions, Inc., 2020-Ohio-806, ¶ 27 (8th Dist.). The appellants were obligated to

preserve any arguments regarding the necessity of an oral hearing based on the

statutory language in light of this district’s precedent, and new arguments cannot be

raised for the first time in an appeal. State v. Wintermeyer, 2019-Ohio-5156, ¶ 10 (“A first principle of appellate jurisdiction is that a party ordinarily may not present

an argument on appeal that it failed to raise below.”), citing Goldfuss v. Davidson,

79 Ohio St.3d 116, 121 (1997). The corollary to that proposition, is an argument

attempting to circumvent established precedent that is not raised in the trial court

cannot be preserved for the first time in appellate briefing. Craig v. Gilchrist, 2022-

Ohio-4477, ¶ 11 (10th Dist. ) (constitutional arguments cannot be preserved in an

appeal when not first raised with the trial court). The first assignment of error is

overruled.

In the second and third assignments of error, appellants claim the trial

court applied the wrong standard in compelling arbitration, or in the alternative

abused its discretion because the appellees “clearly” waived their right to arbitration.

Those will be addressed out of order for the sake of simplicity.

The third assignment of error is without merit. The trial court

concluded, expressly “mindful that Ohio law strongly favors compelling arbitration

where appropriate[,]” that

[w]hen considering the totality of the circumstance presented herein, this court is unable to find that the defendants unequivocally waived their right to arbitrate. See Vining v. Logan Clutch Corp., 2020-Ohio- 675, ¶ 11 (8th Dist.). Any doubt as to the existence of a waiver is to be resolved against plaintiffs. Guerrini v. Chanell Roofing & Home Improvement, LLC, 2024-Ohio-585, ¶ 24 (8th Dist.), Neel v. A. Perrino Construction, Inc., 2018-Ohio-1826, ¶ 35 (8th Dist.). Based upon the foregoing, this case is ordered to arbitration and further proceedings are stayed pending the outcome of the arbitration.

Appellants have not explained how that conclusion is contrary to the established

precedent. Instead, their sole argument is that the limited analysis precludes

appellate review and therefore warrants summary reversal for a more detailed

decision. Appellants have cited no authority to support that proposition. See State

v. Quarterman, 2014-Ohio-4034, ¶ 19 (concluding that appellate courts “are not

obligated to search the record or formulate legal arguments on behalf of the

parties”), citing State v. Bodyke, 2010-Ohio-2424, ¶ 78 (O’Donnell, J., concurring

in part and dissenting in part); App.R. 16(A)(7). The facts, for the most part

consisting of the procedural history of this years-long dispute, are largely

undisputed. The sole focus of the appeal is application of those facts to the legal

analysis under R.C. 2711.03. In light of that, the trial court’s order is not unduly

vague or incapable of review. And more to the point of the assigned error presented,

the trial court’s decision accurately states and applies the prevailing standard for

determining waiver. The sole issue is the weight given to the various factors under

the waiver analysis, as will be discussed below. The third assignment of error is

In the second assignment of error, appellants claim the trial court

abused its discretion in finding that the appellees did not waive their contractual

right to arbitration.

In order to prevail on an argument that a defendant has waived their

right to arbitrate, the plaintiff must demonstrate “‘(1) that the party knew of its right

to assert an argument or defense and (2) that the totality of the circumstances

establish that the party acted inconsistently with that right.’” Blue Technologies Smart Solutions, L.L.C., 2020-Ohio-806, at ¶ 13 (8th Dist.), quoting Gembarski v.

PartsSource, Inc., 2019-Ohio-3231, ¶ 25. “A party may explicitly waive its right to

arbitration or may implicitly waive its right by failing to assert it or by participating

in litigation to such an extent that its actions are ‘completely inconsistent with any

reliance’ on this right, resulting in prejudice to the opposing party.” Bass Energy

Inc. v. Highland Hts., 2010-Ohio-2102, ¶ 33 (8th Dist.), quoting Gen. Star Natl. Ins.

Co. v. Administratia Asigurarilor De Stat, 289 F.3d 434, 438 (6th Cir. 2002). “Any

doubt as to the existence of a waiver is to be resolved against the party asserting it.”

Guerrini v. Chanell Roofing & Home Improvement, LLC, 2024-Ohio-585, ¶ 24 (8th

Dist.), citing Rimedio v. SummaCare, Inc., 2004-Ohio-4971, ¶ 13 (9th Dist.).

Factors the trial court may consider in determining whether the

totality of the circumstances supports a finding of waiver include the following:

“(1) whether the party seeking arbitration invoked the jurisdiction of the trial court by filing a complaint, counterclaim, or third-party complaint without asking for a stay of proceedings; (2) the delay, if any, by the party seeking arbitration in requesting a stay of proceedings or an order compelling arbitration; (3) the extent to which the party seeking arbitration participated in the litigation, including the status of discovery, dispositive motions, and the trial date; and (4) any prejudice to the non-moving party due to the moving party’s prior inconsistent actions.”

Am. Gen. Fin. v. Griffin, 2013-Ohio-2909, ¶ 18 (8th Dist.), quoting Ohio Bell Tel. Co.

v. Cent. Transport, Inc., 2011-Ohio-6161, ¶ 16 (8th Dist.). No one factor controls,

and trial courts have discretion to weigh each factor considered.

When reviewing whether the trial court erred in concluding that a

party has or has not waived arbitration, appellate courts apply an abuse-of- discretion standard. Bernat v. Ek Real Estate Fund I LLC, 2024-Ohio-5043, ¶ 27

(7th Dist.), citing Steese v. Canton Regency, 2022-Ohio-4711 (5th Dist.). Abuse of

discretion generally applies in situations where the trial “‘court is empowered to

make a decision — of its choosing — that falls within a range of permissible

decisions.’” (Emphasis in original.) Miller v. Eldridge, 146 S.W.3d 909 (Ky. 2004),

quoting Zervos v. Verizon New York, Inc., 252 F.3d 163, 169 (2d Cir. 2001). When

trial courts are vested with discretion to render a decision, the court is not required

to make any “particular decision.” Zervos at 169. Generally, a case involving a

discretionary decision involves the weighing of factors or circumstances based on

some factual underpinning. The waiver analysis under R.C. 2711.03 is no different.

In order to find error under an abuse-of-discretion standard, the

reviewing court must find that there “is no sound reasoning process that would

support that decision. It is not enough that the reviewing court, were it deciding the

issue de novo, would not have found that reasoning process to be persuasive.” AAAA

Ents., Inc. v. River Place Community Urban Redevelopment Corp., 50 Ohio St.3d

157, 161 (1990); In re Sullivan, 2006-Ohio-3206, ¶ 12 (11th Dist.). As this court has

previously recognized, the abuse-of-discretion standard “‘is a high standard to

satisfy and we cannot simply substitute our judgment for that of the trial court.’”

Adkins v. Women’s Welsh Club of Am. Found., 2021-Ohio-1084, ¶ 16 (8th Dist.),

quoting Beegle v. S. Pointe Hosp., 2011-Ohio-3591, ¶ 15 (8th Dist.).

Because the abuse-of-discretion standard applies to reviewing any

decision granting or denying a motion to compel arbitration based on the fact- intensive claims of waiver, although instructive, prior case law is rarely, if ever,

dispositive. The standard to reverse a trial court’s decision based on claims of waiver

is high, whether that be to grant or to deny a motion to compel. Prior decisions do

not create a standard demanding a particular outcome, but instead demonstrate a

range of decisions based on the weighing of factors by the trial court. From the

record before us, we are unable to find the trial court’s decision to grant appellees’

motion to compel arbitration and stay the case was arbitrary, capricious, or

unconscionable in this matter, or was contrary to any legal standard.

Appellants claim that the Nordell appellees failed to invoke the

arbitration provisions three separate times: during the concluded Delaware Books

and Records Action, the concluded Delaware Contempt Action, and the first

dismissed action preceding the underlying, refiled case. In addition, appellants

claim that in their capacities as beneficiaries of their respective trusts, appellants

collectively filed two separate actions against Muth in Florida in 2021, which remain

pending and in which Muth failed to assert her individual right to arbitration.

According to the appellants, the interrelatedness of the Florida actions and this

pending action cannot be disputed.1 The appellants further claim that the appellees

delayed filing a responsive pleading in the underlying case for several months and,

therefore, waived their right to assert arbitration.

1 A natural question that begs to be asked is why then was Muth included in this

action filed in Cuyahoga County? Appellants’ argument essentially invites this panel to disagree with the

trial court’s discretionary decision based on reviewing the same factors and the

undisputed procedural history of the parties’ disputes as presented to the trial court.

We decline to do so because such a review would be more aptly described as de novo.

The trial court expressly reviewed the totality of the circumstances as presented by

appellants, including appellants’ reliance on defendants’ conduct in the respective

out-of-state actions and the procedural posture of the underlying case.

The Delaware actions were, at best, tangentially related to the

underlying claims. Appellants claim that the Delaware actions were focused on their

rights to inspect records in possession of the WHC Ventures 2009, 2013, and 2016

and the subsequent action to compel was based on allegations that the Nordell

appellees violated the final order in that earlier Delaware action. Although that

action may have provided a foundation for the current claims, the action was limited

in nature. As a panel from this district recently concluded, prior litigation

tangentially related to ongoing disputes does “not act as a blanket waiver for all other

disputes between the parties.” Gerston v. Parma VTA, LLC, 2023-Ohio-1563, ¶ 18

(8th Dist.). We have not been provided with a reason or any authority to conclude

otherwise.

The only other conduct by the Nordell appellees, and Mary Murfey for

that matter, was their appearance and agreement to settlement negotiations in the

first filing in Cuyahoga County and their filing of their motion to compel arbitration

seven months into the underlying litigation. Three months after filing the initial complaint in the underlying case, however, appellants filed their first amended

complaint, resetting the time to respond. During that time, no discovery or

significant litigation occurred with respect to those parties. The trial court,

therefore, did not abuse its discretion in concluding that the Nordell appellees and

Mary Murfey did not waive their right to compel arbitration by seeking settlement

discussions in the original filing or by seeking additional time to file a responsive

pleading. “Any doubt as to the existence of a waiver is to be resolved against the

party asserting it,” and in this case there is no clear waiver on the part of those

appellees. Guerrini, 2024-Ohio-585, at ¶ 24 (8th Dist.), citing Rimedio, 2004-Ohio-

4971, at ¶ 13 (9th Dist.).

With respect to Maria Muth, appellants extensively rely on her

defending that action on its merits in Florida. At oral argument, the parties

represented that appellants’ claims against Muth, and Mary Murfey, had been

tentatively resolved. No request to dismiss the appeal as to those parties has been

filed. Couple that with the fact that the Nordell appellees are entitled to assert their

rights to arbitrate the claims, we decline to address any issues pertaining to Maria

Muth individually. The trial court’s decision to stay the entire matter under R.C.

2711.02(B) moots any issues with respect to her claims regardless of a purported

settlement. The underlying proceeding is stayed pending the arbitration compelled

at least by the Nordell appellees. Any resolution of the appellate arguments

pertaining to Muth would be advisory and have no impact on the procedural posture

of this case moving forward. The second assignment of error is overruled. The trial court did not abuse its discretion in staying the action after

compelling the parties to arbitrate their dispute. Appellants by and large are simply

asking this panel to disagree with the trial court’s conclusion based on de novo-esque

review of the procedural history of the parties’ lengthy dispute as applied to the

waiver analysis. That form of review is inappropriate under the abuse-of-discretion

standard. There is no clear waiver of the right to arbitrate in light of the limited

nature of the previous actions in Delaware and the parties’ limited involvement in

the first filing of this case. We cannot conclude that the trial court abused its

discretion in so concluding.

As a result, the decision of the trial court is affirmed.

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

The court finds there were reasonable grounds for this appeal.

It is ordered that a special mandate issue out of this court directing the

common pleas 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.

______________________ SEAN C. GALLAGHER, JUDGE

MICHAEL JOHN RYAN, P.J., and KATHLEEN ANN KEOUGH, J., CONCUR