Paulozzi v. Parkview Custom Homes, L. L.C.

122 N.E.3d 643, 2018 Ohio 4425
CourtCourt of Appeals of Ohio, Eighth District, Cuyahoga County
DecidedNovember 1, 2018
DocketNo. 106617
StatusPublished
Cited by8 cases

This text of 122 N.E.3d 643 (Paulozzi v. Parkview Custom Homes, L. L.C.) is published on Counsel Stack Legal Research, covering Court of Appeals of Ohio, Eighth District, Cuyahoga County primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Paulozzi v. Parkview Custom Homes, L. L.C., 122 N.E.3d 643, 2018 Ohio 4425 (Ohio Super. Ct. 2018).

Opinion

MARY J. BOYLE, P.J.:

{¶ 1} Defendant-appellant, Parkview Custom Homes, L.L.C. ("Parkview"), appeals the trial court's order denying its motion to stay litigation and compel arbitration. It raises one assignment of error for our review:

The trial court erred in finding that the arbitration clause is unenforceable under the doctrine of impossibility.

{¶ 2} Finding merit to Parkview's assignment of error, we reverse and remand.

I. Procedural History and Factual Background

{¶ 3} In August 2012, plaintiffs-appellees, Bryan and Kristi Paulozzi, entered into a construction agreement ("the Agreement") with Parkview. Under the Agreement, the Paulozzis would pay Parkview $552,469 to build them a home in Strongsville, Ohio. The Agreement set forth the following remedies:

REMEDIES: If Owner fails to satisfy Owner's obligations, defaults, or breaches with respect to this Agreement, at Contractor's option, Contractor may (a) terminate this Agreement and all deposits and payments by Owner shall be the property of Contractor (as liquidated damages) and Contractor and Owner shall be relieved from all obligations hereunder, or (b) sue for damages or specific performance in the Court of Common Pleas with jurisdiction or (c) arbitrate any claim or dispute as provided below.
If Contractor fails to satisfy its obligations, defaults, or breaches with respect to this Agreement, as Owner's sole remedies, Owner may either (d) terminate this Agreement and shall receive all payments and deposits made by Owner in excess of actual costs incurred by Contractor (with any dispute as to said costs or any related matter to be determined solely by arbitration, as provided below) and Contractor and Owner shall be relieved from all obligations hereunder, or (e) proceed through arbitration[.]
* * *
In the event any remedy or limitation of remedy is invalid or unenforceable, such invalidity or unenforceability shall not adversely effect any other limitation or remedy of either Owner or Contractor.
* * *

*646{¶ 4} The Agreement also set forth the following arbitration clause:

ARBITRATION:
(a) With respect to all claims, breaches, defaults, disputes and damages arising out of or related to this Agreement or the Property or the Residence (whether grounded in contract or tort), to which arbitration applies, as provided above, the arbitration shall be conducted under the auspices of the Ohio Arbitration and Mediation Center in accordance with its rules, at Cleveland, Ohio. The cost of the arbitration shall be paid one-half (1/2) by each party, and each party shall be responsible for all fees and costs which they incur in engaging counsel or other experts in representing them in the arbitration proceeding. The decision of the arbitrator shall be conclusive and may be enforced in any court with jurisdiction over the parties.
(b) Ohio law contains important requirements the Owner must follow before the Owner may file lawsuit or commence arbitration proceedings for defective construction against the residential contractor (Seller) which constructed the Owner's home. At least sixty (60) days before the Owner files lawsuit or commences arbitration proceedings, the Owner must provide the contractor with written notice of the conditions the Owner alleges are defective. Under Chapter 1312, of the Ohio Revised Code, the contractor has an opportunity to offer to repair or pay for the defects. The Owner is not obligated to accept any offer the contractor makes. There are strict guidelines and procedures under State law, and failure to follow them may affect the Owner's ability to file lawsuit or commence arbitration proceedings.

{¶ 5} According to the Paulozzis, Parkview finished building the home in 2013; however, within the first year of moving into the home, the Paulozzis allege that they experienced issues with the driveway and kitchen floor. The Paulozzis allege that they informed Parkview of the problems, but that Parkview never fixed the problems and did not respond to their 60-day notice of construction defect letter.

{¶ 6} In September 2017, the Paulozzis filed a complaint against Parkview, National Carpet Outlet, Inc., and an "unknown concrete-pouring company." The Paulozzis set forth claims for breach of contract, unjust enrichment, conversion, promissory estoppel, negligent misrepresentation, fraudulent misrepresentation, breach of express warranty, breach of implied warranty, violations of Ohio's Home Construction Service Suppliers Act, and violations of Ohio's Consumer Sales Practices Act against Parkview.

{¶ 7} Parkview moved to stay the litigation and compel arbitration under the Agreement's arbitration provision. The Paulozzis opposed Parkview's motion, arguing that the arbitration clause was unenforceable because

the parties['] chosen arbitration forum, Ohio Arbitration and Mediation Center ("OAMC"): (1) is non-responsive and appears to be defunct; (2) likely was defunct when the parties entered into their Construction Agreement ("the Agreement"); and (3) has a fatal conflict of interest due to undisclosed relationships between OAMC's representatives and Parkview's principals.

The Paulozzis argued that ordering arbitration would therefore be pointless. The Paulozzis also argued that the arbitration *647clause was void due to fraud; specifically, the Paulozzis argued that Parkview failed to disclose the professional relationship that it had with the OAMC.1

{¶ 8} Parkview filed a reply brief, arguing that the "essential purpose of the arbitration provision" was "still capable of substantial accomplishment." It stated that even if or though the OAMC was no longer operational, the court only had to appoint or the parties only had to agree to a different arbitrator. Parkview also argued that "the limited relationship between * * * Parkview * * * and the OAMC" is irrelevant and does not establish bias.

{¶ 9} The trial court denied Parkview's motion in a judgment entry, stating

The arbitration clause at issue in this case states that the arbitration "shall be conducted under the auspices of the [OAMC.]" However, the OAMC is now defunct. The arbitration agreement did not provide for an alternative arbitration forum. Therefore, the arbitration clause is unenforceable under the doctrine of impossibility.

{¶ 10} It is from this order that Parkview now appeals.

II. Law and Analysis

{¶ 11} In its sole assignment of error, Parkview argues that the trial court erred in finding that the Agreement's arbitration provision was unenforceable under the doctrine of impossibility. Parkview's arguments in support of its assignment of error are nearly identical to that argued in its reply brief filed below and discussed above, with the exception of a newly-added argument that the trial court "failed to give full effect and meaning to the severability clause of the agreement." The Paulozzis' arguments in response are the same as those they raised in their opposition below.

Standard of Review

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Cite This Page — Counsel Stack

Bluebook (online)
122 N.E.3d 643, 2018 Ohio 4425, Counsel Stack Legal Research, https://law.counselstack.com/opinion/paulozzi-v-parkview-custom-homes-l-lc-ohctapp8cuyahog-2018.