Pearl Leasing Co., L.L.C. v. Budoris

2016 Ohio 2628

• Court: Ohio Court of Appeals
• Decided: April 21, 2016
• Docket: 103096
• Status: Published

Opinion

[Cite as Pearl Leasing Co., L.L.C. v. Budoris, 2016-Ohio-2628.]

Court of Appeals of Ohio EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA

JOURNAL ENTRY AND OPINION No. 103096

PEARL LEASING CO., L.L.C. PLAINTIFF-APPELLEE

vs.

MARYANN BUDORIS DEFENDANT-APPELLANT

JUDGMENT: REVERSED AND REMANDED

Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-15-840846

BEFORE: E.T. Gallagher, P.J., S. Gallagher, J., and Blackmon, J.

RELEASED AND JOURNALIZED: April 21, 2016 ATTORNEYS FOR APPELLANTS

David J. Tocco Kari B. Coniglio David J. Gingerich Vorys, Sater, Seymour & Pease, L.L.P. 200 Public Square, Suite 1400 Cleveland, Ohio 44114

ATTORNEYS FOR APPELLEE

Sara M. Donnersbach Matthew G. Burg Weltman, Weinberg & Reis Co., L.P.A. 323 West Lakeside Avenue Suite 200 Cleveland, Ohio 44113 EILEEN T. GALLAGHER, P.J.:

{¶1} This cause came to be heard on the accelerated calendar pursuant to App.R.

11.1 and Loc.R. 11.1. Defendant-appellant, Maryann C. Budoris (“Budoris”), appeals an

order denying a motion for relief from judgment and to stay the case pending arbitration

that was jointly filed with plaintiff-appellee, Pearl Leasing Co., L.L.C. (“Pearl”). She

assigns the following two errors:

1. The trial court erred in not applying the Ohio Arbitration Act.

2. The trial court erred in not staying Pearl Leasing’s claims, because the arbitration agreement is enforceable.

{¶2} We find merit to the appeal and reverse.

I. Facts and Procedural History

{¶3} In February 2013, Budoris signed documents to admit her uncle, Edward

Joseph Wrobel (“Wrobel”), into a licensed nursing home owned and operated by Pearl.

The admission documents included an Ohio Alternative Dispute Resolution Agreement

(“ADR Agreement”), signed by Wrobel and Carol Nichols, a representative of Pearl.

The ADR Agreement provided, in relevant part:

Nonpayment of Charges. Any dispute, disagreement, or claim of any kind arising out of, or related to the Agreement, or the breach thereof, regarding nonpayment by Resident for payments due to the Facility shall be settled in binding arbitration as set forth in Section C below, or arbitrated if mutually agreed to by the other parties.

Section C provided that “[a]ny claim or dispute arising out of or relating to this contract

shall be resolved by binding arbitration by the parties.” The ADR Agreement further provided, in bold text, that “[b]inding arbitration means that the parties are waiving

their right to a trial, including their right to a jury trial, their right to a trial by a

judge, and their right to appeal the decision of the arbitrator(s).”

{¶4} Despite the terms of the ADR Agreement, Pearl filed a complaint against

Budoris, as Wrobel’s attorney-in-fact, alleging that Wrobel breached a contract by failing

to pay for goods and services provided by Pearl. Budoris filed a motion to stay the action

pending arbitration pursuant to the ADR Agreement. The trial court denied the motion

even though it was unopposed, and Budoris appealed. Following mediation with this

court’s conference attorney, the parties agreed that independent arbitration was the correct

forum.

{¶5} Accordingly, the parties filed a joint motion in the trial court seeking relief

from judgment and to stay the case pending arbitration, and this court sua sponte

remanded the case to the trial court with instructions to rule on the parties’ jointly filed

motions. The trial court subsequently denied the motions without opinion, and this

appeal was reinstated. Pearl has not filed a brief in opposition to Budoris’s merit brief.

II. Law and Analysis

{¶6} In the first assignment of error, Budoris argues the trial court’s failure to stay

this litigation pending arbitration violates both public policy and the Ohio Arbitration Act,

R.C. Chapter 2711. In the second assignment of error, Budoris argues the trial court

should have stayed this litigation pursuant to the parties’ ADR Agreement because the agreement to arbitrate was enforceable. We discuss these assigned errors together

because they both challenge the court’s judgment denying the motion to stay.

{¶7} Public policy encourages arbitration as a method of settling disputes.

Schaefer v. Allstate Ins. Co., 63 Ohio St.3d 708, 711-712, 590 N.E.2d 1242 (1992).

Arbitration is favored because it provides the parties “with a relatively expeditious and

economical means of resolving a dispute.” Id. R.C. 2711.02 states that a trial court

“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.” (Emphasis added.)

Therefore, the court must indulge a strong presumption in favor of arbitration and resolve

any doubts in favor of arbitrability. Williams v. Aetna Fin. Co., 83 Ohio St.3d 464, 471,

700 N.E.2d 859 (1998).

{¶8} Arbitration agreements are “‘valid, irrevocable, and enforceable, except upon

grounds that exist at law or in equity for the revocation of any contract.’” Taylor Bldg.

Corp. of Am. v. Benfield, 117 Ohio St.3d 352, 2008-Ohio-938, 884 N.E.2d 12, ¶ 33,

quoting R.C. 2711.01(A). In other words, because arbitration agreements are contracts,

they are subject to the same defenses as other contracts. McCann v. New Century Mtge.

Corp., 8th Dist. Cuyahoga No. 82202, 2003-Ohio-2752, ¶ 39, citing Doctor’s Assocs.,

Inc. v. Casarotto, 517 U.S. 681, 684-685, 116 S.Ct. 1652, 134 L.Ed.2d 902 (1996)

(generally applicable contract defenses, such as fraud, duress, or unconscionability, may

be applied to invalidate arbitration agreements); Andersons, Inc. v. Horton Farms, Inc.,

166 F.3d 308, 322 (6th Cir.1998). Common defenses include fraud, duress, and unconscionability. McCann at ¶ 39. The party opposing arbitration bears the burden of

establishing the grounds for revocation of the agreement. Hayes v. Oakridge Home, 122

Ohio St.3d 63, 2009-Ohio-2054, 908 N.E.2d 408, ¶ 20.

{¶9} The appropriate standard of review on judgments pertaining to the

enforceability of an arbitration agreement depends on the questions raised in challenging

the applicability of the arbitration provision. McCaskey v. Sanford-Brown College, 8th

Dist. Cuyahoga No. 97261, 2012-Ohio-1543, ¶ 7.

{¶10} As relevant here, we review the trial court’s determination as to whether a

party agreed to submit an issue to arbitration de novo. Id. at ¶ 7-8, citing Shumaker v.

Saks, Inc., 163 Ohio App.3d 173, 2005-Ohio-4391, 837 N.E.2d 393 (8th Dist.), and

Taylor at ¶ 38.

{¶11} It is undisputed that the parties executed an arbitration agreement that

specifically mandated that any dispute regarding nonpayment of charges were to be

resolved in binding arbitration. Indeed, Pearl did not oppose Budoris’s original motion

to stay pending arbitration, joined in her motion for relief from judgment and to stay

arbitration, and does not oppose the trial court’s judgment on appeal. Therefore, because

Pearl has not established any grounds on which the agreement should be revoked or found

to be unenforceable, the presumption in favor of arbitrability has not been rebutted.

{¶12} Therefore, the trial court erred in denying the parties’ joint motion for relief

from judgment and the parties’ joint motion to stay litigation pending arbitration.

Accordingly, we sustain both the first and second assignments of error. {¶13} The trial court’s judgment is reversed. We remand the case to the trial

court with instructions to stay the case pending arbitration.

It is ordered that appellant recover from appellee costs herein taxed.

The court finds there were reasonable grounds for this appeal.

It is ordered that a special mandate be sent to 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.

EILEEN T. GALLAGHER, PRESIDING JUDGE

SEAN C. GALLAGHER, J., and PATRICIA ANN BLACKMON, J., CONCUR