[Cite as Slezak v. Slezak, 2019-Ohio-3467.]
STATE OF OHIO ) IN THE COURT OF APPEALS )ss: NINTH JUDICIAL DISTRICT COUNTY OF SUMMIT )
DR. FREDERICK A. SLEZAK, M.D., et al. C.A. No. 29102
Appellees
v. APPEAL FROM JUDGMENT ENTERED IN THE ARNOLD G. SLEZAK COURT OF COMMON PLEAS COUNTY OF SUMMIT, OHIO Appellant CASE No. CV-2017-04-1680
DECISION AND JOURNAL ENTRY
Dated: August 28, 2019
CARR, Judge.
{¶1} Defendant-Appellant Arnold Slezak appeals from the judgment of the Summit
County Court of Common Pleas. This Court affirms in part, reverses in part, and remands the
matter for proceedings consistent with this opinion.
I.
{¶2} In 2014, siblings Arnold Slezak, Plaintiffs-Appellees Dr. Frederick Slezak, M.D.,
and Cynthia Slezak owned all of the shares of common stock of Plaintiff-Appellee RJS
Corporation. The Slezaks entered into a close corporation agreement. Arnold Slezak was an
officer, director, and also employee of RJS Corporation. The close corporation agreement
contained an arbitration provision.
{¶3} In November 2015, Dr. Slezak and Cynthia Slezak filed a demand for commercial
arbitration. They alleged claims for breach of fiduciary duty against Arnold Slezak, and Arnold 2
Slezak asserted counterclaims for “breach arising out of [Arnold Slezak’s] departure from his
employment and his subsequent removal as an Officer and Director of RJS Corporation, Inc.”
{¶4} An arbitrator was appointed January 8, 2016. The arbitration hearing took place
March 1, 2016 through March 3, 2016. On May 24, 2016, the arbitrator issued a decision in
which she made the following findings:
1) Respondent Arnold Slezak voluntarily resigned as an employee of RJS effective January 6, 2015;
2) Respondent Arnold Slezak was properly terminated from his position as an Officer and Director of RJS for cause effective October 23, 2015;
3) Respondent Arnold Slezak, due to his voluntary resignation as an employee of RJS and his subsequent termination from his positions as an Officer and Director of RJS for cause, must sell not less than all of the shares owned by Respondent to Claimants [Dr. and Cynthia Slezak] and/or the Corporation, pursuant to Section 7(c) of the Close Corporation Agreement and at a value to be determined in accordance with Section 8 of that Agreement.
4) Respondent and Claimant pursuant to Section 8(a)(i) of the Close Corporation Agreement shall attempt to execute an Agreed Value Certificate to the value of the Respondent’s shares to be sold to the Claimants and/or the Corporation within 30 days of the Arbitrator’s final Order, the Claimants and Respondent shall adhere to the appraisal procedures for determining the value of Respondent’s shares, as outlined in Section 8(a)(ii) of the Close Corporation Agreement. Pursuant to the parties’ agreement, Respondent shall receive, in exchange for his shares, an amount equal to 100% of their value as reflected in either the Agreed Value Certificate or such other appraised value determined in accordance with Section 8(a)(ii) of the Close Corporation Agreement.
5) The administrative filing fees of the American Arbitration Association (“the Association”) totaling $10,400.00 and the compensation of the Arbitrator shall be borne equally by the parties. Therefore, Respondent shall reimburse Claimants the sum of $550.00 for that portion of its share of administrative filing fees previously incurred by Claimant.
6) This award is in full settlement of all claims and counterclaims submitted to this arbitration. All claims not expressly granted herein are hereby, denied.
{¶5} When the Slezaks could not agree on a value of Arnold Slezak’s shares, the
appraisal process was begun. The close corporation agreement provided that first RJS 3
Corporation’s outside certified public accountant would appraise the fair market value of RJS
Corporation and provide an analysis as to the value of one share. The selling shareholder would
then have the opportunity to dispute the valuation, and provide his or her own appraisal. If the
difference between the values was less than 10%, then the mean of the two values would become
the final value. If the difference was more than 10%, then the two appraisers would select a third
appraiser who would choose one of the two original values, which would become the final and
binding value.
{¶6} Here, Arnold Slezak did dispute the value determined by the accountant from RJS
Corporation and had his own appraisal done. That value was significantly higher than that of the
corporation’s accountant. As the difference between the two values was more than 10%, a third
appraiser was chosen and that appraiser chose the value the corporation’s accountant used. That
final appraisal was completed on November 9, 2016.
{¶7} Thereafter, RJS Corporation issued a promissory note and began sending monthly
checks to Arnold Slezak. Arnold Slezak refused to accept or cash the payments.
{¶8} On April 26, 2017, Dr. Slezak, Cynthia Slezak, and RJS Corporation filed a
“Combined Application to Confirm Arbitration Award and Complaint for Declaratory Judgment
and Mandatory Injunction” in the trial court. Therein, they sought to have the award confirmed,
to have various declarations issued, and for the trial court to issue an injunction requiring Arnold
Slezak to accept the payments made by RJS Corporation as provided by the promissory note. As
to the declarations, Dr. Slezak, Cynthia Slezak, and RJS Corporation requested that the trial court
declare that Arnold Slezak voluntarily agreed to adhere to the arbitration award, agreed to
engage in the valuation process in the close corporation agreement, did engage in the process
without objection, and permitted his shares to be transferred to RJS Corporation. 4
{¶9} On June 29, 2017, Arnold Slezak filed an answer and counterclaims for breach of
fiduciary duty and declaratory judgment. He alleged that Dr. and Cynthia Slezak and RJS
Corporation breached their fiduciary duty by providing the third appraiser with “selective and
misleading information” and by excluding Arnold Slezak from the valuation process. Arnold
Slezak sought declarations that the arbitration award should not be confirmed, the appraisal
process was not impartial, the failure to confirm the award prior to the valuation process
rendered the valuation process void, the original valuation was not binding because it used a
valuation date prior to the date of the award, Arnold Slezak was entitled to valuation based on
complete and accurate information, he was entitled to information concerning the valuation
process, and the refusal to allow him to exercise his shareholders rights after October 23, 2015
was contrary to law.
{¶10} That same day, Arnold Slezak also filed a motion to vacate the arbitration award.
Inter alia, he asserted that the arbitrator lacked subject matter jurisdiction because the close
corporation agreement provided that the arbitrations had to commence within 30 days of the
appointment of the arbitrator and it did not.
{¶11} Arnold Slezak filed a motion for partial summary judgment and Dr. and Cynthia
Slezak and RJS Corporation filed a motion for summary judgment.
{¶12} A non-evidentiary hearing was held before a magistrate. The matter was
supposed to be limited to the application to confirm the award and the motion to vacate the
award; however, some argument concerning the valuation was allowed. The magistrate issued a
decision granting the application to confirm the award, denying the motion to vacate the award
as untimely, and ordering Arnold Slezak to sell his shares at the value determined by the third
appraiser. Arnold Slezak filed objections to the magistrate’s decision including that the 5
magistrate erred in failing to hold a full evidentiary hearing when it not only ruled on the
application to confirm but also decided the value of the stock, erred in finding that the valuation
process was part of the award, erred in ordering Arnold Slezak to sell his shares at the value
specified by the third appraiser, erred in concluding the motion to vacate was untimely, and erred
in determining that he waived his objection to the arbitrator’s alleged lack of subject matter
jurisdiction.
{¶13} The trial court overruled the objections and adopted the magistrate’s decision in
its entirety. It concluded that the application to confirm the arbitration award was timely and the
motion to vacate the award was untimely. The trial court granted the application to confirm the
award and denied the motion to vacate. The trial court ordered Arnold Slezak to sell his shares
at the value determined by the third appraiser. The trial court then dismissed the counts of the
complaint and counterclaim.
{¶14} Arnold Slezak has raised four assignments of error for our review, which will be
discussed out of sequence to facilitate our analysis.
II.
General Standard of Review
{¶15} “[W]e generally review a trial court’s action on a magistrate’s decision for an
abuse of discretion, but do so with reference to the nature of the underlying matter.” (Internal
quotations and citations omitted.) Harrison v. Lewis, 9th Dist. Summit No. 28114, 2017-Ohio-
275, ¶ 40. “When reviewing a trial court’s decision to confirm, modify, vacate, or correct an
arbitration award, an appellate court should accept findings of fact that are not clearly erroneous
but should review questions of law de novo.” Portage Cty. Bd. of Dev. Disabilities v. Portage
Cty. Educator’s Assn. for Dev. Disabilities, 153 Ohio St.3d 219, 2018-Ohio-1590, ¶ 2. 6
ASSIGNMENT OF ERROR IV
THE TRIAL COURT ERRED IN FINDING APPELLANT’S MOTION TO VACATE THE AWARD WAS UNTIMELY AND THAT APPELLANT WAIVED HIS RIGHT TO OBJECT TO THE ARBITRATOR’S LACK OF SUBJECT MATTER JURISDICTION.
{¶16} Arnold Slezak argues in his fourth assignment of error that the trial court erred in
concluding that his motion to vacate was untimely because the arbitrator lacked subject matter
jurisdiction. He argues that the arbitrator lacked subject matter jurisdiction because the arbitrator
failed to hold the hearing in the timeframe stated in the arbitration clause. It is undisputed that
the arbitrator did not hold the hearing in the timeframe provided for in the arbitration clause;
however, there was evidence in the record that the parties, through counsel, agreed to at least
some extension of the time period, and there is nothing that suggests Arnold Slezak objected to
the delay in holding the arbitration hearing. Nonetheless, due to this alleged lack of subject
matter jurisdiction of the arbitrator, Arnold Slezak contends that the timing requirement
contained in R.C. 2711.13 was inapplicable. Arnold Slezak does not dispute that his motion to
vacate was filed outside the time period provided in the statute.
{¶17} “R.C. Chapter 2711 provides the exclusive statutory remedy which parties must
use in appealing arbitration awards to the courts of common pleas.” Galion v. Am. Fedn. Of
State, Cty. & Mun. Emp., Ohio Council 8, AFL-CIO, Local 2243, 71 Ohio St.3d 620, 623 (1995).
“R.C. 2711.10 and 2711.11 clearly establish the circumstances where a party may appeal to the
common pleas court to vacate, modify, or correct an arbitration award.” Id. at 622. With respect
to a motion to vacate, those circumstances include when “[t]he arbitrators exceeded their powers,
or so imperfectly executed them that a mutual, final, and definite award upon the subject matter
submitted was not made.” R.C. 2711.10(D). “The essential function of paragraph (D) is to
ensure that the parties get what they bargained for by keeping the arbitrator within the bounds of 7
the authority they gave h[er].” Piqua v. Fraternal Order of Police, 185 Ohio App.3d 496, 2009-
Ohio-6591, ¶ 21 (2d Dist.). Arguably, Arnold Slezak’s specific claim that the arbitrator lacked
subject matter jurisdiction is in essence an argument that the arbitrator “exceeded [her] powers.”
R.C. 2711.10(D); see also Summit Cty. Children’s Serv. Bd. v. Local No. 4546, Communications
Workers of Am., 9th Dist. Summit No. 21184, 2003-Ohio-726, ¶ 3-22 (considering whether the
arbitrator lacked subject matter jurisdiction as whether the arbitrator violated R.C. 2711.10(D)).
{¶18} “In order to vacate, modify, or correct an award, a party may file an action in the
common pleas court pursuant to R.C. 2711.13.” Galion at 622. R.C. 2711.13 provides that
“[n]otice of a motion to vacate, modify, or correct an award must be served upon the adverse
party or his attorney within three months after the award is delivered to the parties in interest, as
prescribed by law for service of notice of a motion in an action.” “If the General Assembly did
not intend for the statute of limitations in R.C. 2711.13 to apply [to motions brought pursuant to
R.C. 2711.10 and 2711.11], it would have expressly excluded R.C. 2711.10 and 2711.11 from
[R.C. 2711.13].” Galion at 622. Therefore, “R.C. 2711.13 provides a three-month period within
which a party must file a motion to vacate, modify, or correct an arbitration award under R.C.
2711.10 or 2711.11.” (Emphasis added.) Id. at paragraph one of the syllabus. “If an application
is filed after this period, the trial court lacks jurisdiction.” Id. at 622.
{¶19} Given the foregoing, including the particular facts of this case, Arnold Slezak has
not convinced us that his argument would allow him to avoid the application of the time period
set forth in R.C. 2711.13. In fact, his argument and the surrounding facts fit neatly into the
situations contemplated by R.C. 2711.10(D) and, thereby the time limit in R.C. 2711.13. See
Galion at 622. Arnold Slezak has not pointed to any Ohio Supreme Court case adopting his
position. Nor has he explained why the language in R.C. 2711.10(D) would not be applicable to 8
this situation. See App.R. 16(A)(7). Instead, he points to cases from other districts that are not
binding authority that we believe are either distinguishable or not compelling.
{¶20} Arnold Slezak has not demonstrated that the trial court erred in concluding that
his motion to vacate the arbitration award was untimely. His fourth assignment of error is
overruled.
ASSIGNMENT OF ERROR I
THE TRIAL COURT ERRED IN FINDING THAT OHIO REVISED CODE CHAPTER 2711 APPLIES TO APPELLEES’ COMPLAINT FOR DECLARATORY JUDGMENT AND APPELLANT’S COUNTERCLAIM.
{¶21} Arnold Slezak essentially argues in his first assignment of error that the trial court
erred in determining that confirming the arbitration award required the trial court to order Arnold
Slezak to sell his shares at the value determined by the third appraiser and also required the trial
court to dismiss the complaint and counterclaims.
{¶22} It is true that, “[w]hen a motion is made pursuant to R.C. 2711.09 to confirm an
arbitration award, the court must grant the motion if it is timely, unless a timely motion for
modification or vacation has been made and cause to modify or vacate is shown.” Warren Edn.
Assn. v. Warren City Bd. of Edn., 18 Ohio St.3d 170 (1985), paragraph one of the syllabus; see
also State ex rel. R.W. Sidley, Inc. v. Crawford, 100 Ohio St.3d 113, 2003-Ohio-5101, ¶ 22.
There also appears to be no dispute that Dr. and Cynthia Slezak and RJS Corporation timely
moved to confirm the arbitration award. Further, given our resolution of Arnold Slezak’s fourth
assignment of error, it is clear that the trial court was bound to confirm the award. See id.
Instead, much of the dispute concerns what exactly confirming the award resolved.
{¶23} Here, the trial court confirmed the arbitration award; however, it also appears that
the trial court believed that doing so required it to confirm the value of the shares, which was 9
determined subsequent to the arbitration proceedings. The arbitrator made the following
findings:
1) Respondent Arnold Slezak voluntarily resigned as an employee of RJS effective January 6, 2015;
2) Respondent Arnold Slezak was properly terminated from his position as an Officer and Director of RJS for cause effective October 23, 2015;
3) Respondent Arnold Slezak, due to his voluntary resignation as an employee of RJS and his subsequent termination from his positions as an Officer and Director of RJS for cause, must sell not less than all of the shares owned by Respondent to Claimants [Dr. and Cynthia Slezak] and/or the Corporation, pursuant to Section 7(c) of the Close Corporation Agreement and at a value to be determined in accordance with Section 8 of that Agreement.
4) Respondent and Claimant pursuant to Section 8(a)(i) of the Close Corporation Agreement shall attempt to execute an Agreed Value Certificate to the value of the Respondent’s shares to be sold to the Claimants and/or the Corporation within 30 days of the Arbitrator’s final Order, the Claimants and Respondent shall adhere to the appraisal procedures for determining the value of Respondent’s shares, as outlined in Section 8(a)(ii) of the Close Corporation Agreement. Pursuant to the parties’ agreement, Respondent shall receive, in exchange for his shares, an amount equal to 100% of their value as reflected in either the Agreed Value Certificate or such other appraised value determined in accordance with Section 8(a)(ii) of the Close Corporation Agreement.
5) The administrative filing fees of the American Arbitration Association (“the Association”) totaling $10,400.00 and the compensation of the Arbitrator shall be borne equally by the parties. Therefore, Respondent shall reimburse Claimants the sum of $550.00 for that portion of its share of administrative filing fees previously incurred by Claimant.
6) This award is in full settlement of all claims and counterclaims submitted to this arbitration. All claims not expressly granted herein are hereby, denied.
{¶24} Thus, the arbitrator did not determine the value of Arnold Slezak’s shares.
Instead, the arbitrator ordered the parties to engage in a process by which the value of the shares
would be determined in the future. Accordingly, confirming the arbitration award and entering
judgment thereon would not determine the value of the shares. See Accu-Med Servs., Ltd. v.
Omnicare, 1st Dist. Hamilton No. C-020789, 2004-Ohio-655, ¶ 24-28. Therefore, while the trial 10
court did not err in confirming the arbitration award and entering judgment thereon, it was
mistaken as to the breadth of what the arbitrator actually decided.
{¶25} Because the trial court ordered Arnold Slezak to sell his shares at the value
determined by the third appraiser and dismissed the complaint and counterclaims solely because
it confirmed the arbitration award and thereafter entered judgment, we agree that the trial court
erred. Confirming the arbitration award and denying the motion to vacate did not inherently
render the complaint and counterclaims moot, as they at least, in part, addressed issues that
occurred subsequent to the arbitration award, nor did it require that the trial court order Arnold
Slezak to sell his shares at the value chosen by the third appraiser.
{¶26} Notably, the parties filed motions for summary judgment addressing the
complaint and counterclaims. The merits of those issues were never considered by the trial court
as the trial court dismissed the claims and counterclaims and concluded that the remaining
pending motions were moot, including Dr. and Cynthia Slezak’s and RJS Corporation’s
alternative motion to stay the proceeding pending arbitration.
{¶27} Arnold Slezak’s first assignment of error is sustained to the extent discussed
above.
ASSIGNMENT OF ERROR II
THE TRIAL COURT ERRED BY FAILING TO HOLD A FULL EVIDENTIARY HEARING.
{¶28} Arnold Slezak argues in his second assignment of error that the trial court erred in
failing to hold a full evidentiary hearing. First, we note that Arnold Slezak’s argument appears
to be that the trial court’s error discussed in the first assignment of error essentially deprived him
of review of the merits of his counterclaims and due process. To the extent that is the case,
Arnold Slezak’s current argument is moot. 11
{¶29} To the extent Arnold Slezak argues that the trial court was required to hold an
evidentiary hearing on the application to confirm and motion to vacate the arbitration award, we
disagree. This Court in the past has concluded that, in situations such as this, where both an
untimely motion to vacate is filed along with a timely application to confirm, failing to hold any
hearing on the motions is not reversible error. Falkowski v. Strategic Merchandising, Inc., 9th
Dist. Lorain No. 99CA007610, 2000 WL 1752240, *2 (Nov. 22, 2000). Accordingly, given that
precedent, Arnold Slezak has not convinced us that a full evidentiary hearing is warranted under
the circumstances.
{¶30} Arnold Slezak’s second assignment of error is overruled.
ASSIGNMENT OF ERROR III
THE TRIAL COURT ERRED IN FINDING THAT APPELLANT IS REQUIRED TO SELL HIS SHARES AT A VALUE OF $66,863.00 PER SHARE.
{¶31} Arnold Slezak argues in his third assignment of error that the trial court erred by
requiring him to sell his shares at the value determined by the third appraiser because the
valuation process that occurred was improper and violated the provisions of the close corporation
agreement. To the extent he argues that the trial court erred in ordering him to sell his shares at
the value specified, we sustain his argument for the reasons, and to the extent, discussed in his
first assignment of error. However, to the extent that he argues the valuation process was
improper, the trial court has yet to consider the merits of that argument. Accordingly, it would
be premature for this Court to address this issue.
{¶32} Arnold’s Slezak’s third assignment of error is sustained in part. The remainder of
the assignment of error is premature. 12
III.
{¶33} Arnold Slezak’s first assignment of error is sustained to the extent discussed
above. His second and fourth assignments of error are overruled. His third assignment of error
is sustained in part. However, because a portion of his third assignment of error is premature, we
decline to address it. The judgment of the Summit County Court of Common Pleas is affirmed
in part, reversed in part, and the matter is remanded for proceedings consistent with this decision.
Judgment affirmed in part, reversed in part, and cause remanded.
There were reasonable grounds for this appeal.
We order that a special mandate issue out of this Court, directing the Court of Common
Pleas, County of Summit, State of Ohio, to carry this judgment into execution. A certified copy
of this journal entry shall constitute the mandate, pursuant to App.R. 27.
Immediately upon the filing hereof, this document shall constitute the journal entry of
judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the
period for review shall begin to run. App.R. 22(C). The Clerk of the Court of Appeals is
instructed to mail a notice of entry of this judgment to the parties and to make a notation of the
mailing in the docket, pursuant to App.R. 30.
Costs taxed equally to both parties.
DONNA J. CARR FOR THE COURT 13
TEODOSIO, P. J. CALLAHAN, J. CONCUR.
APPEARANCES:
ROBERT D. KEHOE, KEVIN P. SHANNON, and LAUREN N. ORRICO, Attorneys at Law, for Appellant.
RONALD S. KOPP, STEPHEN W. FUNK, and JESSICA A. LOPEZ, Attorneys at Law, for Appellees.