21st Century Concrete Constr., Inc. v. Reginella Constr. Co., Ltd., 2013 Ohio 3006

Background

21st Century Concrete (subcontractor) sued Reginella Construction (general contractor) for breach of subcontract and sued Travelers (surety) on a performance/payment bond for refusing to pay.
Reginella and 21st Century had an arbitration provision; Reginella moved to stay the court action and compel arbitration and asked the court to include Travelers in the arbitration.
The trial court stayed the case and ordered all three parties (21st Century, Reginella, Travelers) to arbitrate, reasoning Travelers, as surety, was in privity with Reginella and could be bound by an arbitration decision.
Reginella later appealed the order requiring Travelers to participate, arguing Travelers is not a party to the arbitration agreement, is not in privity, and inclusion would delay ongoing arbitration; Reginella also argued lack of standing to challenge the court’s order as to Travelers.
Travelers agreed it should participate to protect any preclusive effects of an arbitration award and cited precedent that a surety in privity may be bound by arbitration involving its principal.
The court of appeals affirmed, holding Reginella invited the alleged error (it had requested Travelers’ inclusion) and that Travelers’ participation was appropriate because the surety’s interests were aligned with the principal and privity could make arbitration binding.

Issues

Issue	Plaintiff's Argument (21st Century)	Defendant's Argument (Reginella)	Held
Did Reginella have standing / may it challenge the order adding Travelers to arbitration?	21st Century argued Reginella sought stay and arbitration; court should rule on inclusion of Travelers.	Reginella argued it lacked standing to contest order as to Travelers because bond claim is separate.	Reginella invited the order by requesting Travelers be included; cannot complain (invited error).
Could the court order a nonparty surety (Travelers) to participate in arbitration?	21st Century argued arbitration could bind Travelers via privity with Reginella; Travelers sought participation to protect rights.	Reginella argued Travelers is not a signatory, not in privity, so cannot be compelled to arbitrate.	Court held Travelers is in privity with Reginella and participation was appropriate; Reginella cannot complain because it requested Travelers’ inclusion.
Did Travelers waive its right or otherwise create conflict by filing separate litigation?	21st Century/Travelers noted Travelers sought participation and timely protection of its interests.	Reginella argued Travelers filed suit in Pennsylvania and became an adversary, creating divergent interests and delay.	Reginella’s objection was untimely; interests remained aligned (surety’s liability is derivative), so no preclusive conflict shown.
Would Travelers’ participation unduly delay arbitration or add irrelevant evidence?	21st Century argued Travelers had little independent evidence and could join only to protect preclusion rights.	Reginella claimed Travelers’ presence would delay ongoing arbitration and add nothing.	Court found little risk of delay; Travelers’ participation was justified to protect its preclusive rights.

Key Cases Cited

State ex rel. The V Cos. v. Marshall, 81 Ohio St.3d 467 (1998) (invited error doctrine applies when a party induces the court’s action)
State v. Campbell, 90 Ohio St.3d 320 (2000) (invited error requires active responsibility by counsel)
Teramar Corp. v. Rodier Corp., 40 Ohio App.3d 39 (1988) (non-signatory guarantors generally not bound to arbitration clauses)
Piqua v. Ohio Farmers Ins. Co., 84 Ohio App.3d 619 (1992) (arbitration clauses may be enforced against guarantors when contract terms are incorporated into the guaranty)
Thomas Steel, Inc. v. Wilson Bennett, Inc., 127 Ohio App.3d 96 (1998) (surety and principal liability are generally derivative and coextensive)
Holben v. Interstate Motor Freight Sys., 31 Ohio St.3d 152 (1987) (surety may assert defenses of its principal)