2013 Ohio 1770
Ohio Ct. App.2013Background
- Appellees are five percent members of Oregon Homes, LLC and guarantors who signed an operating agreement with an arbitration clause.
- Oregon Homes issued five promissory notes to First Merit Bank, and the Appellees guaranteed payment under those notes.
- Oregon Homes defaulted; Appellees paid the sums due and sought reimbursement under R.C. 1303.59 on November 12, 2010.
- Oregon Homes moved to compel arbitration under the Operating Agreement on January 10, 2011; the trial court denied on March 3, 2011.
- On appeal, the court previously reversed to allow a hearing on the motion to compel arbitration; after hearing, the trial court again denied the motion.
- The dispositive issue is whether the Appellees’ reimbursement claim falls within the scope of the arbitration clause in the Operating Agreement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the dispute is within the arbitration clause scope | Appellees: claim can be maintained without the Operating Agreement | Oregon Homes: clause covers disputes related to operation of the business | Not within scope; arbitration not required |
Key Cases Cited
- VIS Sales, Inc. v. KeyBank, N.A., 2011-Ohio-1520 (9th Dist. 2011) (arbitration scope hinges on contract language and scope of the clause)
- Academy of Medicine of Cincinnati v. Aetna Health, Inc., 108 Ohio St.3d 185 (2006-Ohio-657) (arbitration requires positive belief clause covers the dispute; broad vs. narrow analysis)
- Alexander v. Wells Fargo Fin. Ohio 1, Inc., 122 Ohio St.3d 341 (2009-Ohio-2962) (determine if action can be maintained without reference to contract)
- Taylor v. Ernst & Young, L.L.P., 130 Ohio St.3d 411 (2011-Ohio-5262) (strong public policy favoring arbitration but focus remains on scope)
- Shumate v. Shumate, 9th Dist. No. 09CA009707, 2010-Ohio-5062 (2010-Ohio-5062) (presumption of regularity when transcript missing; standard for reviewing arbitration denial)