2019 Ohio 3872
Ohio Ct. App.2019Background
- Gene and Cindy Gotham contracted with Basement Care, Inc. for basement waterproofing using a two-page form contract. The first page stated: “This Agreement contains a binding arbitration provision which may be enforced by the parties.” The second page contained a stand‑alone arbitration clause requiring arbitration of disputes.
- The Gothams sued Basement Care for breach of contract, Consumer Sales Practices Act violations, and lack of workmanlike performance.
- Basement Care moved to dismiss or, alternatively, to stay the case pending arbitration under the contract. The Gothams argued the phrase “may be enforced by the parties” was ambiguous and could reasonably be read to require mutual, post‑contract consent to arbitration.
- The trial court denied dismissal but granted a stay, finding the notice sentence unambiguous (a mere notice that an arbitration clause exists) and the actual arbitration clause on page two mandatory.
- The Ninth District Court of Appeals affirmed: it reviewed contract interpretation de novo, held the phrase was not reasonably susceptible to a mutual‑consent reading (such a reading would render the language superfluous), and therefore did not construe the clause against the drafter. Judge Carr dissented, arguing the phrase could reasonably mean mutual agreement is required and would remand.
Issues
| Issue | Plaintiff's Argument (Gotham) | Defendant's Argument (Basement Care) | Held |
|---|---|---|---|
| Proper legal standard for contractual ambiguity | Trial court failed to apply the standard that ambiguity exists if a provision is susceptible to more than one reasonable interpretation | Trial court applied correct legal standard | Court: trial court applied correct standard (de novo review of ambiguity) |
| Whether phrase “may be enforced by the parties” is ambiguous | Phrase is susceptible to a reasonable interpretation requiring both parties’ consent to enforce arbitration | Phrase is a notice only; reading it to require mutual agreement would be unreasonable and make language superfluous | Court: not ambiguous; reasonable reading is notice that arbitration clause exists |
| Whether ambiguous language must be construed against the drafter | If ambiguous, the clause should be construed against Basement Care | If not ambiguous, contra‑proferentem does not apply | Court: no ambiguity → no need to construe against drafter; assignments of error overruled |
Key Cases Cited
- Lager v. Miller-Gonzalez, 120 Ohio St.3d 47 (2008) (ambiguity exists only when a provision is susceptible of more than one reasonable interpretation)
- Transtar Elec., Inc. v. A.E.M. Elec. Servs. Corp., 140 Ohio St.3d 193 (2014) (avoid interpretations that render contract terms superfluous)
- State v. Bethel, 110 Ohio St.3d 416 (2006) (interpretations that render a provision meaningless are not reasonable)
- Columbus & Franklin Cty. Metro. Park Dist. v. Shank, 65 Ohio St.3d 86 (1992) (presume words are used for specific purposes; avoid redundant readings)
- Sloan & Co. v. Liberty Mut. Ins. Co., 653 F.3d 175 (3d Cir. 2011) (courts should not interpret contracts in a way that makes clauses superfluous)