2020 Ohio 4653
Ohio Ct. App.2020Background
- Carl F. Hughes and Martin J. Hughes III served as co-trustees of the Natalie A. Hughes 2005 Trust; Robin Hughes is a fiduciary for two beneficiary children.
- The trust contains a mandatory arbitration clause; disputes over trust administration (particularly distribution of Fahey Bank shares and payment of estate taxes) were submitted to arbitration.
- The arbitrator found Carl committed a material breach of trust by delaying distributions, failing to provide for estate-tax liquidity, and putting his own interests ahead of beneficiaries; arbitrator suspended Carl as trustee for 90 days and directed Martin to implement a liquidity/distribution plan.
- Carl moved in common pleas court to vacate the arbitrator’s award, arguing the arbitrator disregarded the plain language of the trust and applicable law (invoking the "manifest disregard of the law" standard).
- The trial court denied vacatur, holding judicial review is limited to the statutory grounds in R.C. 2711.10 and a court may not reexamine the merits of the arbitrator’s legal or factual conclusions.
- Carl appealed; the Tenth District affirmed, rejecting application of a nonstatutory manifest-disregard ground and finding Carl did not allege any statutory basis for vacatur.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trial court abused its discretion in denying Carl's motion to vacate the arbitration award | Carl: Arbitrator manifestly disregarded law and ignored the trust's plain terms, so award must be vacated | Martin/Robin: Ohio law limits vacatur to R.C. 2711.10 grounds; manifest-disregard is not an independent Ohio ground; Carl raised no statutory ground | Court: Affirmed. Judicial review confined to R.C. 2711.10; manifest-disregard is not a separate basis for vacatur here and appellant did not allege a statutory ground |
Key Cases Cited
- Dawahare v. Spencer, 210 F.3d 666 (6th Cir. 2000) (articulated the "manifest disregard of the law" standard under the FAA)
- Hall St. Assocs., LLC v. Mattel, Inc., 552 U.S. 576 (U.S. 2008) (held the FAA's statutory vacatur/modification grounds are exclusive, undermining manifest-disregard as an independent ground)
- PolyOne Corp. v. Westlake Vinyls, Inc., 937 F.3d 692 (6th Cir. 2019) (reiterated FAA provides only the narrow, enumerated grounds for vacatur and courts cannot review arbitrator legal conclusions)
- Miller v. Gunckle, 96 Ohio St.3d 359 (Ohio 2002) (Ohio Supreme Court: challenges to arbitration awards are limited to statutory procedures and grounds in R.C. Chapter 2711)
- Close v. Motorists Mut. Ins. Co., 21 Ohio App.3d 228 (10th Dist. 1985) (refused to impute arbitrator misbehavior absent evidence; did not create an independent manifest-disregard ground)
- Goodyear Tire & Rubber Co. v. Local Union No. 220, 42 Ohio St.2d 516 (Ohio 1975) (discussed statutory grounds for vacatur under Ohio law)