Patrick v. Dixie Imports, Inc., 2017 Ohio 9093

Background

Ashley Patrick bought a used 2008 BMW X5 from Dixie Imports on March 16, 2016 and signed a Retail Purchase Agreement and a five-page Retail Installment Sales Contract.
The Retail Purchase Agreement stated the vehicle was sold "as-is," disclaimed warranties, and included an unmarked box referencing an attached arbitration form that was not provided.
The Retail Installment Sales Contract contained an arbitration clause on page 5 and Patrick initialed each page and signed page 4, acknowledging she had read all pages including the arbitration clause.
After purchase Patrick discovered an undisclosed safety recall and alleged engine damage from poor oil/filter change, then sued Dixie Imports under consumer protection and related rules on October 17, 2016.
Dixie Imports filed responsive pleadings, sought a more definite statement, noticed depositions, attended a status conference, answered with a jury demand, and only moved to stay for arbitration roughly four months after the complaint.
The trial court denied Dixie Imports’ motion to stay, finding (1) an ambiguity regarding mutual assent to arbitration because of the unmarked box in the Retail Purchase Agreement and (2) Dixie Imports waived arbitration by participating in litigation; Dixie Imports appealed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the parties formed an enforceable arbitration agreement	Patrick argued there was no mutual assent because the Retail Purchase Agreement’s arbitration box was unmarked and documents are ambiguous	Dixie argued the Retail Installment Sales Contract clearly and unambiguously required arbitration (Patrick initialed and signed acknowledging the arbitration clause)	Court of Appeals: Arbitration clause in the Retail Installment Contract is unambiguous and applies to disputes arising from the vehicle purchase
Whether ambiguity in the transaction documents prevents arbitration	Patrick argued ambiguity (unmarked box, placement of clauses) must be construed against Dixie as drafter	Dixie argued the Retail Installment Contract controls and removes ambiguity	Court: Unmarked box does not create ambiguity as to the Retail Installment Contract; the installment contract governs and expresses intent to arbitrate
Whether Dixie Imports waived its right to arbitrate by litigation conduct	Patrick argued Dixie waived arbitration by delaying and engaging in discovery and court proceedings	Dixie argued participation and a four-month delay did not amount to waiver and waiver requires more substantial prejudice	Court: Dixie waived arbitration — delay plus active participation (motions, depositions, status conference, jury demand) amounted to inconsistent conduct and prejudice to Patrick
Who decides arbitrability (court vs. arbitrator) where arbitration clause exists but defendant delayed	Patrick argued waiver includes the right to have arbitrator decide arbitrability; inconsistent conduct precludes arbitrator deciding arbitrability	Dixie argued arbitrability issues (including scope) should be for the arbitrator under the clause	Court: Waiver by Dixie precludes delegating arbitrability to arbitrator; the court may decide arbitrability because defendant forfeited that right by litigation conduct

Key Cases Cited

Taylor v. Ernst & Young, L.L.P., 130 Ohio St.3d 411 (recognizes Ohio policy favoring arbitration)
Williams v. Aetna Fin. Co., 83 Ohio St.3d 464 (arbitration clauses generally enforceable like other contract provisions)
Hamilton Ins. Servs. v. Nationwide Ins. Co., 86 Ohio St.3d 270 (court’s role is to ascertain parties’ intent in contract interpretation)
Westfield Ins. Co. v. Huls Am., 128 Ohio App.3d 270 (whether contract terms are clear or ambiguous is a question for the court)
Blakemore v. Blakemore, 5 Ohio St.3d 217 (standard for abuse of discretion review)
Harsco Corp. v. Crane Carrier Co., 122 Ohio App.3d 406 (failure to move for stay plus responsive pleadings can constitute waiver of arbitration)
Mills v. Jaguar-Cleveland Motors, Inc., 69 Ohio App.2d 111 (failure to move for stay coupled with responsive pleadings constitutes waiver)