PS Commercial Play, L.L.C. v. Harp Contrs., Inc.
2017 Ohio 4011
| Ohio Ct. App. | 2017Background
- Play & Park (subcontractor) sued Harp (prime contractor) and Ohio Farmers (surety) for unpaid subcontract work and on a payment bond, claiming $117,285.96 unpaid after project completion.
- The written subcontract identified an arbitration clause (Art. 10.7) giving the contractor (Harp) sole discretion to elect arbitration; it required a written demand "within a reasonable time after the dispute has arisen."
- Play & Park filed suit in May 2016 alleging breach of contract, bond claim, and unjust enrichment; attached to the complaint were the subcontract and payment bond.
- Harp answered and simultaneously moved to stay the litigation pending arbitration, asserting the subcontract gave it the right to arbitrate and that owner withholdings (for alleged subcontractor deficiencies) justified arbitration and offset defenses.
- Play & Park opposed the stay, arguing Harp unreasonably delayed asserting arbitration (more than a year after substantial completion in March 2015) and thus waived or defaulted its arbitration right.
- The trial court denied Harp’s motion, finding Harp was in default for failing to demand arbitration within a reasonable time; Harp appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the subcontract’s arbitration clause compels staying the litigation | The clause is discretionary to Harp; Play & Park had no duty to wait and properly sued once unpaid — arbitration cannot be forced because Harp must elect it | The clause grants Harp the contractual right to require arbitration and Harp preserved that right by moving to stay with its answer | The clause gives Harp election but required a written demand within a reasonable time; Harp failed to timely demand arbitration and thus was in default, so stay denied |
| Whether Harp waived or was in default in proceeding with arbitration by delay | Play & Park: Harp waited over a year after substantial completion and after notice of disputes; such delay constitutes default/waiver | Harp: Filing the motion to stay with its answer preserved arbitration rights; it was not required to initiate arbitration preemptively | Court: Harp was in default for not filing a demand within a reasonable time after the dispute arose; denial of stay was not an abuse of discretion |
| Whether the court should also stay the payment-bond claim pending arbitration | Play & Park: Bond claimant may proceed in court; arbitration clause does not prevent bond suit | Harp: Bond claim is derivative of subcontract dispute and should be stayed with the underlying claims | Trial court stayed nothing; appellate decision affirms denial of stay for arbitration, effectively permitting bond claim to proceed in court |
| Standard of review for denial of stay to compel arbitration | Play & Park: trial court applied reasonable discretion under statutory framework | Harp: argued legal error in applying default requirement or abuse of discretion | Court: Applied abuse-of-discretion standard and found no abuse in concluding Harp defaulted by delay |
Key Cases Cited
- Taylor Bldg. Corp. of Am. v. Benfield, 884 N.E.2d 12 (Ohio 2008) (recognizes a presumption favoring arbitration when disputes fall within an arbitration clause)
- Huffman v. Hair Surgeon, Inc., 482 N.E.2d 1248 (Ohio 1985) (defines abuse of discretion standard)
- AAAA Enterprises, Inc. v. River Place Community Urban Redevelopment Corp., 553 N.E.2d 597 (Ohio 1990) (explains when a decision is unreasonable under abuse-of-discretion review)
- Routson-Gim-Belluardo v. Jefferson Twp. Local School Dist. Bd. of Educ., 61 N.E.3d 914 (Ohio App. 2016) (discusses arbitration/default principles under Ohio law)