2011 Ohio 1520
Ohio Ct. App.2011Background
- VIS Sales opened a KeyBank checking account in 2004 under a Deposit Account Agreement that includes a broad arbitration clause.
- VIS Sales also obtained a line of credit secured by a promissory note, a commercial guaranty, a security agreement, and a 2007 Business Loan Agreement, all tied to the line of credit.
- A Cash Reserve Credit Account with a $10,000 limit existed to cover potential overdrafts; only the Deposit Account Agreement contains an arbitration clause.
- The promissory note matured in October 2008 and KeyBank demanded payment; VIS Sales defaulted.
- In 2009 VIS Sales sued KeyBank seeking declaratory judgment, injunctive relief, and damages; KeyBank responded with counterclaims based on the promissory note and guaranty.
- The trial court stayed all proceedings pending arbitration, and on appeal the court clarified which claims are arbitrable under the Deposit Account Agreement and its arbitration clause.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are the disputes arising from the Deposit Account Agreement arbitrable? | VIS Sales argues only the checking account is subject to arbitration, not all disputes. | KeyBank contends the broad arbitration clause extends to all claims related to the accounts and related agreements. | No; court held the broad clause did not automatically compel arbitration of all claims. |
| Do VIS Sales' claims for declaratory judgment/injunctive relief relate to cognovit provisions and fall within arbitration? | VIS Sales seeks to invalidate cognovit provisions tied to the line of credit. | KeyBank argues cognovit provisions arise from the note/guaranty, not the Deposit Account Agreement. | These claims do not arise from or relate to the Deposit Account Agreement; not arbitrable. |
| Are KeyBank’s counterclaims (promissory note and security agreement) arbitrable? | N/A | Counterclaims arise from other loan documents without arbitration clauses. | Not arbitrable; the counterclaims proceed outside arbitration. |
Key Cases Cited
- Academy of Medicine of Cincinnati v. Aetna Health, Inc., 108 Ohio St.3d 185 (2006-Ohio-657) (arbitration clause scope; broad vs. narrow interpretation; contract-based arbitrability)
- Murray v. David Moore Builders, Inc., 177 Ohio App.3d 62 (2008-Ohio-2960) (arbitration policy; determining arbitrability when contract contains multiple agreements)
- May v. Wachovia Securities, LLC, 2009-Ohio-4339 (9th Dist. No. 24635) (broad arbitration clause analysis; proper test for arbitrability)
- Tomovich v. USA Waterproofing & Foundation Services, Inc., 2007-Ohio-6214 (9th Dist. No. 07CA009150) (stay until arbitration when issue is referable to arbitration)