BST Ohio Corp. v. WolgangBST Ohio Corp. v. Wolgang
JUDGMENT: REVERSED AND REMANDED
RELEASED AND JOURNALIZED: November 21, 2019
Appearances:
Ciano & Goldwasser, L.L.P., Phillip A. Ciano, and Brent S. Silverman; Ulmer & Berne, L.L.P., Michael N. Ungar, and Amanda Martinsek, for appellees.
Calfee, Halter & Griswold, L.L.P., Colleen M. O‘Neil, Alexandra R. Forkosh; Hamburg, Karic, Edwards & Martin, L.L.P., Steven S. Karic, for appellants.
{¶ 1} The question presented in this case is whether
I. Procedural History and Factual Background
{¶ 2} Defendants-appellants, Evan Gary Wolfgang (“Wolfgang“) and Massillon Management Company (“Massillon Management“), appeal a judgment of the Cuyahoga County Court of Common Pleas confirming an arbitration award in favor of plaintiffs-appellees, BST Ohio Corporation and 26 other individuals and companies. Respondents raise two assignments of error for our review:
- The trial court erred as a matter of law by granting respondents’ motion to confirm arbitration award under
R.C. 2711.09 before the expiration of the three-month period in which a party may file and serve a motion to vacate or correct an arbitration award underR.C. 2711.13 . The trial court abused its discretion by denying appellants’ motion to stay proceedings or, in the alternative, for continuance of the hearing on respondents’ motion to confirm, until after the expiration of the three-month period in which a party may file and serve a motion to vacate or correct an arbitration award under R.C. 2711.13 .
{¶ 3} The parties in this case are owners of Prophecy Massillon L.L.C., a Delaware limited liability company. Prophecy owns real estate in Massillon, Ohio, that, according to the arbitrator, “is improved with facilities for dry and cold storage and distribution, parking, offices, and related uses.” Appellees own a supermajority interest in Prophecy, and appellants own approximately 17% of it. Massillon Management, of which Wolfgang was the sole owner, managed Prophecy.
{¶ 4} The dispute in this case arose over appellants’ management of Prophecy. Prophecy was governed by a “Second Amended and Restated Operating Agreement” (“SOA“), which the owners of Prophecy entered into on May 14, 2014. The SOA contained an arbitration agreement that stated that “[a] dispute arising out of or relating to this agreement * * * shall be settled by arbitration in Cuyahoga County, Ohio, in accordance with the American Arbitration Association.” Under the SOA, the manager of Prophecy could only be removed for cause.
{¶ 5} In accordance with the SOA, appellees commenced commercial arbitration against appellants in February 2017 with the American Arbitration Association in Cleveland, Ohio. Plaintiffs sought, in part, a declaration that appellants should be removed for cause as the manager of Prophecy.
{¶ 6} After several weeks of hearings that took place between December 2017 and June 1, 2018, the arbitrator determined, among many other things, that
{¶ 7} On December 6, 2018, the day the arbitrator issued her final award, appellees filed an application for an order confirming it. Appellees served appellants with their application that same day.
{¶ 8} On December 22, 2018, the trial court issued notice to the parties that it set a hearing on appellees’ application to confirm arbitration award for December 27, 2018.
{¶ 9} On December 24, 2018, appellants moved to stay the proceedings or in the alternative, for a continuance, requesting an “expedited ruling.” In their motion, appellants informed the trial court that on December 7, 2018, they filed a petition to vacate or correct the arbitration award in a county court in Los Angeles, California (“the California Petition to Vacate“).1 Appellants further asserted that a stay would be prudent because, inter alia,
{¶ 10} The court held the hearing as scheduled on December 27, 2018. Appellants appeared by telephone.
{¶ 11} On January 14, 2019, the trial court denied appellants’ motion to stay the proceedings or in the alternative, a continuance. On January 15, 2019, the trial court confirmed the arbitration award. It is from this judgment that appellants now appeal.
II. R.C. 2711.09 and 2711.13
{¶ 12} This case calls upon us to interpret the meaning of two statutes,
{¶ 13} The Ohio Arbitration Act was designed to significantly limit judicial intervention in the arbitration process and provides the exclusive statutory remedy that parties must use in appealing arbitration awards to the courts of common pleas.
{¶ 14}
At any time within one year after an award in an arbitration proceeding is made, any party to the arbitration may apply to the court of common pleas for an order confirming the award. Thereupon the court shall grant such an order and enter judgment thereon, unless the award is vacated, modified, or corrected as prescribed in sections
2711.10 and2711.11 of the Revised Code. Notice in writing of the application shall be served upon the adverse party or his attorney five days before the hearing thereof.
{¶ 15}
After an award in an arbitration proceeding is made, any party to the arbitration may file a motion in the court of common pleas for an order vacating, modifying, or correcting the award as prescribed in sections
2711.10 and2711.11 of the Revised Code.Notice of a motion to vacate, modify, or correct an award must be served upon the adverse party or his attorney within three months after the award is delivered to the parties in interest, as prescribed by law for service of notice of a motion in an action. For the purposes of the motion, any judge who might make an order to stay the proceedings in an action brought in the same court may make an order, to be served with the notice of motion, staying the proceedings of the adverse party to enforce the award.
{¶ 17} The Ohio Supreme Court held in Galion:
In our view, the language of
R.C. 2711.13 is clear, unmistakable and, above all, mandatory.R.C. 2711.10 specifies when an arbitration award can be vacated,R.C. 2711.11 establishes the circumstances under which the common pleas court may modify or correct an arbitration award, andR.C. 2711.13 states the time frame in which the motion must be made. We are unpersuaded by appellant‘s argument that the statute of limitations inR.C. 2711.13 does not apply to motions brought underR.C. 2711.10 and2711.11 . If the General Assembly did not intend for the statute of limitations inR.C. 2711.13 to apply, it would have expressly excludedR.C. 2711.10 and2711.11 from that section.Thus, in answering the certified issue, we hold that
R.C. 2711.13 provides a three-month period within which a party must file a motion to vacate, modify, or correct an arbitration award underR.C. 2711.10 or2711.11 . If an application is filed after this period, the trial court lacks jurisdiction.
{¶ 19} Appellants cite to Schwartz v. Realtispec, Inc., 11th Dist. Lake No. 2002-L-098, 2003-Ohio-6579, in support of their argument that an application to confirm an arbitration award cannot be granted before the expiration of the three-month period set forth in
Read together,
R.C. 2711.09 and2711.13 set forth an intelligible procedural scheme. To wit,R.C. 2711.09 requires a hearing on an application to confirm. As a matter of law, a motion to confirm must be granted unless a timely motion to modify or vacate is made and cause to modify or vacate is demonstrated. A party seeking to modify or vacate an arbitration award has up to three months from the date of the award to file its motion. Therefore, the proper way to approach a situation such as the one sub judice, is to conduct a hearing after an adverse party files a motion to modify or vacate. However, if three months have elapsed since the award and a motion to modify or vacate has not been filed, a court should continue forward with a hearing on the motion to confirm.
{¶ 21}
{¶ 22} Appellees cite to two Tenth District cases that they contend have definitively decided the issue in this case in their favor: Amanda Scott Publishing v. Legacy Marketing Group, 10th Dist. Franklin No. 92AP-233, 1992 Ohio App. LEXIS 4267 (Aug. 11, 1992), and Goldsmith v. On-Belay, Inc., 10th Dist. Franklin No. 90AP-301, 1990 Ohio App. LEXIS 4114 (Sept. 20, 1990). We agree with appellees that these cases stand for the proposition that a trial court can confirm an arbitration award in some situations before the three-month statute of limitations in
{¶ 23} In Amanda Scott, the winning arbitration party moved to confirm the arbitration award within three months of the award being issued. The vice president of the company opposing confirmation appeared at the confirmation hearing and “endeavored to file a response.” Id. at 1. The Tenth District explained that “a corporation cannot maintain litigation in proprio persona, or appear, in court through an officer of the corporation or an appointed agent not admitted to the practice of law.” Id. at 2. It therefore determined that the vice president‘s response was a nullity and did not provide the notice contemplated by
{¶ 24} In Goldsmith, the party opposing confirmation of the arbitration award appeared at the confirmation hearing and did not inform the trial court or the opposing party that it intended to file a motion to vacate the arbitration award. The party opposing confirmation then filed a motion to vacate the confirmation of the award at a later point (but within the three-month statutory timeframe). The Tenth District upheld the trial court‘s denial of that motion, explaining, “Appellant had the opportunity to oppose the application and to make its contentions known to the trial court at the hearing on June 6, 1989. It failed to do so. This resulted in the issuance of a final appealable order confirming the award. This order was not appealed.” Id. at ¶ 4. Again, in the present case, appellants made it known the trial court and appellees in their motion to stay or continue and at the December 27th hearing that they fully intended to move to vacate the arbitration award.
{¶ 25} Accordingly, we conclude that the trial court erred as a matter of law when it confirmed the arbitration award in this case before the three-month statute of limitations had passed as set forth in
{¶ 26} Judgment reversed and remanded. Upon remand, the trial court must give appellants 50 days from the date the case is reactivated on the trial court‘s docket upon which to file their motion to vacate, modify, or correct the arbitration
It is ordered that appellant recover from appellee costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate be sent to said court to carry this judgment into execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure.
MARY J. BOYLE, PRESIDING JUDGE
KATHLEEN ANN KEOUGH, J., and
RAYMOND C. HEADEN, J., CONCUR