Milling Away, L.L.C. v. UGP Properties, L.L.C.Milling Away, L.L.C. v. UGP Properties, L.L.C.
David M. Watson
137 S. Main Street
Suite 300
Akron, OH 44308
ATTORNEYS FOR APPELLEES
For UGP Properties LLC and
Corvallis Development LLC
Jennifer L. Carroll
Thomas R. Peppard
J. Kearney Shanahan
The Shanahan Law Firm LLC
2005 Huntington Building
925 Euclid Avenue
Cleveland, OH 44115
For JERA Contractors, Inc.
John F. Myers
Holland Myers & Myers
159 South Main Street
Suite 815
Akron, OH 44308
KATHLEEN ANN KEOUGH, J.:
I
{¶ 2} In April 2008, Milling Away entered into a written contract with UGP Properties whereby Milling Away was to provide countertop and cabinet work for an apartment/condominium project owned by UGP and Corvallis Development. A representative of JERA signed the contract as agent for the owners. The contract included a provision stating that, “[c]ontractor agrees that mediation and arbitration by the construction industry mediation rules of the American Arbitration Association will be used to settle disputes from this Agreement.”
{¶ 3} A dispute eventually arose regarding $88,019.17 in unpaid labor, material, and services that Milling Away contended it provided to UGP pursuant to the agreement. The parties met in December 2009 to resolve the issue of the unpaid monies, but did not come to any agreement. Accordingly, on January 4, 2010, Milling Away filed an affidavit for mechanic‘s lien against appellees’ property.
{¶ 4} The parties met again, unsuccessfully, on February 2, 2010 to try to resolve their differences. Then, on February 23, 2010, UGP and Corvallis served notice upon
{¶ 5} Consequently, on April 22, 2010, Milling Away filed suit against appellees, asserting claims for breach of contract, unjust enrichment, and foreclosure on its mechanic‘s lien. Because the parties continued to engage in settlement negotiations, defendants-appellees did not answer the complaint, but took two unopposed leaves to plead. On July 27, 2010, UGP and Corvallis filed a “motion to dismiss to compel mediation and/or arbitration or, in the alternative, stay proceedings and compel arbitration.” JERA filed a similar motion the next day; Milling Away then filed a brief opposing both motions.
{¶ 6} The trial court subsequently granted defendants-appellees’ motions,1 and ordered the parties to mediation and arbitration under the construction industry rules of the American Arbitration Association. The court did not stay the matter pending
II
{¶ 7} In its single assignment of error, Milling Away contends that the trial court erred in compelling arbitration because defendants-appellees waived their right to arbitration.
{¶ 8} Like any other contractual right, the right to arbitration may be waived. Rock v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1992), 79 Ohio App.3d 126, 128, 606 N.E.2d 1054. But in light of Ohio‘s strong policy in favor of arbitration, waiver of the right to arbitrate is not to be lightly inferred. Griffith v. Linton (1998), 130 Ohio App.3d 746, 751, 721 N.E.2d 146. A party asserting waiver must prove the waiving party (1) knew of the existing right to arbitrate; and (2) acted inconsistently with that right. Checksmart v. Morgan, 8th Dist. No. 80856, 2003-Ohio-163, ¶22. “‘The essential question is whether, based upon the totality of the circumstances, the party seeking arbitration has acted inconsistently with the right to arbitrate.‘” Id., quoting Wishnosky v. Star-Lite Bldg. & Dev. Co. (Sept. 7, 2000), 8th Dist. No. 77245.
{¶ 9} Among the factors a court may consider in determining whether the totality of circumstances supports a finding of waiver are: (1) whether the party seeing arbitration invoked the jurisdiction of the trial court by filing a complaint, counterclaim, or third-party complaint without asking for a stay of proceedings; (2) the delay, if any, by the party seeking arbitration in requesting a stay of proceedings or an order compelling arbitration; (3) the extent to which the party seeking arbitration participated in the
{¶ 10} The question of waiver is usually a fact-driven issue and an appellate court will not reverse the trial court‘s decision absent a showing of abuse of discretion. Featherstone v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 159 Ohio App.3d 27, 2004-Ohio-5953, 822 N.E.2d 841, ¶10. A court abuses its discretion when its decision is unreasonable, arbitrary, or unconscionable. Blakemore v. Blakemore (1983), 5 Ohio St.3d 217, 219, 450 N.E.2d 1140.
{¶ 11} Here, the parties do not dispute that appellees knew of their right to arbitrate as contained in the contract. Instead, the disputed issue is whether, under the totality of the circumstances, appellees acted inconsistently with that right. Specifically, Milling Away contends that appellees waived the right to arbitration by: (1) terminating the contract and firing Milling Away; (2) demanding pursuant to
{¶ 12} We agree with appellees’ assertion that Milling Away is precluded from arguing on appeal that appellees’ termination of the contract resulted in waiver of the arbitration clause because Milling Away did not raise this issue in the trial court. Milling Away did not allege in its complaint that appellees terminated the contract, nor did it argue in its brief in opposition to appellees’ motions to compel arbitration that appellees’
{¶ 13} We next consider Milling Away‘s contention that appellees waived their right to seek arbitration by filing notice under
{¶ 14} Nevertheless, we hold that the trial court did not abuse its discretion in finding that appellees did not waive their right to arbitration by serving notice under
{¶ 15} Further, with respect to the settlement discussions, we do not find that appellees’ conduct in engaging in pre-litigation settlement negotiations constituted a waiver of arbitration. Robbins v. Country Club Ret. Ctr. IV, Inc., 7th Dist. No. 04BE43, 2005-Ohio-1338, ¶70; Harsco Corp. v. Crane Carrier Co. (1997), 122 Ohio App.3d 406, 414, 701 N.E.2d 1040. Nor do we find that appellees’ participation in post-suit discussions waived their right to arbitration. Milling Away contends that appellees waived their right to arbitration because they met with Milling Away five times about the dispute and asked it to produce voluminous documentation to support its claim. But Milling Away does not assert, nor do we find, that there was an agreement between the parties that the discussions or Milling Away‘s production of documents waived any party‘s right to file suit or seek arbitration. Hence, without more, we cannot find that the pre- or post-suit settlement discussions waived appellees’ right to seek arbitration under the contract and, accordingly, the trial court did not abuse its discretion in referring the matter to arbitration. Appellant‘s assignment of error is therefore overruled.
{¶ 16} However, although the trial court did not abuse its discretion in referring the matter to arbitration, the court should have stayed the lawsuit instead of entering a dismissal.2
{¶ 17}
{¶ 18} In light of the statute, this court has held that when a dispute is subject to arbitration under
{¶ 19} Further, under
Affirmed in part; remanded in part with instructions to the trial court to reinstate the matter on its docket and then stay the case pending arbitration.
It is ordered that the parties share equally the 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.
KATHLEEN ANN KEOUGH, JUDGE
MARY EILEEN KILBANE, A.J., and
JAMES J. SWEENEY, J., CONCUR