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North Park Retirement v. Sovran Companies Ltd.

October 6, 2011

NORTH PARK RETIREMENT COMMUNITY CENTER, INC., ET AL. PLAINTIFFS-APPELLANTS
v.
SOVRAN COMPANIES LTD., ET AL. DEFENDANTS-APPELLEES



Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-736025

The opinion of the court was delivered by: Melody J. Stewart, P.J.:

Cite as N. Park Retirement Community Ctr., Inc. v. Sovran Cos., Ltd. ,

JOURNAL ENTRY AND OPINION

JUDGMENT:

AFFIRMED

BEFORE: Stewart, P.J., Cooney, J., and Rocco, J.

{¶1} Plaintiffs-appellants, North Park Retirement Community Center, Inc., J&R Health Associates, Inc., and John and Kimberly Coury (we shall refer to them collectively as "North Park" unless otherwise noted), appeal from an order that stayed proceedings and referred to arbitration a breach of contract complaint against defendants-appellees, Sovran Companies, Ltd. and William Sheehan. North Park argues that the court erred by finding its dispute with Sovran to be arbitrable because the dispute between the parties was unrelated to a prior agreement that contained an arbitration clause.

I

{¶2} As a preliminary matter, the parties both note that this court has issued conflicting opinions on the standard of review we employ when reviewing cases to determine whether the parties have agreed to arbitrate a dispute. In one line of cases, we have employed the de novo standard of review; while in another line of cases, we have employed the abuse of discretion standard of review. Compare Shumaker v. Saks Inc., 163 Ohio App.3d 173, 2005-Ohio-4391, 837 N.E.2d 393 (de novo review) with Sikes v. Ganley Pontiac Honda (Sept. 13, 2001), 8th Dist. No. 79015 (abuse of discretion review).

Rather than resolve this conflict, panels of this court have decided to review the issue under both standards. See, e.g., GB AZ 1, L.L.C. v. Arizona Motors, L.L.C., 8th Dist. No. 95502, 2011-Ohio-1808, ¶8; Bentley v. Cleveland Browns Football Co., L.L.C., 8th Dist. No. 95921, 2011-Ohio-3390, ¶13. This is an unacceptable course of action given that an appellate court is charged with stating the applicable law.

{¶3} These cases do not conflict in the sense that they disagree on the correct standard of review; rather they involve different issues and therefore use different standards of review. For example, in Sikes, the issue was whether the court erred by staying the matter pending arbitration, so the panel applied the abuse of discretion standard to determine whether the stay was properly granted. Other cases raise issues in the context of the referral to arbitration, which is in essence a review of the contract to determine whether the dispute is contractually covered by an agreement to arbitrate, thus requiring the de novo standard of review applied to contract construction. See, e.g., Vanyo v. Clear Channel Worldwide, 156 Ohio App.3d 706, 2004-Ohio-1793, 808 N.E.2d 482, ¶8. ("The issue of whether a controversy is arbitrable under the provisions of a written contract is a question of law for the trial court to decide.")

{¶4} The core issue in any dispute regarding the arbitrability of a matter is whether the parties agreed to arbitration. Arbitration is a creature of contract, see United Steelworkers v. Warrior & Gulf Navigation Co. (1960), 363 U.S. 574, 582, 80 S.Ct. 1347, 4 L.Ed.2d 1409, so we are guided by "the principle that a party can be forced to arbitrate only those issues it specifically has agreed to submit to arbitration[.]" First Options of Chicago, Inc. v. Kaplan (1995), 514 U.S. 938, 945, 115 S.Ct. 1920, 131 L.Ed.2d 985. This requires an examination of the agreement to arbitrate, which has always been considered a review as a "matter of law;" in other words, a de novo review. See Alexander v. Buckeye Pipe Line Co. (1978), 53 Ohio St.2d 241, 374 N.E.2d 146, paragraph one of the syllabus. If a court determines that the parties have agreed to arbitrate a dispute, it must refer the matter to arbitration. See R.C. 2711.03(A) ("upon being satisfied that the making of the agreement for arbitration or the failure to comply with the agreement is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the agreement").

{¶5} Once a court determines that the parties have agreed to arbitrate a dispute and has ordered the parties to proceed to arbitration, staying the action pending the outcome of arbitration is required. While courts typically have discretion to grant or deny general requests for stays, see State ex rel. Verhovec v. Mascio (1998), 81 Ohio St.3d 334, 336, 691 N.E.2d 282, R.C. 2711.02(B) removes this discretion in arbitration cases. That section states that the court, "upon being satisfied that the issue involved in the action is referable to arbitration under an agreement in writing for arbitration, shall on application of one of the parties stay the trial of the action until the arbitration of the issue has been had in accordance with the agreement, provided the applicant for the stay is not in default in proceeding with arbitration." (Emphasis added.) The use of the word "shall" means that the court has no discretion and must comply with the statute. See State ex rel. Law Office Pub. Defender v. Rosencrans, 111 Ohio St.3d 338, 2006-Ohio-5793, 856 N.E.2d 250, ¶31 (the word "shall" establishes a mandatory duty while the word "should" requires the use of discretion and judgment).

{¶6} R.C. 2711.02(A) is consistent with the Federal Arbitration Act, Section 3, Title 9, U.S.Code, which likewise states that the federal courts have no discretion to deny a stay if the issues raised are within the agreement to arbitrate. See Hornbeck Offshore Corp. v. Coastal Carriers Corp. (C.A.5, 1993), 981 ...


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