Court of Appeals of Ohio, Eleventh District, Lake
Appeal from the Lake County Court of Common Pleas, Case No.
2016 CV 000895.
Crook, Shryock, Crook & Associates, LLP, (For
Jeffrey A. Ford and Jason L Fairchild, Andrews & Pontius,
L.L.C., 4817 State Road, #100, (For Defendants-Appellees).
COLLEEN MARY OTOOLE, J.
Appellants, Nicholas and Monica Koudela ("the
Koudelas"), appeal from the January 17, 2017 judgment of
the Lake County Court of Common Pleas, granting
appellees', Johnson & Johnson Custom Builders, LLC,
William J. Johnson, and Robert W. Johnson, motion to stay
proceedings pending binding arbitration. Finding no error, we
On January 7, 2015, the Koudelas entered into a construction
contract for a single-family craftsman style home located in
Willowick, Lake County, Ohio with a purchase price of $227,
200.00. The contract contained the following
binding arbitration provision:
"22. ARBITRATION. Aside from warranty claims that shall
be processed in accordance with the Limited Warranty
procedure in Exhibit E, should any disputes arise
between the parties as to the meaning or interpretation of
this Agreement or the Contract Documents, or as the result of
any controversy which may arise by virtue of the construction
of the Dwelling, and the parties are unable between
themselves to resolve such disputes, it is mutually agreed
that the parties will submit all disputes to binding
arbitration in Cleveland, Ohio, through Construction Industry
Arbitration Rules of the Ohio Arbitration and Mediation
Center ('OAMC'), or a similar Alternative Dispute
Resolution forum mutually accepted by the parties. The cost
of such arbitration shall be borne by the party initiating
the claim. The parties further agree and consent to the
application of the Ohio Rules of Civil procedure to govern
the scope and extent of discovery in preparation for such
arbitration. Contractor and Owner hereby acknowledge that
by agreeing to binding arbitration, they are waiving
their right to a trail (sic) by jury." (Emphasis
Disputes later arose regarding work performed under the
contract. On May 27, 2016, the Koudelas filed a complaint
against appellees alleging claims for fraud in the inducement
(that appellee William Johnson, under the name of a
fictitious entity, "Johnson & Johnson Builders"
instead of "Johnson & Johnson Custom Builders, LLC,
" entered into the construction contract), breach of
contract, negligence, conversion, unjust
enrichment/detrimental reliance, and declaratory judgment
(that the arbitration clause in the parties' contract is
Appellees were granted leave and filed a Civ.R. 12(B)(6)
motion to dismiss, or in the alternative, a motion to stay
pending binding arbitration on August 5, 2016. Appellees
stress that the contract has an arbitration provision in
which the parties agreed to arbitrate disputes and give up
their right to a trial by jury.
The Koudelas filed a brief in opposition on September 2, 2016
on the grounds that appellees' failure to disclose the
unregistered and fictitious nature of the contractor
identified in the agreement amounts to fraud which prevented
a meeting of the minds. As such, the Koudelas posit that the
arbitration clause is void.
Appellees filed a reply brief ten days later maintaining they
are entitled to seek arbitration pursuant to the parties'
agreement. Appellees point out that the alleged failure to
disclose any unregistered and fictitious name prevents
appellees as contractor from bringing an action but it does
not prevent appellees as contractor from defending an action.
Appellees also stress that the Koudelas have alleged that the
contract was fraudulently induced but not that the
arbitration clause itself was fraudulently induced.
On January 17, 2017, the trial court denied appellees'
Civ.R. 12(B)(6) motion to dismiss, based upon the
parties' agreement to arbitrate in lieu of litigation,
but granted appellees' alternative motion to stay
proceedings pending binding arbitration pursuant to the terms
of the contract finding that the arbitration provision is
valid and enforceable. The Koudelas filed a timely appeal
asserting the following assignment of error:
"The trial court committed reversible error in granting
the stay of proceedings to Defendant-Appell[ees] when none of
them were named parties to the contract containing the
arbitration clause and the fictitious entity with whom the
contract was made is not a party to the lawsuit."
"Ohio and federal courts encourage arbitration to settle
disputes. Kelm v. Kelm (1993), 68 Ohio St.3d 26, 27
* * *; Southland Corp. v. Keating (1984), 465 U.S.
1, 10 * * * Our General Assembly also favors arbitration.
R.C. 2711.02 requires a court to stay an action if the issue
involved falls under an arbitration agreement[.]"