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JDH Management Group, LLC v. Pierce

Court of Appeals of Ohio, Twelfth District, Warren

February 26, 2018

JDH MANAGEMENT GROUP, LLC, Plaintiff-Appellant,
v.
GREGORY W. PIERCE, et al., Defendants-Appellees.

         CIVIL APPEAL FROM WARREN COUNTY COURT OF COMMON PLEAS Case No. 17CV894158

          Robbins, Kelly, Patterson & Tucker, James M. Kelly, Richard O. Hamilton, Jr., and Jarrod M. Mohler, for plaintiff-appellant

          Jacobs, Kleinman, Seibel & McNally, L.P.A., Mark J. Byrne, The Cincinnati Club Building, for defendants-appellees

          OPINION

          M. POWELL, J.

         {¶ 1} Plaintiff-appellant, JDH Management Group, LLC ("JDH"), appeals a decision of the Warren County Court of Common Pleas denying its motion for judgment on the pleadings, or in the alternative, to stay the proceedings and compel arbitration.

         {¶ 2} In February 2014, defendants-appellees, Gregory and Debra Pierce, contracted with JDH to build a residence for them in Liberty Township, Ohio ("Construction Contract"). Pursuant to the Construction Contract, the total cost of construction of the residence was $1, 783, 415. The Construction Contract incorporated a Customer Information Sheet which set forth the various allowances for specific items included within the contract price. The Customer Information Sheet further provided that the contract price was subject to change based upon the Pierces' actual expenditures in relation to the various allowances stated in the Customer Information Sheet. Upon completion of the work and factoring in actual expenditures and prior payments, the Pierces owed JDH a final payment of $319, 150.69, to be paid at closing. Pursuant to the Construction Contract, the Pierces were not permitted to occupy the home until JDH had been paid in full.

         {¶ 3} In November 2014, the Pierces advised JDH that they were unable to make the final payment due at closing. In a follow-up email, the Pierces inquired if they could pay the balance upon the sale of their current residence and whether JDH could "work something out." On December 11, 2014, JDH offered to accept monthly payments on a reduced balance of $270, 189.55 and sent the Pierces a Repayment Agreement and a mortgage memorializing such offer. On December 13, 2014, the Pierces offered to pay a further reduced balance of $249, 189.55 and sent JDH a signed Repayment Agreement for that amount and a signed, un-notarized mortgage for $249, 598.55. JDH accepted the Pierces' counteroffer. Consequently, pursuant to the Repayment Agreement, the Pierces were to pay JDH $249, 598.55 at 10 percent per annum interest and $1, 200 per month for the use of the residence. The entire unpaid balance was payable by February 1, 2015. The Pierces anticipated paying JDH in full with the sale proceeds of their current residence.

         {¶ 4} The Pierces made a $1, 200 payment for their use of the residence in December 2014. However, they made no further payments and did not pay the balance on or before February 1, 2015, as provided in the Repayment Agreement. The Pierces advised JDH they would pay the remaining balance of $255, 289.55 by March 14, 2015, but failed to do so.

         {¶ 5} On January 17, 2017, JDH filed a complaint against the Pierces for breach of the Repayment Agreement. The Pierces answered and alleged six counterclaims: (1) breach of the Construction Contract, (2) negligence, (3) breach of warranty, (4) fraud in the inducement and performance of the Construction Contract, (5) performance of the Construction Contract in violation of R.C. Chapter 4722, and (6) fraud in the inducement of the Repayment Agreement.

         {¶ 6} JDH filed a reply to the Pierces' counterclaims and moved for judgment on the pleadings, or in the alternative, to stay the counterclaims pending arbitration. Specifically, JDH argued it was entitled to judgment on the Pierces' counterclaims because the Repayment Agreement superseded the Construction Contract. Alternatively, JDH argued the counterclaims were to be stayed pending mandatory arbitration pursuant to Article 15 of the Construction Contract.

         {¶ 7} Article 15 of the Construction Contract provides that "any Claim arising from or relating to this Agreement or the breach thereof is subject to good faith negotiation, and if not resolved within 60 days, is subject to arbitration at the request of either party." Article 15 further provides that "[a]ny Claim arising out of this Agreement shall be commenced with[in] one (1) year from JDH's last date of Work on the Project." JDH's motion stated that its last date of work on the project was October 23, 2014.

         {¶ 8} On June 6, 2017, the trial court denied JDH's motion for judgment on the pleadings, rejecting JDH's claim that the Repayment Agreement superseded the Construction Contract because "[t]here [was] nothing in the Repayment Agreement indicating the parties' desire or intent to disregard the Construction Contract." The trial court further denied JDH's motion to stay the counterclaims pending arbitration. The trial court found that although the Repayment Agreement did not have an arbitration clause, the Repayment Agreement and Construction Contract were "clearly linked, " in that "[w]ithout the Construction Contract, there would be no Repayment Agreement to enforce." Consequently, the trial court found that JDH waived its right to arbitration under the Construction Contract when it filed suit to enforce the Repayment Agreement.

         {¶ 9} JDH now appeals, raising two assignments of error that will be considered in reverse order.

         {¶ 10} ...


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