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Neel v. A. Perrino Construction, Inc.

Court of Appeals of Ohio, Eighth District, Cuyahoga

May 10, 2018

PAUL NEEL, ET AL. PLAINTIFFS-APPELLANTS
v.
A. PERRINO CONSTRUCTION, INC., ET AL. DEFENDANTS-APPELLEES

          Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-16-867716

          ATTORNEYS FOR APPELLANTS Daniel J. Myers Samantha A. Vajskop Myers Law, L.L.C.

          ATTORNEYS FOR APPELLEES Andrew J. Natale Aaron S. Evenchik Hahn, Loeser & Parks, L.L.C.

          BEFORE: McCormack, J., E.A. Gallagher, A.J., and Celebrezze, J.

          JOURNAL ENTRY AND OPINION

          TIM MCCORMACK, JUDGE.

         {¶1} Plaintiffs-appellants Paul and Stephanie Neel ("the Neels") appealed the trial court's decision granting a motion to stay pending arbitration. For the reasons that follow, we affirm in part the trial court's decision but remand for the limited purpose of staying all claims against all parties pending arbitration.

         Factual and Procedural History

         {¶2} The Neels filed a complaint on August 16, 2016, against defendant-appellee A. Perrino Construction, Inc. ("Perrino"), along with defendants Pat Perrino, Greenwalt Architects, Inc., and Christopher E. Greenwalt. The complaint alleged breach of contract, fraudulent misrepresentation, negligent misrepresentation, civil conspiracy, and violations of R.C. 4722.02, et seq., the Home Construction Service Suppliers Act ("the HCSSA").

         {¶3} The Neels had contracted with the defendants to construct a new home in Hinckley, Ohio. Pursuant to a restrictive covenant in the Neels' deed, the home was required to be at least 2, 800 square feet. The Neels entered into a contract with Perrino by which Perrino was to construct a custom home for them for a contract price of $364, 900. The contract was six pages long. It included an arbitration provision in paragraph 13, which stated:

Aside from warranty claims that shall be processed in accordance with the Limited Warranty procedure described in paragraph 8 above, should any dispute arise between the parties with respect to the completion of any stage of construction, the completion of the entire construction, or any other matter involved in the construction, disbursement of funds, amounts due and payable, said dispute shall be decided by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association. The cost of the Arbitration shall be paid by the parties in equal shares. Further, the Contractor and Owner do hereby agree to abide by the decision of the American Arbitration Association and the judgment of the American Arbitration Association shall be final and not appealable. 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 trial by jury.

         {¶4} In addition to the various allegations described above, the Neels' complaint alleged that the parties had agreed that the home would be at least 3, 000 square feet, but the home's actual footprint was several hundred feet smaller.

         {¶5} On September 19, 2016, Perrino filed an answer and counterclaim. In this pleading, Perrino expressly stated that it was not waiving its right to insist upon arbitration. Perrino also filed a new party complaint asserting claims against the Neels' counsel for defamation, tortious interference with contract, and tortious interference with business relationships. While these claims stem from counsel's representation of the Neels in the underlying case, they are unrelated to the contract between the Neels and Perrino and they are not subject to arbitration.

         {¶6} On November 17, 2016, counsel for all parties participated in a pretrial conference. The parties discussed ongoing discovery. In its journal entry, the trial court stated, "A. Perrino Construction (D1) is ordered to file with the court its intention to pursue private arbitration with [plaintiffs] or waive its rights under the arbitration clause no later than the end of business on 11/28/2016."

         {¶7} On November 28, 2016, in accordance with the trial court's instruction, Perrino filed a motion to stay all proceedings pending arbitration.

         {¶8} On January 5, 2017, the trial court granted Perrino's motion to stay pending arbitration. The court's journal entry stated, in part:

The court carefully reviewed the [plaintiffs'] causes of action and the very broad scope of the arbitration clause within the contract between the [plaintiffs] and [defendant] Perrino Construction. All of [plaintiffs'] claims include [defendant] Perrino Construction as a party. The scope of the arbitration clause is clearly broad enough to cover - without question -all of the [plaintiffs'] claims against this single [defendant.] Therefore the court grants the motion to stay proceedings as against [defendant] Perrino Construction. All proceedings by and between [plaintiffs] and [defendant] Greenwalt Architects Inc. are not stayed and litigation and discovery shall continue unabated between them. The court ignores the existence of the two individual [defendants] Pat Perrino and Christopher Greenwalt as it is not clear that [plaintiffs] enjoy any cause of action under Ohio law against the principals of their corporations that are [codefendants] in the litigation. The court will determine the existence of causes of action against the latter two individual [defendants]. Notice issued.

         {¶9} It is from this decision that the Neels appeal, presenting three assignments of error for our review.

         Law and Analysis

         I. ...


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