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Avery v. Academy Investments, L.L.C.

Court of Appeals of Ohio, Eighth District, Cuyahoga

August 29, 2019

JOHN T. AVERY, Plaintiff-Appellant,
v.
ACADEMY INVESTMENTS, L.L.C., ET AL. Defendants-Appellees.

          Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-18-895362

         JUDGMENT: AFFIRMED

          Singerman, Mills, Desberg & Kauntz Co., L.P.A., and Christopher O'Connell, for appellant

          Dinn, Hochman & Potter L.L.C., Thomas A. Barni and Jason A. Whitacre, for appellees.

          JOURNAL ENTRY AND OPINION

          EILEEN A. GALLAGHER, JUDGE

         {¶ 1} Plaintiff-appellant John Avery filed a complaint seeking judicial dissolution of two companies of which he claims to be a member, defendants-appellees Academy Investments, L.L.C. ("AI") and the Academy of Fetish Arts, L.L.C. ("AFA").[1] Avery also sought an accounting for both companies. The appellees moved to dismiss, and alternatively, to stay the action pending arbitration and mediation as required by the arbitration clauses in both companies' operating agreements. The appellees argued that Avery's claims were subject to arbitration but also disputed Avery's contention that he was a member of the companies and attached evidence indicating that Avery's membership in both was terminated prior to him filing the complaint. The trial court granted the motion, staying the entire case "pending mandatory, binding arbitration of Avery's claims in accordance with the provisions of the AI and AFA operating agreements." For the reasons that follow, we affirm.

         {¶ 2} On appeal, Avery asserts one assignment of error:

The trial court erred by staying Avery's judicial-dissolution action pending binding arbitration.

         Relevant Background Facts

         {¶ 3} As noted, Avery claims that he is a member of both AI and AFA despite evidence indicating that he is not[2] Both AI and AFA are Ohio limited liability companies and governed by operating agreements. The AI operating agreement provides that "[t]he terms and conditions of this Agreement will govern the Members within the limited liability company," and that "[t]his Agreement contains the entire agreement between the parties." Similarly, the AFA operating agreement provides that "[t]he terms and conditions of this Agreement will govern the Keystone Members within the limited liability company, "[3] and that "[t]his Agreement contains the entire agreement between the parties."

         {¶ 4} Each operating agreement addresses the issue of membership in the companies. For example, both agreements list the company members, delineate member rights and responsibilities, detail the nature of a member's interest in the company as well as outline to what a member is entitled by virtue of membership. This includes the specific right of access to the company's financial records. The agreements also contain mechanisms for admitting new members and removing existing members.

         {¶ 5} The AI and AFA operating agreements contain arbitration clauses. Though there is some difference between the two clauses, for our purposes they are functionally equivalent.[4] The AI arbitration clause applies to any dispute that "arises out of or in connection with [the AI operating agreement] * * *." The AFA arbitration clause applies to any dispute that "arises out of, in connection with or is related to [the AFA operating agreement] * * *."

         {¶ 6} Avery acknowledges that he is bound by, and subject to, both the AI and AFA operating agreements. Further, he recognizes that both agreements contain arbitration clauses. His argument is instead that judicial dissolution does not "arise" out of the agreements and is thus outside of the scope of the arbitration clauses. We disagree.

         Law and ...


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