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BST Ohio Corp. v. Wolgang

Court of Appeals of Ohio, Eighth District, Cuyahoga

November 21, 2019

BST OHIO CORPORATION, ET AL., Plaintiffs-Appellees,
v.
EVAN GARY WOLGANG, ET AL., Defendants-Appellants.

          Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-18-908058

          Ciano & Goldwasser, L.L.P., Phillip A. Ciano, and Brent S. Silverman; Ulmer & Berne, L.L.P., Michael N. Ungar, and Amanda Martinsek, for appellees.

          Calfee, Halter & Griswold, L.L.P., Colleen M. O'Neil, Alexandra R. Forkosh; Hamburg, Karic, Edwards & Martin, L.L.P., Steven S. Karic, for appellants.

          JOURNAL ENTRY AND OPINION

          MARY J. BOYLE, PRESIDING JUDGE

         {¶1} The question presented in this case is whether R.C. 2711.13 requires a trial court to wait three months before confirming an arbitration award under R.C. 2711.09 when the party opposing confirmation appears and informs the trial court that he or she intends to file a motion to vacate within the three-month time frame set forth in R.C. 2711.13. We hold that it does. We therefore reverse the judgment of the trial court confirming the arbitration award and remand to give appellants 50 days from the date this case is reactivated on the trial court's docket to file a motion to vacate, modify, or correct the award under RC. 2711.10 or 2711.11 (50 days is the amount of the time from the judgment entry of confirmation, January 15, 2018, to the time that appellants would have had to file the motion had the trial court not confirmed the award prematurely, March 6, 2018).

         I. Procedural History and Factual Background

         {¶2} Defendants-appellants, Evan Gary Wolfgang ("Wolfgang") and Massillon Management Company ("Massillon Management"), appeal a judgment of the Cuyahoga County Court of Common Pleas confirming an arbitration award in favor of plaintiffs-appellees, BST Ohio Corporation and 26 other individuals and companies. Respondents raise two assignments of error for our review:

1. The trial court erred as a matter of law by granting respondents' motion to confirm arbitration award under RC. 2711.09 before the expiration of the three-month period in which a party may file and serve a motion to vacate or correct an arbitration award under R.C. 2711.13.
2. The trial court abused its discretion by denying appellants' motion to stay proceedings or, in the alternative, for continuance of the hearing on respondents' motion to confirm, until after the expiration of the three-month period in which a party may file and serve a motion to vacate or correct an arbitration award under R.C. 2711.13.

         {¶3} The parties in this case are owners of Prophecy Massillon L.L.C., a Delaware limited liability company. Prophecy owns real estate in Massillon, Ohio, that, according to the arbitrator, "is improved with facilities for dry and cold storage and distribution, parking, offices, and related uses." Appellees own a supermajority interest in Prophecy, and appellants own approximately 17% of it. Massillon Management, of which Wolfgang was the sole owner, managed Prophecy.

         {¶4} The dispute in this case arose over appellants' management of Prophecy. Prophecy was governed by a "Second Amended and Restated Operating Agreement" ("SOA"), which the owners of Prophecy entered into on May 14, 2014. The SOA contained an arbitration agreement that stated that "[a] dispute arising out of or relating to this agreement * * * shall be settled by arbitration in Cuyahoga County, Ohio, in accordance with the American Arbitration Association." Under the SOA, the manager of Prophecy could only be removed for cause.

         {¶5} In accordance with the SOA, appellees commenced commercial arbitration against appellants in February 2017 with the American Arbitration Association in Cleveland, Ohio. Plaintiffs sought, in part, a declaration that appellants should be removed for cause as the manager of Prophecy.

         {¶6} After several weeks of hearings that took place between December 2017 and June 1, 2018, the arbitrator determined, among many other things, that appellants "breached their fiduciary duty of loyalty by failing to act in good faith or that constituted willful or wanton misconduct," which amounted to cause under the SOA. But the arbitrator determined that she did not have the authority under the SOA to remove appellants as the manager of Prophecy, leaving that to other members of Prophecy. The arbitrator also issued a monetary judgment against appellants.

         {¶7} On December 6, 2018, the day the arbitrator issued her final award, appellees filed an application for an order confirming it. Appellees served ...


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