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Dumas v. North East Auto Credit, L.L.C.

Court of Appeals of Ohio, Eighth District

November 21, 2019

THEODORE DUMAS, ET AL., Plaintiffs-Appellees,
NORTH EAST AUTO CREDIT, L.L.C., Defendant-Appellant.

          Civil Appeal from the Cuyahoga County Common Pleas Court Case No. CV-17-885863

          Frederick & Berler, L.L.C., Ronald I. Frederick, Michael Berler, and Michael L. Fine, for appellees.

          The Gertsburg Law Firm Co., L.PA., Mark M. Turner, Eugene Friedman, Maximilian Julian, and Cynthia M. Menta; and William J. Krueger, for appellant



         {¶1} North East Auto Credit, L.L.C. ("NEAC"), appeals the denial of its motion to stay the trial court proceedings under R.C. 2711.02(B) pending an arbitration of the class-action allegations, which were advanced for the first time in an amended complaint filed over a year after the initial pleading. Although the trial court erred in concluding that NEAC waived its right to assert the arbitration defense with respect to the putative class members, it nonetheless reached the correct result. We therefore affirm.

         {¶2} Theodore Dumas and Charlene Parker purchased a vehicle from NEAC. In their purchase agreement, Dumas and Parker agreed that either party may seek to arbitrate any disputes arising thereunder, and that if the matter was arbitrated, the plaintiffs waived any right to join a class-action lawsuit:

1.Either you or we may choose to have any dispute between us decided by arbitration and not in court or by jury trial.
2.If a dispute is arbitrated, you will give up your right to participate as a class representative or a class member on any class claim you have against us including any right to class arbitration or any consolidation of individual arbitrations.
Any claim or dispute, whether in contract tort, statute or otherwise (including the interpretation and scope of the Arbitration Agreement, and the arbitrability of the claim or dispute), between you and us or our employees, agents, successors or assigns, which arises out of or relates to * * * [the] purchase or condition of this vehicle, this contract or any resulting transaction or relationship (including any such relationship with third parties that don't sign this contract) shall, at your or our election, be resolved by neutral, binding arbitration and not court action.

         In light of the permissive nature of the arbitration clause, Dumas and Parker chose to file a lawsuit to settle a disagreement with NEAC, which in turn, consented to proceed on the individual claims despite preserving its affirmative defense of arbitration. We note that according to the express terms of their agreement, Dumas and Parker have not waived their right to participate as class representatives or members, and in addition, NEAC is not asserting any right to seek a stay pending the arbitration of Dumas and Parker's individual claims.

         {¶3} During the pretrial proceedings, Dumas and Parker requested and were granted leave to amend their complaint, although the basis of that request is disputed. The motion for leave was made orally during a pretrial conference, and there is no record of the proposed amendments. The amended complaint included allegations for similarly situated, putative class members. Dumas and Parker claim that NEAC should have been aware of the impending class-action allegations regardless of any confusion over the substantive basis of their request, and therefore, NEAC consented to including the class allegations. NEAC claims that Dumas and Parker only asked for leave to amend the complaint in order to address their individual claims; otherwise, NEAC would have objected to the inclusion of the class-action allegations.

         {¶4} Because there is no record substantiating the basis of Dumas and Parker's oral motion, we cannot conclude that NEAC affirmatively consented to the amended complaint including the class allegations to waive any defenses to the amendment of the allegations. "To establish waiver, the party seeking waiver must demonstrate (1) that the party knew of its right to assert an argument or defense and (2) that the totality of the circumstances establish that the party acted inconsistently with that right." Gembarski v. PartsSource, Inc., Slip Opinion No. 2019-Ohio-3231, ¶ 25, citing Donnell v. Parkcliffe Alzheimer's Community, 6th Dist. Wood No. WD-17-001, 2017-Ohio-7982, ¶ 21; and Atkinson v. Dick Masheter Leasing II, Inc., 10th Dist. Franklin No. 01AP-1016, 2002-Ohio-4299, ¶ 20. In light of the silent record, brought on by the fact that the motion for leave to amend the pleading was made orally with no notation in the record as to its substance, we cannot consider Dumas and Parker's argument that NEAC affirmatively consented to an amendment to include the class allegations, and through that alleged consent, waived the right to challenge the class-action allegations.

         {¶5} In response to the amended pleading, NEAC retained additional counsel and immediately filed a motion to strike the class claims under Civ.R. 12(F), or in the alternative, a motion to stay the case pending arbitration of the class claims based on the undisputed fact that NEAC used the same arbitration language in "virtually" all of their transactions. In the alternative to the aforementioned consent argument, Dumas and Parker argued that NEAC waived the right to seek arbitration of the putative class members' claims because NEAC arguably waived its right to compel arbitration against the individual plaintiffs. The trial court agreed, but concluded that the court "cannot in fairness permit [NEAC's] new counsel to be the occasion to change the course of litigation which was filed so many months ago." It is not clear from the record how NEAC's arbitration defense advanced in response to the amended complaint, which raised the class allegations for the first time, would have unilaterally altered the course of the litigation that had been limited to Dumas and Parker's individual claims. If Dumas and Parker were permitted to substantially change the course of litigation by including class allegations over a year after the filing of the initial complaint, it would seem that any notion of fairness or due process would dictate that NEAC be permitted to respond in kind.

         {¶6} Regardless, in this appeal, the only issue that we have jurisdiction to address is the denial of the motion to stay pending arbitration of the class allegations. It is without question that an order granting or denying a motion for stay pending arbitration is a final appealable order. R.C. 2711.02(C). All other issues, including the granting of leave to amend a pleading, are interlocutory in nature and outside the scope of our current jurisdiction.[1] The trial court erred in concluding that NEAC waived the right to assert arbitration as a defense to the class allegations based on the Ohio Supreme Court's decision in Gembarski. ...

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