Opinion ID: 2691002
Heading Depth: 2
Heading Rank: 2

Heading: The Ohio Arbitration Act

Text: {¶ 18} The Ohio Arbitration Act (“OAA”) provides: “A provision in any written contract    to settle by arbitration a controversy that subsequently arises out of the contract    shall be valid, irrevocable, and enforceable, except upon grounds that exist at law or in equity for the revocation of any contract.” R.C. 2711.01(A). The language of the OAA tracks the language of the Federal Arbitration Act (“FAA”), which provides: “[A] contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract    shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” Section 2, Article 9, U.S.Code. The OAA expresses Ohio’s strong public policy favoring arbitration, which is consistent with federal law supporting arbitration. Taylor Bldg. Corp. of Am. v. Benfield, 117 Ohio St.3d 352, 2008-Ohio-938, 884 N.E.2d 12, ¶ 26, fn. 1. {¶ 19} The FAA was enacted in 1925 “ ‘to reverse the longstanding judicial hostility to arbitration agreements that had existed at English common law and had been adopted by American courts, and to place arbitration agreements upon the same footing as other contracts.’ ” Equal Emp. Opportunity Comm. v. Waffle House (2002), 534 U.S. 279, 289, 122 S.Ct. 754, 151 L.Ed.2d 755, quoting Gilmer v. Interstate/Johnson Lane Corp. (1991), 500 U.S. 20, 24, 8 January Term, 2011 111 S.Ct. 1647, 114 L.Ed.2d 26. The purpose was “ ‘to make arbitration agreements as enforceable as other contracts, but not more so.’ ” Id. at 294, quoting Prima Paint Corp. v. Flood & Conklin Mfg. Co (1967), 388 U.S. 395, 404, 87 S.Ct. 1801, 18 L.Ed.2d 1270, fn. 12. Therefore, the FAA “ ‘does not require parties to arbitrate when they have not agreed to do so.’ ” Id. at 293, quoting Volt Information Sciences, Inc. v. Bd. of Trustees of Leland Stanford Junior Univ. (1989), 489 U.S. 468, 478, 109 S.Ct. 1248, 103 L.Ed.2d 488; see also id. at 294 (holding that the FAA is, at its core, a policy of enforcing contractual arrangements). {¶ 20} Consistently, this court has held: “ ‘ “[A]rbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which [it] has not agreed so to submit.”    This axiom recognizes the fact that arbitrators derive their authority to resolve disputes only because the parties have agreed to submit such grievances to arbitration.’ ” Council of Smaller Ents. v. Gates, McDonald & Co. (1998), 80 Ohio St.3d 661, 665, 687 N.E.2d 1352, quoting AT&T Technologies, Inc. v. Communications Workers of Am. (1986), 475 U.S. 643, 648-649, 106 S.Ct. 1415, 89 L.Ed.2d 648, quoting United Steelworkers of Am. v. Warrior & Gulf Navigation Co. (1960), 363 U.S. 574, 582, 80 S.Ct. 1347, 4 L.Ed.2d 1409. Accordingly, when deciding motions to compel arbitration, the proper focus is whether the parties actually agreed to arbitrate the issue, i.e., the scope of the arbitration clause, not the general policies of the arbitration statutes. Waffle House at 294. It follows that although any ambiguities in the language of a contract containing an arbitration provision should be resolved in favor of arbitration, the courts must not “override the clear intent of the parties, or reach a result inconsistent with the plain text of the contract, simply because the policy favoring arbitration is implicated.” Id. {¶ 21} For these reasons, Ohio courts recognize a presumption in favor of arbitration when a claim falls within the scope of an arbitration provision. 9 SUPREME COURT OF OHIO Williams v. Aetna Fin. Co. (1998), 83 Ohio St.3d 464, 471, 700 N.E.2d 859. But significantly, there is a counterweighing presumption against arbitration when a party seeks to invoke an arbitration provision against a nonsignatory. Council of Smaller Ents. at 667, citing First Options of Chicago, Inc. v. Kaplan (1995), 514 U.S. 938, 945, 115 S.Ct. 1920, 131 L.Ed.2d 985. In the latter instance, “there is serious doubt that the party resisting arbitration has empowered the arbitrator to decide anything   .” Id. C. The Liquidator Is Not Bound by the Arbitration Clause 1. The liquidator does not stand in the shoes of an insolvent insurer, but in a public-protection role {¶ 22} We first address E&Y’s argument that the liquidator is bound by the arbitration agreement, like a signatory, because she stands in the shoes of a signatory, ACLIC. We hold that the liquidator does not stand in the shoes as a mere successor in interest of the insolvent insurer. Consequently, she is not bound to arbitration agreements entered into by the insolvent insurer as if she were the signatory insurer. {¶ 23} Our holding is in accord with the United States Supreme Court’s jurisprudence on arbitration. See, e.g., Waffle House, 534 U.S. at 294, 122 S.Ct. 754, 151 L.Ed.2d 755 (holding that the Equal Employment Opportunity Commission is not bound by an arbitration agreement between an employer and employee). In Waffle House, the Equal Employment Opportunity Commission (“EEOC”) filed an enforcement action against Waffle House based on alleged unlawful employment practices relating to the discharge of an employee who had health problems. Id. at 283. When the employee applied for the job, he signed a standard Waffle House application that contained an agreement to arbitrate any disputes or claims that might develop regarding his potential future employment. Id. at 282-283. He was hired and fired and filed a timely charge of discrimination with the EEOC—but did not seek arbitration. 10 January Term, 2011 {¶ 24} In its suit, the EEOC sought injunctive relief to “ ‘eradicate the effects of [the employer’s] past and present unlawful employment practices’ ” and also sought victim-specific relief for the employee, including back pay, reinstatement, compensatory damages, and punitive damages. Id. at 283-284. Waffle House moved to compel arbitration based on the arbitration agreement between it and the employee. {¶ 25} The court initially noted that the federal circuits that had dealt with the issue had come to conflicting conclusions. The Sixth Circuit was among the circuits that had addressed the issue and decided that an employee’s agreement to arbitrate does not affect the EEOC’s independent statutory authority to pursue an enforcement action, even for victim-specific relief. Id. at 285, citing EEOC v. Frank’s Nursery & Crafts, Inc. (C.A.6, 1999), 177 F.3d 448. The court agreed with the Sixth Circuit and held that the arbitration agreement between the employee and the employer did not bind the EEOC for the simple reason that the EEOC was not a party to the agreement. Id. at 294. In so holding, it rejected the argument that the EEOC stands in the shoes of aggrieved employees, reasoning that “the statute specifically grants the EEOC exclusive authority over the choice of forum and the prayer for relief once a charge has been filed.” Id. at 297-298. The court further explained that it had previously recognized several situations in which the EEOC does not stand in the employee’s shoes when it held that the EEOC does not have to comply with statutes of limitations or certain civil rules. Finally, the court explained that although the employee’s actions are relevant in the application of the principles of res judicata, mootness, and mitigation, that relevancy does not “render the EEOC a proxy for the employee.” Id. at 298. {¶ 26} Similarly, the characteristics of the liquidator’s public-protection role confirm that she does not stand in the shoes of the insolvent insurer. The liquidator, like the EEOC, has the exclusive choice of forum (when there is a choice). R.C. 3903.21(A)(6)(a), 3903.21(A)(12), and 3903.41(A)(2). She 11 SUPREME COURT OF OHIO similarly enjoys the sole discretion to pursue or forgo claims, which is independent of the shareholders’ desires and subject instead to judicial approval. R.C. 3903.21(A)(12). Finally, the ordinary statutes of limitations do not apply in the liquidation context to the liquidator or to the estate’s creditors. R.C. 3903.24(B), 3903.22(B), and 3903.36. The fact that any judgments in favor of the liquidator accrue to the benefit of insureds, policyholders, and creditors means that the liquidator’s unique role is one of public protection, and one that is even more so than the EEOC’s. We therefore reject E&Y’s argument that she is bound by an insolvent insured’s act of signing the arbitration agreement. {¶ 27} In doing so, we also reject E&Y’s argument that Shearson/Am. Express, Inc. v. McMahon (1987), 482 U.S. 220, 107 S.Ct. 2332, 96 L.Ed.2d 185, justifies the opposite result. In Shearson, two private parties entered into an arbitration agreement. One signatory sued the other for alleged violations of the federal Securities Exchange Act and the Racketeer Influenced and Corrupt Organizations Act. The Security Exchange Act provided for exclusive jurisdiction in the federal district courts over claims brought under it. Section 27, Title 15, U.S.Code. The United States Supreme Court held that the exclusive jurisdictional provisions did not preclude arbitration. Id. at 227. {¶ 28} In contrast to Waffle House, as well as this case, Shearson involved signatories of an arbitration agreement. A material fact in Waffle House was that the EEOC was not a signatory to the arbitration agreement. Waffle House, 534 U.S. at 294, 122 S.Ct. 754, 151 L.Ed.2d 755 (“It goes without saying that a contract cannot bind a nonparty. Accordingly, the proarbitration policy goals of the FAA do not require the agency to relinquish its statutory authority if it has not agreed to do so”). Therefore, Shearson is inapposite. {¶ 29} E&Y also relies on Benjamin v. Ernst & Young, 167 Ohio App.3d 350, 2006-Ohio-2739, 855 N.E.2d 128. The dispute in Benjamin was part of this ongoing litigation between E&Y and the liquidator. Id. at ¶ 1. The Tenth District 12 January Term, 2011 Court of Appeals decided Benjamin while E&Y’s motion to compel arbitration (at issue in this case) was pending before the Franklin County Common Pleas Court. It is of limited persuasive value here, given its posture. Moreover, Benjamin undermines, rather than supports, E&Y’s arguments. Benjamin is the result of a motion filed by a law firm, Foley & Lardner, and one of its attorneys, Michael J. Woolever (collectively, “Foley”), that sought to remove the case to the Ohio Court of Claims. Id. at ¶ 1. Foley asserted counterclaims against the superintendent based on her alleged failure “to act to protect the policyholders, creditors, and the public,” thereby causing the injuries for which the liquidator was seeking to recover from E&Y and Foley. Id. at ¶ 5. The Court of Claims held that the counterclaims “were not asserted against the superintendent in her capacity as liquidator of ACLIC, but, rather, were asserted against the superintendent in her regulatory capacity    based on actions that allegedly occurred [before] the liquidation of ACLIC.” Id. at ¶ 7. Therefore, the Court of Claims granted the liquidator’s motion to dismiss the counterclaims because “[a] counterclaim may only be asserted against an opposing party and only against that party in the capacity in which that party sued.” Id., citing Quintus v. McClure (1987), 41 Ohio App.3d 402, 536 N.E.2d 22. As a result, the Court of Claims remanded the case to the Franklin County Common Pleas Court. Id. at ¶ 2. E&Y appealed the decision of the Court of Claims.4 Id. {¶ 30} In affirming, the Tenth District explained that the “superintendent as liquidator is a separate entity from the superintendent as regulator.” Id. at ¶ 19. In attempting to make the distinction, that court stated that the superintendent as liquidator “stands in the shoes of the insolvent insurer.” Id. at ¶ 18. Nonetheless, it more fully explained: “Any benefits received from a judgment or settlement in 4. Foley ended up partially settling the liquidator’s claims against it and, consequently, did not pursue its appeal of the Court of Claims decision. Benjamin, 167 Ohio App.3d 350, 2006-Ohio2739, 855 N.E.2d 128, at ¶ 2-4. 13 SUPREME COURT OF OHIO an action initiated by the liquidator accrue to the sole benefit of the members, shareholders, policyholders, and creditors of the insured, not to the state of Ohio.” Id. {¶ 31} E&Y’s argument in this case is fatally flawed for the same reason that Foley’s failed in Benjamin—that is, its argument that the liquidator is, in essence, ACLIC, is inconsistent with the nature of the liquidator’s claims. Any assertion that the liquidator is a mere successor in interest who is bringing breachof-contract claims on behalf of ACLIC ignores the fact that the superintendent did not bring this suit on behalf of ACLIC and its shareholders but, rather, in her capacity as liquidator of ACLIC for the protection of “the rights of insureds, policyholders, creditors, and the public generally.” Fabe v. Prompt Fin., Inc., 69 Ohio St.3d at 275, 631 N.E.2d 614. {¶ 32} Notwithstanding E&Y’s claim to the contrary, this case presents a garden-variety attempt to enforce an arbitration clause against a nonsignatory. Therefore, there is a presumption against arbitration in this case. See Council of Smaller Ents., 80 Ohio St.3d at 667, 687 N.E.2d 1352. Because that presumption applies here, we must respect it, absent a showing to the contrary. 2. The liquidator’s claims do not arise from the engagement letter {¶ 33} E&Y’s asserts that the arbitration agreement is enforceable against the liquidator because her claims “relate to” the subject matter of the engagement letter. This is not the applicable test.5 The test is whether the liquidator, a nonsignatory, has asserted claims that arise from the contract containing the arbitration clause. See, e.g., Gerig v. Kahn, 95 Ohio St.3d 478, 2002-Ohio-2581, 769 N.E.2d 381, ¶ 19. Consistent with our precedent, we conclude that the 5. The test that E&Y urges the court to apply is the test for signatories, based on the broad language of this specific arbitration agreement. The agreement provides that all claims “related to” the services covered in the engagement letter shall be arbitrated. If one signatory were attempting to enforce the arbitration clause against the other signatory, the court would look to the contract language and determine whether the parties agreed to arbitrate the relevant dispute. That is not, however, the test for a nonsignatory. 14 January Term, 2011 presumption against arbitration is not overcome, because neither of the liquidator’s claims arises from the engagement letter that contained the arbitration provision. See id. at ¶ 19; see also Henderson v. Lawyers Title Ins. Corp., 108 Ohio St.3d 265, 2006-Ohio-906, 843 N.E.2d 152, ¶ 42; Peters v. Columbus Steel Castings Co., 115 Ohio St.3d 134, 2007-Ohio-4787, 873 N.E.2d 1258, at ¶ 6. Because the liquidator’s claims differ in nature, we address each in turn.
{¶ 34} The liquidator’s first claim alleged that E&Y failed to conduct its audit of ACLIC in accordance with generally accepted auditing standards as required and, consequently, material misstatements in ACLIC’s financial statements went undisclosed or undetected. This malpractice claim does not arise from the engagement letter for two related reasons. First, the malpractice claim plainly does not seek a declaration of a signatory’s rights and obligations under the engagement letter. See Gerig at ¶ 19. Second, the malpractice claim arises independently of the engagement letter because it arises from the powers given to the liquidator by the General Assembly together with the allegedly false or misleading audit report E&Y filed with ODI. See Henderson at ¶ 42. {¶ 35} In Gerig, this court addressed whether an issue of insurance coverage was subject to arbitration in accordance with an agreement between a physician and a hospital. While under the care of a physician, Dawn Gerig gave birth to twins at St. Vincent Mercy Medical Center. At the time of the deliveries, the physician was working at the hospital under an affiliation agreement that required the hospital to insure him against medical-malpractice claims. The Gerigs filed suit against the physician and alleged that he caused birth defects to one of the twins by malpractice during the delivery. At the time the suit was filed, the hospital provided malpractice insurance to the physician through an insurance company with liability limits up to $4 million. In addition, the hospital funded a self-insurance plan to pay malpractice claims. Id. at ¶ 1–2. 15 SUPREME COURT OF OHIO {¶ 36} Thereafter, the insurance company became insolvent and was forced into liquidation. The Ohio Insurance Guaranty Association (“OIGA”) became involved in the case to pay any covered claims brought by consumers against the insolvent insurance company, pursuant to R.C. Chapter 3955. {¶ 37} Because the statutory limit for OIGA claims was $300,000 and because OIGA pays claims only after a claimant has exhausted her rights under all other insurance policies, the Gerigs, the physician, and OIGA sought judicial clarification on the issue of insurance coverage, in light of the insurance company’s insolvency. Id. at ¶ 3–6. The Gerigs and the physician sought a declaration that by virtue of the affiliation agreement, the hospital was responsible for any judgment up to $4 million. The OIGA sought a declaration that by virtue of the affiliation agreement, the hospital was required to pay any judgment to the Gerigs under its self-insurance fund and that consequently, OIGA was not obligated to pay any damages unless the Gerigs exhausted that fund. The hospital moved the trial court to stay the proceedings and to compel arbitration in the medical-malpractice case and “also sought an order compelling arbitration of the dispute regarding whether St. Vincent [was] legally required, pursuant to the agreement, to insure [the physician] through its self-insurance plan.” Id. at ¶ 7. The physician, who was the only other signatory to the affiliation agreement, did not oppose the hospital’s motion. {¶ 38} In deciding the issue, we first noted that the Gerigs and OIGA sought a declaration of the hospital’s rights and obligations to the physician under the affiliation agreement. Id. at ¶ 12. By the same token, they did not have a direct dispute with the hospital. We then held that it would be inequitable to allow them to avoid arbitration while simultaneously seeking a substantive benefit of the contract that contained the arbitration clause. Accordingly, based on the principle of equitable estoppel, we found the arbitration agreement to be enforceable against the interested nonsignatories. Id. at ¶ 19. 16 January Term, 2011 {¶ 39} In this case, the liquidator is not seeking a declaration of E&Y’s obligations to ACLIC. Notably, the liquidator’s claim did not request or require the court to interpret the engagement letter to determine E&Y’s obligations to ACLIC. The complaint alleges the following: {¶ 40} (1) Pursuant to R.C. 3901.04, 3901.041, 3901.042, and 3905.29 and Ohio Adm.Code 3901-1-50, ACLIC had a duty to file its financial statements with ODI, including the financial statement for the year ending December 31, 1998. {¶ 41} (2) Pursuant to Ohio Adm.Code 3901-1-50(E)(1), ACLIC was required to register with ODI the name of its certified public accountant retained to audit its financial statements, and ACLIC registered E&Y as its auditor. {¶ 42} (3) Pursuant to Ohio Adm.Code 3901-1-50(H), E&Y had a duty to conduct its audit in a manner conforming to generally accepted auditing standards. {¶ 43} (4) Pursuant to Ohio Adm.Code 3901-1-50(I), E&Y had a duty to inform ACLIC if it detected any material misstatements in the financial report. {¶ 44} Additionally, the liquidator alleges that E&Y represented in its certification that was filed with ODI that it conducted the audit in accordance with generally accepted auditing standards but that E&Y did not, in fact, conduct its audit in accordance with those standards and, therefore, failed to discover or disclose material misstatements in the financial statements. As a result, the liquidator alleges, even though ACLIC was already insolvent, the superintendent, ACLIC’s creditors, and the public did not know it. This claim plainly arises from statutory duties and certifications filed in public record by ACLIC and E&Y. In no form does the liquidator seek judicial interpretation of the engagement letter. {¶ 45} Further, unlike the nonsignatories in Gerig, the liquidator has a direct dispute with E&Y—that is, she claims that ACLIC’s policyholders, creditors, and the public, as well as ODI itself, relied on and were misled by the 17 SUPREME COURT OF OHIO audit report that E&Y prepared and filed with ODI. Consequently, she alleges, the superintendent was hindered in exercising a greater level of oversight sooner, and E&Y thereby caused harm to policyholders, creditors, and the public by aiding ACLIC in continuing to transact business. By its nature, this is a dispute between E&Y and the liquidator on behalf of the estate’s creditors. Therefore, Gerig is materially different from this case and does not compel the result sought by E&Y. {¶ 46} This matter is guided by our ruling in Henderson, 108 Ohio St.3d 265, 2006-Ohio-906, 843 N.E.2d 152. In Henderson, customers of a titleinsurance company, Lawyers Title, filed a class-action complaint against it for its alleged failure to give them (and other policyholders) a 40 percent reissue credit that they were entitled to receive under the applicable rate schedule filed by Lawyers Title with ODI. The named plaintiffs, the Hendersons, bought certain property in May 1999 and sold other property to the Johnsons in August 1999. At each transaction, the buyers and sellers split the cost of title insurance; Lawyers Title provided the insurance for both deals. Although the Hendersons and the Johnsons split the cost of the second insurance policy, it insured record title in the purchaser of the property, the Johnsons. {¶ 47} Lawyers Title sought to compel the Hendersons to arbitrate based on an arbitration clause contained in the insurance policy that it issued to the Johnsons. Id. at ¶ 5. We upheld the lower courts’ denial of Lawyers Title’s motion on two bases, stating, “The holding in Gerig applies when a nonparty is ‘seeking a declaration of the signatories’ rights and obligations under the contract.’ ” (Emphasis added in Henderson.) Id. at ¶ 42, quoting Gerig, 95 Ohio St.3d 478, 2002-Ohio-2581, 769 N.E.2d 381, ¶ 19. We reasoned that “the sellers’ alleged rights with regard to a reissue credit exist independently of the purchasers’ rights and obligations under the policy because the sellers are not parties to the 18 January Term, 2011 insurance contract and their rights arise instead from the terms of the insurer’s rate schedule [that was filed with ODI].” Id. {¶ 48} It is difficult to imagine a fact pattern that fits more neatly into the Henderson rule than the one presented here. The liquidator’s claims arise from the harm that she alleges was caused by E&Y’s filing of its certification of ACLIC’s financial statement. Once the liquidator discovered that ACLIC was already insolvent when it filed financial statements that represented that it was solvent, the liquidator could trace the alleged harm to E&Y via the public filings and certifications, without reference to the engagement letter. Therefore, the claims do not arise from the engagement letter wherein E&Y agreed to provide the accounting services in conformance with the standards that the codes independently required it to observe. {¶ 49} For all of these reasons, the malpractice claim does not arise from the engagement letter that contains the arbitration provision, and therefore, the liquidator is not bound by it.
{¶ 50} The liquidator’s second claim alleged that ACLIC transferred money to E&Y after it became insolvent and did so either to improperly favor E&Y or to defraud other creditors. Because preference and fraudulent-transfer claims arise only by virtue of statute and arise only in favor of the liquidator, they cannot as a matter of law arise from a contract entered into by an insolvent insurer. Therefore, E&Y may not enforce the arbitration clause against the liquidator’s preference claims, because ACLIC did not have authority to bind the liquidator to arbitrate those claims. See Peters v. Columbus Steel Castings Co., 115 Ohio St.3d 134, 2007-Ohio-4787, 873 N.E.2d 1258, at ¶ 6. {¶ 51} In Peters, an employee entered into a contract with his employer that required him to arbitrate any legal claims “regarding [his] employment.” Id. at ¶ 2. By its express terms, the arbitration provision purported to apply to the 19 SUPREME COURT OF OHIO employee’s “heirs, beneficiaries, successors, and assigns.” Id. The employee was fatally injured at work. Thereafter, his estate brought a survival action, as well as a wrongful-death action. Based on the arbitration provision of the employment agreement, the employer sought to compel arbitration of both claims. In response, the estate dismissed the survival claim and proceeded solely on the wrongful-death claim. The court of appeals affirmed the trial court’s denial of the motion to dismiss for arbitration, and we upheld that decision. Id. at ¶ 6. {¶ 52} In so holding, we explained that even though the claims are brought by the same nominal party, a survival action is brought to compensate for injuries a decedent sustained before death but that a wrongful-death action is brought on behalf of the decedent’s beneficiaries for their damages arising from that death. Id. at ¶ 11. We further explained that there is no common-law wrongful-death action—only statutory rights that spring to life after a wrongful death. Id. at ¶ 9. With this understanding, we applied the principle that “only signatories to an arbitration agreement are bound by its terms” and, accordingly, held that “ ‘[i]njured persons may release their own claims; they cannot, however, release claims that are not yet in existence and that accrue in favor of persons other than themselves.’ ” Id. at ¶ 7 and 15, quoting Thompson v. Wing (1994), 70 Ohio St.3d 176, 183, 637 N.E.2d 917. The employee, therefore, “could not restrict his beneficiaries to arbitration of their wrongful-death claims, because he held no right to those claims; they accrued independently to his beneficiaries for the injuries they personally suffered as a result of the death.” Id. at ¶ 19. {¶ 53} Likewise, an insurance company does not have the authority to bind the liquidator to arbitrate preference or fraudulent-transfer claims, which are purely statutory claims that spring to life in favor of the liquidator only upon the issuance of a liquidation order. R.C. 3903.26. The very nature of the preference claim suggests this result. It would be illogical to allow an insolvent insurer to bind the liquidator to arbitrate her preference claims when such claims exist only 20 January Term, 2011 when there is an allegation that the insolvent insurer did something improper by transferring the money in the first place. See R.C. 3903.26(A) (“Every transfer made    by an insurer within one year prior to the filing of a successful complaint for rehabilitation or liquidation    is fraudulent as to then existing and future creditors if made or incurred without fair consideration, or with actual intent to hinder, delay, or defraud either existing or future creditors”). Therefore, the liquidator’s preference claims cannot, as a matter of law, be subject to an arbitration agreement entered into by an insolvent insurer.
{¶ 54} The liquidator’s malpractice and preference claims are not subject to arbitration based on the agreement entered into by E&Y and ACLIC. Therefore, E&Y’s third argument that the liquidator cannot disavow part of a contract is moot. Likewise, we do not reach the liquidator’s argument that an irreconcilable conflict exists between the Ohio Liquidation Act and the Ohio Arbitration Act. The Tenth District did not analyze whether the liquidator’s claims arise from the engagement letter. Instead, it relied on another case in which it concluded that “ ‘compelling arbitration against the will of the liquidator will always interfere with the liquidator’s powers and will always adversely affect the insolvent insurer’s assets.’ (Emphasis sic.)” Hudson v. Ernst & Young, 189 Ohio App.3d 60, 2010-Ohio-2731, 937 N.E.2d 585, at ¶ 20, quoting Pipoly, 155 Ohio App.3d 171, 2003-Ohio-5666, 800 N.E.2d 50, at ¶ 45. In Pipoly, the Tenth District held that the liquidator was not bound to an arbitration agreement in an employment contract that was entered into by the insurer and its employees, because her claims did not arise from the employment contract. Nonetheless, that court went on to hold that conflicts, when they did arise, would always be irreconcilable and arbitration agreements of the insolvent insurer’s can never be enforced against the liquidator. But we are required by the General Assembly to 21 SUPREME COURT OF OHIO construe potentially conflicting statutes so that effect is given to both. R.C. 1.51. We have done so. D. The Tolling Agreement Did Not Preserve the Right to Compel Arbitration {¶ 55} E&Y’s second proposition can be disposed of in short order. E&Y contends that the tolling agreement preserved its right to compel arbitration under now-overruled Tenth District case law. In the tolling agreement, E&Y agreed that for a period of one year from the effective date, May 2, 2002, the liquidator “may forbear and postpone the filing, commencement and prosecution of any and all claims or causes of action it may have against E&Y: (a) arising out of accounting or auditing services provided by E&Y to ACLIC; or (b) arising out of transfers of monies or other property from ACLIC to E&Y during the period from March 13, 1999 to March 13, 2000.” The liquidator also agreed that E&Y could likewise “forbear and postpone the filing, commencement and prosecution of any and all claims, causes of action or counterclaims it may have against ACLIC: (a) arising out of accounting or auditing services provided by E&Y to ACLIC; or (b) arising out of transfers of monies or other property from ACLIC to E&Y during the period from March 13, 1999 to March 13, 2000.” The parties agreed that any lawsuit brought within the tolling period would not be deemed time-barred if the lawsuit or claim would not be deemed time-barred on the effective date. The parties further agreed that the liquidator “may otherwise assert, as defenses to any lawsuit or claim E&Y may file against ACLIC, all defenses that ACLIC has as of the Effective Date, including but not limited to the statute of limitations,” and that E&Y “may otherwise assert, as defenses to any lawsuit or claim the liquidator may file against E&Y, all defenses that E&Y has as of the Effective Date, including but not limited to the statute of limitations.” {¶ 56} “The general rule is that a decision of a court of supreme jurisdiction overruling a former decision is retrospective in its operation, and the 22 January Term, 2011 effect is not that the former was bad law, but that it never was the law.” Peerless Elec. Co. v. Bowers (1955), 164 Ohio St. 209, 210, 57 O.O. 411, 129 N.E.2d 467. The tolling agreement simply gave each side additional time to file claims against the other and preserved each side’s right to defend against those claims.