Court Opinion

ID: 9882384
Source: CourtListenerOpinion
Date Created: 2023-10-05 22:09:02.808425+00
Date Added: 2024-06-11T15:01:26.923431
License: Public Domain

[Cite as Bauer v. River City Mtge., L.L.C., 2023-Ohio-3443.]

                            IN THE COURT OF APPEALS
                   FIRST APPELLATE DISTRICT OF OHIO
                             HAMILTON COUNTY, OHIO

 ALYSSA BAUER,                                      :          APPEAL NO. C-230001
                                                               TRIAL NO. A-2203082
       Plaintiff-Appellant,                         :
                                                                  O P I N I O N.
    vs.                                             :

 RIVER CITY MORTGAGE, LLC,                          :

    and                                             :

 NICHOLAS A. HUNTER,                                :

       Defendants-Appellees.                        :

Civil Appeal From: Hamilton County Court of Common Pleas

Judgment Appealed From Is: Reversed and Cause Remanded

Date of Judgment Entry on Appeal: September 27, 2023

Haber LLP, Richard C. Haber, Lindsey K. Self and Natalie D. Davis, for Plaintiff-
Appellant,

Owens and Yurik LLC and Timothy J. Owens, for Defendants-Appellees.
                     OHIO FIRST DISTRICT COURT OF APPEALS

KINSLEY, Judge.

       {¶1}    Plaintiff-appellant Alyssa Bauer appeals from the trial court’s decision

granting defendants-appellees River City Mortgage, LLC, and Nicholas A. Hunter’s

(together “River City”) motion to dismiss or stay proceedings and compel arbitration.

Bauer argues that the employee manual she reviewed and signed as a condition of her

employment with River City was not a binding contract, and she therefore cannot be

compelled to arbitrate based on language contained in the manual. We agree. Because

the employee manual contained a broad disclaimer of contractual obligations, there

was no mutual assent. Accordingly, given that the employee manual was not a binding

contract, Bauer’s assignment of error is sustained, the judgment of the trial court is

reversed, and this cause is remanded to the trial court for further proceedings.

                        Factual and Procedural Background

       {¶2}   Bauer was employed by River City as an administrative assistant. As a

condition of her employment, Bauer reviewed River City’s employee manual and

signed the accompanying acknowledgement form.             Among other policies, the

employee manual contained an arbitration and choice-of-law provision, which

required the parties to arbitrate rather than litigate their disputes. The following

portions of the acknowledgement form that Bauer signed are also relevant to this

appeal:

       This Employee Manual has been prepared for your understanding of the

       policies, practices and benefits of River City Mortgage. It is important

       to read this entire Manual. We reserve the right to make changes

       at any time without notice and to interpret these policies and

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                    OHIO FIRST DISTRICT COURT OF APPEALS

       procedures at the discretion of our Company. This Employee

       Manual supersedes all prior manuals and previously-issued policies.

                                        ***

       You acknowledge that this Manual is not intended to create,

       nor shall be construed as creating, any express or implied contract of

       employment for a definite or specific period of time, between you and

       Company or to otherwise create express or implied legally

       enforceable contractual obligations on the part of Company

       concerning     any     terms,    conditions,     or   privileges      of

       employment.

(Emphasis added.)

       {¶3}   In her complaint, Bauer alleged that she was eventually promoted to the

position of executive assistant and reported directly to Hunter. She further alleged

that she was subjected to repeated discrimination and harassment by Hunter and that

River City’s human resources representative was aware of this inappropriate behavior

by Hunter but did not intervene.       Bauer was eventually discharged from her

employment with River City.

       {¶4}   River City moved to dismiss or stay proceedings and compel arbitration.

They asserted that the employee manual that Bauer reviewed and the accompanying

acknowledgement form that she signed prior to her employment contained a

mandatory arbitration policy which encompassed her claims against them. They

further argued that either dismissal or a stay of proceedings was necessary, because

the employee manual was a binding contract. Because the trial court found that Bauer

had expressly agreed to arbitrate disputes with River City by signing the

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                      OHIO FIRST DISTRICT COURT OF APPEALS

acknowledgement form that accompanied the employee manual, it granted

defendants’ motion and stayed proceedings pending arbitration.

       {¶5}   Bauer now appeals.

                     Employee Handbooks as Implied Contracts

       {¶6}   In her sole assignment of error, Bauer argues the trial court erred in

granting defendants’ motion to dismiss or stay proceedings and compel arbitration.

Bauer asserts that neither the employee manual nor the arbitration provision in the

employee manual constitutes a binding contract.

       {¶7}     “Whether a controversy is arbitrable under a contract requires the

court to invoke principles of contract interpretation, and thus presents a question of

law, which we review de novo.” Rippe & Kingston Co. PSC v. Kruse, 1st Dist. Hamilton

No. C-130587, 2014-Ohio-2428, ¶ 20.      The essential elements of contract formation

are required to compel arbitration. Id. We summarized the requirements of contract

formation in Deffren v. Johnson:

       A contract is generally defined as a promise, or a set of promises,

       actionable upon breach.      And the essential elements of a contract

       include an offer, acceptance, contractual capacity, consideration, a

       manifestation of mutual assent and legality of object and of

       consideration. A meeting of the minds as to the essential terms of the

       contract is a requirement to enforcing the contract.

(Internal quotation marks and citations omitted.) Deffren v. Johnson, 2021-Ohio-817,

169 N.E.3d 270, ¶ 16 (1st Dist.).

       {¶8}   And in Smiddy v. Kinko’s, Inc., we explained implied contracts in the

context of employee handbooks:

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                     OHIO FIRST DISTRICT COURT OF APPEALS

       Under a theory of implied contract, the terms of employee handbooks,

       policy manuals, and the like may alter the initial at-will nature of the

       employment. In order to have this effect, however, both parties must

       have intended for the language in handbooks or manuals to be legally

       binding. In other words, the employee’s belief that the handbook

       affords him contractual rights does not mean that it does unless the

       employer intends it do so. As in all contracts, express or implied, both

       parties must intend to be bound. Absent mutual assent, a handbook

       becomes merely a unilateral statement of rules and policies which create

       no obligation and rights.

(Internal quotation marks and citations omitted.) Smiddy v. Kinko’s, Inc., 1st Dist.

Hamilton No. C-020222, 2003-Ohio-446, ¶ 20.

       {¶9}   In Deffren, we further explained that “an employee handbook cannot

form the basis of an implied contract unless both parties intended for the language in

handbooks or manuals to be legally binding.” (Internal quotation marks and citations

omitted.) Deffren at ¶ 19. There, we held that the employee handbook at issue did not

create contractual obligations, because it expressly disavowed any binding force,

reserved the right for modification at any time unilaterally by the employer, and

specified that employees were at-will employees. Id. at ¶ 20.

       {¶10} Similarly, in Redmond v. Big Sandy Furniture, Inc., the court held the

arbitration agreement was unenforceable where it gave “almost unfettered authority

upon [the employer] to modify or terminate the arbitration clause.” Redmond v. Big

Sandy Furniture, Inc., 4th Dist. Lawrence No. 08AC12, 2008-Ohio-6084, ¶ 13

(collecting cases). And in Miller v. Lindsay-Green Inc., the court reached the same

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                      OHIO FIRST DISTRICT COURT OF APPEALS

conclusion, despite the employee’s execution of an acknowledgment form. Miller v.

Lindsay-Green, Inc., 10th Dist. Franklin No. 04AP-848, 2005-Ohio-6366, ¶ 67-68.

This was because the court reasoned that the acknowledgement form was nothing

more than a written memorialization of the employee’s receipt of the handbook. Id.

at ¶ 64.

       {¶11} Conversely, in Cunningham-Malhoit v. Salomon Smith Barney, Inc., a

case upon which River City heavily relies, the court held that two employee handbook

receipt forms constituted agreements to arbitrate. Cunningham-Malhoit v. Salomon

Smith Barney, Inc., 6th Dist. Lucas No. L-02-1277, 2003-Ohio-2795, ¶ 19. In one of

the employee handbook receipt forms, the employee explicitly “agreed that she would

be bound by [the employer’s] Principles of Employment, which include[ed] a

predispute, employment arbitration provision as a part of her employment.” (Internal

quotation marks omitted.) Id. at ¶ 17. Because this language evidenced an enforceable

contract, the court held the employee had “clearly agreed to submit all employment

disputes to arbitration.” Id. at ¶ 19.

       {¶12} Likewise, in Corl v. Thomas & King, the court held that because the

employee signed a policy acknowledgment form that specified that she agreed to

binding arbitration as the sole and exclusive method of resolving employment

disputes, the contract would be enforced as written. Corl v. Thomas & King, 10th Dist.

Franklin No. 05AP-1128, 2006-Ohio-2956, ¶ 18, 27. The court noted that where “both

parties agree to take certain disputes to arbitration and to be bound by the outcome,

sufficient consideration exists.” Id. at ¶ 20.

       {¶13} Here, unlike the acknowledgement forms in Cunningham and Corl, the

acknowledgment form that Bauer signed did not make specific reference to

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                     OHIO FIRST DISTRICT COURT OF APPEALS

arbitration. Though Bauer agreed to comply with the policies in the employee manual

and be bound by them, the acknowledgement form she signed also clearly and

unequivocally disavowed any binding force. The acknowledgment form stated that the

employee manual was “not intended to create, nor shall be construed as creating any

express or implied contract of employment * * * or to otherwise create express or

implied legally enforceable contractual obligations on the part of [River City].”

       {¶14} Further, the acknowledgement form provided River City with

“unfettered authority” to modify the employee manual without any notice to Bauer.

See Redmond, 4th Dist. Lawrence No. 08AC12, 2008-Ohio-6084, at ¶ 13. Many courts

have “found that permitting an employer to unilaterally amend or terminate an

arbitration agreement without notice renders the agreement illusory.” Id. at ¶ 13-14

(collecting cases). Because the acknowledgement form disavowed any binding force

and provided River City with the authority to amend the employee manual at any time

without notice to Bauer, we hold there was no meeting of the minds here. And absent

mutual assent, the employee handbook was merely a unilateral statement of rules and

policies which did not create any contractual obligation and rights. See Smiddy, 1st

Dist. Hamilton No. C-020222, 2003-Ohio-446, at ¶ 20.

       {¶15} Defendants rely heavily on Ohio’s strong policy favoring arbitration to

argue the employee manual was a binding contract. But this policy is not triggered

when a broad disclaimer of contractual obligations indicates the parties never agreed

to arbitrate. Further, the presumption in favor of arbitration is useful in resolving

ambiguities in the language of an arbitration provision. Rippe & Kingston Co. PSC,

1st Dist. Hamilton No. C-130587, 2014-Ohio-2428, at ¶ 20.           But here, no such

ambiguities exist, as the acknowledgement form clearly and unequivocally disclaims

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                      OHIO FIRST DISTRICT COURT OF APPEALS

any contractual obligations. Defendants’ reliance on Ohio’s strong policy favoring

arbitration is therefore misplaced.

       {¶16} Bauer also contends the arbitration provision is not an enforceable

contract on its own. But because the arbitration provision is incorporated in the

employee manual which we hold is not a binding contract, this contention is moot.

       {¶17} Therefore, because the employee manual did not constitute a binding

contract, the trial court erred in granting defendants’ motion and staying proceedings

pending arbitration. Bauer’s assignment of error is sustained, the judgment of the trial

court is reversed, and the matter is remanded to the trial court for further proceedings.

                                       Conclusion

       {¶18} For the foregoing reasons, we hold that the trial court erred in granting

defendants’ motion to dismiss or stay proceedings and compel arbitration. We sustain

Bauer’s assignment of error, reverse the judgment of the trial court, and remand the

cause to the trial court.

                                               Judgment reversed and cause remanded.

CROUSE, P.J., and BERGERON, J., concur.

Please note:
       The court has recorded its own entry on the date of the release of this opinion.

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