Court Opinion

ID: 4579607
Source: CourtListenerOpinion
Date Created: 2020-10-22 16:11:02.647756+00
Date Added: 2024-06-11T08:47:48.821898
License: Public Domain

[Cite as Debois, Inc. v. Guy, 2020-Ohio-4989.]

                               COURT OF APPEALS OF OHIO

                              EIGHTH APPELLATE DISTRICT
                                 COUNTY OF CUYAHOGA

DEBOIS, INC. DBA DBS FINANCIAL,                   :

                 Plaintiff-Appellant,             :
                                                              No. 108943
                 v.                               :

DUANE GUY, ET AL.,                                :

                 Defendants-Appellees.            :

                                JOURNAL ENTRY AND OPINION

                 JUDGMENT: AFFIRMED
                 RELEASED AND JOURNALIZED: October 22, 2020

            Civil Appeal from the Cuyahoga County Court of Common Pleas
                                Case No. CV-17-888154

                                            Appearances:

                 Collins, Roche, Utley & Gamer, L.L.C., and Megan D.
                 Stricker, for appellants.

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

MARY EILEEN KILBANE, J.:

                   Plaintiff-appellant Debois, Inc., d.b.a. DBS Financial (“DBS”), and

third-party defendant-appellant ABC Motor Credit (“ABC”) (jointly, “Appellants”)
appeal the judgment of the trial court denying Appellants’ motion to stay pending

arbitration. For the reasons that follow, we affirm.

I.     BACKGROUND

               ABC is a used car dealership that offers on-site financing through

DBS.    The companies are related and share a common owner, Mr. Sam

Snellenberger.

               Appellee Duane Guy (“Guy”) purchased a 2005 Kia Sedona from ABC

in June 2016. ABC financed the purchase through DBS. ABC and Guy executed a

Motor Vehicle Retail Installment Contract in connection with the vehicle sale. ABC

assigned the contract to DBS. The contract includes an arbitration provision. On

the same day, ABC and Guy also executed an Agreement to Arbitrate, which is

incorporated by reference into the Motor Vehicle Retail Installment Contract.

       A.    The Arbitration Agreement

               The arbitration provisions provide, in relevant part:

       All disputes, claims, or controversies arising from or relating to this
       Contract or the relationships which result from this Contract, or the
       validity of this arbitration clause or the entire Contract, shall, at the
       election of either party, be resolved by binding arbitration * * *.

       ***

       The parties agree and understand that they choose arbitration instead
       of litigation to resolve disputes. * * * The parties agree and understand
       that all disputes arising under case law, statutory law, and all other laws
       including, but not limited to, all contract, tort, and property disputes,
       will be subject to binding arbitration in accordance with this Contract.
       Any claim or dispute is to be arbitrated on an individual basis, and not
       as a class action, and you expressly waive any right you may have to
       arbitrate a class action.
       ***

       The institution and maintenance of any action for judicial relief in a
       court to obtain a monetary judgment or to enforce this Contract shall
       not constitute a waiver of the right of any party to compel arbitration
       regarding any dispute or remedy subject to arbitration in this Contract.

               The agreement further provides that no party is “required to arbitrate

any individual claim that is filed * * * until a Party entitled to do so requests

arbitration” and that “no Party waives the right to request arbitration under this

Agreement by exercising other rights and remedies or by initially agreeing to litigate

a claim in court * * *.”

       B.     DBS Initiated Litigation Against Guy

               DBS filed a complaint against Guy to recover $6,869.60 in alleged

unpaid payments on the car in October 2017, after repossessing Guy’s vehicle and

selling it at auction. DBS’s complaint attached a copy of the contract, including both

arbitration provisions, but did not mention or assert the right to arbitrate. After

filing its complaint against Guy, DBS moved for default judgment.           Like the

complaint, DBS’s motion for default judgment also did not mention or assert the

right to arbitrate. The trial court set a hearing date for DBS’s motion for default

judgment, but Guy filed a responsive pleading in time to avoid default.

               Guy, pro se at the time, filed an answer and counterclaim against

Appellants on December 18, 2017. After retaining counsel, he amended his initial

pleading on January 3, 2018, to assert a counterclaim against DBS and a third-party

complaint against ABC. Both the counterclaim and third-party complaint asserted
class action allegations.1    Guy’s class action alleges that Appellants prey on

consumers with poor credit through a price-gouging scheme that violates several

laws, including Ohio’s Consumer Sales Practices Act, Ohio’s Retail Installment Sales

Act, and the Truth in Lending Act.

               More specifically, Guy claims that ABC marked up the price of his

vehicle by 159%, resulting in a total profit of approximately 339%, and charged him

a usurious interest rate. (R. 8 at ¶ 22-23, 31.) He further alleges that when the

“overpriced Sedona ceased to work, he could not continue to pay the usurious rate

imposed on him by ABC and DBS.” (Id. at ¶ 32.) He also claims that the notices

DBS sent regarding the auction sale failed to comport with legal standards and that

DBS’s demand of $6,869.60 fails to account for the amount DBS received from the

auction sale of the car.

               Guy filed his counterclaim on January 3, 2018. The day after Guy

filed his counterclaim, Appellants participated in a case management conference

with Guy and the trial court. The trial court set a briefing schedule related to class

certification and set a pretrial for May 9, 2018. Guy claims that Appellants did not

mention arbitration during the conference.

               On January 31, 2018, Appellants jointly moved for an extension of

time to respond to the counterclaim Guy filed against them. The trial court granted

the motion. On February 26, 2018, Appellants further delayed any indication of a

      1 For ease of discussion, we will hereafter refer to Guy’s counterclaim and third-
party complaint as the “counterclaim.”
desire to arbitrate and moved for a second extension of time to respond, which the

trial court also granted. Appellants did not mention a desire to arbitrate in either

motion.

              On March 12, 2018, Appellants’ counsel informed Guy’s counsel by

letter that Appellants intended to pursue arbitration. Just over a week later, on

March 20, 2018, Appellants filed an answer in which they asserted, for the first time,

that Guy’s counterclaim was barred by an arbitration agreement. They also filed a

motion to stay pending arbitration that same day, over five months after initiating

the litigation and just under three months after Guy filed his amended counterclaim.

              After finally moving to stay pending arbitration on March 20, 2018,

Appellants nevertheless continued to participate in the litigation. On March 26,

2018, Appellants responded to Guy’s requests for admission, although their

responses were submitted subject to an objection on the grounds that they were

seeking to enforce arbitration. 2 Before responding to Guy’s discovery requests,

Appellants sought an extension of time from the trial court. The court awarded

Appellants more time, but the judgment entry came after Appellants’ responses

were due to Guy.

              On April 2, 2018, a week after responding to discovery and two weeks

after moving to stay, Appellants filed a third-party complaint seeking

      2 Guy claims that on February 19, 2018, DBS responded to discovery requests Guy
issued pro se. However, there is no direct evidence of this in the record.
indemnification and contribution from their former legal counsel for alleged

negligence related to Appellants’ transaction with Guy.

              Meanwhile, DBS’s initial complaint against Guy was still pending

until March 22, 2018, when DBS filed a notice of voluntary dismissal without

prejudice.   Appellants later voluntarily dismissed their third-party complaint,

without prejudice, on June 5, 2018.

              The parties engaged in a period of limited discovery related to the

arbitration issue and attended two more court conferences.            Guy opposed

Appellants’ motion to stay on December 3, 2018. Appellants filed their final reply

in support of their motion on December 28, 2018.

              On August 22, 2019, the trial court denied Appellants’ motion to stay.

In its judgment entry, the trial court considered Appellants’ participation in the

litigation and found that Appellants’ actions were “inconsistent with the right to

arbitrate and demonstrate a waiver of the right.” (R. 50.) It further found that “DBS

and ABC may not rely on the arbitration agreement to compel arbitration of this

case” because the agreement “appears to exclude class actions from being arbitrated,

or at best is ambiguous.” (Id.)

              Appellants raise two assignments of error for our review:

                             Assignment of Error No. 1

      The trial court committed reversible error in finding that DBS and ABC
      waived their right to arbitrate pursuant to the signed agreement with
      Duane Guy.
                              Assignment of Error No. 2

      The trial court committed reversible error in finding that the agreement
      to arbitrate is unenforceable on the basis that it appears to exclude class
      actions from being arbitrated.

               We will address Appellants’ two assignments of error in turn.

II.   LAW AND ANALYSIS

      A. Assignment of Error No. 1

               Appellants state their first assignment of error as follows:

      The trial court committed reversible error in finding that DBS and ABC
      waived their right to arbitrate pursuant to the signed agreement with
      Duane Guy.

               In their first assignment of error, Appellants argue that they did not

waive their contractual right to arbitrate. Guy argues that Appellants did waive their

right to arbitrate. The trial court reviewed Appellants’ participation in the litigation

and ruled that Appellants waived their right to arbitrate, finding that their

participation in the litigation was inconsistent with the right to arbitrate.

          1. Waiver Standard of Review

               Whether a party has waived the right to arbitrate is subject to the

abuse of discretion standard. Gertson v. Parma VTA, L.L.C., 8th Dist. Cuyahoga

No. 108823, 2020-Ohio-3455, ¶ 11.           Thus, we will review Appellants’ first

assignment of error for abuse of discretion. Abuse of discretion implies that the trial

court’s ruling was “unreasonable, arbitrary, or unconscionable” and requires “more

than an error of law or judgment” to merit reversal. Blakemore v. Blakemore, 5

Ohio St.3d 217, 219, 450 N.E.2d 1140 (1983).
                 The trial court is in the best position to determine whether a party has

waived its right to arbitrate. Phillips v. Lee Homes, 8th Dist. Cuyahoga No. 64353,

1994 Ohio App. LEXIS 596, 10-11 (Feb. 17, 1994). Accordingly, when applying the

abuse of discretion standard, an appellate court may not substitute its own judgment

for that of the trial court. Black v. Hicks, 8th Dist. Cuyahoga No. 108958, 2020-

Ohio-3976, ¶ 96. “Thus, if the record demonstrates a reasonable basis for the trial

court’s decision, we must affirm.” MRK Technologies, Ltd. v. Accelerated Sys.

Integration, Inc., 8th Dist. Cuyahoga No. 84747, 2005-Ohio-30, ¶ 11.

                 Upon review, we affirm the trial court’s decision. We find that the

record demonstrates a reasonable basis for the trial court’s decision and therefore

cannot find that the trial court abused its discretion in finding that Appellants

waived their right to arbitrate. Accordingly, we overrule Appellants’ first assignment

of error.

            2. Appellants’ Waiver of Right to Arbitrate by Inconsistent Acts

                 R.C. 2711.02(B) permits a court to grant a stay pending arbitration if

it finds that (1) “the issue involved in the action is referable to arbitration under an

agreement in writing for arbitration” and (2) “the applicant for the stay is not in

default in proceeding with arbitration.” R.C. 2711.02(B). When determining waiver,

the “essential question is whether, based on the totality of the circumstances, the

party seeking arbitration has acted inconsistently with the right to arbitrate.”

Phillips at 8.
               The right to arbitrate is not without limits and can be waived. Gertson

at ¶ 15, citing Bass Energy, Inc. v. Highland Hts., 193 Ohio App.3d 725, 2010-Ohio-

2102, 954 N.E.2d 130, ¶ 33 (8th Dist.); Blue Technologies Smart Solutions, L.L.C. v.

Ohio Collaborative Learning Solutions, Inc., 8th Dist. Cuyahoga No. 108535, 2020-

Ohio-806, ¶ 13. Nevertheless, we are mindful that “there is a strong public policy

that favors arbitration” and we therefore “do not lightly infer that a party who has

initiated litigation on a matter has waived the right to arbitration.” Gertson v.

Parma VTA, L.L.C., 8th Dist. Cuyahoga No. 108823, 2020-Ohio-3455, ¶ 16, citing

Harsco Corp. v. Crane Carrier Co., 122 Ohio App.3d 406, 414, 701 N.E.2d 1040 (3d

Dist.1997).

               In light of the policy in favor of arbitration, the party arguing waiver

bears a “heavy burden.” Gertson at ¶ 16, citing U.S. Bank v. Wilkens, 8th Dist.

Cuyahoga No. 93088, 2010-Ohio-262, ¶ 32. “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.” Blue Technologies at ¶ 13, quoting Gembarski v.

PartsSource, Inc., 157 Ohio St.3d 255, 2019-Ohio-3231, 134 N.E.3d 1175, ¶ 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.
                   a)   Appellants         knew      about     the     arbitration
                   agreement.

              Appellants do not argue that they were ignorant of the arbitration

policy and there is no evidence that they did not know about the arbitration

provisions before DBS invoked the court’s jurisdiction and initiated litigation

against Guy. ABC drafted the contract and assigned it to DBS, who then attached

the arbitration provisions to its complaint. Thus, there is no basis to conclude that

Appellants did not know about the arbitration agreement. Blue Technologies Smart

Sols, L.L.C. v. Ohio Collaborative Learning Solutions, Inc., 8th Dist. Cuyahoga No.

108535, 2020-Ohio-806, ¶ 16 (“‘[A] contracting party is presumed to know the

reasonable import of the contents of a signed agreement, including the existence and

scope of an arbitration clause.’”), quoting Garcia v. Wayne Homes, 2d Dist. Clark

No. 2001 CA 53, 2002-Ohio-1884, ¶ 64.

              Having established that Appellants knew about their arbitration

rights, we next discuss whether the trial court abused its discretion in finding that

Appellants acted inconsistently with their rights.

                   b)   Appellants acted inconsistently with the right to
                   arbitrate.

              Because waiver calls for consideration of the totality of the

circumstances, “[w]hether a party waived their right to arbitrate is dependent on the

facts of that particular case.” Cantie v. Hillside Plaza, 8th Dist. Cuyahoga No.

99850, 2014-Ohio-822, ¶ 17, citing Phillips v. Lee Homes, 8th Dist. Cuyahoga No.
64353, 1994 Ohio App. LEXIS 596 (Feb. 17, 1994). Factors that a trial court might

consider in evaluating the totality of circumstances include:

      “‘(1) whether the party seeking arbitration invoked the jurisdiction of
      the trial court by filing a complaint, counterclaim, or third-party
      complaint without asking for a stay of proceedings; (2) the delay, if any,
      by the party seeking arbitration in requesting a stay of proceedings or
      an order compelling arbitration; (3) the extent to which the party
      seeking arbitration participated in the litigation, including the status of
      discovery, dispositive motions, and the trial date; and (4) any prejudice
      to the non-moving party due to the moving party’s prior inconsistent
      actions.’”

Blue Technologies at ¶ 19, quoting Am. Gen. Fin. v. Griffin, 8th Dist. Cuyahoga No.

99088, 2013-Ohio-2909, ¶ 18, quoting Ohio Bell Tel. Co. v. Cent. Transp., Inc., 8th

Dist. Cuyahoga No. 96472, 2011-Ohio-6161, ¶ 16.

                Appellants argue that they did not act inconsistently with the right to

arbitrate, but we cannot find that the trial court abused its discretion in finding that

Appellants waived the right to arbitrate. The trial court is in the best position to

assess the significance of Appellants’ actions. Phillips at 10. Here, the trial court

considered the circumstances and did not act unreasonably, arbitrarily, or

unconscionably in determining that Appellants acted inconsistently with the right

to arbitrate.

                           (1)    Appellants invoked the court’s jurisdiction.

                The first factor to consider is “whether the party seeking arbitration

invoked the jurisdiction of the trial court by filing a complaint, counterclaim, or

third-party complaint without asking for a stay of proceedings.” Blue Technologies

at ¶ 19. The trial court noted that DBS repeatedly invoked the court’s jurisdiction by
initiating the lawsuit and seeking default judgment. Those acts support the trial

court’s finding of waiver.      See MRK Technologies, Ltd. v. Accelerated Sys.

Integration, Inc., 8th Dist. Cuyahoga No. 84747, 2005-Ohio-30, ¶ 13 (finding waiver

where party had “obvious knowledge of the arbitration provision” yet “initiated

proceedings in the common pleas court”); Phillips v. Lee Homes, 8th Dist. Cuyahoga

No. 64353, 1994 Ohio App. LEXIS 596, 15 (Feb. 17, 1994) (finding waiver where

party initiated counterclaims and sought partial summary judgment because

“[s]ubmitting a case to the trial court for decision is not consistent with a desire to

arbitrate”).

               The trial court also noted that Appellants again invoked the court’s

jurisdiction by filing a third-party complaint.      Although Appellants eventually

voluntarily dismissed their complaint and third-party complaint without prejudice,

it was not an abuse of discretion for the trial court to consider the fact that they were

filed in the first place. See MRK Technologies, Ltd. v. Accelerated Sys. Integration,

Inc., 8th Dist. Cuyahoga No. 84747, 2005-Ohio-30, ¶ 14 (voluntary dismissal of

initial complaint was not a revocation of waiver where party seeking arbitration

initiated the lawsuit and actively litigated the case before its dismissal). Appellants

filed their third-party complaint after they sought a stay of the proceedings, but the

timing of their filing does not make it consistent with seeking arbitration, especially

since DBS initiated the litigation without seeking arbitration. We agree with the trial

court that filing a third-party complaint after asserting the right to arbitrate was

inconsistent with seeking the right to arbitrate and supports a finding of waiver.
                           (2)    Appellants delayed seeking arbitration.

               The second factor considers “the delay, if any, by the party seeking

arbitration in requesting a stay of proceedings or an order compelling arbitration.”

Blue Technologies at ¶ 19. The trial court noted that Appellants did not move to stay

pending arbitration until several months after DBS filed its complaint.3

               This court has previously observed that a delay of six months “has

been deemed both sufficient to show waiver, and insufficient to show waiver,

depending on the degree of participation in the litigation during this time period.”

Vining v. Logan Clutch Corp., 8th Dist. Cuyahoga No. 108563, 2020-Ohio-675, ¶ 14

(collecting cases). Appellants did not move to stay until about five months after DBS

filed its complaint against Guy. Before moving to stay, DBS initiated the litigation,

sought default judgment, attended a court conference, and sought two extensions of

time before officially asserting the right to arbitrate. Considering the circumstances

of the delay, we cannot say the trial court abused its discretion in finding that

Appellants’ delay weighed in favor of finding waiver.

                           (3)    Appellants participated in the litigation.

               The third factor requires courts to examine “the extent to which the

party seeking arbitration participated in the litigation, including the status of

discovery, dispositive motions, and the trial date.” Blue Technologies at ¶ 19. The

      3   The trial court stated that Appellants waited six months after initiating the
litigation to assert the right to arbitrate. DBS filed its complaint initiating litigation
against Guy on October 27, 2017. Appellants moved to stay pending arbitration on March
20, 2018. Thus, Appellants’ delay in asserting the right to arbitrate was just under five
months after initiating the lawsuit.
trial court noted that Appellants participated in some discovery, although

Appellants objected to the discovery on the grounds that they had a right to arbitrate.

Even though Appellants’ participation in discovery was not extensive, we cannot say

the trial court abused its discretion in finding waiver in light of Appellants’ sum total

participation in the litigation. Apart from the discovery responses, Appellants

initiated the lawsuit, sought default judgment, attended a case management

conference, and sought two extensions of time to respond to Guy’s counterclaim

without mentioning arbitration. Then, after moving to stay, Appellants answered

discovery and filed a third-party complaint. Considered together, Appellants’ acts

are glaringly inconsistent with the desire to arbitrate.

                           (4) Guy would be prejudiced by granting a
                           stay.

               Finally, we consider any prejudice to Guy. The trial court did not

expressly make a finding as to prejudice, but that alone does not constitute an abuse

of discretion. The trial court was not required to find prejudice in order to find

waiver. Cantie v. Hillside Plaza, 8th Dist. Cuyahoga No. 99850, 2014-Ohio-822, ¶

16 (“Whether the nonmoving party was prejudiced is only a factor to be considered

and not necessary for finding waiver occurred.”); Pinnell v. Cugini & Cappoccia

Builders, Inc., 10th Dist. Franklin No. 13AP-579, 2014-Ohio-669, ¶ 20 (“[N]o one

factor is controlling in a totality of the circumstances analysis.”).

               Regardless, the record indicates that the trial court did consider

prejudice. The trial court noted that “Guy seeks to engage in discovery to pursue his

amended class action counterclaim” and that the “‘Arbitration Agreement’ appears
to exclude class actions from being arbitrated, or at best is ambiguous * * *.” (R. 50.)

Guy raised his class action counterclaim in response to DBS’s lawsuit and promptly

sought discovery from Appellants. It appears that the trial court considered that

granting a stay for arbitration would mean that Guy could no longer pursue his class

action counterclaim and could no longer benefit from the discovery he promptly

sought from Appellants, which would undoubtedly be prejudicial to him.

               We agree that Guy would be prejudiced by granting a stay. Appellants

invoked the court’s jurisdiction when DBS filed its complaint and induced Guy to

raise his class action counterclaim in court. Because DBS invoked the court’s

jurisdiction and then delayed nearly five months before seeking arbitration, Guy

filed a pleading pro se, hired counsel, and asserted a class action against Appellants.

He also served discovery on Appellants during their delay and received some

responses, which might not be available to him in arbitration.

               Thus, Appellants’ inconsistent actions support a finding of prejudice.

See Borror Property Mgt., LLC v. Oro Karric N., LLC, S.D.Ohio No. 2:19-cv-04375,

2020 U.S. Dist. LEXIS 14597, 6 (Jan. 29, 2020) (finding waiver where party seeking

to enforce arbitration of opponent’s claims drafted a presuit letter threatening

opponent with litigation in court); 84 Lumber Co. v. O.C.H. Constr., LLC, 2015-

Ohio-4149, 44 N.E.3d 961, ¶ 24 (7th Dist.) (finding that initiating litigation that

requires your opponent to retain an attorney and file responsive pleadings

constitutes prejudice), citing Farrow Builders v. Slodov, 11th Dist. Geauga No.

2000-G-2288, 2001 Ohio App. LEXIS 2952 (June 29, 2001); Supervalu Holdings
v. Schear’s Food Ctrs., 2d Dist. Montgomery No. 16881, 1998 Ohio App. LEXIS

3506, at *11 (June 26, 1998) (“Additionally, a party’s failure to assert a prelitigation

demand for arbitration may contribute to a finding of prejudice because the other

party has no notice of intent to arbitrate.”).

               In sum, the record supports the conclusion that Appellants took an

active role in the litigation and acquiesced to proceeding in a judicial forum. We

cannot say the trial court’s decision was arbitrary, unreasonable, or unconscionable.

Thus, the trial court did not abuse its discretion in finding waiver based on the

totality of the circumstances.

          3. Appellants Do Not Identify An Abuse Of Discretion

               Next, we will address Appellants’ arguments, which largely ignore

that “no one factor is controlling in a totality of the circumstances analysis.” Pinnell

v. Cugini & Cappoccia Builders, Inc., 10th Dist. Franklin No. 13AP-579, 2014-Ohio-

669, ¶ 20.

               They first argue that the trial court abused its discretion in denying

its motion to stay because there is a general presumption in favor of arbitration.

While we are mindful of that presumption, it is not enough to save Appellants from

waiver. The concept of waiver is an exception to the general policy favoring

arbitration. Chapter 2711 of the Revised Code codified Ohio’s policy favoring

arbitration. Doe v. Contemporary Servs. Corp., 8th Dist. Cuyahoga No. 107229,

2019-Ohio-635, ¶ 17, citing Kaminsky v. New Horizons Computer Learning Ctr. of

Cleveland, 2016-Ohio-1468, 62 N.E.3d 1054, ¶ 14-15 (8th Dist.). R.C. 2711.02(B)
permits a court to stay an action pending arbitration only if “the applicant for the

stay is not in default in proceeding with arbitration.” The trial court was not

required to grant Appellants’ motion based merely on the presumption in favor of

arbitration where the totality of circumstances supported the trial court’s finding of

waiver, which we have found to be the case.

               Appellants also take issue with the sequence of events and believe

they should be able to force arbitration of Guy’s counterclaim even though they

initiated the lawsuit with knowledge of the arbitration provisions. They argue that

it “defies logic” to find waiver based on DBS’s initial complaint and motion for

default judgment where those pleadings were filed before Guy filed his class action.

They similarly claim they could not have waived the right to arbitrate because they

asserted the right to arbitrate in all of their post-counterclaim submissions. We

disagree.

               That Guy filed a counterclaim does not excuse DBS’s failure to

immediately raise the right to arbitration when it initiated the litigation and sought

default judgment with knowledge of the arbitration provision. This case is unique

in that the party seeking arbitration initiated the litigation. In most cases, including

Phillips v. Lee Homes, 8th Dist. Cuyahoga No. 64353, 1994 Ohio App. LEXIS 596,

(Feb. 17, 1994), which sets forth the totality of the circumstances test for waiver, it is

the defendant who is seeking to enforce arbitration. See Med. Imaging Network,

Inc. v. Med. Resources, 7th Dist. Mahoning No. 04 MA 220, 2005-Ohio-2783, ¶ 29
(“We note that this test presupposes that it is the defendant who has arguably waived

arbitration since the plaintiff already waived arbitration by filing the suit.”).

               Accordingly, courts agree that filing a lawsuit without mentioning a

right to arbitration, as Appellants did, indicates an implicit waiver of a contractual

right to arbitration, even if the right is eventually asserted after counterclaims are

filed. MRK Technologies, Ltd. v. Accelerated Sys. Integration, Inc., 8th Dist.

Cuyahoga No. 84747, 2005-Ohio-30, ¶ 13, citing Checksmart v. Morgan, 8th Dist.

Cuyahoga No. 80856, 2003-Ohio-163 (party waived its right to arbitrate

counterclaims brought against it after initiating the lawsuit by filing a complaint);

Mills v. Jaguar-Cleveland Motors, Inc., 69 Ohio App.2d 111, 430 N.E.2d 965 (8th

Dist.1980) (“[A] plaintiff’s waiver may be effected by filing suit.”), citing Std.

Roofing Co. v. John G. Johnson & Sons Constr. Co., 54 Ohio App.2d 153, 157, 376

N.E.2d 610 (8th Dist.1977) (plaintiff lessor waived his right to arbitration as long as

the action was pending in court). See also Chef Italiano v. Crucible Dev. Corp., 9th

Dist. Summit No. 22415, 2005-Ohio-4254, ¶ 54 (holding that the initiation of a

lawsuit raises the presumption that the plaintiff waived its right to arbitration); Stow

Masonry Const. v. Larry Evan Hausch Builders, 9th Dist. Summit No. 15454, 1992

Ohio App. LEXIS 4384, at 13 (Aug. 26, 1992) (“When a party to a contract requiring

arbitration either initiates a lawsuit, or as the responding party, files an answer

without a demand for arbitration, that party has waived its right to arbitration under

the contract.”); Jones v. Honchell, 14 Ohio App.3d 120, 470 N.E.2d 219 (12th
Dist.1984), syllabus (“A party to a contract to arbitrate waives its right to arbitration

when it files a lawsuit rather than requesting arbitration.”).

               Finally, Appellants hang their hats on the existence of antiwaiver

language within the arbitration provisions. They argue that they could not have

waived the right to arbitrate by initiating litigation because the arbitration

provisions contain an antiwaiver clause. Such a clause, however, is merely one

factor a court may consider in evaluating waiver of the right to arbitrate and can be

waived just like any other contractual provision. Pinnell v. Cugini & Cappoccia

Builders, Inc., 10th Dist. Franklin No. 13AP-579, 2014-Ohio-669, ¶ 19, citing

Snowville Subdivision Joint Venture Phase I v. Home S. & L. of Youngstown, Ohio,

8th Dist. Cuyahoga No. 96675, 2012-Ohio-1342, ¶ 17, citing Glenmoore Builders,

Inc. v. Smith Family Trust, 9th Dist. Summit No. 24299, 2009-Ohio- 3174, ¶ 41;

Dynamark Sec. Ctrs., Inc. v. Charles, 9th Dist. Summit No. 21254, 2003-Ohio-2156,

¶ 18. See also 13 Williston on Contracts 39:36 (4th Ed.) (“The general view is that a

party to a written contract can waive a provision of that contract by conduct despite

the existence of a so-called antiwaiver or failure to enforce clause in the contract”.).

               Relying on the antiwaiver clause to save them from the litigation they

initiated, Appellants direct us to three cases:       (1) Credit Acceptance Corp. v.

Davisson, 644 F.Supp.2d 948 (N.D. Ohio 2009); (2) Household Realty Corp. v.

Rutherford, 2d Dist. Montgomery No. 20183, 2004-Ohio-2422; and (3) U.S. Bank

v. Wilkens, 8th Dist. Cuyahoga No. 93088, 2010-Ohio-262. Appellants read these

cases too broadly.
               Credit Acceptance Corp., applying federal law, held that the plaintiff

did not waive its right to arbitrate where the parties’ arbitration agreement included

an antiwaiver provision and there were no “factual circumstances where the plaintiff

requested arbitration after attempting to litigate the defendant’s counterclaims.” Id.

at 957. Here, however, Appellants attended a court conference after Guy filed his

counterclaim and sought two extensions of time to respond before officially

asserting their right to arbitrate by moving to stay. In addition, after moving to stay

pending arbitration, Appellants filed a third-party complaint and responded to

limited discovery. Thus, Credit Acceptance Corp. is distinguishable.

               As for the Ohio state cases, Household Realty Corp. v. Rutherford

and U.S. Bank v. Wilkens, both dealt with antiwaiver clauses within arbitration

agreements, but neither held that such clauses universally or automatically preclude

a finding of waiver.     Rather, each court, under the circumstances before it,

determined that the right to arbitrate had not been waived. The Twelfth District has

similarly recognized this point of distinction in its review of Household Realty Corp.

v. Rutherford and U.S. Bank v. Wilkens:

      While both of those cases dealt with a substantially similar waiver
      provision contained within an arbitration agreement, the issue before
      those courts was not whether that clause precludes a court from ever
      finding waiver occurred, but instead, whether the act of filing a lawsuit
      waived that party’s right to later compel arbitration. See Household
      Realty at ¶ 20; U.S. Bank at ¶ 10. In fact, even after finding the waiver
      provision ‘explicitly provided the filing of a foreclosure action did not
      amount to a waiver of arbitrable claims,’ the Eighth District Court of
      Appeals in U.S. Bank went on to analyze whether the bank waived its
      right to arbitrate by engaging in inconsistent acts. See Id. at ¶ 10-45.
Dixon v. Residential Fin. Corp., 12th Dist. Madison No. CA2009-11-024, 2010-

Ohio-4409, ¶ 15, fn. 4.

               Both cases are also distinguishable from the instant case in other

ways. In Household Realty Corp. v. Rutherford, the plaintiff seeking to arbitrate

took no other action after initiating the litigation and moved the court to stay

litigation pending arbitration of the counterclaims immediately after the

counterclaim was filed. Appellants, however, attended a court conference and

sought two extensions of time before formally moving to stay pending arbitration,

then answered discovery and filed a third-party claim after moving to stay. Second,

the court required a showing of prejudice, even though prejudice is merely one factor

to consider among the totality of the circumstances. The court held: “Because the

Rutherfords failed to establish that HRC’s allegedly inconsistent act of filing this

lawsuit prejudiced them, they have not met their burden of proof to show that HRC

waived its right to arbitrate.” Id. at ¶ 1. Prejudice, however, is merely one factor and

a trial court need not find prejudice in order to find waiver. Phillips at 17. Moreover,

although the trial court here did not expressly find prejudice, the record supports a

finding of prejudice, unlike in Household Realty Corp. v. Rutherford.

               Finally, in U.S. Bank v. Wilkens, this court did not find a waiver of

arbitration even though the bank seeking to arbitrate counterclaims had initiated

the lawsuit in court. In part, the court found that the bank’s delayed request for

arbitration did not waive its right to arbitrate because the bank did not know about

the arbitration provision until after participating in the discovery process. Upon
discovering the arbitration provision, the bank apparently moved for arbitration

shortly thereafter. Wilkens at ¶ 34. Here, as already discussed, Appellants knew

about the arbitration provision before filing suit. Thus, neither the antiwaiver clause

nor the cases Appellants rely on renders the trial court’s decision unreasonable,

arbitrary, or unconscionable. See Cantie v. Hillside Plaza, 8th Dist. Cuyahoga No.

99850, 2014-Ohio-822, ¶ 18-19 (distinguishing Wilkens on similar grounds).

               Having come to the reasonable conclusion that Appellants waived the

right to arbitrate, therefore putting them “in default in proceeding with arbitration”

pursuant to R.C. 2711.02(B), the trial court did not abuse its discretion in denying

Appellants’ motion to stay.

               Appellants’ first assignment of error is overruled.

      B.     Assignment of Error No. 2

               Appellants state their second assignment of error as follows:

      The trial court committed reversible error in finding that the agreement
      to arbitrate is unenforceable on the basis that it appears to exclude class
      actions from being arbitrated.

               In their second assignment of error, Appellants argue that the trial

court erred in finding the arbitration agreement unenforceable because it precludes

class actions. Guy responds that the argument mischaracterizes or misunderstands

the trial court’s ruling. We agree with Guy.

           1. Standard Of Review

               “[W]hether a party has agreed to submit an issue to arbitration or

questions of unconscionability are reviewed under a de novo standard of review.”
Gertson v. Parma VTA, L.L.C., 8th Dist. Cuyahoga No. 108823, 2020-Ohio-3455, ¶

11. Thus, we will review Appellants’ second assignment of error de novo. “Under a

de novo standard of review, we give no deference to a trial court’s decision.” Reznik

v. OH Canon Constr., L.L.C., 8th Dist. Cuyahoga No. 107339, 2019-Ohio-1350, ¶ 10.

          2. The Trial Court Did Not Rule On The Enforceability Of The
             Arbitration Agreement

               A trial court may only grant a stay pending arbitration upon finding

that (1) “the issue involved in the action is referable to arbitration under an

agreement in writing for arbitration” and (2) “the applicant for the stay is not in

default in proceeding with arbitration.” R.C. 2711.02(B). Here, the trial court

considered Appellants’ actions in the underlying litigation and determined that they

waived any right to arbitrate. It further noted that the “‘Arbitration Agreement’

appears to exclude actions from being arbitrated, or at best is ambiguous. Therefore,

DBS and ABC may not rely on the Arbitration Agreement to compel arbitration of

this case.” (R. 50.)

               Appellants argue that based on this court’s decision in Wallace v.

Ganley Auto Group, 8th Dist. Cuyahoga No. 95081, 2011-Ohio-2909, the trial court

erred in finding the arbitration agreement unenforceable because it precludes class

claims. In Wallace, the arbitration provision provided that “[c]lass action claims *

* * are and shall be prohibited in any arbitration proceeding.” Wallace at ¶ 8. We

held that “enforcement of arbitration clauses cannot be conditioned upon the

availability of classwide arbitration.” Id. at ¶ 19.
               Wallace does not govern Appellants’ second assignment of error

because we find that trial court did not rule on the enforceability of the arbitration

provisions or comment on the policy of the arbitration provisions at issue. Rather,

the trial court questioned whether Appellee’s class claims are “referable to

arbitration” under the contract, as R.C. 2711.02(B) requires. Since the trial court did

not rule on the arbitration agreement’s enforceability, we find Appellants’ second

assignment of error presents issues not properly before this court and we decline to

review it. Wilkens, 2010-Ohio-262, ¶ 45.

               Appellants’ second assignment of error is overruled.

               Judgment affirmed.

      It is ordered that appellee recover from appellants costs herein taxed.

      The court finds there were reasonable grounds for this appeal.

      It is ordered that a special mandate be sent to said court to carry this judgment

into execution.

      A certified copy of this entry shall constitute the mandate pursuant to Rule

27 of the Rules of Appellate Procedure.

MARY EILEEN KILBANE, JUDGE

ANITA LASTER MAYS, J., CONCURS;
SEAN C. GALLAGHER, P.J., CONCURS IN JUDGMENT ONLY