Court Opinion

ID: 4093245
Source: CourtListenerOpinion
Date Created: 2016-10-27 14:24:27.552198+00
Date Added: 2024-06-11T08:44:56.751421
License: Public Domain

[Cite as Conte v. Blossom Homes, L.L.C., 2016-Ohio-7480.]

                Court of Appeals of Ohio
                              EIGHTH APPELLATE DISTRICT
                                 COUNTY OF CUYAHOGA

                             JOURNAL ENTRY AND OPINION
                                     No. 103751

                                   RALPH CONTE, JR.
                                                            PLAINTIFF-APPELLEE

                                                   vs.

                     BLOSSOM HOMES L.L.C., ET AL.
                                                            DEFENDANTS-APPELLANTS

                                  JUDGMENT:
                            REVERSED AND REMANDED

                                     Civil Appeal from the
                            Cuyahoga County Court of Common Pleas
                                   Case No. CV-15-848225

        BEFORE: Laster Mays, J., Stewart, P.J., and S. Gallagher, J.

        RELEASED AND JOURNALIZED: October 27, 2016
                                      -i-

ATTORNEYS FOR APPELLANTS

Andrew M. Wargo
Marshall Dennehey Warner Coleman & Goggin
127 Public Square, Suite 3510
Cleveland, Ohio 44114

Douglas V. Bartman
Berns, Ockner & Greenberger, L.L.C.
3733 Park East Drive
Beachwood, Ohio 44122

ATTORNEYS FOR APPELLEE

Thomas L. Brunn
Alison D. Ramsey
Brunn Law Firm Co., L.P.A.
700 West Saint Clair Avenue
208 Hoyt Block Building
Cleveland, Ohio 44113

FOR BELLMAN PLUMBING, INC.

Todd M. Haemmerle
Gallagher Sharp
Bulkley Building, Sixth Floor
1501 Euclid Avenue
Cleveland, Ohio 44115

FOR BRIDEN CONSTRUCTION, L.L.C.

Jeffrey L. Tasse
Weston Hurd, L.L.P.
1301 East 9th Street, Suite 1900
Cleveland, Ohio 44114
                                       -ii-

FOR JOSHUA MILLER

Brian C. Lee
Reminger Co., L.P.A.
101 Prospect Avenue West, Suite 1400
Cleveland, Ohio 44115

FOR DAVID MILLER

James A. Desmith
Mark F. Fischer
Fischer, Evans & Robbins, Ltd.
3521 Whipple Avenue N.W.
Canton, Ohio 44718
ANITA LASTER MAYS, J.:

        {¶1}     Defendant-appellant Blossom Homes, L.L.C. (“Blossom”) appeals the

trial court’s denial of its motion to stay the case against it pending arbitration.   After a

thorough review of the record, we reverse the trial court’s order, finding that the

arbitration provision is enforceable. However, we also find that the loser-pays provision

is unconscionable, and is excised from the contract.

I.      BACKGROUND AND FACTS

        {¶2}   Plaintiff-appellee Ralph Conte, Jr. (“Conte”), and Blossom entered into a

contract (“Contract”) dated January 30, 2013, for remodeling and construction on Conte’s

home.    The Contract consists of a preprinted form agreement entitled “Residential

Purchase Agreement,” and contains a scope of work described as the construction of a

single -family dwelling residence, and incorporated additional listed documents.

Consideration for the Contract is $175,658.00, subject to change order adjustments.

        {¶3}    A number of problems developed as work began and disputes arose

between the parties regarding timely performance, deviation from the original plans,

failure of the work to pass inspections, as well as structural and workmanship defects.

Due to these issues, Conte withheld $9,750 from his final payment for the work.
Blossom filed a mechanic’s lien for that amount on January 6, 2014, though no work was

performed at the property after October 11, 2013.

      {¶4}    In January 2014, the original structural engineer, Brian Hengle (“Hengle”),

inspected the work and discovered that Blossom had deviated from the original plans and

specifications, causing structural defects.   Hengle hired a framer to assess remedial

options.   Conte hired Isaac A. Lewin, P.E. (“Lewin”), an independent structural engineer

to render an opinion.     Lewin noted a number of significant issues.        In order to

permanently resolve those issues, the estimated cost would exceed $75,000.

      {¶5}    On July 14, 2015, Conte filed suit against Blossom, Anthony Kucia (a

principal of Blossom), and several subcontractors for breach of contract, negligence,

breach of warranty, fraudulent misrepresentation, Ohio Consumer Sales Practices Act

(“OCSPA”) violations, and negligence. As of the date the suit was filed, the work that

Blossom performed had not been approved by the Village of Valley View’s Building

Commissioner.

      {¶6}    The first count of the complaint alleged that Blossom materially breached

the contract by failing to properly construct and/or administer the project and additional

expenses would be incurred to make the proper repairs.     The second count alleged that

Blossom negligently breached its implied warranty to perform the services in a

workmanlike manner by failing to exercise ordinary care and skill in the construction

and/or administration of the work. The third count against Blossom was for breach of

express and/or implied warranties in contravention of R.C. 1302.26 and 1302.27 by using
defective    and/or   inferior   materials.   The    fourth   count   alleged   fraudulent

misrepresentation and requested punitive damages.    Two counts of the complaint alleged

violations of the OCSPA, R.C. 1345.01 et seq.           Conte also claimed fraudulent

misrepresentation, negligence, to quiet title, and for slander of title as a result of the

mechanic’s lien.

      {¶7}     Blossom responded with a motion to stay pending arbitration based on

Article XX of the Contract (the “Clause”).    The Clause is entitled, “Notice of Builder’s

Right to Cure; Arbitration,” and provides:

      OHIO LAW CONTAINS IMPORTANT REQUIREMENTS YOU MUST
      FOLLOW BEFORE YOU MAY COMMENCE ARBITRATION
      PROCEEDINGS FOR DEFECTIVE CONSTRUCTION AGAINST THE
      RESIDENTIAL PROCEEDINGS. YOU MUST PROVIDE THE
      CONTRACTOR WITH A WRITTEN NOTICE OF THE CONDITIONS
      YOU ALLEGE ARE DEFECTIVE UNDER CHAPTER 1312 OF THE
      OHIO REVISED CODE. THE CONTRACTOR HAS AN OPPORTUNITY
      TO OFFER TO REPAIR OR PAY FOR THE DEFECTS. YOU ARE NOT
      OBLIGATED TO ACCEPT ANY OFFER THE CONTRACTOR MAKES,
      THERE ARE STRICT DEADLINES AND PROCEDURES UNDER
      STATE LAW, AND FAILURE TO FOLLOW THEM MAY AFFECT
      YOUR ABILITY TO COMMENCE ARBITRATION PROCEEDINGS.
      YOU ARE EXPRESSLY ADVISED TO CONSULT THE OHIO
      REVISED CODE, SECTION 1312.01 ET SEQ., FOR THE LAW
      GOVERNING THIS RIGHT TO CURE.

      All claims or disputes arising out of this Agreement or the breach thereof,
      including claims for construction defects that are not resolved by the right
      to cure process set forth in the Ohio Revised Code 1312.01 et seq., shall be
      decided by a single arbitrator in an arbitration in accordance with the
      construction industry arbitration rules of the American Arbitration
      Association. This agreement to arbitrate shall be specifically enforceable
      in accordance with applicable law in any court having jurisdiction thereof.
      Notice of the demand for arbitration shall be filed in writing with the other
      party and with the American Arbitration Association and shall be made
      within a reasonable time after the dispute has arisen, except that ANY
       CLAIM NOT SUBMITTED TO ARBITRATION BY FILING A
       DEMAND FOR ARBITRATION WITHIN ONE (1) YEAR AFTER
       THE CLAIM ACCRUES SHALL BE BARRED. The arbitrator’s
       decision shall be final and binding upon the Purchaser and Builder and a
       judgment for the enforcement thereof may be entered by a court of
       competent jurisdiction.

       (a)     The arbitrator will have no authority to award punitive or other
               damages unrelated to the prevailing party’s actual damages
               (including incidental and consequential damages) and may not, in
               any event, make any ruling, finding or award that does not conform
               to the terms and conditions of the Residential Purchase Agreement
               and the other Contract Documents.

       (b)     Neither a party nor an arbitrator may disclose the existence, content
               or results of any arbitration hereunder without the prior written
               consent of both parties except as may be required for the entry of a
               judgment.

       (c)     Each party shall bear its own costs and expenses and an equal share
               of the arbitrator’s and administrative fees of arbitration. Provided,
               however, that under Article XV, the arbitrator may award attorneys’
               fees to the prevailing party.
       (d)     The arbitration process will otherwise comport with the statutory
               rules governing arbitration as contained within the Ohio Revised
               Code, and an arbitration decision shall be enforced as provided for
               within the statutory rules.

       {¶8}    Conte opposed the motion, observing that the font in Article XX was not

bolded and was the same size font throughout the Contract. He also argued that there is

no definition of    “arbitration,” and that the language does not advise that it is a waiver of

the constitutional right to a trial by jury.

       {¶9}    In addition to the Clause, Article XIX of the Contract addresses limited

warranties, assignment of warranties, limitation of damages and waiver of claims relating

to emotional distress.    The Contract states that an exemplar of the written warranty is to
be provided at the time the Contract is signed, and the actual warrant(ies) would be

provided later.     The section does not reference arbitration or Article XX.       It does,

however, contain an express limitation of damages and legal remedies, in regular font,

within the paragraph.

         {¶10}    The trial court denied the motion to stay on October 27, 2015, finding that

the agreement was substantively and procedurally unconscionable and contrary to public

policy. The trial court did not issue findings of fact and conclusions of law, and there is

no evidence in the record that such was requested.     This appeal ensued.

II.      ASSIGNMENT OF ERROR

         {¶11}    Blossom presents a single assignment of error for review, arguing that the

trial court erred in finding the arbitration clause of the Contract to be unconscionable and

against public policy. We find that Blossom’s position has merit.

III.     STANDARD OF REVIEW

         {¶12}    The issue of whether a party has agreed to submit a dispute to arbitration

is reviewed under a de novo standard.             Hedeen v. Autos Direct Online, Inc.,

2014-Ohio-4200, 19 N.E.3d 957, ¶ 9 (8th Dist.), citing McCaskey v. Sanford-Brown

College, 8th Dist. Cuyahoga No. 97261, 2012-Ohio-1543, ¶ 7, and Taylor Bldg. Corp. of

Am. v. Benfield, 117 Ohio St. 3d 352, 2008-Ohio-938, 884 N.E.2d 12. We give no

deference to a trial court’s decision when reviewing an issue de novo. Hedeen at         ¶ 9,

citing     Brownlee v. Cleveland Clinic Found., 8th Dist. Cuyahoga No. 97707,
2012-Ohio-2212, ¶ 9.     Akron v. Frazier, 142 Ohio App. 3d 718, 721, 756 N.E.2d 1258

(9th Dist.2001).

IV.   LAW AND ANALYSIS

      {¶13}    The public policy of Ohio favors enforcement of arbitration provisions:

      Arbitration is encouraged as a method of dispute resolution and a
      presumption favoring arbitration arises when the claim in dispute falls
      within the arbitration provision. Williams v. Aetna Fin. Co., 83 Ohio St. 3d
464, 471, 700 N.E.2d 859 (1998). Ohio’s policy of encouraging
      arbitration has been declared by the legislature through the Ohio Arbitration
      Act, R.C. Chapter 2711. Goodwin v. Ganley, Inc., 8th Dist. Cuyahoga No.
      89732, 2007-Ohio-6327, ¶ 8.

Vasil v. Pulte Homes of Ohio, L.L.C., 8th Dist. Cuyahoga No. 102212, 2015-Ohio-2407, ¶

10. There is a presumption in favor of arbitration where the disputed issue falls within

the scope of the arbitration agreement, “except upon grounds that exist at law or in equity

for the revocation of any contract.”   Taylor Bldg.    at ¶ 32, quoting R.C. 2711.01(A);

Williams v. Aetna Fin. Co., 83 Ohio St. 3d 464, 471, 700 N.E.2d 859 (1998).

      {¶14}    A party cannot be required to submit to arbitration any dispute that it has

not agreed to submit because arbitration is a matter of contract. Taylor v. Ernst &

Young, L.L.P., 130 Ohio St. 3d 411, 2011-Ohio-5262, 958 N.E.2d 1203, ¶ 20, citing AT&T

Technologies, Inc. v. Communications Workers of Am., 475 U.S. 643, 648-649, 106 S. Ct.
1415, 89 L. Ed. 2d 648 (1986).      See also Academy of Med. v. Aetna Health, Inc., 108
Ohio St. 3d 185, 2006-Ohio-657, 842 N.E.2d 488, ¶ 11-14 (in order for an arbitration

agreement to be enforceable, the agreement must apply to the disputed issue), and

Ghanem v. Am. Greetings Corp., 8th Dist. Cuyahoga No. 82316, 2003-Ohio-5935, ¶ 12.
      {¶15}     The trial court determined that the Contract’s arbitration clause was

unconscionable and against public policy. We disagree.

      {¶16}     We have acknowledged on the issue of unconscionability that:

      When, however, an agreement is made under circumstances or terms that
      are so one-sided that the exchange of promises is involuntary, the law
      regards it as unfair or “unconscionable” to enforce the contract. The
      Supreme Court of the United States has defined an unconscionable
      agreement as one “such as no man in his senses and not under delusion
      would make on the one hand, and as no honest and fair man would accept
      on the other. Thonen v. McNeil-Akron, Inc., 661 F. Supp. 1252 (N.D. Ohio
      1986), quoting Hume v. United States, 132 U.S. 406, 411, 10 S. Ct. 134, 33
L. Ed. 393 (1889).”

Devito v. Autos Direct Online, Inc., 2015-Ohio-3336, 37 N.E.3d 194, ¶ 14 (8th Dist.).

      {¶17} There are two facets to unconscionability, substantive and procedural.

Procedural unconscionability involves the absence of meaningful choice on the part of

one of the parties, or the indication that there was no meeting of the minds.      Taylor

Bldg., 117 Ohio St. 3d 352, 2008-Ohio-938, 884 N.E.2d 12, at ¶ 34; Hayes v. Oakridge

Home, 122 Ohio St. 3d 63, 2009-Ohio-2054, 908 N.E.2d 408, ¶ 30.              Indicators of

procedural unconscionability include intelligence, age, education, whether the provisions

were explained to the less sophisticated party and whether alternative sources existed for

the goods or services in question.          Vasil, 8th Dist. Cuyahoga No. 102212,

2015-Ohio-2407, ¶ 17, citing Collins v. Click Camera & Video, 86 Ohio App. 3d 826,

834, 621 N.E.2d 1294 (2d Dist.1993).

      {¶18} While procedural unconscionability focuses on the process, substantive

unconscionability focuses on the terms of the contract:
          “Substantive unconscionability pertains to the contract itself, without any
          consideration of the individual contracting parties, and requires a
          determination of whether the contract terms are commercially reasonable in
          the context of the transaction involved.” Wallace v. Ganley Auto Group, 8th
          Dist. Cuyahoga No. 95081, 2011-Ohio-2909, ¶ 21.

Vasil at ¶ 17.     Courts also recognize that, in demonstrating unconscionability, “‘the more

substantively oppressive the contract term, the less evidence of procedural

unconscionability is required.’       1 E. Allan Farnsworth, Farnsworth on Contracts,

Section 4.28 at 585 (3d Ed.2004).”       Devito, 2015-Ohio-3336, 37 N.E.3d 194, ¶ 20 (8th

Dist.).

          {¶19}     Blossom advances four propositions in support of its argument that the

Clause is not unconscionable: (1) the loser-pays provision is not mandatory; (2) the

contractual statute of limitations is not unconscionable; (3) the Clause contains enough

details to be enforceable; and     (4) the jury waiver need not be express.

          A.      Procedural Unconscionability

          {¶20}    Conte argued below that he was unable to understand the terms of the

agreement so that there was no meeting of the minds, and that the relative bargaining

power between the parties resulted in no meaningful choice on Conte’s part. Taylor

Bldg., 117 Ohio St. 3d 352, 2008-Ohio-938, 884 N.E.2d 12, at 361. Conte avers in the

affidavit opposing the motion to stay, that he: (1) met with Kucia at 6:30 a.m., prior to

leaving for work; (2) had no discussion with Kucia about the contract provisions prior to

signing; (3) had no prior experience with residential construction contracts or knowledge
of construction regulations; and (4) did not understand what arbitration was, and that he

was waiving a jury trial should problems develop.

       {¶21} The Contract encompasses substantial structural modifications to Conte’s

home for the sum of $175,658.00, subject to change order adjustments. Conte knew that a

large sum of money was at stake.      Conte was not required to meet with Kucia as he

hurried to leave for work at 6:30 a.m., and rush through execution.    The record does not

support that Conte was in a take it or leave it situation, or that Blossom was the only

provider of residential construction services, so that Conte had no meaningful choice.

Taylor Bldg. at ¶ 33; Lake Ridge Academy v. Carney, 66 Ohio St. 3d 376, 383, 613 N.E.2d
183 (1993).

       {¶22}   Conte initialed each page of the Contract.      There is no declaration in

Conte’s affidavit that Blossom denied requests to make changes to the Contract, refused

to address questions regarding the provisions, or somehow denied Conte the opportunity

to seek third-party advice.     Williams at 473, 700 N.E.2d 859 (1998).           Hedeen,

2014-Ohio-4200, 19 N.E.3d 957, ¶ 36.

       {¶23}    Conte’s averment that he did not read, or did not understand, certain

provisions of the Contract is not sufficient to demonstrate unconscionability.

       The Ohio Supreme Court in ABM Farms, Inc. v. Woods, 81 Ohio St. 3d 498,
       692 N.E.2d 574 (1998), rejected the argument that if one fails to read what
       they have signed, then they are not held to the agreement. In that case, the
       plaintiff signed an Account Acceptance Form that stated she had received,
       read and understood the terms of the Account Agreement booklet
       describing the terms of the arbitration agreement. The plaintiff later
       claimed she was unaware of the existence of the arbitration agreement.
       The court held there was no misrepresentation of facts, only a failure of the
       defendant to inform the plaintiff of the content of the contract, which it was
       under no obligation to do. The court explained: “a person of ordinary
       mind cannot be heard to say that he was misled into signing a paper which
       was different from what he intended, when he could have known the truth
       by merely looking when he signed.” Id. at 503.

Butcher v. Bally Total Fitness Corp., 8th Dist. Cuyahoga No. 81593, 2003-Ohio-1734, ¶

32. Conte also failed to establish that he was unable to understand the terms of the

agreement, or that he was pressured to sign it. Vanyo v. Clear Channel Worldwide, 156
Ohio App. 3d 706, 2004-Ohio-1793, 808 N.E.2d 482, ¶ 19 (8th Dist.).

       B.      Substantive Unconscionability

               1.       Jury Trial Waiver

       {¶24}        “The waiver of the right to a jury trial is a necessary consequence of

agreeing to arbitration and is not unconscionable.” Taylor Bldg., 117 Ohio St. 3d 352,

2008-Ohio-938, 884 N.E.2d 12, ¶ 55. We repeat that Conte was not required to execute

the agreement if he did not understand it, and also observe that the waiver is mutual to the

parties. Butcher at ¶ 32; Hayes, 122 Ohio St. 3d 63, 2009-Ohio-2054, 908 N.E.2d 408, ¶

43.

       {¶25}    As to Conte’s assertion that the waiver provision was not express or easily

discernible, “[t]he loss of the right to a jury trial is a necessary and fairly obvious

consequence of an agreement to arbitrate.” Pierson v. Dean, Witter, Reynolds, 742 F.2d
334, 339 (7th Cir.1984); Taylor Bldg. at ¶ 55.

               2.       Loser Pays
      {¶26}    Blossom also argues that the loser-pays provision is not unconscionable, a

position rejected by Conte who points to this court’s holding in Devito v. Autos Direct

Online, Inc., 2015-Ohio-3336, 37 N.E.3d 194 (8th Dist.), where we rejected a loser-pays

provision. The Contract provides:

      Each party shall bear its own costs and expenses and an equal share of the
      arbitrator’s and administrative fees of arbitration. Provided, however, that
      under Article XV, the arbitrator may award attorneys fees to the prevailing
      party.

(Emphasis added.)     Contract Article XX(c).      Distilled, Blossom offers that only

mandatory loser-pays provisions are unconscionable. See, e.g., Devito, as well as this

court’s decision in Hedeen, 2014-Ohio-4200, 19 N.E.3d 957. We disagree.

      {¶27}      As in Devito, Conte’s claims include violations of the OCSPA,

R.C. Chapter 1345 and, as Blossom asserts, the provisions of the Home Construction

Service Suppliers Act (“HCSSA”), R.C. Chapter 4722 are also applicable in this case.

Both acts include provisions for an award of attorney fees under specific circumstances,

including the award of attorney fees to a defendant in the event of bad faith, groundless

filings on the part of the consumer or homeowner (R.C. 4722.08(D)(1); 1345.09(F)).

      {¶28}     Whether mandatory or optional, the broad language of the Contract

regarding fees results in a chilling effect on an aggrieved consumer.      As we did in

Devito, we refer to the AAA rules referenced in the Contract for further guidance.

      {¶29}    The Contract provides that the Construction Industry Arbitration Rules

and Mediation Procedures (“Rules”) of the American Arbitration Association (“AAA”)

govern arbitration between the parties.    There is no explanation of what the Rules
encompass.      There is no website referenced in the Contract or offered by Blossom to

provide a set of the Rules upon request.

       {¶30}     We first observe that the Rules in effect at the time the arbitration demand

filing requirements are met is the version that will govern the arbitration, and not the

version of the Rules in effect at the time an agreement is executed.            The Rules, geared

toward construction industry disputes,1 provide four procedural track options:

       [T]he Regular Track Procedures (Section R), the Procedures for the
       Resolution of Disputes through Document Submission (Section D), the Fast
       Track Procedures (Section F) and the Procedures for Large, Complex
       Construction Disputes (Section L). The Regular Track Procedures are
       applied to the administration of all arbitration cases, unless they conflict
       with any portion of Section D, Section F, or Section L whenever these
       Sections apply. In the event of a conflict, the Fast Track Procedures,
       Procedures for the Resolution of Disputes through Document Submission,
       or the Procedures for Large, Complex Construction Disputes apply.

       {¶31}     Conte’s claim is not eligible for the simpler Fast Track option, as the

amount prayed for in this case exceeds $100,000.            Instead, the Rules provide that the

Large, Complex Construction Disputes Rules will apply, unless otherwise agreed upon by

the parties. The Contract is silent on this issue. The Contract provides for a single

arbitrator, while the Rules provide for a highly qualified panel “compensated at their

customary rates,” leaving open the question of how many arbitrators will be required and

at what cost.

1
   AAA construction rules also reference arbitration and mediation for home construction to allow for
a simpler, faster, and cost effective procedure. However, those are not the rules specified in the
Contract.
       {¶32}   The question of locale for proceedings depends on the agreement of the

parties according to the Rules.     If the location is not specified, the arbitrator will select a

city “nearest to the site of the project in dispute, as determined by the AAA, subject to the

power of the arbitrator to finally determine the locale within 14 calendar days after the

date of the preliminary hearing.”

       {¶33}   Administrative fees governing the proceedings are not set forth in the

Rules, but are contained in a separate fee schedule.        The schedule includes filing fees

ranging from $750 to $1500 depending on the sum involved, additional fees to add parties

and certain services, and hearing room rental fees.           The schedule does not include

arbitrator compensation or expenses, court reporting or post-award charges incurred by

the parties in enforcing the award.     The Rules also provide for “[a]n award of attorneys

fees if all parties have requested such an award or it is authorized by law or their

arbitration agreement.”

       {¶34}       The unconscionability and public policy concerns that this court

expressed in Devito and Hedeen are not assuaged by making the award optional yet

without condition.     The loser-pays provision effectively nullifies the OCSPA and

HCSSA provisions that allow the imposition of such fees only where a consumer acts in

bad faith and files a groundless complaint. (R.C. 4722.08(D)(1); 1345.09(F)).

       Therefore, we agree with Hedeen that the loser-pays provision chills
       consumers from pursing their statutory claims through arbitration.

        ***
       [W]e find that the arbitration clause is unenforceable because it vanquishes
       the remedial purpose of a statute by imposing arbitration costs and
       preventing actions from being brought by consumers. See Eagle [v. Fred
       Martin Motor Co.], 157 Ohio App. 3d 150, 2004-Ohio-829, 809 N.E.2d
1161, at ¶ 68 [9th Dist.]. Such a contract clause is injurious to the interests
       of the State, is against public policy, and accordingly cannot, and will not,
       be enforced. Id. at ¶ 74, citing King [v. King], 63 Ohio St. 363, 372, 59
N.E. 111 [1900].

Hedeen, 2014-Ohio-4200, 19 N.E.3d 957, ¶ 48-49.

       {¶35}        We find that the loser-pays provision is unconscionable and against

public policy.       “[I]t is hereby excised from the arbitration contract.”          Devito,

2015-Ohio-3336, 37 N.E.3d 194, ¶ 44.

               3.      Statute of Limitations

       {¶36}         Following the two sentence notification, in lower case letters and

regular font, that the Contract is subject to binding arbitration, Article XX proclaims that,

“ANY CLAIM NOT SUBMITTED TO ARBITRATION BY FILING A DEMAND FOR

ARBITRATION WITHIN ONE (1) YEAR AFTER THE CLAIM ACCRUES SHALL

BE BARRED.” Similar to the jury trial waiver, which is not explicitly set forth in the

Contract, there is no reference to the impact of the limitation or that it applies regardless

of any Ohio law governing limitation of actions.

       {¶37}     Conte posits that the limitation is not reasonable in this case due to the

nature of the work; however, Conte cites no authority in support of this position.2

2
    “An appellate court may disregard an assignment of error pursuant to App.R. 12(A)(2) if an
appellant fails to cite to any legal authority in support of an argument as required by App.R.
16(A)(7).” State v. Moore, 8th Dist. Cuyahoga No. 85828, 2006-Ohio-277, ¶ 31. However, in the
interest of justice, we elect to address this issue.
Blossom counters that the limitation applies to the parties equally, and the language

provides for a one-year limitation after “accrual” of the claim. Conte has failed to

respond to Blossom’s argument with evidence of how and why the one-year limitation is

unconscionable and against public policy, or how the provision has prevented the pursuit

of his legal rights and remedies.

       {¶38}     The Ohio Supreme Court has recognized that parties may agree to a

limitation on the time within which an action may be initiated where the applicable statute

of limitations provides a longer period.   However, such a contractual limitations period

is valid only if the time provision is unambiguous, is for a reasonable period, and is not in

violation of public policy.    See Kraly v. Vannewkirk, 69 Ohio St. 3d 627, 632, 635
N.E.2d 323 (1994); Miller v. Progressive Cas. Ins. Co., 69 Ohio St. 3d 619, 624, 635
N.E.2d 317 (1994).

       Public policy is the community common sense and common conscience,
       extended and applied throughout the state to matters of public morals,
       health, safety, welfare, and the like. Again, public policy is that principle
       of law which holds that no one can lawfully do that which has a tendency to
       be injurious to the public or against the public good. Accordingly,
       contracts which bring about results which the law seeks to prevent are
       unenforceable as against public policy. Moreover, actual injury is never
       required to be shown; it is the tendency to the prejudice of the public’s good
       which vitiates contractual relations.

(Footnotes omitted.) Devito, 2015-Ohio-3336, 37 N.E.3d 194, ¶ 37 (8th Dist.), quoting

17 Ohio Jurisprudence 3d, Contracts, Section 94 at 528 (1980).

       {¶39}   The majority of cases in Ohio on this issue involve automobile insurance

contracts; however, this case involves a residential construction agreement.        What is
reasonable in the context of an automobile insurance policy may not be reasonable in a

construction case, where defects may be latent.

       {¶40}    As observed by the New York Court of Appeals in analyzing the

reasonableness of a reduced statute of limitations period, there is no hard-line rule as to

when the period of time within which an action must be brought is fair and reasonable. It

turns on the circumstances of each particular case.      “A ‘limitation period’ that expires

before suit can be brought is not really a limitation period at all, but simply a nullification

of the claim.” Executive Plaza, LLC v. Peerless Ins. Co., 22 N.Y.3d 511, 5 N.E.3d 989,

¶ 4 (2014), citing     Continental Leather Co. v. Liverpool, Brazil & River Plate Steam

Navigation Co., 259 N.Y. 621, 622-623, 182 N.E. 207 (1932).

       {¶41}    As we have determined that the Contract is enforceable in this case, it is

within the purview of the arbitrator to determine the reasonableness of the reduced statute

of limitations, and to determine whether there is any tension between the limitation and

Ohio law.    See SW Ohio Regional Transit Auth. v. Amalgamated Transit Union, Local

627, 91 Ohio St. 3d 108, 110, 2001-Ohio-294, 742 N.E.2d 630; Bechtel Do Brasil

Construções Ltda. v. UEG AraucÁria Ltda., 638 F.3d 150, 154-155 (2d Cir.2011)

(arbitrator shall determine issues involving limitation of actions based on language of

agreement, and address whether such provision conflicts with New York law).
               4.       Detailed Enough to Enforce

       {¶42}         The final component of Blossom’s appeal is that the Contract is detailed

enough to enforce.      We agree.

       {¶43}        This court has upheld in numerous cases the incorporation by reference

of the governing arbitral association and rules:

       [I]t is commonplace for arbitration agreements to incorporate the AAA
       rules. The mere fact that an agreement incorporates the rules does not make
       it invalid. Rather, the complaining party must be able to specifically cite to,
       and demonstrate how, a specific provision in the AAA rules renders the
       Agreement invalid.

Melia v. OfficeMax N. Am., Inc., 8th Dist. Cuyahoga No. 87249, 2006-Ohio-4765, ¶ 36.

Notwithstanding this court’s decision to excise the loser-pays provision in this case,

Conte has failed to demonstrate how the provisions of the AAA Rules render the Contract

invalid. Id.

V.     CONCLUSION

       {¶44}        We find that the trial court erred in denying Blossom’s motion to stay

pending arbitration in toto. Specifically, we find that the arbitration agreement is

enforceable with the excision of the loser-pays provision.

       {¶45} This case is reversed and remanded for further proceedings consistent with

the opinion.

       It is ordered that the appellant recover from appellee costs herein taxed.

       The court finds there were reasonable grounds for this appeal.
       It is ordered that a special mandate issue out of this court directing the common

pleas 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.

_______________________________________
ANITA LASTER MAYS, JUDGE

MELODY J. STEWART, P.J., and
SEAN C. GALLAGHER, J., CONCUR