Court Opinion

ID: 2701949
Source: CourtListenerOpinion
Date Created: 2014-08-04 19:43:39.346157+00
Date Added: 2024-06-11T12:54:27.132424
License: Public Domain

[Cite as Murea v. Pulte Group, Inc., 2014-Ohio-398.]

                 Court of Appeals of Ohio
                               EIGHTH APPELLATE DISTRICT
                                  COUNTY OF CUYAHOGA

                              JOURNAL ENTRY AND OPINION
                                      No. 100127

                                     RAZVAN MUREA
                                                             PLAINTIFF-APPELLEE

                                                       vs.

                          PULTE GROUP, INC., ET AL.
                                                             DEFENDANTS-APPELLANTS

                                   JUDGMENT:
                             REVERSED AND REMANDED

                                     Civil Appeal from the
                            Cuyahoga County Court of Common Pleas
                                     Case No. CV-801591

        BEFORE: E.T. Gallagher, J., Celebrezze, P.J., and Rocco, J.

        RELEASED AND JOURNALIZED: February 6, 2014
ATTORNEY FOR APPELLANTS

Douglas V. Bartman
The Bartman Law Office, L.L.C.
1991 Crocker Road, Suite 600
Cleveland, Ohio 44145

ATTORNEYS FOR APPELLEES

For Razvan Murea

Michael T. Conway
Michael T. Conway and Co.
3456 Sandlewood Drive
Brunswick, Ohio 44212

For Schield Family Brands

Timothy L. McGarry
Henderson & Schmidlin Co., L.P.A.
840 Brainard Road
Cleveland, Ohio 44143
EILEEN T. GALLAGHER, J.:

      {¶1} This cause came to be heard on the accelerated calendar pursuant to App.R.

11.1 and Loc.R. 11.1.

      {¶2} Defendant-appellant, Pulte Homes of Ohio, L.L.C. (“Pulte”), appeals the trial

court’s judgment denying its motion to stay pending arbitration. We find merit to the

appeal and reverse.

      {¶3} Plaintiff-appellee, Razvan Murea (“Murea”), purchased a newly constructed

home from Pulte in 2003. The parties’ purchase agreement provides a limited warranty

and contains an arbitration clause. The arbitration clause, which is marked with the

heading “ARBITRATION” in bold font, states:

      ARBITRATION: Any controversy, claim or dispute arising out of or
      related to this Agreement or Your purchase of the Home (other than claims
      under the Limited Warranty) shall be settled by arbitration in accordance
      with the Construction Industry Arbitration Rules of the American
      Arbitration Association (“AAA”) and the Federal Arbitration Act (Title 9 of
      the United States Code) and any judgment rendered by the arbitrator(s) may
      be confirmed, entered and enforced in any court having jurisdiction. As a
      condition precedent to arbitration, the dispute shall first be mediated in
      accordance with the Construction Industry Mediation Rules of the AAA, or
      such other mediation service selected by Us. Claims under the Limited
      Warranty shall be arbitrated in according with the arbitration provision set
      forth in the Limited Warranty.

      {¶4} The limited warranty is expressly incorporated into the purchase agreement

by reference to specific documents identified in the agreement. The purchase agreement

states, in relevant part: “You and We acknowledge that the documents listed below are a
part of this Agreement: * * * The Limited Warranty.” By executing the purchase

agreement, Murea acknowledged that he had previously received a copy of the limited

warranty.   Immediately above the signature line, in all capitals and bold print, the

purchase agreement states, in relevant part:

       PLEASE MAKE SURE THAT ALL PROVISIONS ARE READ AND
       UNDERSTOOD BEFORE SIGNING.       IF YOU DO NOT
       UNDERSTAND ANY PROVISIONS, YOU SHOULD SEEK LEGAL
       ADVICE.

       {¶5} Paragraph II.E of the limited warranty, entitled “DISPUTE SETTLEMENT,”

provides, in relevant part:

       Binding Arbitration is provided as a remedy for resolving the dispute. * *
       * Any binding arbitration proceeding will be conducted pursuant to the
       United States Arbitration Act. * * * The Arbitration will determine THE
       HOMEOWNER’s, THE BUILDER’s, and (if applicable) the Insurer’s
       rights and obligations under this Limited Warranty. * * * The award of
       the arbitrator(s) will be final, binding and enforceable as to the
       HOMEOWNER, THE BUILDER and (if applicable) the Insurer.

       {¶6} In February 2012, Murea filed a complaint against Pulte, Pulte Group, Inc.,

and Schield Family Brands (“Schield”). Schield is the manufacturer of “Weather Shield”

and “Visions 2000” windows, which were installed in Murea’s house. Murea alleged

that the windows in his home leak air and thermal energy as a result of either a

manufacturing defect or improper installation. Murea further alleged that despite his

demands, Pulte and Schield failed to repair or replace the windows and that such failure

constitutes a breach of warranty and breach of contract.

       {¶7} Pulte filed a motion to stay litigation pending arbitration pursuant to R.C.

2711.02(B). In support of its motion, Pulte submitted authenticated copies of the parties’
purchase agreement and limited warranty.         Murea opposed the motion, arguing the

arbitration clause was an adhesion contract, not supported by consideration, and was

therefore unconscionable. The trial court agreed and denied Pulte’s motion to stay.

Pulte now appeals and raises two assignments of error.

       {¶8} In the first assignment of error, Pulte argues the trial court erred in denying its

motion to stay pending arbitration because the parties had a valid agreement to arbitrate

Murea’s claims, and Murea’s claims were within the scope of the arbitration agreement.

In the second assignment of error, Pulte argues the trial court erred in finding that the

arbitration clause was unconscionable.        We discuss these assigned errors together

because they are interrelated.

       {¶9} Ohio’s public policy encourages arbitration as a method to settle disputes.

Schaefer v. Allstate Ins. Co., 63 Ohio St.3d 708, 711-712, 590 N.E.2d 1242 (1992). R.C.

2711.02 states that a trial court “shall on application of one of the parties stay the trial of

the action until the arbitration of the issue has been had in accordance with the

agreement.”    As a result, the court must indulge a strong presumption in favor of

arbitration and resolve any doubts in favor of arbitrability. Williams v. Aetna Finance

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

       {¶10} Arbitration agreements are “valid, irrevocable, and enforceable, except upon

grounds that exist at law or in equity for the revocation of any contract.” Taylor Bldg.

Corp. of Am. v. Benfield, 117 Ohio St.3d 352, 2008-Ohio-938, 884 N.E.2d 12, ¶ 33,
quoting R.C. 2711.01(A). For example, an arbitration provision may be invalid if it is

unconscionable. Id.

      {¶11} Unconscionability embodies two separate concepts: (1) unfair and

unreasonable contract terms, i.e., substantive unconscionability; and (2) an absence of

meaningful choice on the part of one of the parties. Taylor Bldg. at ¶ 34. A party

asserting the unconscionabilty of a contract must prove a quantum of both substantive and

procedural unconscionability.      Hayes v. Oakridge Home, 122 Ohio St.3d 63,

2009-Ohio-2054, 908 N.E.2d 408, ¶ 30; Taylor Bldg. at ¶ 34. In other words, these two

concepts create a two-prong conjunctive test for unconscionability. Gates v. Ohio Sav.

Assn., 11th Dist. Geauga No. 2009-G-2881, 2009-Ohio-6230, ¶ 47. A conjunctive test is

not satisfied if one of the requirements is not met. Strack v. Pelton, 70 Ohio St.3d 172,

174, 637 N.E.2d 914 (1994).

      {¶12} In determining whether an agreement is procedurally unconscionable, courts

consider the relative bargaining positions of the parties including each party’s age,

education, intelligence, experience, and who drafted the contract.       Taylor at ¶ 44.

Courts will also consider “whether alterations in the printed terms were possible, [and]

whether there were alternate sources of supply for the goods in question.” Oakridge

Home at ¶ 23. No single factor alone determines whether a contract is procedurally

unconscionable; a court must consider the totality of the circumstances. Id. at ¶ 29-30.

      {¶13} There is no evidence in the record regarding Murea’s age, educational

background, business acumen, or experience.       Despite bearing the burden of proof,
Murea did not submit any evidence by way of affidavit, responses to written discovery, or

deposition testimony, and the court never held a hearing to make any factual

determinations. The only evidence in the record consists of the written agreement and

limited warranty. Although these agreements were apparently presented to Murea by

Pulte, there is no evidence that Murea was unable to understand the agreements.

       {¶14} The arbitration provisions in both agreements were clearly marked in capital

letters. The arbitration clause in the purchase agreement was conspicuously written in

bold print, and the signature line of the agreement expressly warned Murea to “make sure

that all provisions are read and understood before signing.”            The contract also

recommended that Murea consult with an attorney before signing if there were any

provisions he did not understand.          There simply is no evidence of procedural

unconscionability under these circumstances, and Murea cannot establish both prongs of

the conjunctive two-part unconscionability test.        Therefore, the trial court erred in

denying Pulte’s request to stay litigation pending arbitration.

       {¶15} Both assigned errors are sustained.

       {¶16} We reverse the trial court’s judgment and remand the case to the trial court

with instructions to stay litigation pending arbitration.

       It is ordered that appellant recover from appellees costs herein taxed.

       The court finds there were reasonable grounds for this appeal.

       It is ordered that a special mandate be sent to 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.

EILEEN T. GALLAGHER, JUDGE

FRANK D. CELEBREZZE, JR., P.J., and
KENNETH A. ROCCO, J., CONCUR