Court Opinion

ID: 9942372
Source: CourtListenerOpinion
Date Created: 2024-02-20 21:10:56.776685+00
Date Added: 2024-06-11T13:47:59.781037
License: Public Domain

[Cite as Grimm v. Professional Dental Alliance, L.L.C., 2024-Ohio-637.]

                 IN THE COURT OF APPEALS OF OHIO
                           ELEVENTH APPELLATE DISTRICT
                                PORTAGE COUNTY

SUSAN GRIMM, D.D.S., M.S.,                             CASE NO. 2023-P-0054

                 Plaintiff-Appellant,
                                                       Civil Appeal from the
        - vs -                                         Court of Common Pleas

PROFESSIONAL DENTAL
ALLIANCE, LLC,                                         Trial Court No. 2023 CV 00356

                 Defendant-Appellee.

                                              OPINION

                                   Decided: February 20, 2024
                                Judgment: Reversed and remanded

Paul V. Wolf, 700 West St. Clair Avenue, Suite 400, Cleveland, OH 44113 (For Plaintiff-
Appellant).

Evelyn P. Schonberg and Peter O’Grady, Ross, Brittain & Schonberg, Co., LPA, 6480
Rockside Woods Boulevard, South, Suite 350, Cleveland, OH 44131 (For Defendant-
Appellee).

MARY JANE TRAPP, J.

        {¶1}     Appellant, Susan Grimm, D.D.S., M.S. (“Dr. Grimm”), appeals from the

judgment of the Portage County Court of Common Pleas, which stayed her age

discrimination action against appellee, Professional Dental Alliance, LLC (“Prof. Dental”),

and ordered the parties to resolve their dispute through binding arbitration pursuant to

their professional services agreement.

        {¶2}     Dr. Grimm raises one assignment of error on appeal, contending the trial

court erred to her prejudice by granting Prof. Dental’s “Motion to Stay Proceedings and
Compel Arbitration.” More specifically, she contends the arbitration provision in the

agreement is unenforceable because it contains a “loser pays” clause, which is

unconscionable and contrary to public policy.

       {¶3}   After a careful review of the record and pertinent law, we find Dr. Grimm’s

assignment of error has merit in part since the trial court failed to address Dr. Grimm’s

allegation and determine whether the “loser pays” clause is unconscionable and contrary

to public policy. Further, the record has not been sufficiently developed for us to ascertain

unconscionability, i.e., there are no factual findings and/or evidence of the circumstances

surrounding the agreement.

       {¶4}   Accordingly, we reverse the judgment of the Portage County Court of

Common Pleas and remand for the trial court to determine whether the “loser pays” clause

is unconscionable and/or contrary to public policy and thus unenforceable, with factual

findings supporting its determinations.

                          Substantive and Procedural History

       {¶5}   In May 2023, Dr. Grimm filed a complaint alleging she was wrongfully

terminated from her employment with Prof. Dental as an orthodontist due to age

discrimination.

       {¶6}   Approximately one month later, Prof. Dental filed a “Motion to Compel

Arbitration and Stay Proceedings” pursuant to R.C. 2711.02 since Dr. Grimm agreed in

the parties’ professional services agreement to submit any claims from or related to her

employment to mandatory arbitration.         Attached to the motion were the parties’

professional services agreement and an email to Dr. Grimm’s counsel notifying him of the

arbitration provision.

                                             2

Case No. 2023-P-0054
       {¶7}      In turn, Dr. Grimm filed a “Brief in Opposition to Defendant’s Motion to

Compel Arbitration and Stay Proceedings,” arguing the mandatory arbitration provision is

invalid and unenforceable because it contains a “loser pays” clause, which is

unconscionable and against public policy.

       {¶8}      After Prof. Dental filed a reply, the trial court issued a judgment entry

granting Prof. Dental’s motion, staying the proceedings, and ordering the parties “to

resolve their dispute through binding arbitration, as provided for in the parties’

Agreement.”

       {¶9}      Dr. Grimm filed the instant appeal, raising one assignment of error for our

review:

       {¶10} “The trial court erred to the prejudice of Plaintiff-Appellant in granting

Defendant-Appellee’s Motion to Stay Proceedings and Compel Arbitration.”

                                     Unconscionability

       {¶11} In her sole assignment of error, Dr. Grimm contends the trial court erred in

granting Prof. Dental’s motion to stay and compel arbitration because the “loser pays”

clause in the parties’ professional services agreement is unconscionable and contrary to

public policy.

       {¶12} A trial court’s decision whether to grant a stay pending arbitration

proceedings pursuant to R.C. 2711.02 is generally reviewed under an abuse of discretion

standard. Robie v. Maxill, Inc., 11th Dist. Trumbull No. 2021-T-0007, 2021-Ohio-2644, ¶

30. However, when the trial court’s grant or denial of a stay is premised upon questions

of law, such as the unconscionability of an arbitration agreement, our review is de novo.

Id. at ¶ 31. See, e.g., Taylor Bldg. Corp. of Am. v. Benfield, 117 Ohio St.3d 352, 2008-

                                               3

Case No. 2023-P-0054
Ohio-938, 884 N.E.2d 12, ¶ 2 (“the proper standard of review of a determination of

whether an arbitration agreement is enforceable in light of a claim of unconscionability is

de novo”). In such a case, any related factual findings made by the trial court must be

afforded appropriate deference. Id.

       {¶13} Ohio courts recognize a “‘presumption favoring arbitration’” that arises

“‘when the claim in dispute falls within the scope of the arbitration provision.’” Id. at ¶ 27,

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

       {¶14} “Ohio law directs trial courts to grant a stay of litigation in favor of arbitration

pursuant to a written arbitration agreement on application of one of the parties, in

accordance with R.C. 2711.02(B).” Id. at ¶ 28.

       {¶15} Pursuant to R.C. 2711.02(B), “If any action is brought upon any issue

referable to arbitration under an agreement in writing for arbitration, the court in which the

action is pending, upon being satisfied that the issue involved in the action is referable to

arbitration under an agreement in writing for arbitration, 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, provided the applicant for the stay is not in default in

proceeding with arbitration.”

       {¶16} Further, Ohio law authorizes appellate review of such orders. Taylor Bldg.

at ¶ 30.

       {¶17} Pursuant to R.C. 2711.02(C), “[A]n order under division (B) of this section

that grants or denies a stay of a trial of any action pending arbitration * * * is a final order

and may be reviewed, affirmed, modified, or reversed on appeal pursuant to the Rules of

                                               4

Case No. 2023-P-0054
Appellate Procedure and, to the extent not in conflict with those rules, Chapter 2505. of

the Revised Code.”

       {¶18} “‘Unconscionability includes both “an absence of meaningful choice on the

part of one of the parties together with contract terms which are unreasonably favorable

to the other party.”’” Hayes v. Oakridge Home, 122 Ohio St.3d 63, 2009-Ohio-2054, 908

N.E.2d 408, ¶ 20, quoting Lake Ridge Academy v. Carney, 66 Ohio St.3d 376, 383, 613

N.E.2d 183 (1993), quoting Williams v. Walker-Thomas Furniture Co., 350 F.2d 445, 449

(D.C.Cir.1965). The party asserting unconscionability of a contract bears the burden of

proving that the agreement is both procedurally and substantively unconscionable. Id.;

see Taylor Bldg. at ¶ 34 (a party challenging an arbitration agreement must prove a

quantum of both procedural and substantive unconscionability).

       {¶19} Procedural unconscionability considers the circumstances surrounding the

contracting parties’ bargaining, such as the parties’ age, education, intelligence, business

acumen and experience, and who drafted the contract. Taylor Bldg. at ¶ 44.

       {¶20} Additional factors may include a belief by the stronger party that there is no

reasonable probability that the weaker party will fully perform the contract; knowledge of

the stronger party that the weaker party will be unable to receive substantial benefits from

the contract; knowledge of the stronger party that the weaker party is unable to reasonably

protect his interests by reason of physical or mental infirmities, ignorance, illiteracy or

inability to understand the language of the agreement, or similar factors. Id.

       {¶21} “An assessment of whether a contract is substantively unconscionable

involves consideration of the terms of the agreement and whether they are commercially

reasonable.” Hayes at ¶ 33. “Factors courts have considered in evaluating whether a

                                             5

Case No. 2023-P-0054
contract is substantively unconscionable include the fairness of the terms, the charge for

the service rendered, the standard in the industry, and the ability to accurately predict the

extent of future liability.” Id. “No bright-line set of factors for determining substantive

unconscionability has been adopted by [the Supreme Court of Ohio]. The factors to be

considered vary with the content of the agreement at issue.” Id.

        {¶22} A review of the trial court’s judgment entry reveals the court failed to

address Dr. Grimm’s allegations and determine whether the “loser pays” clause is

unconscionable and contrary to public policy. Further, the record has not been sufficiently

developed for us to ascertain unconscionability, i.e., there are no factual findings and no

evidence of the circumstances surrounding the agreement.

        {¶23} In Paradie v. Turning Point Builders, Inc., 2021-Ohio-2178, 174 N.E.3d 940,

(11th Dist.), we explained that an appellate court cannot determine the enforceability of

an arbitration provision where there is a lack of a record to support such a holding. Id. at

¶ 31.    Thus, the matter must be remanded for an evidentiary hearing or further

proceedings on the issue. Id.

        {¶24} Similarly, in Brownell v. Van Wyk, 2d Dist. Montgomery No. 24042, 2010-

Ohio-6338, the Second District reversed and remanded for an evidentiary hearing on the

issue of unconscionability where the trial court made no factual findings supporting its

determination that the arbitration provision was unconscionable and the circumstances

surrounding the arbitration agreement were not sufficiently developed in the record. Id.

at ¶ 31. See also Robie, supra, at ¶ 55 (the trial court should have the first opportunity to

address the existence or nonexistence of unconscionability); Verandah Properties, LLC

v. Ullman Oil Co., LLC, 11th Dist. Geauga No. 2019-G-0213, 2020-Ohio-1559, ¶ 34 (an

                                             6

Case No. 2023-P-0054
allegation that the arbitration clause is unenforceable as unconscionable places the

validity of the provision at issue and requires a court to determine enforceability before it

can grant a motion to stay).

       {¶25} Accordingly, we reverse the judgment of the trial court and remand for the

trial court to determine whether the “loser pays” clause is unconscionable and/or contrary

to public policy and thus unenforceable, with factual findings supporting its

determinations.

       {¶26} Finding Dr. Grimm’s assignment of error to have merit in part, the judgment

of the Portage County Court of Common Pleas is reversed and remanded in accordance

with this opinion.

MATT LYNCH, J.,

ROBERT J. PATTON, J.,

concur.

                                             7

Case No. 2023-P-0054