Court Opinion

ID: 4316483
Source: CourtListenerOpinion
Date Created: 2018-09-28 14:38:09.50172+00
Date Added: 2024-06-11T14:45:03.532644
License: Public Domain

[Cite as Becker, Co. v. Jedson Eng., Inc., 2018-Ohio-3924.]

                             IN THE COURT OF APPEALS OF OHIO
                                SECOND APPELLATE DISTRICT
                                    MONTGOMERY COUNTY

 THE JOHN A. BECKER COMPANY                             :
                                                        :
         Plaintiff-Appellee/Cross-                      :     Appellate Case No. 27891
         Appellant                                      :
                                                        :     Trial Court Case No. 2016-CV-6260
 v.                                                     :
                                                        :     (Civil Appeal from
 JEDSON ENGINEERING, INC.                               :      Common Pleas Court)
                                                        :
         Defendant-Appellant/Cross-                     :
         Appellee
                                               ...........

                                               OPINION

                          Rendered on the 28th day of September, 2018.

                                               ...........

SCOTT A. LIBERMAN, Atty. Reg. No. 0058432 and STEVEN E. BACON, Atty. Reg. No.
0059926, 1 S. Main Street Suite 1590, Dayton, Ohio 45402
     Attorneys for Plaintiff-Appellee/Cross-Appellant

LEONARD A. WEAKLEY, Atty. Reg. No. 0000152, 1 Centennial Plaza, 705 Central
Avenue, Cincinnati, Ohio 45202
     Attorney for Defendant-Appellant/Cross-Appellee

                                              .............
                                                                                               -2-

HALL, J.

       {¶ 1} Two appeals are before us. Defendant-appellant, Jedson Engineering, Inc.,

appeals from an order overruling its motion for a stay pending arbitration. Jedson

contends that the trial court erred by finding that it waived its right to arbitration by actively

participating in litigation for nine months before raising the issue of arbitration. Plaintiff-

cross-appellant, the John A. Becker Co., cross-appeals from the same order, but does

not want the order reversed or modified. Rather, Becker seeks to change the reason for

the denial of a stay. Becker contends that the arbitration clause in Jedson’s “purchase

order,” which was submitted in response to Becker’s “Credit Application Agreement” and

Becker’s quotation for materials, was not part of the contract, and consequently Jedson

has no contractual right to arbitration.

       {¶ 2} We conclude that the trial court did not abuse its discretion by finding that

Jedson waived its right to arbitration. We also conclude that the trial court’s findings as to

the content of the parties’ contract, which are raised by Becker in its cross-appeal, remain

interlocutory in nature at this point in the proceedings and are not properly before us. We

affirm the trial court’s order.

                                        I. Background

       {¶ 3} This case arises out of a project in Oklahoma in which Jedson was the

general contractor hired by CP Kelco to convert an existing manufacturing line from one

product to another product. Jedson sought to purchase certain lighting materials from

Becker, and on April 20, 2016, Jedson executed Becker’s “Credit Application Agreement,”

which included sale terms and conditions, including payment terms. The next day, April

21, Becker sent Jedson a quotation for certain materials, totaling $40,998. Jedson
                                                                                       -3-

submitted a “Purchase Order” the same day for the items listed in the quotation.

Accompanying the purchase order were certain terms and conditions, including these two

provisions:

      2. Acceptance. Acceptance of the Order is expressly limited to the terms

      of the Agreement. Shipment and/or delivery by Seller of the items covered

      by the Agreement with the consent of the buyer shall in all cases constitute

      an unqualified acceptance of all the terms and conditions of the Agreement

      by Seller, whether or not Seller has countersigned the Agreement and/or

      the Order. No additional and/or different terms, including those which

      appear    in   any   quotation,   acceptance,   invoice,   sales   order,   or

      acknowledgement or written confirmation from Seller, shall be of any force

      or effect. Buyer has hereby notified Seller of Buyer’s objection to any

      additional and/or different terms, in a duly executed writing. The Agreement

      shall constitute the entire agreement between Buyer and Seller unless

      otherwise expressly agreed to in a writing duly executed by Buyer and

      Seller.

      16. Law and Jurisdiction: Dispute Resolution. * * * Buyer, at its option may

      also invoke binding and exclusive arbitration in Cincinnati, Ohio under the

      American Arbitration Association’s Commercial Arbitration Rules, and

      Seller agrees to submit to such arbitration and to dismiss any legal

      proceedings related to the subject matter of such arbitration * * *. Buyer, at

      its option, may also invoke non-binding mediation, and Seller agrees to

      submit to such mediation and to stay or dismiss any legal proceedings
                                                                                       -4-

      relating to the subject matter there.

      {¶ 4} On June 7, 2016, Becker delivered the materials to Oklahoma, in accordance

with the parties’ agreement. But Jedson did not pay. According to Jedson, disputes about

the project arose between it and CP Kelco, and CP Kelco refused to pay Jedson for work

performed on the project. As a result, Jedson failed to pay approximately fifty

subcontractors and material suppliers, including Becker. In August 2016, one of these

subcontractors, Miller Valve & Controls, Inc., filed suit in Oklahoma state court against

Jedson, CP Kelco, and six other defendants related to lien foreclosure and payment

claims for the project. In September 2016, Jedson filed cross-claims against CP Kelco,

and CP Kelco then filed cross-claims against Jedson for, among other things, “defective,

nonconforming and unfit design and construction work” by Jedson’s subcontractors and

vendors. CP Kelco’s cross-claims did not specify the nature of the alleged defective,

nonconforming work, and unfit work or the responsibility of specific subcontractors or

vendors. As a result, Jedson claimed that it did not know if the materials supplied by

Becker were defective, nonconforming, or unfit, as alleged by CP Kelco.

      {¶ 5} On December 9, 2016, Becker filed suit against Jedson in the Montgomery

County Common Pleas Court for breach of contract. The parties originally stipulated to

an extension of time until April 11, 2017, for Jedson to respond to the complaint, but the

trial court found this unreasonable and shortened the deadline to February 28. Jedson

did not file a response by the deadline, so on March 7, the trial court issued a notice of

default. Jedson responded to the notice, and the court granted it leave to respond. On

April 19, Jedson filed a motion to dismiss or, alternatively, a motion for a stay of the

proceedings. Jedson asked the court to dismiss Becker’s complaint or to stay any further
                                                                                           -5-

proceedings under the doctrine of forum non conveniens, as a matter of comity (due to

the pending Oklahoma litigation), or because of a failure to join CP Kelco as a necessary

party. The motion also mentioned a stay based on a request for mediation, but Jedson

did not argue this basis and, according to an affidavit filed by Becker, Jedson never

requested that Becker engage in mediation. In response, Becker pointed out that it did

not have a claim against CP Kelco, nor did it have a lien on CP Kelco’s property.

Moreover, Becker said that it was not involved in the Oklahoma litigation and that there

was no litigation pending between it and Jedson in Oklahoma.

       {¶ 6} The trial court and both parties agreed to hold the case in abeyance while

the parties in the Oklahoma litigation tried to resolve the matter and get all the

subcontractors and vendors paid. Counsel for Becker updated the trial court on the status

of the Oklahoma litigation. In May 2017, Jedson filed a third-party complaint against

Becker in the Oklahoma litigation, but it later voluntarily dismissed its claims against

Becker, after Becker filed a motion to dismiss for lack of personal jurisdiction. This

occurred after the Oklahoma court had dismissed on the same ground Jedson’s claims

against another Ohio-based defendant similarly situated to Becker.

       {¶ 7} Back in Ohio, on September 22, 2017, while Jedson’s first motion for a stay

was still pending, Jedson filed a second motion for a stay pending arbitration. On

November 6, the trial court overruled Jedson’s first motion to dismiss or stay proceedings,

and on January 29, 2018, the court overruled Jedson’s motion for a stay pending

arbitration. The court concluded that, while the terms of parties’ contract gave Jedson the

right to invoke arbitration, Jedson had waived the right by failing to seek (or even mention)

arbitration as a remedy for over nine months while actively participating in litigation.
                                                                                           -6-

       {¶ 8} Jedson appeals from the order overruling its motion for a stay pending

arbitration, and Becker cross-appeals from the order.

                                 II. Waiver of Arbitration

       {¶ 9} Jedson’s sole assignment of error alleges:

       The Trial Court Erred By Overruling Defendant/Appellant’s Motion To Stay

       Pending Arbitration.

       {¶ 10} The trial court concluded that, under the parties’ contract, Jedson had the

right to invoke arbitration, but the court further found that Jedson had waived this right by

actively participating in litigation for nine months. Jedson challenges this finding.

       {¶ 11} “ ‘[T]he question of waiver is usually a fact-driven issue.’ ” Murtha v. Ravines

of McNaughton Condominium Assn., 10th Dist. Franklin No. 09AP-709, 2010-Ohio-1325,

¶ 20, quoting ACRS, Inc. v. Blue Cross & Blue Shield of Minnesota, 131 Ohio App. 3d
450, 456, 722 N.E.2d 1040 (8th Dist.1998). “In determining whether a trial court has

properly ruled upon a motion to stay the proceedings and compel arbitration, the standard

of review is whether the order constitutes an abuse of discretion.” (Citation omitted.)

Lindsey v. Sinclair Broadcast Group, Inc., 2d Dist. Montgomery No. 19903, 2003-Ohio-

6898, ¶ 19.

       {¶ 12} The parties agree that Ohio law governs this case. Ohio arbitration law

provides that a case involving an arbitrable issue should be stayed pending arbitration of

that issue:

       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
                                                                                               -7-

       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.

R.C. 2711.02(B). However, “ ‘[l]ike any other contractual right, the right to arbitrate may

be waived.’ ” White v. Smith, 2d Dist. Greene No. 2014-CA-48, 2015-Ohio-1671, ¶ 24,

quoting Murtha at ¶ 20. “Given Ohio’s public policy favoring arbitration, the party asserting

that the right to arbitrate has been waived bears the burden of proving waiver.” (Citation

omitted.) Morris v. Morris, 189 Ohio App. 3d 608, 2010-Ohio-4750, 939 N.E.2d 928, ¶ 17

(10th Dist.). “A court will not lightly infer waiver of a right to arbitrate.” Id. at ¶ 18, citing

Harsco Corp. v. Crane Carrier Co., 122 Ohio App. 3d 406, 415, 701 N.E.2d 1040 (3d

Dist.1997). “ ‘ “A party asserting waiver must prove that the waiving party knew of the

existing right to arbitrate and, based on the totality of the circumstances, acted

inconsistently with that known right.” ’ ” White at ¶ 25, quoting Pinnell v. Cugini &

Cappoccia Builders, Inc., 10th Dist. Franklin No. 13AP-579, 2014-Ohio-669, ¶ 18, quoting

Dispatch Printing Co. v. Recovery Ltd. Partnership, 10th Dist. Franklin No. 10AP-353,

2011-Ohio-80, ¶ 21. “ ‘ “In determining whether the totality of the circumstances supports

a finding of waiver, a court may consider such factors as: (1) whether the party seeking

arbitration invoked the court’s jurisdiction by filing a complaint or claim without first

requesting a stay; (2) the delay, if any, by the party seeking arbitration to request a stay;

(3) the extent to which the party seeking arbitration has participated in the litigation; and

(4) whether prior inconsistent acts by the party seeking arbitration would prejudice the

non-moving party.” ’ ” Id., quoting Pinnell at ¶ 18, quoting Dispatch Printing at ¶ 21.
                                                                                             -8-

       {¶ 13} Jedson first appeared in this case by filing a stipulation for extension of time

to file a responsive pleading. When the extension expired, the trial court prompted Becker

to file for default judgment. Six days later, Jedson filed a response to the court’s notice of

default in which it stated that it had not received any orders from the court. At the same

time, Jedson filed a motion for leave to move, plead, or otherwise defend out of time on

the grounds of excusable neglect. A month later, Jedson filed a motion to dismiss based

on forum non conveniens, its right to mediate any dispute arising out of the purchase-

order terms, and failure to join a necessary party. Alternatively, Jedson moved the court

to stay the case as a matter of comity based on the pending litigation in Oklahoma. After

a telephone conference with the trial court, with the understanding that the Oklahoma

litigation influenced this case, the parties agreed to provide the trial court with status

updates on the Oklahoma case. Becker filed updates in July, August, and September

2017. Then, on September 22, 2017, before the court issued a decision on the pending

motion to dismiss or stay, Jedson filed the motion for a stay pending arbitration. Before

this, Jedson had never raised the issue of arbitration in the trial court. Furthermore, in an

affidavit, Becker averred that it did not receive any notice or other information of Jedson’s

intent to arbitrate this dispute. So from the time that Jedson first appeared in this case in

January 2017 until it filed the motion for a stay pending arbitration, it never mentioned its

right to invoke arbitration.

       {¶ 14} The trial court found that, given the express terms in the purchase order,

Jedson knew of its right to invoke arbitration and that it acted inconsistently with that right.

The court acknowledged that Jedson had yet to file an answer, but the court found that

Jedson did file a third-party complaint against Becker in the Oklahoma case that was
                                                                                           -9-

based on the purchase order’s terms and conditions; Jedson later dismissed this

complaint. The court concluded that, though Jedson did not initially invoke the court’s

jurisdiction, all the remaining factors weighed heavily in favor of waiver. The court later

found that Jedson’s actions throughout this case and in the Oklahoma case were

inconsistent with its right to invoke binding arbitration. The trial court considered Jedson’s

first motion to dismiss or stay as most important to its decision, because in that motion

Jedson asked for a stay of the case on the grounds of comity, based on the pending

litigation in Oklahoma, but did not mention arbitration. Jedson argued in that motion that

the case should be stayed because the Oklahoma case involved the same parties and

the same subject matter and because Jedson had filed a third-party complaint in that

case. The trial court found that Jedson’s request to stay the case on those grounds

constituted conduct entirely inconsistent with its right to arbitration.

       {¶ 15} Jedson argues that Ohio appellate courts have held that arbitration

provisions should be enforced in circumstances far less compelling than those in this

case. But the cases that Jedson cites are factually distinguishable from this case. In

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

Dist.1997), the arbitration provision provided that the parties agreed to submit all disputes

to arbitration. The provision did not just give one party the option. Furthermore, the waiver

argument was based on conduct that occurred before suit was filed. The arbitration

provision in Savage v. All Family Homes, Inc., 11th Dist. Geauga No. 92-G-1688, 1992
WL 366898 (Dec. 11, 1992), similarly made all disputes subject to arbitration. The plaintiff

asserted that the defendant had waived arbitration but provided no evidence to support

that assertion. Also, the defendant had asserted the defense of lack of jurisdiction based
                                                                                        -10-

on the arbitration provision and had defended on the grounds that the contract barred the

action. The court found that this was sufficient to preserve the right to arbitration. In

Morris v. Morris, 189 Ohio App. 3d 608, 2010-Ohio-4750, 939 N.E.2d 928 (10th Dist.), the

appellate court concluded that a request to file a cross-claim was not inconsistent with

the contractual right to arbitrate, because the cross-claim was never actually filed and

because the proposed cross-claim would not have been subject to arbitration.

       {¶ 16} On the record in this case, we cannot say that the trial court abused its

discretion by finding that Jedson waived its right to arbitration. Jedson’s sole assignment

of error is overruled.

                               III. Becker’s cross-appeal

       {¶ 17} The sole cross-assignment of error in Becker’s cross-appeal from the order

overruling Jedson’s motion for a stay pending arbitration alleges:

       The Trial Court Erred in Holding that the Parties’ Credit Agreement and

       Becker’s April 21, 2016 Quote, Issued to Jedson, Did Not Constitute an

       Offer and in Failing to Find that the Arbitration Provisions of Jedson’s

       Purchase Order Were a Material Alteration to the Parties’ Contract Which

       Were Not Binding on Becker.

       {¶ 18} A party must file a notice of cross-appeal only if the party “seeks to change

the judgment or order.” App.R. 3(C)(1). Becker does not seek to change the order, but

to change the reason for the order. The trial court denied Jedson a stay because it found

that Jedson had waived its right to arbitration. Becker would rather the reason be that

Jedson has no right to arbitration, because the right to arbitration was not part of the

parties’ contract. Becker contends that the trial court incorrectly concluded that its
                                                                                        -11-

quotation was not the offer. Becker argues that its quotation, along with the credit

agreement, was the offer; that Jedson accepted that offer; that Jedson’s acceptance was

not conditioned on accepting the arbitration provision in the purchase order, under R.C.

1302.10(A); and that the arbitration provision in the purchase order did not become part

of the parties’ contract, under R.C. 1302.10(B), because the provision would materially

alter the contract, under R.C. 1302.10(B)(2). In essence, Becker is defending the trial

court’s decision on a different basis, one that the court considered but rejected.

        {¶ 19} An appellate court has jurisdiction to review, affirm, modify, set aside, or

reverse judgments or final orders for prejudicial error. R.C. 2501.02. An appellate court

may affirm based on different reasoning than found by a trial court, but an appellate court

cannot disturb a judgment or order that is legally correct based on different reasoning.

See State ex rel. Sommers v. Perkins Local Schools Bd. of Edn., 2017-Ohio-7991, 98
N.E.2d 1117, ¶ 26 (6th Dist.). The fundamental questions in an appeal are, one, whether

the appealed decision itself is erroneous and, two, whether that error is prejudicial. A

decision that achieves the right result must be affirmed, even if the wrong reasoning is

used to justify the decision, because an error in reasoning is not prejudicial. See id.,

quoting City of Toledo v. Schmiedebusch, 192 Ohio App. 3d 402, 2011-Ohio-284, 949
N.E.2d 504, ¶ 37 (6th Dist.) (an appellate court will not reverse a trial court decision

that “ ‘achieves the right result for the wrong reason, because such an error is not

prejudicial’ ”).

        {¶ 20} Here, the appealed order was the denial of a stay pending arbitration. We

have concluded that denying the stay was the right result. Becker does not disagree.

Whether that decision were justified on the ground that Jedson waived its right to
                                                                                             -12-

arbitration or on the ground that Jedson had no right to arbitration, the result would be the

same—no stay. Far from prejudicing Becker, it is what Becker wanted.

       {¶ 21} Becker also wants to argue the contents of the parties’ contract in this

appeal. But the only issue that is properly before us now is whether it was an abuse of

discretion for the trial court to find that Jedson waived its right to arbitration. We think that

any findings by the trial court related to the contract’s contents are interlocutory at this

stage in the case and therefore they are not properly before us in this appeal.

       {¶ 22} The cross-assignment of error is overruled.

                                       IV. Conclusion

       {¶ 23} We have overruled Jedson’s assignment of error and found that the issues

raised in Becker’s cross-assignment of error are not properly before us. The trial court’s

order denying a stay pending arbitration is affirmed and the matter is remanded for further

proceedings.

                                       .............

DONOVAN, J. and FROELICH, J., concur.

Copies sent to:

Scott A. Liberman
Steven E. Bacon
Leonard A. Weakley
Hon. Gregory F. Singer