Court Opinion

ID: 2704778
Source: CourtListenerOpinion
Date Created: 2014-08-04 20:31:21.262499+00
Date Added: 2024-06-11T09:12:26.975911
License: Public Domain

[Cite as GB AZ 1, L.L.C. v. Arizona Motors, L.L.C., 2011-Ohio-1808.]

           Court of Appeals of Ohio
                                EIGHTH APPELLATE DISTRICT
                                   COUNTY OF CUYAHOGA

                           JOURNAL ENTRY AND OPINION
                                   No. 95502

                                        GB AZ 1, LLC
                                                           PLAINTIFF-APPELLEE

                                                    vs.

                  ARIZONA MOTORS, LLC, ET AL.
                                                           DEFENDANTS-APPELLANTS

                                          JUDGMENT:
                                           AFFIRMED

                                  Civil Appeal from the
                         Cuyahoga County Court of Common Pleas
                                  Case No. CV-719497

        BEFORE:           Keough, J., Boyle, P.J., and Sweeney, J.

        RELEASED AND JOURNALIZED:                               April 14, 2011
ATTORNEYS FOR APPELLANTS

Stephen B. Doucette
Mark R. Koberna
Rick D. Sonkin
Sonkin & Koberna, Co., LPA
3401 Enterprise Parkway
Suite 400
Cleveland, OH 44122

ATTORNEYS FOR APPELLEE

For GB AZ 1, LLC

J. Kurt Denkewalter
J. Kurt Denkewalter, LLC
110 South Huntington Street
Medina, OH 44256

Also listed:

For Volkswagen of America, Inc.

David A. Schaefer
McCarthy, Lebit, Crystal & Liffman Co.
1800 Midland Building
101 Prospect Avenue
Cleveland, OH 44115
KATHLEEN ANN KEOUGH, J.:

      {¶ 1} Defendants-appellants, Arizona Motors, LLC, Joseph Huang,

Kevin Whalen, and Seth Severin (collectively “appellants”), appeal from the

trial court’s decision denying their motion to compel arbitration and stay all

proceedings pending arbitration. Finding no merit to the appeal, we affirm.

      {¶ 2} In May 2010, plaintiff-appellee, GB AZ 1, LLC (“appellee”), filed

an amended complaint against Volkswagen of America, Inc., Joseph Abbass,

and appellants alleging breach of contract, promissory estoppel, fraud, unjust

enrichment/quantum meruit, fraudulent inducement, civil conspiracy, and

negligent misrepresentation. These causes of action arose out of a business

deal whereby appellee and appellants agreed to purchase and develop

property in Peoria, Arizona for the purposes of establishing a Volkswagen car

dealership. The terms and conditions of the agreement were set forth in a

Joint Venture Agreement that all parties executed in 2007.           Appellee

terminated the business relationship and filed its amended complaint

alleging damages.

      {¶ 3} In response, appellants filed their answer and a motion to compel

arbitration and stay proceedings pending arbitration. Appellants demanded

that the matter be submitted to arbitration pursuant to an arbitration

provision contained in a Lease Agreement executed only by appellee and

appellant Arizona Motors.
      {¶ 4} Appellee maintained, however, that the Lease Agreement was not

at issue and did not control this matter. Instead, appellee argued that the

Joint Venture Agreement executed by all parties was the contract in dispute

and upon which the amended complaint was based.             Because the Joint

Venture Agreement did not contain an arbitration provision, appellee

requested that the court deny the motion to compel. The trial court agreed

with appellee and denied appellants’ motion to compel arbitration and stay

proceedings pending arbitration.

      {¶ 5} Appellants appeal, raising as their sole assignment of error that

the trial court erred in denying their motion to compel arbitration and stay all

proceedings pending arbitration.

      {¶ 6} This court has previously been split as to the standard of review

for the granting or denial of a motion to compel arbitration and to stay

proceedings pending arbitration.     See Shumaker v. Saks Inc., 163 Ohio

App.3d 173, 2005-Ohio-4391, 837 N.E.2d 393, citing Vanyo v. Clear Channel

Worldwide, 156 Ohio App. 3d 706, 2004-Ohio-1793, 808 N.E.2d 482 (holding

that the question of whether a party has agreed to submit an issue to

arbitration is a question of law requiring de novo review).        Cf. Bevan v.

Owens-Illinois, Inc., Cuyahoga App. No. 84776, 2005-Ohio-2323; Sikes v.

Ganley Pontiac Honda (Sept. 13, 2001), Cuyahoga App. No. 79015 (holding

that the appropriate standard of review is abuse of discretion).
      {¶ 7} In Taylor v. Bldg. Corp. of Am. v. Benfield, 117 Ohio St. 3d 352,

2008-Ohio-938, 884 N.E.2d 12,, the Ohio Supreme Court clarified this issue

and held that when determining the alleged unconscionability of an

arbitration clause, the reviewing court must conduct a de novo review.

      {¶ 8} However, the issue before this court does not involve an

allegation of unconscionability or enforceability of an arbitration clause.

Rather, the issue is whether the allegations in the amended complaint

pertain to the Lease Agreement, thereby invoking the arbitration provision

contained therein, or whether the allegations arise from the Joint Venture

Agreement, which does not contain an arbitration provision. Resolving this

issue requires us to simply review the factual allegations contained in the

amended complaint and determine what document gives rise to the

controversy between the parties.

      {¶ 9} Regardless of which standard of appellate review this court

applies, abuse of discretion or de novo, we find that the trial court did not err

in denying appellants’ motion to compel arbitration and stay proceedings

pending arbitration.

      {¶ 10} Appellants contend that the claims and facts alleged in the

amended complaint “fall squarely within the language of the arbitration

provision, which covers ‘any dispute, controversy or claim arising out of or

relating to’ the Lease.” Reviewing the amended complaint, we disagree and
find that no dispute, controversy or claim alleged in the amended complaint

arises out of the Lease Agreement.

     {¶ 11} The allegations contained in the amended complaint pertain

solely to the Joint Venture Agreement, wherein the parties agreed to

purchase and develop property in Peoria, Arizona for the purposes of

establishing a Volkswagen car dealership.     Paragraph 37 of the amended

complaint alleges that appellee terminated the Joint Venture Agreement in

January 2008 and demanded reimbursement for monies expended in

connection with purchasing the Peoria site. This termination was prior to

the execution of the Lease Agreement.

     {¶ 12} Additionally, paragraph 49 of the amended complaint alleges that

the Lease Agreement was executed in July 2008, but that it never “(1)

commenced, (2) became effective or (3) became an enforceable contract for

many reasons including, without limitation, the Defendants [sic] inability to

provide the tri-party agreement with Defendant Volkswagen.” Although the

Lease Agreement was executed between appellee and appellant Arizona

Motors, the amended complaint contains no allegation that damages resulted

from nonperformance under the Lease Agreement.           In fact, appellants

maintain in their appellate brief that “[i]t is undisputed that Arizona Motors

was not awarded the Volkswagen franchise that would have made the

dealership successful and the Lease marketable.” After reviewing the terms
of the Lease Agreement, it is questionable whether the Lease Agreement

commenced or became effective for the appellee to even assert a claim against

it.

      {¶ 13} Therefore, we find that the allegations and causes of action giving

rise to the amended complaint pertain to the Joint Venture Agreement, which

does not contain an arbitration provision.      “[A]rbitration is a matter of

contract and, in spite of the strong policy in its favor, a party cannot be

compelled to arbitrate any dispute which he has not agreed to submit.”

Stillings v. Franklin Twp. Bd. of Trustees (1994), 97 Ohio App. 3d 504, 508,

646 N.E.2d 1184.      Accordingly, the trial court did not err in denying

appellants’ motion to compel arbitration and stay proceedings.              The

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.

KATHLEEN ANN KEOUGH, JUDGE
MARY J. BOYLE, P.J., and
JAMES J. SWEENEY, J., CONCUR