Court Opinion

ID: 2693507
Source: CourtListenerOpinion
Date Created: 2014-08-01 22:02:38.819669+00
Date Added: 2024-06-11T13:13:29.682107
License: Public Domain

[Cite as Haight v. Cheap Escape Co., 2013-Ohio-182.]

         IN THE COURT OF APPEALS FOR MONTGOMERY COUNTY, OHIO

JOHN HAIGHT, et al.                                    :

        Plaintiffs-Appellees                           :        C.A. CASE NO.      25345

v.                                                     :        T.C. NO.    12CV946

CHEAP ESCAPE COMPANY, et al.                           :            (Civil appeal from
                                                                    Common Pleas Court)
        Defendants-Appellants                          :

                                                       :

                                            ..........

                                           OPINION

                        Rendered on the        25th        day of     January   , 2013.

                                            ..........

ANDREW BILLER, Atty. Reg. No. 0081452, 4200 Regent Street, Suite 200, Columbus,
Ohio 43219
      Attorney for Plaintiffs-Appellees

SCOTT J. ROBINSON, Atty. Reg. No. 0074053, 1111 Superior Avenue, Suite 1000,
Cleveland, Ohio 44114
       Attorney for Defendants-Appellants

                                            ..........

DONOVAN, J.

        {¶ 1}    Defendant-appellant Cheap Escape Company (dba “JB Dollar Stretcher”)
                                                                                           2

and its principals, Robert Minchak and Joan Minchak, appeal a decision of the Montgomery

County Court of Common Pleas, General Division, overruling their motion made pursuant to

R.C. 2711.02 and R.C. 2711.03 to stay proceedings against them and compel

plaintiffs-appellees John Haight and Christopher Pence (hereinafter “the appellees”) to

engage in arbitration over their wage-related claims against JB Dollar. The trial court

issued its decision overruling JB Dollar’s motion on August 2, 2012. JB Dollar filed a

timely notice of appeal with this Court on August 27, 2012.

       {¶ 2}   In early August of 2011, appellees Haight and Pence both executed contracts

provided by JB Dollar which purported to govern the terms and conditions of their

employment and the scope of their duties as sales representatives (hereinafter “the

contract”). The contract consists of a detailed non-compete agreement, which includes an

arbitration clause which is at the heart of the instant litigation. Haight was employed by JB

Dollar as sales representative from August of 2011 to December 2011.             Pence was

employed in the same capacity from August of 2011 through October of 2011.

       {¶ 3}   On February 6, 2012, the appellees filed a complaint against JB Dollar

asserting that appellants wrongfully withheld wages and/or commissions from appellees,

plus claims of breach of contract and quantum meruit. Appellees also sought a declaratory

judgment in order to determine the constitutionality of R.C. 4111.14(B)(1) and R.C.

4111.14(K). Appellees also requested certification of a collective action based on their

claims arising out R.C. 4111.14(K).

       {¶ 4}   Shortly thereafter, JB Dollar filed a motion to stay the proceedings and to

compel arbitration, pursuant to R.C. 2711.02 and R.C. 2711.03. In its motion, JB Dollar
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argues that the employment agreement signed by the parties contained an arbitration

provision to which appellees’ claims are subject. Appellees filed a memorandum contra on

March 2, 2012, in which they argue that the agreement submitted by JB Dollar and signed by

appellees was merely a non-compete agreement with an arbitration clause built into it.

Thus, appellees asserted that the non-compete agreement was inapplicable to their claims.

         {¶ 5}   The trial court agreed with appellees and overruled JB Dollar’s motion for a

stay and motion to compel arbitration in a decision issued on August 2, 2012, specifically

finding that the agreement entered by JB Dollar was a non-compete agreement that did not

apply to appellees’ claims. Accordingly, the trial court held that appellees did not have to

submit to arbitration, but rather were free to litigate their claims against JB Dollar in the trial

court.

         {¶ 6}   It is from this decision that JB Dollar now appeals.

         {¶ 7}   JB Dollar’s first assignment of error is as follows:

         {¶ 8}   “THE TRIAL COURT ERRED IN FAILING TO STAY THE MATTER

AND COMPEL ARBITRATION.”

         {¶ 9}   In its first assignment, JB Dollar contends that appellees failed to meet their

burden with respect to adducing sufficient evidence that their claims were excluded from the

scope of the arbitration agreement. Specifically, JB Dollar argues that the trial court erred

when it improperly relied on a document designated the “Outside Commission

Salesperson-Employee Compliance Agreement” as being the basis for the appellees’ claims,

rather than the actual arbitration agreement signed and executed by appellees as part of their

employment agreement.
[Cite as Haight v. Cheap Escape Co., 2013-Ohio-182.]

        {¶ 10} Ohio has long had a strong public policy favoring arbitration. Schaeffer v.

All State Ins. Co, 63 Ohio St.3d 708, 711, 590 N.E.2d 1242, 1245 (1992). Arbitration is

favored because it allows parties to by-pass expensive and time-consuming litigation and

“provides the parties thereto with a relatively expeditious and economical means of

resolving a dispute.” Id. at 712.

        {¶ 11} The primary question in the instant appeal is whether the appellees’ claims

against JB Dollar are subject to the arbitration clause in the contract. “The arbitrability of a

claim is a question of law, and we review the arbitrability of a claim de novo.” McManus v.

Eicher, 2d Dist. Greene No. 2003-CA-30, 2003-Ohio-6669; see also St. Mary’s v. Auglaize

Cty. Bd. of Commrs., 115 Ohio St.3d 387, 2007-Ohio-5026, 875 N.E.2d 561, at ¶ 38

(“Contract interpretation is a matter of law, and questions of law are subject to de novo

review on appeal.”).

        {¶ 12} Ohio’s public policy favoring arbitration is codified at R.C. Chapter 2711.

Under R.C. 2711.02(A), a written arbitration clause “shall be valid, irrevocable, and

enforceable, except upon grounds that exist at law or in equity for the revocation of any

contract.”   If a party moves to stay proceedings pending arbitration, pursuant to “an

agreement in writing for arbitration,” the court must first satisfy itself “that the issue

involved in the action is referable to arbitration” under the agreement. R.C. 2711.02(B).

        {¶ 13} In the instant case, appellees do not dispute that they signed and consented to

a non-compete agreement provided by JB Dollar. Additionally, appellees agree that the

non-compete agreement contains an arbitration clause. Appellees do not dispute that the

arbitration clause is applicable to non-compete and non-disclosure related employment

issues. Appellees, however, contend that pursuant to the contract, the enforceability of the

arbitration clause is limited to only non-compete and non-disclosure related employment

issues. Specifically, appellees argue that JB Dollar is attempting to apply an arbitration

clause that is part of a non-compete agreement to legal claims which are completely

unrelated to the underlying contract.
                                                                                           5

       {¶ 14} Initially, we note that the contract is clearly titled on the first page,

“NON-COMPETITION AGREEMENT.”                   Additionally, the first page of the contract

contains the following statements which outline the purpose and scope of the agreement:

       WHEREAS,         the   Corporation    has   developed    confidential    business
       information and products which it desires to protect from unauthorized

       disclosure or use by its employees, former employees and third parties; and

       WHEREAS, the Employee understands that the purpose of this Agreement is

       to restrict the use, disclosure or copying of confidential information or

       products of the Corporation and to restrict the Employee from competing

       with the Corporation as set forth herein.

       {¶ 15} In light of the foregoing unequivocal contractual language, the purpose of

the contract was that it serve as a non-compete and non-disclosure agreement. Thus, it

follows that the arbitration clause in the contract only relates to non-compete and

non-disclosure issues. It is undisputed that appellees’ legal claims against JB Dollar are

totally unrelated to non-competition/non-disclosure matters.

       {¶ 16} Relevant to appellees’ argument in this regard is Section 12(a) of the

contract which states in pertinent part:

       With the exception of claims by Corporation or Employee for injunctive

       relief, Employee agrees that any dispute, controversy, claim, or difference

       between Corporation and Employee which directly or indirectly relates to or

       arises out of this Agreement, or its breach, shall be subject to arbitration ***.

       {¶ 17} Upon review, we find that none of appellees’ claims relate to or arise out of

any issues with respect to non-competition and/or non-disclosure as they are discussed in the

contract.

       {¶ 18} We also note that the exhibits attached to the contract do not act to expand

the scope of the arbitration clause’s purview to matters outside those contained in the
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contract, nor do the exhibits transform the non-competition contract into an agreement which

governs every aspect of the appellees’ employment at JB Dollar. For example, Exhibits A

and B are not contractual provisions. Rather, Exhibit A is a list of JB Dollar’s commissions

structure for its salespeople. Exhibit B merely contains a discussion of how JB Dollar pays
commissions and makes certain deductions from those commissions. Pursuant to language

in the contract, Exhibits A and B “fluctuate according to paper and postage pricing and can

be revised by the Publishers at any time.” Lastly, Exhibit C is simply a job description for

outside commission salespeople which contains a list of duties and other responsibilities for

that position. Each exhibit is primarily a policy statement prepared by JB Dollar that does

not rely upon the existence of the contract. We note that the non-compete contract does

not explicitly mention the Outside Commission Salesperson Employee Compliance

Agreement (OCSECA), nor is the OCSECA specifically labeled as Exhibit A, Exhibit B or

Exhibit C. Moreover, the OCSECA has a separate signature line and title heading. Thus,

the attachment of certain exhibits and the OCSECA does not act to expand the arbitration

clause in the contract beyond non-competition/non-disclosure issues.

       {¶ 19} When the language of a written agreement is clear, a court may look no

further than the writing itself to find the intent of the parties. Alexander v. Buckeye Pipe Line

Co., 53 Ohio St.2d 241, 374 N.E.2d 146 (1978).            As a matter of law, a contract is

unambiguous if it can be given a definite legal meaning. Westfield Ins. Co. v. Galatis, 100

Ohio St.3d 216, 219, 2003-Ohio-5849, 797 N.E.2d 1256, 1261. It is generally the role of

the trier of fact to decide if an ambiguity is present in a written agreement. Davis v. Loopco

Industries, Inc., 66 Ohio St.3d 64, 66, 609 N.E.2d 144, 145 (1993). If a court finds an

ambiguity in a contract between parties of unequal bargaining power, the court will strictly

construe the ambiguity in favor of the less powerful, non-drafting party. Westfield Ins. Co.

v. Galatis, 100 Ohio St.3d at 220.

       {¶ 20} Viewed in its entirety, the contract purports to be a non-competition
                                                                                                7

agreement with an arbitration clause applicable only to issues relating to employee

non-competition/non-disclosure. The contract is not a comprehensive agreement meant to

govern all aspects of employee conduct and responsibility. However, if any ambiguity

exists regarding the nature and scope of the contract, we must strictly construe the ambiguity
in favor of appellees.      Accordingly, we find that the contract is, in fact, solely a

non-competition agreement governed by an arbitration clause.            The arbitration clause

applies only to those issues regarding non-competition and non-disclosure.                  As we

previously stated, it is undisputed that appellees’ claims against JB Dollar are completely

unrelated to non-competition/non-disclosure matters. Thus, we find that the trial court did

not err when it overruled JB Dollar’s motion made pursuant to R.C. 2711.02 and R.C.

2711.03 to stay proceedings against them and compel appellees to engage in arbitration over

their wage-related claims which did not fall under the purview of the non-competition

agreement’s arbitration clause.

        {¶ 21} JB Dollar’s first assignment of error is overruled.

        {¶ 22} JB Dollar’s second and final assignment of error is as follows:

        {¶ 23} “THE TRIAL COURT ERRED IN FAILING TO CONDUCT A R.C. §

2711.02(A) HEARING AND R.C. § 2711.03(B) TRIAL.”

        {¶ 24} In its final assignment, JB Dollar argues that the trial court erred by

overruling the motions to stay and compel arbitration without first conducting an oral

hearing pursuant to R.C. 2711.03(A) and a trial pursuant to R.C. 2711.03(B).

        {¶ 25} R.C. 2711.03 governs a motion to compel arbitration and states in pertinent

part:

        (A) [T]he court shall hear the parties, and, upon being satisfied that the

        making of the agreement for arbitration or the failure to comply with the

        agreement is not in issue, the court shall make an order directing the parties to

        proceed to arbitration in accordance with the agreement.
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       (B) If the making of the arbitration agreement or the failure to perform it is in

       issue in a petition filed under division (A) of this section, the court shall

       proceed summarily to the trial of that issue. If no jury trial is demanded as

       provided in this division, the court shall hear and determine that issue.
       {¶ 26} With respect to division (A) of R.C. 2711.03, JB Dollar asserts that the

language “[t]he court shall hear the parties ***” means that a trial court is required to hold

an oral or evidentiary hearing. It is undisputed that JB Dollar never requested an oral

hearing, and the trial court permitted the parties to submit extensive briefs regarding the

issues surrounding the applicability or inapplicability of the arbitration clause to the

appellees’ claims.    At least three other Ohio appellate courts have concluded that a party

waives its right to an R.C. 2711.03 hearing by failing to request one. Hoppel v. Feldman, 7th

Dist. Columbiana No. 09 CO 34, 2011-Ohio-1183, ¶41 (citing cases). We note, too, that

the parties here were “heard” insofar as they submitted evidence to the trial court in the form

of affidavits. See Hoppel, at ¶42 (reasoning that “a party is ‘heard’ for the purposes of R.C.

2711.03 where the trial court accepts his or her affidavit”).

       {¶ 27} On February 27, 2012, JB Dollar filed a motion to stay the proceedings and

to compel arbitration, pursuant to R.C. 2711.02 and R.C. 2711.03. Attached to its motion

was the non-compete agreement and the exhibits. Appellees filed a memorandum contra on

March 2, 2012, in which they argue that the agreement submitted by JB Dollar and signed by

appellees was merely a non-compete agreement with an arbitration clause built into it.

Attached to appellees’ memo contra were affidavits from both appellees Haight and Pence,

as well as various other evidentiary materials. JB Dollar filed a reply brief on March 12,

2012, to which it failed to attach any additional evidentiary materials.

       {¶ 28} Upon review, we conclude that JB Dollar’s failure to request a hearing

below and submission of written evidentiary materials in the form of briefs and other

documentation has waived its right to complain about the lack of a hearing pursuant to R.C.
                                                                                            9

2711.03(A). Moran v. Riverfront Diversified, Inc., 197 Ohio App.3d 471, 2011-Ohio-6328,

968 N.E.2d 1 (2d Dist.).

        {¶ 29} Having found that the trial court was not required to hold a hearing pursuant

to R.C. 2711.03(A), it was unnecessary for the court to conduct a trial pursuant to R.C.
2711.03(B) because “the making of the arbitration agreement” was not at issue, nor was “the

failure to perform” the arbitration agreement at issue. R.C. 2711.03(B). After “hearing” the

parties pursuant to R.C. 2711.03(A), the trial court specifically found that appellees’ claims

were not subject to the terms of the arbitration agreement. Accordingly, the trial court was

not required to further consider any additional arguments by JB Dollar.

        {¶ 30} JB Dollar’s second and final assignment of error is overruled.

        {¶ 31} All of JB Dollar’s assignments of error having been overruled, the judgment

of the trial court is affirmed.

                                         ..........

FAIN, P.J. and HALL, J., concur.

Copies mailed to:
Andrew Biller
Scott J. Robinson
Hon. Mary Katherine Huffman