Court Opinion

ID: 8484659
Source: CourtListenerOpinion
Date Created: 2022-11-17 18:08:17.511719+00
Date Added: 2024-06-11T16:49:55.513259
License: Public Domain

[Cite as Epps v. State Farm Auto. Ins., 2022-Ohio-4084.]

                                 COURT OF APPEALS OF OHIO

                                EIGHTH APPELLATE DISTRICT
                                   COUNTY OF CUYAHOGA

MICHELLE EPPS,                                             :

        Plaintiff-Appellant,                               :
                                                               No. 111378
        v.                                                 :

STATE FARM AUTOMOBILE                                      :
INSURANCE,
                                                           :
        Defendant-Appellee.

                                JOURNAL ENTRY AND OPINION

                 JUDGMENT: AFFIRMED AND REMANDED
                 RELEASED AND JOURNALIZED: November 17 ,2022

             Civil Appeal from the Cuyahoga County Court of Common Pleas
                                 Case No. CV-21-955713

                                            Appearances:

                 The Henry Law Firm and Eric W. Henry, for appellant.

                 Gallagher, Gams, Tallan, Barnes & Littrell L.L.P. and
                 James R. Gallagher, for appellee.

MICHELLE J. SHEEHAN, J.:

                  Plaintiff-appellant, Michelle Epps, appeals the trial court’s stay of

proceedings in her declaratory-judgment action seeking an order that her insurer,

State Farm Mutual Automobile Insurance (“State Farm”) has no subrogation rights
to settlement proceeds she negotiated with Allstate Insurance Co. (Allstate).

Because State Farm is subject to an arbitration agreement with Allstate regarding

any disputed subrogation rights, the trial court did not abuse its discretion in staying

the case pursuant to R.C. 2711.02(B) pending State Farm’s arbitration with Allstate.

I. PROCEDURAL HISTORY AND RELEVANT FACTS

              On August 28, 2019, Michelle Epps was involved in an automobile

accident and suffered injuries. Epps was insured by State Farm. Robert Nieves, the

other motorist involved, was insured by Allstate. State Farm paid Epps $5,000

pursuant to the Medical Payments Coverage provision in State Farm’s insurance

policy issued to Epps.

              On August 16, 2021, Epps’s counsel informed State Farm that Epps

wished to settle her claim with Nieves’s insurer, Allstate, and sought to “confirm her

repayment/subrogation obligation with State Farm for the medical payments

coverage.” On August 18, 2021, State Farm informed Epps’s counsel that she was

not authorized to make a claim for, collect, negotiate, or otherwise attempt in any

way to recover State Farm’s $5,000 subrogated interest for the medical-payments

coverage provided by State Farm.

              On August 30, 2021, Epps settled her personal-injury claim with

Allstate. Included in the settlement agreement was a provision that Allstate would
hold $5,000 in abeyance, the amount of the medical-payments coverage, pending

Epps obtaining a release from State Farm of its subrogation claim for the $5,000.

              On September 7, 2021, Epps’s counsel informed State Farm that

because State Farm refused Epps’s assistance in collecting its subrogated interest

from Allstate and the two-year statute of limitations expired for Epps to file a lawsuit

against Nieves, Epps’s counsel believed State Farm’s subrogated interest for the

medical-payments coverage also expired and State Farm no longer possessed a valid

subrogation interest. Counsel requested that State Farm release its subrogation

claim. On October 7, 2021, State Farm informed Epps that it would not release its

claim as it was in arbitration proceedings with Allstate to recover the $5,000

medical-payments coverage it had paid Epps.

              On November 12, 2021, Epps filed a declaratory judgment action

against State Farm seeking an order from the court that “State Farm has no

subrogation rights against [Epps’s] car crash settlement where State Farm expressly

declined [Epps’s] assistance in collecting its subrogation interest and then failed to

timely initiate a civil action against the tortfeasor.”1

              In answering Epps’s complaint, State Farm alleged that it was bound

by a mandatory intercompany arbitration agreement with Allstate in order to

1Epps did not join Allstate in the declaratory judgment action. State Farm indicated
at oral argument that it could not join Allstate in the action as it was required to
submit its claim in arbitration.
enforce its subrogation interest and its subrogation claim was perfected upon State

Farm filing its claim against Allstate with “Arbitration Forums, Inc.” on June 29,

2021. State Farm also filed a motion for stay of all proceedings pending its

arbitration with Allstate pursuant to R.C. 2711.02. Within the motion, State Farm

argued that “Ohio statutory and 8th Appellate District law provide that the stay of

proceedings requested by State Farm is mandatory, even though Plaintiff Epps is

not a party to the mandatory arbitration agreement.” Epps argued that State Farm

did not demonstrate that it was bound by an arbitration agreement and that, further,

because she was not subject to an arbitration agreement with State Farm, the trial

court could not stay the case for arbitration.

               In reply to Epps’s argument that it did not present evidence that there

was an arbitration agreement, State Farm referred the trial court to a Specimen Copy

of the Arbitration Forums Medical Payment Subrogation Arbitration Agreement

attached to its amended answer. It further referred the trial court to screenshots

from Arbitration Forums Member Directory showing State Farm and Allstate to be

members of that intercompany-arbitration process, and Arbitration Forum, Inc.’s

Rules” effective August 1, 2021. State Farm also provided the trial court with a copy

of State Farm’s Medical Payments Subrogation Claim that was submitted to

arbitration.

               The trial court granted State Farm’s motion for stay pending

arbitration, from which order Epps appeals.
II. LAW AND ARGUMENT

      A. ASSIGNMENT OF ERROR

              Pursuant to R.C. 2711.02(C), Epps appeals the stay of proceedings and

raises one assignment of error, which reads:

      The trial court erred in granting defendant-appellee State Farm’s
      motion to stay proceedings pending arbitration where plaintiff-
      appellant Michelle Epps was neither a party to, nor a signatory of, an
      arbitration agreement.

              Epps argues that State Farm cannot bind Epps to an arbitration

agreement to which she is not a party. Epps also argues that State Farm did not

show that it was bound by an arbitration agreement where it attached only a

specimen agreement regarding arbitration. State Farm argues that it provided

sufficient evidence that it was bound to an arbitration agreement with Allstate. State

Farm further argues that there is a presumption in Ohio law favoring arbitration and

because it was required to arbitrate its subrogation claim with Allstate, the trial court

did not abuse its discretion by granting its motion to stay proceedings pursuant to

R.C. 2711.02(B).

      B. STANDARD OF REVIEW AND APPLICABLE LAW

              In this case, we are tasked with reviewing the propriety of the trial

court’s order to stay the proceedings. A trial court’s decision to stay proceedings

pending arbitration is reviewed for an abuse of discretion. Mak v. Silberman, 8th

Dist. Cuyahoga No. 95590, 2011-Ohio-854, ¶ 11, citing Brooks v. Doverwood

Estates, 8th Dist. Cuyahoga No. 90397, 2008-Ohio-3791, ¶ 7; Sikes v. Ganley
Pontiac Honda, Inc., 8th Dist. Cuyahoga No. 82889, 2004-Ohio-155. We will affirm

a decision to stay proceedings “[a]bsent a finding that the trial court's decision is

unreasonable, arbitrary, or unconscionable.” Id.

               “Ohio has a strong public policy favoring arbitration of disputes, and

there is a presumption favoring arbitration that arises when the dispute falls within

the scope of an arbitration provision.” Franklin Dissolution L.P. v. Athenian Fund

Mgt., 8th Dist. Cuyahoga No. 110641, 2022-Ohio-623, ¶ 18. In furtherance of this

policy, R.C. 2711.02(B) requires a trial court to stay an action at the request of a party

in an action “brought upon any issue referable to arbitration.” (Emphasis added.)

R.C. 2711.02(B) specifically provides:

      (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.

      C. THE TRIAL COURT DID NOT ABUSE ITS DISRECTION BY STAYING
      THE PROCEEDINGS PENDING ARBITRATION

              In her declaratory judgment action, Epps sought a ruling that State

Farm had no subrogation right to the $5,000 State Farm paid for medical-payments

coverage and that was included in her settlement with Allstate. State Farm asserted

that pursuant to the Medical Payment Subrogation Arbitration Agreement, it was
required to arbitrate any medical-payment subrogation claims with Allstate through

Arbitration Forums, Inc.

              Epps argues that the trial court erred in granting the stay as she was

not a party to an arbitration agreement, and she is correct in stating that no one can

be bound by an arbitration agreement to which they are not a party. See Krafcik v.

USA Energy Consultants, 107 Ohio App.3d 59, 63, 667 N.E.2d 1027 (8th Dist.1995).

However, R.C. 2711.02(B) does not limit its mandate to stay proceedings to cases in

which all parties in a lawsuit are subject to an arbitration agreement. Rather,

R.C. 2711.02(B) mandates the trial court to stay proceedings where the lawsuit is

“brought upon any issue referable to arbitration.” This and other courts of appeals

have found that a trial court does not abuse its discretion in granting a stay where

some, but not all, parties in a lawsuit are subject to an arbitration agreement.

Krafcik at 63-64; Panzica Constr. Co. v. GRE Ins. Group, 8th Dist. Cuyahoga No.

79931, 2002-Ohio-2023, ¶ 15; Zellner v. Prestige Gardens Rehab. & Nursing Ctr.,

3d Dist. Union No. 14-18-14, 2019-Ohio-595, ¶ 42; Hoppel v. Feldman, 7th Dist.

Columbiana No. 09 CO 34, 2011-Ohio-1183, ¶ 49-50; Painesville Twp. Local School

Dist. v. Natl. Energy Mgt. Inst., 113 Ohio App.3d 687, 695, 681 N.E.2d 1369 (11th

Dist.1996), fn.2. As such, the trial court did not abuse its discretion in granting the

motion to stay where Epps was not a party to an arbitration agreement so long as

the requirements of R.C. 2711.02(B) were met.

              R.C. 2711.02(B) requires the trial court to order a stay of proceedings

where it is 1) “satisfied” that there is a written arbitration agreement, and 2) where
an issue upon which the suit is brought is subject to that arbitration agreement. As

to the existence of a written arbitration agreement, State Farm submitted a series of

documents that when read together provided evidence in the record for the trial

court to be satisfied that State Farm and Allstate are members of an organization in

which they are bound by a written agreement to arbitrate medical-payment

subrogation claims.

              As to whether an issue upon which the lawsuit was brought is subject

to the arbitration agreement, Epps sought a declaration from the trial court that

State Farm had no subrogation interest in the medical payments. That interest was

subject to an arbitration agreement with Allstate, and in fact, State Farm was

actively pursuing its interest in the medical payments made to Epps. Accordingly,

the mandate to stay the case pending arbitration in R.C. 2711.02(B) applies and we

do not find that the trial court abused its discretion by staying the proceedings.

              The sole assignment of error is overruled.

III. CONCLUSION

              Epps filed a declaratory-judgment action to have the trial court

determine that State Farm did not have a subrogation interest as to her settlement

agreement with Allstate. State Farm provided evidence that it was subject to an

arbitration agreement with Allstate for the recovery of its subrogated interest in the

medical payments made to Epps. Although Epps is not subject to the arbitration

agreement between State Farm and Allstate, R.C. 2711.02(B) mandates that

proceedings be stayed where an issue is subject to an arbitration agreement, not
where all parties in a lawsuit are subject to an arbitration agreement. As such, the

trial court did not abuse its discretion by staying the proceedings.

              Judgment affirmed, and the case is remanded to the trial court.

              It is ordered that appellee recover of appellant costs herein taxed.

      The court finds there were reasonable grounds for this appeal.

      It is ordered that a special mandate issue out of this court directing 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.

________________________________
MICHELLE J. SHEEHAN, JUDGE

FRANK DANIEL CELEBREZZE, III, P.J., and
KATHLEEN ANN KEOUGH, J., CONCUR