Court Opinion

ID: 2747648
Source: CourtListenerOpinion
Date Created: 2014-11-03 19:05:28.983382+00
Date Added: 2024-06-11T11:26:35.033745
License: Public Domain

[Cite as Mills v. Lakewood Constr. Assocs., Ltd., 2014-Ohio-4886.]

                                        COURT OF APPEALS
                                      LICKING COUNTY, OHIO
                                    FIFTH APPELLATE DISTRICT

RYAN E. MILLS, ET AL.                                       JUDGES:
                                                            Hon. William B. Hoffman, P.J.
        Defendants-Appellants                               Hon. Patricia A. Delaney, J.
                                                            Hon. Craig R. Baldwin, J.
-vs-
                                                            Case No. 14-CA-15
LAKEWOOD CONSTRUCTION
ASSOCIATIES, LIMITED
                                                            OPINION
        Plaintiff-Appellee

CHARACTER OF PROCEEDING:                               Appeal from the Licking County Court of
                                                       Common Pleas, Case No. 2014CV0008

JUDGMENT:                                              Reversed and Remanded

DATE OF JUDGMENT ENTRY:                                 October 30, 2014

APPEARANCES:

For Plaintiff-Appellee                                 For Defendants-Appellants

KERRY T. BOYLE                                         CHARLEY HESS
ALICIA E. ZAMBELLI                                     7211 Sawmill Road
JAMES M. YOUNG                                         Suite 200
Isaac, Wiles, Burkholder & Teetor, LLC                 Dublin, Ohio 43016-5010
2 Miranova Place, Suite 700
Columbus, Ohio 43215
Licking County, Case No. 14-CA-15                                                           2

Hoffman, P.J.

         {¶1}   Defendants-appellants Ryan and Tamara Mills appeal the February 11,

2014 Judgment Entry entered by the Licking County Court of Common Pleas granting

the motion to stay case and compel arbitration filed by Plaintiff-appellee Lakewood

Construction Associates, Ltd.

                                    STATEMENT OF THE CASE1

         {¶2}   Appellee Lakewood Construction Associates, Ltd. initiated the within

action pursuant to a mechanic's lien claiming over $79,000.00 due and owing from

Appellants on a cost-plus construction agreement for the construction of Appellants'

home. The written estimated cost to construct the home was $337,200.00. Appellee

joined the construction lender, Park National Bank, in the suit.

         {¶3}   In October of 2012, the parties entered into an agreement for the

construction of a residence by Appellee on a cost-plus basis on a lot owned by

Appellants located in Granville, Ohio. Appellants claim they were lead to believe a cost-

plus price contract was less expensive than a fixed-price contract based upon

representations made by Appellee. Appellants assert upon occupancy of the residence,

they received numerous billings containing differing amounts due. The final billing

exceeded the contractually estimated price by over $79,000.00.               Appellants later

approved a draw request made by Appellee, but for a lesser amount.

         {¶4}   Appellants filed an eight-count counterclaim against Appellee, and a

cross-claim against Park National Bank. The counterclaims included workmanship

issues. The cross-claim concerned the use of draw money and money owed to a

1
    A rendition of the underlying facts is unnecessary for our resolution of this appeal.
Licking County, Case No. 14-CA-15                                                      3

landscaping subcontractor. Appellants subsequently settled the cross-claim with Park

National.

       {¶5}   Subsequent to the initiation of the within action, Appellee was sued in the

Licking County Court of Common Pleas by CMLH Holdings, LLC, a subcontractor of

Appellee, for money owed for work performed on Appellants' home. Appellee moved the

trial court to consolidate the cases. The trial court granted the motion.

       {¶6}   Appellee then moved the trial court to stay the case and compel

arbitration. The trial court granted the motion without Appellants' having been afforded

an opportunity to respond.

       {¶7}   Appellants now appeal, and assign as error:

       {¶8}   "I. THE TRIAL COURT ERRED AS A MATTER OF LAW IN ITS

JUDGMENT ENTRY DATED FEBRUARY 11, 2014, WHEN IT GRANTED APPELLEE'S

MOTION TO STAY THE CASE AND COMPEL ARBITRATION BEFORE THE

EXPIRATION OF THE TIME ALLOWED FOR APPELLANTS TO FILE A TIMELY

RESPONSE OPPOSING THE MOTION IN WHICH APPELLANTS WOULD HAVE

DEMONSTRATED, ON THE RECORD, THE ABSENCE OF INDEPENDENCE AND

IMPARTIALITY IN THE SELECTION OF THE ARBITRATOR.

       {¶9}   "II. THE TRIAL COURT ERRED AS A MATTER OF LAW IN ITS

JUDGMENT ENTRY DATED FEBRUARY 11, 2014, WHEN IT GRANTED APPELLEE'S

MOTION TO STAY THE CASE AND COMPEL ARBITRATION WHEN, UNDER THE

CIRCUMSTANCES THAT EXIST, THE ARBITRATION PROVISION IS BOTH

SUBSTANTIVELY AND PROCEDURALLY UNCONSCIONABLE.
Licking County, Case No. 14-CA-15                                                       4

       {¶10} "III. THE TRIAL COURT ERRED AS A MATTER OF LAW IN ITS

JUDGMENT ENTRY DATED FEBRUARY 11, 2014, WHEN IT GRANTED APPELLEE'S

MOTION TO STAY THE CASE AND COMPEL ARBITRATION IMPLICITLY RULING

THAT THE ISSUES RAISED BY APPELLEE IN ITS COMPLAINT ARE ARBITRABLE

AND WITHIN THE SCOPE OF THE ARBITRATION PROVISION THAT IS

CONTAINED IN THE CONSTRUCTION CONTRACT.

       {¶11} "IV. THE TRIAL COURT ERRED AS A MATTER OF LAW IN ITS

JUDGMENT ENTRY DATED FEBRUARY 11, 2014, BY IMPLICITLY RULING THAT

APPELLEE'S      CLAIM    FOR     FORECLOSURE         IS   A   PROPER     SUBJECT      OF

ARBITRATION."

                                                I

       {¶12} R.C. 2711.02(B) provides,

       {¶13} "(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."

       {¶14} Section 14 of the parties' Agreement herein, entitled Cost Plus

Construction Agreement, reads:

       {¶15} "14. PROCEDURE IN CASE OF DISPUTES. In the event Owner believes

that Contractor has provided Work which does not conform to the Quality Standards
Licking County, Case No. 14-CA-15                                                      5

promulgated by the Building Industry Association of Central Ohio or does not

substantially conform to the Plans and Specifications, Owner shall promptly provide

written notice to Contractor of the same specifying with reasonable certainty the nature

and effect of such claims. Thereafter, Contractor shall be afforded a reasonable

opportunity to review and evaluate such claims and, to the extent necessary to

complete such evaluation, Contractor may request additional information and/or a

meeting with Owner and/or architect or engineer (if applicable) at the Premises to

discuss the same. After completion of such review to the extent Contractor agrees with

Owner, Owner shall provide Contractor with a reasonable opportunity to cure any such

agreed upon non-conformity and in this respect Owner agrees not to remove contractor

from the job or order Contractor to stop work so long as contractor diligently undertakes

to cure the same. In the event that after completion of such review by Contractor there

is a claim(s), dispute(s), or other matter in question over which Contractor and Owner

cannot agree to a resolution thereof, or in the event Owner and Contractor cannot agree

to the resolution of any other dispute arising under the terms of this Agreement, Owner

and Contractor agree that a decision as to the disputed term(s) shall be reached

through arbitration based upon the rules ("Rules") promulgated by the American

Arbitration Association which shall be conducted in a prompt and expeditious manner

and in accordance with the following guidelines. Owner and Contractor agree that

notwithstanding the rules, the Chairman of the Professional Standards committee of the

Building Industry Association of Central Ohio shall select an arbitrator to perform the

arbitration. To this end, Owner specifically acknowledges that neither the Professional

Standards Association Committee of the Building Industry Association of Central Ohio
Licking County, Case No. 14-CA-15                                                        6

nor the Building Industry Association of Central Ohio itself will actually be requested to

conduct the arbitration. Rather, they will only assist in naming the arbitrator. The fees

of the arbitrator shall be split by Owner and Contractor. Thereafter, a hearing shall be

held. The decision of the arbitrator at such hearing shall be final and binding upon the

parties. Owner and Contractor additionally agree that in the case of such a claim or

dispute, time is of the essence and that the most expeditious reasonable method of

arbitration as set forth above shall be used, and further, that all of the parties shall be

bound by the outcome of such arbitration." (Emphasis added.)

       {¶16} Appellants argue the above provision is unconscionable, and had the trial

court waited until they had timely filed a response to the motion to stay and compel

arbitration, Appellants would have submitted admissible evidence of the unfairness of

the provision.

       {¶17} Appellee filed its Motion to Stay on February 3, 2014, accompanied by its

Certificate of Service reflecting regular U.S. Mail service issued on that same date.

Appellee did not submit to the trial court an order or notice of hearing scheduling an oral

or non-oral hearing upon the motion as required by the Licking County Court of

Common Pleas General Division Rule of Civil Practice 5(B).            Ohio Rule of Civil

Procedure 6(C) provides, "A written motion, …, and notice of the hearing thereof shall

be served not later than seven days before the time fixed for hearing…" Ohio Civ.R

6(D) provides the non-moving party an additional three days to respond when served by

regular mail.

       {¶18} Without notice of hearing, the trial court granted Appellee's Motion to Stay

via Order and Entry filed February 11, 2014. Such entry was filed on the eighth day
Licking County, Case No. 14-CA-15                                                         7

after the motion to stay was filed and five days after service upon Appellants. We find

Appellants were not afforded adequate time to respond and were never given notice or

an opportunity to be heard in opposition to the motion before the trial court issued its

order.

         {¶19} Appellants' first assignment of error is sustained.

                                             II, III, & IV

         {¶20} In light of our disposition of Appellants' first assignment of error, we find

the remainder of their assignments of error premature.

         {¶21} The February 11, 2014 Judgment Entry entered by the Licking County

Court of Common Pleas is reversed and the matter remanded for further proceedings.

By: Hoffman, P.J.

Delaney, J. and

Baldwin, J. concur