Court Opinion

ID: 5134368
Source: CourtListenerOpinion
Date Created: 2021-12-13 17:10:51.856457+00
Date Added: 2024-06-11T08:23:43.424569
License: Public Domain

[Cite as Nye v. DeLille Oxygen, Inc., 2021-Ohio-4364.]

                      IN THE COURT OF APPEALS OF OHIO
                          THIRD APPELLATE DISTRICT
                               SENECA COUNTY

AARON NYE,

        PLAINTIFF-APPELLEE,                               CASE NO. 13-21-08

        v.

DELILLE OXYGEN, INC., ET AL.,                             OPINION

        DEFENDANTS-APPELLANTS.

                  Appeal from Seneca County Common Pleas Court
                            Trial Court No. 18-CV-0205

                                      Judgment Affirmed

                          Date of Decision: December 13, 2021

APPEARANCES:

        Christopher R. Pettit and Dennis D. Grant for Appellants

        John F. Burke, III for Appellee
Case No. 13-21-08

ZIMMERMAN, J.

       {¶1} Defendants-appellants, DeLille Oxygen, Inc. (“DeLille”), NyeCo Gas,

Inc. (“NyeCo”), and Thomas R. Smith (“Smith”) (collectively, “defendants”),

appeal the March 22, 2021 judgment of the Seneca County Court of Common Pleas

granting judgment in favor of plaintiff-appellee, Aaron Nye (“Nye”). For the

reasons that follow, we affirm.

       {¶2} This case stems from a dispute over the sale of Nye’s business, NyeCo,

to the defendants. Following strained business dealings between the parties, DeLille

agreed to pay Nye $643,263.00 in exchange for 100 shares of NyeCo stock under a

stock purchase agreement (“SPA”), which was executed between the parties in

2016. Also as part of the agreement, DeLille agreed to continue to employ Nye

(under an employment agreement) for a period of seven years.

       {¶3} When relations between the parties soured amidst the execution of the

SPA and the employment agreement, Nye filed a complaint in the trial court on

August 17, 2018 asserting five claims against defendants: (1) breach of the SPA;

(2) breach of the employment agreement; (3) conversion; (4) a declaration that he

is not subject to a non-compete clause of the employment agreement; and (5) a

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Case No. 13-21-08

declaration that he is the owner of a laptop computer.1 (Doc. No. 2). On September

17, 2018, the defendants filed a motion to stay the proceedings pending arbitration.

(Doc. No. 14). On September 27, 2018, Nye filed a memorandum in opposition to

the defendants’ motion to stay the proceedings pending arbitration. (Doc. No. 15).

The defendants filed their reply to Nye’s memorandum in opposition to their motion

to stay the proceedings pending arbitration. (Doc. No. 16). The trial court granted

the defendants’ motion to stay the proceedings pending arbitration on January 31,

2019. (Doc. No. 17).

        {¶4} The case proceeded to arbitration on July 6, 7, 27 and 28, 2020 as to

Nye’s first, third, and fifth claims. (See Doc. No. 47). (See also Doc. No. 50, Ex.

1). The arbitrator made the following findings (as relevant to this case):

             It is undisputed that [DeLille] has not made the annual required
        payments under the [SPA]. These payments, in the amount of
        $44,500.00, are due on July 1st of each year. No such payments were
        made in July 2018, 2019, or 2020. Thus, past payments allegedly are
        owed in the amount of $133,500.00 plus interest at 8%, and future
        payments, as of September 1, 2020, allegedly are owed in the amount
        of $311,500.00, the present value of which is $232,393.00.
        Accordingly, Nye is allegedly owed $365,829.00.

             These claims are subject to Delille’s [sic] claims for indemnified
        losses pursuant to Section 6.1 of the SPA * * * .

            Section 6.1, however must be read together with Section 2.3.2 of
        the SPA, which permits Delille [sic] to delay such installment

1
  Following the exchange of arguments between the parties, the trial court declared the laptop computer the
property of NyeCo on August 19, 2019. (Doc. Nos. 25, 26, 28, 29). Nye filed a notice of appeal from the
trial court’s entry on August 30, 2019, which this court dismissed. (Doc. No. 30).
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Case No. 13-21-08

      payments until there is an “…order of a court of competent
      jurisdiction that is not subject to appeal, reconsideration or review.”
      [(Doc. No. 2, Ex. C)]. It is the Arbitrator’s finding that the parties, by
      submitting to this arbitration, have waived this portion of Section
      2.3.2. Indeed, Section 8.10 of the SPA provides (twice) that the
      decision of the Arbitrator is final and binding. It further provides that
      a judgment, in accordance with the Arbitrator’s decision may be
      entered in any court of competent jurisdiction.

      ***

      Claimant, Aaron Nye, is awarded:

      1. $133,500.00 in past due payments due under the SPA plus
      simple interest at 8% from the due date of each of the unpaid
      payments, which equals $7,713.00 for a total of $141,213.00; and

      2. The present value of future payments in the amount of
      $232,393.00.

      3. Subject to the award to [the defendants] * * * , the total award to
      [Nye] is $373,606.00.

      ***

      The total set-off awarded to [the defendants] is $107,312.29

      Accordingly, the net award to [Nye] is $266,293.71.

(Footnote omitted.) (Doc. No. 50, Ex. 1).

      {¶5} On September 2, 2020, following the August 31, 2020 decision of the

arbitrator awarding judgment in favor of Nye in the amount of $266,293.71, Nye

requested that the trial court issue a judgment reflecting the arbitrator’s award.

(Doc. No. 47). On September 16, the defendants filed a memorandum in opposition

to Nye’s motion requesting that the trial court issue a judgment reflecting the
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Case No. 13-21-08

arbitrator’s award along with a motion to vacate or modify the arbitrator’s award.

(Doc. No. 51). (See also Doc. No. 60). Nye filed a memorandum in opposition to

the defendants’ motion to vacate or modify the arbitrator’s award on October 1,

2020. (Doc. No. 56). On October 7, 2020, Nye filed a reply to the defendants’

memorandum in opposition to his motion requesting that the trial court issue a

judgment reflecting the arbitrator’s award. (Doc. No. 57).

       {¶6} On March 22, 2021, the trial court denied the defendants’ motion to

vacate or modify the arbitrator’s award. (Doc. No. 66). On April 23, 2021, the trial

court issued a judgment reflecting the arbitrator’s award by issuing a judgment in

favor of Nye in the amount of $266,293.71 as to Nye’s first, third, and fifth claims.

(Doc. No. 72). Even though Nye’s second and fourth claims remain pending, the

trial court certified that there is no just reason for delay under Civ.R. 54(B).

       {¶7} The defendants filed their notice of appeal on May 5, 2021. (Doc. No.

75). They raise two assignments of error, which we will discuss together.

                             Assignment of Error No. I

       The Trial Court Committed Reversible Error in Holding that the
       Arbitration Award Draws Its Essence from the Stock Purchase
       Agreement.

                             Assignment of Error No. II

       The Trial Court Committed Reversible Error by Failing to Modify
       the Arbitration Award as Required under Ohio Revised Code
       §2711.11.

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Case No. 13-21-08

       {¶8} In their assignments of error, the defendants argue that the trial court

erred by denying their motion to vacate or (in the alternative) modify the arbitrator’s

award. Specifically, the defendants contend that the arbitrator’s award conflicts

with the express terms of the SPA and that the trial court should have either vacated

the arbitrator’s award under R.C. 2711.10(D) or modified the award under R.C.

2711.11(A).

                                 Standard of Review

       {¶9} “Ohio has a well-established public policy that favors arbitration.”

Champion Chrysler v. Dimension Serv. Corp., 10th Dist. Franklin No. 17AP-860,

2018-Ohio-5248, ¶ 9. “Arbitration awards are presumed valid, and a reviewing

court may not merely substitute its judgment for that of the arbitrator.” Id.

       {¶10} “‘“Once an arbitration is completed, a court has no jurisdiction except

to confirm and enter judgment (R.C. 2711.09 and 2711.12), vacate (R.C. 2711.10

and 2711.13), modify (R.C. 2711.11 and 2711.13), correct (R.C. 2711.11 and

2711.13), or enforce the judgment (R.C. 2711.14).”’” Norman v. Kellie Auto Sales,

Inc., 10th Dist. Franklin No. 18AP-32, 2020-Ohio-4311, ¶ 32, quoting Champion

Chrysler at ¶ 10, quoting State ex rel. R.W. Sidley, Inc. v. Crawford, 100 Ohio St.3d

113, 2003-Ohio-5101, ¶ 22. “‘“A trial court may not evaluate the actual merits of

an award and must limit its review to determining whether the appealing party has

established that the award is defective within the confines of R.C. Chapter 2711.”’”

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Case No. 13-21-08

Id., quoting Champion Chrysler at ¶ 10, quoting Telle v. Estate of William Soroka,

10th Dist. Franklin No. 08AP-272, 2008-Ohio-4902, ¶ 9. “Because R.C. Chapter

2711 is the method to challenge an arbitration award, ‘[t]he jurisdiction of the courts

to review arbitration awards is thus statutorily restricted; it is narrow and it is

limited.’” Id., quoting Warren Edn. Assn. v. Warren City Bd. of Edn., 18 Ohio St.3d

170, 173 (1985).

        {¶11} “An appellate court’s role when reviewing a trial court’s determination

regarding arbitration is even more limited.” Id. at ¶ 33. See also Hughes v. Hughes,

3d Dist. Marion No. 9-19-88, 2020-Ohio-4882, ¶ 22 (emphasizing that “‘our review

is not a de novo review of the merits of the dispute as presented to the arbitrator’”

since a trial court has jurisdiction to review only the arbitration award), quoting

Adams Cty./Ohio Valley Local School v. OAPSE/AFSCME, Local 572, 4th Dist.

Adams No. 16CA1034, 2017-Ohio-6929, ¶ 18. “‘[W]hen a court of appeals reviews

a trial court’s judgment concerning an arbitration award, the appellate court must

confine its review to evaluating the order issued by the trial court pursuant to R.C.

Chapter 2711.’” Norman at ¶ 34, quoting State v. Ohio Civ. Serv. Emps. Assn.,

Local 11 AFSCME AFL-CIO, 10th Dist. Franklin No. 14AP-906, 2016-Ohio-5899,

¶ 13.

        {¶12} Thus, “‘when reviewing a decision of a common pleas court

confirming, modifying, vacating, or correcting an arbitration award, an appellate

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Case No. 13-21-08

court should accept findings of fact that are not clearly erroneous but decide

questions of law de novo.’” Hughes at ¶ 22, quoting Portage Cty. Bd. of Dev.

Disabilities v. Portage Cty. Educators’ Assn. for Dev. Disabilities, 153 Ohio St.3d

219, 2018-Ohio-1590, ¶ 26. “De novo review is independent and without deference

to the trial court’s determination.” ISHA, Inc. v. Risser, 3d Dist. Allen No. 1-12-47,

2013-Ohio-2149, ¶ 25, citing Costner Consulting Co. v. U.S. Bancorp, 195 Ohio

App.3d 477, 2011-Ohio-3822, ¶ 10 (10th Dist.).

                                      Analysis

       {¶13} “‘R.C. Chapter 2711 provides the exclusive statutory remedy which

parties must use in appealing arbitration awards to the courts of common pleas.’”

Slezak v. Slezak, 9th Dist. Summit No. 29102, 2019-Ohio-3467, ¶ 17, quoting

Galion v. Am. Fedn. of State, Cty. & Mun. Emp., Ohio Council 8, AFL-CIO, Local

2243, 71 Ohio St.3d 620, 623 (1995). See also Geiger v. Morgan Stanley DW, Inc.,

10th Dist. Franklin No. 09AP-608, 2010-Ohio-2850, ¶ 8. “‘R.C. 2711.10 and

2711.11 clearly establish the circumstances where a party may appeal to the

common pleas court to vacate, modify, or correct an arbitration award.’” Slezak at

¶ 17, quoting Galion at 622.

       {¶14} On appeal, the defendants argue in their first assignment of error that

the trial court erred by denying their motion to vacate the arbitrator’s award because

“[t]he Arbitrator * * * exceeded his authority as prohibited by R.C. §2711.10(D)”

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Case No. 13-21-08

since “the Arbitration Award conflicted with the express terms of the SPA and

lacked rational support under the terms of the SPA.” (Appellant’s Brief at 12). In

their second assignment of error, the defendants argue that the trial court erred by

denying their alternative request to modify the arbitrator’s award because it is

“tainted by * * * ‘evident material miscalculation[s] of figures’” as described under

R.C. 2711.11(A).     (Id. at 27, quoting R.C. 2711.11(A)).       We will begin by

addressing the defendants’ argument that the trial court erred by denying their

motion to vacate the arbitrator’s award under R.C. 2711.10(D).

       {¶15} “The statutory grounds for vacating an arbitrator’s award are

contained in R.C. 2711.10.” Hughes at ¶ 23. That statute authorizes a trial court to

vacate an arbitrator’s award only if:

       “(A) The award was procured by corruption, fraud, or undue means.

       (B) There was evident partiality or corruption on the part of the
       arbitrators, or any of them.

       (C) The arbitrators were guilty of misconduct in refusing to postpone
       the hearing, upon sufficient cause shown, or in refusing to hear
       evidence pertinent and material to the controversy; or of any other
       misbehavior by which the rights of any party have been prejudiced.

       (D) The arbitrators exceeded their powers, or so imperfectly executed
       them that a mutual, final, and definite award upon the subject matter
       submitted was not made.”

Norman, 2020-Ohio-4311, at ¶ 12, quoting R.C. 2711.10. “R.C. 2711.10 thus

‘limits judicial review of arbitration to claims of fraud, corruption, misconduct, an

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Case No. 13-21-08

imperfect award, or [claims] that the arbitrator exceeded his authority.” Champion

Chrysler, 2018-Ohio-5248, at ¶ 11, quoting Goodyear Tire & Rubber Co. v. Local

Union No. 200, United Rubber, Cork, Linoleum & Plastic Workers of Am., 42 Ohio

St.2d 516 (1975), paragraph two of the syllabus.

       {¶16} “The essential function of [R.C. 2711.10(D)] is to ensure that the

parties get what they bargained for by keeping the arbitrator within the bounds of

the authority they gave him.” Piqua v. Fraternal Order of Police, 185 Ohio App.3d

496, 2009-Ohio-6591, ¶ 21 (2d Dist.). Nevertheless, “‘[o]nce an arbitrator has made

an award, it cannot be easily overturned * * * .’” (Citations omitted.) Hughes at ¶

24, quoting Fraternal Order of Police Capital City Lodge No. 9 v. Reynoldsburg,

10th Dist. Franklin Nos. 12AP-451 and 12AP-452, 2013-Ohio-1057, ¶ 23.

Therefore, even if a court concludes that an arbitrator committed error, so long as

the arbitrator conceivably construes or applies the contract and acts within the scope

of his or her authority, there is no basis to overturn the award. Id. “‘Generally, if

the arbitrator’s award is based on the language and requirements of the agreement,

the arbitrator has not exceeded his powers.’” (Citation omitted.) Id., quoting

Northwest State Community College v. Northwest State Community College Edn.

Assn. OEA/NEA, 3d Dist. Henry No. 7-16-11, 2016-Ohio-8393, ¶ 33.

       {¶17} “Yet, arbitrators do not possess boundless authority to interpret and

enforce the parties’ contract.” Id. at ¶ 25. “Because ‘[t]he authority of an arbitrator

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Case No. 13-21-08

to interpret and enforce a contract is drawn from the contract itself, * * * “an

arbitrator’s authority is limited to that granted him by the contracting parties * * *

.”’” Id., quoting Cedar Fair, L.P. v. Falfas, 140 Ohio St.3d 447, 2014-Ohio-3943,

¶ 5, quoting Goodyear at 519. Because an arbitrator is limited to the interpretation

and application of the contract, the arbitrator may not dispense his own brand of

industrial justice. Id.

       {¶18} Even though an arbitrator’s authority is expansive, an arbitrator’s

award exceeds that authority if it does not draw its essence from the parties’

agreement. Id. at ¶ 26. “An arbitrator’s award draws its essence from a[n] * * *

agreement when there is a rational nexus between the agreement and the award, and

where the award is not arbitrary, capricious, or unlawful.” Mahoning Cty. Bd. of

Mental Retardation & Dev. Disabilities v. Mahoning Cty. TMR Edn. Assn., 22 Ohio

St.3d 80 (1986), paragraph one of the syllabus. “Stated differently, ‘[a]n arbitrator’s

award draws its essence from an agreement when (1) the award does not conflict

with the express terms of the agreement and (2) the award has rational support or

can be rationally derived from the terms of the agreement.’” (Citation omitted.)

Hughes at ¶ 26, quoting Northwest State at ¶ 33. “‘Once it is determined that the

arbitrator’s award draws its essence from the * * * agreement and is not unlawful,

arbitrary or capricious, a reviewing court’s inquiry for purposes of vacating an

arbitrator’s award pursuant to R.C. 2711.10(D) is at an end.’” Id., quoting Bd. of

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Edn. of the Findlay City School Dist. v. Findlay Edn. Assn., 49 Ohio St.3d 129

(1990), paragraph two of the syllabus. “‘“[T]he question whether an arbitrator has

exceeded his authority is a question of law.”’” Id. at ¶ 23, quoting Portage Cty.,

153 Ohio St.3d 219, 2018-Ohio-1590, at ¶ 25, quoting Green v. Ameritech Corp.,

200 F.3d 967, 974 (6th Cir.2000).

       {¶19} Here, the defendants advance two arguments for why this court should

vacate the arbitrator’s award. First, the defendants contend that the arbitrator

exceeded his authority by interpreting the SPA in a way in which conflicts with the

parties’ agreement and fashioning an award that lacks rational support under the

SPA. Specifically, the defendants contend that the arbitrator exceeded his authority

by “awarding [Nye] a single, lump sum amount for the balance of the purchase price

for [his] shares of NyeCo stock, which is due and payable by DeLille immediately

with an interest rate at 8% [because the award] conflicts with the express terms of

Section 2.3.1 and Section 2.3.2 of the SPA.” (Appellant’s Brief at 13). In other

words, the defendants allege that the arbitrator exceeded his authority (1) by

accelerating their obligations to Nye (by awarding Nye a lump-sum award) under

the SPA absent an acceleration clause in the contract and (2) by concluding that the

defendants waived the provision of Section 2.3.2 of the SPA, “which excuses

DeLille from making installment payments until its indemnified loss claims are

finally adjudicated.” (Id. at 16).

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Case No. 13-21-08

      {¶20} Under sections 2.3.1 and 2.3.2 of the SPA, the parties agreed that Nye

would receive payment as follows:

      2.3.1 Cash at Closing. Payment to Seller in a certified check or money
      order of Three Hundred Forty-five Thousand Dollars ($345,000.00)
      at Closing.

      2.3.2 Installment Payments. Payment to Seller of Four Hundred
      Forty-four Thousand Five Hundred Dollars ($444,500.00) to Seller
      [sic] in ten (10) equal annual installment payments of Forty-four
      Thousand Four Hundred Fifty Dollars ($44,500.00) apiece,
      commencing on July 1, 2017 with the last payment occurring on July
      1, 2026, resulting in a net present value of Two Hundred Ninety-eight
      Thousand, Two Hundred Sixty-three Dollars ($298,263.00) based on
      an eight percent (8%) discount rate. * * * If Buyer has made a claim
      for an Indemnified Loss under Section 6 hereof that Seller has not
      paid, Buyer may delay payment of any installment hereunder
      sufficient to pay such Indemnified Loss until such claim is deemed
      final by mutual written agreement of the Buyer and Seller or by order
      of a court of competent jurisdiction that is not subject to appeal,
      reconsideration or review.

(Emphasis sic.) (Doc. No. 2, Ex. C).

      {¶21} To resolve the dispute between the parties, the arbitrator found that it

was uncontroverted that the defendants did not deliver the annual installment

payments as required under the agreement. Because it was undisputed that the

defendants were in breach of the agreement, the arbitrator fashioned an award in

accordance with the essence of the parties’ agreement. Specifically, the arbitrator

awarded Nye the past due payments (in the amount of $133,500.00) plus interest at

eight percent from the due date of each of the unpaid payments (in the amount of

$7,713.00) and the present value of future payments (in the amount of $232,393.00).
                                        -13-
Case No. 13-21-08

In addition, the arbitrator considered the indemnification counterclaims raised by

the defendants (under section 6.1 of the SPA) and offset Nye’s award by

$107,312.29.

       {¶22} The trial court concluded that the defendants “failed to meet their

burden to prove that the award does not draw its essence from the SPA” since “the

Arbitrator noted and applied the SPA to his decision.” (Doc. No. 66). We agree.

       {¶23} On appeal, it is not the prerogative of this court to determine whether

the “arbitrator correctly interpreted [the parties’ agreement] and applied it to the

circumstances of this case.” Hughes, 2020-Ohio-4882, ¶ 36. Rather, our review is

limited to whether the arbitrator’s award can be rationally derived from the terms of

the” parties’ agreement. Id. at ¶ 37. In other words, as long as the arbitrator

“arguably interpreted and applied the terms of the [parties’ agreement, the

defendants] must tolerate even serious errors in the” arbitrator’s award. Id. at ¶ 36.

       {¶24} “With that in mind, we conclude that, irrespective of whether the * *

* arbitrator’s interpretation and application of the [SPA is] objectively correct, the

* * * arbitrator’s award can be rationally derived from the terms of the” SPA. Id.

at ¶ 37. Section 2.3.2 of the SPA delineates the schedule of the payments that the

defendants were to remit to Nye as well as the interest rate applicable to those

payments. The arbitrator’s award is based on that schedule of payments as well as

the interest rate applicable to those payments. Likewise, the arbitrator permitted the

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defendants to litigate their indemnified-loss claims in accordance with Section 6 of

the SPA, and reduced Nye’s award based on the defendants’ successful

indemnified-loss claims.

       {¶25} Based on our review of the record, we conclude that the defendants’

argument that the arbitrator’s award does not draw its essence from the SPA because

the award conflicts with the express terms of the SPA and lacks rational support

under the SPA is not persuasive. Rather, “[t]he parties gave the arbitrator the power

to interpret and construe their agreement,” and the arbitrator’s award is based on his

personal interpretation an application of the SPA. See Hughes at ¶ 29. See also

Kettering Health Network v. CareSource, 2d Dist. Montgomery No. 27233, 2017-

Ohio-1193, ¶ 26. Importantly, “[a]n arbitrator’s improper determination of the facts

or misinterpretation of the contract does not provide a basis for reversal of an award

by a reviewing court.” Cedar Fair, 140 Ohio St.3d 447, 2014-Ohio-3943, at ¶ 6.

See also Kettering Health Network at ¶ 26 (“An arbitrator does not exceed his

powers when he interprets a contract incorrectly.”). “Indeed, ‘“[i]t is not enough *

* * to show that the [arbitrator] committed an error—or even a serious error.”’”

Kettering Health Network at ¶ 26, quoting Cedar Fair at ¶ 6 quoting Stolt-Nielsen,

S.A. v. AnimalFeeds Internatl. Corp., 559 U.S. 662, 671, 130 S.Ct. 1758 (2010).

Instead, when “determining whether the arbitrator exceeded his powers, ‘the

question for a judge is not whether the arbitrator construed the parties’ contract

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Case No. 13-21-08

correctly, but whether he construed it at all.’” Id., quoting Oxford Health Plans LLC

v. Sutter, 569 U.S. 564, 573, 133 S.Ct. 2064 (2013).

       If the arbitrator interpreted the contract incorrectly, well, that was part
       of the deal:

       “All we say is that convincing a court of an arbitrator’s error—even
       his grave error—is not enough. So long as the arbitrator was “arguably
       construing” the contract * * * a court may not correct his mistakes
       under [the statute]. The potential for those mistakes is the price of
       agreeing to arbitration.”

Id., quoting Oxford Health at 572-573.

       {¶26} In this case, our review of the arbitrator’s award reveals that the

arbitrator construed the SPA in resolving the parties’ dispute, and it would be

improper for this court to substitute its own interpretation. See Greater Dayton

Regional Transit Auth. v. Amalgamated Transit Union AFL CIO Local 1385, 2d

Dist. Montgomery No. 28086, 2018-Ohio-5158, ¶ 25.                 Therefore, since the

arbitrator’s award is not only based on the schedule of payments but also applies the

interest rate applicable to those payments, there is some rational nexus between the

arbitrator’s award and the SPA, and the award is not arbitrary, capricious, or

unlawful. See Hughes at ¶ 37. See also Kettering Health Network at ¶ 26.

Consequently, we conclude that the arbitrator’s award draws its essence from the

SPA. See Kettering Health Network at ¶ 26 (concluding that “‘[t]he arbitrator’s

construction holds, however good, bad, or ugly’”), quoting Oxford Health at 573.

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      {¶27} Having concluded that the arbitrator’s award draws its essence from

the SPA, we must now consider the defendants’ second basis for why this court

should vacate the arbitrator’s award—expressly, that the arbitrator exceeded his

authority “by applying an incorrectly high burden of proof” to their “Indemnified

Loss claims based upon [Nye’s] misrepresentations.” (Appellant’s Brief at 20).

Here, the defendants contend that “the Arbitrator required [them] to prove their

Indemnified Loss claims against [Nye] for the misrepresentations he made in the

SPA by clear and convincing evidence.” (Id. at 19). The defendants claim that this

is the wrong quantum of proof and that the arbitrator was required to apply a

preponderance-of-the-evidence standard.

      {¶28} “[A]bsent express language in an agreement, procedural issues are

decided by the arbitrator.” Piqua, 185 Ohio App.3d 496, 2009-Ohio-6591, at ¶ 32.

Indeed, unless an arbitrator is expressly prohibited from exercising the power, the

arbitrator “has the inherent power to decide the question of proof.” Id., citing Bd.

of Trustees of Miami Twp. v. Fraternal Order of Police, 81 Ohio St.3d 269, 272

(1998). See also N. Royalton v. Urich, 8th Dist. Cuyahoga No. 99276, 2013-Ohio-

2206, ¶ 23.

       {¶29} Under the SPA, the parties agreed that the arbitrator “shall issue a

written decision resolving the disputed matters applying such reasonable and

equitable principles (consistent with this Agreement and applicable law) as he or

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she deems appropriate.” (Doc. No. 2, Ex. C). Based on the language of the SPA,

the parties authorized the arbitrator to resolve their dispute by applying a quantum

of proof which he determined to be appropriate. See Kettering Health Network,

2017-Ohio-1193, at ¶ 16 (“The parties gave the arbitrator the power to interpret

AHLA Rules by agreeing to arbitrate under the AHLA’s auspices.”), citing Piqua

at ¶ 35. Because the arbitrator determined that a clear-and-convincing standard was

appropriate under the facts and circumstances of this case, we cannot conclude that

the arbitrator exceeded his authority by applying that standard. Compare Urich at

¶ 23 (“The arbitrator’s application of a clear and convincing burden of proof,

therefore, does not conflict with an express term of the CBA.”). See also Kettering

Health Network at ¶ 16 (“Even if the arbitrator’s interpretation of the Rules were

unreasonable, this would not be grounds to vacate. An unreasonable interpretation

would show that the arbitrator ‘merely erred in executing his powers’ not that he

“exceeded his powers.”), quoting Piqua at ¶ 34.

       {¶30} For these reasons, we conclude that the trial court did not err by

concluding that the arbitrator did not exceed his powers or by denying the

defendants’ motion to vacate the arbitrator’s award. Acord Hughes, 2020-Ohio-

4882, at ¶ 37. Consequently, the defendants’ first assignment of error is overruled.

       {¶31} Turning to the defendants’ second assignment of error, the defendants

contend that the trial court erred by denying their alternative request to modify the

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arbitrator’s award under R.C. 2711.11(A). Specifically, the defendants argue that

the arbitrator’s award reflects an evident material miscalculation of the following

figures: 1) Nye should have been awarded $133,350.00 instead of $133,500.00 for

the 2018, 2019, and 2020 installment payments; 2) Nye should have been awarded

six instead of seven future installment payments; and 3) Nye should not have been

awarded interest (at a rate of eight percent) on the 2018, 2019, and 2020 installment

payments.

       {¶32} R.C. 2711.11 authorizes a trial court to modify an award only
if:

       “(A) There was an evident material miscalculation of figures or an
       evident material mistake in the description of any person, thing, or
       property referred to in the award;

       (B) The arbitrators have awarded upon a matter not submitted to them,
       unless it is a matter not affecting the merits of the decision upon the
       matters submitted;

       (C) The award is imperfect in matter of form not affecting the merits
       of the controversy.”

Norman, 2020-Ohio-4311, at ¶ 14, quoting R.C. 2711.11.

       {¶33} Under R.C. 2711.11(A), “a material miscalculation warranting

modification of an arbitration award must be of such a nature that it can be corrected

without the use of any fact-finding, discretion, or judgment.” Worndle v. Colonnade

Med. Group, Inc., 5th Dist. Fairfield No. 17-CA-24, 2018-Ohio-462, ¶ 44. That is,

“an arbitration award can only be modified if the miscalculation is evident from the

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face of the award and can be corrected without fact-finding.” Id. at ¶ 43, quoting

Arrow Uniform Rental, L.P. v. K&D Group, Inc., 11th Dist. Lake No. 2010-L-152,

2011-Ohio-6203, ¶ 51. See also Akron v. Akron Firefighters Assn., 9th Dist. Summit

No. 27119, 2015-Ohio-994, ¶ 9 (stating that a “court may not review the evidence

and reconsider the merits underlying the award” when considering whether to

modify an arbitrator’s award under R.C. 2711.11(A)).

       {¶34} Importantly, “‘Ohio law recognizes that when parties agree to submit

their disputes to binding arbitration, they have bargained for the arbitrator’s

determination concerning the issues submitted and agreed to accept the result

regardless of its legal or factual accuracy.’” Robert W. Setterlin & Sons v. N. Mkt.

Dev. Auth., Inc., 10th Dist. Franklin No. 99AP-141, 1999 WL 1267340, *3 (Dec.

30, 1999), quoting Marra Constructors, Inc. v. Cleveland Metroparks Sys., 82 Ohio

App.3d 557, 562 (8th Dist.1993). “Although ‘“[t]hat result may seem inequitable,

* * * any different result would destroy the integrity of binding arbitration. * * * If

the parties could challenge an arbitration decision on the ground that the arbitrators

erroneously decided legal or factual issues, no arbitration would be binding.”’” Id.,

quoting State ex rel. Internatl. Union of Operating Engs., Local No. 18 v. Simmons,

58 Ohio St.3d 247, 248 (1991), quoting Huffman v. Valletto, 15 Ohio App.3d 61, 63

(8th Dist.1984).

       {¶35} Here the arbitrator found that the defendants failed to make

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       the annual required payments under the [SPA] * * * in the amount of
       $44,500.00 * * * in 2018, 2019, or 2020. Thus, past due payments
       allegedly are owed in the amount of $133,500.00, plus interest at 8%,
       and future payments * * * are owed in the amount of $311,500.00, the
       present value of which is $232,393.00.

(Doc. No. 50, Ex. 1). Further, the arbitrator awarded Nye “$133,500.00 in past due

payments due under the SPA plus simple interest at 8% from the due date of each

of the unpaid payments, which equals $7,713.00 for a total of $141,213.00” and

“[t]he present value of future payments in the amount of $232,393.00.’ (Id.).

       {¶36} Based on our review, the award issued by the arbitrator does not

disclose any mathematical error on its face—that is, the arbitrator’s award does not

reflect a material miscalculation of figures. Accord Arrow Uniform Rental, 2011-

Ohio-6203, at ¶ 51; Robert W. Setterlin & Sons at *3. See also Akron Firefighters

at ¶ 11. Instead, the arbitrator based the award on different criteria than the

defendants would have preferred, and we may not substitute our judgment for that

of the arbitrator. See Arrow Uniform Rental at ¶ 35, 51. Thus, we conclude that the

defendants “failed to draw our attention to any evident material miscalculation of

figures on the part of the arbitrator in arriving at his award.” Id.

       {¶37} Consequently, because the defendants are challenging the arbitrator’s

analysis of the parties’ agreement—not a material miscalculation of figures on the

face of the arbitrator’s award—the defendants are not entitled to a modification of

the arbitrator’s award. Accord id. See also Robert W. Setterlin & Sons at *3

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(“Because any error the arbitrator may have made in arriving at the retainage amount

is not evident from the face of the award and cannot be corrected without the use of

factfinding or judgment on the part of the trial court, we [conclude] that plaintiff’s

requested modification of the retainage amount falls outside the scope of R.C.

2711.11.”). Therefore, the trial court did not err by denying the defendants’ motion

for a modification of the arbitrator’s award.

       {¶38} For these reasons, the defendants’ second assignment of error is

overruled.

       {¶39} Having found no error prejudicial to the appellant herein in the

particulars assigned and argued, we affirm the judgment of the trial court.

                                                                 Judgment Affirmed

MILLER and SHAW, J.J., concur.

/jlr

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