Dervin v. Christopher Cox Ins. & Invests., Inc.

[Cite as Dervin v. Christopher Cox Ins. & Invests., Inc., 2020-Ohio-260.]

COURT OF APPEALS STARK COUNTY, OHIO FIFTH APPELLATE DISTRICT

ALBERT H. DERVIN : JUDGES: : Hon. John W. Wise, P.J. Plaintiff-Appellee : Hon. Craig R. Baldwin, J. : Hon. Earle E. Wise, Jr., J. -vs- : : CHRISTOPHER COX INSURANCE & : INVESTMENTS, INC., ET AL. : Case No. 2019CA00116 : Defendant-Appellant : OPINION

CHARACTER OF PROCEEDING: Appeal from the Court of Common Pleas, Case No. 2019CV00999

JUDGMENT: Affirmed DATE OF JUDGMENT: January 27, 2020 APPEARANCES: For Plaintiff-Appellee For Defendant-Appellant

KAREN C. LEFTON JACK MORRISON, JR. TIMOTHY D. SMITH THOMAS R. HOULIHAN 3480 W. Market Street THOMAS A. MARINO II Suite 304 One Cascade Plaza Akron, OH 44333 Suite 1510 Akron, OH 44308

Stark County, Case No. 2019CA00116 2 Wise, Earle, J.

{¶ 1} Defendant-Appellants Christopher Cox Insurance and Investments, Inc., et al, (Cox) appeal the July 16, 2019 judgment of the Court of Common Pleas, Stark County, Ohio denying appellant's motion to stay proceedings pending arbitration, and granting appellee's motion for leave to plead. Plaintiff-Appellee is Albert H. Dervin (Dervin).

FACTS AND PROCEDURAL HISTORY

{¶ 2} In 2001, Cox and Dervin formed Christopher Cox Insurance and Investments, Inc., each as a 50% shareholder. The parties executed a 5-page Shareholders Agreement to govern the business.

{¶ 3} On May 6, 2019, following years of disagreement between the parties, Dervin filed a Complaint for Judicial Dissolution pursuant to O.R.C. 1701.91(A)(4).

{¶ 4} Cox did not answer the complaint. Rather, on June 6, 2019, he filed a Motion to Dismiss for Lack of Subject Matter Jurisdiction, citing a mandatory arbitration clause within the Shareholders Agreement. On June 28, 2019, Cox filed a Motion to Stay Proceedings Pending Arbitration.

{¶ 5} The trial court denied both motions. On June 25, 2019, the trial court found the matter was properly before it pursuant to O.R.C. 1701.91. On July 16, 2019, the trial court denied Cox's Motion to Stay Proceedings Pending Arbitration. It is from this judgment entry that Cox appeals. He raises two assignments of error as follow:

I

{¶ 6} "THE TRIAL COURT ERRED BY DENYING A MOTION TO STAY

PROCEEDINGS PENDING ARBITRATION WITHOUT SETTING FORTH ANY

FINDINGS OR REASONING." Stark County, Case No. 2019CA00116 3

{¶ 7} In his first assignment of error, Cox argues the trial court erred in denying his motion to stay proceedings pending arbitration without setting forth any findings or reasoning. We disagree.

{¶ 8} The trial court's judgment entry states in its entirety:

This matter is before the Court on Defendant's Motion to Stay

Proceedings Pending Arbitration, and in the Alternative, for Leave to

Plead. Said motion was filed on June 28, 2019. Plaintiff filed a

Memorandum in Opposition on July 12, 2019.

Upon Review, Defendant's motion to stay proceedings pending

arbitration is DENIED. Defendant's motion for leave to plead is

GRANTED up to and including August 5, 2019.

{¶ 9} Cox argues we should remand this matter, and order the trial court to enter a new judgment entry with specific reasoning. In support of his argument, Cox relies on this court's opinion in Premier Homes, Inc. v. Hanna-Commercial, LLC, 5th Dist. Stark No. 2017CA00135, 2018-Ohio-1126. That matter, however, was far more complicated than the matter at bar. Memorandums before the trial court in Premier set forth multiple arguments on both sides, and we were unable to determine which reason or reasons the trial court relied upon in denying the parties motions to stay. Premier ¶ 19-20.

{¶ 10} Such is not the case here. As noted by Dervin, the matter here is a simple contract dispute, limited to the question of whether or not the Shareholder's Agreement compelled the parties to arbitrate the dissolution of their corporation. In denying Cox's Stark County, Case No. 2019CA00116 4 motion to stay proceedings pending arbitration, we may confidently infer the trial court found the matter was not subject to arbitration.

{¶ 11} The first assignment of error is overruled.

II

{¶ 12} "THE TRIAL COURT ERRED BY DENYING A MOTION TO STAY

PROCEEDINGS PENDING ARBITRATION PURSUANT TO A VALID AND

ENFORCEABLE ARBITRATION PROVISION IN THE SHAREHOLDERS'

AGREEMENT."

{¶ 13} In his final assignment of error, Cox argues the trial court erred by denying his motion to stay pending arbitration because the Shareholder Agreement mandates arbitration of the dissolution. We disagree.

{¶ 14} In the case of contracts and other written instruments, the construction of the writing is a matter of law which we review de novo. See, Martin v. Lake Mohawk Property Owner's Ass'n., 5th Dist. No. 04 CA 815, 2005-Ohio-7062, ¶ 23, citing Long Beach Assn., Inc. v. Jones, 82 Ohio St.3d 574, 576, 697 N.E.2d 208 (1998). Under a de novo review, an appellate court may interpret the language of the contract substituting its interpretation for that of the trial court. Witte v. Protek Ltd., 5th Dist. No. 2009CA00230, 2010-Ohio-1193, 2010 WL 1076070, ¶ 6, citing Children's Medical Center v. Ward, 87 Ohio App.3d 504, 622 N.E.2d 692 (1993).

{¶ 15} “Both the Ohio General Assembly and Ohio courts have expressed a strong public policy favoring arbitration.” Hayes v. Oakridge Home, 122 Ohio St.3d 63, 2009-Ohio-2054, 908 N.E.2d 408. R.C. 2711.01(A) provides an arbitration agreement “shall be valid, irrevocable, and enforceable, except upon grounds that exist at law or in equity for Stark County, Case No. 2019CA00116 5 the revocation of any contract.” Arbitration, however, is a matter of contract. A party cannot be forced to arbitrate that which the party has not agreed to arbitrate. AT & T Technologies, Inc. v. Communications Workers of Am., 475 U.S. 643, 648-649, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986).

{¶ 16} Dervin filed his complaint for judicial dissolution pursuant to R.C. 1701.91(A)(4). That section states:

(A) A corporation may be dissolved judicially and its affairs wound

up:

***

(4) By an order of the court of common pleas of the county in this

state in which the corporation has its principal office, in an action

brought by one-half of the directors when there is an even number of

directors or by the holders of shares entitling them to exercise at least

two-thirds of the voting power, when it is established that the

corporation has an even number of directors who are deadlocked in

the management of the corporate affairs and the shareholders are

unable to break the deadlock, or when it is established that the

corporation has an uneven number of directors and that the

shareholders are deadlocked in voting power and unable to agree

upon or vote for the election of directors as successors to directors

whose terms normally would expire upon the election of their

successors. Under these circumstances, dissolution of the Stark County, Case No. 2019CA00116 6

corporation shall not be denied on the ground that the corporation is

solvent or on the ground that the business of the corporation has

been or could be conducted at a profit.

{¶ 17} Cox argues Christopher Cox Insurance and Investments, Inc. may not be judicially dissolved because the matter is subject to arbitration per the Shareholder Agreement. In support of this argument, Cox relies upon two portions of the Shareholder Agreement. First, Section 9(f) which states:

{¶ 18} "All issues on which the shareholders are deadlocked in voting power or on which the directors or other parties managing the corporation are deadlocked shall be arbitrated according to Section 13 of this agreement."

{¶ 19} Section 13 states:

{¶ 20} "Arbitration. In the event differences arise among the parties hereto as to the rights, obligations, meaning, interpretation, or application of the provisions of this Agreement or in the event of a deadlock as provided in Section 9(f) hereof, those differences shall be settled or the deadlock resolved by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association. Judgment may be entered on any award at arbitration in any court of competent jurisdiction."

{¶ 21} As Dervin notes, while addressing death, disability, or retirement of a shareholder, nowhere in the Shareholder's Agreement is a mechanism for winding up the corporation mentioned. Although Cox argues the above language of the Shareholder agreement requires all disputes and issues on which shareholders are deadlocked be Stark County, Case No. 2019CA00116 7 subject to arbitration, the winding up of the corporation is not a "dispute" contemplated by the Shareholder Agreement.

{¶ 22} We find, therefore the trial court did not err in denying Cox's motion to stay proceedings pending arbitration.

{¶ 23} The judgment of the Stark County Court of Common Pleas is affirmed. By Wise, Earle, J. Wise, John, P.J. and Baldwin, J. concur. EEW/rw