Opinion
No. 109237
10-22-2020
DEMETRIUS ROUSSEAU, Plaintiff-Appellee, v. SETJO, L.L.C., ET AL., Defendants-Appellants.
Appearances: The Spitz Law Firm, L.L.C., and Fred M. Bean, for appellee. Zashin & Rich Co., L.P.A., Stephen S. Zashin, and David P. Frantz, for appellants.
JOURNAL ENTRY AND OPINION JUDGMENT: AFFIRMED AND REMANDED Civil Appeal from the Cuyahoga County Court of Common Pleas
Case No. CV-19-919370 Appearances: The Spitz Law Firm, L.L.C., and Fred M. Bean, for appellee. Zashin & Rich Co., L.P.A., Stephen S. Zashin, and David P. Frantz, for appellants. RAYMOND C. HEADEN, J.:
{¶ 1} Defendants-appellants Setjo, L.L.C. ("Setjo") and David Gruhin ("Gruhin") (collectively "Appellants") appeal the trial court's ruling that denied Appellants' motion to stay proceedings pending submission of plaintiff-appellee Demetrius Rousseau's ("Rousseau") claims to arbitration. For the reasons that follow, we affirm and remand.
I. Factual and Procedural History
{¶ 2} Rousseau began working as a car salesman for Setjo, the owner of Kia of Bedford, in August 2011. Gruhin was Rousseau's manager at the car dealership. On October 25, 2018, while employed with Setjo, Rousseau executed an arbitration agreement whereby he agreed to resolve any covered disputes raised by either Rousseau or Setjo through final and binding arbitration.
{¶ 3} The arbitration agreement was governed by the laws of the state of Ohio. The agreement contained a clause that stated the agreement became effective upon its execution by all parties. Rousseau executed the document but Setjo never signed the agreement.
{¶ 4} Setjo terminated Rousseau on February 28, 2019. On August 6, 2019, Rousseau filed a complaint against Appellants alleging his termination was premised upon age and disability discrimination. On September 3, 2019, Appellants forwarded a copy of the arbitration agreement to Rousseau's counsel and sought Rousseau's consent to stipulate to a stay pending arbitration of his claims. Rousseau did not stipulate to arbitration and attempted to withdraw his signature from the arbitration agreement.
{¶ 5} On October 7, 2019, Appellants filed an answer to Rousseau's complaint as well as a motion to stay pending submission of Rousseau's claims to arbitration and a request for costs and sanctions against Rousseau. On October 9, 2019, Appellants withdrew their request for costs and sanctions. On October 29, 2019, the trial court found there was no binding contract between the parties to require arbitration and, therefore, denied Appellants' motion to stay the proceedings.
{¶ 6} Appellants filed a timely appeal on November 26, 2019, and raised this single assignment of error:
The trial court erred in determining that no binding contract between the parties existed that would require Rousseau to arbitrate his claims against Defendants.
II. Law and Analysis
{¶ 7} The enforceability of an arbitration agreement is reviewed under a de novo standard of review. Jatsek Constr. Co. v. Burton Scot Contrs., L.L.C., 8th Dist. Cuyahoga No. 98142, 2012-Ohio-3966, ¶ 15. The issue to be decided is whether a contract existed between Rousseau and Setjo that required Rousseau's claims to first be submitted to arbitration. We find no arbitration agreement was entered by the parties.
{¶ 8} While courts prefer to enforce arbitration clauses, parties cannot be compelled to arbitrate a dispute where the arbitration agreement itself is invalid. Anthony v. Princeton Trading Group, Inc., 8th Dist. Cuyahoga No. 97460, 2012-Ohio-1834, ¶ 14. "A valid arbitration agreement, like any contract, requires an offer and acceptance that is supported by consideration and is premised on the parties' meeting of the minds as to the essential terms of the agreement." Corl v. Thomas & King, 10th Dist. Franklin No. 05AP-1128, 2006-Ohio-2956, ¶ 8, citing Miller v. Lindsay-Green, Inc., 10th Dist. Franklin No. 04AP-848, 2005-Ohio-6366, ¶ 55.
{¶ 9} The arbitration agreement presented by Setjo to Rousseau was a proposed contract between the two parties. Corl at ¶ 10. Interpretation of a contract requires the court to ascertain and give effect to the parties' intent. MRI Software, L.L.C. v. W. Oaks Mall FL, L.L.C., 2018-Ohio-2190, 116 N.E.3d 694, ¶ 27 (8th Dist.), citing Hamilton Ins. Servs., Inc. v. Nationwide Ins. Cos., 86 Ohio St.3d 270, 273, 714 N.E.2d 898 (1999). In so doing, the court reviews the contract as a whole and presumes the parties' intent is reflected in the contract's language. Kelly v. Med. Life Ins. Co., 31 Ohio St.3d 130, 509 N.E.2d 411 (1987), paragraph one of the syllabus. As a result, if the contract's language is plain and unambiguous, the terms are enforced as written, and courts may not turn to evidence outside the four corners of the contract to alter its meaning. Beverage Holdings, L.L.C. v. 5701 Lombardo, L.L.C., 159 Ohio St.3d 194, 2019-Ohio-4716, 150 N.E.3d 28, ¶ 13.
{¶ 10} The intent of the parties was depicted in the arbitration agreement that utilized plain and unambiguous language. According to paragraph one, the parties agreed to arbitrate all covered disputes. Covered disputes were defined in paragraph two of the arbitration agreement and included Rousseau's complaint for age and gender discrimination. If the arbitration agreement were enforceable, its terms would have dictated that Rousseau's discrimination claim be submitted to arbitration prior to his filing a lawsuit.
{¶ 11} Paragraph 28 of the arbitration agreement provides:
28. Effective Date. This Agreement shall become effective when all parties have signed it. The date of this Agreement will be the date that this Agreement is signed by the last party to sign it, as indicated by the date associated with that party's signature.Hence, according to the express terms of the arbitration agreement, the agreement was not enforceable until both parties signed the document. Courts require signatures by both parties to a contract where the agreement clearly demonstrates that was the parties' intent:
Although it is well-established that courts will give effect to the manifest intent of the parties where there is clear evidence demonstrating that the parties did not intend to be bound by the terms of an agreement until formalized in a written document and signed by both * * *.Richard A. Berjian, D.O., Inc. v. Ohio Bell Tel. Co., 54 Ohio St.2d 147, 151, 375 N.E.2d 410 (1978). See Champion Gym & Fitness, Inc. v. Crotty, 178 Ohio App.3d 739, 2008-Ohio-5642, 900 N.E.2d 231, ¶ 15 (2d Dist.) ("[C]ourts must give effect to the manifest intent of the parties where there is clear evidence demonstrating that the parties did not intend to be bound until the terms of the agreement are formalized in a signed written document.").
{¶ 12} Similarly, we need to give effect to the intent of the parties. As shown by the terms of paragraph 28 — that presumably was drafted by Setjo — the parties did not intend to be bound until both Rousseau and Setjo signed the document. Absent Setjo's signature on the document, the arbitration agreement was never effective and, therefore, the agreement was unenforceable.
{¶ 13} Appellants reference this court's decision in Jatsek, 8th Dist. Cuyahoga No. 98142, 2012-Ohio-3966, for the proposition that an unsigned contract is enforceable. The facts of Jatsek are distinguishable as no evidence was introduced that showed the Jatsek contract included a clause requiring both parties to execute the document prior to its enforceability.
{¶ 14} Setjo's contention that paragraph 22, Employee's Right to Revoke Agreement After Signing, shows that Setjo's signature was unnecessary lacks merit. Paragraph 22 reads as follows:
22. Employee's Right to Revoke Agreement After Signing. Employee may revoke this Agreement during the first seven days after Employee has signed it. To revoke, Employee must deliver a written notice of revocation to Setjo at: Setjo, L.L.C. c/o Claim Administrator, 18180 Rockside Rd., Bedford, Ohio 44146. Any such revocation will be effective upon its receipt by Setjo.Setjo argues that paragraph 22 required Rousseau to adhere to the arbitration agreement unless he revoked his signature within seven days. In other words, once seven days passed following Rousseau's execution of the agreement, both parties were bound regardless of whether Setjo ever signed the document as required under paragraph 28. Appellants argue that "if [Rousseau's] signature did not bind him, the revocation provision would be meaningless." (Appellants' brief at 10.)
{¶ 15} In contrast, we find Setjo's interpretation makes the terms of paragraph 28 — that requires both parties to sign the document to make it effective — moot. And "[a] court must give effect to all of the words of a written document." Arnett v. Midwestern Ents., 95 Ohio App.3d 429, 434, 642 N.E.2d 683 (10th Dist.1994). Paragraph 22 provided Rousseau with a seven-day grace period within which he could choose to withdraw his acceptance of the offer. Paragraph 22's terms are separate and distinct from Setjo's option to commit to the terms of the arbitration agreement by affixing its signature as required under paragraph 28. We do not agree with the Appellants' proposed interpretation and find paragraph 22 had no bearing on the enforceability of the agreement.
The arbitration agreement reflects Rousseau's signature dated October 25, 2018. While Rousseau argues he does not recollect signing the document, claims the signature has not been authenticated, and purports his signature was withdrawn, we find these arguments moot based upon our finding that the contract was unenforceable. --------
{¶ 16} Setjo maintains it could execute the document at any time, including today, after Rousseau executed the agreement and its signature would render the arbitration agreement enforceable. Based upon this argument, Setjo declares a finding that the arbitration agreement is unenforceable absent its signature "defies logic." (Appellants' brief at 10.) Setjo provides no case law in support of their position, and we reject this argument. Further, Appellants argue that because the arbitration agreement's language is broad and applies retroactively to claims predating the parties' execution of the arbitration agreement, the arbitration agreement was enforceable upon Rousseau's execution and Setjo's signature was unnecessary. (Reply brief at 4.) This argument ignores the issue before the court — whether the arbitration agreement was executed. Without an executed agreement, the retroactive nature of the agreement is irrelevant.
{¶ 17} Lastly, Appellants analogize the arbitration agreement to settlement agreements that have been found binding and enforceable even when not reduced to writing. Yet, the case law cited by Appellants states that courts "must enforce the settlement as agreed to by the parties and [are] not permitted to alter the terms of the agreement." Brock v. Scheuner Corp., 841 F.2d 151, 154 (6th Cir.1988), citing In re Air Crash Disaster at John F. Kennedy Internatl. Airport, 687 F.2d 626, 629 (2d Cir.1982). Similarly, the trial court had to impose the terms of the arbitration agreement, which required both parties to execute the agreement before it was enforceable.
{¶ 18} Setjo drafted and presented an arbitration agreement that specifically required both parties to sign the document before they were bound by the terms of the agreement. Rousseau executed the agreement but Setjo did not. Due to Setjo's failure to comply with the agreed-upon terms, the arbitration agreement was unenforceable and the trial court did not err when it denied Setjo's motion to stay the proceedings pending arbitration. Thus, Appellants' assignment of error lacks merit and is overruled.
{¶ 19} Judgment affirmed and remanded to the trial court for further proceedings consistent with this opinion.
It is ordered that appellee recover from appellants costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate be sent to said 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. /s/_________
RAYMOND C. HEADEN, JUDGE FRANK D. CELEBREZZE, JR., P.J., and
LARRY A. JONES, SR., J., CONCUR