Winters Law Firm, L.L.C. v. Caryn Groedel & Assocs., Co., L.P.A. , 2013 Ohio 5260 ( 2013 )

[Cite as Winters Law Firm, L.L.C. v. Caryn Groedel & Assocs., Co., L.P.A., 2013-Ohio-5260.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 99922
WINTERS LAW FIRM, L.L.C.
PLAINTIFF-APPELLEE
vs.
CARYN GROEDEL & ASSOCIATES CO.,
L.P.A., ET AL.
DEFENDANTS-APPELLANTS
JUDGMENT:
AFFIRMED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-775860
BEFORE: Kilbane, J., S. Gallagher, P.J., and Rocco, J.
RELEASED AND JOURNALIZED: November 27, 2013
ATTORNEYS FOR APPELLANTS
Melisa M. Mazanec-Fisco
Caryn M. Groedel
Caryn Groedel & Associates, L.P.A.
31340 Solon Road
Suite 27
Cleveland, Ohio 44139
ATTORNEY FOR APPELLEE
Joseph F. Scott
17410 Dorchester Drive
Cleveland, Ohio 44119
MARY EILEEN KILBANE, J.:
{¶1} Defendants-appellants, Caryn Groedel & Associates, L.P.A., Co., and
Caryn Groedel (collectively referred to as “Groedel”), appeal the trial court’s decision
granting the motion to stay proceedings pending arbitration filed by plaintiff-appellee,
Winters Law Firm, L.L.C. (“Winters”). For the reasons set forth below, we affirm.
{¶2} In February 2012, Winters filed a “complaint to compel
arbitration/complaint for tortious interference” against Groedel. The complaint
contained two causes of action — breach of contract and tortious interference with
business relationships. The complaint arises from a co-counseling agreement between
the parties, in which they agreed to jointly represent clients from September 2011 to
August 2012 in all wage and hour cases under the Fair Labor Standards Act.
{¶3} Winters amended his complaint in June 2012. The amended complaint,
also titled “complaint to compel arbitration/complaint for tortious interference” again set
forth a breach of contract claim and tortious interference with business relationships
claim. The amended complaint alleges that under the agreement
the Parties agreed to attempt to resolve any dispute under the Agreement by
informal resolution; and if that failed, to resolve the dispute by meeting
with a neutral third party; and if that failed, through binding arbitration.
The complaint alleges that disputes had arisen, and that Winters has met the “conditions
precedent to invoke the arbitration agreement.”
{¶4} Groedel answered both the original and amended complaint. In response to
the original complaint, Groedel added Ryan Winters as a new-party defendant and filed
counterclaims for breach of contract, frivolous conduct, and breach of lease agreement.
{¶5} Winters also filed a motion for an “order to proceed to arbitration and to
appoint a neutral arbitrator” in June 2012. Groedel opposed the motion on the grounds
that: (1) local and/or state bar associations retain exclusive jurisdiction over Groedel’s
breach of contract alleged in the counterclaim; (2) Winters’s tortious interference with a
business relationship claim was not subject to arbitration because it was unrelated to the
parties’ agreement; and (3) Groedel’s breach of lease agreement claim alleged in the
counterclaim was also unrelated to the parties’ agreement.
{¶6} The trial court denied Winters’s motion and ordered that the disputes first
be mediated. Winters appealed from this order in Winters Law Firm, L.L.C. v. Caryn
Groedel & Assocs., 8th Dist. Cuyahoga No. 98665, 2013-Ohio-169. On appeal, Winters
argued the trial court erred by failing to determine whether all or part of the dispute is
subject to arbitration and by denying the motion to compel arbitration without conducting
a hearing. Id. at ¶ 6. We found that Winters’s request for arbitration was made under
R.C. 2711.03, which requires a hearing. Therefore, we reversed the trial court’s
judgment and remanded to the trial court to conduct a hearing to determine what was
subject to arbitration. Id. at ¶ 7-8.
{¶7} Following our remand, Winters filed a renewed motion for an order to stay
proceedings pending arbitration. Groedel opposed the motion, arguing that Winters
sought to arbitrate a tort claim against her that she never agreed to arbitrate. The trial
court held a hearing on Winters’s renewed motion in April 2013. The trial court granted
Winters’s motion, finding that
[d]uring their oral argument at the hearing, [Groedel] conceded or agreed
that the breach of contract claim contained in [Winters’s] amended
complaint, and all counts contained in [Groedel’s] counterclaim are subject
to, or fall within the scope of the arbitration agreement. [Groedel]
maintained their position that Count II of [Winters’s] amended complaint,
i.e., the tortious interference with a business relationship claim, was not
subject to or within the scope of the arbitration agreement. However, this
court finds that because the issue of privilege, or lack thereof, constitutes an
element of this tort claim or an affirmative defense thereto, it cannot be
maintained without reference to the co-counseling agreement or contract at
issue. Therefore, all claims are subject to the arbitration agreement and no
merit discovery is permitted.
{¶8} It is from this order that Groedel appeals, raising the following two
assignments of error for review. For ease of discussion, we will address both
assignments of error together.
Assignment of Error One
The trial court erred and abused its discretion in granting [Winters’s]
motion to stay proceedings pending arbitration without affording [Groedel]
a reasonable opportunity to conduct discovery.
Assignment of Error Two
The trial court erred and abused its discretion in ruling that [Winters’s]
claim for tortious interference with a business relationship is subject to the
parties’ arbitration agreement.
Standard of Review
{¶9} The parties dispute the applicable standard of review governing this case,
both citing to decisions of this court with varying holdings in the area. We note that this
court has recently addressed this dispute, explaining that the appropriate standard of
review depends on “the type of questions raised challenging the applicability of the
arbitration provision.” McCaskey v. Sanford-Brown College, 8th Dist. Cuyahoga No.
97261, 2012-Ohio-1543, ¶ 7. Generally, an abuse of discretion standard applies in limited
circumstances, such as a determination that a party has waived its right to arbitrate a
given dispute. Id., citing Milling Away, L.L.C. v. UGP Properties, L.L.C., 8th Dist.
Cuyahoga No. 95751, 2011-Ohio-1103, ¶ 8. The issue of whether a party has agreed to
submit an issue to arbitration or questions of unconscionability are reviewed under a de
novo standard of review. Shumaker v. Saks Inc., 163 Ohio App.3d 173,
2005-Ohio-4391, 837 N.E.2d 393 (8th Dist.); Taylor Bldg. Corp. of Am. v. Benfield, 117
Ohio St.3d 352, 2008-Ohio-938, 884 N.E.2d 12.
{¶10} In this case, we apply a de novo standard of review because we are
reviewing the trial court’s decision to grant a motion to stay after finding that the claims
are subject to arbitration.
The abuse of discretion standard of review has no application in the context
of the court deciding to stay proceedings pending the outcome of arbitration
because a stay in such circumstances is mandatory, not discretionary.
N. Park Retirement Community Ctr., Inc. v. Sovran Cos., Ltd., 8th Dist. Cuyahoga No.
96376, 2011-Ohio-5179, ¶ 7 (recognizing that R.C. 2711.02(B) imposes a mandatory duty
to stay the proceedings, leaving no discretion for the trial court upon being satisfied that
the matter was subject to arbitration); see also McCaskey at ¶ 9. “Under a de novo
standard of review, we give no deference to a trial court’s decision.” Brownlee v.
Cleveland Clinic Found., 8th Dist. Cuyahoga No. 97707, 2012-Ohio-2212, citing Akron
v. Frazier, 142 Ohio App.3d 718, 721, 756 N.E.2d 1258 (9th Dist.2001).
Arbitrability of Tortious Interference with Business Relationships Claim
{¶11} In the instant case, the arbitration provision of the co-counseling agreement
between Winters and Groedel states:
10. DISPUTE RESOLUTION
In the event of a dispute between co-counsel regarding this agreement or the
distribution of funds under the Agreement, co-counsel shall attempt in good
faith to resolve the matter through discussion and, if unsuccessful, shall
agree upon a neutral third party to assist them in attempting to resolve the
matter informally.
If these measures are unsuccessful, the dispute shall be referred to a
mutually agreed upon dispute resolution provider for binding arbitration.
Co-counsel shall bear their own fees and costs for arbitration, but shall pay
equally for the filing fee and arbitrator’s fees regardless of the outcome of
the dispute.
{¶12} Groedel argues the trial court erred when it ruled that Winters’s claim for
tortious interference with business relationships is subject to the arbitration agreement
because Groedel “never agreed to arbitrate that claim and that claim is wholly unrelated
to the parties’ Co-Counseling Agreement[.]” Groedel contends that Winters could
maintain the tort claim even if the co-counseling agreement never existed.
{¶13} While Ohio public policy favors arbitration, we recognize that ““‘arbitration
is a matter of contract and a party cannot be required to submit to arbitration any dispute
which he has not agreed to so submit.’”” Academy of Medicine of Cincinnati v. Aetna
Health, Inc., 108 Ohio St.3d 185, 2006-Ohio-657, 842 N.E.2d 488, ¶ 11, quoting AT&T
Technologies, Inc. v. Communications Workers of Am., 475 U.S. 643, 106 S.Ct. 1415, 89
L.Ed.2d 648 (1986), quoting United Steelworkers of Am. v. Warrior & Gulf Navigation
Co., 363 U.S. 574, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960). In Academy of Medicine of
Cincinnati, the Ohio Supreme Court noted that it adopted the following four rules for
reviewing decisions concerning a dispute’s arbitrability, as set forth in AT&T
Technologies, Inc. v. Communications Workers of Am., 475 U.S. 643, 106 S.Ct. 1415, 89
L.Ed.2d 648 (1986):
(1) “arbitration is a matter of contract and a party cannot be required to so
submit to arbitration any dispute which he has not agreed to so submit”; (2)
the question whether a particular claim is arbitrable is one of law for the
court to decide; (3) when deciding whether the parties have agreed to
submit a particular claim to arbitration, a court may not rule on the potential
merits of the underlying claim; and (4) when a “contract contains an
arbitration provision, there is a presumption of arbitrability in the sense that
‘[a]n order to arbitrate the particular grievance should not be denied unless
it may be said with positive assurance that the arbitration clause is not
susceptible of an interpretation that covers the asserted dispute.’”
Id. at ¶ 5.
{¶14} This case focuses around the first rule — whether the parties agreed to
submit the tort claim to arbitration. In determining whether the parties agreed to submit
a dispute to arbitration, the “‘proper method of analysis * * * is to ask if an action could
be maintained without reference to the contract or relationship at issue.”’ Academy of
Medicine of Cincinnati at ¶ 24, quoting Fazio v. Lehman Bros., Inc., 340 F.3d 386, 395
(6th Cir.2003).
{¶15} Winters’s claim for tortious interference alleges that as part of the
co-counsel agreement, Groedel was to pay $2,500 per month to Winters, which
represented an advance of the cases the parties expected to earn. Winters alleges
Groedel breached the agreement by failing to proffer all payments due to Winters. As a
result, Winters sought a business relationship with another law firm to co-counsel wage
and hour cases. Winters alleges that Groedel knowingly and intentionally interfered with
Winters’s business relationship with the other firm by engaging in direct communications
with the firm, stating that she had a right to Winters’s clients and cases. Winters further
alleges that Groedel’s actions prevented him from maintaining a rightful business
relationship with the law firm, and as a result, his business relationship with the firm was
damaged.
{¶16} In Barilla v. Patella, 144 Ohio App.3d 524, 532, 760 N.E.2d 898 (8th Dist.
2001), we stated:
“The elements essential to recovery for a tortious interference with a
business relationship are: (1) a business relationship; (2) the wrongdoer's
knowledge thereof; (3) an intentional interference causing a breach or
termination of the relationship; and (4) damages resulting therefrom.”
(Citations omitted.) Wolf v. McCullough-Hyde Memorial Hosp., Inc.
(1990), 67 Ohio App. 3d 349, 355, 586 N.E.2d 1204. “The torts of
interference with business relationships and contract rights generally occur
when a person, without a privilege to do so, induces or otherwise purposely
causes a third person not to enter into or continue a business relation with
another, or not to perform a contract with another.” (Citations omitted.)
A&B — Abell Elevator Co. v. Columbus/Cent. Ohio Bldg. & Constr. Trades
Council (1995), 73 Ohio St.3d 1, 14, 651 N.E.2d 1283. “The basic
principle of a ‘tortious interference’ action is that one, who is without
privilege, induces or purposely causes a third party to discontinue a business
relationship with another is liable to the other for the harm caused thereby.”
Wolf, 67 Ohio App. 3d at 355, citing Juhasz v. Quik Shops, Inc.(1977), 55
Ohio App.2d 51, 57, 379 N.E.2d 235, 238.
{¶17} Winters must prove that Groedel, without a privilege to do so, induced or
otherwise purposely caused the law firm not to continue a business relationship with
Winters. In other words, Winters must prove that Groedel did not have a contractual
right to Winters’s clients and cases. If the co-counsel agreement gave Groedel the right
to interfere, then she acted with privilege and Winters’s claim fails.
{¶18} The co-counsel agreement between the parties specifically provides that
“[i]n the event of a dispute between co-counsel regarding this agreement or the
distribution of funds under the Agreement, co-counsel shall attempt in good faith to
resolve the matter through discussion and, if unsuccessful * * *, the dispute shall be
referred to a mutually agreed upon dispute resolution provider for binding arbitration.”
(Emphasis added.) The plain language of the co-counsel agreement provides for
arbitration in the event of a dispute regarding the agreement. Here, the resolution of
Winters’s tortious interference with business relationships claim constitutes a dispute
regarding the agreement, and thus, directly implicates the co-counsel agreement.
Therefore, we find trial court properly determined that the tortious interference with
business relationships claim is subject to arbitration.
Discovery
{¶19} Groedel also argues that the trial court erred by not permitting her to
conduct discovery. Groedel contends that discovery is essential because Winters
“refused to provide a basis that would permit the trial court to determine whether the
alleged business relationship even existed, let alone whether the claim based on that
alleged relationship is subject to arbitration.” “This court, however, ruled in Sasaki v.
McKinnon, 124 Ohio App.3d 613, 707 N.E.2d 9 (8th Dist.1997), that R.C. 2711.02,
governing stay of proceedings pending arbitration, does not require discovery but, rather,
only mandates that the court be satisfied that the dispute is governed by the arbitration
provision.” Melia v. OfficeMax N. Am., Inc., 8th Dist. Cuyahoga No. 87249,
2006-Ohio-4765, ¶ 38.
{¶20} Here, the trial court found that “no merit discovery is permitted” because the
tortious interference with business relationships claim cannot be maintained without
reference to the co-counseling agreement. Groedel did not seek discovery on the
enforceability of the arbitration agreement; rather, she sought discovery on the merits of
the tort claim. Since Groedel’s arguments did not evidence a need for discovery, the trial
court was not required to allow for it. Brownlee at ¶ 19, citing Melia v. OfficeMax N.
Am., Inc., at ¶ 38.
{¶21} Therefore, the first and second assignments of error are overruled.
{¶22} Accordingly, judgment is affirmed.
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.
MARY EILEEN KILBANE, JUDGE
SEAN C. GALLAGHER, P.J., and
KENNETH A. ROCCO, J., CONCUR