In Paxton, supra, we held that an order of a trial court staying all proceedings before it pursuant to R.C. 2711.02 and compelling the parties to arbitrate pursuant to R.C. 2711.03 was not a final, appealable order.Summary of this case from General Electric Supply v. Warden
Nos. 78-856 and 78-893
Decided July 18, 1979.
Arbitration — Enforcement of arbitration agreement — Not final appealable order, when.
An order of a trial court which stays all proceedings before it pursuant to R.C. 2711.02 and compels arbitration between the parties who have contracted to do so pursuant to R.C. 2711.03, is not a final appealable order pursuant to R.C. 2505.02 when it does not, in effect, determine the action and prevent a judgment.
CERTIFIED by the Courts of Appeals for Belmont and Mahoning Counties.
These causes result from separate actions filed in the Courts of Common Pleas of Belmont and Mahoning Counties. Both causes were initiated as the result of alleged breaches of construction contracts. The contracts, between the prime contractors and their subcontractors, were drawn up according to the standard form provided by the American Institute of Architects, AIA Document A201, entitled "General Conditions of the Contract for Construction." The standard form is made up of 14 articles, among them the one pertinent to these causes, Section 7.10, Arbitration, which provides as follows:
" 7.10 ARBITRATION
" 7.10.1 All claims, disputes and other matters in question arising out of, or relating to, this Contract or the breach thereof, except as set forth in Subparagraph 2.2.9 with respect to the Architect's decisions on matters relating to artistic effect, and except for claims which have been waived by the making or acceptance of final payment as provided by Subparagraphs 9.7.5 and 9.7.6, shall be decided by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association then obtaining unless the parties mutually agree otherwise. This agreement to arbitrate shall be specifically enforceable under the prevailing arbitration law. The award rendered by the arbitrators shall be final, and judgment may be entered upon it in accordance with applicable law in any court having jurisdiction thereof."
In case No. 78-856, Bellaire City Schools Board of Education v. Paxton, the facts are as follows:
The plaintiff-appellant Bellaire City Schools Board of Education ("Bellaire") entered into a construction contract with defendant-appellee Jerome Miller Sons, Inc., as general contractor and defendant-appellee Mansuetto Roofing Company ("Mansuetto") as the roofing subcontractor. Defendant-appellee Kenneth G. Paxton was the architect whose plans were utilized in the building process.
Allegedly, within one year after completion of the construction project, numerous leaks developed throughout the entire roof system. After repeated attempts by Mansuetto to correct the problem failed, and after negotiations between all parties became fruitless, Bellaire commenced a lawsuit in the Court of Common Pleas on January 23, 1978, nearly ten years after this cause of action arose.
The defendant Mansuetto moved, pursuant to R.C. 2711.02, for a stay of the lawsuit, and requested that the matter be submitted to arbitration. The trial court granted this motion for a stay and ordered that the matters alleged in the compaint be submitted to arbitrators.
Bellaire appealed to the Court of Appeals for Belmont County on May 25, 1978. Mansuetto filed a motion to dismiss the appeal based upon the argument that the order of the trial court staying the lawsuit was not a final appealable order. The Court of Appeals granted this motion and further denied Bellaire's application for reconsideration.
The Court of Appeals, finding its judgment to be in conflict with the judgment of the Court of Appeals for Franklin County in Systems Construction, Inc., v. Worthington Forest (1975), 46 Ohio App.2d 95, certified the record of the case to this court for review and final determination.
In case No. 78-893, Mid-States v. Mosser, the facts are as follows:
Plaintiff-appellee Mid-States Electric Co., Inc. ("Mid-States"), was the electrical subcontractor for work involved on the south side unit of the Youngstown Hospital, Defendant-appellee Mosser Construction Co., Inc. ("Mosser"), was the general contractor on the project and defendant-appellee Aetna Casualty Surety Co., Inc. ("Aetna"), was the performance and payment bond surety for Mosser. Defendant-appellant city of Youngstown ("City") was the owner of the property on which the project was located, while defendant-appellant Youngstown Hospital Association ("Hospital") was the lessee and equitable owner of the project.
As a result of various additional costs incurred during the performance of the electrical work, Mid-States initiated a demand for arbitration. Subsequently, upon demand made by Mosser, Mid-States filed the instant action in the Court of Common Pleas of Mahoning County, seeking judgment against defendants Mosser, the City, and the Hospital, in accordance with the anticipated award of the arbitrators in the pending arbitration; and, in the event of non-payment by those parties, judgment in like amount against Aetna as surety, a determination of the validity of the mechanic's liens filed by Mid-States against the property, and foreclosure of the liens.
The Hospital filed a counterclaim against Mid-States and a cross-claim against Mosser, and sought a declaratory judgment of its rights and a stay of arbitration pending such judgment.
The trial court, upon motion for partial summary judgment ( i. e., solely on the issue of stay of arbitration) made by Mosser, ordered the parties to arbitrate the disputes arising from the performance of the work, in accordance with the contracts between the parties. Upon the motion of Mid-States, the trial proceedings were stayed pending the outcome of the arbitration proceedings.
The City and Hospital appealed those rulings to the Court of Appeals for Mahoning County, which held that the ruling by the trial court was not an appealable order, and thereupon dismissed the appeal.
The Court of Appeals, finding its judgment to be in conflict with the judgment of the Court of Appeals for Franklin County in Systems Construction, Inc., v. Worthington Forest, supra, certified the record of the case to this court for review and final determination.
These causes, having been certified, and raising essentially the same issue, are consolidated for consideration and decision herein.
Messrs, Malik, Malik Knapp, Mr. Charles F. Knapp and Mr. Daniel L. Frizzi, Jr., for appellant Bellaire City Schools Bd. of Edn. in case No. 78-856.
Messrs. Thomas Thomas and Mr. Harold B. Thomas, for appellee Mansuetto Roofing Co. in case No. 78-856.
Messrs. Roth Stephens, Mr. Jerry O. Stephens, Mr. Richard B. Blair, Messrs. Walstad Asselin, Mr. Thomas H. Asselin and Mr. Joseph H. Kasimer, for appellee Mid-States Electric Co. in case No. 78-893.
Messrs. Arter Hadden, Mr. Hugh M. Stanley and Mr. John A. Jenkins, for appellee Mosser Construction Co. in case No. 78-893.
Messrs. Harrington, Huxley Smith, Mr. William C. Ramage and Mr. Eldon S. Wright, for appellant Youngstown Hospital Assn. in case No. 78-893.
Mr. William R. Copperman, for appellant City of Youngstown in case No. 78-893.
The critical issue raised in the two appeals before us can be phrased as follows: Is an order of a trial court, pursuant to R.C. 2711.02 et seq., staying further proceedings in a pending action, and ordering parties who have contracted to do so to submit to arbitration, a final appealable order as defined in R.C. 2505.02?
R.C. 2711.02 reads:
"If any suit or proceeding is brought upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceedings is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration."
The jurisdiction of the Court of Appeals can be no more extensive in matters involving non-original jurisdiction, than the grant set forth in Section 3(B)( 2), Article IV of the Ohio Constitution, which limits it to "* * * such jurisdiction as may be provided by law to review and affirm, modify or reverse judgments or final orders of the courts of record inferior to the court of appeals * * *."
An appealable order is defined in R.C. 2505.02 as follows:
"An order affecting a substantial right in an action which in effect determines the action and prevents a judgment, an order affecting a substantial right made in a special proceeding or upon a summary application in an action after judgment, or an order vacating or setting aside a judgment and ordering a new trial is a final order which may be reviewed, affirmed, modified, or reversed, with or without retrial." (Emphasis added.)
In Pewter Mug v. M.U.G. Enterprises, Inc. (1975), 46 Ohio App.2d 93, 94, the Court of Appeals for Franklin County enumerated the requirements to establish an appealable order pursuant to R.C. 2505.02, as follows:
"If * * * [the trial court's order] lacks one of the three qualifications of (a) affecting a substantial right, (b) determining the action, or (c) preventing a judgment, it cannot be a final order, for all three attributes must concur to make it such."
Numerous jurisdictions have held that if a court has retained jurisdiction over the parties, even though all issues have been referred to arbitration, the court's order to arbitrate and its stay of trial are final and appealable only after judgment is entered on the arbitration award. The rationale appears to be a compelling desire to avoid interlocutory appeals and a strong policy in favor of prompt resolution of disputes in accordance with written contractual arbitration clauses. See Schoenamsgruber v. Hamburg American Line (1935), 294 U.S. 454; Harris v. State Farm Mut. Automobile Ins. Co. (Fla.App. 1973), 283 So.2d 147; Teufel Construction Co. v. American Arbitration Assn. (1970), 3 Wn. App. 24, 472 P.2d 572; Roeder v. Huish (1970), 105 Ariz. 508, 467 P.2d 902; Standard Chlorine of Delaware v. Leonard (C.A. 2, 1967), 384 F.2d 304. This court has, likewise, long favored enforcement of written arbitration clauses and the avoidance of interlocutory appeals. See Dayton Teachers Assn. v. Dayton Bd. of Edn. (1975), 41 Ohio St.2d 127; Campbell v. Automatic Die Products Co. (1954), 162 Ohio St. 321; Squire v. Guardian Trust Co. (1946), 147 Ohio St. 1; Springfield v. Walker (1885), 42 Ohio St. 543.
We endorse the policy in favor of enforcing arbitration contracts to promote speed and efficiency and to lessen the burdens on the court system. To allow an immediate appeal from every order enforcing an arbitration clause would clearly defeat these policies. Moreover, the objective of prompt and orderly disposition of cases through the prohibition of interlocutory appeals would also be defeated if one could immediately appeal the order to arbitrate, then later appeal the arbitration order and any judgment remaining from the trial court.
In an analogous context this court reiterated the policy of limiting judicial intervention into the contractually agreed upon arbitration process in Goodyear v. Local Union No. 200 (1975), 42 Ohio St.2d 516, certiorari denied, 423 U.S. 986. In that decision the court held that the scope of judicial review of arbitration awards was limited to claims of fraud, corruption, misconduct, an imperfect award, or that the arbitrator exceeded his authority. To sanction a more extensive intrusion into the workings of the arbitration machinery "would defeat the bargain made by the parties and would defeat as well the strong public policy favoring private settlement of grievance disputes arising from collective bargaining agreements." Id., at page 520.
The Courts of Appeals in this state also appear to be in general agreement with the foregoing policy supporting the interlocutory nature of such orders. The Court of Appeals for Hamilton County, in Board of Education v. Nolte-Tillar Bros. Construction Co. (1946), 79 Ohio App. 193, citing with approval Schoenamsgruber v. Hamburg-American Line, supra, held that an order to stay trial pending arbitration of issues contractually committed to arbitration is not a final order since it does not determine the action or prevent a judgment. As the court indicated, at page 198, "It amounts to no more than a postponement of the trial."
In Systems Contruction, Inc., v. Worthington Forest, supra, the Court of Appeals for Franklin County held that where all the issues are submitted to arbitration, the order is final since no effective judgment could be rendered in the trial court predicated upon the pleadings. Besides citing Nolte-Tillar, supra, for the proposition that an order staying trial pending completion of arbitration is not a final appealable order, the court noted, at page 97:
"An order staying proceedings in a pending action and ordering that part of the issues raised be submitted to arbitration may well be interlocutory and not appealable, since there will eventually be a judgment upon the remaining issues."
Moreover, Systems Construction also cites Pewter Mug v. M.U.G. Enterprises, supra, decided less than a month before by a different panel of judges of the Court of Appeals for Franklin County. That decision also cites Nolte-Tillar, supra, approvingly and holds that an order denying a stay of proceedings pending arbitration is not a final appealable order.
In the causes sub judice, all the issues pertaining to all the parties before the trial courts have not been disposed of. No judgments have been rendered for or against any of the parties and the lower courts have retained jurisdiction over all concerned.
The orders issued pursuant to R.C. 2711.02 will dissolve in accordance with the terms of the statute upon the conclusion of the arbitration, whereupon the remaining issues pending may be determined by a trial or otherwise. Likewise, a dissatisfied party can always seek either modification or vacation of the arbitration award pursuant to R.C. 2711.10 or 2711.11.
In conclusion, since the records before us indicate that the judgment entries of the trial courts, "in effect," neither determined the respective actions nor prevented judgments from eventually being entered, they do not fall within the definition of a final appealable order expressed in R.C. 2505.02.
Accordingly, in case No. 78-856, the dismissal of Bellaire's appeal by the Court of Appeals for Belmont County is affirmed.
In case No. 78-893, the dismissal of the appeal of the Hospital and the City by the Court of Appeals for Mahoning County is affirmed.
CELEBREZZE, C.J., HERBERT, W. BROWN, SWEENEY, PRYATEL and HOLMES, JJ., concur.
CONNORS, J., of the Sixth Appellate District, sitting for P. BROWN, J.
PRYATEL, J., of the Eighth Appellate District, sitting for LOCHER, J.