Opinion
2022 AP 10 0038
07-31-2023
VALERIE JEAN WHITMAN, Plaintiff - Appellee v. STEPPING STONE RESIDENTIAL FACILITY LLC and BRENTON D. WHITMAN Defendants - Appellants
For Plaintiff-Appellee MAX W. THOMAS McCleery Law Firm For Defendants-Appellants ROBERT J. TSCHOLL
Appeal from the Tuscarawas Court of Common Pleas, Case No. 2020 CV 0600
JUDGMENT: Affirmed
For Plaintiff-Appellee MAX W. THOMAS McCleery Law Firm
For Defendants-Appellants ROBERT J. TSCHOLL
JUDGES: Hon. Patricia A. Delaney, P.J., Hon. Craig R. Baldwin, J., Hon. Andrew J. King, J.
OPINION
Baldwin, J.
{¶1} Stepping Stone Residential Facility, LLC and Brenton D. Whitman appeal the decision of the Tuscarawas County Court of Common Pleas affirming an arbitration award in favor of Appellee, Valerie Jean Whitman.
STATEMENT OF THE FACTS AND THE CASE
{¶2} Valerie Jean Whitman initiated arbitration proceedings seeking judgment for a distribution of profits from the operation of Stepping Stone Residential Facility, LLC naming the company and her recently divorced spouse, Brenton D. Whitman, as parties. Brenton and Stepping Stone refused to participate, claiming that Valerie's dispute was subject to the jurisdiction of the Tuscarawas County Common Pleas Court, Domestic Relations Division. The Arbitrator disagreed, found that she had jurisdiction and moved forward with the arbitration.
{¶3} The Arbitrator found in favor of Valerie and awarded her judgment against Brenton and Stepping Stone, jointly and severally, in the amount of $87,350.00. Valerie was also awarded the filing fee of $1,925.00 and the Arbitrator's Fee of $3,425.00.
{¶4} Valerie applied to the Tuscarawas Court of Common Pleas to confirm the arbitration award on June 6, 2022. Stepping Stone and Brenton filed a response and a request to vacate the arbitration award on June 30, 2022. Valerie opposed the motion to vacate the award. (Brief in Opposition to Request of Defendants to Vacate Arbitration Award July 1, 2022). The trial court issued an order granting the Application to Confirm the Award, denying the Answer and Request to Vacate and expressly confirming the orders of the Arbitrator and incorporating them as a final judgment of the court. (Order Confirming Arbitration Award, Sept. 15, 2022). The trial court granted Brenton's Motion to Stay the Judgment pending the resolution of the appeal.
{¶5} Brenton Whitman and Stepping Stone filed a timely notice of appeal and submitted three assignments of error:
{¶6} "I. THE TRIAL COURT ERRED IN ENFORCING THE ARBITRATION AWARD. APPELLEE'S CLAMS DID NOT RISE UNDER THE ARBITRATION CLAUSE OF THE OPERATING AGREEMENT BUT RATHER OUT OF THE CONTINUING JURISDICTION OF THE DOMESTIC RELATIONS COURT."
{¶7} "II. THE TRIAL COURT ERRED AS A MATTER OF LAW AND ABUSED ITS DISCRETION WHEN IT CONFIRMED THE ARBITRATION AWARD. APPELLEE WAS NOT AN ACTIVE MEMBER OF STEPPING STONE AT THE TIME SHE CHALLENGED HER 2019 DISTRIBUTION."
{¶8} "III. THE TRIAL COURT ABUSED ITS DISCRETION AND COMMITTED REVERSIBLE ERROR WHEN IT SUGGESTED A RIGHT TO ARBITRATE APPELLEE'S 2019 DISTRIBUTION CLAIM IN ITS JUDGMENT ENTRY DENYING APPELLEE'S MOTION TO VACATE. APPELLEE WAIVED HER RIGHT TO ARBITRATE BY ACTIVELY PARTICIPATING IN LITIGATION WHICH RESULTED IN AN AGREEMENT THAT THE DOMESTIC RELATIONS COURT WOULD HOLD EXCLUSIVE CONTINUING JURISDICTION OVER HER ASSET DISTRIBUTION CLAIMS."
THE RECORD
{¶9} "Our appellate review is limited to the record before us * * * Congress Lake Co. v. Green, 5th Dist. Stark No. 2019CA00002, 2019-Ohio-3487, ¶ 21. See Village of Somerset v. Shaner, 5th Dist. Perry No. CA-349, 1986 WL 5513 as quoted in State v. McGuire, 5th Dist. Fairfield No. 18 CA 10, 2018-Ohio-4676, ¶ 47 ("* * * [a]ppellate review is limited to considering errors revealed in the record.") Generally, the content of the record is clear, but Appellants' request to supplement the record raised questions regarding whether pleadings and related documents from a separate domestic relations case should be included.
{¶10} Appellants moved this court to supplement the record on appeal "to include a certified copy of the docket, original papers and exhibits filed in the trial court, the transcript of proceedings in the parties' divorce proceedings entitled Valerie J. Whitman v. Brenton D. Whitman, Tuscarawas County Court of Common Pleas, Case No. 2018 TM 08 0288." (Defendants-Appellants' Motion to Supplement the Record on Appeal, Nov. 10, 2022, p. 2). Appellants supported the motion by claiming "that to fully argue the issues in this appeal and in the interests of justice it is necessary to consider the divorce proceeding between the parties" and that "the parties' divorce proceedings, including the seventeen-page transcript of the parties' uncontested divorce held on November 19, 2019, were matters actually before the trial court and therefore constitute part of the record." Id.
{¶11} This court found that it had "no way of determining at this juncture whether the parties' divorce proceedings were considered by the trial court" and that a filing by the Appellee that mentions the divorce proceedings was not conclusive proof that the trial court considered the divorce proceedings. We remanded the matter to the trial court to determine "whether the divorce proceedings are part of the record on appeal." (Judgment Entry, Nov. 16, 2022).
{¶12} The trial court decided that:
* * the parties' divorce proceedings, beyond the plain language contained in the documents specifically filed in this case, were not part of the record considered by the trial court. Therefore, this Court concludes that the divorce proceedings should not be part of the record on appeal in Case No. 2022 AP 10 0038. The record on appeal should be limited to the record in Case No. 2022 CV 06 0333.(Judgment Entry, Dec. 21, 2022, p. 2)
{¶13} This court is therefore constrained to a review of only the motions, attachments, orders and related documents contained within the trial court file for Tuscarawas Common Pleas Case No. 2022 CV 06 0333.
{¶14} Appellants also moved to consolidate this case with the case of Valerie Jean Whitman v. Brenton D. Whitman, Tuscarawas App. No. 2022 AP 10 0041. Appellants argued that because the cases "basically involve the same issue-whether the continuing jurisdiction of the Tuscarawas County Domestic Relations Court was the exclusive remedy for appellee's distribution claims" the cases were appropriate for consolidation. Appellant offered an alternative solution, asking that the record be supplemented with the "transcript of the uncontested divorce" and "the transcript referred to by the trial court in its October 26, 2012 judgment entry which was attached to the appellee's brief in opposition to the request to vacate arbitration award * * *" (Motion to Consolidate Appeals of Defendants-Appellants, Dec. 27, 2022, p. 6).
{¶15} The Motion to Consolidate was denied February 10, 2023, after Appellants filed their brief in this matter. Appellants included a footnote in the opening of their brief regarding this issue: "The pleadings and hearings in the divorce proceedings before the Tuscarawas County Common Pleas Court as Case No. 2018TM080288 are a necessary part of this appeal to understand the arguments made herein. The Appellants filed a Motion to Consolidate with Case No. 2022AP 10 0041 on December 27,, (sic) 2022." (Appellants' Brief, p. 1, fn. 1) Because we denied the Motion to Consolidate, any matter from the divorce proceedings that was not properly submitted to the trial court in Tuscarawas Common Pleas Case No. 2022 CV 06 0333 is not part of the record in this case and we will not consider it. Any reference by Appellants to matters outside the record will be disregarded.
STANDARD OF REVIEW
{¶16} Appellants' assignments of error focus upon the interpretation and application of an arbitration clause contained within the Operating Agreement of Stepping Stone. When reviewing a challenge to an arbitration clause, 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, 2012 WL 1142880, ¶ 7. Generally, an abuse of discretion standard applies in limited circumstances, such as a determination a party has waived its right to arbitrate a given dispute. Id. (Citation omitted). Whether a controversy is arbitrable under an arbitration provision of a contract is a question of law for the court to decide; therefore, the standard of review on those issues is de novo. Church v. Fleishour Homes, Inc., 5th Dist., 172 Ohio App.3d 205, 2007-Ohio-1806, 874 N.E.2d 795, ¶ 9. "Under a de novo standard of review, we give no deference to a trial court's decision." Hedeen v. Autos Direct Online, Inc., 8th Dist., 2014-Ohio-4200, 19 N.E.3d 957, ¶ 9 (Citations omitted). When the validity of an arbitration agreement is in question, the determination involves a mixed question of law and fact. Scott v. Kindred Transitional Care & Rehab., 8th Dist. Cuyahoga No. 103256, 2016-Ohio-495, 2016 WL 561756, ¶ 4 (Citation omitted). Any factual findings regarding the circumstances surrounding the making of the contract should be reviewed with great deference. See, Taylor Bldg. Corp. of Am. v. Benfield, 117 Ohio St.3d 352, 2008-Ohio-938, 884 N.E.2d 12, ¶ 38.
{¶17} We find that the First Assignment of Error, that the "Trial Court erred in enforcing the arbitration Award" because "Appellee's claims did not rise under the arbitration clause of the Operating Agreement but rather out of the continuing jurisdiction of the Domestic Relations Court" seeks a finding that the matter is not arbitrable for which we apply a de novo review. The Second Assignment of Error, that the "Trial Court erred as a matter of law and abused its discretion when it confirmed the arbitration award" because "Appellee was not an active member of Stepping Stone at the time she challenged her 2019 distribution" raises a mixed question of law and fact. We owe the trial court deference regarding the finding of fact, but not regarding the question of law. Finally, the Third Assignment of Error, regarding a potential waiver of the right to arbitrate, is subject to an abuse of discretion review.
ARBITRATION
{¶18} This appeal requires us to review the trial court's confirmation of the results of an arbitration and we do so recognizing that "[b]oth the Ohio General Assembly and Ohio courts have expressed a strong public policy favoring arbitration." (Citations omitted.) Craver v. Tomsic, 5th Dist. Delaware No. 13CAE110078, 2014-Ohio-2603, ¶ 17. "'Arbitration is favored because it provides the parties thereto with a relatively expeditious and economical means of resolving a dispute'. * * * Arbitration also has the additional benefit of unburdening crowded court dockets." Id.
{¶19} We are also mindful that "[arbitration awards are presumed valid, and a reviewing court may not merely substitute its judgment for that of the arbitrator." Dodge v. Dodge, 10th Dist. No. 16AP-166, 2017-Ohio-7087, 95 N.E.3d 820, ¶ 13 quoting State v. Ohio Civ. Serv. Emps. Assn., Local 11 AFSCME AFL-CIO, 2016-Ohio-5899, 71 N.E.3d 622, ¶ 12 quoting Schaefer v. Allstate Ins. Co., 63 Ohio St.3d 708, 711, 590 N.E.2d 1242 (1992). The Ohio Supreme Court observed that "[t]he whole purpose of arbitration would be undermined if courts had broad authority to vacate an arbitration award." Mahoning Cty. Bd. of Mental Retardation & Dev. Disabilities v. Mahoning Cty. TMR Edn. Assn., 22 Ohio St.3d 80, 83-84, 488 N.E.2d 872 (1986).
{¶20} "The jurisdiction of the courts to review arbitration awards is thus statutorily restricted; it is narrow and it is limited." Massillon City School Dist. Bd. of Edn. v. Massillon Edn. Assn., 2014-Ohio-3197, 17 N.E.3d 56, ¶ 22 (5th Dist.) quoting Smith v. Palm Harbor Homes, Inc., 5th Dist. Guernsey No. 05 CA 31, 2006-Ohio-5863, ¶ 14, quoting Miller v. Gunckle, 96 Ohio St.3d 359, 2002-Ohio-4932, 775 N.E.2d 475, ¶ 10 (Additional citations and internal quotations omitted.) The court of common pleas can only base its decision on the arbitration record. Arrow Uniform Rental, LP. v. K&D Group, Inc., 11th Dist. Lake No. 2010-L-152, 2011-Ohio-6203, ¶ 32, 35. It is generally recognized that the interpretation of the agreement and the determination of the factual matters are clearly within the powers of the arbitrator. See Lancaster Educ. Ass'n. v. Lancaster City School Dist. Bd. of Educ, 5th Dist. Fairfield No. 97 CA 82, 1998 WL 346841 (May 29, 1998), citing Hillsboro v. Fraternal Order of Police, Ohio Labor Council, Inc., 52 Ohio St.3d 174, 556 N.E.2d 1186 (1990). "The arbitrator is the final judge of both the law and the facts, and a court may not substitute its judgment for that of the arbitrator. Judicial deference in arbitration cases is based on a recognition that the parties have agreed to have their dispute settled by an arbitrator rather than the courts and 'to accept the arbitrator's view of the facts and the meaning of the contract regardless of the outcome of the arbitration.'" (Citations omitted.) Arrow Uniform Rental, LP., supra at ¶ 35-36.
{¶21} Once arbitration is completed, a trial court has no jurisdiction over the arbitration award other than that granted by statute. "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." Dodge v. Dodge, 10th Dist. No. 16AP-166, 2017-Ohio-7087, 95 N.E.3d 820, ¶ 14 quoting Telle v. Estate of William Soroka, 10th Dist. No. 08AP-272, 2008-Ohio-4902, 2008 WL 4368567, ¶ 9.
{¶22} Revised Code 2711.10 provides that a court may vacate an award "upon the application of any party," for any of the following reasons: (1) the award was procured by corruption, fraud, or undue means; (2) there was evident partiality or corruption on the part of the arbitrators; (3) the arbitrators are guilty of misconduct in refusing to postpone the hearing, or refusing to hear pertinent and material evidence; or (4) 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. R.C. 2711.10 thus "limits judicial review of arbitration to claims of fraud, corruption, misconduct, an imperfect award, or that the arbitrator exceeded his authority." Goodyear Tire & Rubber Co. v. Local Union No. 220, 42 Ohio St.2d 516, 330 N.E.2d 703 (1975), paragraph two of the syllabus.
APPELLEE'S CLAIM
{¶23} The parties have asked this court to determine whether Appellee's claim should be addressed by the Domestic Relations Court under its continuing jurisdiction or by the application of the arbitration clause contained within Stepping Stone's Operating Agreement. That provision states: "Any controversy between the Members relating to this Agreement or the transactions contemplated hereby shall be submitted to arbitration in Tuscarawas, Ohio, in accordance with the Commercial Arbitration Rules of the American Arbitration Association then in effect." The Operating Agreement also states "The decision of the arbitrator(s) and any award pursuant thereto shall be final, binding and conclusive evidence on the parties and shall be non-appealable. Final judgment on such decision and any award may be entered by any court of competent jurisdiction." (Application for Order Confirming Arbitration Award, June 6, 2022, Exhibit 1, p. 8-9, |f 16.1, 16.2).
{¶24} The members of Stepping Stone are listed as appellant, Brenton Whitman and appellee, Valerie Whitman. (Id. at p. 1). Valerie filed an Application to Confirm an arbitration award on June 6, 2022 and attached a copy of the Operating Agreement, an Interim Order of the Arbitrator and the Award of the Arbitrator, fulfilling the requirements of R.C. 2711.09 and 2711.14. The Application provided a summary of the proceedings leading to the Arbitrator's issuance of the final award. The Application also notes that Appellants objected to the jurisdiction of the American Arbitration Association and that the Arbitrator decided that issue in Appellee's favor in the following paragraphs:
Respondent contends that the Claim is not subject to arbitration because he believes a court order would be required ordering Stepping Stone Residential Facility, LLC and Mr. Whitman to arbitrate Ms. Whitman's
claim; and therefore, desires to withdraw from these arbitration proceedings. However, the Tuscarawas County Court of Common Pleas issued a Judgment Entry on October 26, 2021 which held that "if Plaintiff [Claimant] believes that Stepping Stone Residential Facility, LLC violated her rights as a shareholder in 2019, she should pursue her rights as a previous shareholder against the business." As such, the Trial Court has already issued the Order that Respondent suggests Claimant needs.
Furthermore, the(sic) Section 16 of the Operating Agreement of Stepping Stone Residential Facility, LLC states that any controversy between the Members relating to this Agreement or the transactions contemplated hereby shall be submitted to arbitration..."(Application to Confirm Arbitration Award, June 6, 2022, Exhibit 2)
{¶25} Brenton Whitman and Stepping Stone responded to the Application to Confirm by filing a request to "Vacate Arbitration Award" and "Response to Plaintiffs Petition to Confirm Arbitration Award." The document states four "Oppositions" to the Application for Confirmation with little or no argument in support of the assertions. In the "First Opposition" Appellants claim that the Arbitrator "did not have jurisdiction over the claims of the parties" and "exceeded his (sic) authority under R.C. 2711.10(D)." We cannot discern from the Request or the record whether these Oppositions are intended to state different grounds for vacating the award. (Request of Defendants to Vacate Arbitration Award, June 30, 2022, p. 1, First and Second Opposition).
{¶26} The "Third Opposition" admits or denies the specific allegations in the Request. In their "Fourth Opposition," Appellants state that Appellee's "demand for a distribution from Stepping Stone is res judicata" but offers no argument or explanation in support of that conclusion. In the "Fourth Opposition" Appellants refer to the Settlement Agreement and Divorce Entry, claiming that Brenton Whitman was "100 % owner on November 19, 2019" and "that the trial court had continuing jurisdiction regarding Stepping Stone's and Brenton Whitman's liabilities regarding the split up of the company between Brenton and Valerie Whitman." Appellants further allege that "Valerie Whitman does not have standing as a shareholder of Stepping Stone to file for arbitration under the Operating Agreement in January 2020 because she was no longer a shareholder as of November 19, 2019."
{¶27} Valerie filed a Reply to Appellant's Request to Vacate and attached a copy of a Magistrate's Decision from the Domestic Relations case, dated July 14, 2021, which recommended that Valerie "should receive a Pro Rata distribution from the business for 2019, which reflects her 46.98631% interest in the business until 12/31/2019." (Plaintiff/Applicant's Brief in Opposition to Request of Defendants to Vacate Arbitration Award, July 1, 2022, Exhibit 4, p. 11). Also attached was the Domestic Relations Court entry, issued in response to the parties' objections to the Magistrate's Decision.
{¶28} The Domestic Relations Court amendments to the Findings of Fact issued by the Magistrate are relevant to this case. First, regarding the date of the transfer of Valerie's interest in Stepping Stone to Brenton, the Domestic Relations Court added: "However, the parties' Separation Agreement does not specify that the transfer was to be effective on 12/31/2019, and neither party presented evidence or testimony to prove the date that Valerie Whitman actually relinquished her 50% interest in the business." (Exhibit 4, supra, p. 4, amending Finding of Fact No. 3). Finding of Fact No. 11 was amended to include: "Valerie Whitman should have received the distribution she was entitled to as a 46.98631% shareholder of Stepping Stone Residential Facility, LLC in 2019." (Exhibit 4, supra, p. 4, amending Finding of Fact No. 11).
{¶29} After completing these and other amendments, the Domestic Relations trial court found that:
The Court FINDS that the limited evidence presented by Plaintiff suggests that she may have been entitled to a larger distribution from Stepping Stone Residential Facility, LLC in 2019.
The Court FINDS, however, that a Civ.R. 60(B) motion was not the proper procedural mechanism for the relief requested by Plaintiff.
The Court further FINDS that if Plaintiff believes that Stepping Stone Residential Facility, LLC violated her rights as a shareholder in 2019, she should pursue her rights as a previous shareholder against the business.(Exhibit 4, supra, p. 6-7).
{¶30} The balance of Valerie's Opposition to the Request to Vacate contains a narrative argument responding to the allegations contained in the Request to Vacate. She contends that several of the assertions of Appellants are vague, ambiguous, unaccompanied by any specific basis or unsupported by facts. She notes that this dispute is not between the spouses regarding the distribution of marital property, but involves a claim that arises under the Stepping Stone Operating Agreement which is subject to the arbitration requirement contained within that document. We share Appellee's concern regarding the lack or argument of explanation offered by Appellants to the trial court.
{¶31} Revised Code 2711.05 provides that actions to confirm or vacate arbitration awards "shall be made and heard in the manner provided by law for the making and hearing of motions, except as otherwise expressly provided in such sections." Civil Rule 7(B) provides:
(1) An application to the court for an order shall be by motion which, unless made during a hearing or a trial, shall be made in writing. A motion, whether written or oral, shall state with particularity the grounds therefor, and shall set forth the relief or order sought. A written motion, and any supporting affidavits, shall be served in accordance with Civ.R. 5 unless the motion may be heard ex parte.
(2) To expedite its business, the court may make provision by rule or order not inconsistent with these rules for the submission and determination of motions without oral hearing upon brief written statements of reasons in support and opposition.
{¶32} Tuscarawas County has adopted a local rule under the authority granted by Civ.R. 7(B)(2) which requires that "[a]ll motions shall be accompanied by a brief or memorandum stating the grounds for the motion and citing relevant authorities." Tuscarawas Local Rule 2.06. That rule also warns that "Oral argument upon a motion will not be held unless written request is made by the party submitting or opposing the motion."
{¶33} Appellants did not request a hearing on this matter and made only a modest attempt to present their arguments in support of their contentions in the court below, reserving the bulk of their argument for presentation before this court. We do not condone this practice and encourage parties to vigorously and comprehensively present arguments to the trial court to ensure that the record clearly reflects the parties' positions and adequately preserves the relevant issues for review by this court.
{¶34} Appellants' filings are more akin to an answer and counterclaim which only require "a short plain statement that the party is entitled to relief" or a statement in "short and plain terms" that includes the parties defenses to each claim asserted and shall admit or deny the averments upon which the adverse party relies." (Civ.R. 8(A)(B)). Appellants' response to the Application to Confirm the Arbitration Award created a record lacking the argument that can be provided in a memorandum or brief accompanying a motion filed under Civ. R. 7 and Tuscarawas Local Rule 2.06 to the detriment of Appellants.
I.
{¶35} In their First Assignment of Error, Appellants contend that Appellee's claim for a distribution from Stepping Stone "did not rise under the arbitration clause of the Operating Agreement but rather out of the continuing jurisdiction of the Domestic Relations Court."
{¶36} Appellants begin their argument by contending that "[t]he domestic relations court erred when it inserted a clause in its judgment entry suggesting arbitration when that issue was not argued, not before it, not requested by any party and there was a viable alternate remedy for appellee's claim - the continuing jurisdiction of the court." (Appellants' Brief, p. 7). They conclude their argument by stating "The trial court erred as a matter of law and abused its discretion in suggesting a remedy outside of the jurisdiction of the domestic relations court and enforcing the arbitration award." (Appellants' Brief, p. 13). That "clause" and suggested "remedy" is contained within a judgment entry journalized in the case of Valerie Whitman v. Brenton Whitman, Tuscarawas Common Pleas Case No. 2018 TM 08 0288 and is part of the record in this case only as Exhibit 4 to Appellee's Brief in Opposition to Request of Defendants to Vacate Arbitration Award filed with the trial court. That judgment entry is not before us for review and, as noted by Appellants, no party appealed from the judgment of the Domestic Relations Court. We will not consider whether the trial court erred in issuing the statement that Valerie "should pursue her rights as a previous shareholder against the business."
{¶37} Appellants' conclusion that Appellee's claim is subject to the continuing jurisdiction of the Domestic Relations Court and should not be resolved by arbitration under the clause in Stepping Stone's Operating Agreement is not supported by the facts or the law. "Ohio courts recognize four principles that guide arbitrability[.]" Entire Energy & Renewables, LLC v. Duncan, 2013-Ohio-4209, 999 N.E.2d 214, ¶ 17 (10th Dist.), quoting Academy of Medicine of Cincinnati v. Aetna Health, Inc., 108 Ohio St.3d 185, 2006-Ohio-657, ¶ 10-14, 842 N.E.2d 488. They are:
(1) that 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) that the question whether a particular claim is arbitrable is one of law for the court to decide; (3) that 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) that 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.
{¶38} The parties agreed to submit disputes regarding Stepping Stone to arbitration, we need not rule on the underlying merits to resolve the arbitrability of the claim and the record supports a conclusion that the arbitration clause is susceptible to an interpretation which does cover the dispute. Mindful of the guiding principles, we consider whether Appellee's claim is arbitrable by applying the test described in Fazio v. Lehman Bros., Inc., 340 F.3d 386, 395 (6th Cir.2003). See Academy of Medicine v. Aetna Health, Inc., 108 Ohio St.3d 185, 2006-Ohio-657, 842 N.E.2d 488, ¶ 30 (approving the use of the Fazio test). In Fazio, the court held that a proper method of analysis for determining whether an issue is within the scope of an arbitration agreement "is to ask if an action could be maintained without reference to the contract or relationship at issue. If it could, it is likely outside the scope of the arbitration agreement." Fazio at 395.
{¶39} In the matter before us, Appellee sought judgment for disbursements from Stepping Stone for the tax year 2019. The obligation of Stepping Stone to issue distributions and the member's share of any disbursements cannot be determined without reliance on the Operating Agreement, supporting a conclusion that the action is within the scope of the Operating Agreement. Further, the dispute does not require reference to the Separation Agreement as the parties did not address disbursement of Stepping Stone profits within that document.
{¶40} The court in Katz found "The Ohio Supreme Court has recognized that "[a]n arbitration clause that contains the phrase 'any claim or controversy arising out of or relating to the agreement' is considered 'the paradigm of a broad clause.'" Academy of Medicine, 108 Ohio St.3d 185, 2006-Ohio-657, 842 N.E.2d 488, at ¶ 18, quoting Collins & Aikman Prods. Co. v. Bldg. Sys. Inc., 58 F.3d 16, 20 (2d Cir.1995)." Katz v. Katz, 6th Dist. Lucas No. L-17-1157, 2018-Ohio-3210, ¶ 29. The Operating Agreement in the matter before us contains analogous language: "Any controversy between the Members relating to this Agreement or the transactions contemplated hereby shall be submitted to arbitration * * *" (Application to Confirm, Exhibit 1, ¶16) supporting the conclusion that the dispute is subject to arbitration. We find that the Appellee's claim arose from that agreement and therefore was subject to the arbitration requirements. Further, we find that Appellants have agreed to the arbitration clause in the Operating Agreement and are therefore bound by its terms.
{¶41} The Domestic Relations Court finding that Appellee must pursue her claim in a different venue does highlight an issue that Appellants do not address in their First Assignment of Error and we find that a critical omission. Appellants contend that the issue of the distribution from Stepping Stone is subject to the continuing jurisdiction of the Domestic Relations Court under the judgment entry in the domestic relations case, but that case applies only to disputes between the parties therein, the Whitmans. Appellants do not contend that the continuing jurisdiction applies to Stepping Stone, a legal entity subject to the terms of its Operating Agreement and the Revised Code. And, Appellants do not contend that Stepping Stone was not a necessary party to any dispute regarding distribution to members. While the record is slim regarding the proceedings before the Arbitrator, the award issued by the Arbitrator and confirmed by the trial court does include Stepping Stone as a party who is now jointly and severally liable to Appellee for the judgment rendered. Appellee could not pursue a claim for a distribution against Stepping Stone through the Domestic Relations Court as Stepping Stone was not a party to that action and such a claim would generally not be within the Domestic Relations Court's jurisdiction.
{¶42} The Separation Agreement addressed the transfer of ownership of Stepping Stone, but it did not address any distribution of profits that might occur for the time period during which Appellee was a member. Appellants urge a conclusion that the Domestic Relations Court retained jurisdiction relying on a clause in the Separation Agreement, and that clause, contained in the section captioned "Business Ownership Interests" states: "The Court shall retain continuing jurisdiction to implement the provisions of this Separation Agreement as it pertains to such liabilities and to the transfer of ownership from Wife to Husband." (Separation Agreement, p. 8, attached as an exhibit to Request of Defendants to Vacate Arbitration Award: R.C. 2711.10 and Defendant's Response to Plaintiffs Petition to Confirm Arbitration Award, June 30, 2022). Nothing within that document describes an obligation of either party with regard to disbursements from Stepping Stone. The Separation Agreement is restricted to "rights and liabilities arising out of their marriage" Id. at p. 16 and did not address or in any way attempt to modify Stepping Stone's Operating Agreement with the exception of the terms of the transfer of Valerie's interest to Brenton. The dispute before the Arbitrator was not related to the transfer of an interest in Stepping Stone and based upon the record before us, was not related to any right or liability arising out of the parties' marriage. Instead, the members of the limited-liability company were engaged in a dispute over the calculation of a disbursement of profits and, under the controlling language of the Operating Agreement, that matter was subject to mandatory arbitration.
{¶43} Ohio's public policy encourages the use of arbitration to settle disputes. Eagle at ¶ 14, citing Schaefer v. Allstate Ins. Co., 63 Ohio St.3d 708, 711-712, 590 N.E.2d 1242 (1992). Accordingly, there exists a presumption in favor of arbitration when the disputed issue falls within the scope of the arbitration agreement. Eagle at ¶ 14, citing Williams v. Aetna Fin. Co., 83 Ohio St.3d 464, 471, 700 N.E.2d 859 (1998). Arbitration agreements are "valid, irrevocable, and enforceable, except upon grounds that exist at law or in equity for the revocation of any contract." R.C. 2711.01(A); Eagle at ¶ 16. We find that the disputed issue in this case falls within the scope of the arbitration agreement and the domestic relations action did not modify the terms of that agreement.
{¶44} The First Assignment of Error is denied.
II.
{¶45} In their Second Assignment of Error, Appellants claim that "the Trial Court erred as a matter of law and abused its discretion when it confirmed the arbitration award" because "Appellee was not an active member of Stepping Stone at the time she challenged her 2019 disbursement."
{¶46} Appellant again cites to the proceedings in the domestic relations matter, material that is not contained in the record and not subject to our review. The Separation Agreement and the Judgment Entry granting the divorce were attached to the pleadings and those documents do outline Valerie's obligation to transfer her interest in Stepping Stone to Brenton, but the record contains no evidence regarding when, or if, that transfer occurred. Further, the record contains no evidence regarding when Stepping Stone issued the 2019 disbursement. We also note that Appellants' argument that Appellee was not a member entitled to any disbursement from Stepping Stone is contradicted in the Domestic Relations Court's Judgment Entry attached to Appellee's Brief in Opposition to Request of Defendants to Vacate Arbitration Award, as Exhibit 4. The Domestic Relations Court found that Stepping Stone issued a K-1 to Appellee reflecting a disbursement of $6,000.00 for 2019. Id. at p. 4).
{¶47} We find that Stepping Stone's issuance of a 2019 K-1 to Appellee is an acknowledgment of her entitlement to a disbursement for that tax year. We also note that same Exhibit 4 contains the following finding by the Domestic Relations Court: "Brenton Whitman took an approximately $80,000.00 distribution. Valerie Whitman should have received the distribution she was entitled to as a 46.98631% shareholder of Stepping Stone Residential Facility, LLC in 2019." (Brief in Opposition to Request of Defendants to Vacate Arbitration Award, July 1, 2022, Exhibit 4, p. 4).
{¶48} As the issue of Appellee's entitlement to a distribution has been resolved by an admission of an Appellant and by the Domestic Relations Court, Appellants' argument has no merit.
{¶49} The Second Assignment of Error is denied.
III.
{¶50} In their Third Assignment of Error, Appellants claim the trial court "abused its discretion and committed reversible error when it suggested a right to arbitrate Appellee's 2019 disbursement claim in its judgment entry denying Appellee's motion to vacate" because "Appellee waived her right to arbitrate by actively participating in litigation which resulted in an agreement that the Domestic Relations Court would hold exclusive continuing jurisdiction over her asset disbursement claims."
{¶51} We have reviewed the record and find that Appellants did not argue that Appellee waived her right to arbitration before the trial court. Appellants stated several grounds of opposition, but did not mention waiver at any juncture and we will not infer that argument from the Appellants' pleading. "A party's failure to raise an issue at the trial court level acts as a waiver of the issue on appeal." State ex rel. Zollner v. Indus. Comm. (1993), 66 Ohio St.3d 276, 278, 611 N.E.2d 830 quoting State ex rel. Gibson v. Indus. Comm. (1988), 39 Ohio St.3d 319, 530 N.E.2d 916.
{¶52} The Third Assignment of Error is denied.
{¶53} The decision of the Tuscarawas County Court of Common Pleas is affirmed.
Baldwin, J. Delaney, P.J. and King, J. concur.