Opinion
110149
09-23-2021
CAROLYN F. NEMEC, M.D., Plaintiff-Appellant, v. THOMAS MORLEDGE, M.D., ET AL., Defendants-Appellees.
Caryn Groedel & Associates Co., L.P.A., and Caryn M. Groedel, for appellant. Brennan, Manna & Diamond, L.L.C., Jeffrey C. Miller, and Russell T. Rendall, for appellees.
Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-20-931335
JUDGMENT: AFFIRMED
Caryn Groedel & Associates Co., L.P.A., and Caryn M. Groedel, for appellant.
Brennan, Manna & Diamond, L.L.C., Jeffrey C. Miller, and Russell T. Rendall, for appellees.
JOURNAL ENTRY AND OPINION
MICHELLE J. SHEEHAN, J.
{¶ 1} Plaintiff-appellant Carolyn F. Nemec, M.D., entered into an employment contract with defendants-appellees Thomas Morledge, M.D. and RIM Associates, L.L.C. a.k.a Revati Wellness (collectively "appellees") to provide "concierge" medical care. Appellees terminated Nemec's contract a year and a half later. She then filed a complaint in the Cuyahoga County Court of Common Pleas against appellees alleging breach of contract and other related claims. Appellees moved the trial court to compel arbitration based on the arbitration agreement contained in the employment contract. The trial court granted the motion. On appeal, Nemec argues the trial court abused its discretion in failing to hold a hearing and in granting the motion. Upon a review of applicable law and the record, we find no merit to her claims and affirm the judgment of the trial court.
Substantive Facts and Procedural Background
{¶ 2} On March 13, 2018, Nemec entered into an employment contract with Morledge and RIM Associates, L.L.C., operating under the trade name Revati Wellness. Under the contract, Nemec would provide "concierge" medical service. The "concierge" medical service allows patients to pay a monthly or annual fee in exchange for immediate access to a primary care doctor.
{¶ 3} Nemec began her employment on April 1, 2018. On November 7, 2019, appellees terminated her contract. During the time of her employment, disputes arose as to the calculations of her compensation under the contract. She alleged that, under the contract, she was entitled to one-half of the concierge membership fee generated by each new patient brought into the practice, all payments made to her by the patients' insurance company for consultation, treatment, and diagnostic services, and payment of her malpractice insurance premiums.
{¶ 4} On March 23, 2020, Nemec filed a complaint against appellees, alleging breach of contract, bad faith, "failure to tender pay by regular payday" pursuant to R.C. 4113.15, and defamation. Attached to the complaint was the employment contract executed by Nemec and Thomas Morledge, M.D., as member of RIM Associates, L.L.C.
{¶ 5} On May 19, 2020, a pretrial was held on the matter. The trial court set forth a briefing schedule, and the parties agreed to the discovery cutoff date of September 18, 2020. Nemec amended her complaint on July 15, 2020, adding claims for a violation of Article II of the Ohio Constitution and failure to pay benefits under Ohio law.
{¶ 6} On July 17, 2020, appellees filed a motion to compel arbitration based on the arbitration provision contained in the employment contract. Paragraph 18, the last paragraph of the contract, contains the following arbitration provision:
18. Arbitration. Any controversy or claim arising out of or relating to this Agreement, or the breach therefore, shall be settled by expedited arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association with such arbitration to be conducted on an expedited basis in the Greater Cleveland, Ohio area. Judgment upon the award rendered by the Arbitrator(s) may be entered in the Common Pleas Court of Cuyahoga County, Ohio. The costs of the arbitration, but not each party's separate expenses, shall be paid equally by the Employer and the Employee.
{¶ 7} On August 4, 2020, the trial court issued a journal entry granting the unopposed motion. On August 11, 2020, Nemec asked the trial court to reconsider and set aside its judgment, asserting her brief in opposition to appellees' motion was not due until August 13, 2020, pursuant to the Supreme Court of Ohio's order tolling the deadlines due to the Covid-19 pandemic. The trial court set aside the judgment and allowed Nemec to file her opposition to the motion to compel arbitration.
{¶ 8} On August 21, 2020, Nemec filed a brief opposing defendants' motion to compel arbitration. She attached a single exhibit, the subject employment contract, to support her opposition. She argued that the employment contract contains conflicting provisions and the arbitration provision fails to state the arbitration would be binding. She also argued the arbitration provision is procedurally unconscionable, alleging appellees presented the employment contract to her on a "take it or leave it" basis and she was required to sign the contract "as is." In addition, Nemec argued that the arbitration agreement is too bare-boned to be enforceable and claimed the employer should pay for the arbitrator's fee. Notably, Nemec submitted no evidence such as affidavits or deposition testimony to support her opposition other than the employment contract, and she did not request an evidentiary hearing.
{¶ 9} On September 1, 2020, appellees filed a reply to Nemec's opposition. They asserted the lack of the word "binding" in the arbitration provision does not affect the binding nature of the arbitration agreement; a disagreement regarding the fee-splitting arrangement would not affect the enforceability of the arbitration provision; Nemec's claim of procedural unconscionability was unsupported and undermined by her own reliance on the employment contract; and the arbitration provision provided sufficient information regarding arbitration.
{¶ 10} While defendants' motion to compel arbitration was pending, on October 14, 2020, Nemec filed a motion to compel discovery unrelated to the issue of arbitration. In response, defendants asserted that the case was stayed pending the trial court's decision on their motion to compel arbitration and they would fully respond to the motion to compel discovery once the trial court ruled on their motion to compel arbitration.
{¶ 11} On November 19, 2020, the trial court granted appellees' motion to compel arbitration. Nemec now appeals, raising the following assignment of error for our review:
The trial court erred in granting Defendants-Appellees' Motion to Compel Arbitration.
Standard of Review
{¶ 12} Ohio and federal courts encourage arbitration to settle disputes between parties. ABM Farms, Inc. v. Woods, 81 Ohio St.3d 498, 500, 692 N.E.2d 574 (1998). Both the Ohio General Assembly and the 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, ¶ 15. Arbitration is favored because it provides the parties "'with a relatively expeditious and economical means of resolving a dispute.'" Id., quoting Schaefer v. Allstate Ins. Co., 63 Ohio St.3d 708, 712, 590 N.E.2d 1242 (1992).
{¶ 13} We review the trial court's decision granting a motion to compel arbitration under an abuse of discretion standard. U.S. Bank, NA. v. Wilkens, 8th Dist. Cuyahoga No. 93088, 2010-Ohio-262, ¶ 9. An abuse of discretion "connotes more than an error of law or judgment; it implies that the court's attitude is unreasonable, arbitrary or unconscionable." Blakemore v. Blakemore, 5 Ohio St.3d 217, 219, 450 N.E.2d 1140 (1983).
Analysis
{¶14} In her brief opposing appellees' motion to compel arbitration, Nemec claimed the arbitration agreement is unenforceable for the following reasons: sections 17 and 18 of the arbitration agreement conflict with each other; the arbitration agreement in this case does not indicate that arbitration would be binding; the arbitration agreement is procedurally unconscionable because the employment contract containing the arbitration agreement was presented to her in a "take it or leave it" manner; and the arbitration agreement is too "bare-boned" to be enforceable. On appeal, she adds the claim that the trial court should have held a hearing on the validity of the arbitration agreement or submitted the issue for a determination by the jury. We consider that issue first.
a. Hearing
{¶ 15} R.C. 2711.03 ("Enforcing arbitration agreement") states:
(A) The party aggrieved by the alleged failure of another to perform under a written agreement for arbitration may petition any court of common pleas having jurisdiction of the party so failing to perform for an order directing that the arbitration proceed in the manner provided for in the written agreement. * * * The court shall hear the parties, and, upon being satisfied that the making of the agreement for arbitration or the failure to comply with the agreement is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the agreement.
(B) If the making of the arbitration agreement or the failure to perform it is in issue in a petition filed under division (A) of this section, the court shall proceed summarily to the trial of that issue.
{¶ 16} We first note that, while Nemec argues on appeal that the trial court should have held a hearing on the issue or submitted the issue to the jury, she did not request a hearing or a jury trial when opposing appellees' motion to compel arbitration.
{¶ 17} "'As a general rule, the doctrine of waiver is applicable to all personal rights and privileges, whether secured by contract, conferred by statute, or guaranteed by the Constitution * * *.'" Sanitary Commercial Servs., Inc. v. Shank, 57 Ohio St.3d 178, 180-181, 566 N.E.2d 1215 (1991), quoting State ex rel. Hess v. Akron, 132 Ohio St. 305, 307, 7 N.E.2d 411 (1937). As such, "a person may waive rights and privileges secured by statute, including the statutory right to a hearing conferred by R.C. 2711.03." Church v. Fleishour Homes, Inc., 172 Ohio App.3d 205, 2007-Ohio-1806, 874 N.E.2d 795, ¶ 30 (5th Dist), citing Liese v. Kent State Univ., 11th Dist. Portage No. 2003-P-0033, 2004-Ohio-5322, ¶ 44. "While a party's request for an oral hearing shall be granted pursuant to R.C. 2711.03, an oral hearing is not mandatory absent a request." Id. at ¶ 29, citing Cross v. Carnes, 132 Ohio App.3d 157, 166, 724 N.E.2d 828 (11th Dist.1998), and Liese at ¶ 43.
{¶ 18}} Moreover, as this court noted in Marks v. Morgan Stanley Dean Witter Commer. Fin. Servs., 8th Dist. Cuyahoga No. 88948, 2008-Ohio-1820, the "hearing" required in R.C. 2711.03 is interpreted as any confrontation, oral or otherwise, "sufficient to allow the individual to present the case in a meaningful manner" and such a hearing may take the form of a court hearing or a paper hearing without oral exchange between the parties. Id. at ¶ 29, citing Liese at fn.6.
{¶19} Here, both parties allowed themselves to be heard on the arbitration issue without requesting a hearing. Consequently, the trial court did not abuse its discretion in granting the motion to compel without an oral hearing. See Marks at 33, citing Church at ¶ 31; Cross at 166 (an oral hearing is not mandatory absent a request); and Chrysler Fin. Servs., Ams., L.L.C. v. Henderson, 4th Dist. Athens No. 11CA4, 2011-Ohio-6813, ¶ 20 (where parties did not specifically request an oral or evidentiary hearing on a motion to compel arbitration, the trial court acted properly in "hearing" the matter upon a non-oral hearing).
{¶ 20} Finally, we note that when determining whether a trial is necessary under R.C. 2711.03, "the relevant inquiry is whether a party has presented sufficient evidence challenging the validity or enforceability of the arbitration provision to require the trial court to proceed to trial before refusing to enforce the arbitration clause." Garcia v. Wayne Homes, 2d Dist. Clark No. 2001 CA 53, 2002-Ohio-1884, ¶ 29. While Nemec opposed the motion to compel arbitration claiming procedural unconscionability on the ground that the employment contract was presented to her on a "take-it-or-leave-it" basis, she had the opportunity but never submitted any evidence to demonstrate her claim, relying instead on the employment contract alone to support her allegation. As such, Nemec did not submit sufficient evidence for the claim of procedural unconscionability to require the trial court to hold an oral or evidentiary hearing.
b. Whether the Arbitration Agreement Must Refer to Binding Arbitration
{¶ 21} Nemec claims that the arbitration agreement is not enforceable because it does not state that the arbitration agreement is binding.
{¶ 22} "Arbitration agreements are 'valid, irrevocable, and enforceable, except upon grounds that exist at law or in equity for the revocation of any contract.'" Taylor Bldg. Corp. of Am. v. Benfield, 117 Ohio St.3d 352, 2008-Ohio-938, 884 N.E.2d 12, ¶ 33, quoting R.C. 2711.01(A). Citing R.C. 2711.01, this court noted that there is no requirement for an arbitration agreement to expressly refer to "binding" arbitration in order for the agreement to be enforceable; rather, the statute provides that if the parties enter into an agreement, the agreement, subject to a few exceptions, shall be valid, irrevocable, and enforceable. Sebold v. Latina Design Build Group, L.L.C., 2021-Ohio-124, 166 N.E.3d 688, ¶ 19 (8th Dist). There is no requirement that the arbitration agreement explicitly state that the arbitration is binding, as "[t]he very definition of arbitration requires a 'final and binding award.'" Id., quoting DeVito v. Autos Direct Online, Inc., 2015-Ohio-3336, 37 N.E.3d 194, ¶ 41 (8th Dist).
R.C. 2711.01 states:
c. Purported Conflict or Ambiguity
{¶ 23} Nemec also claims the employment contract is ambiguous because the arbitration agreement contained in section 18 conflicts with section 17 of the employment contract, which states:
Governing Law. This Employment Contract shall be governed by and construed in accordance with the laws of the State of Ohio. The parties hereby confer jurisdiction to enforce this Agreement upon the Common Pleas Court of Cuyahoga County, Ohio.
{¶ 24} Section 18 states:
18. Arbitration. Any controversy or claim arising out of or relating to this Agreement, or the breach therefore, shall be settled by expedited arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association with such arbitration to be conducted on an expedited basis in the Greater Cleveland, Ohio area. Judgment upon the award rendered by the Arbitrator(s) may be entered in the Common Pleas Court of Cuyahoga County, Ohio. The costs of the arbitration, but not each party's separate expenses, shall be paid equally by the Employer and the Employee.
{¶ 25} Without any elaboration or supporting authority, Nemec claims the conflict and ambiguity in these two sections must be construed against the drafter, appellees in this case. Our review indicates these provisions are drafted in accordance with the statutes governing arbitration.
{¶ 26} R.C. 2711.16 governs the jurisdiction of common pleas courts in arbitration matters. It states:
Jurisdiction of judicial proceedings provided for by sections 2711.01 to 2711.14, inclusive, of the Revised Code, is generally in the courts of common pleas, and actions and proceedings brought under such sections shall be brought either in the court of common pleas of the county designated by the parties to the arbitration agreement as provided in section 2711.08 of the Revised Code, which designation is an irrevocable consent to the parties thereto to such jurisdiction [.]
{¶ 27} R.C. 2711.08 states that "[t]he parties to the arbitration agreement may designate therein the county in which the arbitration shall be held and the award made." In addition, RC. 2711.09 states:
At any time within one year after an award in an arbitration proceeding is made, any party to the arbitration may apply to the court of common pleas for an order confirming the award. Thereupon the court shall grant such an order and enter judgment thereon, unless the award is vacated, modified, or corrected as prescribed in sections 2711.10 and 2711.11 of the Revised Code. * * *.
{¶ 28} Finally, "[u]pon the granting of an order confirming, modifying, correcting, or vacating an award made in an arbitration proceeding, the court must enter judgment in conformity therewith." RC. 2711.12.
{¶ 29} Here, section 18 requires arbitration for "[a]ny controversy or claim arising out of or relating to this Agreement" and it designates the greater Cleveland area for arbitration to be held and judgment upon the arbitrator's award to be rendered in the Cuyahoga County Common Pleas Court. Consistent with section 18, section 17 states "[t]he parties hereby confer jurisdiction to enforce this Agreement upon the Common Pleas Court of Cuyahoga County." As such, we do not perceive any conflict or ambiguity claimed by Nemec.
d. Purported Procedural Unconscionability
{¶ 30} Nemec argues the arbitration agreement is procedurally unconscionable because it was presented to her on a "take it or leave it" basis. She alleges that if she did not sign the employment contract "as is," there would be no employment.
{¶ 31} Adhesion contracts are "standard form printed contracts prepared by one party and submitted to the other on a 'take it or leave it' basis where the only alternative to complete adherence is outright rejection." Sutton v. Laura Salkin Bridal & Fashions, 8th Dist. Cuyahoga No. 72107, 1998 Ohio App. LEXIS 382, 9 (Feb. 5, 1998). An adhesion contract is "a standardized form contract prepared by one party, and offered to the weaker party, usually a consumer, who has no realistic choice as to the contract terms." Taylor Bldg., 117 Ohio St.3d 352, 2008-Ohio-938, 884 N.E.2d 12, at ¶ 49. In the consumer context, the Ohio Supreme Court cautioned that when "there are strong indications that the contract at issue is an adhesion contract, and the arbitration clause itself appears to be adhesive in nature, * * * there arises considerable doubt that any true agreement ever existed to submit disputes to arbitration." Williams v. Aetna Fin. Co., 83 Ohio St.3d 464, 473, 700 N.E.2d 859 (1998).
{¶ 32} The instant dispute involves an employment contract rather than a consumer transaction. While alleging the employment contract was presented to her on a "take it or leave it" basis, Nemec does not assert the contract is an adhesion contract. More importantly, she did not submit any evidence, testimonial or otherwise, to show that her employer presented the contract to her on a "take it or leave it" basis and her only option was to accept or reject the entire contract.
{¶ 33} Rather, the only exhibit Nemec submitted to support her opposition is a copy of the employment contract and our review of the document shows that she initialed every page of the contract and her signature appears at the end of the contract, immediately below section 18, the section containing the arbitration provision. Nemec, who is a physician and presumably not an unsophisticated party, did not allege she was not given time to review the employment contract or not allowed to negotiate any aspect of the contract. "'[A] contracting party is presumed to know the reasonable import of the contents of a signed agreement, including the existence and scope of an arbitration clause.'" Blue Technologies Smart Solutions, L.L.C. v. Ohio Collaborative Learning Solutions, Inc., 8th Dist. Cuyahoga No. 108535, 2020-Ohio-806, ¶ 16, quoting Garcia, 2d Dist. Clark No. 2001 CA 53, 2002-Ohio-1884, at ¶ 64. There was no evidence in the record to support Nemec's claim that that the arbitration agreement is procedurally unconscionable.
e. Additional Claims
{¶ 34} Nemec also argues the arbitration agreement is too "bare-boned" to be enforceable. She cites two federal cases to support her claim that the arbitration agreement here lacks sufficient detail regarding the arbitration forum and procedures and therefore is unenforceable. Contrary to her claim, section 18 designates the American Arbitration Association ("AAA") to be the arbitration forum and states the disputes are to be settled in accordance with the Commercial Arbitration Rules of the American Arbitration Association.
{¶ 35} Regarding the arbitrator's fee, while section 18 states that "[t]he costs of the arbitration, but not each party's separate expenses, shall be paid equally by the Employer and the Employee," Nemec claims on appeal that the trial court should have ordered the employer to pay the entire cost of arbitration except the filing fee. She alleges that the AAA's national rules for the resolution of employment disputes - which she failed to make part of the record - provides that unless the employee chooses to pay a portion of the arbitrator's compensation, such compensation shall be paid in total by the employer. The issue was never before the trial court, however. In her opposition, she only asked the trial court to find the arbitration agreement unenforceable and to deny the motion to compel arbitration. She sought no relief regarding the arbitrator's fee.
{¶ 36} Finally, Nemec claims the trial court abused its discretion in granting the motion to compel arbitration without providing an analysis or explaining the reasons for its ruling. While it is best practice for the trial court to give an analysis for its ruling, the trial court's failure to give an analysis in this case is not in itself an abuse of discretion. "Abuse of discretion' implies a decision that is arbitrary or capricious, one that is without a reasonable basis or clearly wrong." Internatl Culture & Trade Complex v. Drenik, 10th Dist. Franklin Nos. 13AP-596 and 13AP-597, 2014-Ohio-713, ¶ 7, citing Pembaur v. Leis, 1 Ohio St.3d 89, 437 N.E.2d 1199 (1982). The record in this case reflects a reasonable basis for the trial court to grant the motion to compel arbitration pursuant to the language of the arbitration agreement in section 18 of the employment contract; Nemec opposed arbitration but submitted no supporting evidence beyond the employment contract. Because the record supports the trial court's decision, we cannot say the trial court's granting the motion to compel arbitration without providing an analysis in this case was an abuse of discretion.
{¶ 37} The assignment of error is without merit. The trial court's judgment granting the motion to compel arbitration is affirmed.
{¶ 38} Judgment affirmed.
It is ordered that appellees recover of appellant costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this court directing the common pleas 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.
ANITA LASTER MAYS, P.J., and LARRY A. JONES, SR., J., CONCUR
A provision in any written contract * * * to settle by arbitration a controversy that subsequently arises out of the contract, or out of the refusal to perform the whole or any part of the contract, or any agreement in writing between two or more persons to submit to arbitration any controversy existing between them at the time of the agreement to submit, or arising after the agreement to submit, from a relationship then existing between them or that they simultaneously create, shall be valid, irrevocable, and enforceable, except upon grounds that exist at law or in equity for the revocation of any contract.