Tuesday, June 6, 2017

Potential conflict in arbitration case

The Ninth District has just released a decision in Kelsey v. Carrington Homes, Inc., in which it held that a trial court must conduct an evidentiary hearing before compelling the parties to arbitrate a dispute.

This holding appears to conflict with that of at least one other appellate district, and may be a candidate for review by the Supreme Court as a certified conflict.

The potential conflict is over the interpretation of R.C. 2711.03. Division (A) of that statute provides that when a motion to compel arbitration is filed, "The court shall hear the parties" with respect to the motion. Division (B) provides that if the requirement of arbitration is in dispute, then "the court shall proceed summarily to the trial of that issue." This is contrasted with R.C. 2711.02, which relates to staying proceedings in order to permit the parties to arbitrate, rather than compelling the parties to arbitrate. In the 2003 case of Maestle v. Best Buy Co., the Supreme Court held that an evidentiary hearing was not required when the movant seeks relief under R.C. 2711.02, but it has never specifically interpreted what is required when the movant seeks relief under R.C. 2711.03.

The Kelsey court concluded that the language in R.C. 2711.03 requires an evidentiary hearing, even though the movant below did not request one.

This stands in conflict with other cases from other districts. In Chrysler Financial Services v. Henderson, for example, the Fourth District held that R.C. 2711.03 does not require an evidentiary hearing, and that the parties were "heard" when the court considered the fully briefed motion. The Eighth District reached a similar conclusion in cases such as Panzica Construction Co. v. Zaremba, Inc. and Mattox v. Dillard's Inc.

This case strikes me as a good candidate for a motion to certify a conflict under Ohio Appellate Rule 25. The essential requirement for certification under Rule 25 is that two districts have reached opposite conclusions on pure questions of law--i.e., that the differing outcomes are not attributable to differing facts. 

The appellee, Carrington Homes, has ten days from the date of the Ninth District's opinion to file a motion to certify, meaning its motion is due late next week.

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