[Cite as Wetli v. Bugbee & Conkle, L.L.P., 2015-Ohio-4213.]
IN THE COURT OF APPEALS OF OHIO
SIXTH APPELLATE DISTRICT
LUCAS COUNTY
John F. Wetli Court of Appeals No. L-15-1009
Appellant Trial Court No. CI0201204952
v.
Bugbee and Conkle, LLP, et al. DECISION AND JUDGMENT
Appellees Decided: October 6, 2015
*****
James F. Nooney, for appellant.
Cary Rodman Cooper, for appellees.
*****
YARBROUGH, P.J.
I. Introduction
{¶ 1} Appellant, John Wetli, appeals the judgment of the Lucas County Court of
Common Pleas, denying his cross-motion for partial summary judgment and appellees’,
Bugbee and Conkle, LLP, Gregory Denny, Tybo Wilhelms, Robert Solt, III, and Robert
King, first and second motions for summary judgment, and staying this action pending
arbitration.
A. Facts and Procedural Background
{¶ 2} The underlying facts in this appeal are undisputed. In December 2007,
appellant, a practicing attorney and former partner of the Toledo law firm of Bugbee and
Conkle, LLP, entered into a “Third Amended and Restated Limited Liability Partnership
Agreement” (hereinafter referred to as the “partnership agreement”) with the individual
appellees herein, all of whom are also partners at Bugbee and Conkle, LLP. Under the
terms of the partnership agreement, each of the five partners owned a 20 percent interest
in the property of the law firm. Further, the partnership agreement provides that a partner
wishing to retire from the practice of law is entitled to a payment of $100,000 as “full
settlement and satisfaction of such [retiring] Partner’s interest in Partnership Property.”
The term “retirement” is defined as “the permanent cessation from the practice of law.”
{¶ 3} Subsequent to the execution of the aforementioned partnership agreement,
conflicts arose between appellant and the other partners. Eventually, the partners
provided appellant with an ultimatum to retire, withdraw from the firm, or face expulsion
from the firm. Consequently, appellant sent a letter to the partners on September 2, 2010,
indicating that he would be retiring from the firm effective December 2, 2010, and
requesting payment of $100,000 as satisfaction of his interest in partnership property
pursuant to the terms of the partnership agreement. In his letter, appellant expressed
concern over his “forced retirement” and the enforceability of those provisions within the
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partnership agreement that required him to permanently cease practicing law in order to
receive the $100,000 payment for his interest in partnership property. Specifically,
appellant contended that this restriction was unenforceable as an unlawful restriction on
his ability to earn a living and a violation of his clients’ rights to continued representation
by counsel of their choice.
{¶ 4} Appellant reiterated the foregoing concerns in a subsequent letter dated
September 17, 2010. Because the partners refused to pay appellant for his interest in
partnership property on account of his continued practice of law, appellant demanded
arbitration pursuant to paragraph 10 of the partnership agreement.
{¶ 5} Thereafter, the matter proceeded to arbitration for the resolution of a number
of issues, including, inter alia, whether appellant voluntarily retired or was forced to do
so and whether the restriction requiring appellant to cease practicing law in order to
receive his payout for his interest in partnership property was enforceable.
{¶ 6} In his decision, the arbitrator determined that appellant freely chose to retire
rather than withdraw from the firm or be expelled by the other partners. Regarding
appellant’s contention that he was forced to retire, the arbitrator concluded that “the
history of discussions and the exchanges between the parties does not support any
determination that he was compelled to do so.” Concerning the enforceability of the
partnership agreement provisions requiring appellant to cease practicing law in order to
receive the $100,000 payout for his interest in partnership property, the arbitrator stated:
3.
The language conditioning the $100,000.00 payment on the
permanent cessation from the practice of law improperly restricts a
lawyer’s ability to practice law after termination of the partner relationship.
It also improperly prohibits a client from choosing a lawyer of the client’s
choice. * * * As a result, the provision requiring the permanent cessation
from the practice of law cannot be enforced without violating rule 5.6 of the
Ohio Rules of Professional Conduct. The provision is invalid and
unenforceable.
The arbitrator went on to examine the severability of the unenforceable language from
the remaining retirement provisions within the partnership agreement.1 He ultimately
found that the retirement provisions including the provision entitling retiring partners to a
$100,000 payout for their interest in partnership property, were unenforceable in their
entirety, reasoning that “[t]here is no way to excise the offending language while still
retaining the retirement option when the retirement option is expressly conditioned on the
permanent cessation from the practice of law.”
{¶ 7} Thereafter, on December 20, 2011, appellant filed an “application for order
confirming arbitration award and entering judgment thereon.” On January 24, 2012, the
trial court confirmed the arbitrator’s decision. Following the confirmation of the
arbitrator’s award, appellant sent a letter to the remaining partners, demanding payment
for his interest in the partnership pursuant to R.C. 1776.54. Having received no such
1
The partnership agreement does not contain a severability clause.
4.
payment over the five months that followed, appellant filed his complaint in this case,
seeking judicial determination of the buyout price of his interest in the partnership as of
December 2, 2010, and an award against appellees in that amount.
{¶ 8} Two months after the complaint was filed, appellees filed an answer, in
which they asserted that appellant’s statutory claims for the payment of his partnership
interest were barred by res judicata and collateral estoppel. Alternatively, appellees
alleged that appellant’s claims were subject to mandatory, binding arbitration under
Section 10 of the partnership agreement. Thus, in the event the trial court found that the
claims were not barred by res judicata and collateral estoppel, appellees insisted that the
matter should be referred to arbitration.
{¶ 9} Thereafter, on November 13, 2012, appellees filed their motion for summary
judgment, arguing that appellant’s statutory claims in the present case could have and
should have been raised in the prior action involving the enforceability of the retirement
clauses within the partnership agreement. Thus, appellees reasoned that appellant’s
action was barred by the doctrine of res judicata.
{¶ 10} In response to appellees’ motion for summary judgment, appellant, on
December 11, 2012, filed his memorandum in opposition along with his own motion for
partial summary judgment. In his motion for partial summary judgment, appellant argued
that he was entitled to a valuation of his 20 percent ownership interest in Bugbee and
Conkle, LLP under R.C. 1776.54, and a judgment ordering appellees to pay him the
estimated amount of the buyout price of his interest in the firm, together with interest,
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attorney’s fees, and the fees and expenses of appraisers and other experts. Appellant also
sought an order requiring appellees to provide him with a statement of partnership assets
and liabilities as of the date of his retirement, along with a current balance sheet and
income statement. In his memorandum in support of his motion for partial summary
judgment and in opposition to appellees’ motion for summary judgment, appellant argued
that his statutory claims were not barred by res judicata because they were not, and could
not have been, raised in the prior arbitration.
{¶ 11} Subsequent to the filing of appellant’s motion for partial summary
judgment, appellees filed another motion for summary judgment, this time arguing that
they were entitled to judgment because appellant’s claims were not timely filed within
the applicable one-year statute of limitations under R.C. 1776.54(I)(1). Appellant
responded by asserting that his statutory claims were timely filed within two months of
the judicial confirmation of the arbitrator’s decision striking the retirement provisions
from the partnership agreement. According to appellant, the statutory claims could not
have been asserted before the retirement provisions were deemed unenforceable since the
Uniform Partnership Act only serves as a set of default rules that are triggered when the
partnership agreement is silent on a particular issue.
{¶ 12} On December 22, 2014, the trial court issued its decision on appellant’s
motion for partial summary judgment and appellees’ first and second motions for
summary judgment. In its decision, the court found that the doctrine of res judicata was
inapplicable. The court reasoned that appellant could not have brought his statutory
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claim in the prior litigation because his contractual claim was his sole remedy. The court
noted that the Uniform Partnership Act only governs disputes where the partnership
agreement does not otherwise control. Because the partnership agreement contained a
provision governing appellant’s buyout, the trial court found that appellant could not
assert his statutory claim until that provision was deemed unenforceable. Thus, the court
denied appellees’ first motion for summary judgment.
{¶ 13} In addition to the foregoing, the trial court examined whether appellant’s
statutory claims, along with appellees’ defenses to those claims, were subject to the
arbitration provisions contained in the partnership agreement. The court found that the
claims and defenses were subject to arbitration, stating:
[Appellant’s] statutory claim is subject to the arbitration clause
contained in the Agreement because it is a controversy related to his rights
under the partnership relationship and cannot be maintained without
reference to the Agreement. * * * In order to determine the merits of
[appellant’s] claim and calculate any amount owed to him, the Court would
have to determine the value of the Partnership assets, which would include
the Partnership Property. See R.C. 1776.54(B)(1)(a). The record evidence
shows that Paragraph 1 of the Agreement * * * defines Partnership
Property.
***
7.
Accordingly, to calculate the buyout price of any amount owed to
[appellant] following his retirement, the Court would necessarily need to
look to the Agreement to define the Partnership’s assets and determine their
value at the time of [appellant’s] disassociation.
{¶ 14} Having found that the remaining issues were subject to arbitration under
the partnership agreement, the trial court denied appellant’s motion for partial summary
judgment and appellees’ second motion for summary judgment, and ordered the case
stayed pending completion of arbitration proceedings. Thereafter, appellant filed his
timely notice of appeal.
B. Assignment of Error
{¶ 15} On appeal, appellant assigns the following error for our review:
THE TRIAL COURT ERRED IN REFERRING APPELLANT’S
(WETLI’S) STATUTORY RIGHT TO A BUYOUT OF HIS INTEREST
IN PARTNERSHIP PROPERTY, AND APPELLEES’ (THE FIRM’S)
TIME LIMITATION DEFENSE THERETO TO ARBITRATION, AND
IN FAILING TO ENTER PARTIAL SUMMARY JUDGMENT
ESTABLISHING WETLI’S STATUTORY RIGHT TO A BUYOUT OF
HIS INTEREST IN PARTNERSHIP PROPERTY AND DIRECTING
THE FIRM’S PAYMENT TO WETLI OF THE FIRM’S ESTIMATE OF
THE BUYOUT PRICE PLUS INTEREST.
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II. Analysis
{¶ 16} In appellant’s sole assignment of error, he argues that the trial court erred
in denying his motion for partial summary judgment and staying the case pending
arbitration. Appellant advances several arguments in support of his contention that the
trial court erroneously denied his motion for partial summary judgment. However, we
note that the trial court’s reluctance to examine the merits of appellant’s claims
concerning the buyout of his partnership interest stemmed from its finding that such
claims are subject to arbitration under paragraph 10 of the partnership agreement. The
United States Supreme Court has previously held that, “in deciding whether the parties
have agreed to submit a particular grievance to arbitration, a court is not to rule on the
potential merits of the underlying claims.” AT&T Technologies, Inc. v. Communications
Workers of Am., 475 U.S. 643, 650, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986). Thus, we
must determine whether appellant’s claims are subject to arbitration prior to examining
the merits of those claims.
{¶ 17} We review the question of whether, as a matter of law, a particular claim is
subject to arbitration under a de novo standard of review. Hussein v. Hafner &
Shugarman Ents., 176 Ohio App.3d 127, 2008-Ohio-1791, 890 N.E.2d 356, ¶ 23; see
also Rippe & Kingston Co., PSC v. Kruse, 1st Dist. Hamilton No. C-130587, 2014-Ohio-
2428, ¶ 20 (“Whether a controversy is arbitrable under a contract requires the court to
invoke principles of contract interpretation, and thus presents a question of law, which we
review de novo.”). Because arbitration is a matter of contract, a party may only be forced
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to arbitrate a dispute that it has agreed to submit to arbitration. Taylor v. Ernst & Young,
LLP, 130 Ohio St.3d 411, 2011-Ohio-5262, 958 N.E.2d 1203, ¶ 20. Nevertheless, a
presumption in favor of arbitration applies to claims that are within the scope of an
arbitration provision. Williams v. Aetna Fin. Co., 83 Ohio St.3d 464, 471, 700 N.E.2d
859 (1998).
{¶ 18} In the case sub judice, the partnership agreement contains the following
arbitration provision:
10. Arbitration.
If any controversy or difference shall arise between the parties
hereto with respect to the interpretation or effect of this agreement, or the
rights, obligations or liabilities of the parties hereunder, or otherwise, then
each and every such controversy or difference shall be submitted to and
settled by arbitration in accordance with the Arbitration Rules of the Toledo
Bar Association’s Alternate Dispute Resolution Program then in effect, or
if not then in effect, pursuant to Chapter 2711 (Arbitration) of the Ohio
Revised Code.
{¶ 19} Here, appellant argues that the parties to the partnership agreement could
not have intended to arbitrate his statutory claims under R.C. 1776.54, since such claims
were superseded by the retirement provisions in the agreement that have since been
deemed unenforceable. Thus, appellant concludes that he “cannot be required to arbitrate
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disputes which neither he nor the Firm specifically agreed to, anticipated or intended to
submit to arbitration at the time they entered into the [partnership agreement].”
{¶ 20} “When courts interpret the meaning of disputed contractual provisions,
they must presume the intent of the parties is reflected in the language drafted into the
agreement.” Brinkman v. State Farm Mut. Auto. Ins. Co., 6th Dist. Lucas No. L-05-1224,
2006-Ohio-727, ¶ 12, citing Kelly v. Medical Life Ins. Co., 31 Ohio St.3d 130, 509
N.E.2d 411 (1987), paragraph one of the syllabus. “A contract, such as an arbitration
agreement, that is clear and unambiguous, requires no real interpretation or construction
and will be given the effect called for by the plain language of the contract.” Locum
Med. Group, L.L.C. v. VJC Med., L.L.C., 8th Dist. Cuyahoga No. 102512, 2015-Ohio-
3037, ¶ 11, citing Aultman Hosp. Assn. v. Community Mut. Ins. Co., 46 Ohio St.3d 51,
55, 544 N.E.2d 920 (1989).
{¶ 21} In examining whether an arbitration provision encompasses statutory
claims, we must first consider whether the provision itself or the statute at issue contains
limitations as to arbitrability. Academy of Medicine of Cincinnati v. Aetna Health, Inc.,
108 Ohio St.3d 185, 2006-Ohio-657, 842 N.E.2d 488, ¶ 17. If the parties expressly
removed statutory claims from the scope of the arbitration provision, or the General
Assembly “evinced an intention to preclude a waiver of judicial remedies for the
statutory rights” created by the Uniform Partnership Act, appellant’s claims would fall
outside the scope of the arbitration agreement. Id., citing Mitsubishi Motors Corp. v.
Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628, 105 S.Ct. 3346, 87 L.Ed.2d 444
11.
(1985). However, the parties in this case did not remove statutory claims from the scope
of the agreement, and the Uniform Partnership Act does not preclude a waiver of judicial
remedies for the rights it creates. Thus, we must look to the language of the arbitration
provision to determine whether it limits itself to certain aspects of the partnership
agreement.
“To determine whether the claims asserted in the complaint fall
within the scope of an arbitration clause, the Court must ‘classify the
particular clause as either broad or narrow.’ Louis Dreyfus Negoce S.A. v.
Blystad Shipping & Trading Inc., 252 F.3d 218, 224 (2d Cir.2001). An
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.’ Collins & Aikman Prods. Co. v. Bldg. Sys. Inc., 58 F.3d 16, 20 (2d
Cir.1995).” Academy of Medicine of Cincinnati at ¶ 18, quoting ADR/JB,
Corp. v. MCY III, Inc. (E.D.N.Y.2004), 299 F.Supp.2d 110, 114.
{¶ 22} Upon examination, we find that the arbitration clause in this case is broad
in its scope. Indeed, the clause applies to “each and every” controversy arising between
the parties, including those concerning the rights, obligations or liabilities of the parties
on matters arising out of the partnership agreement, or otherwise. This provision is clear
and unambiguous. Under its plain language, all disputes between the parties that arise
under the partnership agreement are subject to arbitration. Further, we agree with the
trial court’s conclusion that the litigation of appellant’s statutory claims under the
12.
Uniform Partnership Act will necessarily implicate provisions in the partnership
agreement. Under R.C. 1776.03(A), the partnership agreement “governs relations among
the partners and between the partners and the partnership. To the extent the partnership
agreement does not otherwise provide, this chapter governs relations among the partners
and between the partners and the partnership.” (Emphasis added.) Here, appellant seeks
the buyout of his interest in the partnership under R.C. 1776.54. In order to calculate the
amount owed to appellant, the value of the partnership assets must first be determined.
R.C. 1776.54(B)(1)(a). In turn, whether a particular asset is a partnership asset is set
forth in the partnership agreement, which defines partnership property. Thus, in order to
identify and value appellant’s interest in partnership property, the property itself must
first be identified, which will require the application of the definition of partnership
property found within the partnership agreement.
{¶ 23} In light of the breadth of the arbitration provision at issue in this case, we
find that the trial court did not err when it concluded that the claims raised in this case are
subject to arbitration. Having concluded that appellant’s claims are subject to arbitration
under the partnership agreement, we do not reach appellant’s remaining arguments
concerning the merits of his claims. See AT&T Technologies, Inc., supra, 475 U.S. at
650, 106 S.Ct. 1415, 89 L.Ed.2d 648 (“[I]n deciding whether the parties have agreed to
submit a particular grievance to arbitration, a court is not to rule on the potential merits of
the underlying claims.”).
{¶ 24} Accordingly, appellant’s sole assignment of error is not well-taken.
13.
III. Conclusion
{¶ 25} Based on the foregoing, the judgment of the Lucas County Court of
Common Pleas is affirmed. Costs are hereby assessed to appellant in accordance with
App.R. 24.
Judgment affirmed.
A certified copy of this entry shall constitute the mandate pursuant to App.R. 27.
See also 6th Dist.Loc.App.R. 4.
Mark L. Pietrykowski, J. _______________________________
JUDGE
Thomas J. Osowik, J.
_______________________________
Stephen A. Yarbrough, P.J. JUDGE
CONCUR.
_______________________________
JUDGE
This decision is subject to further editing by the Supreme Court of
Ohio’s Reporter of Decisions. Parties interested in viewing the final reported
version are advised to visit the Ohio Supreme Court’s web site at:
http://www.sconet.state.oh.us/rod/newpdf/?source=6.
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