Discover Bank v. Bennington

[Cite as Discover Bank v. Bennington, 2018-Ohio-3246.]

IN THE COURT OF APPEALS

ELEVENTH APPELLATE DISTRICT

GEAUGA COUNTY, OHIO

DISCOVER BANK, : OPINION

Plaintiff-Appellee, :
CASE NO. 2017-G-0138
- vs - :

JOY L. BENNINGTON, :

Defendant-Appellant. :

Civil Appeal from the Chardon Municipal Court, Case No. 2017 CVF 00108.

Judgment: Reversed and remanded.

Amanda Yurechko, Weltman, Weinberg & Reis Co., L.P.A., 323 West Lakeside
Avenue, Suite 200, Cleveland, OH 44113, and David Mullen, Weltman, Weinberg &
Reis Co., L.P.A., 965 Keynote Circle, Brooklyn Heights, OH 44131 (For Plaintiff-
Appellee).

Andrew Pollis, Milton A. Kramer Law Clinic Center, Case Western Reserve, School of
Law, 11075 East Boulevard, Cleveland, OH 44106 (For Defendant-Appellant).

COLLEEN MARY O’TOOLE, J.

{¶1} Appellant, Joy L. Bennington, appeals from the October 13, 2017

judgment of the Chardon Municipal Court, denying her motion to stay proceedings

pending arbitration. The main issue presented in this appeal is whether a defendant

may obtain a stay of proceedings pending arbitration without having first initiated the

arbitration proceedings. For the reasons stated, we reverse and remand.
 {¶2} On February 10, 2017, appellee, Discover Bank (“Discover”), filed a

complaint against appellant to recover an unpaid credit card balance alleging the

following: Discover is a foreign corporation licensed to do business in the state of Ohio;

appellant applied for an account with Discover; by use of the account, appellant became

bound by the terms in the Cardmember Agreement; appellant defaulted under the terms

of the Agreement; and the principal amount due is $12,642.01. Discover attached to its

complaint the statements from the credit card account (Exhibit A) and the Cardmember

Agreement (Exhibit B). Regarding arbitration, the Cardmember Agreement states:

{¶3} “Agreement to arbitrate. In the event of a dispute between you and us

arising under or relating to this Account, either may choose to resolve the dispute by

binding arbitration, as described below, instead of in court. Any claim * * * may be

resolved by binding arbitration if either side requests it. THIS MEANS IF EITHER YOU

OR WE CHOOSE ARBITRATION, NEITHER PARTY SHALL HAVE THE RIGHT TO

LITIGATE SUCH CLAIM IN COURT OR TO HAVE A JURY TRIAL. ALSO

DISCOVERY AND APPEAL RIGHTS ARE LIMITED IN ARBITRATION.

{¶4} “* * *

{¶5} “Governing Law and Rules. This arbitration agreement is governed by

the Federal Arbitration Act (FAA). Arbitration must proceed only with the American

Arbitration Association (AAA) or JAMS. The rules for the arbitration will be those in this

arbitration agreement and the procedures of the chosen arbitration organization, but the

rules in this arbitration agreement will be followed if there is disagreement between the

agreement and the organization’s procedures. If the organization’s procedures change

after the claim is filed the procedures in effect when the claim was filed will apply. For a

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copy of each organization’s procedures, to file a claim or for other information, please

contact:

{¶6} “AAA at 1101 Laurel Oak Rd., Voorhees, NJ 08043, www.adr.org (phone

1-877-495-4185) or

{¶7} “JAMS at 620 Eighth Ave., Floor 34, New York, NY 10018,

www.jamsadr.com (phone 1-800-352-5267) * * *

{¶8} “Fees and Costs. If you wish to begin arbitration against us but you

cannot afford to pay the organization’s or arbitrator’s costs, we will advance those costs

if you ask us in writing. Any request like this should be sent to Discover, PO Box 30421,

Salt Lake City, UT 84130-0421. If you lose the arbitration, the arbitrator will decide

whether you must reimburse us for money we advanced for you for the arbitration. If

you win the arbitration, we will not ask for reimbursement of money we advanced.

Additionally, if you win the arbitration, the arbitrator may decide that you are entitled to

be reimbursed your reasonable attorneys’ fees and costs (if actually paid by you).”

{¶9} On February 13, 2017, appellant filed an answer to the complaint. On

March 31, 2017, appellant filed a motion to stay proceedings pending arbitration.

{¶10} A status hearing was held on May 11, 2017 and dates for the progression

of the case were set by a magistrate’s order. On May 30, 2017, appellant filed a motion

to set aside the magistrate’s order, which was denied on June 8, 2017.

{¶11} Without waiting for the trial court to rule on the motion for stay, appellant

filed an appeal from the June 8, 2017 judgment, Case No. 2017-G-0123. On

September 5, 2017, this court sua sponte dismissed that appeal for lack of a final

appealable order.

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 {¶12} On September 22, 2017, Discover filed a brief in opposition to appellant’s

motion to stay proceedings pending arbitration. On October 13, 2017, the trial court

denied appellant’s motion to stay proceedings pending arbitration. Appellant filed the

instant appeal, Case No. 2017-G-0138, and raises the following assignment of error:

{¶13} “The trial court erred in denying Ms. Bennington’s motion to stay

proceedings pending arbitration.”

{¶14} In her sole assignment of error, appellant argues the trial court erred in

denying her motion to stay proceedings pending arbitration. Appellant asserts that Ohio

law does not require a defendant to initiate arbitration before seeking to stay

proceedings in the trial court. She further alleges that the Cardmember Agreement did

not require her to request a fee advance or take any other action before seeking to stay

proceedings pending arbitration.

{¶15} “Generally, a trial court’s decision to stay proceedings pending arbitration

is reviewed for an abuse of discretion. River Oaks Homes, Inc. v. Krann, 11th Dist.

Lake No. 2008-L-166, 2009-Ohio-5208, * * *, ¶41. When the trial court’s grant or denial

of a stay is premised upon questions of law, we review the judgment de novo. Naylor

Family Partnership v. Home S. & L. Co. of Youngstown, 11th Dist. Lake No. 2013-L-

096, 2014-Ohio-2704, * * *, ¶13. ‘Therefore, this court reviews de novo a trial court’s

legal conclusion as to whether a party is contractually bound by an arbitration clause.’

Id.” (Parallel citations omitted.) Knight v. Altercare Post-Acute Rehabilitation Center,

Inc., 11th Dist. Portage No. 2016-P-0045, 2017-Ohio-6946, ¶9.

{¶16} “‘Ohio and federal courts encourage arbitration to settle disputes. Kelm v.

Kelm (1993), 68 Ohio St.3d 26, 27 (* * *); Southland Corp. v. Keating (1984), 465 U.S.

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1, 10 (* * *). Our General Assembly also favors arbitration. R.C. 2711.02 requires a

court to stay an action if the issue involved falls under an arbitration agreement(.)’

(Parallel citations omitted.) ABM Farms, Inc. v. Woods, 81 Ohio St.3d 498, 500 (1998).”

Koudela v. Johnson & Johnson Custom Builders, LLC, 11th Dist. Lake No. 2017-L-024,

2017-Ohio-9331, ¶10.

{¶17} R.C. 2711.02(B) states: “If any action is brought upon any issue referable

to arbitration under an agreement in writing for arbitration, the court in which the action

is pending, upon being satisfied that the issue involved in the action is referable to

arbitration under an agreement in writing for arbitration, shall on application of one of

the parties stay the trial of the action until the arbitration of the issue has been had in

accordance with the agreement, provided the applicant for the stay is not in default in

proceeding with arbitration.”

{¶18} “Nothing in the above statute imposes a requirement that a party must

initiate arbitration before seeking a stay. Oftentimes, the question of whether a matter is

referable to arbitration is disputed by the parties. Further, the statute clearly reflects

that a party need only file a motion to have the proceedings stayed when ‘the action is

referable to arbitration under an agreement in writing for arbitration.’ R.C. 2711.02(B).”

Capital One Bank (USA), N.A. v. Rotman, 8th Dist. Cuyahoga No. 96891, 2012-Ohio-

480, ¶8.

{¶19} “Case law instructs that where a matter is subject to arbitration, ‘(t)he

burden is on the plaintiff to commence the arbitration action, and the parties are obliged

to cooperate and respond in a timely manner.’ Sexton v. Kidder, Peabody & Co., Inc.,

8th Dist. No. 74833, 1999 WL 652028 (Aug. 24, 1999). See also Kessinger v. SR83

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Hotel Partners, LLC, 5th Dist. No. 04-CA-83, 2005-Ohio-4110, * * *, ¶17; Johnson v. E.

Bay Kia, Inc., S.D.Ala. No. 08-00656-CG-B, 2009 WL 928674, at *1 (Apr. 2, 2009).

Indeed, it would be nonsensical to require a defendant to commence arbitration of a

claim against himself. Thus, where a defendant properly exercises a right to arbitration,

it is incumbent upon the plaintiff to pursue its claims in arbitration once a stay of the

action is granted.” (Parallel Citation omitted.) Rotman, supra, at ¶9.

{¶20} Like Rotman, the terms of the arbitration provision in the Cardmember

Agreement in the case at bar gave either party the right to elect arbitration of any claim

between them. Thus, either party had the right to have the matter referred to arbitration.

As stated, the “Agreement to arbitrate” under the Cardmember Agreement states; “IF

EITHER YOU OR WE CHOOSE ARBITRATION, NEITHER PARTY SHALL HAVE THE

RIGHT TO LITIGATE SUCH CLAIM IN COURT OR TO HAVE A JURY TRIAL.”

{¶21} Appellant indicated her desire for arbitration by requesting a stay in the

trial court. She was required to do no more. There is no dispute that the matter was

referable to arbitration and thus, the trial court had no basis for demanding that

appellant take any steps to initiate it. R.C. 2711.02 requires a court to stay an action if

the issue involved falls under an arbitration agreement. See ABM Farms, supra, at 500;

Koudela, supra, at ¶10. Nothing in R.C. 2711.02(B) imposes a requirement that a party

must initiate arbitration before seeking a stay. R.C. 2711.02(B) “clearly reflects that a

party need only file a motion to have the proceedings stayed.” Rotman, supra, at ¶8.

{¶22} In addition, while the arbitration provision in the Cardmember Agreement

permits appellant to ask Discover to advance arbitration costs, it does not require that

she do so. As stated, the cost-deferring procedure in the Cardmember Agreement

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applies only “[i]f you wish to begin arbitration against [Discover].” (Emphasis added.)

However, appellant does not wish to begin arbitration against Discover. Rather,

appellant merely insists that if Discover wishes to pursue claims against her, it must do

so in arbitration instead of in court.

{¶23} Upon consideration, we find the trial court erred in denying appellant’s

motion to stay proceedings pending arbitration.

{¶24} For the foregoing reasons, appellant’s sole assignment of error is well-

taken. The judgment of the Chardon Municipal Court is reversed and the matter is

remanded for further proceedings consistent with this opinion. Upon remand, the trial

court is instructed to issue an order staying proceedings and referring the matter to

arbitration. The trial court shall instruct Discover to timely initiate the arbitration

proceedings or else be subject to dismissal of the action pursuant to Civ.R. 41(B).

CYNTHIA WESTCOTT RICE, J., concurs,

TIMOTHY P. CANNON, J., concurs in judgment only with a Concurring Opinion.

_________________________

TIMOTHY P. CANNON, J., concurring in judgment only.

{¶25} I agree with the majority that the trial court erred in denying appellant’s

motion to stay proceedings pending arbitration. Appellant was not required to initiate

arbitration prior to seeking the stay. I write separately because the majority directs the

trial court to “instruct Discover to timely initiate the arbitration proceedings or else be

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subject to dismissal of the action pursuant to Civ.R. 41(B).” The burden is not on

Discover to initiate the proceedings where arbitration is not mandatory.

{¶26} The majority cites to an Eighth Appellate District decision for the

proposition that the burden is always on the plaintiff to commence an arbitration action.

See Capital One Bank (USA) v. Rotman, 8th Dist. Cuyahoga No. 96891, 2012-Ohio-

480, ¶9. Rotman’s reliance on Sexton v. Kidder and Kessinger v. SR83 Hotel Partners,

LLC is misplaced, however, because both cases involved agreements that mandated

arbitration. See Sexton v. Kidder Peabody & Co., Inc., 8th Dist. Cuyahoga No. 69093,

1996 WL 100855, *6 (Mar. 7, 1996) and Kessinger v. SR83 Hotel Partners, LLC, 5th

Dist. Ashland No. 04 CA 83, 2005-Ohio-4110, ¶2-3. Where an agreement mandates

arbitration, neither party has a right to initiate litigation in the first place.

{¶27} Here, the arbitration agreement states that “[a]ny claim may be resolved

by binding arbitration if either party requests it.” The agreement further provides that if

either party chooses arbitration then neither party has the right to litigate the claim in

court. Because the agreement does not mandate arbitration, Discover could choose to

initiate litigation to recover the unpaid credit card balance, which it did. The complaint

put appellant on notice that a claim was filed against her. Pursuant to the agreement,

appellant could choose to initiate arbitration in order to defend the claim, effectively

terminating Discover’s right to litigation.

{¶28} Accordingly, I concur with the majority opinion, but disagree with the

instruction directing the trial court to order Discover to initiate arbitration. Obviously,

Discover did not want to initiate arbitration. If appellant wants to initiate arbitration,

however, she should do so without delay.

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