COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 68819 DAVID J. WILLIAMS : : Plaintiff-Appellee : : JOURNAL ENTRY -vs- : AND : OPINION COLEJON MECHANICAL : CORPORATION : : Defendant-Appellant : : DATE OF ANNOUNCEMENT OF DECISION: NOVEMBER 22, 1995 CHARACTER OF PROCEEDING: CIVIL APPEAL FROM THE COMMON PLEAS COURT CASE NO. CV-246028 JUDGMENT: AFFIRMED IN PART; REVERSED IN PART AND REMANDED. DATE OF JOURNALIZATION: APPEARANCES: For Plaintiff-Appellee: DANIEL T. TODT (#0033178) REBECCA L. TODT (#0033167) DANIEL T. TODT & ASSOCIATES The Standard Building - 20th Floor 1370 Ontario Street Cleveland, Ohio 44113-1701 For Defendant-Appellant: JEFFREY A. BELKIN (#0018294) LESTER W. ARMSTRONG (#0036832) BELKIN & HARROLD CO., L.P.A. 25101 Chagrin Blvd., Suite 210 Cleveland, Ohio 44122 - 2 - 2 SPELLACY, P.J.: Defendant-appellant ColeJon Mechanical Corporation ("appellant") appeals the denial of its motion to vacate an arbitration award and the confirmation of the award by the trial court. Appellant assigns the following errors for review: I. THE TRIAL COURT ERRED IN CONFIRMING THE ARBITRATION AWARD AND IN DENYING DEFENDANT- APPELLANT'S MOTION TO VACATE WHERE THERE WAS UNCONTROVERTED EVIDENCE OF "EVIDENT PARTIALITY" ON THE PART OF THE ARBITRATOR. (DEFENDANT'S MOTION TO VACATE ARBITRATION AWARD AND SUPPLEMENTAL MEMORANDUM IN SUPPORT, RECORD NOS. 58 AND 60.) II. THE TRIAL COURT ERRED IN CONFIRMING THE ARBITRATION AWARD AND IN DENYING DEFENDANT- APPELLANT'S ALTERNATIVE MOTION TO MODIFY WHERE THE ARBITRATOR EXCEEDED HIS AUTHORITY IN AWARD- ING PLAINTIFF-APPELLEE RELIEF BEYOND WHAT WAS PLED IN THE AMENDED COMPLAINT. (DEFENDANT'S MOTION TO VACATE ARBITRATION AWARD AND SUPPLE- MENTAL MEMORANDUM IN SUPPORT, RECORD NOS. 58 AND 60. III. THE TRIAL COURT ERRED IN CONFIRMING THE ARBITRATION AWARD AND IN DENYING DEFENDANT- APPELLANT'S ALTERNATIVE MOTION TO MODIFY WHERE THE ARBITRATOR EXCEEDED HIS AUTHORITY IN AWARDING PREJUDGMENT INTEREST AND IN AWARDING COMPOUND INTEREST. (DEFENDANT'S MOTION TO VACATE ARBITRATION AWARD AND SUPPLEMENTAL MEMORANDUM IN SUPPORT, RECORD NOS. 58 AND 60.) Finding appellant's third assignment of error to have merit, the judgment of the trial court is affirmed in part and reversed in part. - 3 - 3 I. On January 20, 1993, David J. Williams filed a complaint for breach of contract and for a violation of the Employee Retirement Income Security Act of 1974 ("ERISA"). Williams alleged appellant agreed to pay him a percentage of an award fee bonus. The bonus was paid under a contract appellant entered into with the United States Goverment for a NASA project. Williams received a fee bonus from appellant from 1984 to 1990. Appellant did not distribute the bonus to Williams after 1990 although appellant was given an award fee by NASA. Williams amended his complaint to add a second ERISA claim but later dismissed both ERISA claims. The parties agreed to submit the remaining breach of contract claim to binding arbitration. An arbitrator was mutually agreed upon by the parties. After two days of hearings, the arbitrator awarded Williams $32,813.04 in damages plus $19,813.14 in prejudgment interest. Appellant filed a motion to vacate the arbitration award. Appellant sought to vacate the award under R.C. 2711.10(B) by arguing the arbitrator was partial as he represented clients in a sexual harassment case against Turner Construction Company. Appellant was associated with Turner Construction Company on the same project from which the sexual harassment claims arose. Appellant's position was that the arbitrator breached his obligation to disclose any possible conflict of interest which was likely to affect his partiality. Because the arbitrator did not - 4 - 4 disclose his representation of the women in the sexual harassment suit, the award should be vacated. Appellant also argued the arbitrator had exceeded his authority by awarding Williams relief beyond that demanded by Williams in his prayer for relief and by awarding prejudgment interest. The trial court denied appellant's motion to vacate and confirmed the arbitration award. Appellant appeals from this ruling. II. In its first assignment of error, appellant argues the trial court erred by failing to vacate the award pursuant to R.C. 2711.10(B). Appellant contends the arbitrator had a duty to disclose any relationship or conflict of interest which was likely to affect his partiality. Appellant asserts the arbitrator must have recognized appellant's affiliation with Turner Construction Company as both companies' names were on the letterhead of a position statement given to the EEOC by Turner and signs bearing the companies' names were at the construction site. Also, there was testimony at the hearing that appellant was involved in the construction project. The policy of the law of Ohio is to favor and encourage arbitration. Generally, an arbitration award carries a presumption of validity. Brumm v. McDonald & Co. Securities, Inc. (1992), 78 Ohio App.3d 96, 103. A common pleas court's review of an arbitration award is quite narrow. The merits of the arbitration - 5 - 5 may not be reviewed and the award can be set aside only if the party attempting to have the award set aside establishes that the award is defective in a manner recognized by R.C. Chapter 2711. Motor Wheel Corp. v. Goodyear Tire & Rubber Co. (1994), 98 Ohio App.3d 45, 51. Appellate review of an arbitration award is limited to an evaluation of the confirmation order of the court of common pleas. The substantive merits of the award are not reviewable absent evidence of material mistakes or extensive impropriety. Brumm, supra at 104. A trial court cannot vacate the award unless one of the criteria of R.C. 2711.10 is affirmatively shown. R.C. 2711.10 provides: In any of the following cases, the court of common pleas shall make an order vacating the award upon the application of any party to the arbitration if: *** (B) There was evidence partiality or corrup- tion on the part of the arbitrators, or any of them. In King v. Sentry Claims Serv. (1991), 71 Ohio App.3d 701, an attorney signed a complaint filed for injuries received by a plaintiff in a pedestrian-automobile accident. He signed the complaint as a courtesy for another attorney who was substituted as counsel after the complaint was filed. The original attorney never met with the plaintiff or had any pecuniary interest in the matter. That same attorney was on a panel arbitrating a claim by that plaintiff against an insurance company for injuries received in a - 6 - 6 second accident. The trial court vacated the award in order to avoid the appearance of impropriety, fraud or misconduct. This court reversed as there was no evidence of bias, partial- ity or misconduct. There was no evidence explaining how the lawsuits arising from two different accidents were related or how the arbitrator's partiality was affected. The court found the arbitrator did not have a close, substantial or economic relation- ship with the claimant. Because bias could not be reasonably in- ferred and no evidence of bias, misconduct, or fraud was provided, the award should not have been vacated. In Gerl Constr. Co. v. Medina Cty. Bd. of Commrs. (1985), 24 Ohio App.3d 59, this court held that arbitration awards should be vacated if the undisclosed relationship creates an impression of possible bias. However, the relationship must be such that one could reasonably infer bias, not those which are peripheral, superficial, or insignificant in order to vacate an award. The nexus between the nonparty and the arbitrator must be substantial enough to reasonably create an impression of bias. The matters must be decided on a case-by-case basis depending on the facts. In the instant case, appellant infers the arbitrator was biased because he represented clients in a sexual harassment suit against Turner Construction Company. Appellant was associated with Turner on the same project from which the sexual harassment suit arose. The arbitration in this case was based on a different project and was over a dispute of an award fee bonus. Appellant - 7 - 7 has presented no evidence of evident partiality on the part of the arbitrator. R.C. 2711.10(B) requires more than the mere imaginative appearance or suspicion of partiality. "Evident partiality" connotes more than a mere suspicion or appearance of partiality. Staff v. State Farm Mut. Ins. Co. (1993), 87 Ohio App.3d 440. The two construction projects are not related. Turner Construction Company apparently was not involved in the NASA project. The causes of action are quite different. Bias cannot be reasonably inferred as the connection between the cases is too insignificant. Appellant's first assignment of error is overruled. III. In its second assignment of error, appellant asserts the trial court erred by not modifying the arbitration award to the amount reflected in Williams' prayer for relief. Williams asked for $17,500 in damages for his breach of contract claim. Appellant argues the arbitrator had ruled Williams' claim would be limited to the years 1990 and 1991 but instead awarded damages for the period of 1987 through 1991. Williams was awarded $32,813.04 in damages. At common law, the courts have almost uniformly refused to vacate an arbitrator's award because of an error of law or fact. It has been held that the arbitrator is the final judge of both law and facts, and that an award will not be set aside except upon a clear showing of fraud, misconduct or some other irregularity rendering the award unjust, inequitable, or unconscionable *** and that - 8 - 8 even a grossly erroneous decision is binding in the absence of fraud. *** (Citations omitted.) Goodyear v. Local Union No. 200 (1975), 42 Ohio St.2d 516, 522. Appellant has not shown fraud, misconduct or any irregularity in the arbitration award. Further, appellant did not file a tran- script of the arbitration hearing with the trial court. Therefore, appellant has not demonstrated that the arbitrator exceeded his authority in making the award. The regularity of the arbitration proceedings and award will be presumed in the absence of an adequate record supporting the appellant's claims of error. See Marra Constructors, Inc. v. Cleveland Metroparks Sys. (1993), 82 Ohio App.3d 557. Appellant's second assignment of error is not well taken. IV. In its third assignment of error, appellant contends the arbitrator lacked authority to award prejudgment interest. Appellant argues no prejudgment interest may be granted until the arbitration award is confirmed by a trial court. This case involves a dispute over a contract. R.C. 1343.03(A) provides: In cases other than those provided for in sections 1343.01 and 1343.02 of the Revised Code, when money becomes due and payable upon any bond, bill, note, or other instrument of writing, upon any book account, upon any settlement between parties, upon all verbal contracts entered into, and upon all judg- ments, decrees, and orders of any judicial tribunal for the payment of money arising out of tortious conduct or a contract or other transaction, the creditor is entitled to - 9 - 9 interest at the rate of ten per cent per annum, and no more, unless a written contract provides a different rate of interest in relation to the money that becomes due and payable, in which case the creditor is entitled to interest at the rate provided in that contract. The trial court confirmed the arbitration award including the award of prejudgment interest. Therefore, the issue has been decided by the trial court and there is no error in the grant of prejudgment interest. Appellant also argues the arbitrator erred by compounding the prejudgment interest. Prejudgment interest is to be calculated from the date payment becomes due. Horning-Wright Co. v. Great American Ins. Co. (1985), 27 Ohio App.3d 261. The arbitrator calculated the interest from when the various award fee payments were made by NASA. However, the arbitrator compounded the interest in making the award. Simple interest is to be used when there is no specific agreement to compound interest or a statutory provision authorizing the compound interest. State, ex rel. Elyria, v. Trubey (1984), 20 Ohio App.3d 8. There was no agreement among the parties to compound interest nor is there any statutory provision which would permit the interest to be compounded. The trial court erred in confirming the award of compounded prejudgment interest. Appellant's third assignment of error is overruled in part and sustained in part. Judgment affirmed in part, reversed in part and remanded for further proceedings consistent with this Journal Entry and Opinion. - 10 - It is ordered that appellant recover of appellee its 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. JAMES M. PORTER, J. and JOSEPH J. NAHRA, J., CONCUR. LEO M. SPELLACY PRESIDING JUDGE N.B. This entry is made pursuant to the third sentence of Rule 22(D), Ohio Rules of Appellate Procedure. This is an announcement of decision (see Rule 26). Ten (10) days from the date hereof this document will be stamped to indicate journalization, at which time .