COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 69581 FRAGAPANE CONSTRUCTION COMPANY, : INC., : : Plaintiff-Appellant : : JOURNAL ENTRY vs. : and : OPINION HENRY YISHA, ET AL., : : Defendants-Appellees : DATE OF ANNOUNCEMENT OF DECISION : MAY 16, 1996 CHARACTER OF PROCEEDING : Civil appeal from : Common Pleas Court : Case No. 156992 JUDGMENT : AFFIRMED. DATE OF JOURNALIZATION : _______________________ APPEARANCES: For plaintiff-appellant: James D. Vail Jonathan L. Stark SCHNEIDER, SMELTZ, RANNEY & LaFOND 629 Euclid Avenue 1525 National City Bank Building Cleveland, Ohio 44114 For defendants-appellees: Kent R. Minshall, Jr. 21690 River Oaks Drive Rocky River, Ohio 44116 -2- NAHRA, J.: Plaintiff-appellant Fragapane Construction Co., Inc. appeals from the trial court order which certified an arbitration award in favor of defendants-appellees. Appellant is in the home construction business. During the period from 1984 through 1986, appellees purchased new homes built by appellant. Every purchase agreement entered into between appellant and each appellee contained a clause providing for settlement of disputes arising out of construction or sale of the new house by arbitration "at the instance of either party." The purchase agreements also contained only the following warranty: 16. Builder shall warrant his workmanship and material, except for concrete and masonry material, for a period of one year after completion, and shall further provide Purchasers with special warranties and guaranties for installation of appliances, heating equipment, etc. Appellees became unhappy with some aspects of the construction of their homes and dissatisfied with appellant's response to their concerns; thus, sometime in 1988 several of them began picketing at some of appellant's new construction sites. As a result of this activity, on September 22, 1988, appellant filed suit against appellees in the Cuyahoga County Court of Common Pleas. In its complaint, appellant sought injunctive relief to restrain appellees from picketing and also included a claim against appellees for breach of contract for failing to submit their claims to arbitration. Appellant's prayer for relief included a request for an injunction prohibiting appellees from "seeking redress ... in any manner except through the American Arbitration Association." -3- Thereafter, the trial court monitored the parties as they negotiated the lawsuit. On April 27, 1989, the trial court journalized a "stipulated judgment entry" which had been filed by the parties. This judgment entry contained the following pertinent provisions: 1) appellant dismissed its claims against appellees for damages based upon the picketing on the condition appellees would refrain from continuing it; 2) appellant would complete the home repairs "already agreed upon" with appellees; 3) appellees would present an attached list of construction claims to the American Arbitration Association "in the manner set forth in paragraph 7 below;" and 4) any of appellees' construction claims not included in the attached list were "dismissed." Paragraph 7 of the stipulated judgment entry stated in pertinent part as follows: 7. Any claims the [appellees] may wish to pursue in arbitration shall comply with the following procedure: a) This Stipulated Judgment Entry shall serve as a submission of claim to the American Arbitration Association. * * * c) The claims of all [appellees] shall be presented at one arbitration with the same arbitrators determining the claims of each [appellee]. d) [Appellant] or [appellees] may call witnesses who will testify as to a claim presented by more than one [appellee]. Such testimony shall be deemed probative on the claims of any [appellees] making such claim. e) Rules of the American Arbitration Association shall govern the arbitration with the exception that the parties shall be -4- entitled to pursue discovery in accordance with Ohio Rules of Civil Procedure. The Agreements between Fragapane and the [appellees], and then current laws, rules, regulations, and ordinances of Ohio and the City of Parma shall govern the determination of the substantive issues of any arbitration contemplated hereby; provided however that any party hereto may offer evidence as to the way in which all laws, rules, regulations, and ordinances were interpreted as of the date Fragapane sold and constructed homes purchased by [appellees]. * * * h) The decision of the arbitrators shall be binding upon the parties. (Emphasis added.) The record reflects an absence of activity on the case until February, 1992, when appellant made a "demand" for arbitration with respect to only appellee Yisha. Thereafter, on September 2, 1992 appellees filed in the trial court a motion to "compel arbitration." Appellees stated as the basis for their motion that appellant had failed to respond to repeated requests to submit the case to an arbitration panel. On September 18, 1992, therefore, the trial court issued a journal entry order granting appellees' motion and ordering arbitration to proceed. Once again, however, arbitration was delayed: the record reflects the matter was not heard by an arbitration panel until November, 1994. The arbitration panel finally issued its report and award in January, 1995. The report stated appellant must pay a certain -5- amount of cash to each appellee and further stated "[t]his award is in full settlement of all claims submitted to this arbitration." On March 16, 1995, appellees filed a motion to confirm the arbitration award pursuant to R.C. 2711.09. On March 23, 1995, appellant filed a motion to "vacate or modify" the award and a brief in opposition to appellees' motion. In its brief, appellant stated the arbitration award was improper based upon R.C. 2711.10(D). Appellant argued the arbitrators had "exceeded their powers" in awarding damages on claims which were barred by the statute of limitations specifically, appellees' claims concerning their concrete driveways. On April 25, 1995, the trial court issued a journal entry 1 stating only the following: Pltfs motion, filed 3-23-95 to vacate or modify arbitration award is grtd. This court finds that the arbitrators exceeded their powers as the statute of limitations on defs. claims had expired. R.C. 2711.10(D). In re Arbitration of Port Clinton v. Scagnetti 1990 Ohio App LEXIS 34. The record reflects that although appellees filed a "motion to strike" appellant's motion to vacate the award, they had not yet responded to the merits of appellant's motion before the trial court issued the foregoing order. On May 5, 1995, appellees filed in the trial court a motion for "reconsideration" of the April 25, 1995 order. In their brief, appellees requested the trial court vacate the order, basing their 1 The trial court's journal entry is set forth verbatim. -6- request upon the following arguments: 1) they had not had the opportunity to respond to the merits of appellant's motion; 2) the arbitrators did not state which claims they had found meritorious; and 3) the Stipulated Judgment Entry specifically stated the attached claims were subject to determination by arbitration; thus, appellant's statute of limitations argument was both inapplicable and had been considered by the arbitrators. On May 12, 1995, the trial court granted appellees' motion for reconsideration. In the same judgment entry, the trial court stated appellant's motion to vacate "is itself vacated" and the "matter" was set for a pretrial. On June 12, 1995, appellant filed a "motion to reinstate" the April 25, 1995 order. In its brief in support of the motion, appellant essentially argued as follows: 1) the April 25, 1995 order was final, thus the trial court lacked jurisdiction to grant appellees' motion for reconsideration; and 2) the April, 25, 1995 order was proper pursuant to R.C. 2711.10(D). On August 23, 1995, the trial court issued two separate judgment entries in the case. In one, the trial court denied appellant's motion to vacate the arbitration award and granted appellees' motion to certify it. In the other, the trial court 2 stated: This matter comes on for consideration of Plf's Motion to Reinstate Court's Order Vacating Arbitration Award. In the first instance this Court finds its 5-12- 2 See footnote 1. -7- 95 Vacating Arbitration Award a proper method of correcting a prior error in its record. As to the merits of plf's motion, this is in essence a two-fold argument: (1) that the claim was submitted beyond the relevant limitation period to the private arb. panel, and (2) the arb. panel was without authority to rule that it was not. This court finds (a) the parties Judgment Entry of 4-27-89 at par. 7(a) reflects the parties agreement; and (b) Bd. of Lib. Trustees v. Ozanne (1995), 100 Ohio App.3d 26 controls. On September 22, 1995, appellant filed a notice of appeal in this court from the foregoing order. On October 13, 1995, this court dismissed appellant's appeal for lack of a final appealable order. On October 17, 1995, the trial court issued another judgment entry in which it both set forth the substance of the arbitration award in each appellee's favor and confirmed the award. Thereafter, appellant's appeal was reinstated. I. Appellant presents two assignments of error for review. The first follows: THE TRIAL COURT ERRED IN GRANTING APPELLEES' MOTION FOR RECONSIDERATION BECAUSE THE TRIAL COURT'S PREVIOUS ORDER GRANTING THE APPELLANT'S MOTION TO VACATE WAS A FINAL, APPEALABLE ORDER WHICH DIVESTED THE TRIAL COURT OF JURISDICTION TO CONSIDER THE MOTION FOR RECONSIDERATION. Appellant argues the trial court's April 25, 1995 order met 3 the requirements of R.C. 2505.02, thus, the trial court lacked 3 R.C. 2505.02 states in pertinent part: 2505.02 Final order. -8- jurisdiction to grant appellees' motion for reconsideration. Interestingly, appellant makes this argument despite the following: 1) appellant's own failure, if jurisdiction was no longer with the trial court, to file an appeal from the May 12, 1995 order which granted appellee's motion; and 2) this court's actions in first dismissing and then reinstating appellant's appeal only after the trial court issued its October 17, 1995 judgment entry. R.C. 2505.02 confers jurisdiction upon this court to review the final order of a court of common pleas. In Stewart v. Midwestern Indemn. Co. (1989), 45 Ohio St.3d 124, the Ohio Supreme Court determined that a trial court order which both vacates an arbitration award and orders a new arbitration proceeding is not final and appealable pursuant to R.C. 2505.02, stating as follows: R.C. 2711.15 provides: "An appeal may be taken from an order confirming, modifying, correcting, or vacating an award made in an arbitration proceeding or from judgment entered upon an award." Consequently, reading R.C. 2505.02 and 2711.15 in pari materia, it is crucial that an order made pursuant to R.C. 2711.15 must satisfy the requirements of R.C. 2505.02 in order to be a final appealable order if the court of appeals is to have jurisdiction to hear an appeal from such an order. An order that affects a substantial right in an action which in effect determines the action and prevents a judgment, an order that affects a substantial right made in a special proceeding or upon a summary application in an action after judgment, or an order that vacates or sets aside a judgment or grants a new trial is a final order that may be reviewed, affirmed, modified, or reversed, with or without retrial. * * * -9- Id., at 126. (Emphasis added.) See, also, City of Bedford Heights v. F.O.P. Lodge 67 (June 8, 1995), Cuyahoga App. No. 68229, unreported; cf., Findlay City School Dist. Bd. of Edn. v. Findlay Edn. Assn. (1990), 49 Ohio St.3d 129. In this case, although the trial court's April 25, 1995 judgment entry did not purport to order a new arbitration proceeding, nevertheless, it failed to resolve the claims of the 4 parties since it did not state how the order affected them. Thus, under the circumstances, the trial court had not issued an order actually determining the action or preventing a judgment as required by R.C. 2505.02. Stewart v. Midwestern Indemn. Co., supra. It follows that since the order of April 25, 1995 was merely interlocutory, the trial court retained jurisdiction to reconsider it. Pitts v. Ohio Dept. of Transportation (1981), 67 Ohio St.2d 378, footnote 1; Civ.R. 54(B); Summit Petroleum Inc. v. K.S.T. Oil & Gas Co. (1990), 69 Ohio App.3d 468. Similarly, in merely vacating its previous order, without more, the trial court's order of May 12, 1995, also failed to determine the claims of the parties in the action. Charles Fazio & 4 In stating this, however, this court is mindful that often in the context of an appeal from a trial court order vacating an arbitration award, the issue of the finality of the trial court's order has not been addressed by the appellate court. See, e.g., Ohio Office of Collective Bargaining v. Ohio Civ. Serv. Emp. Assn., Local 11, AFSCME (1990), 69 Ohio App.3d 546; Ohio Office of Collective Bargaining v. Ohio Civil Service Employees Assn., AFSCME, AFL-CIO (1992), 73 Ohio App.3d 392; Cleveland Police Patrolmen's Assn. v. Cleveland (1994), 99 Ohio App.3d 63; cf., Cleveland Police Patrolmen's Assoc. v. City of Cleveland (Oct. 26, 1995), Cuyahoga App. No. 67896, unreported. -10- Associates, Inc. v. Meisen (April 25, 1996), Cuyahoga App. No. 68596, unreported; cf., Chester Twp. v. Fraternal Order of Police, Ohio Labor Council, Inc. (1995), 102 Ohio App.3d 404. As the foregoing demonstrates and as this court recognized when reinstating this appeal subsequent to the trial court's October 17, 1995 judgment entry, the trial court's order became final only when the substance of the arbitrator's award was stated in the order of confirmation, thus determining the action. R.C. 2505.02; R.C. 2711.15. Accordingly, appellant's first assignment of error lacks merit and is overruled. II. Appellant's second assignment of error states: THE TRIAL COURT ERRED IN GRANTING APPELLEES' MOTION FOR RECONSIDERATION AND CONFIRMATION OF THE ARBITRATION AWARD BECAUSE THE ARBITRATORS EXCEEDED THEIR AUTHORITY BY AWARDING DAMAGES ON CLAIMS BARRED BY THE STATUTE OF LIMITATIONS. Appellant argues the arbitrators impermissibly awarded damages to appellees on their claims for defective concrete driveways despite the language of the home purchase agreements and the four- year statute of limitations on such claims, thus, the award should have been vacated pursuant to R.C. 2711.10(D). This court disagrees. It is well-settled that the jurisdiction of courts in the area of arbitration and arbitration awards is limited. See e.g., Findlay City School Dist. Bd.of Edn. v. Findlay Edn. Assn., supra; -11- Warren Education Assoc. v. Warren City Board of Education (1985), 18 Ohio St.3d 170. Judicial intervention in this area is statutorily restricted by R.C. Sections 2711.09, 2711.10 and 2711.11. These sections give the court the power to vacate or modify an arbitration award only on certain enumerated grounds. Appellant challenged the arbitrators' award in this case pursuant to R.C. 2711.10(D). R.C. 2711.10 states: 2711.10 Court may vacate award. 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: (A) The award was procured by corruption, fraud, or undue means. (B) There was evidence (sic) partiality or corruption on the part of the arbitrators, or any of them. (C) The arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced. (D) The arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made. (Emphasis added.) With regard to the basis that R.C. 2711.10 provides for vacating an arbitrator's award, this court has cautioned that judicial review of the matter must be "very narrow." Cuyahoga Community College v. Dist. 925, Serv. Emp. Internatl. Union AFL- CIO (1988), 42 Ohio App.3d 166 at 170. Furthermore, the Ohio Supreme Court has declared: -12- The whole purpose of arbitration would be undermined if courts had broad authority to vacate an arbitrator's award. Thus, this court has stated: "[i]t is the policy of the law to favor and encourage arbitration and every reasonable intendment will be indulged to give effect to such proceedings and to favor the regularity and integrity of the arbitrator's acts. Campbell v. Automatic Die & Products Co. (1954), 162 Ohio St. 321, 329 [55 O.O. 195]. Indeed, this court has held that "[a] mere ambiguity in the opinion accompanying an arbitration award, which permits the inference that the arbitrator may have exceeded his authority, is not a reason for vacating the award when such award draws its essence from a[n] . . . agreement." Goodyear v. Local Union No. 200 (1975), 42 Ohio St.2d 516 [71 O.O.2d 509], paragraph one of the syllabus. An arbitrator's award draws its essence from a[n] . . . agreement when there is a rational nexus between the agreement and the award, and where the award is not arbitrary, capricious or unlawful. Mahoning Cty. Bd. of Mental Retardation v. Mahoning Cty. TMR Edn. Assn. (1986), 22 Ohio St.3d 80 at 83-84. (Emphasis added.) In this case, the home purchase agreements entered into between appellant and appellees contained not only a workmanship warranty clause, but also a clause providing for arbitration of disputes. Indeed, appellant filed this action, in part, to enforce the arbitration clause. Once the trial court obtained jurisdiction, therefore, the arbitration clause was invoked in order to settle the dispute. At this point, the parties filed in the trial court the Stipulated Judgment Entry of April 27, 1989. This document set forth the parties' agreement to arbitrate. It detailed for the arbitrators both the procedure to be followed and the substantive issues to be considered. Clearly, the arbitrators were given authority under the agreement to consider any claims set forth in -13- the attached exhibit. Bd. of Library Trustees, Shaker Hts. Pub. Library v. Ozanne Constr. Co., Inc. (1995), 100 Ohio App. 326; Huffman v. Valletto (1984), 15 Ohio App.3d 61. Moreover, since the Stipulated Judgment Entry clearly stated that it served as a submission of claims to arbitration, appellant's argument that by the time the arbitrator decided appellees' driveway claims the claims were barred by the statute of limitations is specious. Furthermore, for this same reason, appellant's reliance upon In re Arbitration Between City of Port Clinton, Ohio v. Scagnetti Contr. Co. (Jan. 12, 1990), Ottawa Cty. App. No. OT-88-47, unreported, is unavailing. Finally, appellant's argument cannot be countenanced because a review of the arbitrators' award reveals it is ambiguous. Goodyear v. Local Union No. 200 (1975), 42 Ohio St.2d 516. There is no evidence upon which to base a conclusion the arbitrators awarded damages on any claims concerning concrete driveways. Indeed, there is no basis to conclude the arbitrators committed any impropriety at all. Id. A review of the record on appeal demonstrates, instead, there was "a rational nexus between the . . . agreement and the award" and the arbitrators were neither "corrupt [n]or committed gross procedural improprieties." Cuyahoga Community College v. District 25, Serv. Emp. Internatl. Union AFL-CIO, supra. The trial court having properly made this determination, judicial review of this case was at an end. Findlay City School Dist. Bd. of Edn. v. Findlay Edn. Assn., supra; Huffman v. Valletto, supra. -14- Therefore, appellant's second assignment of error also lacks merit and is accordingly overruled. The judgment of the trial court confirming the arbitrators' award is affirmed. -15- It is ordered that appellees recover of appellant their 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. SWEENEY, JAMES D., P.J., and PORTER, J., CONCUR. JOSEPH J. NAHRA 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 .