COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 69790 BARBARA GIELTY : : : PLAINTIFF-APPELLEE : JOURNAL ENTRY : v. : AND : : OPINION INTEGRITY BUILDERS, ET AL. : : : DEFENDANTS-APPELLANTS : DATE OF ANNOUNCEMENT OF DECISION: DECEMBER 26, 1996 CHARACTER OF PROCEEDING: Civil appeal from Court of Common Pleas, Case No. CV-259914. JUDGMENT: REVERSED AND REMANDED. DATE OF JOURNALIZATION: APPEARANCES: For Plaintiff-appellee: Steven M. Weiss, Esq., Law Offices of Steven M. Weiss, 1250 Illuminating Building, 55 Public Square, Cleveland, Ohio, 44113. For Defendants-appellants: Les A. Chambers, Esq., 593 Sunbury Road, Delaware, Ohio, 43015. For Counter-Claimant appellant: Richard E. Dobbins, Esq., Ridgewood Centre, Suite 105, 1000 S. Cleveland-Massillon Rd., Akron, Ohio, 44333. SWEENEY, JAMES D., P.J.: Defendant-appellant Integrity Builders, Inc. appeals from the trial court's order denying its motion to confirm an arbitration award, motion to stay trial so that arbitration may occur, and motion for summary judgement. The denial of the motion to stay the trial is a final appealable order pursuant to R.C. 2711.02. The Community Development Corporation of Lakewood (CDC) funded the home repairs for which Plaintiff-appellee Barbara Gielty had contracted with the appellant. The contract between the appellant and the appellee contains the following clauses: 13. This contract may be amended only by a writing executed by the contractor, owner and approved by the CDC. 14. The homeowner and the contractor agree to abide by the dispute procedure attached hereto as Exhibit A and made a part of herein as if the same were fully written herein. Exhibit A details the dispute procedure as follows: 1) Following the receipt of a written or oral complaint by the CONTRACTOR or OWNER, the Program Administrator for Housing Rehabilitation of the Community Development Corporation of Lakewood shall schedule a meeting to discuss the dispute item or items and attempt to resolve the matter. If said complaint is resolved, a writing evidencing the agreement shall be executed by the OWNER and CONTRACTOR. 2) If the dispute is not resolved in Step 1 above, a written complaint shall be prepared by the Homeowner or Contractor and said complaint shall be filed with the Chairman of the Community Development Corporation. Within ten (10) days following the receipt of the - 3 - formal complaint, a hearing shall be held and all parties shall be informed of the hearing date by written communication. 3) The Dispute Board shall conduct the hearing. The OWNER and CONTRACTOR shall have the right to be present and present any statements relative to the matter at the hearing. The Dispute Board shall consist of the Assistant Director of Law, the Director of Community Development, and Chairman of the Board of Trustees of the Community Development Corporation. 4) The Dispute Board shall issue its decision and/or negotiated settlement in writing by sending all interested parties a copy of said decision within ten (10) working days after the hearing. All decisions of the Board are final. The Board's decision shall be implemented as follows: a) Should the Board rule in favor of the OWNER, the Community Development Corporation shall withhold all payments to the CONTRACTOR until the disputed items have been corrected.* b) If the Board rules in favor of the CONTRACTOR, a check shall be prepared and issued in the name of the CONTRACTOR for the amount of work performed. The Owner shall be required to execute the check in conformance with usual and customary procedures regarding the issuance of checks to CONTRACTORS. * If the contractor refuses to correct the disputed items, the Community Development Corporation of Lakewood may cause the following to occur: 1) Employ the services of another contractor to satisfactorily complete said items. 2) Remove said contractor from its list of approved contractors. - 4 - 3) Register a complaint with the Building Department of the City of Lakewood. The evidence in the file shows that the appellee was unsatisfied with the repairs made by the appellant. Notification was sent to the CDC and, in response, the director of planning and development sent the following letter, dated December 31, 1987, to the appellee with a copy to the appellant: Pursuant to your written complaint of December 29, 1987 to Brian King, Chairman of the Community Development Corporation of Lakewood, you are hereby notified to attend a hearing of the Community Development Corporation Dispute Board to be held on Thursday, January 7, 1988 at 2:00 PM in the first floor Jury Room, Lakewood City Hall, 12650 Detroit Avenue, Lakewood, Ohio 44107. The Dispute Board consists of the City of Lakewood Assistant Director of Law, the Director of Planning and Development, and the Chairman of the Board of Trustees of the Community Development Corporation. Under the rules of the Board the owner and contractor shall have the right to be present and to present any statements relative to the dispute at the hearing. The chairman of the board of trustees of the CDC, Brian King, informed the appellee of the results of the hearing in a letter dated February 29, 1988: Since we have not received the signed Settlement and Satisfaction of Owner's Statement from you and since you have indicated to our Program Administrator, Mrs. Geraldine Murphy, that you do not intend to sign the Settlement, you leave us no alternative but to arrive at the following decision. - 5 - First, the Community Development Corporation of Lakewood shall credit from our funds the amount of $850.00 as outlined in our negotiated settlement letter of January 11, 1988. This will result in a reduction of the total loan from $15,963.00 to $15,113.00. We will then release the balance of the contract owing to Integrity Builders ($4,963.00) on Friday, March 4, 1988. I am sorry that our negotiated settlement did not work out in the manner set out January 11, 1988. In response to this letter, the appellee's counsel by way of a letter dated February 29, 1988, responded to the CDC decision: Regarding your letter of February 29, 1988, you are prohibited from releasing the balance of the contract you claim is owing to Integrity Builders in the amount of $4,963.00. Any such action on your part may result in legal action being taken against you. The CDC did not release the monies to the appellant and both parties left the matter lie until October 30, 1993, when the appellee filed suit against the appellant. The appellant answered the complaint and asserted several affirmative defenses, including an assertion that the matter had been resolved by arbitration before the CDC. The appellant then filed a counterclaim seeking confirmation of the arbitration award. The appellee answered the counterclaim and filed a motion for summary judgment arguing that an arbitration award does not exist, and assuming arguendo, that one did exist, the motion to confirm was not timely filed. The appellant subsequently filed its own motion for summary judgment which the trial court denied. The appellant filed an appeal which was dismissed for lack of a final appealable order. - 6 - Gielty v. Integrity Builders, Inc. (June 15, 1995), Cuyahoga App. 67631, unreported. The appellant then filed its motion to confirm arbitration, renewed its motion for summary judgment, and an application to stay pursuant to R.C. 2711.02 and R.C. 2711.03. These motions were denied by the court and this timely appeal follows. The appellant sets forth three assignments of error, the third of which will be considered first: III THE TRIAL COURT ERRED IN FAILING TO STAY ITS PROCEEDINGS AS REQUIRED BY OHIO REVISED CODE SECTION 2711.01 ET SEQ. The appellant argues that the trial court erred in denying the motion to stay trial for arbitration as required under the contract. The appellee asserts that the contract makes no provision for mandatory arbitration, but merely gives the CDC an option to mediate any disputes that may arise between a homeowner and a contractor. Secondly, the appellee argues that even if arbitration is required, the claims asserted in the complaint are outside the scope of the dispute board's authority. The complaint alleges that the appellant actually caused damage to the home while attempting to make improvements. The appellee posits that since the claims do not relate to completion of work performed, the contract limits the CDC to settling disputes relating to substandard workmanship. - 7 - In order to determine whether or not the court should have stayed its proceedings, it must first be determined whether or not the contract between the parties required an arbitration, the arbitrability of the issues, and whether or not the proceedings which occurred between the parties constituted either a mediation or an arbitration. The outcome of this appeal turns, in part, on an interpretation of the contract between the parties. The court must give effect to the intent of the parties. See Miles v. Realty One, Inc. (May 9, 1996), Cuyahoga App. 69506, unreported, where this court held: Our primary obligation in construing the contract provisions is to give effect to the intent of the parties. The general principles we must apply are stated in The Toledo Group, Inc. v. Benton Industries, Inc. (1993), 87 Ohio App.3d 798, 805, 623 N.E.2d 205: The interpretation of a written contract is a matter of law for the court. Alexander v. Buckeye Pipeline Co. (1978), 53 Ohio St.2d 241, 7 Ohio Op. 3d 403, 374 N.E.2d 146, paragraph one of the syllabus. The purpose of contract construction is to effectuate the intent of the parties. Skivolocki v. East Ohio Gas Co. (1974), 38 Ohio St.2d 244, 67 Ohio Op. 2d 321, 313 N.E.2d 374, paragraph one of the syllabus. The intent of the parties is presumed to reside in the language they chose to employ in the agreement. Kelly v. Med. Life Ins. Co. (1987), 31 Ohio St.3d 130, 31 OBR 289, 509 N.E.2d 411, paragraph one of the syllabus. Common words appearing in the instrument will be given their plain and ordinary meaning unless manifest absurdity results or some other meaning is clearly evidenced from the face or overall contents of the contract. Alexander, supra, at paragraph two of the syllabus. - 8 - The first paragraph of the contract exhibit which delineates the procedure by which to resolve disputes provides for a written or oral complaint followed by a meeting to discuss the dispute and an attempt to resolve the matter. Upon resolution, a writing evidencing the agreement is to be executed by the parties. This initial procedure constitutes a mediation. The second and third paragraph of the exhibit provide that if the mediation fails, a written complaint may be filed with the chairman of the CDC and that a hearing will be held within ten days. Following the hearing, the parties will be informed of the decision in writing. The hearing is to be conducted by a dispute board consisting of the assistant director of law, the director of the CDC, and the chairman of the board of trustees of the CDC. The parties have the right to be present and to present evidence. The contract explicitly requires that a final decision be rendered by this board. The answer to whether or not the second and third paragraphs constitute an arbitration can be found in Schaefer v. Allstate Ins. Co. (1992), 63 Ohio St.3d 708. In this case the Supreme Court recognizes the strong public policy favoring arbitration. Various definitions of the term arbitration were reviewed by the court. One definition states that arbitration is a proceeding for the hearing and determining of a dispute between parties by a person or persons chosen by the parties instead of by a judicial tribunal. Id. at 712. Experts have stated that arbitration is a final - 9 - determination of the respective rights and claims of the parties. Schaefer, supra, at 712, 713. The court held that R.C. 2711 indicates that arbitration is intended to be an alternate method of dispute resolution which is final in all circumstances except those specifically set forth in the statute. Id. at 713, 714. Examining the contract signed by both the appellant and the appellee, and giving the words of the contract their plain, ordinary meaning, it is clear that the parties specifically agreed to abide by the dispute procedures set forth in the exhibit which was incorporated into the contract. The contract contains an integration clause and no pertinent amendment has been presented. The contract makes no mention of an appeal to a court of law, and this court finds that the intention of the parties was to resolve any and all disputes arising out of the contract using only the procedures set forth in the contract. This court must conclude that paragraphs two and three of the contract exhibit constitute an arbitration clause, and that no appeal may be taken from the arbitration except as provided for in R.C. 2711.10. The next issue to be resolved is the arbitrability of the issues themselves. In the absence of an agreement between the parties as to arbitrability of specific issues, the arbitrability of the dispute becomes a question of law for the courts upon the examination of the contract. Service Employees International Union, Local 47 v. Cleveland Neighborhood Health Services, Inc. (March 28, 1996), Cuyahoga App. 69388, unreported. - 10 - An examination of the contract herein shows that the parties did not limit the type of dispute that may be resolved in the dispute procedures. The mediation and arbitration clauses merely require a complaint brought by either the contractor or the homeowner. The contract outlines the method of implementing any determination under either procedure by either withholding money from the contractor until the complaints are rectified or requiring the owner to issue a check to the contractor in conformance with customary procedures. Should the contractor fail to correct disputed items, the CDC is empowered to employ another contractor, remove the contractor from its list of contractors, or register a complaint with the city building department. Despite the appellee's arguments, these methods of implementing the result of mediation or the arbitration decision do not limit the issues that may be brought in the dispute resolution procedure. Since the plain language of the contract does not limit the dispute resolution procedures, neither will this court. The issues raised by the appellee in her complaint fall within the dispute resolution procedures as agreed to by the parties in the contract. The final issue to be resolved is a determination, as a matter of law, which category of proceeding, mediation or arbitration, occurred between the parties in the case sub judice. Although the record contains an affidavit from Mr. King, the chairman of the board of trustees of the CDC, indicating that he did not consider the procedure before the dispute board to be an arbitration, this - 11 - opinion, while interesting, may not usurp this court's function of determining as a matter of law the nature of the proceedings. The record does not contain the written complaint notifying the CDC of the appellee's dispute with the appellant so it is not possible to know exactly which proceeding the appellee was seeking. What is clear is that a "hearing" was scheduled before the "dispute board" consisting of the assistant law director, the director of planning and development, and the chairman of the board of trustees of the CDC. Save the substitution of the director of planning and development for the director of community development, which may, as a practical matter, be the same office, the December 31, 1997, letter from the director of planning and development to the appellee comports with the procedures outlined in the second and third paragraphs of the contract exhibit for an arbitration. However, the second letter, that of February 29, 1988, from Brian King to the appellee, indicates that some form of settlement and satisfaction was arrived at between the parties, but not signed and executed by the appellee. This type of a negotiation more nearly comports with the requirements of the first paragraph of the contract exhibit for mediation. The difficulty with categorizing this letter is that it goes on to actually issue a "decision." This decision sets out specific monetary amounts which allot damages between the parties and could be construed as a complete determination of the dispute between the parties. - 12 - In order to resolve the inconsistencies in this letter, it is important to note that R.C. 2711.08 requires that an award made in an arbitration proceeding must be in writing and must be signed by the majority of the arbitrators. The letter which issues the "decision" is signed by only one person and does not meet the statutory requirements. Therefore, after weighing the equities, this court holds that the procedure participated in by the parties, although perhaps originally intended to be an arbitration, ended as a mediation between the disputing parties. Since the parties have completed only phase one of the mandatory contract dispute resolution procedures, the trial court improperly denied the appellant's motion to stay the proceedings for an arbitration pursuant to R.C. 2711.02. The trial court should have granted the stay for a full resolution of all disputes between the parties. Should either party wish to appeal the arbitration, they are limited to the grounds set forth in R.C. 2711.10. The appellant's third assignment of error is well taken. The first and second assignments of error are overruled as moot pursuant to App.R. 12. Judgment reversed and remanded for an order staying the trial for full resolution of all disputes through arbitration. - 13 - This cause is reversed and remanded. It is, therefore, considered that said appellant(s) recover of said appellee(s) costs herein. It is ordered that a special mandate be sent to said 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. Exceptions. JOSEPH J. NAHRA, J., CONCURS; DIANE KARPINSKI, J., DISSENTS, WITH DISSENTING OPINION ATTACHED. JAMES D. SWEENEY PRESIDING JUDGE N.B. This entry is an announcement of the court's decision. See App.R. 22(B), 22(D) and 26(A); Loc.App.R. 27. This decision will be journalized and will become the judgment and order of the court pursuant to App.R. 22(E) unless a motion for reconsideration with supporting brief, per App.R. 26(A), is filed within ten (10) days of the announcement of the court's decision. The time period for review by the Supreme Court of Ohio shall begin to run upon the journalization of this court's announcement of decision by the clerk per App.R. 22(E). See, also S.Ct.Prac.R. II, Section 2(A)(1). COURT OF APPEALS OF OHIO EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 69790 : BARBARA GIELTY : : : Plaintiff-Appellee : : DISSENTING v. : : OPINION INTEGRITY BUILDERS, ET AL. : : : Defendant-Appellant : : : DATE OF ANNOUNCEMENT OF DECISION: DECEMBER 26, 1996 KARPINSKI, J., DISSENTING: I respectfully dissent. Appellee's claims are outside the scope of the Dispute Procedure outlined in the contract. The process described did not envision disputes continuing, much less beginning, after the contractor has been paid. Under this procedure the two fundamental alternatives available to the Board are withholding payments to the contractor, on the one hand, or preparing a check and requiring the Owner to execute the check, on the other. In the case at bar, however, the contractor was already paid when the Owner discovered the damage allegedly caused by the contractor. - 2 - Even if the check had not been issued, the actions the Board is expressly authorized to take describe only correcting substandard workmanship or completing tasks not finished: If the contractor refuses to correct the dispute items, the Community Development Corporation of Lakewood may cause the following to occur: (1) Employ the services of another contractor to satisfactorily complete said items. (2) Remove said contractor from its list of approved contractors. (3) Register a complaint with the Building Department of the City of Lakewood. In the case at bar the problem is long past correcting by these means. The reason is that the damages appellee alleges go beyond completing work started or repairing work done. Appellant alleges that the damages to the home may exceed the amount paid to the contractor under the contract. Even though the dispute procedure specifies a grievance mechanism, that mechanism cannot be imposed on claims the remedy to which lies outside the scope of the Board's authority. It would be fundamentally unfair to preclude appellee from bringing a lawsuit if the alternative is a dispute procedure that cannot make her whole. Unless the Board has the authority to award damages and also to award damages beyond the cost of the contract and unless such an .