COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 71941 ERNEST SASAKI, ET AL. : : JOURNAL ENTRY PLAINTIFFS-APPELLANTS : : AND v. : : OPINION PORTER C. McKINNON, ET AL. : : DEFENDANTS-APPELLEES : : DATE OF ANNOUNCEMENT OF DECISION: DECEMBER 18, 1997 CHARACTER OF PROCEEDING: Civil appeal from Court of Common Pleas, Lower Case No. CV-309847. JUDGMENT: AFFIRMED. DATE OF JOURNALIZATION: APPEARANCES: For Appellant Ernest Sasaki: Dennis E. Murray, Jr., Esq., David D. Yeagley, Esq., Murray & Murray Co., L.P.A., Attorneys at Law, 111 East Shoreline Drive, Post Office Box 19, Sandusky, Ohio 44871-0019; Robert P. Sugarman, Esq., Jeffrey S. Abraham, Esq., Elaine S. Kusel, Esq., Milberg, Weiss, Bershad, Hynes & Lerach, LLP, One Pennsylvania Plaza, 49th Floor, New York, NY 10119- 0165; Howard D. Finkelstein, Esq., Jeffrey R. Krinsk, Esq., Finkelstein & Associates, 501 West Broadway, Suite 1250, San Diego, CA 92101. For Appellee Porter McKinnon: Ralph E. Cascarilla, Esq., 1300 Terminal Tower, Cleveland, Ohio, 44113. -i- For ABS Industries, Inc.: Legal Counsel, ABS Industries, Inc., Interstate Square 1, Suite 300, Willoughby, Ohio 44094. For David Dean: Richard A. Talda, Esq., Chester, Willcox & Saxbe, 17 South High Street, Suite 900, Columbus, Ohio 43215- 3413. For Ernst & Young: Andrew Heaton, Esq., Thomas L. Reisenberg, Esq., Assistant General Counsel, Ernst & Young LLP, 1225 Connecticut Avenue, N.W., Washington, D.C. 20036; David S. Cupps, Esq., John Winship Read, Esq., David J. Tocco, Esq., Vorys, Sater, Seymour & Pease, 2100 One Cleveland Center, 1375 East Ninth Street, Clevleand, Ohio, 44114-1724. For Theodore Ursu III: Nicholas J. Milanich, Esq., Reminger & Reminger, 113 St. Clair Building, Cleveland, Ohio, 44114. -2- WEENEY, JAMES D., C.J.: Plaintiffs-appellants Ernest Sasaki, Kenneth Sano and David amada appeal from the granting of defendant-appellee Ernst & oung's1 (E&Y) motion to stay litigation pending arbitration. For he reasons adduced below, we affirm. A review of the record on appeal indicates that this case nvolves a shareholders' derivative action pursuant to Civ.R. 23.1, rought by plaintiffs, who are shareholders of ABS Industries, nc.2, on behalf and for the benefit of ABS and its shareholders. &Y, an international accounting firm, was retained to serve as utside auditor of ABS. Plaintiffs allege in their complaint that hey sustained economic harm when E&Y failed to detect or isclose...accounting improprieties and resulting material verstatements of ABS' performance and condition as reflected in oth audited and other periodic financial statements. Appellants' rief, at 5. In short, plaintiffs allege accounting fraud in their auses of action, which include the following for which money amages are sought: breach of contract, malpractice, negligent isrepresentation, and contribution and indemnity. Upon being served with discovery requests, E&Y moved to stay itigation of the plaintiffs' derivative claims pending arbitration ursuant to a provision in the December 21, 1995 Retention Letter, hich was entered into between E&Y LLP and Mr. William McCarthy, in 1Ernst & Young refers to Ernst & Young and its successor, Ernst & Young LLP (a limited liability partnership formed in 1994 under the law of the State of Delaware). 2ABS Industries, Inc. will be referred to as ABS. -3- is corporate capacity3. A copy of this Retention Letter is ttached to Appellants' brief, at Appendix 2, and provides at aragraph 11 therein the following: 11. Any controversy or claim arising out of the services covered by this letter or heretofore or hereafter provided by us to the Company (including any such matter involving any parent, subsidiary, affiliate, successor in interest, or agent of the Company or of Ernst & Young LLP) shall be submitted first to voluntary mediation, and if the mediation is not successful, then to binding arbitration, in accordance with the dispute resolution procedures set forth in Exhibit I to this letter. Judgment on any arbitration award may be entered in any court having proper jurisdiction. (Italicization added.) The trial court, using a half-sheet status form, granted a stay f proceedings by order journalized on December 23, 1996. Journal ol. 2032, page 153. This timely appeal followed presenting six assignments of rror. I THE TRIAL COURT ERRED BY STAYING THE PLAINTIFFS-SHAREHOLDERS' DERIVATIVE CLAIMS AGAINST ABS' FORMER AUDITORS AND INSTEAD ORDERING ARBITRATION. Resolution of this appeal involves the application of the Ohio rbitra tion Act, which is set forth at R.C. 2711.01, et seq. ection .01(A) of this Chapter provides, generally, that provisions 3Mr. McCarthy was the president and chief executive officer of ABS. -4- n a written contract containing an arbitration clause for settling isputes arising under the contract shall be valid, irrevocable, nd enforceable, except upon grounds that exist at law or in equity or the revocation of any contract. (Italicization added.) ection .02 of this Chapter further provides the following: 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 that the applicant for the stay is not in default in proceeding with arbitration. An order under this section ..., is a final order and may be reviewed, affirmed, modified, or reversed on appeal pursuant to the Rules of Appellate Procedure and, to the extent not in conflict with those rules, Chapter 2505 of the Revised Code. (Italicization added.) In Krafcik v. USA Energy Consultants, Inc. (Cuyahoga, 1995), 07 Ohio App.3d 59, this court, citing Didado v. Lamson & Sessions o. (1992), 81 Ohio App.3d 302, 304, 610 N.E.2d 1085, 1086, easoned: A clause in a contract providing for dispute resolution by arbitration should not be denied effect unless it may be said with positive assurance that the subject arbitration clause is not susceptible to an interpretation that covers the asserted dispute. Independence Bank v. Erin Mechanical (1988), 49 Ohio App.3d 17, 550 N.E.2d 198; Gibbons-Grable Co. v. Gilbane Bldg. Co. (1986), 34 Ohio App.3d 170, 517 N.E.2d 559. In examining such a clause, a courtmust bear in mind the strong presumption in favor of arbitrability, and any doubts should be resolved in favor of coverage under the arbitration clause. Siam Feather & Forest Prod. Co., Inc. v. Midwest Feather Co. -5- (S.D.Ohio 1980), 503 F.Supp. 239, affirmed (C.A.6, 1981), 663 F.2d 1073; Gibbons-Grable Co., supra; Independence Bank, supra. lso see St. Vincent Charity Hosp. v. URS Consultants, Inc. (May 23, 996), Cuyahoga App. No. 69504, unreported, 1996 Ohio App. LEXIS 175. In this assignment, appellants argue that: (1) a shareholder's erivativ e action should not, as a matter of law, be subject to rbitration; (2) ABS is not bound to arbitrate, hence the derivative epresentatives are not bound to arbitrate, because Mr. McCarthy's lleged self-interest disabled him from acting for ABS, even though e was the president/chief executive officer of ABS at the time the etention letter's terms were accepted by ABS; and, (3) E&Y cannot nforce the arbitration provision because E&Y circumvented ABS' udit committee, thereby causing E&Y to compromise its role as an ndependent auditvoice and became an adversary of its client, ABS. As to the first sub-argument presented by appellants, it is rgedthat the arbitration proceeding is not adequate to implement r protect the procedural safeguards contained in Civ.R. 23.1. We ote that appellants provide no established authority in this State or this proposition. Reviewing the precepts of R.C. 2711.01, et eq., which are stated in mandatory terms which favor the pplication of arbitration, we cannot divine an intention to exempt hareholders' derivative actions from application of that Chapter. either can we accept appellants' suggestion that a panel of rbitrators wouldbe ill-equipped to deal with the issues, which by mplication infers that the trial court or a jury would do a better -6- ob at evaluating the evidence and applicable law. See Appellants rief, at 13, 14-15. To the contrary, it would appear that in atters of complex litigation involving securities and investments, panel of arbitrators versed in the issues common to that industry s better suited to review the litigation than a general urisdiction trial court or a jury panel drawn from the general opulation who is, more likely than not, untrained in the ntricacies of the financial markets, sophisticated corporate ccounting and their governing regulations. This argument is not ersuasive. The second sub-argument attacks the authority of the reside nt/chief executive officer to bind ABS to the accounting ontrac t. The basis for this sub-argument is appellants' peculation that Mr. McCarthy was plotting with E&Y to cover up the lleged financial misrepresentations at ABS which furthered Mr. cCarthy's personal economic interests to the detriment of ABS hareholders. Speculation does not alter the fact that a reside nt/chief executive officer has, at the very least, the pparent authority to bind the corporation which employs his or her ervices when negotiating the services contemplated by the retention f E&Y. See Master Consol. Corp. v. BancOhio Nat'l Bank (1991), 61 hio St.3d 570 (two part standard of review for determining whether pparent authority of an agent demonstrated); Stocker v. Castle nspections, Inc. (Cuyahoga, 1995), 99 Ohio App.3d 735 (apparent uthority of agent binds the principal to enforce a clause in a ontract for arbitration). Further, the record, on its face, does -7- ot support the theory that the retention of E&Y was not in the best nterest of ABS or somehow particularly favored E&Y. The third sub-argument is equally without merit. While ABS did aintain an audit committee, and the Retention Letter did mandate hat E&Y, after the acceptance of the letter, would report to the BS audit committee regarding the conduct and results of the audit, ee Retention letter at paragraph 5, there is no evidence to suggest hat E&Y could not negotiate directly with the president/chief xecutive officer of ABS for the contracting of accounting services. he insertion of an arbitration clause into the services agreement etween ABS and E&Y does not impact the duties of E&Y during the udit to report to the ABS audit committee regarding the conduct and esults of the audit: Instead, this arbitration clause impacts ispute s which would arise subsequent to the completion of the ervices provided under the Retention Letter. The first assignment of error is overruled. II THE TRIAL COURT ERRED BY STAYING PLAINTIFF'S DISCOVERY REQUESTS, AND THEREBY ORDERED ARBITRATION ON AN INCOMPLETE RECORD. A review of the record on appeal discloses that plaintiffs did erve discovery requests on the defendants upon the filing of the nderlying complaint. However, the record discloses that while the otion to stay proceedings was pending, plaintiffs did not seek to ave the court delay ruling on the motion to stay until the iscovery requests were complied with. Accordingly, the plaintiffs- ppellants' waived any error therein. Furthermore, plaintiffs- -8- ppellants' cite to no authority which compels a trial court to llow for discovery prior to entertaining a motion to stay roceedings pending arbitration. The Ohio Arbitration Act, which trongly favors arbitration, compels the court to review the rbitration clause at issue and, if the court is satisfied that the ispute or claim is covered by the arbitration clause, give effect o the clause and stay the proceedings pursuant to R.C. 2711.02. The second assignment of error is overruled. III THE TRIAL COURT ERRED BY FAILING TO REQUIRE THE PARTIES MOVING TO STAY LITIGATION PENDING ARBITRATION TO CARRY THEIR BURDEN OF PROOF OF PROVING THE ENFORCEABILITY OF THE ARBITRATION PROVISION AND ESTABLISHING ALL PREDICATE FACTS. In this assignment, appellants argue that the trial court, part from interpreting the written arbitration clause itself, hould also have accepted as true the allegations contained in the laintiffs' pleading and papers in determining whether the motion o stay should have been granted pursuant to R.C. 2711.02. It is an elementary proposition that the burden of proof in any otion hearing rests, initially, with the party seeking relief or remedy. There is no requirement to look to the allegations ontained in the pleadings as in the case of a motion to dismiss a omplaint pursuant to Civ.R. 12, which is essentially sought by ppellants. R.C. 2711.02 only requires that when an arbitration tay is requested, the trial court must review the subject clause nd determine its applicability to the claim. There is no equirement to look to the allegations contained in the pleadings -9- s in the case of a motion to dismiss a complaint pursuant to Civ.R. 2. However, contrary to appellants' assertions, E&Y submitted ocumentary evidence and affidavits in addition to the Retention etter which allowed the court to conclude that the arbitration rovision should be enforced. As previously stated, the court is ot required to look beyond the written contract unless the contract ay be voided on grounds common to the revocation of any contract, .C. 2711.01(A) and .02, but in this case the court had before it ufficient documentary evidence to conclude that E&Y met its burden f proof and that the contract should not have been revoked based n the facts presented to the court by the parties. The third ssignment of error is overruled. IV THE TRIAL COURT ERRED BY FAILING TO MAKE SPECIFIC FINDINGS OF FACT AND CONCLUSIONS OF LAW IN SUPPORT OF ITS DECISION STAYING LITIGATION PENDING ARBITRATION, THEREBY IMPEDING APPELLATE REVIEW. In this assignment, appellants argue that the trial court was equired to prepare findings of fact and conclusions of law in uling on the motion to stay proceedings pending arbitration. ppellants rely upon Divine Construction Co. v. Ohio-American Water o. (Franklin, 1991), 75 Ohio App.3d 311, which appellants isconstrue. In Divine, the defendant-appellant, who opposed rbitration of the matter, had made a request for a jury demand on he issue of the formation of a disputed contract containing an rbitration clause, but the court determined the issue of contract ormation at a non-oral hearing. In Divine, at 317, the court noted -10- he existence of a jury demand on the issue and held that the trial ourt was required to make specific findings pursuant to a trial egarding the existence of the contract. Civ.R. 52 provides that inding s of fact and conclusions of law be made by a trial court nly when questions of fact are tried by the court without a jury nd a party requests such findings and conclusions. In the case sub udice, appellants-shareholders made no jury demand to the trial ourt, nor did plaintiffs-appellants request findings of fact and onclus ions of law from the trial court. Plaintiffs-appellants aving failed to comply with Civ.R. 52, the court was not bound to repare findings of fact and conclusions of law. The fourth assignment of error is overruled. V EVEN ASSUMING THE ENFORCEABILITY OF THE ARBITRATION PROVISION, THE TRIAL COURT ERRED BY ORDERING ARBITRATION OF CLAIMS ASSERTED AGAINST A THIRD PARTY, E&Y, AN ENTITY WHICH WAS NOT A PARTY TO THE ARBITRATION CLAUSE. Appellants argue that the terms of the Retention Letter only ind ABS and E&Y LLP, and not E&Y. As previously noted above, at ootnote 1, E&Y LLP is the successor entity to E&Y. Technically, ppellants are correct that predecessor-E&Y is not a named party to he contract. However, this distinction is minimal. These two ntitie s, E&Y and E&Y LLP are, but for the corporate change to a imited liability partnershipdesignation, the same entities for all racticable intents and purposes. Pursuant to the discretion of the rial court, the court could stay the proceedings even where one arty is not a party to the contract. Richard L. Bowen & Assoc. v. -11- 200 W. 9thSt., Ltd. Partnership (October 24, 1991), Cuyahoga App. o. 61573, unreported, at 12-13, 1991 Ohio App. LEXIS 5109. The fifth assignment of error is overruled. VI EVEN ASSUMING THE ENFORCEABILITY OF THE ARBITRATION PROVISION, THE TRIAL COURT ERRED BY ORDERING ARBITRATION OF EQUITABLE CLAIMS, WHICH LIE CLEARLY OUTSIDE THE TERMS OF THE ARBITRATION CLAUSE. Appellants argue that because the shareholders' claims are llegedly equitable in nature, having been based on a derivative ction, and the Retention Letter provides that the arbitrators may ot award equitable relief, the equitable claims cannot be forced o go to arbitration. This argument is without merit. While the claims may be based on equitable principles, the elief sought, to-wit, money damages, is not an equitable remedy. t is only equitable reliefwhich is unavailable to the arbitrators, ho have within their power the ability to award monetary damages. urthermore, whether the claims are equitable or not is irrelevant. hat is relevant is whether the claims are the types of disputes hichthe parties have agreed to arbitrate pursuant to the written ontract. Finally, the terms of the Dispute Resolution Procedures ttached to the Retention Letter leave the power to determine the xtent to which a particular dispute is subject to the arbitration lause in the hands of the arbitrators4. 4The Dispute Resolution Procedures provide, at 1, under the heading Arbitration, the following: ***. Any issue concerning the extent to which any dispute is subject to arbitration, -12- The sixth assignment of error is overruled. Judgment affirmed. or concerning the applicability, interpretation, or enforceability of these procedures, ... shall be governed by the Federal Arbitration Act and resolved by the arbitrators. *** -13- It is ordered that appellees recover of appellants their costs erein taxed. The Court finds there were reasonable grounds for this appeal. It is ordered that a special mandate issue out of this Court irecting the Common Pleas Court to carry this judgment into xecution. A certified copy of this entry shall constitute the mandate ursuant to Rule 27 of the Rules of Appellate Procedure. xceptions. ERRENCE O'DONNELL, J., and IANE KARPINSKI, J., CONCUR. _______________________________ JAMES D. SWEENEY CHIEF JUSTICE .B. This entry is an announcement of the court's decision. See pp.R. 22(B), 22(D) and 26(A); Loc.App.R. 27. This decision will e journalized and will become the judgment and order of the court ursuant to App.R. 22(E) unless a motion for reconsideration with upporting brief, per App.R. 26(A), is filed within ten (10) days f the announcement of the court's decision. The time period for eview by the Supreme Court of Ohio shall begin to run upon the .