Smith v. Allied Home Mtge. Corp.

SUPREME COURT CASES

Laws-info.com » Cases » Ohio » 9th District Court of Appeals » 2012 » Smith v. Allied Home Mtge. Corp.

State: Ohio

Court: Ohio Southern District Court

Docket No: 2012-Ohio-5434

Case Date: 11/26/2012

Plaintiff: Smith

Defendant: Allied Home Mtge. Corp.

Preview:[Cite as Smith v. Allied Home Mtge. Corp., 2012-Ohio-5434.]
STATE OF OHIO                                                                                          )                                            IN THE COURT OF APPEALS
                                                                                                       )ss:            NINTH JUDICIAL DISTRICT
COUNTY OF LORAIN                                                                                       )
LINDA M. SMITH, et al.                                                                                                 C.A. No.                     12CA010145
Appellees
v.                                                                                                                     APPEAL FROM JUDGMENT
                                                                                                                       ENTERED IN THE
ALLIED HOME MORTGAGE CAPITAL                                                                                                                        COURT OF COMMON PLEAS
CORP., et al.                                                                                                          COUNTY OF LORAIN, OHIO
                                                                                                                       CASE No.                     07CV153202
Appellants
                                                                                                                       DECISION AND JOURNAL ENTRY
Dated: November 26, 2012
BELFANCE, Judge.
{¶1}   Defendants-Appellants Allied Home Mortgage Capital Corporation, Allied Home
Mortgage  Credit  Corporation,  Allied  Home  Mortgage  Corporation                                    (collectively   “Allied
defendants”)  and  Jimmy  Condon  appeal  the  denial  of  Allied  Home  Mortgage  Capital
Corporation’s and Jimmy Condon’s motion to stay proceedings and compel arbitration by the
Lorain County Court of Common Pleas.   For the reasons set forth below, we reverse in part and
dismiss in part.
I.
{¶2}   The Allied defendants are mortgage brokers, and Mr. Condon was an employee of
at least one of the Allied defendants as of the time of the transaction at issue.   In October 2005,
Plaintiffs-Appellees Linda and Larry Smith purchased services from the Defendants-Appellants
related to a mortgage loan.    On October  17,  2007, Mr. and Mrs. Smith filed a five-count
complaint against the Defendants-Appellants.   The first three counts alleged class-action claims,

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and the remaining two claims alleged individual claims of Mr. and Mrs. Smith.   The claims are
connected to the services provided by Defendants-Appellants with respect to mortgage loans.
{¶3}   Defendants-Appellants filed a notice of removal of the matter to federal court;
however, ultimately the case was remanded back to the Lorain County Court of Common Pleas.
While the matter was pending in federal court, Mr. Condon and Allied Home Mortgage Capital
Corporation filed a motion to stay proceedings and a motion to compel arbitration.   When the
matter was returned to state court, Allied Home Mortgage Capital Corporation and Mr. Condon
filed  supplemental  authority  in  support  of  their  motion  to  stay  proceedings  and  compel
arbitration, which referenced both R.C. 2711.02 and R.C. 2711.03 and alleged that the disputes
as between Allied Home Mortgage Capital Corporation, Mr. Condon, and the Smiths were
subject to arbitration.   The memorandum in support of the motion specifically stated that the
arbitration agreement did “not apply to Defendants, Allied Home Mortgage Credit Corporation
or Allied Home Mortgage Corporation[.]”   Without waiving the issue of enforceability, Mr. and
Mrs. Smith asserted that their claims were not subject to arbitration based upon the language of
the arbitration agreement and this Court’s decision in Strickler v. First Ohio Banc & Lending,
Inc., 9th Dist. Nos. 08CA009416, 08CA009460, 2009-Ohio-1422.   Extensive briefing followed;
however, no hearing was held on the motion.   Instead, the trial court issued an entry denying the
“Motion to Arbitrate” based upon Strickler.   Defendants-Appellants have appealed, raising two
assignments of error for our review.
II.
ALLIED  HOME  MORTGAGE  CREDIT  CORPORATION’S  AND  ALLIED
HOME MORTGAGE CORPORATION’S APPEAL
{¶4}   Before this Court addresses the merits of this appeal, this Court must address
whether Allied Home Mortgage Credit Corporation and Allied Home Mortgage Corporation

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have standing to appeal.   Neither of these parties filed a motion to stay proceedings or compel
arbitration.                                                                                        In  fact,  there  is  an  acknowledgement  in  Allied  Home  Mortgage  Capital
Corporation’s and Mr. Condon’s motion to stay proceedings and compel arbitration that the
arbitration agreement applies to neither Allied Home Mortgage Credit Corporation nor Allied
Home  Mortgage  Corporation.    Accordingly,  we  fail  to  see  how  Allied  Home  Mortgage
Corporation and Allied Home Mortgage Credit Corporation are aggrieved by the trial court’s
ruling which denied Allied Home Mortgage Capital Corporation’s and Mr. Condon’s motion to
stay proceedings and compel arbitration.   See In re Estate of Shepherd, 9th Dist. No. 19239,
1999 WL 312378, *1 (May 5, 1999) (“In order to have standing to appeal, an appellant must
show that he is an aggrieved party, in that the lower court’s decision has adversely affected his
rights.”).    As we fail to see how the trial court’s decision adversely affected Allied Home
Mortgage Corporation’s or Allied Home Mortgage Credit Corporation’s rights, we dismiss the
appeal with respect to these two parties.
ASSIGNMENT OF ERROR I.
THE TRIAL COURT DID NOT HOLD A HEARING PRIOR TO ISSUING A
DECISION  ON  ALLIED’S  MOTION  TO  STAY  PROCEEDINGS  AND
COMPEL  ARBITRATION.     DID  THE  TRIAL  COURT  ERR  BY  NOT
HOLDING A HEARING?
{¶5}   Allied Home Mortgage Capital Corporation and Mr. Condon assert that the trial
court erred in denying their motion without holding a hearing.  We agree.
{¶6}                                                                                                “‘The Ohio Arbitration Act allows for either direct enforcement of [arbitration]
agreements through an order to compel arbitration under R.C. 2711.03, or indirect enforcement
through an order staying proceedings under R.C. 2711.02.’”   Maestle v. Best Buy Co., 100 Ohio
St.3d 330, 2003-Ohio-6465, ¶ 14, quoting Brumm v. McDonald & Co. Securities, Inc., 78 Ohio
App.3d 96, 100 (4th Dist.1992).   This Court has held that, “[w]hen a motion is filed under R.C.

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2711.03, alone or in combination with a motion to stay the proceedings, the trial court must
conduct a hearing.”   Krakora v. Superior Energy Sys., 9th Dist. No. 08CA009423, 2009-Ohio-
401, ¶ 5; Biondi v. Oregon Homes, LLC, 9th Dist. No. 25875, 2012-Ohio-1714, ¶ 6; Boggs
Custom Homes, Inc. v. Rehor, 9th Dist. No. 22211, 2005-Ohio-1129, ¶ 16.   While Mr. and Mrs.
Smith contend that no motion to compel was filed, the record discloses otherwise.   The motion
filed in the trial court is captioned “Defendants, Allied Home Mortgage Capital Corporation’s
and Jimmy Condon’s, Supplemental Authority in Support of Their Motion to Stay Proceedings
and Motion to Compel Arbitration[.]”  Moreover, the motion cites to both R.C. 2711.02 and R.C.
2711.03 and states that the movants request “that this Court, pursuant to R.C. 2711.02 stay any
further proceedings in this matter * * * [and] enter an order pursuant to R.C. 2711.03 ordering
the parties to commence with the arbitration process.”    Additionally, the trial court’s entry
references that the movants sought to stay the proceedings and to compel arbitration.
{¶7}   Accordingly, given there is no evidence that the trial court conducted a hearing
pursuant to Mr. Condon’s and Allied Home Mortgage Capital Corporation’s motion, under our
precedent we are required to reverse the trial court’s decision and remand the matter for a
hearing.   See Biondi at ¶ 7; Krakora at ¶ 6; Boggs at ¶ 18.   Thus, we sustain Allied Home
Mortgage Capital Corporation’s and Mr. Condon’s first assignment of error.
ASSIGNMENT OF ERROR II
THE   TRIAL   COURT   DENIED   ALLIED’S   MOTION   TO   STAY
PROCEEDINGS AND COMPEL ARBITRATION AND DETERMINED THAT
THE  SMITH’S  CLASS  ACTION  CLAIMS  ARE  EXCLUDED  FROM
ARBITRATION UNDER THE AGREEMENT.  DID THE TRIAL COURT ERR
BY  FAILING  TO  ENFORCE  THE  CLASS  ACTION  WAIVER  FOUND
WITHIN THE AGREEMENT?
{¶8}   Allied  Home  Mortgage  Capital  Corporation  and  Mr.  Condon  assert  in  their
second assignment of error that the trial court erred in determining the merits of their motion.

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However, because it is necessary for this Court to remand the matter for a hearing, we do not
address the merits of the trial court’s decision.  See, e.g., Krakora, 2009-Ohio-401, at ¶ 6.
III.
{¶9}   In light of the foregoing, we dismiss this appeal with respect to Allied Home
Mortgage  Corporation  and  Allied  Home  Mortgage  Credit  Corporation.    We  sustain  Mr.
Condon’s and Allied Home Mortgage Capital Corporation’s first assignment of error and do not
address their second assignment of error.  The judgment of the Lorain County Court of Common
Pleas is reversed and the matter is remanded so that a hearing in accordance with R.C. 2711.03
can be conducted.
Judgment reversed in part,
appeal dismissed in part,
and cause remanded.
There were reasonable grounds for this appeal.
We order that a special mandate issue out of this Court, directing the Court of Common
Pleas, County of Lorain, State of Ohio, to carry this judgment into execution.  A certified copy of
this journal entry shall constitute the mandate, pursuant to App.R. 27.
Immediately upon the filing hereof, this document shall constitute the journal entry of
judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the
period for review shall begin to run.   App.R. 22(C).   The Clerk of the Court of Appeals is
instructed to mail a notice of entry of this judgment to the parties and to make a notation of the
mailing in the docket, pursuant to App.R. 30.

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Costs taxed equally to both parties.
EVE V. BELFANCE
FOR THE COURT
MOORE, P. J.
CARR, J.
CONCUR.
APPEARANCES:
TERRENCE L. SEEBERGER, CHRISTOPHER A. TIPPING, and MICHAEL T. ALTVATER,
Attorneys at Law, for Appellants.
THOMAS R. THEADO, Attorney at Law, for Appellees.
JACK A. MALICKI, Attorney at Law, for Appellees.
JAMES M. MCCLAIN, Attorney at Law, for Appellees.

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