Ohio Appeals Court Upholds Owner’s Refusal to Arbitrate

Cleveland Jet Center, Inc. v. Structural Sales Corp.,
1995 Ohio App. LEXIS 4113 (Ohio Ct. App., Sept. 22, 1995).

Utilization of AIA Document A111, Standard Form of Agreement Between Owner & Contractor, 1978 Edition, without express incorporation of AIA Document A201, General Conditions of the Contract for Construction, left owner free to refuse arbitration. 

Cleveland Jet Center, Inc. (“Jet Center”), a corporation in the business of repairing, refurbishing and modifying jet aircraft, entered into a contract with Structural Sales Corp. (“Structural”), in which Structural agreed to design and build a hangar and office area at the Lost Nation Airport in Willoughby, Ohio. Structural selected the American Institute of Architects (“AIA”) Document A111, Standard Form of Agreement Between Owner & Contractor, 1978 Edition” as the contract form and drafted the blank terms.

After a dispute arose regarding the quality of work and final payment, Structural filed a demand for arbitration with the American Arbitration Association (AAA). Jet Center objected, arguing that the contract did not contain an arbitration clause. It filed a petition for preliminary/permanent injunction in the Cuyahoga County Court of Common Pleas, seeking to enjoin AAA from proceeding with the arbitration. The court denied the petition.

Jet Center then filed a complaint against Structural in the Lake County Court of Common Pleas. The complaint sought a declaratory judgment that the contract did not contain an arbitration clause, as well as monetary damages for Structural’s alleged breaches of the contract and the implied warranty of workmanlike construction. In response, Structural filed a motion to dismiss the complaint, or, in the alternative, to stay the proceeding pending the outcome of the AAA proceeding. The motion in the alternative was made pursuant to R.C. 2711.01, which provides for the stay of actions involving issues subject to a written arbitration agreement. Both motions were denied, and this appeal of the denial of stay followed.

Noting that under Ohio law “the determination of whether a specific controversy is arbitrable under a contract is a question of law for the court to decide upon examination of the contract,” the appellate court proceeded to review the trial court’s analysis of the contract. It first found that the 1978 Edition of AIA Document A111 does not contain an express arbitration provision. The court noted that the 1987 Edition of A111 does contain an express arbitration provision, but found this fact to be of little consequence because Structural had chosen to use the 1978 form.

Next, the court noted that Article 16 of Document A111 provides space for a listing of all the documents composing the contract, and that the corresponding instruction sheet indicates the A111 is to be used in conjunction with the 1976 Edition of AIA Document A201, General Conditions of the Contract for Construction. In this case, however, the space was left blank, i.e., Document A201 was not specifically incorporated by reference. In any event, no evidence was presented to indicate that the 1976 Edition of Document A201 contained an arbitration provision.

Having thus determined that the contract contained no arbitration provision, the Court of Appeals of Ohio held that the trial court had properly concluded that the dispute involved was not referable to arbitration. The Court of Appeals reiterated the general principle that although the law favors the resolution of disputes through arbitration, a party cannot be compelled to arbitrate a dispute that it has not agreed to arbitrate.

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