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Papandreas v. KNL Custom Homes, Inc.
Citation: 2016 Ohio 5136Docket: 103556
Court: Ohio Court of Appeals; July 28, 2016; Ohio; State Appellate Court
Original Court Document: View Document
Samuel and Joyce Papandreas (plaintiffs-appellants) appealed a trial court order that vacated a previous order granting their joint motion to stay counterclaims and bifurcate their breach of settlement claim against KNL Custom Homes, Inc. (defendant-appellee). The underlying dispute arose from a 2009 construction agreement, where the Papandreases alleged issues with KNL's work quality and scope, leading to withheld payments and mechanics liens filed by KNL. The Settlement Agreement included an arbitration clause, mandating binding arbitration for unresolved disputes. KNL initiated arbitration in 2011 for breach of contract, while the Papandreases countered with claims of breach, fraud, and misrepresentation. As arbitration costs escalated, the parties allegedly reached a settlement in August 2013, but KNL did not sign the Settlement Agreement prepared by the Papandreases’ counsel. In September 2014, the Papandreases filed a lawsuit against KNL for breach of the Settlement Agreement. KNL counterclaimed, prompting the Papandreases to move to bifurcate their breach claim from KNL's counterclaims and to stay the counterclaims pending arbitration. The trial court denied these motions, leading to the appeal. The appellate court reversed the trial court's order and remanded the case for further proceedings. The joint motion to vacate indicated that if the settlement favored Papandreas, KNL's counterclaims would be moot; if KNL prevailed, the counterclaims would go to arbitration. The trial court granted the joint motion on April 10, 2015, and subsequently bifurcated and stayed the counterclaims, extending discovery to June 10, 2015. On April 20, 2016, the court sua sponte recused itself from the case but continued to issue orders, including a case management order on August 26, 2015, where it also vacated the earlier April 10 order, stating it was improvidently issued. The appellants argued that the trial court erred by effectively denying Papandreases’ motion to stay arbitration. The court found that the trial court lacked authority to vacate the April 10 order because such orders regarding arbitration are final and appealable, and the recusal order issued on April 21, 2015, removed the judge’s authority to act on the case. The court referenced precedents confirming that a trial court cannot reconsider such final orders without jurisdictional grounds. It concluded that the August 26, 2015, order was ineffective, vacated that order, reinstated the April 10 order, and mandated the case be reassigned due to the trial court's recusal. Costs were to be split equally between the parties, and the court found reasonable grounds for the appeal.