Kallas v. Manor Care of Barberton, OH, L.L.C.

Citation: 2017 Ohio 76Docket: 28068

Court: Ohio Court of Appeals; January 10, 2017; Ohio; State Appellate Court

Original Court Document: View Document

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In Kallas v. Manor Care of Barberton, OH, L.L.C., the Ninth Judicial District Court of Appeals affirmed the Summit County Court of Common Pleas' denial of ManorCare's motion to stay proceedings pending arbitration. Kimberly Kallas was admitted to ManorCare Barberton for therapy and signed a "Voluntary Arbitration Agreement" during her stay. Kallas later filed suit against ManorCare, which sought to enforce the arbitration agreement. Kallas contended that the agreement did not properly identify ManorCare Barberton or HCR ManorCare as parties, as it left the counterparties blank and only designated her as the patient. The trial court sided with Kallas, stating that the agreement, while identifying her, lacked a defined counterparty, rendering it unenforceable. The court did not address Kallas's argument regarding unconscionability. ManorCare appealed, asserting that the agreement was valid and enforceable or alternatively that they were third-party beneficiaries. The appellate court disagreed with ManorCare's claims, upholding the trial court's ruling.

The standard for reviewing a trial court’s decision on a motion to stay trial pending arbitration is an abuse of discretion. A valid arbitration agreement requires an actual contract specifying the arbitration of disputes, and the existence of such a contract is a legal question. The validity of a written arbitration agreement falls under state contract law, which is reviewed de novo. For a contract to be enforceable, the identity of the parties to be bound is crucial.

In the case at hand, the Arbitration Agreement refers to an unnamed "Center" but includes signatures from Kim Kallas and a representative from the Center. ManorCare Barberton admits it is not named as the "Center" in the agreement yet claims that extrinsic evidence indicates it was intended to be the party referred to. ManorCare cites a precedent allowing courts to use extrinsic evidence to clarify ambiguities in contracts where the identity of the parties is contested.

However, when a party's name is not mentioned in the agreement, parol evidence cannot be used to include them. In this instance, since ManorCare Barberton is not identified in the agreement's granting clause or signature block, the court correctly ruled that it was not a counterparty. HCR ManorCare is mentioned only once in relation to identifying sister centers operated by its subsidiaries, and ManorCare has not challenged the trial court's finding that HCR ManorCare is not a party to the Arbitration Agreement.

ManorCare asserts that either ManorCare Barberton or HCR ManorCare is a party to the Arbitration Agreement, claiming entitlement to enforce its provisions. The key arguments presented include: (1) ManorCare Barberton qualifies as the 'Center' and thus can enforce the Agreement as a party; and (2) both ManorCare entities are at least third-party beneficiaries of the Agreement. However, for third-party beneficiary status, a valid contract between a promisor and promisee is necessary. The Arbitration Agreement does not specify a counterparty, leading to the conclusion that no valid contract exists, and therefore, neither ManorCare Barberton nor HCR ManorCare can claim third-party beneficiary status. 

ManorCare also contends that if it were entitled to enforce the Agreement, the claims in the Complaint would fall under its provisions, and there would be no evidence of procedural or substantive unconscionability. However, since it was determined that ManorCare was not entitled to enforce the Agreement, further arguments were deemed unnecessary. The assignment of error by ManorCare was overruled, affirming the judgment of the Summit County Court of Common Pleas. A special mandate is directed to execute this judgment, and the costs are taxed to the Appellants. The document serves as the journal entry of judgment, with instructions for notice of entry to be mailed to the parties involved.