[Cite as VIS Sales, Inc. v. KeyBank, N.A., 2011-Ohio-1520.]


STATE OF OHIO                     )                           IN THE COURT OF APPEALS
                                  )ss:                        NINTH JUDICIAL DISTRICT
COUNTY OF SUMMIT                  )

VIS SALES, INC., et al.                                       C.A. No.   25366

        Appellants/Cross-Appellees

        v.                                                    APPEAL FROM JUDGMENT
                                                              ENTERED IN THE
KEYBANK, N. A.                                                COURT OF COMMON PLEAS
                                                              COUNTY OF SUMMIT, OHIO
        Appellee/Cross-Appellant                              CASE No.   CV 2009-06-4195

                                 DECISION AND JOURNAL ENTRY

Dated: March 30, 2011



        BELFANCE, Presiding Judge.

        {¶1}     Plaintiffs-Appellants/Cross-Appellees VIS Sales, Inc. and Thomas R. Georgeoff,

the president of VIS Sales, Inc., (collectively “VIS Sales”) appeal the decision of the Summit

County Court of Common Pleas concluding both Plaintiffs’ and Defendant’s claims are subject

to arbitration and staying the matter pending arbitration. Defendant-Appellee/Cross-Appellant

KeyBank, N.A. (“KeyBank”) has likewise appealed this decision. For the reasons set forth

below, we affirm in part and reverse in part.

                                                      I.

        {¶2}     In 2004, VIS Sales opened a business checking account at KeyBank which was

subject to a Deposit Account Agreement which contained an arbitration clause. VIS Sales also

established a line of credit with KeyBank in 2004 “enabling VIS Sales to draw on the [line of

credit] and deposit funds directly into its checking account as needed. VIS Sales could likewise

transfer money from the checking account to pay down the [line of credit].” In addition, VIS
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Sales executed a promissory note and a Security Agreement in favor of KeyBank to secure the

promissory note. In 2007, the parties entered into a Business Loan Agreement pertaining to the

line of credit. In addition, Mr. Georgeoff signed a commercial guaranty and promissory note to

secure the line of credit. The line of credit was subsequently extended and the terms of the note

were modified. Thus, several documents are connected to the line of credit: the Business Loan

Agreement, the promissory note, the commercial guaranty, and the security agreement. VIS

Sales also applied for and received a Cash Reserve Credit Account with a limit of $10,000

“which would automatically advance up to $10,000 and place the money in VIS Sales’ checking

account to prevent an overdraft.” The only document containing an arbitration clause was the

Deposit Account Agreement.

       {¶3}   The promissory note became due and payable in October 2008 and thereafter

KeyBank demanded payment in full of the line of credit. VIS Sales did not make payment.

       {¶4}   In 2009, VIS Sales filed a complaint for declaratory judgment, injunctive relief,

and damages against KeyBank. In response, KeyBank filed a motion to dismiss. Thereafter,

VIS Sales filed an amended complaint for declaratory judgment and injunctive relief. The claim

for declaratory/injunction relief essentially sought to invalidate the cognovit provisions in the

promissory note and the commercial guaranty related to the line of credit. In addition, VIS

Sales’ complaint contained a claim for tortious interference, alleging that KeyBank’s actions

interfered with VIS Sales’ attempted business relationship with Wachovia Bank, N.A. and a

claim for unjust enrichment, alleging that KeyBank improperly charged VIS Sales fees and

removed money from its checking account. KeyBank answered and filed a counterclaim seeking

a judgment of confession based upon the promissory note and commercial guaranty, which

KeyBank alleged was in default, and a counterclaim/third party claim seeking to take possession
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of the collateral under the security agreement.        KeyBank later dismissed the third-party

defendants.

       {¶5}    KeyBank then filed several motions, including a motion to stay VIS Sales’ claims

pending arbitration. VIS Sales responded in opposition. The trial court held a hearing on the

issue and ultimately concluded that both VIS Sales’ claims and KeyBank’s counterclaims were

subject to arbitration and stayed the matter pending arbitration.

       {¶6}    VIS Sales has appealed and KeyBank has cross-appealed, each raising a single

assignment of error for our review.

                                                 II.

                                  ASSIGNMENT OF ERROR I

       “THE TRIAL COURT ERRED BY RULING THAT AN ARBITRATION
       CLAUSE IN ONE OF SEVERAL AGREEMENTS REQUIRED THE
       SUBMISSION OF ALL DISPUTES TO ARBITRATION.”

                              CROSS-ASSIGNMENT OF ERROR I

       “THE TRIAL COURT COMMITTED REVERSIBLE ERROR BY
       SUBMITTING KEYBANK’S CLAIMS – CLAIMS PREMISED ON A
       PROMISSORY NOTE AND GUARANTY – TO ARBITRATION.”

       {¶7}    The trial court ruled that both VIS Sales’ claims and KeyBank’s counterclaims

were subject to arbitration and stayed the proceedings pending arbitration. VIS Sales appears to

assert that none of its claims were subject to arbitration as only the checking account contained

an arbitration clause and all of VIS Sales’ allegations with respect to the checking account were

“ancillary.”   KeyBank asserts that the trial court erred in submitting its counterclaims to

arbitration, as its claims were based upon a promissory note and a commercial guaranty.

       {¶8}    Generally, this Court reviews a lower court’s decision to grant or deny a stay

pending arbitration for an abuse of discretion. Ault v. Parkview Homes, Inc., 9th Dist. No.
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24375, 2009-Ohio-586, at ¶7. However, the primary question before this Court is whether the

claims are arbitrable. “The question of whether a controversy is arbitrable under a contract is a

question of law for the Court to decide upon an examination of the contract.” (Internal quotations

and citations omitted.) May v. Wachovia Securities, LLC, 9th Dist. No. 24635, 2009-Ohio-4339,

at ¶5. Thus, our review is de novo. Id.

       {¶9}    Pursuant to R.C. 2711.02(B):

       “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 the applicant for the stay is not in
       default in proceeding with arbitration.”

Thus, a court must stay a matter pending arbitration if: “(1) the action is brought upon any issue

referable to arbitration under a written agreement for arbitration; and (2) the court is satisfied the

issue is referable to arbitration under the written agreement.” (Internal quotations and citations

omitted.) May at ¶6.

       {¶10} Ohio public policy favors arbitration. Murray v. David Moore Builders, 177 Ohio

App.3d 62, 2008-Ohio-2960, at ¶8. Nonetheless, “arbitration is a matter of contract and a party

cannot be required to submit to arbitration any dispute which he has not agreed so to submit.”

(Internal quotations and citations omitted.) Academy of Medicine of Cincinnati v. Aetna Health,

Inc., 108 Ohio St.3d 185, 2006-Ohio-657, at ¶11.          “An arbitration clause in a contract is

generally viewed as an expression that the parties agree to arbitrate disagreements within the

scope of the arbitration clause[.]” (Internal quotations and citations omitted.) Id. at ¶16. “To

determine whether the claims asserted in the complaint fall within the scope of an arbitration

clause, the Court must classify the particular clause as either broad or narrow. An arbitration
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clause that contains the phrase ‘any claim or controversy arising out of or relating to the

agreement’ is considered the paradigm of a broad clause.” (Internal quotations and citations

omitted.) Id. at ¶18.

       {¶11} However, even the presence of a broad arbitration clause does not make all claims

subject to arbitration. See id. at ¶20. The reviewing court still must ask if the parties agreed to

arbitrate the issue at hand. Id. “[A] proper method of analysis is to ask if an action could be

maintained without reference to the contract or relationship at issue.” (Internal quotations and

citation omitted.) Id. at ¶24. This test “allows courts to make determinations of arbitrability

based upon the factual allegations in the complaint instead of on the legal theories presented. It

also establishes that the existence of a contract between the parties does not mean that every

dispute between the parties is arbitrable.” Id. at ¶29.

       {¶12} “[I]f a dispute even arguably falls within the arbitration provision, the trial court

must stay the proceedings until arbitration has been completed.”                Tomovich v. USA

Waterproofing & Foundation Services, Inc., 9th Dist. No. 07CA009150, 2007-Ohio-6214, at ¶8.

       {¶13} We begin by noting that this is not the typical case with one contract containing a

single arbitration clause. This dispute involves several contracts, only one of which contains an

arbitration clause. Thus, our task is to examine the claims and determine which of the claims

arose from, or are related to, the contract containing the arbitration provision, i.e. the Deposit

Account Agreement. Further, despite the parties’ focus on whether different accounts were

subject to arbitration, the real issue before this Court is which, if any, of the parties’ claims are

subject to arbitration based upon the arbitration clause contained within the Deposit Account

Agreement.
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       {¶14} The arbitration provision at issue is contained in section twenty-five of the

Deposit Account Agreement. It provides in pertinent part that:

       “This Arbitration Provision sets forth the circumstances and procedures under
       which a Claim or Claims (as defined below) may be arbitrated instead of litigated
       in court. * * * .

       “As used in this Arbitration Provision, the word ‘Claim’ or ‘Claims’ means any
       claim, dispute, or controversy between you and us arising from or relating to this
       Agreement or your Account(s), including without limitation, the validity,
       enforceability, or scope of this Arbitration Provision or this Deposit Account
       Agreement. ‘Claim’ or ‘Claims’ includes claims of every kind and nature,
       whether pre-existing, present, or future, including without limitation, initial
       claims, counterclaims, cross-claims, and third-party claims, and claims based
       upon contract, tort, fraud and other intentional torts, constitutions, statute,
       regulation, common law, and equity (including, without limitation, any claim for
       injunctive or declaratory relief). The word ‘Claim’ or ‘Claims’ is to be given the
       broadest possible meaning and includes, by way of example and without
       limitation, any claim, dispute, or controversy that arises from or relates to (a) any
       Account subject to the terms of this Agreement[,] (b) any electronic funds transfer
       from or to any account, (c) advertisements, promotions, or oral or written
       statements related to this Agreement or your Account, (d) your application for any
       Account, and (e) the collection of amounts owed by you to us.” (Emphasis
       added.)

The language emphasized above supports the conclusion that the arbitration clause is a broad

clause. See Academy of Medicine of Cincinnati at ¶18.

       {¶15} The Deposit Account Agreement also defines “Account” as “all Checking,

Savings and Time Deposit Accounts.” It defines “Checking Accounts” as “all Accounts we

designate from time to time as Checking Accounts.” It defines “Savings Accounts” as “all

Accounts we designate from time to time as Savings Accounts.” It defines “Time Accounts” as

“all Accounts that you deposit with us for a specified period of time and we classify from time to

time as time deposits.”

       {¶16} The Deposit Account Agreement also defines both “Personal Accounts” and

“Business Accounts[.]” “Personal Accounts means Accounts [KeyBank] classif[ies] from time
                                               7


to time as personal and offer primarily to consumers for personal, family or household

purposes.” It defines “Business Accounts” as “all other Accounts and includes Accounts we

offer from time to time primarily to businesses, organizations, public entities, commercial and

non-profit enterprises, corporations, partnerships, limited liability companies, sole proprietors

and associations.”

       {¶17} The trial court concluded that VIS Sales’ promissory note, checking account, and

cash reserve credit account all constituted “business accounts[,]” despite the fact that the

promissory note and cash reserve credit account are not checking, savings, or time deposit

accounts. While the promissory note and cash reserve credit account might be commonly

referred to as business accounts, there is no evidence that these agreements fit within the

definition of Account stated in the Deposit Account Agreement.       Based upon the definitions

contained in the Deposit Account Agreement, the only contract that appears to meet the

definition of “Account” is the checking account. The trial court further concluded that “[b]ased

upon the broad nature of the Arbitration Provision and the interrelationship between all the

business accounts with the pending claims,” all the claims and counterclaims were subject to

arbitration. Thus, the trial court, in large part, based its decision upon the notion that the

agreements between VIS Sales and KeyBank were all business accounts; a conclusion that is

contrary to how the terms are defined in the Deposit Account Agreement.

       {¶18} Nonetheless, this Court “‘is not authorized to reverse a correct judgment merely

because erroneous reasons were assigned as a basis thereof.’” Murray v. David Moore Builders,

Inc., 177 Ohio App.3d 62, 2008-Ohio-2960, at ¶12, quoting State ex rel. Carter v. Schotten

(1994), 70 Ohio St.3d 89, 92.        Therefore, we independently examine the claims and
                                                 8


counterclaims to determine whether they “aris[e] from or relat[e] to this [Deposit Account]

Agreement or [VIS Sales’] Account(s)[.]”

Claim for Declaratory Judgment/Injunctive Relief

       {¶19} Each of VIS Sales’ requests for relief related to its claim for declaratory

judgment/injunctive relief essentially seek to bar application of the cognovit provisions. While

VIS Sales’ allegations under this claim are varied and seem to implicate several contracts, the

relief it seeks relates solely to invalidating the cognovit provisions.        The only contracts

containing cognovit provisions are the promissory note and commercial guaranty, and the

amendments thereto, all of which are connected to the line of credit. We do not see how

determining whether the cognovit provisions of the promissory note and commercial guaranty

are, or are not, valid implicates the Deposit Account Agreement. This claim arose from, and

relates to, the line of credit, not the checking account governed by the Deposit Account

Agreement containing the arbitration provision. A claim related to the validity of the cognovit

provisions       could       have        been        brought       without         reference    to

the existence of the Deposit Account Agreement. See Academy of Medicine of Cincinnati at

¶24. This Court cannot conclude that the parties agreed to arbitrate this claim.

Claim for Tortious Interference

       {¶20} VIS Sales’ claim for tortious interference alleges that “by participating in a

financial scheme of reckless profiteering, and intending to earn as many fees as possible from

VIS Sales, [KeyBank] interfered with [VIS Sales’] business relationship and caused Wachovia

not to enter into a lending relationship with VIS Sales.” This claim does not arise from or relate

to any of the contracts. The claim essentially alleges that KeyBank wrongfully kept Wachovia

from entering into a relationship with VIS Sales. Resolution of this issue does not on its face
                                                  9


implicate the Deposit Account Agreement. We cannot say the parties agreed to arbitrate this

claim.

Claim for Unjust Enrichment

         {¶21} VIS Sales’ claim for unjust enrichment alleges that KeyBank “inappropriately

charged VIS Sales for fees and removed money directly from VIS Sales’ checking account.”

While it is difficult to discern from the language of the amended complaint, it appears the

problematic fees represent overdraft fees that VIS Sales alleges it would not have been charged if

KeyBank had not altered the manner it which it processed checks or held funds unavailable and

if the cash reserve credit account was being appropriately operated. We conclude this claim

clearly arose from and relates to the Deposit Account Agreement that governs the checking

account and contains the arbitration provision.

         {¶22} We begin by noting that the allegations quoted above implicate the checking

account and therefore the Deposit Account Agreement. Further, to the extent that this claim

encompasses the allegations that KeyBank improperly processed checks or held funds

unavailable, it is also related to the Deposit Account Agreement as both issues are discussed in it.

To the extent that VIS Sales alleges that the overdraft protection of the Cash Reserve Credit

Account did not function appropriately, the claim also relates to the checking account and

Deposit Account Agreement. Mr. Georgeoff testified at the hearing held on this matter that the

Cash Reserve Credit Account was an “automatic line of credit[,]” and that the sole purpose of the

Cash Reserve Credit Account was to fund potential overdrafts on the checking account. As is

evident from Mr. Georgeoff’s testimony, and given the fact that the Deposit Account Agreement

governs the checking account, the broad language of the Deposit Account Agreement containing

the arbitration clause is susceptible to an interpretation that covers this dispute. See Academy of
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Medicine at ¶14. We conclude that VIS Sales’ unjust enrichment claim arose from and relates to

the Deposit Account Agreement containing the arbitration provision. This claim could not be

maintained without reference to the Deposit Account Agreement. See id. Accordingly, this

claim is subject to arbitration.

         {¶23} Based on the foregoing, we sustain in part and overrule in part VIS Sales’

assignment of error.

Counterclaims

         {¶24} We note that neither side argued to the trial court that KeyBank’s counterclaims

were subject to arbitration. Nonetheless, the trial court concluded they were. Assuming that the

trial court had the authority to make that determination sua sponte, we conclude it erred in so

doing.

         {¶25} KeyBank’s first counterclaim seeks payment of the amount due under the line of

credit based upon the promissory note and commercial guaranty.              KeyBank’s second

counterclaim seeks to recover the collateral discussed under the security agreement due to the

alleged default under the promissory note and commercial guaranty. These claims do not arise

from or relate to the Deposit Account Agreement. The line of credit is governed by several

documents: the Business Loan Agreement, a promissory note, a commercial guaranty, and a

security agreement. None of these documents contain an arbitration provision. KeyBank could

proceed on both counterclaims without reference to the Deposit Account Agreement. See id.

The parties did not agree to arbitrate KeyBank’s counterclaims.

         {¶26} Based on the foregoing, we sustain KeyBank’s cross-assignment of error.
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                                                III.

       {¶27} In light of the foregoing, we affirm in part, and reverse in part the judgment of the

Summit County Court of Common Pleas. VIS Sales’ claim for unjust enrichment is subject to

arbitration, while the remaining claims and counterclaims are not subject to arbitration. The

proceedings are stayed pending arbitration. See R.C. 2711.02(B); Tomovich at ¶8.

                                                                        Judgment affirmed in part,
                                                                                 reversed 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 Summit, 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(E). 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.

       Costs taxed to all parties equally.


                                                       EVE V. BELFANCE
                                                       FOR THE COURT

CARR, J.
MOORE, J.
CONCUR
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APPEARANCES:

ERICA L. EVERSMAN, Attorney at Law, for Appellants/Cross-Appellees.

JOEL K. DAYTON, RANDOLPH L. SNOW, and GORDON D. WOOLBERT, II, Attorneys at
Law, for Appellee/Cross-Appellant.
