[Cite as Gaither v. Wall & Assocs., Inc., 2017-Ohio-765.]




                             IN THE COURT OF APPEALS OF OHIO
                                SECOND APPELLATE DISTRICT
                                    MONTGOMERY COUNTY

 STANLEY GAITHER                                        :
                                                        :
         Plaintiff-Appellant                            :   Appellate Case No. 26959
                                                        :
 v.                                                     :   Trial Court Case No. 2015-CV-04573
                                                        :
 WALL & ASSOCIATES, INC., et al.                        :   (Civil Appeal from
                                                        :   Common Pleas Court)
         Defendants-Appellees                           :
                                                        :

                                                ...........

                                               OPINION

                             Rendered on the 3rd day of March, 2017.

                                                ...........

JEREMIAH E. HECK, Atty. Reg. No. 0076742, KATHERINE L. WOLFE, Atty. Reg. No.
0086356, 580 East Rich Street, Columbus, Ohio 43215
     Attorneys for Plaintiff-Appellant

BARRY F. FAGEL, Atty. Reg. No. 0060122, 312 Walnut Street, Suite 3100, Cincinnati,
Ohio 45202
      Attorney for Defendants-Appellees

                                              .............




WELBAUM, J.
                                                                                          -2-




       {¶ 1} In this case, Plaintiff-Appellant, Stanley Gaither, appeals from a judgment

dismissing his action against Defendants-Appellees, Wall and Associates, Inc., et. al,,

without prejudice, based on lack of jurisdiction.      In support of his appeal, Gaither

contends that the arbitration clause in the contract between the parties is unenforceable

because is it unconscionable and is against public policy.

       {¶ 2} We conclude that the arbitration agreement was not procedurally

unconscionable.       Consequently,     because     both     procedural   and   substantive

unconscionability must be established in order to prevent enforcement of an arbitration

agreement, Gaither cannot prevail on this claim.        However, we also conclude that

Gaither is correct in contending that the “loser pays” provision in the arbitration agreement

is unenforceable because it is against public policy. This provision requires the losing

party to pay the costs, including attorney fees, of the party who substantially prevails in

arbitration. Although this provision is against public policy, it can be severed from the

arbitration agreement. Thus, the arbitration agreement may still be enforced, and the

motion for stay of the proceedings, pending arbitration, was proper.

       {¶ 3} Nonetheless, the trial court erred in dismissing the case for lack of

jurisdiction, rather than granting the motion for a stay pending arbitration. Accordingly,

the judgment of the trial court will be reversed, and this cause will be remanded so that

the trial court can enter an order staying the proceedings pending arbitration, with the

provision that the clause pertaining to payment of costs to the substantially prevailing

party is excised from the agreement.
                                                                                      -3-


                                I. Facts and Course of Proceedings

       {¶ 4} In September 2015, Stanley Gaither filed a complaint against Wall and

Associates, Inc., and John Does 1-3 (collectively, “W&A”). The complaint alleged that

W&A had violated the Ohio Consumer Sales Practices Act, R.C. 1345.01 to 1345.99

(CSPA), and the Ohio Debt Adjustment Companies Act, R.C. 4710.01 to 4710.99.

Gaither further alleged that W&A had committed fraud.          These alleged violations

occurred in connection with a consumer sales agreement entered into by Gaither and

W&A.

       {¶ 5} According to the complaint, Gaither was experiencing financial difficulty in

2014, including paying his taxes. Although Gaither had previously arranged a payment

plan with the Internal Revenue Service (“IRS”), Gaither decided to contract with W&A

based on representations that W&A could get his tax liens removed within 48 hours and

would negotiate with the IRS to lower Gaither’s overall tax debt. After speaking with a

representative of W&A, Gaither signed a written contract on October 29, 2014, and paid

an initial payment of $2,500. He also paid $350 in monthly payments for five months, for

a total payment of $4,250. Apparently Gaither became dissatisfied with the resolution of

the case and stopped payments to W&A. He then filed suit in September 2015.

       {¶ 6} Gaither attached a copy of the contract to the complaint. The contract is

three pages long. In the contract, W&A agreed to represent Gaither administratively

before the tax authorities in connection with Gaither’s personal federal and state income

tax for the tax years 1999-2003, 2005-2006, and 2010-2011.           Paragraph 13 of the

contract provided as follows:

       13. Any controversy, dispute, or claim arising out of, or under, or related
                                                                                  -4-


to this Agreement will be finally settled by arbitration conducted with, and in

accordance with the Rules of, the McCammon Group, an independent

arbitration service headquartered in Virginia. Any such arbitration will be

conducted before and decided by one arbitrator, unless the parties to this

agreement agree otherwise. Unless the parties agree to an arbitrator, the

parties to the arbitration will request that the McCammon Group provide the

parties with a list of five potential arbitrators. Each party will then strike

from the list names one after another until one name is left. After the rights

to strike are exercised, the individual remaining on the list will be the

arbitrator. Any such arbitration will take place in Fairfax, Virginia. The

arbitrators in any such arbitration will apply the laws of the Commonwealth

of Virginia and the United States of America. In any arbitration under this

Agreement, the Agreement will be deemed to have been made in, and will

be governed by and construed under the laws of, the Commonwealth of

Virginia and the United States of America. Any decision rendered by the

arbitrator will be final and binding and judgment thereon may be entered in

any court having jurisdiction or application may be made to such court of an

order of enforcement as the case may require. Each of the Parties to this

Agreement intend that this agreement to arbitrate be irrevocable and the

exclusive means of settling all disputes under this Agreement, whether for

money damages or equitable relief. If arbitration is invoked in accordance

with the provisions of this Agreement, the substantially prevailing party in

the arbitration will be entitled to recover from the other all costs, fees, and
                                                                                           -5-


       expenses pertaining or attributable to such arbitration, including reasonable

       attorneys’ fees for those claims on which the substantially prevailing party

       prevailed.

Doc. #1, Complaint, Ex. A, p. 3.

       {¶ 7} The contract further provided that it would be deemed to have been entered

into in Virginia and subject to the laws of Virginia. It also vested jurisdiction exclusively

in the Virginia courts located in Fairfax, Virginia.

       {¶ 8} After W&A answered the complaint, W&A filed a motion to dismiss, or in the

alternative, to stay the proceedings pending arbitration. Additional memoranda were

filed, and on November 30, 2015, the trial court concluded that the arbitration agreement

was enforceable. The court then dismissed the case without prejudice, based on lack of

jurisdiction. Gaither appeals from the judgment of dismissal.



                           II. Was the Arbitration Clause Enforceable?

       {¶ 9} Gaither’s sole assignment of error states that:

              The Trial Court Erred in Finding the Arbitration Clause Contained in

       the Consumer Contract Between the Parties Enforceable.

       {¶ 10} Under this assignment of error, Gaither contends that the arbitration clause

was procedurally and substantively unconscionable. Gaither further contends that the

clause is not enforceable because it violates public policy. And finally, Gaither argues

that even if the arbitration clause is enforceable, any arbitration should take place in Ohio,

based on Ohio public policy.

       {¶ 11} “The Ohio General Assembly in R.C. Chapter 2711 has expressed a strong
                                                                                                -6-

policy favoring arbitration of disputes.” Taylor Bldg. Corp. of Am. v. Benfield, 117 Ohio

St.3d 352, 2008-Ohio-938, 884 N.E.2d 12, ¶ 25. In this regard, R.C. 2711.01(A) provides

that:

                A provision in any written contract, except as provided in division (B)

        of this section, to settle by arbitration a controversy that subsequently arises

        out of the contract, or out of the refusal to perform the whole or any part of

        the contract, or any agreement in writing between two or more persons to

        submit to arbitration any controversy existing between them at the time of

        the agreement to submit, or arising after the agreement to submit, from a

        relationship then existing between them or that they simultaneously create,

        shall be valid, irrevocable, and enforceable, except upon grounds that exist

        at law or in equity for the revocation of any contract.

        {¶ 12} “Ohio law directs trial courts to grant a stay of litigation in favor of arbitration

pursuant to a written arbitration agreement on application of one of the parties, in

accordance with R.C. 2711.02(B).” Taylor at ¶ 28. R.C. 2711.02(B) requires trial courts

to stay trial until arbitration has been held, where the court is satisfied that the issues

involved in the court action are “referable to arbitration under an agreement in writing for

arbitration * * *.”

        {¶ 13} We have previously observed that “when a dispute falls within an arbitration

provision, the provision must be addressed first. If the provision is enforced, the dispute

proceeds to arbitration according to the provision. Only when the provision is found

unenforceable do questions of forum selection and choice of law arise because, absent

arbitration, a court must resolve the dispute.” Banks v. Jennings, 184 Ohio App.3d 269,
                                                                                        -7-


2009-Ohio-5035, 920 N.E.2d 432, ¶ 10 (2d Dist.). Therefore, the first consideration is

whether the arbitration provision is enforceable.

       {¶ 14} As was noted, W&A asked the trial court to dismiss the action, or

alternatively, to stay the proceedings pending arbitration. The trial court concluded that

the arbitration agreement was enforceable and dismissed the action without prejudice,

for lack of jurisdiction.

       {¶ 15} Under Banks, the trial court should have either granted a stay of the action

pending arbitration, if the court concluded that the arbitration clause was enforceable, or

denied the stay, at which time the court could have considered whether it had jurisdiction

over the action (based on forum selection and choice of law). The trial court did not

specifically discuss the forum selection clause in the contract or principles pertaining to

choice of law. However, the court dismissed the action for lack of jurisdiction. This was

an implied finding on forum selection and choice of law, and was premature under our

decision in Banks.

       {¶ 16} Nonetheless, the trial court did consider enforceability of the arbitration

provision in its decision, and consistent with Banks, we will consider that issue. The

Supreme Court of Ohio has noted that “[u]nconscionability is a ground for revocation of a

contract.” (Citation omitted.) Taylor, 117 Ohio St.3d 352, 2008-Ohio-938, 884 N.E.2d

12, at ¶ 33. This determination is a question of law, and we review the trial court’s

decision de novo. Id. at ¶ 35. If the trial court makes factual findings to support its

decision about whether the contract is unconscionable, however, we give these findings

great deference. Id. at ¶ 38.

       {¶ 17} In the case before us, the motion was decided based on the allegations in
                                                                                            -8-


the complaint and the contract language; no factual materials were submitted other than

the affidavit of Mark Yost, the Chief Executive Officer of W&A. However, Yost simply

identified the contract and the fact that W&A is a Virginia corporation. The residence of

the corporation was generally irrelevant to the arbitration issues, and W&A’s answer had

already admitted the existence of the contract (which was attached to the complaint as

Ex. A). As a result, the trial court’s factual determinations, to the extent there were any,

are not entitled to deference.

       {¶ 18} “Unconscionability includes both ‘ “an absence of meaningful choice on the

part of one of the parties together with contract terms which are unreasonably favorable

to the other party.” ’ ” Taylor at ¶ 34, quoting Lake Ridge Academy v. Carney, 66 Ohio

St.3d 376, 383, 613 N.E.2d 183 (1993). (Other citations omitted.) As a result, “[t]he

party asserting unconscionability of a contract bears the burden of proving that the

agreement is both procedurally and substantively unconscionable.” Id.

       {¶ 19} In Taylor, the court stressed that “ ‘an arbitration clause is, in effect, a

contract within a contract, subject to revocation on its own merits.’ ” Taylor, 117 Ohio

St.3d 352, 2008-Ohio-938, 884 N.E.2d 12, at ¶ 41, quoting ABM Farms, Inc. v. Woods,

81 Ohio St.3d 498, 502, 692 N.E.2d 574 (1998). Thus, “[w]hen a party challenges an

arbitration provision as unconscionable pursuant to R.C. 2711.01(A), the party must show

that the arbitration clause itself is unconscionable.      If the court determines that the

arbitration clause is enforceable, claims of unconscionability that relate to the contract

generally, rather than the arbitration clause specifically, are properly left to the arbitrator

in the first instance.” Id. at ¶ 42.

       {¶ 20} “Procedural unconscionability considers the circumstances surrounding the
                                                                                           -9-


contracting parties’ bargaining, such as the parties’ ‘ “age, education, intelligence,

business acumen and experience, * * * who drafted the contract, * * * whether alterations

in the printed terms were possible, [and] whether there were alternative sources of supply

for the goods in question.” ’ ” Taylor at ¶ 44, quoting Collins v. Click Camera & Video,

Inc., 86 Ohio App.3d 826, 834, 621 N.E.2d 1294 (2d Dist.1993). (Other citation omitted.)

“ ‘Factors which may contribute to a finding of unconscionability in the bargaining process

[i.e., procedural unconscionability] include the following: belief by the stronger party that

there is no reasonable probability that the weaker party will fully perform the contract;

knowledge of the stronger party that the weaker party will be unable to receive substantial

benefits from the contract; knowledge of the stronger party that the weaker party is unable

reasonably to protect his interests by reason of physical or mental infirmities, ignorance,

illiteracy or inability to understand the language of the agreement, or similar factors.’ ”

(Bracketed material sic.) Id., quoting 9 Restatement of the Law 2d, Contracts, Section

208, Comment d (1981).

       {¶ 21} In response to W&A’s motion, Gaither failed to present any evidence or

information on the above matters, other than the fact that W&A had drafted the

agreement.     The complaint only indicates that Gaither initially spoke to a W&A

representative after finding its information in a phonebook, and then signed a written

contract on October 29, 2014.1


1 Gaither’s memorandum in the trial court discusses the fact that he did not have
sophisticated knowledge and did not consult with legal counsel before signing the
contract. However, none of these alleged facts are part of the record and they cannot
be considered. In contrast, W&A asserted in the trial court that Gaither was a teacher,
and, therefore, was able to read a contract. Again, these “facts” are not part of the
record. If parties wish the trial court (and later an appellate court) to consider facts, they
must submit evidence, not assertions in memoranda.
                                                                                          -10-

       {¶ 22} In Taylor, the Supreme Court of Ohio stressed that “simply showing that a

contract is preprinted and that the arbitration clause is a required term, without more, fails

to demonstrate the unconscionability of the arbitration clause.” Taylor, 117 Ohio St.3d

352, 2008-Ohio-938, 884 N.E.2d 12, at ¶ 46. The clause involved in the case before us

is contained in a contract of only three pages, is in standard, rather than fine print, and

was not hidden in any way. Gaither failed to submit any evidence that he was hurried

through the process or that he was prevented from consulting an attorney if he desired.

This is similar to the situation in Taylor. Id.

       {¶ 23} The arbitration clause is also not difficult to understand.       Furthermore,

although Gaither argues that arbitration clauses in consumer contracts are like adhesion

contracts, the Supreme Court of Ohio has said that “even a contract of adhesion is not in

all instances unconscionable per se.” Id. at ¶ 50. In this regard, the court stressed that

“few consumer contracts are negotiated one clause at a time,” and that form contracts

can be advantageous to consumers by reducing transaction costs. Id., quoting Carbajal

v. H & R Block Tax Servs., Inc., 372 F.3d 903, 906 (7th Cir. 2004).

       {¶ 24} In any event, Gaither failed to present any evidence in the trial court that he

was precluded from negotiating any terms in the contract. There was simply no evidence

before the trial court to indicate that the arbitration clause was procedurally

unconscionable. Gaither was not precluded from presenting evidence in the trial court;

he simply failed to do so. See, e.g., Hayes v. Oakridge Home, 122 Ohio St.3d 63, 2009-

Ohio-2054, 908 N.E.2d 408, ¶ 27 (commenting that “[a]s the party challenging the

enforceability of the arbitration agreement, it was [the consumer’s] burden to come

forward with evidence supporting her challenge. She did not satisfy that burden. Indeed,
                                                                                          -11-


the paucity of any evidence in support of her claims is notable.”)

       {¶ 25} Because both procedural and substantive unconscionability must be

shown, Gaither’s argument fails on the lack of procedural unconscionability alone. See,

e.g., Ball v. Ohio State Home Servs., Inc., 168 Ohio App.3d 622, 2006-Ohio-4464, 861

N.E.2d 553, ¶ 18 (noting that a court does not need to review whether an arbitration

provision is substantively unconscionable if it fails to find the provision procedurally

unconscionable). Although we are not required to do so, we will additionally discuss

whether the arbitration agreement was substantively unconscionable.

       {¶ 26} “An assessment of whether a contract is substantively unconscionable

involves consideration of the terms of the agreement and whether they are commercially

reasonable.”    (Citations omitted.) Hayes at ¶ 33. “Factors courts have considered in

evaluating whether a contract is substantively unconscionable include the fairness of the

terms, the charge for the service rendered, the standard in the industry, and the ability to

accurately predict the extent of future liability.” Id., citing John R. Davis Trust 8/12/05 v.

Beggs, 10th Dist. Franklin No. 08AP-432, 2008-Ohio-6311, ¶ 13.                (Other citation

omitted.) In Hayes, the court stressed that it had not adopted a “bright-line set of factors

for determining substantive unconscionability,” and that the factors being considered

would vary with the particular agreement’s content. Id.

       {¶ 27} Gaither argues that the arbitration clause is substantively unconscionable

because it would require him to travel to Virginia and incur substantially more cost than if

the case were adjudicated in Ohio. He also contends that arbitration fees were not

disclosed in the contract, but that the website of the McCammon Group indicates fees of

$200 per hour. In addition, Gaither points to the existence of a “loser pays” provision in
                                                                                         -12-


the agreement, which allegedly has a chilling effect on claimants attempting to assert their

rights under the CSPA.

       {¶ 28} The trial court concluded that the facts about the cost of arbitration did not

obviate the parties’ clear agreement to arbitrate disputes. Moreover, the court said that

it found “no compelling reason to strike the loser pays provision and require arbitration in

Montgomery County, Ohio.”          Doc. #18, Decision, Order and Entry Sustaining

Defendant’s Motion to Dismiss, p. 5.

       {¶ 29} As was noted, the agreement provided that if arbitration were invoked, the

“substantially prevailing party” would be entitled to recover all costs, fees, and expenses,

including reasonable attorney fees, for claims on which the party substantially prevailed.

       {¶ 30} “If a contract or term in a contract is found to be unconscionable at the time

that the contract was made, a court may choose either to refuse to enforce the contract,

enforce the contract without the unconscionable portion, or limit the application of the

unconscionable portion to avoid an unconscionable result.” Eagle v. Fred Martin Motor

Co., 157 Ohio App.3d 150, 2004-Ohio-829, 809 N.E.2d 1161, ¶ 36, citing R.C.

1302.15(A). (Other citations omitted.)

       {¶ 31} Regarding the fee for arbitration and the cost of travel, Gaither failed to

submit the detailed type of information that the consumer provided, for example, in Eagle.

In that case, the court found arbitration fees “prohibitive, unreasonable, and unfair as

applied,” because it was highly doubtful that the consumer, “a primary caregiver for one

child and who more recently made approximately $20,000 per year, would be willing and

able to expend on a conservative scale between $4,000 and $6,000 on arbitration fees

and costs * * *.”   Id. at ¶ 50-51.    The court of appeals, therefore, held the clause
                                                                                          -13-

substantively unconscionable. Id. at ¶ 51.

       {¶ 32} Although Gaither contends that he is experiencing financial difficulty, he

failed to provide the trial court with any detail about his particular situation, nor was any

information provided about the arbitration costs, other than a potential hourly fee. This

is similar to what occurred in Taylor, where the Supreme Court of Ohio stated that:

       In light of the dearth of evidence before the trial court on the cost of

       mediation and arbitration and whether such costs would have been

       prohibitive to the [consumers], we need not, and therefore do not, decide as

       a matter of Ohio law whether or at what point arbitration costs can become

       prohibitive so as to render an arbitration agreement, or its provision

       allocating arbitration costs, to be substantively unconscionable.

Taylor, 117 Ohio St.3d 352, 2008-Ohio-938, 884 N.E.2d 12, at ¶ 60.

       {¶ 33} In Taylor the court also discussed whether paragraph seven of the parties’

contract was substantively unconscionable because it required the consumers to pay the

drafter’s “ ‘reasonable legal costs’ of enforcing its rights under the contract, including

attorney fees, court costs, and fees and expenses.” Id. at ¶ 66. The court declined to

answer this question because paragraph seven was not part of the arbitration clause. Id.

at ¶ 67.

       {¶ 34} Nonetheless, the court noted that the contract did not limit the consumers’

remedies, and if they prevailed in the arbitration, they could possibly be awarded their

reasonable attorney fees under the CSPA.           Id.   The court further observed that

paragraph seven could also be read to preclude payment of the drafter’s reasonable legal

costs if it did not prevail on its claims. Id.
                                                                                             -14-


      {¶ 35} In addition, the court commented that:

      Ohio law in some circumstances permits contractual provisions requiring

      the losing party in litigation to pay the prevailing party's attorney fees. See

      Nottingdale Homeowners' Assn., Inc. v. Darby (1987), 33 Ohio St.3d 32,

      514 N.E.2d 702, syllabus. At the least, paragraph seven of the contract

      may be read so as not to grant [the drafter] a right to have the [consumers]

      pay its attorney fees if [the drafter] does not prevail on its claims. In light

      of the uncertainty of paragraph seven's meaning, we cannot find that

      paragraph seven's provision for [the drafter’s] attorney fees is so oppressive

      and one-sided as to “taint” the arbitration clause in paragraph 15 and render

      it unenforceable. Because the arbitration clause itself is enforceable, the

      question of the meaning of paragraph seven and its enforceability under

      Ohio law, like that of other contract terms, will be for the arbitrator in the first

      instance. Cf., e.g., Hawkins v. Aid Assn. for Lutherans (C.A.7, 2003), 338

      F.3d 801, 807 (claim that arbitration clause was unconscionable because it

      limited remedies available to plaintiffs was for arbitrator in the first instance,

      as the adequacy of arbitration remedies “has nothing to do with whether the

      parties agreed to arbitrate”).

Taylor, 117 Ohio St.3d 352, 2008-Ohio-938, 884 N.E.2d 12, at ¶ 68.

      {¶ 36} In a subsequent decision, the Supreme Court of Ohio held that an optional

arbitration agreement, which waived a nursing home resident’s right to seek punitive

damages and attorney fees, was not substantively unconscionable. Hayes, 122 Ohio

St.3d 63, 2009-Ohio-2054, 908 N.E.2d 408, at ¶ 5 and 14. In this regard, the court
                                                                                          -15-


concluded that “[t]he provisions in the agreement by which the parties waive their right to

seek punitive damages and attorney fees are also commercially reasonable.               Both

parties must bear their own attorney fees and costs under the agreement, which is

equitable to both parties. This provision is not one-sided or oppressive.” Id. at ¶ 35.

       {¶ 37} The court also found that a one-sided waiver of punitive damages alone did

not make the arbitration provision commercially unreasonable. Id. at ¶ 36. In particular,

the court stressed that the nursing home had waived some of its own statutory rights.

These rights included: (1) the ability to seek court costs and attorney fees under R.C.

2323.42; (2) the right to pursue an action under R.C. 2323.51 and Civ.R. 11, based on

the resident’s filing of a groundless complaint; and (3) the right to seek dismissal of an

action based on the resident’s failure to file an affidavit of merit under Civ.R. 10(D)(2).

Id. at ¶ 36-39.

       {¶ 38} Neither Taylor nor Hayes involved the type of “loser pays” provision that

exists in the case before us. Furthermore, the provision in question is contained within

the arbitration agreement, not in a separate paragraph of the contract, and W&A does not

give up any rights that it possesses.

       {¶ 39} In a decision issued after both Taylor and Hayes, the Eighth District Court

of Appeals considered, in an en banc proceeding, whether an arbitration clause

containing a “loser pays” provision was procedurally and substantively unconscionable,

or was against public policy. DeVito v. Autos Direct Online, Inc., 2015-Ohio-3336, 37

N.E.3d 194, ¶ 11 (8th Dist.). The provision in DeVito stated that “[t]he non-prevailing

party shall pay, and the arbitrators shall award the prevailing party's arbitration costs and

expenses, including reasonable attorney's fees.” (Emphasis omitted.) Id. at ¶ 9.
                                                                                       -16-


       {¶ 40} Three members of the en banc court agreed that this provision was both

unconscionable and against public policy. Id. at ¶ 44. However, these members also

agreed that if the offending provision were excised, the non-offending portions of the

arbitration agreement would be enforceable, and the trial court’s order staying the

proceedings would be affirmed. Id. at ¶ 44-45.

       {¶ 41} Two judges concurred in the judgment only; one of these judges did not

express his views, and the other concurred in the dissenting opinion of Judge Kilbane.

Id. at ¶ 45.

       {¶ 42} Two other members of the court agreed that the “loser pays” provision was

against public policy, and that the arbitration agreement was enforceable if the offending

provision were removed.      However, these judges did not agree that the loser pays

provision was unconscionable. DeVito, 2015-Ohio-3336, 37 N.E.3d 194, at ¶ 46-67

(Boyle, J., concurring in judgment only and dissenting in part).

       {¶ 43} And finally, four members of the court, plus one judge who had concurred

in the judgment only, concluded that “the entire arbitration clause is unconscionable and,

therefore, unenforceable.”    Id. at ¶ 68 (Kilbane, J., dissenting).     The dissent also

concluded that the arbitration clause violated public policy. Id. at ¶ 78-79. As a result,

a majority of the en banc court concluded that the “loser pays” provision was

unconscionable, but a majority of the court also held that if the provision were removed,

the arbitration agreement would still be enforceable. Almost all members of the en banc

court concluded that the “loser pays” provision was against public policy, with a minority

holding that this made the entire arbitration agreement unenforceable.

       {¶ 44} Previously, a panel of the Eighth District had held that such a provision in
                                                                                           -17-


an arbitration agreement violated public policy to the extent it required an arbitrator to

award the prevailing party reasonable attorney fees even where a consumer did not file

the action in bad faith. Hedeen v. Autos Direct Online, Inc., 2014-Ohio-4200, 19 N.E.3d

957, ¶ 48 (8th Dist.). In this regard, the panel observed that “[t]he CSPA reflects a strong

public policy that consumers who bring good faith claims against suppliers will not have

to pay the supplier's attorney fees under R.C. 1345.09(F), even if the consumer loses his

or claim [sic] against the supplier. [The drafter’s] loser-pays provision effectively nullifies

this statutory protection provided to consumers by the CSPA.” Id.

       {¶ 45} Other courts in Ohio have held that a “loser pays” provision is substantively

unconscionable.     In Fortune v. Castle Nursing Homes, Inc., 164 Ohio App.3d 689,

2005-Ohio-6195, 843 N.E.2d 1216 (5th Dist.), the court held an arbitration provision

substantively unconscionable based on “the fact that it contains a ‘loser pays’ provision,

that a resident or representative of the resident is required to sign the admission

agreement containing the arbitration provision for admission into the facility, and that the

format of the document and the language used is such that a person executing the

document is not placed on notice of the existence of the clause or the ramifications of

agreeing to such a clause.” Id. at ¶ 34. Despite this fact, the court reversed the trial

court’s finding of unconscionability, because the plaintiff failed to also establish that the

arbitration provision was procedurally unconscionable. Id. at ¶ 37.

       {¶ 46} In contrast, courts have found arbitration payment provisions enforceable

where the agreement more fairly allocates costs. See, e.g., Manley v. Personacare, 11th

Dist. Lake No. 2005-L-174, 2007-Ohio-343, ¶ 40-41, and Harrison v. Winchester Place

Nursing, 2013-Ohio-3163, 996 N.E.2d 1001, ¶ 36 (10th Dist.).            In both Manley and
                                                                                         -18-

Harrison, the arbitration clause provided that each party would be responsible for its own

attorney fees, and that the drafter of the agreement would be responsible for paying the

entire cost of a mediation process and the first five days of arbitration costs. Id.

       {¶ 47} As was noted, “[t]he party asserting unconscionability of a contract bears

the burden of proving that the agreement is both procedurally and substantively

unconscionable.” Taylor, 117 Ohio St.3d 352, 2008-Ohio-938, 884 N.E.2d 12, at ¶ 34.

Because we have already concluded that the arbitration clause is not procedurally

unconscionable, Gaither’s assignment of error cannot be sustained on this basis.

However, Gaither also contended in the trial court that the arbitration agreement was

against public policy, and that this is another basis for refusing to enforce the contract.

The trial court did not specifically address the public policy arguments, although the court

did note Gaither’s position that the contract was unenforceable based on

unconscionability as well as public policy.       Doc. #18, Decision, Order and Entry

Sustaining Defendant’s Motion to Dismiss, p. 4.

       {¶ 48} The principle is well established that “contracts which bring about results

which the law seeks to prevent are unenforceable as against public policy.” (Citations

omitted.) Cincinnati City School Dist. Bd. of Edn. v. Conners, 132 Ohio St.3d 468, 2012-

Ohio-2447, 974 N.E.2d 78, ¶ 17. “This rule stems from the ‘ * * * legal principle which

declares that no one can lawfully do that which has the tendency to be injurious to the

public welfare.’ ” King v. Cashland, Inc., 2d Dist. Montgomery No. 18208, 2000 WL

1232768, *2 (Sept. 1, 2000), quoting Garretson v. S.D. Myers, Inc., 72 Ohio App.3d 785,

788, 596 N.E.2d 512 (9th Dist.1991).

       {¶ 49} As an example of how this doctrine is applied, we held in King that
                                                                                         -19-


construing a waiver of privacy claims in a loan agreement so as to permit a debt collector

“to pursue, with impunity, unlimited abusive and harassing methods of debt collection is

repugnant to public policy, and therefore unenforceable.” Id. at *3. Another example

occurred in Med Controls, Inc. v. Hopkins, 61 Ohio App.3d 497, 573 N.E.2d 154 (8th

Dist.1989), where the court held that a contract allowing a collection agency to engage in

the unauthorized practice of law when collecting on accounts was unenforceable because

it violated public policy.   Id. at 499.   We also refused to enforce, on public policy

grounds, a contractual provision requiring a client to pay for services that an attorney

could not perform once the client had exercised its right to terminate the contract with the

attorney. Moraine v. Lewis, 151 Ohio App.3d 526, 2003-Ohio-460, 784 N.E.2d 774, ¶ 32

(2d Dist.)

       {¶ 50} In the trial court and on appeal, Gaither cited the DeVito case in support of

its contention that the “loser pays” provision is against public policy. As was noted, a

majority of the en banc court held in DeVito that such a provision was unenforceable

because it was against public policy. However, a majority also refused to invalidate the

arbitration agreement on this ground.       Instead, the majority excised the provision.

DeVito, 2015-Ohio-3336, 37 N.E.3d 194, at ¶ 36-46.

       {¶ 51} We agree with DeVito that the provision requiring the payment of costs and

fees by the substantially prevailing party is against public policy. Notably, the “loser

pays” provision involved in DeVito is quite similar to the one before us. Both clauses

require a losing party to pay costs, including attorney fees, of the prevailing party. As

the en banc court observed, this form of the “loser pays” provision “attempts to modify or

rewrite the rule for attorney fees” under the CSPA, which allows a prevailing party to be
                                                                                         -20-


awarded attorney fees only where a consumer’s action is groundless or in bad faith, or

where a supplier knowingly commits an act or practice that violates the CSPA. DeVito,

2015-Ohio-3336, 37 N.E.3d 194, at ¶ 38.

       {¶ 52} As the Supreme Court of Ohio has stressed, “[t]he CSPA ‘is a remedial law

which is designed to compensate for traditional consumer remedies and so must be

liberally construed pursuant to R.C. 1.11.’ ” Whitaker v. M.T. Automotive, Inc., 111 Ohio

St.3d 177, 2006-Ohio-5481, 855 N.E.2d 825, ¶ 11, quoting Einhorn v. Ford Motor Co., 48

Ohio St.3d 27, 29, 548 N.E.2d 933 (1990). “One of its purposes is to make ‘private

enforcement of the CSPA attractive to consumers who otherwise might not be able to

afford or justify the cost of prosecuting an alleged CSPA violation, which, in turn, works

to discourage CSPA violations in the first place via the threat of liability for damages and

attorney fees.’ ” Id., quoting Parker v. I&F Insulation Co., Inc., 89 Ohio St.3d 261, 268,

730 N.E.2d 972 (2000).

       {¶ 53} In light of the strong policy for arbitration expressed in Taylor and Hayes,

the best approach is to excise the offending provision but still allow enforcement of the

agreement to arbitrate. This is consistent with the majority decision in DeVito, and with

the principle that an offending provision in an agreement may be severed if it “does not

fundamentally alter the otherwise valid and enforceable provisions of the agreement.”

Ignazio v. Clear Channel Broadcasting, Inc., 113 Ohio St.3d 276, 2007-Ohio-1947, 865

N.E.2d 18, ¶ 20. In Ignazio, the court relied on the fact that the agreement had an

express severance clause, and on “Ohio's strong public policy in favor of arbitration of

disputes.” Id.

       {¶ 54} Although W&A’s contract lacks an express severance clause, the rest of the
                                                                                          -21-


arbitration agreement does not depend on the “loser pays” provision, and severance

would have no effect on the remaining provisions. Furthermore, as was noted, Ohio

does have a robust policy favoring arbitration. See, e.g., Ignazio at ¶ 18, and Hayes,

122 Ohio St.3d 63, 2009-Ohio-2054, 908 N.E.2d 408, at ¶ 15 (both indicating that all

doubts should be resolved in favor of arbitration, given Ohio’s strong public policy in favor

of arbitration).

       {¶ 55} We also distinguish the cases cited by W&A.            Although we rejected

unconscionability of an agreement for attorney fees in Lindsey v. Sinclair Broadcast

Group, Inc., 2d Dist. Montgomery No. 19903, 2003-Ohio-6898, we did not consider public

policy. In addition, Lindsey involved an employment agreement, not the CSPA. Id. at ¶

4-5. Likewise, public policy was not raised or considered in Peltz v. Moyer, 7th Dist.

Belmont No. 06 BE 11, 2007-Ohio-4998. Peltz also involved investors, and the court

rejected the application of cases in which the CSPA had been involved, stating “[u]nlike

a form contract between a purchaser of a car or a home repair solicitation, the contract in

the instant case involved Appellees' investment of certain savings.          Appellees, as

investors of money, are in a much different position than a consumer purchasing a vehicle

or one who is solicited in her home.” Id. at ¶ 68.

       {¶ 56} In addition, we reject Gaither’s argument that if the arbitration provision is

deemed enforceable, the arbitration should take place in Ohio. The contract clearly

provides otherwise, and Gaither had the ability to read it. See, e.g., W.K. v. Farrell, 167

Ohio App.3d 14, 2006-Ohio-2676, 853 N.E.2d 728, ¶ 59 (rejecting party’s arguments

because she failed to read the contract.)

       {¶ 57} As was noted earlier, the trial court should not have dismissed the case for
                                                                                           -22-


lack of jurisdiction. The provision in the contract indicating that jurisdiction would vest

exclusively in Virginia courts is a forum selection or venue provision, not a matter involving

the court’s subject matter jurisdiction.

       {¶ 58} “Subject-matter jurisdiction is the power of a court to entertain and

adjudicate a particular class of cases. A court's subject-matter jurisdiction is determined

without regard to the rights of the individual parties involved in a particular case.”

(Citation omitted.) Bank of Am., N.A. v. Kuchta, 141 Ohio St.3d 75, 2014-Ohio-4275, 21

N.E.3d 1040, ¶ 19.

       {¶ 59} “Ohio's common pleas courts are endowed with ‘original jurisdiction over all

justiciable matters * * * as may be provided by law.’ ” Id. at ¶ 20, quoting Article IV,

Section 4(B), Ohio Constitution.       “Jurisdiction has been ‘provided by law’ in R.C.

2305.01, which states that courts of common pleas have ‘original jurisdiction in all civil

cases in which the sum or matter in dispute exceeds the exclusive original jurisdiction of

county courts.’ ” Id. In Kuchta, the court stressed that it had “long held that the court of

common pleas is a court of general jurisdiction, with subject-matter jurisdiction that

extends to ‘all matters at law and in equity that are not denied to it.’ ” Id., quoting Saxton

v. Seiberling, 48 Ohio St. 554, 558–559, 29 N.E. 179 (1891).

       {¶ 60} “A court's jurisdiction over a particular case refers to the court's authority to

proceed or rule on a case that is within the court's subject-matter jurisdiction.” Kuchta at

¶ 19, citing Pratts v. Hurley, 102 Ohio St.3d 81, 2004-Ohio-1980, 806 N.E.2d 992, ¶ 12.

“This latter jurisdictional category involves consideration of the rights of the parties.” Id.

For example, standing is not a subject-matter jurisdiction issue; it relates to whether a

party has a personal stake in the outcome sufficient to establish standing, and a lack of
                                                                                         -23-

standing may require a court to dismiss an action. Id. at ¶ 22-23. Similarly, a lack of

personal jurisdiction precludes a court in a particular jurisdiction from proceeding with a

matter, even though the court otherwise has jurisdiction. Kuchta at ¶ 18; Pratts at ¶ 11;

Fraley v. Estate of Oeding, 138 Ohio St.3d 250, 2014-Ohio-452, 6 N.E.3d 9, ¶ 11-19.

       {¶ 61} The Supreme Court of Ohio has indicated that “the requirement that a court

have personal jurisdiction over a party is a waivable right and there are a variety of legal

arrangements whereby litigants may consent to the personal jurisdiction of a particular

court system.” Kennecorp Mtge. Brokers, Inc. v. Country Club Convalescent Hosp., Inc.,

66 Ohio St.3d 173, 175, 610 N.E.2d 987 (1993), citing Burger King Corp. v. Rudzewicz,

471 U.S. 462, 472, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). Courts in Virginia have also

described forum selection clauses as “venue selection” clauses. Commw. v. Keel, 29

Va. Cir. 276, 1992 WL 885003, *2 (Va.Cir.Ct.1992).

       {¶ 62} In deciding the validity of a particular forum selection clause, Ohio courts

consider three factors: (1) whether the contract is between commercial entities; (2)

whether the contract is the product of fraud or overreaching; and (3) whether enforcement

is otherwise unreasonable or unjust. Info. Leasing Corp. v. Jaskot, 151 Ohio App.3d

546, 2003-Ohio-566, 784 N.E.2d 1192, ¶ 13-18 (1st Dist.).

       {¶ 63} Virginia has adopted a similar standard, holding that “contractual provisions

limiting the place or court where potential actions between the parties may be brought are

prima facie valid and should be enforced, unless the party challenging enforcement

establishes that such provisions are unfair or unreasonable, or are affected by fraud or

unequal bargaining power.” Paul Business Systems, Inc. v. Canon U.S.A., Inc., 240 Va.

337, 342, 397 S.E.2d 804 (1990). It is not clear that Virginia courts would enforce W&A’s
                                                                                            -24-

forum selection clause.      Most of the cases citing Paul Business Systems involve

commercial entities. In one case that involved a consumer, the court did uphold a “venue

selection” clause requiring the action to be litigated in one Virginia district (selected by the

Commonwealth), rather than the Virginia district to which the defendant had obtained

transfer of the action. Keel, 29 Va. Cir. 276, 1992 WL 885003, at *2. Keel was a student

loan default case brought by the Commonwealth of Virginia. Id. at *1. Notably, in Keel,

the defendant did not challenge the reasonableness of the clause; he only contended that

the selected forum was inconvenient. Id.

       {¶ 64} At such time as arbitration proceedings conclude, and if application for

confirmation of any arbitration award is made, the trial court can decide issues pertaining

to forum selection and choice of law, and whether those provisions should be enforced.

Banks, 184 Ohio App.3d 269, 2009-Ohio-5035, 920 N.E.2d 432, at ¶ 10.

       {¶ 65} Based on the preceding discussion, Gaither’s sole assignment of error is

overruled in part and is sustained insofar as the trial court erred in dismissing the case

for lack of jurisdiction rather than staying the matter pending arbitration. Accordingly, the

trial court’s decision must be reversed, and this cause must be remanded for further

proceedings. On remand, the court will enter an order staying the proceedings pending

arbitration, with the provision that the clause pertaining to payment of costs to the

substantially prevailing party is excised from the agreement.



                                           III. Conclusion

       {¶ 66} Gaither’s sole assignment of error having been overruled in part and

sustained in part, the judgment of the trial court is reversed, and this cause is remanded
                                                                                            -25-


for further proceedings consistent with this opinion.

                                       .............

HALL, P.J., concurs.

FROELICH, J., concurring in part and dissenting in part:

       {¶ 67} The Complaint alleges violations of Ohio’s Consumer Sales Practices Act,

Ohio’s Debt Adjustment Companies Act, and fraud. It seeks damages, injunctive relief,

and attorney fees. The Complaint alleges in both a conclusory and factual manner that

the Montgomery County, Ohio, Common Pleas Court has jurisdiction over the subjects of

the complaint.     The Answer states generally that the court lacks subject matter

jurisdiction (second defense) and specifically that it lacks jurisdiction because “the plaintiff

agreed to be bound by a forum selection clause” requiring litigation in Virginia (third

defense). The Appellee’s motion to dismiss (or to stay pending arbitration) was based

on these defenses.

       {¶ 68} The trial court decision correctly cited Banks to the effect that the arbitration

provision must be addressed first; then the court found the provision to be enforceable

and “dismissed [the case] without prejudice for want of jurisdiction over this matter.”

       {¶ 69} I concur with the majority that the case should have been stayed, rather

than dismissed, but disagree concerning the holding at this time that the “loser pays”

provision should be held unenforceable.

       {¶ 70} On this record, there is nothing unconscionable, against public policy, or

violative of due process in having the arbitration provision in this contract between plaintiff

and defendant; therefore, this case should be stayed pending the outcome of the

arbitration. Then, pursuant to Ohio law and the terms of the contract, either party may
                                                                                         -26-

seek to have the decision of the arbitrator entered as a judgment in this case or apply to

the trial court in this case for an order of enforcement or confirmation.   At that time, the

trial court may address “loser pays,” forum selection, choice of law, and any other aspects

of the arbitrator’s decision.


                                        ..........




Copies mailed to:

Jeremiah E. Heck
Katherine L. Wolfe
Barry F. Fagel
Hon. Mary Katherine Huffman
