[Cite as Alexander v. Wells Fargo Financial Ohio 1, Inc., 122 Ohio St.3d 341, 2009-Ohio-
2962.]




      ALEXANDER, APPELLEE, v. WELLS FARGO FINANCIAL OHIO 1, INC.,
                                     APPELLANT.
  COLEMAN, APPELLEE, v. AMERICAN GENERAL FINANCIAL SERVICES, INC.,
                                     APPELLANT.
[Cite as Alexander v. Wells Fargo Financial Ohio 1, Inc., 122 Ohio St.3d 341,
                                  2009-Ohio-2962.]
Arbitration — Statutory claims of borrower for lender’s delay in recording
       satisfaction of loan and discharge of mortgage — R.C. 5301.36 and
       1309.625 — Penalty claim arises out of and relates to loan agreement —
       Borrower’s claim for statutory penalty is thus arbitrable — Mandatory-
       arbitration agreement applies to penalty claim.
   (Nos. 2008-0905 and 2008-1009 — Submitted March 24, 2009 — Decided
                                   June 30, 2009.)
             APPEAL from the Court of Appeals for Cuyahoga County,
                            No. 89277, 2008-Ohio-1402.
             APPEAL from the Court of Appeals for Cuyahoga County,
                            No. 89311, 2008-Ohio-1403.
                               __________________
       LANZINGER, J.
       {¶ 1} The question presented in these two cases, consolidated sua sponte,
is whether statutory claims for delay in recording the satisfaction of loans and
discharge of mortgages are governed by the arbitration agreements signed by the
parties. Because we hold that the arbitration agreements apply to the parties’
claims, we reverse.
                                I. Case Background
                                 A. Lillie Alexander
                            SUPREME COURT OF OHIO




       {¶ 2} On December 5, 2000, appellee Lillie Alexander entered into a
mortgage agreement with appellant Wells Fargo Financial Ohio 1, Inc. (“Wells
Fargo”) and signed an accompanying mandatory-arbitration agreement. Wells
Fargo filed an entry of satisfaction of the mortgage on January 11, 2002.
       {¶ 3} On May 2, 2006, Alexander filed a class action, alleging that on
July 27, 2001, Alexander paid off the mortgage and that Wells Fargo failed to file
the entry of satisfaction of the mortgage within the 90 days prescribed by R.C.
5301.36(A). The failure to timely file an entry of satisfaction of the mortgage
triggers a $250 penalty. R.C. 5301.36(C). Wells Fargo filed a motion to compel
arbitration, which the trial court granted.
       {¶ 4} The Cuyahoga County Court of Appeals held that the arbitration
agreement does not apply to this dispute and reversed. Alexander v. Wells Fargo
Financial Ohio 1, Inc., 8th Dist. No.89277, 2008-Ohio-1402.
                                B. Shelton Coleman
       {¶ 5} On April 2, 2001, appellee Shelton Coleman entered into a loan
agreement with appellant American General Financial Services, Inc. (“AGFS”)
and signed a UCC-1 financing statement evidencing the collateral that secured his
loan. The loan agreement contained a mandatory-arbitration provision. In July
2003, Coleman repaid his loan in full.
       {¶ 6} On June 16, 2006, Coleman filed a class action, alleging that
AGFS failed to file a termination of the financing statement within the 30 days
prescribed by R.C. 1309.513. According to R.C. 1309.625(E)(4), failure to timely
file the statement triggers a $500 penalty. AGFS answered the complaint and also
filed a motion to compel arbitration, which the trial court denied.
       {¶ 7} The Cuyahoga County Court of Appeals affirmed the trial court’s
holding that Coleman’s claim against AGFS was not subject to the arbitration
agreement. Coleman v. Am. Gen. Financial Servs., 8th Dist. No.89311, 2008-
Ohio-1403.




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                              January Term, 2009




       {¶ 8} This court sua sponte consolidated the two cases for determination
of whether the arbitration agreements apply to the parties’ claims.
                                II. Legal Analysis
       {¶ 9} We first look at the language of the individual arbitration
agreements to determine whether the parties agreed to arbitrate the disputed issue.
We then use the standard articulated in Academy of Medicine of Cincinnati v.
Aetna Health, Inc., 108 Ohio St.3d 185, 2006-Ohio-657, 842 N.E.2d 488, to
determine whether the statutory causes of action are within the scope of the
agreements.
                                   A. Alexander
       {¶ 10} The issue between Alexander and Wells Fargo is whether they
agreed to arbitrate the failure to timely file an entry of satisfaction of the
mortgage.
       {¶ 11} The agreement signed by Alexander states:
       {¶ 12} “RIGHT TO ELECT TO ARBITRATE: Any party covered by
this Agreement may elect to have any claim, dispute or controversy (‘Claim’) of
any kind (whether in contract, tort, or otherwise) arising out of or relating to your
Loan Agreement, or any prior or future dealings between us, resolved by binding
arbitration. A Claim may include, but shall not be limited to, the issue of whether
any particular Claim must be submitted to arbitration, or the facts and
circumstances involved with your signing of this Agreement, or your willingness
to abide by the terms of this Agreement or the validity of this Agreement.”
       {¶ 13} Wells Fargo stresses that Ohio has a strong presumption in favor of
arbitration. ABM Farms, Inc. v. Woods (1998), 81 Ohio St.3d 498, 500, 692
N.E.2d 574; Williams v. Aetna Fin. Co. (1998), 83 Ohio St.3d 464, 471, 700
N.E.2d 859. Wells Fargo also points out that the agreement covers any claim
“arising out of or relating to” the mortgage. We held in Aetna Health, 108 Ohio
St.3d 185, 2006-Ohio-657, 842 N.E.2d 488, ¶ 18, that the phrase “any claim or




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controversy arising out of the agreement” is the paradigm of a broad clause. The
agreement must be enforced unless “ ‘ “it may be said with positive assurance that
the arbitration clause is not susceptible of an interpretation that covers the asserted
dispute. Doubts should be resolved in favor of coverage.” ’ ” Id. at ¶ 14, quoting
AT & T Technologies, Inc. v. Communications Workers of Am. (1986), 475 U.S.
643, 650, 106 S.Ct. 1415, 89 L.Ed.2d 648, quoting United Steelworkers of Am. v.
Warrior & Gulf Navigation Co. (1960), 363 U.S. 574, 582-583, 80 S.Ct. 1347, 4
L.Ed.2d 1409.
        {¶ 14} Alexander argues that since the mortgage was extinguished before
the statutory duty to file the mortgage release arose, the claim does not arise out
of or relate to the mortgage agreement. However, as the dissent noted in the court
of appeals, “statutory duties cannot arise unless and until the loan agreements are
extinguished by full payment of the note. In other words, the precise reason the
court gives for finding that the claims are not subject to arbitration – namely full
payment of the loan – is precisely what must happen before the claimed duties
manifest.” Alexander v. Wells Fargo, 8th Dist. No. 89277, 2008-Ohio-1402, ¶ 24
(Stewart, J., dissenting).
        {¶ 15} Alexander’s claim under R.C. 5301.36 arises out of and relates to
the mortgage agreement. It stems from her initial signing of the mortgage. Her
full payment of the note triggered the statutory duties that underlie her claim. To
recover, she must prove that she paid off the loan and that the mortgage release
was not timely filed.
        {¶ 16} We therefore hold that the arbitration language demonstrates an
agreement between Alexander and Wells Fargo to arbitrate the failure to timely
file an entry of satisfaction of the mortgage.
                                    B. Coleman
        {¶ 17} For the same reasons articulated above, we hold that the arbitration
language demonstrates an agreement between Coleman and AGFS to arbitrate the




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                               January Term, 2009




failure to timely file a termination statement. The agreement signed by Coleman
states:
          {¶ 18} “Either you or Lender may require that certain disputes between
you and Lender be submitted to binding arbitration.”
          {¶ 19} “Covered Claims include, without limitation, all claims and
disputes arising out of, in connection with, or relating to your loan from Lender
today * * *; all documents, actions, or omissions relating to this or any previous
loan * * *; * * * any claim or dispute based on the closing, servicing, collection,
or enforcement of any transaction covered by the Arbitration Provisions; * * *
any claim or dispute based on or arising under any federal or state statute or rule *
* *.”
          {¶ 20} The agreement specifically states that mandatory arbitration
applies “even if your loan has been * * * paid in full.”
          {¶ 21} The language in this arbitration agreement is even stronger than the
language in Alexander’s. In addition to the requirement that claims arise out of or
relate to the loan, the agreement mentions claims that “arise under any federal or
state statute or rule” and that arbitration applies even if the loan has been repaid in
full.
          {¶ 22} We therefore hold that the arbitration language signed by Coleman
demonstrates an agreement between Coleman and AGF to arbitrate the failure to
timely file a termination statement.
                               C. The Aetna Standard
          {¶ 23} Our holding comports with the standard articulated in Academy of
Medicine of Cincinnati v. Aetna Health, Inc., 108 Ohio St.3d 185, 2006-Ohio-657,
842 N.E.2d 488. In that case, we held that Ohio courts may determine whether a
cause of action is within the scope of an arbitration agreement based on the
federal standard found in Fazio v. Lehman Bros., Inc. (C.A.6, 2003), 340 F.3d
386.




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                           SUPREME COURT OF OHIO




       {¶ 24} Fazio held that “[a] proper method of analysis here is to ask if an
action could be maintained without reference to the contract or relationship at
issue. If it could, it is likely outside the scope of the arbitration agreement.”
Fazio, 340 F.3d at 395. Later in that paragraph, Fazio continued: “Even real torts
can be covered by arbitration clauses ‘[i]f the allegations underlying the claims
“touch matters” covered by the [agreement].’ Genesco, Inc. v. T. Kakiuchi & Co.,
Ltd., 815 F.2d 840, 846 (2d Cir.1987).” (Brackets sic.) Fazio, id.
       {¶ 25} The Aetna standard asks whether an action can be maintained
without reference to the contract or relationship at issue. We hold that neither
Alexander’s action for failure to timely file an entry of satisfaction of the
mortgage nor Coleman’s action for failure to timely file a termination statement
can be maintained without reference to the contract or relationship at issue.
       {¶ 26} Alexander’s cause of action requires her to demonstrate that the
mortgage agreement was entered into and satisfied and that the statement of
satisfaction was not timely filed under R.C. 5301.36. Those elements require
reference both to the mortgage and the mortgagor/mortgagee relationship between
the parties and to the statutory duties that govern them.
       {¶ 27} Alexander argues that the action can be maintained without
reference to the contract or relationship at issue because proving a violation of the
statute requires only a showing of the date the mortgage was satisfied and the date
the release was recorded. We disagree. To establish the date on which the
mortgage was satisfied, Alexander must first demonstrate the existence of the
mortgage itself.   Indeed, a showing of satisfaction of the mortgage requires
identifying the mortgagor/mortgagee relationship of the parties to the action.
       {¶ 28} Similarly, Coleman’s action requires him to demonstrate that the
loan agreement was entered into between himself and AGFS, that the loan was
terminated by payment in full, and that the termination statement was not timely




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                               January Term, 2009




filed under R.C. 1309.513. Those elements require reference to both the loan
agreement and the statutory duties that attend the lender/borrower relationship.
                         D. The Eighth District’s Analysis
          {¶ 29} The court of appeals based its holdings in the instant cases on
Pinchot v. Charter One Bank, F.S.B., 99 Ohio St.3d 390, 2003-Ohio-4122, 792
N.E.2d 1105. Alexander v. Wells Fargo, 8th Dist. No.89277, 2008-Ohio-1402, ¶
15; Coleman v. Am. Gen. Fin. Servs., 8th Dist. No. 89311, 2008-Ohio-1403, ¶ 11.
In Pinchot, we held that the recording of a mortgage satisfaction or real estate lien
release is not an integral part of the lending process because it occurs after the
debt is satisfied. Id. at ¶ 46. However, whether the recording is an integral part of
the lending process is not the standard. Aetna Health asks whether the cause of
action can be maintained without reference to the contract or relationship at issue.
Regardless of whether the recording of a mortgage satisfaction or finance-
termination statement is an integral part of the process, the cause of action may
still be related to the relationship that was created when the instrument was
signed.
          {¶ 30} We also note that Pinchot concerned whether a federal regulation
preempted a state statute governing mortgage-satisfaction recording requirements.
Id., syllabus. However, there is a presumption against federal preemption,
Medtronic, Inc. v. Lohr (1996), 518 U.S. 470, 485, 116 S.Ct. 2240, 135 L.Ed.2d
700, while there is a presumption in favor of arbitration, ABM Farms, 81 Ohio
St.3d at 500, 692 N.E.2d 574. The preemption analysis employed in Pinchot does
not apply to the question of arbitrability.
          {¶ 31} Thus, the Eighth District’s use of Pinchot is misplaced. The
standard articulated in Aetna Health must be used to determine whether the
arbitration agreements signed by Alexander and Coleman cover their claims.
                                  III. Dispositions




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                           SUPREME COURT OF OHIO




       {¶ 32} The judgments in both cases must be reversed. The trial court in
Coleman’s case, No. 2008-1009, found that the arbitration agreement did not
apply to the cause of action, and therefore did not rule on whether the agreement
was unconscionable or void as against public policy. Although the trial court in
Alexander’s case, No. 2008-0905, found that the agreement was not
unconscionable, the court of appeals, in reversing, did not address that issue.
Accordingly, case No. 2008-1009 (Coleman) is remanded to the trial court and
case No. 2008-0905 (Alexander) to the court of appeals for further
determinations.
                                                                Judgments reversed
                                                              and causes remanded.
       MOYER, C.J., and LUNDBERG STRATTON, O’CONNOR, O’DONNELL, and
CUPP, JJ., concur.
       PFEIFER, J., dissents.
                                __________________
       PFEIFER, J., dissenting.
       {¶ 33} In Pinchot v. Charter One Bank, F.S.B., 99 Ohio St.3d 390, 2003-
Ohio-4122, 792 N.E.2d 1105, ¶ 46, this court stated, “The recording of a
mortgage satisfaction or real estate lien release is not an integral part of the
lending process, as it occurs after the debt is satisfied and the extension of credit
is extinguished.     Such a recording requirement cannot even begin until the
mortgage has already been terminated.” This statement, which is as applicable to
consumer loans as to real estate liens and mortgages, resolves the issue before us.
The mortgage relationship between Lillie Alexander and Wells Fargo Financial
Ohio 1, Inc., and the consumer-loan relationship between Shelton Coleman and
American General Financial Services, Inc. ended when the loans were repaid in
full. Accordingly, the question of whether Wells Fargo and American General
satisfied their statutory obligations to file statements of termination under R.C.




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                                January Term, 2009




5301.36(B) and 1309.513, respectively, is not subject to arbitration because it
does not arise out of or relate to the loan agreements.
       {¶ 34} As a practical matter, the remedies provided in R.C. 5301.36(C)
and 1309.625(E)(4) are meaningless if plaintiffs are forced into arbitration. The
amounts involved are too small to allow plaintiffs to engage counsel, if they
cannot pursue a class action.
       {¶ 35} I dissent.
                                __________________
       Dworken & Bernstein Co., L.P.A., and Patrick J. Perroti; and Brian
Ruschel, for appellee in case No. 2008-0905.
       Thompson Hine, L.L.P., William C. Wilkinson, Scott A. King, Chad D.
Cooper, and Terry W. Posey Jr., for appellant in case No. 2008-0905.
       Brian Ruschel, for appellee in case No. 2008-1009.
       McGlinchey Stafford, P.L.L.C., Barbara Friedman Yaksic, Richard A.
Freshwater, and Monica Levine Lacks, for appellant in case No. 2008-1009.
       Ballard Spahr Andrews & Ingersoll, L.L.P., Alan S. Kaplinsky, and Mark
J. Levin; and McLaughlin & McCaffrey, L.L.P., Patrick M. McLaughlin, and
Adrienne B. Kirshner, urging reversal for amici curiae American Financial
Services Association and Consumer Bankers Association.
       Thompson Hine, L.L.P., Kip T. Bollin, and James L. DeFeo, urging
reversal for amicus curiae CitiFinancial, Inc.
                            ______________________




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