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Finding a trial court erred by failing to conduct a hearing to determine whether an arbitration agreement was valid, an Ohio appellate court held that when a party challenges an arbitration agreement's validity, a trial court must conduct a hearing to determine the validity and existence of a valid arbitration agreement.
In Castron v. Higginbotham, No. 88559, 2007 WL 1849086 (Ohio. Ct. App. June 28, 2007), Castro purchased a motor vehicle from Higginbotham. The purchase agreement contained an arbitration agreement. Castro filed a complaint against Higginbotham alleging violations of the Ohio Consumer Sales Practices Act and Motor Vehicles Sales Rule, breach of contract, and fraud and deceit. Higginbotham moved to stay proceedings claiming Castro had signed an arbitration agreement. Castro responded by arguing the arbitration agreement was unconscionable, that she was fraudulently induced to enter the agreement, and that her claims were outside the arbitration clause's scope.
The trial court, without hearing and opinion, granted the stay. Castro then appealed.
The Court concluded the trial court abused its discretion by granting the stay without a hearing. R.C. 2711.03 requires the trial court to conduct a hearing when a party challenges an arbitration agreement's existence or validity. Here, Castro challenged the agreement's validity because she averred that the arbitration clause was unconscionable, that she was fraudulently induced into signing the agreement, and that her claims fell outside the arbitration agreement's scope. Therefore, the trial court erred by failing to conduct a hearing.
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