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Under Ohio law, courts must consider evidence regarding the nature and execution of an arbitration agreement, and not just its terms, in considering a motion to compel, according to the Ohio Court of Appeals.
In Strader v. Magic Motors of Ohio, Inc., No. 2006CA00376, 2007 WL 2893422, (Ohio Ct. App. Oct. 1, 2007), Strader brought various court claims against Magic Motors, alleging the improper repossession of an automobile. Magic Motors presented the trial court with the terms of an arbitration agreement signed by the parties, and asked the trial court to compel arbitration of the claims. The trial court granted the motion to compel, and Strader appealed.
The Court found the order to compel to be in error, holding that the trial court had failed to take evidence as to the enforceability of the arbitration agreement before granting the motion.
The Court stated that it must consider the circumstances surrounding the nature and execution of the agreement, not just its terms, and that the trial court “abuse[d] its discretion in granting a motion to stay the proceedings pending arbitration without affording a party a reasonable opportunity to discover and present evidence as to the enforceability of the arbitration clause.” Therefore, since the trial court relied only on the terms of the agreement in granting Magic Motors’s motion to compel, the Court ordered the matter remanded for additional discovery.
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