An Ohio appellate court properly identified de novo review as the standard of review of a trial court's order staying proceedings pending arbitration, but the appellate court erred in finding the arbitration agreement unconscionable due to "unfairness" in contract terms unrelated to the arbitration agreement, according to the Ohio Supreme Court.

In Taylor Building Corp. of America v. Benfield, NO. 2006-1890, 2006-2043, 2008 WL 696334 (Ohio Mar. 12, 2008), Benfield contracted with Taylor for the construction of a residence. The contract contained an arbitration agreement. Unsatisfied with Taylor's work during the project, Benfield refused to pay Taylor for the balance of the contract and demanded a refund of the funds already paid. Taylor filed suit against Benfield for breach, and moved to stay the case pending arbitration.

The trial court found the arbitration agreement valid and enforceable, save for a severable venue provision, and granted Taylor's motion. The appellate court reversed, finding the arbitration agreement unconscionable on de novo review.

The Court initially found that the appellate court had applied the correct standard of review to the trial court's decision, as required by OHIO REV. CODE 2711.02(C). Taylor argued that the appellate court should have applied an abuse of discretion standard, but the Court stated it was not convinced that an arbitration agreement's unconscionability should be reviewed using a different standard than other issues involving contract interpretation.

However, the Court then determined that the appellate court had not correctly applied the de novo standard upon its review of the trial court's decision. First, the Court stated that the appellate court had not accorded proper deference to the trial court's findings of fact by making its own clearly contradictory factual findings. Second, the Court observed that the appellate court had held the arbitration agreement unconscionable based in part on findings that other unrelated terms in the contract were "unfair," which was not an appropriate inquiry in determining the validity of the arbitration agreement standing alone.