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The Ohio Supreme Court held that a state appellate court properly granted a writ of prohibition preventing the trial court from proceeding to trial while the arbitrability of the dispute was under appeal.
In Blanchard Valley Health Ass'n v. Bates, 858 N.E.2d 406 (Ohio 2006), Blanchard Valley and ProMedica, both owners of Ohio healthcare facilities, formed an entity called BVPH Ventures (BVPH).
Several years later, ProMedica filed an action in Lucas County (the Lucas County case), seeking judicial dissolution of BVPH in order to resolve a deadlock over management of the joint venture. Blanchard Valley attempted to resolve the deadlock by filing an action for injunctive relief in Hancock County (the Hancock County case).
In the Hancock County case, the trial court issued an order staying the case while the parties arbitrated their dispute in accordance with the joint operating agreement. Subsequently, Blanchard Valley filed a motion in the Lucas County case, asking the court to stay further proceedings pending the outcome of arbitration. The court denied the motion and advised Blanchard Valley that it would proceed with the trial scheduled for the following week.
On the following day, Blanchard Valley filed a complaint in the court of appeals, seeking a writ of prohibition that would prevent the court in the Lucas County case from proceeding to trial. The court of appeals granted the writ.
The judge in the Lucas County case appealed to the Ohio Supreme Court (the Court), arguing that the court of appeals erred in granting the writ. The Court held that the writ was properly granted because proceeding with trial "would have been inconsistent with the court of appeals' jurisdiction to review the propriety of [the order] denying the motion for a stay pending arbitration."
Allowing the lower court to proceed with trial would have deprived Blanchard Valley of the benefits of arbitration (i.e., the benefit of its bargain) because the added efficiencies would be lost. Based on that principle, a federal court in California recently stayed further proceedings in order to preserve the benefits of arbitration for a party appealing the court's order denying arbitration. See Winig v. Cingular Wireless LLC, No. C-06-4297 MMC, 2006 WL 3201047 (N.D. Cal. Nov. 6, 2006). In Winig, the court noted that "if a party must undergo the expense and delay of a trial before being able to appeal an order denying a motion to compel arbitration the advantages of arbitration – speed and economy – are lost forever."
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