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A state court in Ohio held that when review of an order denying a motion to compel arbitration implicates a question of law, the appropriate standard of review is de novo, not abuse of discretion.
In West v. Household Life Ins. Co., Slip Copy, No. 06AP-906, 2007 WL 611286 (Ohio Ct. App. Mar. 01, 2007), West purchased credit disability and life insurance policies from Household. Shortly thereafter, West became totally disabled.
Household denied West's insurance claim, arguing that his disability was a pre-existing condition. West sued for breach of contract, and Household moved to compel arbitration pursuant to an arbitration rider in a contract between West and "the Lender." The lower court refused to compel arbitration because of lack of evidence that Household was either a party to the agreement or an intended beneficiary.
Applying de novo review, the Court affirmed the denial of the motion to compel. The Court recognized a split in authority as to the appropriate standard of review for a denial of a motion to compel arbitration. Boggs v. Columbus Steel Castings Co., No. 04AP-1239, 2005 WL 2210666 (Ohio Ct. App. 2005).
However, the most recent authority suggested that when an appeal of a motion to compel arbitration presents a question of law, de novo review should be favored over an "abuse of discretion" standard. Peters v. Columbus Steel Castings Co., No. 05AP-308, 2006 WL 225274 (Ohio Ct. App. 2006).
The broader scope of review notwithstanding, the Court agreed with the lower court's analysis of the arbitration rider and denied the motion to compel. Household was not a party to the agreement between West and "the Lender," nor was Household an intended third-party beneficiary.
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