Litigation Byte

Ohio Appeals Court: Denying Arbitration Without Hearing May Be Reversible Error, Even If No Hearing Was Requested

October 22, 2025

In a recent ruling from the Eighth District Court of Appeals in Ohio, the court held that where parties present contradicting affidavits of fact, a trial court may commit reversable error by denying a motion to compel arbitration without first holding a hearing—even if neither party ever requested a hearing at all.

Background

Ms. Cleavenger purchased a car from North East Auto Credit (NEAC). At the time of purchase, she signed a number of documents, including an arbitration agreement. After identifying incorrect information in the contract documents, NEAC later called Ms. Cleavenger and informed her that she needed to return and execute new documents immediately, or NEAC would deem the vehicle stolen. At the time of the phone call, Ms. Cleavenger told NEAC that she had been drinking and was unable to drive. Ultimately, she obtained a ride to the dealership and filled out the new paperwork.

Over a year later, the eventual assignee of the installment contract brought suit against Ms. Cleavenger for breach of contract, which was then met with counterclaims and third-party claims against NEAC. NEAC moved to compel arbitration, pursuant to the agreement. The trial court denied the motion on multiple grounds, finding: (1) Ms. Cleavenger had signed the contract under duress, coercion, and the influence of alcohol, and (2) NEAC had assigned all rights under the contract to an assignee, and thus did not retain the right to compel arbitration under the contract. NEAC appealed.

Court’s Analysis and Decision

As in many states, Ohio has a strong public policy favoring arbitration. Where a contract contains an arbitration clause, that clause gives rise to a presumption of arbitrability. Similarly, parties may agree to include questions of whether any particular issue is arbitrable as questions within the scope of arbitration itself. In short, where parties have a valid arbitration agreement, there is often very little that a court must decide before granting a motion to compel arbitration.

The Eighth District first addressed NEAC’s argument that the trial court should never have considered questions of unconscionability, duress, and lack of capacity at all, as those claims were themselves within the scope of the arbitration agreement. But fatally, NEAC had failed to raise that argument to the trial court, and thus waived their right to raise it on appeal. While this issue may have been dispositive, it was not proper for the court’s consideration.

The court then turned to the next issue: whether the trial court should have held a hearing before denying the motion to compel arbitration. Hearings on motions to compel arbitration are only necessary if the party opposing arbitration “has presented sufficient evidence challenging the validity or enforceability of the arbitration provision to require the trial court to proceed to trial [of that issue] before refusing to enforce the arbitration clause.” A hearing need not necessarily be oral, and a party can waive their right to a hearing by failing to request one.

Here, none of the relevant parties had ever requested a hearing on the motion to compel arbitration. But even absent those requests, a hearing may still be required—and, here, it was. The parties did not dispute that NEAC asked Ms. Cleavenger to sign new contracts, but opposing affidavits of fact presented different versions of the circumstances under which the new contracts were signed. Because there were genuine issues of material fact challenging the enforceability of an arbitration provision, the trial court was obligated to try the issue at a hearing before being able to deny the motion, even though neither party had ever requested one. Because additional testimony was needed to address the factual dispute, the trial court erred and the ruling was reversed by the Eighth District.

Notably, the court acknowledged that whether NEAC had assigned away its right to compel arbitration when it assigned the contract was still a key question. However, the Eighth District held that a ruling on the same was premature and did not address the question further.

Key Takeaway

Ohio’s strong presumption in favor of arbitration extends beyond substantive law, and into procedural. If a party opposing arbitration introduces a genuine issue of material fact about arbitration’s validity or enforceability, a trial court can commit reversable error by denying the motion without holding a hearing. While parties can still seek to explicitly request a hearing when possible, courts often have an obligation to hold one regardless.