Beachwood City Sch. Dist. Bd. of Educ. v. Warrensville Heights City Sch. Dist. Bd. of Educ.

• Decision Date: 17 September 2020
• Docket Number: No. 108253,108253
• Citation: 158 N.E.3d 906
• Parties: BEACHWOOD CITY SCHOOL DISTRICT BD. OF EDUCATION, Plaintiff-Appellant, v. WARRENSVILLE HEIGHTS CITY SCHOOL DISTRICT BD. OF EDUCATION, Defendant-Appellee.
• Court: Ohio Court of Appeals

158 N.E.3d 906

BEACHWOOD CITY SCHOOL DISTRICT BD. OF EDUCATION, Plaintiff-Appellant,

v.WARRENSVILLE HEIGHTS CITY SCHOOL DISTRICT BD. OF EDUCATION, Defendant-Appellee.

No. 108253

Court of Appeals of Ohio, Eighth District, Cuyahoga County.

RELEASED AND JOURNALIZED: September 17, 2020

JOURNAL ENTRY AND OPINION

MARY J. BOYLE, P.J.:

{¶ 1} At the heart of this case are two 1997 agreements between plaintiff-appellant, Beachwood City School District Board of Education ("Beachwood"), and defendant-appellee, Warrensville Heights City School District Board of Education ("Warrensville Heights"). The agreements provide that the school districts would share the tax revenue from a 405-acre tract of land known as the Chagrin Highlands (the "Chagrin Land") that the city of Beachwood annexed from the city of Cleveland in 1990. Despite the disparity between the school districts and the resulting optics in which these agreements were developed and executed, the issue before us in this appeal is limited to whether the agreements that the parties spent years negotiating are valid and enforceable.

{¶ 2} Beachwood raises one assignment of error, that "the trial court erred in granting summary judgment in favor of" Warrensville Heights. Beachwood identifies three issues under its sole assignment of error: (1) whether the parties' agreements are valid without approval from the Ohio Board of Education; (2) whether their agreements are valid without fiscal certificates; and (3) whether Warrensville Heights is immune from Beachwood's tort claims.

{¶ 3} We find merit to Beachwood's sole assignment of error and hold that the 1997 agreements are valid and enforceable. We therefore reverse the trial court's judgment and remand for further proceedings consistent with this opinion.

I. Procedural History and Factual Background

{¶ 4} In August 2018, Beachwood filed a complaint against Warrensville Heights for promissory estoppel, unjust enrichment, conversion, fraud, and two counts of breach of contract. Beachwood sought monetary damages, a declaratory judgment that the 1997 agreements between the parties are valid, and a permanent injunction to enforce the agreements. Beachwood attached the two agreements as exhibits to the complaint.

{¶ 5} In October 2018, Warrensville Heights moved to dismiss Beachwood's complaint, arguing that Warrensville Heights is statutorily immune from claims for promissory estoppel, unjust enrichment, conversion, and fraud. Warrensville Heights further maintained that Beachwood did not allege facts showing that the agreements ever became valid and enforceable. Beachwood filed an opposition, and the trial court denied Warrensville Heights' motion to dismiss.

{¶ 6} In November 2018, Warrensville Heights answered Beachwood's complaint and filed a counterclaim against Beachwood for specific performance. The counterclaim alleged that the agreements were invalid, but if the trial court found otherwise, Warrensville Heights sought an order directing Beachwood to comply with its obligation under the agreements to engage in joint educational programs. Beachwood filed an answer, and the parties engaged in discovery.

{¶ 7} In December 2018, Warrensville Heights filed a motion for summary judgment, and Beachwood filed an opposition. The following facts come from the deposition transcripts and the opposing summary-judgment motions.

{¶ 8} Both Beachwood and Warrensville Heights are political subdivisions under Chapter 2744 of the Ohio Revised Code and are public school districts organized and operating under the laws of the state of Ohio within Cuyahoga County.

{¶ 9} In March 1990, the city of Beachwood annexed the Chagrin Land from the city of Cleveland. Both parties agree that despite the municipal annexation, the Chagrin Land remained within the Warrensville Heights City School District.¹

{¶ 10} In October 1990, Beachwood requested that the Ohio Department of Education transfer the Chagrin Land for school-district purposes from Warrensville Heights to Beachwood pursuant to R.C. 3311.06. Warrensville Heights opposed the request. An Ohio Department of Education representative instructed Beachwood that it must negotiate in good faith with Warrensville Heights pursuant to Ohio Adm.Code Chapter 3301-89 to try to reach an agreement in the best interest of the districts' educational programs. Warrensville Heights and Beachwood attempted, unsuccessfully, to resolve the dispute. In 1993, the Ohio Department of Education provided Warrensville Heights and Beachwood with names of potential mediators who had backgrounds in public education. The parties disagreed on which of the mediators to select. In 1995, the parties asked the Ohio Department of Education to approve a "mediation conducted locally by a mutually acceptable facilitator" because the parties were unclear whether such action would comply with Ohio Adm.Code Chapter 3301-89. The Ohio Department of Education's response is not in the record, but in May 1996, the parties agreed to use former U.S. District Judge Robert M. Duncan ("Duncan") to facilitate the matter.

{¶ 11} The parties met with Duncan to mediate a resolution in November 1996 and January 1997. On April 8, 1997, Duncan issued a memorandum with respect to the "request of the Beachwood City School District for transfer of territory from the Warrensville Heights City School District." In his memorandum, he stated:

The property, which is a 405-acre tract formerly owned by the City of Cleveland, but within Warrensville Heights City School District, was annexed to the City of Beachwood on March 20, 1990. In October 1990, the Beachwood City School District Board of Education authorized action to obtain the transfer of the property to the Beachwood District pursuant to R.C. 3311.06. The Warrensville Heights District has firmly and consistently opposed the transfer. All attempted efforts to settle the transfer issue have failed.

{¶ 12} Duncan then set forth the following recommendations:

1. It was agreed that the property will remain in the Warrensville Heights City School District.

2. Warrensville Heights proposed that real estate tax revenues from the property, generated from that amount of market value of the property (as determined by the Auditor) which exceeds the current amount of $22,258,310 should be shared by the parties. * * *

a. It was agreed that Warrensville Heights shall receive 100% of tax revenue generated by portions of the property classified as residential or agricultural. b. If no abatement of real estate taxes is granted, Warrensville Heights proposed that it should receive 70% and Beachwood should receive 30% of tax revenue generated by the portions of the property classified other than as residential or agricultural. Beachwood proposed the portions of 60% to Warrensville Heights and 40% to itself. * * * I indicated my view that the Warrensville Heights proposal was more equitable.

c. If abatement of real estate taxes is granted, Warrensville Heights proposed a graduated scale of percentage change in its favor, ranging to 100% abatement. Beachwood proposed that the scale should only vary up to 25% abatement, since any percentage in excess of that amount would require the approval of Warrensville Heights. Consensus was reached that the scale should only vary to 25% and above, as follows:

* * *

3. It was agreed that the parties shall mutually engage in joint educational programs and activities, including but not limited to those programs and activities discussed previously.

Duncan concluded his memorandum by "strongly urg[ing] both Boards of Education to act favorably on the recommendations."

{¶ 13} In April 1997, the Ohio Department of Education asked the school districts for a status update, and they responded that they had received Duncan's recommendation and were in the process of preparing "a formal agreement between the parties."

{¶ 14} In May 1997, both school boards voted to adopt Duncan's recommendations.

{¶ 15} On May 12, 1997, Beachwood and Warrensville Heights entered into an agreement, which incorporated Duncan's recommendations and stated in relevant part:

WHEREAS, certain territory in the Warrensville Heights City School District has been annexed for municipal purposes to the City of Beachwood ("the Territory") * * *; and

WHEREAS, Beachwood has requested the Ohio Board of Education to transfer the Territory to the Beachwood School District, pursuant to Section 3311.06(C)(2) of the Ohio Revised Code, which request remains pending; and

* * *

WHEREAS, an agreement incorporating Judge Duncan's recommendations will permit the Territory to remain in Warrensville Heights, with a sharing of tax revenues between the two School Districts on a basis of 70% to Warrensville Heights and 30% to Beachwood which will provide Beachwood with the equivalent of approximately 50% of the revenue which it would have received if the Territory were transferred to Beachwood and other cooperation of educational benefit to both School Districts[.]

{¶ 16} The agreement then stated:

[T]he parties do hereby agree as follows:

1. Beachwood shall withdraw its request to transfer the Territory and shall not institute any further such request.

2. Real estate tax revenues from that amount of market value of the Territory (as determined by the Cuyahoga County Auditor) which exceeds the amount of $22,258,310 (the "Base Amount") shall be shared by the parties as set forth below. a. Warrensville Heights shall receive 100% of real estate tax revenue generated by portions of the Territory classified as residential or agricultural.

b. If no abatement of real estate taxes is granted, Warrensville Heights shall receive 70% and Beachwood shall receive 30% of real estate tax revenue generated by the portions of the Territory classified other than as residential or agricultural, net revenues from the Base Amount.

c. If abatement of real estate taxes is granted, the parties shall receive the respective percentages set forth below * * *

3. The parties shall mutually engage in

...