Beachwood City Sch. Dist. Bd. of Educ. v. Warrensville Heights City Sch. Dist. Bd. of Educ.
| Decision Date | 06 September 2022 |
| Docket Number | 2020-1326 |
| Citation | 2022 Ohio 3071 |
| Parties | Beachwood City School District Board of Education, Appellee, v. Warrensville Heights City School District Board of Education, Appellant. |
| Court | Ohio Supreme Court |
Submitted October 6, 2021
Appeal from the Court of Appeals for Cuyahoga County, No. 108253 2020-Ohio-4459.
Reminger Co., L.P.A., Holly Marie Wilson, Brian D. Sullivan and Aaren R. Host; and Brindza McIntyre & Seed, L.L.P., and Daniel McIntyre, for appellee.
Pepple & Waggoner, Ltd., Christian M. Williams, Donna M. Andrew, and Brian J. DeSantis; and Taft Stettinius & Hollister, L.L.P., Thomas J. Lee, Adrian D. Thompson, Aaron M. Herzig, and Brian A. Morris, for appellant.
{¶ 1} In 1990, the city of Beachwood annexed approximately 405 acres of land known as the Chagrin Highlands, which is part of the Warrensville Heights City School District. Appellee, the Beachwood City School District Board of Education ("Beachwood"), sought approval from the state board of education for a transfer of the annexed territory to the Beachwood City School District, over the objection of appellant, the Warrensville Heights City School District Board of Education ("Warrensville Heights").
{¶ 2} In 1997, following several years of negotiations, Beachwood and Warrensville Heights agreed that the Chagrin Highlands territory would not transfer to the Beachwood City School District but that the districts would instead share the tax revenue generated from real property located within the territory. This appeal concerns the enforceability of that agreement.
{¶ 3} Because we conclude that the parties' agreement is valid and enforceable, we affirm the judgment of the Eighth District Court of Appeals, which reversed the Cuyahoga County Court of Common Pleas' entry of summary judgment in favor of Warrensville Heights.
{¶ 4} To provide context for the facts of this case and the parties' primary arguments, we begin by reviewing R.C. 3311.06, which charges the state board of education with approving or disapproving a transfer of school-district territory following an annexation of territory that includes part, but not all, of a school district's territory. All citations to R.C. 3311.06 in this opinion refer to the version of the statute that was in effect in 1997, when the parties executed their agreement. See Am.Sub.H.B. No. 152, 145 Ohio Laws, Part II, 3341, 3641.
{¶ 5} When a city annexes territory that includes part, but not all, of a school district's territory, the annexed territory remains part of that school district unless the state board of education approves a transfer of the annexed territory to the city school district.[1] R.C. 3311.06(C)(2). R.C. 3311.06 prescribes the exclusive process for obtaining the state board's approval: "No transfer of school district territory or division of funds and indebtedness incident thereto, pursuant to the annexation of territory to a city or village shall be completed in any other manner than that prescribed by this section * * *." R.C. 3311.06(I).
{¶ 6} To obtain the state board's approval, the school board of at least one district whose territory would be affected by the transfer must first pass a resolution requesting the state board's approval and submit the resolution to the state board. R.C. 3311.06(C)(2)(a). The requesting district must also "make a good faith effort to negotiate the terms of transfer with any other school district whose territory would be affected by the transfer." R.C. 3311.06(C)(2). Ohio Adm.Code 3301-89-04 sets out procedures that govern those negotiations. As part of their negotiations, school districts "may agree to share revenues from the property included in the territory to be transferred, establish cooperative programs between the participating districts, and establish mechanisms for the settlement of any future boundary disputes." R.C. 3311.06(D); see also Ohio Adm.Code 3301-89-04(C). If negotiations take place, school districts seeking state-board approval of a transfer of territory must submit to the state board a statement, signed by the participating school boards, of the terms the parties have agreed on and the points on which they could not agree. R.C. 3311.06(C)(2)(c).
{¶ 7} Before the state board may approve or disapprove a transfer of territory, it must receive (1) the resolution required by R.C. 3311.06(C)(2)(a), (2) sufficient evidence that the impacted districts have engaged in good-faith negotiations or that the district requesting the transfer made a good-faith effort to hold such negotiations, R.C. 3311.06(C)(2)(b), and (3) if negotiations have taken place, the statement required by R.C. 3311.06(C)(2)(c) of the terms the parties have agreed on and the points on which they could not agree. Also before approving a transfer of territory, the state board must determine that "an equitable division of the funds and indebtedness between the districts," R.C. 3311.06(G), has been made. R.C. 3311.06(H).
{¶ 8} With these procedures in mind, we now turn to the facts of this case. Facts and procedural background Beachwood requests a transfer of annexed territory
{¶ 9} In October 1990, Beachwood initiated the statutory process described in R.C. 3311.06 by passing a resolution requesting the approval of a transfer of the Chagrin Highlands territory from the Warrensville Heights City School District to the Beachwood City School District and filing that resolution with the state board. Warrensville Heights opposed the requested transfer.
{¶ 10} The districts engaged in negotiations but were unable to reach an agreement on their own. They eventually engaged retired federal judge Robert M. Duncan to serve as a facilitator. Following mediation with the parties in November 1996 and January 1997, Judge Duncan issued written recommendations in April 1997. Judge Duncan recommended that the Chagrin Highlands territory remain part of the Warrensville Heights City School District but that the parties share real-estate tax revenue "generated from that amount of market value of the property [within the territory] (as determined by the Auditor) which exceeds * * * $22,258,310."[2] Judge Duncan recommended that, absent an abatement of real-estate taxes in the Chagrin Highlands territory, Beachwood receive 30 percent of the tax revenue generated by nonresidential and nonagricultural property and that Warrensville Heights receive the remaining 70 percent. Judge Duncan noted that the districts' representatives had agreed to support their respective school boards' adoptions of the recommendations.
The parties agree to settle their dispute without a transfer of territory
{¶ 11} In May 1997, the parties executed a written agreement that incorporated Judge Duncan's recommendations; they characterized the agreement as a "fair and equitable settlement" that was "in the best interests of both districts. The superintendents, treasurers, and board presidents of both districts signed the agreement, which stated that Beachwood would withdraw from the state board its request for approval of a transfer of the Chagrin Highlands territory, that the territory would remain part of the Warrensville Heights City School District, that the districts would share tax revenue generated from nonresidential and nonagricultural property within the territory as set out in Judge Duncan's recommendations, and that they would engage in joint educational programs and activities to benefit both districts. The parties agreed to "jointly request[]" that the Cuyahoga County auditor and treasurer "calculate and distribute [the shared tax] revenues in each year as provided by [the] Agreement." Both school boards unanimously approved the executed agreement.
{¶ 12} There is no evidence that either Beachwood or Warrensville Heights transmitted the agreement to the state board, but in accordance with the agreement's terms, Beachwood withdrew from the state board its request for approval of a transfer of the Chagrin Highlands territory.
Beachwood attempts to enforce the agreement
{¶ 13} As early as 2013, Beachwood Superintendent Dr. Robert P. Hardis (he was the district's assistant superintendent from August 2012 through July 2015) discussed with representatives of Warrensville Heights the implementation of the agreement's revenue-sharing and joint-educational-programming provisions. Dr. Hardis testified that during discussions and meetings between the districts about the valuation of property within the Chagrin Highlands territory and implementation of the agreement's revenue-sharing provisions in 2015 or 2016, "[n]o one stated any sense of disagreement or hesitation" about the validity of the agreement. Nevertheless, Warrensville Heights has at all times refused to share with Beachwood the tax revenues generated from the Chagrin Highlands territory.
Beachwood turns to the courts to enforce the agreement
{¶ 14} In 2017, Beachwood sued Warrensville Heights for breach of contract, promissory estoppel, declaratory judgment, and injunctive relief, but the parties filed a stipulated notice of dismissal without prejudice. Dr. Hardis wrote to Warrensville Heights Superintendent Donald J. Jolly II in January 2018, asking Warrensville Heights to reconsider its position that the parties' agreement was invalid and unenforceable. Dr. Hardis claimed that Beachwood was entitled to $5,571,421.99 in tax revenue generated from properties within the Chagrin Highlands territory for tax years 2012 through 2017.
{¶ 15} In August 2018, Beachwood refiled its claims against Warrensville Heights. Beachwood alleged that by refusing to share tax revenue from the Chagrin Highlands territory, Warrensville Heights breached a contract that arose from the parties' adoption of Judge...
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