Campus v. White Hat Mgmt., LLC

• Decision Date: 14 November 2013
• Docket Number: No. 12AP–496.,12AP–496.
• Parties: HOPE ACADEMY BROADWAY CAMPUS et al., Plaintiffs–Appellants/Cross–Appellees, v. WHITE HAT MANAGEMENT, LLC et al., Defendants–Appellees/Cross–Appellants.
• Court: Ohio Court of Appeals

4 N.E.3d 1087

HOPE ACADEMY BROADWAY CAMPUS et al., Plaintiffs–Appellants/Cross–Appellees,

v.WHITE HAT MANAGEMENT, LLC et al., Defendants–Appellees/Cross–Appellants.

No. 12AP–496.

Court of Appeals of Ohio, Tenth District, Franklin County.

Nov. 14, 2013.

Dinsmore & Shohl LLP, and Karen S. Hockstad; Shumaker, Loop & Kendrick, LLP, James D. Colner, and Adam M. Galat, Columbus, for plaintiffs-appellants/cross-appellees.

Taft, Stettinius & Hollister LLP, Charles R. Saxbe, Donald C. Brey, and James D. Abrams, Columbus, for defendants-appellees/cross-appellants.

Jones Day, Chad A. Readler, and Kenneth M. Grose, Columbus, Amicus Curiae Ohio Coalition for Quality Education.

Michael DeWine, Attorney General, and Todd R. Marti, Columbus, Amicus Curiae Ohio Department of Education.

BROWN J.

{¶ 1} Hope Academy Broadway Campus, Hope Academy Chapelside Campus, Hope Academy Lincoln Park Campus, Hope Academy Cathedral Campus, Hope Academy University Campus, Hope Academy Brown Street Campus, Life Skills Center of Cleveland, Life Skills Center of Akron, Hope Academy West Campus, and Life Skills Center Lake Erie (“the schools”), plaintiffs-appellants/cross-appellees, appeal the judgment of the Franklin County Court of Common Pleas, in which the court granted partial summary judgment in favor of White Hat Management, LLC, WHLS of Ohio, LLC (“WHLS”), HA Broadway, LLC, HA Chapelside, LLC, HA Lincoln Park, LLC, HA Cathedral, LLC, HA University, LLC, HA Brown Street, LLC, LS Cleveland, LLC, LS Akron, LLC, HA West, LLC, and LS Lake Erie, LLC (referred to as a singular entity “White Hat”), defendants-appellees/cross-appellants. The Ohio Department of Education (“ODE”) and the Ohio Coalition for Quality Education have filed amicus briefs. White Hat has filed a motion to dismiss for lack of a final, appealable order.

{¶ 2} The schools are the governing boards of ten community schools. In November 2005, each of the schools entered into similar management agreements with separate education management organizations (“EMO”). The EMOs are owned by WHLS. The EMOs receive assistance from White Hat Management. The White Hat EMOs manage and operate the schools. The management agreements provide for certain payments from the schools to White Hat. The schools paid White Hat a fixed percentage of the per-student state funding they received, called a “continuing fee,” as well as full reimbursements for federal and state grants. White Hat was responsible for the day-to-day operation of the schools, including the purchasing of furniture, computers, books, and all other equipment. White Hat also was responsible for providing a building and staff for the schools.

{¶ 3} The management agreements terminated on June 30, 2007, but the parties renewed them for one-year terms in 2007–2008, 2008–2009, and 2009–2010. As of the time of briefing, of the ten original subject schools, two Hope Academies had closed, and the three Life Skills Centers were under different management.

{¶ 4} On May 17, 2010, the schools filed an action against White Hat and ODE, seeking declaratory relief, injunctive relief, and an accounting alleging claims of breach of contract and breach of fiduciary duty. In general, the schools asserted that, pursuant to the terms of the management agreements, they were entitled to all property purchased by White Hat using public funds without having to pay White Hat for such property. After the action was filed, the parties executed a series of “standstill agreements,” which permitted the parties to continue operations as if the management agreements were still in effect.

{¶ 5} On February 21, 2012, the schools filed a motion for partial summary judgment, claiming they were entitled to all property, without payment to White Hat, that White Hat purchased using public funds to operate the schools. On May 11, 2012, the trial court granted the schools partial summary judgment, finding that the schools are entitled only to the personal property purchased by White Hat using funding sources that required the purchase to be in the schools' names pursuant to the terms of the management agreements. The trial court also found that White Hat had no fiduciary duty to give property to the schools without compensation. The schools appeal the trial court's decision, asserting the following assignments of error:

[I.] The trial court erred when it found that White Hat owns certain personal property under the terms of the Management Agreements and that the Schools must purchase the property from White Hat at the expiration of the Management Agreements.

[II.] The trial court erred in declaring that the Schools have legal authority to transfer title to personal property under R.C. Chapters 3313 and 3314.

[III.] The trial court erred in limiting the nature of White Hat's fiduciary relationship to the Schools.

{¶ 6} We first address White Hat's motion to dismiss for lack of a final, appealable order. Pursuant to Ohio Constitution, Article IV, Section 3(B)(2), this court's appellate jurisdiction is limited to the review of final orders of lower courts. “A final order * * * is one disposing of the whole case or some separate and distinct branch thereof.” Lantsberry v. Tilley Lamp Co., 27 Ohio St.2d 303, 306, 272 N.E.2d 127 (1971). A trial court's order is final and appealable only if it satisfies the requirements of R.C. 2505.02 and, if applicable,Civ.R. 54(B). Denham v. New Carlisle, 86 Ohio St.3d 594, 596, 716 N.E.2d 184 (1999), citing Chef Italiano Corp. v. Kent State Univ., 44 Ohio St.3d 86, 88, 541 N.E.2d 64 (1989).

{¶ 7} When determining whether a judgment or order is final and appealable, an appellate court engages in a two-step analysis. First, the court must determine if the order is final within the requirements of R.C. 2505.02. Second, if the order satisfies R.C. 2505.02, the court must determine whether Civ.R. 54(B) applies and, if so, whether the order contains a certification that there is no just reason for delay. Gen. Acc. Ins. Co. v. Ins. Co. of N. Am., 44 Ohio St.3d 17, 21, 540 N.E.2d 266 (1989). Civ.R. 54(B) does not alter the requirement that an order must be final before it is appealable. Id., citing Douthitt v. Garrison, 3 Ohio App.3d 254, 255, 444 N.E.2d 1068 (9th Dist.1981).

{¶ 8} R.C. 2505.02 defines a final order and provides several definitions. Pursuant to Civ.R. 54(B), a trial court may separate one or more claims from other pending claims for purposes of appellate review. Ohio Millworks, Inc. v. Frank Paxton Lumber Co., 2d Dist. No. 14255, 1994 WL 313068 (June 29, 1994). The claims separated must otherwise have been finally adjudicated. Id. If the trial court expressly determines that there is no just reason for delay, then the claim or claims separated, pursuant to Civ.R. 54(B), may be reviewed on appeal even though other claims remain pending. Id.

{¶ 9} In the present case, White Hat's only real argument is that the trial court's order did not adjudicate all of the parties' claims, and the trial court did not indicate there was no just reason for delay. It is true that the trial court did not adjudicate all claims in this multiple-claim action; thus, there could be no final judgment with regard to either claim absent the “no just reason for delay” language from Civ.R. 54(B). In the original decision, the trial court made no determination that there was no just reason for delay. However, the schools filed a motion for Civ.R. 54(B) certification with respect to the trial court's judgment, which the trial court granted on July 24, 2012. Therefore, we find the judgment was both a final and appealable order. White Hat's motion to dismiss is denied.

{¶ 10} The schools argue in their assignments of error that the trial court erred when it granted partial summary judgment in favor of White Hat. Summary judgment is appropriate when the moving party demonstrates that: (1) there is no genuine issue of material fact, (2) the moving party is entitled to judgment as a matter of law, and (3) reasonable minds can come to but one conclusion when viewing the evidence most strongly in favor of the non-moving party, and that conclusion is adverse to the nonmoving party. Hudson v. Petrosurance, Inc., 127 Ohio St.3d 54, 2010-Ohio-4505, 936 N.E.2d 481, ¶ 29;Sinnott v. Aqua–Chem, Inc., 116 Ohio St.3d 158, 2007-Ohio-5584, 876 N.E.2d 1217, ¶ 29. Appellate review of a trial court's ruling on a motion for summary judgment is de novo. Hudson at ¶ 29. This means that an appellate court conducts an independent review, without deference to the trial court's determination. Zurz v. 770 W. Broad AGA, L.L.C., 192 Ohio App.3d 521, 2011-Ohio-832, 949 N.E.2d 595, ¶ 5 (10th Dist.); White v. Westfall, 183 Ohio App.3d 807, 2009-Ohio-4490, 919 N.E.2d 227, ¶ 6 (10th Dist.).

{¶ 11} When seeking summary judgment on the ground that the non-moving party cannot prove its case, the moving party bears the initial burden of informing the trial court of the basis for the motion and identifying those portions of the record that demonstrate the absence of a genuine issue of material fact on an essential element of the non-moving party's claims. Dresher v. Burt, 75 Ohio St.3d 280, 293, 662 N.E.2d 264 (1996). The moving party does not discharge this initial burden under Civ.R. 56 by simply making a conclusory allegation that the non-moving party has no evidence to prove its case. Id. Rather, the moving party must affirmatively demonstrate by affidavit or other evidence allowed by Civ.R. 56(C) that the non-moving party has no evidence to support its claims. Id. If the moving party meets its burden, then the non-moving party has a reciprocal burden to set forth specific facts showing that there is a genuine issue for trial. Civ.R. 56(E); Id. If the non-moving party does not so respond, summary judgment, if appropriate, shall be entered against the non-moving party. Id.

{¶ 12} The present case involves the reading and interpretation of contracts between the parties. In construing...