Kent State Univ. v. Bradley Univ.

• Decision Date: 28 May 2019
• Docket Number: NO. 2017-P-0056,2017-P-0056
• Parties: KENT STATE UNIVERSITY, Plaintiff-Appellant, v. BRADLEY UNIVERSITY, et al., Defendants-Appellees.
• Court: Ohio Court of Appeals

136 N.E.3d 774

2019 Ohio 2088

KENT STATE UNIVERSITY, Plaintiff-Appellant,

v.BRADLEY UNIVERSITY, et al., Defendants-Appellees.

NO. 2017-P-0056

Court of Appeals of Ohio, Eleventh District, Portage County.

Decided May 28, 2019

THOMAS R. WRIGHT, P.J.

{¶1} Kent State University (KSU) appeals the trial court's decisions granting Bradley University and Gene Ford summary judgment and denying its motion to amend its complaint to conform to the evidence. We affirm in part, reverse in part, and remand.

{¶2} KSU initially employed Ford as its head men's basketball coach for four years, beginning in April of 2008. Before expiration of the first contract, KSU and Ford agreed to an extended employment contract for a period of five years in April of 2010, which included a liquidated damages clause upon breach by either party.

{¶3} In a prior appeal between KSU and Ford only, we affirmed the trial court's decision granting KSU summary judgment and awarding it $ 1.2 million in liquidated damages against Ford for breach of his employment agreement. Kent State Univ. v. Ford, 11th Dist. Portage, 2015-Ohio-41, 26 N.E.3d 868. Although Bradley was a party to the prior trial court case, KSU voluntarily dismissed its claims against Bradley. Id. at ¶19.

{¶4} The case before us arises from KSU's refiled claims. KSU refiled suit against Bradley in March of 2015 and asserted three causes of action. It alleges that Bradley tortiously interfered with KSU's contract with Ford; that KSU is entitled to indemnity for its costs and fees in defending Ford's prior appeals; and that KSU is a third-party beneficiary entitled to $ 400,000 pursuant to Bradley's agreement with Ford.

{¶5} The trial court stayed the refiled proceedings pending resolution of Ford's appeal from the prior decision to the Ohio Supreme Court, and it lifted the stay when the Supreme Court declined jurisdiction and overruled Ford's motion for reconsideration. Kent State Univ. v. Ford, 143 Ohio St.3d 1441, 2015-Ohio-3427, 36 N.E.3d 189.

{¶6} Bradley filed its answer in July of 2016, following the trial court's denial of its motion to dismiss KSU's complaint. On September 2, 2016, KSU filed its first amended complaint adding Gene Ford as a defendant and adding two additional claims for relief against Ford and Bradley, including a claim for punitive damages. KSU alleged that Bradley made fraudulent transfers to Ford to defraud KSU, as Ford's creditor, and that Bradley and Ford conspired to defraud KSU based on its staggered payments to Ford.

{¶7} In April of 2017, KSU and Bradley filed competing motions for summary judgment, and Ford's motion to dismiss was converted to a motion for summary judgment.

{¶8} On April 27, 2017, KSU moved the court to permit it to modify its complaint to conform to the evidence, pointing to Bradley's delayed responses to discovery as the cause, which were not produced until after a motion to compel was filed. KSU alleged that it had just recently discovered that Bradley paid Ford's attorney fees in excess of $ 100,000 pursuing his prior appeals to the court of appeals and the Ohio Supreme Court. KSU claims Bradley and Ford civilly conspired to divert funds owed to KSU, as the third-party beneficiary to Ford's agreement with Bradley. KSU's motion to amend its complaint to conform to the evidence was overruled without analysis on July 21, 2017.

{¶9} On July 27, 2017, the trial court overruled KSU's motion for summary judgment, granted Bradley's and Ford's motions for summary judgment on all of KSU's claims, and dismissed the case with prejudice.

{¶10} KSU's first of five assigned errors argues:

{¶11} "The trial court erred when it granted summary judgment against KSU on its tortious interference with contract claim. Summary judgment instead should have been granted in KSU's favor."

{¶12} We review summary judgment decisions de novo without deference to the trial court's decision, Grafton v. Ohio Edison Co. , 77 Ohio St.3d 102, 105, 671 N.E.2d 241 (1996), and pursuant to Civ.R. 56(C), which provides:

{¶13} "Summary judgment shall be rendered * * * [if the evidence shows] that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. * * * A summary judgment shall not be rendered unless it appears from the evidence or stipulation, and only from the evidence or stipulation, that reasonable minds can come to but one conclusion and that conclusion is adverse to the party against whom the motion for summary judgment is made, that party being entitled to have the evidence or stipulation construed most strongly in the party's favor."

{¶14} "[I]f the moving party has satisfied its initial burden, the nonmoving party then has a reciprocal burden outlined in Civ.R. 56(E) to set forth specific facts showing that there is a genuine issue for trial and, if the nonmovant does not so respond, summary judgment, if appropriate, shall be entered against the nonmoving party." Dresher v. Burt, 75 Ohio St.3d 280, 293, 662 N.E.2d 264 (1996).

{¶15} To establish a claim of tortious interference with contract, a plaintiff must show: "(1) the existence of a contract, (2) the wrongdoer's knowledge of the contract, (3) the wrongdoer's intentional procurement of the contract's breach, (4) lack of [proper] justification, and (5) resulting damages." (Citations omitted.) PNH, Inc. v. Alfa Laval Flow, Inc., 130 Ohio St.3d 278, 2011-Ohio-4398, 958 N.E.2d 120, ¶¶39-40 (Lanzinger, J. dissenting); accord Fred Siegel Co., L.P.A. v. Arter & Hadden , 85 Ohio St.3d 171, 176, 1999-Ohio-260, 707 N.E.2d 853 (1999).

{¶16} KSU's complaint and motion for summary judgment allege that Bradley intentionally and improperly procured Ford's breach of his employment contract with KSU. The existence of Ford's contract and breach have been established as a matter of law. Kent State Univ. v. Ford, supra.

{¶17} Further, Bradley's knowledge that Ford was under contract with KSU at the time it contacted him to interview for their head coaching position is also undisputed.

{¶18} "To establish the intent element of a tortious interference with contract claim, a plaintiff must either (1) prove that the defendant acted with the purpose or desire to interfere with the performance of the contract or (2) prove that the defendant knew that interference was certain or substantially certain to occur as a result of its actions. RFC Capital Corp. v. EarthLink, Inc., 10th Dist. Franklin No. 03AP-735, 2004-Ohio-7046, 2004 WL 2980402, ¶ 68." Ginn v. Stonecreek Dental Care, 12th Dist. Fayette, 2015-Ohio-1600, 30 N.E.3d 1034, ¶17.

{¶19} Here, Bradley knew that Ford was contractually obligated as KSU's head coach for an additional four years. This knowledge is sufficient to show an intentional interference; the interferer need not know the actual content of the existing agreement or its legal significance. Ginn citing Restatement (Second) of Torts § 766 (1979), Comment i. Comment i states:

{¶20} "i. Actor's knowledge of other's contract. To be subject to liability under the rule stated in this Section, the actor must have knowledge of the contract with which he is interfering and of the fact that he is interfering with the performance of the contract. Although the actor's conduct is in fact the cause of another's failure to perform a contract, the actor does not induce or otherwise intentionally cause that failure if he has no knowledge of the contract. But it is not necessary that the actor appreciate the legal significance of the facts giving rise to the contractual duty, at least in the case of an express contract. If he knows those facts, he is subject to liability even though he is mistaken as to their legal significance and believes that the agreement is not legally binding or has a different legal effect from what it is judicially held to have. " (Emphasis added.)

{¶21} The fourth element, whether Bradley lacked a "proper" justification upon hiring Ford while he was under contract with KSU, is contested.

{¶22} In Fred Siegel Co., L.P.A. v. Arter & Hadden, 85 Ohio St.3d 171, 176, 707 N.E.2d 853 (1999), the Ohio Supreme Court stated, "[w]e * * * reaffirm Kenty and hold that establishment of the fourth element of the tort of tortious interference with contract, lack of justification, requires proof that the defendant's interference with another's contract was improper." Upon restating that the elements had been established sufficient to overcome a motion to dismiss in Kenty, the Supreme Court concludes in part that "Kenty [sufficiently pleads] that appellees maliciously interfered with the contract * * *." (Emphasis added.) Kenty v. Transamerica Premium Ins. Co., 72 Ohio St.3d 415, 419, 650 N.E.2d 863 (1995).

{¶23} Malice means: "1. The intent, without justification or excuse, to commit a wrongful act. 2. Reckless disregard of the law or of a person's legal rights." Black's Law Dictionary (10th ed. 2014). "[A]ctual malice such as personal ill will, spite or hatred is not an essential element of the claim. Elwert v. Pilot Life Ins. Co. (1991), 77 Ohio App.3d 529, 602 N.E.2d 1219 ; Reichman v. Drake (1951), 89 Ohio App. 222, 45 O.O. 444, 100 N.E.2d 533 ; MPS Trimco, Inc. v. Lewis (Feb. 18, 1993), Cuyahoga App. No. 61829, unreported, at 7, 1993 WL 39921." Hoyt, Inc. v. Gordon & Assoc., Inc., 104 Ohio App.3d 598, 604, 662 N.E.2d 1088 (8th Dist.1995).

{¶24} The Supreme Court likewise adopted Sections 767 and 768 of the Restatement of the Law 2d, Torts. Section 767 sets forth general factors to use to determine whether conduct is "improper" for a tortious interference with contract claim. This section sets forth a nonexhaustive list of important factors to weigh. Kand Medical, Inc. v. Freund Medical Products, Inc., 963 F.2d 125, 128 (6th Cir.1992). It provides:

{¶25} "[I]n determining whether an actor has acted improperly in intentionally interfering with a contract or prospective contract of another, consideration should be given to the following factors: (a) the nature of the actor's...