State ex rel. Cordray v. Makedonija Tabak 2000

Sadler, Judge,

concurring in part and dissenting in part.

{¶ 44} Being unable to agree completely 'with the majority’s disposition of this case, I respectfully concur in part and dissent in part.

{¶ 45} I do not agree with the majority’s conclusion that genuine issues of material fact exist regarding whether MT-2000 and Leader specifically intended for the state to be a third-party beneficiary of the power of attorney granted to Leader by MT-2000. Specifically, the power of attorney’s unambiguous language shows that the state is an intended third-party beneficiary; thus, I would not consider the affidavit executed by Barry Boren attempting to explain the intent of the parties.

{¶ 46} The power of attorney specifically provided that its purpose was to delegate to Leader the duty of “funding, establishing and maintaining bank and escrow accounts to fund MT-2000’s state mandated escrow obligations.” Delegation of the duty to comply with state escrow laws to Leader directly benefits the state because it allows the state to avoid the difficulties involved in pursuing actions against foreign tobacco manufacturers whose products have entered the stream of commerce, thus making it easier for the state to enforce the escrow provisions that were enacted as part of the state’s duties under the Master Settlement Agreement, the purpose of which is to prevent nonparticipating manufacturers from obtaining a competitive advantage over those manufacturers that did participate.

{¶ 47} The evidence shows that 14 million cigarettes manufactured by MT-2000 were sold in Ohio, with no escrow payments made for those cigarettes as provided by Ohio law. In my view, the resulting frustration of the purpose behind the enactment of the escrow statute is sufficient damage to the state to find that the state can satisfy the damages element necessary to be a third-party beneficiary of the power of attorney. Because the power of attorney between Leader and MT-2000 meets the requirements as set forth in the majority decision for the state to be considered a third-party beneficiary of their agreement, I would overrule appellant’s first assignment of error.

{¶ 48} Further, I believe Leader’s reliance on the limitation-of-liability language contained in the power of attorney is misplaced. I believe that language is relevant to the issue of whether Leader can be held responsible to the state for the civil penalties associated "with the failure to pay the escrow obligation as outlined by the majority in its discussion of appellant’s seventh assignment of error, but that limitation does not affect the question of whether the state is a *90 third-party beneficiary of the agreement between Leader and MT-2000. Therefore, I would overrule appellant’s second assignment of error.

{¶ 49} The majority decision does not separately address the argument that appellant raises in its sixth assignment of error, finding that it should be sustained based on the analysis of appellant’s first assignment of error. In its sixth assignment, appellant argues broadly that the law governing nonparticipating manufacturers as set forth in R.C. 1346.01 et seq. can never be applied to the agent of a nonparticipating manufacturer. It appears that appellant is arguing that a nonparticipating manufacturer cannot legally delegate its duties under the nonparticipating manufacturer statute to third parties, and by sustaining appellant’s sixth assignment of error, it appears that the majority is accepting that broad principle. I disagree, as I do not believe anything in R.C. 1346.01 et seq. prohibits a nonparticipating manufacturer from delegating its duties to a third party. Therefore, I would overrule appellant’s sixth assignment of error.

{¶ 50} I agree with the majority decision in all other respects and would therefore also overrule appellant’s third and fourth assignments of error and sustain appellant’s fifth and seventh assignments of error. Consequently, I respectfully concur in part and dissent in part.