Opinion

Vandercar, L.L.C. v. Port of Greater Cincinnati Dev. Auth.

196 N.E.3d 878
2022 Ohio 3148

Court: Ohio Court of Appeals
Filed: Sep 9, 2022
Status: Published
On the bench: Myers
Cited by: 7 cases
Authority: More cited than 55.3%

The opinion

[Cite as Vandercar, L.L.C. v. Port of Greater Cincinnati Dev. Auth., 2022-Ohio-3148.]

IN THE COURT OF APPEALS

FIRST APPELLATE DISTRICT OF OHIO

HAMILTON COUNTY, OHIO

VANDERCAR, LLC, : APPEAL NOS. C-210643

C-210665

Plaintiff-Appellee/Cross- : C-220130

Appellant, TRIAL NO. A-200900

vs.

: O P I N I O N.

THE PORT OF GREATER

CINCINNATI DEVELOPMENT :

AUTHORITY,

Defendant-Appellant/Cross-

Appellee. :

Civil Appeals From: Hamilton County Court of Common Pleas

Judgments Appealed From Are: Affirmed in Part, Reversed in Part, and Cause

Remanded

Date of Judgment Entry on Appeal: September 9, 2022

Taft Stettinius & Hollister LLP, W. Stuart Dornette, Russell S. Sayre and Beth A.

Bryan, for Plaintiff-Appellee/Cross-Appellant,

Calfee, Halter & Griswold LLP, Mitchell G. Blair, Matthew A. Chiricosta and David

T. Bules, for Defendant-Appellant/Cross-Appellee.

OHIO FIRST DISTRICT COURT OF APPEALS

MYERS, Presiding Judge.

{¶1} The deterioration of the Millennium Hotel in downtown Cincinnati had

long been an obstacle to the city’s efforts to attract convention business. In 2019,

Vandercar, LLC, entered into a $36 million purchase contract with the hotel’s former

owners in order to facilitate the redevelopment of the hotel “as a four-star (or better)

convention center hotel.” Several months later, Vandercar assigned its interest in the

contract to the Port of Greater Cincinnati Development Authority (“the Port”) in

exchange for two potential fees totaling $7.5 million. The Port acquired the hotel

property and paid Vandercar one of its potential fees, in the amount of $2.5 million.

However, although demolition on the Millennium Hotel was completed in 2022, the

dust has not yet settled on the parties’ dispute over the Port’s obligation to pay

Vandercar the second fee of $5 million.

{¶2} Vandercar sued the Port for breach of contract and bad faith, claiming

it was owed additional fees when the Port issued revenue bonds that included funds

for demolition of the hotel and other activities that Vandercar claimed were for

redevelopment. The trial court granted summary judgment in Vandercar’s favor on

its breach-of-contract claim in the amount of $5 million, but denied its motion for

prejudgment interest. The court granted the Port’s motion for partial judgment on

the pleadings on Vandercar’s bad-faith claim. Both parties have appealed.

{¶3} Because we find that the contract is clear and unambiguous in requiring

the Port to pay Vandercar its $5 million fee, we affirm the trial court’s grant of

summary judgment in favor of Vandercar on its breach-of-contract claim. And

because prejudgment interest cannot be assessed against the Port as an arm of the

state in the absence of statutory or contractual authority, we affirm the trial court’s

denial of Vandercar’s motion for prejudgment interest. Finally, because Vandercar’s

OHIO FIRST DISTRICT COURT OF APPEALS

bad-faith claim was subsumed in its breach-of-contract claim, we hold that the trial

court properly dismissed the bad-faith claim as a separate, stand-alone cause of action.

However, because we find that Vandercar has alleged that the Port acted in bad faith,

we reverse the trial court’s granting of judgment on the pleadings as to the recovery of

attorney fees and remand for further proceedings.

Factual Background

{¶4} On July 1, 2019, Vandercar entered into a Purchase and Sale

Agreement (“the Purchase Contract”) with Cincinnati S.I. Co., the owner of the

Millennium Hotel, to purchase the property for $36 million. The Purchase Contract

was amended on August 27, 2019, and on September 13, 2019.

{¶5} On October 4, 2019, Vandercar assigned its rights under the Purchase

Contract to the Port in an Assignment and Assumption Agreement, and the parties

entered into an Agreement Regarding Assignment (“the Agreement”). The Agreement

provided:

THIS AGREEMENT REGARDING ASSIGNMENT (the “Agreement”) is

entered into effective as of the 4th day of October, 2019 (the “Effective

Date”), by and between VANDERCAR, LLC, an Ohio limited liability

company (“Vandercar”), and THE PORT OF GREATER CINCINNATI

DEVELOPMENT AUTHORITY, a port authority and political

subdivision and body corporate and politic duly organized and validly

existing under the laws of the State of Ohio (“Port”), under the following

circumstances:

A. Vandercar is a party to that certain Purchase and Sale Agreement

with Cincinnati S.I. Co., an Ohio limited partnership (“Seller”) dated as

of July 1, 2019, as amended by that certain First Amendment to

Purchase and Sale Agreement dated as of August 27, 2019, and as

further amended by that Second Amendment to Purchase and Sale

OHIO FIRST DISTRICT COURT OF APPEALS

Agreement dated as of September 13, 2019 (as so amended, and as may

be further amended and/or supplemented from time to time, together,

the “Contract”). A true, correct, and complete copy of the Contract is

attached hereto as Exhibit A and incorporated herein.

B. Under the Contract, among other things, Vandercar has agreed to

purchase, and Seller has agreed to sell, certain Real Property (as such

term is defined in the Contract)1 located in the City of Cincinnati,

Hamilton County, Ohio, on which is located the Millennium Hotel

Cincinnati.

C. Port wishes to acquire the Real Property in order to redevelop, or

cause to be redeveloped, the Real Property for a new hotel (the

“Project”), which such acquisition of the Real Property may be financed

with the proceeds of revenue bonds issued by the Port Authority (the

“Property Acquisition Bonds”), and such redevelopment will be

financed with the proceeds of revenue bonds issued by the Port

Authority (the “Redevelopment Bonds”). The Property Acquisition

Bonds and the Redevelopment Bonds may be issued at the same time as

part of one issuance of bonds or, alternatively, may be issued on

separate dates as determined by the Port.

{¶6} After setting forth certain obligations of the parties, the Agreement

provided for certain payments to Vandercar. One of these was to occur upon the

closing of the property (“Development Fee”), and another was to be paid upon the

issuance of Redevelopment Bonds (“Redevelopment Fee”). Specifically, the

Agreement provided in relevant part:

1The “Real Property” referred to in the Agreement was defined in the July 1, 2019 Purchase

Contract to include the Land and Improvements at the Millennium Hotel site.

OHIO FIRST DISTRICT COURT OF APPEALS

D. Port desires to assume Vandercar’s rights and obligations under the

Contract, and Vandercar desires to assign such rights and obligations to

Port, subject, however, to the terms, conditions, and provisions of this

Agreement.

1. Development Fee and Expenses in Connection with the Property

Acquisition and the Contract.

a. On the Closing Date of the acquisition of the Real Property, Port

shall pay Vandercar:

i. a “Development Fee” of $2,500,000.00;

ii. An amount of $250,000.00 to reimburse Vandercar for

its payment to the Seller of the Initial Deposit required

under the Contract;

iii. An amount not to exceed $175,000.00 to reimburse

Vandercar for the fees and expenses incurred by

Vandercar in connection with the initial due diligence

with respect to the Contract, such amount to be paid to be

evidenced by invoices provided to the Port with sufficient

detail as to the work performed; and

iv. An amount not to exceed $47,500.00 to reimburse

Vandercar for the fees and expenses of Government

Solutions in connection with the Contract.

***

2. Additional Vandercar Redevelopment Fee. The Port shall use

commercially reasonable efforts to issue the Redevelopment Bonds

within one year from the date of the closing of the purchase of the Real

Property[.] * * * The Port shall not use or allow to be used any other

method of financing the development of the Project unless such

OHIO FIRST DISTRICT COURT OF APPEALS

financing causes and allows for the payment of the $5,000,000.00

redevelopment fee described below. If the closing of the Redevelopment

Bonds occurs within that one-year period (as may be extend (sic) due to

force majeure event), on such date of closing of the Redevelopment

Bonds[,] the Port shall pay Vandercar an additional amount of

$5,000,000.00.

(Emphasis sic.)

{¶7} On January 15, 2020, the Port adopted Resolution No. 2020-04 (“the

January Resolution”), authorizing the issuance and sale of revenue bonds. The

January Resolution provided:

WHEREAS, the Port of Greater Cincinnati Development Authority (the

“Port”), * * *, authorized and empowered * * * (1) to issue revenue bonds

in one or more series for the purpose of financing costs of acquiring,

constructing, installing, equipping or improving “port authority

facilities,” as defined in Section 4582.21, Ohio Revised Code

***

WHEREAS, pursuant to Board Resolution No. 2019-26 adopted on

September 27, 2019, the Port entered into an Agreement Regarding

Assignment dated as of October 4, 2019, with Vandercar, LLC

(“Vandercar”), under which the Port accepted an assignment of

Vandercar’s rights, interests and obligations under a Purchase and Sale

Agreement dated as of July 1, 2019 (the “PSA”) with Cincinnati, S.I. Co.,

as amended, and pursuant thereto, the Port intends to acquire and

demolish2 (i) the Millennium Hotel, Cincinnati, Hamilton County, Ohio

2We note that “acquire and demolish” does not modify the second phrase of this sentence and have

interpreted the plain language to be: the Port intends (1) to acquire and demolish the Millennium

Hotel and (ii) to evaluate the timing, scope and size of new convention facilities, including a new

hotel. This is consistent with both parties’ arguments.

OHIO FIRST DISTRICT COURT OF APPEALS

and certain other buildings and improvements located upon the Project

Site (defined herein), and (ii) to evaluate the timing, scope and size of

the construction of new convention facilities, including a new hotel, and

an expansion of the convention center on all or a portion of the Project

Site (collectively, the “Project”); and

WHEREAS, upon advice from the Port’s staff, this Board has

determined that it is necessary and proper and in the best interest of the

Port to issue revenue bonds in one or more series in the maximum

aggregate principal amount of $59,000,000 (“Bonds”) in anticipation

of the issuance of additional revenue bonds to pay for the costs of the

Project[.]

{¶8} The January Resolution then authorized the issuance of the bonds. In

it, the Port agreed to use the bond proceeds to pay a portion of the Project’s costs. The

Project is defined in the January Resolution as acquisition, demolition, and evaluation

of the site.

{¶9} Specifically, the January Resolution provided:

The Port will use the proceeds of the Bonds to pay a portion of the costs

of the Project and pay or reimburse related costs, to pay certain costs of

issuance of the Bonds, to make the capitalized interest deposit, if any,

and to fund a debt service fund if required by the Original Purchaser.

{¶10} On February 12, 2020, the Port adopted Resolution No. 2020-11 (“the

February Resolution”) authorizing its president to enter into contracts for the

remediation, demolition, and preconstruction at the Millennium Hotel site and for the

development and construction of new convention facilities, including a convention

center hotel, at the site. The February Resolution reiterated that the revenue bonds

authorized by the January Resolution would be used to “pay the cost of acquiring the

Project Site and demolishing the Millennium Hotel and evaluating the timing, scope

OHIO FIRST DISTRICT COURT OF APPEALS

and size of the construction of new convention facilities, including a new hotel, and an

expansion of the convention center[.]”

{¶11} On February 13, 2020, the Port issued revenue bonds (“the February

revenue bonds”) in the amount of $52.855 million, which were titled “Port of Greater

Cincinnati Development Authority Revenue Bonds, Series 2020 (Convention Center

Hotel Acquisition and Demolition Project).”

{¶12} On February 14, 2020, the Port closed on its acquisition of the real

property and paid Vandercar its $2.5 million Development Fee (plus expenses),

pursuant to Paragraph D(4) of the Agreement.

{¶13} On February 18, 2020, Vandercar submitted an invoice to the Port for

the $5 million Additional Vandercar Redevelopment Fee described in Paragraph D(5)

of the Agreement. In its letter accompanying the invoice, Vandercar asserted that the

February revenue bonds were issued for purposes other than simply property

acquisition and were Redevelopment Bonds issued within one year of closing, which

triggered the Port’s obligation to pay Vandercar’s Redevelopment Fee.

{¶14} On February 24, 2020, Vandercar sued the Port after it did not pay the

Redevelopment Fee.

Procedural History

{¶15} In its complaint, Vandercar alleged two causes of action: breach of

contract and bad faith. Vandercar alleged that the $52.855 million February revenue

bonds issued by the Port included approximately $39 million to acquire the Project

site and to pay Vandercar’s $2.5 million Development Fee, and the balance to begin

redevelopment activities, including demolition of the Millennium Hotel. It alleged

that the Port breached the Agreement when it failed to pay the $5 million

Redevelopment Fee owed to Vandercar when the Port issued “Redevelopment Bonds,

as defined under the Agreement,” as part of the February revenue bond issuance.

Vandercar also alleged that the Port acted in bad faith by refusing to pay the

OHIO FIRST DISTRICT COURT OF APPEALS

Redevelopment Fee and by structuring the bond issue to disguise the demolition and

other redevelopment activity as something other than redevelopment.

{¶16} After the Port filed its Answer, Vandercar moved for judgment on the

pleadings, seeking judgment in its favor on both its breach-of-contract and bad-faith

claims. Vandercar asked the court to award it $5 million in damages as well as its

attorney fees. The trial court denied the motion, finding that genuine issues of

material fact remained to be determined.

{¶17} The Port then moved for partial judgment on the pleadings as to

Vandercar’s bad-faith claim, arguing that the claim was not a legally cognizable, free-

standing cause of action under Ohio law.

{¶18} Before the court ruled on the Port’s motion, and following discovery,

Vandercar moved for summary judgment on its breach-of-contract claim. Then the

Port moved for summary judgment on both the breach-of-contract and bad-faith

claims. Both parties argued that the Agreement was clear and unambiguous.

Vandercar argued that it was entitled to its $5 million Redevelopment Fee because the

February revenue bonds included both Property Acquisition Bonds and

Redevelopment Bonds. The Port argued that the February revenue bonds consisted

only of Property Acquisition Bonds, and that it was not obligated to pay the

Redevelopment Fee because it did not issue Redevelopment Bonds to construct a new

hotel. In addition, the Port argued that Vandercar’s bad-faith claim failed as a matter

of law because there was no evidence of bad faith.

{¶19} The trial court heard arguments on the Port’s motion for partial

judgment on the pleadings and on both motions for summary judgment. At the end

of the hearing, the trial court orally announced its decision granting summary

judgment in favor of Vandercar on its breach-of-contract claim and awarding

Vandercar its $5 million Redevelopment Fee, denying the Port’s motion for summary

judgment, and granting the Port’s motion for partial judgment on the pleadings as to

OHIO FIRST DISTRICT COURT OF APPEALS

Vandercar’s bad-faith claim. Before the court issued a judgment entry, Vandercar filed

a motion for prejudgment interest.

{¶20} The trial court then issued a judgment entry disposing of the motions.

In granting summary judgment in favor of Vandercar on its breach-of-contract claim,

and denying summary judgment to the Port on that claim, the trial court stated:

The Court finds that there is no disputed issue of material fact that the

Port issued revenue bonds to acquire the property, and also redevelop

the property by beginning demolition of the Millennium Hotel. As such,

Vandercar is entitled to judgment as a matter of law on Count One of

the Complaint. The $5-Million-Dollar Redevelopment Fee defined in

the contract was triggered, and is owed.

{¶21} The court rejected the Port’s contention that demolition of the

Millennium Hotel “was paid for by issuance of Property Acquisition Bonds, which

would not trigger the Redevelopment Fee.” The court explained that it considered no

extrinsic evidence in reaching its decision, and it found that the language in the

Agreement was unambiguous. After looking to the dictionary definitions of

“acquisition” and “redevelopment” to find the plain meaning of the terms used in the

Agreement, the court stated:

The Court reads acquisition to refer solely to the gaining possession of

the property. The term Redevelopment would be applied to everything

else after acquisition leading up to construction of a new hotel. This

includes demolition of the previous building.

{¶19} In dismissing Vandercar’s bad-faith claim, the court stated that,

although it was clear that the parties disagreed as to whether the Redevelopment Fee

was owed, “a dispute with regard to contract interpretation is not bad faith in this

case.”

OHIO FIRST DISTRICT COURT OF APPEALS

{¶20} After the court issued its judgment entry disposing of the motions, the

Port appealed in the case numbered C-210643. Vandercar filed a cross-appeal in the

case numbered C-210665, but asserted that the Port’s appeal was premature under

App.R. 4(B)(2)(f) because Vandercar’s motion for prejudgment interest remained

pending in the trial court.

{¶21} This court stayed the appeals and remanded this case to the trial court

to resolve the prejudgment-interest motion. The trial court denied the motion. The

court found that prejudgment interest could not be levied upon the state in the absence

of a statute requiring it. The court found that the Port was an arm or instrumentality

of the state because it was created by, and its powers and authorities are defined by,

the Revised Code. Because the court found that no statute required the imposition of

prejudgment interest on an arm or instrumentality of the state, the court refused to

award prejudgment interest against the Port.

{¶22} Following the trial court’s denial of the motion for prejudgment

interest, Vandercar filed the appeal in the case numbered C-220130.

The Port’s Appeal

{¶23} In two assignments of error, the Port challenges the trial court’s

granting of summary judgment in Vandercar’s favor on the breach-of-contract claim

and denying the Port’s summary-judgment motion on the same claim. The Port argues

that it did not breach the Agreement with Vandercar by not paying the $5 million

Redevelopment Fee. According to the Port, it did not issue Redevelopment Bonds that

would trigger its obligation to pay the Redevelopment Fee, because the Agreement

defined “Redevelopment Bonds” as revenue bonds issued to construct a new hotel.

{¶24} We review a trial court’s ruling on a motion for summary judgment de

novo. Grafton v. Ohio Edison Co., 77 Ohio St.3d 102, 105, 671 N.E.2d 241 (1996).

Summary judgment is appropriately granted when there exists no genuine issue of

material fact, the party moving for summary judgment is entitled to judgment as a

OHIO FIRST DISTRICT COURT OF APPEALS

matter of law, and the evidence, when viewed in favor of the nonmoving party, permits

only one reasonable conclusion that is adverse to that party. State ex rel. Howard v.

Ferreri, 70 Ohio St.3d 587, 589, 639 N.E.2d 1189 (1994).

{¶25} In interpreting a contract, our role is “to give effect to the intent of the

parties to the agreement.” Motorists Mut. Ins. Co. v. Ironics, Inc., Slip Opinion No.

2022-Ohio-841, ¶ 8, quoting Westfield Ins. Co. v. Galatis, 100 Ohio St.3d 216, 2003-

Ohio-5849, 797 N.E.2d 1256, ¶ 11. We must “examine the contract as a whole and

presume that the intent of the parties is reflected in the language of the contract.”

Sunoco, Inc. (R&M) v. Toledo Edison Co., 129 Ohio St.3d 397, 2011-Ohio-2720, 953

N.E.2d 285, ¶ 37. Contract terms that are clear and unambiguous “should be applied

as written.” Sutton Bank v. Progressive Polymers, L.L.C., 161 Ohio St.3d 387, 2020-

Ohio-5101, 163 N.E.3d 546, ¶ 18. “[C]ommon words appearing in a written instrument

will be given their ordinary meaning unless manifest absurdity results, or unless some

other meaning is clearly evidenced from the face or overall contents of the

instrument.” Id. at ¶ 15, quoting Alexander v. Buckeye Pipe Line Co., 53 Ohio St.2d

241, 374 N.E.2d 146 (1978), paragraph two of the syllabus.

{¶26} Where the terms in a contract are clear and unambiguous, courts

“cannot in effect create a new contract by finding an intent not expressed in the clear

language employed by the parties.” Alexander at 246. Where terms are not defined

in the contract, courts rely upon dictionary definitions of the terms to determine their

plain and ordinary meaning. Id. at 247-248 (applying dictionary definitions of

unambiguous contract terms); Mr. Pulpstone, LLC v. Shops on 58, LLC, 9th Dist.

Lorain No. 21CA011718, 2021-Ohio-4467, ¶ 11; Sunoco at ¶ 38-39 (court looked to

dictionary definitions of “arrangement” because the term was not defined in the

parties’ agreement); Nationwide Mut. Fire Ins. Co. v. Guman Bros. Farm, 73 Ohio

St.3d 107, 109, 652 N.E.2d 684 (1995) (court applied Black’s Law Dictionary

definition of “employee” where the term was not defined in parties’ contract).

OHIO FIRST DISTRICT COURT OF APPEALS

{¶27} In this case, both parties assert that the Agreement’s terms are clear and

unambiguous, and that the Agreement contemplated two types of revenue bonds:

Property Acquisition Bonds and Redevelopment Bonds. They agree that, pursuant to

Paragraph D(4) of the Agreement, the Port paid Vandercar’s $2.5 million

Development Fee on the closing date of the acquisition of the Real Property. They

disagree, however, on the meaning of the term “Redevelopment Bonds” in the

Agreement and whether the February revenue bond issuance included Redevelopment

Bonds.

{¶28} The Port argues that the February revenue bonds were solely Property

Acquisition Bonds, which it issued to finance acquisition, site studies, and demolition

of the old Millennium Hotel. Vandercar argues that the February revenue bonds

consisted of both Property Acquisition Bonds and Redevelopment Bonds. In support

of their respective positions, both parties point to Paragraph C of the Agreement,

which we set forth again:

C. Port wishes to acquire the Real Property3 in order to redevelop, or