Opinion

Hope Academy Broadway Campus v. White Hat Mgt., L.L.C. (Slip Opinion)

  • 145 Ohio St. 3d 29
  • 46 N.E.3d 665
  • 2015 Ohio 3716
Court
Ohio Supreme Court
Filed
Sep 15, 2015
Status
Published
Author
Pfeifer
On the bench
Lanzinger, O'Connor, Wise, Kennedy, French, O'Neill, Pfeifer, O'Donnell
Cited by
48 cases

counseling against interpretation of a contract that would lead to a “result [that] is manifestly absurd.”

How later courts described this case

  • counseling against interpretation of a contract that would lead to a “result [that] is manifestly absurd.”
  • parties are free to "contract for the terms they want, and the 'intent of the parties is presumed to reside in the language they chose to use in their agreement.' "
  • “Common words in a contract are given their plain and ordinary meaning, unless another meaning is clearly evident from the face or overall content of the contract, or unless the result is manifestly absurd.”
  • “We have defined the term ‘fiduciary relationship’ as one ‘in which special confidence and trust is reposed in the integrity and fidelity of another and there is a resulting position of superiority or influence, acquired by virtue of this special trust. In determining whether a fiduciary relationship has been created, the main question is whether a party agreed to act primarily for the benefit of another in matters connected with its undertaking.”

Written by the judges who cited it.

The opinion

Pfeifer, J.,

dissenting.

{¶ 90} Charter schools are a noble idea. In theory, they rescue children from broken urban school districts and educate them in smaller settings, similar to private schools, where families can have direct ownership in their child’s education. Unfortunately, the consensus is that the theory has miserably failed to meet the expectations, whether because of flawed legislation, ineffective management, structural defects in the for-profit school model, unmotivated students, or any number of other plausible reasons.

{¶ 91} This case could be little more than an academic exercise because one can only assume that much of the furniture, computers, and other educational and instructional materials at issue are now obsolete, untraceable, lost, or converted to other uses. Even so, the lead opinion is wrong on the merits. The key contract language is not nearly so dispositive as the opinion suggests. The contract states, among other things, that “the Company shall purchase on behalf of the School any furniture, computers, software, equipment, and other personal property which, by the nature of the funding source, must be titled in the School’s name.”

*54 Dinsmore & Shohl, L.L.P., Karen S. Hockstad, and Gregory P. Mathews; and Shumaker, Loop & Kendrick, L.L.P., James D. Coiner, and Adam M. Galat, for appellants.

Barnes & Thornburg, L.L.P., C. David Paragas, Kevin R. McDermott, and Amy Ruth Ita, for appellees.

Ulmer & Berne, L.L.P., and Donald J. Mooney Jr., urging reversal for amicus curiae Ohio School Boards Association.

Benesch, Friedlander, Copian & Aronoff, L.L.P., Martha J. Sweterlitsch, and Katherine Freeh, urging affirmance for amici curiae LeadingAge Ohio, Ohio Association of Community Action Agencies, Ohio Association of Nonprofit Organizations, and Ohio Community Corrections Association.

{¶ 92} The lead opinion has chosen to read this sentence in a way that supports the position of the companies. But that reading is not required by the language. The opinion reads the sentence such that the only items that must be titled in the school’s name are those items that are required to be so titled by the funding source. That reading of the sentence is overly restrictive, ignores the fact that the companies had a fiduciary responsibility to the schools, and does not promote the intention of the parties, or in any event, not the intention of the schools.

{¶ 93} A better reading of this key sentence subordinates the significance of “by the nature of the funding source.” This is not a restrictive term; it is more in the nature of an aside. With this understanding, the sentence essentially states that assets purchased on behalf of the school must be titled in the school’s name because of the nature of the funding source.

{¶ 94} Moreover, the contracts in this case are plainly and obviously unconscionable. In effect, the contracts call for the public to give money to a company to buy materials for the company to use on the public’s behalf to operate a public school. The contracts require that after the public pays to buy those materials for a public use, the public must then pay the companies if it wants to retain ownership of the materials. This contract term is not merely unwise as the lead opinion would have us believe; it is extremely unfair, so unfair, in fact, as to be unconscionable. Black’s Law Dictionary 1757 (10th Ed.2014). The contract term is so one-sided that we should refuse to enforce it.

{¶ 95} Methinks the opinion doth protest too much, going out of its way to support the insupportable. To all but those of an unduly legalistic bent, the conclusion reached by the lead opinion is antithetical to common sense.

*55 Day Ketterer Ltd., Robert J. McBride, Maria L. Markakis, and Kristen S. Moore, urging affirmance for amicus curiae Summit Academy Management, L.L.C.

Jones Day, Chad A. Readier, and Kenneth M. Grose, urging affirmance for amicus curiae Ohio Coalition for Quality Education.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.

A word about cookies

We need a few to keep you signed in and the library working. The rest help us see which pages people use and where they get stuck. They stay off unless you say yes.