Clark Cty. Bd. of Commrs. v. Hardlines Design Co. , 2021 Ohio 1832 ( 2021 )

[Cite as Clark Cty. Bd. of Commrs. v. Hardlines Design Co., 2021-Ohio-1832.]
IN THE COURT OF APPEALS OF OHIO
SECOND APPELLATE DISTRICT
CLARK COUNTY
BOARD OF COUNTY :
COMMISSIONERS OF CLARK :
COUNTY : Appellate Case No. 2020-CA-63
:
Plaintiff-Appellant : Trial Court Case No. 2020-CV-253
:
v. : (Civil Appeal from
: Common Pleas Court)
HARDLINES DESIGN COMPANY :
:
Defendant-Appellee
...........
OPINION
Rendered on the 28th day of May, 2021.
...........
BEAU P. THOMPSON, Atty. Reg. No. 0093688, Assistant Prosecuting Attorney, Clark
County Prosecutor’s Office, Appellate Division, 50 East Columbia Street, Suite 449,
Springfield, Ohio 45502
Attorney for Plaintiff-Appellant
DAVID T. PATTERSON, Atty. Reg. No. 0007454 and FREDERICK T. BILLS, Atty. Reg.
No. 0083833, 10 West Broad Street, Suite 2400, Columbus, Ohio 43215
Attorneys for Defendant-Appellee
.............
HALL, J.
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{¶ 1} The Board of County Commissioners of Clark County (“Clark County”)
appeals the dismissal of its complaint under Civ.R. 12(B)(6) for failure to state a claim on
which relief can be granted. We agree that the complaint should not have been dismissed.
The judgment of the trial court will be reversed and remanded.
I. Factual and Procedural Background
{¶ 2} On July 8, 2020, Clark County filed an action against Hardlines Design
Company, claiming that the county had overpaid Hardlines $164,060 under a 2015
contract for architectural services.1 On August 14, Hardlines filed a motion to dismiss
under Civ.R. 12(B)(6). Hardlines argued, among other things, that Clark County had
waived its claim under a provision in the contract stating that a party waived all claims
that were not commenced in accordance with the parties’ agreement. According to
Hardlines, the waiver provision of the contract applied because the county had failed to
follow the contract’s dispute-resolution procedure, which required mediation of a dispute
before a claim could be brought in court. The county had never pursued mediation.
Alternatively, Hardlines asked the trial court to stay the proceedings and compel
mediation.
{¶ 3} On September 18, 2020, Clark County responded. It argued that its claim
was not one “arising out of or related to this Agreement” but was a dispute about
Hardlines’s billing practices generally. The county also argued that if the contract’s
dispute-resolution procedure applied, the trial court should stay the proceedings and allow
1 The claim was referred to as a claim for unjust enrichment in the complaint, but in a
later filing, Clark County referred to it as a claim for breach of contract.
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the parties to follow them. Hardlines filed a motion to strike the county’s response as
untimely, because the county had filed its response three weeks after the 14-day deadline
for responses in Civ.R. 6(C)(1).
{¶ 4} On October 27, 2020, the trial court sustained Hardlines’s motion to dismiss.
The court found that Clark County had failed to timely respond to Hardlines’s motion to
dismiss. Finding that the county had failed to seek mediation, the court also concluded
that the county has contractually waived its claim against Hardlines. The trial court
dismissed Clark County’s complaint with prejudice.
{¶ 5} The county appeals.
II. Analysis
{¶ 6} The sole assignment of error alleges:
The trial court abused its discretion when it dismissed Plaintiff Board of
County Commissioners of Clark County’s Complaint with Prejudice.
{¶ 7} “An order granting a Civ.R. 12(B)(6) motion to dismiss is subject to de novo
review.” (Citation omitted.) Perrysburg Twp. v. Rossford, 103 Ohio St.3d 79, 2004-Ohio-
4362, 814 N.E.2d 44, ¶ 5. “The factual allegations of the complaint and items properly
incorporated therein must be accepted as true. Furthermore, the plaintiff must be afforded
all reasonable inferences possibly derived therefrom. It must appear beyond doubt that
plaintiff can prove no set of facts entitling her to relief.” (Citations omitted.) Vail v. Plain
Dealer Publishing Co., 72 Ohio St.3d 279, 280, 649 N.E.2d 182 (1995). “In reviewing
whether a motion to dismiss should be granted, we accept as true all factual allegations
in the complaint.” Rossford at ¶ 5, citing Mitchell v. Lawson Milk Co., 40 Ohio St.3d 190,
192, 532 N.E.2d 753 (1988).
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{¶ 8} The interpretation and construction of a written contract are questions of law.
Alexander v. Buckeye Pipe Line Co., 53 Ohio St.2d 241, 374 N.E.2d 146 (1978),
paragraph one of the syllabus, which are reviewed de novo, Gatling Ohio, LLC v.
Allegheny Energy Supply Co., LLC, 2018-Ohio-3636, 120 N.E.3d 392, ¶ 12 (10th Dist.),
citing Long Beach Assn. v. Jones, 82 Ohio St.3d 574, 576, 697 N.E.2d 208 (1998).
{¶ 9} “The purpose of contract construction is to discover and effectuate the intent
of the parties. The intent of the parties is presumed to reside in the language they chose
to use in their agreement.” Graham v. Drydock Coal Co., 76 Ohio St.3d 311, 313, 667
N.E.2d 949 (1996). See also MRC Innovations, Inc. v. Lion Apparel, Inc., 2020-Ohio-694,
152 N.E.3d 513 (2d Dist.), quoting Ohio N. Univ. v. Charles Constr. Servs., Inc., 155 Ohio
St.3d 197, 2018-Ohio-4057, 120 N.E.3d 762, ¶ 11 (“The role of a court in interpreting a
contract ‘ “is to give effect to the intent of the parties to the agreement.” ’ ”).
{¶ 10} Our interpretive task focuses on Section 8.1.1 of the parties’ contract:
The Owner and Architect shall commence all claims and causes of action,
whether in contract, tort, or otherwise, against the other arising out of or
related to this Agreement in accordance with the requirements of the
method of binding dispute resolution selected in this Agreement within the
period specified by applicable law. The Owner and Architect waive all claims
and causes of action not commenced in accordance with this Section 8.1.1.
The “method of binding dispute resolution” is selected in Section 8.2.4, which states that
“[i]f the parties do not resolve a dispute through negotiation the method of binding dispute
resolution shall be * * * [l]itigation in a court of competent jurisdiction, as set forth in
Section 10.1.” Section 10.1 simply selects Clark County Common Pleas Court as the
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forum for litigation by stating “jurisdiction of any disputes that arise in connection with this
Agreement that are not settled through negotiation will be the Court of Common Pleas for
Clark County, Ohio.” Because “the method of binding dispute resolution” is litigation in
Clark County, the clause providing for waiver of claims “not commenced in accordance
with this Section 8.1.1” literally means that waiver only applies to litigation claims filed
beyond the applicable statute of limitations and outside of Clark County Common Pleas
Court. The waiver provision does not incorporate the remaining alternate dispute
resolution clauses of the contract.
{¶ 11} Undoubtedly, the remaining clauses of the contract’s dispute-resolution
procedure proscribe a preference for, and a requirement for, negotiation and mediation.
Section 8.1.4. provides “[p]rior to mediation of any claim * * * the parties * * * “will meet to
attempt to resolve informally * * * the claim* * * *.” If negotiation is unsuccessful, Section
8.2.1. provides for mediation: “Any claim, dispute or other matter in question arising out
of or related to this Agreement shall be subject to mediation as a condition precedent to
binding dispute resolution.”
{¶ 12} Nothing in the quoted alternative dispute resolution sections refers to waiver
of claims not brought within the appropriate time limit or not brought in Clark County
Common Pleas Court. The waiver provision in Section 8.1.1 of the parties’ agreement
provides that only claims that are subject to “binding-dispute resolution” [litigation] are
those brought in a particular court within a certain time. The waiver provision was not
concerned with the negotiation stages of the dispute-resolution procedure; it concerned
only the litigation stage.
{¶ 13} Our interpretation is consistent with the contract’s provision governing
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mediation. While mediation was mandatory before fully engaged litigation, Section 8.2.2
provided that a request for mediation did not need to precede litigation because the
contract allowed litigation and mediation to be requested “concurrently.”
A request for mediation shall be made in writing, delivered to the other party
to the Agreement, and filed with the person or entity administering the
mediation. The request may be made concurrently with the filing of a
complaint or other appropriate demand for binding dispute resolution but, in
such event, mediation shall proceed in advance of binding dispute
resolution proceedings, which shall be stayed pending mediation for a
period of 60 days from the date of filing, unless stayed for a longer period
by agreement of the parties or court order.
That contractual procedure is similar to the Ohio statutory procedure for claims that are
subject to an arbitration provision. See Morgan Stanley Dean Witter Commercial Fin.
Servs., Inc. v. Sutula, 126 Ohio St.3d 19, 2010-Ohio-2468, 929 N.E.2d 1060, ¶ 3, citing
R.C. 2711.02(B) (“Arbitration does not normally require dismissal of the claims referable
to arbitration; it warrants only a stay of those claims pending arbitration.”).
{¶ 14} Hardlines interprets Section 8.1.1’s waiver provision as waiving a claim if
the party fails to follow the contract’s dispute-resolution procedure. Under this
interpretation, simply by bringing its claim in court before instituting mediation, Clark
County was forever barred from any resolution of the dispute. We reject Hardlines’s
interpretation for several reasons. First, the waiver provision refers only to Section 8.1.1,
not the mediation provision. Second, forfeiture is not favored in the law, and courts strictly
construe forfeiture provisions. See Seidler v. FKM Advertising Co., 145 Ohio App.3d 688,
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695, 763 N.E.2d 1266 (7th Dist.2001); McKelvey v. Spitzer Motor Ctr., Inc., 46 Ohio
App.3d 75, 77, 545 N.E.2d 1311 (8th Dist.1988). Third, “[t]his interpretation is a manifest
absurdity and, for that reason, is to be avoided.” Wood Elec., Inc. v. Ohio Facilities Constr.
Comm., 2017-Ohio-2743, 90 N.E.3d 371, ¶ 40 (10th Dist.), citing Laboy v. Grange Indem.
Ins. Co., 144 Ohio St.3d 234, 2015-Ohio-3308, 41 N.E.3d 1224, ¶ 8 (rejecting an
interpretation of a contract that would result in the plaintiff’s never being compensated for
its full damages). The absurdity is that if mediation and litigation can be filed “concurrently”
then there can be no requirement to pursue mediation before suit. Consequently,
Hardlines is in no different position now than it will be when the trial court stays the
litigation and orders mediation.
{¶ 15} Here, Clark County brought a claim in the Clark County Court of Common
Pleas and did not “concurrently” request mediation. The county concedes that it should
have, but did not, request mediation. But there was no contract provision that provided
for waiver of claims if mediation were not requested either before or contemporaneously
with the filing of litigation. Instead, the contract provided that litigation should be stayed
and mediation should proceed first. We note that Hardlines alternatively asked the court
to stay the proceedings and compel mediation. The county too in its response to the
dismissal motion asked the court to stay the proceedings pending mediation.2 In our
opinion, that is what the trial court should have done.
2 Hardlines filed a motion asking us to strike portions of Clark County’s reply brief that
Hardlines says refer to matters that were not raised before the trial court. One of these
matters is the county’s request for a stay pending mediation. This and the other matters
that Hardlines cites were raised by Clark County in its response to the motion to dismiss.
But because the trial court disregarded the response as untimely, Hardlines contends that
the response should not count as having raised an issue. Since none of the matters that
concern Hardlines forms a basis for our decision, we overrule the motion to strike.
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III. Conclusion
{¶ 16} Presuming all factual allegations in the complaint are true, interpreting the
contract as we have, and making all reasonable inferences in the county’s favor, Clark
County can show a set of facts entitling it to relief for breach of contract. Consequently,
the trial court should not have dismissed the complaint under Civ.R. 12(B)(6).
{¶ 17} The assignment of error is sustained.
{¶ 18} The trial court’s judgment is reversed. This case is remanded for further
proceedings.
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DONOVAN, J. and WELBAUM, J., concur.
Copies sent to:
Beau P. Thompson
David T. Patterson
Frederick T. Bills
Hon. Douglas M. Rastatter