A divided appeals court found Kent State University had valid reasons for adding a damages clause to men’s head basketball coach Geno Ford’s contract if he left early to coach at another school and upheld a $1.2 million judgment against him.

The Eleventh District Court of Appeals’ Monday ruling affirmed the decision of a 2013 Portage County Common Pleas Court siding with Kent State. Ford left in 2011 to coach at Bradley University with three years left on his renegotiated second contract with Kent State that paid him $300,000 a year.

Kent State originally named Ford its head coach in 2008, and gave him a four-year contract that contained a liquidated damages clause requiring him to pay back his salary multiplied by the years left on his contract if he were to leave early. Ford renegotiated his contract in April 2010 for a five-year deal, and while he attempted to remove or alter the liquidated damages clause, it remained in the contract.

In March 2011, Kent State gave Ford permission to speak to Bradley and other universities and a month later, Bradley hired Ford for $700,000 a year.  The university then sued Ford for breach of contract to invoke the damages clause and Bradley for interference with its contract with Ford.

In January 2012, Ford filed a motion for summary judgment, arguing Kent State suffered no real damages from his departure and that the liquidated damages clause was not enforceable because it served only as a penalty. Kent State filed its own motion for summary judgment stating the clause was valid and enforceable.

In July 2013, the trial court sided with the university and ordered Ford to pay $1.2 million. Kent State dismissed its case against Bradley and later in a press statement said it did so to preserve further litigation rights if Ford needed Bradley to help him pay the judgment.

In his appeal, Ford cited the Ohio Supreme Court’s Samson Sales, Inc. v Honeywell, Inc. (1984) decision which set the test on whether a liquidated damages clause is enforceable. Writing for the Eleventh District’s majority, Judge Diane V. Grendell wrote there is a three-part test in Samson to determine if the parties agreed to a formula by estimation and adjustment that can serve as an enforceable damages clause. The damages have to be (1) uncertain or difficult to prove; (2) the contract as a whole is not so unconscionable, unreasonable, and disproportionate as to not express the intentions of the parties; and (3) the parties had to agree damages in the amount stated would be imposed following any breach of contract.

“The application of Samson to the facts of this case supports a conclusion that the liquidated damages provision was properly enforced by the lower court. The parties agreed on an amount of damages, stated in clear terms in Ford’s second employment contract,” Judge Grendell wrote.

Judge Grendell noted that the damages a university suffers when its basketball coach leaves are difficult to determine and Kent State argued it could lead to decreased ticket sales, impact recruitment ability, diminish community support, and add to the cost of finding and paying for a replacement. The court noted similar conclusions were reached when former Vanderbilt University football coach Gerry Dinardo breached his contract to coach another team.  Ford argued his only duty was to coach the team and the only damages are the easy-to-measure cost of finding a replacement coach. Judge Grendell wrote that was exactly the argument rejected in Vanderbilt Univ. v. DiNardo, upheld by the U.S. Sixth Circuit Court of Appeals in 1999.

As coach, Ford had contractual supplemental duties, including fundraising and marketing, the court found. In addition, the court noted that Bradley was paying Ford more than double what Kent State paid him, an indication that Kent State’s investment in him as a head coach increased his market value, and that Ford knew the consequences since he was negotiating to have the damage clause removed from his second contract.

Judge Cynthia Westcott Rice concurred in the decision.

In his dissent, Judge Timothy P. Cannon found that the Samson factors pointed in Ford’s favor because the damages clause is not estimated based on anticipated damages, but a simple formula requiring the coach pay back the salary for each year left on the contract.

“This formula neither suggests any reasonable estimate of Kent State’s probable losses nor describes in any way the specific areas of damage to be included in the estimate” he wrote.

Judge Cannon wrote that he would require the trial court hold a hearing to gather evidence on what efforts Kent State made prior to contracting with Ford to determine that the salary payback was the right amount of damages to collect if a breach occurred.

Kent State Univ. v. Ford, 2015-Ohio-41
Opinion: http://sc.ohio.gov/rod/docs/pdf/11/2015/2015-ohio-41.pdf
Civil Appeal From: Portage County Court of Common Pleas
Judgment Appealed From Is: Affirmed
Date of Judgment Entry on Appeal: Jan. 12, 2015

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