Tuesday, September 12, 2023
In re Z.C., Case No. 2022-1251
Eleventh District Court of Appeals (Ashtabula County)
Brooke Smith v. The Ohio State University, Case No. 2023-0009
Tenth District Court of Appeals (Franklin County)
State of Ohio v. Rickey Brown, Case No. 2022-1182
First District Court of Appeals (Hamilton County)
Vandercar LLC v. The Port Authority of Greater Cincinnati Development Authority, Case No. 2022-1312
First District Court of Appeals (Hamilton County)
What Is Standard for Reviewing Cases That Terminate Parental Rights?
In re Z.C., Case No. 2022-1251
Eleventh District Court of Appeals (Ashtabula County)
ISSUE: What is the appropriate standard for appellate courts to use when reviewing a lower court decision to terminate a parent’s rights?
BACKGROUND:
In January 2019, the Ashtabula County Children Services Board began investigating a household where a mother, identified as N.H., lived with her eight children. The agency was given temporary custody of the children.
D.C., the biological father of four of the children, and N.H. didn’t live together when the investigation occurred. Three of D.C.’s children were placed with relatives who subsequently obtained legal custody. The families were unable to take his fourth child, Z.C., who was placed in foster care in March 2020.
The foster family wants to adopt Z.C. In August 2020, the children services agency asked Ashtabula County Juvenile Court for permanent custody of the child. After a hearing, the magistrate terminated N.H.’s and D.C.’s parental rights and granted permanent custody to the agency. D.C. objected, but in March 2022 the court overruled the objections.
The father appealed to the Eleventh District Court of Appeals. He argued that the court’s termination of his parental rights wasn’t in the child’s best interest. The agency responded that D.C. had refused to have contact with Z.C. because the visits would have been supervised, D.C. had found a home but its renovation was incomplete, and he didn’t keep appointments with caseworkers. The guardian ad litem (GAL) hadn’t supported permanent custody for the agency but also didn’t recommend Z.C.’s placement with the father because there were no interactions for the GAL to observe. The Eleventh District upheld the juvenile court decision to terminate D.C.’s parental rights. The appeals court based its decision on a standard called “abuse of discretion” and found that the trial court didn’t abuse its discretion when terminating D.C.’s parental rights.
The Eleventh District found, however, that this standard conflicted with the review standard used by five other Ohio appeals courts. The Eleventh District certified the conflict to the Supreme Court of Ohio, which agreed to review the issue.
Father Disagrees With Appeals Court’s Review
D.C. explains that a review by an appellate court for abuse of discretion looks at whether the lower court ruling was unreasonable, arbitrary, or unconscionable. He argues, though, that this standard is too deferential to a juvenile court that is deciding to terminate a parent’s custody rights.
The father contends that appeals courts should instead use higher standards of review because the right to have and raise one’s children is so fundamental. As many court rulings have stated, terminating parental rights is the family law equivalent of the death penalty in a criminal case, D.C. notes. He argues that appeals courts should instead review these cases based on two standards – the sufficiency of the evidence and the manifest weight of the evidence.
For the sufficiency of the evidence standard, the appeals court examines the record to determine whether the juvenile court had enough information to meet its burden of proof, which is clear and convincing evidence for these types of cases, D.C. maintains. He believes that parents also should be permitted to ask an appellate court to review based on whether the manifest weight of the evidence supported the termination of a parent’s rights. For manifest weight, the appeals court weighs the evidence and reasonable inferences, considers witness credibility, and determines whether the lower court lost its way resulting in a “manifest miscarriage of justice,” his brief explains. If a lower court meets this standard, then the ruling wasn’t biased or subjective and any factors favoring the parents were properly considered, he asserts.
D.C.’s brief contends that Ohio appellate courts differ on how to consider permanent custody cases – using three or four different standards of review – “creat[ing] confusion and potentially inequitable and erroneous results for Ohio families and children.” The Eleventh District should have used a different standard to review this case, and the standard for all Ohio juvenile courts needs to be clarified, the brief concludes.
Mother Submits Brief, Aligning With Father’s Arguments
The children’s mother, N.H., filed an amicus curiae brief in the case as an interested party. She argues for appeals courts to use a two-part analysis based on the same standards D.C. identifies – sufficiency of the evidence and manifest weight of the evidence. She will be permitted to share the time allotted to D.C. to present her views during oral argument.
Agency Notes Cases Are Highly Fact Specific, Appeals Court Did Correct Review
The children services agency board supports a standard of review based on whether the juvenile court abused its discretion. The agency argues that permanent custody determinations are intensely fact specific. Because of that, the reviewing appeals court should follow the abuse of discretion standard by deferring to the lower court, where the testimony was seen and heard.
The agency disagrees with appeals court reviews based on the manifest weight of the evidence standard. When using a manifest weight standard, the appeals court acts as the 13th juror, reexamining all the evidence and deciding whether the jury lost its way or the trier of fact made the wrong call. However, if a lower court decision is supported by some competent, credible evidence, an appeals court can’t find that the ruling was against the manifest weight of the evidence, the agency contends. Evidence is competent and credible in these cases if it meets the requirements in state law for removing custody from a parent, the agency explains. The law first requires a juvenile court to find that one of four circumstances in the relevant statute applies. If that is established, then the court decides, based on the evidence, whether it is in the child’s best interest to terminate a parent’s rights. In this case, both steps were met, the agency argues.
The agency maintains that as long as those statutory requirements were met, then the evidence also is sufficient for an appeals court to uphold the decision. That sufficiency of evidence standard was established in this case, and the transfer of permanent custody of Z.C. to the agency and termination of D.C.’s parental rights should be upheld, the agency concludes.
Additional Briefs Filed in Case
An amicus brief supporting D.C.’s position was submitted by three law professors at Case Western Reserve University School of Law and the Cuyahoga County Public Defender’s Office. They assert that the appropriate standard for appellate courts reviewing these cases depends on what is challenged – sufficiency or manifest weight. However, a review for whether the lower court abused its discretion is an incorrect standard, they maintain.
The Cuyahoga County Division of Children and Family Services filed an amicus brief on the conflict but in support of no party in this case. The division states that if someone challenges the sufficiency of the evidence in a permanent custody case, the appeals court examines whether competent, credible evidence supported the judgment. If someone argues the decision is against the manifest weight of the evidence, then the appellate court looks to whether the lower court abused its discretion, the division maintains. It adds that the Eleventh District properly followed this latter standard.
– Kathleen Maloney
Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.
Contacts
Representing D.C., the biological father: Judith Kowalski, judykowalski@att.net
Representing N.H., the biological mother: Michael Walton, mpw@mwaltonlaw.com
Representing Ashtabula County Children’s Services Board from the Ashtabula County Prosecutor’s Office: Christopher Fortunato, crfortunato@ashtabulacounty.us
Can College Students Seek COVID-19 Related Refunds Through Court of Claims?
Brooke Smith v. The Ohio State University, Case No. 2023-0009
Tenth District Court of Appeals (Franklin County)
ISSUE: Does the Ohio Court of Claims have the authority to consider a lawsuit against a state university if the institution claims it has immunity from lawsuits when it exercises discretion while making essential decisions?
BACKGROUND:
At the onset of the COVID-19 pandemic, Gov. Mike DeWine declared a state of emergency and directed state agencies to develop plans to protect the health and safety of Ohioans. Ohio State University reacted by pivoting from in-person instruction to online instruction for all classes. The suspension of in-person classes and all on-campus activities occurred in the spring of 2020 and resulted in the closing of school facilities for the last five weeks of the 12-week semester.
Brooke Smith was an OSU senior taking her final classes. As an out-of-state student, Smith paid $4,584 in tuition, a $10,488 nonresident tuition surcharge, and room and board. She also paid a $186 general fee, a $37.50 student activity fee, a $90 learning technology fee, a $74.87 recreational fee, a $74.40 student union facility fee, and a $13.50 city bus fee. When the school closed, Smith was refunded a prorated portion of her room and board payments and the recreational fee.
Smith graduated on time in May 2020 with an early childhood education degree and found a full-time teaching position in the fall. Following her graduation, Smith filed a lawsuit in the Court of Claims alleging OSU breached its contract and was unjustly enriched by charging students the full price of tuition and fees without providing in-person instruction and full access to campus facilities. Smith’s lawsuit claimed that the transition to online instruction and limits on access to campus facilities “rendered her education subpar.” The suit was filed as a class action, representing all OSU undergraduate students enrolled in the spring 2020 semester.
In June 2020, OSU asked the Court of Claims to dismiss the case, arguing that while described by Smith as a breach of contract case, it was actually a claim of educational malpractice. OSU argued that educational malpractice is not a recognized legal claim in Ohio.
The court denied the dismissal request, and in September 2020, OSU subsequently argued that it was improper to certify the case as a class-action lawsuit. The university also asserted that it couldn’t be sued in the Court of Claims because the university had “discretionary function immunity.”
The university states in its brief that the discretionary function immunity provides immunity when a state agency exercises “an executive or planning function involving the making of a basic policy decision, which is characterized by the exercise of a high degree of official judgment or discretion.”
The court again denied OSU’s claims, and it appealed the decision to the Tenth District Court of Appeals.
The Tenth District ruled in November 2022 that the class was not properly certified and remanded the case to the Court of Claims. The Tenth District also rejected OSU’s argument that discretionary function immunity stripped the Court of Claims’ right to hear the case. Instead, the appeals court found that discretionary function immunity is an “affirmative defense.” The ruling stated that OSU was free to seek dismissal of the lawsuit by making its immunity argument in the Court of Claims.
OSU appealed the decision to the Supreme Court of Ohio, asking it to find that the Court of Claims has no jurisdiction to consider the case once a state agency establishes that it has discretionary function immunity. It also asked the Supreme Court to apply the immunity argument to its case and dismiss the class-action lawsuit. The Court agreed only to consider the argument of whether the Court of Claims has the jurisdiction to consider lawsuits challenging an agency’s essential decision-making actions.
Critical University Decisions Can’t Be Contested in Court, School Argues
OSU explains state agencies, universities, and other public bodies are entitled to two different forms of immunity from lawsuits. One form is immunity from liability, which means the state can’t be held financially accountable for its actions. The second is immunity from lawsuits, meaning that those aggrieved by a state agency decision can’t bring a lawsuit unless a state statute specifically allows it. In this case, OSU argues that universities can’t be sued if they can raise the defense of discretionary function immunity, which is a type of immunity from lawsuits.
The school notes that the Supreme Court explained discretionary function immunity in its 1984 Reynolds v. State decision. The Court ruled “the state cannot be sued for its legislative or judicial functions or the exercise of an executive or planning function involving the making of a basic policy decision, which is characterized by the exercise of a high degree of official judgment or discretion.” OSU maintains it had to make an unprecedented decision at the onset of a pandemic to protect the health and safety of its students and staff. This involved a high degree of judgment, and the school can’t be sued for exercising its best judgment, the university concludes.
The university argues the Tenth District has wrongly characterized discretionary function immunity as an affirmative defense, which a defendant in a lawsuit must raise and discuss when seeking to dismiss a case. OSU asserts that discretionary function immunity is a “jurisdictional” defense, meaning if the defendant can demonstrate from the onset that it has immunity, a lawsuit cannot proceed. OSU argues this is important to the university because it faces two class-action lawsuits regarding fees, the one by Smith and another one that is proceeding in the Court of Claims regarding the student union fee. OSU also notes similar cases are pending against seven other state universities, raising the same request for a refund of tuition and fees paid during the pandemic. The universities shouldn’t be subjected to prolonged litigation for their pandemic-related decisions, OSU asserts.
OSU argues that the Court of Claims’ jurisdiction is limited by R.C. 2743.02 and permits lawsuits for actions that require state agencies to waive their right to immunity. Those cases typically involve how state employees carry out their duties and whether an agency’s negligence has harmed an individual. However, the law doesn’t give individuals the right to sue state agencies in the Court of Claims based on the essential acts of governmental decision making, OSU concludes.
Case About Questionable Implementation of Policy, Student Argues
Smith maintains the Tenth District’s assessment is correct for two reasons: because discretionary function immunity is an affirmative defense, and because that particular defense plays no role in the class-action lawsuit. Smith notes the lower courts have found that discretionary immunity is “inherently a factual question” and that the Court of Claims wouldn’t be able to decide if immunity applies based on the initial pleadings filed in the case. Because of the need to gather facts to determine whether agency decision making should be shielded from lawsuits, discretionary immunity is appropriately classified as an affirmative defense, Smith maintains. The university must raise the defense and argue the merits of its defense as a case proceeds in the Court of Claims, Smith asserts.
The student argues that even if OSU were to raise the discretionary immunity defense, it wouldn’t apply to her class-action lawsuit. The students aren’t opposing the university’s decision to close the campus and move to online instructions, Smith explains. She agrees that it was executive decision making that required a high degree of judgment. What the students are contesting is the implementation of the decision, she explains. Specifically, the students object to retaining all the tuition and fees paid for in-person instruction without providing the services and access to facilities. The claim that OSU breached the contract by charging for services not provided isn’t related to its governmental decision making, Smith argues, and it is subject to the same laws as any private party that breaches a contract.
– Dan Trevas
Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.
Contacts
Representing The Ohio State University: John Gall, john.gall@squirepb.com
Representing Brooke Smith: Scott Simpkins, sdsimp@climacolaw.com
If Not Revealed Until Trial That Victim Found Suspect on Social Media, Must New Trial Be Ordered?
State of Ohio v. Rickey Brown, Case No. 2022-1182
First District Court of Appeals (Hamilton County)
ISSUES:
- Based on the U.S. Supreme Court ruling in Brady v. Maryland (1963), is a new trial required when a victim found the suspect on social media and that evidence isn’t presented until trial?
- What makes someone a victim of a robbery? If a person owns the property that is stolen and the property owner is present when the property is stolen at gunpoint but the property was in the hands of another person, is the property owner a victim of robbery?
BACKGROUND:
Holly Smothers located a car she was interested in purchasing through an online application called “Letgo.” She used the app’s messaging feature to contact the seller about a 2001 Toyota Corolla. The seller’s name was listed as Danny Buckley. The car was listed for $800, and Smothers offered to buy it for $600 in cash. Buckley accepted the offer. They agreed to meet in person in a Cincinnati neighborhood called Avondale on the afternoon of May 3, 2020.
Smothers asked Sharlene Johnson for a ride to the meeting. Smothers called Buckley when they arrived and the women were redirected to a nearby street, where Buckley waved them down. He approached Johnson’s car and said he would go get the vehicle Smothers was buying. Smothers said she handed her money to Johnson and stepped out of Johnson’s car. Smothers turned around after getting out of the car and saw Buckley was pointing a gun at Johnson in the car. He demanded the money, and Johnson handed him the cash. He took it and ran away.
Smothers called 911. A police officer arrived at about 4:30 p.m. The women described Buckley as a Black man about 20 years old wearing all black, including a black shirt and shorts. The prosecutor's brief states that the officer took photos of messages on Smothers’ phone in the app between Smothers and Buckley.
Victim Looks on Social Media for Robber
The next day, Smothers researched information on the app. She later testified at the trial that she found an email associated with the vehicle posting from Buckley. She said the same email was associated with a Facebook account listed under the name Rickey Tan. She showed the Facebook page to Johnson. On May 7, she also emailed six photographs from Facebook and the name Rickey Tan to the Cincinnati police detective investigating the case. The detective forwarded the information to a specialty law enforcement unit that works on identifications. The unit responded with a name, Rickey Brown, and other identifying information.
The county sheriff's department prepared a photo lineup for Smothers and Johnson to review. On May 9, each woman separately reviewed a set of 10 photos. They each identified the photo of Brown as the person who stole the money.
The detective obtained a search warrant on the phone number Smothers had provided as belonging to the seller originally known as Buckley. The search produced no information, such as text messages or phone numbers contacted from the number. The detective asked Smothers to provide her phone records. She said she would but didn’t.
Defendant Testifies, Offers Three Witnesses to Back His Whereabouts
In June 2020, Brown was indicted on two counts of aggravated robbery, two counts of robbery, and one count of having a weapon illegally.
Brown opted for a bench trial. He testified, stating that he lived in Avondale with his girlfriend at the time of the crime. He maintained that on May 3 he and a friend were buying gifts for another friend’s birthday, picking up food at a Clifton restaurant, and going to an Airbnb in downtown Cincinnati for the birthday gathering. He said he owned a 1998 Toyota Corolla at that time and he had advertised it for sale on Facebook Marketplace and on the Letgo app. He said his Letgo account was in his name.
Three witnesses testified for the defense, discussing Brown’s activities on the afternoon of the robbery. The friend who was with Brown said they went to a grocery store to buy gifts for the woman celebrating her birthday, to a sushi restaurant in Clifton to pick up food, and to the Airbnb. The woman celebrating the birthday testified that she called Brown about 4 p.m. and he said he was at the grocery store. Text messages between them that day were presented.
The trial court found Brown guilty of aggravated robbery of Johnson, robbery of Smothers, and the weapons offense. Brown was sentenced to six years in prison, fined $1,000, and ordered to pay $600 in restitution.
Brown appealed to the First District Court of Appeals. The First District reversed the conviction for robbing Smothers, finding that only Johnson, not Smothers, was under threat of harm. The court also granted a new trial on the aggravated robbery and weapons charges. The evidence that Smothers, not law enforcement, made the connection from the Danny Buckley account on the app to Brown was withheld from Brown until Smothers’ testimony at trial, the court stated. In ordering a new trial on these counts, the court concluded that its confidence in the verdict was undermined.
The Hamilton County prosecutor appealed to the Supreme Court of Ohio, which accepted the case.
State Argues Materials Given in Discovery Met Disclosure Mandate
The Hamilton County Prosecutor’s Office disagrees that a new trial is warranted based on a violation of Brady v. Maryland (1963). In Brady, the U.S. Supreme Court ruled that prosecutors have a duty to disclose evidence favorable to a defendant. The Hamilton County prosecutor points to evidence given to Brown in discovery seven months before the trial – the police officer’s photograph of Letgo messages from Smothers’ phone, the Facebook photographs, and the list of witnesses. The prosecutor maintains that the defendant didn’t prove that Smothers’ research was Brady material that would have helped him or was material to his defense.
At the trial Smothers explained the research she did that led her to Brown. The prosecutor contends that Brady isn’t violated if the evidence is disclosed at trial, even if the defendant is surprised by the disclosure. If there is enough time for the defense to address the evidence during the trial, then there is no Brady violation of the defendant’s constitutional rights to due process and a fair trial, the prosecutor argues. The prosecutor also maintains that had Smothers’ investigation on social media to identify the robber been disclosed before the trial, it wouldn’t have changed the verdict.
The prosecutor also contests the reversal of the robbery conviction. The prosecutor contends that property doesn’t have to be taken directly from a person to support a robbery conviction. The prosecutor maintains that Brown lured Smothers to Avondale for the robbery, and while Smothers stood next to him, Brown demanded her money from Johnson. Smothers owned the cash, was Brown’s intended target for the robbery, and was in proximity when Brown brandished the gun, so she was a victim of robbery, the prosecutor argues.
Man Disputes Connection Between Car Seller and Him
Brown’s brief maintains that the state’s case depends entirely on Smothers connecting the seller Danny Buckley on the Letgo app to Brown’s Facebook account. The defense only learned at the trial during Smothers’ testimony that this was how the defendant had been identified, the brief states. The detective neither collected nor offered any other evidence to connect Buckley to Brown, the brief asserts. Brown argues that his attorney had no opportunity to research the app or to challenge the steps Smothers took to connect the two accounts. He notes that police couldn’t trace her call history with the robber because she said she lost the phone. She couldn’t remember Buckley’s phone number or email, and she never provided her phone records to police, Brown adds. He also contends that the photo lineup was tainted because Smothers and Johnson had seen the photos of him on his Facebook page before the photo array was presented to them by law enforcement. In addition, Brown maintains that the identifying information given to police didn’t match him in several ways.
Brown calls the state’s argument that Brady isn’t violated if the evidence is disclosed during the trial “unfair in the extreme.” The state’s position would allow prosecutors to avoid their duty to share evidence that could be used by the defense, to surprise defendants at trial with the evidence, and to fault defendants if they don’t immediately act on the disclosed information. This approach would shift the state’s responsibility under Brady to the defendant and possibly benefit the state by letting prosecutors neglect their Brady duties, Brown maintains.
Regarding the reversal of the robbery conviction, Brown notes that the robber demanded the money from Johnson and never pointed a gun at Smothers. Also, the incident didn’t meet an element required for a robbery conviction – that the victim turned over property in response to a “threat of harm,” Brown argues. Johnson, not Smothers, turned over Smothers’ money as a result of a threat, so a robbery against Smothers wasn’t proven, Brown contends.
Attorney General and State Public Defenders Submit Briefs
The Ohio Attorney General’s Office filed an amicus brief supporting the Hamilton County prosecutor. The attorney general will argue before the Court, sharing the time allotted to the prosecutor.
An amicus curiae brief supporting the Brown’s positions was submitted by the Ohio Public Defender’s Office.
– Kathleen Maloney
Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.
Contacts
Representing the State of Ohio from the Hamilton County Prosecutor’s Office: Paula Adams, paula.adams@hcpros.org
Representing Rickey Brown: Michael Trapp, mjtrapp@netero.net
Does Port Authority Owe Interest for Breach of Contract?
Vandercar LLC v. The Port Authority of Greater Cincinnati Development Authority, Case No. 2022-1312
First District Court of Appeals (Hamilton County)
ISSUES:
- In a breach of contract case, must a port authority pay prejudgment interest if it is found liable?
- Does R.C. 4582.22(A) waive all immunity from lawsuits for port authorities, including the immunity protecting them against payment of prejudgment interest?
- When a port authority is engaged in traditionally commercial, rather than governmental, functions, does it have the same responsibility as any other private party, including the obligation to pay prejudgment interest?
BACKGROUND:
The Port of Greater Cincinnati Development Authority is involved in efforts to bring a new hotel and upgraded convention center to downtown Cincinnati. As part of the plan, it entered into an “assignment agreement” with the development company Vandercar to acquire Vandercar’s right to purchase the blighted Millennium Hotel. Vandercar entered contracts for two separate fees. It would earn a $2.5 million fee if the port authority completed its purchase of the Millennium property and a $5 million fee if the port authority issued bonds to redevelop the property. Additionally, Vandercar was entitled to be reimbursed $475,000 for its expenses when the port authority completed the hotel property sale.
The port authority completed the property purchase in early 2020 and issued about $53 million in bonds to purchase and demolish the Millennium. It paid Vandercar its $2.5 million fee and $475,000 in expenses.
Vandercar maintained that the issuance of the bonds triggered the redevelopment phase of the project and its $5 million fee. The port authority disputed the claim, arguing that redevelopment was a separate phase that had yet to begin and Vandercar was not entitled to the second fee. Vandercar filed a lawsuit in Hamilton County Common Pleas Court in early 2020 seeking its $5 million fee. More than a year later, in November 2021, the trial court granted summary judgment to Vandercar for breach of contract and ordered the port authority to pay $5 million.
Citing R.C. 1343.03(A), Vandercar asked the trial court to add $348,528 in “prejudgment interest” to account for the 634 days between the time it sued and the date of the judgment. The port authority objected to paying prejudgment interest under R.C. 1343.03(A), arguing it applies to private parties but not government entities like a port authority. The trial court denied the prejudgment interest. The port authority then appealed to the First District Court of Appeals objecting to the trial court’s decision granting the $5 million fee to Vandercar. And Vandercar appealed the decision to deny prejudgment interest.
In September 2022, the First District ruled the port authority breached the contract but sided with the port authority on the issue of prejudgment interest. The appeals court allowed for postjudgment interest based on the delay between the trial court judgment and the appeal, and the port authority paid $145,342 in interest along with the $5 million fee.
Vandercar appealed the denial of the $348,528 in prejudgment interest to the Supreme Court of Ohio, which agreed to hear the case.
Port Authorities Are Not Exempt From Prejudgment Interests Awards, Developer Argues
At the center of the dispute is the lower courts’ application of the Supreme Court of Ohio’s 1988 Beifuss v. Westerville Board of Education decision, Vandercar explains. In that case, the Court ruled that R.C. 1343.03(A) does not apply to government bodies, which included the school board. The decision indicated that prejudgment interest could be awarded as damages for a breach of contract if legislation passed by the General Assembly expressly indicates a government body must pay prejudgment interest or if a provision of the contract between a private party and a government body requires the payment.
Vandercar explains the problem with applying Beifuss is that school boards and many other governmental bodies are granted immunity from liability under different state statutes that don’t apply to port authorities. The law creating port authorities, R.C. 4582.02(A) states that the “exercise by the port authority of the powers conferred upon it shall be considered essential government functions of the state, but no port authority is immune from liability by reason thereof.” The developer argues the law clearly strips port authorities of all immunity, including immunity from paying the penalties for breaches of contract. The port authority should have been treated just like any other party when it entered into a contract with Vandercar, and the port authority is subjected to the same penalties as any private party that breaches a contract, the developer maintains. All losing parties in a breach of contract lawsuit are subject to the payment of prejudgment interest, and the port authority is no exception, Vandercar argues.
Vandercar maintains that the Supreme Court and other Ohio courts have limited Beifuss to wage disputes among public employees and their public employers. The developer argues that the decision shouldn’t apply to its case against the port authority because ports have no immunity from lawsuit liabilities, and there is no need for a specific statute that says the port authority must pay prejudgment interest.
Vandercar makes a second argument that immunity has never been applied when public bodies engage in non-governmental commercial activities. The developer argues that the port authority’s participation in redeveloping property, a traditional activity performed by private entities, is not a governmental function. In such instances, the port authority is to be treated as any other private party and subject to the same breach of contract penalties, Vandercar concludes.
No Interest Rule Applies to Port Authority, Agency Argues
The port authority explains that the Beifuss decision applies to the agency because it is an “arm of the state.” The rationale the Court used in Beifuss traces back to an 1881 Court decision, the port authority maintains, and for more than a century, the Court has ruled that government bodies are not subject to prejudgment interest when they are found to have breached a contract.
The port authority asserts that Vandercar overstates the significance of R.C. 4582.22(A) and the phrase that no port authority “is immune from liability by reason thereof.” The law’s language is consistent with several sections of the Ohio Revised Code, the port authority argues, which indicates that government bodies don’t have complete sovereign immunity and aren’t entirely free from being sued. However, the law states that a port authority can sue or be sued, and the same exceptions to the rules apply to port authorities as they do to other government bodies, the port authority asserts. The Beifuss decision requires that an exception to the immunity rule requires an explicit statute indicating port authorities are required to pay prejudgment interest, or a contract would have to include that requirement, the port authority concludes.
The port authority points to the laws establishing the Court of Claims and actions against state government agencies that can be considered in that court. R.C. 2743.02(A)(1) uses the same “sued or be sued” language as the port authority law and removes complete immunity from liability. However, R.C. 2743.18(A)(1) indicates that prejudgment interest can be awarded in civil cases against state agencies in the Court of Claims. The port authority argues these laws demonstrate that the legislature knows how to separately state the circumstances where prejudgment interest can be awarded. If Vandercar was correct that the blanket statement in the law that a government body is not immune from liability is enough to impose prejudgment interest, then there would have been no need for the Court of Claims law specifying the payment of prejudgment interest, the port authority counters.
In response to Vandercar’s second argument, the port authority maintains there is no exception to the Beifuss rule when port authorities enter into contracts with private parties for governmental functions that have some commercial aspect.
Friend-of-the-Court Brief Submitted
An amicus curiae brief supporting the port authority’s position was submitted jointly by the Columbus-Franklin County Finance Authority, the Dayton-Montgomery County Port Authority, the Development Finance Authority of Summit County, and the Toledo-Lucas County Port Authority.
– Dan Trevas
Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.
Contacts
Representing Vandercar LLC: W. Stuart Dornette, dornette@taftlaw.com
Representing the Port Authority of Greater Cincinnati Development Authority: David Bules, dbules@calfee.com