Cleveland Clinic Found. v. Internatl. Portfolio, Inc.
2014 Ohio 700
Ohio Ct. App.2014Background
- In March 2008 Cleveland Clinic (seller) and International Portfolio, Inc. (International, buyer) executed a Master Purchase and Sale Agreement (the Master Agreement) selling delinquent patient accounts (the Accounts); the Master Agreement included a non-assignment / no-resale clause and incorporated a Bill of Sale as Schedule 2.3.
- Within six months International sold the Accounts to IPI II, L.L.C. (IPI II) and IPI II began collecting on the Accounts; their purchase agreement included a provision (§7.8) prohibiting contact or notice to the Clinic about any transfer.
- Nearly four years later IPI II requested HIPAA-protected patient information from the Clinic; the Clinic refused to recognize IPI II as a successor and denied access.
- IPI II sued the Clinic seeking replevin, accounting, injunctive relief, and conversion; the Clinic counterclaimed and filed a third-party claim against International and IPI II seeking declaratory relief that the International→IPI II assignment was null and void and an injunction barring IPI II from collecting.
- The Clinic moved for partial summary judgment asserting the Master Agreement prohibited the resale/assignment; International and IPI II cross-moved and argued the Bill of Sale unconditionally transferred title and freed the Accounts from assignment restrictions.
- The trial court granted the Clinic’s motion, declared the International→IPI II sale void, ordered the Accounts to revert to International, and denied the cross-motions; the appellate court affirmed.
Issues
| Issue | Plaintiff's Argument (Cleveland Clinic) | Defendant's Argument (International / IPI II) | Held |
|---|---|---|---|
| Whether the Master Agreement prohibited assignment/resale of the Accounts | Master Agreement contains an unambiguous non-assignment/no-resale clause; any transfer without prior written consent is null and void | Assignment to IPI II was valid regardless of clause; Clinic’s denial of successor status was improper | Clauses were clear; assignment without Clinic consent violated the Master Agreement and is null and void |
| Whether the separately executed Bill of Sale conveyed absolute, unencumbered title freeing Accounts from Master Agreement restrictions | Bill of Sale is governed by and executed pursuant to the Master Agreement; it is incorporated by reference and therefore subject to the Master Agreement’s restrictions | Bill of Sale conveyed Accounts free and clear, so subsequent resale was permitted | Bill of Sale was attached/incorporated into the Master Agreement and is subject to the Master Agreement’s non-assignment clause |
| Whether anti-resale clause is an unlawful restraint on alienation / void as against public policy | Enforceable contractual restriction when clearly and unambiguously stated | Clauses restricting resale of property unreasonably restrain alienation and should be unenforceable | Court rejected public policy attack; clear contractual prohibition is enforceable as one of the recognized exceptions to free assignment |
| Whether summary judgment for Clinic and denial of cross-motions was proper | No genuine issue of material fact; plain language entitles Clinic to judgment as a matter of law | Issues of contract interpretation or fact preclude summary judgment | De novo review: contract unambiguous; summary judgment for Clinic was appropriate and affirmed |
Key Cases Cited
- Baiko v. Mays, 140 Ohio App.3d 1 (5th Dist. 2000) (standard of appellate review for summary judgment)
- Smiddy v. The Wedding Party, Inc., 30 Ohio St.3d 35 (1987) (deference and standards for summary judgment review)
- Dresher v. Burt, 75 Ohio St.3d 280 (1996) (movant’s burden under Civ.R. 56)
- Shifrin v. Forest City Ents., Inc., 64 Ohio St.3d 635 (1992) (contracts construed to give effect to parties’ intent)
- Alexander v. Buckeye Pipeline Co., 53 Ohio St.2d 241 (1978) (when contract is unambiguous, courts look to the four corners)
- Kelly v. Medical Life Insurance Co., 31 Ohio St.3d 130 (1987) (same principle on contract interpretation)
- Pilkington North America, Inc. v. Travelers Casualty & Surety Co., 112 Ohio St.3d 482 (2006) (assignment generally allowed except where contract clearly prohibits it)