Cordray v. International Preparatory School
128 Ohio St. 3d 50
| Ohio | 2010Background
- TIPS was a nonprofit community school formed under R.C. Chapter 3314 and sponsored by LCESC.
- Shabazz and her deceased husband were on TIPS’s board, with Shabazz serving as treasurer or filling interim treasurer roles.
- TIPS ceased operating in October 2005 after a state court action and a receiver was appointed in 2006.
- Auditor’s 2007 findings showed TIPS improperly received $1,407,983 from the DOE by inflating enrollment figures.
- The state sued under R.C. 117.28 and 117.36 to recover the public funds, and Shabazz moved for summary judgment citing corporate-protection statutes.
- The court ultimately held community-school officials may be liable as public officials for misused public funds and remanded for fact-specific determinations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the community-school treasurer is a public official for strict liability. | State contends Shabazz, as treasurer, is a public official; funds loss triggers liability. | Shabazz argues she is not a public official; corporate protections apply. | Yes; community-school officers are public officials and may be liable; remand for facts. |
| Whether R.C. 1702.55 shields corporate officers from liability for public funds. | Public-official liability overrides corporate-protection arguments. | R.C. 1702.55 protects corporate members from corporate debts. | No protection for public officials; liability arises from holding public office. |
| Whether community schools are public offices under R.C. 117.01 and thus subject to strict liability. | Community schools are public offices under state law; officials owe fiduciary duties. | Question unresolved; should be evaluated at trial. | Community schools are public offices; officers are public officials; remand to determine receipt/collection of funds. |
Key Cases Cited
- Crane Twp. ex rel. Stalter v. Secoy, 103 Ohio St. 258 (1921) (public trust for public funds; strict liability of officials)
- Seward v. Natl. Surety Co., 120 Ohio St. 47 (1929) (public officials liable for money received under color of office)
- State v. Herbert, 49 Ohio St.2d 88 (1976) (strict liability for loss of public funds; public policy)
- State ex rel. Ohio Congress of Parents & Teachers v. State Bd. of Edn., 111 Ohio St.3d 568 (2006) (community schools as part of public education system)