Mentor Exempted Village School Dist. Bd. of Edn. v. Lake Cty. Educational Serv. Ctr. Governing Bd.
2016 Ohio 7649
| Ohio Ct. App. | 2016Background
- Mentor Exempted Village School District (Mentor) contracted with Lake County Educational Service Center (Lake ESC) for shared services since 1991; a 1995 City/County Contract included a longstanding informal practice crediting Mentor with an amount equal to Mentor-based state/local subsidies toward purchased personnel.
- Parties executed a 2012–2013 Interdistrict Service Agreement (citing multiple ORC sections) containing an automatic-renewal provision and an invoice clause for "net costs (not covered by state and federal funds)" to employ specified personnel.
- In May 2013 Lake ESC announced it would cancel the 1995 City/County Contract credit practice (effective July 1, 2013) and began treating Mentor-based subsidies as general ESC funds for operations and uniform services for all member districts.
- Mentor and Lake ESC then executed a 2013–2014 Interdistrict Service Agreement that expressly superseded prior agreements and did not obligate Lake ESC to apply Mentor-based subsidies exclusively to Mentor (the Exhibit A showed personnel listed as "Per Mentor – Separate").
- Mentor sued (declaratory relief, breach, unjust enrichment), arguing the 2012–2013 agreement and R.C. 3313.843(G) required Lake ESC to use Mentor’s subsidies solely to offset Mentor’s staffing costs; the trial court granted summary judgment to Lake ESC and the court of appeals affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the 2012–2013 agreement remained in force and automatically renewed | Mentor: the 2012–2013 Interdistrict Agreement (and its renewal clause) continued, so Lake ESC could not unilaterally change the subsidy-credit practice | Lake ESC: the 2013–2014 Agreement superseded and replaced the 2012–2013 Agreement, terminating prior terms | Held: 2013–2014 agreement superseded 2012–2013; no automatic continuation of the prior credit term |
| Whether Lake ESC was required to spend Mentor-based state/local subsidies solely on Mentor’s services (2014 subsidy) | Mentor: former R.C. 3313.843(G) and the parties’ agreement mandated that the subsidy be used to pay/offset Mentor-specific personnel costs | Lake ESC: statutes govern calculation/payment flow but do not dictate how an ESC must spend its subsidy; 2013–2014 contract contains no such restriction | Held: statutes and the controlling 2013–2014 Agreement do not require Lake ESC to spend Mentor-based subsidies only on Mentor |
| Breach of contract for 2014–2015 services | Mentor: Lake ESC breached by not providing/crediting services as under the 2012–2013 agreement | Lake ESC: no contractual obligation in the controlling 2013–2014 (and 2014–2015) agreements to provide subsidy credits; services were offered and Mentor received services it chose not to use | Held: no breach as a matter of law; summary judgment for Lake ESC |
| Unjust enrichment for retention of Mentor-based subsidies | Mentor: Lake ESC was unjustly enriched by keeping Mentor’s subsidies without providing corresponding services/credits | Lake ESC: subsidies are ESC funds intended for general operations/mandated services; Mentor received opportunity to align elsewhere and later did so | Held: unjust enrichment fails—no unjust retention of a benefit requiring restitution; summary judgment for Lake ESC |
Key Cases Cited
- Nationwide Mut. Fire Ins. Co. v. Guman Bros. Farm, 73 Ohio St.3d 107 (1995) (standard for appellate review of legal questions and summary judgment principles)
- Vahila v. Hall, 77 Ohio St.3d 421 (1997) (summary judgment standard and construction of evidence in favor of nonmoving party)
- Aultman Hosp. Ass'n v. Community Mut. Ins. Co., 46 Ohio St.3d 51 (1989) (when contract terms are clear and unambiguous, courts are confined to the four corners)
- Alexander v. Buckeye Pipe Line Co., 53 Ohio St.2d 241 (1978) (give words plain and ordinary meaning unless absurd)
- Kelly v. Medical Life Ins. Co., 31 Ohio St.3d 130 (1987) (party intent is presumed to reside in the language of the contract)
- Latina v. Woodpath Dev. Co., 57 Ohio St.3d 212 (1991) (interpretation of contracts is a question of law)