2013 Ohio 4449
Ohio Ct. App.2013Background
- WR Academy operates a boarding school in Hudson, Ohio; 2006-2007 total tuition was $34,000 plus a $2,000 non-refundable deposit.
- Parents signed an Enrollment Contract on April 6, 2006, including cancellation terms and a non-refundable deposit forfeiture if withdrawn after a date; first payment was $17,000.
- The Parents also purchased a Tuition Refund Plan for $1,428; the plan paid $13,868.42 to WR Academy after Nicholas’ non-medical withdrawal on October 26, 2006.
- Nicholas Franklin withdrew from WR Academy in late 2006 due to a custody dispute; withdrawal occurred after a plan claim was filed.
- In 2012, WR Academy sued for the remaining tuition balance of $9,322.98; the trial court found a breach but determined damages were not recoverable and deemed the contract unconscionable and the balance a penalty.
- WR Academy appealed, arguing the contract was not unconscionable and the damages were not a penalty; the appellate court reversed in part and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the enrollment contract was unconscionable and the balance a penalty | WR Academy contends the contract was not unconscionable and the balance is not a penalty. | Franklins contend the contract was unconscionable and the remaining balance constitutes a penalty. | Contract not unconscionable; balance not a penalty. |
| Whether performance was excused by impossibility | WR Academy challenges the impossibility ruling as a defense to damages. | Franklins argue performance was excused due to impossibility. | Impossibility not established; breach not excused. |
Key Cases Cited
- Collins v. Click Camera and Video, Inc., 86 Ohio App.3d 826 (Ohio 2nd Dist. 1993) (unconscionability requires meaningful choice and terms favorable to the other party)
- Lake Ridge Academy v. Carney, 66 Ohio St.3d 376 (Ohio 1993) (full-tuition damages may be appropriate when damages are uncertain and future budgeting relies on it)
- Ins. Co. of N. Am. v. Automatic Sprinkler Corp., 67 Ohio St.2d 91 (Ohio 1981) (unconscionability as a matter of law; participation in the process)