Westlake v. VWS, Inc.
2014 Ohio 1833
Ohio Ct. App.2014Background
- Westlake appeals a trial court ruling in a CRA dispute with VSM (formerly VWS) over a 1998 CRA Agreement for a 15-year tax exemption.
- VSM built a 100,000 sq ft facility in Westlake and agreed to payroll/tax commitments in exchange for tax abatements.
- The CRA Agreement required VSM to maintain 80% of projected income payroll taxes and to create jobs, with a 15-year exemption (1998-2013).
- VSM subsequently closed Westlake operations around 2008-2009, moving headquarters out of Ohio, while Westlake had granted exemptions for years 1999-2008.
- Ordinance 2010-66 revoked VSM’s abatement, and Westlake sued for unpaid exemptions and fees, seeking approximately $363,767.38; the trial court denied Westlake’s summary judgment and granted VSM’s cross-motion.
- The appellate court reverses, grants Westlake summary judgment for $359,913, and remands to determine other interests.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did VSM breach the CRA by closing operations before the term end? | Westlake: abandonment of Westlake operations breached the 15-year obligations. | VSM: no breach; no specific duration obligation; a threshold year requirement does not force breach. | Yes, material breach due to abandonment and failure to perform for the full term. |
| Is the 80% payroll threshold a condition precedent or ongoing obligation? | Westlake: threshold is a condition of the exemption; failure triggers rescission. | VSM: threshold is not a perpetual duty; failure does not automatically breach. | Threshold is a condition affecting the exemption, but total abandonment still constitutes material breach. |
| Is the CRA Agreement unambiguously interpreted to require 15-year performance? | Westlake: agreement intended full 15-year performance. | VSM: contract language does not plainly require 15-year operation; ambiguity exists. | Contract is unambiguous in the majority view; VSM breached; clawback applicable. |
Key Cases Cited
- Marion Family YMCA v. Hensel, 178 Ohio App.3d 140 (Ohio App.3d 2008) (definition of material breach; clawback context referenced)
- Aultman Hosp. Assn. v. Community Mut. Ins. Co., 46 Ohio St.3d 51 (Ohio 1989) (contract interpretation: plain language governs when unambiguous)
- Inland Refuse Transfer Co. v. Browning-Ferris Indus. of Ohio, Inc., 15 Ohio St.3d 321 (Ohio 1989) (contract interpretation and extrinsic evidence considerations)
- Shifrin v. Forest City Ents., Inc., 64 Ohio St.3d 635 (Ohio 1992) (intent and ambiguity in contract interpretation)
- Nationwide Mut. Fire Ins. Co. v. Guman Bros. Farm, 73 Ohio St.3d 107 (Ohio 1995) (interpretation of contract language and intent)
- Troha v. Troha, 105 Ohio App.3d 327 (Ohio App.3d 1995) (ambiguous contract; extrinsic evidence for fact-finding)
- Campbell v. George J. Igel & Co., 2013-Ohio-3584 (Ohio App. 4th Dist. 2013) (contract interpretation principles)