Columbus Green Bldg. Forum v. StateColumbus Green Bldg. Forum v. State
Rendered on September 18, 2012
Capital University Legal Clinic, and Eric R. McLoughlin, for appellant.
Michael DeWine, Attorney General, Randall W. Knutti, and Emily M. Simmons, for appellees.
APPEAL from the Court of Claims of Ohio.
FRENCH, J.
{¶ 1} Plaintiff-appellant, Columbus Green Building Forum (“CGBF“), appeals the judgment of the Court of Claims of Ohio, which dismissed its complaint against defendants-appellees, the state of Ohio and the Ohio Department of Development (“Department“) (collectively, “defendants“), for lack of subject-matter jurisdiction. For the following reasons, we reverse the court‘s judgment and remand this matter for further proceedings.
{¶ 2} CGBF filed this action in the Court of Claims on July 22, 2011.1 CGBF‘s claims primarily stem from the administration of grants CGBF received from the Department in 2007, 2008, and 2009, to conduct educational programs and technical assistance workshops, including its annual green product exposition. The funding for the grants originated from the United States Department of Energy. Under the grants, CGBF was required to pay the costs of funded projects and to submit requests for reimbursement to the Department. CGBF received $40,000 in reimbursements under the 2007 grant and $105,000 in reimbursements under the 2008 grant.
{¶ 3} On September 30, 2008, the Department conducted an audit of CGBF‘s administration of the 2007 and 2008 grants. On December 3, 2008, the Department notified CGBF of its determination that CGBF had been reimbursed for $70,114.45 in unallowable costs, constituting payments for “professional consulting services performed by a member of [CGBF‘s] Board of [Directors].”2 The disputed costs consisted of payments to CGBF board members Meera Parthasarathy and Lisa Frasure. CGBF‘s 2007 grant proposal, which is attached to and incorporated into the 2007 grant agreement, requested $18,630 for personnel costs to be paid to Parthasarathy. CGBF‘s 2008 grant proposal, which is attached to and incorporated into the 2008 grant agreement, requested $45,600 for personnel costs to be paid to Parthasarathy. Both proposals identified Parthasarathy and Frasure as CGBF board members and identified Parthasarathy as the coordinator of the events for which CGBF sought funding.
{¶ 4} In determining that the disputed payments to Parthasarathy and Frasure were unallowable, the auditor relied on Office of Management and Budget Circular A-122 – Cost Principles for Non-Profit Organizations (“OMB A-122“), which undisputedly applies to CGBF‘s grants. OMB A-122 defines as allowable “[c]osts of professional and consultant services rendered by persons who are members of a particular profession or
{¶ 5} On or about November 20, 2008, the Department approved CGBF‘s grant proposal for 2009 and entered into a 2009 grant with CGBF, for the period November 1, 2008 to September 30, 2009. On March 18, 2009, however, the Department notified CGBF that, based on the audit findings, it would not approve requests for reimbursement under the 2009 grant until Parthasarathy resigned from CGBF‘s board and CGBF acknowledged its intent to repay the alleged overpayments. Parthasarathy resigned from the CGBF board in February 2009, but CGBF has never indicated an intent to repay the alleged overpayments. In July 2009, the Department‘s Chief Legal Counsel, Candace M. Jones, solicited approval for an allowance of the disputed costs from the United States Department of Energy. Jones stated that the amounts paid to Parthasarathy “compensated her for services specifically contemplated and allowed by the subgrant” and that, “[t]o deny CGBF an allowance for compensation elevates the form of Ms. Parthasarathy‘s working relationship with CGBF over the substance of the services she performed.”
{¶ 6} On November 3, 2009, CGBF and the Department executed a first amendment to the 2009 grant, which indicated that the issues surrounding the 2008 audit had been resolved. The amendment reactivated the 2009 grant and extended the period of the grant to September 30, 2010. In September 2010, CGBF and the Department executed a second amendment, which further extended the period of the 2009 grant to October 31, 2010. CGBF began to administer the 2009 grant only after the Department reactivated the grant via the first amendment, and CGBF submitted its first request for reimbursement under the 2009 grant on January 10, 2010. The Department approved and paid CGBF‘s January 10, 2010 request for reimbursement in the amount of $5,935.86. CGBF submitted four subsequent requests for reimbursement between April and October 2010, totaling $51,385.51. Although the Department approved each of CGBF‘s requests for reimbursement under the 2009 grant, it did not make any payments to CGBF after January 10, 2010.
{¶ 8} CGBF‘s complaint sets forth five causes of action. In its first cause of action, CGBF disputes the 2008 audit findings. CGBF requests a declaratory judgment that the payments to Parthasarathy and Frasure were allowable costs and an equitable order that the Department reverse the audit findings and cease further collection attempts. In its second cause of action, CGBF alternatively requests a declaratory judgment that the remaining amount owing on the overpayments is $14,090.79, after deducting certain disallowed costs and the amount of the setoff taken by the Department. In its third cause of action, which requests damages, CGBF alleges that defendants’ failure to timely pay approved requests for reimbursement under the 2009 grant constituted a breach of contract.
{¶ 9} CGBF‘s fourth and fifth causes of action stem from related grant-making activity, but do not specifically involve CGBF‘s grants from the Department. CGBF‘s fourth cause of action, for declaratory and injunctive relief, challenges the Department‘s review process and its award of a 2010 grant to a competing application instead of to CGBF. For its 2010 grant proposal, CGBF partnered with The Ohio State University (“OSU“) Department of Food, Agriculture, and Biological Engineering to propose programs that would be administered by The Ohio State University Extension network (“OSU Extension“) thoughout the state. The Department ultimately awarded the 2010 grant to a partnership between Green Energy Ohio and OSU Extension. CGBF alleges a conflict of interest or bias because a member of the Department‘s grant review team had
{¶ 10} Defendants filed a motion to dismiss CGBF‘s complaint, pursuant to
{¶ 11} On January 9, 2012, the Court of Claims sua sponte dismissed CGBF‘s complaint for lack of subject-matter jurisdiction, pursuant to
II. ASSIGNMENTS OF ERROR
{¶ 12} CGBF filed a timely notice of appeal and now asserts the following assignments of error:
[I.] The Court of Claims erred in holding that CGBF‘s complaint only asserts claims for declaratory and equitable relief, that it does not assert any claims for monetary damages, and in dismissing CGBF‘s complaint for lack of subject matter jurisdiction due to these holdings.
[II.] The Court of Claims erred in holding that CGBF‘s claim for monetary damages arising from work performed under the 2009 Grant accrued on March 18, 2009, and in holding that such claim is therefore barred by the two-year statute of limitations set forth in R.C. 2743.16(A) .[III.] The Court of Claims erred in holding that it has subject matter jurisdiction over claims for declaratory and equitable relief against the state only when such claims are ancillary to a claim for monetary damages, and in dismissing CGBF‘s complaint for lack of subject matter jurisdiction due to this holding.
III. DISCUSSION
{¶ 13} In its first assignment of error, CGBF asserts that the Court of Claims erred by dismissing its complaint for lack of subject-matter jurisdiction. Defendants concede that the Court of Claims has subject-matter jurisdiction over this case because the complaint contains claims for monetary damages. Despite defendants’ concession regarding jurisdiction, a trial court‘s subject-matter jurisdiction raises a question of law that warrants consideration here. See Rowell v. Smith, 10th Dist. No. 10AP-675, 2011-Ohio-2809, ¶ 17.
{¶ 14} The issue of subject-matter jurisdiction involves “a court‘s power to hear and decide a case on the merits and does not relate to the rights of the parties.” Vedder v. Warrensville Hts., 8th Dist. No. 81005, 2002-Ohio-5567, ¶ 14. In considering whether to dismiss a claim for lack of subject-matter jurisdiction, a trial court “must determine whether the claim raises any action cognizable in that court.” Milhoan v. E. Loc. School Dist. Bd. of Edn., 157 Ohio App.3d 716, 2004-Ohio-3243, ¶ 10 (4th Dist.). We review a dismissal for lack of subject-matter jurisdiction de novo. Moore v. Franklin Cty. Children Servs., 10th Dist. No. 06AP-951, 2007-Ohio-4128, ¶ 15.
{¶ 15} The Court of Claims is a court of limited jurisdiction that has exclusive, original jurisdiction over claims brought against the state as a result of the state‘s waiver of immunity in
{¶ 16} The Court of Claims has exclusive, original jurisdiction over civil suits for money damages against the state. Friedman v. Johnson, 18 Ohio St.3d 85, 87 (1985), citing Boggs v. State, 8 Ohio St.3d 15, 17 (1983). On the other hand, it generally lacks jurisdiction over declaratory judgment actions because, prior to the state waiving immunity, parties were permitted to bring declaratory judgment actions against the state in the courts of common pleas. Tiemann v. Univ. of Cincinnati, 127 Ohio App.3d 312, 318 (10th Dist.1998), citing Racing Guild of Ohio, Loc. 304 v. State Racing Comm., 28 Ohio St.3d 317 (1986). The Court of Claims does, however, have jurisdiction over actions for equitable relief, including declaratory judgment, in limited circumstances. Pursuant to
{¶ 17} In light of these standards, the question before the Court of Claims was whether CGBF‘s complaint contained a claim for money damages permitted by the state‘s waiver of immunity. CGBF primarily argues that count three of its complaint, alleging a breach of the 2009 grant, states a legal claim for monetary damages within the Court of Claims’ jurisdiction. CGBF contends that, because the Court of Claims has jurisdiction over its breach of contract claim, the court also has jurisdiction to determine its claims for declaratory and injunctive relief. The Court of Claims, on the other hand, sua sponte determined that CGBF‘s claims sought purely equitable relief. The court
{¶ 18} The Court of Claims properly recognized that not every claim seeking monetary relief is a claim for money damages. See Interim Healthcare at ¶ 15. Even where a claimant seeks relief that will ultimately result in the payment of money by the state, “a cause of action will sound in equity if ‘money damages’ is not the essence of the claim.” Id., citing Ohio Academy of Nursing Homes v. Ohio Dept. of Job & Family Servs., 114 Ohio St.3d 14, 2007-Ohio-2620, ¶ 15. For example, an equitable action for specific relief, “seeking reimbursement of the compensation allegedly denied, is not transformed into a claim for damages simply because it involves the payment of money.” Zelenak v. Indus. Comm., 148 Ohio App.3d 589, 2002-Ohio-3887, ¶ 18 (10th Dist.), citing Ohio Edison Co. v. Ohio Dept. of Transp., 86 Ohio App.3d 189, 194 (10th Dist.1993). In Zelenak, this court held that the plaintiffs’ claim for specific temporary total disability compensation, to which they were statutorily entitled, sought equitable relief and not monetary damages. More recently, the Supreme Court of Ohio has distinguished monetary damages from equitable remedies as follows: “Unlike a claim for money damages where a plaintiff recovers damages to compensate, or substitute, for a suffered loss, equitable remedies are not substitute remedies, but an attempt to give the plaintiff the very thing to which it was entitled.” Interim Healthcare at ¶ 15, citing Santos v. Ohio Bur. of Workers’ Comp., 101 Ohio St.3d 74, 2004-Ohio-28, ¶ 14.
{¶ 19} In Cristino v. Ohio Bur. of Workers’ Comp., 118 Ohio St.3d 151, 2008-Ohio-2013, issued the day after Interim Healthcare, the Supreme Court of Ohio offered a more in-depth discussion of the distinction between restitution as a legal remedy and restitution as an equitable remedy. Cristino relinquished his statutory rights to periodic payments for permanent total disability (“PTD“) compensation in exchange for a lump-sum payment of the present value of his PTD claim, pursuant to an agreement with the bureau of workers’ compensation. Cristino, on behalf of a class of similarly situated plaintiffs, requested from the court of common pleas, among other forms of relief, ” ‘full restitution of the difference between the amounts represented by the Administrator to
{¶ 20} Cristino claimed entitlement to additional funds pursuant to his lump-sum agreement with the bureau of workers’ compensation. Relying on its prior holding in Ohio Hosp. Assn. v. Ohio Dept. of Human Servs., 62 Ohio St.3d 97 (1991), the Supreme Court of Ohio held that “a claim against the state for money due under a contract is not a claim of equitable restitution and must be brought in the Ohio Court of Claims.” Cristino at ¶ 16. See also Measles v. Indus. Comm., 128 Ohio St.3d 458, 2011-Ohio-1523, ¶ 9 (“If the essence of a claim is not of restitution for money owed under a contract, but instead restitution for the state‘s unjust enrichment by withholding funds to which a worker had a statutory right, then the ultimate relief sought is equitable restitution.“). In Cristino, the Supreme Court distinguished its holding in Santos that a suit seeking the return of specific funds wrongfully collected or held by the state is an equitable action. The Cristino court found Santos inapplicable because, in Santos, the plaintiffs “sought the return of funds that had once been in their possession and so belonged to them ‘in good conscience.’ ” Cristino at ¶ 15, quoting Great-West at 213.
{¶ 21} CGBF‘s third cause of action sets forth a legal claim for funds due under the 2009 grant entered into between CGBF and the Department. “Government grant instruments, although not formal contracts, give rise to enforceable obligations analogous to contracts.” Bowen at 923. Based on Cristino, we conclude that CGBF‘s claim for money due under the 2009 grant is a legal claim within the Court of Claims’ exclusive, original jurisdiction. The Court of Claims therefore erred by concluding that
{¶ 22} We now turn to CGBF‘s second assignment of error, in which it contends that the Court of Claims erred by holding that any claim for monetary damages arising from work performed under the 2009 grant was time-barred by the statute of limitations in
{¶ 23} Defendants raised the statute of limitations under
{¶ 24} A breach of contract claim against the state is subject to the two-year limitations period set forth in
{¶ 25} For the Court of Claims to have validly dismissed count three as untimely, it must appear conclusively from the complaint that CGBF‘s claim accrued more than two years before CGBF filed its complaint. The determination of when a cause of action accrued is a question of law that we review de novo. Williams v. Bur. of Workers’ Comp., 10th Dist. No. 09AP-1076, 2010-Ohio-3210, ¶ 21.
{¶ 26} Defendants have argued in their motion to dismiss and in their appellate brief that count three, as well as counts one and two, of CGBF‘s complaint arose either in December 2008, when CGBF received the audit report, or in March 2009, when the Department requested repayment. In either case, defendants maintain that CGBF‘s complaint, filed in July 2011, was time-barred. Although they acknowledge that CGBF denominated its third cause of action a claim for breach of the 2009 grant, defendants contend that it is time-barred because it would require the court to overturn the 2008 audit findings. In fact, defendants argue that count three does not allege a claim for breach of the 2009 grant at all but, instead, relates to performance under the earlier grants.
{¶ 28} Defendants maintain that the crux of CGBF‘s claim is the Department‘s entitlement to set off overpayments identified in the 2008 audit. Setoff is an affirmative defense that must be proven by the party asserting it. First Natl. Bank of Louisville v. Hurricane Elkhorn Coal Corp. II, 763 F.2d 188, 190 (6th Cir.1985). See also Am. Motorists Ins. Co. v. Olin Hunt Specialty Prods., Inc., 10th Dist. No. 00AP-1313 (Sept. 20, 2001), quoting Akron Natl. Bank & Trust Co. v. Roundtree, 60 Ohio App.2d 13, 17 (9th Dist.1978) (“The defense of setoff is in the nature of an ‘independent affirmative action.’ “). A complaint need not anticipate and attempt to negate potential defenses. Savoy at ¶ 8. Thus, whether a complaint states a claim upon which relief can be granted is not dependant upon whether potential defenses are available. Id. Rather, “[a]s long as there is a set of facts consistent with the complaint that would allow the plaintiff to recover, dismissal under
{¶ 29} The essential elements of a breach of contract claim are a contract, performance by the plaintiff, breach by the defendant, and resultant damage to the
{¶ 30} In Children‘s Hospital, which involved a factual scenario similar to this case, the Supreme Court addressed the issue of claim accrual. There, Children‘s Hospital alleged that the Ohio Department of Public Welfare (“Welfare“) wrongfully withheld payments for services the hospital rendered to Medicaid patients. As a result of an audit, Welfare demanded that the hospital repay prior overpayments. After the hospital exhausted the administrative appeal process, Welfare withheld a portion of the overpayments from its next payment to the hospital. The hospital brought an action for wrongful withholding of payment, and it reached the Supreme Court of Ohio on the issue of the timeliness of the hospital‘s complaint.
{¶ 31} In Children‘s Hospital, Welfare conducted its audit in 1972, demanded payment of $169,866 in overpayments in August 1976, adjusted its books to indicate that it would deduct part of the overpayments from its next payment to the hospital in September 1977, and actually withheld a portion of the overpayments in October 1979. The Supreme Court held that “[t]he alleged wrongful act of which [the hospital]
{¶ 32} With respect to count three of CGBF‘s complaint, the date of the alleged breach and the date that CGBF suffered actual damages as a result of the breach are the same. CGBF alleges that defendants breached the 2009 grant by withholding funds due to CGBF on or about January 3, 2011, and CGBF was not actually injured until that time.
{¶ 33} Had CGBF alleged that defendants failed to reimburse it for work performed under the 2009 grant prior to March 18, 2009, we might agree that its claim would have accrued when the Department froze the 2009 grant. That is not, however, what CGBF has alleged. Indeed, CGBF specifically alleged that it operated throughout 2009 with no grant funds. CGBF alleges that it did not begin to administer the 2009 grant until after the Department amended and reactivated the grant in November 2009, when the parties agreed that the audit issue “has * * * been resolved.” CGBF is not seeking payment for work performed either prior to March 2009 or during the period when the 2009 grant was frozen.
{¶ 34} The trial court held that CGBF‘s claim accrued in March 2009, but, at that time, CGBF had performed no work under the 2009 grant and had submitted no request for reimbursement. Defendants’ duty to pay CGBF under the 2009 grant did not arise until CGBF incurred allowed costs related to the funded projects and submitted a request for reimbursement. CGBF alleges that defendants breached the 2009 grant by failing to timely reimburse it for its approved requests, submitted in 2010. CGBF submitted its first unpaid request for reimbursement in April 2010. Accordingly, no contractual claim arising out of defendants’ obligation to reimburse CGBF under the 2009 grant could have arisen before that time. CGBF filed its complaint in July 2011, well within two years after its cause of action for breach of the 2009 grant accrued. Accordingly, the Court of Claims erred in determining that CGBF‘s third cause of action,
{¶ 35} CGBF‘s third assignment of error asserts that the Court of Claims erred in stating that it has subject-matter jurisdiction over claims for declaratory and equitable relief only when those claims are ancillary to a claim for monetary damages. CGBF urges this court to reconsider its opinion in Upjohn Co., which supports the Court of Claims’ statement. Having determined, under CGBF‘s first and second assignments of error, that CGBF‘s complaint includes a timely claim for monetary damages and that the Court of Claims possesses subject-matter jurisdiction over this action, we need not address CGBF‘s third assignment of error, which is moot.
{¶ 36} In their appellate brief, defendants also argue that counts four and five of CGBF‘s complaint fail as a matter of law for other reasons, regardless of whether they state legal or equitable claims. They claim that CGBF lacks standing to pursue count five because the state is immune from suits for the violation of public duties. With respect to count four, defendants contend that OSU, as a partner in both CGBF and Green Energy Ohio‘s 2010 grant applications, is a necessary party, both as a plaintiff and as a defendant. Because the state cannot sue itself, defendants argue that count four must fail. The Court of Claims did not address either of those arguments, and because those arguments are not directly responsive to CGBF‘s assignments of error, we decline to address them, in the first instance, on appeal.
IV. CONCLUSION
{¶ 37} In conclusion, we sustain CGBF‘s first and second assignments of error, thus rendering CGBF‘s third assignment of error moot. We, therefore, reverse the judgment of the Court of Claims of Ohio and remand this matter to that court for further proceedings consistent with this decision and the law.
Judgment reversed; cause remanded.
BROWN, P.J., and KLATT, J., concur.