Hope Academy Broadway Campus v. Integrated Consulting & Mgt.Hope Academy Broadway Campus v. Integrated Consulting & Mgt.
BEFORE: Cooney, J., Kilbane, A.J., and Celebrezze, J.
RELEASED AND JOURNALIZED: December 22, 2011
Michele L. Jakubs
Zashin & Rich Co., LPA
55 Public Square, 4th Floor
Cleveland, Ohio 44113
Joseph E. Rutigliano
260 Meadowhill Lane
Moreland Hills, Ohio 44022
April N. Hart, Esq.
April N. Hart Co., LPA
2529 Canterbury Road
Cleveland Heights, Ohio 44118
ATTORNEYS FOR APPELLEES
For Community Educational Partnerships, LLC, and Beth Perry
Sean P. Ruffin
401 Tuscarawas Street, W., Suite 200
Canton, Ohio 44702
For Integrated Consulting and Management, LLC
Joseph R. Klammer, Esq.
The Klammer Law Office, Ltd.
Lindsay II Professional Building
6990 Lindsay Drive, Suite 7
Mentor, Ohio 44060
{¶ 1} Appellants, 19 Hope Academy and Life Skills Boards (collectively referred to as the “the Boards“),1 James E. Haynes, and James Stubbs, appeal the denial of their motion for partial summary judgment on tort claims brought against them by appellees, Integrated Consulting and Management, LLC (“ICM“), Community Educational Partnerships, LLC (“CEP“), and Beth Perry. We find some merit to the appeal and, therefore, affirm in part and reverse in part.
{¶ 2} The facts, as set forth in affidavits and deposition transcripts, are as follows:
{¶ 3} The 19 Hope Academy and Life Skills charter schools are publicly funded, privately managed alternatives to traditional public schools. They are nonprofit corporations with boards of directors, who are responsible for school operations, including compliance with Ohio law and Ohio Department of Education regulations. Appellant James E. Haynes (“Haynes“) sat on the boards of all 19 charter schools at one time. Appellant James Stubbs (“Stubbs“) sat on 15 of the 19 boards at one time.
{¶ 4} In the spring of 2006, the Boards were concerned that their management company, White Hat Management, was not providing adequate security services to the
{¶ 5} In October 2006, all 19 Boards entered into a “Board Management Contract” with ICM for the provision of board management services. Pursuant to these agreements, the Boards agreed to pay ICM $1,500 per month, per school, for its services for a period of three years. Paragraph 17 of the parties’ contracts, titled “Disclosure,” prohibited ICM from contracting with any other companies providing services to the charter schools. Specifically, paragraph 17 provides:
“ICM and its officers state that there is no financial interest with any Board member as it relates to this Agreement and that ICM does not contract with any other service provider or independent contractor hired by school.”
{¶ 6} Shortly after contracting with ICM, the Boards executed consulting agreements with CEP for the provision of various educational services, including school assessments, programming for students, and human resources. Beth Perry and Angela Perry jointly own CEP. At the time the Boards contracted with ICM and CEP, Fouche and Angela Perry (“Perry“) were romantically involved and had children together.
{¶ 7} In June 2007, the Boards had some financial and billing concerns and attempted to renegotiate the business management services agreement with ICM. Although Fouche expressed a willingness to renegotiate, the renegotiations were not
{¶ 8} On October 2, 2007, the 19 Hope Academy and Life Skills Boards filed a complaint against ICM, Fouche, CEP, and Beth Perry, claiming fraud, conspiracy, and negligent misrepresentation and seeking equitable relief. On the same day, ICM filed a complaint against Haynes, Stubbs, April Hart-Todd (“Hart-Todd“), the Boards’ in-house counsel, and the 19 Boards, claiming breach of contract and tortious interference with contracts. In November, CEP filed a counterclaim against the Boards also claiming breach of contract. The cases were consolidated.
{¶ 9} Following a series of amended pleadings and the resolution of claims between several of the parties, ICM maintains claims against the following: Hope Academy Broadway Campus, Hope Academy Cathedral Campus, Hope Academy Chapelside Campus, Hope Academy High School, Hope Academy Lincoln Park Campus, Hope Academy Northcoast Campus, Life Skills Center of Cleveland, Life Skills Center of Lake Erie, Life Skills Center of Northeast Ohio (collectively “Boards I“), Stubbs, Haynes, and Hart-Todd.
{¶ 11} CEP maintains claims against Hope Academy Broadway Campus, Hope Academy Cathedral Campus, Hope Academy Chapelside Campus, Hope Academy High School, Hope Academy Lincoln Park Campus, Hope Academy Northcoast Campus, Life Skills Center of Cleveland, Life Skills Center of Lake Erie, Life Skills Center of Middletown, Life Skills Center of Northeast Ohio, Life Skills Center of Springfield (collectively “Boards II“). In its amended complaint, CEP alleges that Boards II breached the contract between CEP and the Boards. Boards II maintains claims for fraud, conspiracy, negligent misrepresentation, breach of contract, and breach of fiduciary duties against CEP and Perry.
{¶ 12} In September 2009, Boards I, Stubbs, and Haynes filed a motion for partial summary judgment arguing, inter alia, that they are immune from liability under
Standard of Review
{¶ 13} An appellate court reviews a trial court‘s decision on a motion for summary judgment de novo. Grafton v. Ohio Edison Co. (1996), 77 Ohio St.3d 102, 105, 671 N.E.2d 241. Summary judgment is appropriate when, construing the evidence most strongly in favor of the nonmoving party, (1) there is no genuine issue of material fact; (2) the moving party is entitled to judgment as a matter of law; and (3) reasonable minds can come to but one conclusion, that conclusion being adverse to the nonmoving party. Zivich v. Mentor Soccer Club, Inc. (1998), 82 Ohio St.3d 367, 369-370, 696 N.E.2d 201, citing Horton v. Harwick Chem. Corp. (1995), 73 Ohio St.3d 679, 653 N.E.2d 1196, paragraph three of the syllabus.
Tortious Interference With Contracts
{¶ 14} In their first assignment of error, Boards I, Stubbs, and Haynes (collectively referred to as “appellants“) argue the trial court erred in finding they are not entitled to immunity for the claim of tortious interference with contracts. Appellants argue that, as charter schools, they are engaged in a governmental function and, therefore, are entitled to immunity under
{¶ 16} ICM contends the Boards are not immune from liability because the provision of security and board management services, or the decision to select the company to supply those services, are proprietary functions. In support of its argument, ICM relies on Copeland v. Cincinnati, 159 Ohio App.3d 833, 2005-Ohio-1179, 825 N.E.2d 681. In Copeland, the court held that a city‘s operation of a day camp was a proprietary function as opposed to a governmental function because “[t]he operation of a
{¶ 17} We find Copeland inapplicable to the facts of this case because
{¶ 18} However, the immunity afforded in
{¶ 19} ICM alleges tortious interference with a contract, which is an intentional act, and therefore does not fall within any of the exceptions to immunity set forth in
For employees of political subdivisions, however, the analysis of immunity differs. Instead of the three-tiered analysis described in Colbert,
{¶ 20} ICM alleges that both Haynes and Stubbs were acting with malicious purpose and in bad faith when they terminated ICM‘s contracts. As such, ICM argues that Haynes and Stubbs were acting outside the scope of their official responsibilities.
{¶ 21}
{¶ 22} Within the context of
{¶ 23} There is evidence in the record tending to show that the Boards did not have a justifiable reason for terminating ICM‘s contracts. Although there is evidence that ICM may have assisted CEP with its billing and one other project in violation of paragraph 17 of the contracts, Robert Townsend (“Townsend“), then president of all 19 schools, testified that ICM performed in accordance with the contracts. He stated in an affidavit that: “[t]here simply was no basis to cancel the contracts.” Even Haynes
{¶ 24} Townsend also suggested that Haynes‘s actions were motivated by self-interest. In his affidavit, Townsend stated that in January 2007, Haynes indicated that he wanted to terminate the ICM contract so that he and other Board members could “take over the board management aspect of the contracts and be compensated to do so.” To that end, Haynes introduced a resolution to the Boards to make Stubbs, Wilkens, Townsend, and Haynes consultants to the Board and receive compensation.
{¶ 25} Townsend further stated that he advised Haynes and the Boards’ counsel that ICM had a three-year contract with a 30-day right to cure any problem before canceling the contract. When Townsend later discussed the ICM contract with Haynes, Haynes admitted that “he knew that not paying ICM, and canceling the contract was a violation of the contractual terms,” but “he believed that ICM could not afford to fight the Schools for breach of contract and that it would be destroyed by any litigation.” According to Townsend, Haynes admitted that “he intended to solicit the contracts for himself.” Thus, there is evidence to support an allegation that Haynes wilfully terminated ICM‘s contract in bad faith and for his own personal benefit. Since there is evidence that Stubbs acquiesced in the plan to terminate ICM‘s contracts and assume the business for his personal gain, there is a question of fact as to whether Stubbs acted in bad
{¶ 26} The first assignment of error is sustained as to the Boards I and overruled as to Haynes and Stubbs.
Punitive Damages
{¶ 27} In the second assignment of error, the Boards, Stubbs and Haynes argue they are immune from punitive damages pursuant to
“Notwithstanding any other provisions of the Revised Code or rules of a court to the contrary, in an action against a political subdivision to recover damages for injury, death, or loss to person or property caused by an act or omission in connection with a governmental or proprietary function:
“(A) Punitive or exemplary damages shall not be awarded.”
{¶ 28} Thus, not only are the Boards immune from liability under
{¶ 29} Therefore, the second assignment of error is sustained as to the Boards II and overruled as to Haynes and Stubbs.
{¶ 30} Judgment is affirmed in part and reversed in part. The denial of partial summary judgment on ICM‘s claims against the Boards is reversed, and the denial of partial summary judgment on ICM‘s claims against Haynes and Stubbs is affirmed.
It is ordered that appellants and appellees share the costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this court directing the common pleas court to carry this judgment into execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure.
COLLEEN CONWAY COONEY, JUDGE
MARY EILEEN KILBANE, A.J., and
FRANK D. CELEBREZZE, JR., J., CONCUR