Kurtz v. W. Property, L.L.C.Kurtz v. W. Property, L.L.C.
Rendered on December 27, 2011
Brunner Quinn, and Patrick M. Quinn, for appellant.
Bricker & Eckler, LLP, Christopher L. McCloskey, Vladimir P. Belo, and Francisco E. Luttecke, for appellee.
APPEAL from the Franklin County Court of Common Pleas.
BROWN, J.
{¶1} Plaintiff-appellant, Lloyd Kurtz, appeals from the August 24, 2010 judgment entry of the Franklin County Court of Common Pleas granting the motion of defendant-appellee, Western Property, L.L.C., for judgment on the pleadings, and the October 19, 2010 judgment entry granting judgment for appellee on its counterclaim for attorney fees. For the following reasons, we affirm.
{¶2} On September 27, 2002, appellant entered into an agreement (“agreement“) with Dominion Homes, Inc. (“Dominion“), pursuant to which Dominion agreed to purchase from appellant approximately 164 acres of real estate located in
{¶3} Section 4 of the originally executed agreement provided, in relevant part, as follows:
Additional Security. In the event that Buyer closes the purchase of Phase I, Buyer agrees to deliver to Seller at such closing, as security for Buyer‘s obligation to purchase the remaining Phases, a letter of credit or bond in the amount of the purchase price of such remaining Phases (the “Security“). * * * At the closing of Phase II, the Security shall be replaced by successor Security in the amount of the purchase price of Phase III. If for any reason, through no default of Seller, Buyer fails to close on Phase II or Phase III as required hereunder, Seller shall have the right to draw on the Security for the entire amount due thereunder. * * * In the event that Seller draws upon the Security, the amount drawn by Seller shall constitute liquidated damages, which the parties hereto agree is a reasonable and proper amount in light of the circumstances, and which amount shall be Seller‘s sole remedy at law and in equity for Buyer‘s failure to close.
{¶4} The fourth amendment to the agreement, executed on January 27, 2007, amended Section 4, as follows:
Section 4 is amended to provide that (i) the amount of the letter of credit or bond to be delivered at the closing of Phase I (the “Security“) shall be 5% of the purchase price of Phases II and III, and (ii) at the closing of Phase II the amount of the Security shall be reduced to be 5% of the purchase price of Phase III. In lieu of a letter of credit or bond, Buyer may elect to deliver the amount of the Security to Seller in cash at the closing of Phase I.
{¶6} In addition, Section 19 of the originally executed agreement, which remained unchanged throughout the amendment process, provided, in pertinent part, that “[i]n any action brought to enforce this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees and other expenses incurred in connection with such action.”
{¶7} On March 30, 2007, Dominion assigned all its right, title, and interest as the buyer under the agreement to appellee. Pursuant to the assignment, appellant and appellee closed on Phase I on August 24, 2007. At the closing, in accordance with the fourth amendment to Section 4 of the agreement, appellee delivered to appellant $111,375 as security for Phase II and $111,349.30 as security for Phase III, which amounts represented five percent of the purchase price of those two phases. The parties closed on Phase II on August 22, 2008. On June 26, 2009, appellee sent a letter to appellant indicating that it had elected not to close on the purchase of Phase III and that it forfeited the $111,349.30 to appellant as liquidated damages pursuant to Section 4 of the agreement.
{¶8} On July 24, 2009, appellant filed a three-count complaint against appellee. In Count 1, appellant requested a declaratory judgment that appellee had breached the agreement by refusing to complete the purchase of Phase III; that such breach precluded appellee from enforcing the attorney fee provision in Section 19; that the liquidated damages clause in Section 4 did not apply to limit or restrict appellee‘s legal or equitable remedies; and that the liquidated damages clause in Section 4 was invalid and unenforceable as a matter of law. In Count 2, appellant alleged that appellee had
{¶9} Appellee filed an answer and counterclaim on August 20, 2009. In its answer, appellee denied that it breached the agreement. In its counterclaim, appellee sought a declaratory judgment that the agreement applied to the litigation and that appellee could enforce the fee-shifting provision if it prevailed in the litigation.
{¶10} On the same day, appellee filed a
{¶11} By decision and entry filed July 9, 2010, the trial court granted appellee‘s motion for judgment on the pleadings. The court concluded that the liquidated damages provision contained in Section 4 of the agreement applied to the facts of the case and that the provision was enforceable as a matter of law. Thereafter, in a judgment entry filed August 24, 2010, the trial court dismissed appellant‘s claims with prejudice and set appellee‘s counterclaim for attorney fees for trial. Following a September 15, 2010 bench trial, the trial court, on October 19, 2010, filed a judgment entry finding that the fee-shifting provision contained in Section 19 of the agreement was enforceable against appellant.
{¶12} Appellant timely appeals, advancing three assignments of error for our review:
- The trial court erred in enforcing the liquidated damages provision in the Agreement because that provision is, on its own terms, inapplicable to this action.
- The trial court erred in enforcing the liquidated damages provision where actual damages are neither uncertain in amount nor difficult to prove, and there is no evidence that the actual damages are proportionate to the stipulated amount.
- The trial court erred in awarding attorney‘s fees pursuant to a fee-shifting provision in the Agreement when Western raised only a claim for declaratory judgment, and Western materially breached the Agreement.
{¶13} Appellant‘s first and second assignments of error challenge the trial court‘s decision to grant appellee‘s motion for judgment on the pleadings. Accordingly, we shall first set forth the applicable standard of review.
{¶14}
{¶15} In deciding a
{¶16} Appellant contends in his first assignment of error that the trial court erred in enforcing the liquidated damages provision of the agreement, as it is, on its own terms, inapplicable to the facts of the case. Appellant concedes that, at the closing on Phase I, appellee, in accordance with the amendment to Section 4 of the agreement, elected to deliver to appellant $111,349.30 in cash, which constituted five percent of the purchase price for Phase III, rather than providing a bond or letter of credit. Appellant further concedes that he accepted, and has retained, the cash security. Appellant contends, however, that the liquidated damages provision granted him the right, but not the obligation, to draw on the security, and that only in the event he chose to draw on the security could the liquidated damages provision have been invoked. Appellant maintains that “drawing” on the security required him to take some “affirmative action” and that his passive acceptance of the cash security at the closing on Phase I did not constitute such “affirmative action.” Appellant contends that, because he never exercised the option of
{¶17} The parties’ briefs present no specific authority controlling the issue sub judice, and our research confirms the absence of precise case law. However, we are persuaded by the following argument advanced by appellee. The amendment to Section 4 of the agreement altered not only the amount of the security required—from the entire purchase price to five percent of the purchase price of Phases II and III—but also the tender in which the security could be provided. The amendment permitted appellee, at its discretion, to provide the security via a letter of credit or bond, both of which would require a “draw,” or in cash. Appellee exercised its option to post the security in cash at the closing on Phase I. The additional step of drawing upon a bond or letter of credit was obviated by appellee‘s delivery of the cash. Contrary to appellant‘s assertion, his acceptance and retention of the cash constituted an “affirmative action” to “draw on” the security, triggering the liquidated damages provision.
{¶18} Appellant further contends that the agreement provides him discretion to either employ the liquidated damages provision in Section 4 or file a breach of contract action seeking actual damages in court. However, under the plain language of the agreement, the liquidated damages provision is the only remedy available to appellant. As noted above, Section 4 provides that the security is appellant‘s “sole remedy at law and in equity for [appellee‘s] failure to close.”
{¶19} This “sole remedy” language is crucial, as another provision of the agreement demonstrates that the parties could have negotiated for alternative remedies beyond liquidated damages. Section 3 of the agreement, which addresses the earnest money deposit, provides that, “if for any reason, through no default of Seller, Buyer fails to
{¶20} In support of his contention that he was not limited to the liquidated damages provision in Section 4, appellant relies on Williams v. Kondziela, 11th Dist. No. 2002-L-190, 2004-Ohio-2077, and Arena v. Heather (Oct. 17, 1983), 5th Dist. No. 6112. Neither case aids appellant.
{¶21} In Williams, the parties entered into a contract for the sale of real property. The contract included a liquidated damages provision, which stated in relevant part that, if the buyer refused to perform the contract, ” ‘Seller may, in lieu of other remedies available to him, declare this Agreement null and void as to Buyer, and, at his option, all monies paid on account hereof not in excess of 15% of the agreed purchase price herein shall be forfeited to Seller as fixed, stipulated and liquidated damages without proof of loss.’ ” Id. at ¶14. When the buyer did not close on the transaction, the seller sold the property to another buyer and then sued the original buyer for breach of contract. The original buyer argued that the seller was limited to the liquidated damages amount specified in the contract. The court disagreed, based upon the discretionary language of the liquidated damages provision. The court explained:
The liquidated damages provision in question states that the seller may, in lieu of other remedies available, accept damages for default in an amount not exceeding fifteen percent of the agreed purchase price. The term “may” implies the exercise of discretion. Consequently, the seller is not required to accept 15% of the agreed purchase price as damages in the event of default. Rather, a seller may use the
liquidated damages provision as a mechanism for compensation in the event that he or she does not want to pursue other remedies. The provision does not foreclose the possibility of the seller pursuing alternate remedies. In the current case, appellant failed to close the transaction. After waiting for approximately ten months after the established date of closing, appellee, in his discretion, filed a complaint for breach of contract. Appellee did so in lieu of utilizing the liquidated damages provision in the purchase agreement. The liquidated damages provision did not preclude appellee from moving forward with his complaint for breach of contract. Rather, the liquidated damages provision was merely a stipulated remedy available to the seller at his option that, if utilized, would preclude alternate remedies. Pursuant to the plain language of the contract, appellee was not manacled to liquidated damages in the event of default.
(Emphasis sic.) Id. at ¶16-17.
{¶22} In Arena, the parties entered into a real estate purchase contract which included a liquidated damages provision identical to the one in Williams. When the buyers defaulted on the contract, the sellers sued for breach of contract. The buyers claimed that the liquidated damages provision constituted the exclusive remedy for the sellers. The court disagreed, finding that the provision gave the sellers the option of invoking the liquidated damages clause or pursuing their other available remedies. The court determined that the sellers’ decision to file a breach of contract action and collect their actual damages was permissible pursuant to the “in lieu of” language in the liquidated damages provision.
{¶23} The “in lieu of” language integral to the courts’ decisions in Williams and Arena is conspicuously absent from the agreement in the instant case. Here, the parties made no reservation as to the security being forfeited “in lieu of” other contract remedies. To the contrary, Section 4 of the agreement contemplates the liquidated damages as the “sole” remedy available in the event appellee did not close on Phase III of the agreement.
{¶25} Appellant‘s second assignment of error contends the trial court erred in concluding that the liquidated damages provision of the parties’ agreement was valid and enforceable. We disagree.
{¶26} “As a general rule, parties are free to enter into contracts that contain provisions which apportion damages in the event of default. ‘The right to contract freely with the expectation that the contract shall endure according to its terms is as fundamental to our society as the right to write and to speak without restraint. Responsibility for the exercise, however improvident, of that right is one of the roots of its preservation.’ ” Lake Ridge Academy v. Carney (1993), 66 Ohio St.3d 376, 381, quoting Blount v. Smith (1967), 12 Ohio St.2d 41, 47.
{¶27} In Samson Sales, Inc. v. Honeywell, Inc. (1984), 12 Ohio St.3d 27, the Supreme Court of Ohio set forth the law governing liquidated damages clauses in contracts: “While some jurisdictions have rejected such contract provisions on policy grounds, clauses in contracts providing for reasonable liquidated damages are recognized in Ohio as valid and enforceable. * * * However, reasonable compensation for actual damages is the legitimate objective of such liquidated damage provisions and where the amount specified is manifestly inequitable and unrealistic, courts will ordinarily regard it as a penalty.” Id. at 28. “Whether a particular sum specified in a contract is
{¶28} The Samson Sales court then set forth the following three-part test for evaluating the enforceability of a liquidated damages provision: “Where the parties have agreed on the amount of damages, ascertained by estimation and adjustment, and have expressed this agreement in clear and unambiguous terms, the amounts so fixed should be treated as liquidated damages and not as a penalty, if the damages would be (1) uncertain as to amount and difficult of proof, and if (2) the contract as a whole is not so manifestly unconscionable, unreasonable, and disproportionate in amount as to justify the conclusion that it does not express the true intention of the parties, and if (3) the contract is consistent with the conclusion that it was the intention of the parties that damages in the amount stated should follow the breach thereof.” Id. at syllabus.1 “The tripartite test of Samson Sales is stated in the conjunctive, and, hence, all three elements must be met.” Zurich-Am. Ins. Co. v. Citadel Alarm, Inc. (May 8, 1986), 8th Dist. No. 50499.
{¶29} As noted by the trial court, it bears emphasis that a challenge to a liquidated damages provision requires the court to “step back and examine it in light of what the
{¶30} With regard to the first prong of the Samson Sales test, appellant contends that the trial court erred in concluding that his actual damages would be uncertain as to amount and difficult to prove. Appellant contends that his damages are easily quantifiable and constitute the difference between the contract price and the fair market value of Phase III at the time of breach. However, as noted by the trial court, although the contract price is easily ascertainable, the fair market value of real estate fluctuates, in some cases dramatically, and these fluctuations, based upon numerous independent variables, are unpredictable.
{¶31} Difficulties inherent in assessing the fair market value of property due to the volatility of the real estate market have been the impetus for Ohio courts giving effect to liquidated damages provisions in real estate transactions. In Norpac Realty Co. v. Schackne (1923), 107 Ohio St. 425, the Supreme Court of Ohio enforced a liquidated damages provision in a land sale contract. The Supreme Court noted the general principle that ” ‘[i]f the sum to be paid is uncertain at the time and may vary with circumstances, the parties may fix the same by agreement and it will be regarded as liquidated damages.’ ” Id. at 427, quoting Knox Rock Blasting Co. v. Grafton Stone Co., 64 Ohio St. 361, 366. The Supreme Court applied the principle to the case before it,
a liquidated damages clause presents a somewhat unusual circumstance. The court nonetheless proceeded to apply the Samson Sales test; we agree with the trial court that the test is applicable.
{¶32} In the instant case, the trial court noted that the amendment to Section 4 of the agreement, which set the security amount at five percent of the purchase price, was executed on January 27, 2007, with closing on Phase III to occur two and one-half years later, on August 22, 2009. We agree with the trial court that, at the time the agreement was amended, the parties could not have predicted with any certainty what the fair market value of the Phase III property would be at an unknown time up to two and one-half years in the future.
{¶33} The vast majority of the cases upon which appellant relies in support of his contention that his damages are easily quantifiable are readily distinguishable because they did not involve the sale of real estate. Beatley v. Schwartz, 10th Dist. No. 03AP-911, 2004-Ohio-2945, involved the breach of a residential apartment lease. Am. Financial Leasing & Servs. Co. v. Miller (1974), 41 Ohio App.2d 69, involved the breach of an equipment lease. Easton Telecom Servs., L.L.C. v. Creedom Internet Group, Inc. (N.D.Ohio, 2002), 216 F.Supp.2d 695, involved the breach of a contract for
{¶34} Hayzer v. Bedecs (8th Dist. 1929), 7 Ohio Law Abs. 420, the case cited by appellant that did involve a real estate transaction, is also distinguishable. In Hayzer, the real estate contract involved the exchange of two properties, not the sale of one property. In a property exchange, concerns regarding market fluctuations are absent, as the value of both properties will be similarly affected. Such is not the case in a traditional real estate transaction, as here, involving the sale of one property for a set amount.
{¶35} Regarding the second prong of the Samson Sales test, appellant contends the trial court improperly analyzed the proportionality requirement.2 More specifically, appellant contends that, because the court granted appellee‘s motion for judgment on the pleadings, there was no evidence demonstrating whether the liquidated damages were proportionate to actual damages.
{¶36} The second prong of the Samson Sales test requires that the “contract as a whole is not so manifestly unconscionable, unreasonable, and disproportionate in amount as to justify the conclusion that it does not express the true intention of the parties.” Id. at 29. Liquidated damages must bear “a reasonable (not necessarily exact) relation to actual damages.” Lake Ridge Academy at 382.
{¶37} Appellant contends that the history of the agreement suggests that the liquidated damages are disproportionate to actual damages. Appellant notes that, under the originally executed agreement, the liquidated damages were set at 100 percent of the purchase price and that the amendment to Section 4 of the agreement reduced the
{¶38} The parties included language in Section 4 of the originally executed agreement that the amount of the security “is a reasonable and proper amount in light of the circumstances.” As noted above, this language carried forward throughout the amendment process. As stated in Sheffield-King Milling Co. v. Domestic Science Baking Co. (1917), 95 Ohio St. 180:
“The parties themselves best know what their expectations are in regard to the advantages of their undertaking and the damages attendant on its failure, and when they have mutually agreed on the amount of such damages in good faith and without illegality, it is as much the duty of the court to enforce that agreement as it is the other provisions of the contract.”
Id. at 185, quoting Doan v. Rogan (1909), 79 Ohio St. 372, 388, quoting Dwinel v. Brown (Sup.Ct.Me.1867), 54 Me. 468.
{¶39} Thus, when the amendment to Section 4 of the agreement was executed, the parties considered and agreed that five percent of the purchase price was a reasonable amount of liquidated damages. Appellant‘s acquiescence in the amendment, which, as noted above, incorporated the language that the security amount was “reasonable and proper in light of the circumstances,” constitutes evidence that the liquidated damages were both reasonable and proportionate to his actual damages.
{¶40} We also note that appellant‘s complaint contains no factual allegation that the five-percent amount is disproportionate to his actual damages and no factual allegation as to the amount of his actual damages for the trial court to accept as true in determining whether the liquidated damages were so manifestly disproportionate in amount as to justify the conclusion that the agreement did not express the true intention of the parties.
{¶41} It is true that we do not know from the pleadings the fair market value of the Phase III property at the time of breach and, therefore, cannot calculate appellant‘s actual damages to compare to the five-percent amount. However, we do know from the face of the agreement itself that the amendment to the five-percent liquidated damages amount was preceded and accompanied by amendments to (1) increase the deposit amount required of appellee as buyer to extend the contingency period, and (2) increase the purchase price of the property. The contingency period deposit amount, which the parties agreed was non-refundable and in most cases not credited3 against the purchase price, was increased from $25,000 per six-month extension to as much as $200,000 for subsequent extensions. The purchase price for the 54.7 acres of the Phase III property was increased from $35,000 per acre to $41,500 per acre. Contrary to what appellant suggests, it is reasonable that the increases in the contingency period deposit amounts
{¶42} Appellant does not challenge the trial court‘s conclusion regarding the third prong of the Samson Sales test; i.e., that the agreement is consistent with the conclusion that the parties intended that the five-percent security already in appellant‘s possession constitute appellant‘s sole remedy for appellee‘s failure to close on Phase III.
{¶43} For the foregoing reasons, the trial court did not err in concluding that the liquidated damages provision of the parties’ agreement was valid and enforceable as a matter of law. Accordingly, appellant‘s second assignment of error is overruled.
{¶44} Under the third assignment of error, appellant asserts that the trial court erred in its determination that Section 19 of the agreement, in particular the attorney fee-shifting provision, was enforceable against appellant. Appellant‘s argument is two pronged. First, appellant argues that the provision cannot be enforced pursuant to a declaratory judgment. Second, appellant argues that the entire provision is unenforceable because appellee materially breached the agreement.
{¶45} It is necessary to consider whether a contractual provision is enforceable before considering whether the means of enforcement were proper. We will therefore
except in the case of the deposits for the third and seventh extension periods, not credited against the purchase price.
{¶46} Section 19 of the agreement states in part: “In any action brought to enforce this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees and other expenses incurred in connection with such action.”
{¶47} As noted earlier, appellee filed a counterclaim seeking a declaration that it can enforce the fee-shifting provision of the agreement if it prevailed in the litigation. After the trial court granted appellee‘s motion for judgment on the pleadings, the court set appellee‘s counterclaim for a hearing. No witnesses testified at the hearing, and the parties stipulated to the amount of attorney fees appellee incurred. Appellee requested that it be awarded those fees in accordance with Section 19 of the agreement. In response, appellant raised the arguments now asserted on appeal.
{¶48} Following argument by counsel for both parties, the trial court stated, in relevant part:
The pertinent language of paragraph 19 is clear and unambiguous in any action which includes this one brought to enforce the Agreement and defining the obligations of the parties is certainly a method of enforcing the Agreement. The prevailing party shall be entitled to reasonable attorney fees and other expenses incurred in connection with such action. That is a very--just the language is express and clear.
The Court does not need to make a determination as to whether the breach is material. I would tend to say more likely than not it is, but I don‘t have to reach that because the remedy provided by the express agreement of the parties covers that breach and therefore * * * the provisions of paragraph 19 which I quoted a few moments ago, remain undisturbed.
* * *
[T]he Court hereby finds that the request for attorney fees is granted.
(Sept. 15, 2010, Tr. 46-47.)
{¶49} We find unavailing appellant‘s contention that appellee‘s material breach of the agreement by failing to complete the purchase of Phase III excused him from any further obligation under the agreement, including the obligation to pay appellee‘s attorney fees. In support of his argument, appellant cites several cases that set forth general contract principles regarding the definition of “material breach,” and the effect such has on the non-breaching party‘s further obligations under the contract. None of these cases, however, involve a contractual fee-shifting provision; accordingly, they are not analogous, and we are not persuaded that they control. Moreover, as appellee points out, appellant‘s argument requires the court to read the term “non-breaching party” into the fee-shifting provision. However, the agreement does not state that only a non-breaching party is entitled to recover attorney fees. Under the clear language of the fee-shifting provision, the right to recover attorney fees is not contingent upon which party breaches or the nature of the breach. Rather, the only condition precedent to recovery of attorney fees is a determination as to the prevailing party. Further, there is no dispute that appellee was the “prevailing party” in the action instituted by appellant. Thus, pursuant to the express terms of the agreement, appellee, as the “prevailing party,” was entitled to an award of attorney fees pursuant to the fee-shifting provision in Section 19 of the agreement regardless of whether it materially breached the agreement.
{¶50} Having determined that Section 19 of the agreement is enforceable against appellant, we consider whether the means of enforcement was proper. Appellant claims that the attorney fee award is prohibited because of the nature of the relief sought in
{¶51} At the outset, we note that appellant‘s claim that monetary judgments are precluded in declaratory judgment actions does not find support under Ohio case law. See Jeppe v. Blue Cross of Northeast Ohio (1980), 67 Ohio App.2d 87, 92 (“[w]hile there is no express statutory provision for the granting of a money judgment in a declaratory judgment action, such relief may be granted so long as it is prayed for and warranted by the proof“). See also Rose v. Natl. Mut. Ins. Co. (1999), 134 Ohio App.3d 229, 244 (“[w]hile a declaratory judgment declares only the ‘rights, status, and other legal relations’ of the parties,
{¶52} With respect to appellant‘s second argument,
{¶53} In enacting
{¶54} In Ashwood Home Owners’ Assn. v. Reitor, 12th Dist. No. CA2003-06-142, 2004-Ohio-3536, the plaintiff, Ashwood Homeowners’ Association (“Association“), commenced a declaratory judgment action against the defendant, a resident and member
{¶55} On appeal, the defendant argued that the trial court erred in granting attorney fees to the Association on the basis that attorney fees are precluded pursuant to
{¶56} Similarly, in the instant case, the parties entered into an agreement providing in part: “In any action brought to enforce this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees and other expenses incurred in connection with such action.” By virtue of the trial court‘s grant of appellee‘s motion for judgment on the pleadings, appellee, as the prevailing party, was entitled to the award of fees based upon the terms of the fee-shifting provision. As in Ashwood, the record indicates that the trial court did not treat the source of the obligation as a claim for declaratory relief.
{¶57} Further, appellant was clearly on notice of the issues before the court at the hearing on the counterclaim, and both sides were afforded the opportunity to argue as to the propriety of an award. As noted, prior to the hearing on the request for attorney fees, the parties entered into a stipulation that the amount of fees requested was reasonable. Here, the language of the parties’ agreement made clear their intent for attorney fees to be awarded in any action to enforce the agreement (and we note that appellant, in fact, had similarly requested an award of attorney fees under Section 19 of the agreement in his complaint seeking declaratory judgment and claims for breach of contract). Under these circumstances, the trial court did not abuse its discretion in awarding appellee attorney fees pursuant to the fee-shifting provision of the agreement, nor was the award of fees in derogation of
{¶58} Based upon foregoing, appellant‘s third assignment of error is without merit and is overruled.
{¶59} For the foregoing reasons, appellant‘s three assignments of error are overruled, and the judgments of the Franklin County Court of Common Pleas are hereby affirmed.
Judgments affirmed.
SADLER, J., concurs.
DORRIAN, J., concurs in part and dissents in part.
DORRIAN, J., concurring in part and dissenting in part.
{¶61} Appellee‘s prayer for relief requested: (1) “a declaration that Section 19 of the Agreement, including the fee-shifting provision is valid and applicable“; (2) “a declaration that Western may enforce Section 19 of the Agreement, including the fee-shifting provisions“; and (3) that “the Court * * * grant Western its attorneys’ fees, costs, and expenses related with this litigation.”
{¶62}
{¶63}
{¶64} In Proctor v. Kardassilaris, 115 Ohio St.3d 71, 2007-Ohio-4838, ¶12, the Supreme Court of Ohio set forth the following statement regarding statutory interpretation:
When analyzing a statute, our primary goal is to apply the legislative intent manifested in the words of the statute. See State ex rel Herman v. Klopfleish (1995), 72 Ohio St.3d 581, 584, 651 N.E.2d 995. Statutes that are plain and unambiguous must be applied as written without further interpretation. See Lake Hosp. Sys. v. Ohio Ins. Guar. Assn. (1994), 69 Ohio St.3d 521, 524, 634 N.E.2d 611. In construing the terms of a particular statute, words must be given their usual, normal, and/or customary meanings. See State ex rel. Solomon v. Police & Firemen‘s Disability & Pension Fund Bd. of Trustees (1995), 72 Ohio St.3d 62, 65, 647 N.E.2d 486, citing
R.C. 1.42 .
{¶65} Appellee requested attorney fees “related with this litigation.” The attorney fees requested by appellee, although related to the same litigation, can be divided into different categories of work: (1) attorney fees incurred in answering appellant‘s complaint/ declaratory judgment action and filing the Civ.R. 12(C) motion for judgment on the pleadings; and (2) attorney fees incurred in filing the counterclaim/declaratory judgment action and preparing for and attending the hearing related thereto. I would find that the plain and unambiguous language of
{¶66} The General Assembly enacted
SECTION 3. The General Assembly hereby declares that, in enacting section
2721.16 of the Revised Code * * * it is the intent of the General Assembly to do all of the following:
(A) To supersede the effect of the holding in Motorists Mut. Ins. Co. v. Brandenburg (1995), 72 Ohio St.3d 157, and in its progeny, including Landis v. Grange Mut. Ins. Co. (1998), 82 Ohio St.3d 339, 342-343, that the “whenever necessary or proper” and “further relief” language in section
2721.09 of the Revised Code, as it existed prior to the effective date of this act, reflected the General Assembly‘s conferral of authority upon an Ohio trial court to award “attorney‘s fees based on a declaratory judgment issued by the court“;(B) To recognize the dissent‘s accurate construction in Brandenburg of the “whenever necessary or proper” and “further relief” language in section
2721.09 of the Revised Code, as it existed prior to the effective date of this act;(C) To recognize the holding of the Ohio Supreme Court in Sorin v. Bd. of Edn. (1976), 46 Ohio St.2d 177, and its progeny that Ohio follows the “American Rule” under which an award of attorney fees to a prevailing party in a civil action or proceeding generally must be based on an express authorization of the General Assembly;
(D) To recognize, consistent with the “American Rule,” that authority to grant an award of attorney fees in connection with an action or proceeding in which declaratory relief is sought under Chapter 2721. of the Revised Code must be expressly conferred by the General Assembly upon the courts of this state and has not been so conferred prior to the effective date of this act.
{¶67} In Motorists Mut. Ins. Co. v. Brandenburg, 72 Ohio St.3d 157, 1995-Ohio-281, the plaintiff was injured in an automobile accident and submitted a claim for uninsured motorists coverage to his insurer. The insurer filed a declaratory judgment action seeking a determination that it was not obligated to provide coverage under the policy. In his counterclaim, the plaintiff asserted he was entitled to attorney fees and punitive damages as a result of the declaratory judgment action filed by the insurer. Upon the parties’ cross-motions for summary judgment, the trial court concluded that the plaintiff was entitled to coverage under the policy. In a subsequent order, the trial court granted the insurer‘s motion to strike the counterclaim, determining that the plaintiff would
{¶68} On appeal, the plaintiff asserted that regardless of the specific duties imposed upon an insurer and irrespective of the insurer‘s conduct, a trial court, as incidental to a declaration of an insurer‘s obligations to its insured, had the discretion under
By its clear terms, the intent of
R.C. 2721.09 , affording further relief in declaratory judgment actions, is to provide a trial court with the authority to enforce its declaration of right. * * * Nowhere in R.C. Chapter 2721 is there any provision which narrows the broad authority conferred byR.C. 2721.09 . Moreover,R.C. 2721.09 does not place any legal significance on the insurer‘s conduct nor is the operation of the section conditioned on which party actually prevails in the underlying action. Rather, the only limitation placed on the trial court isthat the relief must be “necessary or proper.” Hence, this court should not create a blanket limitation precluding an award of attorney fees based upon conduct of a party and/or who wins or who loses. This is even more apparent give the requirement under R.C. 2721.13 that “[s]ections2721.01 to2721.15 , inclusive, of the Revised Code are remedial, and shall be liberally construed and administered.”
{¶69} As noted in the uncodified language,
{¶70} As noted by the majority, the General Assembly also intended to perpetuate adherence to the so-called “American Rule,” which requires that each party involved in litigation pay his or her own attorney fees.
{¶71} The unique facts of the case before us create tension between the General Assembly‘s intentions in enacting
{¶72} Nevertheless, I believe that