Vandercar, L.L.C. v. Port of Greater Cincinnati Dev. Auth. ( 2024 )

[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as
Vandercar, L.L.C. v. Port of Greater Cincinnati Dev. Auth., Slip Opinion No. 2024-Ohio-1501.]
NOTICE
This slip opinion is subject to formal revision before it is published in an
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South Front Street, Columbus, Ohio 43215, of any typographical or other
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the opinion is published.
SLIP OPINION NO. 2024-OHIO-1501VANDERCAR, L.L.C., APPELLANT, v. PORT OF GREATER CINCINNATI
DEVELOPMENT AUTHORITY, APPELLEE.
[Until this opinion appears in the Ohio Official Reports advance sheets, it
may be cited as Vandercar, L.L.C. v. Port of Greater Cincinnati Dev. Auth.,
Slip Opinion No. 2024-Ohio-1501.]
Civil law—Contracts—R.C. 1343.03(A)—R.C. 4582.22(A)—A port authority
created under R.C. 4582.22(A) may be held liable for prejudgment interest
under R.C. 1343.03(A) absent an agreement by the parties that provides
otherwise—Court of appeals’ judgment reversed and cause remanded to
trial court.
(No. 2022-1312—Submitted September 12, 2023—Decided April 23, 2024.)
APPEAL from the Court of Appeals for Hamilton County,
Nos. C-210643, C-210665, and C-220130, 2022-Ohio-3148.
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SUPREME COURT OF OHIO
FISCHER, J.
{¶ 1} Appellant, Vandercar, L.L.C. (“Vandercar”), was granted summary
judgment on its breach-of-contract claim against appellee, the Port of Greater
Cincinnati Development Authority (“the Port”). The issue before this court is
whether the Port may be required to pay prejudgment interest under R.C.
1343.03(A). We hold that the Port may be held liable to pay prejudgment interest
because the Port, a port authority created under R.C. 4582.22(A), is not exempt
from the application of R.C. 1343.03(A), which entitles a creditor to prejudgment
interest when the creditor receives a judgment for the payment of money due under
a contract. Therefore, we reverse the judgment of the First District Court of
Appeals, and we remand the cause to the trial court to evaluate Vandercar’s motion
for prejudgment interest under the correct standard.
I. BACKGROUND
{¶ 2} Vandercar entered into a $36 million purchase contract with the owner
of the Millennium Hotel in Cincinnati and then assigned its interest in the hotel to
the Port. Under the agreement between Vandercar and the Port, the Port would pay
Vandercar a $5 million “Additional Vandercar Redevelopment Fee” (“the
redevelopment fee”) if the Port issued bonds to redevelop the hotel within a year of
its acquisition. The Port acquired the hotel and issued acquisition bonds, but it
denied that the bonds were for redevelopment of the hotel, so it refused to pay the
redevelopment fee.
{¶ 3} Vandercar sued the Port for breach of contract for failing to pay the
redevelopment fee. The parties filed competing motions for summary judgment.
Vandercar also moved for prejudgment interest under R.C. 1343.03, arguing that
the redevelopment fee had become due under the agreement and it was therefore
entitled to prejudgment interest.
{¶ 4} The trial court found that Vandercar was entitled to the redevelopment
fee and granted Vandercar’s motion for summary judgment on that issue. However,
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the trial court denied Vandercar’s motion for prejudgment interest, concluding that
prejudgment interest could not be imposed on the Port since it was “an
arm/instrumentality of the state.” Hamilton C.P. No. A 2000900, 2022 WL
19559389 (Mar. 15, 2022).
{¶ 5} Both parties appealed to the First District. The First District affirmed
the trial court’s grant of summary judgment in favor of Vandercar on its breach-of-
contract claim concerning the redevelopment fee, and it affirmed the trial court’s
denial of Vandercar’s motion for prejudgment interest.
{¶ 6} Vandercar appealed to this court, asserting two propositions of law
concerning the denial of its motion for prejudgment interest: (1) “Port authorities,
which have been stripped by the General Assembly of all sovereign immunity, are
liable for prejudgment interest,” and (2) “When a governmental entity enters into a
commercial contract with a private party, the governmental entity is treated as any
other party for purposes of assessment of prejudgment interest.” We accepted
jurisdiction over the appeal. 168 Ohio St.3d 1526, 2023-Ohio-86, 200 N.E.3d 1148.
II. ANALYSIS
A. Under the plain language of R.C. 1343.03(A) and 4582.22(A), a port
authority may be held liable for prejudgment interest when a judgment has
been entered against it for payment of money due under a contract
{¶ 7} This appeal concerns whether the Port, a port authority created under
R.C. 4582.22(A), may be held liable under R.C. 1343.03(A) for prejudgment
interest when a judgment has been entered against it for payment of money due
under a contract. The answer to this question lies within the plain language of the
statutes. See Caldwell v. State, 115 Ohio St. 458, 466-467, 154 N.E. 792 (1926).
{¶ 8} The General Assembly enacted R.C. Chapter 4582 to permit
municipal corporations, townships, and counties to create port authorities. See R.C.
4582.02 and 4582.22. A port authority is a “body corporate and politic,” R.C.
4582.21(A), that “may sue and be sued, plead and be impleaded,” R.C. 4582.22(A).
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The powers of a port authority are dictated by R.C. Chapter 4582 and are considered
“essential governmental functions of this state, but no port authority is immune
from liability by reason thereof.” (Emphasis added.) R.C. 4582.02 and
4582.22(A). The General Assembly has granted immunity to a port authority’s
director and members of its board for monetary damages that arise from actions
those persons take in the performance of their official duties, with three exceptions:
(1) the act or any omission is not made in good faith, (2) the act involves intentional
misconduct or a knowing violation of the law, or (3) the act results in the director’s
gain of an improper personal benefit. R.C. 4582.031 and 4582.271. Other than the
limited immunity granted to the director and the members of the board of a port
authority, there are no exceptions in R.C. Chapter 4582 to a port authority’s
liability.
{¶ 9} Under R.C. 1343.03, parties are entitled to prejudgment interest in
certain situations, including when a creditor receives a judgment for the payment
of money due under a contract, R.C. 1343.03(A). In R.C. 1343.03(D), the General
Assembly set forth two exceptions to application of the interest rules contained in
R.C. 1343.03. The first exception is that R.C. 1343.03(B), which addresses the
method of computing the amount of monetary interest in a matter that has been
settled by the parties, “does not apply to a judgment, decree, or order rendered in a
civil action based on tortious conduct or a contract or other transaction.” R.C.
1343.03(D). And the second exception is that R.C. 1343.03(C), which addresses
the method of computing the amount of monetary interest in a matter in which the
parties did not make a good-faith effort to settle the action, “does not apply to a
judgment, decree, or order rendered in a civil action based on tortious conduct * * *
if it is rendered in an action against the state in the court of claims.” (Emphasis
added.) R.C. 1343.03(D). The General Assembly did not include in R.C.
1343.03(D) any exception to the application of R.C. 1343.03(A). Had it wanted to
include an exception to the application of R.C. 1343.03(A) in civil cases involving
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a judgment for payment of money due under a contract, it knew how to do so, as
demonstrated by its enactment of R.C. 1343.03(D). See State v. Droste, 83 Ohio
St.3d 36, 39, 697 N.E.2d 620 (1998) (“Under the general rule of statutory
construction expressio unius est exclusio alterius, the expression of one or more
items of a class implies that those not identified are to be excluded”).
{¶ 10} Reading R.C. 1343.03 and 4582.22 together, by their plain language,
a port authority may be ordered to pay prejudgment interest under R.C. 1343.03(A).
In this case, the Port, as a port authority created under R.C. 4582.22(A), may be
held liable for the actions it took pursuant to the powers granted it under R.C.
Chapter 4582. R.C. Chapter 4582 does not provide immunity to the Port for those
actions; specifically, it does not include a statute that provides immunity against
liability for prejudgment interest. Thus, for failing to pay the money due under its
contract with Vandercar, the Port may be held liable for prejudgment interest under
the plain language of R.C. 1343.03(A), because R.C. 1343.03(D) does not provide
any exception to the application of R.C. 1343.03(A). The Port points to no statutory
provision that grants it immunity from prejudgment-interest liability by altering the
application of R.C. 1343.03(A).
{¶ 11} The Port contends that R.C. 4582.22 must include an express
reference to the state to waive a port authority’s immunity as a political subdivision
of the state. The Port maintains that this point is best illustrated by the General
Assembly’s enactment of R.C. 2743.18(A)(1), which allows creditors to seek
prejudgment interest from the state for actions brought in the Court of Claims only.
The Port posits that the General Assembly’s decision to allow parties to seek
prejudgment interest from the state by using explicit language authorizing
prejudgment-interest liability in R.C. 2743.18(A)(1) but not to allow parties to seek
prejudgment interest from port authorities by choosing not to use similar language
in R.C. 4582.22(A) demonstrates that the General Assembly did not intend to allow
parties to seek prejudgment interest from port authorities. But this argument fails
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because it ignores the existence of express exceptions to a port authority’s liability
under R.C. 4582.271 and to application of the interest rules under R.C. 1343.03(D).
{¶ 12} We must give effect to the words used in the statutes and refrain from
adding or deleting words or phrases to the language chosen by the General
Assembly. See Hulsmeyer v. Hospice of Southwest Ohio, Inc., 142 Ohio St.3d 236,
2014-Ohio-5511, 29 N.E.3d 903, ¶ 26. We will not create an exception to a statute
where none exists. Because no exception to the application of R.C. 1343.03(A)
exists, under the plain language of R.C. 1343.03 and 4582.22, the Port may be held
liable for prejudgment interest under R.C. 1343.03(A).
B. We will not apply the Beifuss rule in this case
{¶ 13} The Port encourages us to reject the plain-language analysis because
that analysis was rejected by this court when addressing the prejudgment-interest
liability of another type of political subdivision—boards of education—in Beifuss
v. Westerville Bd. of Edn., 37 Ohio St.3d 187, 525 N.E.2d 20 (1988), and State ex
rel. Stacy v. Batavia Local School Dist. Bd. of Edn., 105 Ohio St.3d 476, 2005-
Ohio-2974, 829 N.E.2d 298, ¶ 62. In Beifuss, this court held that “[a] public school
board of education is not liable for the payment of prejudgment interest on an award
of back pay absent a statute requiring such payment or an express contractual
agreement to make such payment.” Beifuss at syllabus. While the rule announced
in Beifuss and applied in Stacy involved boards of education, the Port argues that
both a port authority and a board of education are “bod[ies] politic and corporate”
with the capability to sue and be sued and that both also perform essential
governmental functions, R.C. 3313.17 and 4582.22(A), and therefore should be
treated the same under the Beifuss rule.
{¶ 14} Vandercar acknowledges that the Beifuss rule supports the argument
that prejudgment interest would not apply to an award of back pay against a board
of education without an express statute authorizing such an award, but Vandercar
maintains that this court’s decision in Beifuss is an outlier and that the Beifuss rule
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has not been adopted in cases other than those involving boards of education and
awards for prejudgment interest relating to back pay. Vandercar argues that the
plain language of the statutes at issue here and this court’s prior holdings
concerning application of the doctrine of sovereign immunity would require us to
reject the rationale applied in Beifuss and hold that the Port may be held liable for
prejudgment interest.
{¶ 15} We agree with Vandercar that the Beifuss rule is inapplicable in this
case. While we agree with the Port that port authorities and boards of education
are both “bod[ies] politic and corporate” with the capability to sue and be sued and
that both also perform essential governmental functions, R.C. 3313.17 and
4582.22(A), there is a key difference between the two political subdivisions.
{¶ 16} In R.C. 4582.22(A), the General Assembly specifically denies port
authorities immunity related to their essential governmental functions.
Consequently, a port authority is not entitled to immunity unless expressly provided
by statute. No such statement pertaining to immunity is included in R.C. 3313.17
concerning boards of education. Therefore, because R.C. 4582.22(A) expressly
waives a port authority’s immunity relating to any governmental function it
performs—such as entering into a contract pursuant to its powers enumerated
throughout R.C. Chapter 4582—it is an express statute authorizing a court to hold
a port authority liable for prejudgment interest. Because R.C. 4582.22(A) waives
all immunity for a port authority, the Beifuss rule is inapplicable here. And because
the Port may be held liable for its actions taken under R.C. Chapter 4582 and there
are no exceptions to the application of R.C. 1343.03(A), the Port may be required
to pay Vandercar prejudgment interest under R.C. 1343.03(A).
{¶ 17} But even assuming arguendo that a port authority and a board of
education can be treated similarly under the Beifuss rule, we cannot ignore that
there are several issues with this court’s analysis and rationale in Beifuss. Beifuss
and its progeny are not in line with this court’s prior holdings concerning
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application of the doctrine of sovereign immunity. This is made apparent when we
review the line of cases this court relied on when deciding Beifuss and those that
followed our decision in Beifuss.
{¶ 18} To set the stage, we acknowledge that the state is entitled to
sovereign immunity and that since 1912, the state has been capable of being sued
only as provided by law. Article I, Section 16, Ohio Constitution; see Raudabaugh
v. State, 96 Ohio St. 513, 514, 118 N.E. 102 (1917). It is only when liability is
expressly authorized by statute that liability may be imposed on the state.
Raudabaugh at 514; see also State ex rel. Parrott v. Bd. of Public Works, 36 Ohio
St. 409 (1881), paragraphs three and four of the syllabus.
{¶ 19} Prior to the 1912 amendment of Article I, Section 16 of the Ohio
Constitution, this court explained that while a board of education is a “bod[y] politic
and corporate,” it is a quasicorporation and an arm of the state for the promotion of
education that could not be held liable under tort law. Cincinnati Bd. of Edn. v.
Volk, 72 Ohio St. 469, 480-483, 74 N.E. 646 (1905). However, after the
amendment, this court determined that once a board of education was “clothed with
the capability to sue and be sued, it [wa]s thereby rendered amenable to the laws
governing litigants.” State ex rel. Springfield City School Dist. Bd. of Edn. v.
Gibson, 130 Ohio St. 318, 321, 199 N.E. 185 (1935). Thus, this court held that
“[w]here a statute does not expressly exempt a subordinate political subdivision
from its operation, the exemption therefrom does not exist.” (Emphasis added.) Id.at paragraph three of the syllabus. Applying that rule, this court determined that a
board of education would be subject to a statute of limitations like any other litigant.
Id. at paragraph two of the syllabus.
{¶ 20} After Gibson was decided, this court again acknowledged that “a
board of education is a body corporate and politic of the state of Ohio, and,
therefore, a suit against the board is plainly a suit against the government and its
property.” Brown v. Monroeville Local School Dist. Bd. of Edn., 20 Ohio St.2d 68,
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70, 253 N.E.2d 767 (1969), fn. But in reconciling the decisions in Volk and Gibson,
this court acknowledged that a board of education’s capability to sue and be sued
“was limited to legal actions of the kind that would relate to the other capabilities
conferred on the board by the statute,” such as contracting and matters relating to
real property. Brown at 73. Because there was no statute creating liability in tort
and there was no liability at common law, a board of education could not be held
liable for a tort, as stated in Volk. Brown at 73. However, because a board of
education could be sued and had the power to hold real property, and because the
board in Brown did not show that the statute of limitations was inapplicable, this
court held that a board of education could be sued for adverse possession. Id.{¶ 21} In Beifuss, this court seemingly backtracked on the position set forth
in Gibson and Brown by holding that a public-school board of education could not
be held liable for prejudgment interest on damages assessed against it in a contract
action. Beifuss, 37 Ohio St.3d at 188, 525 N.E.2d 20. This court concluded that
without an express statute requiring that a board of education pay prejudgment
interest or an express contractual agreement to make such payment, a board of
education could not be required to pay prejudgment interest on an award for back
pay. Id. at 189. In a separate opinion, Justice Douglas noted that this court’s
holding in Beifuss was contrary to R.C. 3313.17, which allows a board of education
to sue and be sued and engage in the creation of contracts, and contrary to the
decision in Gibson, in which this court determined that a board of education, once
clothed with the capability to be sued, could be treated the same as a private litigant.
Beifuss at 192 (Douglas, J., concurring in part and dissenting in part). That same
year, we applied the Beifuss rule and reversed an award of interest on back pay to
a teacher. State ex rel. Brown v. Milton-Union Exempted Village Bd. of Edn., 40
Ohio St.3d 21, 28, 531 N.E.2d 1297 (1988).
{¶ 22} But three years later, this court readopted the position stated in
Gibson, finding that R.C. 1343.03(A) renders a board of education liable for
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postjudgment interest. State ex rel. Tavenner v. Indian Lake Local School Dist. Bd.
of Edn., 62 Ohio St.3d 88, 90-91, 578 N.E.2d 464 (1991). Justice Douglas, in
another separate opinion, noted the inconsistency between this court’s decision in
Beifuss concerning awards of prejudgment interest and the decision in Tavenner
concerning awards of postjudgment interest, given that both cases, though dealing
with different types of interest, were governed by the same statutory provision—
R.C. 1343.03(A)—and dealt with the same type of political subdivision—boards of
education. Tavenner at 91 (Douglas, J., concurring).
{¶ 23} The discrepancy outlined in Justice Douglas’s concurring opinion in
Tavenner was discussed in Ziegler v. Wendel Poultry Servs., Inc., 67 Ohio St.3d
10, 18, 615 N.E.2d 1022 (1993), overruled on other grounds by Fidelholtz v. Peller,
81 Ohio St.3d 197, 690 N.E.2d 502 (1998). In Ziegler, we noted that Beifuss was
a contract case in which we declined to expand a board of education’s contractual
liability without express legislation authorizing such liability or an agreement by
the parties. Ziegler at 18-19. But yet in Ziegler, we walked back this court’s
decision in Beifuss with the following determination: “If school boards should be
treated like other litigants and can have postjudgment interest assessed against
them pursuant to R.C. 1343.03(A), then they should be subject to prejudgment
interest under R.C. 1343.03(C), if they do not make a good faith effort to settle.”
(Emphasis added.) Ziegler at 19. We further limited application of the Beifuss rule
in State ex rel. Carver v. Hull, 70 Ohio St.3d 570, 579, 639 N.E.2d 1175 (1994),
holding that prejudgment interest could have been available if the matter had
accrued in contract or if one of the parties had failed to make a good-faith effort to
settle the case.
{¶ 24} In another attempt to further distinguish Beifuss, this court doubled
down on the judicially created justification for treating prejudgment-interest awards
differently from postjudgment-interest awards under R.C. 1343.03 when deciding
Judy v. Bur. of Motor Vehicles, 100 Ohio St.3d 122, 2003-Ohio-5277, 797 N.E.2d
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45. In that case, we explained that the “distinction between prejudgment and
postjudgment interest [was] born of good reason,” being based on the policy
concerns behind the two types of interest, id. at ¶ 32, none of which were
acknowledged by the plain language of the statute. We held:
Beifuss and Tavenner make clear two propositions of law: a
school board is (1) a state agency for purposes of * * * litigation
[over postjudgment interest] and (2) liable for postjudgment interest
under R.C. 1343.03. These two propositions, taken together, stand
for the principle that the state is liable for postjudgment interest
under R.C. 1343.03.
Judy at ¶ 33. We thus remained firm in our position that based on policy preference,
a board of education could be held liable for postjudgment interest, implying that a
board of education would not be liable for prejudgment interest. See id. at ¶ 32-33.
{¶ 25} This court later affirmed the holding in Beifuss that a board of
education would not be liable for prejudgment interest under R.C. 1343.03(A). In
denying a request for prejudgment interest on a back-pay award in Stacy, we relied
on our prior determination that “[a] public school board of education is not liable
for the payment of prejudgment interest on an award of back pay absent a statute
requiring such payment or an express contractual agreement to make such
payment.” 105 Ohio St.3d 476, 2005-Ohio-2974, 829 N.E.2d 298, at ¶ 61, citing
Beifuss at syllabus.
{¶ 26} Reviewing these cases, it is apparent that Beifuss is an outlier and
was wrongly decided. Beifuss ignored the plain language of R.C. 1343.03(A) that
imposes liability for interest in certain cases, including contract cases.
Am.Sub.H.B. No. 189, Section 1, 139 Ohio Laws, Part I, 2034-2035. And it
contradicted the statutory waiver of a board of education’s immunity relating to
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contract disputes. See Gibson, 130 Ohio St. 318, 199 N.E. 185, at paragraphs one,
two, and three of the syllabus; Brown, 20 Ohio St.2d at 73, 253 N.E.2d 767. As we
stated in Gibson, once boards of education were clothed with the capability to sue
and be sued, they were to be treated as any other litigant. Gibson at 321.
{¶ 27} It is also apparent that the Beifuss rule defies practical workability.
It is difficult to comprehend why we would hold that a board of education may be
liable for postjudgment interest under R.C. 1343.03(A) but not prejudgment interest
under the same provision when both holdings rely on the same language in R.C.
3313.17 that authorizes boards of education to sue and be sued and enter into
contracts. The Beifuss rule required this court to apply R.C. 1343.03(A) differently
depending on the type of interest—prejudgment or postjudgment—being sought
even though there is no language in the statute that permits such a distinction. This
court in Beifuss essentially created an exception for boards of education where none
existed at the time by failing to recognize that the General Assembly had already
waived immunity for boards of education, as recognized in Gibson, and did not
need to expressly do so again in another statute.
{¶ 28} Simply put, the rationale announced in Beifuss makes little sense and
cannot be reconciled with the plain-language analysis we used in Gibson and
Tavenner. Thankfully, the Beifuss rule has been narrowly applied, its application
having been limited to cases involving interest on back-pay awards against boards
of education. We have applied the Beifuss rule only twice, once in 1988 and again
in 2005. See Milton-Union Exempted Village Bd. of Edn., 40 Ohio St.3d at 28, 531
N.E.2d 1297; Stacy, 105 Ohio St.3d 476, 2005-Ohio-2974, 829 N.E.2d 298, at
¶ 61. And even though the Beifuss rule has existed since 1988, it has been on shaky
ground, as indicated in this court’s decisions in Tavenner and Ziegler.
{¶ 29} We should no longer turn a blind eye and further extend the rule
announced in Beifuss, because that rule conflicts with statutes enacted by the
General Assembly and this court’s prior holdings concerning application of the
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doctrine of sovereign immunity. To uphold and further extend the Beifuss rule
would be to invade the province of the General Assembly to write laws and make
policy decisions. See Pratte v. Stewart, 125 Ohio St.3d 473, 2010-Ohio-1860, 929
N.E.2d 415, ¶ 54 (declining to invade the province of the legislature by rewriting a
statute to allow for a tolling provision). Furthermore, to extend this court’s holding
in Beifuss would be to create a rule that goes against the common law and benefits
the party that breached the contract while depriving the injured party of complete
reparation. See Lawrence RR. Co. v. Cobb, 35 Ohio St. 94, 98-99 (1878) (the
injured party should be made whole, which may include an award of interest when
the wrongdoer withheld reparation that ought to have been promptly made). For
those reasons, the Beifuss rule will not be applied in this case. Instead, we apply
the basic principle announced in Gibson that “[w]here a statute does not expressly
exempt a subordinate political subdivision from its operation, the exemption
therefrom does not exist” (emphasis added), 130 Ohio St. 318, 199 N.E. 185, at
paragraph three of the syllabus.
{¶ 30} In this case, the lower courts agreed that the Port had breached its
agreement with Vandercar and therefore owed Vandercar the redevelopment fee.
The Port agrees that it is a port authority created under R.C. 4582.22(A) and thus
has the capability to sue and be sued and may be held liable for actions taken by
authority of the powers granted it by law. Because no statute grants a port authority
immunity, the Port may be held liable for prejudgment interest under R.C.
1343.03(A) since a judgment was entered against it for payment of money due
under a contract that it entered into consistent with its powers under R.C. Chapter
4582. See Gibson at paragraph three of the syllabus. The lower courts erred in
denying Vandercar’s motion for prejudgment interest based on their conclusions
that the Port, as an arm or instrumentality of the state, was entitled to sovereign
immunity.
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III. CONCLUSION
{¶ 31} The General Assembly provided that a port authority may be held
liable for actions taken under R.C. Chapter 4582 and that a port authority cannot
claim immunity against liability for those actions simply because those actions are
considered essential governmental functions. R.C. 4582.22(A). R.C. 1343.03(A)
entitles a creditor to prejudgment interest on an award for money due under a
contract, and no exceptions to that liability are granted to anyone under the statute,
see R.C. 1343.03(D). Therefore, because R.C. 1343.03 does not expressly exempt
a port authority from its operation, the Port may be held liable for prejudgment
interest on the money due Vandercar under its agreement. See Gibson at paragraph
three of the syllabus.
{¶ 32} Since the plain language of the statutes resolves the prejudgment-
interest issue, we decline to review the second proposition of law. We also decline
to apply our holding in Beifuss to this case given the differences between the
language of R.C. 4582.22(A) that governs port authorities and the language of R.C.
3313.17 that governs boards of education and given the inconsistencies in this
court’s application of R.C. 3313.17 and 1343.03.
{¶ 33} We reverse the First District Court of Appeals’ judgment, and we
remand the cause to the trial court to rule on Vandercar’s motion for prejudgment
interest under the correct standard.
Judgment reversed
and cause remanded.
KENNEDY, C.J., and DEWINE, DONNELLY, and BRUNNER, JJ., concur.
STEWART, J., dissents, with an opinion joined by POWELL, J.
MIKE POWELL, J., of the Twelfth District Court of Appeals, sitting for
DETERS, J.
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STEWART, J., dissenting.
{¶ 34} I agree with the majority that this appeal can be resolved by the plain
language of the statutes, but I would reach a different conclusion given that the
relevant statutes do not expressly permit appellant, Vandercar, L.L.C., to recover
prejudgment interest from appellee, the Port of Greater Cincinnati Development
Authority. Additionally, two aspects of the majority’s opinion might result in
confusion. For these reasons, I respectfully dissent.
{¶ 35} First, the majority opinion introduces confusion by incorrectly
stating that R.C. 4582.22(A) “waives all immunity for a port authority,” majority
opinion, ¶ 16, and that “no statute grants a port authority immunity,” id. at ¶ 30.
But R.C. Chapter 2744 expressly provides political subdivisions with immunity
from tort liability as described in that chapter. And R.C. 2744.01(F) includes in the
definition of “political subdivision” a “port authority created pursuant to section
4582.02 * * * of the Revised Code.” See also State ex rel. Toledo Blade Co. v.
Toledo-Lucas Cty. Port Auth., 121 Ohio St.3d 537, 2009-Ohio-1767, 905 N.E.2d
1221, ¶ 2 (“Respondent, the Toledo-Lucas County Port Authority, is a political
subdivision of the state of Ohio that was created in 1955 and operates under R.C.
Chapter 4582”).
{¶ 36} Like a port authority created under R.C. 4582.02, the port authority
in this case, which was created under R.C. 4582.22, bears the same hallmarks of a
political subdivision that is subject to tort-liability immunity as described in R.C.
2744.01. For example, the statutory language describing a port authority’s creation
under R.C. 4582.02 is nearly identical to the language used to describe a port
authority’s creation under R.C. 4582.22; both statutes provide that port authorities
are bodies “corporate and politic which may sue and be sued, plead and be
impleaded, and [have] the powers and jurisdiction” enumerated in specific statutes.
Compare R.C. 4582.02 with R.C. 4582.22. Port authorities created under these
statutes also exercise powers that are deemed to be “essential governmental
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functions of this state,” but they are not “immune from liability by reason thereof.”
Compare R.C. 4582.02 with R.C. 4582.22; see also 1990 Ohio Atty.Gen.Ops. No.
90-060, at 2-259. Indeed, the majority opinion also refers to port authorities as
political subdivisions. See majority opinion at ¶ 15.
{¶ 37} Because political subdivisions enjoy certain immunity from liability
for tort claims as set forth in R.C. Chapter 2744 and because port authorities are
political subdivisions as that term is defined in R.C. Chapter 2744, it cannot be said,
as the majority does, that R.C. 4582.22 waives “all immunity” for a port authority,
majority opinion at ¶ 16.
{¶ 38} Additionally, the General Assembly has stated that the language in
R.C. 4582.22(A) that says a port authority “may sue and be sued” does not waive a
port authority’s immunity for civil liability. See R.C. 2744.02(B)(5). Thus, the
language in R.C. 4582.22(A) that says a port authority is a “body corporate and
politic which may sue and be sued” and that “the powers conferred upon [a port
authority] shall be deemed to be essential governmental functions of this state, but
no port authority is immune from liability by reason thereof,” cannot mean what
the majority says it means.
{¶ 39} But what did the General Assembly mean when it stated in R.C.
4582.22(A) that a port authority is not immune from liability by reason of its
exercising essential governmental functions of the state? To answer that question,
we look to the sovereign-immunity law that existed at the time the statute was
enacted.
{¶ 40} Prior to the enactment of R.C. 4582.22 in 1982, see Am.Sub.H.B.
No. 439, 139 Ohio Laws, Part II, 2742, 2755 (“H.B. 439”), this court explained that
“[t]he long established common law rule in Ohio is that the state, being sovereign,
is not amenable to suit in its own courts without its express consent.”
Schenkolewski v. Cleveland Metroparks Sys., 67 Ohio St.2d 31, 33, 426 N.E.2d 784(1981). We explained that Article I, Section 16 of the Ohio Constitution was
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amended in 1912 to provide that “ ‘[s]uits may be brought against the state, in such
courts and in such manner, as may be provided by law.’ ” Schenkolewski at 34,
quoting Article I, Section 16, Ohio Constitution. That constitutional provision was
determined not to be self-executing and since then “the principle has been
steadfastly reiterated that statutory express consent is required before the state or
its instrumentalities [are] amenable to suit.” Id. at 35.
{¶ 41} In 1975, the Court of Claims Act, R.C. 2743.01 et seq., took effect.
See Am.Sub.H.B. No. 800, 135 Ohio Laws, Part II, 869, 871 (“H.B. 800”). By that
enactment, the General Assembly consented to the state’s being sued in the Court
of Claims, thereby waiving the state’s sovereign immunity within the scope of that
statutory scheme. See id.; Schenkolewski at 33-34. But “political subdivisions”
were excluded from the Court of Claims Act. See former R.C. 2743.01(A)
(excluding “political subdivisions” from the definition of “state”) and (B) (defining
“political subdivisions” as “municipal corporations, townships, villages, counties,
school districts, and all other bodies corporate and politic responsible for
governmental activities only in geographic areas smaller than that of the state to
which the sovereign immunity of the state attaches” [emphasis added]), H.B. 800,
135 Ohio Laws, Part II, at 871; Schenkolewski at 34. At that time, our case law
generally recognized that political subdivisions enjoyed immunity from liability (at
least for tort claims) arising from its performance of governmental functions but
not its performance of proprietary functions. See Schenkolewski at 36-38.
{¶ 42} When the General Assembly enacted R.C. 4582.22(A) in 1982, that
provision stated, “The exercise by such port authority of the powers conferred upon
it shall be deemed to be essential governmental functions of this state, but no port
authority is immune from liability by reason thereof.” H.B. 439, 139 Ohio Laws,
Part II, at 2755. This statutory language provided the necessary consent by the state
to abrogate any common-law tort immunity for port authorities at that time.
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{¶ 43} Nonetheless, in 1985, after a series of decisions from this court
effectively eliminated sovereign-immunity protections for political subdivisions,
the General Assembly enacted R.C. Chapter 2744 to expressly restore immunity
from tort liability to the state’s political subdivisions within the scope described in
that Chapter. See Am.Sub.H.B. No. 176, 141 Ohio Laws, Part I, 1699, 1703-1724
(“H.B. 176”); see also Legislative Service Commission Analysis of H.B. 176.
When enacted, R.C. 2744.02(B)(5) included the following statement:
Liability shall not be construed to exist under another section of the
Revised Code merely because a responsibility is imposed upon a
political subdivision or because of a general authorization that a
political subdivision may sue and be sued.
(Emphasis added.) H.B. 176, 141 Ohio Laws, Part I, at 1713. A materially similar
statement remains in today’s version of R.C. 2744.02(B)(5). For these reasons, the
inclusion of the phrase “may sue and be sued” and the reference to a waiver of
immunity in R.C. 4582.22(A) cannot be read as constituting a waiver of all
immunities for a port authority. The majority’s statements to the contrary risk
introducing unnecessary confusion into this area of the law.1
{¶ 44} Moreover, the port authority here is not arguing that it is immune
from contractual liability. Thus, even if the phrase in R.C. 4582.22(A) stating that
a port authority is not immune from liability for the exercise of its governmental
functions means that a port authority is not immune from liability for breach of
contract, that is irrelevant here because the issue presented in this case is a narrower
one—namely, whether the port authority must pay prejudgment interest on the
1. To be sure, R.C. 2744.09(A) states that R.C. Chapter 2744 does not apply to civil actions against
political subdivisions for contractual liability. But the majority has not distinguished between tort
liability and contractual liability in stating that R.C. 4582.22(A) waives “all immunity” for a port
authority, majority opinion at ¶ 16.
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contract damages it owes. We do not find the answer to that issue in the language
of R.C. 4582.22(A), which the majority relies on.
{¶ 45} The second way the majority introduces confusion here is by
overruling, by implication, this court’s holding in Beifuss v. Westerville Bd. of Edn.,
37 Ohio St.3d 187, 525 N.E.2d 20 (1988)—an unnecessary action given the
majority’s purported reliance on a plain-language statutory-interpretation analysis.
As the majority recognizes, this court affirmed the holding in Beifuss in 2005 in
State ex rel. Stacy v. Batavia Local School Dist. Bd. of Edn., 105 Ohio St.3d 476,
2005-Ohio-2974, 829 N.E.2d 298, ¶ 62. Nonetheless, despite concluding that “the
Beifuss rule is inapplicable in this case,” majority opinion at ¶ 15, and that there is
a “key difference” between port authorities and boards of education, id. at ¶ 15, the
majority engages in a lengthy criticism of Beifuss, ultimately deciding that “Beifuss
is an outlier and was wrongly decided,” majority opinion at ¶ 26, and that it “defies
practical workability,” id. at ¶ 27. Rather than simply concluding that Beifuss is
distinguishable from and inapplicable to this case, the majority applies this court’s
holding in State ex rel. Springfield City School Dist. Bd. of Edn. v. Gibson, 130
Ohio St. 318, 199 N.E. 185 (1935)—a case that is also about a board of education
and was decided more than 50 years before Beifuss. But Gibson also addresses
whether sovereign immunity enjoyed by the state extends to a board of education.
So if this court’s holding in Beifuss is inapplicable here, as the majority states,
because there is a difference between port authorities and boards of education, then
Gibson is also inapplicable. In this way, the majority implicitly overrules Beifuss
by dicta, only to adopt by dicta a one-syllabus paragraph from Gibson.
{¶ 46} Additionally, the majority states that “to extend this court’s holding
in Beifuss would be to create a rule that goes against the common law and benefits
the party that breached the contract while depriving the injured party of complete
reparation.” Majority opinion at ¶ 29. But it is unclear what aspect of the common
law the majority is referring to. If the majority means the common law on damages
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for contractual liability, it should be noted that the port authority in this case is not
challenging the damages it owes for its contractual liability. If the majority means
the common law on recovery of interest on a debt, it should be noted that interest
recovery has been a creature of statute in Ohio—not of the common law—since at
least 1824.2 And, as this court noted in Beifuss when citing a line of cases dating
back to 1881, it has been well established in this state that absent a statute or a
promise to pay it, “ ‘interest cannot be adjudged against the state for delay in the
payment of money,’ ” Beifuss at 188-189, quoting State ex rel. Parrott v. Bd. of
Pub. Works, 36 Ohio St. 409 (1881), paragraph four of the syllabus; see also State
ex rel. Nixon v. Merrell, 126 Ohio St. 239, 246, 185 N.E. 56 (1933); Lewis v.
Benson, 60 Ohio St.2d 66, 67, 397 N.E. 2d 396 (1979); State ex rel. Home Care
Pharmacy, Inc. v. Creasy, 67 Ohio St.2d 342, 344, 423 N.E. 2d 482 (1981); State
ex rel. Montrie Nursing Home, Inc. v. Creasy, 5 Ohio St.3d 124, 126-127, 449 N.E.
2d 763 (1983).
{¶ 47} The Gibson rule that the majority cites—that “[w]here a statute does
not expressly exempt a subordinate political subdivision from its operation, the
exemption therefrom does not exist,” Gibson at paragraph three of the syllabus—
does not recognize political-subdivision sovereign immunity. See id. at 322 (noting
that sovereign immunity is a privilege to be asserted only by or on behalf of the
2. The original enactment of the law setting a rate of interest when such rate has not been stipulated
to by the parties appears to have been in 1824 in “An Act Fixing the Rate of Interest,” which stated
“[t]hat all creditors shall be entitled to receive interest on all money, after the same shall become
due,” 29 Ohio Laws 451. In 1879, Ohio’s general statutes were reclassified for publication as
Revised Statutes, see H.B. No. 1083, 76 Ohio Laws 192, 195-196, and the law setting the rate of
interest when not otherwise stipulated to could be found in R.S. 3181. When the Revised Statutes
were reclassified in 1910 as the General Code, see S.B. No. 31, 98 Ohio Laws 221; H.B. No. 148,
101 Ohio Laws 39; and H.B. No. 131, 102 Ohio Laws 46, the interest-rate-setting law could be
found at G.C. 8305. And in 1953, when Ohio’s statutes were recodified as the Ohio Revised Code,
see Am.H.B. No. 1, 125 Ohio Laws 7, the interest-rate-setting law could be found in R.C. 1309.03.
In 1962, the General Assembly enacted R.C. 1343.03, the text of which was analogous to that of
R.C. 1309.03. See Am.S.B. No. 5, 129 Ohio Laws 13, 173.
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sovereign and explaining that “[t]he extension of the privileges of sovereignty to
others than the general and state governments does not find favor in enlightened
jurisdictions”). But, since Gibson was decided in 1935, the law in this state has at
times recognized such immunity, while at other times it has not, see generally
Schenkolewski, 67 Ohio St.2d at 33-35, 426 N.E.2d 784, until, as noted above, the
General Assembly codified political-subdivision sovereign immunity against
liability for tort claims in R.C. Chapter 2744. See Legislative Service Commission
Analysis of H.B. 176. This is not to criticize the holding in Gibson, which
presumably aptly reflected the state of the law when Gibson was decided, but it is
intended to point out that the majority’s decision to elevate the holding in Gibson
over the holding in Beifuss does no greater honor to the common law than what the
majority criticizes Beifuss of doing.
{¶ 48} Finding no persuasive reason to depart from this court’s more recent
precedent, I would rely on and apply the holding in Beifuss to this case. As
previously noted, Beifuss cited the “well-established” law that “ ‘[i]n the absence
of a statute requiring it, or a promise to pay it, interest cannot be adjudged against
the state for delay in the payment of money.’ ” 37 Ohio St.3d at 188-189, 525
N.E.2d 20, quoting Parrott at paragraph four of the syllabus. Additionally, in
Beifuss this court acknowledged that the functions of a public-school board of
education more closely resembled those of a state entity. See Beifuss at 189. For
example, in Beifuss, this court recognized that a public school board’s duties and
powers are extensively defined in Title 33 of the Revised Code and therefore are
“ ‘managed and controlled by the dictates of the General Assembly.’ ” Beifuss at
189, quoting Thaxton v. Medina City Bd. of Edn., 21 Ohio St.3d 56, 57, 488 N.E.2d
136 (1986). We also recognized the following in Beifuss:
Judicial intrusion into the matters of contracting parties is an
extreme measure which should occur sparingly, if at all. We find
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that such an expansion of a public school board’s contractual
liability should be created through clearly expressed legislation by
the General Assembly or by the parties themselves at the bargaining
table.
(Footnote omitted.) Beifuss at 190.
{¶ 49} Here, the General Assembly has extensively enumerated the powers
and duties of a port authority in R.C. Chapter 4582, and it has expressly stated that
port authorities are “necessary for the welfare of the state and its inhabitants,” R.C.
4582.59. Although a municipal corporation may create a port authority as
described in R.C. 4582.22, a port authority is also a distinct entity from a municipal
corporation. A port authority is exempt from payment of property taxes. See R.C.
4582.46. A port authority may exercise the right of eminent domain. See R.C.
4582.31(A)(17). Although a port authority may enter into contracts, in some
instances a port authority is required to follow the competitive-bidding process for
entering into contracts as outlined by the General Assembly. See R.C.
4582.31(A)(18). A port authority may levy a property tax within its jurisdiction if
approved by the qualified electors in a primary or general election, and its board of
directors becomes the taxing authority if such a levy is approved. See R.C. 4582.40.
Additionally, the board of directors of a port authority may contract with a county’s
prosecuting attorney to obtain legal services. See R.C. 4582.23.
{¶ 50} In Beifuss, based on the characteristics of a public school board and
given the well-established rule against adjudging interest against the state for delay
of payment in the absence of a statute or contractual provision allowing it, this court
concluded that the school board was not required to pay prejudgment interest on
the back-pay awards in that case, because there was no statutory authority requiring
it to do so nor any contractual agreement between the parties to do so. Beifuss at
190. Applying the holding in Beifuss here leads to the same conclusion.
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Ultimately, the majority relies on the absence of language in R.C. 1343.03(A) that
would except a port authority from liability for prejudgment interest. But we
should, instead, look for authority in the statutes that allows the recovery of
prejudgment interest from a port authority—language like that which the General
Assembly used in R.C. 2743.18 for the recovery of prejudgment interest in cases
filed against the state in the Court of Claims.
{¶ 51} R.C. 1343.03 is a general statute that fixes a rate of interest when the
parties to a contract have not otherwise stipulated to a rate. Nothing in R.C. 1343.03
expressly permits the recovery of prejudgment interest from a port authority. And
despite the General Assembly’s extensive description of a port authority’s powers
and limitations in R.C. Chapter 4582, nothing in that statutory scheme expressly
permits the recovery of prejudgment interest from a port authority. Having found
no statutory authority that requires a port authority to pay prejudgment interest, and
there being no assertion by the parties that an allowance for prejudgment interest
exists in their contractual provisions, I would hold that the port authority here may
not be assessed prejudgment interest and would therefore affirm the judgment of
the First District Court of Appeals.
POWELL, J., concurs in the foregoing opinion.
_________________
Taft Stettinius & Hollister, L.L.P., W. Stuart Dornette, Russell S. Sayre, and
Beth A. Bryan, for appellant, Vandercar, L.L.C.
Calfee, Halter & Griswold, L.L.P., David T. Bules, Mitchell G. Blair,
Matthew A. Chiricosta, and Xin (Sage) Wen for appellee, The Port of Greater
Cincinnati Development Authority.
Squire Patton Boggs (U.S.), L.L.P., Scott A. Kane, Shams H. Hirji, and
Gregory R. Daniels, urging affirmance for amici curiae Columbus-Franklin County
Finance Authority, Development Finance Authority of Summit County, Dayton-
Montgomery County Port Authority, and Toledo-Lucas County Port Authority.
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