Asia-Pacific Futures Research Symposium Planning Commt. v. Kent State Univ. , 2016 Ohio 2691 ( 2016 )

[Cite as Asia-Pacific Futures Research Symposium Planning Commt. v. Kent State Univ., 2016-Ohio-2691.]
IN THE COURT OF APPEALS
ELEVENTH APPELLATE DISTRICT
PORTAGE COUNTY, OHIO
ASIA-PACIFIC FUTURES RESEARCH : OPINION
SYMPOSIUM PLANNING COMMITTEE,
AS SUCCESSOR IN INTEREST TO :
CBOT EDUCATIONAL RESEARCH CASE NO. 2015-P-0052
FOUNDATION, :
Plaintiff-Appellant, :
- vs - :
KENT STATE UNIVERSITY, et al., :
Defendants-Appellees. :
Civil Appeal from the Portage County Court of Common Pleas.
Case No. 2013 CV 00649.
Judgment: Affirmed.
Mark W. Bernlohr and Sandra K. Zerrusen, Jackson Kelly, PLLC, 17 South Main
Street, Suite 101B, Akron, OH 44308; Sam P. Israel, Sam P. Israel, P.C., One Liberty
Plaza, 23rd Floor, New York, NY 1006 (For Plaintiff-Appellant).
Mike DeWine, Ohio Attorney General, and James D. Miller, Assistant Attorney
General, 30 East Broad Street, 16th Floor–Education Section, Columbus, OH 43215
(For Defendants-Appellees Kent State University and Gene Finn).
Rodd A. Sanders and Lawrence R. Bach, Roderick Linton Belfance LLP, 50 South
Main Street, 10th Floor, Akron, OH 44308-1828 (For Defendant-Appellee The Kent
State University Foundation).
TIMOTHY P. CANNON, J.
{¶1} Appellant, Asia-Pacific Futures Research Symposium Planning
Committee, as Successor in Interest to CBOT Educational Research Foundation,
appeals the decision of the Portage County Court of Common Pleas granting summary
judgment in favor of appellees, Kent State University, The Kent State University
Foundation, and Gene Finn. For the reasons that follow, we affirm.
{¶2} In 2002, the Chicago Board of Trade Educational Research Foundation
(“CBOT-ERF”) decided to gift $1.2 million to The Kent State University Foundation (“the
Foundation”). The purpose of the gift was two-fold: (1) to financially support an annual
symposium and its publications regarding futures, options, and financial engineering;
and (2) to financially support a Master of Science in Financial Engineering program at
Kent State University (“the University”).
{¶3} To effectuate this gift, CBOT-ERF and the Foundation entered into a
contract (“the Agreement”). The Agreement provided, in paragraph 14, that in the event
CBOT-ERF was dissolved, “all rights and obligations under the Agreement” could be
assigned to an Emeritus Board. The Emeritus Board was to “be comprised initially of
individuals who currently serve[d]” on CBOT-ERF, and it had authority to appoint a
“Donor Representative” to act on its behalf with the Foundation. Pursuant to the
Agreement, the Foundation was permitted to “accept without further inquiry that any
Donor’s Representative designated by the Emeritus Board has the authority to bind the
Emeritus Board for purposes of complying with and enforcing the terms of this
Agreement.” The Agreement also provided, in paragraph 10, that if expenditures were
rendered “unnecessary or impracticable for the purposes and objectives specified in
[the] Agreement and the Donor or Donor’s Representative [did] not provide alternative
feasible directions,” the Foundation was permitted to expend funds “for support of such
programs that further the purposes for which the [funds] were established.”
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{¶4} CBOT-ERF subsequently dissolved, and the directors became the
Emeritus Board (“the Board”). For ten years, the Board met annually with Dr. Mark
Holder, the head of the University’s Master of Science and Financial Engineering
program (“MSFE program”). Dr. Holder was appointed as the Donor’s Representative
at one of these meetings. During these meetings, Dr. Holder provided the Board with
results of that year’s symposium, and the Board provided input regarding the next
symposium. These symposiums were held under the moniker of “Asia-Pacific Futures
Research Symposium” (“APFRS”) and were held overseas. Although the CBOT-ERF
gift provided the majority of funds used to financially support the APFRS, there were
other donors involved as well.
{¶5} The MSFE program was eliminated by 2012, and the director of the
Foundation, Gene Finn, determined it was not practical to continue the APFRS. Mr.
Finn contacted Patrick Catania, the Board’s appointed contact, and suggested the gifted
funds could instead support the University’s College of Business and Risk Management.
{¶6} Mr. Catania responded that the Board was not pleased with these
developments and the consensus was to move the funds to another local university.
This plan never came to fruition. Mr. Catania later sought to obtain the Board’s consent
to continue funding the APFRS but was met with disagreement. The rest of the
directors wanted to move the gifted funds from the Foundation and create a 501(c)(3)
charitable entity to hold the funds. Mr. Catania strongly opposed this decision, and the
Board suggested Mr. Catania resign.
{¶7} Mr. Catania informed Mr. Finn of the disagreement between the directors
and his opposition to the change. Mr. Finn responded that he would act only after
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receiving instruction from the Board. Mr. Catania expressed his concern that the
Foundation would consider moving the funds to the charitable entity. Mr. Finn then
expressed to Mr. Catania that although he was not opposed to continued funding of the
APFRS, he could only act upon agreement of the Board. In October 2012, the Board
instructed Mr. Finn to transfer the funds once the 501(c)(3) charitable entity was
approved. Mr. Finn responded that this would completely prevent the Foundation from
funding the APFRS.
{¶8} In May 2013, the Board appointed Mr. Lawrence Dorf, Chairman of the
Board, as the new Donor’s Representative. The Foundation did not distribute any funds
for the APFRS that year due to the situation with the gifted funds. Litigation was
commenced by the purported “planning committee” of the APFRS, appellant herein, “at
the direction of” Dr. Holder, “Managing Member of the Organizer Committee of the
Symposium, a position held by him since its inception,” and Mr. Catania, “former
President and CEO of CBOT-ERF, and at all times the sole liaison between the
Committee and the Foundation.”
{¶9} Appellant filed a complaint, an amended complaint, and finally a second
amended verified complaint against the Foundation, the University, and Mr. Finn as
both the Executive Director of the Foundation and an employee of the University.
Appellant filed a motion for leave to file a third amended complaint, which was denied.
Appellant asserted a breach of contract claim against all three defendants, and breach
of fiduciary duty and conversion claims against the Foundation. It requested the court
(1) issue a declaratory judgment that appellees were in breach of terms of the
Agreement; (2) order specific performance of the Agreement; and (3) grant an injunction
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compelling future compliance with the Agreement. Appellant also filed a motion for a
preliminary injunction, which was denied after a hearing.
{¶10} The Foundation and Mr. Finn (in his capacity as Executive Director) filed a
joint partial motion to dismiss, which the trial court subsequently converted to a motion
for summary judgment pursuant to Civ.R. 12(B). The University and Mr. Finn (as an
employee of the University) also filed a joint motion for summary judgment. The trial
court granted both summary judgment motions in separate entries and dismissed all of
appellant’s claims.
{¶11} Appellant filed a timely appeal from these entries and asserts six
assignments of error for our review:
[1.] The trial court erred in granting the Defendants-Appellees Kent
State University Foundation, Inc., and Eugene Finn’s motion for
summary judgment on the Plaintiff-Appellant’s breach of contract
claim due to lack of standing to enforce the agreement because a
factual question existed as to whether the ‘circumstances’
surrounding a quasi-endowment agreement established that the
Plaintiff-Appellant was an intended third-party beneficiary to the
agreement.
[2.] The trial court erred in granting summary judgment on the issue
of breach of contract in favor of Defendants-Appellees. The Asia-
Pacific Futures Research Symposium is the only extant symposium
founded by a donor in a quasi-endowment agreement which
required annual funding to ‘the symposium,’ has been the only
Symposium to receive funding under the quasi-endowment
agreement since 2003, and the testimony from the chief drafter of
the agreement and CEO of the donor established that the quasi-
endowed funds were specifically intended to fund the Plaintiff-
Appellant’s annual symposium. The halt of funding constituted a
breach of the agreement.
[3.] The trial court, on a summary judgment motion, erred in
rejecting, as unreliable, the sworn-testimony of Patrick Catania that
no assignment of contractual rights ever occurred between the
Chicago Board of Trade Educational Research Foundation and any
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‘Emeritus Board’ prior to the Chicago Board of Trade Educational
Research Foundation’s dissolution.
[4.] The trial court erred in granting summary judgment on the claim
of breach of fiduciary duty in favor of Defendant-Appellant Kent
State University Foundation because uncontroverted testimony
established that the foundation had received hundreds of
thousands of dollars in funds from no-less than nineteen third-party
donors that were provided for expenditure on Plaintiff-Appellant’s
annual symposium and, accordingly, the foundation’s current
refusal to release the funds comprises a breach of the trust reposed
in it by the Plaintiff-Appellant.
[5.] The trial court erred in granting summary judgment in favor of
Defendant-Appellant Kent State University because a triable issue
of fact exists as to whether the Kent State University Foundation—
which publically purports to ‘receive gifts on behalf’ of Kent State
University and represented that it had control over Kent State
University’s faculty and staff for the purposes of the Agreement—
acted as an agent of Kent State University with respect to the
quasi-endowment agreement.
[6.] The trial court erred in determining that Mark Holder was not
the Donor’s Representative on summary judgment because
testimony of multiple parties established that the original Donor’s
Representative appointed by CBOT-ERF nominated Mark Holder
as his successor; Kent State University and the Kent State
University Foundation accepted and recognized Mark Holder as the
Donor’s Representative for a decade; and no ‘Emeritus Board’
exists under the agreement with authority to revoke the Donor’s
Representative’s status.
{¶12} Summary judgment is appropriate under Civ.R. 56(C) when (1) there is no
genuine issue of material fact remaining to be litigated; (2) the moving party is entitled to
judgment as a matter of law; and (3) it appears from the evidence that reasonable
minds can come to but one conclusion and, viewing the evidence in favor of the
nonmoving party, that conclusion favors the moving party. Temple v. Wean United,
Inc., 50 Ohio St.2d 317, 327 (1977).
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{¶13} The moving party bears the initial burden to inform the trial court of the
basis for the motion and to identify those portions of the record which demonstrate there
is no genuine issue of material fact to be resolved in the case. Dresher v. Burt, 75 Ohio
St.3d 280, 292 (1996). “If this initial burden is met, the nonmoving party then bears the
reciprocal burden to set forth specific facts which prove there remains a genuine issue
to be litigated, pursuant to Civ.R. 56(E).” Fed. Home Loan Mtge. Corp. v. Zuga, 11th
Dist. Trumbull No. 2012-T-0038, 2013-Ohio-2838, ¶12, citing Dresher, supra, at 293.
{¶14} We review a trial court’s decision on a motion for summary judgment de
novo. Grafton v. Ohio Edison Co., 77 Ohio St.3d 102, 105 (1996). Thus, this court
conducts an independent review of the evidence and arguments that were before the
trial court without deference to the trial court’s decision. Brown v. Cty. Commrs. of
Scioto Cty., 87 Ohio App.3d 704, 711 (4th Dist.1993).
{¶15} Initially, we note that appellant’s legal capacity to sue is in question.
There is no explanation in the second amended verified complaint as to the legal status
of the “planning committee.” The complaint itself alleges it was brought “at the direction
of” Dr. Holder and Mr. Catania. The Foundation and Mr. Finn referenced a lack of
capacity in their reply to appellant’s opposition to the motion to dismiss; however,
capacity was never addressed by the trial court. Nevertheless, while the capacity of
appellant as a “planning committee” to file suit has not been established, it is not
necessary to determine for disposition of this appeal.
{¶16} Under its first assignment of error, appellant asserts the trial court erred in
granting summary judgment in favor of the Foundation and Mr. Finn on the breach of
contract claim based on its finding that appellant lacked standing to sue on the contract.
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{¶17} Appellant claimed the Foundation and Mr. Finn breached its contractual
obligation by failing to fund the APFRS. As the moving parties for summary judgment,
the Foundation and Mr. Finn showed an element of the breach of contract claim could
not be established: i.e., appellant does not have standing to enforce the contract
because it is not a party to the agreement. Appellant responded that it does have
standing to enforce the contract as an intended third-party beneficiary and contends it
has created a genuine issue of material fact in this regard.
{¶18} “Generally, a contract is only binding on those who are parties to it. A
party cannot sue for performance or breach of a contract to which he is not a party or
privy.” Waterfield Mtge. v. Buckeye State Mut. Ins. Co., 2d Dist. Miami No. 93-CA-53,
1994 Ohio App. LEXIS 4343, *6 (Sept. 30, 1994), citing Delly v. Lehtonen, 21 Ohio
App.3d 90, 90 (11th Dist.1984). Intended third-party beneficiaries “have the rights of
parties in privity of contract and thus may bring suit for breach of contract or to enforce
performance.” Id. at *9, citing Grant Thornton v. Windsor House, Inc., 57 Ohio St.3d
158, 161 (1991) (contrasting incidental and intended third-party beneficiaries). It is
clear, from the face of the contract, that appellant was not an express party to the
Agreement. Therefore, appellant could survive summary judgment on the issue of
standing only if it established a genuine issue of material fact existed regarding its
status as an intended third-party beneficiary.
{¶19} Regarding third-party beneficiaries, the Ohio Supreme Court has adopted
the statement of law in Restatement of the Law 2d, Contracts Section 302 (1981). Hill
v. Sonitrol of Southwestern Ohio, Inc., 36 Ohio St.3d 36, 40 (1988). Section 302(1)(b)
provides: “[A] beneficiary of a promise is an intended beneficiary if recognition of a right
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to performance in the beneficiary is appropriate to effectuate the intention of the parties
and * * * the circumstances indicate that the promisee intends to give the beneficiary the
benefit of the promised performance.” Therefore, “unless the third person is an
intended beneficiary as here defined, no duty to him is created.” Id. at Comment e.
{¶20} The Supreme Court further explained this “intent to benefit test” by
adopting the following language:
‘Under this analysis, if the promisee * * * intends that a third party
should benefit from the contract, then that third party is an
“intended beneficiary” who has enforceable rights under the
contract. If the promisee has no intent to benefit a third party, then
any third-party beneficiary to the contract is merely an “incidental
beneficiary,” who has no enforceable rights under the contract.’
Hill, supra, at 40, quoting Norfolk & W. Co. v. United States, 641 F.2d 1201, 1208 (6th
Cir.1980); see also Huff v. FirstEnergy Corp., 130 Ohio St.3d 196, 2011-Ohio-5083,
¶11.
{¶21} “Ohio law thus requires that for a third party to be an intended beneficiary
under a contract, there must be evidence that the contract was intended to directly
benefit that third party.” Huff, supra, at ¶12. Courts generally presume that an
“intention to benefit a third party will be found in the language of the agreement.” Id.There is no requirement, however, that the third-party beneficiary be explicitly identified
in the contract. See, e.g., Daley v. Fryer, 3d Dist. Allen No. 1-14-48, 2015-Ohio-930,
¶33; First Fed. Bank of Ohio v. Angelini, 3d Dist. Crawford No. 3-07-04, 2007-Ohio-
6153, ¶11.
{¶22} “If a contract is clear and unambiguous, then its interpretation is a matter
of law and there is no issue of fact to be determined.” Inland Refuse Transfer Co. v.
Browning-Ferris Indus. of Ohio, Inc., 15 Ohio St.3d 321, 322 (1984), citing Alexander v.
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Buckeye Pipe Line Co., 53 Ohio St.2d 241, 246 (1978). “Only when the language of a
contract is unclear or ambiguous, or when the circumstances surrounding the
agreement invest the language of the contract with a special meaning will extrinsic
evidence be considered in an effort to give effect to the parties’ intentions.” Shifrin v.
Forest City Ents., Inc., 64 Ohio St.3d 635 (1992), at syllabus.
{¶23} Here, with emphasis added, paragraph 3 of the Agreement states:
3. The funds shall be used for the following purposes:
a. To provide financial support of at least $40,000 per year to
continue and preserve the tradition that the Donor started with
its annual symposium dedicated to futures and options.
b. To provide financial support for the publication of the
proceedings of the symposium.
c. To provide financial support for the Master of Science in
Financial Engineering (‘MSFE’) Program and supporting
components at Kent State University, but only to the extent that
the use of funds for this purpose will not detract from the
Foundation’s ability to fund the annual symposium on an
ongoing basis.
{¶24} It is undisputed that the APFRS had been organized and managed prior to
the Agreement as a result of the efforts of CBOT-ERF, the Donor. In order to “continue
and preserve the tradition that the Donor started,” the only reasonable interpretation of
“its annual symposium” is that it refers to the APFRS. It was also the only symposium
to ever receive funding via this contract. However, nowhere in the Agreement does it
state or imply that appellant, as a “planning committee,” was entitled to be the sole
organizer or manager of the symposium.
{¶25} Further, paragraphs 10 and 14 of the Agreement state the following:
10. If State or Federal laws, actions, dissolutions of Kent State
University or other events render expenditures unnecessary or
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impracticable for the purposes and objectives specified in this
Agreement and the Donor or Donor’s Representative * * * does not
provide alternative feasible directions as to use of the CBOT-ERF
Operating and Quasi-Endowed Funds within twelve (12) months
after notice of the need for modification is mailed by the Foundation
to the Donor/Donor’s Representative’s last known address, the
balances of the CBOT-ERF Operating and Quasi-Endowed Funds
may be expended by the Directors of the Foundation for support of
such programs that further the purposes for which the CBOT-ERF
Operating and Quasi-Endowed Funds were established.
***
14. * * * The Foundation may accept without further inquiry that
any Donor’s Representative designated by the Emeritus Board has
the authority to bind the Emeritus Board for purposes of complying
with and enforcing the terms of this Agreement. [Emphasis added.]
Again, there is no reference to appellant, and appellant has not provided any evidence
to suggest it has any contractual right to sponsor, manage, or organize the symposium.
{¶26} Given these contractual provisions, we conclude the Foundation and
CBOT-ERF unambiguously entered into the Agreement with no intention to directly and
primarily benefit appellant and with no intention to bestow control of the APFRS upon
appellant. Appellant has not established a genuine issue of material fact exists
regarding any legal right, pursuant to this Agreement, to sponsor the APFRS. Any
benefit appellant may have received from this Agreement was therefore incidental, as a
matter of law, and does not have standing to sue on the contract.
{¶27} Appellant’s first assignment of error is without merit.
{¶28} Under its second assignment of error, appellant asserts the trial court
erred in granting summary judgment in favor of the Foundation and Mr. Finn on the
breach of contract claim based on its finding that there was no breach. The Foundation
and Mr. Finn correctly point out, however, that their motion for summary judgment did
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not present any argument regarding breach, and the trial court did not reach the issue of
breach because it found appellant did not have standing to enforce the contract. This
argument is therefore not properly before us. Further, based upon our disposition of the
first assignment of error, this issue is moot.
{¶29} Appellant’s second assignment of error is without merit.
{¶30} Under its fifth assignment of error, appellant asserts the trial court erred in
granting summary judgment in favor of the University and Mr. Finn, as its employee.
{¶31} Appellant claimed the University and Mr. Finn breached a contractual
obligation by failing to order the Foundation to fund APFRS. As the moving parties for
summary judgment, the University and Mr. Finn showed an essential element of
appellant’s breach of contract claim could not be established: i.e., the University and Mr.
Finn were not parties to the agreement and had no direct control over the Foundation.
This was sufficient to shift the burden to appellant to establish the existence of a
genuine issue of material fact. Appellant maintained the University can be held liable
for breach of contract as the Foundation’s principal. Appellant did not provide any
evidentiary material in support of this argument, however, and thus has not established
a genuine issue of material fact exists as to the University and Mr. Finn’s liability on the
contract.
{¶32} Appellant’s fifth assignment of error is without merit.
{¶33} Under its fourth assignment of error, appellant asserts the trial court erred
in granting summary judgment in favor of the Foundation on the breach of fiduciary duty
claim.
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{¶34} To succeed on a claim for breach of fiduciary duty, a plaintiff must
establish the existence of a fiduciary duty, a breach of that duty, and an injury
proximately resulting therefrom. Hurst v. Ent. Title Agency, Inc., 157 Ohio App.3d 133,
2004-Ohio-2307, ¶39 (11th Dist.). A fiduciary relationship exists when “‘special
confidence and trust is reposed in the integrity and fidelity of another and there is a
resulting position of superiority or influence, acquired by virtue of this special trust.’” Ed
Schory & Sons, Inc. v. Francis, 75 Ohio St.3d 433, 442 (1996), quoting In re Pratt, 40
Ohio St.2d 107, 115 (1974); see also Vinecourt Landscaping Inc. v. Kleve, 11th Dist.
Geauga No. 2013-G-3142, 2013-Ohio-5825, ¶35.
{¶35} The Foundation, as the party moving for summary judgment, argued it
owed no duty to appellant and contended appellant could not establish the existence of
such a duty. Appellant claims a fiduciary relationship existed because “the KSU
Foundation and KSU were entrusted with the special role of providing [appellant] with
the funding it needed to plan and organize the Symposium.” Appellant further argues
the Foundation breached its fiduciary duty when it refused to financially support APFRS.
{¶36} In support of this claim, appellant points to the terms of the Agreement
and the testimony from Mr. Holder and Mr. Catania that the Agreement was breached.
As we held above, however, appellant does not have standing to assert a claim that the
Agreement was breached. Further, appellant apparently solicited other donors of the
Foundation and claimed a breach as to those donors. Appellant does not have standing
to argue that a fiduciary duty was owed, and breached, as to other donors of the
Foundation. Therefore, appellant has not established a genuine issue of material fact
exists as to a fiduciary duty owed by the Foundation.
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{¶37} Appellant’s fourth assignment of error is without merit.
{¶38} Under its third and sixth assignments of error, appellant essentially asserts
the trial court erred by weighing the evidence and making factual findings, an improper
exercise on summary judgment. Neither our holding, nor that of the trial court, that
appellant lacked standing to bring its claims requires a “weighing” of any disputed
factual issues. As a result, these assignments of error are not well taken.
{¶39} Appellant’s third and sixth assignments of error are without merit.
{¶40} For all of the foregoing reasons, the judgment of the Portage County Court
of Common Pleas is affirmed.
DIANE V. GRENDELL, J.,
THOMAS R. WRIGHT, J.,
concur.
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