Cintas Corp. v. Findlay Chrysler Dodge Jeep Ram, Inc. , 94 N.E.3d 606 ( 2018 )

[Cite as Cintas Corp. v. Findlay Chrysler Dodge Jeep Ram, Inc. , 2018-Ohio-455.]
IN THE COURT OF APPEALS OF OHIO
THIRD APPELLATE DISTRICT
HANCOCK COUNTY
CINTAS CORPORATION,
PLAINTIFF-APPELLEE, CASE NO. 5-17-14
v.
FINDLAY CHRYSLER DODGE,
JEEP, RAM, INC., OPINION
DEFENDANT-APPELLANT.
Appeal from Hancock County Common Pleas Court
Trial Court No. 2016 CV 00021
Judgment Affirmed
Date of Decision: February 5, 2018
APPEARANCES:
Ian A. Weber for Appellant
Michael S. Clawson for Appellee
Case No. 5-17-14
ZIMMERMAN, J.,
{¶1} This appeal is brought by Findlay Chrysler Dodge, Jeep, Ram, Inc.,
Defendant-Appellant herein, from the judgment of the Hancock County Court of
Common Pleas, finding in favor of Cintas Corporation, Plaintiff-Appellee, in a
breach of contract action. On appeal, Appellant asserts that the trial court abused
its discretion: 1) by finding that there was a valid contract and by finding that its
employee, Justin Lobdell, had the apparent authority to enter into the contract that
is the subject of this case; 2) by enforcing the liquidated damages clause in the
contract; and 3) by failing to award appropriate damages by permitting the Appellee
to collect under the contract’s liquidated damages clause. For the reasons that
follow, we affirm the decision of the trial court.
Factual Background
{¶2} The Cintas Corporation (“Cintas” or “Appellee”) is a foreign
corporation with a business location in Perrysburg, Ohio that offers custom
uniforms to businesses for rent or for purchase. Findlay Chrysler Dodge, Jeep, Ram,
Inc. (“Appellant”) is an automobile dealership located in Findlay, Ohio.
{¶3} In September or October of 2015, Ryan Caudill (“Caudill”), a Cintas
Sale Representative, contacted Appellant’s business to discuss a uniform service
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contract.1 Caudill contacted Justin Lobdell (“Lobdell”), Appellant’s Service
Manager, to arrange a time to discuss such a contract.
{¶4} Thereafter, Caudill and Lobdell met at Appellant’s dealership wherein
Lobdell advised Caudill that Appellant had an existing service contract with City
Laundry for towels, mats, and rugs, which Appellant desired to continue. However,
Lobdell informed Caudill that Appellant was seeking a new style of business
uniform, and therefore, was interested in pursuing a service contract with Appellee.
As a result of their meeting, Caudill and Lobdell commenced negotiations for
Appellee to provide Appellant with business uniforms. As part of negotiations,
Lobdell provided Caudill with a copy of an invoice from City Laundry so Caudill
could analyze its pricing structure. On October 14, 2015, Caudill and Lobdell
finalized negotiations by entering into a sixty (60) month uniform service contract.
{¶5} Testimony (at trial) revealed that Lobdell reviewed the service contract
electronically on a touch screen tablet furnished him by Caudill. At trial, Caudill
testified that after Lobdell examined the agreement on the tablet, Caudill asked
Lobdell if he had any questions, and Lobdell responded in the negative. Then,
Caudill checked the box on the service contract indicating that Lobdell had read the
1
For ease of analysis, we use “contract” and “agreement” interchangeably.
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terms and conditions of the contract. Lobdell then signed the agreement
electronically on October 14, 2015.2
{¶6} After entering into the service contract, Caudill returned to Appellant’s
dealership several times to measure its employees for uniforms. Caudill testified
that during his visits he always wore a shirt that identified him as a Cintas employee.
Further, Caudill testified that during one of his visits at the dealership he met with
Nick Brunotte (“Brunotte”), Appellant’s Operations Director, and discussed the
process of measuring employees for uniforms. At no point during the contract
negotiations or during the uniform fitting process did Lobdell, Brunotte, or any other
employee of Appellant question Caudill’s status as a Cintas representative; for being
on the premises; or for measuring uniforms for Appellant’s employees.
{¶7} After completing his measurements, Caudill ordered and delivered the
new uniforms to the dealership. However, after the first delivery, Lobdell requested
Caudill to provide specialized “Mopar” shirts for the employees because the
dealership owner wanted a different style shirt. Further, and as part of the service
contract, lockers bearing Cintas’ logo were delivered and installed on November 4,
2015 by Appellee at Appellant’s dealership to house the uniforms.
2
Lobdell denied this chain of events at trial, claiming that he was pressured into signing the contract and that
he never read its terms and conditions. He further testified that it was the first time (at trial) that he had seen
the service contract that he signed.
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{¶8} At some point, Lobdell asked Caudill if different uniform jackets could
be ordered. However, before the order was placed, City Laundry became aware of
the service contract between Appellant and Appellee, and threated to sue Appellant
for contracting with Appellee for uniforms. Thereafter, and shortly after learning
that it would be subject to legal action by City Laundry, Appellant advised Appellee
that it was terminating the uniform service agreement, because Lobdell lacked the
authority to enter into it. Appellee attempted to resolve the conflict, but Appellant
refused and unilaterally terminated the agreement.
Procedural History
{¶9} This case commenced with Appellee filing a complaint for money
damages and complaint for arbitration in the Hancock County Common Pleas Court
on January 19, 2016. (Doc. No. 1). Appellee’s complaint alleged that Appellant
breached its contract with Appellee, requesting $21,394.21 in damages. (Id.).
Appellee also requested a stay of the proceedings because the contract with
Appellant contained a mandatory arbitration provision. (Id.).
{¶10} On February 18, 2016, Appellant filed its answer in the trial court
denying Appellee’s allegations. (Doc. No. 15). The Appellant’s answer also
contained several affirmative defenses, including the defense that the contract was
void because an authorized representative of the Appellant failed to sign the
contract. (Doc. No. 15).
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{¶11} On April 27, 2016, the trial court scheduled mediation between the
parties for July 14, 2016. (Doc. No. 21). At the mediation hearing no business
representative appeared for Appellant, just its attorney. (Doc. No. 23). Thereupon,
limited discussions occurred and no settlement was reached. (Id.).
{¶12} On October 20, 2016, Appellee filed its motion for summary judgment
pursuant to Civ.R. 56 in the trial court. (Doc. Nos. 28 & 29). Appellant responded
to the motion, arguing that summary judgment was inappropriate because issues of
material fact were present, precluding the trial court from entering summary
judgment in favor of Appellee. (Doc. Nos. 31 & 32). The trial court denied
Appellee’s motion for summary judgment on November 21, 2016. (Doc. No. 35).
{¶13} A one-day bench trial occurred in the trial court on February 24, 2017.
At the conclusion of the trial the parties were given an opportunity to submit post-
trial memorandums on the contested issues. (Doc. No. 37). Each party filed a
memorandum. (Doc. Nos. 39-40).
{¶14} On May 16, 2017, the trial court issued its decision awarding judgment
to Appellee for $21,394.21 on its breach of contract claim. (Doc. No. 42).
Specifically, the trial court found that the testimony and evidence presented at trial
did not support Appellant’s defense that Lobdell lacked the authority to bind
Appellant to the service contract, and damages were awarded based on the
liquidated damages clause contained in the contract. (Id.). On November 24, 2017,
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the trial court filed its final judgment entry, granting Appellee judgment in the
amount of $21,394.21, plus costs. (Doc. No. 42). From this final judgment entry
Appellant appeals, and presents the following assignments of error for our review:
ASSIGNMENT OF ERROR NO. I
THE TRIAL COURT AUBSED [SIC] ITS DISCRETION BY
FINDING THAT THERE WAS A VALID CONTRACT AND
APPELLANT’S EMPLOYEE, JUSTIN LOBDELL HAD THE
APPARENT AUTHORITY TO ENTER INTO THE
CONTRACT THAT IS THE SUBJECT OF THIS CASE.
ASSIGNMENT OF ERROR NO. II
THE TRIAL COURT AUBSED [SIC] ITS DISCRETION BY
ENFORCING THE LIQUIDATED DAMAGES CLAUSE IN
PARAGRAPH 11 OF THE CONTRACT.
ASSIGNMENT OF ERROR NO. III
THE TRIAL COURT AUBSED [SIC] ITS DISCRETION BY
FAILING TO PROPERLY AWARD THE APPROPRIATE
DAMAGES AND ALLOWING THE APPELLEE TO
COLLECT UNDER THE LIQUIDATED DAMAGES CLAUSE.
{¶15} On appeal, Appellant challenges the trial court’s finding that Lobdell
had the apparent authority to enter into a service contract with Appellee. Further,
Appellant argues that even if Lobdell did have the apparent authority to enter into
the contract with Appellee, the trial court erred by enforcing the liquidated damages
clause contained in the contract.
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Appellant’s First Assignment of Error
{¶16} In its first assignment of error, Appellant asserts that the trial court
abused its discretion by finding that Appellant’s employee had the apparent
authority to enter into the contract with Appellee. For the reasons that follow, we
disagree.
Standard of Review
{¶17} Appellant argues its first assignment of error under an “abuse of
discretion” standard of review. However, we find otherwise. Since the issue before
us is whether Lobdell had the apparent authority to enter into a contract with
Appellee, we will analyze this assignment of error under the manifest weight of the
evidence standard of review.3 See generally, Seasons Coal Co. v. City of Cleveland,
10 Ohio St.3d 77, 79, 461 N.E.2d 1273 (1984). As such, “‘[j]udgments supported
by some competent, credible evidence going to all the essential elements of the case
will not be reversed by a reviewing court as being against the manifest weight of the
evidence.’” Id. at 80, quoting C.E. Morris Co. v. Foley Const. Co., 54 Ohio St.2d
279, 376 N.E.2d 578 (1978), syllabus. In analyzing a trial court’s decision, “it is
3
While we could analyze this assignment of error under a sufficiency of the evidence standard of review,
pursuant to Eastley v. Volkman, we choose to analyze this assignment under a manifest weight of evidence
standard of review, because on appeal Appellant is challenging the trial court’s interpretation of the greater
amount of credible evidence. See, Eastley v. Volkman, 132 Ohio St.3d 328, 2012-Ohio-2179, 972 N.E.2d
517, ¶ ¶ 10-12.
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also important that * * * a court of appeals be guided by a presumption that the
findings of the trier-of-fact were indeed correct.” Id. at 79-80.
Analysis
Existence of a Contract
{¶18} “‘A contract is generally defined as a promise, or a set of promises,
actionable upon a breach.’” Kostelnik v. Helper, 96 Ohio St.3d 1, 2002-Ohio-2985,
770 N.E.2d 58, ¶ 16 quoting Perlmuter Printing Co. v. Strome, Inc. 436 F.Supp.
409, 414 (N.D.Ohio 1976). “‘Essential elements of a contract include an offer,
acceptance, contractual capacity, consideration * * *, a manifestation of mutual
assent and legality of object and of consideration.’” Id. quoting Perlmuter, supra.“A meeting of the minds as to the essential terms of the contract is a requirement to
enforcing the contract.” Id.{¶19} To determine whether a valid contract existed, the Court must examine
the language contained within the contract. The purpose of contract construction is
to realize and give effect to the intent of the parties. Graham v. Drydock Coal Co.,
76 Ohio St.3d 311, 313, 1996-Ohio-393, 667 N.E.2d 949. The intent of the parties
is presumed to reside in the language they choose to use in their agreement. Id.“Extrinsic evidence is admissible to ascertain the intent of the parties when the
contract is unclear or ambiguous, or when circumstances surround the agreement
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give the plain language special meaning.” Id. at 313-14. Lastly, courts are to
construe a contract against the party who drafted it. Id.
{¶20} Appellant claims that the trial court incorrectly found that there was a
valid contract between the parties. However, Appellant does not suggest that the
contract was invalid because its language was ambiguous or unclear,4 rather,
Appellant asserts that the contract was invalid because Lobdell did not know what
he was signing. In support of this assertion, Appellant directs us to Lobdell’s
testimony on direct examination, wherein he testified that he was not provided with
a copy of the contract prior to signing it. (02/24/17 Tr. at 132). Lobdell also testified
that he never signed any contracts for Appellant, and his employment duties were
limited to signing service and/or delivery slips. (Id. at 139). Finally, Lobdell
testified that he had no discussion with Cintas regarding the terms of the service
contract. (Id. at 142).
{¶21} However, on cross-examination, Lobdell conceded that he had seen at
least the fourth page of the service contract provided by Cintas, as his signature
appeared on said page. (Id. at 144; see also, Appellee Ex. No. 2). Additionally, the
contract paragraph immediately above Lobdell’s signature contains the following
language:
By signing this agreement, the customer waives his/her signature as a
requirement for services rendered. The customer agrees to pay all
4
See generally, Kelly v. Med. Life Ins. Co., 31 Ohio St.3d 130, 132, 509 N.E.2d 411 (1987).
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services in full without the signature on their weekly invoice(s).
Customers with multiple weekly invoices have the option to waive
their signature on all but one invoice or may waive their signature on
all invoices. If the customer chooses to retain signature authority, the
respective SSR must be able to contact the customer to obtain a
delivery signature.
(Id.; Appellee Ex. No. 2). Further, the line above Lobdell’s signature states: “I agree
that I am authorized to sign on behalf of the Findlay Chrysler Dodge Jeep.”
(Emphasis added). (Id.). Moreover, Lobdell testified on cross that he had some
discussions with Caudill regarding the service contract, conceding that he agreed to
a $200 per week obligation to Cintas for a period of time. (Id. at 165).
{¶22} Appellee also introduced into evidence a copy of Appellant’s City
Laundry agreement, which contained Lobdell’s signature, revealing that Lobdell
was authorized to sign that contract on behalf of Appellant. (Id. at 150; see also
Appellee Ex. No. 8).
{¶23} In addition to Lobdell’s conflicting testimony (regarding his lack of
knowledge of the service contract), Appellee offered the testimony of Caudill in its
case in chief. Caudill testified that after he and Lobdell first met to discuss a uniform
service agreement, they exchanged e-mails to negotiate the terms of the service
contract. (Id. at 29). Caudill identified an email of October 7, 2015, between he
and Lobdell, verifying their negotiations. (Id.; Appellee Ex. 1). Caudill further
testified that before Lobdell signed the service contract, he reviewed the terms and
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conditions of it with Lobdell, and presented the agreement in electronic form (to
Lobdell) for him to read and sign. (Id. at 32).
{¶24} Appellant’s assertion that the service contract was invalid because
Lobdell did not read it is inconsistent with the testimony and the evidence produced
at trial. Further, even if Lobdell failed to completely read the contract, it is a long-
standing contract principle that “parties to contracts are presumed to have read and
understood them and that a signatory is bound by a contract that he or she willingly
signed.” Preferred Capital, Inc. v. Power Eng. Group, Inc., 112 Ohio St.3d 429,
2007-Ohio-257, 860 N.E.2d 741, ¶ 10; De Camp v. Hamma, 29 Ohio St. 467, 471-
72 (1876). Moreover, since there is competent and credible evidence in the record
supporting that Lobdell freely signed the service contract with Cintas, we find no
error with the trial court’s decision that a valid contract existed between the parties.
Apparent Authority
{¶25} Next, Appellant argues that even if there was a valid contract, Lobdell
did not have the authority to sign it because he was not held out by Appellant as
having such (apparent) authority.
{¶26} It is well established that “under an apparent-authority analysis, the
acts of the principal, rather than the agent, must be examined.” Groob v. KeyBank,
108 Ohio St.3d 348, 2006-Ohio-1189, 843 N.E.2d 1170, ¶ 56 citing Master Consol.
Corp. v. BancOhio Natl. Bank, 61 Ohio St.3d 570, 576-77, 575 N.E.2d 817 (1991).
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“For the principle to be liable, the principal’s acts must be found to have clothed the
agent with apparent authority.” Id. In Ohio, courts use a two-part test to determine
whether apparent authority exists. Logsdon v. Main-Nottingham Inv. Co., 103 Ohio
App. 233, 241-42, 141 N.E.2d 216 (2nd Dist.1956). Specifically, a party claiming
apparent authority must show:
(1) [t]hat the principal held the agent out to the public as possessing
sufficient authority to embrace the particular act in question, or
knowingly permitted him to act as having such authority; and (2) taht
[sic] the person dealing with the agent knew of the facts and acting in
good faith had reason to believe and did believe that the agent
possessed the necessary authority.
Id. Accordingly, we will analyze each factor in turn.
Principal held the agent out to the public as possessing sufficient authority to
embrace the particular act in question, or knowingly permitted
him to act as having such authority
{¶27} Kable Darrow (“Darrow”) is the sole owner of Appellant’s dealership.
(2/24/2017 Tr. at 168). Darrow testified that it is his company’s protocol for him to
review contracts if there is a contract to be signed. In support of this contention,
Darrow referenced the City Laundry agreement, which Lobdell signed, testifying
that Lobdell had a discussion with him prior to Lobdell’s signing the addendum to
that agreement. (Id. at 172; Appellee Ex. No. 8). Darrow also testified that the City
Laundry Agreement was signed by his father and general manager, Dan Darrow,
with his permission and knowledge. (Id. at 170-71).
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{¶28} Moreover, in determining the authority that Darrow held Lobdell to
possess to the public, the evidence and testimony supports that Lobdell had authority
to enter into contracts. Specifically, Darrow testified that Lobdell was able to sign
warranty claims and documents relative to day-to-day operations, such as the
purchase of oil, which financially obligated Darrow. (Id. at 187). Further, and as
previously discussed, Darrow authorized Lobdell to sign the addendum to the City
Laundry contract. (Id. at 150). Accordingly, despite Darrow’s assertion that it was
his policy to permit Lobdell and other employees to only sign contracts with his
(Darrow’s) knowledge and permission, there was an absence of testimony and
evidence supporting that the public was informed of such policy.
{¶29} As to the contract with Cintas, Darrow testified (that) he was aware
(that) Cintas had come to the dealership to discuss uniforms with Lobdell and that
Cintas provided his dealership with uniforms after November 4, 2015. (Id. at 174;
181). Nevertheless, at no time prior to being threatened with a lawsuit from City
Laundry, did Darrow tell Caudill that Lobdell was without authority to sign the
service contract on Appellant’s behalf.
{¶30} In analyzing the actions of the principal (i.e. Darrow), we find that
competent and credible evidence supports the trial court’s determination that
Darrow “knowingly permitted Lobdell to act as having [the necessary] authority” to
sign the Cintas contract, consistent with the apparent authority analysis set forth in
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Master Consolidated Corporation v. BancOhio National Bank. (Doc. No. 41 at 9);
Master Consol. Corp., 61 Ohio St.3d 570, 576-77, 575 N.E.2d 817 (1991). And,
because there is competent and credible evidence to support that Darrow clothed
Lobdell with the appearance of authority to the public, we cannot say that the trial
court’s ruling on this prong of analysis was against the manifest weight of the
evidence.
The person dealing with the agent knew of the facts and acting
in good faith had reason to believe/did believe that
the agent possessed the necessary authority
{¶31} In our review of the record, we find that competent and credible
evidence exists to support Caudill’s actions in believing that Lobdell possessed the
necessary authority to enter into the Cintas agreement. Specifically, when Caudill
first contacted Appellant’s dealership, he was directed to Lobdell by the receptionist
as the person who handled the dealership’s uniforms. (Id. at 24). Caudill testified
that when meeting with Lobdell, he was informed (by Lobdell) of the existing
service contract with City Laundry. (Id. at 25). And, after this meeting, Caudill and
Lobdell exchanged emails and had discussions at the dealership to negotiate the
terms of the service contract. (Id. at 29; Appellee’s Ex. No. 1). Ultimately, Lobdell
signed a contract which specifically provided that “I agree that I am authorized to
sign on behalf of the Findlay Chrysler Dodge Jeep.” (Id. at 33, Appellee’s Ex. No.
2). Additionally, and after the service contract was signed, it was Lobdell who
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contacted Caudill to change the order because the owner wanted custom shirts. (Id.
at 35). And finally, Caudill’s testimony reveals that after he met with Brunotte,
Appellant’s Operations Director, no concerns were voiced regarding Cintas
providing uniforms or with Lobdell having the authority to enter into a contract. (Id.
at 27).
{¶32} Based upon the actions of Lobdell, Brunotte, and Appellant’s various
employees, the evidence in the record supports the trial court’s finding that Caudill
was acting in good faith in believing that Lobdell possessed sufficient authority to
enter into a contract on behalf of Appellant. As such, there is competent, credible
evidence to support the trial court’s determination that the combined conduct of
Darrow, Brunotte, and Lobdell was sufficient to establish Caudill’s good faith belief
that Lobdell had the authority to sign a contract on behalf of Appellant.
Contract Ratification
{¶33} Even assuming, arguendo, that Lobdell lacked apparent authority to
enter into the service contract with Cintas, we find that Darrow’s behavior ratified
the contract that Lobdell entered into. “‘Ratification’ is a confirmation of a
previous, voidable act that operates to give the act the effect it was originally
intended to have.” Garrison v. Daytonian Hotel, 105 Ohio App.3d 322, 326, 663
N.E.2d 1316 (2nd Dist.1995). Furthermore, “it is equivalent to a previous
authorization and relates back in time to when the act ratified was done.” Id. It is
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“a well-settled doctrine of the law of agency that a principal may ratify the acts of
its agent performed beyond the agent’s scope of authority.” Penn Traffic Co. v. AIU
Ins. Co., 99 Ohio St.3d 227, 2003-Ohio-3373, 790 N.E.2d 119, ¶ 16 quoting State
v. Warner, 55 Ohio St.3d 31, 65, 564 N.E.2d 18 (1990). Specifically, Darrow
testified that he was aware that Cintas had been at the dealership to discuss providing
uniform rental services. (2/24/2017 Tr. at 174). Furthermore, Darrow admitted that
he was aware that Cintas was providing uniforms for Appellant’s dealership and
paid Cintas for multiple weeks of service. (Id. at 181). Since Darrow was aware of
and received the benefit of Cintas’ services for several weeks without objection, and
complied with the obligations under the contract, we find that that Darrow ratified
the service contract between Appellant and Cintas.
{¶34} Accordingly, we overrule Appellant’s first assignment of error.
Appellant’s Second and Third Assignments of Error
{¶35} In its second and third assignments of error, Appellant argues that the
trial court abused its discretion by enforcing the liquidated damages clause in the
service contract and by allowing the Appellee to collect such damages. For the
reasons that follow, we disagree.
Standard of Review
{¶36} While Appellant asserts that the trial court abused its discretion under
its second and third assignments, this asserted standard of review is misplaced.
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Specifically, “the question of whether a stipulation in a contract constitutes
liquidated damages, a penalty, or forfeiture is a question of law.” Cintas Corp. v.
Joel Lehmkuhl Excavating, 2nd Dist. Montgomery No. 19613, 2003-Ohio-2958, ¶
12 citing Lake Ridge Academy v. Carney, 66 Ohio St.3d 376, 380, 613 N.E.2d 183(1993). See also, Boone Coleman Constr., Inc. v. Piketon, 145 Ohio St.3d 450,
2016-Ohio-628, 50 N.E.3d 502, ¶ 10. Accordingly, we will review questions of law
de novo. Id.Analysis
{¶37} “Parties are generally free to enter into contracts that include a
provision which apportion damages in the event of default.” Id. However, for
public policy purposes, parties may not contract for liquidated damages if they
constitute a penalty. Id. at ¶ 13 citing Westbrock v. W. Ohio Health Care Corp., 137
Ohio App.3d 304, 322, 738 N.E.2d 799 (2nd Dist.2000).
{¶38} In Ohio, courts use a three-part test to determine whether a liquidated
damages provision is enforceable:
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 amount 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.
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Samson Sales, Inc. v. Honeywell, Inc., 12 Ohio St.3d 27, 465 N.E.2d 392 (1984),
syllabus citing Jones v. Stevens, 112 Ohio St. 43, 146 N.E. 894 (1925), paragraph
two of the syllabus.
{¶39} In this case, it is uncontroverted that the contract permitted liquidated
damages in the event of cancellation. Specifically, paragraph 11 of the parties’
contract states:
11. Additional customer employees, products and services may be
added to this agreement and shall become part of and subject to the
terms hereof this agreement, and subject to all of its provisions. If this
agreement is terminated early, the parties agree that the damages
sustained by Company will be substantial and difficult to ascertain.
Therefore, if this agreement is terminated by Customer prior to the
application expiration date for any reason other than documented
quality of service reasons which are not cured as set forth above, or
terminated by Company for cause at any time, Customer will pay to
Company, as liquidated damages and not as a penalty, the greater of
50% of the average weekly invoice total multiplied by the number of
weeks remaining in the unexpired term, or buy back all garments and
other products allocated to Customer at the then current replacement
values. Customer shall also be responsible for any unpaid charges on
Customers account prior to termination.
(Emphasis added). (02/24/2017 Tr. at 31; Appellee Ex. No. 2 at 3).
{¶40} The plain reading of the above language suggests that Cintas explicitly
informed Appellant that the liquidated damages provision was not a penalty. (Id.)
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Furthermore, we find the terms of this provision to be clear and unambiguous on its
face.5
{¶41} In our review of the record, we find that Appellee presented evidence
to the trial court that the damages would be difficult to prove. Specifically,
Christopher Sherman (“Sherman”), Appellee’s Market Manager, testified that
damages would be uncertain and difficult to prove due to variances in the costs of
fuel, delivery, garments, and changes in the customer. (Id. at 96). Sherman further
testified that Cintas was not able to resell the uniforms because of their customized
nature. (Id. at 106).
{¶42} We find the evidence supports that the contract in question was not
otherwise unreasonable or unconscionable. See generally, Physicians Anesthesia
Serv., Inc. v. Burt, 1st Dist. Hamilton No. C-060761, 2007-Ohio-6871, ¶ 18. The
evidence supports that Caudill advised Lobdell of the terms and conditions of the
contract, and that Lobdell had signed other contracts on behalf of Appellant prior to
executing the Cintas agreement. (02/24/2017 Tr. at 72). Additionally, Caudill
testified that Lobdell reviewed the entire contract, including the terms and
conditions prior to signing it. (Id. at 76). While Lobdell testified to a different
5
It is of note that the 2nd District Court of Appeals held that a liquidated damages provision involving a
contract between Cintas and a third party, containing substantially the same wording as the current contract
before the Court, was clear and demonstrated the parties’ intent to be bound by such provision. Cintas Corp.,
2nd Dist. Montgomery No. 19613, 2003-Ohio-2958, ¶ 21. Additionally, it is also of note that Darrow testified
that the City Laundry Agreement he approved contains the same liquidated damages language and calculation
formula as the Cintas agreement currently before this Court. (02/2/2015 Tr. at 182; Appellee Ex. No. 8).
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version of events surrounding the signing of the contract, a review of his testimony
reveals inconsistencies, and in regard to these inconsistencies, we find that the trial
court was in the superior position to judge witness credibility as to whether or not
Lobdell was indeed credible. See generally, State v. Bostock, 4th Dist. Athens No.
11CA23, 2012-Ohio-3324, ¶ 13 (the trial court is in the best position to determine
witness credibility). Thus, we find that the contract is consistent with what the
parties intended following a breach.
{¶43} While Appellants argue that Appellee should be limited to their actual
damages, such argument is contrary to law. “‘[I]f a liquidated-damages clause is
otherwise valid, the party seeking such damages need not prove that actual damages
resulted from a breach.’” Physicians Anesthesia Serv., Inc., 1st Dist. Hamilton No.
C-060761, 2007-Ohio-6871, ¶ 20 quoting Sec. Fence Group, Inc. v. Cincinnati, 1st
Dist. Hamilton No. C-020837, 2003-Ohio-5263, ¶ 8. Appellant attempts to limit
the damages to the four-week period in which services were rendered, arguing that
the uniforms were returned and therefore reusable by Appellee. However, for the
reasons set forth above, this assertion is inconsistent with the testimony produced
by Appellee at trial. Because the liquidated damages provision permitted Appellee
either recovery of 50% of the average weekly volume multiplied by the number of
remaining weeks in the contract, or the current replacement value, whichever is
greater, the trial court was able to calculate damages consistent with such formula.
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(See generally, Doc. No. 41 at 12). Therefore, we find no error of law with respect
to the trial court’s calculation of the liquidated damages per that provision in the
contract.
{¶44} Thus, we hold that the liquidated damages clause in the contract was
not a penalty, was not ambiguous, and is enforceable as written. Furthermore, we
find that the trial court correctly awarded damages based on the plain language
provided in the contract. Accordingly, we overrule Appellant’s second and third
assignments of error.
{¶45} Having found no error prejudicial to the Appellant herein in the
particulars assigned and argued, we overrule Appellant’s first, second, and third
assignments of error and affirm the judgment of the Hancock County Common
Pleas Court.
Judgment Affirmed
WILLAMOWSKI, P.J. and SHAW, J., concur.
/jlr
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