Siltstone Servs., L.L.C. v. Guernsey Cty. Community Dev. Corp. , 2020 Ohio 3878 ( 2020 )

[Cite as Siltstone Servs., L.L.C. v. Guernsey Cty. Community Dev. Corp., 2020-Ohio-3878.]
COURT OF APPEALS
GUERNSEY COUNTY, OHIO
FIFTH APPELLATE DISTRICT
SILTSTONE SERVICES, LLC JUDGES:
Hon. William B. Hoffman, P.J.
Plaintiff-Appellant Hon. John W. Wise, J.
Hon. Earle E. Wise, Jr., J.
-vs-
Case No. 19CA000049
THE GUERNSEY COUNTY
COMMUNITY DEVELOPMENT
CORPORATION, et al.,
Defendants-Appellees O P I N IO N
CHARACTER OF PROCEEDINGS: Appeal from the Guernsey County Court
of Common Pleas, Case No.
17CV000611
Affirmed in part, reversed and remanded
JUDGMENT: in part
DATE OF JUDGMENT ENTRY: July 27, 2020
APPEARANCES:
For Plaintiff-Appellant For Defendants-Appellees Guernsey
County Community Development Corp.
ANDREW LYCANS MARIBETH MELUCH
Critchfield, Critchfield & Johnston, LTD Isaac Wiles Burkholder & Teetor, LLC
225 North Market Street Two Miranova Place – Ste. #700
P.O. Box 599 Columbus, Ohio 43215
Wooster, Ohio 44691
For Defendants-Appellees Synergy Land
MANMEET S. WALIA Company, LLC and Whispering Pines
Siltstone Services, LLC Land Company, LLC
1801 Smith Street – Ste. #2000
Houston, TX 77002 CRAIG G. PELINI & PAUL B. RICARD
Pelini, Campbell & Williams, LLC
8040 Cleveland Ave., NW – Ste. #400
North Canton, Ohio 44720
Guernsey County, Case No. 19CA00049 2
For Defendant-Appellee
Ohio Public Works Commission
DAVID YOST
Attorney General of Ohio
LIDIA MOWAD
JAMES PATTERSON
RACHEL HUSTON
CHRISTIE LIMBERT
CORY GOE
MICHELLE PFEFFERLE
JOSHUA NAGY
Assistant Attorneys General
Executive Agencies Section
30 E. Broad Street – 26th Floor
Columbus, Ohio 43215
Guernsey County, Case No. 19CA00049 3
Hoffman, P.J.
{¶1} Plaintiff-Appellant Siltstone Resources, LLC (“Siltstone”) appeals the
judgment entered by the Guernsey County Common Pleas Court dismissing its complaint
against Guernsey County Community Development Corporation (“CDC”) on summary
judgment.
STATEMENT OF THE FACTS AND CASE
{¶2} This case concerns the Clean Ohio Conservation Program and
approximately 60 acres of property in Guernsey County, Ohio.
{¶3} In 2000, Ohio voters approved a constitutional amendment to create a tax-
exempt bond fund to be used for environmental conservation and revitalization purposes.
Ohio Constitution, Article VIII, Section 2o(A). The amendment permitted the General
Assembly to enact laws in accordance with the amendment. Ohio Constitution, Article
VIII, Section 2o(B). As a result of the amendment, the Clean Ohio Fund Green Space
Conservation Program was created and the Ohio Public Works Commission (OPWC) was
tasked with administering the program.
{¶4} In 2006, CDC applied for a grant of $894,500 from the Clean Ohio Fund for
its Leatherwood Creek Riparian Project. CDC represented to OPWC it would purchase
land along the Leatherwood Creek “to allow the riparian corridor to be protected from
encroachment by development and allow the natural beauty of [the] valley to be accessed
by the public.” CDC represented “the primary emphasis of this project is the preservation
and restoration of water quality, natural stream channels, functioning floodplains,
wetlands, streamside forests, and other natural features that contribute to the quality of
life in Guernsey and Belmont County.” The project included land in both Belmont and
Guernsey Counties.
Guernsey County, Case No. 19CA00049 4
{¶5} OPWC approved the grant and a project agreement was entered into
between Appellant OPWC and CDC in 2006. As part of the agreement, deed restrictions
were required to be recorded with the deeds for any property CDC purchased with grant
funds from OPWC.
{¶6} In February, 2008, CDC purchased approximately 60 acres in Guernsey
County from George and Autumn Thompson using grant funds received from OPWC. The
deed contained the following restrictions:
1. Use and Development Restrictions. Declarant hereby agrees, for
itself and its successors and assigns as owners of the Property, which
Property shall be subject to the following: This property will not be
developed in any manner that conflicts with the use of the Premises as a
green space park area that protects the historical significance of this
particular parcel. Only current structures will be maintained and no new
structures will be built on the premises.
2. Perpetual Restrictions. The restrictions set forth in this deed shall
be perpetual and shall run with the land for the benefit of, and shall be
enforceable by, Ohio Public Works Commission (OPWC). This deed and
the covenants and restrictions set forth herein shall not be amended,
released, extinguished or otherwise modified without the prior written
consent of OPWC, which consent may be withheld in its sole and absolute
discretion.
Guernsey County, Case No. 19CA00049 5
3. Enforcement. If Grantee, or its successors or assigns as owner of
the Property, should fail to observe the covenants and restrictions set forth
herein, the Grantee or it is successors or assigns, as the case may be, shall
pay to OPWC upon demand, as liquidated damages, an amount equal to
the rate of (a) two hundred percent (200%) of the amount of the Grant
received by Grantee, together with interest accruing at the rate of six
percent (6%) per annum from the date of Grantee's receipt of the Grant, or
(b) two hundred percent (200%) of the fair market value of the Property as
of the date or demand by OPWC. Grantee acknowledges that such sum is
not intended as, and shall not be deemed, a penalty, but is intended to
compensate for damages suffered in the event a breach or violation of the
covenants and restrictions set forth herein, the determination of which is not
readily ascertainable.
OPWC shall have the right to enforce by any proceedings at law or
in equity, all restrictions, conditions, and covenants set forth herein. Failures
by OPWC to proceed with such enforcement shall in no event be deemed
a waiver of the right to enforce at a later date the original violation or
subsequent violation.
4. Restrictions on transfer of the Property. Grantee acknowledges
that the Grant is specific to Grantee and that OPWC's approval of Grantee's
application for the Grant was made in reliance on Grantee's continued
ownership and control of the Property. Accordingly, Grantee shall not
voluntarily or involuntarily sell, assign, transfer, lease, exchange, convey or
Guernsey County, Case No. 19CA00049 6
otherwise encumber the Property without the prior written consent of
OPWC, which consent may be withheld in its sole and absolute discretion.
{¶7} 2008 Deed from George and Autumn Thompson to CDC.
{¶8} On April 24, 2013, the Executive Director of CDC, Daniel Speedy, signed a
right of way letter agreement giving Siltstone the right use a private road on the property
to access Siltstone’s adjoining property. In exchange for use of the right of way for its
commercial oil and gas activities, Siltstone agreed to maintain the road. However, at
some point in time, CDC erected a gate on the property preventing Siltstone from using
the right of way.
{¶9} Siltstone filed the instant action against CDC on November 1, 2017, seeking
a declaration the right of way agreement between the parties remained in effect and an
order directing CDC to specifically perform under the agreement by executing a
recordable right of way. Siltstone later amended the complaint, adding a cause of action
seeking money damages for breach of contract.
{¶10} OPWC intervened in the action on July 2, 2018. OPWC filed a counterclaim
against Siltstone and a cross-claim against CDC, alleging the right of way agreement and
other interests in the property conveyed by CDC violated the deed restrictions. OPWC
obtained leave to join six other parties to which CDC had transferred an interest in the
property, and filed cross-claims against these new party defendants.1
{¶11} Pertinent to this appeal, both Siltstone and CDC filed motions for summary
judgment concerning Siltstone’s complaint against CDC. The trial court found Speedy’s
1The trial court’s disposition of the remaining parties’ claims is the subject of the related appeal, Case No.
19CA00047.
Guernsey County, Case No. 19CA00049 7
action in signing the right of way agreement without the approval of CDC’s board of
directors was ultra vires and not binding on CDC, and accordingly granted CDC’s motion
for summary judgment and denied Siltstone’s motion for summary judgment.
{¶12} It is from the October 25, 2019 judgment of the Guernsey County Common
Pleas Court Siltstone prosecutes this appeal, assigning as error:
I. THE TRIAL COURT ERRED IN HOLDING THAT THE RIGHT OF
WAY AGREEMENT IS NOT BINDING BECAUSE ITS SIGNING
CONSTITUTED AN ULTRA VIRES ACT.
II. THE TRIAL COURT ERRED IN CONSTRUING FACTS AGAINST
THE NON-MOVANT IN DECIDING THE MOTION FOR SUMMARY
JUDGMENT.
I., II.
{¶13} We address both of Siltstone’s assignments of error together, as both argue
the trial court erred in granting summary judgment; specifically, the trial court erred in
holding the right of way is not binding because its signing by Speedy constituted an ultra
vires act.
{¶14} Summary judgment proceedings present the appellate court with the unique
opportunity of reviewing the evidence in the same manner as the trial court. Smiddy v.
The Wedding Party, Inc., 30 Ohio St.3d 35, 36 (1987). As such, we must refer to Civ. R.
56(C) which provides in pertinent part:
Guernsey County, Case No. 19CA00049 8
Summary Judgment shall be rendered forthwith if the pleadings,
depositions, answers to interrogatories, written admissions, affidavits,
transcripts of evidence, and written stipulations of fact, if any, timely filed in
the action, show that there is no genuine issue as to any material fact and
that the moving party is entitled to judgment as a matter of law. No evidence
or stipulation may be considered except as stated in this rule. A summary
judgment shall not be rendered unless it appears from the evidence or
stipulation, and only from the evidence or stipulation, that reasonable minds
can come to but one conclusion and that conclusion is adverse to the party
against whom the motion for summary judgment is made, that party being
entitled to have the evidence or stipulation construed most strongly in the
party’s favor.
{¶15} Pursuant to the above rule, a trial court may not enter summary judgment if
it appears a material fact is genuinely disputed. The party moving for summary judgment
bears the initial burden of informing the trial court of the basis for its motion and identifying
those portions of the record demonstrating the absence of a genuine issue of material
fact. The moving party may not make a conclusory assertion the non-moving party has
no evidence to prove its case. The moving party must specifically point to some evidence
which demonstrates the moving party cannot support its claim. If the moving party
satisfies this requirement, the burden shifts to the non-moving party to set forth specific
facts demonstrating there is a genuine issue of material fact for trial. Vahila v. Hall, 77
Guernsey County, Case No. 19CA00049 9
Ohio St.3d 421, 429, 1997-Ohio-259, citing Dresher v. Burt, 75 Ohio St.3d 280, 1996-
Ohio-107.
{¶16} As to Siltstone’s claims for injunctive and declaratory relief, in our related
opinion in Guernsey App. No. 19CA000047, we held CDC’s transfer of a right of way to
Siltstone violated the use and transfer restrictions in the Thompson deed. Therefore,
Siltstone is not entitled to injunctive or declaratory relief concerning its right to use the
right of way, and summary judgment is appropriate as to those two causes of action.
{¶17} However, Siltstone’s complaint also sought damages from CDC for breach
of contract. We find its breach of contract action is not resolved by our holding the right
of way transfer violates the deed restrictions. Impossibility of performance is an
affirmative defense to a breach of contract claim, occurring where, after the contract is
entered into, an unforeseen event arises rendering impossible the performance of one of
the contracting parties. W. Res. Academy v. Franklin, 5th Dist. Stark No. 2012CA00207,
2013-Ohio-4449, 999 N.E.2d 1198, ¶26. In its motion for summary judgment, CDC
argued the unforeseen event was CDC’s recognition of the possible ramifications of the
deed restrictions on the right of way conveyance after the right of way letter was executed.
However, we find the potential impact of the deed restrictions was not an unforeseen
event on the part of CDC, as CDC entered into an agreement with OPWC to receive the
grant money, based in part on the these restrictions being made a part of the Thompson
deed, before CDC purchased the property, and before CDC conveyed the right of way to
Siltstone. CDC’s lack of recognition of the impact those restrictions potentially had on
the right of way agreement did not render the impact of the restrictions an “unforeseen
event.”
Guernsey County, Case No. 19CA00049 10
{¶18} Regarding Siltstone’s claims against CDC, the trial court ruled:
As to the Right of Way Letter Agreement signed by Daniel Speedy,
this Court concludes that Speedy’s actions regarding the creation of the
same were ultra vires and therefore not binding upon the Defendant CDC.
{¶19} Judgment Entry, October 25, 2019, Conclusion of Law 7.
{¶20} In its motion for summary judgment, CDC argued the right of way letter was
executed by Dan Speedy without authority in his position to convey any interest in the
property. CDC argued its bylaws required him to first seek approval of the Board of
Trustees, which he failed to do. CDC argued the agreement was therefore ultra vires and
void as a matter of law.
{¶21} Black's Law Dictionary (7 Ed.1999) pg. 1525, defines ultra vires as
“Unauthorized; beyond the scope of power allowed or granted by a corporate charter or
by law.” In re Sims, 7th Dist. Jefferson No. 02-JE-2, 2002-Ohio-3458. Pursuant to the
doctrine of ultra vires, a property transfer would be invalid only if it were ultra vires in the
truest sense: a corporate act beyond the statutory and charter powers of the corporation.
Carr v. Acacia Country Club Co., 8th Dist. No. 96731, 2012-Ohio-1940, 970 N.E.2d 1075,
¶ 44. “[T]he notion of ultra vires acts by a corporation does not encompass a corporation's
violation of its own regulations or bylaws.” Id.{¶22} In the instant case, CDC’s argument Speedy acted outside the
requirements of the bylaws of the organization in executing the right of way letter with
Siltstone would not render the action ultra vires. There is no suggestion the transfer of
Guernsey County, Case No. 19CA00049 11
the property interest in the instant case was a corporate act beyond the statutory and
charter powers of CDC. Therefore, we find the trial court erred in entering summary
judgment on the basis the act was ultra vires.
{¶23} Both parties make arguments based on evidence in the record concerning
whether Speedy had apparent authority to execute the right of way letter. Because the
trial court did not consider the issue of apparent authority and Siltstone does not assign
as error that it is entitled to summary judgment on this basis, we decline to undertake an
analysis of the issue of Speedy’s apparent authority to execute the right of way letter for
the first time on appeal. In Murphy v. Reynoldsburg, 65 Ohio St.3d 356, 604 N.E.2d 138(1992), the Ohio Supreme Court held an appellate court may not independently review
the record for a summary judgment motion when the trial court failed in its mandatory duty
to “thoroughly review all appropriate materials” before ruling on the motion. Id. at 360,
604 N.E.2d 138. The Court found “[a] reviewing court, even though it must conduct its
own examination of the record, has a different focus than the trial court. If the trial court
does not consider all the evidence before it, an appellate court does not sit as a reviewing
court, but, in effect, becomes a trial court.” Id. Because the trial court focused solely on
the legal doctrine of ultra vires, the trial court did not review the evidence to determine
whether summary judgment was appropriate on the issue of Speedy’s apparent authority
to act, and we decline to do so for the first time on appeal.
{¶24} The assignment of error is overruled as to Siltstone’s claims for declaratory
and injunctive relief. The assignment of error is sustained as to Siltstone’s claim for
breach of contract.
Guernsey County, Case No. 19CA00049 12
{¶25} The summary judgment of the Guernsey County Common Pleas Court is
affirmed as to Siltstone’s claims for declaratory and injunctive relief and reversed as to
Siltstone’s claim for breach of contract. This case is remanded for further proceedings
consistent with this opinion.
By: Hoffman, P.J.
Wise, John, J. and
Wise, Earle, J. concur