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

[Cite as Siltstone Servs., L.L.C. v. Guernsey Cty. Community Dev. Corp., 2020-Ohio-3877.]
COURT OF APPEALS
GUERNSEY COUNTY, OHIO
FIFTH APPELLATE DISTRICT
SILTSTONE SERVICES, LLC JUDGES:
Hon. William B. Hoffman, P.J.
Plaintiff-Appellee Hon. John W. Wise, J.
Hon. Earle E. Wise, Jr., J.
-vs-
Case No. 19CA000047
THE GUERNSEY COUNTY
COMMUNITY DEVELOPMENT
CORPORATION, et al.,
Defendants-Appellees O P I N IO N
And NUNC PRO TUNC
OHIO PUBLIC WORKS COMMISSION
Defendant-Appellant
And
DEVON ENERGY PRODUCTION
COMPANY, LP
Defendant-Appellee-
Cross-Appellant
CHARACTER OF PROCEEDINGS: Appeal from the Guernsey County Court
of Common Pleas, Case No.
17CV000611
JUDGMENT: Affirmed in part; Reversed and remanded
in part; Final Judgment entered in part
DATE OF JUDGMENT ENTRY: October 28, 2020
Guernsey County, Case No. 19CA00047 2
APPEARANCES:
For Plaintiff-Appellee Siltstone For Defendant-Appellee Guernsey
Services, LLC 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 Defendant-Appellee Patriot Land
MANMEET S. WALIA Company, LLC
Siltstone Services, LLC
1801 Smith Street – Ste. #2000 RICHARD V. ZURZ, JR.
Houston, TX 77002 Slater & Zurz, LLP
One Cascade Plaza – Ste. #2210
Akron, Ohio 44308
For Defendant-Appellees Synergy For Defendant-Appellee Gulfport Energy
Land Company, LLC and Whispering Corporation
Pines Land Company, LLC
DANIEL C. GIBSON
CRAIG G. PELINI MATTHEW W. WARNOCK
PAUL B. RICARD AARON M. BRUGGEMAN
Pelini, Campbell & Williams, LLC CHRISTINE RIDEOUT SCHIRRA
8040 Cleveland Ave., N.W. – Ste. #400 Bricker & Eckler, LLP
North Canton, Ohio 44720 110 South Third Street
Columbus, Ohio 43215
ZACHARY M. SIMPSON
Gulfport Energy Corporation
3001 Quail Springs Parkway
Oklahoma City, OK 73134
Guernsey County, Case No. 19CA00047 3
For Defendant-Appellant Ohio Public For Defendant-Appellee/Cross-Appellant
Works Commission Devon Energy Production Company, LP
DAVE YOST TIMOTHY B. McGRANOR
Attorney General of Ohio ELIZABETH S. ALEXANDER
Vorys, Sater, Seymour and Pease, LLP
LIDIA MOWAD 52 East Gay Street
JAMES PATTERSON Columbus, Ohio 43215
RACHEL HUSTON
CHRISTIE LIMBERT For Cross-Appellee
CORY GOE Guernsey County Community
MICHELLE PFEFFERLE Development Corporation
JOSHUA NAGY
Assistant Attorneys General ERIK A. SCHRAMM
Executive Agencies Section KYLE W. BICKFORD
30 E. Broad Street – 26th Floor Hanlon, Estadt, McCormick, &
Columbus, Ohio 43215 Schramm Co., LPA
46457 National Road West
St. Clairsville, Ohio 43950
Guernsey County, Case No. 19CA00047 4
Hoffman, P.J.
{¶1} Defendant-Appellant Ohio Public Works Commission (“OPWC”) appeals
the judgment entered by the Guernsey County Common Pleas Court granting Plaintiff-
Appellee's Siltstone Resources, LLC (“Siltstone”); Defendant-Appellee's Guernsey
County Community Development Corporation (“CDC”); Cross-Claim Defendants-
Appellees' Gulfport Energy Corporation (“Gulfport”), Synergy Land Company
(“Synergy”),Whispering Pine, LLC (“Whispering Pine”), Patriot Land Company, LLC
(“Patriot”), Devon Energy Production, LP (“Devon”), and Guernsey County
Commissioners (“Guernsey County”)1 motions for summary judgment and/or judgment
on the pleadings, and denying Appellant OPWC's motion for partial 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, the Clean Ohio Fund Green Space Conservation Program
was created, and 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
1 The Guernsey County Commissioners have not filed a brief in the instant action.
Guernsey County, Case No. 19CA00047 5
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.
{¶5} OPWC approved the grant and a project agreement was entered into
between OPWC and CDC in 2006. As part of the agreement, deed restrictions were
required to be recorded with the deeds for any land purchased by CDC with grant money
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
Guernsey County, Case No. 19CA00047 6
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.
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.
Guernsey County, Case No. 19CA00047 7
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
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} In March, 2011, CDC entered into an oil and gas lease with Patriot. Patriot
assigned the lease to Gulfport in October of 2012, but retained a royalty interest. Patriot
subsequently assigned a portion of its royalty interest to Synergy and Whispering Pines.
The lease included rights of ingress and egress to establish, conduct, and/or maintain
production operations, and did not prohibit disturbing the surface of the land. CDC did
not seek written consent of OPWC before entering this agreement, nor did Patriot receive
consent to transfer its interest in the property.
{¶9} In August, 2012, CDC entered into a Water and Surface Use Agreement
with Devon. Pursuant to the agreement, Devon was given the right to withdraw water
from the ponds on the land incident to Devon’s oil and gas activities. Devon could enter
the land; draw water from the ponds in such volumes as Devon required; place and
maintain both surface and subsurface pipelines, equipment, or facilities necessary or
convenient for Devon’s operations or for drawing, transporting, or storing water; distribute
on the land earth, rock, or other materials excavated in laying pipelines or installing,
Guernsey County, Case No. 19CA00047 8
repairing, or removing other facilities on the land; and cut trees and other vegetation.
CDC agreed not to allow third parties to use the ponds for swimming or other recreational
purposes while Devon conducted operations on or near the pond. Pursuant to an
amendment to the agreement between CDC and Devon, Devon was permitted to pump
non-potable replenishment water into the pond, and CDC agreed the pond would not be
used as a source of drinking water or fish for human consumption.
{¶10} Devon exercised its rights under the agreement in 2013. After installing
water pipelines and a portable water pump, Devon withdrew 71,332 barrels of water from
ponds on the property and from a creek, paying CDC a total of $14,726.40 for the water.
CDC did not seek written consent of OPWC before entering this agreement with Devon.
{¶11} In October of 2012, CDC transferred two acres of surface rights to the
property to Guernsey County for construction of a trailhead, without obtaining the consent
of the OPWC for the sale.
{¶12} On April 24, 2013, the Executive Director of CDC, Daniel Speedy, signed a
right of way letter agreement giving Siltstone the right to 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. Eventually, CDC
erected a gate on the property preventing Siltstone from using the right of way, which
action gave rise to the instant lawsuit.
{¶13} 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
Guernsey County, Case No. 19CA00047 9
recordable right of way. Siltstone later amended the complaint, adding a cause of action
seeking money damages for breach of contract.
{¶14} 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
the other interests in the property conveyed by CDC violated the deed restrictions. OPWC
obtained leave to join Gulfport, Patriot, Synergy, Whispering Pines, Devon, and Guernsey
County to the action, and filed cross-claims against these new party defendants. OPWC
sought both injunctive relief and monetary damages pursuant to the liquidated damages
clause in the deed restrictions. Devon filed a cross claim against CDC, alleging pursuant
to its water and surface use agreement with CDC, it had a right of defense and
indemnification from CDC. CDC cross-claimed against OPWC, seeking a declaration
OPWC is limited to money damages and equitable relief is not available, the transfer
restriction in the deed is void, the use restriction is limited to the surface of the property
only, the use restriction only bars activity inconsistent with use of the property as green
space, and the liquidated damages provision is void as a penalty.
{¶15} All parties filed dispositive motions. OPWC filed a motion for partial
summary judgment on all issues except liquidated damages. CDC filed motions for
summary judgment as to Siltstone’s claims, OPWC’s claims, and Devon’s claim. Siltstone
filed a motion for summary judgment. Devon filed a motion for summary judgment as to
OPWC’s cross-claims, and a motion for partial summary judgment on its cross-claim
against CDC. Patriot filed a motion for summary judgment. Gulfport, Synergy, and
Whispering Pine filed motions for judgment on the pleadings pursuant to Civ. R. 12(C).
Guernsey County, Case No. 19CA00047 10
{¶16} The trial court found Speedy’s actions in signing the right of way agreement
were ultra vires and not binding on CDC.2 The court found OPWC was not entitled to
injunctive nor declarative relief pursuant to statute.
{¶17} The trial court concluded the use restriction in the deed applied only to the
surface of the land. The court found no evidence the surface was used by Patriot,
Gulfport, Synergy or Whispering Pine, and therefore the oil and gas leases did not violate
the use restriction in the deed.
{¶18} The trial court found OPWC had not established actual damages for the
withdrawal of water from the pond by Devon, and the liquidated damages clause in the
Thompson deed was disproportionate to the damage caused by Devon to the ponds, and
therefore void as a penalty.
{¶19} The trial court concluded the transfer to Guernsey County did not violate the
use restriction, as the construction of a trailhead was consistent with green space use.
The trial court found no structures have been erected, and the transfer augments the
green space objectives.
{¶20} Finally, the trial court concluded the transfer restriction is void as a matter
of law, as it requires perpetual ownership rather than ownership or long-term control.
{¶21} The court accordingly granted CDC’s motion for summary judgment as to
Siltstone’s complaint, and denied Siltstone’s summary judgment motion as to CDC. The
court granted CDC’s motion for summary judgment as to OPWC’s cross claim against
CDC, and granted CDC’s motion for summary judgment on its cross-claim against
OPWC. The court granted CDC’s motion for summary judgment on Devon’s cross-claim
2 Siltstone’s appeal from this judgment is the subject of the related appeal, Case No. 19CA00049.
Guernsey County, Case No. 19CA00047 11
against CDC, and denied Devon’s motion for summary judgment on said cross-claim.
The court granted the motion for summary judgment filed by Patriot, and the motions for
judgment on the pleadings filed by Gulfport, Synergy and Whispering Pine. The court
denied Siltstone’s motion for summary judgment on OPWC’s counterclaim because the
right of way agreement was found to be void as ultra vires, and denied OPWC’s motion
for partial summary judgment.
{¶22} As to Devon’s cross-claim against the CDC, the trial court found the
indemnification clause relates to damages to the ponds or personal injury. The court
found the cross-claims of OPWC against Devon did not relate to either damage to the
ponds or personal injury, and therefore granted summary judgment to CDC on the cross-
claim.
{¶23} It is from the October 25, 2019 judgment of the Guernsey County Common
Pleas Court OPWC prosecutes this appeal, assigning as error:
I. THE TRIAL COURT ERRED IN DENYING THE COMMISSION’S
MOTION FOR PARTIAL SUMMARY JUDGMENT AND IN GRANTING
APPELLEES’ VARIOUS MOTIONS BECAUSE THE COURT SHOULD
HAVE APPLIED THE PLAIN LANGUAGE OF THE DEED RESTRICTIONS
TO FIND THAT APPELLEES BREACHED THE DEED RESTRICTIONS.
II. THE TRIAL COURT ERRED IN DENYING THE COMMISSION’S
MOTION FOR PARTIAL SUMMARY JUDGMENT AND IN GRANTING
APPELLEES’ VARIOUS MOTIONS FOR SUMMARY JUDGMENT
Guernsey County, Case No. 19CA00047 12
BECAUSE THE DEED RESTRICTIONS ARE VALID AND ARE
ENFORCEABLE THROUGH DECLARATORY AND INJUNCTIVE RELIEF.
III. THE TRIAL COURT ERRED IN DENYING THE COMMISSION’S
MOTION FOR PARTIAL SUMMARY JUDGMENT AND IN GRANTING
APPELLEES’ VARIOUS MOTIONS FOR SUMMARY JUDGMENT
BECAUSE THE COMMISSION IS ENTITLED TO MONEY DAMAGES.
{¶24} Devon assigns a single error to the October 25, 2019 judgment of the court:
THE TRIAL COURT ERRED IN DENYING DEVON’S MOTION FOR
PARTIAL SUMMARY JUDGMENT AND GRANTING THE CDC’S MOTION
FOR SUMMARY JUDGMENT ON DEVON’S CROSS-CLAIMS AGAINST
THE CDC.
I.
{¶25} OPWC argues the trial court erred in granting the various dispositive
motions of the Appellees herein and in denying its motion for summary judgment
regarding CDC’s violations of the use, transfer and perpetual restrictions in the Thompson
deed.
{¶26} 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. 19CA00047 13
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.
{¶27} 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. 19CA00047 14
Ohio St.3d 421, 429, 1997-Ohio-259, citing Dresher v. Burt, 75 Ohio St.3d 280, 1996-
Ohio-107.
{¶28} A motion for a judgment on the pleadings, pursuant to Civ. R. 12(C),
presents only questions of law. Peterson v. Teodosio, 34 Ohio St.2d 161, 165–166, 297
N.E.2d 113 (1973). The determination of a motion under Civ. R. 12(C) is restricted solely
to the allegations in the pleadings and the nonmoving party is entitled to have all material
allegations in the complaint, with all reasonable inferences to be drawn therefrom,
construed in its favor. Id. Evidence in any form cannot be considered. Conant v. Johnson,
1 Ohio App.2d 133, 135, 204 N.E.2d 100 (1964). In considering such a motion, one must
look only to the face of the complaint. Nelson v. Pleasant, 73 Ohio App.3d 479, 597
N.E.2d 1137 (1991).
{¶29} OPWC first argues the court erred in granting CDC’s motion for summary
judgment and denying its own motion for summary judgment on its claim CDC’s transfers
of interest in the property to Patriot, Devon, and Siltstone violated the use restriction in
the Thompson deed.
{¶30} The use restriction in the deed provides:
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
Guernsey County, Case No. 19CA00047 15
particular parcel. Only current structures will be maintained and no new
structures will be built on the premises.
{¶31} The trial court found the use restriction applied only to the surface of the
property, and not to the subsurface. The trial court found the Patriot lease has been
released, and there was no evidence presented concerning any surface use of the
property under the lease. The trial court found the OPWC did not present evidence the
withdrawal of “the de minimus [sic] amount of water for a limited period of time” by Devon
conflicted with the use of the property as a green space. The trial court found the
Siltstone right of way was invalid on other grounds.
{¶32} In interpreting the identical use restriction language set forth in the
Thompson deed, the Court of Appeals for the Seventh District, in a case involving the
Leatherwood Creek project as it relates to land located in Belmont County and involving
many of the same parties as the instant case, concluded the term “green space park area”
in this use restriction applied only to the surface of the land:
Since there is no statutory or deed definition for “green space park
area,” rules of construction indicate we use the common definition. A park
is an area of land set aside for public use.
https://www.thefreedictionary.com/park. Green space is “a natural area in
or around a development, intended to provide buffer, noise control,
recreational use, and/or wildlife refuge, all in order to enhance the quality
of life in and around the development.” https://financial-
Guernsey County, Case No. 19CA00047 16
dictionary.thefreedictionary.com/green+space. Green space is often
intentionally provided in the urban setting; it is nature space in the city.
However, green space may occur in the rural setting also. Commonly, in
the rural settings it is preserving areas of nature from development or
reclaiming areas of nature that were used for industry. In northeast Ohio,
unused railways are converted to trails and land stripped from mining is
reclaimed. Both occurred on the property in this case.
Therefore, the phrase “green space park area” means the portion of
the property that one would use in the normal park setting, meaning the
area on which one actually walks, runs, bikes, and hikes, which is the
surface, not the subsurface. The trial court's limitation of green space to the
surface of the property was correct.
{¶33} Siltstone Resources, LLC v. Ohio Pub. Works Commission, 7th Dist. No. 18
BE 0042, 2019-Ohio-4916, 137 N.E.3d 144, ¶¶ 42-43, reconsideration denied sub nom.
Siltstone Resources, LLC v. State of Ohio Pub. Works Commission, 7th Dist. Belmont
No. 18 BE 0042, 2020-Ohio-729, ¶¶ 42-43, and appeal allowed sub nom. Siltstone
Resources, L.L.C. v. Ohio Pub. Works Comm., 158 Ohio St.3d 1443, 2020-Ohio-1032,
¶¶ 42-43 (2020).
{¶34} Although we agree with the Seventh District’s decision the use restriction
term “green space park area” refers to the surface of the property only, not to both the
surface and the subsurface, we find resolution of this issue unnecessary to our analysis
of whether the Patriot, Devon, and Siltstone property interests conveyed by CDC violated
Guernsey County, Case No. 19CA00047 17
the use restriction. We disagree with the trial court the extinguishment of the property
interests held by Patriot and Devon rendered this claim moot. OPWC sought declaratory
and injunctive relief, as well as liquidated damages, on its claim CDC violated the use
restriction by entering agreements which permitted use of the property in a manner
inconsistent with its use as a green space park area, whether or not the property was
actually damaged under these agreements. For the following reasons, we conclude the
interests conveyed to Patriot, Devon, and Siltstone all violated the use restriction at the
time the agreements were entered into by CDC.
{¶35} Patriot: As explained in Siltstone, supra, a lease of mineral rights allows
the lessee reasonable access to the surface, defeating the purpose of a “green space
park area:”
Appellant OPWC argues that allowing lateral mining still permits
Appellees reasonable access to the surface and therefore allowing mining
of any sort defeats the purpose of a “green space park area.” Admittedly, at
common law the mineral holder was still entitled to reasonable access to
the surface to reach his or her property. Eastern Mineral Law Foundation,
The Issues: The Rights and Interests at Play, 23 E. Min. Found. § 9.04,
2003 WL 22234516 (“Despite the availability of modern directional drilling,
the development and production of oil and gas in Eastern states most often
requires reasonable access to and the use and occupancy of some portion
of the surface.”). See also Skivolocki, 38 Ohio St.2d at 249, 313 N.E.2d 374,
fn. 1 (“ ‘* * * unless the language of the conveyance by which the minerals
are acquired repels such construction, the mineral estate carries with it the
Guernsey County, Case No. 19CA00047 18
right to use as much of the surface as may be reasonably necessary to
reach and remove the minerals.’ See, also, 37 Ohio Jurisprudence 2d 18,
Mines and Minerals, Section 14. This implied right of the mineral owner is
best explained as a practical attempt to insure that both he, and the surface
owner, can enjoy their respective estates.”). If the mineral holder was not
permitted reasonable access, then the minerals would essentially be
landlocked without means of extraction. Typically when mineral rights are
leased, the lease usually permits reasonable access to the surface by the
terms of the lease. For instance, often the lease permits drilling of water
wells, building access roads, installing fencing, and removing trees and
brush. These acts affect the surface.
{¶36} Siltstone, supra, at ¶44.
{¶37} The oil and gas lease CDC entered with Patriot did not include language
preventing use of the surface to access the subsurface minerals. Thus, the lease
impliedly included the right to use the surface to access the minerals, which is in conflict
with the use of the property as green park space. Further, the language of the Patriot
lease specifically gave Patriot the right to engage in “core drilling, and the drilling,
operating for, and producing of” oil and gas on the property, as well as the right to lay
pipeline, remove timber, dig pits, and construct gates on all access roads on the property.
The lease further made provisions for possible impacts and effects on the property
surface, as well as the water on the property, and thus recognized the possibility of
damage to the surface of the property should Patriot exercise its rights under the lease.
Guernsey County, Case No. 19CA00047 19
{¶38} We find the lease CDC entered with Patriot violated the use restriction in
the Thompson deed, as it allowed for Patriot’s use of the surface of the land in a manner
inconsistent with the use of the property as green park space.
{¶39} Devon: CDC entered into a Water and Surface Use Agreement with Devon.
Pursuant to the agreement, Devon was given the right to withdraw water from the ponds
on the land incident to Devon’s oil and gas activities. Devon could enter the land; draw
water from the ponds in such volumes as Devon required; place and maintain both
surface and subsurface pipelines, equipment, or facilities necessary or convenient for
Devon’s operations or for drawing, transporting, or storing water; distribute on the land
earth, rock, or other materials excavated in laying pipelines or installing, repairing, or
removing other facilities on the land; and cut trees and other vegetation. CDC agreed not
to allow third parties to use the ponds for swimming or other recreational purposes while
Devon conducted operations on or near the pond. Pursuant to an amendment to the
agreement between CDC and Devon, Devon was permitted to pump non-potable3
replenishment water into the pond, and CDC agreed the pond would not be used as a
source of drinking water or fish for human consumption.
{¶40} Devon exercised its rights under the agreement in 2013. After installing
water pipelines and a portable water pump, Devon withdrew 71,332 barrels of water from
ponds on the property and from a creek, paying CDC a total of $14,726.40 for the water.
{¶41} We find the water and surface use agreement violated the use restriction in
the Thompson Deed. Not only was Devon given rights to disturb the surface of the land,
the agreement required CDC to ban the public from use of the land during Devon’s
3 Non-potable water is water that is not of drinking quality, but may still be used for many other purposes.
Guernsey County, Case No. 19CA00047 20
operations, which clearly is in conflict with the use of the property as green park space.
Further, the agreement allowed Devon to damage the ponds on the property by pumping
non-potable water into the ponds, preventing the use of the pond for fishing. In addition,
Devon actually laid pipe, installed a water pump, and withdrew water from the property,
in conflict with the use restriction confining the use of the property to green park space.
While the trial court characterized the withdrawal of water as de minimis, we find the
withdrawal of 71,332 barrels of water is in conflict with the use of the property as green
park space. We find the Water and Surface Use Agreement CDC entered with Devon
violated the use restriction of the Thompson deed.
{¶42} Siltstone: The right of way letter Speedy signed with Siltstone allows
Siltstone, “for consideration paid to CDC the sufficiency of which is hereby acknowledged,
to have access to the right of way.” The agreement further gives “Siltstone, its affiliates,
and its third parties full and direct access to the ROW.” Siltstone agreed to service the
right of way as necessary to maintain it in the same or better condition as when the
agreement was signed.
{¶43} Siltstone argues its use of the pre-existing road, which also is used by
people using the space for green space park purposes, does not conflict with the use of
the surface of the property as green space, and in fact enhances the roadway because
of its agreement to maintain the road. We disagree. We find the use of the road
concomitant to Siltstone’s commercial business enterprise differs from use of the road for
green space park purposes. The use of the road by Siltstone’s commercial oil and gas
equipment is different in both purpose and in traffic volume to the use of the road by
members of the public, who are driving private vehicles to access the property for
Guernsey County, Case No. 19CA00047 21
recreational purposes. Use of the right of way was not necessary for Siltstone to access
its property, as Siltstone’s property was not landlocked. Accordingly, we find the right of
way agreement Speedy entered with Siltstone violated the use restriction in the deed.
{¶44} OPWC also argues the transfers of property interests CDC made to Patriot,
Devon, Siltstone, and Guernsey County violated the transfer restriction in the Thompson
deed, which provides:
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
otherwise encumber the Property without the prior written consent of
OPWC, which consent may be withheld in its sole and absolute discretion.
{¶45} It is undisputed CDC did not obtain the written consent of OPWC before
selling, leasing, or encumbering the property via its agreements with Patriot, Devon, and
Siltstone, and Guernsey County. However, the trial court found the transfer restriction
was void as a matter of law.
{¶46} We note at the outset, we concur with the Seventh District Court of Appeals
that the transfer restriction applies to both the surface and the subsurface. Siltstone,
supra, ¶¶50-51.
Guernsey County, Case No. 19CA00047 22
{¶47} Turning to the issue of whether the restriction is void, where land is devised
upon condition the devisee shall not sell it, such a restraint is void as repugnant to the
devise and contrary to public policy. Ohio Soc. for Crippled Children & Adults, Inc. v.
McElroy, 175 Ohio St. 49, 52, 191 N.E.2d 543, 546 (1963), citing Anderson v. Cary, 36
Ohio St. 506, 38 Am.Rep. 602 (1881); Hobbs v. Smith, 15 Ohio St. 419 (1864). However,
such a restraint on alienation of property conveyed to a trustee to be held for charitable
or other public uses will usually be given effect. Id., citing Perin v. Carey, 24 How. 465,
65 U.S. 465, 16 L.Ed. 701 (1861); Board of Education of Incorporated Village of Van Wert
v. Inhabitants, 18 Ohio St. 221, 98 Am.Dec. 114 (1868); Babin v. City of Ashland, 160
Ohio St. 328, 345 et seq., 116 N.E.2d 580 (1953); Gearhart v. Richardson, 109 Ohio St.
418, 142 N.E. 890 (1924). “There are two reasons for this: (1) the interest of the public in
encouraging the creation and the continuation of trusts for charitable or public purposes
and (2) the power of a court of equity to authorize a prohibited sale where necessary for
the proper accomplishment of the charitable or public purposes of the trust, thereby
preventing the trust property from being completely inalienable.” Id. at 52-53.
{¶48} In the instant case, we find the transfer restriction akin to property conveyed
to be held for charitable or public use, and therefore find an exception to the general rule
that restrictions on alienation of property are void.
{¶49} 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
Guernsey County, Case No. 19CA00047 23
Conservation Program was created and OPWC was tasked with administering the
program. CDC applied for grant money from OPWC for the specific purpose of
purchasing property to be used for environmental conservation and revitalization
purposes, in order to further the public policy as set forth by the voters in approving the
constitutional amendment to create the tax-exempt bond fund for environmental
conservation. While CDC argues Ohio also has expressed a public policy encouraging
oil and gas production, CDC did not apply for grant funds from OPWC to further the
State’s public policy interest in oil and gas production. However, CDC did apply for and
receive grant funds to further the State’s interest in preserving land for environmental
conservation and revitalization.
{¶50} The contract between OPWC and CDC, in which CDC agreed to the
transfer restriction as a condition of receiving grant funds, and the resultant purchase of
the property from the Thompsons including the transfer restriction in the deed, are not a
normal land transfer between grantor and grantee. The receipt of grant funds from OPWC
placed the parties in a unique relationship, both as to each other and as to the public.
Pursuant to the constitutional amendment passed by the voters of the state of Ohio,
OPWC became the guardian and “trustee” of the public’s interest in land purchased with
grant money from the State for the purposes expressed in the amendment, while the
public was the third party beneficiary of such agreements. In entering into an agreement
whereby CDC received money from OPWC to purchase property in furtherance of the
purposes set forth in the amendment, CDC stepped into OPWC’s shoes as trustee of the
public interest with respect to property purchased with grant funds. OPWC maintained
an ongoing interest in ensuring the property, which it gave CDC grant money to purchase,
Guernsey County, Case No. 19CA00047 24
was in fact used for the purposes represented by CDC at the time it applied for the grant
money. OPWC maintained a responsibility to ensure any transfer of any interest in the
property would continue to meet the purposes for which the grant money was given. As
such, we find the alienability restriction in this case is not void, as it is similar in character
to a restraint on alienation of property conveyed to a trustee to be held for charitable or
other public uses. See Ohio Soc. For Crippled Children & Adults, supra.
{¶51} There is no dispute CDC violated the transfer restriction in its transfers to
Patriot, Devon, Siltstone and Guernsey County, as it did not receive the written
permission of OPWC before making the transfers of interest. Further, we find the fact the
Patriot and Devon leases are no longer in effect to be irrelevant. The transfer restriction
was violated at the time of the transfer, entitling OPWC to relief and subjecting CDC to
liability.
{¶52} Finally, OPWC argues the transfer to Guernsey County violates the
perpetual restriction:
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. 19CA00047 25
{¶53} The deed restrictions are not present in the deed transferring two acres from
CDC to Guernsey County. It is undisputed CDC did not obtain prior written consent of
OPWC before transferring the property without the requisite deed restrictions.
Accordingly, we find the transfer to Guernsey County violates the perpetual restriction, in
addition to the transfer restriction as noted supra.
{¶54} In sum, we find the trial court erred in granting summary judgment to CDC
and denying partial summary judgment to OPWC on the issue of violation of the use
restriction by CDC’s transfer of property interests to Patriot, Devon, and Siltstone; on the
issue of violation of the transfer restriction by CDC’s transfer of property interests to
Patriot, Devon, Siltstone, and Guernsey County; and on the issue of violation of the
perpetual restriction and transfer restriction by CDC’s sale of property to Guernsey
County.
{¶55} The first assignment of error is sustained.
II.
{¶56} In its second assignment of error, OPWC argues the trial court erred in
finding it was not entitled to injunctive or declaratory relief.
{¶57} The trial court found pursuant to R.C. 164.26(A), OPWC’s relief was limited
solely to liquidated damages, and OPWC could not receive injunctive or declaratory relief.
R.C. 164.26(A) provides:
The director of the Ohio public works commission shall establish
policies related to the need for long-term ownership, or long-term control
through a lease or the purchase of an easement, of real property that is the
Guernsey County, Case No. 19CA00047 26
subject of an application for a grant under sections 164.20 to 164.27 of the
Revised Code and establish requirements for documentation to be
submitted by grant applicants that is necessary for the proper administration
of this division. The policies shall provide for proper liquidated damages and
grant repayment for entities that fail to comply with the long-term ownership
or control requirements established under this division.
{¶58} The enforcement provision of the deed provides for both equitable relief and
liquidated damages:
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.
Guernsey County, Case No. 19CA00047 27
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.
{¶59} The Seventh District addressed this identical issue, concluding OPWC was
entitled to injunctive and declaratory relief, in addition to liquidated damages provided for
in the statute:
First, nothing in R.C. 164.26(A) prevents equitable relief. That
section instructs the director of the OPWC to establish policies related to
the need for long-term ownership or control of property that is subject to
clean Ohio conservation fund grants. It also states the policies are to
provide for proper liquidated damages and grant repayment for entities that
fail to comply with the long-term ownership or control requirements.
Reading the plain wording of the statute leads to the conclusions that (1)
the OPWC director must establish policies relating to the need for long-term
ownership or control of the property that is the subject of the grant and (2)
some of those policies are to provide for liquidated damages and grant
repayment for failure to comply with the long-term requirement.
Nothing in the statute prevents equitable relief as a remedy for failure
to comply with the long-term ownership requirement. The statute does not
Guernsey County, Case No. 19CA00047 28
include an exclusive list of remedies. The remedies the statute mentions
are in regard to instructing the director of the OPWC to establish policies to
provide for liquidated damages and grant repayment.
Second, the Enforcement Restriction clearly and unambiguously
provides that Appellant OPWC has the right to enforce the deed restrictions
in equity. Nothing in the language of the Enforcement Restriction can be
construed to mean anything else.
{¶60} Siltstone, supra, ¶¶66-68.
{¶61} We agree with the reasoning of the Seventh District. As this Court has
previously noted:
The Supreme Court of Ohio has consistently held that “[w]here the
language contained in a deed restriction is indefinite, doubtful and capable
of contradictory interpretation, that construction must be adopted which
least restricts the free use of the land.” Houk v. Ross (1973), 34 Ohio St.2d
77, 296 N.E.2d 266, paragraph two of the syllabus, overruled on other
grounds by Marshall v. Aaron (1984), 15 Ohio St.3d 48, 15 OBR 145, 472
N.E.2d 335. “Where the language in the restriction is clear, the court must
enforce the restriction. Otherwise, the court would be rewriting the
restriction. * * * The key issue is to determine the intent of the parties as
reflected by the language used in the restriction.” Dean v. Nugent Canal
Guernsey County, Case No. 19CA00047 29
Yacht Club, Inc. (1990), 66 Ohio App.3d 471, 475, 585 N.E.2d 554, 556-
557.
{¶62} Morgan Woods Homeowners' Assn. v. Wills, 5th Dist. Licking No. 11 CA 57,
2012-Ohio-233, ¶ 42.
{¶63} We find the language in the restriction agreed to by the parties is clear:
OPWC has the right to enforce the deed restrictions in law and in equity. We find R.C.
164.26(A) provides for liquidated damages, but does not make liquidated damages the
sole remedy available to OPWC.
{¶64} The second assignment of error is sustained.
III.
{¶65} In its third assignment of error, OPWC argues the court erred in granting
summary judgment finding the liquidated damages provision to be a penalty, and
therefore unenforceable.4
{¶66} The trial court made the following conclusion of law regarding the liquidated
damages provision:
OPWC’s claims relating to the Devon Energy Water and Surface
Agreements do not establish a claim for damages. The OPWC put forth no
evidence that the withdrawal of the de minimus [sic] amount of water for a
limited period of time conflicts with the use of the CDC property as a green
space park area. Additionally, OPWC’s claim for damages based upon the
4 OPWC did not seek summary judgment on the validity of the liquidated damages provision, but rather
argues evidence is necessary on the issue of whether the damages clause is a penalty.
Guernsey County, Case No. 19CA00047 30
Enforcement Provision in the Thompson Deed, is disproportionate to the
alleged damages sustained and rather act [sic] as a penalty. Liquidated
damages clauses are invalid and unenforceable where the damages clause
provides for an amount disproportionate to the actual damage. Lakewood
Creative Customers v. Sharp, 31 Ohio App. 3d 116, Syll. ¶2 (1986).
{¶67} Judgment entry, October 25, 2019, conclusion of law 9.
{¶68} The enforcement clause in the instant case provides in pertinent part:
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.
Guernsey County, Case No. 19CA00047 31
{¶69} While generally liquidated damages clauses are enforceable, such
damages are not enforceable on public policy grounds when the stipulated damages
constitute a penalty. Lake Ridge Academy v. Carney, 66 Ohio St.3d 376, 381, 613 N.E.2d
183, 187 (1993). The Ohio Supreme Court has set forth the following test to judge a
stipulated damages provision:
Where the parties have agreed on the amount of damages,
ascertained by estimation and adjustment, and have expressed this
agreement in clear and unambiguous terms, the 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.
{¶70} Samson Sales, Inc. v. Honeywell, Inc., 12 Ohio St.3d 27, 29, 465 N.E.2d
392, 394 (1984), citing Jones v. Stevens, 112 Ohio St. 43, 146 N.E. 894, 3 Ohio Law Abs.
164 (1925).
{¶71} The Supreme Court has provided additional guidance for determining if
stipulated damages are a penalty:
Guernsey County, Case No. 19CA00047 32
[I]t is necessary to look to the whole instrument, its subject-matter,
the ease or difficulty of measuring the breach in damages, and the amount
of the stipulated sum, not only as compared with the value of the subject of
the contract, but in proportion to the probable consequences of the breach,
and also to the intent of the parties ascertained from the instrument itself in
the light of the particular facts surrounding the making and execution of the
contract. Jones v. Stevens (1925), 112 Ohio St. 43, 146 N.E. 894,
paragraph one of the syllabus. “Neither the parties' actual intention as to its
validity nor their characterization of the term as one for liquidated damages
or a penalty is significant in determining whether the term is valid.” 3
Restatement of Contracts, supra, at 159, Section 356, Comment c. See
Samson Sales, Inc. v. Honeywell, Inc. (1984), 12 Ohio St.3d 27, 28, 12 OBR
23, 24, 465 N.E.2d 392, 394. Thus, when a stipulated damages provision is
challenged, the court must step back and examine it in light of what the
parties knew at the time the contract was formed and in light of an estimate
of the actual damages caused by the breach. If the provision was
reasonable at the time of formation and it bears a reasonable (not
necessarily exact) relation to actual damages, the provision will be
enforced. See 3 Restatement of Contracts, supra, at 157, Section 356(1).
{¶72} Lake Ridge Academy, supra, at 381–82, 613 N.E.2d at188.
{¶73} In the instant case, the trial court did not apply the test set forth by the Ohio
Supreme Court in Lake Ridge Academy, supra and Samson Sales, supra, nor did it step
Guernsey County, Case No. 19CA00047 33
back and examine the liquidated damages provision in light of what the parties knew at
the time the contract was formed. Rather, the trial court based its evaluation of damages
on its conclusion the only potential violation of the deed restrictions by CDC in this case
was the water and surface lease agreement under which Devon withdrew water from the
ponds on the property, an amount of water the court classified as de minimis. As we have
found multiple violations by CDC of the deed restrictions and have found the actions of
Devon were more than de minimis, we find the trial court’s analysis was flawed.
{¶74} R.C. 164.26(A) specifically requires liquidated damages, stating, “The
policies shall provide for proper liquidated damages and grant repayment for entities that
fail to comply with the long-term ownership or control requirements established under this
division.” This statute appears to reflect a legislative determination the amount of
damages for violation of the use and transfer restrictions, designed to further the public
policy expressed by the electorate of the State in enacting the constitutional amendment
pursuant to which CDC received grant money in the instant case, are difficult to ascertain
as to amount and difficult to prove. We find the trial court did not apply the appropriate
test concerning liquidated damages at the time the agreement was entered, and
improperly limited its analysis to CDC’s contract with Devon (which it erroneously held
did not violate the use restriction) instead of all the use and transfer restriction violations
identified supra.
{¶75} The third assignment of error is sustained.
Guernsey County, Case No. 19CA00047 34
Cross-Appeal I.
{¶76} On cross-appeal, Devon argues the trial court erred in granting CDC’s
motion for summary judgment on its cross-claim for defense and indemnification pursuant
to the Water and Surface Use Agreement it entered with CDC.
{¶77} We note at the outset because OPWC has abandoned its claim for
monetary damages against Devon, the issue on cross-appeal concerns only CDC’s
contractual duty to defend Devon in the instant action, as indemnification is no longer at
issue.
{¶78} The relevant clause in the First Water and Surface Use Agreement entered
into by CDC and Devon provides:
5. LANDOWNER AGREES TO HEREBY FOREVER INDEMNIFY,
RELEASE, ACQUIT, DISCHARGE, AND HOLD HARMLESS DEVON
FROM ALL EXISTING AND FUTURE CLAIMS, DEMANDS, AND CAUSES
OF ACTION, WHETHER KNOWN OR UNKNOWN, WHETHER BASED ON
TORT (INCLUDING STRICT LIABILITY), CONTRACT, OR STATUTORY
LAW, WHETHER GOVERNED BY FEDERAL, STATE, TRIBAL, OR
LOCAL LAWS, RULES, OR ORDINANCES, THAT HAVE BEEN
BROUGHT OR THAT COULD HAVE BEEN BROUGHT IN ANY COURT,
TRIBUNAL, OR FORUM, IN THIS OR ANY OTHER JURISDICTION, THAT
RELATE TO OR ARISE FROM (A) DAMAGES TO THE PONDS CAUSED
BY THE OPERATIONS, OR (B) PERSONAL INJURY OR DEATH
RESULTING FROM THE PONDS OR THE CONTENTS OF THE PONDS
Guernsey County, Case No. 19CA00047 35
BEING USED FOR PURPOSES NOT PERMITTED BY PARAGRAPH 5 OF
THIS AGREEMENT.
{¶79} The trial court found the cross-claim brought by OPWC against Devon did
not fall within the terms of this clause as a matter of law, as the claim was not for damage
to the ponds or personal injury or death. We disagree. Given the broad language
concerning actions arising in tort, contract, or pursuant to statute, we find the instant
action, based on the contract between Devon and CDC allowing damage to the ponds,
fell within the scope of this clause. It is clear, OPWC was initially seeking monetary
damages from Devon.
{¶80} CDC argues this clause is no longer in effect due to the second agreement
entered between the parties, which states in pertinent part:
This Agreement represents the entire agreement between the
Parties relating to the subject matter hereof and supersedes any prior
agreements, representations, or statements, oral or written, relating to the
subject matter of this Agreement.
{¶81} This second agreement did not include an indemnification clause.
{¶82} However, at the same time the parties entered the second agreement, they
also amended the first agreement. The amendment specifically changed the phrase
“paragraph 5” in the last line of the indemnification clause cited above to “paragraph 4” to
correct a typographical error in the first agreement. The amendment provides in pertinent
Guernsey County, Case No. 19CA00047 36
part, “Except as hereby amended, all other terms and conditions of the Agreement shall
remain in full force and effect as presently written.”
{¶83} We find because the second agreement did not specifically address or
otherwise eliminate the indemnification clause, the language in the amendment to the first
agreement, “all other terms and conditions of the [first] Agreement shall remain in full
force and effect as presently written” controls. Accordingly, we find the indemnification
clause remains valid and enforceable.
{¶84} Finally, CDC argues the above cited language does not include a duty to
defend. Although Devon argues CDC raises this issue for the first time on appeal, CDC
raised this issue in a footnote in their reply to Devon’s motion for partial summary
judgment on this issue, filed September 17, 2019, noting the word “defend” is not utilized
in Paragraph 5 of the first agreement.
{¶85} In the insurance arena, the duty to provide a defense to an insured under
an insurance contract is separate and distinct from the duty to pay a judgment or an award
of costs against the insured. Pasco v. State Auto. Mut. Ins. Co., 10th Dist. Franklin No.
04AP-696, 2005-Ohio-2387, ¶15. The language in the indemnification clause in the first
agreement does not include a duty to defend. Because the duty of a defense is separate
from the duty to indemnify, and the contract between the parties did not provide for a right
to a defense but only to indemnification, CDC was not contractually obligated to provide
a defense to Devon, and the trial court did not err in granting CDC’s motion for summary
judgment on Devon’s cross-claim.
{¶86} The assignment of error on cross-appeal is overruled.
Guernsey County, Case No. 19CA00047 37
{¶87} The judgment of the Guernsey County Court of Common Pleas, granting
the summary judgment motions of CDC, Siltstone, Devon, and Patriot, and the motions
for judgment on the pleadings of Gulfport, Synergy, and Whispering Pines, thereby
dismissing OPWC’s counterclaims and crossclaims, is reversed. Pursuant to App. R.
12(B), we hereby enter final judgment granting OPWC’s motion for partial summary
judgment. The judgment of the Guernsey County Common Pleas Court granting CDC’s
motion for summary judgment dismissing Devon’s cross-claim against CDC is affirmed.
This cause is remanded for further proceedings consistent with this opinion.
By: Hoffman, P.J.
Wise, John, J. and
Wise, Earle, J. concur
IN THE COURT OF APPEALS FOR GUERNSEY COUNTY, OHIO
FIFTH APPELLATE DISTRICT
SILSTONE SERVICES, LLC :
:
Plaintiff-Appellee :
:
-vs- : JUDGMENT ENTRY
:
THE GUERNSEY COUNTY :
COMMUNITY DEVELOPMENT :
CORPORATION, et al., : Case No. 19CA000047
:
Defendants-Appellees :
:
And :
:
OHIO PUBLIC WORKS COMMISSION :
:
Defendants-Appellants :
:
And :
:
DEVON ENERGY PRODUCTION :
COMPANY, LP :
:
Defendant-Appellee- :
Cross-Appellant :
The judgment of the Guernsey County Court of Common Pleas, granting the
summary judgment motions of CDC, Siltstone, Devon, and Patriot, and the motions for
judgment on the pleadings of Gulfport, Synergy, and Whispering Pines, thereby
dismissing OPWC’s counterclaims and crossclaims, is reversed. Pursuant to App. R.
12(B), we hereby enter final judgment granting OPWC’s motion for partial summary
judgment. The judgment of the Guernsey County Common Pleas Court granting CDC’s
motion for summary judgment dismissing Devon’s cross-claim against CDC is affirmed.
This cause is remanded for further proceedings consistent with this opinion. Costs of
OPWC’s direct appeal are assessed to CDC. Costs of the cross appeal are assessed to
Devon.