Innovative Business Technologies, L.L.C. v. Ohio State Univ. ( 2021 )

[Cite as Innovative Business Technologies, L.L.C. v. Ohio State Univ., 2021-Ohio-2403.]
INNOVATIVE BUSINESS Case No. 2018-01403JD
TECHNOLOGIES, LLC
Judge Dale A. Crawford
Plaintiff
DECISION
v.
THE OHIO STATE UNIVERSITY
Defendant
I. Introduction
{¶1} Plaintiff Innovative Business Technologies, LLC (IBT) brings claims of
breach of contract and tortious interference with a contract against Defendant The Ohio
State University (OSU). The parties’ dispute stems from two contracts concerning two
projects at OSU’s College of Engineering: Active Directory (AD) Project, and System
Center Configuration Management (SCCM) Project.
{¶2} The case proceeded to a bench trial on issues of liability and damages. At
the conclusion of trial, the Court determined that IBT proved by a preponderance of the
evidence that OSU breached the parties’ two contracts. The Court also determined that
OSU is liable for damages that are proximately caused by its breaches. The Court
ordered the parties to submit briefing on the issues of damages and attorney fees. The
Court, however, took the issue of IBT’s claims for tortious interference with a contractual
relationship under advisement pending a review of submitted deposition evidence.
{¶3} Following the trial OSU submitted a filing labeled “Memorandum In
Opposition To An Award Of Attorney Fees And To IBT’s Last-Minute Damage Claim
and Review Of IBT’s Damage Claim.” And following the trial IBT submitted a post-trial
brief and a Notice of Filing. In the Notice of Filing IBT represents that it filed the
followingdocuments: (1) Trial Transcript with Exhibits, (2) Deposition of Marsha Henfer
Case No. 2018-01403JD -2- DECISION
with Exhibits, (3) Deposition of Stacy Spear with Exhibits, (4) Affidavit of Shaina Thorpe
with Exhibits, and (5) Affidavit of Beth Lashuk with Exhibits. A review of the docket,
however, discloses that the documents identified in IBT’s Notice of Filing were not
contemporaneously filed with IBT’s Notice.
II. IBT has not proven by a preponderance of the evidence that OSU tortiously
interfered with IBT’s contracts with its subcontractors.
{¶4} IBT is required to establish its claims of tortious interference with a contract
by a preponderance of the evidence. See Weishaar v. Strimbu, 76 Ohio App.3d 276,
282, 601 N.E.2d 587 (8th Dist.1991). A preponderance of the evidence “is defined as
that measure of proof that convinces the judge or jury that the existence of the fact
sought to be proved is more likely than its nonexistence.” State ex rel. Doner v. Zody,
130 Ohio St.3d 446, 2011-Ohio-6117, 958 N.E.2d 1235, ¶ 54. Under Ohio law the
elements of the tort of tortious interference with a contract “are (1) the existence of a
contract, (2) the wrongdoer’s knowledge of the contract, (3) the wrongdoer’s intentional
procurement of the contract’s breach, (4) the lack of justification, and (5) resulting
damages.” Fred Siegel Co., L.P.A. v. Arter & Hadden, 85 Ohio St.3d 171, 176, 707
N.E.2d 853 (1999), citing Kenty v. Transamerica Premium Ins. Co., 72 Ohio St. 3d 415,
650 N.E.2d 863 (1995), paragraph two of the syllabus.
{¶5} Based on the submitted evidence, the Court finds that OSU did not
intentionally procure the breach of IBT’s contracts with IBT’s subcontractors—Syllogistic
Group or LenMar Project Solutions—as alleged by IBT. Thus, IBT has not proven all
the required elements of the tort of tortious interference with a contract and,
consequently IBT has failed to prove by a preponderance of the evidence that OSU
tortiously interfered with IBT’s contracts with Syllogistic Group or LenMar Project
Solutions. The Court holds that IBT is not entitled to relief on its claims of tortious
interference with a contract.
Case No. 2018-01403JD -3- DECISION
III. IBT is entitled to damages and prejudgment interest for OSU’s breach of
the parties’ contracts.
{¶6} At trial the Court found that OSU is liable for IBT’s lost profit of
approximately $8,000. IBT asserts, however, that “the amount due and payable to IBT
for the breach of contract claims is the $439,840 service cost due under the AD
Contract, along with waiting time for five resources under the AD Contract and two
resources under the SCCM Contract through the end the Contracts in March 2018 of
$1,710,140. The resulting total amount due to IBT is $2,149,980 plus attorney’s fees
and costs.”
{¶7} OSU challenges IBT’s calculation of the amount due and payable. OSU
contends that IBT’s unwillingness to engage in good faith settlement discussions bars
recovery. OSU further contends that before trial (1) IBT was offered more than this
Court awarded at trial, (2) IBT refused to negotiate in good faith, and (3) IBT insisted
that the case should go to trial. OSU reasons that, if IBT had accepted OSU’s offer or
continued to negotiate, it would not have incurred attorney fees in the weeks leading up
to and through trial.
{¶8} In Allen, Heaton & McDonald, Inc. v. Castle Farm Amusement Co., 151 Ohio
St. 522, 86 N.E.2d 782 (1949), the Ohio Supreme Court discussed the concept of
damages resulting from a breach of contract. The Ohio Supreme Court held, “Where a
plaintiff sues on a contract to recover the amount he would have received for the full
performance thereof which was prevented by a defendant's breach, he seeks in effect to
recover as damages the profit from performance of the contract that defendant's breach
prevented him from earning.” Castle Farm Amusement Company at paragraph two of
the syllabus. The Ohio Supreme Court further held, “In such a case, plaintiff has the
burden of alleging and proving not only (a) what he would have received under the
contract from the performance so prevented, but also (b) what such performance would
have cost him (or the value to him of relief therefrom). Unless he proves both of
Case No. 2018-01403JD -4- DECISION
thosefacts, he cannot recover as damages the profits he would have earned from full
performance of the contract.” Id. at paragraph three of the syllabus. Accord ABLE
Roofing v. Pingue, 10th Dist. Franklin No. 10AP-404, 2011-Ohio-2868, ¶ 24, quoting
Restatement (Second) of Contracts (1981), Section 347 (injured party has a right to
damages as measured by (a) the loss in the value to him of the other party's
performance caused by its failure or deficiency, plus (b) any other loss caused by the
breach, less (c) any cost or other loss that he has avoided by not having to perform).
{¶9} Based on the submitted evidence, the Court finds that OSU paid IBT
$74,300 for the SCCM Project, which was the agreed price for the SCCM Project. IBT
thus received the benefit of its bargain for the SCCM Project. IBT is therefore not
entitled to damages for OSU’s breach of the contract for the SCCM Project.
{¶10} Based on the parties’ representations to the Court and evidence submitted,
and for reasons that the Court announced at trial, the Court finds that IBT is entitled to
damages for lost profits in the amount of $8,385.00 for OSU’s breach of the contract for
the AD project, which the Court determines as follows:
$219,810.00 (IBT’s projected total profits)
- $211,424.45 (IBT’s actual profits received)
$ 8,385.55 (Difference between projected total profits and actual profits)
See generally Charles R. Combs Trucking, Inc. v. Internatl. Harvester Co., 12 Ohio
St.3d 241, 466 N.E.2d 883 (1984), paragraph two of the syllabus (holding that lost
profits “may be recovered by the plaintiff in a breach of contract action if: (1) profits were
within the contemplation of the parties at the time the contract was made, (2) the loss of
profits is the probable result of the breach of contract, and (3) the profits are not
Case No. 2018-01403JD -5- DECISION
remoteand speculative and may be shown with reasonable certainty”); see also JLJ Inc.
v. Rankin & Houser, Inc., 2d Dist. Montgomery No. 23685, 2010-Ohio-3912, ¶ 21.1
{¶11} R.C. 2743.18 governs an award of prejudgment interest on a judgment
rendered against the state. R.C. 2743.18(A)(1) provides, “Prejudgment interest shall be
allowed with respect to a civil action on which a judgment or determination is rendered
against the state for the same period of time and at the same rate as allowed between
private parties to a suit.” (Emphasis added.) See R.C. 1343.03 (interest when rate is
not stipulated). In Royal Elec. Constr. Corp. v. Ohio State Univ., 73 Ohio St.3d 110,
116, 652 N.E.2d 687 (1995), the Ohio Supreme Court stated, “[I]n determining whether
to award prejudgment interest pursuant to R.C. 2743.18(A) and 1343.03(A), a court
need only ask one question: Has the aggrieved party been fully compensated?” In
Royal Electric Construction Corporation the Ohio Supreme Court held:
In a case involving breach of contract where liability is determined
and damages are awarded against the state, the aggrieved party is
entitled to prejudgment interest on the amount of damages found due by
the Court of Claims. The award of prejudgment interest is compensation to
the plaintiff for the period of time between accrual of the claim and
1In JLJ Inc. v. Rankin & Houser, Inc., 2d Dist. Montgomery No. 23685, 2010-Ohio-3912, ¶ 21, the
Second District Court of Appeals stated:
“‘As a general rule, an injured party cannot recover damages for breach of contract
beyond the amount that is established by the evidence with reasonable certainty, and
generally, courts have required greater certainty in the proof of damages for breach of
contract than in tort.’ * * * The damages awarded for a breach of contract should place
the injured party in as good a position as it would have been in but for the breach. Such
compensatory damages, often termed ‘expectation damages,’ are limited to actual loss,
which loss must be established with reasonable certainty.” Textron Fin. Corp. v.
Nationwide Mut. Ins. Co. (1996), 115 Ohio App.3d 137, 144, 684 N.E.2d 1261. We have
noted, however, that a trial court “enjoys a certain degree of latitude in ‘structuring
damage awards in a manner most appropriate to the case before it.’” Davis v. Sun
Refining and Marketing Co. (1996), 109 Ohio App.3d 42, 59, 671 N.E.2d 1049 (citation
omitted).
Case No. 2018-01403JD -6- DECISION
judgment, regardless of whether the judgment is based on a claim which
was liquidated or unliquidated and even if the sum due was not capable of
ascertainment until determined by the court. (R.C. 2743.18[A] and
1343.03[A], construed and applied.)
(Emphasis added.) Id. at syllabus. In accordance with Royal Electric Construction
Corporation, IBT therefore is entitled to prejudgment interest on the amount of damages
on IBT’s claims of breach of contract.
{¶12} Based on the submitted evidence, the Court holds that IBT is entitled to
$8,385.55 in damages for lost profits for OSU’s breaches of contract, plus prejudgment
interest at the statutory rate as of June 23, 2017 (the date that OSU called IBT about
terminating the parties’ contracts). See United States Playing Card Co. v. Bicycle Club,
119 Ohio App.3d 597, 609, 695 N.E.2d 1197 (1st Dist.1997) (finding that prejudgment
interest is to be calculated from the date of a breach until the date the trial court’s
judgment was entered); see also R.C. 1343.03(A) and 5703.47.
IV. IBT is entitled to an award of attorney fees under the parties’ contracts.
{¶13} OSU disputes that it contractually agreed to an award of attorney fees.
OSU maintains that, according to Sections 7 and 12 of the General Terms and
Conditions contained in the parties’ contracts, OSU agreed that IBT may “seek”
damages, including attorney fees.
{¶14} Both of the parties’ contracts contain General Terms of Conditions,
Sections 7 and 12, whose provisions are identical. Section 7 provides,
PAYMENT TERMS - The Project Initiation Service Fees are due 14 days
prior to the Initialization/Kick-off meeting for the Project. All remaining
payments are to be made according to the “Payment Schedule on page 7
of this contract/Agreement. Charges resulting from changes to the SOW
will be due in advance of commencing services. All invoiced work will be
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due upon receipt of invoice ACH payment is the preferred method of
payment. If payment due to IBT is not received within 15 days from due
date IBT shall be entitled to seek all amounts due it in law or in equity
including court costs, and reasonable attorney fees (including but not
limited to pre-litigation, representation through appeals and post-trial
motions) which may be incurred by IBT in the collection of any invoices
not paid in full by Customer.
(Emphasis added.) Section 12 states,
LAW OF AGREEMENT - The parties agree that the laws of the State of
Ohio shall govern any dispute arising from or related to this agreement.
The parties further agree that entry into this agreement constitutes
irrevocable consent that the exclusive venue for any such dispute shall be
solely in the state or county courts in and for Franklin County, Ohio.
Litigation in federal court is precluded by agreement of the parties hereto.
The parties acknowledge and agree that they have had the opportunity to
review this agreement, its terms and conditions, with counsel of their
choice prior to executing same. IBT reserves all rights to seek reasonable
attorneys’ fees in all proceedings, trials, investigations, appearances,
appeals, arbitrations, and in any bankruptcy proceeding or administrative
proceeding as the prevailing party.
(Emphasis added.)
{¶15} Contract interpretation presents a question of law. City of St. Marys v.
Auglaize Cty. Bd. of Commrs., 115 Ohio St.3d 387, 2007-Ohio-5026, 875 N.E.2d 561, ¶
38. Contracts “are to be interpreted so as to carry out the intent of the parties, as that
intent is evidenced by the contractual language.” Skivolocki v. E. Ohio Gas Co., 38
Ohio St.2d 244, 313 N.E.2d 374 (1974), paragraph one of the syllabus. Common words
in a written instrument “will be given their ordinary meaning unless manifest absurdity
Case No. 2018-01403JD -8- DECISION
results, or unless some other meaning is clearly evidenced from the face or overall
contents of the instrument.” Alexander v. Buckeye Pipeline Co., 53 Ohio St.2d 241,
241, 374 N.E.2d 146 (1978), paragraph two of the syllabus.
{¶16} To construe Sections 7 and 12 as meaning that OSU promised that IBT
may “seek” damages is tantamount to concluding that OSU offered no consideration
because a plaintiff generally can always “seek” damages, including an award of attorney
fees, in a contractual dispute. See McGlone v. Motorist Mut. Ins., 3d Dist. Crawford No.
3-2000-25, 2001-Ohio-2188, 2001 Ohio App. LEXIS 1626, *10 (April 5, 2001) (“[a]n
illusory promise is a promise that lacks consideration and thus, is unenforceable”).
Courts generally disfavor interpretations of contracts that render contracts illusory or
unenforceable, and courts generally prefer a meaning, which gives the contract vitality.
See Thomas v. Am. Elec. Power Co., 10th Dist. Franklin No. 03AP-1192, 2005-Ohio-
1958, ¶ 32. The Court determines that under Sections 7 and 12 the parties intended
that IBT, as a prevailing party, is entitled to reasonable attorney fees for the amount
owed to IBT. When a state entity contractually agrees to an attorney fees provision, this
Court should enforce the contractual provision. See Georgalis v. Cloak Factory
Condominium Unit Owners’ Assn., 8th Dist. Cuyahoga No. 109300, 2021-Ohio-66, ¶ 34
(observing that that the Ohio Supreme Court has made clear that courts should not
rewrite contracts).
{¶17} The Court finds that IBT is entitled to an award of reasonable attorney fees
from the time during pretrial negotiations that OSU offered to resolve the parties’ dispute
for $8,385.55, or an amount more than $8,385.55. Plaintiff shall prepare an affidavit
reflecting reasonable attorney fees for services rendered to Plaintiff from the time during
pretrial negotiations that OSU offered $8,385.55, or an amount more than $8,385.55.
Plaintiff shall file such affidavit with the Court within 10 days of the date of this entry.
And Plaintiff shall serve OSU with the affidavit that Plaintiff shall prepare.
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{¶18} If the parties agree to the amount of attorney fees owed to IBT, then the
parties shall inform the Court of the parties’ agreement within 14 days of the date of this
entry. However, if the parties cannot agree on the amount of attorney fees to which IBT
is due, then the parties shall notify the Court within 14 days of the date of the entry. If
the parties are unable to reach an agreement on the amount of attorney fees that are
due, then the Court will schedule an evidentiary hearing to determine the amount of
attorney fees to which IBT is entitled.
DALE A. CRAWFORD
Judge
Filed May 17, 2021
Sent to S.C. Reporter 7/14/21