Marchbanks v. Icehouse Ventures, L.L.C. ( 2023 )

[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as
Marchbanks v. Ice House Ventures, L.L.C., Slip Opinion No. 2023-Ohio-1866.]
NOTICE
This slip opinion is subject to formal revision before it is published in an
advance sheet of the Ohio Official Reports. Readers are requested to
promptly notify the Reporter of Decisions, Supreme Court of Ohio, 65
South Front Street, Columbus, Ohio 43215, of any typographical or other
formal errors in the opinion, in order that corrections may be made before
the opinion is published.
SLIP OPINION NO. 2023-OHIO-1866MARCHBANKS, DIR. OF THE OHIO DEPARTMENT OF TRANSPORTATION,
APPELLEE, v. ICE HOUSE VENTURES, L.L.C., ET AL., APPELLANTS.
[Until this opinion appears in the Ohio Official Reports advance sheets, it
may be cited as Marchbanks v. Ice House Ventures, L.L.C., Slip Opinion No.
2023-Ohio-1866.]
Contracts—Damages—Eminent domain—Parties did not make a material mistake
about a basic assumption on which their contract was made—Settlement
agreement was enforceable—Court of appeals’ judgment reversed and
cause remanded to the court of appeals.
(No. 2022-0047—Submitted February 7, 2023—Decided June 8, 2023.)
APPEAL from the Court of Appeals for Franklin County, No. 21AP-24,
2021-Ohio-4195.
__________________
STEWART, J.
{¶ 1} In this discretionary appeal, we are asked to determine whether there
was an enforceable settlement agreement between appellee, Jack Marchbanks,
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director of the Ohio Department of Transportation (“ODOT”),1 and appellants, Ice
House Ventures, L.L.C., Lion Management Services, L.L.C., and Smokestack
Ventures, L.L.C. (collectively, “IHV”), related to an appropriation proceeding
resulting from ODOT’s exercise of eminent domain over property owned by IHV.
Because we conclude that there was an enforceable settlement agreement, we
reverse the judgment of the Tenth District Court of Appeals and remand the case to
that court for further proceedings.
I. Facts and Procedural History
{¶ 2} As part of a project to repair and improve Interstate 70 running
through downtown Columbus, the state, through ODOT, sought to exercise eminent
domain over property owned by IHV in the city’s Brewery District. In 2016,
ODOT filed a petition in the Franklin County Court of Common Pleas to
appropriate the property in accordance with statutorily prescribed eminent-domain
procedures. IHV exercised its right to demand a jury trial to determine the value of
the appropriated property. In 2018, a few days before trial was scheduled to begin,
ODOT and IHV informed the trial court that they had reached an agreement on a
compensation package, under which ODOT would compensate IHV in exchange
for a release of all claims for further compensation, including interest, arising from
the appropriation. The trial court memorialized the parties’ settlement agreement
in a judgment entry.
{¶ 3} The compensation portion of the settlement agreement consisted of
two parts: (1) a payment of $900,000 from ODOT to IHV and (2) the transfer of a
small parcel of land, which is referred to in the agreement as the “Parking
Mitigation Property,” to IHV. The second part of the compensation portion of the
agreement, regarding the transfer of the small parcel of land, is the basis of this
1. The current director of ODOT, Marchbanks, is substituted as a party for the former director of
ODOT, Jerry Wray, who was the director when this action commenced. See S.Ct.Prac.R. 4.06(B);
Civ.R. 25(D)(1).
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dispute. Although the city of Columbus owned the small parcel of land at the time
of the agreement, ODOT believed that the city would be willing to transfer the
parcel to ODOT, which could then transfer the parcel to IHV. The agreement stated
that “ODOT shall provide IHV with marketable fee simple title” to the Parking
Mitigation Property and that the property “shall be conveyed to [IHV] free and clear
of all limitations of access or other liens and encumbrances, excepting only such
restrictions and easements of record which shall not unreasonably interfere with
use of the Parking Mitigation Property as a parking lot sufficient to hold twelve
(12) parking spaces as generally depicted in [a parking plan attached to the
agreement as an exhibit].”
{¶ 4} There is no dispute that ODOT was unable to transfer the Parking
Mitigation Property to IHV. Because that portion of the agreement was not
performed, the following language in the agreement is relevant to this appeal:
It is further ORDERED that, within one year after the date
hereof: (1) if ODOT fails to convey marketable fee simple title to
the Parking Mitigation Property as provided herein; or (2) if ODOT
fails to modify its plans for [the improvements to Interstate 70] to
allow for the construction of a parking lot on the Parking Mitigation
Property in accordance with the Parking Plan; or (3) if all permits
and/or approvals required for IHV to construct a parking lot on the
Parking Mitigation Property in accordance with the Parking Plan
have not been obtained; then the Court shall retain jurisdiction to
determine the damages due to IHV for the failure of ODOT to
deliver this portion of the consideration for ODOT’s appropriation
of IHV’s property.
(Boldface and capitalization sic.)
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{¶ 5} In April 2019, IHV moved to enforce the agreed judgment entry on
the settlement. In June 2019, the trial court held an evidentiary hearing on the
motion and thereafter issued an order granting IHV’s motion and awarding
damages to IHV. The following portion of the order summarizes the trial court’s
reasoning for the damages award and states the amount of the award:
Once the Parties settled the case in October 2018, ODOT’s
Eminent Domain action terminated. After ODOT informed IHV
and the Court that it could not deliver the Parking Mitigation
Property, this case became about ODOT’s potential breach of
settlement, nothing more. The Court appreciates the evidence from
the numerous expert witnesses who testified about the various
eminent domain appraisals, but once ODOT conceded it could not
deliver the Parking Mitigation Property, this case ceased to be about
the value of IHV’s property before and after the taking. It was never
about the damage to the residue, or what the Parking Mitigation
parcel is worth. The issues are 1) did ODOT breach the settlement,
and if so, 2) what is the value of twelve (12) parking spaces in the
Brewery District, because that is what ODOT promised to IHV.
Those spaces are what IHV expected, and the monetary damages for
the value of those twelve (12) spaces is what IHV is entitled to under
Ohio law.
V. HOLDINGS AND ORDERS
Based on the foregoing, the Court hereby issues the following
orders:
1. The Court awards Ice House Ventures judgment in the amount of
nine hundred thousand dollars ($900,000.00).
***
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(Boldface and capitalization sic.)
{¶ 6} ODOT appealed the trial court’s judgment to the Tenth District Court
of Appeals, raising four assignments of error: (1) “The trial court erred in enforcing
settlement because there was no meeting of the minds on a material term of
settlement,” (2) “The trial court lacked subject-matter jurisdiction to award contract
damages against ODOT,” (3) “The trial court erred in finding that ODOT breached
the settlement,” and (4) “The trial court erred in finding ODOT liable for IHV’s
attorney fees.”
{¶ 7} The Tenth District reversed the trial court’s judgment based on
ODOT’s first assignment of error. 2021-Ohio-4195, ¶ 7, 17-18. The court of
appeals noted that the term “damages” was not defined in the agreement. Id. at
¶ 11. It also noted that ODOT had argued that the term “damages” in the agreement
meant eminent-domain damages, i.e., “damages to the residue,” whereas IHV had
contended that “damages” meant contract damages, i.e., “expectation damages
premised on the benefit of the bargain.” Id. The court determined that “the record
does not contain any evidence to support the conclusion that the parties mutually
agreed that ‘damages’ meant expectation damages versus damages to the residue
and indeed, shows that the parties disagreed on what ‘damages’ meant.” Id. at ¶ 17.
And it held that “[b]ecause there is no evidence of a meeting of the minds on what
the parties meant by ‘damages,’ the trial court erred by finding there was an
enforceable settlement agreement in the first place.” Id. The court of appeals
vacated the agreed judgment entry on the settlement and remanded the matter for
trial “as any appropriation proceeding would be tried—on the issues of
compensation for the property taken and damages to the residue.” Id.
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{¶ 8} This court accepted IHV’s discretionary appeal on the following
propositions of law2:
[1.] When parties enter into a written settlement agreement,
a meeting of minds is presumed. That presumption may only be
rebutted by competent evidence, not after-the-fact argument by
counsel.
[2.] After a written agreement is memorialized in a court
order, a party may not collaterally attack the order by claiming that
no meeting of the minds exists. A trial court has the inherent
authority to interpret and enforce its own order.
[3.] A party alleging a breach of a settlement agreement in
an eminent domain matter is entitled to its expectation damages.
See 166 Ohio St.3d 1448, 2022-Ohio-994, 184 N.E.3d 159.
II. Law and Analysis
{¶ 9} Under its first proposition of law, IHV asks this court to hold that
Ohio law presumes that a meeting of the minds exists when parties enter into a
written agreement and that the presumption may be overcome only by “clear and
satisfactory” evidence. At the outset, we note that the posture of this case is
different from that in a contract dispute in which one side files a complaint seeking
2. We note that in its memorandum in opposition to jurisdiction, ODOT, the appellee here,
presented three “Plaintiff-Appellee’s Proposition[s] of Law,” even though ODOT did not file a
cross-appeal in this court. In its merit brief, ODOT has presented three “Proposition[s] of Law” that
do not correspond directly to IHV’s propositions of law that we accepted for review. Although
parties in this court are free to strategically craft their arguments as they see fit, we caution appellees
to be mindful of two relevant rules of practice in this court. S.Ct.Prac.R. 7.03(B)(1)(b) requires a
memorandum in response to a memorandum in support of jurisdiction to contain “[a] brief and
concise argument in support of the appellee’s position regarding each proposition of law raised in
the memorandum in support of jurisdiction.” (Emphasis added.) And S.Ct.Prac.R. 16.03(B)(1)
states, “The appellee’s brief shall * * * answer the appellant’s contentions * * * and make any other
appropriate contentions as reasons for affirmance of the order or judgment from which the appeal is
taken.” (Emphasis added.)
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to enforce contractual terms and the other side asserts defenses. Here, the
proceeding in the trial court that led to this appeal was a damages hearing conducted
pursuant to the parties’ settlement agreement, which stated that the trial court “shall
retain jurisdiction” to determine damages. The arguments at that hearing centered
on the proper nature and amount of damages and not on whether the agreement was
valid or any alleged lack of clarity about the parties’ performances or obligations
under the agreement.3 Although ODOT argued in the trial court that it should
interpret the meaning of the term “damages” in the agreement as meaning “damages
to the residue,” ODOT also presented evidence of what it asserted to be the proper
calculation of expectation damages, if the court were to determine that expectation
damages were what IHV should be awarded.
{¶ 10} ODOT attempts to analogize this case to Rulli v. Fan Co., 79 Ohio
St.3d 374, 683 N.E.2d 337 (1997). In Rulli, this court recognized that “[t]o
constitute a valid settlement agreement, the terms of the agreement must be
reasonably certain and clear.” Id. at 376. We held that “[w]here the meaning of
terms of a settlement agreement is disputed, or where there is a dispute that contests
the existence of a settlement agreement, a trial court must conduct an evidentiary
hearing prior to entering judgment.” Id. at 377.
{¶ 11} We find Rulli wholly distinguishable from this case. This court
described the facts in Rulli as follows:
3. We recognize that ODOT argued in its response to IHV’s motion to enforce the agreed entry on
settlement that “[i]n the alternative, if as stated by IHV, ‘the property conveyance was the linchpin
to the settlement[,]’ then this court can set aside the entire settlement and set this for a trial on the
merits to determine the issues of compensation for the property taken and damages to the residue,
if any, pursuant to standard practice in eminent domain actions.” We understand that argument to
go to IHV’s request for specific performance—i.e., that the court require ODOT to convey the
Parking Mitigation Property to IHV—and not to any argument that the contract was not valid or
enforceable.
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SUPREME COURT OF OHIO
Though upon first examination, the settlement terms as read
into the record on June 23, 1993, appear reasonably clear, the parties
were subsequently unable to agree upon the meaning and effect of
those terms. They were unable to execute a formal purchase
agreement and they did not provide the court with an entry as
ordered by the court. The parties instead offered varying
interpretations of the terms read into the record, and disputed nearly
every major element of the purported agreement. Therefore, the
language read into the record at the initial hearing reflects, at best,
merely an agreement to make a contract.
Id. at 376-377.
{¶ 12} Unlike in Rulli, the record in this case demonstrates that ODOT and
IHV clearly intended to enter into, and in fact entered into, a binding settlement
agreement. During ODOT’s closing argument at the June 2019 evidentiary hearing,
ODOT’s counsel stated about the agreement: “It’s black and white. It’s written.
Your Honor signed it. You know, so we are not disputing that at all. What we—
what we are disputing is that valuation attached to [the Parking Mitigation
Property].” The circumstances in this case are not analogous to those in Rulli, in
which the parties had failed to even reduce their purported oral agreement to a
judgment entry as was requested by the court, id. at 374-375.
{¶ 13} Moreover, “ ‘[e]ssential elements of a contract include an offer,
acceptance, contractual capacity, consideration (the bargained for legal benefit
and/or detriment), a manifestation of mutual assent and legality of object and of
consideration.’ ” 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). Because a breach of a contract is not an inevitability, it
cannot follow that a definition of “damages” is an essential element of a contract.
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If a contract’s terms are properly performed, the question of damages never arises.
Indeed, a valid contract may exist and bind the parties without its mentioning
damages at all. Thus, we reject ODOT’s argument that Rulli instructs that the
settlement agreement here was not a valid contract simply because the term
“damages” was not defined therein.
{¶ 14} After the trial court awarded expectation damages to IHV, ODOT
argued on appeal that the trial court had erred by enforcing the parties’ settlement
agreement because, in its view, there had been no meeting of the minds as to what
the parties meant by the term “damages.” Indeed, ODOT’s arguments in the court
of appeals and here seem to conflate the concepts of lack of a meeting of the minds
and mutual mistake. Its arguments are best understood as claims that it should be
relieved of its obligations under the settlement agreement, not that it did not agree
to those obligations under the settlement in the first place.
{¶ 15} This court has recognized the doctrine of mutual mistake as a ground
for rescission of an existing agreement. See Reilley v. Richards, 69 Ohio St.3d 352,
632 N.E.2d 507 (1994), citing Irwin v. Wilson, 45 Ohio St. 426, 15 N.E. 209 (1887).
The mistake must be one that is material to the contract, i.e., a mistake regarding a
basic assumption on which the contract was made that frustrates the intent of the
parties. Id. at 353; 1 Restatement of the Law 2d, Contracts, Section 152(1), at 385
(1981). “The party alleging mutual mistake bears the burden of proving its
existence by clear and convincing evidence.” Coldwell v. Moore, 2014-Ohio-5323,
22 N.E.3d 1097, ¶ 18 (7th Dist.), citing Frate v. Rimenik, 115 Ohio St. 11, 152 N.E.
14 (1926), paragraph one of the syllabus.
{¶ 16} ODOT asserts that the “textbook” example of mutual mistake found
in Raffles v. Wichelhaus, 159 Eng.Rep. 375 (1864), is instructive here. In Raffles,
the parties agreed to the sale of cotton arriving at Liverpool, England, from
Bombay, India, aboard a ship named “Peerless.” Id. But two ships named
“Peerless” sailed from Bombay to Liverpool several months apart carrying cotton,
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with the seller having meant one of those ships and the buyer having meant the
other. Id. ODOT argues that the parties’ disagreement over the meaning of the
term “damages” here is like the confusion over the ships in Raffles.
{¶ 17} But unlike in Raffles, the purported “mistake” here does not concern
the basis of the parties’ agreement. Specifically, the parties’ performances under
the agreement—ODOT’s compensation to IHV for the appropriation of IHV’s land
and IHV’s release of claims for further compensation relating to the
appropriation—did not depend on a particular calculation or amount of damages.
And the parties did not contract for a particular type or amount of damages, despite
being sophisticated parties negotiating in good faith with the advice of legal
counsel. For example, the parties could have included a liquidated-damages clause
or some specific description of the type of damages to be awarded if that were
appropriate under and material to the agreement. However, the agreement is clear
that the parties left the question of damages to the trial court, if the question arose.
The agreed judgment entry on the settlement plainly states: “[T]he Court shall
retain jurisdiction to determine the damages due to IHV for the failure of ODOT to
deliver this portion of the consideration[, i.e., the Parking Mitigation Property,] for
ODOT’s appropriation of IHV’s property.”
{¶ 18} Moreover, had the terms of the contract been fully performed, the
question of damages never would have arisen. In other words, even assuming that
each party understood the term “damages” to mean something different, that
mistake would not frustrate the obligations of the parties or the intent of the
agreement, because the parties’ performances of the terms existed independently of
the type or amount of damages that might become due if a breach occurred. Any
uncertainty regarding the meaning that each party assigned to the term “damages”
in the agreement is irrelevant, because the essential elements of the parties’
agreement were clear. See, e.g., Coldwell, 2014-Ohio-5323, 22 N.E.3d 1097, at
¶ 22 (“Regardless of the meaning the [buyers] attached to the term ‘minerals’ or
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what they believed they already owned, the record is clear that they intended to buy
all of the mineral rights to those parcels from the [sellers]” [emphasis sic]). Thus,
even if we were to determine that the parties understood the meaning of the term
“damages” in the agreement differently, that is not a mistake that is material to the
agreement.
{¶ 19} Further, recall that a material mutual mistake is “ ‘a mistake * * * as
to a basic assumption on which the contract was made [that] has a material effect
on the agreed exchange of performances.’ ” (Ellipsis and brackets added in Reilley
and emphasis added.) Reilley, 69 Ohio St.3d at 353, 632 N.E.2d 507, quoting 1
Restatement, Section 152(1), at 385. ODOT points to no evidence showing that it
had a different understanding of the term “damages” at the time the agreement was
made in a way that has a material effect on the parties’ agreed-upon settlement
obligations. The point in time at which a different understanding of a term occurs
is important. The court of appeals determined that the parties’ “fundamentally
divergent understandings” of the term “damages” was apparent based on the
arguments presented at the hearing on the motion to enforce the settlement
agreement, during which ODOT attempted to minimize its damages exposure while
IHV attempted to maximize its potential recovery. 2019-Ohio-4195 at ¶ 16. This
after-the-fact disagreement about how to construe the term “damages” does not
support a finding that the parties made a material mistake about a basic assumption
on which the contract was made.
{¶ 20} Accordingly, ODOT has not shown by clear and convincing
evidence that it is entitled to rescission of the settlement agreement or that any lack
of understanding about the term “damages” in the agreement renders it
unenforceable.
III. Conclusion
{¶ 21} Because we conclude that the settlement agreement is enforceable,
we reverse the judgment of the Tenth District holding otherwise. The Tenth
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District’s decision resolved ODOT’s appeal only on its first assignment of error, in
which ODOT argued that there had been no meeting of the minds on a material
term of the settlement agreement. 2021-Ohio-4195 at ¶ 19. Based on that
resolution, the court of appeals declined to address ODOT’s three remaining
assignments of error, some of which raise issues that may be determinative of the
parties’ liabilities and obligations under the agreement. Given that those issues
remain unresolved in the court of appeals, and given our resolution of IHV’s first
proposition of law, we need not address IHV’s remaining propositions of law to
this court and, instead, we remand the cause to the Tenth District Court of Appeals
for it to address ODOT’s remaining assignments of error.
Judgment reversed
and cause remanded.
KENNEDY, C.J., and FISCHER, DEWINE, DONNELLY, BRUNNER, and DETERS,
JJ., concur.
_________________
Dave Yost, Attorney General, Benjamin M. Flowers, Solicitor General,
Samuel C. Peterson, Deputy Solicitor General, and William J. Cole and L. Martin
Cordero, Assistant Attorneys General, for appellee.
Vorys, Sater, Seymour & Pease, L.L.P., Joseph R. Miller, John M. Kuhl,
Daniel E. Shuey, and Danielle S. Rice, for appellants.
Dinsmore & Shohl, L.L.P., and Richik Sarkar; and Kevin D. Shimp, Ohio
Chamber of Commerce, urging reversal for amicus curiae, Ohio Chamber of
Commerce.
_________________
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