Ada Exempted Vill. Sch. Dist. Bd. of Educ. v. Ada Wind, LLC

157 N.E.3d 232

2020 Ohio 4017

ADA EXEMPTED VILLAGE SCHOOL DISTRICT BOARD OF EDUCATION, Plaintiff-Appellant,

v.ADA WIND, LLC, et al., Defendants-Appellees.

NO. 6-19-13

Court of Appeals of Ohio, Third District, Hardin County.

Date of Decision: August 10, 2020

Christian M. Williams, Cleveland, for Appellant.

Gregory P. Amend, Akron, for Appellees.

SHAW, P.J.

{¶1} Plaintiff-appellant, Ada Exempted Village School District Board of Education (the "Board"), appeals the October 18, 2019 judgment of the Hardin County Court of Common Pleas granting the motion to dismiss its complaint filed by defendants-appellees, Ada Wind, LLC ("Ada Wind") and NexGen Energy Partners, LLC ("NexGen"). On appeal, the Board argues that the trial court erred in determining that the contractual limitations period had expired prior to the Board filing its complaint.

Relevant Facts

{¶2} On June 24, 2009, the Board and Ada Wind entered into a contract known as the Renewable Energy Service Agreement ("RESA") for the installation of a wind turbine generator on the Board's property.¹ In exchange for allowing Ada Wind to install the wind turbine on the Board's property, the Board purchased the energy produced by the turbine at a locked-in predictable rate.

{¶3} In January of 2010, the wind turbine was installed and the Board began purchasing the energy that the turbine produced as provided for by the RESA.

{¶4} On June 23, 2016, a lightning strike caused substantial damage to the wind turbine, rendering it inoperable. The parties agreed that the lightning strike constituted a "Force Majeure" under the RESA. Thereafter, the Board notified Ada Wind of the damage and requested the turbine be repaired.

{¶5} On June 26, 2017, after no repair to the turbine had been made the Board through counsel notified Ada Wind of its intent to terminate the agreement pursuant to sections 9.2.2 and 12.3 of the RESA. These provisions of the RESA allow for the Board to give a 30-day notice of termination of the agreement if a Force Majeure has occurred preventing Ada Wind from producing energy for twelve consecutive months and releases both parties from further liability under the RESA. The Board further demanded that Ada Wind remove the turbine from its property pursuant to section 9.4 of the RESA. Thereafter, Ada Wind and NexGen entered on the property and removed parts from the turbine for another customer, but did not remove the turbine.

{¶6} On April 11, 2018, counsel for the Board sent a letter notifying Ada Wind that the Board intended to file a cause of action against Ada Wind and/or NexGen. The Board expressed its willingness to resolve the matter pursuant to section 19.7 of the RESA, under which the parties agreed to arbitrate their disputes, or in the alternative, section 19.7 permitted the parties to file a lawsuit to resolve any dispute covered by the RESA, but only after the parties engaged in meditation as a condition precedent. The Board requested a response from Ada Wind's counsel.

{¶7} On May 10, 2018, counsel for Ada Wind responded, indicating that Ada Wind was willing to mediate the matter and inquiring whether the Board had suggestions as to who would be the mediator and a location for the mediation.

{¶8} On June 7, 2018, counsel for Ada Wind contacted the Board's counsel to follow up on the previous correspondence.

{¶9} On July 25, 2018, counsel for the Board responded by suggesting the use of a specific mediator, one that NexGen had used in a similar dispute with another school board, and requesting that Ada Wind provide possible dates, times, and locations for the mediation. Two days later, on July 27, 2018, counsel for Ada Wind indicated that he would speak to his client and get back to the Board.

{¶10} On August 28, 2018, counsel for the Board contacted Ada Wind's counsel inquiring of the status of the mediation planning.

{¶11} On September 10, 2018, counsel for Ada Wind informed the Board's counsel that Ada Wind was no longer willing to participate in mediation because it had no liability under the contract.

Procedural History

{¶12} On December 3, 2018, the Board filed a complaint against Ada Wind and NexGen for a declaratory judgment and breach of contact.² Specifically, the Board alleged that under the RESA Ada Wind and NexGen were required to remove the turbine from the Board's property at Ada Wind's and/or NexGen's expense. The Board requested specific performance and/or compensatory damages arising from Ada Wind's and NexGen's refusal to remove the turbine,³ as well as an award of reasonable costs and attorney fees related to bringing the lawsuit.

{¶13} Ada Wind and NexGen subsequently filed a motion to dismiss the complaint pursuant to Civ.R. 12(B)(6). Specifically, Ada Wind and NexGen claimed that the Board's complaint failed to state a claim upon which relief could be granted because a one-year contractual limitations period for filing a lawsuit had expired prior to the Board filing its complaint. Ada Wind and NexGen further argued that, even assuming the Board's case was not time barred, the express terms of the RESA, which relate to the parties' rights and obligations following a Force Majeure event, released them from liability.

{¶14} The Board filed a response arguing that it initiated the mediation process prior to the one-year contractual limitations period, therefore, the claims asserted in its complaint against Ada Wind and NexGen were not time-barred. The Board also argued that the dispute resolution procedure under the RESA was ambiguous and asserted that Ada Wind and NexGen acted in bad faith when they initially agreed to mediate, but then refused.

{¶15} The trial court conducted a hearing on Ada Wind's and NexGen's motion to dismiss the complaint. At the hearing, the parties appeared to agree that the one-year contractual limitations period set forth in the RESA began to run on or about July 26, 2017, after the 30-day notice period had expired for the Board's declaration of its intent to terminate the RESA. Accordingly, the contractual limitations period was set to expire on July 26, 2018. The parties disputed whether their communications during April through July 2018 attempting to arrange a mediation were sufficient to constitute an "action" under the RESA.

{¶16} On October 18, 2019, the trial court issued a judgment entry granting Ada Wind's and NexGen's motion to dismiss on the basis that the one-year contractual limitations period had expired prior to the Board filing its complaint initiating this lawsuit.

{¶17} It is from this judgment that the Board now appeals asserting the following assignment of errors.

ASSIGNMENT OF ERROR NO. 1

THE TRIAL COURT ERRED TO THE PREJUDICE OF PLAINTIFF-APPELLANT ADA EXEMPTED VILLAGE SCHOOL DISTRICT BOARD OF EDUCATION BY GRANTING DEFENDANTS-APPELLEES' ADA WIND, LLC, AND NEXGEN ENERGY PARTNERS, LLC, MOTION TO DISMISS, AS THE PARTIES TIMELY INITIATED AND COMPLIED WITH THE AGREEMENT'S MANDATORY

MEDIATION PROCESS WITHIN THE CONTRACTUAL LIMITATION OF ACTIONS PERIOD.

ASSIGNMENT OF ERROR NO. 2

THE TRIAL COURT ERRED TO THE PREJUDICE OF PLAINTIFF-APPELLANT ADA EXEMPTED VILLAGE SCHOOL DISTRICT BOARD OF EDUCATION BY GRANTING DEFENDANTS-APPELLEES' ADA WIND, LLC, AND NEXGEN ENERGY PARTNERS, LLC, MOTION TO DISMISS IN DEROGATION OF OHIO'S PUBLIC POLICY FAVORING MEDIATION.

ASSIGNMENT OF ERROR NO. 3

THE TRIAL COURT ERRED TO THE PREJUDICE OF PLAINTIFF-APPELLANT ADA EXEMPTED VILLAGE SCHOOL DISTRICT BOARD OF EDUCATION BY GRANTING DEFENDANTS-APPELLEES' ADA WIND, LLC, AND NEXGEN ENERGY PARTNERS, LLC, MOTION TO DISMISS DESPITE APPELLEES' BAD FAITH REFUSAL TO ADHERE TO THE PARTIES' AGREEMENT.

First Assignment of Error

{¶18} In its first assignment of error, the Board argues that the trial court erred in granting Ada Wind's and NexGen's motion to dismiss the complaint pursuant to Civ.R. 12(B)(6). Specifically, the Board asserts that the trial court erred when it determined that the one-year contractual limitations period for filing a lawsuit had expired prior to the Board filing its complaint because under the express terms of the contract, the parties were required to "submit the dispute to mediation" prior to the filing of a lawsuit, and the Board had attempted to initiate mediation with Ada Wind and NexGen prior to the expiration of the limitations period. Alternatively, the Board argues that the parties' agreement to initiate mediation tolled the running of the contractual limitations period and, therefore, Ada Wind and NexGen were equitably estopped from asserting the contractual limitations period as a defense.

Standard of Review

{¶19} A Civ.R. 12(B)(6) motion to dismiss for failure to state a claim upon which relief can be granted tests only the legal sufficiency of the complaint. State ex rel. Hanson v. Guernsey Cty. Bd. of Commrs. , 65 Ohio St.3d 545, 548, 605 N.E.2d 378 (1992). For a court to dismiss on this basis, "it must appear beyond doubt from the complaint that the plaintiff can prove no set of facts entitling him to recovery." O'Brien v. Univ. Community Tenants Union, Inc. , 42 Ohio St.2d 242, 327 N.E.2d 753 (1975), syllabus. In ruling on a Civ.R. 12(B)(6) motion, the court must accept the factual allegations contained in the complaint as true and draw all reasonable inferences from these facts in favor of the plaintiff. Mitchell v. Lawson Milk Co. , 40 Ohio St.3d 190, 192, 532 N.E.2d 753 (1988). If there is a set of facts consistent with the complaint that would allow for recovery, the court must not grant the motion to dismiss. York v. Ohio State Hwy. Patrol , 60 Ohio St.3d 143, 145, 573 N.E.2d 1063 (1991). When reviewing a judgment rendered on a Civ.R. 12(B)(6) motion to dismiss, our standard of review is ordinarily de novo. Foreman v. Ohio Dept. of Rehab. & Corr. , 10th Dist. Franklin No. 14AP-15, 2014-Ohio-2793, 2014 WL 2931925, ¶ 9, citing Perrysburg Twp. v. Rossford , 103 Ohio St.3d 79, 2004-Ohio-4362, 814 N.E.2d 44, ¶ 5.

Relevant Contractual Provisions in the RESA

{¶20} By way of providing some background, the...