Every law school graduate surely remembers that 1L Contracts case about the two ships named "Peerless" and the doctrine of mutual mistake.
In Marchbanks v. Ice House Ventures, LLC, No. 2022-0047 (June 8, 2023), the Ohio Supreme Court rejected the DOT's claim that a previously-agreed-upon agreement to settle an eminent domain action did not reflect a meeting of the minds, because it was the product of a mutual mistake.
Here's the story. ODOT instituted an eminent domain case to take the property of Ice House Ventures for a freeway improvement project. A few days before the jury trial on valuation was to get underway, the parties settled. ODOT agreed to two things: (1) pay $900k compensation, and (2) transfer to IHV a separate small parcel of land owned by the City of Columbus, to be used by IHV for a 12-car parking lot. ODOT believed the city would be willing to make the transfer, and ODOT promised it would provide IHV with "marketable fee simple title."
You know where this is going, don't you? That's right, "[t]here is no dispute that ODOT was unable to transfer the Parking Mitigation Property to IHV." Slip op. at 3.
The parties had anticipated this scenario, and the settlement agreement provided that if ODOT was not able to convey marketable title within a year, the trial court would award "damages" to IHV (the term "damages" was not defined). So IHV moved to enforce the judgment. The trial court agreed that ODOT hadn't delivered, and entered a damage award to IHV for the value of the 12 parking spaces, rejecting ODOT's argument that "damages" meant damage to the residue.
ODOT appealed, and the court of appeals agreed that "damages" was a disputed term, and that ODOT asserted that it meant severance damages, while IHV thought it meant breach-of-contract damages (what the nonbreaching party could expect to have gained by the bargain). Thus, the court concluded, the parties had not agreed on a material term and thus no meeting of the minds (and thus no settlement agreement). The court remanded for the trial court to hold a trial on severance damages.
The Ohio Supreme Court granted discretionary review.
The court concluded that "ODOT and IHV clearly intended to enter into, and in fact entered into, a binding settlement agreement." Slip op. at 8. And the term "damages" was not an essential term (because "breach of contract is not an inevitability"). Id.
The court also rejected ODOT's argument that this is the Peerless case:
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."
Slip op. at 10.
The settlement contract "is enforceable." Slip op. at 11.
Yet another lesson that when a case is resolved by settlement, the courts generally speaking like those agreements enforced, as this case (and this other recent decision) reminds us.
Marchbanks v. Ice House Ventures, LLC, No 2022-0047 (Ohio June 8, 2023)
