Court News Ohio
Court News Ohio
Court News Ohio

Wednesday, March 1, 2023

WEDNESDAY, March 1, 2023

Josh Schaad v. Karen Alder, finance director of the city of Cincinnati, et al., Case No. 2022-0316
First District Court of Appeals (Hamilton County)

State of Ohio v. Leelin Miller, Case No. 2022-0321
Eighth District Court of Appeals (Cuyahoga County)

Deborah Ayers v. David Ayers, Case No. 2022-0560
Sixth District Court of Appeals (Wood County)

Wildcat Drilling LLC v. Discovery Oil and Gas LLC, Case No. 2022-0596
Seventh District Court of Appeals (Mahoning County)


Could Cities Tax Nonresident Workers Who Did Their Jobs Outside City During Pandemic?

Josh Schaad v. Karen Alder, finance director of the city of Cincinnati, et al., Case No. 2022-0316
First District Court of Appeals (Hamilton County)

ISSUES:

  • Was a municipal tax law enacted in response to stay-at-home orders during the COVID-19 pandemic incompatible with due process and earlier Supreme Court of Ohio rulings?
  • Can the General Assembly authorize municipalities to tax outside of their geographical territory?
  • Did the General Assembly’s constitutional authority to pass emergency laws give it the power to enact this municipal tax law?

BACKGROUND:
In March 2020, steps were taken throughout Ohio to respond to the public health threat from the worldwide spread of the coronavirus. The governor issued an executive order on March 9 declaring a state of emergency. On March 22, the director of the state health department issued a stay-at-home order. With exceptions, individuals living in the state were told to stay at home or their place of residence. Businesses and operations were ordered to cease activity in the state unless they were designated as essential or their employees could perform their work remotely.

The General Assembly passed an emergency COVID-19 relief bill, House Bill 197, which took effect on March 27 that year. Section 29 of the legislation, an uncodified law, dealt with municipal taxation. It stated that the work an employee did from a location other than the employee’s principal place of work during this time would be considered done at the employee’s principal place of work.

Employee Challenges Cincinnati Taxes for Work He Did in Blue Ash
Josh Schaad works in the financial services sector for an employer located in downtown Cincinnati. Before the pandemic, Schaad worked some days in the office and other days at home or traveling for business. Schaad states that he was an essential worker under the stay-at-home order and he initially worked from both his home in Blue Ash and the Cincinnati office. In June 2020, his employer directed him to work exclusively from home. He returned to working at the Cincinnati office part time in December of that year.

His employer withheld taxes from his paycheck for Cincinnati city taxes. Schaad filed for a refund of a portion of the taxes in January 2021. The city gave him a partial refund for 2020 based on the days he would have worked outside of Cincinnati before the pandemic. It declined, though, to refund him for the additional days in 2020 that he worked outside of the city because of the stay-at-home order.

In February 2021, Schaad filed a lawsuit in Hamilton County Common Pleas Court against Cincinnati Finance Director Karen Alder and Ohio Attorney General Dave Yost. The court subsequently dismissed the attorney general from the lawsuit. Schaad argued that Section 29 was unconstitutional because it violated due process rights by allowing a municipality to tax nonresidents for work performed outside of the city. He also asked to recover the taxes he paid under the law.

The city requested that the case be dismissed. The trial court agreed, granting the dismissal in June 2021. Schaad appealed to the First District Court of Appeals, which upheld the city’s dismissal of the case.

COVID-19 Legislation Addresses City Taxation of Nonresident Workers
In the March 2020 COVID-19 relief bill, H.B. 197, the legislature enacted Section 29 about municipal taxes. Section 29 states:

“Notwithstanding section 718.011 of the Revised Code, and for the purposes of Chapter 718. of the Revised Code, during the period of the emergency declared by Executive Order 2020-01D, issued on March 9, 2020, and for thirty days after the conclusion of that period, any day on which an employee performs personal services at a location, including the employee’s home, to which the employee is required to report for employment duties because of the declaration shall be deemed to be a day performing personal services at the employee’s principal place of work.”

COVID-19 Legislation Addresses City Taxation of Nonresident Workers
In the March 2020 COVID-19 relief bill, H.B. 197, the legislature enacted Section 29 about municipal taxes. Section 29 states:

“Notwithstanding section 718.011 of the Revised Code, and for the purposes of Chapter 718. of the Revised Code, during the period of the emergency declared by Executive Order 2020-01D, issued on March 9, 2020, and for thirty days after the conclusion of that period, any day on which an employee performs personal services at a location, including the employee’s home, to which the employee is required to report for employment duties because of the declaration shall be deemed to be a day performing personal services at the employee’s principal place of work.”

He appealed to the Supreme Court of Ohio, which agreed to review the issues.

Tax on Nonresident Employees Working Elsewhere Is Unconstitutional, Man Argues
Schaad explains that the due process arguments turn on whether the governmental entity that seeks to impose a tax – in this case the city of Cincinnati – has the jurisdiction over the person or thing it wants to tax. A city’s taxation of a nonresident’s compensation for services must be based on the nonresident’s location when the services were performed, Schaad argues.

He points to several Supreme Court of Ohio decisions – including Hillenmeyer v. Cleveland Bd. of Rev. (2015) and Willacy v. Cleveland Bd. of Income Tax Rev. (2020). Hillenmeyer addressed a Cleveland law that taxed professional athletes, such as a Chicago Bears linebacker, for days they played football games in the city. While rejecting the formula used to calculate the athletes’ taxes, Hillenmeyer made clear that a local government can tax work that was performed in the city, Schaad states.

In Willacy, the Supreme Court emphasized that a municipality has the authority to tax “income arising from work performed within jurisdiction” or if the income to be taxed “is fairly attributable to the taxpayer’s activities in the taxing jurisdiction.”

The requirements of those decisions aren’t met in this case, Schaad maintains. During the time he worked exclusively from home, he performed no work in Cincinnati, nor did he rely on Cincinnati for a place to work or for city services, he states.

“[T]here is no provision in the Ohio or the U.S. Constitutions that allows a legislature to deny reality and create jurisdiction by pretending that work was performed in one political subdivision when it was actually performed in another,” his brief states.

State Law Governs All Ohioans, City Maintains
The city points out that the General Assembly, which passed the law, has jurisdiction over Schaad, who lives and works in Ohio. The legislature made a policy decision, through its constitutional power to legislate for the general welfare of Ohio, to enact Section 29, the city asserts. It notes that the section was passed to deal with the extensive disruptions caused by the sudden shift to working from home caused by the pandemic. The city argues the law provided stability and certainty during an uncertain period of emergency.

The city maintains that Section 29 applied only to workers whose work location changed because of the state health orders and the law limited the local taxation of workers only to the municipality where they principally worked before the pandemic.

State lawmakers also had a rational basis for the law, the city contends. The legislators concluded that displaced employees who worked remotely during the pandemic had sufficient connection to the cities where they had been working to allow them to be taxed by that municipality, the city argues.

“[I]t was rational for the General Assembly to conclude that these employees would, while working from home, be using technological tools to virtually maintain those preexisting connections and deliver their work product to their employers’ offices,” the city’s brief states.

The city argues that Hillenmeyer was different because it dealt with limits on a state’s power to tax business and transactions occurring in multiple states, not within one state. The Chicago Bears player wasn’t an Ohio resident, and he spent only two days in Cleveland, the city notes. Schaad, however, is an Ohio resident who worked more in state in 2020 than anywhere else. Schaad, like all Ohioans, is subject to the jurisdiction of the General Assembly and its laws, the city asserts. Willacy doesn’t apply in this case because it didn’t address the constitutionality of an Ohio statute governing municipal taxation, the city maintains.

State Can’t Broaden Jurisdiction for City Taxes, Man Asserts
Schaad maintains that Ohio was not the taxing authority in his case, and the state neither imposed nor collected the tax. The taxes instead were paid directly to the city, based on city laws, he notes. He contends that Cincinnati as the taxing entity must itself have jurisdiction to tax a worker, but it didn’t have jurisdiction to tax him for work he did in Blue Ash.

He argues it is unconstitutional for the state to say that work actually performed in one taxing jurisdiction was instead done in another location for the purpose of requiring taxes to be paid to a specific municipality.

He acknowledges that the state has the authority under the Ohio Constitution to “limit” taxation by municipalities. However, Schaad contends, the state isn’t authorized to expand the scope of that taxation beyond the municipality’s borders. And although the General Assembly can act quickly to address emergencies, its powers can’t be broadened beyond those permitted in the Ohio Constitution, he concludes.

Legislature Can Expand Tax Powers of Municipalities, City Contends
The city responds that the General Assembly has the power to enact any law that doesn’t conflict with the U.S. or Ohio constitutions. The state constitution specifically gives the Ohio legislature the power to pass laws for taxing income. Although a municipality’s home rule powers generally can’t be exercised beyond the municipality’s limits, the General Assembly is permitted to pass laws that give municipalities powers in addition to their home rule powers, the city argues.

Also, the provision in the state constitution giving the legislature the power to “limit” taxation must be broadly interpreted, in the city’s view. The city maintains that this power encompasses the General Assembly authority to regulate the administration of municipal income taxes, as it did in Section 29.

The city asserts that the emergency nature of the pandemic was relevant for the lower courts to consider. That factor supported the rational basis that the General Assembly had when enacting the temporary provision, the city concludes.

Additional Arguments Submitted by Multiple Groups
Amicus curiae briefs supporting Schaad’s positions were submitted by:

  • City of Lebanon, Ohio.
  • Independent Women’s Law Center.
  • Ohio Chamber of Commerce.
  • Ohio Society of Certified Public Accountants, National Federation of Independent Business, North Central Ohio Chapter of the National Electrical Contractors Association, Greater Cleveland Chapter of the National Electrical Contractors Association, and Manufacturing Policy Alliance, in a joint brief.
  • National Taxpayers Union Foundation.

The Ohio Municipal League filed an amicus brief supporting the city of Cincinnati.

Kathleen Maloney

Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.

Contacts
Representing Josh Schaad, from the Buckeye Institute: Robert Alt, 614.224.4422

Representing Karen Alder, finance director of the city of Cincinnati: Diane Menashe, 614.221.6500

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Is Eyewitness’ Confession of Lying During Murder Trial Grounds for New Trial?

State of Ohio v. Leelin Miller, Case No. 2022-0321
Eighth District Court of Appeals (Cuyahoga County)

ISSUES:

  • Did an appeals court use the wrong standard to deny a hearing to determine if new evidence in the case of a man convicted of murder would affect the outcome of the original trial?
  • Does the Ohio Constitution guarantee the right to a hearing or new trial based on a claim of actual innocence in light of new evidence that contradicts evidence presented at the original trial?

BACKGROUND:
In 2013, Richard McCoy was at a Cleveland auto shop with two friends, Mario Godfrey and Leelin Miller. At the shop, McCoy and a cousin of Miller’s had a verbal dispute regarding money. McCoy, Godfrey, and Miller left the shop in McCoy’s vehicle. During the ride home, Godfrey claimed that Miller shot McCoy. McCoy died from the gunshot wound.

About a week later, Miller was arrested for shooting McCoy. Godfrey, a convicted felon, didn’t come forward immediately, but told police that he witnessed Miller shooting McCoy.

Miller denied involvement in shooting. He told police McCoy had dropped him off at a nearby bar. He said police never went to the bar to verify his alibi. Godfrey was the sole eyewitness to testify at Miller’s trial. While Godfrey didn’t immediately tell the police he saw the shooting, his girlfriend testified that Godfrey called her the day of the shooting and told her, “Lee shot Rich.” Godfrey’s mother also testified that on the day of the shooting, her son told her he was in the vehicle when the shooting happened.

The jury convicted Miller of aggravated murder and other charges. He was sentenced to 47 years to life in prison. He appealed his sentence, and the Eighth District Court of Appeals affirmed his conviction in 2014.

Witness Recants, Man Seeks New Trial
In 2019, Miller’s son received a three-page document from a family friend. It contained a handwritten, notarized statement from Godfrey stating that he had lied during the trial. Godfrey stated that police pressured him to implicate Miller in the shooting and was told if Miller wasn’t charged, then Godfrey would be charged with murdering McCoy. In his statement, Godfrey said he never saw Miller with a gun that evening.

Miller directed his son to send the materials to the Ohio Innocence Project with the expectation the organization would assist him with a new challenge to his conviction. Concerned with the organization’s delay in considering his claim, Miller’s family was able to employ a lawyer, and in late 2020, Miller instituted two new legal actions.

Because of the time delay between his 2014 conviction and receiving Godfrey’s letter, Miller missed the general deadline to request a new trial, which is 120 days after the verdict. Under Ohio rules for criminal cases, Miller had to request permission from the trial court, through a “motion for leave,” to have the trial court consider his request for a new trial.

Miller also filed a petition for postconviction relief under R.C. 2953.21. This postconviction relief process allowed him to claim he was unable to properly appeal his 2014 conviction within the timeframe because he was “unavoidably prevented” from discovering that Godfrey lied on the witness stand.

He requested the trial judge conduct a hearing to consider his new evidence and allow Godfrey to testify. The trial court denied both requests without a hearing.

Miller appealed to the Eighth District, which affirmed the trial court’s rulings.

Miller appealed to the Supreme Court of Ohio, which agreed to consider his case.

Appeals Court Wrongly Upheld Denial of New Hearing or Trial, Defendant Asserts
Miller argues the Eighth District stated one of its reasons for affirming the trial court’s ruling was that Miller didn’t establish that he was unavoidably prevented from knowing that Godfrey lied. The court ruled that Miller could have contacted Godfrey within 120 days of the verdict to ask if he lied when he testified in 2014, Miller notes. The Eighth District also questioned the delay between the time Miller asked the Innocence Project to get involved and his actual filing of his new motions more than a year later.

Miller argues that the Eighth District failed to apply a 2022 ruling by the Supreme Court in its State v. Bethel case, which found a defendant doesn’t have to request a new trial in a “reasonable time” if the information discovered could potentially change the outcome of the trial. Miller maintains that Godfrey’s statements would absolutely change the outcome. He notes that in the closing arguments of his trial, the prosecutor described Godfrey as the “key” to the case, and the prosecutor stated that Godfrey was telling the truth.

Miller notes the trial court denied his motion without any explanation. He argues that the delay in bringing his case is no reason for the trial court to have not at least conducted an evidentiary hearing to consider why the delay occurred. He argues that if he were granted a hearing, or a new trial, the judge could hear and see Godfrey explain why he recanted and determine if his statements were credible.

Miller also argues that provisions of the Ohio Constitution imply that he has a right to a court hearing to proclaim his actual innocence even after he was convicted of a crime. Miller concedes that the U.S. Supreme Court ruled the U.S. Constitution doesn’t include a guarantee that once a person is convicted of a crime, there is a right to start a separate legal proceeding to argue actual innocence. Miller maintains, though, that the Ohio Constitution grants greater powers of due process and more protections against cruel and unusual punishment than the federal constitution. He notes several other states have recognized the claim of actual innocence under their state constitutions. The protections of the Ohio Constitution should at least compel the trial court to conduct an evidentiary hearing to consider whether Godfrey lied, and if that impacted the outcome of the trial, Miller concludes.

New Trial Appropriately Denied, Prosecutor Maintains
The Cuyahoga County Prosecutor’s Office argues the Court should rule the case was improvidently allowed. The office notes that the Court resolved the issue of rejecting an appeal because of delay when it ruled last year in Bethel. The office asserts that Miller fails to address the other reason the Eighth District dismissed the case, and that was because it found Godfrey’s recantation “lacked credibility.”

The office notes the request to seek a new trial must show that the newly discovered evidence could affect the trial outcome. Godfrey doesn’t explain why he changed his statement six years later, and the evidence presented in court raises questions about his new account of the events, the office asserts. The testimony of Godfrey’s mother and girlfriend supported his statement that he witnessed Miller shoot McCoy, the prosecutor states. The trial court properly rejected the request to pursue a new trial solely on Godfrey’s new statement, and the Eighth District accurately questioned Godfrey’s credibility, the prosecutor asserts.

Nothing in the Ohio Constitution or anything in Ohio history indicates that the state provides the right to pursue a new claim of actual innocence after a defendant has been convicted of a crime and the direct appeal of that conviction has been affirmed, the prosecutor notes. The office maintains there wasn’t a violation of Miller’s rights when the trial court, without conducting a hearing, determined that there wasn’t new evidence that could impact the outcome of the original trial.

Dan Trevas

Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.

Contacts
Representing Leelin Miller: John Parker, 216.881.0900

Representing the State of Ohio from the Cuyahoga County Prosecutor’s Office: Anthony Miranda, 216.443.7416

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How Is Parent’s Lack of Employment Factored Into Child Support Calculations?

Deborah Ayers v. David Ayers, Case No. 2022-0560
Sixth District Court of Appeals (Wood County)

ISSUE: Must a trial court explicitly state that a parent’s unemployment or underemployment is voluntarily before determining the parent’s potential income for child support calculation purposes?

BACKGROUND:
Deborah Belleville, formerly Ayers, filed for divorce from David Ayers in June 2019. The couple married 13 years earlier in Bowling Green and had three children.

In February 2020, Ayers’ employer, CSX Transportation Intermodal, restructured the company and he lost his job as a load engineering and design services coordinator. He had been employed there for nine years.

Before his job was eliminated, he and his wife, who was employed as a school teacher, made comparable incomes. During the divorce hearings later in 2020 in the Wood County Domestic Relations Court, Ayers maintained that he was seeking work, but it was difficult finding a job because of the COVID-19 pandemic. Belleville asked the court for child support from Ayers.

Ayers noted that CSX provided a separation payout after the restructuring, but those benefits ended in August 2020. His only income was $750 in unemployment every two weeks. He argued his unemployment was involuntary and only his unemployment benefits should be used for the child support calculation.

The court looked at Ayers’ income while employed by CSX, along with his average bonus, and ordered him to pay $1,391 per month in child support. The court stated in its order that there was no evidence that he couldn’t earn the income used for the calculation. And it noted that while the pandemic was limiting employment opportunities, a vaccine was expected to be available in about six months.

Ayers appealed to the Sixth District Court of Appeals. The appeals court upheld the trial court calculation of child support, ruling that the factors in state law that are to be considered were applied to the facts in this case.

The Sixth District determined that its decision on this issue conflicts with a ruling from the Ninth District Court of Appeals. The Supreme Court of Ohio agreed and will review the conflict.

Father Argues Court Must Explicitly Articulate Why Unemployment Was Voluntary
The Ayers brief explains that for a parent who is unemployed or underemployed, “income” for child support calculations is defined as “the sum of the gross income of the parent and any potential income of the parent.” The brief states that R.C. 3119.01 defines “potential income” to include income that the court determines the parent would have earned if fully employed, as determined by a list of criteria.

However, Ayers notes, the “potential income” definition applies to parents whom the court determines are unemployed voluntarily or underemployed voluntarily. Ayers argues his unemployment is involuntary so the criteria – such as his prior employment and education – don’t apply to his situation.

Ayers also contends that the Wood County court did not explicitly make findings in its written judgment to support a determination that his unemployment was voluntary. He maintains that Supreme Court of Ohio decisions make this step a clear requirement – in Rock v. Cabral (1993), Marker v. Grimm (1992), and Depalmo v. Depalmo (1997). The rulings emphasize that trial courts must strictly comply with child support statutes and that the court’s determination must be clearly articulated in the record , Ayers states. He notes that the Ninth District in Misleh v. Badwan (2007) also rejected the idea that a trial court can imply its findings to determine the appropriate income for a child support calculation.

Mother Responds That Court Explained Facts and Its Reasoning
Belleville counters that the trial court made a factual determination given the evidence before it. Whether a parent is voluntarily unemployed, as well as the parent’s potential income, are questions of fact for the trial court to answer, she maintains. The trial court applied the R.C. 3119.01 factors for potential income to the facts of this case, she argues. She asserts that the trial court was explicit, not silent, in finding that Ayers was voluntarily unemployed, then applying the factors to calculate his potential income.

Belleville maintains that Misleh is different than this case because that trial court computed a parent’s potential income without reciting the relevant facts from the trial or applying the factors in the statute. Her brief warns of a “cataclysmic cascade of child support challenges” asking to reconsider and reopen earlier child support determinations if the Court rules that trial courts must explicitly state that a parent’s unemployment or underemployment is voluntarily.

Kathleen Maloney

Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.

Contacts
Representing David Ayers: Karin Coble, 888.268.3625

Representing Deborah Belleville, formerly Deborah Ayers: Elizabeth Bostdorff, 419.359.6546

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Can Fined Well Owner Seek Repayment From Driller Without Notification of Violation?

Wildcat Drilling LLC v. Discovery Oil and Gas LLC, Case No. 2022-0596
Seventh District Court of Appeals (Mahoning County)

ISSUE: When a contract clause specifies that only the terms of the contract define the entire contractual agreement, does that express a clear intent of the parties to nullify application of common law contract rules?

BACKGROUND:
This is the second time this case is before the Supreme Court of Ohio. In 2020, the Court in Wildcat Drilling, L.L.C. v. Discovery Oil & Gas, L.L.Cremanded the case to the Mahoning County Common Pleas Court. The Supreme Court directed the trial court to determine if the contract between Discovery Oil and Gas and Wildcat Drilling expressed a clear intent that only the terms in the contract regarding indemnification applied to incidents where Wildcat needed to reimburse Discovery for certain costs.

The controversy began in 2014 when Discovery contracted with Wildcat for Wildcat to drill a well in Stark County. The drilling began in late December and was completed in February 2015. In January 2015, an Ohio Department of Natural Resources (ODNR) inspector visited the drilling site and tested water wells nearby. The inspector determined that Wildcat was illegally using brine water in its operation. Under Ohio law, the permit owner, Discovery, not the driller, receives notification of the drilling violations. ODNR issued a violation order to Discovery and indicated that Wildcat violated three laws and two administrative regulations. Discovery negotiated a settlement with ODNR to pay a $50,000 fine without notifying Wildcat about the dispute.

When Wildcat completed the drilling, it sent Discovery a bill for $190,350 for its services. Discovery didn’t pay, but rather notified Wildcat that ODNR found Wildcat had violated the law, and that Discovery was forced to pay a $50,000 fine. Citing an indemnification clause in the contract between the two parties, Discovery indicated it would deduct the fine amount and its legal expenses from the total it owed Wildcat. Wildcat claimed it didn’t violate the law, and that had it been notified, it could have negotiated for a smaller penalty if a violation had occurred. It claimed the penalty should be no more than $10,000.

Both parties sued each other for breach of contract. In 2017, the trial court ruled that Discovery could deduct the fine and $14,150 for expenses, and ordered it to pay $126,200 plus interest to Wildcat. Both parties appealed to the Seventh District Court of Appeals.

The Seventh District ruled that because Discovery failed to notify Wildcat of the negotiations, Discovery was not entitled to any indemnification. The Supreme Court accepted Discovery’s appeal and, in a divided opinion, remanded the case to the trial court for further proceedings.

On remand, the trial court found that a common law contract rule required Discovery to notify Wildcat of the dispute before it could seek to have Wildcat reimburse the company for the fine. The Seventh District affirmed the decision and Discovery again appealed to the Supreme Court, which agreed to hear the case.

Notification Not Required to Enforce Contract, Well Operator Argues
Discovery explains that the Supreme Court in its first decision noted a contract can supplant common law rules regarding the enforcements of contracts. The Court stated there are no specific or “magic” words that need to be in a contract to nullify common law, as long as the contract language indicates “a clear intent to abrogate common law.”

Discovery argues that the intent was clear. It noted that Wildcat drafted the contract, which contained a multi-page provision regarding indemnification. Nothing in the lengthy section indicated that Discovery had to notify Wildcat in advance of a matter that it would be seeking indemnification, and it wasn’t required by the contract to tell Wildcat about the ODNR fine. Discovery notes it decided not to notify Wildcat because the driller had previous violations and Discovery believed Wildcat’s presence might make it more difficult to settle the matter with ODNR.

Discovery asserts that several other provisions of the contract do indicate that notification to Wildcat is required. That demonstrates that if Wildcat wanted to be notified about an indemnification issue in advance, it would have added it to the contract, the company argues.

Discovery points to a provision in the indemnification clause that Wildcat’s obligations under the contract are “without limit.” And another portion of the contract indicates the written contract is the total agreement between the companies. Taken together, stating the obligations are “without limit” and that the contract is the total agreement, Discovery argues the only requirements regarding indemnification are those stated in the contract, and notice isn’t one of them. Discovery asks the Court to remand the case again to the trial court to reconsider its decision.

Contract Didn’t Eliminate Notice Requirement, Driller Maintains
Wildcat explains that contracts made in Ohio are governed by Ohio common law, and the common law has rules for the enforcement of contracts. It argues the Court made it clear in the 2020 decision that a contract can override the use of common law rules if the parties clearly intend to do that. In this case, the trial court closely examined the contract and couldn’t find any clear intent that Wildcat forfeited the right to use common law rules to enforce the indemnification provisions.

Wildcat maintains the that if Discovery wanted to override common law, the contract had to have explicit language stating it wanted to “opt out.” The driller argues it has no obligation to write in the contract that it is “opting in” to being governed by common law. The trial court and the Seventh District examined the contract and found that notification of a request to indemnify is a common law rule that applies when one party seeks indemnification. The courts didn’t see any indication that Wildcat intended to waive the requirement, the driller asserts. When a contract doesn’t clearly intend to nullify a common law rule, then the common law supplements the terms of the contract, the company argues. Because of the lack of intent to waive notification, the lower courts correctly applied common law rules to side with Wildcat, the driller maintains.

Wildcat accuses Discovery of misinterpreting the “without limit” term of the contract. The driller argues that term only applies to the amount of damages it would have to pay Discovery in the case of an issue such as an ODNR fine. The company argues the term means it agrees to pay what owes, but doesn’t mean that any other legal rules governing how indemnification works, including the right to notification, are waived.

Dan Trevas

Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.

Contacts
Representing Discovery Oil and Gas LLC: David Detec, 330.743.1171

Representing Wildcat Drilling LLC: Molly Johnson, 330.533.1921

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