Supportive Solutions Training Academy, L.L.C. v. Elec. Classroom of Tomorrow

[Cite as Supportive Solutions Training Academy, L.L.C. v. Elec. Classroom of Tomorrow, 2012-Ohio-1185.]

Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA

JOURNAL ENTRY AND OPINION
Nos. 95022 and 95287

SUPPORTIVE SOLUTIONS TRAINING ACADEMY
L.L.C.
PLAINTIFF-APPELLEE

vs.

ELECTRONIC CLASSROOM OF TOMORROW
DEFENDANT-APPELLANT

JUDGMENT:
DISMISSED

Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-652873

BEFORE: Keough, J., Jones, P.J., and S. Gallagher, J.

RELEASED AND JOURNALIZED: March 22, 2012
ATTORNEYS FOR APPELLANT

Paul W. Flowers
Paul W. Flowers Co., LPA
Terminal Tower, 35th Floor
50 Public Square
Cleveland, OH 44113

John A. Demer
James A. Marniella
Demer & Marniella, LLC
2 Berea Commons, Suite 200
Berea, OH 44017

Deena M. Giordano
3700 High Street
Columbus, OH 43207

ATTORNEYS FOR APPELLEE

Maureen Connors
Ann S. Vaughn
Connors & Vaughn
6000 Freedom Square Drive
Suite 165
Independence, OH 44131
KATHLEEN ANN KEOUGH, J.:

{¶1} In this consolidated appeal, defendant-appellant, Electronic Classroom of

Tomorrow (“ECOT”), appeals various rulings by the trial court and the jury’s award for

monetary damages in favor of plaintiff-appellee, Supportive Solutions Training Academy,

L.L.C. (“Supportive Solutions”). ECOT raises the following assignments of error:

Appeal No. 95022

I. The trial judge erred, as a matter of law, in failing to grant summary

judgment upon [Supportive Solutions’] claims of implied contract [because

the merits of the case warranted summary judgment or breach of implied

contracts do not apply to political subdivisions].

II. Summary judgment was improperly denied, as a matter of law, upon
[Supportive Solutions’] unsubstantiated claim of defamation [because the
merits of the case warranted summary judgment or the claim of defamation is
barred by political subdivision immunity].

III. Summary judgment was warranted, as a matter of law, on the claims of
negligent misrepresentation [because the merits of the case warranted
summary judgment or political subdivisions are immune from claims of
negligent misrepresentation].

IV. The trial judge abused his discretion in denying [ECOT’s] motion for
leave to amend [its] answer [to assert the affirmative defense of political
subdivision immunity].

Appeal No. 95287
 I. The trial judge abused his discretion in denying [ECOT’s] motion for
leave to amend [its] answer [to assert the affirmative defense of political
subdivision immunity].

II. The trial judge erred, as a matter of law, in failing to grant summary
judgment upon [Supportive Solutions’] claims of implied contract [because
the merits of the case warranted summary judgment or breach of implied
contracts do not apply to political subdivisions].

III. Summary judgment was improperly denied, as a matter of law, upon
[Supportive Solutions’] claim of defamation [because the merits of the case
warranted summary judgment or the claim of defamation is barred by
political subdivision immunity].

IV. Summary judgment was warranted, as a matter of law, on the claims of
negligent misrepresentation [because the merits of the case warranted
summary judgment or political subdivisions are immune from claims of
negligent misrepresentation].

V. [ECOT] was entitled to either a directed verdict or a new trial upon the
claim of breach of express contract.

VI. The trial judge abused his discretion by granting pre-judgment interest

in favor of [Supportive Solutions] under R.C. 1343.03.

I. Facts and Procedural History

{¶2} The jurisdictional complexity and procedural history in this case are

convoluted, confusing, and mimic a tortuous law school civil procedure final exam.

{¶3} The facts and case history were set forth in State ex rel. Electronic Classroom

of Tomorrow v. Cuyahoga Cty. Court of Common Pleas, 129 Ohio St.3d 30,

2011-Ohio-626, 950 N.E.2d 149 (“ECOT I”):

[ECOT] is a community school established pursuant to R.C. Chapter 3314.
ECOT was the first Internet-based community school in Ohio and is
currently the state’s largest community school. Its operating revenues are
derived almost exclusively from state and federal funds.

ECOT entered into a series of service agreements with respondent
Supportive Solutions Training Academy, L.L.C. (“Supportive Solutions”) to
take effect beginning in the 2007-2008 school year. ECOT paid Supportive
Solutions $107,110, which ECOT believed was all that was due under the
agreements, but Supportive Solutions claimed that it was entitled to more.
Supportive Solutions went out of business and provided no further services
to ECOT after December 2009.

In March 2008, Supportive Solutions filed a suit for damages against ECOT
and others in the Cuyahoga County Court of Common Pleas. The case,
which was designated Supportive Solutions Training Academy, L.L.C. v.
Electronic Classroom of Tomorrow, Cuyahoga Cty. C.P. [C]ase No. CV 08
652873, included claims of breach of implied contract, misrepresentation,
negligent misrepresentation, promissory estoppel, unjust enrichment, fraud,
fraud in the inducement, respondeat superior, and defamation. The case
was originally assigned to Judge Ronald Suster. ECOT and the other
defendants filed an answer in which they did not raise the affirmative defense
of political-subdivision immunity. In December 2008, Supportive
Solutions filed an amended complaint to raise a claim of tortious interference
with business relations against a new defendant, Lucas County Educational
Service Center (“Service Center”). In ECOT’s answer to the amended
complaint, it again did not raise political-subdivision immunity as an
affirmative defense.

In January 2009, Service Center moved to dismiss Supportive Solutions’
claim against it based on, among other things, political-subdivision
immunity. Shortly thereafter, Service Center was dismissed from the case.
Nearly a year later, in January 2010, ECOT raised for the first time the
defense of political-subdivision immunity in its motion for partial summary
judgment. After Supportive Solutions claimed that ECOT had waived this
affirmative defense by failing to raise it in the answer, ECOT filed a motion
for leave to file an amended answer. Judge Suster denied ECOT’s motion
in an entry journalized in April 2010. Judge Suster also granted ECOT and
the other defendants’ motion for partial summary judgment on the claims of
fraud and intentional misrepresentation and ordered that the remaining
claims be resolved at the scheduled trial.
ECOT and the other defendants appealed from the court’s decision denying
their motion for leave to amend their answer to include the affirmative
defense of political-subdivision immunity. Supportive Solutions moved to
stay the trial court case pending resolution of ECOT’s appeal. In its motion,
Supportive Solutions conceded that of the remaining causes of action against
ECOT, the motion for leave to amend the answer “would have an impact on
seven” of them. The trial proceeded before Judge James D. Sweeney, who
denied ECOT’s motion to limit the evidence to Supportive Solutions’
express-contract claims and any other matters that were not currently under
the jurisdiction of the court of appeals.

On May 7, 2010, the jury returned a verdict for Supportive Solutions and
against ECOT and the other defendants for $1,000,000 for breach of implied
contract, $120,000 for negligent misrepresentation, and $86,400 for breach
of express contract. Judge Sweeney entered a judgment reflecting the jury
verdict, granted Supportive Solutions prejudgment interest in the amount of
$104,973.32, and denied ECOT’s motion for judgment notwithstanding the
verdict or for a new trial. ECOT appealed from the judgment, and ECOT’s
motion for stay of execution of the judgment was denied.

ECOT then filed a motion in the court of appeals for a stay of execution of
the common pleas court’s judgment pending appeal, and Supportive
Solutions filed a motion for a supersedeas bond. On July 30, 2010, the court
of appeals granted the stay but conditioned it on ECOT’s posting of a
supersedeas bond in the amount of $1,210,000. On the same day, the court
of appeals dismissed ECOT’s earlier appeal from the common pleas court’s
denial of its motion for leave to file an amended answer for lack of a final,
appealable order.

On August 10, 2010, ECOT filed this action for extraordinary relief. ECOT
requests a writ of prohibition to prevent respondents, Cuyahoga County
Court of Common Pleas, Judge Suster, and Judge Sweeney, from enforcing
the allegedly invalid portion of its judgment in the underlying case, a writ of
mandamus requiring the common pleas court and judges to vacate that
portion of the judgment, and, insofar as any money judgment against ECOT
remains, a writ of mandamus to compel the common pleas court and judges
to issue a stay of execution without bond pursuant to Civ.R. 62(C). ECOT
also named Supportive Solutions as a respondent but did not request any
relief against it. A few days later, ECOT filed a motion for an emergency
stay of execution of the judgment. On August 17, we granted ECOT’s
motion and an alternative writ. 126 Ohio St.3d 1536, 2010-Ohio-3840, 931
 N.E.2d 1099. On August 20, the court of appeals stayed its consideration of
ECOT’s appeal and related appeals pending our disposition of this writ case.
The parties have submitted evidence and briefs in this case. Id. at ¶ 2-9.

{¶4} In ECOT I, the Ohio Supreme Court concluded:

Based on the foregoing, ECOT has established its entitlement to a writ of
prohibition to prevent the common pleas court, Judge Suster, and Judge
Sweeney from enforcing the portions of the judgment in the underlying civil
case that were subject to an appeal filed by ECOT from the denial of its
motion for leave to amend its answer and a writ of mandamus ordering the
common pleas court and judges to vacate those portions of the judgment.
ECOT is also entitled to a writ of mandamus to compel the common pleas
court, Judge Suster, and Judge Sweeney to stay the portion of the judgment
relating to the breach of express contract without requiring the posting of
bond pending ECOT’s appeal of the judgment. Id. at ¶ 31.

II. Effect of ECOT I and this Court’s Jurisdiction

{¶5} The Ohio Supreme Court’s judgment entry and opinion in ECOT I, effectively

divested this court of jurisdiction to consider the appeals filed by ECOT. By vacating the

judgments rendered on the counts of implied contract and negligence, we now lack a final

appealable order to consider the merits of the appeals filed because all claims raised in the

complaint and counterclaim have not been disposed.

{¶6} “When there are multiple claims and/or multiple parties to an action, an order

of a court is a final, appealable order only if the requirements of both R.C. 2505.02 and

Civ.R. 54(B) are met.” Qualchoice Health Plan, Inc. v. Progressive Quality Care, Inc.,

8th Dist. No. 95046, 2011-Ohio-483, ¶ 13, citing Chef Italiano Corp. v. Kent State Univ.,

44 Ohio St.3d 86, 541 N.E.2d 64 (1989), syllabus. Under Civ.R 54(B), when more than

one claim for relief is presented in an action, a court may enter final judgment as to fewer
than all the claims “only upon an express determination that there is no just reason for

delay.” In the absence of such a determination, “any order * * * which adjudicates fewer

than all the claims * * * shall not terminate the action as to any of the claims or parties.” Id.

{¶7} In essence, the Ohio Supreme Court’s decision reverts this case back and

prior to trial, as if the trial were a nullity on the claims that were affected by the first appeal,

i.e., all claims except the breach of express contract. Accordingly, pursuant to R.C.

2505.02 and Civ.R. 54(B), we lack a final, appealable order because all claims raised by

Supportive Solutions and ECOT’s counterclaims have not been disposed of, which are

interdependent on another. Furthermore, because the requisite Civ.R. 54(B) language is

not included in the trial court’s judgment entries, ECOT’s appeal relating to the judgment

rendered on Supportive Solutions’ breach of express contract claim (its fifth and sixth

assignments of error) is not final and appealable, but interlocutory. Because no final,

appealable order exists, all interlocutory orders are not ripe for review, including the denial

of ECOT’s motion for partial summary judgment and motion for leave to file an amended

answer, which will be further discussed below.

III. Motion for Leave to File an Amended Answer

{¶8} ECOT contends in its fourth assignment of error in App. No. 95022, and its

first assigned error in App. No. 95287, that the trial court abused its discretion in denying

its motion for leave to file an amended answer to assert the affirmative defense of political

subdivision immunity.
 {¶9} Prior to reaching the merits of any appeal, an appellate court must ensure it has

jurisdiction. “‘It is well-established that an order must be final before it can be reviewed

by an appellate court. If an order is not final, then an appellate court has no jurisdiction.’”

Digiorgio v. City of Cleveland, 8th Dist. No. 95945, 2011-Ohio-5824, ¶ 4, quoting Gen.

Acc. Ins. Co. v. Ins. Co. of N. Am., 44 Ohio St.3d 17, 20, 540 N.E.2d 266 (1989).

Generally, a motion for leave to file an amended answer is not a final, appealable order.

However, ECOT contends that R.C. 2744.02(C) provides an exception to this rule.1

{¶10} Under R.C. 2744.02(C), “[a]n order that denies a political subdivision or an

employee of a political subdivision the benefit of an alleged immunity from liability as

provided in this chapter or any other provision of the law is a final order.”

{¶11} Therefore, the issue before this court is whether a motion for leave to file an

amended answer to assert the affirmative defense of political subdivision immunity is a

final, appealable order. After reviewing the case law, we find this issue is one of first

impression but one that Justice Pfeifer contemplated in his dissent in Hubbell v. Xenia, 115

Ohio St.3d 77, 2007-Ohio-4839, 873 N.E.2d 878.

{¶12} In Hubbell, the Ohio Supreme Court held that “when a trial court denies a

motion in which a political subdivision or its employee seeks immunity under R.C. Chapter

2744, that order denies the benefit of an alleged immunity and is therefore a final,

appealable order pursuant to R.C. 2744.02(C).” Id. at syllabus

ECOT raised this argument in its motion to reinstate appeal of immunity issues filed on June
1

30, 2011.
 {¶13} As this court recognized in the en banc decision in Digiorgio v. City of

Cleveland, 8th Dist. No. 95945, 2011-Ohio-5824, “although decided in the context of a

motion for summary judgment, the Hubbell court made clear that its holding was not

limited to only motions for summary judgment.” Digiorgio at ¶ 5. The Ohio Supreme

Court held,

We conclude that the use of the words “benefit” and “alleged” illustrates that
the scope of this provision is not limited to orders delineating a “final” denial
of immunity. R.C. 2744.02(C) defines as final a denial of the “benefit” of
an “alleged” immunity, not merely a denial of immunity. Therefore, the
plain language of R.C. 2744.02(C) does not require a final denial of
immunity before the political subdivision has the right to an interlocutory
appeal.

***

Accordingly, we hold that when a trial court denies a motion in which a
political subdivision or its employee seeks immunity under R.C. Chapter
2744, that order denies the benefit of an alleged immunity and is therefore a
final, appealable order pursuant to R.C. 2744.02(C). Hubbell at ¶ 12, 27.

{¶14} The Hubbell court explained the policy reasons for its broad interpretation of

R.C. 2744.02(C) as follows: “As the General Assembly envisioned, the determination of

immunity [should] be made prior to investing the time, effort, and expense of the courts,

attorneys, parties, and witnesses * * * .” Id. at ¶ 26, quoting Burger v. Cleveland Hts., 87

Ohio St.3d 188, 199-200, 718 N.E.2d 912 (1999).

{¶15} However, the question before this court is whether this broad interpretation

encompasses motions for leave to file amended responsive pleadings. We find that it does

not.
 {¶16} We find most significant the cases wherein Hubbell and its progeny are cited

and relied on for authority involve dispositional-type motions, i.e., Civ.R. 12(B)(6)

motions to dismiss, Civ.R. 12(C) motions for judgment on the pleadings, and Civ.R. 56

motions for summary judgment. See, e.g., Digiorgio; Rucker v. Newburg Hts., 8th Dist.

No. 89487, 2008-Ohio-910; Summerville v. Forest Park, 128 Ohio St.3d 221,

2010-Ohio-6280, 943 N.E.2d 522. To expand Hubbell to include orders such as denial of

leave to file amended pleadings or motions would open the door for political subdivisions

to challenge all adverse rulings potentially affecting its immunity defense with an

immediate appeal. We do not believe Hubbell was intended to be read this broadly.

{¶17} Although the policy reasons behind Hubbell are to determine the immunity

issues prior to a determination of the merits, there should also be a competing policy that a

political subdivision should timely assert its immunity defense so that the other litigant

does not devote its time and resources in litigating a lawsuit that could be barred by

immunity. Interpreting Hubbell this broadly could lead to potential abuse by political

subdivisions by sitting on its rights and responsibilities to assert a timely immunity

defense, knowing that any denial would be immediately appealable.

{¶18} We find our interpretation of Hubbell consistent with the waiver provisions

of the Ohio Rules of Civil Procedure. An affirmative defense can be waived if it is not

timely asserted, including the defense of immunity. We find that no caveat or niche has

yet been carved out giving a political subdivision an exception to the waiver provision of

the Civil Rules.
 {¶19} In Turner v. Cent. Local School Dist., 85 Ohio St.3d 95, 1999-Ohio-207, 706

N.E.2d 1261, the Ohio Supreme Court considered whether granting a motion for leave to

amend an answer was an abuse of discretion. The Ohio Supreme Court held that a

political subdivision waived its right to assert the statutory immunity defense by failing to

timely assert it in its answer. Id. at 99-100. In Turner, Central waited until after the trial

date was scheduled, which was almost three years after the complaint was filed, to amend

its answer to assert the affirmative defense of political subdivision immunity. The Ohio

Supreme Court ruled that the trial court abuse its discretion in granting Central leave to

amend its answer. Id. This holding demonstrates that the waiver provisions of the Civil

Rules apply to political subdivisions, political immunity can be waived if not timely

asserted, and political subdivisions are not always “king.” Hubbell, 115 Ohio St.3d 77,

2007-Ohio-4839, 873 N.E.2d 878, at ¶ 41, Pfeifer, J., dissenting.

{¶20} In this case, denying a motion for leave to amend an answer to assert the

affirmative defense does not “deny” the “benefit” of an “alleged immunity.” The denial of

leave made no determination about immunity. Although the Supreme Court in ECOT I

determined that ECOT is a political subdivision for purposes of posting a supersedeas

bond, no determination was made whether the classification extends to the merits of the

case or whether ECOT will be immune from liability. Therefore, there was no “denial” of

the “benefit” of an “alleged immunity” by failing to grant ECOT leave to file an amended

answer; Hubbell does not apply.

IV. Denial of Summary Judgment on the Basis of Immunity
 {¶21} Insofar as ECOT raises three assignments of error in both appeals contending

that the trial court erred in denying its motion for partial summary judgment because it is

immune from those causes of action, we find that this court lacks jurisdiction to consider

these assignments of error at this time.

{¶22} First, ECOT’s notice of appeal in App. No. 95022 only specifies that it is

appealing the trial court’s April 19, 2010 denial of ECOT’s motion for leave to amend its

answer. Attached to the notice of appeal was the sole journal entry denying ECOT leave.

Although ECOT has artfully crafted an argument in its appellate brief that the language in

the notice of appeal “and all other adverse and appealable rulings in this matter” includes

the trial court’s denial of ECOT’s motion for partial summary judgment, we find that

ECOT had a duty to file an amended notice of appeal pursuant to App.R. 3 and include the

additional journal entry denying partial summary judgment, if it was ECOT’s intention to

challenge this ruling and attempt to create a final, appealable order. Because ECOT did

not file an amended notice of appeal, the denial of partial summary judgment is not

included in App. No. 95022.

{¶23} Moreover, we find that immunity was not properly raised in the motion for

partial summary judgment and thus was not a basis for the trial court’s denial of summary

judgment, which would fall under the Hubbell final, appealable order exception.

{¶24} Under Civ.R. 8(C), a defendant is required to affirmatively set forth matters

that will effectively preclude a finding of liability on the part of the defendant. Failure to

raise such defenses in a responsive pleading or motion will constitute a waiver of those
defenses. Statutory immunity is an affirmative defense, and if it is not raised in a timely

fashion, it is waived. State ex rel. Koren v. Grogan, 68 Ohio St.3d 590, 594, 629 N.E.2d

446 (1994), Civ.R. 8(C); Civ.R. 12(H). Further, even if immunity is asserted as an

affirmative defense in a defendant’s answer, it still must be asserted in the motion for

summary judgment. Leibson v. Ohio Dept. of Mental Retardation & Developmental

Disabilities, 84 Ohio App.3d 751, 761, 618 N.E.2d 232 (8th Dist.1992). However, a

summary judgment motion is not the proper format in which to raise an affirmative defense

for the first time in a case. Mossa v. W. Credit Union, Inc., 84 Ohio App.3d 177, 181, 616

N.E.2d 571 (10th Dist.1992). Affirmative defenses cannot be asserted for the first time in

a motion for summary judgment. Carmen v. Link (1997), 119 Ohio App.3d 244, 695

N.E.2d 28.

{¶25} As previously discussed, a denial of summary judgment when immunity is

asserted and claimed is a final, appealable order under Hubbell. However, that is not the

case before this court. ECOT’s motion for summary judgment asserted for the first time

the affirmative defense of immunity. Supportive Solutions argued that ECOT waived the

immunity defense by failing to raise it in its second amended answer. To cure this defect,

ECOT moved for leave to file an amended answer to assert the defense, which was denied.

Because leave was denied, immunity was not properly asserted; thus, immunity could not

be and was not the basis for the trial court’s denial of ECOT’s motion for partial summary

judgment. Therefore, the denial of ECOT’s motion for partial summary judgment falls

under the general rule that a denial of summary judgment is not a final, appealable order.
 {¶26} In Dawson v. Cleveland, 8th Dist. No. 94510, 2010-Ohio-5142, this court

considered a similar case. In Dawson, the City raised the immunity defense in its answer,

but failed to assert the defense in its motion for summary judgment; rather, the City

asserted the defense for the first time in its reply brief in support of its motion for summary

judgment. The trial court struck the City’s reply brief and then denied the City’s motion

for summary judgment. The City immediately filed an appeal under the guise of Hubbell.

This court held that because the trial court struck the reply brief, which raised the immunity

defense, “the immunity argument was neither before, nor decided by, the trial court.” Id.

at ¶11. Therefore, the denial of the City’s motion for summary judgment did not deny the

City the benefit of an alleged immunity. Id. Therefore, R.C. 2744.02 did not apply, but

rather R.C. 2505.02 applied and an order denying summary judgment is not a final,

appealable order. Id. at ¶ 12, citing State ex rel. Overmeyer v. Walinski, 8 Ohio St.2d 23,

222 N.E.2d 312 (1966).

{¶27} Much like the case before us, the trial court’s decision denying ECOT leave

to amend its answer rendered the immunity argument raised in its motion for summary

judgment to have no legal effect. Therefore, the immunity argument was neither before

the trial court, decided by the trial court, nor the basis for summary judgment denial; as

such, the order denying partial summary judgment became an interlocutory order. As

previously concluded, the ECOT I holding and order divested this court of jurisdiction to

consider the interlocutory orders on appeal. Accordingly, we lack jurisdiction to consider

ECOT’s second, third, and fourth assignments of error raised in App. No. 95287.
 IV. Conclusion

{¶28} The decision in ECOT I vacated portions of the final judgment, which was the

basis for the final, appealable order filed with this court. Accordingly, because we now

lack a final, appealable order, this court lacks jurisdiction to consider the issues raised on

appeal. Moreover, we hold that the denial of leave to file an amended answer to assert the

affirmative defense of political subdivision immunity does not fall under the broad holding

of Hubbell, and thus, is not in and of itself a final, appealable order.

{¶29} Dismissed.

It is ordered that appellee recover from appellant costs herein taxed.

The court finds there were reasonable grounds for this appeal.

It is ordered that a special mandate be sent to said court to carry this judgment into

execution.

A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the

Rules of Appellate Procedure.

KATHLEEN ANN KEOUGH, JUDGE

LARRY A. JONES, SR., P.J., and
SEAN C. GALLAGHER, J., CONCUR