Capital Equity Group v. Ripken Sports Inc. et al

Filing 72

Memorandum of Opinion and Order For the reasons set forth herein, Defendants' Motion to Dismiss (ECF No. #12 ) is granted. This matter is dismissed with prejudice. Judge Benita Y. Pearson on 9/19/2017. (JLG)

PEARSON, J.
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
CAPITAL EQUITY GROUP,

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Plaintiff,
v.

RIPKEN SPORTS INC., et al.,
Defendants.

CASE NO. 1:16CV1953

JUDGE BENITA Y. PEARSON

MEMORANDUM OF OPINION AND
ORDER

Pending is the Rule 12(b)(6) motion to dismiss filed by Defendants Ripken Sports Inc.,
Sports Fields Inc., and Sports Force Parks Sandusky LLC (collectively “Defendants”). ECF No.
12. Plaintiff opposes. ECF No. 28. Defendants replied. ECF No. 37. The Court has been
advised, having reviewed the record, the parties’ briefs and the applicable law. For the reasons
set forth below, Defendants’ motion is granted.
I. Background
Plaintiff Capital Equity Group (“CEG”) is in the business of raising equity capital for
real estate and business development. ECF No. 1 ¶ 1. Defendants Sports Fields Inc. (“SFI”)1 and
Sports Force Parks Sandusky LLC (“Sports Force”) are in the business of developing and
operating sports complexes throughout the United States. Id. at ¶ 2. Plaintiff and Defendants
became partners in the development of Sports Force Parks at Cedar Point Sports Center (the

1

Defendant Ripken Sports Inc. (“Ripken”) is a d/b/a of SFI. ECF No. 1 ¶ 3; ECF
No. 13 at PageID #: 134; ECF No. 13-1.

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“Sports Center”)—a youth tournament baseball complex and sports park in the City of Sandusky,
Erie County, Ohio.2 Id. at ¶¶ 11, 29. See also ECF No. 13 at PageID #: 134-35; ECF No. 28 at
PageID #: 255. Although the exact start of this pairing cannot be clearly gleaned from the
pleadings3, over the course of their nineteen-month business development relationship the parties
split certain roles and tasks. ECF No. 1 ¶ 20.
Plaintiff’s role in the business development relationship was to focus on developing and
procuring financing for the Sports Center by, among other things: bringing major partners to the
deal, including non-parties Cedar Point Park, LLC (“Cedar Point”), and the Erie County and City
of Sandusky governments; working with governmental bodies and joint venture partners to
obtain bond financing; and, coordinating the logistics of securing approximately $20,000,000.00
in financing for the Sports Center from private and public funding sources. ECF No. 1 ¶¶ 15-16,
20, 22-25; ECF No. 13 at PageID #: 135; ECF No. 28 at PageID #: 256. In this role, Plaintiff
worked with Erie County and non-party Cedar Point to structure, negotiate, draft and execute a
Cooperative Agreement (ECF No. 1-4) that memorialized the financing terms for the Sports
Center. ECF No. 1 ¶¶ 20, 22-23; ECF No. 13 at PageID #: 135; ECF No. 28 at PageID #: 256.

2

See Sports Force Parks at Cedar Point Sports Center,
https://www.cedarpoint.com/play/cedar-point-sports-center (last visited Sept. 8, 2017)
3

On the one hand Plaintiff alleges that it was invited to commence and
commenced due diligence on financing and development of the Sports Park in November
2011. ECF No. 1 ¶¶ 11-12. But Plaintiff does not reveal whom extended the invitation.
On the other hand, Plaintiff states that it “solely sponsored” the development of the
Sports Park until June 2013 when Plaintiff “invited [Defendants] to participate . . . as the
operator and builder. . . as early as 2011.” ECF No. 28 at PageID #: 255. See also ECF
No. 1 ¶ 13.
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Defendants’ role in the business development relationship was to focus on the
development, design, and operations plans for the Sports Center by, among other things:
providing feasibility and market analysis; leading the design and construction; and, operating the
Sports Center once it is constructed. ECF No. 1 ¶ 22; ECF No. 13 at PageID #135. In this role,
Defendants worked with non-party Cedar Point to structure, negotiate, draft and execute a
Development and Operations Agreement (ECF No. 1-3) between Defendant SFI and non-party
Cedar Point. See ECF No. 1 ¶¶ 22, 24; ECF No. 28 at PageID #: 256.
To document this split-role arrangement, the parties agreed to certain terms of
engagement that were memorialized in two (2) letters of intent—the 2013 Letter of Intent (the
“2013 LOI”) (ECF No. 1-2) and the 2014 Binding Letter of Intent (the “2014 LOI”) (ECF No. 11). See ECF No. 1 ¶¶ 14, 23; ECF No. 13 at PageID #: 133-34. As a result of Plaintiff’s effort to
secure financing for the Sports Center pursuant to the letters of intent, the Cooperative
Agreement (ECF No. 1-4) between non-parties Cedar Park and Erie County was executed on or
about October 26, 2015 and went into effect on October 1, 2015. ECF No. 1 ¶ 25. Thereafter,
Plaintiff alleges communication with Defendants ceased. Id. at ¶ 26. Approximately six (6)
months later, on April 25, 2016, a local news media outlet published an article stating that
Defendant Sports Force entered into a “a new venture” with non-parties Cedar Point and Erie
County to open the Sports Center. Id. at ¶ 30. The Sports Center opened to the public in March
2017 hosting “high school lacrosse games, an adult softball tournament, soccer tournaments and

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a baseball tournament.”4 Plaintiff has not received any share of the profits or any payment of
fees for its role in the business development relationship with Defendants. ECF No. 28 at
PageID #: 257.
Plaintiff filed this action prior to the Sports Center opening to the public. The Complaint
(ECF No. 1) alleges claims for breach of contract (“Count One”) and bad faith (“Count Two”).5
ECF No. 1. Plaintiff alleges that the 2013 LOI and 2014 LOI were binding agreements under
which Plaintiff held an exclusive right to provide equity financing for the Sports Center. ECF No.
1 at ¶¶ 11, 29. See also ECF No. 28 at PageID #: 255. Plaintiff also alleges that the financial
forecasts prepared by Defendants “induced [Plaintiff] to continue devoting substantial time and
effort to consummate the [Sports Center].” ECF No. 1 ¶ 21. Plaintiff contends that Defendants
breached the alleged binding agreements and acted in bad faith when Plaintiff was ultimately
“cut out of the [final] deal” between Defendants and non-parties Cedar Point and Erie County to
develop the Sports Center, and was “denied its right to exclusively raise the equity participation”
for the Sports Center. Id. at ¶ 30.
As to Counts One and Two, Plaintiff seeks $4,434,235.00 in damages as to each count.
Id. at ¶¶ 33, 37. In addition, Plaintiff seeks preliminary and permanent injunction enjoining
Defendants from, among other things, “financing, developing, building and/or operating” Sports

4

See Edward Pevos, An inside look at Cedar Point's new Sports Force Parks,
MLive.com (May 2, 2017),
http://www.mlive.com/travel/index.ssf/2017/05/an_inside_look_at_cedar_points.html.
5

Although Plaintiff brings a five-count Complaint, Counts Three, Four, and Five
are remedies sought by Plaintiff in this action.
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Force Parks at Cedar Point Sports Center without Plaintiff (“Count Three”) (Id. at ¶¶ 38-44); an
order appointing a receiver over Defendants pursuant to Ohio Rev. Code § 2735.01 (“Count
Four”) (Id. at ¶¶ 45-46); and, an order requiring Defendants to “immediately furnish a full
accounting of all matters . . . relating to” the Sports Center], the 2013 LOI, and/or the 2014 LOI
(“Count Five”) (Id. at ¶¶ 47-50).
Defendants filed a 12(b)(6) motion to dismiss the Complaint. ECF No. 12. Plaintiff
opposes (ECF No. 28); a reply (ECF No. 37) was filed.
II. Legal Standard
To survive a Fed. R. Civ. P.12(b)(6) motion to dismiss, the plaintiff’s complaint must
allege enough facts to “raise a right to relief above the speculative level.” Ass’n of Cleveland
Fire Fighters v. City of Cleveland, Ohio, 502 F.3d 545, 548 (6th Cir. 2007) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 555 (2007)). Fed. R. Civ. P. 8(a)(2) requires only that a
pleading contain “a short and plain statement of the claim showing that the pleader is entitled to
relief.” However, “a plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’
requires more than labels and conclusions, and a formulaic recitation of the elements of a cause
of action will not do.” Twombly, 550 U.S. at 555 (citing Papasan v. Allain, 478 U.S. 265, 286
(1986)). A complaint requires “further factual enhancement,” which “state[s] a claim to relief
that is plausible on its face.” Id. at 557, 570. A claim has facial plausibility when there is
enough factual content present to allow “the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

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When a claim lacks “plausibility in th[e] complaint,” that cause of action fails to state a claim
upon which relief can be granted. Twombly, U.S. 550 at 564.
The Court's inquiry is limited to the four corners of the complaint, along with any other
materials permitted under Fed. R. Civ. P. 12(b)(6) and 10(c). Jackson v. Maui Sands Resort,
Inc., No. 1:08-CV-2972, 2009 WL 7732251, at *3 (N.D. Ohio Sept. 8, 2009). “A copy of a
written instrument that is an exhibit to a pleading is a part of the pleading for all purposes.” Fed.
R. Civ. P. 10(c). A court may also consider “documents incorporated into the complaint by
reference, and matters of which a court may take judicial notice.” Solo v. United Parcel Serv.
Co., 819 F.3d 788, 794 (6th Cir. 2016) (quoting Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551
U.S. 308, 322 (2007)).
III. Analysis
A. Count One
To establish a claim for breach of contract pursuant to Ohio law, a plaintiff must establish
the existence of a contract, performance by the plaintiff, the defendant’s failure to fulfill its
contractual obligations, and damages as a result of the breach. See Pavlovich v. Nat’l City Bank,
435 F.3d 560, 565 (6th Cir. 2006) (citing Wauseon Plaza Ltd. P’ship v. Wauseon Hardware Co.,
807 N.E.2d 953, 957 (Ohio Ct. App. 2004)). Defendants move to dismiss Count One on two
grounds. As a threshold issue, Defendants move to dismiss Count One on grounds that Plaintiff
has not met the first element of a breach of contract claim—the existence of a contract or
agreement. ECF No. 13 at PageID #: 137-40. Next, Defendants move to dismiss Count One on
grounds that, even if the 2013 and 2014 LOI’s are enforceable as contracts, Plaintiff did not

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factually allege the third element of a breach of contract claim—that Defendants failed to fulfill
their contractual obligations. Id. at PageID #: 140-41. The Court considers Defendants’
arguments below.
(1) 2013 LOI
Plaintiff claims that the 2013 LOI (ECF No. 1-2) was a “binding contract” between the
parties. ECF No. 1 ¶¶ 14, 31-33; ECF No. 28 at PageID #: 261. Defendants contend that Count
One should be dismissed because the 2013 LOI is a non-binding agreement-to-agree that
“anticipated a future, formal agreement between the parties, specifically stating that its provisions
would not become binding ‘[u]ntil such time as the parties sign a formal letter of agreement.’”
ECF No. 13 at PageID #: 137-38. In its opposition, Plaintiff advances arguments and case law
relevant to agreements-to-agree, appearing to concede that the 2013 LOI is an agreement-toagree. ECF No. 28 at PageID #: 259.
“Although ‘an agreement to make an agreement is [not] per se unenforceable ... [t]he
enforceability of such an agreement depends . . . on whether the parties have manifested an
intention to be bound by its terms and whether these intentions are sufficiently definite to be
specifically enforced.’” InhalIntentionation Plastics, Inc. v. Medex Cardio-Pulmonary, Inc., 638
F. App’x 489, 498 (6th Cir. 2016) (quoting M.J. DiCorpo, Inc. v. Sweeney, 634 N.E.2d 203, 208
(Ohio 1994)). Therefore, the issue before the Court is whether (1) the parties have manifested an
intent to be bound by the terms of the 2013 LOI, and (2) whether the parties’ intent to be bound
by the terms of the 2013 LOI are sufficiently definite to be specifically enforced.

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When a letter of intent forms the bases for an agreement-to-agree, the parties do not
manifest an intent to be bound by the terms of the agreement if “the express terms of the letter of
intent clearly indicate that the document was nothing more than an agreement to principles which
were subject to further negotiation and [a] detailed and definitive [future] agreement [, and] the
letter itself [does] not address all the essential terms of the [future agreement].”
M.J. DiCorpo, 634 N.E.2d at 208 (holding that letter of intent did not constitute a binding
merger agreement). See also Faurecia Auto. Seating, Inc. v. Toledo Tool & Die Co., 579 F.
Supp. 2d 967, 972 (N.D. Ohio 2008) (Carr, J.) (“In the Sixth Circuit, ‘if [an] obligation, in order
to become binding, rests on a future agreement to be reached by parties, so that either party may
refuse to agree, there is no contract.’” ) (quoting General Motors Corp. v. Keener Motors, 194
F.2d 669, 676 (6th Cir. 1952)).
The introductory paragraph of the 2013 LOI provides:
This letter is intended to set forth the intent of a future
partnership between Capital Equity Group (“CEG”) and Ripken
Sports (“RS”) whereas RS and CEG intend to work together to help
develop a sports complex in Erie County, OH. This Letter of Intent
contains provisions that are binding and non-binding when signed
by the parties. Until such time as the parties sign a formal letter
of agreement will the services or business entities herein mentioned
entirely become binding on the parties.
See also ECF No. 1-2 (emphasis added).
Defendants contend that the parties did not manifest an intent to be bound by the terms of
the 2013 LOI because the 2013 LOI “anticipated a future, formal agreement between the parties,
specifically stating that its provisions would not become binding ‘[u]ntil such time as the parties

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sign a formal letter of agreement.’” ECF No. 13 at PageID #: 137-38. Plaintiff contends that the
parties manifested an intent to be bound by the terms of the 2013 LOI because the introductory
paragraph states, in part, that it contains both “binding and non-binding” provisions. ECF No. 28
at PageID #: 260. However, neither Plaintiff nor 2013 LOI reveal which terms were binding and
which were not.6 Additionally, the ending of the sentence on which Plaintiff’s assertion relies,
conditions the “binding and non-binding” provisions on the 2013 LOI being “signed by the
parties.” ECF No. 1-2. The 2013 LOI is only signed by Jim Arnold (a.k.a. James S. Arnold ),
Defendant SFI d/b/a Ripken Sports, Inc.’s Director of Business Development. ECF No. 1-2; ECF
No. 13 at PageID #134. Therefore, on its face, the express terms of the 2013 LOI clearly indicate
that its terms were not binding on the parties until both parties sign the 2013 LOI—a condition
not met. In the alternative, the express terms of the 2013 LOI also indicate that the terms shall
be binding when the parties sign a formal letter of agreement in the future. Such a contingency
means there is no contract. See General Motors Corp., 194 F.2d at 676 (“If the obligation to
become binding rests on a future agreement to be reached by the parties, so that either party may
refuse to agree, there is no contract. In other words: As long as both parties contemplate that
something remains to be done to establish contractual relationship, no contract has been made.”).
Having found that the parties have not manifested an intent to be bound by the terms of
the 2013 LOI, the Court finds that the 2013 LOI is not a binding contract. Because the 2013 LOI
is not a binding contract, the Court need not decide whether the parties’ intentions to be bound by

6

While not insignificant, as indicated below, the Court’s ruling makes giving this
vagueness additional treatment unnecessary.
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the terms of the 2013 LOI are sufficiently definite to be specifically enforced. To the extent
Plaintiff’s claims rely on the enforceability of the 2013 LOI, the claims are dismissed.
(2) 2014 LOI
Plaintiff claims that the 2014 LOI (ECF No. 1-1) is a “binding contract” between the
parties. ECF No. 1 ¶¶ 18, 31-33; ECF No. 28 at PageID #: 261. Unlike the 2013 LOI, the 2014
LOI is unambiguously labeled a “BINDING LETTER OF INTENT.” See ECF No. 1-1 at
PageID #: 18 (“THIS BINDING LETTER OF INTENT (“Agreement”) . . .” ). The 2014 LOI
provides:
WHEREAS, while it is anticipated that the Parties will ultimately
enter into a more formal and detailed agreement, it is the Parties’
desire to set forth a binding contractual framework for their
agreement with one another as it relates to the Project and any other
project resulting from a Party and the other’s Contact. Regardless of
whether a more formal document is ever agreed upon and
executed, this Agreement shall be treated as a binding contract.”
ECF No. 1-1 at PageID #: 18 (emphasis added).
Here, the express terms of the 2014 LOI are clear and unambiguous as to the parties’
intent to be bound and sufficiently definite to be enforceable. See Inhalation Plastics, 638 F.
App’x at 498. Moreover, Defendants concede that, on its face, “the [2014 LOI] states that the
parties desired to set forth a ‘binding contractual framework’ that would survive even if they did
not enter into a formal contract.” ECF No. 13 at PageID #: 138. The 2014 LOI was signed by
Plaintiff and James S. Arnold (a.k.a. Jim Arnold), Defendant SFI d/b/a Ripken Sports, Inc.’s
Director of Business Development. ECF No. 1-1 at PageID #: 21; ECF No. 13 at PageID #134.

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Nevertheless, Defendants argue that Count One should be dismissed (as to the 2014 LOI
as well) because the terms of the 2014 LOI are too indefinite and vague to be enforced. ECF No.
13 at PageID #: 138-40.
While the parties need not agree on every conceivable circumstance
that might arise in order for a contract to exist, they must agree on the
contract’s essential terms. [ ] Thus, a valid contract must be specific
as to its essential terms. [ ]In a contract that is not for goods, the
essential terms are, generally, the parties to the contract and its
subject matter. . . . An agreement is sufficiently certain for
enforcement if it provides a basis for determining the existence of a
breach and for giving an appropriate remedy.
In re Estate of Bohl, 60 N.E.3d 511, 520 (Ohio 2016) (citations and quotations omitted).
Essentially, a valid contract must be specific as to its essential terms, such as the identity of the
parties to be bound, the subject matter of the contract, consideration, a quantity term, and a price
term. It is well settled under Ohio law that if the Court determines that the parties intended to be
bound by an agreement that falls short, the Court “may fashion those less essential terms that
were omitted to reach a fair and just result.” Mantia v. House, 900 N.E.2d 641, 644 (Ohio Ct.
App. 2008) (quoting Litsinger Sign Co. v. Am. Sign Co., Inc., 227 N.E.2d 609, 619 (Ohio 1967)).
Defendants argue a litany of reasons why the terms of the 2014 LOI are not sufficiently
definite or certain. Among their arguments, Defendants aver that the 2014 LOI “identifies no
definitive duties that the parties owe to one another related to financing, developing, or operating
the project.” ECF No. 13 at PageID #: 139. Defendants also assert that the 2014 LOI lacks
financial terms, deadlines, timetables, metrics for compliance, and consequences for
noncompliance. Id. at PageID #: 140. In addition, Defendants assert that the 2014 LOI lacks

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“definite terms allowing a factfinder to determine whether a breach has occurred [and] the proper
remedy for an alleged breach.” Id. at PageID #: 139.
Plaintiffs retort on grounds that the 2014 LOI contains sufficiently definite terms detailing
the parties roles, the term length, the exclusivity of the partnership, confidentiality, applicable
law, and agency authority. See ECF No. 28 at PageID # 261. Plaintiff also avers that the 2014
LOI contained sufficiently definite financial terms because the 2014 LOI gave Plaintiff exclusive
right to finance the project. Id. at PageID #: 262. See also ECF No. 1-1, ¶1.a. (“CEG shall
exclusively procure all equity participation[.]”). Plaintiff contends that, separate from the 2014
LOI, the parties forecasted that this exclusive equity participation would generate $4.44 million
in profits for Plaintiff over ten (10) years. ECF No. 28 at PageID #: 262. See also ECF No. 1 ¶
21 (alleging that Defendants prepared financial forecasts indicating a roughly $4.4 million total
return on capital investment and fees).
The 2014 LOI sufficiently identifies the names of the parties to the agreement, their roles,
and its subject matter. Defendants agree “the 2014 Letter of Intent contemplates that [Plaintiff]
would have the right to provide equity financing, and Defendants would not.” ECF No. 37,
PageID # 438. The 2014 LOI reveals that the parties agreed to that “Plaintiff shall exclusively
procure all equity participation into the Project.” See ECF No. 1-1 at ¶1.a. Unfortunately for
Plaintiff, while it appears to have been given responsibility for financing the project, the 2014
LOI is not sufficiently certain for enforcement because it does not provide a basis for giving an
appropriate remedy. While Plaintiff contends that, its exclusive equity participation under the
2014 LOI would result in a $4.44 million profit over ten (10) years, Plaintiff does not point the

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Court to any provision in the 2014 LOI that either expressly or impliedly guarantees Plaintiff a
monetary benefit from the 2014 LOI. Method of determining an amount of compensation are
glaring omissions of essential terms the Court cannot fashion.7
Accordingly, the Court finds the 2014 LOI unenforceable. To the extent Plaintiff’s
claims rely on the enforceability of the 2014 LOI, the claims are dismissed. Consequently,
Plaintiff’s claims for breach of contract are also dismissed. Plaintiff fails to state a claim upon
which relief may be granted in the absence of an enforceable contract or agreement between the
parties in this action.
B. Count Two
Count Two alleges that Defendants’ conduct breached the “implied covenants of good
faith and fair dealing pursuant to [Ohio Rev. Code] § 1301.304.” ECF No. 1 ¶¶ 34-37.
Defendants move to dismiss Count Two on grounds that, under Ohio law, a claim for breach of
implied covenant of good faith and fair dealing is not an independent cause of action. ECF No.
13 at PageID #: 142-43. Defendants also contend that Ohio law only recognizes an implied
covenant of good faith and fair dealing in insurance contracts. See ECF No. 37 at PageID #: 444.

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Defendants’ summary of their argument on this issue bears repeating: “even if
Defendants agreed that [Plaintiff] would have the ‘exclusive’ right to provide equity
financing for the project, [Plaintiff] later chose to give away the exclusivity of that right,
without any involvement from Defendants.” ECF No. 37, PageID # 439. When the
Complaint is viewed in the light mos favorable to Plaintiff, it supports Defendants’
position. Plaintiff’s argument that this is Defendants’ attempt to modify the 2014 LOI
misses the mark. Either the 2014 LOI failed to provide terms specifying the
compensation, price, or remedy Plaintiff seeks, or Plaintiff contracted away its
expectation of payment when it negotiated the Cooperative Agreement.
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“Ohio law only recognizes an implied covenant of good faith and fair dealing in insurance
contracts and in limited circumstances where the duty arises from the language of the contract.”
Pappas v. Ippolito, 895 N.E.2d 610, 622 (Ohio Ct. App. 2008). The matter at bar does not
concern an insurance contract. Moreover, because the Court has ruled that there is no
enforceable contract in this action, the duty of good faith and fair dealing does not arise from the
language of any contract in this case. Accordingly, Count Two is dismissed.
C. Counts Three - Five
Defendants move to dismiss Counts Three through Five on grounds that a preliminary
injunction, the appointment of a receiver, and an accounting are remedies and not independent
causes of action. ECF No. 13 at PageID #: 143. Having found that there is no contract or
agreement to enforce in this action, the Court dismisses Counts Three, Four and Five on grounds
that these claims constitute request for remedies, without viable underlying causes of action,
Plaintiff fails to state a claim upon which relief may be granted in the absence of an enforceable
contract or agreement between the parties.
IV. Conclusion
For the foregoing reasons, Defendants’ motion to dismiss (ECF No. 12) is granted. This
matter is dismissed with prejudice.

IT IS SO ORDERED.

September 19, 2017
Date

/s/ Benita Y. Pearson
Benita Y. Pearson
United States District Judge
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