North Canton Board of Education v. AT&T, Inc. et al
Memorandum Opinion and Order: Defendants' motion to dismiss (Doc. No. 10 ) is granted in part and denied in part. Counts Two, Four and Five are dismissed as to all defendants. Count One is dismissed as to defendant AT&T and will proc eed as to the other two defendants. Count Three is dismissed as to defendants Cingular Wireless and Tower Holdings and will proceed only as to defendant AT&T. The claim for punitive damages as it relates to Count Three will be dismissed unless plaintiff files, within 7 days of the date of this order, an amended complaint that sufficiently pleads facts to support an inference of actual malice. Judge Sara Lioi on 3/27/2017. (P,J)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
NORTH CANTON BOARD OF
EDUCATION, aka North Canton City
School District Board of Education,
AT&T INC., et al.,
CASE NO. 5:16-cv-1420
JUDGE SARA LIOI
Before the Court is the Rule 12(b)(2) and 12 (b)(6) motion to dismiss filed by defendants
AT&T, Inc. (“AT&T”), New Cingular Wireless PCS, LLC (“Cingular Wireless”), and NCWPCS
MPL 30-Year Sites Tower Holdings, LLC (“Tower Holdings”) (collectively, “defendants”). (Doc.
No. 10 [“Mot.”].) Plaintiff North Canton Board of Education (“the District” or “plaintiff”) has
filed a memorandum in opposition (Doc. No. 21 [“Opp’n”]), and defendants have filed a reply
(Doc. No. 22 [“Reply”]). For the reasons set forth herein, the motion is granted in part and
denied in part.
On May 6, 2016, the District filed a complaint against defendants in Stark County Court
of Common Pleas asserting claims under Ohio common law for breach of contract, tortious
interference with contract, breach of fiduciary duty, civil conspiracy, and accounting. Defendants
removed the case to this Court on June 10, 2016, on the basis of diversity of citizenship. 28 U.S.C.
The complaint (Doc. No. 1-1 [“Compl”]1) alleges that, on or about May 25, 2005, the
District entered into a lease agreement (“the Lease”) with AT&T (alleged to be the parent company
of Cingular Wireless and Tower Holdings) that enabled AT&T to install on the District’s property
a pole designed to support antenna equipment and transmission wires for wireless communications
signals (“the Premises”). (Compl. ¶¶ 2, 13.) A copy of the Lease is attached to the complaint as
Exhibit 1.2 (See Doc. No. 1-1, beginning at 25.)3 The Court notes that, despite plaintiff’s allegation
that AT&T was a party to the Lease, the document itself states that the Lease was between the
District, as “Lessor,” and Cingular Wireless, as “Lessee.” (Id., Introductory paragraph.)
The complaint further alleges that the Lease required payment of a monthly base rent to
the District (Compl. ¶ 14), plus a specified share of revenue received by AT&T from third parties.
(Id. ¶ 15, citing § 10 of the Lease.) Section 10 of the Lease provides as follows:
Assignment; Sublease; Colocation.
Lessee may assign this Agreement and its other rights hereunder to
any person or business entity without the prior consent of Lessor.
Lessee may sublease space on the Premises, including the Pole, or
allow another party’s use of the Premises, including the Pole, and Lessee agrees to
share the rent, revenue or other consideration received from any sublessee or other
party using the Premises, including the Pole, with Lessor in accordance with the
The Notice of Removal contains three exhibits. Ex. A consists of the state court pleadings served on AT&T; Ex. B
is the state court pleadings served on Cingular Wireless; and Ex. C is the state court pleadings served on Tower
Holdings. The three exhibits are virtually identical. Therefore, throughout this ruling, for ease of reference, the Court
will cite to only Ex. A (Doc. No. 1-1) as the complaint.
In ruling on a motion to dismiss under Fed. R. Civ. P. 12, a court “may consider the [c]omplaint and any exhibits
attached thereto, public records, items appearing in the record of the case and exhibits attached to defendant’s motion
to dismiss so long as they are referred to in the [c]omplaint and are central to the claims contained therein.” Bassett v.
Nat’l Coll. Ath. Ass’n, 528 F.3d 426, 430 (6th Cir. 2008) (citing Amini v. Oberlin Coll., 259 F.3d 493, 502 (6th Cir.
All page number references are to the page identification number generated by the Court’s electronic docketing
Lessee will remit payment to Lessor in an amount equal to twentyfive percent (25%) of the rent, revenue or other consideration
received from the first sublessee or other party using the Premises,
including the Pole, but not less than Five Hundred Dollars ($500.00)
per month; and
Lessee will remit payment to Lessor in an amount equal to fifty
percent (50%) of the rent, revenue or other consideration received
from the second sublessee or other party using the Premises,
including the Pole, but not less than Seven Hundred Fifty Dollars
($750.00) per month.
Lessee represents and warrants unto Lessor that any sublease agreement entered
into between Lessee and any sub-lessee is subject to Lessor’s review and reasonable
approval and that Lessee will require any sublessee to attorn to and be obligated
under this Agreement in the same manner as Lessee is so obligated. Lessee
acknowledges that a sublease includes any form of colocation by an entity on the
(Doc. No. 1-1 at 29.)
The Lease was amended on July 29, 2013 (“the First Amendment”), to permit installation
of an additional cell tower. A copy of the First Amendment is attached to the complaint as Exhibit
2. (See Doc. No. 1-1, beginning at 44.) Again, the Court notes that, despite plaintiff’s allegation
that the parties to the First Amendment were the District and AT&T, the document identifies the
parties as the District and Cingular Wireless. (Id.)
Space on the Premises was allegedly leased to third parties T-Mobile and Verizon, who
paid for the right to co-locate on the site. (Compl. ¶ 18.) The District alleges that AT&T did not
timely and accurately pay the District its rightful share of the revenue under § 10 of the Lease,
despite repeated notice from the District, which included notice of default and reservation of rights
to terminate the Lease, to accelerate the lease payments, and to exercise the District’s right of first
refusal to acquire the cell towers on the Premises. (Id. ¶¶ 19-20.)
Allegedly in an effort to avoid termination of the Lease, AT&T executed a Second
Amendment to the Lease. (Id. ¶ 21.) A copy of the Second Amendment is attached to the complaint
as Exhibit 3. (See Doc. No. 1-1, beginning at 66.) Although it appears that the District approved
the Second Amendment on March 11, 2015, and Tower Holdings (the successor in interest to
Cingular Wireless) approved it on June 17, 2015 (Id. at 68, 69), the document says it was effective
on an unspecified day in June, 2014. (Id. at 66.) As before, despite the District’s allegation that
AT&T was a party to the Second Amendment, the document identifies the parties as the District
and Tower Holdings. (Id.) The Second Amendment continued to require payment to the District
of a share of rent, revenue, or other consideration, in addition to attorney fees, expert fees, costs of
suit, and court costs in the event of a default. (Compl. ¶ 23.) The Second Amendment also provided
for a late fee, with interest, on delinquent amounts. (Id. ¶ 24.)
The gravamen of this lawsuit is contained in ¶¶ 25 to 41 of the complaint. There, plaintiff
alleges a scheme on AT&T’s part designed to evade paying the District its fair share of revenues
earned on the Premises.
The complaint alleges that, on or about October 19, 2013,4 AT&T entered into a Master
Agreement with Crown Castle International Corp. (“Crown”) under which Crown agreed to lease
from AT&T more than 9,000 cell towers, including the Premises. (Id. ¶ 25-26.) A copy of this
Master Agreement is attached to the complaint as Exhibit 4. (See Doc. No. 1-1, beginning at 73.)
Despite allegedly receiving approximately $4.85 billion of rent, revenue, or other consideration
from Crown’s use of the cell towers, AT&T has refused to pay any revenue sharing to landowners,
such as the District. (Compl. ¶¶ 27, 28.)
The date on the actual document is October 18, 2013.
Plaintiff alleges that the Master Agreement was intentionally drafted in a way to evade the
revenue-sharing obligations of the Lease and its Amendments. In particular, under § 4.8(a) of the
Master Agreement, if a landowner such as the District demanded payment of revenue shares,
Crown was to recharacterize that landowner’s site as a “Managed Site” rather than a “Leased Site.”
(Id. ¶ 33.) Even so, the Master Agreement also provides that all sites must be treated as leased sites
for income tax purposes and all so-called “Managed Sites” must be operated “in a manner
consistent with” operation of “Leased Sites.” (Id. ¶¶ 35, 37, 39.) The District alleges that its Lease
and the Amendments require revenue sharing for any rent, revenue or other consideration received
by AT&T relating to the Premises, regardless of how the Premises are labeled. (Id. ¶¶ 40-41.)
Defendants filed their motion to dismiss on July 15, 2016; it included a challenge to
personal jurisdiction. (See Mot. § III.A.) Shortly thereafter, plaintiff moved for leave to conduct
limited discovery relating to personal jurisdiction. Following telephone conferences with the Court
and counsel, the matter was referred to the assigned magistrate judge for resolution. On September
9, 2016, defendants voluntarily withdrew the portion of their motion to dismiss that had challenged
personal jurisdiction over AT&T. (See Notice of Voluntary Withdrawal, Doc. No. 18.) Therefore,
this ruling will not address personal jurisdiction, that matter having now been waived.5
The notice of voluntary withdrawal does not expressly state that it waives a challenge to personal jurisdiction. Rather,
it states that AT&T is unwilling to devote the extended time to discovery on the issue that plaintiff had requested,
deeming it to be a waste of time given what AT&T believes are strong legal arguments for its dismissal on the merits.
To be clear, however, especially in view of this ruling on the motion to dismiss, the Court has construed Doc. No. 18
as a waiver of personal jurisdiction by AT&T. Days Inns Worldwide, Inc. v. Patel, 445 F.3d 899, 905 (6th Cir. 2006)
(“The requirement that a court have personal jurisdiction is a due process right that may be waived either explicitly or
implicitly.”) (internal quotation marks and citations omitted).
Standard on a Motion to Dismiss
A complaint must contain “a short and plain statement of the claim showing that the pleader
is entitled to relief[.]” Fed. R. Civ. P. 8(a)(2). Although this pleading standard does not require
great detail, the factual allegations in the complaint “must be enough to raise a right to relief above
the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 167 L. Ed.
2d 929 (2007) (citing authorities). In other words, “Rule 8(a)(2) still requires a ‘showing,’ rather
than a blanket assertion, of entitlement to relief.” Id. at 556, n.3 (criticizing the Twombly dissent’s
assertion that the pleading standard of Rule 8 “does not require, or even invite, the pleading of
“To survive a motion to dismiss, a complaint must contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S.
662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009) (quoting Twombly, 550 U.S. at 570).6 Rule 8
does not “unlock the doors of discovery for a plaintiff armed with nothing more than conclusions.”
Id. at 678-79. “While legal conclusions can provide the framework of a complaint, they must be
supported by factual allegations. When there are well-pleaded factual allegations, a court should
assume their veracity and then determine whether they plausibly give rise to an entitlement to
relief.” Id. at 679. “The court need not, however, accept unwarranted factual inferences.” Total
Benefits Planning Agency, Inc. v. Anthem Blue Cross & Blue Shield, 552 F.3d 430, 434 (6th Cir.
2008) (citing Morgan v. Church’s Fried Chicken, 829 F.2d 10, 12 (6th Cir. 1987)).
The Court notes that here, where jurisdiction is based on diversity and all the claims are raised under Ohio common
law, the Court applies the substantive law of Ohio to determine whether a particular claim has been stated. City of
Cleveland v. Ameriquest Mortg. Secs., Inc., 615 F.3d 496, 502 (6th Cir. 2010) (citations omitted).
Failure to State a Claim Against AT&T for Breach of Contract
In Count One of the complaint, the District alleges a breach of contract claim against all
three defendants, including AT&T, who is not a party to the Lease, the First Amendment, or the
Second Amendment. AT&T argues that the breach of contract claim against it must fail as a matter
The District concedes in its brief that AT&T is not a party to the relevant contracts. (Opp’n
at 877.) It argues, however, that “in discovery, [it] expects to obtain evidence that AT&T
orchestrated efforts to misrepresent facts in the negotiations of the Lease Amendments relied upon
by the [District].” (Id.) It claims that “‘courts have been reluctant to dismiss the action where the
facts underlying the claims are within the defendant’s control.’” (Id. at 875, quoting Kovach v.
Access Midstream Partners, L.P., No. 5:15-cv-616, 2016 WL 1162061, at * 7 (N.D. Ohio Mar.
While the District’s argument that it should be allowed to flesh out a claim through
discovery might be applicable to another claim, it offers no support with respect to Count One, to
the extent that count is leveled against AT&T. AT&T is simply not a party to any of the agreements
and no amount of discovery, even of material that may be within AT&T’s sole control, is going to
change that fact. The documents speak for themselves. As correctly argued by AT&T, “[w]here,
as here, a written instrument contradicts the allegations of the complaint to which it is attached,
the written instrument trumps the allegations.” (Mot. at 743, citing Creelgroup, Inc. v. NGS
American, Inc., 518 F. App’x 343, 347 (6th Cir. 2013).)
The Court agrees with AT&T and, to that extent, its motion to dismiss is granted. The
breach of contract claim in Count One shall proceed only against Cingular Wireless and Tower
Failure to State a Claim for Breach of Fiduciary Duty
In Count Two, plaintiff claims that defendants “assumed the role of fiduciaries to the
[District], with respect to revenue sharing under the Lease and Amendments[,]” that “AT&T had
sole access and knowledge concerning the rent, revenue or other consideration received from third
parties’ use of the Premises[,]” and that the District “placed special confidence and trust in the
integrity and fidelity of AT&T, and there was a resulting position of superiority that AT&T
acquired by virtue of this special trust of which AT&T was aware.” (Compl. ¶¶ 53, 54, 55.) The
District alleges that AT&T “had a duty to disclose . . . all information relating to rent, revenue or
other consideration that AT&T received from third parties’ use of the Premises[,]” that AT&T
“failed to disclose” with respect to that duty, and that it “materially misrepresented . . . the nature
of the AT&T-Crown transaction and falsely represented . . . that it did not receive any rent, revenue
or other consideration from Crown related to the Premises.” (Id. ¶¶ 56, 57, 58.)
Defendants argue, first, that it is a basic tenet of Ohio law that a party cannot convert a
contract action into a tort action. (Mot. at 744, citing Ketcham v. Miller, 136 N.E. 145 (Ohio 1922)
and Corporex Dev. & Constr. Mgmt., Inc. v. Shook, Inc., 835 N.E.2d 701, 705 (Ohio 2005).)
Further, it is not a tort to breach a contract, regardless of motive. (Id., citing cases.)
Defendants also argue that the District has alleged no facts upon which the Court could
conclude that defendants owed the District a special duty, outside the terms of the contract. They
claim that the only duties owed by Cingular Wireless and Tower Holdings arose from the contracts,
and that AT&T, a non-party to any contract, had no relationship with the District that would give
rise to a fiduciary duty. (Mot. at 746-47.)
In opposition, the District asserts that it was in a “quasi-partnership [with Cingular
Wireless] for purposes of equally sharing revenue generated by the tower sites.” (Opp’n at 877.)
It argues that it was induced to enter into the First Amendment based on “the express representation
that [it] would continue to share 50% of the revenue generated from third parties.” (Id., footnote
omitted.) The District “expand[ed] the size of the leased premises, add[ed] a second cell tower,
and extend[ed] the initial term of the lease[,]” in return for an agreement to “cooperate in efforts
to obtain additional rent, revenue or other consideration from third parties’ use of the site.” (Id. at
877-78.) The District claims that, unbeknownst to it, “at the same time it was induced to execute
the First Amendment with the representation of increased revenue, AT&T was devising a scheme
to evade such revenue sharing obligations by executing the Master Agreement[.]” (Id. at 878.) The
District claims that, after AT&T formed Tower Holdings, it required Cingular Wireless “to
contribute its interest in the [District’s] real estate to Tower Holdings.” (Id.) The District asserts
that “AT&T crafted a scheme to defraud landowners who had leases with revenue sharing
provisions.” (Id. at 879.) This, according to the District, “created a de facto fiduciary relationship
between the parties.” (Id. at 881.)
The District argues that defendants held a special, and superior, position that caused the
District to place special trust in them when entering into their contracts. The problem with this
argument is that, as to Cingular Wireless and Tower Holdings, any duty owed to the District arises
only from the terms of the contracts. There would be no duty to the District but for the contracts
and they do not give rise to any separate fiduciary duty. As explained by the Sixth Circuit:
A fiduciary duty requires more than the generalized business obligation of
good faith and fair dealing. The Texas Supreme Court described this distinction in
Crim Truck & Tractor Co. v. Navistar Int’l Transp. Corp., 823 S.W.2d 591 (Tex.
The duty of good faith and fair dealing merely requires the parties to “deal
fairly” with one another and does not encompass the often more onerous
burden that requires a party to place the interest of the other party before his
own, often attributed to a fiduciary duty.
The fact that one businessman trusts another, and relies upon his promise to
perform a contract, does not rise to a confidential relationship. Every
contract includes an element of confidence and trust that each party will
faithfully perform his obligation under the contract. Neither is the fact that
the relationship has been a cordial one, of long duration, evidence of a
In re Sallee, 286 F.3d 878, 891-92 (6th Cir. 2002) (quoting Crim Truck & Tractor Corp., 823
S.W.2d at 594-95) (internal citations omitted in original).
As to AT&T, it had no contractual duty, not being a party to the contracts, and, since it had
no other relationship with the District, the Court is hard pressed to see how there could be an
independent fiduciary duty to plaintiff. Even though, as the District argues, the allegations of the
complaint should be accepted as true (Opp’n at 882), that applies to factual allegations. The mere
allegation of a de facto fiduciary relationship, which is a question of law, Ivancic v. Enos, 978
N.E.2d 927, 939 (Ohio Ct. App. 2012), does not require this Court, on a motion to dismiss, to
accept that legal assertion as true. There are no facts in the complaint that would support a
conclusion that the District and AT&T had any relationship, much less a fiduciary relationship.
Defendants are entitled to dismissal in its entirety of the claim of breach of fiduciary duty
in Count Two.
Failure to State a Claim for Tortious Interference with Contract
Tortious interference with contract occurs “when a person, without a privilege to do so,
induces or otherwise purposely causes a third person . . . not to perform a contract with another.”
A&B-Abell Elevator Co. v. Columbus/Cent. Ohio Bldg. & Constr. Trades Council, 651 N.E.2d
1283, 1294 (Ohio 1995) (citations omitted). Defendants argue that both the Sixth Circuit and the
Northern District of Ohio have held that “a parent company is privileged to interfere with its
subsidiary’s contract because it is considered the same as the subsidiary.” (Mot. at 747, quoting
Wamen v. Goodyear Tire & Rubber Co., No. 5:13CV1084, 2014 WL 185901, at *6 (N.D. Ohio
Jan. 15, 2014); see also id. n.6 (citing Canderm Pharm., Ltd. v. Elder Pharm., Inc., 862 F.2d 597,
601 (6th Cir. 1988); Kirk v. Shaw Envtl., Inc., No. 1:09-cv-1405, 2010 WL 1387887, at *8 (N.D.
Ohio Mar. 31, 2010); Ragen v. Hancor, Inc., 920 F. Supp. 2d 810, 841-42 (N.D. Ohio 2013); ITS
Fin., LLC v. Advent Fin. Servs., LLC, 823 F. Supp. 2d 772, 783-84 (S.D. Ohio 2011); Neely v.
Crown Solutions Co., LLC, No. 3:13-cv-00109, 2013 WL 6056205, at *16 (S.D. Ohio 2013)).)
In opposition, the District argues that, although the Ohio Supreme Court has not decided
the issue of whether a parent may be held liable for interference with a subsidiary’s contract, an
Ohio appellate court has very recently addressed the issue. The District cites Paramount Farms
Int’l., L.L.C. v. Ventilex B.V., 61 N.E.3d 702 (Ohio Ct. App. 2016), for the proposition that the
parent’s relationship to its subsidiary is “but one of the several factors” that must be considered
under Restatement (Second) of Torts § 767 (1979), which “the Ohio Supreme Court has adopted
. . . [as] guidelines to be followed in determining whether an actor’s interference with another’s
contract is improper.” (Opp’n at 886, quoting Paramount Farms, 61 N.E.3d at 710.) According to
a court determining whether an actor’s interference with a contract was improper
or “privileged” should consider the following factors: (a) the nature of the actor’s
conduct, (b) the actor’s motive, (c) the interests of the other with which the actor’s
conduct interferes, (d) the interests sought to be advanced by the actor, (e) the social
interests in protecting the freedom of action of the actor and the contractual interests
of the other, (f) the proximity or remoteness of the actor’s conduct to the
interference, and (g) the relations between the parties.
61 N.E.3d at 710 (quoting Fred Siegel Co., L.P.A. v. Arter & Hadden, 707 N.E.2d 853, 860 (Ohio
1999)). Ohio’s Twelfth District Court of Appeals expressly declined to follow Canderm, Kirk, and
ITS Financial (all relied upon by defendants here), concluding that “[a]lthough the decisions speak
directly to the issue at bar, none of the decisions cite an opinion from an Ohio court explicitly
[supporting their underlying reasoning].” Id. at 709.
In their reply brief, defendants assert that Paramount Farms is an “aberrational unreported
decision” that should not take precedence over “controlling precedent from the Sixth Circuit and
Northern District of Ohio[.]” (Reply at 909.) In the alternative, defendants argue that, even if this
Court were to apply Paramount Farms, plaintiff’s tortious interference claim would still fail as a
matter of law because plaintiff “alleges no facts demonstrating that the alleged interference was
improper or that AT&T Inc. caused Cingular Wireless/Tower Holdings to breach the Lease
Agreement.” (Id. at 911, footnote omitted.)
The dilemma here is how to interpret Ohio law where earlier federal decisions interpreting
that same law, which might otherwise guide this Court, have been expressly rejected by the later
decision of an Ohio intermediate appellate court. The Court concludes that it must simply continue
to apply the basic legal principles that it would apply were it writing on an entirely clean slate.
Where the Ohio Supreme Court has not spoken on an issue of state law, the task confronting
a federal court addressing that issue “is to make the best prediction of what the state court would
do if confronted with the question.” Andrews v. Columbia Gas Transmission Corp., 544 F.3d 618,
624 (6th Cir. 2008) (citation omitted). “State appellate court decisions are generally authoritative,
‘absent a strong showing that the state’s highest court would decide the issue differently.’” Id.
(quoting Kurczi v. Eli Lilly & Co., 113 F.3d 1426, 1429 (6th Cir. 2008)); see also In re Nowak,
414 B.R. 269, 276 (Bankr. S.D. Ohio 2009) (the court may rely upon “opinions of the State’s
intermediate appellate courts to the extent that they are persuasive indicia of the State Supreme
Court direction”). “While engaged in [the] predictive process, ‘[t]he Court must employ the
appropriate [state] methodology to decide this issue the way that [it] believe[s] the Supreme Court
of [the state] would decide it.” Id. (alterations in original; all internal quotation marks and citations
The court in Paramount Farms carefully evaluated the Ohio Supreme Court’s adoption of
Section 767 of the Restatement of Torts, providing guidelines for determining whether a party’s
interference is proper or not. It cited comments under Section 767, which state that the factors
listed in the section are “to be weighed against each other and balanced in arriving at a judgment[,]”
as to whether interference was proper or not, that “[t]he weight carried by these factors may vary
considerably and the determination of whether the interference is improper may also vary; but the
listed factors are nevertheless important[.]” Paramount Farms, 61 N.E.3d at 710 (emphasis
added). The court concluded that concentrating solely on the “relations between the parties” to the
exclusion of all the other elements “elevate[s] the parent company/subsidiary relationship to a
super, threshold factor, the presence of which precludes the consideration and weighing of the
various Section 767 factors.” Id. at 711.
Notwithstanding the various federal cases that previously decided this issue differently,
this Court is persuaded that the decision in Paramount Farms should now be controlling on this
issue of state law, given that it is a decision of an intermediate appellate court in Ohio that relies
upon Ohio authority, that it provides “persuasive indicia of the State Supreme Court direction,”
and that it expressly rejected the previous federal court rulings on the issue.
Although defendants urge the Court to follow the federal decisions rejected by Paramount
Farms, and although they label Paramount Farms as “aberrational,” they do not explain how its
reasoning is incorrect in light of Ohio law. Where an Ohio intermediate appellate court has spoken
with respect to Ohio law, and has done so in a reasoned manner, this Court, when applying that
same Ohio law, must be guided by the Ohio appellate court, not by other federal courts7 attempting
to interpret Ohio law.
Although the claims asserted against AT&T in Count Three are barely above conclusory,
given the standard that the Court is required to apply when deciding a motion to dismiss, the Court
finds that AT&T is not entitled to dismissal as a matter of law of the claim of tortious interference
with contract. Given the test sited in Paramount Farms that may apply to this claim, the Court has
determined that this issue is best reserved for determination at a later stage of the proceedings. 8
The Court also notes that defendants point to a 2014 decision by the undersigned as authority for dismissal of Count
Three. See Wamen v. Goodyear Tire & Rubber Co., supra. Wamen was decided before Paramount Farms, and it relied
upon the same three federal cases (Canderm, Kirk, and ITS Financial) that Paramount Farms expressly rejected. (In
fact, Paramount Farms also rejected Wamen. 61 N.E.3d at 709 n.2.) Therefore, the Court does not feel constrained to
rule in the same way as it ruled in Wamen, having been now convinced that an Ohio appellate Court, interpreting Ohio
law, decided the issue differently. In addition, although this Court determined in Wamen that the tortious interference
claim should be dismissed for the alternative reason that plaintiff had failed to allege that the parent’s and the
subsidiary’s interests were not aligned, that same argument raised by defendants here (see Reply at 911-12) is not
persuasive, given the procedural posture of the case and the possibility of amending the pleadings, a possibility
suggested by plaintiff’s opposition brief arguing that, in implementing the Master Agreement with Crown, AT&T
acted in its own interests and not in the interest of Tower Holdings. Finally, Wamen is also distinguishable for its
additional finding that there was no contract and/or no breach and, therefore, there could be no tortious interference.
Although the Court feels constrained to retain Count Three at this juncture, it is hard-pressed to see how the
allegations of the complaint suggest that AT&T interfered with the Lease between the District and Cingular
Wireless/Tower Holdings. In particular, if the District is correct that the Lease, as twice amended, requires revenue
sharing for any rent, revenue or other consideration received relating to the Premises (Compl. ¶ 40), and entitles the
District to share with Cingular Wireless/Tower Holdings any revenues earned by the latter from the Premises
(notwithstanding their characterization by the Master Agreement as “managed”) (id. ¶ 41), then there has been no
interference by AT&T, even though there may have been a breach of contract by Cingular Wireless/Tower Holdings
due to failure to pay.
That said, it goes without saying that defendants Cingular Wireless and Tower Holdings, as parties
to the contracts, “cannot be sued in tort for interfering with [their] own performance.” Contadino
v. Tilow, 589 N.E.2d 48, 52 (Ohio Ct. App. 1990) (citing Battista v. Lebanon Trotting Ass’n, 538
F.3d 111, 116 (6th Cir. 1976) (“a party to a contract cannot be liable in tort for inducing his own
breach”)). Although the allegations in Count Three of the complaint are only directed against
AT&T, since the District’s prayer seeks damages against all defendants for all counts, the Court
finds it necessary to clarify that Count Three will proceed only against AT&T.
Failure to State a Claim for Civil Conspiracy
In Count Four of the complaint, the District specifically alleges that “[d]efendants have
maliciously combined, colluded, and conspired, . . . to perpetuate the breach of fiduciary duty and
other unlawful acts against the [District] and other similar landowners.” (Compl. ¶ 69.)
The tort of civil conspiracy is defined as “a malicious combination of two or more persons
to injure another in person or property, in a way not competent for one alone, resulting in actual
damages.” Kenty v. Transamerica Premium Ins. Co., 650 N.E.2d 863, 867 (Ohio 1995) (internal
quotation marks and citations omitted). “[A]n underlying unlawful act is required before a civil
conspiracy claim can be successful.” Gosden v. Louis, 687 N.E.2d 418, 496 (Ohio Ct. App. 1996)
(citing Minarik v. Nagy, 193 N.E.2d 280, 280-81 (Ohio 1963)). “[T]he underlying unlawful act
must be a tort.” Avery v. Rossford, OH Transp. Improvement Dist., 762 N.E.2d 388, 395 (Ohio Ct.
App. 2001). Further, “[t]he conspiracy claim must be pled with some degree of specificity, and
vague or conclusory allegations that are unsupported by material facts will not be sufficient to state
a claim.” Id.
Here, as pointed out by defendants, the District’s civil conspiracy claim is pleaded based
on an alleged underlying claim of breach of fiduciary duty. Since that claim has been dismissed,
defendants assert that there is no basis for the conspiracy claim.
Plaintiff argues in its opposition that the conspiracy claim can be based upon either the
breach of fiduciary duty claim or the tortious interference with contract claim. But, plaintiff has
not pleaded the conspiracy based on anything other than breach of fiduciary duty. Even if ¶ 69 of
the complaint were amended to allege: “[d]efendants have maliciously combined, colluded, and
conspired, . . . to perpetuate the tortious interference with contract and other unlawful acts against
the [District] and other similar landowners[,]” the conspiracy claim could not survive. As
explained in Wagoner v. Leach Co., No. 17580, 1999 WL 961166, at * 19 (Ohio Ct. App. July 2,
1999), a cause of action for conspiracy to tortiously interfere with a contractual relationship “must
involve two or more nonparties [to the agreement] conspiring to induce a party to breach his
contract.” This is because “[i]t makes no sense to say that a party conspired to induce [itself] to
breach a contract.” Id.
Defendants are entitled to dismissal of the civil conspiracy claim in Count Four.
Failure to State a Claim for Accounting
In Count Five of the complaint, the District seeks “a full accounting from [d]efendants of
all monies [d]efendants received in connection with the Premises.” (Compl. ¶ 74.) Defendants
argue that an accounting is not an independent cause of action, and seek dismissal of Count Five.
They also seek dismissal of any prayer for an accounting, since the District has failed to allege that
there is no adequate remedy at law. (Mot. at 753.)
“Under Ohio law, ‘where there is an adequate remedy at law, an equitable remedy is
improper.’” Skurka Aerospace, Inc. v. Eaton Aerospace, L.L.C., No. 1:08CV1565, 2011 WL
1134591, at * 3 (N.D. Ohio Mar. 25, 2011) (quoting McNulty v. PLS Acquisition Corp., Nos.
79025, 79125, 79195, 2002 WL 31875200, ¶ 80 (Ohio Ct. App. Dec. 26, 2002)).
The District has not opposed this portion of defendants’ motion and, thus, has conceded
the point. Even had the District not conceded the point, defendants’ motion is well taken and,
therefore, Count Five is dismissed.
Failure to State a Claim for Punitive Damages
In four of the five claims, plaintiff requests punitive damages, allegedly based upon
conduct “with actual malice and/or with a reckless disregard” for plaintiff’s rights. (Compl. ¶¶ 51,
62, 67, 71.) Defendants assert that these requests fail because there are no underlying tort claims
and one cannot recover punitive damages in an action for breach of contract. (Mot. at 753-54.)
In opposition, plaintiff argues that punitive damages are available for tort claims upon a
showing of actual malice, and are available for a breach of contract claim if the breach is
“accompanied by a connected, but independent[,] tort involving fraud, malice or oppression.”
(Opp’n at 893, quoting McMahon v. Alternative Claims Serv., Inc., 521 F. Supp. 2d 656, 661 (N.D.
Ohio 2007) (further citation omitted) (alteration added).)
In Ohio, punitive damages are available only upon a showing of actual malice. Calmes v.
Goodyear Tire & Rubber Co., 575 N.E.2d 416, 419 (Ohio 1991). “Actual malice, necessary for an
award of punitive damages, is (1) that state of mind under which a person’s conduct is
characterized by hatred, ill will or a spirit of revenge, or (2) a conscious disregard for the rights
and safety of other persons that has a great probability of causing substantial harm.” Preston v.
Murty, 512 N.E.2d 1174 (Ohio 1987) (Syllabus).
The bare allegations of “actual malice” repeated in the four cited paragraphs of the
complaint are, by themselves, insufficient under the Twombly/Iqbal standard of pleading to survive
a motion to dismiss. But, under Ohio law, punitive damages need not be specially pleaded or
claimed. Brookridge Party Ctr., Inc. v. Fisher Foods, Inc., 468 NE.2d 63 (Ohio Ct. App. 1983).
Plaintiff must, however, “allege facts in the complaint from which the essential element of malice
may be inferred.” Bell v. Joecken, No. 20705, 2002 WL 533399, at *1 (Ohio Ct. App. Apr. 10,
2002) (citing Columbus Fin., Inc. v. Howard, 327 N.E.2d 654 (Ohio 1975); Candler v. Ash, 372
N.E.2d 617 (Ohio Ct. App. 1976)). If there are no facts in the complaint to support an inference of
malice, plaintiff must amend the complaint. Id. (citing Lambert v. Shearer, 616 N.E.2d 965, 96970 (Ohio Ct. App. 1992)).
Here, although there are some allegations that AT&T acted in an attempt to evade the
revenue-sharing obligations of the Lease (Compl. ¶¶ 30, 35, 39) or acted intentionally to conceal
from the District that it owed revenue-sharing amounts (id. ¶¶ 31, 65), there are no allegations that
permit an inference of actual malice as that is defined by Ohio law.
Accordingly, although the Court finds that the District has failed to adequately plead facts
that would entitle it to punitive damages, it will grant the District leave until seven (7) days after
the date of this order to amend its complaint to add sufficient allegations to support a punitive
damages claim with respect to the remaining tort claim in Count Three.9
For the reasons set forth herein, defendants’ motion to dismiss (Doc. No. 10) is granted in
part and denied in part.
There is no basis for a claim of punitive damages relating to Count One.
Counts Two, Four and Five are dismissed as to all defendants. Count One is dismissed as
to defendant AT&T and will proceed as to the other two defendants. Count Three is dismissed as
to defendants Cingular Wireless and Tower Holdings and will proceed only as to defendant AT&T.
The claim for punitive damages as it relates to Count Three will be dismissed unless
plaintiff files, within 7 days of the date of this order, an amended complaint that sufficiently pleads
facts to support an inference of actual malice.
IT IS SO ORDERED.
Dated: March 27, 2017
HONORABLE SARA LIOI
UNITED STATES DISTRICT JUDGE
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