[Cite as Deerfield Twp. v. Mason, 2013-Ohio-779.]



                                    IN THE COURT OF APPEALS

                           TWELFTH APPELLATE DISTRICT OF OHIO

                                           WARREN COUNTY




DEERFIELD TOWNSHIP, WARREN                          :
COUNTY, OHIO,
                                                    :   CASE NO. CA2011-12-138
        Plaintiff-Appellee,
                                                    :         OPINION
                                                               3/4/2013
   - vs -                                           :

                                                    :
CITY OF MASON, OHIO,
                                                    :
        Defendant-Appellant.
                                                    :



         CIVIL APPEAL FROM WARREN COUNTY COURT OF COMMON PLEAS
                             Case No. 10CV77576



Frost Brown Todd LLC, Thomas A. Swope, Benjamin J. Yoder, 9277 Centre Pointe Drive,
Suite 300, West Chester, Ohio 45069, for plaintiff-appellee

Wood & Lamping LLP, Dale A. Stalf, Jeffrey D. Forbes, Kenneth J. Schneider, 600 Vine
Street, Suite 2500, Cincinnati, Ohio 45202, for defendant-appellant



        RINGLAND, J.

        {¶ 1} Defendant-appellant, the city of Mason ("Mason"), appeals from a decision in

the Warren County Court of Common Pleas awarding summary judgment to plaintiff-

appellee, Deerfield Township ("Deerfield"), regarding taxes owed to Deerfield as a result of

an annexation reparation agreement between the parties. For the reasons outlined below,
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we affirm.

         {¶ 2} This case revolves around a 262.36-acre tract of real property ("the Territory")

that was situated in Deerfield. In order to attract a Proctor and Gamble Company ("P&G")

research facility to the area, the Warren County Commissioners ("commissioners") passed

several tax abatements. Following the enactment of the tax abatements, P&G constructed a

research facility in Warren County on the Territory.

         {¶ 3} Before the P&G research facility opened, a petition was filed requesting Mason

annex the Territory. Mason supported the annexation. However, Deerfield initially opposed

the annexation largely due to tax revenue it would lose. At the request of the commissioners,

Mason and Deerfield entered negotiations. Eventually, Mason and Deerfield reached an

agreement regarding the annexation, which was executed on October 24, 1995.

         {¶ 4} The following are the relevant general portions of the agreement:

                [3] WHEREAS, Mason and Deerfield desire to enter into an
                agreement to provide for annual payments to compensate
                Deerfield for lost tax revenues pursuant to Ohio Revised Code
                Section 709.191;

                ***

                [6] WHEREAS, it is the intent of the parties that Deerfield shall
                not suffer any loss of tax revenue by reason of the annexation of
                the territory described herein.

         {¶ 5} In addition, there are several relevant specific portions of the agreement, which

state:

                NOW THEREFORE, for and in consideration of the mutual
                promises, covenants and benefits contained herein, the parties
                do hereby agree as follows:

                ***

                2.     AMOUNT AND NUMBER OF PAYMENTS




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               a)     During the term of this agreement, Mason shall make an
               annual payment to Deerfield to compensate for lost tax revenues
               due to the annexation of the Territory.

               b)      Until such time as the tax abatement upon the property
               expires, the annual payment shall be equal to that amount of
               real, public utility and tangible personal property taxes which
               Deerfield would collect from the Territory, based upon the tax
               rate in effect within Deerfield at the time, but for the annexation
               of the Territory. There shall be no payment made to offset the
               tax abatement.

               c)      Upon the expiration of the tax abatement and/or Tax
               Increment Financing (T.I.F.) upon the Territory, the annual
               payment referred to as Item 2 a) above shall equal the lesser of
               the amount of real, public utility and tangible personal property
               taxes which: (i) Mason actually collects form the Territory; or (ii)
               Deerfield would realize from the Territory based upon the tax rate
               in effect within Deerfield at the time, but for the annexation of the
               Territory.

      {¶ 6} In the agreement, section two, paragraph d had several modifications. To

illustrate the modifications, section two, paragraph d as it appeared in the agreement is set

forth below:




      {¶ 7} With the modifications, the final version of section two, paragraph d, states:

               d)      It is specifically agreed by the parties that the amount of
               the annual payment set forth in Items 2 b) and c) above shall
               include any increases or decreases in the taxes realized by
               Mason upon the Territory or that would have been realized by
               Deerfield upon the Territory, but for the annexation of the
               Territory, due to change in tax rates or revaluation upon the
               territory. This item 2 d) is subject to the terms of Item 2 c).

      {¶ 8} Subsequent to the agreement and annexation, Deerfield passed fire and parks

levies that became effective in 1999.        Also succeeding the annexation, Ohio passed

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Am.Sub.H.B. 66 in 2005 that gradually phased out the tangible personal property tax. This

bill established the Ohio Commercial Activity Tax ("commercial activity tax"), and also

established a local government tangible property tax replacement fund ("replacement fund").

A dispute arose as to whether Mason was responsible to reimburse Deerfield under the

agreement for the taxes that Deerfield would have generated on the Territory due to the fire

and parks levies and changes in state law with the commercial activity tax. Subsequently,

Deerfield filed a complaint alleging breach of contract.

       {¶ 9} On June 14, 2011, Deerfield moved for summary judgment, and Mason filed its

own motion for summary judgment in response. The trial court granted Deerfield's motion for

summary judgment on all relevant parts and denied Mason's motion for summary judgment.

The trial court found that Mason was required to pay Deerfield for the taxes generated by the

fire and parks levies and the changes in state law under the commercial activity tax. The trial

court awarded Deerfield $776,703.53 in money damages for the fire and parks levies. The

trial court further awarded Deerfield $343,301.00 in money damages for reimbursement

under the commercial activity tax. Additionally, the trial court awarded prejudgment interest

with an accrual date of January 1 of each year for annual payment.

       {¶ 10} Mason timely appeals, and asserts two assignments of error for review.

       {¶ 11} Assignment of Error No. 1:

       {¶ 12} THE TRIAL COURT ERRED IN DENYING [MASON'S] MOTION FOR

SUMMARY JUDGMENT AND GRANTING [DEERFIELD'S] MOTION FOR SUMMARY

JUDGMENT.

       {¶ 13} Mason argues the trial court erred in granting summary judgment in favor of

Deerfield regarding the taxes produced by the levies and monies produced by the

commercial activity tax. Specifically, Mason argues that the manifest intent of the parties was

not to include new tax levies as evidenced by a provision that initially stated "due to new
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levies" that was struck and replaced with "change in tax rates." Additionally, Mason argues

that the manifest intent of the parties did not include payments due to subsequent changes in

state law. Mason argues that although the agreement provides that payments should include

all taxes that would have been received "but for" the annexation, the parties had not

contemplated payments under the commercial activity tax. We disagree.

       {¶ 14} Initially, we note that an appellate court reviews a trial court's ruling on a motion

for summary judgment independently and without deference to the trial court's determination.

Brown v. Scioto Cty. Bd. of Commrs., 87 Ohio App.3d 704, 711 (4th Dist.1993). In reviewing

a trial court's disposition of a summary judgment motion, an appellate court applies the same

standard as that of the trial court. Howard v. Kirkpatrick, 12th Dist. No. CA2008-11-040,

2009-Ohio-3686, ¶ 9; Maust v. Bank One Columbus, N.A., 83 Ohio App.3d 103, 107 (10th

Dist.1992). Summary judgment is proper when (1) there are no genuine issues of material

fact remaining for trial, (2) the moving party is entitled to judgment as a matter of law, and (3)

reasonable minds can come only to a conclusion adverse to the nonmoving party, construing

the evidence most strongly in that party's favor. See Civ.R. 56(C); Touhey v. Ed's Tree &

Turf, L.L.C., 194 Ohio App.3d 800, 2011-Ohio-3432, ¶ 7 (12th Dist.).

       {¶ 15} To set forth a claim for breach of contract, a plaintiff must prove the following

elements: (1) the existence of a contract, (2) the plaintiff fulfilled its contractual obligations,

(3) the defendant failed to fulfill its contractual obligations, and (4) the plaintiff incurred

damages as a result. S&G Invests., L.L.C. v. United Cos., L.L.C., 12th Dist. No. CA2010-03-

017, 2010-Ohio-3691, ¶ 12. Both parties agree that contract interpretation is central to

determining whether Mason failed to perform. There is no dispute as to the existence of the

contract or that Deerfield failed to perform in any way. Additionally, there is no disagreement

as to the amount owed to Deerfield if the contract covers the fire and parks levies and the

changes to state law affecting taxes on tangible personal property. Both parties agree that
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with the additional taxes, the amount owed to Deerfield for the fire and parks levies would be

$776,703.53 and the amount owed to Deerfield because of changes to state law affecting

taxes on tangible personal property would be $343,301.00.

       {¶ 16} With the issue of contract interpretation, the intent of the parties is paramount.

Sunoco, Inc. (R & M) v. Toledo Edison Co., 129 Ohio St.3d 397, 2011-Ohio-2720, ¶ 37. A

court is to examine the contract as a whole and presume that the intent of the parties is

reflected within the contract language itself. Id. A court's construction of a contract should

attempt to harmonize all the provisions of the document rather than to produce conflict in

them and give effect to all of its provisions. Pierce Point Cinema 10, L.L.C. v. Perin-Tyler

Family Found., L.L.C., 12th Dist. No. CA2012-02-014, 2012-Ohio-5008, ¶ 11, citing Farmers

Natl. Bank v. Delaware Ins. Co., 83 Ohio St. 309, 337 (1911). Additionally, a court looks to

the plain and ordinary meaning of language within a contract "unless another meaning is

clearly apparent from the contents of the agreement." Sunoco at ¶ 37. Common, undefined

words appearing in a contract "will be given their ordinary meaning unless manifest absurdity

results, or unless some other meaning is clearly evidenced from the face or overall contents"

of the agreement. Id. at ¶ 38, quoting Alexander v. Buckeye Pipe Line Co., 53 Ohio St.2d

241 (1978), paragraph two of the syllabus. When the terms in a contract are unambiguous,

courts will not in effect create a new contract by finding an intent not expressed in the clear

language employed by the parties. Shifrin v. Forest City Ents., Inc., 64 Ohio St.3d 635, 638

(1992). Consequently, extrinsic evidence cannot be used when contract interpretation turns

on plain language. Sunoco at ¶ 47, 58.

       {¶ 17} We begin by looking at the plain meaning of the term "tax rate" and its effect

regarding the fire and parks levies. Both Black's Law Dictionary and Webster's Dictionary

provide similar definitions. Black's Law Dictionary defines "tax rate" as "[a] mathematical

figure for calculating a tax, usually expressed as a percentage." Black’s Law Dictionary 1502
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(8th Ed.2004). Webster's Dictionary defines the terms separately, but the meaning is similar.

Webster's Dictionary defines "tax" as "a usu[al] pecuniary charge imposed by legislative or

other public authority upon persons or property for public purposes." Webster's Third New

International Dictionary 2345 (1981). Furthermore, the term "rate" is defined both as "a

charge, payment, or price fixed according to a ratio, scale, or standard" and "a fixed or

established portion or measure." Webster's Third New International Dictionary 1884 (1981).

Both authorities indicate that a tax rate is a way of calculating an amount or tax that can be a

fixed amount or expressed as a ratio or percentage. While utilizing the definition of "rate" as

a fixed amount is a lesser used definition, we nevertheless find that this definition embodies

the intent of the parties in this case.

       {¶ 18} The trial court referred to "overriding principles" in its decision. Mason contends

that the agreement does not contain any overriding principles. Nevertheless, there are

several general provisions in the agreement, whether or not construed as "overriding

principles," that shed light on the parties' intent. Mason notes that specific provisions trump

general provisions in interpreting contracts. While this may be true, interpreting section two,

paragraph d through the lens of more general provisions is not rendering this specific

provision ineffective. Rather, by viewing the provisions in this way, they are harmonized with

one another.

       {¶ 19} Regarding general provisions, paragraph three of the preamble states that the

parties "desire to enter into an agreement to provide for annual payments to compensate

Deerfield for lost tax revenues * * *." Paragraph six explicitly states that "it is the intent of the

parties that Deerfield shall not suffer any loss of tax revenue by reason of the annexation of

the [T]erritory described herein." The parties' intent is further evidenced by language in

several specific sections, section two, paragraphs b, c, and d, that the amount paid to

Deerfield includes real, public utility, and tangible personal property taxes that would have
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been realized by Deerfield, "but for the annexation of the Territory[.]" (Emphasis added.)

Consequently, but for the annexation of the territory or, stated another way, if the territory had

not been annexed, Deerfield would currently be receiving taxes from the fire and parks levies.

By utilizing this language, it appears that the intent of the parties is that Deerfield should

recover real, public utility, and tangible personal property taxes as if the Territory was still a

part of Deerfield.1 Harmonizing the general provisions with specific provisions and the fact

that a change in tax rates can be a change in an overall amount, we find that the language

utilized in section two, paragraph d necessarily includes new levies that impact real, public

utility, and tangible personal property taxes that Deerfield would have received but for the

annexation.

        {¶ 20} Mason also contends that because the parties deleted the language "due to

new tax levies," the parties expressed a clear and unmistakable intent not to include new

levies in the taxes Mason owed Deerfield under the agreement. Mason cites 11 Williston,

Contracts, Section 32.13 (4th Ed.2012) for this proposition. However, this section of Williston

also states that added or modified provisions control over printed provisions in a contract. Id.

Consequently, the added provision of "change in tax rates" is the controlling provision. Such

a change makes section two, paragraph d internally consistent with other paragraphs within

the section that refer to "tax rate." Furthermore, the plain meaning of the term "tax rate" can

include new levies, which was the intent of the parties in this case when looking within the

four corners of the agreement as demonstrated in the analysis above.

        {¶ 21} In regard to the commercial activity tax, Mason argues that "[w]hen a written

agreement expressly provides that the payments to be made thereunder should include all


1. We recognize that this statement is limited by the specific provision of section two, paragraph b, specifying
that there is to be "no payment to offset the tax abatement." Furthermore, this statement is limited by the specific
provision of section two, paragraph c, which provides that Deerfield is limited to the lesser amount of the real,
public utility, and tangible personal property taxes that Mason actually collects or that Deerfield would have
realized "but for" the annexation of the Territory.
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taxes that would have been received by a party 'but for' an annexation the manifest intent of

the parties is that such payments do not include money that is generated as a result of a

subsequent change in state tax law." Mason argues that the replacement fund was not

contemplated by either of the parties at the time of the agreement, and thus Deerfield is not

entitled to any compensation under such a fund. Furthermore, Mason asserts that under the

commercial activity tax, the county treasurer is to distribute amounts to the "proper local

taxing unit as if they had been levied and collected as taxes * * *," and the statute does not

require the treasurer to "look back in time" to determine the proper local taxing unit. Finally,

Mason contends that the statute requires a written agreement between parties that must be

certified by the commissioners by a certain date to receive any money from this fund when a

portion of an unincorporated territory is annexed by a municipal corporation.

       {¶ 22} Am.Sub.H.B. 66 created the commercial activity tax. As a part of the bill, the

tangible personal property tax was phased out. R.C. 5711.22. However, at the same time,

the bill replaced lost revenue due to the phasing out of the tax by ordering a portion of the

commercial activity tax receipts to go to the "local government tangible property tax

replacement fund." R.C. 5751.20(B).

       {¶ 23} While this particular change in state law may not have been contemplated by

the parties, as discussed above, the language "but for the annexation" indicates that

Deerfield was to receive real, public utility, and tangible personal property taxes as if the

Territory was still a part of Deerfield rather than Mason. If the Territory had not been

annexed, Deerfield would be receiving reimbursement. Furthermore, a portion of the

commercial activity tax receipts goes to the "local government tangible property tax

replacement fund" to replace lost revenues due to the phasing out of the tangible personal

property tax. R.C. 5751.20; Am.Sub.H.B. 66. While an agreement was not executed

between the parties that complied with the statute, an agreement was already in place prior

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to the change in state law that required such payment by Mason to Deerfield. Additionally,

even if the statute does not require the treasurer to "look back in time" to determine the

proper local taxing unit, Mason still has an obligation to pay Deerfield under the agreement.

Consequently, we find that Deerfield is entitled to reimbursement.

       {¶ 24} We find that reasonable minds can come to only one conclusion; Mason is

required to reimburse Deerfield for the money it would have received absent the annexation

for the fire and parks levies. We also find that reasonable minds can only come to the

conclusion that Mason is required to reimburse Deerfield for the money it would have

received absent the annexation due to changes in state law affecting the tangible personal

property tax. Accordingly, Deerfield is entitled to judgment as a matter of law. Mason's first

assignment of error is overruled.

       {¶ 25} Assignment of Error No. 2:

       {¶ 26} THE TRIAL COURT ERRED BY AWARDING PREJUDGMENT INTEREST TO

BEGIN TO ACCRUE ON JANUARY 1 OF EACH APPLICABLE CALENDAR YEAR.

       {¶ 27} Mason argues in its second assignment of error that the trial court erred in

awarding Deerfield prejudgment interest because Deerfield did not properly request such

interest. Furthermore, Mason argues that the trial court erred in specifying the accrual dates

of prejudgment interest as January 1 from each annual payment that Mason should have

made to Deerfield. We disagree.

       {¶ 28} R.C. 1343.03(A) has been applied in awarding both prejudgment and

postjudgment interest in contract causes of action. Hance v. Allstate Ins. Co., 12th Dist. No.

CA2008-10-094, 2009-Ohio-2809, ¶ 5. In Hance, we held that granting interest pursuant to

R.C. 1343.03(A) is mandatory, rather than discretionary. Id. at ¶ 16. Because prejudgment

interest is mandatory in this case, we find that the trial court did not err in awarding

prejudgment interest despite the form of Deerfield's request, or lack of request, for
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prejudgment interest.

       {¶ 29} Mason concedes that according to Landis v. Grange Mut. Ins. Co., 82 Ohio

St.3d 339, 342 (1998), it is the trial court's responsibility to determine the accrual date of

prejudgment interest once it has been awarded.            This court reviews the trial court's

determination of when prejudgment interest accrues under an abuse of discretion standard.

See Cox v. Grubb, 12th Dist. No. CA2010-09-020, 2011-Ohio-1635, ¶ 34. More than an error

of law or judgment, an abuse of discretion implies that the court's attitude was unreasonable,

arbitrary, or unconscionable. Blakemore v. Blakemore, 5 Ohio St.3d 217, 219 (1983).

       {¶ 30} In this case, the trial court found that there were no references or stipulations as

to an invoice date in the agreement that determined when Mason was to pay Deerfield.

Mason was to make "annual" payments to Deerfield. The trial court found that all obligations

set forth in the accompanying exhibits were in the form of calendar years. Consequently, the

trial court found that the accrual of prejudgment interest was to run from January 1. Deerfield

concedes that the January 1 accrual date is the January 1 after the taxes were collected.

Despite any past practices, Mason would be able to calculate the amount of tax owed to

Deerfield by this date. Given the agreement's references to annual payments and the ability

of Mason to pay Deerfield taxes by January 1, we cannot say the decision of the trial court

ordering prejudgment interest to accrue from January 1 each year was an abuse of

discretion. Mason's second assignment of error is overruled.

       {¶ 31} Judgment affirmed.


       HENDRICKSON, P.J., and S. POWELL, J., concur.




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