Hawken School v. Machado

2024 Ohio 1060, 240 N.E.3d 352

• Court: Ohio Court of Appeals
• Decided: March 21, 2024
• Docket: 112837
• Status: Published

Opinion

[Cite as Hawken School v. Machado, 2024-Ohio-1060.]

COURT OF APPEALS OF OHIO

EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA

HAWKEN SCHOOL, :

Plaintiff-Appellee, : No. 112837 v. :

SANDRA MACHADO, :

Defendant-Appellant. :

JOURNAL ENTRY AND OPINION

JUDGMENT: AFFIRMED RELEASED AND JOURNALIZED: March 21, 2024

Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-22-961108

Appearances:

Weltman Weinberg & Reis Co., LPA, and Roy J. Schechter, for appellee.

L. Bryan Carr, for appellant.

EILEEN T. GALLAGHER, J.:

Defendant-appellant, Sandra Machado (“Machado”), appeals from the

trial court’s judgment granting summary judgment in favor of plaintiff-appellee,

Hawken School (“Hawken”). Machado raises the following assignments of error for

review: 1. The trial court erred in granting the appellee’s motion for summary judgment and in denying appellant’s motion for summary judgment; it was the appellant who was entitled to summary judgment.

2. The trial court erred in denying the appellant’s motion to strike.

3. The trial court erred in denying the appellant’s motion for more definite statement.

After careful review of the record and relevant case law, we affirm the

trial court’s judgment.

I. Procedural and Factual History

Hawken is a coeducational college preparatory day school located in

Geauga County, Ohio. On January 15, 2021, Machado, a resident of Cuyahoga

County, electronically executed two enrollment agreements (the “Enrollment

Agreements”) with Hawken on behalf of her minor children, G.M. and J.M., for the

2021-2022 academic school year. At the time the agreements were executed,

Machado paid deposits totaling $3,000. The Enrollment Agreements were

countersigned by Hawken on February 1, 2021.

In this case, the Enrollment Agreements set forth the annual tuition

and fee obligations for each student, requiring Machado to make payments in the

amount of $32,680 for G.M., and $27,950 for J.M. In addition, the Enrollment

Agreements contain express provisions concerning the cancellation of a student’s

enrollment at Hawken. The relevant provisions provide as follows:

6. Cancellation Period. The Parent understands and agrees that the Student is enrolled for the entire school year, and the Parent is liable for the entire year’s tuition and fees upon the signing of this Agreement, unless written notice of cancellation is delivered to the School on or before May 1, 2021. If this agreement is entered into on or after May 1, 2021, the Parent is liable for the tuition and fees as outlined in Section 7 below.

7. Tuition Obligation. The Parent further agrees that the Parent’s withdrawal or School’s dismissal of the Student after the period for cancellation of this Agreement has expired, whether as a result of accident, sickness, move/transfer, disciplinary action, academic failure, negative parent actions or otherwise, does not relieve the Parent of responsibility for payment of the entire year’s tuition and fees. If enrollment for the 2021-2022 school year is cancelled between May 1 and before July 1, 2021, Parents are obligated to pay fifty percent (50%) of the annual tuition and fees. If enrollment is cancelled on or after July 1, 2021, Parents are obligated to pay one hundred percent (100%) of the annual tuition and fees.

***

9. Finance Charge. If all or a portion of any payment under Section 7 above is not paid by the due date, the Parent must pay a Finance Charge on the outstanding balance equal to 0.5% for each month the balance remains outstanding. The Annual Percentage Rate of this charge (the cost of credit as a yearly rate) is 6.17%. The Parent further agrees that the total amount, including the finance charges, due and payable to the School shall be considered as agreed upon liquidated damages between the parties to this Agreement.

(Emphasis sic.) (Enrollment Agreement, Sections 6-7, and 9.)

On July 21, 2021, Machado sent an email correspondence to Brad Large

(“Large”), Hawken’s Director of Flexible Tuition and Associate Director of

Enrollment, notifying Hawken that she intended to cancel the children’s enrollment

for the 2021-2022 academic-school year. The email stated, in relevant part:

My name is Sandra and both my kids ([G.M. and J.M.]) are currently enrolled at Hawken but we will be transferring them to Solon. Can you please share the procedure for this process? I also would like to have some information about tuition refund. On March 24, 2022, Hawken filed a civil complaint against Machado,

alleging that she “failed to make payments as agreed for [G.M.] in the amount of

$30,350 and [J.M.] in the amount of $26,450, for a combined balance due and

owing of $56,800.” The complaint incorporated the Enrollment Agreements and

the outstanding tuition and fee balances for each child as of June 30, 2022.

On June 6, 2022, Machado filed a motion for more definite statement

pursuant to Civ.R. 12(E). In the motion, Machado asserted that a more definite

statement “as to the claim/complaint being filed against her” was required because

the complaint failed “to allege any specific breach of the [Enrollment Agreement]”

and is “confusing and ambiguous.” The motion was summarily denied by the trial

court on June 27, 2022.

On October 6, 2022, Hawken filed a motion for summary judgment,

arguing it was entitled to a judgment in the amount of $56,800, plus interest and

costs, for unpaid tuition and fees. Relying on Sections 6, 7, and 9 of the Enrollment

Agreements, Hawken argued that Machado was liable for the “entire year’s tuition

and fees” for each student because she failed to provide written notice of cancellation

on or before May 1, 2021. Thus, Hawken asserted that it was entitled to judgment

as a matter of law, stating:

Given the uncontroverted facts and language of the Agreements, it is difficult to understand how the contractual liability could be any clearer. By waiting to cancel the Agreements until July 21, 2021, and by refusing to pay the full tuition, Machado is in breach of the Agreements. Finally, Hawken argued that the Enrollment Agreements’ cancellation provision,

and the agreed-upon damages set forth therein, constituted a valid and enforceable

liquidated-damages clause.

Hawken’s motion for summary judgment was supported by (1) copies

of the Enrollment Agreements for G.M. and J.M.; (2) the affidavit of the school’s

Budget Analyst, Debra Greene (“Greene”); (3) Machado’s cancellation email

correspondence, dated July 21, 2021, and (4) copies of the students’ outstanding

tuition and fee balances as of June 30, 2022, reflecting a total balance owed of

$56,800.

On October 7, 2022, Machado filed a competing motion for summary

judgment, arguing she is entitled to judgment as a matter of law on Hawken’s claim

because (1) Hawken provided no educational services to her children for the 2021-

2022 academic school year, (2) Section 7 of the Enrollment Agreement did not apply

in this case because the children were enrolled before May 1, 2021, and (3) the

demand for $56,800 is a disproportionate and unenforceable penalty — not a valid

amount of liquidated damages.

In support of her motion for summary judgment, Machado attached

(1) copies of the Enrollment Agreements for G.M. and J.M.; (2) the deposition

testimony of Hawken’s Assistant Head of School Enrollment Manager, Katherine

O’Neil (“O’Neil”); (3) the deposition testimony of Hawken’s Chief Financial Officer,

James Miller (“Miller”); (4) the deposition testimony of Large; (5) the deposition

testimony of Greene; (6) copies of various email correspondences; (7) copies of written discovery responses, and (8) a copy of an enrollment from a previous school

year that contained different terms.

On November 3, 2022, Machado filed a brief in opposition to

Hawken’s motion for summary judgment, reiterating her position that Hawken’s

demand for $56,800 for services it did not provide “is nonsensical and violates the

concepts of reasonableness and public policy (common sense).” Machado further

sought to strike Greene’s affidavit from Hawken’s motion for summary judgment.

Machado claimed that Greene’s affidavit was a “sham” “border[ing] on frivolous”

because (1) she was not identified as Hawken’s “authorized representative,” (2) her

affidavit inaccurately infers that she is “deeply involved with and knowledgeable

with Hawken’s budget,” and (3) her averments directly contradicted her deposition

testimony.

On November 4, 2022, Hawken filed a brief in opposition to

Machado’s motion for summary judgment. Hawken restated its previous arguments

and disputed Machado’s interpretation of the controlling language in the

Enrollment Agreements.

On May 31, 2023, the trial court issued a judgment entry (1) denying

Machado’s motion for summary judgment, (2) denying Machado’s motion to strike

the affidavit of Greene, and (3) granting summary judgment in favor of Hawken.

Accordingly, the trial court entered judgment in favor of Hawken in the amount of

$56,800 with interest at the rate of 6.17 percent per annum, plus costs.

Machado now appeals from the trial court’s judgment. II. Law and Analysis

A. Motion to Strike

We consider Machado’s assignments of error out of order for the ease

of discussion. In the second assignment of error, Machado argues the trial court

erred by failing to strike Greene’s affidavit from Hawken’s motion for summary

judgment. Machado contends that the affidavit was frivolous and materially

inconsistent with Greene’s deposition testimony.

“We review a trial court’s decision to deny a motion to strike an

affidavit for an abuse of discretion.” Williams v. Schneider, 2018-Ohio-968, 109

N.E.3d 124, ¶ 108 (8th Dist.), citing State ex rel. O’Brien v. Messina, 10th Dist.

Franklin No. 10AP-37, 2010-Ohio-4741, ¶ 21. A court abuses its discretion when it

exercises its judgment in an unwarranted way with respect to a matter over which it

has discretionary authority. Johnson v. Abdullah, 166 Ohio St.3d 427, 2021-Ohio-

3304, 187 N.E.3d 463, ¶ 35. An abuse of discretion implies that the court’s attitude

is unreasonable, arbitrary, or unconscionable. See, e.g., State v. Musleh, 8th Dist.

Cuyahoga No. 105305, 2017-Ohio-8166, ¶ 36, citing Blakemore v. Blakemore, 5

Ohio St.3d 217, 219, 450 N.E.2d 1140 (1983). “An abuse of discretion also occurs

when a court ‘“applies the wrong legal standard, misapplies the correct legal

standard, or relies on clearly erroneous findings of fact.”’” Cleveland v. Wanton, 8th

Dist. Cuyahoga No. 109828, 2021-Ohio-1951, ¶ 8, quoting S. Euclid v. Datillo, 2020-

Ohio-4999, 160 N.E.3d 813, ¶ 8 (8th Dist.), quoting Thomas v. Cleveland, 176 Ohio

App.3d 401, 2008-Ohio-1720, 892 N.E.2d 454, ¶ 15 (8th Dist.). Civ.R. 56(E) sets forth the requirements for affidavits submitted on

summary judgment and provides, in relevant part:

Supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated in the affidavit. Sworn or certified copies of all papers or parts of papers referred to in an affidavit shall be attached to or served with the affidavit.

“Ohio courts have defined ‘personal knowledge’ as ‘knowledge gained

through firsthand observation or experience, as distinguished from a belief based

upon what someone else has said.’” See RBC, Inc. v. McClintock, 5th Dist. Stark No.

2016CA00045, 2016-Ohio-5800, ¶ 20, quoting Zeedyk v. Agricultural Soc. of

Defiance Cty., 3d Dist. Defiance No. 4-04-08, 2004-Ohio-6187, ¶ 16; U.S. Bank

Trust Natl. Assn. v. Williams, 10th Dist. Franklin No. 21AP-576, 2022-Ohio-4590,

¶ 34. Ohio law recognizes that personal knowledge may be inferred from the

contents of an affidavit. Bush v. Dictaphone Corp., 10th Dist. Franklin No. 00AP-

1117, 2003-Ohio-883, ¶ 73. A mere assertion of personal knowledge can satisfy

Civ.R. 56(E) if the nature of the facts in the affidavit, combined with the identity of

the affiant, creates a reasonable inference that the affiant has personal knowledge of

the facts set forth in the affidavit. Nationstar Mtge., L.L.C. v. Wagener, 8th Dist.

Cuyahoga No. 101280, 2015-Ohio-1289, ¶ 26; Home S. & L. Co. v. Eichenberger,

10th Dist. Franklin No. 12AP-1, 2012-Ohio-5662, ¶ 18.

In this case, Greene’s affidavit contained the following relevant

averments: 1. I have been employed by Hawken for five years and am the Business Analyst in Hawken School’s business office. Because of my position, I am familiar with the Hawken School budgeting process during the 2021-2022 school year, including issues relating to the claims made in the captioned lawsuit involving the children of Dr. Sandra Machado. I have personal knowledge of the matters herein or have otherwise based my knowledge on Hawken business records.

2. I am familiar with and have access to the business records of Hawken concerning the captioned lawsuit. These business records * * * are kept in the course of Hawken’s regularly conducted business activity relating to its business practices as a private school. Hawken’s regular practice is making and maintaining these records as part of its business records.

3. Dr. Sandra Machado, on January 15, 2021, electronically executed two Hawken School Enrollment Agreements for her two children, [G.M. and J.M], for the 2021-2022 academic years as set forth in the Enrollment Agreements attached hereto as Exhibits 1 and 2, which are true and accurate duplicates of those business records.

4. On July 21, 2021, Machado notified Hawken by email that her children would not be attending Hawken as set forth in the duplicate email attached hereto as Exhibit 3, which is a true and accurate duplicate of that business record.

5. As a private school, Hawken goes through a lengthy multi-step budgeting process. For the 2021-22 school year, the budgeting process began in October 2020 with the formulation of the initial budget. After that, the budget plan was presented to the Hawken Board in December 2020. Although the budget was reviewed again later in August, close to the commencement of the school year, the budget was largely finalized by the beginning of May 2020.

6. The budget is primarily determined by the pooled student “net tuition revenue,” which pays for staff salaries and benefits, department budgets, student materials, maintenance, improvements, and utilities. Net tuition revenue means tuition “net” of financial aid. A significant portion of this tuition comes from re-enrollments of existing students who move up a grade, and the enrollment packages for the next class year are presented to parents in January with the requirement for a non-refundable deposit at that time. Any spots not filled by previously enrolled students are evaluated and offered to new families in February. This was the case in the 2021-2022 school year, and there was no waiting list for applicants in grade 3 and grade 7[.] Indeed, the target class size for the 2021-2022 third grade class was 64, but actual enrollment was only 61. Similarly, the target class size for the 2021- 2022 seventh grade class was 85, but actual enrollment was only 81.

7. The most significant component of the budget is the compensation for teachers and administrators. Most of these employees are sent their yearly contracts as early as February, as was the case in the 2021-2022 school year. Therefore, the January timing of the Enrollment Agreements with the non-refundable deposits for renewing students relates to the committed net-tuition revenue component of the budget, which is relied upon by Hawken to make its contractual financial commitments to its employees.

8. Generally, Hawken sets its budgeted class sizes based on physical space, the number of sections needed in the grade level as determined by the forecasted number of students returning, and projected new student enrollment. When setting budgeted enrollment targets for given class sizes, Hawken looks at various factors, including, but not limited to, classroom faculty, support staff, and specialist staff. The budgeting process is thus not precise “science” but educated guesswork and projections of different variables, culminating in final decisions as the school year approaches. In such a holistic context, it is not possible to calculate the precise financial impact of a given failure to pay individual tuition on the overall budget.

9. On July 21, 2021, Machado formally notified Hawken in an email captioned “Unenrollment,” that both of her children “are currently at Hawken but we will be transferring them to Solon.” In the course of communications between the parties that followed, Machado was advised that she would be held to the terms of the Agreements and expected to pay the full tuition balance.

10. To date, Machado has declined to pay the tuition balances, which total $56,800 and are due and payable as set forth in the statements attached as Exhibits 4 and 5, which are true and accurate duplicates of those business records.

Based on the foregoing, it is evident that Hawken presented Greene’s

affidavit to (1) authenticate the relevant Enrollment Agreements based on her

position at Hawken and her familiarity with the school’s business records, (2) to verify the date agreements were executed, (3) to verify the date Machado provided

notice of unenrollment, (4) to verify Machado’s failure to pay the outstanding tuition

balance for the 2021-2022 academic school year, and (5) generally describe

Hawken’s budgetary process. Contrary to Machado’s assertion on appeal, Greene

did not present herself as an expert in the field of accounting or damages. (Greene

depo. at p. 52.) Rather, Greene was an authenticating witness. Her averments

concerning Hawken’s business records, budgetary procedure, and enrollment

figures from the 2021-2022 academic school year were matters within her personal

knowledge as an employee in the business office. The fact that Hawken identified

O’Neil as its “authorized representative” for the purposes of Civ.R. 30(B) does not

diminish Greene’s averments concerning issues within her personal knowledge as

an employee at Hawken.

Similarly, we find no material inconsistency or contradiction between

Greene’s averments and her subsequent deposition testimony. In each instance,

Greene stated that she was employed in Hawken’s business department and is

familiar with the school’s enrollment and budgetary process. Based on her personal

knowledge and experience, Greene expressed that the damages sought by Hawken

were based on the terms and conditions of the Enrollment Agreements because it is

“not possible” to quantify the damages caused by an untimely unenrollment.

(Greene affidavit at ¶ 8; Greene depo. at p. 39, and 73.) Having reviewed the relevant

evidentiary materials in their entirety, we find no reasonable basis to suggest that

Greene’s supporting affidavit amounted to a “sham” as Machado suggests. Accordingly, the trial court did not abuse its discretion by denying Machado’s

motion to strike.

The second assignment of error is overruled.

B. Motion for More Definite Statement

In the third assignment of error, Machado argues the trial court erred

in denying her motion for a more definite statement pursuant to Civ.R. 12(E).

Machado contends that Hawken’s complaint was “defective” and did not sufficiently

articulate “how the contract was breached.”

We review a ruling on a motion for a more definite statement under

an abuse-of-discretion standard. Sazima v. Chalko, 86 Ohio St.3d 151, 154,

712 N.E.2d 729 (1999). As stated, an abuse of discretion occurs when a trial court’s

decision is “unreasonable, arbitrary, or unconscionable.” State v. Hill, 171 Ohio

St.3d 524, 2022-Ohio-4544, 218 N.E.3d 891, ¶ 9, citing Blakemore, 5 Ohio St.3d at

219, 450 N.E.2d 1140.

“Ohio is a notice-pleading state, [and] Ohio law does not ordinarily

require a plaintiff to plead operative facts with particularity.” Cincinnati v. Beretta

USA Corp., 95 Ohio St.3d 416, 2002-Ohio-2480, 768 N.E.2d 1136, ¶ 29. Civ.R. 8(A)

requires a complaint to contain (1) a short and plain statement of the claim showing

that the party is entitled to relief, and (2) a demand for judgment for the relief to

which the party claims to be entitled. Civ.R. 12(E) allows a party to move for a more

definite statement if a pleading is “so vague or ambiguous that a party cannot

reasonably be required to frame a responsive pleading * * *.” As discussed in further detail below, a cause of action for breach of

contract generally “requires the claimant to establish the existence of a contract, the

failure without legal excuse of the other party to perform when performance is due,

and damages or loss resulting from the breach.” Lucarell v. Nationwide Mut. Ins.

Co., 152 Ohio St.3d 453, 2018-Ohio-15, 97 N.E.3d 458, ¶ 41.

In this case, Hawken alleged in its complaint that Machado executed

the Enrollment Agreements on or about January 15, 2021, to secure her children’s

enrollment at the private school for the 2021-2022 academic school year. The

complaint further alleged that Machado inexcusably breached the express terms and

conditions of each agreement by failing “to make payments as agreed for [G.M.] in

the amount of $30,350.00 and [J.M.] in the amount of $26,450.00 for a combined

balance due and owing of $56,800.00.” Finally, Hawken alleged that Machado’s

“breach of the Agreements has damaged plaintiff in the amount of $56,800.00.”

Viewing the pleading in its entirety, we find the complaint is not vague

or ambiguous and alleges sufficient operative facts to support a breach-of-contract

claim. The complaint provided fair notice of the nature of the action and attached

copies of the contracts under which the claim arose. See Civ.R. 10. Under these

circumstances, the trial court did not abuse its discretion by denying Machado’s

motion for a more definite statement.

The third assignment of error is overruled. C. Summary Judgment

In the first assignment of error, Machado argues the trial court erred

in granting summary judgment in favor of Hawken while simultaneously denying

her competing motion for summary judgment. Machado contends that she was

entitled to a judgment as a matter of law because the evidentiary materials attached

to her motion established that (1) she had no obligation to comply with deadlines set

forth in Section 7 of the Enrollment Agreements, and (2) the Enrollment

Agreements “do not contain liquidated damage clauses, but unenforceable,

unlawful, and unreasonable penalties.”

1. Standard of Review

Appellate review of summary judgments is de novo. Grafton v. Ohio

Edison Co., 77 Ohio St.3d 102, 105, 671 N.E.2d 241 (1996). Pursuant to Civ.R. 56(C),

summary judgment is appropriate when (1) there is no genuine issue of material

fact; (2) the moving party is entitled to judgment as a matter of law; and (3)

reasonable minds can come to but one conclusion and that conclusion is adverse to

the nonmoving party, the party being entitled to have the evidence construed most

strongly in his or her favor. Horton v. Harwick Chem. Corp., 73 Ohio St.3d 679,

653 N.E.2d 1196 (1995), paragraph three of the syllabus; Zivich v. Mentor Soccer

Club, 82 Ohio St.3d 367, 696 N.E.2d 201 (1998).

The party moving for summary judgment bears the burden of showing

that there is no genuine issue of material fact and that he or she is entitled to

judgment as a matter of law. Dresher v. Burt, 75 Ohio St.3d 280, 662 N.E.2d 264 (1996). Once the moving party satisfies its burden, the nonmoving party “may not

rest upon the mere allegations or denials of the party’s pleadings, but the party’s

response, by affidavit or as otherwise provided in this rule, must set forth specific

facts showing that there is a genuine issue for trial.” Civ.R. 56(E); Mootispaw v.

Eckstein, 76 Ohio St.3d 383, 667 N.E.2d 1197 (1996).

2. Breach of Contract

As stated, Hawken’s complaint alleged that Machado breached the

express terms of the Enrollment Agreements by failing to make tuition and fee

payments in the amount of $56,800. A breach of contract is established when a

party shows (1) the existence of a contract, (2) that the nonbreaching party

performed on the contract, (3) that the breaching party failed to perform its

contractual obligations without legal excuse, and (4) the nonbreaching party

suffered damages flowing from the breach. Holliday v. Calanni Ents., 2021-Ohio-

2266, 175 N.E.3d 663, ¶ 20 (8th Dist.), citing Doner v. Snapp, 98 Ohio App.3d 597,

600, 649 N.E.2d 42 (2d Dist.1994).

“Contract formation requires an offer, acceptance, consideration, and

mutual assent between two or more parties with the legal capacity to act.” Widok v.

Estate of Wolf, 8th Dist. Cuyahoga No. 108717, 2020-Ohio-5178, ¶ 52, citing

Kostelnik v. Helper, 96 Ohio St.3d 1, 2002-Ohio-2985, 770 N.E.2d 58, ¶ 16. “‘A

meeting of the minds as to the essential terms of the contract is a requirement to

enforcing the contract.’” Kertes Ents., L.L.C. v. Sanders, 8th Dist. Cuyahoga No.

109584, 2021-Ohio-4308, ¶ 19, quoting Kostelnik at ¶ 16. The essential terms of a contract are the “identity of the parties to be bound, the subject matter of the

contract, consideration, a quantity term, and a price term.” Fairfax Homes, Inc. v.

Blue Belle, Inc., 5th Dist. Licking No. 2007CA00077, 2008-Ohio-2400, ¶ 19, citing

Alligood v. Procter & Gamble Co., 72 Ohio App.3d 309, 594 N.E.2d 668 (1st

Dist.1991). “In order to declare the existence of a contract, both parties to the

contract must consent to its terms * * *; there must be a meeting of the minds of

both parties * * *; and the contract must be definite and certain.” Episcopal

Retirement Homes v. Ohio Dept. of Indus. Relations., 61 Ohio St.3d 366, 369, 575

N.E.2d 134 (1991).

a. Liability under the Enrollment Agreements

In this case, Machado does not dispute that she electronically

executed the Enrollment Agreements on January 15, 2021, and subsequently

cancelled her children’s enrollment at Hawken after the designated cancellation

period had passed. Nevertheless, she challenges the trial court’s interpretation and

application of Sections 6 and 7 of the Enrollment Agreements.

The legal standards for the interpretation of contracts are well

established. Ohio courts seek to give effect to the intent of the parties, and we

presume that the intent of the parties is reflected in the plain language of the

contract. Westfield Ins. Co. v. Galatis, 100 Ohio St.3d 216, 2003-Ohio-5849,

797 N.E.2d 1256, ¶ 11. Thus, if the language of a contract is plain and unambiguous,

we enforce the terms as written, and we may not turn to evidence outside the four

corners of the contract to alter its meaning. See id.; Aultman Hosp. Assn. v. Community Mut. Ins. Co., 46 Ohio St.3d 51, 53, 544 N.E.2d 920 (1989) (“Intentions

not expressed in the writing are deemed to have no existence and may not be shown

by parol evidence.”). When considering the language of a particular contractual

provision, “[c]ommon words * * * will be given their ordinary meaning unless

manifest absurdity results or unless some other meaning is clear from the face or

overall contents of the agreement.” Cincinnati Ins. Co. v. Anders, 99 Ohio St.3d 156,

2003-Ohio-3048, 789 N.E.2d 1094, ¶ 34, citing Alexander v. Buckeye Pipe Line Co.,

53 Ohio St.2d 241, 374 N.E.2d 146 (1978), paragraph two of the syllabus.

On appeal, Machado suggests that she had no contractual obligation

to pay the full amount of tuition and fees designated in the Enrollment Agreements

because “the deadline Hawken relied upon (Section 7 of the Enrollment

Agreements) does not apply to [her].” Machado summarizes her position as follows:

Section 7 of Hawken’s Enrollment Agreements with Machado (unlawfully) states:

“If enrollment for the 2021-2022 school year is cancelled between May 1 and before July 1, 2021, Parents are obligated to pay fifty percent (50%) of the annual tuition and fees. If enrollment is cancelled on or after July 1, 2021, Parents are obligated to pay one hundred percent (100%) of the annual tuition and fees.”

However, Section 7 does not even apply. Perhaps because it continually revises its Enrollment Agreements * * * Hawken glosses over Section 6 of Machado’s Enrollment Agreements which states:

“If this agreement is entered into on or after May 1, 2021, the Parent is liable for the tuition and fees as outlined in Section 7 below.”

As the Machado’s Enrollment Agreements were entered into on February 1, 2021 (well before May 1, 2021) Section 7 does not apply. Thus, Machado was under no obligation to cancel before July 1st. The penalties in Section 7 (which are unlawful anyway) do not apply to Machado. * * * As Section 7 (and its arbitrary deadlines) does not even apply, Hawken’s argument was frivolous. Minimally, this language is ambiguous and confusing and ambiguous [sic], which must be construed against Hawken.

After careful examination, we find no merit to Machado’s

interpretation of the agreements or her disregard of the controlling language in

Section 6. In this case, Section 6 of the Enrollment Agreements unambiguously

provides that a parent who enrolls his or her child into Hawken before May 1, 2021,

is “liable for the entire year’s tuition upon the signing of [the] Agreement, unless a

written notice of cancellation is delivered to the School on or before May 1, 2021.”

(Emphasis added.) By executing the agreements in January 2021, Machado

reserved spots for her children in Hawken’s third and seventh-grade classes in

exchange for a $1,500 nonrefundable deposit and a promise to pay the balance of

the tuition later that year in accordance with the payment schedule set forth under

Section 8 of each agreement. The Enrollment Agreements provided Machado the

option to cancel the agreements and withdraw her children from the school without

having to pay the rest of the tuition if she did so prior to May 1, 2021. By the express

terms of Section 6, Machado’s ability to unilaterally repudiate the agreement

without further payment obligations expired on May 1, 2021.

Notwithstanding the clear implications of Section 6, the agreements

further clarified in Section 7 that a parent’s withdrawal of the student “after the

period for cancellation of [the] Agreement has expired, whether the result of * * * move/transfer * * * does not relieve the parent of the responsibility for payment of

the entire year’s tuition and fees.” Contrary to Machado’s interpretation of this

provision, Section 7 is not exclusively limited to those parents who enroll a child

after the May 1, 2021 cancellation deadline referenced in Section 6. Regardless of

the date the agreement was executed, a parent is not relieved of liability merely

because the unenrollment was premised on unforeseen circumstances, including a

move or transfer of schools. The last sentence of Section 6 merely notes that when

a parent executes an Enrollment Agreement after the designated “cancellation” date

of May 1, 2021, the parent’s liability for tuition and fees is subject to Section 7’s

distinction between cancellations occurring between May 1, 2021, and July 1, 2021,

and those made after July 1, 2021. Contrary to Machado’s assertion on appeal, the

last sentence of Section 6 is inclusive of liability and not exclusive.

In this case, Machado did not exercise her right to cancel the contract

until after the May 1, 2021 date designated in Sections 6 had expired (and after the

July 1, 2021 date referenced in Section 7). As a matter of law, Machado’s failure to

comply with her express obligations under the Enrollment Agreements following the

untimely cancellations constituted a breach of the agreements. See Lake Ridge

Academy v. Carney, 66 Ohio St.3d 376, 380, 613 N.E.2d 183 (1993) (“Under a

school reservation agreement, when a parent is given the option to cancel the

agreement before a certain date without incurring liability for the full tuition and

does not do so, the parent may become liable for the full tuition if the contract so

provides. The parent’s notification of cancellation, given after the option date, is ineffective to discharge liability. Subsequent failure to make scheduled tuition

payments constitutes a breach of contract.”). Thus, if the liquidated damages

provision contained in Section 9 is valid, we find the unambiguous terms of the

Enrollment Agreements required Machado to pay the “entire” annual tuition and

fees designated in each child’s enrollment agreement.

b. Liquidated-Damages Clause

Next, Machado contends that the Enrollment Agreements do not

contain an enforceable liquidated-damages clause. Machado does not dispute that

Section 9 of each Enrollment Agreement expressly provides that “the parent further

agrees that the total amount * * * due and payable to the school shall be considered

as agreed upon liquidated damages between the parties.” (Emphasis added.)

Machado suggests, however, that the provision constitutes an unenforceable and

invalid penalty. In support of this position, Machado asserts that damages in the

amount of $56,800 were disproportionate to the actual damages because “Hawken

suffered no damages; yet made more money in tuition in 2021-2022 than in the

prior year.”

“[L]iquidated damages are damages that the parties to a contract

agree upon, or stipulate to, as the actual damages that will result from a future

breach of the contract.” Boone Coleman Constr., Inc. v. Piketon, 145 Ohio St.3d 450,

2016-Ohio-628, 50 N.E.3d 502, ¶ 11, citing Sheffield-King Milling Co. v. Domestic

Science Baking Co., 95 Ohio St. 180, 183, 115 N.E. 1014 (1917). ““‘The effect of a

clause for stipulated damages in a contract is to substitute the amount agreed upon as liquidated damages for the actual damages resulting from breach of the contract,

and thereby prevents [sic] a controversy between the parties as to the amount of

damages.’”” Id. at ¶ 12, quoting Dave Gustafson & Co., Inc. v. South Dakota, 83 S.D.

160, 164, 156 N.W.2d 185 (1968), quoting 22 American Jurisprudence 2d, Damages,

Section 235, at 321 (1965). “Put another way, ‘a liquidated damages clause in a

contract is an advance settlement of the anticipated actual damages arising from a

future breach.’” Id., quoting Carrothers Constr. Co., L.L.C. v. S. Hutchinson, 288

Kan. 743, 754, 207 P.3d 231 (2009).

“As a general rule, parties are free to enter into contracts that contain

provisions which apportion damages in the event of default.” Lake Ridge Academy,

66 Ohio St.3d at 381, 613 N.E.2d 183. Thus, “‘the law does not look with disfavor

upon “liquidated damages” provisions in contracts. When they are fair and

reasonable attempts to fix just compensation for anticipated loss caused by breach

of contract, they are enforced.’” Boone at ¶ 14, quoting Priebe & Sons, Inc. v. United

States, 332 U.S. 407, 411, 68 S.Ct. 123, 92 L.Ed. 32 (1947). “The modern rule is ‘to

look with candor, if not with favor’ upon liquidated-damages provisions in contracts

when those provisions were ‘deliberately entered into between parties who have

equality of opportunity for understanding and insisting upon their rights.’” Id.,

quoting Wise v. United States, 249 U.S. 361, 365, 39 S.Ct. 303, 63 L.Ed. 647 (1919).

However, complete freedom of contract is not permitted for public

policy reasons, such as when the stipulated damages actually constitute a penalty.

In general, “‘[t]he characteristic feature of a penalty is its lack of proportional relation to the damages which may actually flow from failure to perform under a

contract.’” Lake Ridge Academy at 381, quoting Garrett v. Coast & S. Fed. S. & L.

Assn., 9 Cal.3d 731, 739, 108 Cal.Rptr. 845, 511 P.2d 1197 (1973). “A penalty is

designed to coerce performance by punishing nonperformance; its principal object

is not compensation for the losses suffered by the nonbreaching party.” Id.

In Samson Sales, Inc. v. Honeywell, Inc., 12 Ohio St.3d 27, 465

N.E.2d 392 (1984), the Ohio Supreme Court approved the test to be used when

determining whether such a clause constitutes liquidated damages or a penalty.

“Where the parties have agreed on the amount of damages, ascertained by estimation and adjustment, and have expressed this agreement in clear and unambiguous terms, the amount so fixed should be treated as liquidated damages and not as a penalty, if the damages would be (1) uncertain as to amount and difficult of proof, and if (2) the contract as a whole is not so manifestly unconscionable, unreasonable, and disproportionate in amount as to justify the conclusion that it does not express the true intention of the parties, and if (3) the contract is consistent with the conclusion that it was the intention of the parties that damages in the amount stated should follow the breach thereof.”

Id. at 29, quoting Jones v. Stevens, 112 Ohio St. 43, 146 N.E. 894 (1925), paragraph

two of the syllabus. Thus, “valid and enforceable liquidated-damages provisions are

those intended by the parties to give reasonable compensation for damages, but

provisions that impose amounts that are ‘manifestly inequitable and unrealistic’ are

deemed unenforceable penalties.” Boone, 145 Ohio St.3d 450, 2016-Ohio-628, 50

N.E.3d 502, at ¶ 19, citing Honeywell at 28. Following the release of Honeywell, the Ohio Supreme Court provided

additional guidance for assessing contractual provisions that apportion damages in

the event of default. The court explained, in relevant part:

Determining whether stipulated damages are punitive or liquidated is not always easy: [I]t is necessary to look to the whole instrument, its subject-matter, the ease or difficulty of measuring the breach in damages, and the amount of the stipulated sum, not only as compared with the value of the subject of the contract, but in proportion to the probable consequences of the breach, and also to the intent of the parties ascertained from the instrument itself in the light of the particular facts surrounding the making and execution of the contract. Jones v. Stevens, 112 Ohio St. 43, 146 N.E. 894 (1925), paragraph one of the syllabus. “Neither the parties’ actual intention as to its validity nor their characterization of the term as one for liquidated damages or a penalty is significant in determining whether the term is valid.” 3 Restatement of Contracts, supra, at 159, Section 356, Comment c. See Samson Sales, Inc. v. Honeywell, Inc., 12 Ohio St.3d 27, 28, 465 N.E.2d 392, 394 (1984). Thus, when a stipulated damages provision is challenged, the court must step back and examine it in light of what the parties knew at the time the contract was formed and in light of an estimate of the actual damages caused by the breach. If the provision was reasonable at the time of formation and it bears a reasonable (not necessarily exact) relation to actual damages, the provision will be enforced. See 3 Restatement of Contracts, supra, at 157, Section 356(1).

Lake Ridge Academy, 66 Ohio St.3d at 381-382, 613 N.E.2d 183.

The determination as to whether a particular clause constitutes

liquidated damages or a penalty is one of law. Id. at 380. Therefore, this court will

apply a de novo standard of review. See Cleveland Elec. Illum. Co. v. Pub. Util.

Comm., 76 Ohio St.3d 521, 668 N.E.2d 889 (1996), citing Indus. Energy Consumers

of Ohio Power Co. v. Pub. Util. Comm., 68 Ohio St.3d 559. 563, 629 N.E.2d 423

(1994). Consistent with the factual circumstances presented in this case, Lake

Ridge Academy stemmed from a breach-of-contract action pursued by a private

school against a student’s father for unpaid tuition and fees. The father had signed

a contract with the school to enroll his son for the 1989-1990 school year. The

contract contained a cancellation date of August 1, 1989, and stated that if

enrollment was cancelled after such date, the parent or guardian for the child would

be responsible for the full tuition, books, and supplies charges. On August 7, 1989,

the defendant cancelled the contract and the school sued for breach of contract,

seeking the balance due under the contract.

After the trial court entered judgment in favor of the defendant on the

basis that he had substantially complied with the cancellation provision and the

school was not harmed by the late withdrawal, the school appealed. The court of

appeals reversed, finding that the defendant had breached the contract and that the

clause requiring the defendant to pay the full tuition was not punitive, but rather

constituted a valid liquidated-damages provision.

In affirming the judgment of the court of appeals, the Ohio Supreme

Court found that (1) defendant breached his contract with the private school by

failing to make scheduled tuition payments after providing an untimely notice of

cancellation of enrollment, and (2) the damages provision in the contract was a valid

liquidated-damages clause. With respect to the latter, the Lake Ridge Academy

Court applied the three-prong test adopted in Honeywell and concluded that the

liquidated-damages provision was enforceable. The court found (1) damages were uncertain as to amount and “difficult of proof” due to the “uncertain science”

involved in a private institution’s year-long budgeting process; (2) the contract as a

whole was not so manifestly unconscionable, unreasonable, or disproportionate in

amount as to justify the conclusion that it does not express the true intentions of the

parties because (a) the parties negotiated at arm’s length and there was no evidence

of coercion or duress, (b) the contract and the cancellation deadline was reasonable

given the school’s need to finalize its financial commitments and the amount of time

given to the defendant to cancel the contract without penalty, and (c) damages in

the amount of full tuition was not disproportionate to the school’s actual damages,

and (3) the plain and unambiguous language of the damages provision represented

the intention of the parties.

After careful consideration, we find the discussion in Lake Ridge

Academy is persuasive and supports the conclusion that the damages provision

contained in Hawken’s Enrollment Agreements is a valid and enforceable

First, when Machado and Hawken’s agreement was finalized in

February 2021, the damages Hawken might suffer as a result of a breach by Machado

were “uncertain as to amount and difficult of proof.” Similar to the circumstances

assessed in Lake Ridge Academy, the record reveals that Hawken goes through a

“lengthy multi-step budgeting process which begins each year in October.” (Greene

affidavit at ¶ 5.) As explained by Greene, Hawken’s budgeting process relies

extensively on the projected enrollments and the “pooled student ‘net tuition revenue,’” which is used to pay for staff salaries and benefits, department budgets,

student materials, maintenance, improvements, and utilities. (Greene affidavit at

¶ 6, 8.) Thus, Hawken plans its yearly budget based upon its enrollment

commitments for the following year and makes irreversible financial commitments

to teachers and staff based upon such commitments. Greene clarified, however, that

the budgeting process is not a “precise science” because it relies on educated

guesswork and projections of numerous variables. (Greene affidavit at ¶ 8.)

Collectively, the evidence attached to Hawken’s motion for summary judgment

established that, as with most private-educational institutions, the budgetary

process implemented at Hawken relies on various uncertainties that would prevent

the school from precisely calculating and proving the exact financial impact the lost

tuition for each child would have on the overall budget.

Second, we find the agreements, viewed in their entirety, are not so

manifestly unconscionable, unreasonable, and disproportionate in amount to justify

the conclusion that they do not reflect the true intention of the parties. In this case,

Machado was familiar with Hawken’s enrollment process and there is no evidence

in the record to suggest that Machado was pressured or otherwise coerced into

executing the Enrollment Agreements. Similarly, we are unable to conclude that the

contents of the Enrollment Agreements, including the designated cancellation date,

were unreasonable. Greene explained that the cancellation deadline was necessary

because the budget for the upcoming school year was “largely finalized by the

beginning of May.” (Greene affidavit ¶ 5.) Full disclosure was provided as to the consequences of an untimely withdrawal and Machado had several months after she

executed the agreements to decide whether to cancel her children’s enrollment at

Hawken for the 2021-2022 academic school year. Lastly, we cannot say that

damages in the amount of the full tuition are disproportionate to the actual damages

suffered by Hawken. As noted by Greene, Hawken’s third- and seventh-grade

classes for 2021-2022 were underenrolled for their respective projected class sizes.

(Greene affidavit at ¶ 6.) Thus, Hawken was unable to fulfill its projected net-tuition

revenue despite relying on the enrollment figures when allocating resources

necessary to support the school’s educational mission for the 2021-2022 academic

school year. While the precise amount of damages are necessarily difficult to

ascertain, it is not unreasonable to conclude that the stipulated damages provision

bore a proportionate (not necessarily exact) relationship to the actual damages

sustained by Hawken. Thus, the stipulated damages were neither manifestly

inequitable nor unrealistic.

Finally, we find the language set forth in the terms and conditions of

each Enrollment Agreement is so clear that we can only conclude that it represents

the parties’ intent. As previously stated, the relevant provision in the agreement

states as follows:

The Parent understands and agrees that the Student is enrolled for the entire school year, and the Parent is liable for the entire year’s tuition and fees upon the signing of this Agreement, unless written notice of cancellation is delivered to the School on or before May 1, 2021. (Emphasis added.) (Section 6, Enrollment Agreement.) When parties make mutual

promises and integrate them “‘into an unambiguous written contract, duly signed

by them, courts will give effect to the parties’ expressed intentions.’” Lake Ridge

Academy, 66 Ohio St.3d at 384, 613 N.E.2d 183, quoting Aultman, 46 Ohio St.3d at

53, 544 N.E.2d 920. Contrary to Machado’s bare assertions, we find no reason to

believe that the plain language used in each agreement does not represent the

intention of the parties.

Based on the foregoing, we find the Enrollment Agreements contain a

valid and enforceable liquidated-damages clause. See Lake Ridge Academy at 382-

384; see also W. Res. Academy v. Franklin, 2013-Ohio-4449, 999 N.E.2d 1198

(5th Dist.); Tremco Inc. v. Kent, 8th Dist. Cuyahoga No. 70920, 1997 Ohio App.

LEXIS 2367 (May 29, 1997). As discussed, Machado executed the Enrollment

Agreements obligating her to pay tuition and fees in an amount totaling $59,630.

Machado tendered nonrefundable deposits totaling $3,000, and subsequently made

a payment in the amount of $830, leaving an unpaid balance of $56,800. In

accordance with the express terms of each agreement, when Machado waited until

July 21, 2021, to cancel her children’s enrollment at the school for the 2021-2022

academic school year, reasonable minds could only reach the conclusion that

Machado became liable for the entire balance due and owing. Accordingly, the trial

court did not err by granting summary judgment in favor of Hawken and ordering

Machado to pay $56,800, with interest at a rate of 6.17 % per annum, plus costs. See

Lake Ridge Academy; see also Sisters of the Holy Child Jesus at Old Westbury, Inc. v. Corwin, 51 Misc.3d 44, 48, 29 N.Y.S.3d 736 (N.Y. App. Term. 2016) (“Plaintiff

private school was entitled to summary judgment on its complaint in an action

seeking to recover the full amount of tuition and fees from defendants, who had

signed a contract enrolling their child in the school, but, after expiration of the

cancellation date in the contract, notified the school administrators of their decision

to not have their child attend the school and ceased making payments.”); see also

Pierre v. St. Benedict’s Episcopal Day School, 324 Ga.App. 283, 750 SE.2d 370

(2013); Barrie School v. Patch, 401 Md. 497, 933 A.2d 382 (2007); St. Margaret’s-

McTernan School, Inc. v. Thompson, 31 Conn.App. 594, 627 A.2d 449 (1993).

The first assignment of error is overruled.

Judgment affirmed.

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 issue out of this court directing the

common pleas 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.

EILEEN T. GALLAGHER, JUDGE

KATHLEEN ANN KEOUGH, A.J., and SEAN C. GALLAGHER, J., CONCUR