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It’s the Board Resolution that Matters – Not the Contract

In the case of Sun Bldg. Ltd. Partnership v. Value Learning & Teaching Academy, Inc., 2017-Ohio-

8727, an Ohio appellate court ruled that “a governmental entity can bind itself to a [contract] by taking sufficient action before it is executed.” Sun at ¶ 22.

The case involved a fight over the remaining assets belonging to a shuttered community school. The owners of the real estate that housed the community school filed a lawsuit “seeking the recovery of unpaid rent, future rent owed under the lease, and recoupment of the costs of the improvements to the property.” Sun at ¶ 4. The Ohio Department of Education, the Ohio Attorney General, and the community school’s sponsor all intervened in that lawsuit asserting that they had an interest in the remaining assets of the insolvent community school.

The community school argued that the leases were unenforceable because the board did not vote to accept the leases after they were signed by the superintendent. The appellate court rejected this argument finding that a “governmental entity can bind itself to a lease by taking sufficient action before it is executed.” Sun at ¶ 22. Specifically, the owners “presented unrefuted evidence that the board had voted to authorize the leases before execution.” Sun at ¶ 23.

This decision is consistent with a central tenant of school law, which provides that “[n]o contract shall be binding upon any board [of education] unless it is made or authorized at a regular or special meeting of such board.” R.C. 3313.33(B). It is not the act of signing a document that makes a contract binding on a board of education – it is the actual board action authorizing the agreement. As the appellate court found, the owners “established that the board had authorized the leases before they were executed by” the superintendent. Sun at ¶ 23. “This is sufficient [to bind the board to the contract], and the board was not required to subsequently ratify the contract they had already authorized.” Sun at ¶ 23.

To read this case, please click here.

Authors: Matthew John Markling and Patrick Vrobel

Note: This blog entry does not constitute – nor does it contain – legal advice. Legal jurisprudence is like the always changing Midwestern weather. As a result, this single blog entry cannot substitute for consultation with a McGown & Markling attorney. If legal advice is needed with respect to a specific factual situation, please feel free to contact a McGown & Markling attorney.

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