Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca6-24-03319/USCOURTS-ca6-24-03319-0/pdf.json

Parties Involved:
655 Dearborn Park Lane, LLC
Appellant
Cologix COL5, LLC
Appellee

Document Text:

NOT RECOMMENDED FOR PUBLICATION

File Name: 24a0519n.06

No. 24-3319

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

655 DEARBORN PARK LANE, LLC,

Defendant-Appellant,

v.

COLOGIX COL5, LLC, 

Plaintiff-Appellee.

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ON APPEAL FROM THE 

UNITED STATES DISTRICT 

COURT FOR THE 

SOUTHERN DISTRICT OF 

OHIO 

OPINION

Before: KETHLEDGE, LARSEN, and MATHIS, Circuit Judges.

KETHLEDGE, Circuit Judge. 655 Dearborn Park Lane, LLC appeals the district court’s 

grant of Cologix Col5, LLC’s motion for judgment on the pleadings. We vacate and remand.

Dearborn owns a four-acre parcel of land in Franklin County, Ohio. In August 2022, 

Cologix conditionally agreed to purchase that parcel from Dearborn to build a “data center facility” 

there. Agreement § 8.1(a)(ii). Under § 8.1(a)(ii) of the contract, Cologix could terminate the deal 

if Cologix was “not satisfied as a result of its due diligence of the Property (as reasonably 

demonstrated to Seller)” that it could develop the property “as a data center facility[.]” The 

contract also provided that Cologix was entitled to return of its downpayment ($300,000) if it 

properly terminated the contract under § 8.1(a)(ii). Agreement § 4.2.

Data centers use large amounts of electricity, so the contract expressly recited “available 

utility power to the Property” as a potential concern. Agreement § 8.1(a)(ii). During due diligence,

Cologix identified high-voltage lines near the property as a potential source of electricity. But 

Cologix also identified a natural-gas pipeline and related easement that ran between the highCase: 24-3319 Document: 28-2 Filed: 12/12/2024 Page: 1
No. 24-3319, Dearborn v. Cologix

-2-

voltage lines and the property—raising a concern, apparently, about whether Cologix could 

connect the property to those lines. Eventually, in October 2022, Cologix informed Dearborn that 

it was terminating the contract because of its concerns about its ability to access the high-voltage 

power lines. In a follow-up email a week later, Cologix elaborated on its decision:

To help you understand our decision, I am willing to state that one of the 

biggest concerns with any data center is the ability to obtain sufficient 

electrical power to the Property. For this property, we believe that electrical 

power would come from AEP via high voltage lines from the west. 

However, given the placement of the gas distribution pipeline (and the 

related easement) we weren’t satisfied that AEP could deliver the necessary 

power to the Property—we weren’t satisfied that AEP could locate its power 

lines around the gas pipeline easement. As a result, we weren’t satisfied 

that we could develop the property as a data center, and we properly 

terminated the Agreement during the Inspection Period.

Dearborn refused to authorize a refund of Cologix’s down payment for the property, so 

Cologix brought this suit. Cologix moved for judgment on the pleadings, which the district court 

granted. We review that decision de novo. Warrior Sports, Inc. v. NCAA, 623 F.3d 281, 284 (6th 

Cir. 2010). 

The parties agree that Ohio law governs this dispute. Ohio courts interpret contracts 

according to their plain meaning. Westfield Ins. Co. v. Galatis, 797 N.E.2d 1256, 1261 (Ohio 

2003). Here, the dispute focuses on the contract’s termination clause, in § 8.1(a)(ii). That clause 

provides in relevant part:

(a) Notwithstanding anything to the contrary set forth in this Agreement, 

this Agreement may be terminated at any time prior to Closing: 

(ii) At any time prior to the expiration of the Inspection Period by 

Purchaser if Purchaser is not satisfied as a result of its due 

diligence of the Property (as reasonably demonstrated to Seller) 

that the Property can be developed by Purchaser as a data center 

facility (including, without limitation, as it relates to title or 

survey matters, zoning, available utility power to the Property or 

environmental issues)[.]

Case: 24-3319 Document: 28-2 Filed: 12/12/2024 Page: 2
No. 24-3319, Dearborn v. Cologix

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Thus, to terminate the contract under § 8(a)(ii), Cologix must not be “satisfied” that it can develop 

the property as a data-center facility, “as a result of its due diligence of the property (as reasonably 

demonstrated to Dearborn).” Here, Cologix claims it was not satisfied that it could develop the 

property as a data-center facility. The question, then, is whether Cologix’s lack of satisfaction was 

the “result of its due diligence of the Property (as reasonably demonstrated to [Dearborn]).”

The parties dispute what must be “reasonably demonstrated to” Dearborn, to satisfy this 

clause. Cologix argues—and the district court seemed to agree—that Cologix needed only to show 

that “it was not actually satisfied that it could develop the property as a data center facility.”

Appellee’s Br. at 16. Dearborn counters that the basis for Cologix’s dissatisfaction “must be 

demonstrated to a degree that would satisfy a reasonable person.” Appellant’s Br. at 5-6.

We read this provision largely as Dearborn does. Section 8.1(a)(ii) requires more than that 

Cologix simply was unsatisfied that it could develop the property as a data-center facility. Instead, 

Cologix’s lack of satisfaction must have been the “result of its [i.e., Cologix’s] due diligence of 

the property (as reasonably demonstrated to Seller)[.]” That much, the provision’s express terms 

make clear.

The provision’s implications are likewise clear enough. Cologix must also do more than 

show that its lack of satisfaction was, in fact, based—reasonably or not—on its due diligence. That 

reading, as a practical matter, would elide the “as reasonably demonstrated” language, and make 

§ 8.1(a)(ii) applicable upon Cologix’s attestation alone. What Cologix must demonstrate, rather,

is that its lack of “satisfaction” was not only based on its due diligence, but reasonably so. Section 

8.1(a)(ii) requires that Cologix have good reasons—as a result of its due diligence alone—to doubt 

whether it can develop the property as a data-center facility. And if Cologix has those reasons, it 

Case: 24-3319 Document: 28-2 Filed: 12/12/2024 Page: 3
No. 24-3319, Dearborn v. Cologix

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need not bet the contract’s purchase price or its $300,000 downpayment that it can develop the 

property for that purpose nonetheless. 

The district court, for its part, granted judgment on the pleadings solely on the ground that 

Cologix had undisputedly communicated the fact of its dissatisfaction to Dearborn. As shown 

above, however, § 8.1(a)(ii) requires more than that: Cologix must demonstrate that its lack of 

“satisfaction” was reasonably based on its due diligence. 

The district court’s judgment is vacated, and the case is remanded for proceedings 

consistent with this opinion.

Case: 24-3319 Document: 28-2 Filed: 12/12/2024 Page: 4