Opinion ID: 811017
Heading Depth: 3
Heading Rank: 1

Heading: Flight Options’ Breach of Contract

Text: The Purchase Agreements provide that Ohio substantive law governs the breach-of-contract claims. Under Ohio law, the elements of a breach-of-contract claim are offer, acceptance, consideration, breach, and damages. See, e.g., Lucio v. Safe Auto Ins. Co., 919 N.E.2d 260, 267 (Ohio Ct. App. 2009). The central element that is in dispute is whether Flight Options’ February 15th notice to JNV was a valid acceptance of an offer. Under Ohio law, “a contract is to be read as a whole and the intent of each part gathered from a consideration of the whole.” Saunders v. Mortensen, 801 N.E.2d 452, 455 (Ohio 2004). “If it is reasonable to do so, we must give effect to each provision of the contract.” Id. “Common words appearing in a written instrument 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 instrument.” Foster Wheeler Enviresponse, Inc. v. Franklin Cnty. Convention Facilities Auth., 678 N.E.2d 519, 526 (Ohio 1997) 8 Case: 11-10958 Document: 00512037269 Page: 9 Date Filed: 10/30/2012 No. 11-10958 (citations omitted). Further, “writings executed as part of the same transaction, will be read as a whole, and the intent of each part will be gathered from a consideration of the whole.” Id. (citations omitted). Finally, a court should construe a contract strictly against the drafter and in favor of the nondrafting party. Safeco Ins. Co. of Am. v. White, 913 N.E.2d 426, 430-31 (Ohio 2009). We agree with the district court that Flight Options breached the Purchase Agreements when it failed to repurchase JNV’s Interests after exercising its right to do so and contemporaneously terminating JNV’s flying privileges. The central dispute between the parties here is whether Section 4.2(d) of the Purchase Agreements contained a unilateral offer that, when Flight Options notified JNV that it was “exercising [its] option to repurchase” JNV’s Interests, created a binding contract between the parties. JNV asserts that Flight Options’ notice represented Flight Options’ acceptance of JNV’s unilateral offer to sell back the Interests, thereby creating a binding contract. Flight Options contends that the exercise of its option to repurchase JNV’s Interests was contingent upon JNV’s acceptance of the prices Flight Options proposed to pay. Flight Options also argues that it was able to change its mind about exercising its option to repurchase because of the absence of a binding contract. However, Flight Options’ interpretation of the agreements contradicts wellestablished principles relating to option contracts. Under Ohio law, an option becomes effective as a contract once it is accepted. See Moss et al. v. Olson, 76 N.E.2d 875, 878 (Ohio 1947) (holding that, where a lease provided that the lessee shall have the right to renew and extend such lease for a term of three years upon the giving of specified notice, the lessee’s giving of such notice automatically extended the lease for three years); Plickerd v. Mongeluzzo, 596 N.E.2d 601, 606 (Ohio Ct. App. 1992) (citation omitted) (“[T]he party having the option is of course not bound to exercise it; he can withdraw from it at any time prior to the exercise thereof[.]”); see also 9 Case: 11-10958 Document: 00512037269 Page: 10 Date Filed: 10/30/2012 No. 11-10958 generally 17 Ohio Jurisprudence 3d Contracts § 30 (“An option becomes effective as a contract upon acceptance thereof[.]”). In light of the foregoing principles, it is clear to us that the Purchase Agreements contained JNV’s unilateral offer to sell back its Interests to Flight Options, an offer which Flight Options accepted in the February 15th letters. Flight Options’ own internal communications and sworn testimony relating to this litigation support this conclusion. Thus, once Flight Options initiated the repurchase, it was obligated to follow the process that the Purchase Agreements prescribed for determining the value of the Interests–either mutual agreement on a price or, if mutual agreement was not possible, the appraisal remedy. Flight Options breached the agreements by failing to do so. We therefore affirm the district court’s grant of summary judgment to JNV on its breach of contract claim and the district court’s denial of summary judgment to Flight Options on its breach of contract counterclaim.