Motion in Limine Evidentiary in ED MAP INC Vs DELTA CAREER EDUCATION CORPORATION VS.DELTA CAREER EDUCATION CORPORATION ET AL| Trellis.Law

On March 15, 2018 a Order was filed involving a dispute between and for OTHER CIVIL in the District Court of Franklin County.

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Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Sep 19 3:52 PM-18CV002305
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IN THE FRANKLIN COUNTY COURT OF COMMON PLEAS
CIVIL DIVISION

ED MAP, INC

Plaintiff,
Case No. 2018 CV 2305
v
Judge Cain
DELTA CAREER EDUCATION
CORPORATION, e7 al.,

Defendants.

MOTION OF PLAINTIFF ED MAP, INC.
FOR RECONSIDERATION OF THE COURT’S AUGUST 22, 2018 DECISION AND
ENTRY, OR IN THE ALTERNATIVE, TO AMEND THE DECISION AND ENTRY TO
INCLUDE CIVIL RULE 54(B) LANGUAGE

Plaintiff Ed Map, Inc. (“Ed Map”), by and through counsel, respectfully moves the Court

to reconsider its August 22, 2018 Decision and Entry (“Decision”) granting the June 15, 2018

Motion to Dismiss filed by Defendants’, STVT-AAI Education, Inc. (“Ancora Education”) and

Ancora Intermediate Holdings, LLC (“Ancora Holdings” collectively with Ancora Education are

referred to as the “Ancora Defendants”).

Ed Map submits this motion to seek reconsideration of the unsupported factual finding in

the Court’s Decision, that the Ancora Defendants did not assume the contract between Ed Map

and Delta Career Education Corp. (“Delta”). The Court’s Decision failed to analyze the asset

purchase agreement between Delta and Ancora Holdings (the “APA”), which was attached in

redacted form to Ed Map’s sur-reply and includes terms that undermine the Court’s finding.

Because the Court is required to construe the language of the APA, along with the factual

allegations and evidence submitted by the Parties in favor of Ed Map, the Court should

reconsider its Decision and find that it has personal jurisdiction over the Ancora Defendants
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In the alternative, should the Court decline this opportunity to reconsider and reverse its

Decision, and because the Decision impacts Ed Map’s substantive, contractual rights, Ed Map

respectfully requests that the Court amend its Decision nunc pro tunc to include an express

determination that there is no just reason to delay an appeal, pursuant to Civ.R. 54(B). Such an

amendment is proper to facilitate Ed Map’s appeal from the Court’s interlocutory Decision,

particularly in light of the fact that the remaining Defendants — those unaffected by the Decision

regarding the court’s personal jurisdiction over the Ancora Defendants — have filed for

bankruptcy, making Ed Map’s claims against them subject to the bankruptcy court’s stay.

A Memorandum in Support accompanies this motion.

Respectfully submitted

/s/ Elizabeth L. Moyo
Elizabeth L. Moyo (0081051)
Allen T. Carter (0085393)
Porter, Wright, Morris & Arthur LLP
41 South High Street, 29" Floor
Columbus, Ohio 43215
Telephone: (614) 227-2000
Facsimile: (614) 227-2100

Attorneys for Plaintiff Ed Map, Inc.
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MEMORANDUM IN SUPPORT

L INTRODUCTION

The Court’s Decision finding that it does not have personal jurisdiction over the Ancora

Defendants undermines Ed Map’s ability to enforce the contract for educational services and

materials between Ed Map and Delta that is the subject of this litigation (the “Agreement”). In

its Decision, the Court found that the Ancora Defendants did not assume the Agreement.

(Decision at 2.) That key factual finding was made without any analysis of the APA and

potentially affects Ed Map’s ability to enforce the Agreement against the Ancora Defendants in

any forum.'

When construing the language of the APA in Ed Map’s favor, as the Court must do in the

ontext of the Ancora Defendants’ Motion to Dismiss, the Court should find that the Ancora

Defendants assumed the Agreement. Pursuant to the Agreement, Ed Map provided educational

services and materials in January 2018 that allowed the Ancora Defendants to continue to

operate the business assets that they acquired from Delta. Because the Agreement related to the

business of Delta that the Ancora Defendants acquired, the Agreement fell within the definition

of a “Purchased Contract” and made it an “Assumed Liability” under the APA. Moreover, a

complete review of the APA with schedules and exhibits reveals that: (1) the transaction between

Delta and Ancora Holdings was a no-cash sale such that the only consideration that Ancora

Holdings provided was the assumption of liabilities of Delta’s business; (2) the Agreement was

not included in the APA’s schedule of Excluded Contracts; and (3) Ancora Education expressly

1
See Nat'l City Commer. Capital Corp. v. AAAA at Your Serv., 114 Ohio St. 3d 82,
83-84, 2007-Ohio-2942, {9 (reversing a trial court’s dismissal for lack of personal jurisdiction
where a plaintiff had assumed a contract with a forum selection clause and sought to enforce the
clause against the defendants: “National City has a contract that it is seeking to enforce, but upon
a determination that the trial court lacks personal jurisdiction over the defendant, National City is
prevented from enforcing that right.”)
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assumed the Purchased Contracts through an Assignment and Assumption Agreement included

in the APA.

The Court should reconsider its Decision and find that the Ancora Defendants assumed

the Agreement and are thus subject to this Court’s exercise of personal jurisdiction under the

Agreement’s forum selection clause. If, however, the Court declines to reconsider its Decision,

the Court should amend the Decision munc pro tunc to insert Civ.R. 54(B) language to facilitate

Ed Map’s appeal from the Decision.”

Il. BACKGROUND

Pursuant to the APA, the Ancora Defendants bought certain assets and acquired certain

liabilities of Delta and its affiliates (collectively, “Delta Defendants”) on January 18, 2018. (Am

Compl. at J 18; Sur-Reply, Ex. A, Greg Smith Aff. at § 13, Aff. Ex. 1, redacted APA. 5) On

February 2, 2018, the Agreement expired, and Ed Map was left with an unpaid balance of nearly

two and a half million dollars. (Am. Compl. at § 51, Compl. and Exhs. A & D.)

A. Procedural History

On March 15, 2018, Ed Map sued the Delta Defendants and Ancora Education for breach

of the Agreement, among other claims. (Compl. at {] 54-83.) On June 1, 2018, Ed Map

amended its complaint to include Ancora Holdings as a defendant. The Amended Complaint

2
In order to preserve its appellate rights, Ed Map intends to file a Notice of Appeal
from the Decision within 30 days of the entry of the Decision. The Court will, even after the
notice of appeal, retain jurisdiction to decide this motion for reconsideration or to amend its
order to add Civ.R. 54(B) language. See Ferrao v. B.F. Goodrich, 149 Ohio App. 3d 301, 306,
2002-Ohio-4398, $ 9 (9th Dist.)
3
Before filing this lawsuit, the Ancora Defendants’ counsel provided Ed Map’s
counsel with a redacted copy of the APA that did not include schedules, exhibits, and
appendices. That redacted APA was attached to Greg Smith’s affidavit supporting Ed Map’s
Sur-Reply, which the Court granted Ed Map leave to file and deemed filed instanter in its
Decision. (Decision at 1.)
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included four exhibits: (1) the Agreement; (2) the Amendment to the Agreement; (3) Delta’s

account statement with Ed Map; and (4) a December 27, 2017 email between Greg Smith, Tim

Ryder, and Bill Nance. The Ancora Defendants moved to dismiss Ed Map’s amended complaint

for lack of personal jurisdiction and included an affidavit of their CEO Michael Zawisky.

(Ancora Defendants’ Mot. to Dismiss Am. Compl., filed June 15, 2018 (“Motion to Dismiss”).)

The Delta Defendants did not respond to Ed Map’s complaint and filed for bankruptcy in the

Eastern District of Virginia on July 27, 2018. (n re: Delta Career Education Corporation, et

al., Case No. 18-33822-KLP, (E.D. Va. Jul. 27, 2018).)

In response to the Motion to Dismiss, and among other arguments in favor of personal

jurisdiction, Ed Map further explained its theory set forth in the Amended Complaint and

exhibits to the Amended Complaint that the Ancora Defendants assumed the Agreement and

were subject to this Court’s exercise of personal jurisdiction because of the Agreement’s forum

selection clause. (Ed Map’s Memo. Contra to Ancora Defendants’ Mot. to Dismiss (“Mem

Contra”), filed Jun. 29, 2018, at 5-8.) In addition to its Memorandum Contra and in response to

the Ancora Defendants reply memorandum, Ed Map requested leave to file instanter a sur-reply

that included a supporting affidavit from Ed Map’s CFO Greg Smith and a redacted copy of the

APA. (Sur-Reply, Ex. A, Smith Aff. ¥ 13, Aff. Ex. 1, redacted APA.)

After briefing was complete on the Ancora Defendants’ Motion to Dismiss, Ed Map

obtained a complete, unredacted copy of the executed APA with schedules and exhibits

Pursuant to an agreement with the Ancora Defendants, Ed Map has attached a copy of the

complete APA with schedules and exhibits, with some confidential terms remaining redacted, as

Exhibit 1 to this motion
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No hearing was held on the Motion to Dismiss. In its Decision, the Court granted Ed

Map’s motion for leave to file its sur-reply instanter and dismissed Ed Map’s Amended

Complaint against the Ancora Defendants for lack of personal jurisdiction. (Decision at 1.) That

Decision also found the Ancora Defendants had not assumed the Agreement. (/d. at 2.) That

finding was in error.

B. The APA Between Delta and Ancora Holdings

The APA between Delta and Ancora Holdings was a no-cash agreement, in which the

only consideration that Ancora Holdings provided to the Delta Defendants was a Lender Consent

agreement and the assumption of certain liabilities of the Delta Defendants. (Ex. 1, APA, at

§ 2.5.) As set forth in Ed Map’s Sur-Reply, under the APA, Ancora Holdings expressly assumed

liabilities arising under Purchased Contracts or related to the ongoing operation of the Delta

assets that Ancora Holdings acquired. (See Sur-Reply, Ex. A, Smith Aff. 12, Aff. Ex. 1,

Redacted APA, § 2.3(a)(i)-(ii).) Under the APA, “‘Purchased Contracts’ means all Contracts

that relate to the Business that are not Excluded Contracts.” The APA defined “Business” as

“the business of owning and operating the Schools (as such business is conducted by the Seller

on the date of this Agreement).” (/d.) Given that Ed Map supplied educational materials and

services in January 2018 to students who were attending schools that Ancora acquired from

Delta, the Agreement “relate[d] to the Business” — pursuant to the APA. (Sur-reply, Ex. A, Greg

Smith Aff. 4] 4, 10 — 12.)
In addition to the language concerning Purchased Contracts and Assumed Liabilities,

which were included in the redacted APA attached to Ed Map’s Sur-Reply, the complete APA

attached to this motion includes a schedule of Excluded Contracts. The Agreement between Ed

Map and Delta is no? part of that schedule confirming that the Agreement falls within, and is not
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excluded from, the definition of Purchased Contracts. (Ex. 1, APA, at Schedule 2.2(a).) The

complete APA also includes an Assignment and Assumption Agreement that makes express the

parties’ intent that Ancora Education assume the Purchased Contracts. (Ex. 1, APA, at

Assignment and Assumption Agreement, § 1.)

Til. LAW AND ARGUMENT

A trial court may reconsider its decision any time before a final judgment is entered. See

D’Agastino v. Uniroyal-Goodrich Tire Co., 129 Ohio App. 3d 281, 288, 717 N.E.2d 781, 785

(6th Dist. 1998); see also Snyder Computer Sys. v. United States DOT, No. 2:12-cv-1140, 2014

US. Dist. LEXIS 144147, at *4 (S.D. Ohio Oct. 8, 2014) (ruling that a court may find reason to

reconsider an interlocutory order “when there is (1) an intervening change of controlling law; (2)

new evidence available; or (3) a need to correct a clear error or prevent manifest injustice”). In

this case, the Court should reconsider its Decision because it did not analyze the language of the

APA between Delta and the Ancora Defendants in concluding that the Ancora Defendants did

not assume the Agreement and are not subject to this Court’s exercise of personal jurisdiction

Based on the APA, the Court should conclude that the Ancora Defendants assumed the

Agreement, and are thus subject to the Agreement’s forum selection clause and the jurisdiction

of this Court.

Tf the Court declines to reconsider its Decision, then in the alternative the Court should

amend its Decision nunc pro tunc to include Civ.R. 54(B) language because there is no just cause

to delay Ed Map’s appeal ofthe Decision.

A. The Court Has Personal Jurisdiction Over the Ancora Defendants Because
they Assumed the Agreement.

The Court has personal jurisdiction over the Ancora Defendants because, among other

reasons, the Ancora Defendants assumed the Agreement, which includes a forum selection
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clause in favor of this Court. See Ranco, Inc. of Delaware v. Gold Sec. Australia Ltd., 10th Dist.

Franklin No. 90AP-114, 1991 Ohio App. LEXIS 406, *6-8 (Jan. 31, 1991). The Court did not

hold a hearing on the Ancora Defendants’ Civ.R. 12(B)(2) motion, and therefore, was required to

construe the pleadings and evidence in favor of Ed Map in determining whether Ed Map had

made a prima facie showing that the Court has personal jurisdiction over the Ancora Defendants.

Residential Fin. Corp. v. Greenpoint Mortg. Funding, Inc., 2010-Ohio-1322, § 16 (10th Dist.)

(reversing a trial court’s dismissal for lack of personal jurisdiction because it analyzed a contract

and its forum selection clause without construing the pleadings and evidence in favor of the non-

moving party); Ranco, Inc., of Delaware v. Gold Sec. Australia, Ltd., 10th Dist. Franklin No.

90AP-114, 1991 Ohio App. LEXIS 406, *6-8 (Jan. 31, 1991) (same). Based on the APA

provisions concerning Purchased Contracts and Assumed Liabilities, as well as the complete

APA with schedules and exhibits, the Court should find that the Ancora Defendants assumed the

Agreement

1 The APA’s Provisions Demonstrate that the Ancora Defendants Assumed the
Agreement.

As set forth in Ed Map’s Sur-Reply, the Ancora Defendants assumed certain contracts

and liabilities from Delta under the terms of the APA. “Assumed Liabilities” included those

arising under “Purchased Contracts” or related to the ongoing operation of the Delta assets that

Ancora Holdings acquired. (See Sur-Reply, Ex. A, Smith Aff., Ex. 1, Redacted APA, at

§ 2.3(a)(i)-(ii).) “‘Purchased Contracts’ means all Contracts that relate to the Business that are

not Excluded Contracts.” (/d. at § 1.1.) The Agreement was a “Purchased Contract” because it

related to the “Business” and was not an “Excluded Contract.”

First, the allegations in the Amended Complaint and the evidence that Ed Map provided

to the Court demonstrate that the Agreement was related to the Business. Under the APA,
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“Business” is defined as “the business of owning and operating the Schools (as such business is

conducted by the Seller on the date of this Agreement).” (/d.) Under the Agreement, Ed Map

provided students with course materials in January 2018 in order that Delta (and then the Ancora

Defendants) were able to operate the schools. (Sur-Reply, Ex. 1, Smith Aff. at JJ 4 & 10-12.)

Second, there is no evidence that the Agreement was an “Excluded Contract” under the

APA. Although the redacted APA that was attached to Ed Map’s Sur-Reply did not include the

schedule of “Excluded Contracts,” the Court was required to construe the terms of the APA in

favor of Ed Map. See Residential Fin. Corp., 2010-Ohio-1322, at § 16. Therefore, when

construing the APA in favor of Ed Map, the Court should have determined that the Agreement

between Ed Map and Delta was not an Excluded Contract but rather a Purchased Contract and an

Assumed Liability. As such, the Ancora Defendants are subject to the Agreement’s forum

selection clause and the personal jurisdiction of this Court.

2. The Complete APA Confirms the Agreement was a “Purchased Contract”
Assumed by the Ancora Defendants.

The complete APA with schedules and exhibits — mainly, the schedule of Excluded

Contracts, the Transition Services Agreement, and the Assignment and Assumption Agreement —

confirms that the Agreement was a “Purchased Contract” and assumed by the Ancora

Defendants. Although Ed Map did not have the complete APA when it responded to the Ancora

Defendants’ Motion to Dismiss, this new evidence is another reason that the Court should

reconsider its Decision and find that the Ancora Defendants assumed the Agreement between Ed

Map and Delta and are subject to this Court’s jurisdiction. See Snyder, 2014 U.S. Dist. LEXIS

144147, at *4.

First, the Agreement is not listed on the schedule of “Excluded Contracts.” Schedule

2.2(a) excludes: “1. Any contracts related to the administration or provision of any employee
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benefit plans. [AND] 2. Disclosure 2 on Schedule II is incorporated by reference.” (Ex. 1,

APA, at Schedule 2.2(a).) The Agreement does not relate to the administration or provision of

any employee benefits plans. (See Sur-Reply, Ex. 1, Smith Aff. at { 4.)

Disclosure 2 on Schedule II excludes, “Any contracts pursuant to which the Seller is

providing services as required by the terms of the Transition Services Agreement.” (Ex. 1, APA,

at Schedule II.) The Transition Services Agreement, in turn, lists the services and references the

contracts by which Delta was to provide transition services, and therefore, are, by definition,

“Excluded Contracts.” (Ex. 1 at Transition Services Agreement at Section 1.01(a) and Service

Exhibit.) The services and contracts listed in the Transition Services Agreement do not relate to

the Agreement.*

Second, and in addition to the schedule of Excluded Contracts, there is a document in the

APA titled the Assignment and Assumption Agreement. The Assignment and Assumption

Agreement provides, in pertinent part, that Ancora Education “hereby (i) purchases, acquires and

takes assignment and delivery of (subject to the terms of Section 2.6 of the Purchase Agreement)

each of the Purchased Contracts and (ii) assumes and agrees to be responsible for, timely pay

and discharge all of the Assumed Liabilities.” (Ex. 1, APA, at Assignment and Assumption

Agreement, { 1, emphasis added.) In other words, the Assignment and Assumption Agreement

4
The contracts referenced in the Services List to the Transition Services
Agreement are: (1) Software Subscription Agreement, effective July 22, 2013, between Delta
and Broadleaf Systems, LLC; (2) Professional Services Agreement, effective January 3, 2007,
between Delta and Campus Management Corp.; (3) Software License Agreement, effective
January 3, 2007, between Delta and Campus Management Corp.; (4) Google App. Enterprise via
Reseller Agreement, effective March 29, 2012, between Delta and Google, Inc.; (5) General
ledger and related financial reporting support services through Seller’s owned instance of Great
Plains 2010, as maintained from time-to-time on an individual project/invoice basis by Dynamic
Enterprise Solutions; (6) Agreement, effective April 8, 2011, between Delta and Customer Bank
d/b/a BankMobile Disbursements; and (7) Custom Service Agreement, effective September 10,
2012, between Delta and Sprint Solutions, Inc.
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within the APA, in addition to the language found in Section 2.2(a) of the APA, makes express

the parties’ intent to bind Ancora Education to make payment under the Purchased Contracts —

including the Agreement that is the subject of this collection action. The Ancora Defendants’

assumption of the Agreement, and the Agreement’s forum selection clause, gives the Court

personal jurisdiction over the Ancora Defendants.

B. In the Alternative, Ed Map Requests that this Court Amend its Judgment to
Include Civ.R. 54(B) Language.

If this Court declines the opportunity to reconsider its Decision, Ed Map respectfully

requests that the Court amend its judgment to include an express determination, pursuant to

Civ.R. 54(B), that there is no just reason for delay. When a court issues a final order that

dispenses of fewer than all the claims against fewer than all the parties, as the Court did here,

that final order is not appealable without an express determination from the court that there is no

just reason to delay. Civ.R. 54(B).

First, the Decision is a final order that affects Ed Map’s substantive rights. See R.C.

2502.02(B). Under Ohio law, if a court exercises, or declines to exercise, personal jurisdiction

over a defendant and the basis of its potential jurisdiction was a contractual right, /.e. a forum

selection clause, a court has affected a party’s substantive rights by declining to enforce the

terms of the contract, and thereby, rendered a final order. Nat’! City Commer. Capital Corp.,

2007-Ohio-2942 at {{] 8-10; Residential Fin. Corp., 2010-Ohio-1322 at JJ 12-14.

Because Ed Map’s remaining claims are against the bankrupt Delta Defendants, there is

no just cause for delay. Ed Map’s claims against the Delta Defendants are stayed indefinitely

due to the Delta Defendants’ Chapter 7 bankruptcy. (/n re: Delta Career Education

Corporation, et al., Case No. 18-33822-KLP, (E.D. Va. Jul. 27, 2018).) Thus, there is little to no

tisk that issues will be litigated at the trial level while the appeal is pending and that may be
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impacted by the decision in the appellate court. See Bell Drilling & Prod. Co. v. Kilbarger

Constr., 1997 Ohio App. LEXIS 2963, *10 (4th Dist. June 26, 1997). But the resolution of these

issues on appeal will impact Ed Map’s pursuit of its claims at the trial level. See Nat'l City

Commer. Capital Corp., 2007-Ohio-2942 at {J 8-10; Residential Fin. Corp., 2010-Ohio-1322 at

q§ 12-14. Thus, the “interests of sound judicial administration” would be served by a finding of

no just reason for delay. Winsintainer v. Elcen Power Strut Co., 67 Ohio St. 3d 352, 355 (1993).

Iv. CONCLUSION

For the foregoing reasons, Plaintiff Ed Map requests that this Court reconsider its

August 22, 2018 Decision dismissing the Amended Comploaint against the Ancora Defendants,

and that the Court now deny the Ancora Defendants’ Motion to Dismiss. If the Court declines to

reconsider its decision, Ed Map respectfully requests, in the alternative that the Court amend its

decision nunc pro tunc to include an express determination that there is no just reason to delay

Respectfully submitted

Attorneys for Plaintiff Ed Map, Inc.

10
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CERTIFICATE OF SERVICE

The undersigned certifies that on September 19, 2018, the foregoing was served via email

on the following

C. Craig Woods, Esq.
Andrew H. King, Esq
Michael T. Mullaly, Esq.
Squire Patton Boggs (US) LLP
2000 Huntington Center
41 South High Street
Columbus, Ohio 43125
Counsel for Defendants
STVT-AAI Education, Inc.
dba Ancora Education and
Ancora Intermediate Holdings LLC

/s/ Elizabeth L. Moyo
Elizabeth L. Moyo

DMs/11544163v.6
11

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Order: ED MAP INC Vs DELTA CAREER EDUCATION CORPORATION VS.DELTA CAREER EDUCATION CORPORATION ET AL

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