Windsor Realty & Mgt., Inc. v. Northeast Ohio Regional Sewer Dist.

[Cite as Windsor Realty & Mgt., Inc. v. Northeast Ohio Regional Sewer Dist., 2016-Ohio-4865.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 103635
WINDSOR REALTY AND MANAGEMENT, INC.
PLAINTIFF-APPELLEE
vs.
NORTHEAST OHIO REGIONAL SEWER DISTRICT, ET
AL.
DEFENDANTS-APPELLANTS
JUDGMENT:
DISMISSED IN PART; AFFIRMED IN PART;
REVERSED IN PART; REMANDED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-13-818605
BEFORE: E.A. Gallagher, P.J., Stewart, J. and Celebrezze, J.
RELEASED AND JOURNALIZED: July 7, 2016
ATTORNEYS FOR APPELLANTS CITY OF CLEVELAND
AND BARRY WITHERS
Barbara A. Langhenry
Director of Law
By: John Mills
Assistant Director of Law
City Hall, Room 106
601 Lakeside Avenue
Cleveland, Ohio 44114
ATTORNEYS FOR APPELLANT NORTHEAST OHIO REGIONAL SEWER
DISTRICT
Marlene Sundheimer
Chief Legal Officer and General Counsel
Katarina K. Waag
Assistant General Counsel
Northeast Ohio Regional Sewer District
3900 Euclid Avenue
Cleveland, Ohio 44115
ATTORNEYS FOR APPELLEE
Gary L. Lieberman
Darren Dowd
Gary L. Lieberman Co., L.P.A.
30195 Chagrin Blvd., Suite 300
Pepper Pike, Ohio 44124
EILEEN A. GALLAGHER, P.J.:
{¶1} Defendants-appellants the Northeast Ohio Regional Sewer District
(“NEORSD”), the city of Cleveland (the “city”) and Barry Withers (collectively,
“appellants”) appeal from an order of the trial court denying their motion to dismiss the
amended complaint of plaintiff-appellee Windsor Realty and Management, Inc.
(“Windsor”) pursuant to Civ.R. 12(B)(6). In its amended complaint, Windsor asserts
various claims against appellants based on alleged overcharges for water and sewer
services provided to Windsor, the city’s alleged negligent failure to detect an underground
water leak and appellants’ failure to honor a settlement agreement Windsor allegedly
negotiated with Withers to resolve the overcharges. For the reasons that follow, we
dismiss the appeal in part, affirm the trial court’s decision in part, reverse the trial court’s
decision in part, and remand the matter for further proceedings.
Factual and Procedural Background
{¶2} Windsor manages Pinecrest Apartments, a residential apartment complex
consisting of 87 apartment units, in Broadview Heights, Ohio (the “property”). At all
relevant times, the city (through its division of water) provided water service to the
property and NEORSD provided sewer service to the property. The city and NEORSD
invoiced Windsor on a quarterly basis for the water and sewer services provided to the
property.
{¶3} Beginning in April 2005, Windsor’s water and sewer bills for the property
increased significantly. At that time, a number of the apartment units were vacant and,
according to Windsor, there had been no increase in usage. Windsor contacted the city
and requested that it conduct an inspection of the property to determine if there was an
underground water leak. In May 2005, a city representative conducted an inspection of
the property and found no leak. Dissatisfied with the results of the city’s inspection,
Windsor retained its own inspector to conduct an independent inspection of the property.
Windsor’s inspector discovered an underground leak on the property that Windsor
claimed was missed at the city’s inspection. Windsor paid $4,000 to repair the leak.
{¶4} In September 2005, Windsor contacted the city, informed the city of the leak
and requested an adjustment to its account due to the leak and the city’s negligent
inspection. Windsor continued to pay the current water and sewer charges billed on its
account but did not pay the “delinquent balance,” which Windsor claimed was
attributable to the underground water leak and the city’s negligent inspection of the
property. No adjustment was made to its account balance. Windsor made numerous
follow up requests for an adjustment of its account balance to no avail.
{¶5} In January 2008, the city replaced the water meter at the property and
conducted a “take out read” and a “set read” of the meter. The March 2008 and June
2008 invoices for Windsor’s water usage totaled $21,940.58 and $24,505.06,
respectively. Windsor disputed these invoices, claiming they were inaccurate, because
they greatly exceeded the amounts of its prior invoices. According to Windsor, its
historical, average quarterly cost for water usage at the property — excluding the time
period of March 2005 through May 2005 — was $9,947.58.
{¶6} In response to Windsor’s complaints, in July 2008, the city conducted an
inspection of the water meter at the property. The invoice Windsor received for the
billing cycle following the July 2008 inspection was $8,834.25. Because this figure was
consistent with its normal usage, Windsor paid the invoice in full, but continued to
dispute the invoices from March and May 2005 as well as the invoices from March and
June 2008.
{¶7} The city did not respond to Windsor’s repeated requests to resolve the billing
dispute. Instead, the city sent delinquency notices and water shut off notices, including
notices to Windsor’s tenants, threatening to shut off the water supply if Windsor did not
pay the disputed sums in full. The city also denied Windsor’s request for a hearing
before the water review board.
{¶8} In July 2012, Windsor met with Withers, who was then the city’s Director of
Utilities, in an attempt to resolve the billing dispute. During the meeting, Windsor and
Withers agreed that the city would install a new water meter on the property and monitor
it for three billing cycles. At the end of the three billing cycles, the disputed invoices
from 2005 and 2008 would be adjusted based on the average of those three billing cycles.
In February 2013, the city installed a new water meter on the property and destroyed the
old meter. However, the city did not otherwise comply with the alleged settlement
agreement. Instead of adjusting the previously disputed invoices based on the next three
billing cycles, in December 2013 the city discontinued water service to the property.
{¶9} On December 12, 2013, Windsor filed a complaint against NEORSD and the
city for damages and injunctive relief along with a motion for preliminary injunction
seeking to compel the city and NEORSD to restore water and sewer service to the
property and to enjoin them from discontinuing or interrupting water or sewer service
while the action was pending. On December 13, 2013, the trial court granted Windsor’s
motion for preliminary injunction and entered an order enjoining the city and NEORSD
from “discontinuing, stopping, or interrupting water service” to the property. The order
was to remain in effect until the lawsuit was resolved. The court further ordered
Windsor to deposit $25,000 in escrow with the clerk of courts in lieu of bond. Windsor
deposited the required funds in escrow with the clerk of courts that same day.
{¶10} On February 23, 2015, Windsor filed an amended complaint (with leave of
court), adding Withers as a defendant. Windsor asserted claims of breach of contract,
negligence, negligent misrepresentation and negligent inspection against the city and
NEORSD related to their alleged overbilling of Windsor for water and/or sewer services
that were not provided to the property, the city’s alleged failure to exercise reasonable
care in inspecting the property for an underground water leak in 2005 and in
communicating information regarding the inspection and leak to Windsor and failure to
exercise reasonable care in setting and reading the water meter in 2008. Windsor also
asserted a claim for breach of settlement agreement and promissory estoppel against the
city and NEORSD and a claim of negligent misrepresentation against Withers based on
representations Withers allegedly made to Windsor during the July 2012 settlement
meeting, Windsor’s reliance on those representations and Windsor’s belief that the parties
had entered into a binding settlement agreement to resolve the disputed balances on
Windsor’s account. Windsor also asserted a spoliation of evidence claim against the city
and NEORSD alleging that the city and NEORSD had willfully destroyed the 2008 water
meter with knowledge that litigation related to the billing dispute was “probable.”
{¶11} On March 23, 2015, appellants filed a joint motion to dismiss the amended
complaint pursuant to Civ.R. 12(B)(6). Appellants argued that Windsor’s negligence
claims were barred by the applicable statute of limitations set forth in R.C. 2744.04(A)
and that “[i]ndependent of the statute of limitations,” they were immune from liability on
Windsor’s negligence claims and spoliation claim pursuant to R.C. 2744.02 and
2744.03(A)(6). Appellants also argued that Windsor’s claims for breach of contract and
breach of settlement agreement “fail[ed] as a matter of law” because Windsor did not
have a contract with appellants for water or sewer service and that no enforceable
settlement agreement existed under Ohio law. Appellants asserted that the city and
NEORSD do not provide water and sewer services to their customers “under contract,”
but rather, “by authority derived from Article XVIII, section 4 of the Ohio Constitution”
and “through the authority of R.C. § 6119 et seq.” and that under Ohio law, implied
contract theories of recovery do not apply to political subdivisions. Appellants further
argued that the city could only enter into a contract in accordance with its city charter and
that pursuant to the city charter no binding agreement exists unless and until the city’s law
director executes and delivers the agreement — which was not alleged to have occurred
here. Finally, appellants argued that Windsor’s amended complaint failed to state a
claim for promissory estoppel or injunctive relief because (1) there was no allegation in
the complaint that NEORSD participated in the settlement discussions or made any
representation to Windsor that it would adjust Windsor’s water bills, (2) Withers lacked
authority to bind the city to a settlement with Windsor and (3) Windsor could not
establish irreparable harm or other “essential requirements necessary for the [c]ourt to
grant an injunction.”
{¶12} Windsor opposed the motion. On September 15, 2015, the trial court
denied the motion to dismiss, reasoning that although “the statute of limitations began
when the wrongful act was committed,” “[t]he overbilling did not result in injury until the
services were disconnected.” The trial court also indicated that “the dispute at issue
involves proprietary governmental functions” and that “defendants had apparent authority
to enter into a binding settlement contract with plaintiff.”
{¶13} Appellants appealed the trial court’s ruling, raising the following seven
assignments of error for review:
Assignment of Error No. 1:
The Trial Court erred in failing to dismiss Appellee’s count for breach of
contract because Appellee does not have an implied contract for water
service with the City of Cleveland and does not have an implied contract for
water service with the Northeast Ohio Regional Sewer District.
Assignment of Error No. 2:
The Trial Court erred in failing to dismiss Appellee’s count for breach of
settlement because Appellee does not have an implied settlement agreement
with the City of Cleveland and NEORSD.
Assignment of Error No. 3:
The Trial Court erred in failing to dismiss Appellee’s count for spoliation of
evidence because all Appellants are immune from intentional torts under
R.C. 2744.02 and Appellee had not attempted to argue otherwise.
Assignment of Error No. 4:
The Trial Court erred in failing to dismiss Appellee’s counts for negligence
in favor of the City of Cleveland and NEORSD on the basis of the
sovereign immunity provided to the Appellants as political subdivisions by
Chapter 2744 of the Ohio Revised Code.
Assignment of Error No. 5:
The Trial Court erred in failing to dismiss tort and negligence counts
against Appellant Barry Withers because Withers is immune from
Appellee’s claims under R.C. 2744.03(A)(6) and Appellee failed to plead
otherwise.
Assignment of Error No. 6:
The Trial Court erred in failing to dismiss Appellee’s count for promissory
estoppel against the City and NEORSD because
A. the City’s Director of Public Utilities lacks the authority
under the City of Cleveland Charter to bind the City to an oral
agreement; and
B. NEORSD was not alleged to have participated in the
alleged conduct.
Assignment of Error No. 7:
The Trial Court erred in granting Appellant’s [sic] amended count for
injunctive relief without following the mandatory requirements of Civ.R.
65.
For ease of discussion, we address appellants’ assignments of error out of order and
together where appropriate.
Law and Analysis
{¶14} As an initial matter, we must first address this court’s jurisdiction to review
the assignments of error raised by appellants. An appellate court can review only final,
appealable orders. Without a final, appealable order, an appellate court has no
jurisdiction. See Hubbell v. Xenia, 115 Ohio St.3d 77, 2007-Ohio-4839, 873 N.E.2d 878,
¶ 9; Ohio Constitution, Article IV, Section 3(B)(2); R.C. 2501.02. An order denying a
motion to dismiss is generally not a final, appealable order. See, e.g., Maclin v.
Cleveland, 8th Dist. Cuyahoga No. 102417, 2015-Ohio-2956, ¶ 9; DiGiorgio v.
Cleveland, 196 Ohio App.3d 575, 2011-Ohio-5824, 964 N.E.2d 495, ¶ 4 (8th Dist.),
citing Polikoff v. Adam, 67 Ohio St.3d 100, 103, 616 N.E.2d 213 (1993). However, R.C.
2744.02(C) provides that “[a]n order that denies a political subdivision or an employee of
a political subdivision the benefit of an alleged immunity from liability as provided in this
chapter or any other provision of the law is a final order.” Thus, R.C. 2744.02(C) grants
appellate courts jurisdiction to review the denial of a motion to dismiss based upon
immunity. Hubbell at ¶ 27 (“[W]hen a trial court denies a motion in which a political
subdivision or its employee seeks immunity under R.C. Chapter 2744, that order denies
the benefit of an alleged immunity and thus is a final, appealable order pursuant to R.C.
2744.02(C).”); Maclin at ¶ 9 (“While ordinarily we do not have appellate jurisdiction over
the denial of a Civ.R. 12(B)(6) motion to dismiss because such orders are interlocutory in
nature, the denial of a motion to dismiss based on political subdivision immunity is a final
and appealable order subject to appellate court review.”); DiGiorgio at ¶ 11, 15 (trial
court’s order denying municipal defendants’ motion to dismiss is a final, appealable order
under R.C. 2744.02(C), even if the order does not explain the basis for the court’s
decision).
{¶15} Appellate review under R.C. 2744.02(C) is, however, limited to review of
alleged errors involving denial of “the benefit of an alleged immunity from liability”; it
does not authorize the appellate court to otherwise review the merits of a trial court’s
decision to deny a motion to dismiss. See, e.g., Owens v. Haynes, 9th Dist. Summit No.
27027, 2014-Ohio-1503, ¶ 8-9; see also Reinhold v. Univ. Hts., 8th Dist. Cuyahoga No.
100270, 2014-Ohio-1837, ¶ 21 (“An appeal from a denial of summary judgment based on
sovereign immunity is limited to the review of alleged errors in the portion of the trial
court’s decision that denied the political subdivision the benefit of immunity.”), citing
Riscatti v. Prime Properties Ltd. Partnership, 137 Ohio St.3d 123, 2013-Ohio-4530, 998
N.E.2d 437, ¶ 20; CAC Bldg. Properties, LLC v. Cleveland, 8th Dist. Cuyahoga No.
91991, 2009-Ohio-1786, ¶ 9, fn. 1 (appellate court had jurisdiction to review city’s appeal
only with respect to issues that were based on the trial court’s denial of summary
judgment on immunity grounds; other issues city raised on appeal with respect to the
denial of its summary judgment motion were not reviewable). Thus, when appealing a
denial of a motion to dismiss based on immunity under R.C. 2744.02(C), a party cannot
raise other alleged errors concerning the denial of its motion to dismiss that are based
upon other alleged defenses or pleading deficiencies. See, e.g., Riscatti at ¶ 20
(“Although our prior decisions have interpreted R.C. 2744.02(C) broadly in favor of early
appeal, they have always been tethered directly to the defense of immunity, not to other
defenses”); see also Owens at ¶ 8-9; Reinhold at ¶ 21; CAC Bldg. Properties at ¶ 9, fn. 1.
{¶16} In this case, appellants moved to dismiss only Windsor’s negligence and
spoliation claims on grounds of immunity. Appellants moved to dismiss the remaining
claims set forth in Windsor’s amended complaint — Windsor’s claims for breach of
contract, breach of settlement agreement, promissory estoppel and injunctive relief — on
other grounds. Thus, none of the errors alleged in appellants’ first, second, sixth and
seventh assignments of error involve the denial of “the benefit of an alleged immunity
from liability” under R.C. 2744.02(C).
{¶17} In their first and second assignment of errors, appellants argue that the trial
court erred in denying their motion to dismiss Windsor’s claims for breach of contract
and breach of settlement agreement because Windsor “does not have” an implied contract
or implied settlement agreement with the city or NEORSD. The immunity set forth in
R.C. Chapter 2744 does not apply to contract claims against a political subdivision. R.C.
2744.09(A) expressly provides: “This chapter does not apply to, and shall not be
construed to apply to * * * [c]ivil actions that seek to recover damages from a political
subdivision or any of its employees for contractual liability[.]” Therefore, based on the
plain language of R.C. Chapter 2744.09(A), appellants could not establish immunity
under R.C. Chapter 2744 on Windsor’s claims for breach of contract or breach of
settlement agreement. See Duncan v. Cuyahoga Community College, 2012-Ohio-1949,
970 N.E.2d 1092, ¶ 29 (8th Dist.) (denial of political subdivision’s motion for judgment
on pleadings on plaintiff’s breach of contract claim not final and appealable under R.C.
2744.02(C) and 2744.09(A)).
{¶18} In an attempt to circumvent this limitation, appellants argue that Windsor’s
contract claims are nothing more than “causes of action in negligence styled as
contractual,” pled to “avoid the implications” of R.C. Chapter 2744 and the statute of
limitations applicable to negligence claims and that, as such, we should disregard the
“label” given to Windsor’s contract claims and review them as negligence claims.
Appellants also assert that because (1) Windsor failed to attach a copy of any written
contract or settlement agreement to its amended complaint as required under Civ.R.
10(D)(1) 1 and (2) “no contracts exist for political subdivisions outside their statutory
procedures,” its claims for breach of contract and breach of settlement agreement must be
construed as claims for breach of an “implied contract,” which cannot be asserted against
a political subdivision as a matter of law.
{¶19} Appellants may be correct that, on the facts here, Windsor cannot establish,
as a matter of law, the existence of an enforceable contract for water service or an
enforceable settlement agreement. Appellants may also be correct that Windsor pled
contract claims in an attempt to avoid the bar of the statute of limitations that may
otherwise preclude its negligence claims. However, pursuant to R.C. 2744.02(C), we
have jurisdiction to consider only whether the trial court properly denied appellants’
motion to dismiss on immunity grounds, i.e., whether the trial court’s denial of
1
With respect to Windsor’s failure to attach a copy of its alleged contract with the city and NEORSD
for the treatment and supply of water to the property, the amended complaint states simply “[a] copy
of the contract is not available at this time.” The amended complaint is silent with respect to
whether a written settlement agreement existed.
appellants’ motion to dismiss denied appellants “the benefit of an alleged immunity from
liability” — not whether the trial court correctly concluded that the allegations of the
amended complaint were sufficient to state a claim for breach of contract as a matter of
law and not whether the trial court erred in concluding that Windsor’s claims were not
barred by the statute of limitations.2 See, e.g., Today & Tomorrow Heating & Cooling v.
Greenfield, 4th Dist. Highland No. 13CA14, 2014-Ohio-239, ¶14-17 (appellate court
lacked jurisdiction to consider the propriety of trial court’s denial of village’s motion for
summary judgment on the issue of whether plaintiffs’ claim for breach of contract stated a
claim for relief); Riscatti, 137 Ohio St.3d 123, 2013-Ohio-4530, 998 N.E.2d 437, at ¶
19-21 (denial of motion for judgment on the pleadings predicated on a
statute-of-limitations defense under R.C. 2744.04(A) does not deny the benefit of
immunity and is not a final, appealable order “even though it arose along with a political
subdivision’s immunity claim”; “the fact that a political subdivision is the party that raises
a statute-of-limitations defense does not change the general rule that the ruling on that
defense is not a final,appealable order”). The trial court’s alleged erroneous
determination that Windsor pled sufficient facts to support its contract claims does not
deny appellants the “benefit of an alleged immunity of liability.”
{¶20} Likewise, appellants’ sixth and seventh assignments of error do not involve
the trial court’s denial of the “benefit of an alleged immunity from liability.” In their
2
Thus, for the same reason, we lack jurisdiction to consider appellants’ argument, in their fourth
assignment of error, that Windsor’s negligence claims are barred by the applicable statute of
limitations.
sixth assignment of error, appellants argue that the trial court erred in failing to dismiss
Windsor’s promissory estoppel claim because (1) Withers lacked authority to bind the city
to a settlement agreement, (2) NEORSD was not alleged to have participated in the
settlement discussions and (3) Windsor’s reliance was unreasonable as a matter of law.
In their seventh assignment of error, appellants argue that the trial court erred in denying
their motion to dismiss Windsor’s claim for injunctive relief and in granting Windsor’s
“amended count for injunctive relief” without complying with Civ.R. 65. 3 These
assignments of error are based upon alleged defenses that are unrelated to immunity and
the trial court’s denial of appellants’ motion to dismiss those claims is not otherwise a
final, appealable order.
{¶21} Accordingly, this court lacks jurisdiction to consider appellants’ first,
second, sixth and seventh assignments of error. Appellants’ appeal is dismissed to the
extent we lack jurisdiction to consider it.
Political Subdivision Immunity
{¶22} In their third, fourth and fifth assignments of error, appellants contend that
the trial court erred in denying their Civ.R. 12(B)(6) motion to dismiss because they are
3
There is nothing in the record to support appellants’ contention that the trial court “granted”
Windsor’s “amended count for injunctive relief” without complying with Civ.R. 65. Rather, the
record reflects that the trial court granted Windsor’s motion for preliminary injunction at the time it
filed its original complaint, enjoining the city and NEORSD from “discontinuing, stopping, or
interrupting water service” to the property, and indicating that the order would remain in effect until
the lawsuit was resolved. In any event, because this assignment of error does not involve the denial
of the benefit of immunity from liability or a ruling that is otherwise the subject of a final, appealable
order, we lack jurisdiction to consider it.
immune from liability on Windsor’s spoliation and negligence claims pursuant to R.C.
Chapter 2744.
Standard of Review
{¶23} A Civ.R. 12(B)(6) motion to dismiss for failure to state a claim tests the
sufficiency of the complaint. Antoon v. Cleveland Clinic Found., 8th Dist. Cuyahoga
No. 101373, 2015-Ohio-421, ¶ 7. In deciding whether a complaint should be dismissed
pursuant to Civ.R. 12(B)(6), the court’s review is limited to the four corners of the
complaint along with any documents properly attached to or incorporated within the
complaint. High St. Properties L.L.C. v. Cleveland, 8th Dist. Cuyahoga No. 101585,
2015-Ohio-1451, ¶ 17, citing Glazer v. Chase Home Fin. L.L.C., 8th Dist. Cuyahoga Nos.
99875 and 99736, 2013-Ohio-5589, ¶ 38. The court accepts as true all the material
factual allegations of the complaint and construes all reasonable inferences to be drawn
from those facts in favor of the nonmoving party. Fahnbulleh v. Strahan, 73 Ohio St.3d
666, 667, 653 N.E.2d 1186 (1995); Brown v. Carlton Harley-Davidson, Inc., 8th Dist.
Cuyahoga No. 99761, 2013-Ohio-4047, ¶ 12, citing Garofalo v. Chicago Title Ins. Co.,
104 Ohio App.3d 95, 104, 661 N.E.2d 218 (8th Dist.1995). To prevail on a Civ.R.
12(B)(6) motion, it must appear beyond doubt from the complaint that the plaintiff can
prove no set of facts entitling the plaintiff to relief. O’Brien v. Univ. Community Tenants
Union, Inc., 42 Ohio St.2d 242, 327 N.E.2d 753 (1975), syllabus. If there is “‘a set of
facts, consistent with the plaintiff’s complaint, which would allow the plaintiff to recover,
the court may not grant a defendant’s motion to dismiss.’” High St. Properties at ¶ 16,
quoting York v. Ohio State Hwy. Patrol, 60 Ohio St.3d 143, 145, 573 N.E.2d 1063(1991). “‘A court cannot dismiss a complaint under Civ.R. 12(B)(6) merely because it
doubts the plaintiff will prevail.’” Bono v. McCutcheon, 159 Ohio App.3d 571,
2005-Ohio-299, 824 N.E.2d 1013, ¶ 8 (2d Dist.), quoting Leichtman v. WLW Jacor
Communications, Inc., 92 Ohio App.3d 232, 234, 634 N.E.2d 697 (1st Dist. 1994).
{¶24} An appellate court conducts a de novo review of a trial court’s ruling on a
Civ.R. 12(B)(6) motion to dismiss. Perrysburg Twp. v. Rossford, 103 Ohio St.3d 79,
2004-Ohio-4362, 814 N.E.2d 44, ¶ 5, citing Cincinnati v. Beretta U.S.A. Corp., 95 Ohio
St.3d 416, 768 N.E.2d 1136 (2002). Under this standard of review, the appellate court
must undertake an independent analysis without deference to the lower court’s decision.
Hendrickson v. Haven Place, Inc., 8th Dist. Cuyahoga No. 100816, 2014-Ohio-3726,
¶ 12.
{¶25} Ohio’s Political Subdivision Tort Liability Act, codified in R.C. Chapter
2744, absolves political subdivisions and their employees of tort liability, subject to
certain exceptions. Whether a political subdivision or an employee of a political
subdivision is entitled to statutory immunity under Chapter 2744 is a question of law for
determination by the court. See, e.g., Srokowski v. Shay, 8th Dist. Cuyahoga No.
100739, 2014-Ohio-3145, ¶ 11, citing Conley v. Shearer, 64 Ohio St.3d 284, 291, 595
N.E.2d 862 (1992), and Feitshans v. Darke Cty., 116 Ohio App.3d 14, 19, 686 N.E.2d
536 (2d Dist.1996).
{¶26} To determine whether a political subdivision is entitled to immunity from
civil liability under R.C. Chapter 2744, a reviewing court must conduct a three-tiered
analysis. Hortman v. Miamisburg, 110 Ohio St.3d 194, 2006-Ohio-4251, 852 N.E.2d
716, ¶ 9, citing Cater v. Cleveland, 83 Ohio St.3d 24, 28, 697 N.E.2d 610 (1998). The
first tier is the general rule that a “political subdivision” is not liable “in damages in a
civil action for injury, death, or loss to person or property allegedly caused by any act or
omission of the political subdivision or an employee of the political subdivision in
connection with a governmental or proprietary function.” R.C. 2744.02(A)(1); Hortman
at ¶ 10-11. If the political subdivision is entitled to immunity under R.C. 2744.02(A)(1),
then the court must determine, under the second tier of the analysis, whether any of the
five exceptions to immunity set forth in R.C. 2744.02(B) applies.4 Hortman at ¶ 10-11.
If an exception to immunity applies, then a third tier of analysis is performed to determine
whether the political subdivision can establish one of the statutory defenses to liability set
forth in R.C. 2744.03 to reinstate immunity. Hortman at ¶ 12.
{¶27} In this case, the parties do not dispute that both the city and NEORSD are
“political subdivisions” entitled to the general grant of immunity under R.C.
2744.02(A)(1). See R.C. 2744.01(F) (definition of political subdivision). There is
4
The exceptions to immunity recognized under R.C. 2744.02(B) involve the
negligent operation of a motor vehicle by an employee; negligent performance of
acts by an employee with respect to proprietary functions of the political
subdivision; negligent failure to keep public roads in repair and other negligent
failure to remove obstructions from public roads; negligence of an employee relating
to a physical defect in a building used in connection with the performance of a
governmental function; and/or liability imposed by another section of the Revised
Code.
likewise no dispute that Windsor, with its amended complaint, seeks to recover damages
for losses allegedly caused by an act or omission of the political subdivision or its
employees “in connection with a governmental or proprietary function.” Pursuant to
R.C. 2744.01(G)(2)(c)-(d), a “proprietary function” includes “[t]he establishment,
maintenance, and operation of a * * * water supply system” and “[t]he maintenance,
destruction, operation, and upkeep of a sewer system.” Thus, unless an exception to
immunity applies, Windsor’s tort claims against the city and NEORSD would be barred
under R.C. 2744.02(A)(1).
{¶28} Windsor asserts that both its spoliation and negligence claims fall within the
exception to immunity set forth at R.C. 2744.02(B)(2). Under R.C. 2744.02(B)(2), a
political subdivision is liable for “injury, death, or loss to person or property caused by
the negligent performance of acts by their employees with respect to proprietary functions
of the political subdivisions.”
Windsor’s Spoliation Claim Against the City and NEORSD
{¶29} As to its spoliation claim against the city and NEORSD, Windsor alleges
that the city and NEORSD willfully destroyed the water meter that was used to overbill
Windsor in 2008 in order “to disrupt Plaintiff from proving its case.” Under Ohio law,
spoliation is an intentional tort. See, e.g., Smith v. Howard Johnson Co., Inc., 67 Ohio
St.3d 28, 29, 615 N.E.2d 1037 (1993) (identifying the elements of a spoliation claim as
“(1) pending or probable litigation involving the plaintiff, (2) knowledge on the part of
defendant that litigation exists or is probable, (3) willful destruction of evidence by
defendant designed to disrupt the plaintiff’s case, (4) disruption of the plaintiff’s case,
and (5) damages proximately caused by the defendant’s acts”) (emphasis added.).
Negligent conduct does not give rise to a cause of action for spoliation. See, e.g., Fifth
Third Bank v. Gen. Bag Corp., 8th Dist. Cuyahoga No. 92793, 2010-Ohio-2086, ¶ 42
(“‘Ohio does not recognize a cause of action for negligent spoliation of evidence.’”),
quoting White v. Ford Motor Co., 142 Ohio App.3d 384, 388, 755 N.E.2d 954 (10th Dist.
2001); Wheatley v. Marietta College., 4th Dist. Washington No. 14CA18,
2016-Ohio-949, ¶ 109 (“[A] plaintiff who alleges that a defendant spoliated evidence
must show that the defendant acted willfully so as to disrupt the plaintiff’s case. The term
‘willful,’ as used in ‘willful destruction of evidence by defendant designed to disrupt the
plaintiff’s case,’ ‘necessarily contemplates more than mere negligence or failure to
conform to standards of practice, but instead anticipates an intentional, wrongful act.’”),
quoting White at 387-388; see also Heimberger v. Zeal Hotel Group, Ltd.,
2015-Ohio-3845, 42 N.E.3d 323, ¶ 37 (10th Dist.). Accordingly, Windsor’s spoliation
claim does not fall within the exception to immunity stated in R.C. 2744.02(B)(2).
{¶30} Nor does it fall within any other exception to immunity under R.C.
2744.02(B). See, e.g., O’Brien v. Olmsted Falls, 8th Dist. Cuyahoga Nos. 89966 and
90336, 2008-Ohio-2658, ¶ 39 (trial court properly granted summary judgment on
plaintiff’s spoliation claim against city because city is immune from intentional torts
under R.C. 2744.02); R.K. v. Little Miami Golf Ctr., 2013-Ohio-4939, 1 N.E.3d 833, ¶ 2,
49 (1st Dist.) (where child sustained injuries from a falling tree limb on golf course
operated by the park district, park district was immune from liability on spoliation claim
alleging that park district altered, destroyed, and removed the tree and fallen branches;
physical-defect exception to immunity under R.C. 2744.02(B)(4) does not apply to
intentional torts, leaving the general grant of immunity under R.C. 2744.02(A)(1) intact).
Accordingly, we find the trial court erred as a matter of law in concluding that statutory
immunity did not bar Windsor’s spoliation claim. Appellants’ third assignment of error
is sustained.
Windsor’s Negligence Claims Against the City and NEORSD
{¶31} In their fourth assignment of error, appellants argue that the trial court erred
in denying their motion to dismiss Windsor’s negligence claims against the city and
NEORSD on statutory immunity grounds. In their motion to dismiss, appellants
indicated that they had “no reason to dispute the operation of a municipal water/sewer
system is a recognized proprietary function” and proceeded to argue that one or more
defenses to liability set forth in R.C. 2744.03(A)(3) and/or (5) applied to reinstate
immunity. They take a different approach on appeal arguing, for the first time, that
Windsor’s negligence claims arise out of two city “inspections” of the property in 2005
and 2008, which they contend are a “governmental function” under R.C.
2744.01(C)(2)(p) — rather than a “proprietary function” under R.C. 2744.01(G)(2)(c)-(d)
— and that the exception set forth in R.C. 2744.02(B)(2) applicable to negligent acts by
employees in the performance of proprietary functions, therefore, does not apply.
{¶32} R.C. 2744.01(C)(2)(p) provides:
A “governmental function” includes, but is not limited to * * * [t]he
provision or nonprovision of inspection services of all types, including, but
not limited to, inspections in connection with building, zoning, sanitation,
fire, plumbing, and electrical codes, and the taking of actions in connection
with those types of codes, including, but not limited to, the approval of
plans for the construction of buildings or structures and the issuance or
revocation of building permits or stop work orders in connection with
buildings or structures[.]
{¶33} It is, however, well established that a party cannot raise arguments and
issues for the first time on appeal that it failed to raise before the trial court. See, e.g.,
Mosley v. Cuyahoga Cty. Bd. of Mental Retardation, 8th Dist. Cuyahoga No. 96070,
2011-Ohio-3072, ¶ 55, citing Dolan v. Dolan, 11th Dist. Trumbull Nos. 2000-T-0154 and
2001-T-0003, 2002-Ohio-2440, ¶ 7, citing Stores Realty Co. v. Cleveland, 41 Ohio St.2d
41, 322 N.E.2d 629 (1975); Home Bank, F.S.B. v. Papadelis, 8th Dist. Cuyahoga Nos.
87527, 87528, 87529 and 87530, 2006-Ohio-5453, ¶ 32. Accordingly, we need not
address appellants’ “governmental function” argument here.
{¶34} Even if, however, we were to consider the merits of appellants’
“governmental function” argument, we would find no error by the trial court in denying
appellants’ motion to dismiss Windsor’s negligence claims against the city and NEORSD
because we would find that Windsor’s claims involved the alleged negligent performance
of a proprietary function. Citing Klein v. Sloger, 7th Dist. Columbiana No. 90-C-19,
1991 Ohio App. LEXIS 2455 (May 24, 1991), and Gates-Hewlett v. Cleveland, 8th Dist.
Cuyahoga No. 78863, 2001 Ohio App. LEXIS 3734 (Aug. 23, 2001), Coleman v.
Degray, 8th Dist. Cuyahoga No. 76934, 2000 Ohio App. LEXIS 5716 (Dec. 7, 2000),
appellants argue that “all inspections” performed by a political subdivision are a
governmental function for which the political subdivision is immune from negligence,
regardless of the purpose or context of the inspection. In Klein, the Seventh District
held that the inspection of water and sewage systems by the Columbiana County
Department of Health, which a potential home buyer had requested in connection with his
purchase of a residence, was a governmental function because “it was a function imposed
upon the state as an obligation of sovereignty and performed by appellee health
department pursuant to legislative requirement, namely, R.C. 3701.56 (requiring local
boards of health to enforce the Ohio Sanitary Code) and R.C. 3707.01 (providing for local
boards of health to regulate the location, construction and repair of water closets, privies,
cesspools, sinks, plumbing and drains).” Klein, 1991 Ohio App. LEXIS 2455 at *4-5.
Gates-Hewlett involved an alleged faulty residential housing inspection by a city painting
inspector, 2001 Ohio App. LEXIS 3734 at *3, 9-13, and in Coleman this court held that a
city’s inspection and approval of a residential contractor’s work in connection with a
low-interest loan program was a governmental function where the city could issue a stop
work order if the work was not up to code. Coleman, 2000 Ohio App. LEXIS 5716, at
*2-6. However, unlike the inspections at issue in those cases, the two alleged
“inspections” referenced in Windsor’s amended complaint — the 2005 “inspection” of
the property to determine if there was an underground water leak or the July 2008
“inspection” of the water meter to make sure it was operating properly — were directly
related to appellants’ operation, maintenance and upkeep of the water supply and sewer
systems and were performed to ensure that Windsor was being billed for only water and
sewer services appellants actually used by Windsor.
{¶35} Simply because Windsor described certain of its negligence claims against
the city and NEORSD as claims for “negligent inspection” in its amended complaint does
not compel the conclusion that the claims involve the “provision or nonprovision of
inspection services” that are a governmental function under R.C. 2744.01(C)(2)(p).
(Emphasis added.) As the Ninth District explained in Kendle v. Summit Cty., 9th Dist.
Summit No. 15268, 1992 Ohio App. LEXIS 2005 (Apr. 15, 1992), appellants have taken
the “inspection” language in R.C. 2744.01(C)(2)(p) “out of context”:
This statute refers to inspection services a political subdivision may or may
not choose to provide to the public and any liability based thereon. * * *
It does not encompass the obligation of a political subdivision to inspect the
operation of its own proprietary functions. If we were to accept the
County’s position, political subdivisions might avoid liability by deciding to
forego inspection of their proprietary functions. They could put blinders
on, ignoring dangers which a reasonable inspection would have revealed.
Clearly the operation of a sewer system includes a duty to use due diligence
to inspect for defects. Accordingly the County is chargeable with
knowledge of what a reasonable inspection would have revealed. See
Restatement of the Law 2d, Torts (1965), 44, Section 289, Comment.
Kendle at *5-6; see also Riscatti v. Prime Properties Ltd. Partnership, 8th Dist. Cuyahoga
No. 97254, 2012-Ohio-2941, ¶ 30 (for purposes of sovereign immunity, “[a] complaint is
properly characterized as a maintenance, operation, or upkeep issue,” i.e., relating to the
performance of a proprietary as opposed to a governmental function, “when ‘remedying
the sewer problem would involve little discretion but, instead, would be a matter of
routine maintenance, inspection, repair, removal of obstructions, or general repair of
deterioration’”) (emphasis added), quoting Essman v. Portsmouth, 4th Dist. Scioto No.
09CA3325, 2010-Ohio-4837, ¶ 32; see also Martin v. Gahanna, 10th Dist. Franklin No.
06AP-1175, 2007-Ohio-2651, ¶ 17 (“need to inspect and replace missing components
necessary for the safe operation of the storm water system clearly falls within the
definition of maintenance or upkeep of a sewer system”) (emphasis added).
{¶36} Appellants also argue that the trial court erred in denying their motion to
dismiss Windsor’s negligence claims against the city and NEORSD on immunity grounds
because Windsor did not specifically allege in its amended complaint that the city or
NEORSD “acted with negligence in the performance of a proprietary function”; rather,
its amended complaint “is predicated in [sic] simple negligence only.” (Emphasis
added.) Appellants contend that “in the absence of specific allegations” in the amended
complaint that one of the five exceptions to immunity applies, appellants must be deemed
to be immune from liability from Windsor’s claims under the general grant of immunity
in R.C. 2744.02(A)(1). Finally, appellants argue that the trial court erred in denying
appellants’ motion to dismiss Windsor’s negligence claims against the city and NEORSD
because even if the exception to immunity in R.C. 2744.02(B)(2) applies, immunity was
reinstated based on the defense to liability set forth at R.C. 2744.03(A)(5). 5 We
disagree.
{¶37} As this court previously explained, in addressing a plaintiff’s burden on a
Civ.R. 12(B)(6) motion based on political subdivision immunity:
“In Ohio, a notice-pleading state, the plaintiff need not prove his or her case
at the pleading stage. * * * Thus, a plaintiff need not affirmatively dispose
of the immunity question altogether at the pleading stage. * * * Requiring a
plaintiff to affirmatively demonstrate an exception to immunity at this stage
would be tantamount to requiring the plaintiff to overcome a motion for
summary judgment at the pleading stage. * * * Instead, a plaintiff must
merely allege a set of facts that, if proven, would plausibly allow for
recovery.”
Srokowski v. Shay, 8th Dist. Cuyahoga No. 100739, 2014-Ohio-3145, ¶ 14, quoting Scott
v. Columbus Dept. of Pub. Utils., 192 Ohio App.3d 465, 2011-Ohio-677, 949 N.E.2d 552,
5
R.C. 2744.03(A)(5) provides:
The political subdivision is immune from liability if the injury, death, or loss to person or property
resulted from the exercise of judgment or discretion in determining whether to acquire, or how to use,
equipment, supplies, materials, personnel, facilities, and other resources unless the judgment or
discretion was exercised with malicious purpose, in bad faith, or in a wanton or reckless manner.
Construing the allegations of the amended complaint in the light most favorable to Windsor, there is
nothing in the amended complaint that compels the conclusion that Windsor’s alleged harm was
attributable to “the exercise of judgment or discretion in determining whether to acquire, or how to
use, equipment, supplies, materials, personnel, facilities, and other resources.”
¶ 8 (10th Dist.). Thus, Windsor was not required to prove the applicability of an
exception to immunity or to disprove the applicability of a claimed defense to an
exception to immunity to avoid the dismissal of its amended complaint.
{¶38} At this stage of the proceedings, our analysis is limited to the facts alleged in
the amended complaint. Construing all material allegations in the amended complaint
(along with all reasonable inferences that could be drawn therefrom) in favor of Windsor,
we cannot state that there is no set of facts consistent with the complaint that would allow
Windsor to prove an exception to immunity from liability on its negligence claims against
the city and NEORSD or that a defense to liability would necessarily apply to reinstate
immunity even if Windsor were successful in establishing an exception to immunity
under R.C. 2744.02(B)(2). Therefore, the trial court did not err in denying appellants’
motion to dismiss Windsor’s negligence claims against the city and NEORSD on
immunity grounds. See, e.g., McKee v. Univ. Circle, Inc., 8th Dist. Cuyahoga No.
102068, 2015-Ohio-2953 (trial court did not err in denying motion to dismiss on grounds
of political subdivision immunity where it was “not clear beyond dispute that [defendant]
is a political subdivision entitled to immunity” and based on the allegations in his
complaint, plaintiff met his “burden of merely alleging a set of facts that, if proven, would
plausibly allow for recovery”).
{¶39} Appellants’ fourth assignment of error is overruled.
Windsor’s Negligent Misrepresentation Claim Against Withers
{¶40} In their fifth assignment of error, appellants contend that the trial court erred
in denying their motion to dismiss the negligence misrepresentation claim against Withers
because he is immune from liability under R.C. 2744.03(A)(6). The immunity granted to
political subdivisions under R.C. Chapter 2744 “is extended, with three exceptions, to
employees of the political subdivisions under R.C. 2744.03(A)(6).” O’Toole v. Denihan,
118 Ohio St.3d 374, 2008-Ohio-2574, 889 N.E.2d 505, ¶47. However, the immunity
analysis applied to claims against an employee of a political subdivision differs from that
applied in determining the immunity of the political subdivision itself. Instead of the
three-tiered analysis applied in determining whether a political subdivision is immune
from liability, whether an employee of a political subdivision is immune from liability is
determined by applying R.C. 2744.03(A)(6). Cramer v. Auglaize Acres, 113 Ohio St.3d
266, 2007-Ohio-1946, 865 N.E.2d 9, ¶17. Under R.C. 2744.03(A)(6), an employee of a
political subdivision is immune from liability, unless one of the following applies:
(a) The employee’s acts or omissions were manifestly outside of the scope
of the employee’s employment or official responsibilities;
(b) The employee’s acts or omissions were with malicious purpose, in bad
faith, or in a wanton or reckless manner;
(c) Civil liability is expressly imposed upon the employee by a section of the
Revised Code. * * *
{¶41} Windsor’s amended complaint alleges that Withers was acting within “the
course and scope of his employment as [the city’s] Director of Utilities” at the time of his
actions and does not allege that civil liability was imposed on Withers by any section of
the Ohio Revised Code. Therefore, neither subsection (a) nor (c) applies to Windsor’s
claim against Withers and Withers is immune from liability for simple negligence. In
order for Withers to be liable to Windsor, Windsor would have to show that Withers
committed the actions (or omissions) that allegedly caused harm to Windsor “with
malicious purpose, in bad faith, or in a wanton or reckless manner.” R.C.
2744.03(A)(6)(b). Assuming all the facts pled in the amended complaint as true, there is
nothing in the amended complaint that could support a finding that Withers acted or failed
to act “with malicious purpose, in bad faith, or in a wanton or reckless manner.” In
support of its claim for negligent misrepresentation against Withers, Windsor alleges that
Withers “provided false information or representations in the guidance of how to resolve
a business dispute” between the parties and “failed to exercise reasonable care in
communicating such false information or representations.” Such allegations, if true,
could support only a finding of ordinary negligence. Because Withers was otherwise
immune from liability for negligence under 2744.03(A)(6), the trial court erred in denying
appellants’ motion to dismiss Windsor’s negligent misrepresentation claim against
Withers. Appellants’ fifth assignment of error has merit and is sustained.
{¶42} The trial court’s denial of appellants’ Civ.R. 12(B)(6) motion to dismiss is
affirmed as to Windsor’s negligence claims against the city and NEORSD. The trial
court’s denial of appellants’ motion to dismiss is reversed as to Windsor’s negligent
misrepresentation claim against Withers and its spoliation claim against the city and
NEORSD. The remainder of this appeal is dismissed because this court lacks
jurisdiction to consider it. The matter is remanded for further proceedings consistent with
this opinion.
{¶43} Appeal dismissed in part; judgment affirmed in part; judgment reversed in
part; remanded.
It is ordered that appellee and appellants share the costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate be sent to the Cuyahoga County Court of
Common Pleas 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 A. GALLAGHER, PRESIDING JUDGE
MELODY J. STEWART, J., and
FRANK D. CELEBREZZE, JR., J., CONCUR