State ex rel. Countryside Investors, L.L.C. v. Carroll Cty. Bd. of Commrs.

[Cite as State ex rel. Countryside Investors, L.L.C. v. Carroll Cty. Bd. of Commrs., 2015-Ohio-4344.]
STATE OF OHIO, CARROLL COUNTY
IN THE COURT OF APPEALS
SEVENTH DISTRICT
STATE OF OHIO ex rel. ) CASE NO. 13 CA 885
COUNTRYSIDE INVESTORS, LLC, )
et al. )
)
PLAINTIFFS-APPELLANTS )
)
VS. ) OPINION
)
BOARD OF COMMISSIONERS OF )
CARROLL COUNTY, OHIO, et al. )
)
DEFENDANTS-APPELLEES )
CHARACTER OF PROCEEDINGS: Civil Appeal from the Court of Common
Pleas of Carroll County, Ohio
Case No. 2012 CVH 27300
JUDGMENT: Affirmed.
JUDGES:
Hon. Cheryl L. Waite
Hon. Gene Donofrio
Hon. Carol Ann Robb
Dated: October 13, 2015
[Cite as State ex rel. Countryside Investors, L.L.C. v. Carroll Cty. Bd. of Commrs., 2015-Ohio-4344.]
APPEARANCES:
For Plaintiffs-Appellants Atty. Daniel E. Clevenger
Countryside Investors, LLC and Atty. Kristen Moore
Donald and Robin Warner: Day Ketterer Ltd.
Millennium Centre-Suite 300
200 Market Avenue North
Canton, Ohio 44701-4213
For Defendant-Appellee Atty. Donald R. Burns, Jr.
Board of Commissioners Carroll County Prosecutor
of Carroll County, Ohio: Atty. Steven D. Barnett
Assistant Prosecuting Attorney
11 East Main Street
Carrollton, Ohio 44615
For Defendant-Appellee Atty. Ronald W. Dougherty
Radius Hospitality Management, LLC: Atty. Kristen L. Fitchko
Krugliak, Wilkins, Griffiths
& Dougherty Co., L.P.A.
4775 Munson Street, N.W.1
P.O. Box 36963
Canton, Ohio 44735-6963
For Defendant-Appellee Atty. J. Kevin Lundholm
Muskingum Watershed Conservancy District: Atty. Jonathan C. Mizer
Kyler, Pringle, Lundholm
& Durmann
A Legal Professional Association
405 Chauncey Ave. N.W.
New Philadelphia, Ohio 44663
[Cite as State ex rel. Countryside Investors, L.L.C. v. Carroll Cty. Bd. of Commrs., 2015-Ohio-4344.]
WAITE, J.
{¶1} In this taxpayer action, Appellants Countryside Investors, LLC and
Donald and Robin Warner appeal a January 4, 2013 Carroll County Common Pleas
Court judgment entry granting summary judgment to Appellees Board of
Commissioners of Carroll County, Ohio (“Carroll County”), Muskingum Watershed
Conservancy District (“MWCD”), and Radius Hospitality Management, LLC
(“Radius”). Appellants claim that Carroll County lacked statutory authority to enter
into an agreement with MWCD allowing the county to own and operate Atwood Lake
Resort (“Atwood”). Further, Appellants argue that a related contract between Carroll
County and Radius for Atwood’s management is illegal and void ab initio, as it
contained oppressive indemnification provisions that do not comport with R.C.
5705.41(D)(1). For the reasoning provided below, Appellants’ arguments are without
merit and the judgment of the trial court is affirmed.
Factual and Procedural History
{¶2} The Atwood property in question involves a hotel with restaurant and
pool facilities, a conference center, campground and golf course. MWCD owned and
operated Atwood from 1965 until 2012. During that time period, Atwood operated at
a deficit and lost a significant amount of money. As a result, MWCD donated Atwood
to Carroll County in January of 2012. The parties entered into a donation agreement
where MWCD agreed to donate Atwood and the mineral rights associated with the
property so long as Carroll County continued to operate the golf course, hotel, and
other facilities.
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{¶3} Shortly thereafter, Carroll County entered into a lease with Radius. The
lease stated, in relevant portion, that Radius would operate the hotel in exchange for
nominal rent. Carroll County agreed to pay the costs to renovate and update
Atwood. Carroll County further agreed to allow Radius to opt out of the contract if it
did not make at least $5,000 profit per month before the renovations, and at least
$10,000 per month following renovation. Additionally, the contract included two
indemnity provisions: one for any cause of action arising out of the county’s actions
and a second provision related to the payment for the renovation and reopening of
Atwood. Finally, Carroll County agreed to pay the expenses associated with
reopening the property.
{¶4} Taxpayer Appellants, who are the owners of Countryside Investors,
own a hotel in Carroll County which competes with Atwood. Appellants initiated legal
action by serving the Carroll County Prosecutor with a letter requesting that the
prosecutor’s office intervene and prevent the county from spending public funds on
Atwood. The prosecutor’s office did not respond. Appellants then sought a
preliminary injunction to prohibit Carroll County from operating Atwood. The action
was unsuccessful and Appellants appealed to this Court, however, it was voluntarily
dismissed. Appellants then brought a taxpayer’s action in the trial court challenging
Carroll County’s ability to own and operate Atwood. MWCD filed a motion for
summary judgment, which the trial court granted. Appellants have now filed a timely
appeal from this ruling by the trial court.
Summary Judgment
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{¶5} An appellate court reviews a trial court’s decision to grant summary
judgment de novo using the same standards as the trial court, in accordance with
Civ.R. 56(C). Campbell Oil Co. v. Shepperson, 7th Dist. No. 05-CA-817, 2006-Ohio-
1763, ¶8, citing Grafton v. Ohio Edison Co., 77 Ohio St. 3d 102, 105, 671 N.E.2d 241
(1996).
{¶6} When ruling on a motion for summary judgment, the trial court must
look at all facts in the light most favorable to the non-moving party and find that: “(1)
no genuine issue as to any material fact remains to be litigated; (2) the moving party
is entitled to judgment as a matter of law; and (3) it appears from the evidence that
reasonable minds can come to but one conclusion, and viewing the evidence most
favorably in favor of the party against whom the motion for summary judgment is
made, the conclusion is adverse to that party.” Campbell Oil Co. at ¶8, citing Temple
v. Wean United, Inc., 50 Ohio St. 2d 317, 327, 364 N.E.2d 267 (1977).
{¶7} In moving for summary judgment, “the moving party bears the initial
responsibility of informing the trial court of the basis for the motion, and identifying
those portions of the record which demonstrate the absence of a genuine issue of
fact on a material element of the nonmoving party's claim.” (Emphasis deleted.)
Campbell Oil Co. at ¶9, citing Dresher v. Burt, 75 Ohio St. 3d 280, 296, 662 N.E.2d
264 (1996). In response, the non-moving party must set forth specific facts showing
that there is a genuine issue of fact for trial and that a reasonable factfinder could
rule in that party’s favor. Brewer v. Cleveland Bd. of Edn., 122 Ohio App. 3d 378,
386, 701 N.E.2d 1023 (8th Dist.1997).
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FIRST ASSIGNMENT OF ERROR
THE TRIAL COURT ERRED IN HOLDING THAT R.C. 307.02 GRANTS
POWER TO A POLITICAL SUBDIVISION TO EXPEND TAXPAYER
FUNDS TO OWN AND OPERATE A MULTI-MILLION DOLLAR
VACATION RESORT.
{¶8} In relevant part, R.C. 307.02 provides that a board of county
commissions may either purchase, lease, construct, or build the following facilities:
[A] courthouse, county offices, jail, county home, juvenile court building,
detention facility, public market houses, retail store rooms and offices, if
located in a building acquired to house county offices, for which store
rooms or offices the board of county commissioners may establish and
collect rents or enter into leases as provided in section 307.09 of the
Revised Code, county children's home, community mental health
facility, community mental retardation or developmental disability
facility, facilities for senior citizens, alcohol treatment and control center,
other necessary buildings, public stadiums, public auditorium, exhibition
hall, zoological park, public library buildings, golf courses * * *.
{¶9} As a county is only permitted to act in a manner authorized by statute,
Appellants assert that Carroll County may only own and operate Atwood if expressly
authorized by a statute. Although the theory of ejusdem generis was used to expand
the categories found in R.C. 307.02, Appellants argue that an application of ejusdem
generis must be limited, as it is a mechanism meant to restrict, not expand, a
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definition. Although a county is allowed to own and operate a “necessary building,”
Appellants contend a resort cannot be considered “necessary.” Further, as this case
involves public funds, Appellants urge that the acts must be authorized by the “clear
authority of law.” (Appellants’ Brf., p. 9.) Noting that any applicable statute must be
strictly construed against Carroll County, Appellants conclude that there is no
statutory authority supporting Carroll County’s actions, here.
{¶10} Carroll County responds by arguing that several statutes provide it with
the authority to own, and operate the Atwood property. Carroll County cites to a
series of statutes which, as a whole, allow it to: accept a donation, abide by any
reasonable terms of a donation agreement, acquire real estate for parks, acquire
recreational facilities, and lease or purchase a golf course. Pursuant to the authority
granted in these statutes, Carroll County states that it is authorized not only to own
and operate Atwood, but also accept the terms of the donation agreement that
requires operation of the facilities associated with the resort.
{¶11} In addition to Carroll County’s arguments, Co-Appellee MWCD posits
an additional argument based on R.C. 307.02, which allows a county to own and
operate “public market houses, retail store rooms and offices,” if these buildings are
“necessary.” However, the language of R.C. 307.02 states that a county can own
public market houses, retail store rooms and offices when they are, “located within a
building acquired to house county offices.” There is no evidence in this record that
Atwood houses county offices, thus this section of R.C. 307.02 appears inapplicable.
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{¶12} MWCD also argues that although operation of a hotel and other resort
facilities is not specifically listed within R.C. 307.02, Appellants are too limited in their
ejusdem generis argument, especially considering the similarities between the resort
and the kind of facilities listed in the statute. MWCD argues that similar facilities that
are devoted to enjoyment by the general public have qualified as a “necessary
building.” MWCD notes that Atwood is open to and benefits the entire public, not just
a specific private group.
{¶13} Co-Appellee Radius adopts Carroll County’s arguments and also
advances two additional arguments. First, Radius asserts that taxpayer funds are not
being used in this venture, as Atwood was donated to the county. Second, Radius
notes that the recreational and conference areas of the resort draw out-of-county
guests, which results in a need for temporary lodging for these guests.
{¶14} In Ohio, it is well established that a board of county commissioners is a
creature of statute and has “only such power and jurisdiction as are expressly
conferred by statutory provision.” State ex rel. Shriver v. Board of Commissioners,
148 Ohio St. 277, 280, 244 N.E.2d 248 (1947), citing Elder v. Smith, Auditor, 103
Ohio St. 369, 133 N.E. 791 (1921). One power expressly conferred to a board of
commissioners by statute is the ability to accept donations and to abide by any
reasonable terms of the donation. See R.C. 9.20.
{¶15} Here, the Carroll County Board of Commissioners accepted a donation,
the Atwood property, from MWCD. Pursuant to R.C. 9.20, Carroll County was
permitted to accept Atwood and abide by any reasonable terms of the donation
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agreement. The remaining question is whether the terms of the donation agreement
were reasonable. Looking to the donation agreement, the terms required Carroll
County to operate the golf course, hotel, and other facilities. To aid in our
determination as to whether these terms are reasonable, we first look to the Ohio
Revised Code.
{¶16} Pursuant to R.C. 307.02, a board of commissioners is expressly
permitted to own a golf course. Thus, the operation of the golf course is not in
question, here. Turning to the real crux of Appellants’ complaint, whether operation
of the hotel and conference center is proper, there are no statutes that specifically
address whether a board of commissioners can operate a hotel or conference center.
However, several attorney general opinions do provide some guidance. In 2009 one
such opinion noted that the facilities listed within R.C. 307.02 are specifically devoted
to use by the general public and serve the public or a sector of the public in some
way. 2009 Atty.Gen.Ops. No 2009-040, at *3. Thus, part of the question looks to be
whether ownership and operation of the hotel and conference center serve the
general public or a sector of the public.
{¶17} Addressing first the hotel, evidence shows that it serves the general
public. Carroll County has a stated interest in promoting tourism. Tourism serves the
general public, as it encourages out-of-town guests to travel to the local community,
which provides several benefits to the community and to the local businesses.
Appellants describe Atwood as a recreational resort. One of the drawing cards to
attract tourism and travel is the availability of recreational facilities. As stated in an
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attorney general opinion, “[a] major aspect of tourism and its promotion involves
encouraging persons to travel from their homes to particular places for pleasure,
personal reasons, or recreational purposes.” 2003 Atty.Gen.Ops. No. 2003-039, at
*4. The county itself has other features to attract tourism, but the recreational
facilities at Atwood also serve as a draw. As the hotel serves and promotes all of
these, the trial court did not err in finding that its continuing operation was reasonable
and serves a public use.
{¶18} Turning to the conference center, such facility caters to many sectors of
the public, notably the business sector. However, a conference center is not limited
to solely the business sector, as many other social and public events are commonly
held at such facilities. Additionally, similar to the support provided by the hotel to
Atwood’s recreational facilities, the hotel provides a housing structure for those
traveling to events or business meetings at the conference center. All of this, of
course, promotes tourism. Thus, the conference center also serves the general
public or, at the least, some sectors of the public.
{¶19} In 2009 the state attorney general opined that even though a specific
type of building is not listed within the language R.C. 307.02, the theory of ejusdem
generis should be applied to expand its categories to include buildings of a similar
nature. 2009 Atty.Gen.Ops. No 2009-040, at *3. When applying ejusdem generis, a
court should consider the specific features and characteristics of the facilities
specified by statute and determine whether the facility at issue “reasonably is within
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the legislative intent that underlies the general phrase ‘other necessary buildings.’ ”
Id.
{¶20} R.C. 307.02 specifically permits counties to own and operate several
similar recreational facilities including: public stadiums, public auditoriums, exhibition
halls, and zoos. Both Atwood and the facilities listed within R.C. 307.02 are rooted in
recreational activities which are open to the public. Under the theory of ejusdem
generis, the trial court did not err in deciding that the hotel and conference center are
ancillary to those facilities listed within R.C. 307.02, and ownership and operation by
Carroll County are thus permitted by statute.
{¶21} As for Appellants’ argument regarding the financial burden on the
taxpayers, the record reveals that any such burden is minimal. This property was
donated to the county. In addition to the property itself, MWCD also donated the
mineral rights associated with the property to offset the costs of its operation. The
mineral rights have been leased for $2.2 million. Thus, the burden of operating
Atwood is greatly reduced as a result of money generated from the mineral rights.
Accordingly, Appellants’ first assignment of error is without merit and is overruled.
SECOND ASSIGNMENT OF ERROR
THE TRIAL COURT ERRED IN HOLDING THAT THE CONSTITUTION
OF THE STATE OF OHIO, SPECIFICALLY ARTICLE VIII, § 13,
AUTHORIZES A POLITICAL SUBDIVISION TO OWN AND OPERATE
A MULTI-MILLION DOLLAR VACATION RESORT.
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{¶22} Appellants claim that the trial court erred in deciding that Article VIII,
Section 13 of the Ohio Constitution (“Section 13”) allowed Carroll County to own and
operate Atwood. They argue that this section of the constitution is not self-executing
and as such does not support Carroll County’s actions on its own. Hence, the trial
court’s decision must be reversed.
{¶23} A constitutional provision that merely sets out general principles is not
self-executing. State ex rel. Russell v. Bliss, 156 Ohio St. 147, 151, 101 N.E.2d 289
(1951). A self-executing provision fixes the nature and extent of the right conferred,
and imposes liability by the very terms of the constitution, itself. Id. Thus, both the
claimed rights and liability can be determined by examining the constitutional
language. Id. It is presumed that all constitutional provisions are self-executing. Id.
{¶24} In relevant part, Section 13 allows the state and its political subdivisions
to create and preserve jobs and employment opportunities, as employment of its
citizens is in the public interest. Further, Section 13 allows the state and its political
subdivisions to acquire, construct, enlarge, improve, and equip facilities within the
State of Ohio for purposes of industry, commerce, distribution, and research. Section
13 states that “[t]he powers herein granted shall be in addition to and not in
derogation of existing powers of the state or its political subdivisions * * *.”
{¶25} Appellants argue that Section 13 is not self-executing, so that an
independent source of authority must exist in order to authorize action. Appellants
argue that the trial court erroneously authorized Carroll County to own and operate
Atwood pursuant to Section 13 without determining that a statutory source clearly
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authorized this action. Appellants cite to two Ohio Supreme Court cases which have
held that the language, “[l]aws may be passed to carry into effect such purposes,”
found within Section 13, reflects that this section is not self-executing. See State v.
Aetna Cleaning Contractors of Cleveland, Inc., 45 Ohio St. 2d 345 N.E.2d 61 (1976);
Elder v. Shoffstall, 90 Ohio St. 265, 107 N.E. 539 (1914). Appellants argue that the
language of Section 13 merely permits the general assembly to pass laws to create
and preserve jobs: that this section merely recognized that such further action is in
the public interest and has a proper public purpose. Appellants claim that no court
has authorized government action solely based on this section of the constitution
without further statutory enactments.
{¶26} Appellants also assert that the issue of whether a political subdivision
can own and operate a facility such as Atwood is a political question. Therefore, only
the general assembly and governor can determine whether such an action is
permitted. For these reasons, Appellants argue that the trial court’s decision violates
the Ohio Constitution.
{¶27} In response, the county argues that Section 13 of the constitution
provides a broad grant of authority and its terms are clear and unambiguous. Carroll
County explains that there are two parts to any analysis under this section. First, it
must be shown that the facility in question is within the State of Ohio and generally
benefits commerce. Second, it must be shown that the purpose of the facility is to
maintain and create jobs. Carroll County notes that the facility’s location is not in
question as it is clearly located within the State of Ohio. It is also uncontested that
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the facility’s purpose is to maintain and create jobs. In a lengthy and somewhat
convoluted argument, they also urge the conclusion that Atwood benefits commerce.
Co-Appellees Radius and MWCD join Carroll County in this argument.
{¶28} Although Appellees devote a significant portion of their argument to this
Section 13 analysis, such argument is unnecessary. Appellants’ sole argument,
here, is that the trial court erroneously found Section 13 to be self-executing.
Appellants ignore the fact that the trial court did not rule solely on the basis of the
constitutional provision. Hence, the trial court did not rule that the provision was self-
executing. Instead, the trial court began its analysis with a discussion of R.C. 307.02,
which we addressed under the first assignment of error.
{¶29} Once the trial court determined that statutory authority exists to support
Carroll County’s action in owning and operating the resort, the court examined
whether Carroll County’s ownership and operation of Atwood was constitutionally
appropriate. The court noted that Section 13 gave Carroll County the power to
acquire property within the state for purposes of industry and commerce, thus
Section 13 (by and through R.C. 307.02) authorized the county to own and operate
Atwood.
{¶30} Although the court did state that Section 13 of the constitution
authorized Carroll County’s actions, this determination was not made in a vacuum, as
Appellants contend. The court specifically stated that R.C. 307.02 statutorily
supported these actions. As the trial court held that R.C. 307.02 authorized the
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acquisition, its reliance on Section 13 of the constitution was completely appropriate.
Accordingly, Appellants’ second assignment of error is without merit and is overruled.
THIRD ASSIGNMENT OF ERROR
THE TRIAL COURT ERRED IN NOT REACHING THE QUESTION OF
WHETHER THE BOARD'S ACTIONS IN ENTERING INTO AN
OPPRESSIVE CONTRACT WITH RADIUS VIOLATED OHIO LAW.
{¶31} In their final assignment, Appellants contend that even if we find in
Appellees’ favor as to the ownership and operation of Atwood, the contract between
Carroll County and Radius is illegal and void ab initio. According to Appellants,
Carroll County entered into a contract with Radius that includes two “oppressive
indemnification provisions.” (Appellants’ Brf., p. 26.) Appellants assert that,
according to the Ohio Attorney General, a county can enter into an indemnification
provision only when the contract specifies a maximum dollar amount for which the
county agrees to be held liable and the amount is appropriated and certified in
accordance with R.C. 5705.41(D)(1). Appellants argue that the requirement was not
met in this case, as neither indemnity provision caps the county’s potential liability.
Thus, Appellants claim that Carroll County would have been unable to appropriate
the necessary funds to satisfy its potential obligations before finalizing the contract,
and this is required by law.
{¶32} Carroll County appears to concede that the appropriate contractual
procedures were not completely followed here, but urge that Appellants waived this
argument by failing to raise the issue in the complaint or amended complaint. Even
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so, Carroll County argues that Appellants lack standing to contest the issue as they
are not a party to the contract. Co-Appellee Radius has adopted Carroll County’s
argument.
{¶33} Co-Appellee MWCD does not concede that the contractual procedure
was flawed. MWCD argues that all necessary indemnity provisions between MWCD
and Carroll County exist within the donation agreement between it and MWCD.
However, Appellants do not challenge the indemnification provisions involving the
MWCD donation agreement. Rather, Appellants are challenging the indemnity
provisions between Carroll County and Radius.
{¶34} Before we can address the merits of Appellants’ argument, we must
first determine whether they have standing on this issue. Appellants claim they have
standing pursuant to R.C. 309.13, which allows a taxpayer to bring an action to
restrain, recover, or receive damages from the contemplated misuse of funds or an
illegal contract when the prosecutor fails to bring such action when properly
requested. Importantly, R.C. 309.13 allows such an action to be filed only for the
benefit of the county.
{¶35} The law does not allow “mere interlopers to meddle with the affairs of
the state.” A taxpayer lawsuit is permitted only when the public injury at issue will be
serious. State ex rel. Teamsters Local Union 436 v. Cuyahoga Cty. Bd. of Commrs.,
132 Ohio St. 3d 47, 2012-Ohio-1861, 969 N.E.2d 224, ¶12, citing State ex rel.
Academy of Trial Lawyers v. Sheward, 86 Ohio St. 3d at 472, 715 N.E.2d 1062
(1999). When the remedy sought is merely for the taxpayer’s individual benefit, the
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taxpayer has no standing, as he or she cannot assert that the individual taxpayer is
vindicating a public right. Id.
{¶36} The Ohio Supreme Court has held in a series of cases that when the
court believes that an assertion of public protection is a pretext for a personal benefit,
there is no standing. Id. at ¶14. See Cleveland ex rel. O'Malley v. White, 148 Ohio
App.3d 564, 2002-Ohio-3633, 774 N.E.2d 337, ¶42-47 (8th Dist.) (although union
cited public safety for contesting the county’s decision to use non-union electricians
to perform certain jobs, the union’s motivation was protecting the union members.
Thus, there was no public interest in the action.)
{¶37} Here, it is clear from the record that Appellants’ lawsuit is aimed at
protecting their private interests rather than the interests of the public. Nowhere in
Appellants’ brief do they argue that the public interest is threatened by the Radius
contract. In fact, Appellants never even mention the public. Instead, Appellants
devote the arguments within their brief to alleging that the unfair “government
subsidy” given to Radius is affecting the fairness of competition among local hotels,
their own hotel included. As the record supports a determination that the motivation
for the lawsuit was to protect the private, financial interests of Appellants’ hotel rather
than the interests of the general public, they lack standing on this issue pursuant to
R.C. 309.13. Appellants’ third assignment of error is without merit and is overruled.
Conclusion
{¶38} As Article VIII, Section 13 of the Ohio Constitution through R.C. 307.02
authorize Carroll County’s actions in owning and operating Atwood, the trial court did
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not err in granting summary judgment in Appellees’ favor. Further, Appellants lack
standing to bring a taxpayer action on the issue of the management contract, thus
the trial court did not err in failing to address this contract between Carroll County and
Radius. The judgment of the trial court is hereby affirmed in full.
Donofrio, P.J., concurs.
Robb, J., concurs.