Patriot Water Treatment, L.L.C. v. Ohio Dept. of Natural Resources

[Cite as Patriot Water Treatment, L.L.C. v. Ohio Dept. of Natural Resources, 2013-Ohio-5398.]
IN THE COURT OF APPEALS OF OHIO
TENTH APPELLATE DISTRICT
Patriot Water Treatment, LLC, :
Plaintiff-Appellant, :
No. 13AP-370
v. : (C.C. No. 2012-07951)
Ohio Department of Natural Resources, : (ACCELERATED CALENDAR)
Defendant-Appellee. :
_____
D E C I S I O N
Rendered on December 10, 2013
_____
Bott Law Group LLC, April R. Bott, Sarah L. Herbert, and
MacDonald W. Taylor, for appellant.
Michael DeWine, Attorney General, Randall W. Knutti and
Emily M. Simmons, for appellee.
APPEAL from the Court of Claims of Ohio
DORRIAN, J.
{¶ 1} Plaintiff-appellant, Patriot Water Treatment, LLC ("Patriot"), appeals from
a judgment entered by the Court of Claims of Ohio. The court granted a motion to dismiss
Patriot's complaint that had been filed by defendant-appellee, Ohio Department of
Natural Resources ("ODNR"), pursuant to Civ.R. 12(B)(1) and (6). The court dismissed
the complaint based on its conclusion that: (1) Patriot had failed to state a spoliation
claim, and (2) the Court of Claims lacked jurisdiction over Patriot's claim that ODNR
violated R.C. 149.351, Ohio's public records retention statute.
{¶ 2} Patriot raises two assignments of error, as follows:
[1.] The Court of Claims erred in granting Appellee's
Motion to Dismiss Count I of Appellant's Complaint.
No. 13AP-370 2
[2.] The Court of Claims erred in granting Appellee's
Motion to Dismiss Count II of Appellant's Complaint.
{¶ 3} For the following reasons, we affirm in part and reverse in part.
I. Case History
{¶ 4} Patriot initiated this action on November 2, 2012, when it filed a complaint
alleging "spoliation of evidence" and "unlawful disposition or destruction of public
records." (Complaint, ¶ 1.) It sought $3.5 million in damages based on its spoliation
claim and injunctive relief, monetary damages, and attorney's fees based on the alleged
violation of the public records retention statute.
{¶ 5} The complaint alleged that, on August 10, 2010, the Ohio Environmental
Protection Agency ("OEPA"), had issued Patriot a permit to install and operate a water
treatment facility that was designed to treat solid-containing waters emanating from the
oil and gas industry. Patriot's permit, in conjunction with an OEPA permit issued to the
city of Warren, allowed Patriot to send the water after treatment to Warren's water
treatment facility for further processing. The complaint alleged that OEPA and ODNR
had corresponded prior to OEPA's issuance of the permit concerning whether the
proposed facility would comply with Ohio statutes, and specifically R.C. 1509.22.1 Patriot
further alleged that, after receiving the 2010 permit, it invested millions of dollars to build
its treatment facility, which began operating in 2011.
{¶ 6} In addition, the complaint alleged that, in December 2010, new directors of
both OEPA and ODNR were appointed and that these officials disagreed with their
agencies' prior interpretation of R.C. 1509.22. On May 16, 2011, the new OEPA Director,
Scott Nally, wrote a letter to the new ODNR director, David Mustine, in which Nally
memorialized their discussions concerning interpretation of R.C. 1509.22 and stated that
" 'moving forward' ODRN will not authorize discharges of gas well wastewater through
[publically owned treatment works]," such as that operated by the city of Warren.
(Complaint, ¶ 14.)
{¶ 7} The complaint further alleged that the next day, May 17, 2011, Patriot sent a
letter to both directors expressing the company's concern that the state had "decid[ed] to
take away Patriot's right to [do] business in Ohio." (Complaint, ¶ 18.) The complaint
1R.C. 1509.22 regulates the placement in surface or ground water of brine or other fluids associated with the
development of oil and gas resources.
No. 13AP-370 3
alleged that, on June 10, 2011, Patriot representatives met with ODNR staff, including the
in-house legal counsel, and informed ODNR that litigation involving ODNR was probable.
Patriot further alleged that, on March 19, 2012, OEPA issued modified permits to Patriot
and also to the city of Warren that precluded Warren from accepting water from Patriot
on or after April 1, 2012, prompting Patriot to discontinue its water-treatment operations
and initiate litigation against both OEPA and ODNR.
{¶ 8} The complaint alleged additional facts relative to public records requests
made by Patriot. Patriot claimed that its first public records request to ODNR was made
on May 17, 2011, through counsel, and sought "specifically identified records from
January 1, 2009 to May 17, 2011." (Complaint, ¶ 25.) Patriot alleged that ODNR provided
records in response but that the production was incomplete. Patriot asserted that it later,
on April 10, 2012, became aware during the deposition of a retired ODNR official, John
Husted, that at least one additional record responsive to their public records request
existed but had not been provided to it. That record was an e-mail written by Husted
dated July 21, 2009. Patriot asserted in its complaint that timely disclosure of the Husted
e-mail in response to its public records request would have prevented or limited Patriot's
involvement in subsequent litigation and would also have prevented a three-month
cessation of Patriot's business activities.
{¶ 9} Patriot's complaint also alleged that, on April 19 and May 1, 2012, ODNR
delivered to Patriot additional records dated during or after April 2010. It alleged that
"upon Patriot's information and belief, ODNR has concealed and/or destroyed public
documents that are both responsive to the May 17 Request and inculpatory evidence
against ODNR." (Complaint, ¶ 42.) It alleged that "ODNR willfully concealed, interfered
with and/or destroyed relevant public records, with knowledge of pending and probable
litigation * * * [and] was designed to disrupt Patriot's legal cases." (Complaint, ¶ 59.) That
litigation included a declaratory judgment action filed in the Trumbull County Court of
Common Pleas and appeals to the Ohio Environmental Review Appeals Commission
("ERAC"), of the modified permits issued to Patriot and the city of Warren. Patriot
asserted that, on July 3, 2012, ERAC issued its decision, which allowed Patriot to resume
its former operations at its facility. It alleged that the common pleas court dismissed the
declaratory judgment action on March 30, 2012.
No. 13AP-370 4
{¶ 10} Patriot further alleged that, "[w]ithout the records concealed, interfered
with and/or destroyed by ODNR, Patriot's litigation options were substantially disrupted,
which directly or proximately resulted in damages to Patriot." (Complaint, ¶ 61.)
{¶ 11} In response to the complaint, ODNR filed a motion to dismiss Patriot's
complaint pursuant to Civ.R. 12(B)(1) and (6). It asserted that Patriot's spoliation claim
rested on a single document—Husted's July 21, 2009 e-mail—and that the document
could not, as a matter of law, have disrupted Patriot's litigation before the ERAC or the
Trumbull County Court of Common Pleas. It argued that Patriot had, therefore, failed to
state a claim of spoliation. It additionally asserted that the Court of Claims lacks subject-
matter jurisdiction over claims based on Ohio's public records statute, and that Count II
should therefore be dismissed. Patriot did not provide evidentiary materials with its
Civ.R. 12(B)(6) motion.
{¶ 12} In its decision, the Court of Claims concluded that Patriot had failed to state
a claim of spoliation in Count I of the complaint. It reasoned that Patriot became aware
of the Husted e-mail prior to the conclusion of the ERAC appeal and that, therefore,
pursuant to Davis v. Wal-Mart Stores, Inc., 93 Ohio St. 3d 488 (2001), Patriot should
have pursued its claim that evidence had been spoliated during the pendency of the ERAC
proceedings. The court further agreed with ODNR that the Court of Claims lacked
jurisdiction to consider the public records claims asserted in Count II of the complaint.
{¶ 13} Patriot timely appealed the judgment of the Court of Claims, and the case is
now before us for disposition.
II. Legal Analysis
A. Spoliation Claim—Civ.R. 12(B)(6)
{¶ 14} We begin our analysis by recounting the framework by which we review a
trial court's ruling on a motion to dismiss for failure to state a claim:
A motion to dismiss under Civ.R. 12(B)(6) for failure to state a
claim is procedural and tests the sufficiency of the complaint.
* * * Dismissal for failure to state a claim upon which relief
can be granted is proper if, after all factual allegations are
presumed to be true and all reasonable inferences are made in
favor of the non-moving party, it appears beyond doubt from
the complaint that the plaintiff could prove no set of facts
warranting the requested relief. * * * A court of appeals
No. 13AP-370 5
reviews the dismissal of a complaint pursuant to Civ.R.
12(B)(6) under a de novo standard.
(Citations omitted.) Modern Office Methods, Inc. v. Ohio State Univ., 10th Dist. No.
11AP-1012, 2012-Ohio-3587, ¶ 9.
{¶ 15} Moreover, " 'whether a complaint states a claim upon which relief can be
granted is not dependent upon whether potential defenses are available.' * * * Rather, '[a]s
long as there is a set of facts consistent with the complaint that would allow the plaintiff to
recover, dismissal under Civ.R. 12(B)(6) is not proper.' " Columbus Green Bldg. Forum v.
State, 10th Dist. No. 12AP-66, 2012-Ohio-4244, ¶ 28, quoting Jones v. Goodyear Tire &
Rubber Co., 9th Dist. No. 21724, 2004-Ohio-2821, ¶ 12.
{¶ 16} Ohio is one of a minority of states that recognizes spoliation of evidence as a
tort. Davis (Cook, J., dissenting). Recovery on a spoliation claim in Ohio is dependent
upon proof of all of the following elements: "(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." Smith v. Howard Johnson Co., Inc., 67 Ohio St. 3d 28, 29 (1993).
{¶ 17} Accordingly, we review Patriot's complaint as to the spoliation claim to
determine whether Patriot alleged facts that would, if proven true, satisfy the five Smith
elements of spoliation. We conclude that it did.
{¶ 18} Patriot clearly alleged the first and second Smith elements; i.e., that pending
or probable litigation involving Patriot existed and that ODNR had knowledge of the
existence or probability of that litigation. Moreover, Patriot pled the third element of the
cause of action by alleging that "ODNR willfully concealed, interfered with and/or
destroyed relevant public records * * * [and] such * * * destruction of * * * public
records was designed to disrupt Patriot's legal cases." (Emphasis added.) (Complaint,
¶ 59.) In addition, Patriot alleged that, without those records, "Patriot's litigation options
were substantially disrupted," which "directly or proximately resulted in damages to
Patriot." (Complaint ¶ 61.) Patriot thus pled the fourth and fifth elements of the tort of
spoliation as established in Smith.
No. 13AP-370 6
{¶ 19} Patriot further stated specific facts, rather than mere unsupported
conclusions, that would, when presumed to be true and in light of reasonable inferences
in Patriot's favor, state a claim in spoliation. It alleged the existence of at least one specific
document that ODNR had failed to disclose in response to Patriot's public records
request—the Husted e-mail. Compare, White v. Equity, Inc., 191 Ohio App. 3d 141, 2010-
Ohio-4743 (10th Dist.) (reversing a Civ.R. 12(B)(6) dismissal of a spoliation claim where
plaintiff asserted that, "on information and belief," the defendants willfully redacted an
original document, copied it, and then destroyed the original). Patriot argues that only
through discovery will it be able to determine the full scope of ODNR's actions relative to
the disposition of other e-mails and public records, including possible destruction of
them. We agree.
{¶ 20} In granting ODNR's motion to dismiss, the Court of Claims cited Davis. In
that case, the Supreme Court of Ohio stated that "claims for spoliation of evidence may be
brought after the primary action has been concluded only when evidence of spoliation is
not discovered until after the conclusion of the primary action." Davis at 491. The Court
of Claims concluded that the allegations in Patriot's complaint established that Patriot
became aware of the Husted e-mail during the pendency of litigation at ERAC. It deemed
the ERAC appeal to be the "primary action" for purposes of Davis and concluded that
Patriot could not, therefore, assert a tort claim of spoliation after the conclusion of the
ERAC administrative appeals.
{¶ 21} Davis involved an employer intentional tort wrongful-death action. The
plaintiff, the worker's widow, asserted that she had discovered during post-trial
proceedings that the employer, Wal-Mart, had withheld evidence and documents during
the course of the litigation. She claimed that, had she been aware of the evidence, she
would not have dismissed a survivor claim seeking additional compensatory and punitive
damages.
{¶ 22} The plaintiff in Davis asserted her spoliation claim in a separate and new
action. Wal-Mart argued that the spoliation claim was barred by res judicata in that the
wrongful-death action had already concluded. Wal-Mart sought to establish a legal
proposition that "[c]laims for spoliation of evidence should be brought at the same time
as, or as an amendment to, the primary action." Id. at 491.
No. 13AP-370 7
{¶ 23} The Supreme Court of Ohio rejected Wal-Mart's arguments. It stated in its
syllabus the premise upon which the Court of Claims relied in the case now before us, i.e.,
that spoliation claims may be brought "after the primary action has been concluded only
when evidence of spoliation is not discovered until after the conclusion of the primary
action." Id.
{¶ 24} In her dissent, Justice Cook observed that the majority opinion had not
explained "when a 'primary action' 'concludes' for purposes of its syllabus and/or res
judicata." (Emphasis sic.) Id. at 494. She warned that "[b]ecause the majority opinion
never actually applies the syllabus to the specific evidence alleged to have been spoliated
in this case, the spoliation tort will remain as unexplained to the bench and bar as it was
after its cursory recognition in Smith. Id.
{¶ 25} Construing Davis in view of the facts then before the Supreme Court, we
conclude that Davis supports the premise that, if spoliation is discovered after an action
between the same parties has concluded, res judicata does not bar a subsequent claim
against an alleged spoliation tortfeasor. But in the case before us, the disposition of the
ERAC appeals could not constitute a res judicata bar of a spoliation claim, regardless of
the time at which the spoliation was discovered, as ERAC lacks subject-matter jurisdiction
to adjudicate tort claims against the state, and a spoliation claim therefore could not have
been adjudicated by ERAC. See R.C. 3745.04(B) establishing that ERAC has "exclusive
original jurisdiction over any matter that may, under this section, be brought before it.")
Patriot could not, therefore, have successfully asserted a spoliation claim in the ERAC
proceedings.
{¶ 26} It is true that common pleas courts have subject-matter jurisdiction over
claims asserting the tort of spoliation and that Patriot acknowledged in its complaint that
an action in which both Patriot and ODNR were parties was pending in a common pleas
court at the time Patriot became aware of ODNR's failure to produce the Husted e-mail.
However, had Patriot attempted to amend its complaint to include the spoliation claim in
the pending Trumbull County Court of Common Pleas declaratory judgment action, that
claim would have been subject to summary dismissal based on its nature as a tort claim
for monetary damages that could only be tried in the Court of Claims. See R.C. 2743.02
No. 13AP-370 8
(Court of Claims has exclusive, original jurisdiction over civil suits for money damages
brought against the state); see also Columbus Green Bldg. Forum, at ¶ 15-16.
{¶ 27} In short, we conclude that Davis, in contrast to the case before us,
concerned a case in which the application of res judicata was at issue. Res judicata does
not appear to be relevant in the case before us. We therefore find that Davis does not
apply in this case, as the doctrine of res judicata is not implicated. Accord Tate v. Adena
Regional Med. Ctr., 155 Ohio App. 3d 524, 2003-Ohio-7042 (4th Dist.), ¶ 26 (observing
that "the issue in Davis was whether a spoliation claim was barred by the doctrine of res
judicata" and that "the spoliation claim itself was not at issue"); Monroe v. Forum
Health, 11th Dist. No. 2012-T-0026, 2012-Ohio-6133.
{¶ 28} Accordingly, we find that the trial court erred in granting ODNR's motion to
dismiss the spoliation claim in reliance on Davis. We therefore sustain Patriot's first
assignment of error.
B. Public Records Claim—Civ.R. 12(B)(1) (Lack of Subject-Matter
Jurisdiction)
{¶ 29} "Civ.R. 12(B)(1) permits dismissal where the trial court lacks jurisdiction
over the subject matter of the litigation. The standard of review for a dismissal pursuant
to Civ.R. 12(B)(1) is whether any cause of action cognizable by the forum has been raised
in the complaint. * * * We review an appeal of a dismissal for lack of subject-matter
jurisdiction under Civ.R. 12(B)(1) de novo." (Citation omitted.) PNC Bank, Natl. Assn. v.
Botts, 10th Dist. No. 12AP-256, 2012-Ohio-5383, ¶ 21.
{¶ 30} In reviewing de novo ODNR's motion to dismiss Count II, we are cognizant
that "[t]he Court of Claims is a court of limited jurisdiction." Windsor House, Inc. v. Ohio
Dept. of Job and Family Servs., 10th Dist. No. 11AP-367, 2011-Ohio-6459, ¶ 15. Modern
Office Methods, Inc., ¶ 10. It has exclusive, original jurisdiction over civil suits for money
damages brought against the state as a result of the waiver of immunity reflected in R.C.
2743.02. Columbus Green Bldg. Forum at ¶ 15-16. Not every claim seeking monetary
relief, however, is a claim for money damages. Id. at ¶ 18.
{¶ 31} In this appeal, the parties have focused on the allegations in Count II of
Patriot's complaint relative to its Ohio's record retention statute, R.C. 149.351, rather than
No. 13AP-370 9
Ohio's public records statute, R.C. 149.43. The record retention statute provides in part
as follows:
All records are the property of the public office concerned and
shall not be removed, destroyed, mutilated, transferred, or
otherwise damaged or disposed of, in whole or in part, except
as provided by law * * * Those records shall be delivered by
outgoing officials and employees to their successors and shall
not be otherwise removed, destroyed, mutilated, or
transferred unlawfully.
(Emphasis added.) R.C. 149.351(A).
{¶ 32} Accordingly, public servants may only destroy public records "as provided
by law." Pursuant to R.C. 149.351, a public office may "dispos[e] of items, including
transient and other documents (e.g., e‐mail messages) that are no longer of
administrative value and are not otherwise required to be kept, in accordance with the
office's properly adopted policy for records retention and disposal." State ex rel.
Glasgow v. Jones, 119 Ohio St. 3d 391, 2008‐Ohio‐4788, ¶ 21, fn. 1. R.C. 149.331
provides that the state records program of the department of administrative services has
the authority to approve retention schedules submitted to it by state agencies. R.C.
149.333 provides that state agencies must submit proposed records retention schedule
to the state records program under the director of administrative services for approval,
rejection, or modification). Ohio law, thus, permits a public servant to dispose of public
records in accord with a valid retention schedule.
{¶ 33} R.C. 149.351(B) expressly provides a specific statutory remedy for violation
of the obligation imposed by R.C. 149.351(A) and also specifies the court in which that
remedy may be pursued. That court is not the Court of Claims:
Any person who is aggrieved by the removal, destruction,
mutilation, or transfer of, or by other damage to or disposition
of a record in violation of division (A) of this section, or by
threat of such removal, destruction, mutilation, transfer, or
other damage to or disposition of such a record, may
commence either or both of the following in the court of
common pleas of the county in which division (A) of this
section allegedly was violated or is threatened to be violated:
(1) A civil action for injunctive relief to compel compliance
with division (A) of this section, and to obtain an award of the
No. 13AP-370 10
reasonable attorney's fees incurred by the person in the civil
action;
(2) A civil action to recover a forfeiture in the amount of one
thousand dollars for each violation, but not to exceed a
cumulative total of ten thousand dollars, regardless of the
number of violations, and to obtain an award of the
reasonable attorney's fees incurred by the person in the civil
action not to exceed the forfeiture amount recovered.
(Emphasis added.) R.C. 149.351(B).
{¶ 34} Accordingly, a claim based on an alleged violation of R.C. 149.351(A) and
seeking the statutorily authorized remedy of injunctive relief, a "forfeiture" in the amount
of $1,000 per violation, or attorney's fees, may only be brought in "the court of common
pleas of the county in which division (A) of this section allegedly was violated or is
threatened to be violated."
{¶ 35} Patriot observes that the Court of Claims has exclusive jurisdiction over civil
actions against the state for monetary damages pursuant to R.C. 2743.03(A)(1). But that
statute is general in nature while R.C. 149.351 is a specific statute governing claims for
violations of the public records retention statute. As such, R.C. 149.351 prevails over the
general provision in the Court of Claims Act cited by Patriot. Compare State Fraternal
Order of Police Grand Lodge Number 1 v. State, 10th Dist. No. 80AP-744 (Dec. 31, 1981),
citing State ex rel. Myers v. Chiaramonte, 46 Ohio St. 2d 230 (1976) (status of state
highway patrol officers governed by R.C. 5503.03 because the specific legislation provided
in R.C. Chapter 5503 controls over the general civil service provisions of R.C. Chapter
124). Moreover, Patriot has provided no authority to support the proposition that it may
assert a claim for "monetary damages" beyond the statutory monetary recovery
authorized by R.C. 149.351(B), i.e., reasonable attorney's fees and a forfeiture penalty in
the amount of $1,000 per violation. A recovery of the forfeiture penalty authorized by
R.C. 149.351(B) does not constitute "monetary damages," as that term is used to describe
the exclusive original jurisdiction of the Court of Claims.
{¶ 36} Similarly, the public records statute, as opposed to the public records
retention statute, expressly provides that a person who believes he or she was aggrieved
by the failure of a public office to comply with its obligation to promptly produce
requested public records, may "commence a mandamus action to obtain a judgment that
No. 13AP-370 11
orders the public office * * * to comply with [R.C. 149.43(B)], that awards court costs and
reasonable attorney's fees * * * and, if applicable, * * * statutory damages under [R.C.
149.43(C)(1)]." (Emphasis added.) R.C. 149.43(C)(1). A mandamus action filed by such
an individual may be commenced in one of only three courts: "the court of common pleas
of the county in which division (B) of this section allegedly was not complied with, in the
supreme court pursuant to its original jurisdiction under Section 2 of Article IV, Ohio
Constitution, or in the court of appeals for the appellate district in which division (B) of
this section allegedly was not complied with pursuant to its original jurisdiction
under Section 3 of Article IV, Ohio Constitution." R.C. 149.43(C)(1). Accordingly, the
Court of Claims did not have subject-matter jurisdiction over any claims asserted by
Patriot to the extent its complaint is construed as asserting violations of R.C. 149.43.
{¶ 37} The Court of Claims therefore did not err in sustaining ODNR's Civ.R.
12(B)(1) motion to dismiss Count II of Patriot's complaint for lack of subject-matter
jurisdiction. Accordingly, we overrule Patriot's second assignment of error.
III. Conclusion
{¶ 38} For the foregoing reasons, we sustain Patriot's first assignment of error,
and overrule its second assignment of error. The judgment of the Court of Claims is
affirmed in part and reversed in part, and this case is remanded to that court for further
proceedings to adjudicate Count I of Patriot's complaint.
Judgment affirmed in part, reversed in part,
and cause remanded with instructions.
TYACK and CONNOR, JJ., concur.
___________________