[Cite as Hudson v. Akron, 2017-Ohio-7590.]
STATE OF OHIO ) IN THE COURT OF APPEALS
)ss: NINTH JUDICIAL DISTRICT
COUNTY OF SUMMIT )
CITY OF HUDSON C.A. No. 28011
Appellant
v. APPEAL FROM JUDGMENT
ENTERED IN THE
CITY OF AKRON COURT OF COMMON PLEAS
COUNTY OF SUMMIT, OHIO
Appellee CASE No. CV-2014-12-5497
DECISION AND JOURNAL ENTRY
Dated: September 13, 2017
CARR, Judge.
{¶1} Appellant, the City of Hudson, appeals the judgment of the Summit County Court
of Common Pleas. This Court affirms.
I.
{¶2} This matter arises out of a water services dispute between the City of Akron and
the City of Hudson, two municipal corporations in Northeast Ohio. Akron maintains a public
water utility that services its residents as well as extraterritorial purchasers in various locations
throughout the surrounding area. Hudson residents and businesses receive water utility services
from four different providers.1 A portion of Hudson’s residents and businesses receive water
utility services from Akron. In addition to a capital projects charge, Akron charges its Hudson
customers a rate that is roughly 60% higher than the water rate charged to Akron customers. In
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Hudson stated in its complaint that Hudson residents, businesses, and other entities
receive public water services from the City of Hudson, the City of Akron, the City of Stow, and
the City of Cleveland.
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November 2014, Akron began charging its residential Hudson customers a surcharge of $17.76
per month (“the Surcharge”) and its commercial Hudson customers a 42% increase in water
charges. A small portion of Hudson’s residents and businesses receive water utility services
from the City of Stow. While Stow owns the waterlines that service its customers in Hudson,
Stow buys the water that flows through its waterlines from Akron. When Stow declined to
charge its Hudson customers with a comparable surcharge, Akron began directly billing Stow’s
customers in Hudson in order to collect the Surcharge.
{¶3} Before the increase in charges, Akron notified Hudson that it was necessary to
replace a major waterline known as the Twinsburg Line. The Twinsburg Line extends from a
water source in Portage County to cities in the northern part of Summit County such as Hudson
and Twinsburg. The cost of replacing the line will be approximately 15 million dollars and the
vast majority of that cost will be absorbed by Hudson.2 Hudson maintains that Akron imposed
the Surcharge on its customers in Hudson in order to pay for the replacement of the Twinsburg
Line.
{¶4} On December 12, 2014, Hudson filed a class action complaint for declaratory
judgment against Akron in the Summit County Court of Common Pleas. After filing an
amended complaint, Hudson filed a second amended complaint on February 9, 2015. Therein,
Hudson sought a declaration that the Surcharge violates Ohio law because it is unfair and
unreasonable and bears no rational relationship to the service being provided. Hudson further
alleged that the unreasonable rates were implemented in order to compel Hudson to enter into an
unfavorable agreement for water utility services. In addition to the declaration, Hudson sought
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Hudson stated in its amended complaint that replacing the Twinsburg Line would cost
roughly 15 million dollars and that Akron’s Hudson customers would be responsible for 13
million dollars of that cost.
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permanent injunctive relief preventing Akron from continuing to impose the Surcharge, as well
as damages.
{¶5} On February 24, 2015, Akron filed a motion to dismiss pursuant to Civ.R.
12(B)(6). Hudson filed a memorandum in opposition to the motion to dismiss, and Akron
replied thereto. Hudson then filed a surreply brief with leave of court. The trial court issued a
journal entry granting the motion to dismiss on the basis that it did not have authority under Ohio
law to grant the relief requested by Hudson.
{¶6} Hudson filed a timely notice of appeal. Now before this Court, Hudson raises one
assignment of error.
II.
ASSIGNMENT OF ERROR
THE TRIAL COURT ERRED BY CONCLUDING THAT IT WAS
PRECLUDED FROM STRIKING DOWN A SURCHARGE ASSESSED BY A
MUNICIPAL WATER PURVEYOR TO WATER CUSTOMERS IN ANOTHER
MUNICIPALITY THAT HAS NO CONTRACT FOR WATER SERVICE WITH
THE PURVEYOR WHERE THE SURCHARGE IS UNFAIR,
UNREASONABLE, AND HAS NO RELATIONSHIP TO THE WATER
SERVICES PROVIDED.
{¶7} In its sole assignment of error, Hudson contends that the trial court erred by
granting Akron’s motion to dismiss. This Court disagrees.
{¶8} An appellate court reviews a trial court order granting a motion to dismiss
pursuant to Civ.R. 12(B)(6) under a de novo standard of review. Perrysburg Twp. v. Rossford,
103 Ohio St.3d 79, 2004-Ohio-4362, ¶ 5, citing Cincinnati v. Beretta U.S.A. Corp., 95 Ohio
St.3d 416, 2002-Ohio-2480, ¶ 4-5.
{¶9} In reviewing whether a motion to dismiss should be granted, an appellate court
must accept as true all factual allegations in the complaint and all reasonable inferences must be
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drawn in favor of the nonmoving party. Rossford at ¶ 5; Mitchell v. Lawson Milk Co., 40 Ohio
St.3d 190, 192 (1988). “To prevail on a Civ.R. 12(B)(6) motion to dismiss, it must appear on the
face of the complaint that the plaintiff cannot prove any set of facts that would entitle him to
recover.” Apostolos Group, Inc. v. BASF Constr. Chems., L.L.C., 9th Dist. Summit No. 25415,
2011-Ohio-2238, ¶ 9, quoting Raub v. Garwood, 9th Dist. Summit No. 22210, 2005-Ohio-1279,
¶ 4, citing O’Brien v. Univ. Community Tenants Union, 42 Ohio St.2d 242, 245 (1975).
{¶10} Moreover, as a general rule, “[w]hen a trial court enters a judgment in a
declaratory judgment action, the order must declare all of the parties’ rights and obligations in
order to constitute a final, appealable order.” No-Burn, Inc. v. Murati, 9th Dist. Summit No.
24577, 2009-Ohio-6951, ¶ 11, quoting Bowman v. Middleburg Hts., 8th Dist. Cuyahoga No.
92690, 2009-Ohio-5831, ¶ 6. However, a trial court properly dismisses a declaratory judgment
action pursuant to Civ.R. 12(B)(6) where there is not a justiciable issue before the court. Davis
v. Miraldi, 9th Dist. Lorain No. 15CA010741, 2016-Ohio-868, ¶ 7; Chafin v. Ohio Adult Parole
Auth., 10th Dist. Franklin No. 13AP-646, 2014-Ohio-1192, ¶ 14. Thus, “[i]n an action for
declaratory judgment, the trial court must declare the rights of the parties or dismiss the
complaint because either (1) no real controversy or justiciable issue exists between the parties or
(2) the declaratory judgment will not terminate the uncertainty or controversy.” Velasquez v.
Ghee, 99 Ohio App.3d 52, 53-54 (9th Dist.1994), quoting Miller v. Summit Cty. Bd. of Edn., 9th
Dist. Summit No. 15847, 1993 WL 99998, *1 (Apr. 7, 1993).
DISCUSSION
{¶11} In its October 30, 2015 journal entry, the trial court conducted a deliberate
analysis regarding whether it was permissible under Ohio law for Akron to impose the Surcharge
on its Hudson customers, in addition to the charges and fees that were already in place. The trial
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court concluded that if Akron could not be compelled to sell water to Hudson under Ohio law,
then it stands to reason that a court does not have authority to order Akron to provide water to
Hudson at a particular rate. On this basis, the trial court granted Akron’s motion to dismiss
because Hudson failed to state a claim upon which relief could be granted.
{¶12} On appeal, Hudson contends that every utility customer in Ohio should have a
mechanism for challenging their water rates. Hudson points to the Supreme Court of Ohio’s
decision in State ex. Rel. Mt. Sinai Hosp. of Cleveland v. Hickey, 137 Ohio St. 474 (1940), in
support of the proposition that Akron’s residential and commercial customers situated in Hudson
are entitled to a reasonable rate for water services. Hudson attempts to bolster this assertion by
pointing to cases such as the Eighth District’s decisions in Bedford v. Cleveland, 8th Dist.
Cuyahoga No. 33787, 1975 WL 182695 (Apr. 3, 1975) and Lakewood v. Cleveland, 8th Dist.
Cuyahoga No. 35113, 1976 WL 191079 (July 22, 1976), wherein the court entertained
challenges to water rates where extraterritorial customers argued that the rates were arbitrary and
unreasonable. Hudson similarly points to the Supreme Court’s decision in Niles v. Union Ice
Corp., 133 Ohio St. 169, 181 (1938), in support of its assertion that Akron is actually functioning
as a private water purveyor and its rates should be subject to a reasonableness review. Hudson
further contends that Akron is charging the unreasonable water rates in order to leverage Hudson
into entering into an unfavorable contract for water utility services and to finance the
replacement of the Twinsburg Line, which would allow Akron to expand its water utility
operations to areas north of Hudson.
{¶13} “[A] city’s power to acquire, construct, own, and operate a public utility within or
without its corporate limits has been conferred upon it by Sections 4 and 6, Article XVIII, of the
Ohio Construction.” Bakies v. Perrysburg, 6th Wood Nos. WD-03-055, WD-03-062, 2004-
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Ohio-5231, ¶ 38. The Supreme Court of Ohio has held that “[m]unicipally owned public utilities
have no duty to sell their products, including water, to extraterritorial purchasers absent a
contractual obligation.” Fairway Manor, Inc. v. Board of Com’rs of Summit Co., 36 Ohio St.3d
85 (1988), paragraph one of the syllabus. “Accordingly, absent a contract obligating a city to
provide its services, a municipality has the authority to impose conditions on the sale of its utility
services to extraterritorial users and, consequently, has the authority to refuse to sell its services
to extraterritorial users who do not agree to the conditions demanded by the municipality.”
Bakies at ¶ 38, citing State ex rel. Indian Hill Acres, Inc. v. Kellogg, 149 Ohio St. 461 (1948),
paragraph three of the syllabus. Furthermore, “a municipality does not assume a duty to
continue supplying water in perpetuity to extraterritorial customers merely by virtue of having
once agreed to supply it.” Fairway Manor at 89.
{¶14} The trial court properly dismissed Hudson’s complaint in this case. While
Hudson urges this Court to apply a reasonableness standard similar to the standard established by
the Supreme Court in Mt. Sinai, 137 Ohio St. 474, the instant matter has a vastly different factual
posture than the circumstances the high court confronted in that case. In Mt. Sinai, the Supreme
Court held that, where a citizen receives water utility services from his or her own municipality,
“[t]he only general restraints imposed on the distribution of water are that the rates charged be
reasonable and that there be no unjust discrimination among the customers served * * *.” Mt.
Sinai, 137 Ohio St. at 477. Unlike Mt. Sinai, this matter involves a dispute between a
municipality-owned public utility and extraterritorial customers who are operating outside the
bounds of a contractual agreement. Hudson’s reliance on Niles is also misplaced as this matter
does not involve a municipality functioning as a private corporation. Moreover, though Hudson
points to the Eighth District’s decisions in Lakewood and Bedford, we note that those decisions
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were decided prior to the high court’s decision in Fairway Manor. As noted above, the Supreme
Court in Fairway Manor held that “[m]unicipally owned public utilities have no duty to sell their
products, including water, to extraterritorial purchasers absent a contractual obligation.”
Fairway Manor at paragraph one of the syllabus. “The degree of control which the courts will
exert over such public utilities is strictly limited to protecting residents of the municipality from
the imposition of rates which are unreasonable * * *.” (Emphasis sic.) Id. at 86-87. Thus, if
Akron has no obligation to provide water services to customers in Hudson absent a contractual
agreement under Fairway Manor, the most rudimentary extension of that holding is that Hudson
customers have no right to demand reasonable water rates from Akron, unless those rates are
negotiated into a contract. To conclude otherwise would frustrate the high court’s holdings in
both Mt. Sinai and Fairway Manor by allowing Akron’s extraterritorial customers to demand
essentially the same right to reasonable water rates as residents of the municipality, irrespective
of whether the extraterritorial customers entered into a contractual agreement with Akron for
water utility services. It follows that while Hudson suggests that every utility customer in Ohio
should have a mechanism for challenging their water rates, no such right currently exists under
Ohio law. Under these circumstances, the trial court properly concluded that it did not have
authority to grant the relief requested by Hudson and dismissed the complaint for lack of a
justiciable controversy.
{¶15} For the foregoing reasons, the assignment of error is overruled.
III.
{¶16} Hudson’s assignment of error is overruled. The judgment of the Summit County
Court of Common Pleas is affirmed.
Judgment affirmed.
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There were reasonable grounds for this appeal.
We order that a special mandate issue out of this Court, directing the Court of Common
Pleas, County of Summit, State of Ohio, to carry this judgment into execution. A certified copy
of this journal entry shall constitute the mandate, pursuant to App.R. 27.
Immediately upon the filing hereof, this document shall constitute the journal entry of
judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the
period for review shall begin to run. App.R. 22(C). The Clerk of the Court of Appeals is
instructed to mail a notice of entry of this judgment to the parties and to make a notation of the
mailing in the docket, pursuant to App.R. 30.
Costs taxed to Appellant.
DONNA J. CARR
FOR THE COURT
HENSAL, P. J.
TEODOSIO, J.
CONCUR.
APPEARANCES:
R. TODD HUNT, AIMEE W. LANE, and BENJAMIN G. CHOJNACKI, Attorneys at Law, for
Appellant.
EVE V. BELFANCE, Director of Law, and DAVID FOLK, Assistant Director of Law, for
Appellee.
STEPHEN W. FUNK and JUSTIN MARKEY, Attorneys at Law, for Appellee.