[Cite as Dover Chem. Corp. v. Dover, 2025-Ohio-20.]
COURT OF APPEALS TUSCARAWAS COUNTY, OHIO FIFTH APPELLATE DISTRICT
DOVER CHEMICAL CORPORATION : JUDGES: : Hon. W. Scott Gwin, P.J. Plaintiff-Appellee : Hon. John W. Wise, J. : Hon. Andrew J. King, J. -vs- : : CITY OF DOVER, OHIO : Case Nos. 2024 AP 02 0008 : 2024 AP 04 0016 : Defendant-Appellant : OPINION
CHARACTER OF PROCEEDING: Appeal from the Court of Common Pleas, Case No. 2021 CV 02 0097
JUDGMENT: Affirmed/Reversed in Part and Remanded
DATE OF JUDGMENT: January 3, 2025
APPEARANCES:
For Plaintiff-Appellee For Defendant-Appellant
SCOTT L. BRAUM DOLORES GARCIA TIMOTHY R. RUDD ROBIN WILSON 812-C East Franklin Street HALDEN R. SCHWALLIE Dayton, OH 45459 1660 West 2nd Street, Suite 1100 Cleveland, OH 44113-1448 Tuscarawas County, Case Nos. 2024 AP 02 0008 & 2024 AP 04 0016 2
King, J.
{¶ 1} Defendant-Appellant, City of Dover, Ohio, appeals the April 5, 2024
judgment entry of the Court of Common Pleas of Tuscarawas County, Ohio, granting
summary judgment to Plaintiff-Appellee, Dover Chemical Corporation. We affirm in part
and reverse in part the trial court.
FACTS AND PROCEDURAL HISTORY
{¶ 2} City owns an electric utility providing electric power to homes and
businesses within its municipal jurisdiction (Dover Light & Power). Starting in 1976, Dover
Chemical started purchasing electricity from City even though it was located outside City's
municipal jurisdiction. City constructed an electrical line and installed distribution
transformers beyond the metering point and provided maintenance services to this
equipment located within the fence line of Dover Chemical's plant. City owned the line
and the equipment and charged Dover Chemical for the electricity used at the same rate
as other industrial customers located within the municipal jurisdiction. Dover Chemical
had the option to purchase the line and equipment beyond the meter if it so desired; the
selling price would be established at that time based on an appraised value of the line
and equipment.
{¶ 3} In 2003, City's Mayor informed Dover Chemical it was responsible for
maintaining any electrical equipment located on its property beyond the primary metering
point. The Mayor admitted City violated its own rules (Electric Service Regulations of the
City of Dover) by providing equipment to Dover Chemical and maintenance service was
becoming a safety issue. Dover Chemical did not object and any equipment from the Tuscarawas County, Case Nos. 2024 AP 02 0008 & 2024 AP 04 0016 3
primary metering pole became the property of Dover Chemical on May 1, 2003. But City
alleged it continued to provide maintenance services to the equipment after 2003.
{¶ 4} In 2019, Dover Chemical requested a rate reduction. Instead, City Council
discussed increasing the rate to add a surcharge for all the equipment, maintenance, and
repairs City provided to Dover Chemical over the years without receiving additional
compensation.
{¶ 5} On September 10, 2020, the Times-Reporter newspaper published an
article regarding City's consideration of adding a surcharge on electricity used by Dover
Chemical in order to recoup the cost of what "Law Director Doug O'Meara says is illegal
services the Dover Electric Field Division has been providing the company for 44 years."
See Article attached to March 22, 2021 Amended Complaint as Appendix H. The article
referred to a letter written by the Law Director to City Council.
{¶ 6} On February 10, 2021, Dover Chemical filed a complaint against City and
Law Director Douglas O'Meara for declaratory judgment and other relief, listing ten claims.
Pertinent to this appeal is Claim III, "Ohio Declaratory Judgment Act - O.R.C. § 2721.01
et seq. Non-Contractual Penalties." Dover Chemical alleged City was threatening to
impose by ordinance a penalty against it for "alleged unpaid services, equipment,
manpower, or materials," and such a penalty was unenforceable absent a contractual
agreement. Also pertinent is Dover Chemical's Claim VII for unjust enrichment. Dover
Chemical claimed it was overcharged because City denied it "credit due to certain
customers who own and maintain their own equipment." Dover Chemical filed an
amended complaint on March 22, 2021, to add a claim for preliminary and permanent
injunction which was subsequently resolved. Tuscarawas County, Case Nos. 2024 AP 02 0008 & 2024 AP 04 0016 4
{¶ 7} On March 12, 2021, City enacted Amended Emergency Ordinance 29-20,
assessing Dover Chemical a surcharge to recoup the services Dover Chemical allegedly
improperly received. The surcharge would remain in effect for at least two years and
amounted to an additional $0.03125 per kWh over 100,000 kWh per month.
{¶ 8} On April 5, 2021, City filed a motion to dismiss all of Dover Chemical's
claims and alleged it had immunity as to some of the claims. By judgment entry filed July
9, 2021, the trial court dismissed three of the ten claims and found immunity applied to
the fraudulent misrepresentation claim. City filed an appeal; this court affirmed the trial
court's decision, but found the law director was immune from the defamation claim. See
Dover Chemical Corporation v. Dover, 2022-Ohio-2307 (5th Dist.).
{¶ 9} On September 15, 2022, City filed an answer and a counterclaim seeking a
declaratory judgment that it could enact the ordinance (Count I), and made claims to
recover the costs of services and equipment provided to Dover Chemical without
compensation (unjust enrichment, breach of contract, conversion, civil theft, civil
conspiracy, and abuse of process).
{¶ 10} On July 17, 2023, Dover Chemical filed a motion for an in-camera
inspection, claiming City withheld production of the letter from Law Director O'Meara to
City Council claiming attorney-client privilege, but O'Meara had provided the letter to the
local newspaper. Dover Chemical argued any other document withheld on the basis of
attorney-client privilege should be reviewed for trial court determination on whether they
should be produced. By judgment entry filed August 29, 2023, the trial court granted the
motion and ordered City to produce any withheld documents alleged to be privileged for
its review. The trial court denied City's motion for reconsideration on October 18, 2023. Tuscarawas County, Case Nos. 2024 AP 02 0008 & 2024 AP 04 0016 5
{¶ 11} On September 28, 2023, City filed a motion for a protective order to limit the
re-deposition of O'Meara after the deposition was terminated due to a dispute that arose
after a break. By judgment entry filed October 25, 2023, the trial court denied the motion.
{¶ 12} On November 7, 2023, Dover Chemical filed a motion to compel testimony
regarding O'Meara's letter. Dover Chemical sought the discovery of information regarding
all communications relating to the subject matter of the letter. On November 20, 2023,
City filed a response, arguing the trial court only granted an in-camera inspection, but did
not issue a ruling that City waived its attorney/client privilege regarding the letter.
{¶ 13} On December 26, 2023, the parties each filed motions for summary
judgment.
{¶ 14} On January 24, 2024, the trial court filed a judgment entry granting in part
Dover Chemical's motion to compel, stating: "It is ORDERED that the City of Dover and
its witnesses shall provide testimony relating to all communications which deal with the
same subject matter as the 'Council Letter,' and shall be responsible for the costs to re-
depose Nicole Stoldt." On February 23, 2024, City filed an appeal of the interlocutory
order (Case No. 2024 AP 02 0008).
{¶ 15} On April 5, 2024, the trial court filed a judgment entry granting City's
summary judgment motion as to all of Dover Chemical's claims except the
aforementioned Claim III, the non-contractual penalties claim. The trial court granted
Dover Chemical's motion for summary judgment on that claim, finding the Amended
Emergency Ordinance passed by City was barred by the Equal Protection Clause. The
trial court found the ordinance was not related to Dover Chemical's status as a customer
located outside the municipal jurisdiction, but was to recover funds that were expended Tuscarawas County, Case Nos. 2024 AP 02 0008 & 2024 AP 04 0016 6
on behalf of Dover Chemical that "were never billed, never charged for, and never
invoiced." The trial court found the surcharge was not equally applied to similarly situated
entities located outside the municipal jurisdiction and as such, was unenforceable and
uncollectable.
{¶ 16} Dover Chemical switched its electric supplier to American Electric Power on
April 17, 2023. City charged Dover Chemical the surcharge from March 12, 2021, to April
17, 2023; Dover Chemical paid the amount into escrow, with a balance well over a million
dollars.
{¶ 17} On April 22, 2024, City filed an appeal on the summary judgment decision
(Case No. 2024 AP 04 0016). On May 23, 2024, the two appeals were consolidated for
review. City assigns the following errors:
I
{¶ 18} "THE TRIAL COURT ERRED WHEN IT GRANTED DOVER CHEMICAL
CORPORATION'S ('DCC') MOTION FOR SUMMARY JUDGMENT ON ITS CONTRACT
CLAIM CHALLENGING THE CITY'S AUTHORITY TO ENACT THE SURCHARGE
ORDINANCE (CLAIM III) AND RULED AGAINST THE CITY OF DOVER, OHIO (THE
'CITY') ON ITS DECLARATORY JUDGMENT COUNTERCLAIM (COUNTERCLAIM I)
REGARDING THE CITY'S AUTHORITY TO PASS AN ORDINANCE REGARDING
MUNICIPAL ELECTRICAL RATES."
II
{¶ 19} "THE TRIAL COURT ERRED WHEN IT ISSUED A DISCOVERY ORDER
COMPELLING TESTIMONY ON PRIVILEGED AND PROTECTED COMMUNICATIONS
WITHOUT MAKING A FINDING THAT THE CITY HAD WAIVED ANY ATTORNEY- Tuscarawas County, Case Nos. 2024 AP 02 0008 & 2024 AP 04 0016 7
CLIENT PRIVILEGE WITH RESPECT TO ITS COMMUNICATIONS OR NARROWLY
DEFINING THE SCOPE OF ANY WAIVER."
{¶ 20} Dover Chemical filed a cross-appeal and assigned the following error:
CROSS-ASSIGNMENT OF ERROR I
{¶ 21} "THE TRIAL COURT ERRED IN GRANTING SUMMARY JUDGMENT ON
DCC'S CLAIM FOR UNJUST ENRICHMENT."
{¶ 22} In its first assignment of error, City claims the trial court erred in granting
summary judgment to Dover Chemical, finding the Amended Emergency Ordinance was
barred by the Equal Protection Clause and the assessed surcharge was unenforceable
and uncollectable, and in denying its claim that it had the authority to pass such an
ordinance. We disagree.
{¶ 23} Summary judgment motions are to be resolved in light of the dictates of
Civ.R. 56. Regarding summary judgment, the Supreme Court stated the following in State
ex rel. Zimmerman v. Tompkins, 75 Ohio St.3d 447, 448 (1996):
Civ.R. 56(C) provides that before summary judgment may be
granted, it must be determined 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 such evidence most strongly Tuscarawas County, Case Nos. 2024 AP 02 0008 & 2024 AP 04 0016 8
in favor of the nonmoving party, that conclusion is adverse to the party
against whom the motion for summary judgment is made. State ex. rel.
Parsons v. Fleming (1994), 68 Ohio St.3d 509, 511, 628 N.E.2d 1377, 1379,
citing Temple v. Wean United, Inc. (1977), 50 Ohio St.2d 317, 327, 4 O.O.3d
466, 472, 364 N.E.2d 267, 274.
{¶ 24} In Leech v. Schumaker, 2015-Ohio-4444, ¶ 13 (5th Dist.), this court
explained the following:
It is well established the party seeking summary judgment bears the
burden of demonstrating that no issues of material fact exist for trial.
Celotex Corp. v. Catrett (1986), 477 U.S. 317, 330, 106 S.Ct. 2548, 91
L.Ed.2d 265 (1986). The standard for granting summary judgment is
delineated in Dresher v. Burt (1996), 75 Ohio St.3d 280 at 293: " * * * a party
seeking summary judgment, on the ground that the nonmoving party cannot
prove its case, bears the initial burden of informing the trial court of the basis
for the motion, and identifying those portions of the record that demonstrate
the absence of a genuine issue of material fact on the essential element(s)
of the nonmoving party's claims. The moving party cannot discharge its
initial burden under Civ.R. 56 simply by making a conclusory assertion the
nonmoving party has no evidence to prove its case. Rather, the moving
party must be able to specifically point to some evidence of the type listed
in Civ.R. 56(C) which affirmatively demonstrates the nonmoving party has Tuscarawas County, Case Nos. 2024 AP 02 0008 & 2024 AP 04 0016 9
no evidence to support the nonmoving party's claims. If the moving party
fails to satisfy its initial burden, the motion for summary judgment must be
denied. However, if the moving party has satisfied its initial burden, the
nonmoving party then has a reciprocal burden outlined in Civ.R. 56(E) to
set forth specific facts showing there is a genuine issue for trial and, if the
nonmovant does not so respond, summary judgment, if appropriate, shall
be entered against the nonmoving party." The record on summary
judgment must be viewed in the light most favorable to the opposing party.
Williams v. First United Church of Christ (1974), 37 Ohio St.2d 150.
{¶ 25} As an appellate court reviewing summary judgment motions, we stand in
place of the trial court and review the issues de novo, under the same standards and
evidence as the trial court. Grafton v. Ohio Edison Co., 77 Ohio St.3d 102, 105 (1996).
{¶ 26} On March 12, 2021, City enacted Amended Emergency Ordinance 29-20
to reset the rates for electrical use provided by City via Dover Electric Light and Power.
The ordinance states that Dover Chemical has been receiving services that were not
invoiced and billed in accordance with City's regulations; City has provided maintenance,
service, equipment, and materials beyond the primary meter without cost to Dover
Chemical. See Amended Emergency Ordinance 29-20, attached to Dover Chemical's
December 26, 2023 Motion for Summary Judgment as Exhibit G. The ordinance
acknowledged "partial charges" had been assessed to Dover Chemical after September
2019 to recoup some of the costs of the provided services, but because the parties could
not reach a negotiated resolution, a surcharge would be levied against Dover Chemical Tuscarawas County, Case Nos. 2024 AP 02 0008 & 2024 AP 04 0016 10
to recoup the services Dover Chemical improperly received. Id. The surcharge would
remain in effect for at least two years and amounted to an additional $0.03125 per kWh
over 100,000 kWh per month. Id. The ordinance stated the surcharge was "justified,
reasonable, supported by the evidence, and specifically assessed to partially recoup the
value of services, materials, and equipment" provided to Dover Chemical after December
1975.
{¶ 27} Jason Hall, Superintendent of the power plant for Dover Light & Power,
testified the next kilowatt hour after the 100,000 kWh did not cost City any more money
to supply. Hall depo. at 92. He admitted the surcharge starting in the next hour after
100,000 did not "bear any relation at all to the cost to supply that next kilowatt hour." Id.
at 93.
{¶ 28} Shane Gunnoe, former City Council President and current Mayor, testified
the surcharge number was decided upon because "it was approximately 20 percent" and
the number would "recoup 1.1 million." Gunnoe depo. at 52. He explained the surcharge
was an attempt to recover costs that "had not been properly recovered for the residents
of the City of Dover"; council wanted to recoup the money without the added cost of having
to file a lawsuit against Dover Chemical. Id. at 52-54, 161. Because detailed work orders
where not taken by City as to the services performed for Dover Chemical, City took the
information it had, together with help from outside counsel, and arrived at the 1.1 million-
dollar figure, even though the law director had first suggested 2.2 million. Id. at 31, 35,
41, 66-67, 171. Gunnoe stated there were gap years where no information was located,
there was incomplete data, and there were missing logbooks for labor calls; so the 1.1 Tuscarawas County, Case Nos. 2024 AP 02 0008 & 2024 AP 04 0016 11
million was a figure council thought was reasonable and they were comfortable with. Id.
at 32, 40-41, 66-67, 150.
{¶ 29} William Abel, Assistant Superintendent of the electric field division for Dover
Light & Power, could not give specifics on what services City performed for Dover
Chemical. May 9, 2023 Abel depo. at 42, 69, 84-85. City never invoiced Dover Chemical
for equipment and services that it now seeks to recoup. Id. at 13.
{¶ 30} In its motion for summary judgment, Dover Chemical argued the surcharge
was outside of City's ratemaking authority - City could not use its "ratemaking authority
as a municipal utility provider to circumvent the Courts and unilaterally impose a
surcharge as a de facto judgment rather than going through proper means"; the surcharge
was "an unenforceable, unilaterally imposed penalty and is therefore invalid." Dover
Chemical's December 26, 2023 Motion for Summary Judgment at 21 and 23.
{¶ 31} In its motion for summary judgment, City argued because the parties did not
operate under a contract for the sale/purchase of electricity, it had the authority to enact
the ordinance "imposing conditions on its sale of electricity" to Dover Chemical. City's
December 26, 2023 Motion for Summary Judgment at 22-23.
{¶ 32} In order to determine whether the surcharge is improper, we will begin with
the general legal framework that City operates within. Through this, we can better clarify
the scope of the rights, responsibilities, and defenses of the parties in reaching a decision.
Generally, the threshold inquiry is whether the political subdivision involved has been
granted legal authority for its conduct. With regard to the operation of a public utility, the
City's source of authority emanates from the Ohio Constitution, Article XVIII, Sections 4
and 6. Tuscarawas County, Case Nos. 2024 AP 02 0008 & 2024 AP 04 0016 12
{¶ 33} Section 4 grants municipalities the authority to either contract for utility
services or supply those utility services directly to the municipality and its inhabitants.
This constitutional grant of authority plainly limits the power of a municipality to provide
service to itself or its inhabitants and without additional authority, it would be powerless
to supply utility services outside its limits. But Section 6 conditionally expands this
authority, allowing a municipally operated public utility to sell its surplus to willing
customers outside the municipal limits. R.C. 743.12. In the case of public utility services
such as electricity, Section 6 also limits the sale of the surplus to fifty percent of the total
available quantity.
{¶ 34} The Supreme Court of Ohio has had the opportunity to construe these
provisions in Toledo Edison Co. v. Bryan, 90 Ohio St.3d 288 (2000). The Court affirmed
that the plain language of these sections limits a municipality to operating the utility for
the benefit of its citizens, while allowing it to market its surplus to others. Id. at 292.
Moreover, these sections broadly prohibit municipalities from entering the general public-
utility business outside its boundaries to compete with other entities. Id. at 292-293, citing
Wilson v. Hance, 169 Ohio St. 457, 461 (1959). This means in the unincorporated areas
of the state, municipal utility service is exceptional while the default providers of utility
services to those inhabitants are private for-profit entities, not-for-profit entities, such as
electric cooperatives, county water and sewer entities under Chapter 6103 and 6117, and
regional water and sewer providers under Chapter 6119.
{¶ 35} It follows that if municipal supplied utility service in the unincorporated areas
are not favored, then municipalities are not required to extend its service to any property
owner or business merely upon a request. In these situations, the judiciary has Tuscarawas County, Case Nos. 2024 AP 02 0008 & 2024 AP 04 0016 13
recognized that a municipality may extend service upon an express contract with a
particular user or in accord with general legislation that regulates the use and rates of its
utility services to extraterritorial customers. See City of Hudson v. City of Akron, 2017-
Ohio-7590, ¶ 13 (9th Dist.); Bakies v. City of Perrysburg, 2004-Ohio-5231, ¶ 38 (6th Dist.);
Xenia v. State, 140 Ohio App.3d 65 (10th Dist. 2000). Here, there is no dispute that Dover
Chemical is situated outside the municipal limits. Despite this, it does not appear that
service was extended upon an express, written agreement; the parties have not produced
any such contract. As a result, we must next consider what, if any, restrictions there are
on the rates a municipality charges to extraterritorial customers such as Dover Chemical.
{¶ 36} The Supreme Court of Ohio has held that when a municipality extends its
utility service to noninhabitants, it does so only in its propriety capacity and is limited to a
reasonable profit. See Orr Felt Co. v. City of Piqua, 2 Ohio St.3d 166, 170 (1983). But a
municipality is prohibited from achieving a reasonable profit via unjust discrimination
between the extraterritorial customers served. Id. at 170-171. The key aspect of this
qualification is the discrimination must be unjust. While a municipality is free to classify
extraterritorial customers into different rate groups, it must do so by a neutral, objective
criteria by which its decision can be fairly reviewed. It is not unjust if a rate difference is
based upon a "'reasonable and fair difference in conditions that equitably and logically
justify a different rate.'" Fairlawn Manor, Inc. v. City of Akron, 1987 WL 9470, *2 (9th Dist.
Apr. 8, 1987), quoting 12 McQuillin, The Law of Municipal Corporations (3 Ed.Rev.1986)
285-287, Section 34.101. For the reasons that follow, we find the amended rate charged
to Dover Chemical is both unreasonable and unjust for at least three reasons. Tuscarawas County, Case Nos. 2024 AP 02 0008 & 2024 AP 04 0016 14
{¶ 37} First, the rate charged to Dover Chemical is an unreasonable profit because
it is unjustifiably disproportionate to the rate it charges to municipal residents. In order to
determine whether the rate set forth in Amended Emergency Ordinance 29-20 represents
reasonable profit, we first turn to Article XVIII, Section 6. The overwhelming purpose of
any municipal utility is to provide that service to its own inhabitants. So, the rate it charges
to its residents must, at a minimum, cover the cost of supplying the current level of service;
otherwise it would operate at a loss and require taxpayer subsidy. The other constituent
of the rate is the profit. The sum charged in excess of that cost would be the profit, which
becomes our particular focus.
{¶ 38} The ordinance sets out industrial rates. The rate for anything over 100,000
kWhr, per kWh, is $0.08782. From our review of the record, it does not appear that City
attempted to determine its cost to produce electricity, the profit it received from residents,
or even the surplus available to sell to Dover Chemical. Council's approach was, at best,
ad hoc. From our review, it appears that council focused on the gross amount it wanted
to collect from Dover Chemical, debated that figure, and ultimately fixed the agreed upon
amount by legislation. Rather than a reasoned inquiry guided by facts such as production
costs, capital costs, maintenance costs, employee costs, financial projects, and so on,
the process used is fairly described as arbitrary and capricious. For example, it seems
that council proceeded to fix the rate without any sort of professional study or report that
would have supported the rate ultimately set by council. It is entirely unclear how the
proposed rate increase was arrived at originally and why the accepted recoupment
amount (1.1 million) was half of what was originally suggested by City's law director (2.2
million). Tuscarawas County, Case Nos. 2024 AP 02 0008 & 2024 AP 04 0016 15
{¶ 39} We also note that regulated utilities are usually precluded from increasing
rates to recoup past expenses. In re Application of Columbus S. Power Co., 2011-Ohio-
1788, ¶ 11. Although that judicially created rule arose in the context of utilities regulated
by the Public Utilities Commission, there is a strong argument that when a municipality
enters the marketplace to sell its surplus to nonresidents, such a rule should be extended
to the municipality. As we discuss below, if we were to impose such a rule, we would
likewise extend that rule precluding a claim of unjust enrichment too. Keco Industries,
Inc. v. Cincinnati & Suburban Bell Tel. Co., 166 Ohio St. 254 (1957). It is doubtful that
Article XVIII, Section 6, would allow a municipality to recoup past expenses through what
amounts to a de facto retroactive rate increase.
{¶ 40} In sum, the rate setting process lacks sufficient indicia of reasonableness.
In light of Article XVIII, Section 6, we do not find the record sufficiently supports sustaining
the rate imposed on a non-residential customer.1
{¶ 41} Second, even if we look past the extraterritorial issue arising from Article
XVIII, Section 6, we still find the rate was unreasonable. The ordinance singled out Dover
Chemical and imposed a surcharge: "For kWh's billed over 100,000 per month, DCC
[Dover Chemical] shall be assessed an additional surcharge above the industrial rate
listed above in section II C of this ordinance or all kWh above 100,000 kWh of $0.03125
per kWh over 100,000 kWh per month." Amended Emergency Ordinance 29-20, attached
to Dover Chemical's December 26, 2023 Motion for Summary Judgment as Exhibit G.
1It may also be the case that this rate exceeds the 10% limit set by R.C. 743.13.Although the Supreme Court found this statute unconstitutional in State ex rel. McCann v. Defiance, 167 Ohio St. 313 (1958), it appears it overruled that precedent in City of Columbus v. Teater, 53 Ohio St.2d 253 (1978). Tuscarawas County, Case Nos. 2024 AP 02 0008 & 2024 AP 04 0016 16
The ordinance stated the surcharge was "specifically assessed to partially recoup the
value of services, materials, and equipment" provided to Dover Chemical after the prior
ordinance and regulations.
{¶ 42} The record demonstrates the rate was unjust and discriminatory. Orr Felt,
2 Ohio St.3d at 170-171. Dover Chemical was singled out of all other users. The record
does not support City's argument that the assessed rate was reasonable; in fact, the
record supports the conclusion that Dover Chemical was charged an arbitrary surcharge.
{¶ 43} Third, even if we were to disregard the lack of evidence to find the rate was
reasonable and just, City would be estopped from seeking to recover costs decades after
the fact. As discussed above, the general rule is that the extraterritorial extension of utility
services should be upon terms agreed to by the user and the municipality and then
memorialized. City of Hudson, 2017-Ohio-7590 (9th Dist.); Bakies, 2004-Ohio-5231 (6th
Dist.); Xenia, 140 Ohio App.3d 65. In the ordinary case, the public purpose for
constructing improvements to facilitate extending utility services to a nonresident user
would be indirect or nonexistent. So, in the ordinary case, we would expect private—not
public—funds be used to pay for the necessary improvements.
{¶ 44} Ordinarily, the cost of extending surplus municipal utility services would not
be paid with public funds; instead, the costs would be paid by the property owner or the
end user. R.C. 743.13. This is because public funds are held in trust for the public by
public bodies and their officers, and those funds can be disbursed only upon clear
authority. State ex rel. Hall v. Board of Trustees of Police Relief & Pension Fund of City
of Lakewood, 149 Ohio St. 367, 376 (1948), citing State ex rel. Smith, Pros. Atty., v.
Maharry, 97 Ohio St. 272, paragraph one of the syllabus. As discussed above, City Tuscarawas County, Case Nos. 2024 AP 02 0008 & 2024 AP 04 0016 17
extended these services without an express agreement with Dover Chemical. And it
appears it expended public funds to do so. Despite R.C. 743.13, we will assume here
that it was proper for City to extend these services, pay to construct the improvements,
and then pay to maintain these improvements. So, the issue before us is did City wait
too long to recoup these public funds from Dover Chemical. We think so.
{¶ 45} We begin by remarking that because the City waited so long to recoup these
costs, detailed figures and records relating to the cost of providing these services have
been lost or destroyed. Moreover, memories of those involved at the beginning have
faded and people with personal knowledge of the initial agreement have sought other
employment or died. And it is difficult to recover what the respective understandings and
verbal agreements of the parties were at the time of the endeavor.
{¶ 46} This is the sort of situation where we might ordinarily apply estoppel or
laches. State ex rel. Madden v. Windham Exempted Village School Dist. Bd. of Educ.,
42 Ohio St.3d 86, 90, (1989); State ex rel. Pennington v. Bivens, 2021-Ohio-3134, ¶ 24-
26. Rather than bring suit and possibly lose on these doctrines or because of the statute
of limitations, City imposed a surcharge.2 Accordingly, we hold City waited too long to
impose this surcharge, assuming it was ever lawful to impose.
{¶ 47} We now turn to Dover Chemical's argument that this surcharge violated the
Equal Protection clause of the Fourteenth Amendment. We agree with the trial court that
it does. The trial court made these findings: the surcharge did not apply to similarly
situated persons outside of the municipal limits; City's intent was to pass an ordinance
2There is further reason to doubt the appropriateness of this surcharge when it approximates a special assessment but avoids any of the statutory burdens of R.C. Ch. 727. Tuscarawas County, Case Nos. 2024 AP 02 0008 & 2024 AP 04 0016 18
that only applied to Dover Chemical; the ordinance was motivated by improper
discrimination and had a discriminatory effect; and the ordinance violated the equal
protection clause. We turn to the standard in evaluating these claims under the equal
protection clause.
{¶ 48} The Equal Protection Clause of the United States Constitution provides that
"No State shall . . . deny to any person within its jurisdiction the equal protection of the
laws." The Equal Protection Clause in the Ohio Constitution is fundamentally equivalent
to the federal guarantee and is analyzed under the same standard. Ohio Const., art. I, §
2. "When the government treats similarly situated individuals differently, that action
implicates the Equal Protection Clause." Mariemont Apt. Assn. v. Village of Mariemont,
2007-Ohio-173, ¶ 27. As explained in Mega Outdoor, L.L.C. v. Dayton, 2007-Ohio-5666,
¶ 58:
Facially neutral legislation may be subject to equal protection attack
where the statute or ordinance has been implemented in a discriminatory
fashion. When challenging the application of a facially neutral statute or
ordinance, the plaintiff must establish (1) that the application had a
discriminatory effect, i.e., that similarly situated persons or entities were
treated differently, and (2) that the unequal application was motivated by a
discriminatory purpose.
{¶ 49} And when reviewing an equal protection claim, we do so under a rational
basis review. Holloway v. Brown, 62 Ohio St.2d 65, 75 (1980). Tuscarawas County, Case Nos. 2024 AP 02 0008 & 2024 AP 04 0016 19
{¶ 50} We agree with the findings of the trial court. And, as we found above, the
surcharge was an unreasonable attempt to recoup past expenses. We find this conduct
also violates the equal protection clause.
{¶ 51} Upon review, we find the trial court did not err in granting summary judgment
to Dover Chemical.
{¶ 52} Assignment of Error I is denied.
{¶ 53} In its second assignment of error, City claims the trial court erred when it
issued a discovery order compelling testimony on privileged and protected
communications without making a finding that the city had waived any attorney-client
privilege with respect to its communications. We disagree.
{¶ 54} This argument centers on the Law Director's letter that was sent to the
newspaper, but was not disclosed in discovery. Dover Chemical requested an in-camera
inspection, claiming City withheld production of the letter claiming attorney-client privilege,
but had provided the letter to the newspaper. City argues it never claimed privilege over
the letter. Appellant's Brief 32. Thereafter, Dover Chemical filed a motion to compel the
discovery of information regarding all communications relating to the subject matter of the
letter. The trial court granted the motion in part, ruling City "shall provide testimony
relating to all communications which deal with the same subject matter" as the letter. See
Judgment Entry filed January 24, 2024.
{¶ 55} The trial court's decision was not overly broad, it limited testimony to
communications which dealt with the same subject matter as contained in the letter, a
letter City claims was never privileged; if the letter was never privileged, then the subject Tuscarawas County, Case Nos. 2024 AP 02 0008 & 2024 AP 04 0016 20
matter within the letter was not privileged. City does not set forth any harm it received
from the ruling.
{¶ 56} Upon review, we do not find the trial court erred in its discovery order.
{¶ 57} Assignment of Error II is denied.
{¶ 58} Dover Chemical claims the trial court erred in granting City's summary
judgment motion on its unjust enrichment claim. We agree.
{¶ 59} Dover Chemical explains "City's Electric Service Regulations make a
distinction between primary metered customers who maintain their own equipment and
primary metered customers that do not by affording a credit of $0.220 per kVA for those
that do." Appellee's Brief at 33. Although Dover Chemical was required to maintain its
own equipment after 2003, it never received the credit and thus City was unjustly
enriched.
{¶ 60} It is undisputed that Dover Chemical did not receive a credit. Dover
Chemical argues in analyzing its unjust enrichment claim, the trial court erred in finding
its motion raised "new allegations of unjust enrichment for the first time; however, those
claims are not properly before the Court." See Judgment Entry filed April 5, 2024, at 24.
{¶ 61} It is unclear what the trial court thought the "new allegations" were. From
our review of the record, it appears the trial court dismissed the claim because of an
argument made in the summary judgment motion. We conclude the argued allegations
were sufficiently contained within the pleadings and dismissing the claim was improper.
We believe Dover Chemical sufficiently stated a cause of action. Whether Dover
Chemical can meet the summary judgment standard remains to be seen. Tuscarawas County, Case Nos. 2024 AP 02 0008 & 2024 AP 04 0016 21
{¶ 62} As a result, we remand this claim to the trial court for consideration under
the summary judgment standard. The trial court may permit any additional briefing or
discovery it determines is appropriate. It may consider, as it deems appropriate, any
additional legal defenses the City may raise, such as the precedent limiting recovery of a
rate payer against a public utility under an unjust enrichment claim, which we briefly
discuss in ¶ 39.
{¶ 63} Upon review, we find the trial court erred in granting summary judgment to
City on Dover Chemical's unjust enrichment claim.
{¶ 64} Cross-Assignment of Error I is granted.
{¶ 65} The judgment of the Court of Common of Tuscarawas County, Ohio is
hereby affirmed with regard to City's appeal and reversed with regard to Dover Chemical's
cross-appeal. The matter is remanded to the trial court.
By King, J.
Gwin, P.J. and
Wise, J. concur.