State ex rel. Cordray v. Massarelli

2013 Ohio 3321

• Court: Ohio Court of Appeals
• Decided: July 24, 2013
• Docket: 2012 AP 08 0045
• Status: Published

Opinion

[Cite as State ex rel. Cordray v. Massarelli, 2013-Ohio-3321.]

COURT OF APPEALS TUSCARAWAS COUNTY, OHIO FIFTH APPELLATE DISTRICT

STATE OF OHIO, EX REL, JUDGES: ATTORNEY GENERAL Hon. William B. Hoffman, P.J. RICHARD CORDRAY Hon. John W. Wise, J. Hon. Patricia A. Delaney, J. Plaintiff-Appellee Case No. 2012 AP 08 0045 -vs-

SHIRLEY A. MASSARELLI OPINION

Defendant-Appellant

CHARACTER OF PROCEEDING: Appeal from the Tuscarawas County Common Pleas Court, Case No. 2010 CV 04 0541

JUDGMENT: Affirmed

DATE OF JUDGMENT ENTRY: July 24, 2013

APPEARANCES:

For Plaintiff-Appellee For Defendant-Appellant

RICHARD CORDRAY EUGENE H. NEMITZ, JR. OHIO ATTORNEY GENERAL 136 2nd Street NE New Philadephia, Ohio 44663 CASEY L. CHAPMAN L. SCOTT HELKOWSKI ALANA R. SHOCKEY Assistant Attorneys General Envirnonmental Enforcement Section 30 East Broad Street, 25th Floor Columbus, Ohio 43215 Tuscarawas County, Case No. 2012 AP 08 0045 2

Hoffman, P.J.

{¶1} Defendant-appellant Shirley A. Massarelli appeals the July 10, 2012

Judgment Entry entered by the Tuscarawas County Court of Common Pleas, which

found her in violation of R.C. 6109.31, and imposed a civil penalty of $144,450.00.

Plaintiff-appellee is State of Ohio, ex rel. Attorney General Richard Cordray (“the

State”).

STATEMENT OF THE FACTS AND CASE

{¶2} Appellant owned and operated The Red Onion Bar (“the Bar”) and The

Red Onion Party Center (“the Party Center”). Pursuant to R.C. 6109.21 and Ohio Adm.

Code 3745-84-02(A), these establishments were public water systems; therefore,

Appellant was required to obtain licenses to operate (“LTOs”) from the Ohio EPA, and

follow certain regulations for providing drinking water to the public. Appellant was also

required to complete applications and pay fees to renew the LTOs.

{¶3} Appellant did not obtain or apply for LTOs for the Bar in 2005, 2006, 2007,

or 2008. Appellant was late in submitting the LTO applications in 2009, and 2010.

Appellant, nonetheless, continued to operate the Bar and serve drinking water to the

public. In addition, throughout substantial periods of her ownership of the Bar,

Appellant failed to properly complete the required bacteriological sampling of the water

served to the public. Appellant failed to sample the drinking water at the Bar for total

coliform during 3 quarters of each year between 2005, and 2009. Appellant failed to

monitor the drinking water at the Bar for nitrate in 2004, 2005, and 2008, and for nitrite

in 2005. Appellant did not post public notifications for her failures to monitor these

chemicals. Tuscarawas County, Case No. 2012 AP 08 0045 3

{¶4} With respect to the Party Center, Appellant failed to apply for LTOs in

2005, 2006, and 2007, and applied late in 2008, and 2009. Appellant submitted a late

application in 2010. Appellant, nonetheless, continued to operate the Party Center and

serve drinking water to the public. In addition, throughout substantial periods of her

ownership of the Party Center, Appellant failed to properly complete the required

bacteriological sampling of the water served to the public. Appellant failed to sample the

drinking water at the Party Center for total coliform during 3 quarters of each year

between 2005, and 2009. Appellant failed to monitor the drinking water at the Party

Center for nitrate in 2004, 2005, and 2008, and for nitrite in 2005. Appellant did not post

public notifications for her failures to monitor these chemicals.

{¶5} Ohio EPA made on-going attempts to bring Appellant to compliance.

Appellant received her first violation for failure to monitor in 1991. Ohio EPA sent

Appellant courtesy reminders, monitoring schedules, notifications, and notice of

violation letters. Ohio EPA also made phone calls and conducted on-site visits in an

attempt to achieve compliance from Appellant.

{¶6} After these attempts proved unsuccessful, Ohio EPA moved to the next

level of enforcement - a bilateral compliance agreement. The bilateral compliance

agreement identified the violations and the actions Appellant agreed to undertake to

return to compliance. The document was signed by Appellant as well as the Chief of

the Division of Drinking and Ground Water. Appellant signed the bilateral compliance

agreement in 1999, but did not perform the necessary actions. In 2001, Ohio EPA

moved to the next level of enforcement with the Director issuing Final Findings and Tuscarawas County, Case No. 2012 AP 08 0045 4

Orders, and Appellant agreeing to comply with the safe drinking water laws and

monitoring schedules. Nonetheless, Appellant’s violations continued.

{¶7} In 2010, Appellant submitted an application for the LTOs eight months

late. The application was denied due to her noncompliance. Appellant’s case was

referred to the Ohio Attorney General’s Office in September, 2009.

{¶8} On April 30, 2010, the State filed a complaint, seeking injunctive relief and

civil penalty against Appellant. The complaint alleged Appellant served drinking water

to the public without having the proper licenses; Appellant failed to routinely test the

drinking water to ensure its safety for human consumption; and Appellant failed to

inform the public of the violations. The State also sought a preliminary injunction. On

May 28, 2010, the trial court ordered Appellant to cease operation of the Bar and Party

Center until she obtained the necessary licenses.

{¶9} The State filed a motion for partial summary judgment on the issue of

liability relative to Counts One through Ten of the complaint. Via Decision filed April 6,

2011, the trial court found Appellant liable for the ten violations. The trial court

determined Appellant had not monitored for total coliform, nitrate, and nitrite; had not

given public notice of the failure to monitor; and had not timely obtained LTOs before

providing drinking water to the public.

{¶10} The trial court conducted a hearing to determine the civil penalties on April

5, 2012. Holly Kaloz, an enforcement coordinator with Ohio EPA, testified regarding

Appellant’s history of noncompliance, the number of violations Appellant committed, the

risk of harm posed by those violations, the economic benefit Appellant received Tuscarawas County, Case No. 2012 AP 08 0045 5

because of the violations, the recalcitrance Appellant exhibited, and the cost of the

enforcement since the referral to the Ohio Attorney General’s Office.

{¶11} The State filed its Civil Penalty Post-Hearing Briefs on April 13, 2012.

Appellant filed her Post-Trial Memorandum on May 4, 2012. Therein, Appellant raised,

for the first time, the State’s failure to present evidence the Attorney General’s Office

received a written referral letter from the Director of Ohio EPA. The State filed a Reply

opposing Appellant’s assertion and attaching a copy of the authenticated referral letter.

Appellant filed a motion to strike the letter as untimely introduced, to which the State

filed a memorandum contra.

{¶12} Via Decision filed July 10, 2012, the trial court assessed a civil penalty

against Appellant in the amount of $144,450.00, which represented a fine of $10 per

each of the 14,445 separate violations.

{¶13} It is from this decision Appellant appeals, raising the following

assignments of error:

{¶14} “I. THE ATTORNEY GENERAL OF OHIO FAILED TO PROVE BY ANY

SUBMISSION OF EVIDENCE THAT HE HAD BEEN REQUESTED BY THE OHIO

DIRECTOR OF THE ENVIRONMENTAL PROTECTION AGENCY TO TAKE ACTION

AGAINST DEFENDANT AS IS REQUIRED BY OHIO REVISED CODE §6109.32 TO

AUTHORIZED SUCH ACTION AND THE TRIAL COURT ERRED IN FAILING TO

DISMISS THE COMPLAINT.

{¶15} “II. THE STATE’S DELAY IN ENFORCEMENT CAUSED THE NUMBER

OF DAYS TO BE AN EXCESSIVELY HIGH NUMBER OF DAYS OF VIOLATION AND

POTENTIALLY (AND IN FACT DID) CAUSE A GREATER PENALTY AS THE COURT Tuscarawas County, Case No. 2012 AP 08 0045 6

USED A MULTIPLE OF WHAT HE CONSIDERED THE NUMBER OF DAYS OF

VIOLATION TO CALCULATE THE PENALTY AND THE COURT ERRED IN

COUNTING ALL OF THE DAYS CLAIMED BY THE STATE AS VIOLATIONS.

{¶16} “III. THE TRIAL COURT ERRED IN FINDING THAT THE DEFENDANT

WAS IN VIOLATION OF OHIO SAFE WATER DRINKING LAWS FOR 14,445 DAYS.

{¶17} “IV. THE TRIAL COURT’S FINDING THAT DEFENDANT GAINED AN

ECONOMIC BENEFIT FROM HER VIOLATION OF THE SAFE DRINKING WATER

LAWS ‘WAS NOT IN EXCESS OF $144,450.00’ IS SERIOUSLY MISLEADING AND

AN ABUSE OF DISCRETION. THE COSTS OF THE WATER TESTING WAS A

QUARTERLY EXPENSE EACH YEAR FROM 2005 TO 2099 [SIC] – A FEW

HUNDRED DOLLARS AT MOST.

{¶18} “V. THE TRIAL COURT ABUSED ITS DISCRETION AND FAILED TO

TAKE INTO ACCOUNT THAT THE AMOUNT OF THE CIVIL PENALTY IMPOSED BY

THE COURT WOULD BE RUINOUS OR OTHERWISE DISABLING AS INDICATED BY

THE TESTIMONY OF DEFENDANT.

{¶19} “VI. THE TRIAL COURT ABUSED ITS DISCRETION IN IMPOSING A

CIVIL PENALTY PURSUANT TO OHIO REVISED CODE §6109.31.”

I

{¶20} In her first assignment of error, Appellant contends the trial court erred by

not dismissing the complaint as the State failed to present evidence the Attorney

General had received a written request from the Director of Ohio EPA to take action

against her as required by R.C. 6109.32. Tuscarawas County, Case No. 2012 AP 08 0045 7

{¶21} Chapter 6109 of the Ohio Revised Code addresses safe drinking water.

Under Section 6109.32, “[t]he attorney general, upon written request by the director [of

environmental protection], shall bring an action for injunction or other appropriate action

against any person violating or threatening to violate [this chapter].”

{¶22} In her post-trial memorandum, Appellant asserted, for the first time, the

trial court lacked jurisdiction as the State failed to present evidence the Director of Ohio

EPA sent a written request to the Attorney General to bring an action. The State filed a

Reply and attached a copy of the written request. Appellant moved to strike the exhibit

as untimely. The trial court found the documentation regarding the referral from the

Director of Ohio EPA to the Attorney General was not a filing requirement, and that the

State was not required to prove a written referral was properly made before a judgment

can be issued. The trial court relied upon the decision of the Ninth District Court of

Appeals in State ex rel. Cordray v. Helms, 192 Ohio App.3d 426, 2011-Ohio-569,

{¶23} In Helms, the attorney general filed complaints against the Helms, who

were the operators of an apartment complex, alleging, inter alia, violations of safe

drinking water and wastewater treatment laws. Id. at para 1. The Helms challenged the

trial court’s jurisdiction, arguing the Ohio Environmental Protection Agency did not

properly authorize the lawsuit; therefore, the attorney general did not have authority to

file a complaint. Id. at para 10. The trial court permitted the State to provide a copy of

the referral letter after the hearing. Id. at para 12. On appeal, the Ninth District upheld

the trial court’s decision to admit the referral letter into evidence after the conclusion of

the hearing. Id. Tuscarawas County, Case No. 2012 AP 08 0045 8

{¶24} We note a trial court has authority to consider any pertinent evidentiary

materials when determining its own jurisdiction. Southgate Develop. Corp. v. Columbia

Gas Transmission Corp., 48 Ohio St.2d 211 (1976). Accordingly, we find the trial court

did not abuse its discretion in accepting the referral letter into evidence post-hearing.1

{¶25} Appellant’s first assignment of error is overruled.

II

{¶26} In her second assignment of error, Appellant argues the State’s delay in

enforcement caused the number of days of violation to be excessive, resulting in a

greater penalty as the trial court used a multiple of the number of days violation in

determining the civil penalty. Appellant concludes the State acquiesced to Appellant’s

violations and should be barred from seeking civil penalties against her.

{¶27} The State brought the action against Appellant in 2010, for violations

occurring between 2005, through 2009. As set forth in our Statement of the Case and

Facts, Ohio EPA made repeated attempts to bring Appellant into compliance. Appellant

signed compliance agreements consenting to comply with the safe drinking water laws

and monitoring schedules. Appellant repeatedly breach those agreements.

{¶28} We do not find an unreasonable or unfair delay in the State’s initiating the

action. Ohio EPA tried to work with Appellant to bring her into compliance. She was

able to effectively avoid her obligations for years on end.

{¶29} Appellant’s second assignment of error is overruled.

1 While unnecessary for our disposition of this assigned error, we question whether the absence of a written referral letter would prohibit the Attorney General from seeking enforcement action on his or her own initiative. We do not interpret the statute as one of limitation of authority, but rather when authority must be exercised. Tuscarawas County, Case No. 2012 AP 08 0045 9

III

{¶30} In her third assignment of error, Appellant maintains the trial court erred in

finding she was in violation of Ohio drinking water laws for 14,455 days. Appellant

submits the trial court simply accepted the total number of alleged violations as testified

to by the State’s witness.

{¶31} We find Appellant has waived any argument as to the appropriateness of

the trial court’s finding relative to the number of days of violations. Appellant did not

oppose the State’s motion for summary judgment on the issue of liability.

{¶32} Appellant’s third assignment of error is overruled.

IV

{¶33} In her fourth assignment of error, Appellant submits the trial court’s finding

the economic benefit she gained from her violations of the safe drinking laws was an

abuse of discretion. Appellant claims any economic benefit she gained was, at most,

several hundred dollars per year, which represents the cost of performing the required

testing.

{¶34} In State v. ex rel. Brown v. Dayton Malleable, 1 Ohio St.3d 151, 153, 438

N.E.2d 120 (1982), the Ohio Supreme Court discussed the factors a trial court should

consider when determining the appropriate amount of a civil penalty. Those factors are:

1) the harm or threat of harm posed to the environment by the violations 2) the level of

recalcitrance, defiance, or indifference demonstrated by the violator of the law (the

defendant's good or bad faith); 3) the economic benefit gained by the violation; and, 4)

the extraordinary costs incurred in enforcement. Id. Tuscarawas County, Case No. 2012 AP 08 0045 10

{¶35} In its July 10, 2012 Decision, the trial court addressed these factors and

concluded the civil penalty was not in excess of Appellant’s economic benefit. We find

the trial court did not abuse its discretion in making this finding.

{¶36} Appellant’s fourth assignment of error is overruled.

V, VI

{¶37} Because Appellant argued her fifth and sixth assignments of error

together, we shall likewise address them together. In her fifth assignment of error,

Appellant asserts the trial court abused its discretion in failing to take into account how

the civil penalty would be ruinous and otherwise disabling to her. In her sixth

assignment of error, Appellant contends the trial court abused its discretion in imposing

a civil penalty in the amount of $144,450.

{¶38} “Civil penalties can be used as a tool to implement a regulatory program.”

State ex rel. Brown v. Howard (1981), 3 Ohio App.3d 189, 191, 3 OBR 216, 444 N.E.2d

469, citing United States ex rel. Marcus v. Hess (1943), 317 U.S. 537, 63 S.Ct. 379, 87

L.Ed. 443. Substantial penalties are used as a mechanism to deter conduct contrary to

the regulatory program. Id. (Citation omitted); Dayton Malleable, supra. In order to be an

effective deterrent to violations, civil penalties should be large enough to hurt the

offender but not cause bankruptcy. Howard; Dayton Malleable.

{¶39} The assessment of an appropriate civil penalty lies within the sound

discretion of the trial court and will not be reversed upon appeal absent evidence that

the trial court abused its discretion in imposing the penalty. Dayton Malleable, Inc.,

supra at 157. In making this determination, the court should consider evidence relating

to defendant's recalcitrance, defiance, or indifference to the law; the financial gain that Tuscarawas County, Case No. 2012 AP 08 0045 11

accrued to defendant; the environmental harm that resulted; and the extraordinary costs

incurred in enforcement of the law. See State ex rel. LG Dev. Corp. 187 Ohio App.3d

211, 219, 931 N.E.2d 642, 648. See also Howard; State ex rel. Celebrezze v. Thermal–

Tron, Inc. (1992), 71 Ohio App.3d 11, 592 N.E.2d 912.

{¶40} We find the trial court did not abuse its discretion in its application of the

Dayton Malleable factors in the instant action.

{¶41} First, the trial court found Appellant’s violations “posed a moderate threat

to the consuming public at her places of business.” Kaloz testified the monitoring of

total coliform is necessary as it is an indicator of whether microbial organisms such al E.

Coli and Fecal Coliform are present in drinking water. Kaloz explained such organisms

could cause the public to become ill. Appellant served untested drinking water to the

public 15 out of the last 21 monitoring periods. Likewise, the monitoring of nitrates and

nitrites is necessary as such contaminants could also result in illness. In addition to

failing to monitor, Appellant failed to provide notice to the public of the lack of

monitoring. We find the trial court did not abuse its discretion when it determined

Appellant’s violations posed a moderate threat.

{¶42} Next, the trial court concluded Appellant’s “indifference to the potential

threat caused by her violations was significant.” The evidence in the record supports

this conclusion. Appellant’s recalcitrance and indifference is exhibit by her years of

violating the safe drinking water laws which placed her customers’ health in jeopardy.

Ohio EPA attempted to work with Appellant to bring the water systems into compliance.

Appellant repeatedly failed to remedy the violations. Appellant blamed Ohio EPA for the

violations, claiming the department failed to send courtesy reminders to her correct Tuscarawas County, Case No. 2012 AP 08 0045 12

mailing address. Appellant acknowledged she provided Ohio EPA with the address

and had, in fact, received mail from the department which she did not open. We find the

trial court did not abuse its discretion in finding Appellant’s indifference was significant.

{¶43} The trial court also found Appellant gained an economic benefit from the

violations. A court may presume an economic benefit from environmental violations.

State ex rel. Petro v. Tri-State Group, Inc., 7th Dist. No. 03BE61, 2004-Ohio-4441. By

violating the safe drinking water laws, Appellant avoided the costs incurred in sampling

the water as well as the fees associated with the LTOs. In addition, any profit earned by

the Bar and the Party Center while Appellant operated the businesses without LTOs

and without sample monitoring would be an economic benefit. It is impossible for either

the trial court or this Court to calculate the precise amount of economic benefit

Appellant gained by her non-compliance. Had Appellant complied, she may have

incurred costs to resolve any non-compliance problems and such may have included

periods of having to shut down operations. Although an exact dollar figure cannot be

calculated, we find the trial court did not abuse its discretion in finding Appellant gained

an economic benefit.

{¶44} The trial court considered the fourth factor – extraordinary costs incurred

in enforcement – and concluded the enforcement costs incurred by the State were

“relatively minimal”. Although Ohio EPA spent a number of years working with

Appellant to bring her into compliance, we find the trial court did not abuse its discretion

in reaching this conclusion. Tuscarawas County, Case No. 2012 AP 08 0045 13

{¶45} Appellant’s fifth and sixth assignments of error are overruled.

{¶46} The judgment of the Tuscarawas County Court of Common Pleas is

affirmed.

By: Hoffman, P.J.

Wise, J. and

Delaney, J. concur

___________________________________ HON. WILLIAM B. HOFFMAN

___________________________________ HON. JOHN W. WISE

___________________________________ HON. PATRICIA A. DELANEY Tuscarawas County, Case No. 2012 AP 08 0045 14

IN THE COURT OF APPEALS FOR TUSCARAWAS COUNTY, OHIO FIFTH APPELLATE DISTRICT

STATE OF OHIO, EX REL, : ATTORNEY GENERAL : RICHARD CORDRAY : : Plaintiff-Appellee : : -vs- : JUDGMENT ENTRY : SHIRLEY A. MASSARELLI : : Defendant-Appellant : Case No. 2012 AP 08 0045

For the reasons stated in our accompanying Opinion, the judgment of the

Tuscarawas County Court of Common Pleas is affirmed. Costs to Appellant.

___________________________________ HON. PATRICIA A. DELANEY