State Ex Rel. Petro v. Mercomp, Inc.

853 N.E.2d 1193, 167 Ohio App. 3d 64, 2006 Ohio 2729
CourtOhio Court of Appeals
DecidedJune 1, 2006
DocketNo. 86563.
StatusPublished
Cited by16 cases

This text of 853 N.E.2d 1193 (State Ex Rel. Petro v. Mercomp, Inc.) is published on Counsel Stack Legal Research, covering Ohio Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State Ex Rel. Petro v. Mercomp, Inc., 853 N.E.2d 1193, 167 Ohio App. 3d 64, 2006 Ohio 2729 (Ohio Ct. App. 2006).

Opinion

*67 Mary Eileen Kilbane, Judge.

{¶ 1} Mercomp, Inc. appeals from an order of the trial court granting summary-judgment in favor of the state of Ohio. It claims that the court erred in granting summary judgment and piercing its corporate veil, by finding individual liability of the company’s sole shareholder, by finding Mercomp subject to injunctive relief, and by refusing to conduct an in camera inspection of documents that the state of Ohio claimed were privileged. We affirm.

{¶ 2} The record reveals that in the early 1950s, Harry Rock formed Harry Rock & Co. (“HRC”) to buy and sell scrap metal. Several years later and in February 1965, Cleveland Land Development Company (“CLD”) was formed and incorporated as a separate entity, but apparently had little responsibility through HRC.

{¶ 3} In the late 1970s, HRC diversified into the landfill business by buying property located at 1329 East Schaaf Road in Brooklyn Heights, Ohio (“the landfill”). The landfill was completed in 1980 and the property was deeded and titled to HRC. Following the completion of the landfill, CLD finally became fully functional and operated to lease the landfill from HRC. CLD, owned jointly by Manny Rock and Howard Bahm, operated the landfill from 1980 through May 1994.

{¶ 4} Shortly before the landfill ceased accepting solid waste and in December 1993, HRC sold all of its assets, with the exception of the landfill and two other properties, and changed its name to Mercomp, Inc. On May 31, 1994, CLD stopped accepting waste at the landfill. From this time forward, the sole function of Mercomp and CLD was to facilitate the closure of the landfill under R.C. Chapter 3734 and Ohio Adm.Code 3745-27.

{¶ 5} During this time period, and actually by 1990, Rock was the sole shareholder of CLD, HRC and Mercomp. By December 1996, CLD was merged into Mercomp, leaving Mercomp as the sole remaining and operational company.

{¶ 6} To facilitate closure of the landfill, Mercomp requested several extensions in order to properly close the landfill. Mercomp’s first extension requested until June 30, 1995 to close the facility. Shortly thereafter, however, Mercomp requested a second extension, citing wet weather conditions in both the spring and summer of 1995. The Ohio Environmental Protection Agency (“Ohio EPA”) denied the request, but informed both Mercomp and Rock that it would not implement escalated enforcement activities if closure was completed by December 31,1995.

{¶ 7} Three years after this extended closure deadline, and on April 22, 1998, Mercomp submitted its first Closure Certification Report to the Ohio EPA. The *68 Ohio EPA informed Mercomp of several deficiencies in this report, and Mercomp submitted an amended closure report on August 30,1998.

{¶ 8} Mercomp was again informed of deficiencies in its amended report and on February 16, 1999, Mercomp submitted an addendum to its previously submitted report. Due to remaining deficiencies, the Ohio EPA sent Mercomp a Notice of Violation letter advising it of 11 violations of Ohio Adm.Code Chapter 3745-27, citing specifically Mercomp’s failure to properly fund a financial assurance instrument, which would provide for the continued postclosure monitoring of the landfill.

{¶ 9} In June 2000, Mercomp submitted a revised Ground Water Sampling and Analysis Plan to the Ohio EPA. After several notices of deficiencies in this plan and in September 2000, the Ohio EPA determined that the revised program was in compliance with Ohio Adm.Code 3745-27-10. However, when the Ohio EPA reviewed the semiannual ground water monitoring report, it determined a statistically significant increase of a leachate and/or leachate-derived substance: an indication that the landfill could be leaking leachate into the groundwater under the landfill.

{¶ 10} In November 2000, the Ohio EPA notified Mercomp that based on its submitted reports and follow-up investigations by the Ohio EPA, closure construction activities had been completed in accordance with Ohio’s solid waste rules, and that the postclosure period of the landfill officially began on September 7, 2000.

{¶ 11} The Ohio EPA continued to monitor Mercomp’s reports and conduct its own investigations. The Ohio EPA repeatedly submitted notices of violations to Mercomp for environmental and human hazards, and its failure to properly fund a financial assurance program for the landfill.

{¶ 12} On July 18, 2001, the state initiated an enforcement action against Mercomp as a corporation and against Manny Rock as its sole shareholder. The complaint alleged violations of Ohio’s solid waste regulations as set forth in Ohio Adm.Code Chapter 3745-27 and governed by R.C. Chapter 3734. The claims were brought specifically against Mercomp and Rock for their failure to (1) establish a financial assurance instrument for the landfill, (2) timely close the landfill, (3) conduct necessary ground water detection at the landfill, and (4) conduct ground water assessment monitoring at the landfill.

{¶ 13} Rock and Mercomp filed a counterclaim for abuse of process, which the trial court later dismissed. The state then voluntarily dismissed two remaining counts of its original complaint and proceeded on the first four claims. Both parties moved for summary judgment on the issue of Rock’s individual liability, *69 and Mercomp and Rock moved for summary judgment on a selective-enforcement claim.

{¶ 14} In February 2003, the trial court granted the state’s motion for summary judgment regarding Rock’s individual liability and denied Mercomp’s selective-enforcement claim, finding that it failed to meet the necessary elements to sustain such a claim. The court also denied Mercomp’s motion for an in camera inspection of documents contained in the state’s privilege log. In March 2003, Mercomp appealed the denial of summary judgment on the selective-enforcement claim, which this court dismissed for lack of subject-matter jurisdiction.

{¶ 15} In February 2004, a two-week hearing was conducted, and two months later, the trial court issued its findings of fact and conclusions of law, setting forth nine compliance orders and granting injunctive relief and a civil penalty. Mercomp again appealed. This court dismissed the case for lack of a final, appealable order due to the omission of a stated amount of attorney fees.

{¶ 16} The parties collectively resolved the omitted issue of attorney fees and Mercomp filed the instant appeal asserting the assignments of error set forth in the appendix to this opinion.

I. PIERCING THE CORPORATE VEIL

{¶ 17} In its first assignment of error, Mercomp asserts error in the trial court’s grant of summary judgment and claims that there are genuine issues of material fact as to the elements necessary to pierce the corporate veil and find Manny Rock individually liable.

{¶ 18} We review the grant of summary judgment de novo, using the same standard as the trial judge, which requires granting the motion if there is no dispute of material fact and the moving party is entitled to judgment as a matter of law. Civ.R. 56(C); Bonacorsi v. Wheeling & Lake Erie Ry. Co., 95 Ohio St.3d 314, 2002-Ohio-2220, 767 N.E.2d 707.

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Bluebook (online)
853 N.E.2d 1193, 167 Ohio App. 3d 64, 2006 Ohio 2729, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-ex-rel-petro-v-mercomp-inc-ohioctapp-2006.