Windsor Realty & Mgt., Inc. v. N.E. Ohio Regional Sewer Dist.

2019 Ohio 3096

• Court: Ohio Court of Appeals
• Decided: August 1, 2019
• Docket: 107597
• Status: Published

Opinion

[Cite as Windsor Realty & Mgt., Inc. v. N.E. Ohio Regional Sewer Dist., 2019-Ohio-3096.]

COURT OF APPEALS OF OHIO

EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA

WINDSOR REALTY AND : MANAGEMENT, INC., ET AL., : Plaintiffs-Appellants, : No. 107597 v. : NORTHEAST OHIO REGIONAL SEWER DISTRICT, ET AL., :

Defendants-Appellees. :

JOURNAL ENTRY AND OPINION

JUDGMENT: AFFIRMED RELEASED AND JOURNALIZED: August 1, 2019

Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-13-818605

Appearances:

Lieberman, Dvorin & Dowd, L.L.C., Andrew K. Shibley, and Darren J. Dowd, for appellants.

Eric Luckage, Chief General Officer, and Amanda L. Holzhauer, Assistant General Counsel, for appellee Northeast Ohio Regional Sewer District.

Barbara A. Langhenry, Law Director, City of Cleveland, and Craig J. Morice and Christopher J. Heltzel, Assistant Directors of Law, for appellee City of Cleveland. RAYMOND C. HEADEN, J.:

Plaintiff-appellant Windsor Realty and Management, Inc.

(“Windsor”) appeals from the trial court’s orders granting defendants-appellees

Northeast Ohio Regional Sewer District (“NEORSD”) and the city of Cleveland

Water Department’s (“the city”) joint motion for reconsideration and motions for

summary judgment. For the reasons that follow, we affirm.

I. Statement of the Facts

D&M Pine Crest Properties, L.L.C. (“D&M”) owns the apartment

building known as Pinecrest Apartments, and Windsor acts as the property manager

of this building. The apartment building receives water and sewer services from the

city and NEORSD, respectively.

Windsor claims the city and NEORSD overcharged Windsor for water

and sewer consumption at the Pinecrest Apartments in 2005 and 2008. The parties

attempted to resolve the alleged billing errors by undergoing inspections of the

property to look for leaks; replacing water meters; and meeting with the director of

utilities to negotiate a settlement agreement. The attempted remedies did not

satisfactorily resolve the overcharges and Windsor filed a lawsuit in December 2013

against the city and NEORSD. D&M, the owner of the apartment building, was not

included as a named plaintiff.

The parties proceeded with litigation. Windsor filed its first amended

complaint on February 23, 2015. The city and NEORSD answered the first amended

complaint on July 21, 2016, and July 22, 2016, respectively. As litigation proceeded, the trial court scheduled discovery cut-off date for the litigation to be April 28, 2017,

and then proceeded to set the trial date for October 23, 2017. During discovery,

defendants-appellees deposed Mark Priore, the president of Windsor and co-owner

of D&M. During discovery, Mr. Priore testified that D&M owns the subject

apartment building and pays all bills related to the property. Specifically, Mr. Priore

testified that D&M is responsible for payment of the water and sewer bills. D&M

and Windsor maintain separate bank accounts and D&M has its own account from

which the utility bills are paid. Further, Mr. Priore testified that D&M has paid for

all legal expenses related to this litigation. It was clear from the proceedings that

invoices from defendants-appellees were mailed to Windsor and it was Windsor who

negotiated with representatives of the city and NEORSD to attempt to resolve the

disputed bills.

On May 26, 2017, after the discovery cut-off date, Windsor filed a

second amended complaint attempting to add D&M as a new party-plaintiff. In

support of its motion, Windsor claimed D&M may be the real party in interest.

Windsor asserted the defendants would not be subject to undue delay or prejudice

with the addition of the new party-plaintiff. The allegations within the second

amended complaint were essentially the same as the original complaint, but the

second amended complaint (1) added plaintiff D&M, (2) alleged that D&M and

Windsor contracted with NEORSD and the city for the treatment of sewage and supply of water, and (3) incorporated allegations of negligent inspection of the water

meter and promissory estoppel.

On June 1, 2017, the trial court granted Windsor’s second amended

complaint to approve the addition of D&M as a new party-plaintiff. The following

day, the city and NEORSD filed a joint motion for reconsideration and opposition to

plaintiff’s motion for leave to amend complaint (“joint motion for reconsideration”).

Windsor did not oppose the joint motion for reconsideration. On February 9, 2018,

the trial court granted defendants’ joint motion for reconsideration and denied

Windsor’s motion to file a second amended complaint because the motion was

“improper and untimely.”

Motions for summary judgment were filed by the city and NEORSD

on May 4, 2018, and granted on July 26, 2018.1 The court’s ruling found Windsor

did not have standing to maintain the lawsuit because Windsor could not establish

that it had suffered an injury as a result of NEORSD and the city’s alleged actions.

Windsor filed this timely appeal.

II. Law and Analysis

A. Motion to Add D&M as an Additional Party-Plaintiff

In its first assignment of error, Windsor claims the trial court erred

when it did not grant Windsor’s motion to file a second amended complaint and

1 In its July 25, 2018 opinion and order, journalized on July 26, 2018, the trial court

ruled on the defendants-appellees’ motions for summary judgment and dismissed NEORSD’s counterclaim against Windsor for spoliation. allow the addition of D&M as an additional party-plaintiff. For the following

reasons, we find Windsor’s first assignment of error is without merit.

An appellate court reviews a motion to amend a complaint for an

abuse of discretion. LAME, Inc. v. E.G. Sys., 8th Dist. Cuyahoga No. 101566, 2015-

Ohio-686, ¶ 14. A trial court demonstrates an abuse of discretion where its acts are

unreasonable, arbitrary, or unconscionable. Blakemore v. Blakemore, 5 Ohio St.3d

217, 219, 450 N.E.2d 1140 (1983).

NEORSD and the city argued in their joint motion for reconsideration

that (1) Windsor was not the real party in interest so that it lacked standing to file a

second amended complaint, and (2) unfair prejudice and delay would result from

adding a new party-plaintiff so late in the litigation. The trial court found Windsor’s

motion for leave to amend its complaint to be “improper and untimely” and,

therefore, denied the motion.

Windsor, on appeal, argues that it sought to add D&M as a new party-

plaintiff pursuant to Civ.R. 15(A) and 20(A). Windsor argues that the granting of

such motion would have been in the interest of judicial economy. Windsor also

argues that the motion was not untimely. Lastly, Windsor argues that the granting

of the motion would not have a prejudicial effect on NEORSD and the city. Because

Windsor did not oppose the joint motion for reconsideration, these arguments are

raised now by Windsor for the first time on appeal.

It is well settled law that “‘[a] party who fails to raise an argument in

the court below waives his or her right to raise it here.’” Niskanen v. Giant Eagle, Inc., 122 Ohio St.3d 486, 2009-Ohio-3626, 912 N.E.2d 595, ¶ 34, quoting State ex

rel. Zollner v. Indus. Comm., 66 Ohio St.3d 276, 278, 611 N.E.2d 830 (1993). As a

result of Niskanen and the line of cases following Niskanen, we do not take

Windsor’s arguments made in its appellate brief into consideration because

Windsor did not oppose defendants-appellees’ motion for reconsideration. We find

that the record as a whole however, does support the trial court’s granting the city

and NEORSD’s joint motion for reconsideration and denying Windsor’s motion to

add D&M as an additional party-plaintiff.

A party seeking to add a new party-plaintiff must have standing to file

the original complaint. Fed. Home Loan Mtge. Corp. v. Schwartzwald, 134 Ohio

St.3d 13, 2012-Ohio-5017, 979 N.E.2d 1214, ¶ 38. The issue of standing establishes

“whether a litigant is entitled to have a court determine the merits of the issues

presented.” State ex rel. Teamsters Local Union No. 436 v. Bd. of Cty. Commrs.,

132 Ohio St.3d 47, 2012-Ohio-1861, 969 N.E.2d 224, ¶ 10, quoting Ohio Contrs.

Assn. v. Bicking, 71 Ohio St.3d 318, 320, 643 N.E.2d 1088 (1994). To demonstrate

standing, a plaintiff must show the presence of three factors: “(1) an injury that is

(2) fairly traceable to the defendant’s allegedly unlawful conduct, and (3) the injury

is likely to be redressed by the requested relief.” Moore v. Middletown, 133 Ohio

St.3d 55, 2012-Ohio-3897, 975 N.E.2d 977, ¶ 22. A person with standing has a real

interest in the subject matter of the lawsuit. Schwartzwald at ¶ 22.

Windsor was unable to show how it was injured by the defendants-

appellees’ alleged overcharging. Windsor lacked title to the property — D&M owned the apartment building. A party without legal or equitable title in a property has no

interest in claims stemming from that property. LAME, Inc., 8th Dist. Cuyahoga

No. 101566, 2015-Ohio-686, at ¶ 21. Additionally, Windsor was not responsible for

payment of the bills. D&M paid the bills and all related litigation costs. Absent title

to the real property and any involvement with payment of the disputed bills,

Windsor had no injury related to the litigation and lacked standing.

Without satisfying the first prong required for standing, Windsor

could not file the original action or a motion to add a new party-plaintiff:

Standing is required to invoke the jurisdiction of the common pleas court. Pursuant to Civ.R. 82, the Rules of Civil Procedure do not extend the jurisdiction of the courts of this state, and a common pleas court cannot substitute a real party in interest for another party if no party with standing has invoked its jurisdiction in the first instance.

Schwartzwald at ¶ 38. The record supports the trial court’s ruling that the motion

to amend the complaint was improper and should be denied.

The record also supports the trial court’s decision that the motion to

add a new party-plaintiff was untimely. The motion was filed three years after the

start of the litigation and one month after the discovery cut-off. The scheduled trial

date was approximately four months after the motion’s filing. Windsor knew from

the time the lawsuit was initiated that D&M, not Windsor, was the owner of the

apartment building and responsible for payment of the water and sewer bills. No

indication was provided as to why D&M, the property owner, was not named as a

plaintiff when the lawsuit was first filed. Windsor stated the proposed addition of

D&M as a plaintiff would result in minimal supplemental discovery. However, it is reasonable to expect the city and NEORSD would need, at a minimum, to depose

the co-owner of D&M and pursue any necessary and additional related discovery

past the discovery cut-off date.

We find that the trial court’s granting the city and NEORSD’s joint

motion for reconsideration was not an abuse of discretion; that the trial court did

not err in ruling that the motion to add a new party-plaintiff was improper and

untimely; and therefore, Windsor’s first assignment of error is overruled.

B. Motions for Summary Judgment filed by the City and NEORSD

In its second and third assignments of error, Windsor contends the

trial court erred when it granted motions for summary judgment in favor of the city

and NEORSD.

Generally, a trial court’s decision to grant summary judgment is

reviewed de novo. Grafton v. Ohio Edison Co., 77 Ohio St.3d 102, 105, 671 N.E.2d

241 (1996). The reviewing court conducts an independent review of the record to

determine whether summary judgment is appropriate. Summary judgment is

appropriate under Civ.R. 56 when the moving party shows:

(1) there is no genuine issue as to any material fact; (2) the moving party is entitled to judgment as a matter of law; and (3) reasonable minds can come to but one conclusion, and that conclusion is adverse to the party against whom the motion for summary judgment is made, who is entitled to have the evidence construed most strongly in his favor.

Harless v. Willis Day Warehousing Co., 54 Ohio St.2d 64, 66, 375 N.E.2d 46 (1978).

“[T]he moving party bears the initial burden of demonstrating that there are no genuine issues of material fact concerning an essential element of the opponent’s

case.” Dresher v. Burt, 75 Ohio St.3d 280, 292, 662 N.E.2d 264 (1996). If the

moving party fails to satisfy this burden, the motion for summary judgment must be

denied. Id. at 293. If the moving party satisfies its initial burden, the nonmoving

party must then set forth specific facts showing that there is a genuine issue for trial.

Id.

Under its second assignment of error, Windsor argues the trial court

erroneously found Windsor was not the customer contracting for water and sewer

services and therefore lacked standing to file the lawsuit. Windsor claims it has a

contract with the city and, as a result, Windsor has standing to bring the underlying

lawsuit. Besides an allegation in its complaint that Windsor has a contract with

NEORSD, Windsor has neither argued the existence of nor introduced any evidence

in support of such a contract. We conclude no contract exists between Windsor and

NEORSD.

Windsor claims a contract between itself and the city exists based on

“a combination of the [Cleveland Codified Ordinances], Windsor’s request for water

service, the [c]ity’s provision of water service, the [c]ity’s invoicing [Windsor, as

agent of D&M,] for water service, and [D&M’s] payment of water service.” The

referenced sections of the Cleveland Codified Ordinances read:

535.01(i). “Customer” means any person, partnership, corporation or association to whom or upon whose request water is supplied, including the premises so supplied with water. 535.30(a). All charges for water shall be made against the premises supplied or against the customer contracting for the service.

The city denies the existence of either an express or implied contract

with Windsor. No written agreement approved by Cleveland City Council has been

introduced. Moreover, a political subdivision in Ohio cannot be found liable under

an implied contract, but can be bound only by a written agreement authorized

through specific channels. Schmitt v. Edn. Serv. Ctr., 2012-Ohio-2208, 970 N.E.2d

1187, ¶ 18 (8th Dist.). We conclude that the city is not liable under a theory of express

or implied contract.

The existence or nonexistence of a contract between the city and

Windsor, by itself, does not determine standing. Rather, standing requires a

showing of an injury fairly traceable to the allegedly unlawful conduct and evidence

that the injury is likely to be redressed by the requested relief. Moore, 133 Ohio

St.3d 55, 2012-Ohio-3897, 975 N.E.2d 977, at ¶ 22. “To have standing, a party

must have a personal stake in the outcome of a legal controversy with an

adversary.” Kincaid v. Erie Ins. Co., 128 Ohio St.3d 322, 2010-Ohio-6036, 944

N.E.2d 207, ¶ 9, quoting Ohio Pyro, Inc. v. Dept. of Commerce, 115 Ohio St.3d 375,

2007-Ohio-5024, 875 N.E.2d 550, ¶ 27.

Windsor failed to establish it suffered an injury or damages due to

the city and NEORSD’s alleged overbillings. Without an injury or personal stake

in the outcome of the controversy, Windsor lacked standing to file the lawsuit

against the city and NEORSD. Windsor’s second assignment of error lacks merit. In its third assignment of error, Windsor argues the trial court erred

when it did not recognize Windsor as an agent of D&M authorized to pursue

litigation in Windsor’s name but on behalf of D&M.

Specifically, Windsor argues that because it was acting as D&M’s

agent, Windsor had authority to file a lawsuit, in its own name but on behalf of

D&M, against the city and NEORSD. Windsor relies on case law where

R.C. 5715.19 authorizes individuals to file an action on behalf of a property owner

to oppose a real property valuation. Toledo Pub. Schools Bd. of Edn. v. Lucas Cty.

Bd. of Revision, 124 Ohio St.3d 490, 2010-Ohio-253, 924 N.E.2d 345. However,

the case sub judice does not address a real property valuation suit and no statute

exists to confer authority on Windsor to file the instant action on D&M’s behalf.

Windsor submits that Merkle v. Eurez, 10th Dist. Franklin No.

89AP-311, 1989 Ohio App. LEXIS 3878, 3 (Sept. 28, 1989), is dispositive on vesting

Windsor with the necessary authority where it reads: “an agent representing an

undisclosed principal may bring an action in his own name for the enforcement of

any legal contract.” Id., quoting Eichman v. Marshall, 38 Ohio Law Abs. 398, 50

N.E.2d 379 (2d Dist.1942); 3 Ohio Jurisprudence 3d, Agency, Section 182 (1986).

This case has not been cited as authority by any jurisdiction, including this court,

in the past 30 years and is distinguishable from the instant matter. Merkle allowed

an agent to bring an action in his own name to enforce a written contract. No

written contract exists between Windsor and the city or NEORSD and, therefore,

we find Merkle unpersuasive. Despite Windsor’s arguments that it had standing because it was the

agent to D&M, no case law supports this position. To establish standing, Windsor

must demonstrate an injury or damage on its behalf that can be remedied through

the lawsuit. Windsor did not pay the disputed water and sewer bills and was not

damaged by the city or NEORSD. The trial court did not err when it did not

recognize Windsor as an agent of D&M and found Windsor lacked standing. For

the foregoing reasons, Windsor’s third assignment of error is without merit.

Judgment affirmed.

It is ordered that appellees recover from appellant costs herein taxed.

The court finds there were reasonable grounds for this appeal.

It is ordered that a special mandate be sent to said court to carry this judgment

into execution.

A certified copy of this entry shall constitute the mandate pursuant to Rule 27

of the Rules of Appellate Procedure.

RAYMOND C. HEADEN, JUDGE

FRANK D. CELEBREZZE, JR., P.J., and KATHLEEN ANN KEOUGH, J., CONCUR