St. Marys v. Auglaize Cty. Bd. of Commrs.

• Decision Date: 03 October 2007
• Docket Number: No. 2006-1033.,2006-1033.
• Citation: 875 N.E.2d 561,115 Ohio St.3d 387,2007 Ohio 5026
• Parties: The CITY OF ST. MARYS, Appellee, v. AUGLAIZE COUNTY BOARD OF COMMISSIONERS, Appellant.
• Court: Ohio Supreme Court

875 N.E.2d 561

115 Ohio St.3d 387

2007-Ohio-5026

The CITY OF ST. MARYS, Appellee, v. AUGLAIZE COUNTY BOARD OF COMMISSIONERS, Appellant.

No. 2006-1033.

Supreme Court of Ohio.

Submitted May 22, 2007.

Decided October 3, 2007.

Vorys, Sater, Seymour & Pease, L.L.P., Bruce Ingram, and Philip F. Downey, Columbus; and Noble, Montague & Moul and Kraig E. Noble, St. Marys, for appellee.

Eastman & Smith Ltd., Henry N. Heuerman, and Albin Bauer III, Toledo; and Edwin A. Pierce, Auglaize County Prosecuting Attorney, for appellant.

Byron & Byron Co., L.P.A., and Stephen L. Byron, Willoughby, urging affirmance for amicus curiae, Ohio Municipal League.

LUNDBERG STRATTON, J.

I. Introduction

{¶ 1} This case involves a dispute arising out of an agreement between a county and city for managing the disposal of solid waste. We accepted the county's three propositions that pertain to the interpretation of the agreement. We also accepted the issue of whether a county's fiscal officer had to comply with R.C. 5705.41(D)(1), which requires the county to certify the availability of public funds before the county could agree to pay for the environmental monitoring of the city's landfill pursuant to the agreement.

{¶ 2} For the reasons explained below, we find in favor of the city with regard to the contractual dispute. We also hold that the county's contractual obligation to pay for the environmental monitoring of the landfill was excepted from the certification requirements of R.C. 5705.41(D) by R.C. 5705.44. Consequently, we affirm the judgment of the court of appeals in favor of the city.

II. Facts and Procedure

{¶ 3} Appellant is the Auglaize County Board of Commissioners ("county"). Appellee is the city of St. Marys, Ohio. The city owns and operates a landfill for disposing of solid waste.

{¶ 4} Effective June 24, 1988, Am.Sub. H.B. No. 592, 142 Ohio Laws, Part III, 4418, established statewide policies for the management of solid and hazardous waste. Danis Clarkco Landfill Co. v. Clark Cty. Solid Waste Mgt. Dist. (1995), 73 Ohio St.3d 590, 596, 653 N.E.2d 646. The bill enacted R.C. 3734.52, which requires each county in Ohio to either form a single-county solid-waste-management district ("SWMD") or participate in a joint solid-waste-management district for the purpose of "orderly development of the solid waste management planning." Section 6(C)(1), Am.Sub.H.B. No. 592, see also Fairfield Cty. Dist. Bd. of Health v. Shank (May 23, 1991), 10th Dist. No. 90AP-1176, 1991 WL 96362. In order to maintain a single-county SWMD, a county with a population under 120,000 was required to acquire an exemption from the Ohio Environmental Protection Agency ("EPA") under R.C. 3734.52(C)(2). In order to obtain this exemption, the county had to demonstrate that it had access to a solid-waste-disposal facility with sufficient capacity to accept the county's solid waste for at least ten years. R.C. 3734.52(C)(2).

{¶ 5} Auglaize County desired to form a single-county SWMD, and because it had a population of less than 120,000, it needed an R.C. 3734.52(C)(2) exemption. On December 22, 1988, the county executed an agreement with the city that permitted the county to dispose of its solid waste in the city's landfill. In return, the county agreed to pay for the environmental monitoring of the city's landfill. The term of the agreement was 12 years.

{¶ 6} On February 17, 1989, the EPA approved the county's exemption, and the county formed the Auglaize County Solid Waste Management District. The county commissioners served as the board of directors for the district as required by R.C. 343.01.

{¶ 7} The policy committee of the district completed its initial plan for solid-waste management in early 1992. The plan set fees and proposed various plans and activities associated with the management and disposal of solid waste, such as the construction of a recycling center.

{¶ 8} In the early to mid 1990s, it became apparent that the city either had to expand or close the landfill. Ultimately, the city closed the landfill in June 1998. Nevertheless, the county continued to pay the costs of environmental monitoring of the landfill through December 2000.

{¶ 9} The city, which claimed that the county was obligated to pay all environmental-monitoring expenses during the 12-year term of the agreement and for 30 years after the landfill closed, sued the county for breach of the agreement after the county stopped paying for the monitoring of the landfill. The parties filed cross-motions for partial summary judgment. The trial court granted partial summary judgment to the city, holding that the agreement obligated the county to pay for postclosure monitoring of the landfill for 30 years even though the agreement had terminated.

{¶ 10} The parties then filed cross-motions for summary judgment on the remaining issues. The county argued that it was not obligated to pay for the monitoring because the city had breached the agreement by failing to set aside a portion of its gate fees into a fund to pay in part for the monitoring costs. (Gate fees were the fees charged by the city for the disposal of solid waste at the landfill.) The court again recognized that the agreement required the county to pay for the monitoring, but it held that the city's failure to set aside a portion of its gate fees resulted in a breach of the contract that relieved the county of its obligation to pay for monitoring. Thus, the court granted summary judgment to the county and dismissed the city's complaint.

{¶ 11} The city appealed. The court of appeals affirmed the trial court's holding that the county had a duty to pay for postclosure environmental monitoring for 30 years after expiration of the agreement but reversed the trial court's finding that the city breached the agreement. St. Marys v. Auglaize Cty. Bd. of Commrs., 3d Dist. No. 2-05-17, 2006-Ohio-1773, 2006 WL 903586, ¶ 16, 32. The court of appeals found that the agreement was ambiguous regarding the city's obligation to contribute to the cost of environmental monitoring but that the parties' course of conduct gave meaning to the agreement. Id. at ¶ 21, 29. Accordingly, the court reversed and remanded the cause to the trial court to issue summary judgment in the city's favor.

{¶ 12} The cause is before this court pursuant to our acceptance of the county's discretionary appeal.

III. Analysis

{¶ 13} We begin our analysis by examining the language of the parties' agreement.

A. The Agreement

1. The County's Obligation to Monitor the Landfill Survives Termination of the Agreement

{¶ 14} The county argues that its contractual obligation to pay for the environmental monitoring of the landfill ended when the agreement terminated in 2000. The city counters that the agreement imposes an obligation on the county to pay for postclosure monitoring beyond the termination date of the agreement.

{¶ 15} Paragraph 5 of the agreement requires the county to monitor the landfill:

{¶ 16} "Pursuant to this agreement, the County shall:

{¶ 17} "a. as soon as the monitoring program initiated by the City pursuant to paragraph 4(f) * * * is approved by the OEPA, undertake complete responsibility for all environmental monitoring required for the City Site by applicable statutes and regulations, including the operation of such environmental monitoring and any capital expenditures to accomplish the monitoring, both prior to and subsequent to closure of the site." (Emphasis added.)

{¶ 18} The role of courts in examining contracts is to ascertain the intent of the parties. Hamilton Ins. Servs., Inc. v. Nationwide Ins. Cos. (1999), 86 Ohio St.3d 270, 714 N.E.2d 898. Where the terms in a contract are not ambiguous, courts are constrained to apply the plain language of the contract. Nationwide Mut. Fire Ins. Co. v. Guman Bros. Farm (1995), 73 Ohio St.3d 107, 652 N.E.2d 684.

{¶ 19} The term of the agreement was 12 years. But the plain language of the agreement provided that once the city initiated monitoring of the landfill as approved by the EPA, the county assumed "complete responsibility for all environmental monitoring required * * * by applicable statutes and regulations * * * both prior to and subsequent to closure of the site." (Emphasis added.)

{¶ 20} We presume that the parties intended for the landfill to remain open for the entire 12-year term. Thus, the language requiring the county to pay for monitoring "subsequent to closure of the site" clearly intended that the county's obligation to monitor the landfill extended beyond the termination of the agreement.

{¶ 21} Accordingly, we hold that the county's obligation to pay for the environmental monitoring of the landfill survived the December 22, 2000 termination date of the agreement and required the county to pay for postclosure monitoring for the entire period that monitoring was required by law.

2. The Parties' Course of Conduct Controls

{¶ 22} In its second and third propositions of law, the county essentially argues that the agreement was not ambiguous, and therefore the court of appeals erred in relying on the parties' course of conduct to interpret the agreement. More specifically, the county argues that the agreement required the city to establish a "rate for the disposal of solid waste" and equates this rate with the city's gate fees. The county further alleges that under the agreement, the city was required to set aside a portion of that rate into a fund, part of which was to be used to finance the monitoring of the landfill. Finally, the county alleges that the city breached the agreement by failing to set aside any portion of its gate fees and therefore the county was discharged from its obligation to pay for monitoring the landfill.

{¶ 23} Paragraphs 8 and 9 of the agreement address the city's rate for the disposal of solid waste and the creation of a fund to be used to pay for environmental monitoring.

{¶ 24} Paragraph 8 provides:

{¶ 25} "Upon commencement of this...