Cheap Escape Co., Inc. v. Haddox, LLC

• Decision Date: 11 December 2008
• Docket Number: No. 2007-1870.,2007-1870.
• Citation: 120 Ohio St.3d 493,2008 Ohio 6323,900 N.E.2d 601
• Parties: CHEAP ESCAPE COMPANY, INC., d.b.a. JB Dollar Stretcher, Appellant, v. HADDOX, L.L.C.; Tessman, Appellee.
• Court: Ohio Supreme Court

900 N.E.2d 601

120 Ohio St.3d 493

2008-Ohio-6323

CHEAP ESCAPE COMPANY, INC., d.b.a. JB Dollar Stretcher, Appellant, v. HADDOX, L.L.C.; Tessman, Appellee.

No. 2007-1870.

Supreme Court of Ohio.

Submitted October 7, 2008.

Decided December 11, 2008.

Gallagher Sharp, Timothy J. Fitzgerald, and Colleen A. Mountcastle, Cleveland, for appellant.

James R. Douglass Co., L.P.A., and James R. Douglass, for appellee.

MOYER, C.J.

I

{¶ 1} This appeal requires us to determine whether municipal courts have subject-matter jurisdiction over matters lacking connections to their geographical territories. For the following reasons, we hold that municipal courts do not have subject-matter jurisdiction over extraterritorial matters except in limited statutorily created circumstances. We therefore affirm the holding of the court of appeals.

II

{¶ 2} Appellant, Cheap Escape Company, Inc., d.b.a. JB Dollar Stretcher ("Cheap Escape"), produces a magazine that features business advertisements. Haddox, L.L.C., a construction firm located in Summit County, entered into two contracts with Cheap Escape to run ads in this magazine; appellee, Jeffrey L. Tessman, signed both agreements as a guarantor. The contracts provided that "in the event either party is in noncompliance with any provision of this Agreement the proper venue for litigation purposes will be in the Franklin County Municipal Court or Franklin County Common Pleas." The parties agree that the events relevant to these transactions occurred outside Franklin County and that the only connection to that forum arises from the forum-selection clauses in the contracts between them.

{¶ 3} After Haddox allegedly defaulted on the agreements, Cheap Escape filed a breach-of-contract action against Haddox and Tessman in the Franklin County Municipal Court, seeking $1,984 in damages. Neither defendant filed a responsive pleading, and the municipal court eventually entered default judgment for Cheap Escape. Nearly 11 months later, Tessman moved to vacate the default judgment, arguing that the municipal court lacked subject-matter jurisdiction because none of the relevant events occurred in Franklin County.¹ The municipal court denied this motion.

{¶ 4} Tessman appealed. The court of appeals determined that R.C. 1901.18 limits municipal court subject-matter jurisdiction in civil matters to cases that have a territorial connection to the court. 173 Ohio App.3d 683, 2007-Ohio-6185, 880 N.E.2d 122, ¶ 24-25. Because the relevant actions in this case occurred in Summit County, not Franklin County, the court of appeals held that the municipal court did not have subject-matter jurisdiction over the case, regardless of the forum-selection clause. Id. at ¶ 34. The court of appeals therefore reversed the municipal court's decision and remanded the case for dismissal. Id. at ¶ 35. We accepted Cheap Escape's discretionary appeal. 116 Ohio St.3d 1474, 2008-Ohio-153, 879 N.E.2d 782.

III

{¶ 5} This case requires us to examine the limits of municipal court jurisdiction. Unfortunately, jurisdiction is a vague term, "`a word of many, too many, meanings.'" Steel Co. v. Citizens for a Better Environment (1998), 523 U.S. 83, 90, 118 S.Ct. 1003, 140 L.Ed.2d 210, quoting United States v. Vanness (C.A.D.C.1996), 85 F.3d 661, 663, fn. 2. Several distinct concepts, including territorial jurisdiction, monetary jurisdiction, personal jurisdiction, and subject-matter jurisdiction, must be demonstrated for a municipal court to be able to hear a specific case.

{¶ 6} While the parties agree that the Franklin County Municipal Court had territorial jurisdiction, monetary jurisdiction, and personal jurisdiction in this case,² they disagree sharply on the issue of municipal court subject-matter jurisdiction. "Subject-matter jurisdiction of a court connotes the power to hear and decide a case upon its merits" and "defines the competency of a court to render a valid judgment in a particular action." Morrison v. Steiner (1972), 32 Ohio St.2d 86, 87, 61 O.O.2d 335, 290 N.E.2d 841.

{¶ 7} Unlike courts of common pleas, which are created by the Ohio Constitution and have statewide subject-matter jurisdiction, see Section 4(A) and (B), Article IV, Ohio Constitution, municipal courts are statutorily created, R.C. 1901.01, and their subject-matter jurisdiction is set by statute. R.C. 1901.18(A) provides the applicable law in this regard: "Except as otherwise provided in this division or section 1901.181 of the Revised Code, subject to the monetary jurisdiction of municipal courts as set forth in section 1901.17 of the Revised Code, a municipal court has original jurisdiction within its territory in all of the following actions or proceedings * * *." The list of enumerated actions includes breach-of-contract cases, which is the cause of action here. Id. at (A)(3).

{¶ 8} To resolve this case, we must specifically determine what the phrase "original jurisdiction within its territory" means. Appellant interprets the phrase to mean that a municipal court has subject-matter jurisdiction over any statutorily prescribed action, regardless of where the underlying events occurred. Conversely, appellee argues that the phrase limits subject-matter jurisdiction to those actions with a territorial connection to the court (e.g., the relevant events occurred within the territorial limits of the court). For the following reasons, we adopt appellee's view.

{¶ 9} When interpreting a statute, we first look to the plain language of the statute and apply it as written when its meaning is clear and unambiguous. State v. Lowe, 112 Ohio St.3d 507, 2007-Ohio-606, 861 N.E.2d 512, ¶ 9. Unfortunately, the phrase "original jurisdiction within its territory" is not a model of clarity.

{¶ 10} Appellant argues that the words "within its territory" refer to "jurisdiction" and not the various types of actions listed in R.C. 1901.18(A)(1) through (12). Under this reading, R.C. 1901.18(A) grants a municipal court subject-matter jurisdiction to hear one of those actions if the court convenes within its geographical territory, regardless of whether the case has a territorial connection to the forum. Thus, appellant claims that the Franklin County Municipal Court had jurisdiction over this case because it was operating in Columbus, as required by R.C. 1901.02(A), even though the relevant events occurred in Summit County. Appellant refers to our decision in Morrison to support this conclusion. See Morrison, 32 Ohio St.2d at 88, 61 O.O.2d 335, 290 N.E.2d 841 (noting that "every municipal court in the state would have subject-matter jurisdiction" over a breach-of-contract action for less than the jurisdictional monetary limit).

{¶ 11} Appellee argues that this approach renders the phrase "within its territory" irrelevant and that R.C. 1901.18 should instead be read to give municipal courts subject-matter jurisdiction only over events having a territorial connection to the court. This interpretation requires us to read "within its territory" as referring to the types of actions that a municipal court may hear. Appellee further claims that Morrison was primarily concerned with issues of venue and that the brief explanation of subject-matter jurisdiction in that case should not be dispositive in this case, because the appellant there did not challenge the court's subject-matter jurisdiction.

{¶ 12} After reviewing these arguments and the plain text of R.C. 1901.18(A), we find the statute to be ambiguous; the words "within its territory" could refer to either "original jurisdiction" or the list of actions in the statutory subsections. It is simply unclear from the statutory language whether the General Assembly intended to limit municipal court subject-matter jurisdiction to territorial matters or to give municipal courts subject-matter jurisdiction over all matters suitable for municipal court review so long as the court sits within its territory when it disposes of a dispute. Both interpretations are reasonable. Our decision in Morrison, which was primarily focused on issues of venue, lends little assistance in this regard. At most, Morrison offers further support for the fact that R.C. 1901.18 establishes municipal court subject-matter jurisdiction; it does not provide meaning to the terms used therein. See Morrison, 32 Ohio St.2d at 88, 61 O.O.2d 335, 290 N.E.2d 841.

{¶ 13} To resolve this ambiguity, we must rely on additional methods of statutory interpretation. Because R.C. 1901.18 is part of a complex series of statutes related to jurisdiction, it is appropriate to review the statutes in pari materia. See State ex rel. Herman v. Klopfleisch (1995), 72 Ohio St.3d 581, 585, 651 N.E.2d 995 (allowing in pari materia review to deduce meaning when a statute is facially ambiguous). Under this canon of construction, we read all statutes relating to the same general subject matter together and interpret them in a reasonable manner that "give[s] proper force and effect to each and all of the statutes." Id., citing United Tel. Co. of Ohio v. Limbach (1994), 71 Ohio St.3d 369, 372, 643 N.E.2d 1129.

{¶ 14} Reading R.C. 1901.18 in pari materia with related statutes clarifies its meaning. As noted above, appellant argues that "within its territory" means that a municipal court may hear any of the actions enumerated in R.C. 1901.18(A)(1) through (12) so long as it sits within its geographical territory. However, R.C. 1901.02 establishes municipal court territorial jurisdiction, providing that municipal courts "have jurisdiction within the corporate limits of their respective municipal corporations," and establishes where each court must sit within a specific county. See also R.C. 1901.021(A) (allowing a municipal court to sit outside the limits of a specific municipal corporation if it has territorial jurisdiction over a broader area).

{¶ 15} Thus, appellant's interpretation would make the phrase "within its territory" in R.C. 1901.18 mere surplusage that duplicates R.C....