Epcon Cmty. Franchising, LLC v. Wilcox Dev. Grp., LLC

• Decision Date: 29 September 2022
• Docket Number: 21AP-674
• Citation: 201 N.E.3d 936
• Parties: EPCON COMMUNITY FRANCHISING, LLC, Plaintiff-Appellant, v. WILCOX DEVELOPMENT GROUP, LLC et al., Defendants-Appellees.
• Court: Ohio Court of Appeals

201 N.E.3d 936

EPCON COMMUNITY FRANCHISING, LLC, Plaintiff-Appellant,

v.WILCOX DEVELOPMENT GROUP, LLC et al., Defendants-Appellees.

No. 21AP-674

Court of Appeals of Ohio, Tenth District, Franklin County.

Rendered on September 29, 2022

On brief: Arnold & Clifford, LLP, Tiffany L. Carwile, and James E. Arnold, Columbus, for appellant. Argued: Tiffany L. Carwile.

On brief: Zeiger, Tigges & Little LLP, Marion H. Little, Jr., and Matthew S. Zeiger, Columbus, for appellees. Argued: Matthew S. Zeiger.

DECISION

BEATTY BLUNT, J.

{¶ 1} Plaintiff-appellant, Epcon Community Franchising, LLC ("Epcon"), appeals from the December 9, 2021 decision and entry of the Franklin County Court of Common Pleas granting the motion to dismiss, filed pursuant to Civ.R. 12(B)(6), of defendantsappellees, Wilcox Development Group, LLC, Charleston Lake II, LLC, and Streetsboro Investments Partners, LLC (collectively, "Wilcox"). For the following reasons, we affirm.

I. Facts and Procedural History

{¶ 2} This dispute arises out of litigation initiated in October 2012 by the Office of Fair Housing and Opportunity against Epcon, a franchisor of residential homes for community development projects, for alleged violations of the Fair Housing Act, 42 U.S.C. Section 3601 - 19 (the "FHA"), at 32 multi-family housing communities developed in Ohio. (Am. Compl. ¶ 13, ¶ 27.) The instant matter concerns violations alleged by the United States at three condominium communities developed by Wilcox under contractual agreements with Epcon. More specifically, the United States alleged that certain elements of the design and construction of the condominium communities did not satisfy the accessibility requirements of the FHA. Id. at ¶ 27.

{¶ 3} After years of negotiations between Epcon and the Department of Justice ("DOJ"), the parties reached a tentative agreement requiring court approval. Id. at ¶ 35-41. In October 2019, the DOJ filed a complaint against Epcon in the Southern District of Ohio. Id. at ¶ 41. On March 25, 2020, the court signed a consent order submitted by the parties. Id. at ¶ 45. The consent order required Epcon to pay over $2.5 million in specified damages, with $2.2 million to be used to establish an accessibility retrofit fund to correct certain deficiencies at the communities, the majority of which were within the exterior portions of the communities. Id. at ¶ 42-44; 48-49. The consent order released all claims under the FHA against Epcon and Epcon's parent entities, subsidiaries, franchisees, and affiliates. Id. at ¶ 47.

{¶ 4} On January 25, 2021, Epcon filed a complaint in the Franklin County Court of Common Pleas, alleging a single claim for contribution under Ohio Revised Code section 2307.25(A). Id. at ¶ 53-59. Wilcox responded by filing a motion to dismiss pursuant to Civ.R. 12(B)(6), whereupon Epcon filed an amended complaint with the same allegations and the same claim for contribution under R.C. 2307.25(A). (See Mar. 2, 2021 Mot. to Dismiss; Am. Compl.) On April 7, 2021, Wilcox filed a motion to dismiss the amended complaint. (See Apr. 7, 2021 Mot. to Dismiss.)

{¶ 5} On December 9, 2021, the trial court issued its decision and entry granting the April 7, 2021 motion to dismiss. In its decision and entry, the trial court stated that "Epcon's claim [for contribution] fails as a matter of law to the extent they assert de facto claims for contribution arising from FHA violations." (Decision & Entry at 6.)

{¶ 6} On December 14, 2021, Epcon filed this timely appeal.

II. Assignment of Error

{¶ 7} Epcon has assigned one error for our review:

The trial court erred in dismissing Epcon's contribution claim as preempted by the Fair Housing Act.

III. Law and Analysis

A. Standard of Review

{¶ 8} Federal preemption is a question of law. Merck Sharp & Dohme Corp. v. Albrecht , ––– U.S. ––––, 139 S.Ct. 1668, 1680, 203 L.Ed.2d 822 (2019). Questions of law are reviewed de novo. State v. Codeluppi , 139 Ohio St.3d 165, 2014-Ohio-1574, 10 N.E.3d 691, ¶ 9.

B. Federal Preemption of State Law

{¶ 9} The issue before this court is straightforward: does the FHA preempt state law claims for contribution, including Ohio's statutorily provided cause of action for contribution set forth in R.C. 2307.25 ? Despite the straightforward nature of the issue, however, we have discerned no controlling case law on it—neither the Supreme Court of Ohio nor this court has previously spoken on the issue. Nor does it appear that any other Ohio appellate courts have addressed it.

{¶ 10} This court has previously discussed in detail the law governing federal preemption generally in State ex rel. Yost v. Volkswagen Aktiengesellschaft , 10th Dist., 2019-Ohio-5084, 137 N.E.3d 1267. In Volkswagen , we stated:

Whether federal law preempts state law is a question of law, and therefore we must apply a de novo standard of review without deference to the trial court's decision. Bailey v. Manor Care of Mayfield Hts ., 8th Dist. 99798, 2013-Ohio-4927, 4 N.E.3d 1071, ¶ 12. The doctrine of federal preemption arises from the Supremacy Clause of the United States Constitution, which provides that "the Laws of the United States * * * shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding." U.S. Constitution, Article VI, cl. 2. Pursuant to the Supremacy Clause, the United States Congress has the power to preempt state laws. In re Miamisburg Train Derailment Litigation , 68 Ohio St.3d 255, 259 (1994).

There are three ways federal law can preempt state law: (1) where federal law expressly preempts state law (express preemption); (2) where federal law has occupied the entire field (field preemption); or (3) where there is a conflict between federal law and state law (conflict preemption¹ ). Norfolk S. Ry. Co. v. Bogle , 115 Ohio St.3d 455, 2007-Ohio-5248 [875 N.E.2d 919] , ¶ 7. Express preemption occurs when Congress explicitly defines the extent to which its enactments preempt state law. English v. Gen. Elec. Co. , 496 U.S. 72, 78 [110 S.Ct. 2270, 110 L.Ed.2d 65] (1990). In the case of field preemption, "state law is pre-empted where it regulates conduct in a field that Congress intended the Federal Government to occupy exclusively. Such an intent may be inferred from a ‘scheme of federal regulation * * * so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it,’ or where an Act of Congress ‘touches a field in which the federal interest is so dominant that the federal system will be assumed to preclude enforcement of state laws on the same subject.’ " Id. at 79 , quoting Rice v. Santa Fe Elevator Corp. , 331 U.S. 218, 230 [67 S.Ct. 1146, 91 L.Ed. 1447] (1947). Conflict preemption occurs "where it is impossible for a private party to comply with both state and federal requirements," or "where state law ‘stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.’ " English at 79 , quoting Hines v. Davidowitz , 312 U.S. 52, 67 [61 S.Ct. 399, 85 L.Ed. 581] (1941). "What is a sufficient obstacle is a matter of judgment, to be informed by examining the federal statute as a whole and identifying its purpose and intended effects."

Crosby v. Natl. Foreign Trade Council , 530 U.S. 363, 373 [120 S.Ct. 2288, 147 L.Ed.2d 352] (2000).

In determining whether federal law preempts state law, " ‘[t]he purpose of Congress is the ultimate touchstone.’ " Malone v. White Motor Corp. , 435 U.S. 497, 504 [98 S.Ct. 1185, 55 L.Ed.2d 443] (1978), quoting Retail Clerks Internatl. Assn. v.Schermerhorn , 375 U.S. 96, 103 [84 S.Ct. 219, 11 L.Ed.2d 179] (1963) ; seeRiverside v. State , 190 Ohio App.3d 765, 2010-Ohio-5868 [944 N.E.2d 281], ¶ 22 (10th Dist.) ("The Supreme Court has framed preemption analysis as asking whether Congress intended to exercise its constitutionally delegated authority to set aside state laws."). "Congress’ intent, of course, primarily is discerned from the language of the pre-emption statute and the ‘statutory framework’ surrounding it. * * * Also relevant, however, is the ‘structure and purpose of the statute as a whole,’ * * * as revealed not only in the text, but through the reviewing court's reasoned understanding of the way in which Congress intended the statute and its surrounding regulatory scheme to affect business, consumers, and the law." (Internal citations omitted.) Medtronic, Inc. v. Lohr , 518 U.S. 470, 486 [116 S.Ct. 2240, 135 L.Ed.2d 700] (1996).

Additionally, a court reviewing possible preemption must consider federalism as part of that analysis. Federalism, which is "central to the constitutional design, adopts the principle that both the National and State Governments have elements of sovereignty the other is bound to respect." Arizona v. United States , 567 U.S. 387, 398 [132 S.Ct. 2492, 183 L.Ed.2d 351] (2012). "[B]ecause the States are independent sovereigns in our federal system," the United States Supreme Court has "long presumed that Congress does not cavalierly pre-empt state-law causes of action." Medtronic at 485 .

Volkswagen at ¶ 12-15.

{¶ 11} Notwithstanding the lack of Ohio case law on the specific issue before us, several federal court decisions have found that state law claims for contribution are preempted or otherwise barred by the FHA, including one from the Southern District of Ohio. In Miami Valley Fair Hous. Ctr., Inc. v. Campus Village Wright State, LLC , S.D. Ohio No. 3:10cv230, 2012 WL 4473236 (Sept. 26, 2012), the district court specifically determined that "Campus Village Cross-Claimants’ contention that the FHA does not prohibit them from pursuing indemnification and contribution claims under Ohio law also lacks merit. The Court finds such state law claims preempted under the doctrine of obstacle preemption. " (Emphasis added.) Campus Village Wright State at *6.

{¶ 12} Other federal cases that have held or otherwise have found that the FHA preempts or otherwise...