Graham v. City of Lakewood

• Decision Date: 10 May 2018
• Docket Number: No. 106094,106094
• Citation: 113 N.E.3d 44,2018 Ohio 1850
• Parties: Edward GRAHAM, et al., Plaintiffs–Appellants v. CITY OF LAKEWOOD, et al., Defendants–Appellees
• Court: Ohio Court of Appeals

113 N.E.3d 44
2018 Ohio 1850

Edward GRAHAM, et al., Plaintiffs–Appellants
v.
CITY OF LAKEWOOD, et al., Defendants–Appellees

No. 106094

Court of Appeals of Ohio, Eighth District, Cuyahoga County.

RELEASED AND JOURNALIZED: May 10, 2018

A. Steven Dever, A. Steven Dever Co., L.P.A., 13363 Madison Avenue, Lakewood, Ohio 44107, Christopher M. Devito, Morganstern Macadams & Devito Co., 623 West St. Clair Avenue, Cleveland, Ohio 44113, ATTORNEYS FOR APPELLANTS

Tracy K. Stratford, Mariam Keramati, James R. Wooley, Katie M. McVoy, Jones Day, 901 Lakeside Avenue, Cleveland, Ohio 44114, For the Cleveland Clinic Foundation and Delos Cosgrove, M.D.

Kevin M. Butler, Law Director, Jennifer L. Swallow, Chief Assistant Law Director, 12650 Detroit Avenue, Lakewood, Ohio 44107, Robert E. Cahill, Sutter O'Connell Co., 1301 East 9th Street, 3600 Erieview Tower, Cleveland, Ohio 44114, For the City of Lakewood and Michael Summers

Lindsey M. Grant, Assistant Attorney General, 615 W. Superior Avenue, 11th Floor, Cleveland, Ohio 44113, Kristine L. Hayes, Joseph E. Schmansky, Associate Assistant Attorneys General, 150 East Gay Street, 23rd Floor, Columbus, Ohio 43215, For Ohio Attorney General Mike DeWine

Jennifer D. Armstrong, Ann Hunt, McDonald Hopkins, 600 Superior Avenue, East, Suite 2100, Cleveland, Ohio 44144, Sara E. Jodka, O. Judson Scheaf, McDonald Hopkins, L.L.C., 250 West Street, Suite 550, Columbus, Ohio 43215, For Lakewood Hospital Association and Thomas Gable

Thomas M. Ehrnfelt, Walter F. Ehrnfelt, Waldheger Coyne Co., L.P.A., 1991 Crocker Road, Suite 550, Westlake, Ohio 44145, For Lakewood Hospital Foundation, Inc., and Kenneth Haber

Aaron M. Bernay, Katherine A. Klaeren, David C. Olson, Frost Brown Todd, L.L.C., 3300 Great American Tower, 301 East Fourth Street, Cincinnati, Ohio 45202, For Subsidium Healthcare, L.L.C.

BEFORE: Blackmon, J., Boyle, P.J., and Laster Mays, J.

JOURNAL ENTRY AND OPINION

PATRICIA ANN BLACKMON, J.:

{¶ 1} Edward Graham, Marguerite Harkness, William Grulich, Deborah Meckes, and Amy Dilzel ("Plaintiffs") filed this lawsuit alleging several causes of action concerning the closing of Lakewood Hospital. The trial court dismissed Plaintiffs' complaint against all Defendants, which included the following: the city of

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Lakewood ("the City"); Lakewood's Law Director, Kevin Butler; Lakewood's Mayor, Michael Summers; the Cleveland Clinic Foundation ("CCF"); CCF's former president and CEO Delos Cosgrove, M.D.; the Lakewood Hospital Association ("LHA"); LHA's Chairman, Thomas Gable; the Lakewood Hospital Foundation ("LHF"); LHF's president, Kenneth Haber; Subsidium Healthcare, L.L.C.; and Ohio Attorney General Mike DeWine (collectively "Defendants"). On appeal, Plaintiffs assign eight errors for our review.¹

{¶ 2} Having reviewed the record and pertinent law, we affirm the trial court's dismissal of Plaintiffs' complaint.

I. Introduction

{¶ 3} Plaintiffs are five residents of the City who take issue with Defendants' agreement to close Lakewood Hospital and replace it with a CCF family health center ("the FHC"). Plaintiffs filed an 18–count complaint, attacking this issue from various angles and requesting various forms of relief.

{¶ 4} In counts 1A, 1B, and 1C, Plaintiffs, acting as taxpayers, allege a derivative action brought on behalf of the City to ensure that its officers do not abuse the municipality's corporate powers. In these taxpayer claims, the Plaintiffs stand in the shoes of the City, and their "rights or claims are no greater than the rights or interests of the municipality." Cincinnati ex rel. Ritter v. Cincinnati Reds , 150 Ohio App.3d 728, 2002-Ohio-7078, 782 N.E.2d 1225, ¶ 20 (1st Dist.). Upon review, we find that Plaintiffs' taxpayer claims have been resolved to the point that they are moot and no longer justiciable.

{¶ 5} Plaintiffs' remaining claims are unrelated to their status as taxpayers. We agree with the trial court that Plaintiffs have either failed to state a claim upon which relief can be granted or lack standing to bring these claims. The apposite facts and our analysis of the law follows.

II. Facts and Procedural History

{¶ 6} In 1930, the City took ownership of Lakewood Hospital and the real estate upon which it sits. In 1987, the City and LHA entered into an agreement in which the City leased Lakewood Hospital to LHA ("the Lease"). This changed the status of Lakewood Hospital from a public hospital to a private, nonprofit hospital. The Lease was renewed in 1996. Also in 1996, LHA and CCF entered into an agreement for the purpose of "integration of [LHA] and the CCF health care system" ("the Agreement"). Additionally, as part of the Agreement, CCF became the sole member of LHA. The practical result of the Lease and the Agreement was that CCF operated and managed Lakewood Hospital.

{¶ 7} The term of the Lease is 30 years, which ends January 2, 2027, although the Lease can be terminated under various conditions. There is no term for the length of the Agreement. However, the Agreement can be terminated by mutual consent of the parties.

{¶ 8} Plaintiffs allege that, beginning in 2005, Defendants "terminated * * * services offered by Lakewood Hospital" in violation of the Lease and the Agreement. For example, Plaintiffs allege that CCF was "turning away patients or sending them to other CCF wholly-owned hospitals [and] regional private ambulatory and public EMS services reportedly had been directed to transport patients to Fairview Hospital instead of Lakewood Hospital." Plaintiffs further allege that "[b]y terminating these services, CCF has been able

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to pursue its strategy of crippling Lakewood Hospital to the point that CCF would have leverage when bargaining alongside LHA with the City to close Lakewood Hospital, prematurely exit its [Agreement] and Lease obligations, and build a new hospital in Avon, Ohio, of which CCF will have complete ownership and control."

{¶ 9} Plaintiffs also allege that, beginning in 2012, CCF "specified that medical services, equipment, and employees would be transferred gradually from Lakewood Hospital to Fairview Hospital * * * in preparation for the closure and razing of Lakewood Hospital as an inpatient acute care medical/surgical hospital." On January 14, 2015, CCF proposed closing Lakewood Hospital and building the FHC at the same location. This was memorialized in a public letter of intent signed by Cosgrove, Gable, and Haber.

{¶ 10} On April 12, 2015, Plaintiffs, as taxpayers pursuant to R.C. 733.59, sent notice to the City requesting "an injunction to enjoin abuses of corporate power; specific performance regarding express rights and public duties stated in the [Lease and the Agreement]; and a writ of mandamus to compel the City officials to perform their duties and obligations" under the Lease and the Agreement.

{¶ 11} On May 1, 2015, the City responded and refused to pursue a taxpayer suit as Plaintiffs requested. On May 28, 2015, Plaintiffs, acting on behalf of the City, filed this lawsuit, and on August 5, 2015, Plaintiffs filed an amended complaint alleging 18 causes of action. Plaintiffs generally allege that Defendants' actions violate the Lease and the Agreement's "express and implied terms to manage and operate Lakewood Hospital through 2026 * * *" and return the property to the City at that time. Defendants filed multiple motions to dismiss, arguing that Plaintiffs' claims should be dismissed for failure to state a claim upon which relief can be granted under Civ.R. 12(B)(6), lack of standing, failure to plead fraud with specificity under Civ.R. 9, mootness, and lack of subject matter jurisdiction under Civ.R. 12(B)(1).

{¶ 12} A summary of the time line in this case, which will be explained in detail throughout the remainder of this opinion, follows.

{¶ 13} On May 28, 2015, Plaintiffs filed their complaint. On December 21, 2015, the City passed an ordinance and entered into an agreement with CCF and LHA to close Lakewood Hospital. On February 6, 2016, Lakewood Hospital was closed. In September and October 2016, parts of Lakewood Hospital were demolished. On November 23, 2016, the City voters ratified the December 21, 2015 ordinance. In April 2017, construction began on the FHC.

{¶ 14} On July 11, 2017, the court, in a 38–page decision, granted Defendants' motions and dismissed Plaintiffs' complaint in its entirety. It is from this order that Plaintiffs appeal.

III. Motion to Partially Dismiss Appeal

{¶ 15} Before reviewing Plaintiffs' arguments, we address Defendants' motions to partially dismiss this appeal. Defendants argue that Plaintiffs' first three causes of action, each styled "Taxpayers Suit," along with their claims for injunctive relief and mandamus, are moot. To support this argument, Defendants attach various affidavits to their motion to partially dismiss. This court has held that

[n]ormally, an appellate court can only consider what is in the record on appeal. When it comes to deciding whether an event has caused an issue to be moot,

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however, it may

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