Karvo Cos. v. Ohio Dep't of Transp.

• Decision Date: 06 November 2019
• Docket Number: No. 29294,29294
• Citation: 135 N.E.3d 837,2019 Ohio 4556
• Parties: KARVO COMPANIES, INC., Appellee v. OHIO DEPARTMENT OF TRANSPORTATION, Appellant
• Court: Ohio Court of Appeals

135 N.E.3d 837

2019 Ohio 4556

KARVO COMPANIES, INC., Appellee

v.OHIO DEPARTMENT OF TRANSPORTATION, Appellant

No. 29294

Court of Appeals of Ohio, Ninth District, Summit County.

Dated: November 6, 2019

DECISION AND JOURNAL ENTRY

CALLAHAN, Presiding Judge.

{¶1} Appellant, Ohio Department of Transportation, appeals from the order of the Summit County Common Pleas Court denying its motion to dismiss for lack of subject-matter jurisdiction. For the reasons set forth below, this Court affirms.

I.

{¶2} Karvo Companies, Inc. ("Karvo") is a paving company located in Summit County with its primary source of business being highway construction contracts with the Ohio Department of Transportation ("ODOT"). In 2017, Karvo was in possession of a certificate of qualification, which permitted it to submit bids to ODOT for construction contracts.

{¶3} On September 22, 2017, ODOT issued a letter to Karvo notifying it that its certificate of qualification was revoked, that Karvo was subject to a proposed debarment, and that Karvo could request a hearing on these issues. A hearing was held, wherein the hearing officer concurred with ODOT's initial decision. Karvo filed objections. On February 5, 2018, the Director of ODOT overruled those objections and ordered that Karvo's certificate of qualification be revoked for six months, nine days, and that Karvo be debarred for a period of time served, with both periods being applied retroactively.

{¶4} Karvo filed an administrative appeal of the Director's Order in both Summit County and Franklin County. ODOT moved to dismiss the administrative appeal filed in Summit County for lack of subject-matter jurisdiction. The Summit County trial court denied the motion to dismiss and proceeded to reverse and remand the Director's February 5, 2018 Order on the merits. ODOT timely appeals the denial of the motion to dismiss.

II.

ASSIGNMENT OF ERROR

THE SUMMIT COUNTY COMMON PLEAS COURT ERRED IN CONSTRUING AND INTERPRETING R.C. 119.12 TO FIND IT HAD SUBJECT-MATTER JURISDICTION OVER KARVO'S ADMINISTRATIVE APPEAL.

{¶5} ODOT contends that the trial court incorrectly interpreted the statutory definition of license and applied the wrong section of R.C. 119.12 to determine that it had subject-matter jurisdiction over this administrative appeal. This Court disagrees.

{¶6} A motion to dismiss an administrative appeal for lack of subject-matter jurisdiction involves questions of law which this Court reviews de novo. Apostolic Faith Assembly, Inc. v. Coventry Twp. , 9th Dist. Summit No. 23938, 2008-Ohio-2820, 2008 WL 2357936, ¶ 3, 5, quoting Crosby-Edwards v. Ohio Bd. of Embalmers & Funeral Dirs. , 175 Ohio App.3d 213, 2008-Ohio-762, 886 N.E.2d 251, ¶ 21 (10th Dist.). Similarly, a trial court's interpretation and application of a statute also presents questions of law and is reviewed de novo. In re Adoption of K.E.M. , 9th Dist. Summit No. 26307, 2012-Ohio-5652, 2012 WL 6042691, ¶ 11, quoting State v. Cruise , 185 Ohio App.3d 230, 2009-Ohio-6795, 923 N.E.2d 702, ¶ 5 (9th Dist.).

{¶7} Subject-matter jurisdiction is the statutory or constitutional power of a court to hear and decide the merits of a particular class of cases. Groveport Madison Loc. Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision , 137 Ohio St.3d 266, 2013-Ohio-4627, 998 N.E.2d 1132, ¶ 25, citing Pratts v. Hurley , 102 Ohio St.3d 81, 2004-Ohio-1980, 806 N.E.2d 992, ¶ 11 ; Bank of Am., N.A. v. Kuchta , 141 Ohio St.3d 75, 2014-Ohio-4275, 21 N.E.3d 1040, ¶ 19. The Ohio Constitution provides a common pleas court with the authority to review proceedings of administrative officers and agencies as set forth in the law. Abt v. Ohio Expositions Comm. , 110 Ohio App.3d 696, 699, 675 N.E.2d 43 (10th Dist.1996), quoting Article IV, Section 4(B), Ohio Constitution. R.C. 119.12 and other specific statutes grant the common pleas court jurisdiction to review an administrative agency's actions. Abt at 699, 675 N.E.2d 43.

Type of Adjudication

{¶8} In relevant part, R.C. 119.12 provides where an appeal of an administrative agency's action is to be filed:

(A)(1) Except as provided in division (A)(2) or (3) of this section, any party adversely affected by any order of an agency issued pursuant to an adjudication denying an applicant admission to an examination, or denying the issuance or renewal of a license or registration of a licensee, or revoking or suspending a license, or allowing the payment of a forfeiture under section 4301.252 of the Revised Code may appeal from the order of the agency to the court of common pleas of the county in which the place of business of the licensee is located or the county in which the licensee is a resident.

* * *

(B) Any party adversely affected by any order of an agency issued pursuant to any other adjudication may appeal to the court of common pleas of Franklin [C]ounty, * * *.

R.C. 119.12(A)(1) and (B).

{¶9} "ODOT is a department with licensing authority." Asphalt Specialist, Inc. v. Ohio Dept. of Transp. , 53 Ohio App.3d 45, 47, 557 N.E.2d 1224 (10th Dist.1988). Only when ODOT performs a licensing function, such as "issuing, suspending, revoking, or canceling licenses[,]" is ODOT an agency issuing an order pursuant to a license adjudication. See R.C. 119.01(A)(1), (B), (D) ; R.C. 119.12(A)(1). See also Asphalt Specialist, Inc. at 47, 557 N.E.2d 1224.

{¶10} Both ODOT and Karvo agree that the Director's Order is an adjudication as defined by R.C. 119.01(D), but disagree as to the type of adjudication. ODOT contends that the Director's Order was of the nature of "any other adjudication" and subject-matter jurisdiction exists in Franklin County. See R.C. 119.12(B). Karvo argues that the Director's Order involved a license adjudication and thus, the county where its business is located, Summit, has subject-matter jurisdiction. See R.C. 119.12(A)(1).

License

{¶11} The first question in determining the nature of the adjudication issued by the Director of ODOT is whether the certificate of qualification is a license as defined by R.C. 119.01(B). The Administrative Procedure Act defines " ‘(l)icense’ " as "any license, permit, certificate, commission, or charter issued by any agency." R.C. 119.01(B). "The object of a license is to confer a right that does not exist without a license. It is a permission to do something which without the license would not be allowed." Bloomfield v. State , 86 Ohio St. 253, 260, 99 N.E. 309 (1912). In the context of an Ohio Revised Code Chapter 119 appeal, the Ohio Supreme Court defined a "license" as " ‘permission granted by some competent authority to do an act which, without such permission, would be illegal.’ " Home S. & L. Assn. v. Boesch , 41 Ohio St.2d 115, 118, 322 N.E.2d 878 (1975), quoting State v. Hipp , 38 Ohio St. 199 (1882), paragraph two of the syllabus.

"[I]llegal" is generally defined as being "[f]orbidden by law; unlawful." Black's Law Dictionary 763 (8th Ed.2004). See State v. Fischer , 128 Ohio St.3d 92, 2010-Ohio-6238, 942 N.E.2d 332, ¶ 24, fn. 1.

{¶12} The Director's Order concerns a certificate of qualification. ODOT concedes that R.C. 119.01(B) includes the word "certificate" in the definition of a license, but argues that a certificate of qualification is not a license because it does not confer the right "to operate a business or perform construction work." ODOT contends that because Karvo is able to bid and complete non-ODOT projects without a license, the certificate of qualification issued by ODOT does not give Karvo a right to do a type of work. ODOT also suggests that the certificate of qualification is not a license because there is no criminal penalty for bidding without a certificate.

{¶13} As to ODOT's first argument, whether Karvo is able to do construction work on non-ODOT projects is irrelevant to whether ODOT's certificate of qualification is a license. A "certificate of qualification shall authorize its holder to bid on all work on which bids are taken by the department of transportation during the period of time therein specified." R.C. 5525.03. "[T]he director of transportation shall not consider any bid filed with the director by any person who has not been qualified to bid[ ]" and "[n]o contract shall be awarded to any bidder not qualified to bid[.]" R.C. 5525.08. Any contracts that are "attempted to be awarded" to a non-qualified bidder are void. R.C. 5525.02. Based upon the statutes, the certificate of qualification confers a right and grants permission to do an act that would otherwise not be allowed.

{¶14} As to ODOT's second argument, its attempt to equate the Supreme Court's use of the word " ‘illegal’ " when defining license in Boesch with the requirement of a criminal penalty is misplaced. Boesch , 41 Ohio St.2d at 118, 322 N.E.2d 878, quoting Hipp , 38 Ohio St. 199 at paragraph two of the syllabus. ODOT discounts Karvo's reliance upon Total Office Prods. v. Dept. of Adm. Servs. , 10th Dist. Franklin No. 05AP-955, 2006-Ohio-3313, 2006 WL 1781434, by latching onto the Tenth District's statement that "[w]ithout [an MBE] certification, it would be illegal for a business to participate in any portion of that percentage of bidding setting aside by R.C. 125.081(A)." Id. at ¶ 19. ODOT extrapolates that "illegal" requires a criminal penalty because R.C. 125.081(F) provides a criminal penalty relative to an MBE certificate, whereas there is no criminal penalty relative to ODOT's certificate of qualification. ODOT's position is wholly unsupported by Total Office Products and R.C. 125.081(F).

{¶15} Total Office Products contained no reference to or analysis of the criminal penalty set forth in R.C. 125.081(F). See id. That criminal penalty only arises when someone misrepresents his status as an MBE in order to obtain the specially designated contracts. R.C. 125.081(F). R.C. 125.081(F), however, does not create a criminal penalty for participating in the competitive bidding without an MBE certificate. See id.

{¶16} R.C. 5525.09 is similar in that it prohibits an applicant...