Ohio Pyro, Inc v. Ohio Dept. of Commerce

• Decision Date: 03 October 2007
• Docket Number: No. 2006-0785.,2006-0785.
• Parties: OHIO PYRO, INC., et al., Appellees, v. OHIO DEPARTMENT OF COMMERCE, DIVISION OF STATE FIRE MARSHAL, et al., Appellants.
• Court: Ohio Supreme Court

875 N.E.2d 550

115 Ohio St.3d 375

2007-Ohio-5024

OHIO PYRO, INC., et al., Appellees, v. OHIO DEPARTMENT OF COMMERCE, DIVISION OF STATE FIRE MARSHAL, et al., Appellants.

No. 2006-0785.

Supreme Court of Ohio.

Submitted May 2, 2007.

Decided October 3, 2007.

Bricker & Eckler, L.L.P., and T. Earl LeVere, for appellees.

Marc Dann, Attorney General, Elise Porter, Acting State Solicitor, Stephen P. Carney, Deputy Solicitor, and Hilary R. Damaser and Susan M. Sullivan, Assistant Solicitors, for appellant Ohio Department of Commerce, Division of State Fire Marshal.

Wiles, Boyle, Burkholder & Bringardner, L.P.A., Michael L. Close, and Dale D. Cook, Columbus; and W. Scott Simon, for appellants Safety 4th Fireworks, Inc., and Liberty Fireworks, Inc.

O'CONNOR, J.

{¶ 1} This appeal implicates the "collateral attack" doctrine, which disfavors the authority of one court to revisit a judgment of another court, in another proceeding, in other than very limited circumstances. For the reasons that follow, we determine that this case amounts to an impermissible collateral attack on a prior valid judgment. We reverse the judgment of the court of appeals.

Relevant Background

{¶ 2} On June 27, 1997, defendant-appellant Safety 4th Fireworks, Inc. ("Safety 4th")¹ faxed an application letter to defendant-appellant, Ohio Department of Commerce, Division of State Fire Marshal ("Fire Marshal"), seeking permission to relocate three of its wholesale fireworks licenses. As a branch of the state's Department of Commerce, the Fire Marshal strictly regulates the fireworks industry in Ohio under the authority of R.C. 3737.22(A)(14), principally through administration and enforcement of the provisions of R.C. Chapter 3743. Fireworks wholesalers operate under annual licenses issued by the Fire Marshal. In order to obtain a license, or to relocate a particular license, a wholesaler must obtain the permission of the Fire Marshal and must comply with all relevant statutory and additional requirements.

{¶ 3} After the Fire Marshal failed to approve Safety 4th's relocation request, Safety 4th sued the Fire Marshal in 1999 in the Jefferson County Court of Common Pleas. The key point of dispute concerned a moratorium on requests for the issuance of wholesaler licenses, which had been in effect in some form since the mid-1980s. Prior to 2001, the moratorium was contained in legislation that was never codified in the Revised Code. See, e.g., Section 29, Sub.H.B. No. 670, 146 Ohio Laws, Part IV, 6440, 6866, effective December 2, 1996; Section 165, Am.Sub.H.B. No. 215, 147 Ohio Laws, Part I, 909, 2197, effective June 30, 1997; Section 4, Sub.H.B. No. 204, 148 Ohio Laws, Part I, 1338, 1341, effective November 16, 1999. This moratorium has since been codified at R.C. 3743.75. See Sub.H.B. No. 161, 149 Ohio Laws, Part III, 5758, 5821-5822, effective June 29, 2001.

{¶ 4} In the 1999 lawsuit, Safety 4th in essence argued that a window existed in the moratorium allowing for the relocation of licenses prior to the effective date of Section 165 of Am.Sub.H.B. No. 215 (June 30, 1997), and that its application for relocation, dated June 27, 1997, preceded that date. Safety 4th sought a declaratory judgment that it was entitled to relocate licenses pursuant to the law that was in effect on June 27, 1997; a declaratory judgment that Am.Sub.H.B. No. 215 was unconstitutional for violating the one-subject rule of Section 15(D), Article II, of the Ohio Constitution; and a writ of mandamus to compel the Fire Marshal to approve the relocations.

{¶ 5} Several companies attempted to intervene in late 1999 in Safety 4th's Jefferson County action, but the trial court denied all motions to intervene. Among those that attempted to intervene was the plaintiff-appellee in the instant action, Ohio Pyro, Inc., a wholesale fireworks company and a competitor of Safety 4th. Ohio Pyro sought intervention in order to argue that moratorium restrictions applied to Safety 4th's application. Ohio Pyro did not appeal from the denial of its motion for intervention.

{¶ 6} Safety 4th and the Fire Marshal eventually reached an agreement to settle the litigation. On June 6, 2001, the Jefferson County Court of Common Pleas journalized an agreed order submitted by the parties "as a full and final settlement of any and all claims." This order dismissed the complaint with prejudice. Paragraph 1 of the order provided, "Defendant will consider Plaintiffs' requests for transfer * * * to any political subdivision in the State of Ohio as if perfected on June 27, 1997 provided all provisions of this Agreed Order are met and further provided that there is compliance with all other applicable rules and regulations. * * * If, at the conclusion of such consideration, Defendant should find that all conditions and requirements have been met, then transfer shall be approved and deemed effective as of June 27, 1997."

{¶ 7} The order also specified a number of conditions Safety 4th was required to meet before approval would be granted, including compliance with all applicable laws and safety regulations (for example, regarding matters such as sprinkler systems, building codes, zoning, and setback requirements). The order also placed additional obligations on the Fire Marshal, such as conducting inspections and performing other duties relevant to the license transfer in a timely manner.

{¶ 8} Acting in reliance on the agreed order, Safety 4th selected a location in Fayette County, purchased real estate at the site, erected a building, and took other significant steps toward gaining final approval from the Fire Marshal regarding, the new site.

{¶ 9} On April 7, 2004, Ohio Pyro initiated the present case by filing a complaint in the Fayette County Court of Common Pleas.² In its complaint, Ohio Pyro alleged that it had learned that Safety 4th was relocating to Fayette County, and that Ohio Pyro was pursuing injunctive relief as its "only opportunity" to preclude the Fire Marshal from approving that and other relocations. Ohio Pyro further alleged that in the 2001 settlement in Jefferson County, the Fire Marshal had "agreed to perform acts that are outside of his statutory authority" and that "contravene the express intent of Ohio's legislature."

{¶ 10} Ohio Pyro sought a declaratory judgment and preliminary and permanent injunctions to protect its market share as "the only company that is presently licensed to operate wholesale fireworks showrooms at any location in Fayette County," and requested that the court determine the "rights, status, and other legal relations" of and among Ohio Pyro, the Fire Marshal, and Safety 4th. Ohio Pyro asserted that it relies on the fireworks moratorium to conduct its business and that it would suffer "diminished revenues, reduced profits, and lost market share" if another fireworks wholesaler were allowed to operate in Fayette County.

{¶ 11} On May 19, 2004, after a hearing that lasted several days, the Fayette County Court of Common Pleas granted Ohio Pyro's request for a preliminary injunction, restraining the Fire Marshal from approving the transfers of any licenses held by Safety 4th "`to any political subdivision in the state of Ohio * * *' other than to another location within the political subdivision in which each license is currently located" pending further proceedings.

{¶ 12} In motions to dismiss, the Fire Marshal and Safety 4th³ each argued that Ohio Pyro's suit conflicted with, and constituted an impermissible collateral attack on, the judgment that had been issued by the Jefferson County Court of Common Pleas in 2001, in which that court approved the settlement agreement entered into by the Fire Marshal and Safety 4th.

{¶ 13} Ohio Pyro later moved for summary judgment, and the Fire Marshal responded by filing a cross-motion for summary judgment.⁴ On February 1, 2005, the trial court denied the motions to dismiss, with no specific explanation, and granted Ohio Pyro's motion for summary judgment. The court made permanent its earlier preliminary injunction on the same terms, forbidding the Fire Marshal from approving Safety 4th's relocation to Fayette County or to any other location not within the same political subdivision where each license was already located.⁵

{¶ 14} The Twelfth District Court of Appeals affirmed the judgment of the trial court, stating, "After reviewing the record, we cannot agree with appellants' position that the trial court's assumption of jurisdiction over the action seeking declaratory judgment and injunctive relief constitutes a collateral attack on the Jefferson County judgment." Ohio Pyro, Inc. v. Ohio Dept. of Commerce, Div. of State Fire Marshal, Fayette App. Nos. CA2005-03-009 and CA2005-03-011, 2006-Ohio-1002, 2006 WL 522457, ¶ 13. Furthermore, the court of appeals held that an injunction was appropriate because Ohio Pyro had established irreparable harm and had no adequate remedy at law. Id. at ¶ 29. Finally, the court of appeals held that a justiciable controversy between the parties exists. Id. at ¶ 35.

{¶ 15} Both the Fire Marshal and Safety 4th appealed to this court, and we accepted jurisdiction to consider whether the trial court's decision in this case amounted to the endorsement of an improper collateral attack on a different court's previous judgment. 110 Ohio St.3d 1437, 2006-Ohio-3862, 852 N.E.2d 187.

Analysis

{¶ 16} This court has described a collateral attack as "`an attempt to defeat the operation of a judgment, in a proceeding where some new right derived from or through the judgment is involved.'" Fawn Lake Apts. v. Cuyahoga Cty. Bd. of Revision (1999), 85 Ohio St.3d 609, 611, 710 N.E.2d 681, quoting Kingsborough v. Tousley (1897), 56 Ohio St. 450, 458, 47 N.E. 541.

{¶ 17} Black's Law Dictionary (8th Ed.2004) 278 defines "collateral attack" as "[a]n attack on a judgment in a proceeding other than a direct appeal; esp., an attempt to undermine a judgment through a judicial proceeding in which the...