Ohio Water Dev. V. W. Res. Water Dist.
| Decision Date | 27 August 2002 |
| Docket Number | No. O1AP-1276.,No. O1AP-1244.,O1AP-1244.,O1AP-1276. |
| Citation | 2002 Ohio 4393,149 Ohio App.3d 155,776 N.E.2d 530 |
| Parties | OHIO WATER DEVELOPMENT AUTHORITY, Appellee, v. WESTERN RESERVE WATER DISTRICT, Appellant; Zak et al., Appellees. Ohio Water Development Authority, Appellant, v. Western Reserve Water District et al., Appellees. |
| Court | Ohio Court of Appeals |
Calfee, Halter & Griswold L.L.P., Mark I. Wallach and Colleen Moran O'Neil, Cleveland, for appellee cross-appellant Ohio Water Development Authority.
Oberholtzer, Filous & Lesiak and John C. Oberholtzer, Medina, for appellant cross-appellee Western Reserve Water District.
Isaac, Brant, Ledman & Teetor and Charles Brant, Columbus, for appellee Jack Schira.
{¶ 1} Appellant, Ohio Water Development Authority ("OWDA"), appeals from a judgment of the Franklin County Court of Common Pleas overruling appellant's objections to a magistrate's decision, which held that appellee Western Reserve Water District ("Western Reserve") is not obligated to vote an assessment to provide repayment of funds advanced to it by OWDA. Western Reserve has cross-appealed, asserting that the trial court erred in considering the OWDA's objections to the magistrate's decision, as they were not timely filed.
{¶ 2} The present appeal arises from a lengthy and fairly complicated factual and procedural context. Fortunately, the parties were able to arrive at a joint stipulation of facts, which was presented to the trial court; the following summary is drawn largely from this joint stipulation.
{¶ 3} Appellant OWDA is a state agency charged with assisting in the development of local water systems in the state of Ohio. Pursuant to R.C. 6121.04(E), OWDA is authorized to lend funds to governmental agencies to assist in the acquisition or construction of water supply and distribution projects.
{¶ 4} Appellee Western Reserve was created in 1991 to develop and provide potable water to residential and commercial areas, including the unincorporated portions of Brunswick Hills Township, in Medina County. Western Reserve anticipated drawing upon the resources of OWDA as part of its developmental plan, and pursuant to this, in February 1992, the parties entered into a "Cooperative Agreement for State Planning Project," under which OWDA agreed to lend up to $510,000 to Western Reserve, and Western Reserve agreed to certain terms of repayment, which are contested in the present case.
{¶ 5} The OWDA funds were duly disbursed to Western Reserve for engineering studies and other preparation for development of a water system, but some five years later, after Western Reserve had obtained and spent the entire $510,000, Western Reserve was forced to conclude that construction would never begin because no suitable water source had been developed. Despite this failure to construct a water system for its residents, Western Reserve remained obligated to repay the loans made by OWDA under the cooperative agreement. In 1997, after planning had been completed and it was apparent that no suitable water source would be found, Western Reserve passed a resolution of necessity and a resolution of assessment. In these resolutions, it was stated that the construction of the water service project remained necessary and beneficial to residents of the district and that construction would be undertaken upon identification of a suitable water source, despite the absence thereof at the conclusion of the planning phase and the time of the passing of the two resolutions.
{¶ 6} Prior to entering into the cooperative agreement, Western Reserve held a meeting in which a resolution was unanimously approved, providing that if the proposed water service project did not proceed through construction, funds borrowed by OWDA for planning purposes would be repaid to OWDA by levying a property assessment on property owners within Western Reserve's district.
{¶ 7} After passage of the 1997 resolutions, residents of the district, objecting to the possibility of an assessment levied by Western Reserve for payment of expenses of the water project, which had yet to come to fruition, filed an administrative appeal in the Medina County Court of Common Pleas asserting that the 1997 resolutions did not comply with R.C. 6119.58 governing expenditure of funds for planning purposes by a water district. The Medina County Court of Common Pleas eventually held that the resolutions were invalid because R.C. 6119.58 required that such resolutions of necessity be passed prior to the actual expenditure of the funds to be recouped through the assessment. On appeal to the Ninth Appellate District, the matter was resolved on different grounds. The Ninth District Court of Appeals held that the resolutions were invalid because Western Reserve had failed to adequately describe the water resource project in the resolution of necessity, as required by R.C. 6119.58. The court did not address the question whether a resolution of necessity must be passed prior to the expenditure of the planning funds. Macko v. W. Res. Water Dist. (Dec. 9, 1988), Medina App. No. 2774-M, 1998 WL 852545, discretionary appeal not allowed in (1999), 85 Ohio St.3d 1460, 708 N.E.2d 1013.
{¶ 8} OWDA then filed the present action in the Franklin County Court of Common Pleas to recover the original loan plus accrued interest from Western Reserve and sought injunctive and declaratory relief. It being uncontested that Western Reserve had no significant assets or cash, no revenue from operations, and no immediate prospect of such revenue, OWDA sought an injunction to obligate Western Reserve to pass a special assessment to generate the income to repay the loans. Also before the trial court were various other claims concerning Western Reserve trustees individually and obligations of a third-party defendant, the Ohio Government Risk Management Plan, to provide a defense or coverage for Western Reserve in the action. All these subsidiary issues have been decided in the trial court without being raised in this appeal and need not be further discussed.
{¶ 9} The matter was referred to a magistrate, who based his decision on the parties' joint stipulation and briefing of applicable law. Examining the language of the cooperative agreement, the magistrate concluded that OWDA could not require the use of either general resources or new assessments for repayment of the loan, but that Western Reserve could voluntarily use general resources or assessments to repay the loan obligation to OWDA if these resources and assessments both existed and were lawful. The magistrate accordingly concluded that in the current circumstances, Western Reserve could not be forced to enact a new assessment to replace the 1997 resolutions, which had been declared unlawful, in order to produce the income necessary to repay the loan to OWDA.
{¶ 10} OWDA filed objections to the magistrate's decision. The timeliness of these objections was questioned by Western Reserve. The trial court found that the objections, although not strictly timely according to rule, would nonetheless be considered in the interest of reaching the merits of the matter. The trial court then proceeded to slightly modify the magistrate's conclusions without altering the outcome.
{¶ 11} OWDA has timely appealed the trial court's judgment and brings the following assignment of error:
{¶ 12} "The trial court erred in concluding that Western Reserve Water District is not liable to Ohio Water Development Authority under the Cooperative Agreement for State Planning Project and, further, erred in failing to issue an injunction ordering Western Reserve Water District to pass a Resolution of Assessment to recoup the funds owed to Ohio Water Development Authority under the Cooperative Agreement for State Planning Project."
{¶ 13} Western Reserve has timely filed a cross-appeal and brings the following assignment of error:
{¶ 14} "The trial court erred in considering the cross-appellee's objections to the magistrate's decision which were untimely filed pursuant to Civil Rule 53(E)."
{¶ 15} We will first address Western Reserve's cross-appeal, which attacks the timeliness of OWDA's objections to the magistrate's decision in the trial court.
{¶ 16} The magistrate filed his decision in its final form on February 28, 2001. Civ.R. 53(E)(3)(a) provides that objections to magistrates' decisions shall be filed within 14 days of the filing of the decision. OWDA's objections, although purportedly mailed on March 14, 2001, were not filed by the Franklin County Clerk of Courts until March 19, 2001, some five days out of rule. OWDA argued before the trial court that its objections had been designated for mailing by overnight express service on March 14, 2001, but had been mistakenly sent by regular mail to the court. OWDA further argued that there was at the very least a split in authority concerning the application of Civ.R. 6(E), the three-day mailing rule, to Civ.R. 53(E) regarding the filing of objections and contended that the clerical mistake in mailing, coupled with the three days' latitude under Civ.R. 6(E), should excuse OWDA from timely compliance in filing the objections. The trial court found that the circumstances constituted excusable clerical error on the part of OWDA, overruled Western Reserve's motion to strike the objections, and proceeded to consider the merits of the objections.
{¶ 17} The trial court's grant of leave to file objections outside the 14-day period of Civ.R. 53(E)(3)(a) will not be reversed absent an abuse of discretion. Russell v. Russell (1984), 14 Ohio App.3d 408, 14 OBR 526, 471 N.E.2d 810. Although Western Reserve correctly points out that the split in...
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