The Wheeling Corp. v. Columbus & Ohio River Railroad Co.

• Decision Date: 20 December 2001
• Docket Number: 00AP-1224,01-LW-4938
• Citation: 2001 Ohio 8751
• Parties: The Wheeling Corporation, Plaintiff-Appellant v. Columbus & Ohio River Railroad Company et al., Defendants-Appellees.
• Court: Ohio Court of Appeals

2001-Ohio-8751

The Wheeling Corporation Plaintiff-Appellant v. Columbus & Ohio River Railroad Company et al Defendants-Appellees.

No. 00AP-1224

01-LW-4938 (10th)

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

December 20, 2001

APPEAL from the Franklin County Court of Common Pleas.

Zeiger & Carpenter, John W. Zeiger and Steven W. Tigges; Taft Stettinius & Hollister, LLP, Stephen M. O'Bryan and Peter M. Poulos, for appellant.

Chester Willcox & Saxbe, LLP, Stephen C. Fitch and David J. Butler, for appellee Columbus & Ohio River Railroad Company.

Roetzel & Andress, Stephen D. Jones and Nadine Hauptman, for appellee The Ohio Rail Development Commission.

Betty D. Montgomery, Attorney General, and Alan H. KlodeII, for appellee The Ohio Rail Development Commission.

OPINION

DESHLER J.

On June 30, 1997, The Wheeling Corporation ("Wheeling") filed a complaint in the Franklin County Court of Common Pleas against Columbus & Ohio River Railroad Company ("C&OR") and the Ohio Rail Development Commission ("ORDC"). Count one sought a declaration as to Wheeling's rights under a request for proposals ("RFP") issued by ORDC on February 20, 1997. Under the RFP, ORDC sought a rail operator for the Panhandle Rail Line ("Panhandle line") running between Columbus and Mingo Junction, Ohio. The state of Ohio had acquired the line from Consolidated Rail Corporation in April 1992, and ORDC is the lessee of the line. At the time of the RFP, C&OR was the existing contract operator/common carrier on the Panhandle line under an operating agreement that was set to expire on April 16, 1997. ORDC issued the RFP, establishing a competitive selection process, in order to determine the best qualified operator and to enter into an operating agreement with the selected rail operator.

The proposal process was to consist of two phases. The RFP set forth a 700-point evaluation procedure to be used in both phases. The RFP called for a "Selection Committee" which would evaluate and score the proposals. The Selection Committee was to be chosen by ORDC and would consist of commissioners, commission staff and others whom ORDC deemed suitable to evaluate the proposals. The top two proposers of the first phase would go on to Phase II. The top-ranked proposer in Phase II would be asked by ORDC to enter into an operating agreement, the terms and conditions of which were not fully set forth in the RFP.

Wheeling and C&OR were chosen as the top two proposers during Phase I, with Wheeling scoring the most points. During Phase II, C&OR was ranked the highest scorer. On May 29, 1997, ORDC passed a resolution selecting C&OR to operate the Panhandle line and authorizing the ORDC staff to enter into a new operating agreement with C&OR, with negotiations to be completed and implemented by June 20, 1997. Such an operating agreement was entered into on June_20, 1997, effective July 1, 1997.

Wheeling's complaint averred that ORDC failed to follow the selection criteria set forth in the RFP and that, had ORDC followed the RFP, Wheeling would have been selected as the rail operator. As indicated above, Wheeling sought a declaration of its rights under the RFP including a declaration that the award to C&OR was unlawful and void and that it should be awarded the operating agreement. Wheeling also sought an injunction prohibiting the operating agreement between ORDC and C&OR from taking effect on July 1, 1997, maintaining the status quo between ORDC and C&OR regarding rail service on the Panhandle line, prohibiting ORDC from taking any further actions to award the operating rights to C&OR, and ordering ORDC to award the operating agreement to Wheeling.

On June 30, 1997, Wheeling sought a temporary restraining order maintaining the then-current operating agreement in effect between ORDC and C&OR and prohibiting the July 1, 1997 operating agreement from taking effect. On July_1, 1997, the trial court denied Wheeling's motion for a temporary restraining order, indicating that such denial would not serve to bar the July 1, 1997 operating agreement from being set aside if the RFP process was found to be flawed.

On July 7, 1997, Wheeling filed an amended complaint adding a claim for damages incurred as a result of the alleged faulty RFP process and a claim alleging ORDC and the Selection Committee had violated R.C. 121.22, commonly referred to as the Open Meetings Act ("OMA").^[1] Wheeling sought a declaration that the July 1, 1997 operating agreement was invalid and void, pursuant to R.C. 121.22(H), and an injunction compelling ORDC's compliance with the OMA with regard to awarding the operating agreement.

The parties agreed to bifurcate the OMA claims from the RFP claims. In December 1997, a bench trial was held on the OMA claims. On April 28, 1998, the trial court rendered a decision and judgment entry. The trial court concluded that the Selection Committee was a public body subject to R.C. 121.22 and that the Selection Committee and ORDC had violated the OMA. Therefore, the trial court invalidated the Selection Committee's decision, the ORDC's May 29, 1997 resolution selecting C&OR as the new rail operator and the July 1, 1997 operating agreement stemming therefrom. The trial court also concluded that Wheeling was entitled to an injunction compelling ORDC's compliance with R.C. 121.22 in awarding the operating agreement. Further, the trial court ordered ORDC to pay Wheeling all court costs and attorney fees upon submission of the appropriate application and affidavit.

ORDC filed a notice of appeal of the April 28, 1998 judgment. However, this court dismissed the appeal for lack of a final, appealable order.

In the meantime, Wheeling submitted an application for attorney fees based on the OMA violations. ORDC filed a memorandum contra, arguing that attorney fees should be reduced or denied pursuant to R.C. 121.22(I)(2)(a).

On March 8, 1999, Wheeling filed a third amended complaint adding a claim against C&OR for damages for intentional interference with business relationships. On this same date, ORDC and C&OR filed motions for summary judgment on counts one, two and three of Wheeling's second amended complaint. On July 10, 1999, the trial court issued a decision on the summary judgment motions. Summary judgment was awarded to ORDC and C&OR on Wheeling's claim for an injunction awarding the operating agreement to Wheeling. The trial court concluded that it lacked the authority to issue an injunction compelling ORDC to award the operating agreement to Wheeling. In addition, the trial court granted summary judgment in favor of ORDC on Wheeling's claims for damages. The trial court denied ORDC's and C&OR's motions for summary judgment on the claim for an injunction compelling ORDC to re-bid the operating agreement and on the claim seeking to enjoin C&OR from participating in any re-bid.

On December 15, 1999, C&OR filed a motion for summary judgment on Wheeling's claim for monetary damages. Summary judgment was granted in favor of C&OR as to this claim on February 22, 2000.

On February 2, 2000, Wheeling filed a motion for a temporary restraining order and preliminary injunction seeking to enjoin ORDC and C&OR from closing or consummating the sale of the Panhandle line to C&OR. On February 4, 2000, the trial court rendered a decision. The trial court refused to issue a preliminary injunction, but it prohibited ORDC and C&OR from selling or otherwise encumbering the ownership of and right to manage the Panhandle line.

In March 2000, a bench trial was held as to the remaining claims.

In June 2000, a hearing was conducted on the reasonableness of attorney fees pursuant to the trial court's April 28, 1998 decision on the OMA violations.

On September 14, 2000, the trial court rendered a decision on the claims stemming from the RFP process. The trial court concluded, among other things, that there was no requirement that ORDC use competitive selection in leasing the Panhandle line, that a public agency was bound to adhere to its RFP, that ORDC and the Selection Committee substantially complied with the RFP, and that ORDC and the Selection Committee acted reasonably and in good-faith in scoring Phase I and Phase II responses. Accordingly, the trial court found in favor of ORDC and C&OR on Wheeling's remaining claims.

On September 18, 2000, the trial court rendered a decision on the issue of attorney fees based on the OMA violations. The trial court declined to award attorney fees on the basis that ORDC and/or the Selection Committee acted in good-faith and/or reasonably in holding nonpublic meetings and that the public benefit gained by Wheeling's success on its OMA claims was not significant enough to merit such an award.

On September 28, 2000, the trial court journalized a final judgment entry. On October 26, 2000, Wheeling filed a notice of appeal with this court. ORDC and C&OR have filed notices of cross-appeal.

Wheeling has set forth the following errors for our consideration:

I. THE TRIAL COURT ERRED AS A MATTER OF LAW IN CONCLUDING THAT ORDC DID NOT ABUSE ITS DISCRETION EVEN THOUGH ORDC CHANGED THE RFP'S PUBLICLY ANNOUNCED SCORING CRITERIA SELECTIVELY APPLIED THE RFP'S RULES TO THE BIDDERS, MODIFIED THE RFP'S NON-NEGOTIABLE BIDDING REQUIREMENTS FOR C&OR, AND AWARDED THE OPERATING AGREEMENT BASED UPON ALL OF THESE UNANNOUNCED CRITERIA.

II. THE TRIAL COURT ERRED AS A MATTER OF LAW IN CONCLUDING THAT WHEELING LACKED STANDING TO CHALLENGE THE ORDC'S MODIFICATION OR WAIVER OF THE NON-NEGOTIABLE PRINCIPLES AND ITS FAILURE TO REJECT C&OR'S BID AS IT WAS NOT IN COMPLIANCE WITH SAME.

III. THE TRIAL COURT ERRED AS A MATTER OF LAW WHEN IT REFUSED TO AWARD ANY ATTORNEY'S FEES TO WHEELING AFTER FINDING THAT SUBSTANTIAL VIOLATIONS OF THE OPEN MEETINGS ACT

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