City of Hudson v. City of Akron
2017 Ohio 7590
| Ohio Ct. App. | 2017Background
- Akron operates a municipal water utility that supplies customers inside Akron and extraterritorial customers in neighboring municipalities, including portions of Hudson.
- Akron charged Hudson customers significantly higher rates (about 60% higher) and, in Nov. 2014, began a $17.76/month residential surcharge and a 42% increase for commercial Hudson accounts (the "Surcharge").
- Hudson alleges the Surcharge was imposed to shift costs of replacing the Twinsburg Line (approx. $15 million, most of which Hudson customers allegedly would bear) and to coerce Hudson into an unfavorable water-services agreement.
- Hudson sued Akron in Summit County Court of Common Pleas seeking declaratory relief, injunctive relief to enjoin the Surcharge, and damages; Akron moved to dismiss under Civ.R. 12(B)(6).
- The trial court granted the motion to dismiss, concluding it lacked authority under Ohio law to grant the relief Hudson sought because Akron had no duty to sell water to extraterritorial users absent a contract.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trial court erred by dismissing Hudson's claim seeking to invalidate Akron's surcharge on extraterritorial customers as unfair/unreasonable | Hudson: Extraterritorial customers should have a mechanism to challenge unreasonable water rates; the Surcharge is arbitrary, bears no relation to service, and was imposed to coerce Hudson and fund Twinsburg Line replacement | Akron: Municipal utilities have no duty to sell to extraterritorial users absent a contract; courts cannot compel sale or set extraterritorial rates in absence of contractual obligation | Court affirmed dismissal: under Ohio precedent a municipality need not sell water to extraterritorial users absent contract, so extraterritorial customers lack a right to judicially demand reasonable rates absent contractual commitment |
Key Cases Cited
- State ex rel. Mt. Sinai Hosp. of Cleveland v. Hickey, 137 Ohio St. 474 (1940) (municipal utility must charge reasonable rates to its own residents)
- Fairway Manor, Inc. v. Board of Com'rs of Summit Co., 36 Ohio St.3d 85 (1988) (municipal utilities have no duty to sell to extraterritorial purchasers absent contract)
- Niles v. Union Ice Corp., 133 Ohio St. 169 (1938) (discusses when municipal operations may be treated analogously to private enterprises)