2022 Ohio 2307
Ohio Ct. App.2022Background
- Dover Chemical operates a facility outside the City of Dover and has received electric service from the City-owned utility (Dover Light & Power) since 1976; primary metering was at a pole and the City historically owned and maintained equipment beyond that meter.
- In 2003 the City purported to transfer ownership of facility equipment to Dover Chemical, but City personnel continued to perform maintenance and service on-site thereafter.
- Beginning in 2019 a rate dispute arose: Dover Chemical sought lower rates; the Mayor proposed options but the Law Director asserted only Council could fix rates and alleged the City had been providing uncompensated services for decades.
- The Law Director drafted Emergency Ordinance 29-20 to impose higher rates/surcharges on Dover Chemical to recoup alleged unpaid services; Council enacted the ordinance over the Mayor’s veto in March 2021.
- Dover Chemical sued (amended complaint filed March 22, 2021) raising multiple claims including unjust enrichment, negligent misrepresentation, and defamation; the City moved to dismiss asserting R.C. Chapter 2744 immunity and that the Law Director’s statements were privileged.
- The trial court denied dismissal as to defamation, unjust enrichment, and negligent misrepresentation; the City appealed the denial of immunity.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Unjust enrichment — is the claim barred by sovereign immunity? | Dover Chemical seeks disgorgement of specific profits the City allegedly collected from reselling power; this is equitable restitution (return of particular funds). | City argues sovereign immunity bars monetary claims against political subdivisions. | Court: The complaint seeks equitable restitution of specific funds wrongfully collected, not ordinary money damages; unjust enrichment claim survives 12(B)(6). |
| Negligent misrepresentation — does R.C. 2744 immunity bar the claim? | Dover Chemical alleges City misrepresented willingness to negotiate rates, causing Dover to delay switching suppliers and suffer pecuniary loss. | City contends negligent-misrep is a negligence tort covered by R.C. Chapter 2744 and, if covered, immunity applies (or defense reinstates immunity). | Court: Negligent misrepresentation is a negligence tort; rate negotiations implicate operation of a utility (a proprietary function). At the pleading stage, the complaint plausibly alleges an exception to immunity, so claim survives. |
| Defamation against Law Director — are his statements immune/privileged? | Dover Chemical alleges Law Director made public statements accusing it of receiving unlawful benefits, harming reputation. | City/Law Director assert absolute/common-law privilege for legal opinions and statutory immunity under R.C. 2744.03(A)(7). | Court: Law Director’s communications were legal opinions in his official capacity and absolutely privileged; defamation claim against him fails and is dismissed. |
Key Cases Cited
- Santos v. Ohio Bur. of Workers' Comp., 101 Ohio St.3d 74 (2004) (distinguishes legal vs. equitable restitution; equity allows return of specific funds in defendant's possession)
- Cristino v. Ohio Bur. of Workers' Comp., 118 Ohio St.3d 151 (2008) (restitution seeking money due under an agreement is legal, not equitable)
- Barrow v. Village of New Miami, 104 N.E.3d 814 (2018) (analyzes whether unjust enrichment seeks equitable restitution and thus avoids sovereign immunity)
- A & B–Abell Elevator Co. v. Columbus/Cent. Ohio Bldg. & Constr. Trades Council, 73 Ohio St.3d 1 (1995) (defines defamation per se and damage to trade/profession)
- Am. Chem. Soc. v. Leadscope, Inc., 133 Ohio St.3d 366 (2012) (elements for defamation claim under Ohio law)
- City of Hudson v. City of Akron, 97 N.E.3d 738 (2017) (discusses municipal authority to impose surcharges on out-of-city utility ratepayers)