State ex rel. Cordray v. Evergreen Land Dev., Ltd.
2016 Ohio 7038
Ohio Ct. App.2016Background
- Valdes and Zebrasky formed Evergreen Land Development, Ltd. to develop Pine Lake project; they obtained an NPDES permit requiring SWP3 and erosion/sediment controls.
- State EPA found repeated erosion and sediment control violations during site inspections from 2003–2006, including missing SWP3, inadequate silt fences, and failure to stabilize the site.
- Sanitary sewer work proceeded before a Permit to Install existed, with sewer installation occurring prior to EPA approval.
- The State filed suit under R.C. 6111.07–6111.09 alleging violations of the NPDES permit and related statutes, seeking penalties and enforcement.
- The trial court found Valdes and Zebrasky personally liable for the violations under the personal participation theory and imposed a $45,000 civil penalty; appellate review upheld liability and penalty.
- The court expressly avoided addressing piercing the corporate veil as an alternative theory since it sustained personal participation liability.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Valdes and Zebrasky can be liable personally for corporate violations | Valdes and Zebrasky personally participated. | They did not direct or partake in violations; acted through Evergreen. | Yes; personal participation established. |
| Whether the personal liability should be considered under piercing the corporate veil | Court should apply veil-piercing to impose liability. | Not necessary; personal participation suffices. | Court did not reach veil-piercing as liability found under personal participation. |
| Whether the civil penalty of $45,000 is proper | Penalty appropriate to deter and reflect harm and enforcement costs. | Penalty excessive and disproportionate to damages. | penalty within trial court’s discretion; not unreasonable or unconscionable. |
| Whether there was sufficient proof of environmental harm to justify penalties | Sediment run-off and erosion harmed waters of the state. | Harm not shown beyond risk; no proven damages. | There was evidence of harm; penalties proper. |
Key Cases Cited
- Belvedere Condominium Unit Owners' Assn. v. R.E. Roark Cos., Inc., 67 Ohio St.3d 274 (Ohio 1993) (corporate officers may be liable for their own acts)
- Yo-Can, Inc. v. The Yogurt Exchange, Inc., 149 Ohio App.3d 513 (7th Dist. 2002) (corporate officer liability for personal participation)
- Tri-State Group, Inc., 2004-Ohio-4441 (7th Dist.) (environmental penalties and discretion guidance)
- Dayton Malleable, 1 Ohio St.3d 151 (Ohio 1982) (mandatory civil penalties framework and deterrence factors)
- Meadowlake Corp., 2007-Ohio-6798 (5th Dist.) (enforcement costs and deterrence considerations in penalties)