State ex rel. DeWine v. Osborne Co., Ltd.
100 N.E.3d 1
| Ohio Ct. App. | 2017Background
- Osborne Co. and the Executors of Jerome Osborne’s estate were sued by Ohio AG under R.C. Chapter 6111 for work in the East Branch Chagrin River that involved excavating (dredging) riverbed material and placing piles on banks and in the channel.
- Ohio EPA and the U.S. Army Corps inspected in 2007, ordered work stopped, and found unauthorized dredging and stockpiling causing habitat degradation, channel incision, loss of floodplain access, and erosion.
- The State alleged three counts under R.C. 6111.04(A) and 6111.07(A): unlawful discharge of dredged/fill material, failure to obtain construction stormwater permit, and pollution/public nuisance from stormwater discharges.
- The trial court (bench trial) found liability on all counts, held Mr. Osborne personally liable (personal participation), imposed a $404,240 civil penalty, and ordered remedial injunctive relief.
- On appeal the Eleventh District affirmed personal liability but reversed and remanded to limit findings, penalties, and injunctive relief to violations actually pled (unauthorized discharge/pollution under R.C. 6111.04(A)).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Scope of R.C. 6111 claims — whether defendants could be held liable for all river-altering work or only for discharges of dredged material | State argued the complaints charged defendants with violations tied to permitting failures and broad pollution-causing activities (including dredging and bank work) | Osborne argued the statutes as charged prohibit discharge/pollution (placing dredged material), not mere excavation or unpermitted bank-stabilization; State relied impermissibly on federal permit framework | Court: Claims must be limited to violations actually pled — unauthorized discharge/pollution under R.C. 6111.04(A); trial court erred to extent it found liability beyond that scope (remand to re-evaluate penalties/remedies limited to pled violations) |
| Whether placing dredged material on banks (above ordinary high water) can constitute pollution of "waters of the state" | State: placing material where it later enters or causes pollution of waters qualifies; ordinary high water mark need not bar liability | Osborne: material placed on dry bank is outside "waters of the state" and outside R.C. 6111 liability; Corps’ ordinary high water concept should not be grafted onto state statute | Court: Pollution may be direct (placement in waters) or indirect (placement where it causes pollution later). It is irrelevant whether placement was above an ordinary high water line if it causes pollution; thus bank placements that later reach the river can support R.C. 6111.04(A) liability |
| Civil penalty amount and scope of injunctive relief — whether trial court properly based penalty and remedies on all river-altering conduct | State relied on damages, ongoing nuisance, cost avoidance, enforcement costs, and the defendants’ refusal to sign a restoration agreement to justify penalty and broad injunctive orders | Osborne argued the penalty and injunction improperly address conduct and harms outside the statutory violations pled and that EPA’s reservation of rights affected settlement options | Court: Remanded — penalties and injunctive relief must be limited to consequences from the statutory violations actually alleged (unauthorized discharge/pollution); trial court must reassess amounts and scope accordingly |
| Personal liability of Jerome Osborne (estate) | State: Mr. Osborne personally directed and supervised the work, benefitted personally, and thus may be held liable under a personal-participation theory without piercing the corporate veil | Osborne: liability should be corporate only; no basis to pierce veil or hold Mr. Osborne personally liable for acts of the corporation | Court: Affirmed — substantial stipulations (orders/instructions to operator, personal observation, economic benefit) supported personal participation and joint-and-several liability of the estate |
Key Cases Cited
- Riedel v. Consol. Rail Corp., 125 Ohio St.3d 358 (2010) (statutory interpretation and de novo review of legal questions)
- State v. Conley, 147 Ohio St. 351 (1947) (construction of statutes requires attention to purpose and evils to be remedied)
- Worthington City School Dist. Bd. of Educ. v. Franklin Cty. Bd. of Revision, 85 Ohio St.3d 156 (1999) (corporation is an artificial person; officers not automatically liable for corporate acts)
- Lindenschmidt v. Bd. of Commrs. of Butler Cty., 72 Ohio St.3d 464 (1995) (decide cases on merits where possible; notice pleading principles)
- Ogle v. Ohio Power Co., 180 Ohio App.3d 44 (2008) (notice pleading standard: short and plain statement gives fair notice)
- Young v. Featherstone Motors, Inc., 97 Ohio App. 158 (1954) (officer may be liable only when he directs, participates in, or cooperates in wrongful act)