STATE ex rel. MICHAEL DeWINE, ATTORNEY GENERAL OF OHIO v. SHADYSIDE PARTY CENTER, et al.
CASE NO. 13 BE 26
STATE OF OHIO, BELMONT COUNTY IN THE COURT OF APPEALS SEVENTH DISTRICT
June 2, 2014
2014-Ohio-2357
Hon. Joseph J. Vukovich, Hon. Gene Donofrio, Hon. Cheryl L. Waite
Civil Appeal from Common Pleas Court, Case No. 13CV112. Judgment: Affirmed.
For Defendants-Appellants: Attorney Dennis McNamara, 88 East Broad Street, Suite 1350, Columbus, Ohio 43215
VUKOVICH, J.
{¶1} Defendant-appellant Shadyside Party Center et al. appeals the decision of the Belmont County Common Pleas Court ordering closure of the store for one year under the public nuisance statute. Appellant does not contest that the store constituted a nuisance due to the store‘s habitual selling of herbal incense packets which contained a controlled substance. Instead, appellant argues that the court erred in ordering the closure of the store for one year as a remedy, asserting that they were diligent in correcting the nuisance and the nuisance ceased to exist after the search warrant was executed, the government had unclean hands, and the order should have been narrowly tailored as to the extent of abatement and the forfeiture of personal property.
{¶2} As this is a statutory injunction action, the general equitable principles are inapplicable. Rather, the statutory provisions apply as written. The Supreme Court has created an exception to the mandatory one-year closure provision for an “owner who did not negligently or knowingly acquiesce to, and did not participate in the creation or perpetuation of the nuisance.” Whether appellant fell under this exception depends on the totality of the facts and circumstances and rational inferences that can be drawn therefrom. We shall not substitute our judgment for that of the trial court on these matters. The trial court‘s judgment is hereby affirmed.
STATEMENT OF THE CASE
{¶3} On March 20, 2013, the
{¶4} The defense presented the testimony of an officer who works for the Shadyside Police Department and the Belmont County Drug Task Force. He testified
{¶5} On March 4, 2013, an undercover BCI agent went into the store and purchased a three-gram packet of “Purple Haze” and a 2.5-gram packet of “Kush Max” from Stacy Heathcote. The products were on display in a glass case. She charged $45, did not use a cash register, and seemed not to charge sales tax. The “Kush Max” packet stated that it contained no nicotine or tobacco, warned that it should be kept out of reach of children and that it was not intended for human consumption, and stated that it was in accordance with a new federal law effective July 9, 2012. The “Purple Haze” packet stated it was a new and improved formula that was chemical and synthetic free and warned that the “potpourri” should not be inhaled or consumed.
{¶6} The officer sent the substances to BCI for testing. In the meantime, the Belmont County Prosecutor had a letter hand-delivered to Shadyside Party Center on March 7, 2013. In the letter, the prosecutor stated that the Belmont County Drug Task Force had informed him that “you may be selling synthetic marijuana, incense, and/or bath salts that are being smoked or ingested by your patrons. Despite what the labels on these packages provide, that they do not contain illegal substances, most if not all of these products do contain illegal substances.” The prosecutor noted that the recipient was a respectable business in the community and expressed a desire to assist the recipient in avoiding future problems by “urging you to cease selling these items immediately and remove all of them from your store.”
{¶8} Ms. Heathcote testified that she immediately removed the incense from the display and ordered her employees to stop selling it. (Tr. 94, 112). The next day, however, she began selling the incense again after speaking to an attorney. On March 8, 2013, Attorney Nichelson wrote a letter to the prosecutor, stating that Shadyside Party Center provided samples of the products to a named officer on the Belmont County Drug Task Force. The letter then stated: “the Drug Task Force has not identified any product from the samples provided that has an illegal substance content. This would be very helpful to know. Please ask the Drug Task Force to provide the test reports that identify any illegal substance that has been found to be contained in the samples provided by the Shadyside Party Center.”
{¶9} On March 13, 2013, the undercover agent returned to the store. The employees informed him that a packet of “Purple Haze” was priced at $20 and a packet of “OMG” was priced at $25. He bought four three-gram packets of “Purple Haze” and five four-gram packets of “OMG.” They charged him $250 (suggesting that they did not use a cash register as the total should have been $205). The “OMG” packet stated that it contained next generation herbal potpourri, claimed that it was not for human consumption, provided a list of illegal substances that it does not contain, stated that it does not contain any DEA banned substances, and encouraged, “Stroke the furry bag.” The agent submitted the products to BCI for testing. All 9 packets tested positive for XLR11 as did the two purchased on March 4, 2013. A search
{¶10} Stacey Heathcote testified that she started selling the incense in the summer of 2012. (Tr. 80, 113). Her customers asked for the product and a cigarette vendor offered the product; she later switched vendors when she found a cheaper price. (Tr. 80-81, 114). When asked what her employee meant when she testified that the products were the “talk of the town,” Ms. Heathcote replied that it was the “talk of every town” that people were smoking the incense. (Tr. 102). Still, she insisted that until that search warrant was executed, she had no reason to believe the products contained an illegal drug. (Tr. 95).
{¶11} Ms. Heathcote stated that she charged sales tax on the products, her register kept track, and the total after tax was an even dollar amount. (Tr. 115-116). She disclosed that the herbal incense generated $2,000-$3,000 per week in sales. (Tr. 83, 100). She claimed that her price mark-up was not greater for herbal incense than for many other products, testifying that her mark-up on real incense was 20-50%. (Tr. 104). Her manager confirmed they sold incense burners and candles, some of which cost more than $20. (Tr. 61). Although Ms. Heathcote initially estimated her mark-up on the illegal product was 20-25%, she also provided examples that put the mark-up at approximately 90%. (Tr. 82, 100).
{¶12} Ms. Heathcote explained that every shipment arrived with a laboratory report from the supplier (or producer). A February 2012 report stated that the sample had been compared to 39 compounds for possible matches in order to detect synthetic cannabinoids. The report concluded that the potpourri blend contained none of the listed cannabinoids. Certain substances (added to Ohio‘s list in 2011) were said to have been tested, but the sample was not tested for XLR11 (which Ohio specifically added to schedule I on December 20, 2012). Other reports from January 23, 2013 also did involve testing for XLR11.
{¶13} Ms. Heathcote and an employee testified that in connection with the investigation of a complaint from Monroe County, the Shadyside police officer asked her for samples of her products so that he would not have to request buy money. (Tr.
{¶14} Ms. Heathcote stated that she was law-abiding and noted that she had just raised $2,000 for the police department by selling candy so they could match grant money. (Tr. 91-92). She explained that her attorney decided to respond to the letter received from the prosecutor on March 7, 2012 by asking for the test results on the products provided to the officer some months prior. She said that her attorney advised her that until she had evidence from the lab saying it was illegal, she was not doing anything wrong. (Tr. 95). Her manager also testified that the attorney advised that he did not see a problem with continuing to sell the product. (Tr. 52).
{¶15} Attorney Nichelson testified that Ms. Heathcote called him when she began selling the product as she wanted to ensure she was selling a legal product. (Tr. 64). She told him about the lab reports provided by the supplier and the labels claiming they were legal. (Tr. 65). The attorney testified that he did not say that she could sell the product but rather advised that she needed to make sure they did not contain an illegal drug. (Tr. 65-66). When she contacted him about the prosecutor‘s letter, he drafted the reply. (Tr. 67). He believed that she was going to continue to sell the products until she received evidence of illegality. He testified that he advised her that she had to be very sure that there was nothing in the products and that until she got test results, she would not be sure. (Tr. 69). He testified that he knew the law was changed in December of 2012 to add certain synthetic names to the schedule but he did not know what the products being sold at Shadyside contained. (Tr. 75-77).
{¶16} The mayor was subpoenaed by the defense, and he testified that the products were behind glass and were not hidden. (Tr. 33). Prior to this, he had never known this storeowner to violate the law. (Tr. 34). Defense counsel was permitted to add in closing that the incense packets were on display in the same glass case as incense oils and burners. (Tr. 124-125). He also noted that the herbal incense is
{¶17} On September 9, 2013, the trial court issued a decision finding by clear and convincing evidence that the defendants committed and participated in committing felony drug trafficking violations of
{¶18} The court permanently enjoined the defendants from maintaining a nuisance in the state by selling controlled substances such as “incense” and “potpourri.” The court ruled that Shadyside Party Center shall be closed for any purpose and remain closed for a period of one year unless sooner released. The court also ordered the forfeiture of all personal property and contents used in conducting and maintaining the nuisance (said to be all personal property and contents confiscated by law enforcement). Upon a request for clarification by the defense, a September 19, 2013 entry signed by the court and both attorneys stated that the forfeiture applied to the personalty, including $9,010 in cash, confiscated from the
{¶19} The defendants filed a timely notice of appeal. The trial court granted a stay pending appeal upon the posting of a $50,000 bond. This appeal was originally consolidated with State of Ohio ex rel. Michael DeWine, Attorney General of Ohio v. Fred‘s Party Centers Inc., 7th Dist. No. 13BE29. However, the appeals have been deconsolidated due to the fact that these were different trials before different judges with different facts and Fred‘s presents evidentiary issues not present in Shadyside.
INTRODUCTION
{¶20} XLR11 is a synthetic cannabinoid laced on plant material and promoted as an herbal incense product but which is smoked for psychoactive effects. XLR11 was specifically added to the schedule I controlled substance list under the category for hallucinogens on December 20, 2012.2 Trafficking in a schedule I controlled substance or a controlled substance analog is a felony. See
{¶21} Premises or real estate on which a felony violation of Chapter 2925 or 3719 occurs constitutes a nuisance subject to abatement pursuant to Chapter 3767. See
{¶22} When a nuisance exists, the attorney general can bring an action in equity in the name of the state upon the relation of the attorney general. See
{¶23} Pursuant to
ASSIGNMENT OF ERROR
{¶24} Appellant‘s sole assignment of error provides:
{¶25} “The Trial Court Erred When [The Court] Ordered that Shadyside Party Center Be Closed for a Period of One Year.”
{¶26} Appellant specifically does not contest that the packets contained the schedule 1 controlled substance of XLR11 or that the court properly found that there
{¶27} In Rezcallah, the owners had tenants or trespassers who committed drug offenses. The Court pointed out that a nuisance had been established as defined in
{¶28} The Court held, however, that as applied to defendants who bear no culpable responsibility in the nature of acquiescence or participation in the creation of the nuisance, the mandatory closure requirement is unconstitutional (even with the opportunity for bond). Id. at 124. But, the ruling dealt only with those who lacked culpability in the creation or perpetuation of a nuisance. Id. at 132. The Court concluded that if the owner acted in good faith, was innocent of any acquiescence to or participation in the conduct establishing the nuisance, and took prompt action to abate the nuisance, then no closure order shall be issued. Id.
{¶29} Before delving into this exception, appellant presses for the application of the unclean hands maxim that one who seeks equity must do equity. See Basil v. Vincello, 50 Ohio St.3d 185, 190, 553 N.E.2d 602 (1990). This doctrine requires that the party invoking equity “not be guilty of reprehensible conduct” regarding the subject matter of the suit. Id.
{¶31} Thus, the Court found it inappropriate to “require the Director of Health to do equity” (have clean hands) in a statutory injunction action against a nursing home operator because such injunctions “and similar injunctions which authorize a governmental agent to sue to enjoin activities deemed harmful by the General Assembly are not designed primarily to do justice to the parties but to prevent harm to the general public.” Id. The Court reasoned that permitting the party to continue operating an unlicensed home which violates essential requirements for licensing merely “because the Director has been slow to grant or deny appellee a license may balance the equities between the Director and appellee, but it ignores the legislative purpose behind the granting of such relief to protect the well being of those who reside in nursing homes.” Id. at 57-58.
{¶32} Later, in a nuisance abatement action under the statutes at issue in this case, the Supreme Court stated that a nuisance abatement action is an equitable action and concluded: “Nuisance abatement actions seek injunctive relief and, as such, are governed by the same equitable principles that apply to injunction actions generally.” See State ex rel. Miller v. Anthony, 72 Ohio St.3d 132, 136, 647 N.E.2d 1368 (1995). Appellant suggests that this means that he can raise the equitable defense of unclean hands here. However, the Anthony holding was made in the context of ruling that there is no right to a jury trial in this type of nuisance action. Id.
{¶34} In any event, unclean hands in the form of reprehensible conduct can be judged as lacking here. For instance, appellant focuses on Ms. Heathcote‘s submission of the products to an officer in Shadyside and argues that the failure to test or report back to her on those products represented unclean hands. The officer testified that he gave the samples to the assistant chief of police with the belief they would be tested, but he did not know the status. The defense did not conduct discovery on the matter or call others to testify as to whether those samples were tested and if not, why not.
{¶35} In fact, a higher police official could rationally realize that they should not rely on samples volunteered by the very person alleged to have been selling illegal products. And, a police department need not use its submission authority to have BCI essentially conduct free testing for local businesses. Additionally, at the time the owner submitted the samples, XLR11 had not yet been specifically added to the controlled substance list. Thereafter, any testing would have been on a product which may no longer represent the products on the shelves. They thus conducted controlled buys to establish what was being sold on March 4, 2013 and again on March 13, 2013, after the prosecutor‘s March 6 letter.
{¶36} Appellant complains that if the drug task force had provided her with the test results on the products, the store would have stopped selling the products before the day the search warrant was executed. However, police need not tell a business that they are about to execute a search warrant based on test results that controlled undercover buys contained a controlled substance, and police need not provide lab
{¶37} In point of fact, Ms. Heathcote states that she immediately removed the products from the shelves upon receiving the letter. She then put them back after having an attorney send a letter asking the prosecutor to ask the task force to provide the test reports on the substances provided to the Shadyside officer months earlier. Notably, the Shadyside officer testified that when Ms. Heathcote gave him the substances for testing, he warned her that there could be a pending investigation from another agency and if the substances tested positive, she could still be arrested for trafficking. (Tr. 27-28). Appellant‘s unclean hands argument lacks merit as there was no showing of reprehensible conduct, and as aforestated, the doctrine is inapplicable in any event.
{¶38} Next, appellant argues that the closure order should not have issued because the store and its owner acted in good faith and promptly rectified the issue. Appellant relies on paragraph two of the Rezcallah syllabus, which states that
{¶39} The state urges that appellant did not act in good faith but rather participated in and acquiesced in the nuisance, turning a “blind-eye” to the illegality in order to make as much money as possible until a positive test result was returned by a government lab. The state disparages the reliance on odd lab reports from the supplier and statements of legality on the labels, characterizing this as appellant‘s
{¶40} Appellant compares the situation before us to State ex rel. Allen Cty. Prosecutor v. Howard, 3d Dist. No. 1-11-33, 2012-Ohio-404. That case merely refused to reverse a trial court‘s decision on the owners’ lack of acquiescence and refused to adopt the prosecutor‘s argument that acquiescence existed as a matter of law. See id. at ¶ 39-40 (owners evicted sons upon discovering they were selling drugs from apartment attached to the market, terminated one son‘s employment, began to work at the market all day themselves, closed the market earlier to diminish drug activity around the market, called police over fifty times to curb the drug activity near the market, and told drug dealers to leave the area on multiple occasions.)
{¶41} Appellant also compares the situation to State ex rel. Cleveland Dir. of Law v. Alahmad, 8th Dist. No. 86447, 2006-Ohio-804. But, that case also dealt with a court‘s refusal to reverse a trial court‘s decision that the city did not demonstrate that the owner acquiesced to or participated in the drug law violations occurring at the premises. See id. at ¶ 40 (owner hired a security guard to remove loiterers, instructed his employees to ask loiterers to leave and to report drug trafficking to the police, repeatedly called the police to report illegal drug activity, ordered a new lighted canopy, and repositioned security cameras to photograph the parking lot).
{¶42} The trial court here found by clear and convincing evidence that appellant committed and participated in the felony violations of the drug trafficking statute and had knowledge of the illegal substance. The court noted that knowledge of the circumstances exist when one is aware that such circumstances probably exist. See
{¶43} This is not a case involving a property owner who was not the seller of the drugs. Appellant was the seller who did a brisk trade in the substance at a highly inflated price. The packets had suspicious labeling regarding their legality and arrived with lab reports claiming that tests had been run for various synthetic cannabinoids. The reports did not claim a test had been conducted for XLR11. Appellant knew
{¶44} Appellant had been informed that the local police and non-local police were concerned that the products being sold from the store were illegal. Moreover, she then received a letter from the prosecutor regarding the illegality of the products. This letter was delivered two and one-half months after XLR11 was specifically added to the list of controlled substances. And, there is no grace period (even in criminal cases). See, e.g., State v. Adams, 12th Dist. No. CA2012-011-240, 2013-Ohio-4639, ¶14-15 (possession of bath salts three weeks after added to list). The letter disclosed that the Belmont County Drug Task Force informed the prosecutor “that you may be selling synthetic marijuana, incense, and/or bath salts that are being smoked or ingested by your patrons. Despite what the labels on these packages provide, that they do not contain illegal substances, most if not all of these products do contain illegal substances.”
{¶45} The prosecutor urged appellant “to cease selling these items immediately and remove all of them from your store” and warned that the failure to remove the product and immediately cease selling it could lead to criminal prosecution for felony drug trafficking. The prosecutor again stated that the letter was sent “[s]o you will know that the bath salts, incense and/or synthetic marijuana that you have in your store should not be sold. That they should immediately be removed from your shelves with no further sales occurring.”
{¶46} Appellant initially removed the products from the shelves and ordered the employees to stop selling the products. Thus, the letter was not as vague as appellant now argues. Then, after having an attorney write a letter asking for the lab results from the samples provided to the Shadyside officer, she kept selling the products. This is even though she had been warned by a police officer that if the products tested positive, she could be arrested for drug trafficking. Under the totality of the circumstances, a lack of culpability under the Rezcallah case is not a legal question that can be answered in appellant‘s favor with no deference to the trial court (as appellant suggests).
{¶48} A rational fact-finder could conclude that appellant‘s situation was not similar to the defendants’ situation in Rezcallah and does not fit the test set forth therein. The judge could rationally conclude that instead of complying with the prosecutor‘s request, appellant decided to gamble on the supplier‘s assertions that none of the packets contained illegal substances, assertions that could be considered highly suspect under the totality of the circumstances. Likewise, a fact-finder could conclude that appellant decided to gamble that liability would not be imposed (appellant would not be blamed) due to the claimed reliance on the supplier‘s lab reports and the willingness to have the product tested, i.e. appellant wanted to keep selling and making money pending an official lab report hoping that ignorance of an actual positive test provided protection.3
{¶49} Where the evidence is susceptible of more than one reasonable construction, the reviewing court is bound to give it that interpretation which is consistent with the verdict and judgment. See Eastley v. Volkman, 132 Ohio St.3d 328, 2012-Ohio-2179, 972 N.E.2d 517, ¶ 21, citing Seasons Coal Co., Inc. v.
{¶50} Appellant also asserts here that by not continuing to sell drugs after the search warrant was executed, there was no nuisance to abate by the time of the hearing, citing the general rule of equity that a court does not issue an injunction to solve a problem that ceases to exist. As aforementioned, the traditional equitable principles do not apply when the statutory injunction is required by its terms. If appellant was not an owner that fit under the Rezcallah test, then the trial court had a mandatory statutory duty to order the closure after finding a nuisance regardless of whether the drug sales were still occurring at the time of the complaint or the time of trial. See State ex rel. Miller v. Anthony, 72 Ohio St.3d 132, 647 N.E.2d 1368 (1995) (felony drug violations need not be occurring at time of complaint or time of hearing in a case where owner was the seller). See also Rezcallah, 84 Ohio St.3d at 123-124.
{¶51} Appellant next states that a court issuing an abatement order must narrowly tailor it to address only the nuisance. Appellant claims that the order was overbroad because the court ordered the store closed “for any purpose” for one year unless sooner released, citing and distinguishing State ex rel. Rothal v. Smith, 151 Ohio App.3d 289, 2002-Ohio-7328, 783 N.E.2d 1001 (9th Dist.) and State ex rel. Roszmann v. Lions Den, 89 Ohio App.3d 775, 627 N.E.2d 629 (12th Dist.1993).
{¶52} In the latter case, the appellate court addressed an argument that the trial court should have narrowly tailored the closure order and found that the trial court could close an adult bookstore because prohibiting only lewd behavior would not work where the patrons only frequented the business to engage in such behavior. Roszmann, 89 Ohio App.3d at 776. Appellant believes this means the permanent injunction abatement order here must be narrowly tailored and points out that, contrary to the situation in Roszmann, patrons did not only come to the premises for the
{¶53} Similarly, most of the pertinent portion of Rothal deals with this statutory provision for the temporary injunction stage. Rothal v. Smith, 151 Ohio App.3d 289, ¶ 100-106 (“we fail to understand how an order requiring the prohibited and lewd conduct in the bar to cease yet allowing the bar to operate would effectuate the intent of the temporary injunction.“). Id. at ¶106. As one of the defendants seemed to be applying his argument to the permanent closure order as well, the court then cited to
{¶54} Here, a temporary order was not issued, and the provision in
{¶55} Finally, appellant points to the language of
{¶56} The defense asked the trial court for clarification of the forfeiture order, stating that it should apply to the products and may also apply to the $9,010 in cash seized from the store but should not apply to the 17 guns or the $65,000 in cash seized from Ms. Heathcote‘s attached residence, stating that the money was not related to the illegal products but was mostly rental income and some was the property of her roommate. A September 19, 2013 entry (signed by the court and the attorneys) stated that the forfeiture applies to the personal property and the $9,010 confiscated from the store but would not apply to the personal property seized from the residence (except that all incense packets were forfeited no matter where they were found).
{¶57} In a three-sentence argument, appellant contends that the forfeiture order was too broad because the statute only permits forfeiture of personal property and contents used in conducting the nuisance, the store is “a large business establishment that sold many products other than the incense and potpourri,” and the court ordered all of the personal property and contents of the party centers forfeited as opposed to only the personal property and contents used in selling the illegal products. Appellant‘s Brief 15, citing Roszmann, 89 Ohio App.3d at 780-781.
{¶58} In the Twelfth District case appellant relies upon and distinguishes, the trial court ordered the sale of “all personal property located at the Interstate Adult Arcade including, but not limited to, all video cassette recorders, all television monitors, all booths, all wiring and any and all other personal property used in the conduct and maintenance of the nuisance.” Roszmann, 89 Ohio App.3d at 780. The defendant argued that the state failed to prove that the forfeited property was used in the nuisance. Id. The appellate court disagreed because the equipment specifically identified by the court was used in conducting the nuisance and the defendant failed to identify any other items removed from the store which were not used in conducting or maintaining the nuisance. Id. at 780-781 (noting that soda, snack, and pinball machines were returned to the appellant during the temporary stage).
{¶60} For the foregoing reasons, the judgment of the trial court is hereby affirmed.
Donofrio, J., concurs.
Waite, J., concurs.