Oral Argument Previews

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Wednesday, Sept. 2, 2009

State ex rel. LetOhioVote.org v. Hon. Jennifer Brunner, Case no. 2009-1310

Utility Service Partners, Inc. v. The Public Utilities Commission of Ohio, Case no. 2008-1507

Estate of Lurene N. Hall by April E. Couch, ADMRX., et al. v. Akron General Medical Center, Case no. 2008-1980
Summit County

The Estate of Jeffrey K. Heintzelman et al. v. Air Experts, Inc., et al., Case no. 2008-2173
Delaware County

Timothy Mynes, et al. v. Otis Brooks, et al., Case no. 2009-0054
Scioto County

Does Secretary of State Have Legal Duty to Accept, Process Petitions Seeking Referendum on Video Lottery Terminals?

State ex rel. LetOhioVote.org v. Hon. Jennifer Brunner, Case no. 2009-1310

ISSUE: When the General Assembly has declared that certain provisions included in a legislative enactment are “appropriations for the current expenses of the state” and therefore are not subject to a referendum by voters, if citizens subsequently submit to the Secretary of State summary petitions seeking to initiate a statewide referendum on that legislative enactment, does the Secretary have a legal duty to process the petitions and commence the referendum process?

BACKGROUND:  Section 1c, Article II of the Ohio Constitution provides that, with certain specified exceptions, bills enacted by the General Assembly do not become law until 90 days after they are transmitted by the governor to the Secretary of State.  During that 90-day period, any individual or group that wishes to do so has the right to seek the repeal of all or a specified part of a  legislative enactment by means of a statewide vote of the people, called a referendum. While placing a referendum on the statewide ballot ultimately requires the sponsor to obtain the signatures of at least six percent of the state’s voters, in order to initiate the referendum process the sponsor must first file with the Secretary of State  preliminary or summary petitions signed by at least 1,000 eligible voters, a copy of the bill or portion of a bill the sponsor wishes to refer to voters, and a summary of that measure. Within one day thereafter, the sponsor  must also file copies of its petition and summary with the state attorney general.

On July 13 of this year, as a part of legislation establishing the state’s biennial budget for 2010-2011, the General Assembly amended R.C. 3770.03 and enacted R.C. 3770.21 to provide for the installation and operation of video lottery terminals (VLTs) under the control and regulation of the Ohio Lottery Commission at seven horse racing tracks across the state. The bill included specific language stating that the provisions authorizing VLTs, which were projected to generate $933 million in state lottery revenues during the current biennium, were exempt from a referendum by voters and therefore would take effect immediately upon being filed with the Secretary of State. The legislative language stated that the VLT provisions were exempt from referendum under Article II, Section 1d of the Ohio Constitution, which bars referenda on measures that  “[are] or relate[] to an appropriation for current expenses of the state government and state institutions.”

Governor Ted Strickland signed the bill, Am. Sub. H.B. 1, and transmitted a copy to Secretary of State Jennifer Brunner on July 17. Pursuant to the language enacted by the legislature, Brunner’s office certified that while various other provisions of the bill would not take effect for 90 days, the VLT provisions became effective immediately. Strickland directed the Ohio Lottery Commission to move forward immediately with implementation of the VLT program, which is now underway.

On July 23, three private citizens acting under the name LetOhioVote.org.org attempted to file with Brunner’s office a summary petition bearing more than 1,000 signatures and stating the sponsors’ intent to initiate a statewide referendum to repeal the VLT provisions included in Am. Sub. H.B. 1. Relying on the legislative language specifying that the VLT provisions were not subject to referendum, Brunner refused to accept or review the sufficiency of the group’s petitions.  LetOhioVote.org. then sought to file a copy of its petition and a summary of the proposed referendum language for review by Attorney General Richard Cordray. The attorney general declined to accept or review those filings, also deferring to the legislature’s declaration that the VLT provisions in Am Sub. H.B. 1 were “current-year appropriation measures” and therefore exempt from referendum.

LetOhioVote.org has filed an original action in the Supreme Court of Ohio asking the Court  to issue a writ of mandamus that compels Brunner to: 1) treat the VLT provisions of Am. Sub. H.B. 1 as subject to referendum notwithstanding the legislature’s assertion to the contrary; 2) accept and process their summary petitions and perform other duties of her office necessary for the group to pursue a statewide referendum on the VLT provisions;  and 3) delay the effective date of the VLT provisions of Am. Sub. H.B. 1 until 90 days after the Court’s decision in this case, to allow LetOhioVote.org the full period prescribed by law to place its referendum on the ballot.

Attorneys for LetOhioVote.org argue that the state laws setting forth the duties of the Secretary of State require Brunner to accept and process any summary petition for referendum that is presented to her, and assert that nothing in the state constitution or laws governing her office grant Brunner authority to reject a proffered filing based on her legal judgments about the underlying legislation.  They argue that the requested writ of mandamus is necessary because a declaratory judgment that the VLT provisions are subject to referendum would not force the secretary of state to “re-start” the 90-day time limit to which referendum supporters are entitled for circulating their petitions and obtaining the signatures required to place the issue before the voters.

Separate briefs opposing the requested writ were filed by Secretary of State Brunner and by the directors of the Ohio Lottery Commission and the state’s Office of Budget and Management as intervening respondents. 

Attorneys for the secretary of state argue that in order to establish entitlement to a writ of mandamus, LetOhioVote.org must show that Brunner’s office had a “clear legal duty” to accept and process the summary petitions it rejected. They assert that no such showing can be made, because no provision of the constitution or state law empowers the secretary of state to ignore or second-guess a declaration by the legislature that part or all of a legislative enactment is an appropriation measure exempt from referendum.  They argue that while the referendum proponents have couched their suit as a request for mandamus, the remedies they actually seek are a declaratory judgment that the VLT provisions of the budget bill are subject to referendum and an injunction directing the secretary of state to accept and process their summary petitions. Because the Supreme Court does not have jurisdiction to grant such relief, they argue, the Court should dismiss the current action and direct the proponents to seek a declaratory judgment and injunctive relief in a court of common pleas.

In their pleadings, attorneys for the Lottery Commission and Office of Budget and Management argue that the VLT provisions of Am. Sub. H.B. 1 meet the legal requirements for classification as “appropriations” because they not only generate revenues via an expansion of the state lottery, but also allocate those revenues to the state’s primary and secondary education spending accounts--because all lottery revenues must by law be allocated for primary and secondary education. They assert that the public policy behind exempting current spending bills from referendum is to prevent the fiscal chaos that could result if tax and appropriation measures adopted by the General Assembly in developing biennial budgets were subject to cancellation or amendment by a popular vote months or even years after the fact.

Douglas R. Cole, 614.469.3939, for LetOhioVote.com (local counsel).

Richard N. Coglianese, 614.466.2872, for Secretary of State Jennifer Brunner.

Benjamin C. Mizer, 614.466.8980, for the Ohio Lottery Commission and Office of Budget & Management.

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Did PUCO Have Authority to Give Gas Company Control Over Repair of Customer-Owned Service Lines?

Utility Service Partners, Inc. v. The Public Utilities Commission of Ohio, Case no. 2008-1507

ISSUE: Did the state Public Utilities Commission (PUCO) exceed its authority by granting Columbia Gas of Ohio exclusive control over the repair or replacement of customer-owned service lines in its service area, effectively nullifying outside gas line repair contracts between more than 100,000 Columbia customers and private warranty service providers?

BACKGROUND: In April 2008, the PUCO approved a stipulated agreement  between Columbia Gas of Ohio and several utility user groups and issued an order authorizing Columbia to: 1) inspect the “riser” (the final, above-ground connector linking an underground gas line to the gas meter inside a building) in all buildings in Columbia’s 22-county service area, and whenever it found a certain type of potentially dangerous plastic riser fitting to replace that fitting with a metal riser; 2) assume exclusive responsibility for repairing or replacing the customer-owned underground service lines running from the street to its customers’ homes or business structures; and 3) add a surcharge to the monthly bills of all Columbia Gas customers to recover the company’s costs of replacing  defective risers and repairing service lines.

Objections to the stipulated agreement were filed by Utility Service Partners Inc., (USP) a company that sells service contracts to individual home and business owners that include repairing or replacing defective outside gas lines. Among its objections, USP argued that the proposed commission order would interfere with service contracts then in force between USP and more than 100,000 of Columbia’s customers under which those customers made monthly payments to USP in exchange for USP’s guarantee that it would perform any needed repairs on the customer’s underground gas lines. The commission overruled USP’s objections, and issued a final order on April 9, 2008 authorizing Columbia to go forward with both its riser inspection and replacement program and with assumption of exclusive authority to perform or contract for the performance of all needed repairs or replacements of customer-owned outside service lines in the company’s service area.

USP has exercised its right to appeal the PUCO’s order to the Supreme Court.

Attorneys for USP assert that the applicable state laws allow the PUCO to issue an order that  interferes with private property rights or impairs private contractual relationships only where the commission has made factual findings that (a) a regulated utility is violating the law; or (b) the commission’s order addresses a condition that has been identified as a current hazard to public safety.  In this case, they say, a research study commissioned by the PUCO established only that a certain type of plastic above-ground riser assembly was prone to failures that had resulted in several explosions, and therefore the plastic riser assembly was a safety hazard that must be replaced.  They say the commission’s research yielded no similar findings that either metal or plastic underground gas lines in Columbia’s service area presented a current safety hazard, and therefore the commission had no legal authority to nullify USP’s service contracts with thousands of Columbia’s customers and give Columbia exclusive authority to repair or replace customer-owned service lines.

Attorneys for the PUCO and Columbia respond that the commission has broad authority to address safety issues that occur anywhere within the network of facilities and pipelines that connect regulated gas companies with their customers. In this case, they argue, the PUCO acted within its authority when it determined that in order to address an identified unsafe condition it was necessary for Columbia not only to replace hazardous plastic risers, but also to assume control over repair and replacement of the underground gas lines within its service area. They assert that the commission followed legal precedent in determining that granting Columbia control over repair of its customers’ underground service lines did not “substantially impair” USP’s contracts with those customers because USP also contracts with property owners for repair of their inside gas lines and inside and outside water, sewer and electric lines, none of which were impacted by the April 2008 PUCO order.

M. Howard Petricoff, 614.464.5414, for Utility Service Partners Inc..

Anne L. Hammerstein, 614.644.8669, for the Public Utilities Commission of Ohio.

Kathleen M. Trafford, 614.227.1915, for Columbia Gas of Ohio.

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May Court Instruct Jurors on ‘Res Ipsa Loquitor’ Inference When Defendant Suggests a Non-Negligent Cause of Injury?

Estate of Lurene N. Hall by April E. Couch, ADMRX., et al. v. Akron General Medical Center, Case no. 2008-1980
Summit County

ISSUE:  In a malpractice case involving fatal injury during a routine medical procedure, when conflicting expert testimony has suggested both a specific theory of negligence by the defendant and a possible non-negligent explanation for the plaintiff’s injuries, may the judge instruct jurors that they are permitted to infer that the defendant acted negligently on the basis that the plaintiff’s injury “speaks for itself”?

BACKGROUND:  When an injury occurs under circumstances in which no injury should occur in the normal course of events if ordinary care is observed, and there is no third-party eyewitness testimony or other hard evidence to establish whether or not the defendant acted negligently, a rule of evidence called res ipse loquitor (the thing speaks for itself) allows a court to instruct jurors that they may infer from the circumstances and nature of the injury that it would not have happened unless the defendant acted negligently.

In this case, patient Lurene Hall died shortly after undergoing a medical procedure at the Akron General Medical Center to insert a hemodialysis catheter in her neck.  An autopsy found that Hall had suffered a four-centimeter tear in a major blood vessel through which the catheter was being threaded, and that bleeding from that torn vessel had filled the pericardial sac around her heart, causing her death. The administrator of Hall’s estate, April Couch filed a malpractice suit against the physician who performed the catheterization, Dr. Richard Patterson, and other defendants. The other defendants were subsequently dismissed from the case.

At trial, Couch introduced testimony by two medical experts stating that the only way Hall could have suffered the ruptured blood vessel that caused her death during a catheterization was if the protective guide wire that preceded a vein-expanding dilator being inserted through her blood vessels had been improperly retracted, allowing the unprotected dilator to puncture the inner wall of the blood vessel. An expert witness called by Dr. Patterson testified that Hall had suffered an infection at the site of a prior catheter insertion, and that infection could have weakened the wall of the injured blood vessel so that it ruptured despite the presence of the guide wire during a properly-conducted catheterization procedure.  At the conclusion of testimony, Couch asked the trial judge to instruct the jurors that under the rule of res ipsa loquitor they were permitted to infer from the circumstances surrounding Hall’s injury that Dr. Patterson had been negligent. The judge refused to give the requested instruction, stating that his understanding of the law was that a res ipsa loquitor jury instruction may not be given in cases where the defendant had introduced evidence suggesting an alternative, non-negligent cause for the plaintiff’s injury. Over Couch’s objection, the case went to the jury without a res ipsa loquitor instruction. The jury returned a verdict in favor of Dr. Patterson.

Couch appealed, asserting among other legal arguments that the trial court had erred in refusing to give a res ipsa loquitor jury instruction. The 9th District Court of Appeals agreed that the requested jury instruction should have been given, and remanded the case for a new trial. Dr. Patterson sought and was granted Supreme Court review of the 9th District’s ruling.

Attorneys for Dr. Patterson argue that the res ipsa loquitor inference is applicable only in cases where a plaintiff  presents no direct evidence of negligence and must rely on circumstantial evidence to argue that there is no other reasonable explanation for his or her injuries. They assert that testimony by Couch’s medical experts stating that improper retraction of the guide wire was “exactly” what  happened in this case constituted direct evidence that the jury must evaluate and either accept or reject, thereby barring a res ipsa loquitor inference.  They also assert that the trial court properly refused to give a res ipsa loquitor instruction because the defense’s expert witness set forth an “equally efficient and probable” explanation for Hall’s injury, and therefore the jury was precluded from inferring from the mere fact of Hall’s injury that it was caused by negligence.

Attorneys for Couch urge the Court to affirm the 9th District’s decision.  They assert  that their claim against Dr. Patterson was not based on “direct” evidence such as eyewitness testimony or a recording of the actual procedure, but rather was exactly the kind of circumstantial claim, based on the absence of any other credible explanation for the victim’s injuries, to which the res ipsa loquitor rule is applicable.  They cite Ohio case law, including the Supreme Court of Ohio’s 1990 holding in Becker v. Lake Cty. Memorial Hospital, which they say held that a defendant’s introduction of expert testimony suggesting some alternative, non-negligent cause of injury does not preclude a res ipsa loquitor jury instruction, because such an instruction simply allows jurors to compare the credibility of the conflicting expert testimony and permits (but does not require) them to infer from the  evidence that the plaintiff’s injury must have been  the result of negligence.

Douglas G. Leak, 216.615.4835, for Dr. Richard D. Patterson.

Paul W. Flowers, 216.344.9393, for April Couch, Administratrix of the Estate of Lurene Hall.

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Does Declaratory Judgment Denying Tortfeasor Insurance Coverage Apply to a Plaintiff Not Joined in That Action?

The Estate of Jeffrey K. Heintzelman et al. v. Air Experts, Inc., et al., Case no. 2008-2173
Delaware County

ISSUE: When an insurance company files a civil action seeking a declaratory judgment that its policy does not provide coverage sought by a policy holder, and the insurer does not join or give notice about that action to a plaintiff with a pending lawsuit against the same policy holder, does the award of a declaratory judgment in favor of the insurer preclude the unjoined plaintiff from later suing the insurance company  to recover  a civil judgment it has obtained against the policy holder?

BACKGROUND:  In July 2002, Delaware homeowner Jeffrey Heintzelman went to his attic to deal with water leaking from a central air conditioning unit and was electrocuted because of an exposed electrical outlet to which that unit was connected. The air conditioner and outlet was installed and had been serviced on several occasions by Thomas Martel, who operated a heating and air conditioning business as a sole proprietor. At the time the air conditioner was installed, Martel’s business was covered by a $500,000 liability insurance policy issued by the American Family Insurance Company.

In December 2002, Jeffrey’s widow, Margaret Heintzelman, filed a wrongful death lawsuit against Martel and a second company that had serviced the air conditioner, Air Experts, on behalf of herself and Jeffrey’s estate. American Family provided Martel with legal representation to defend against the Heintzelmans’ suit. However in December 2003, while the Heintzelmans’ suit was still pending, American Family filed a separate legal action seeking a declaratory judgment that its policy did not provide coverage to Martel for the type of civil damages being sought in the Heintzelmans’ suit. The declaratory judgment action named only Martel as a defendant. The Heintzelmans were not joined as parties, and they received no notice that the suit had been filed. Martel failed to file an answer to the insurance company’s complaint by the legal deadline for doing so.  American Family sought and was granted a default judgment in March 2004 declaring that it had no duty to indemnify Martel for any civil damages arising from the causes of action asserted by the Heintzelmans.

The Heintzelmans subsequently obtained a  judgment and award of damages against Martel totaling $3.65 million (later reduced on appeal to $1,014,186). While various portions of the jury verdict were being appealed, the Heintzelmans filed a supplemental complaint asking the trial court to declare that Martel’s American Family policy provided coverage for the bodily injury and property damage caused to them by Martel.  American Family moved for summary judgment dismissing the supplemental complaint, arguing that the March 2004 default judgment they had obtained against Martel also precluded any claims against their policy by the Heintzelmans based on Martel’s actions. The trial court granted summary judgment in favor of the insurance company, holding that under recent amendments to R.C. 3929.06,  judgment creditors such as the Heintzelmans were bound by a prior declaratory judgment finding that a debtor had no coverage in an insurance policy, even  though the creditors were not parties to the declaratory judgment action.

The Heintzelmans appealed the trial court’s ruling.  On review, the 5th District Court of Appeals reversed and remanded the case for further proceedings.  American Family sought and was granted Supreme Court review of the 5th District’s decision.

Attorneys for the insurance company argue that the legislature’s intent in amending R.C. 3929.06 was to prevent repeated litigation of insurance coverage issues by making a declaratory judgment that affirms or denies coverage in an insurance policy applicable to all future claims asserted by judgment creditors seeking  the same coverage  denied in the declaratory judgment, whether or not those creditors were joined in or notified about the original declaratory judgment action.  In this case, they say, the 2004 declaratory judgment finding that Martel was not entitled to coverage under the American Family policy also precludes a later, post-judgment attempt by the Heintzelmans to recover under that same policy for damages that were caused by Martel.

Attorneys for the Heintzelmans point to the plain language of 3929.09(C)(2) as amended, which they say states that a declaratory judgment determining whether or not an insurance policy covers a specified type of claim has a binding legal effect upon a subsequent judgment creditor only when the declaratory judgment action was commenced by “the holder of the policy ... against the insurer.”  That provision cannot be applied to their claim, they argue, because  it was American Family that initiated the declaratory judgment action against Martel, and not the other way around. They also argue that the insurance company could easily have insured that a declaratory judgment denying coverage under Martel’s policy also applied to the Heintzelmans simply by joining the Heintzelmans as parties in that action.  Instead, they claim, although the insurance company knew that the Heintzelmans had a lawsuit currently pending against Martel, American Family deliberately failed to notify them that it was attempting to evade any liability for Martel’s conduct in a separate lawsuit in order to avoid the Heintzelmans’ intervention in the declaratory judgment action.

Bruce A. Curry, 614.430.8885, for American Family Insurance Company.

Charles H. Cooper, 614.481.6000, for Margaret Heintzelman and Estate of Jeffrey Heintzelman.

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Is Trial Court Order Denying Stay for Arbitration Immediately Appealable Without Civ.R. 54(B) Language?

Timothy Mynes, et al. v. Otis Brooks, et al., Case no. 2009-0054
Scioto County

ISSUE: In a case involving multiple claims and multiple defendants, is an order of the trial court denying a stay of the plaintiff’s claims against one defendant for arbitration a “final” order subject to immediate appellate review under R.C. 2711.02 despite the absence of language required under Civil Rule 54(B) that there is “no just reason for delay” in seeking appellate review?

BACKGROUND: Rule 54(B) of Ohio’s rules of civil procedure addresses the appealability of “partial” orders or rulings issued by a trial court in civil lawsuits that  involve multiple claims and/or multiple plaintiffs and defendants.  The rule states that when a trial court  issues an order or ruling that affects less than all of the parties, or less than all of the claims or rights asserted by or against a single party, that ruling is a “final order” subject to immediate review by a court of appeals only if the trial court includes in its order an express determination that “there is no just cause for delay” in seeking appellate review.  In the absence of this language, a court of appeals lacks jurisdiction to review such an order, and a party wishing to challenge it must wait until a final  judgment has been entered  resolving tall claims in the case, at which time it can appeal the partial ruling with which it disagrees.

In this case, Timothy and Janeen Mynes of Portsmouth purchased a home and 50 acres of surrounding property in Scioto County. Prior to closing on the transaction they contracted with JDG Home Inspections Inc. d/b/a The HomeTeam Inspection Service, to identify any problems or defects on the property. The Myneses subsequently filed suit against JDG, inspector Tom Gambill, the prior owners of the property, the realtors involved in the sale and other defendants.  Their complaint asserted multiple tort claims against the various defendants including, among others, breach of fiduciary duties, failure to disclose defects, and negligence.

During pretrial proceedings, JDG filed a motion asking the court to stay all of the Myneses’ claims against it on the basis that the contract the two parties had signed included an agreement to arbitrate any disputes or damage claims arising from their business relationship.  The court initially granted the motion to stay proceedings on all claims involving JDG pending the results of arbitration.  Several months later, while the Myneses’ claims against the other defendants remained pending, the trial judge granted a motion by the Mynses to reconsider its ruling, vacated its prior stay and issued a new order directing the parties to proceed with litigation of their dispute. The new order did not include Civ.R. 54(B) language indicating that there was no just reason for delay of an appeal.  JDG attempted to appeal the order vacating the stay for arbitration, but the 4th District Court of Appeals ruled that because the trial court had not included the required Civ.R. 54(B) language, the order was not yet ripe for appeal.

The 4th District certified that its ruling in this case was in conflict with prior rulings on the same legal issue by the 6th and 11th District courts of appeals. The Supreme Court agreed to review the case to resolve the conflict among appellate districts.

Attorneys for JDG cite language in R.C. 2711.02 stating that when a trial court issues an order that grants or denies a stay of a trial in order for the parties to engage in arbitration, such an order “is a final order and may be reviewed, affirmed, modified or reversed on appeal pursuant to the Rules of Appellate Procedure.” They argue that in enacting this statutory language, the General Assembly established as a matter of law that trial court orders granting or denying a stay for arbitration are final and appealable, and assert that because the statute affirmatively confers jurisdiction on appellate courts to review these types of orders, it eliminates the need for such orders to include Civ.R. 54(B) language that there is no reason

for delay in doing so. To the extent that there is a conflict between the statute and the rule, they argue, the statute should take precedence because it establishes the substantive right to an immediate appeal of trial court rulings granting or denying a specific type of relief.

Attorneys for the Myneses respond that the cited language in R.C. 2711.02  refers only to trial court orders that stay an entire trial on the basis that the dispute is subject to arbitration.  They argue that the statute  does not eliminate the requirement of Civ.R. 54(B) that partial rulings addressing less than all the issues or less than all the parties in a case are only subject to immediate appellate review when the trial judge makes an express determination that allowing an immediate appeal of that specific ruling will not result in piecemeal or redundant appellate review of the case.  They also argue that because Civ.R. 54(B) does not deny a litigant the substantive legal right to appeal a trial court’s partial ruling, but merely regulates when that right may be exercised, the rule is procedural rather than substantive in nature and therefore takes precedence over a conflicting statute.

Scott L. Braum, 937.396.0089, for JDG Home Inspections Inc.

Kristin Rosan, 614.228.5600, for Timothy and Janine Mynes.

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These informal previews are prepared by the Supreme Court's Office of Public Information to provide the news media and other interested persons with a brief overview of the legal issues and arguments advanced by the parties in upcoming cases scheduled for oral argument. The previews are not part of the case record, and are not considered by the Court during its deliberations.

Parties interested in receiving additional information are encouraged to review the case file available in the Supreme Court Clerk's Office (614.387.9530), or to contact counsel of record.