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Wednesday, February 26, 2014

State ex rel. City of Munroe Falls, et al. v. Beck Energy Corporation, et al., Case no. 2013-0465
Ninth District Court of Appeals (Summit County)

Century Surety Company v. Stinson J. Crews, et al., Case no. 2013-0283
Tenth District Court of Appeals (Franklin County)

In re: Judicial Campaign Complaint Against Colleen Mary O'Toole, Case no. 2012-1653

Are Local Zoning and Drilling Ordinances in Conflict with the State Oil and Gas Drilling Law?

State ex rel. City of Munroe Falls, et al. v. Beck Energy Corporation, et al., Case no. 2013-0465
Ninth District Court of Appeals (Summit County)


Joseph Willingham of Munroe Falls leased the natural gas drilling rights on several acres of his property to Beck Energy Corporation. Beck applied to the state for a permit to drill on the land, and the state approved the permit with several conditions.

Munroe Falls filed an action in common pleas court asking the court to stop the drilling and contending that Beck was violating its local laws. In May 2011, the court found in favor of the city, and Beck appealed to the Ninth District Court of Appeals.

The appellate court ruled that Beck had to comply with the ordinances governing the local roadways, but held that the other local laws – a zoning ordinance and four drilling provisions – conflicted with the state statute.

Munroe Falls filed an appeal with the Ohio Supreme Court, which agreed to hear the case.

Beck’s state permit was issued under R.C. 1509.02, which gives the state “sole and exclusive authority to regulate the permitting, location, and spacing of oil and gas wells and production operations within the state ….”

Attorneys for the city of Munroe Falls ask the court to uphold the city’s zoning ordinance so the city can contain oil and gas drilling to appropriate areas and protect residents from drilling-related noise, lights, traffic, and potential pollution or spills. The attorneys contend that local authorities are best able to determine which areas of their cities will accommodate drilling.

When the Ohio Supreme Court was asked to balance the interests of strip mining with the interests of residential neighborhoods in a 1954 case (Smith v. Juillerat), the Munroe Falls attorneys maintain that the court decided local authorities should determine where to permit strip mining. In a 1992 case about oil and gas drilling (Newbury Twp. Bd. of Trustees. v. Lomak Petroleum (Ohio), Inc.), the Supreme Court again ruled, the attorneys argue, that local governments are best suited to identify appropriate locations for drilling.

They assert that localities, through their zoning powers, have the authority to designate which land to use for oil and gas drilling, and the state, through its law, determines the operational details of such drilling.

As far as the specific mention of the word “location” in the state statute, the city’s attorneys argue that the state has the power to limit the location of wells for safety or to prevent exploitation by neighbors, but it does not have the right to drill in a specific location without regard to local zoning laws.

The state law does not address the issue of local zoning and local concerns, they maintain. While other similar statutes expressly spell out that they displace local zoning laws, Munroe Falls’s attorneys point out that R.C. Chapter 1509 does not state this. As a result, they contend that the local zoning ordinance operates in parallel with the statute. Because the laws govern different aspects of drilling, they are not in conflict and can be harmonized, the attorneys conclude.

They also make an argument that the state drilling law is not a general law, under the Supreme Court’s test in Canton v. State (2002), because the law only applies to the eastern half of the state where oil and gas are found in substantial, “economically viable” quantities. They add that leading states in this industry nationwide did not have to usurp local zoning for their oil and gas businesses to thrive, so Ohio would be a “significant outlier” if it did so.

Some of Munroe Falls’s local laws require oil and gas drillers to obtain a zoning certificate, pay an application fee, wait for a public hearing and notification to nearby landowners, and post a bond. The attorneys for Munroe Falls assert that the Supreme Court’s decision in Fondessy Enters., Inc. v. City of Oregon (1986) permits local ordinances that do not conflict with state law. They claim the Munroe Falls ordinances serve only to protect local interests by educating the public about a project and ensuring safety. None of these local drilling laws impede drilling operations in a substantive or significant way, they conclude.

Attorneys for Beck Energy Corporation first quote additional provisions from R.C. 1509.02:

… The regulation of oil and gas activities is a matter of general statewide interest that requires uniform statewide regulation, and this chapter and rules adopted under it constitute a comprehensive plan with respect to all aspects of the locating, drilling, well stimulation, completing, and operating of oil and gas wells within this state, including site construction and restoration, permitting related to those activities, and the disposal of wastes from those wells. … Nothing in this section affects the authority granted to the director of transportation and local authorities in section 723.01 or 4513.34 of the Revised Code, provided that the authority granted under those sections shall not be exercised in a manner that discriminates against, unfairly impedes, or obstructs oil and gas activities and operations regulated under this chapter. …

Beck’s attorneys contend that municipalities are prohibited by the home-rule amendment of the Ohio Constitution from enforcing their local ordinances in a way that conflicts with state law. In response to the argument that the city is in the best position under its zoning authority to determine whether an area is suitable for drilling, they counter that such a policy argument needs to be directed to the Ohio legislature.

Beck’s attorneys also assert that the Smith decision does not support the city’s claim because the relevant statute in that case did not give the state exclusive authority to oversee strip-mining operations, so there was no home-rule issue. In fact, they argue, that statute specifically allowed for local zoning and regulation of strip mining, whereas in this case the state has been granted “sole and exclusive authority” over oil and gas drilling.

They contend that R.C. 1509.02 is a general law under the Canton test and note that the appeals court agreed. Munroe Falls’s assertion that the statute is not a general law because it does not apply to all parts of the state is improper, Beck’s attorneys argue, because the city did not raise that issue in the lower courts. On its merits the assertion is incorrect as well, they maintain. They claim that in a 1983 case (Clermont Environmental Reclamation Co. v. Wiederhold), the Ohio Supreme Court rejected this type of geographical argument.

They also assert that the exception in the statute allowing municipalities to maintain control over local roadways shows the specific area in which the General Assembly intended to limit state power related to oil and gas drilling. Because the law does not include an exception allowing local officials to determine drilling locations under local zoning power, they conclude that the law provides no such authority. If the law permitted this kind of exception, “municipalities would be able to delay or prohibit drilling under the same patchwork of inconsistent regulations that R.C. Chapter 1509 was intended to eliminate,” they write in their brief to the court. “The legislature chose to have the State, rather than city councils, control Ohio’s energy policy.”

They also maintain that state drilling permits involve extensive regulations to address neighborhood and safety issues. Further, the city’s interpretation that its zoning power means it has the authority to choose the best place for wells, and that the state’s authority over “location” is limited, creates a restriction in the law that is not there, they argue.

They add that the statute does not give municipalities the authority to decide whether an oil or gas driller with a state permit can drill its well. A conflict exists, they claim, because the local ordinance prevents Beck from drilling a well that the state has already approved. The ordinance also imposes restrictions that are incompatible with the state’s uniform, comprehensive, statewide regulatory plan for oil and gas drilling, they conclude.

They dispute the idea that the ordinances in Munroe Falls require information or assess fees related to safety or the environment. Instead, they claim, the local laws require city approval of a local permit, a fee for the permit even if the well is never drilled, and a bond for site restoration rather than for safety.

In addition, they maintain that the city misreads the Supreme Court’s decision in Fondessy. The ordinances in this case are dissimilar to those in Fondessy, they assert, and the Fondessy court actually held that municipalities cannot create a local permitting process nor set additional conditions for drilling under a state permit. They argue that R.C. 1509.02 explicitly prohibits local interference with the statute, except to manage the roadways, so it is a much broader law than the statute at issue in Fondessy.

The Supreme Court has granted the state permission to participate in oral arguments with Beck Energy Corporation. Attorneys for the state and for Beck Energy will divide the allotted 15 minutes.

Amicus curiae (friend of the court) briefs supporting the position of Munroe Falls have been submitted by:

The following have filed amicus briefs supporting Beck Energy Corporation:

Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.

Representing the city of Munroe Falls: Thomas Houlihan, 330.762.2411

Representing Beck Energy Corporation: John Keller, 614.464.6389

Representing the state of Ohio: Peter Glenn-Applegate, 614.466.8980

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Does a Commercial General Liability Insurance Policy Cover Incidents Involving Commercial Flatbed Trailers?

Century Surety Company v. Stinson J. Crews, et al., Case no. 2013-0283
Tenth District Court of Appeals (Franklin County)


On November 24, 2006, a fatal car collision occurred when Julia Augenstein drove her car into a parked flatbed trailer owned and operated by Stinson Crews as part of his paving business, Stinson Crews Trucking (collectively, “Crews”). The trailer had been used to transport equipment to the job site in Grove City, and then it was parked on the road to give Crews full access to the parking lot it was paving.

Augenstein’s estate filed a lawsuit against Crews. In turn, Crews filed a complaint against Century Surety Company, its commercial general liability insurance provider, and Unity Financial Casualty Company (Progressive), its commercial automobile insurance provider.

Century requested that the trial court issue a judgment that its insurance policy did not require Century to provide Crews with a defense or pay for the damages arising from the accident. In addition, Progressive filed a motion for summary judgment, which the trial court granted, finding that Crews’s flatbed trailer was not covered by the Progressive auto policy.

The trial court found Crews to be negligent in the accident and awarded $251,552.04 to Augenstein’s estate. Afterward, Crews and Century renewed their dispute over whether Crews’s Century policy covered the accident. The dispute centered on whether the flatbed trailer was considered an “auto,” which would not be covered under the policy, or “mobile equipment,” which would be covered under the policy.

The trial court held that the flatbed trailer was considered mobile equipment and found Century responsible for the damages awarded in Augenstein’s lawsuit.

Century appealed to the Tenth District Court of Appeals, but the court affirmed the lower court’s decision.

Century then appealed to the Ohio Supreme Court, which agreed to hear the case.

Century’s attorneys argue that the flatbed trailer should be considered an auto and not mobile equipment. The Century policy specifically defines “auto” to include trailers, which are only to be excluded if they qualify as mobile equipment. In their brief to the court, Century’s attorneys assert that Crews’s trailer is not mobile equipment because it is not “a vehicle maintained for purposes other than transportation of cargo.”

Century’s attorneys also contend that the word “cargo” in the definition of “mobile equipment” is an unambiguous term, but even if a word is considered ambiguous, a court must not just look to the dictionary definition of the word. Citing a 2003 Ohio Supreme Court decision (Westfield Ins. Co. v. Galatis), Century’s attorneys maintain that the court must also consider the context and purpose of the policy to “give effect to the intent of the parties to the agreement.”

Finally, attorneys for Century claim that there is a well established distinction between commercial general liability coverage and commercial auto coverage. They assert that it is well recognized that commercial general liability policies do not generally provide coverage for automobile accidents, which is why Crews had insurance under both types of policies. If the auto exclusion did not apply, they contend that both of Crews’s insurance policies would have covered the accident. Given this context, Crews’s flatbed trailer should be considered an auto for purposes of commercial general liability, they argue.

Citing the rule in the Ohio Supreme Court’s decision in Lager v. Miller-Gonzalez (2008), Crews’s attorneys counter that an ambiguous term should be construed strictly against the insurer, and the policy should be read in favor of the insured. They argue that because “cargo” is not defined by Century’s policy, and has more than one dictionary definition, the term is ambiguous. Therefore, the applicable definition should be one that allows the policy to be interpreted in Crews’s favor, they maintain.

Crews’s attorneys also argue that even though commercial general liability policies generally do not cover automobile-related accidents, the insurer must write the policy in a way that clearly states its intentions. Because Century included an ambiguous term in its policy, the policy must be read to include coverage of the trailer, they conclude.

Amicus curiae (friend of the court) briefs supporting the Century Surety Company’s position have been submitted by the Ohio Association of Civil Trial Attorneys and the Ohio Insurance Institute.

Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.

Representing the State of Ohio from the Lucas County Prosecutor’s Office: Evy Jarrett, 419.213.4700

Representing Century Surety Company: Richard Garner, 614.901.9600

Representing Stinson J. Crews and Stinson Crews Trucking: M. Shawn Dingus, 614.542.0220

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Attorney Discipline

In re: Judicial Campaign Complaint Against Colleen Mary O'Toole, Case no. 2012-1653

Former judicial candidate Colleen M. O’Toole is appealing a campaign misconduct sanction for misleadingly creating the impression in 2012 campaign materials that she was serving at that time as a judge on a court.

A complaint was filed that year against O’Toole alleging violations of the Ohio Code of Judicial Conduct related to her activities as a judicial candidate for the Eleventh District Court of Appeals in the general election. A three-member hearing panel of the Board of Commissioners on Grievances & Discipline reviewed the matter and issued a report on October 1, 2012, which it submitted to the Ohio Supreme Court.

A five-judge commission, appointed by the Supreme Court to consider the hearing panel’s report, determined that O’Toole gave the false impression on her web site that she was a sitting judge by identifying herself as “Judge O’Toole” and by not listing the dates she had served as a judge given that her earlier term as an Eleventh District judge had ended in 2011. The commission stated that O’Toole also violated judicial conduct rules by wearing a name badge in public that read “Colleen Mary O’Toole, Judge, 11th District Court of Appeals.”

In one of her objections to the commission, O’Toole argued that Jud.Cond.R. 4.3(A) violates her free speech rights and is unconstitutional. She based this argument on the 2012 decision of a 13-judge commission in O’Neill v. Crawford. However, the commission in this case determined that the O’Neill ruling involved a different judicial conduct rule, so the decision was not relevant to O’Toole.

The commission concluded that O’Toole’s testimony at the hearing left “little doubt that she intended the public to believe that she is a judge, when she is not,” adding: “Canon 4 of the Code of Judicial Conduct does not permit judicial candidates to identify themselves as judge or magistrate if they do not currently hold the public office. Maintaining the integrity of judicial elections requires us to impose a public reprimand in this case.”

The commission also ordered that O’Toole pay a $1,000 fine, the costs of the proceedings, and $2,500 in attorney fees.

O’Toole is permitted to appeal the commission’s sanction to the Supreme Court, which she has done, and the court granted her request for oral arguments.

Attorneys for O’Toole argue that the sanctions, amounting to about $6,000, are excessive and onerous given that her campaign materials created only the possibility of confusion or ambiguity about whether she was a judge at that time. Instead, they assert that her actions were based on her understanding of the O’Neill decision.

They contend that no evidence in the record shows that she intended to mislead anyone about her status as a judge, and they suggest that the commission’s sanctions “were the result of passion and prejudice.”  

They also claim that the sanctions in her case are more severe than those in two other 2012 cases involving more extensive violations of the judicial campaign rules.

In addition, they maintain that James B. Davis, who filed the complaint, was enlisted by the campaign of O’Toole’s 2012 election opponent, Mary Jane Trapp, to submit the document and that he expects his attorney fees to be paid by Trapp’s campaign, so it was inappropriate for the commission to award attorney fees.

Although O’Toole is allowed to appeal only her sanction, not the commission ruling itself, to the court, attorneys for O’Toole also make several arguments about the constitutionality of the judicial rule she was found to have violated. They point to two U.S. Supreme Court decisions involving speech to support their view that the rule is unconstitutional. They also assert that the campaign speech on O’Toole’s web site and her name badge could not have misled a reasonable person to believe that she was an incumbent judge seeking reelection.

The attorney for Davis notes that her attorney fees in this case are $13,472.50 up until October 11, 2012. The issued sanction, then, only covers 18 percent of her fees, which are “due and owing” regardless of who pays them. The attorney also argues that the fees accrued in part because O’Toole refused to agree to any facts at the hearing, so it lasted the full day, and because additional research and writing were necessary as a result of the multiple motions and objections that O’Toole filed.

Davis’s attorney also counters that O’Toole attended five judicial candidate seminars, which included guidance on campaign standards and the importance of following the judicial rules, yet O’Toole still falsely used the title “judge” on her campaign web site and her name badge.

Davis’s attorney contends that not only did O’Neill involve a separate judicial rule, that decision also found the judicial rule in that case was unconstitutional as applied to the facts there, not unconstitutional more broadly on its face.

Specifically on the constitutionality of Jud.Cond.R. 4.3(A), Davis’s attorney states in her brief to the court that “[r]espondent’s arguments attempt to cloak her false statements of fact – whether she was a sitting 11th District Court of Appeals Judge at the time her campaign materials were published – under the rubric of views and opinions which are protected campaign speech or political speech under the First Amendment. This argument is disingenuous and not supported by the objective evidence.” (Emphasis appears in the brief.)

Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.

Representing Colleen M. O’Toole: John Murray, 216.781.5245

Representing James B. Davis: Mary Cibella, 216.344.9220

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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.