Court of Appeals of Ohio, Eighth District, Cuyahoga
EDWARD GRAHAM, ET AL. PLAINTIFFS-APPELLANTS
CITY OF LAKEWOOD, ET AL. DEFENDANTS-APPELLEES
Appeal from the Cuyahoga County Court of Common Pleas Case
ATTORNEYS FOR APPELLANTS A. Steven Dever A. Steven Dever Co.,
L.P.A. Christopher M. Devito.
ATTORNEYS FOR APPELLEES For the Cleveland Clinic Foundation
and Delos Cosgrove, M.D. Tracy K. Stratford Mariam Keramati
James R. Wooley Katie M. McVoy Jones Day.
the City of Lakewood and Michael Summers Kevin M. Butler Law
Director Jennifer L. Swallow Chief Assistant Law Director,
Robert E. Cahill.
Ohio Attorney General Mike DeWine Lindsey M. Grant Assistant
Attorney General, Kristine L. Hayes Joseph E. Schmansky
Associate Assistant Attorneys General.
Lakewood Hospital Association and Thomas Gable Jennifer D.
Armstrong Ann Hunt McDonald Hopkins, Sara E. Jodka O. Judson
Scheaf McDonald Hopkins, L.L.C.
Lakewood Hospital Foundation, Inc., and Kenneth Haber Thomas
M. Ehrnfelt Walter F. Ehrnfelt Waldheger Coyne Co., L.P.A.
Subsidium Healthcare, L.L.C. Aaron M. Bernay Katherine A.
Klaeren David C. Olson Frost Brown Todd, L.L.C.
BEFORE: Blackmon, J., Boyle, P.J., and Laster Mays, J.
JOURNAL ENTRY AND OPINION
PATRICIA ANN BLACKMON, JUDGE.
Edward Graham, Marguerite Harkness, William Grulich, Deborah
Meckes, and Amy Dilzel ("Plaintiffs") filed this
lawsuit alleging several causes of action concerning the
closing of Lakewood Hospital. The trial court dismissed
Plaintiffs' complaint against all Defendants, which
included the following: the city of Lakewood ("the
City"); Lakewood's Law Director, Kevin Butler;
Lakewood's Mayor, Michael Summers; the Cleveland Clinic
Foundation ("CCF"); CCF's former president and
CEO Delos Cosgrove, M.D.; the Lakewood Hospital Association
("LHA"); LHA's Chairman, Thomas Gable; the
Lakewood Hospital Foundation ("LHF"); LHF's
president, Kenneth Haber; Subsidium Healthcare, L.L.C.; and
Ohio Attorney General Mike DeWine (collectively
"Defendants"). On appeal, Plaintiffs assign eight
errors for our review.
Having reviewed the record and pertinent law, we affirm the
trial court's dismissal of Plaintiffs' complaint.
Plaintiffs are five residents of the City who take issue with
Defendants' agreement to close Lakewood Hospital and
replace it with a CCF family health center ("the
FHC"). Plaintiffs filed an 18-count complaint, attacking
this issue from various angles and requesting various forms
In counts 1A, 1B, and 1C, Plaintiffs, acting as taxpayers,
allege a derivative action brought on behalf of the City to
ensure that its officers do not abuse the municipality's
corporate powers. In these taxpayer claims, the Plaintiffs
stand in the shoes of the City, and their "rights or
claims are no greater than the rights or interests of the
municipality." Cincinnati ex rel. Ritter v.
Cincinnati Reds, 150 App.3d 728, 2002-Ohio-7078, 782
N.E.2d 1225, ¶ 20 (1st Dist). Upon review, we find that
Plaintiffs' taxpayer claims have been resolved to the
point that they are moot and no longer justiciable.
Plaintiffs' remaining claims are unrelated to their
status as taxpayers. We agree with the trial court that
Plaintiffs have either failed to state a claim upon which
relief can be granted or lack standing to bring these claims.
The apposite facts and our analysis of the law follows.
Facts and Procedural History
In 1930, the City took ownership of Lakewood Hospital and the
real estate upon which it sits. In 1987, the City and LHA
entered into an agreement in which the City leased Lakewood
Hospital to LHA ("the Lease"). This changed the
status of Lakewood Hospital from a public hospital to a
private, nonprofit hospital. The Lease was renewed in 1996.
Also in 1996, LHA and CCF entered into an agreement for the
purpose of "integration of [LHA] and the CCF health care
system" ("the Agreement"). Additionally, as
part of the Agreement, CCF became the sole member of LHA. The
practical result of the Lease and the Agreement was that CCF
operated and managed Lakewood Hospital.
The term of the Lease is 30 years, which ends January 2,
2027, although the Lease can be terminated under various
conditions. There is no term for the length of the Agreement.
However, the Agreement can be terminated by mutual consent of
Plaintiffs allege that, beginning in 2005, Defendants
"terminated * * * services offered by Lakewood
Hospital" in violation of the Lease and the Agreement.
For example, Plaintiffs allege that CCF was "turning
away patients or sending them to other CCF wholly-owned
hospitals [and] regional private ambulatory and public EMS
services reportedly had been directed to transport patients
to Fairview Hospital instead of Lakewood Hospital."
Plaintiffs further allege that "[b]y terminating these
services, CCF has been able to pursue its strategy of
crippling Lakewood Hospital to the point that CCF would have
leverage when bargaining alongside LHA with the City to close
Lakewood Hospital, prematurely exit its [Agreement] and Lease
obligations, and build a new hospital in Avon, Ohio, of which
CCF will have complete ownership and control."
Plaintiffs also allege that, beginning in 2012, CCF
"specified that medical services, equipment, and
employees would be transferred gradually from Lakewood
Hospital to Fairview Hospital * * * in preparation for the
closure and razing of Lakewood Hospital as an inpatient acute
care medical/surgical hospital." On January 14, 2015,
CCF proposed closing Lakewood Hospital and building the FHC
at the same location. This was memorialized in a public
letter of intent signed by Cosgrove, Gable, and Haber.
On April 12, 2015, Plaintiffs, as taxpayers pursuant to R.C.
733.59, sent notice to the City requesting "an
injunction to enjoin abuses of corporate power; specific
performance regarding express rights and public duties stated
in the [Lease and the Agreement]; and a writ of mandamus to
compel the City officials to perform their duties and
obligations" under the Lease and the Agreement.
On May 1, 2015, the City responded and refused to pursue a
taxpayer suit as Plaintiffs requested. On May 28, 2015,
Plaintiffs, acting on behalf of the City, filed this lawsuit,
and on August 5, 2015, Plaintiffs filed an amended complaint
alleging 18 causes of action. Plaintiffs generally allege
that Defendants' actions violate the Lease and the
Agreement's "express and implied terms to manage and
operate Lakewood Hospital through 2026 * * *" and return
the property to the City at that time. Defendants filed
multiple motions to dismiss, arguing that Plaintiffs'
claims should be dismissed for failure to state a claim upon
which relief can be granted under Civ.R. 12(B)(6), lack of
standing, failure to plead fraud with specificity under
Civ.R. 9, mootness, and lack of subject matter jurisdiction
under Civ.R. 12(B)(1).
A summary of the time line in this case, which will be
explained in detail throughout the remainder of this opinion,
On May 28, 2015, Plaintiffs filed their complaint. On
December 21, 2015, the City passed an ordinance and entered
into an agreement with CCF and LHA to close Lakewood
Hospital. On February 6, 2016, Lakewood Hospital was closed.
In September and October 2016, parts of Lakewood Hospital
were demolished. On November 23, 2016, the City voters
ratified the December 21, 2015 ordinance. In April 2017,
construction began on the FHC.
On July 11, 2017, the court, in a 38-page decision, granted
Defendants' motions and dismissed Plaintiffs'
complaint in its entirety. It is from this order that
Motion to Partially Dismiss Appeal
Before reviewing Plaintiffs' arguments, we address
Defendants' motions to partially dismiss this appeal.
Defendants argue that Plaintiffs' first three causes of
action, each styled "Taxpayers Suit, " along with
their claims for injunctive relief and mandamus, are moot. To
support this argument, Defendants attach various affidavits
to their motion to partially dismiss. This court has held
[n]ormally, an appellate court can only consider what is in
the record on appeal. When it comes to deciding whether an
event has caused an issue to be moot, however, it may 'be
proved by extrinsic evidence outside the record.'
State ex rel Cincinnati Enquirer, Div. of Gannett
Satellite Info. Network, Inc. v. Dupuis, 98 Ohio St.3d
126, 2002-Ohio-7041, 781 N.E.2d 163, ¶ 8.
Gajewski v. Bd. of Zoning Appeals, 8th Dist.
Cuyahoga No. 91101, 2008-Ohio-5270, ¶ 14.
Defendants argue that Plaintiffs' appeal, as it relates
to counts 1A, 1B, 1C, 7, and 8, which seek an injunction,
specific performance, and a writ of mandamus, should be
dismissed, because it is impossible for this court to grant
the relief requested. Defendants further argue that
Plaintiffs "never attempted to enjoin the demolition of
Lakewood Hospital's [parking] garage and professional
office building or the commencement of construction of the
Family Health Center further rendering their claims
Plaintiffs, on the other hand, argue that this case is not
about stopping the demolition of a parking garage or the
construction of a family health center. Rather, according to
Plaintiffs, this case is about stopping "the abuse of
corporate powers by elected officials regarding express
contract terms to operate, manage, and then return in 2026
the City-owned Lakewood Hospital * * * to the citizens of the
City of Lakewood." In the alternative, Plaintiffs argue
that even if this case involves a "construction matter,
" Lakewood Hospital "is admittedly still in
existence" and could be used as a hospital again.
According to Plaintiffs, the "remedy of monetary relief
still exists to hold [Defendants] accountable for their
breaches and to allow for the reopening of an inpatient
medical care facility on the city-owned land and building
comprising the Hospital."
Upon review, we deny Defendants' motion to partially
dismiss this appeal. In the interest of justice, we consider
the parties' arguments on the merits.
Claim 1A - Taxpayer Suit under R.C. 733.59
A plaintiff who ordinarily may not have standing concerning a
City's "abuse of corporate powers" may seek
equitable remedies as a taxpayer under R.C. 733.56-733.59.
"A taxpayer action is properly brought only when the
right under review in the action is one benefitting the
public." State ex rel. Fisher v. Cleveland, 109
Ohio St.3d 33, 2006-Ohio-1827, 845 N.E.2d 500, ¶ 10.
Taxpayers must first request that the City's law director
take action, and if this is unsuccessful, "the taxpayer
may institute suit in his own name, on behalf of the
municipal corporation." R.C. 733.59. Plaintiffs must
allege "abuse of corporate powers" by the political
subdivision, including, 1.) unlawful exercise of powers and,
2.) assumption of powers not conferred. See Elyria Gas
& Water Co. v. Elyria, 57 Ohio St. 374, 49 N.E. 335
Taxpayers may seek equitable relief under R.C. 733.59,
limited to the following forms: 1.) pursuant to R.C. 733.56,
"an order of injunction to restrain * * * the abuse of
[municipal] corporate powers, or the execution or performance
of any contract made [o]n behalf of the municipal corporation
in contravention of the laws or ordinance[s] governing it, or
which was procured by fraud or corruption"; 2.) pursuant
to R.C. 733.57, "the specific performance [of] an
obligation or contract made on behalf of a municipal
corporation"; and 3.) pursuant to R.C. 733.58, "a
writ of mandamus to compel the performance of [a] duty * * *
expressly enjoined by law or ordinance."
In this case, it is undisputed that Plaintiffs made a written
demand to the City's law director requesting that the
City file suit under R.C. 733.56, 733.57, and 733.58. This
demand was unsuccessful, and Plaintiffs filed the instant
action, requesting the following relief: 1.) "a
temporary and permanent injunction to enjoin the abuses of
corporate powers by the City and prohibit the execution or
performance of any resolution or contract in contravention of
the existing" Agreement and Lease; 2.) specific
performance of the Lease and the Agreement; and 3.) writ of
mandamus compelling the City to operate under the Lease and
The trial court dismissed the taxpayer claims for the
following reasons: The statutory taxpayer claims for an
injunction and a writ of mandamus were dismissed for failure
to state a claim upon which relief can be granted under
Civ.R. 12(B)(6); and the statutory taxpayer claim for
specific performance was dismissed for lack of subject matter
jurisdiction based on mootness under Civ.R. 12(B)(1). We
first address whether the court retained subject matter
jurisdiction over the taxpayer claims based on mootness,
because we find this dispositive.
Lack of Subject Matter Jurisdiction and Mootness
Courts of common pleas' jurisdiction is limited to
"justiciable matters." Morrison v.
Steiner, 32 Ohio St.2d 86, 290 N.E.2d 841 (1972).
"If what were once justiciable matters have been
resolved to the point where they become moot, the courts of
common pleas no longer have subject matter jurisdiction to
hear the case." Hirsch v. TRW, Inc., 8th Dist.
Cuyahoga No. 83204, 2004-Ohio-1125, ¶ 11. "The lack
of subject-matter jurisdiction is not a waivable defense and
may be raised for the first time on appeal." In re
Claim of King, 62 Ohio St.2d 87, 89, 403 N.E.2d 200
(1980). Where mootness is concerned, "an actual
controversy must exist at stages of appellate or certiorari
review, and not simply at the date the action is initiated,
" unless the issue is "capable of repetition, yet
evading review." Roe v. Wade, 410 U.S. 113,
125, 93 S.Ct. 705, 35 L.Ed.2d 147 (1973).
"One commentator has defined mootness as 'the
doctrine of standing set in a time frame: The requisite
personal interest that must exist at the commencement of the
litigation (standing) must continue throughout its existence
(mootness).'" United States Parole Comm. v.
Geraghty, 445 U.S. 388, 398, 100 S.Ct. 1202, 63 L.Ed.2d
479 (1980), quoting Monaghan, Constitutional
Adjudication: The Who and When, 82 Yale L. J. 1363, 1384
In the case at hand, on December 21, 2015, the City passed
Ordinance 49-15, which authorized the City to enter into the
Master Agreement with CCF and LHA. The same day, the parties
entered into the Master Agreement, in which the City and LHA
sold certain Lakewood Hospital assets, including real
property, to CCF, with proceeds paid to the City. The Master
Agreement also provided that ownership of other Lakewood
Hospital property "revert back" to the City.
Furthermore, according to Defendants, the Master Agreement
"terminated the Agreement, significantly modified the
Lease, and included a mutual waiver of all claims arising
from the Agreement, the Lease, and the operation and
management of Lakewood Hospital * * *."
Per the terms of the Master Agreement, Lakewood hospital was
closed on February 6, 2016. Additionally, the parties agreed
that CCF would construct the new $34, 000, 000 FHC in its
place. In September and October 2016, CCF demolished Lakewood
Hospital's parking garage and professional office
building. In April 2017, CCF began construction of the FHC at
the site where Lakewood Hospital's parking garage and
professional office building used to stand.
On November 23, 2016, the City's voters passed Issue 64,
which ratified Ordinance 49-15. The City's voters also
adopted the Third Amended Charter for the City, which
"eliminates all references to Lakewood Hospital and the
City owning, leasing, or operating a hospital."
In dismissing Plaintiffs' taxpayer claims, the court
found that, subsequent to the filing of this suit, the
parties agreed to 1.) terminate the Agreement; 2.)
amend/modify the Lease and eventually terminate the Lease
when the FHC is complete; and 3.) waive and release any
claims the City may have against CCF and LHA under the Lease
and the Agreement. The court concluded that "[t]he
release and waiver of claims, combined with the amendment and
imminent termination of the [L]ease and the [A]greement, have
made the Plaintiffs' taxpayers claims - which, it is
worth repeating, are really Lakewood's claims - moot and
there is no case or controversy for me to decide."
Statutory Taxpayer Claim for ...