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Lycan v. City of Cleveland

Court of Appeals of Ohio, Eighth District, Cuyahoga

August 29, 2019

JANINE LYCAN, ET AL., Plaintiffs-Appellees/ Cross-Appellants,
CITY OF CLEVELAND, ET AL., Defendants-Appellants/ Cross-Appellees.

          Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-09-686044


          Bashein & Bashein Co., L.P.A., W. Craig Bashein, and John P. Hurst; Paul W. Flowers Co., L.P.A., Paul W. Flowers, and Louis E. Grube; The Dickson Firm, L.L.C., Blake A. Dickson, for plaintiffs-appellees/cross-appellants, Janine Lycan, et al.

          Barbara A. Langhenry, Cleveland Director of Law, and Gary S. Singletary and Craig J. Morice, Assistant Directors of Law, for defendant-appellant/cross-appellee, City of Cleveland.



         {¶ 1} In this consolidated appeal, both the plaintiffs-appellees/cross-appellants, Janine Lycan, et al. (the "class") and defendant-appellant/cross-appellee, the city of Cleveland (the "City"), appeal the trial court's decision awarding final judgment to the class in the amount of $4, 121, 185.89 and denying the class's request to award an additional amount of $1, 841, 563.51 as the time-value of the funds that were wrongfully withheld.[1] For the reasons set forth below, we affirm.

         {¶ 2} The instant appeal has had a long procedural history spanning over ten years and arises from the City's use of automated traffic cameras. Cleveland Codified Ordinances ("CCO") 413.031 imposes liability on the "owner of a vehicle" committing a red-light or speeding offense. CCO 413.031(b) and (c). The ordinance formerly defined "vehicle owner" as "the person or entity identified by the Ohio Bureau of Motor Vehicles, or registered with any other State vehicle registration office, as the registered owner of a vehicle." Former CCO 4310.031(p)(3).

         {¶ 3} In Dickson & Campbell, L.L.C. v. Cleveland, 181 Ohio App.3d 238, 2009-Ohio-738, 908 N.E.2d 964, ¶ 50 (8th Dist), this court concluded, based on the plain meaning of "vehicle owner," that former CCO 413.031 did not impose liability on vehicle lessees. In light of Dickson & Campbell, the City subsequently amended CCO 413.031, effective March 11, 2009. The ordinance now states that a "vehicle owner" includes the "lessee" of a leased or rented vehicle. CCO 413.031(p)(4).

         {¶ 4} The underlying class action is a result of this court's ruling in Dickson & Campbell The facts and procedural history, after the filing of the class action, can be found in the City's appeal to the Ohio Supreme Court in Lycan v. Cleveland, 146 Ohio St.3d 29, 2016-Ohio-422, 51 N.E.3d 593 ("Lycan III "):

         Plaintiffs' class-action lawsuit

After the Dickson & Campbell decision was announced, Lycan filed a class-action complaint on February 26, 2009, in Cuyahoga County Court of Common Pleas challenging Cleveland's imposition of fines against vehicle lessees under former CCO 413.031. An amended class-action complaint, filed on May 28, 2009, added Pavlish, Task, Charna, Fogle, and Murphy as named plaintiffs. The amended complaint alleged that each of the plaintiffs received a notice of liability from Cleveland stating that an automated traffic camera had identified the vehicle described and pictured in the notice as the vehicle being driven during the commission of a red-light or speeding offense. Plaintiffs alleged that they had leased the vehicles identified in the notices of liability but were never the vehicles' registered owners.
Instead of filing a notice of appeal and requesting a hearing to challenge their tickets, Lycan, Pavlish, Charna, and Fogle paid the $100 fine. Murphy received five notices of liability and paid a reduced amount for one ticket; Cleveland agreed to accept this as payment in full for all five tickets. Task received notices of liability for two separate speeding violations. Task did not pay the fines for either ticket and subsequently received a demand for payment of $320 in fines and penalties.
In their complaint, plaintiffs contended that Cleveland had no authority under the former version of CCO 413.031 to collect fines from plaintiffs as vehicle lessees. As relief, plaintiffs sought the following: (1) disgorgement, under an unjust-enrichment theory, of fines paid to the city, (2) an injunction preventing Cleveland from enforcing the ordinance against vehicle lessees, and (3) declaratory relief. Plaintiffs also filed a motion for class certification.
On November 24, 2009, the trial court granted Cleveland's motion for judgment on the pleadings, finding that plaintiffs had waived the right to pursue judicial remedies by paying their fines and failing to appeal their citations as permitted by CCO 413.0319(k). In the same order, the trial court denied plaintiffs' class-certification motion.
Plaintiffs' appeal to the Eighth District ("Lycan I")
Plaintiffs appealed to the Eighth District Court of Appeals. The appeals court affirmed the trial court's judgment dismissing plaintiffs' claim for injunctive relief, finding that an injunction would serve no purpose because the offending ordinance has since been repealed. Lycan v. Cleveland, 8th Dist. Cuyahoga No. 94353, 2010-Ohio-6021, ¶ 9 ("Lycan I"). But the appeals court reversed the trial court's dismissal of plaintiffs' claims for restitution and declaratory relief. Id. at ¶ 8, 10. The court found that plaintiffs' failure to challenge the fines before payment did not necessarily foreclose plaintiffs from proving a set of facts under which it would be unjust for Cleveland to retain the paid fines. Id. at ¶ 8. The appeals court also reversed the denial of plaintiffs' class-certification motion and remanded for further proceedings on that question. Id. at ¶ 11.
This court declined jurisdiction over Cleveland's discretionary appeal. 128 Ohio St.3d 1501, 2011-Ohio-2420, 947 N.E.2d 683.
Remand to the trial court
On remand, and after completion of discovery, the trial court addressed the parties' competing motions for summary judgment on plaintiffs' unjust-enrichment claim. In support of its motion, Cleveland argued that the administrative process provided an adequate remedy to those receiving civil notices of liability and that the doctrine of res judicata therefore precluded review of the class's unjust-enrichment claim. More specifically, Cleveland argued that its notices of liability, combined with the opportunity to participate in the administrative-appeals process, constituted quasi-judicial administrative proceedings from which the preclusive effect of res judicata arose.
In an order dated February 8, 2013, the trial court granted partial summary judgment for plaintiffs. The court's entry consisted of two lines. The first line stated that plaintiffs' "[motion] for partial summary judgment * * * filed 7/25/2012, is granted." The second line of the order set a hearing date on plaintiffs' motion for class certification and appointment of class counsel. The order contained no other findings of law or fact. Cleveland did not seek interlocutory review of this order by or before the March 11, 2013 appeal deadline. See Ohio App.R. 4(A) (providing that a notice of appeal must be filed within 30 days of a judgment entry).
The trial court held a class-certification hearing on February 19, 2013. Cleveland did not assert res judicata in its memorandum opposing class certification or at the class-certification hearing. On February 26, 2013, the court granted class certification and found that plaintiffs met the seven requirements of Civ.R. 23. The court certified the following class: "All persons and entities who were not a 'vehicle owners' under CCO 413.031, but were issued a notice of citation and/or [assessed] a fine under that ordinance, prior to [M]arch 11, 2009, by/or on behalf of Defendant, City of Cleveland." The class-certification order contains no discussion of res judicata.
Cleveland's appeal to the Eighth District ("Lycan II")
On March 27, 2013, pursuant to R.C. 2505.02(B)(5), which allows immediate appeal of a class-certification order, Cleveland appealed the February 26, 2013 order to the Eighth District. Cleveland's first assignment of error addressed the February 26, 2013 class-certification order and raised two arguments: that plaintiffs failed to meet the requirements of Civ.R. 23 and that res judicata precluded class relief. Cleveland's second assignment of error alluded to the February 8, 2013 partial-summary-judgment order. However, Cleveland did not address the summary-judgment order in its brief.
From the outset, the court distinguished the two orders and noted that the February 8, 2013 partial summary judgment was "not yet appealable" and was "not addressed in the substance of [Cleveland]'s brief." Lycan v. Cleveland, 8th Dist. Cuyahoga No. 99698, 2014-Ohio-203, 6 N.E.3d 91, ¶ 12 ("Lycan II"). The court therefore limited its review to the class-certification order: "the issues raised on appeal pertain to whether the Civ.R. 23(A) class action requirements were met and whether the action is barred by res judicata." Id.
The court began with the latter question and considered whether plaintiffs' failure to appeal their traffic citations through Cleveland's administrative procedure precluded their class action. The doctrine of res judicata, as the court noted, provides that "'a valid, final judgment rendered upon the merits bars all subsequent actions based upon any claim arising out of the transaction or occurrence that was the subject matter of the previous action.'" Id. at ¶ 15, quoting Grava v. Parkman Twp., 73 Ohio St.3d 379, 653 N.E.2d 226 (1995), syllabus. The court concluded that plaintiffs' failure to pursue administrative relief did not bar plaintiffs' class action "because there was never an actual 'judgment' rendered by a court, or administrative tribunal, of competent jurisdiction." Id. Moreover, the court noted, even if an administrative decision had been rendered, Cleveland's parking-violations bureau could not have decided plaintiffs' claims for unjust enrichment and declaratory judgment. Id. The court declined to follow the "expansive view of res judicata" set forth in Carroll v. Cleveland, 522 Fed.Appx. 299 (6th Cir.2013), and Foor v. Cleveland, N.D.Ohio No. 1:12 CV 1754, 2013 U.S. Dist. LEXIS 115552, 2013 WL 4427432 (Aug. 15, 2013). Id. at ¶ 14. The court concluded that "fairness and justice would not support the application of res judicata in this case." Id. at ¶ 19. The court then proceeded to address Cleveland's challenge to class certification. The court concluded that the class met all requirements under Civ.R. 23 and affirmed the trial court's class-certification order.

Id. at ¶ 7-18.

         {¶ 5} The City appealed from Lycan II to the Ohio Supreme Court in Lycan III. The Ohio Supreme Court accepted review on the following proposition of law:

Cleveland Codified Ordinance 413.031 provides an adequate remedy in the ordinary course of law to those receiving civil notices of liability by way of the administrative proceedings set forth in the ordinance. State ex rel. Scott v. Cleveland[, ] 112 Ohio St.3d 324, 2006-Ohio-6573, 859 N.E.2d 923. Individuals who receive a civil citation issued pursuant to a local ordinance and who knowingly decline to take advantage of an available adequate remedy at law are precluded by res judicata from subsequently acting as class representatives and presenting equitable claims predicated in unjust enrichment. Accord Carroll v. Cleveland, 522 Fed.Appx. 299 (6th Cir. Ohio 2013).
See 139 Ohio St.3d 1416, 2014-Ohio-2487, 10 N.E.3d 737.

Lycan III, 146 Ohio St.3d 29, 2016-Ohio-422, 51 N.E.3d 593, at ¶ 19.

         {¶ 6} In Lycan III, the City did not challenge our conclusions in Lycan II regarding whether the proposed class met the requirements of Civ.R. 23. Rather, it only argued that the class could not "proceed with their class action because they did not take advantage of the administrative process and that, therefore, the doctrine of res judicata bars them from relitigating their waived challenges to the traffic citations." Id. at ¶ 20. The Supreme Court did not reach this argument. Instead, it concluded that this court "improperly ruled on the question of res judicata, because the trial court did not decide that question in a final, appealable order." Id. at ¶ 22.

         {¶ 7} In reaching its conclusion, the Lycan III court acknowledged that:

[t]he parties do not dispute that the order that Cleveland appeals here - the trial court's February 26, 2013 class-certification order - is a final, appealable order. See R.C. 2505.02(B)(5) ("An order that determines that an action may or may not be maintained as a class action" is a final, appealable order). That order, however, addresses only whether plaintiffs met the seven Civ.R. 23 requirements to maintain a class action. It contains no findings or discussion pertaining to res judicata or the preclusive effect of Cleveland's administrative process. Therefore, it provides no basis for reviewing the res judicata question in this appeal.
Nor does the trial court's February 8, 2013 entry granting partial summary judgment provide a basis for reviewing the res judicata question. The Eighth District declined to review that ruling because it was "not yet appealable and is not addressed in the substance of [Cleveland's] brief." Lycan II, 2014-Ohio-203, 6 N.E.3d 91, at ¶ 12. We agree and note that if the order had been final and appealable on February 8, 2013, then Cleveland's March 27, 2013 appeal to the Eighth District would have been untimely. We therefore decline to address the partial-summary-judgment order in this appeal.

Id. at ¶ 23-24.

         {¶ 8} As a result, the Supreme Court affirmed in part and vacated in part our decision in Lycan II. The court affirmed the portion of Lycan II with respect to the class certification, noting that City has waived any arguments with regard to certification because it did not assert a proposition of law or present any arguments in its briefs challenging the trial court's finding that plaintiffs satisfied the Civ.R. 23 class-action requirements. Lycan III at ¶ 32. The Supreme Court vacated the portion of Lycan II addressing res judicata. The court concluded that we "erred in deciding that res judicata barred [the class's] claims, in the absence of a final, appealable order from the trial court addressing that question." Id. The matter was then remanded to the trial court for further proceedings.

         {¶ 9} Following the Ohio Supreme Court's remand in Lycan III, the City filed a motion for reconsideration and for summary judgment in August 2016. The city sought reconsideration of the trial court's decision granting the class's motion for partial summary judgment. In its motion, the City stated that it "does not re-litigate the issue of res judicata with the motion." Rather, the City focused its arguments on the class's failure to exhaust administrative remedies and standing. In support of its argument, the City relied on Walker v. Toledo, 143 Ohio St.3d 420, 2014-Ohio-5461, 39 N.E.3d 474. The class opposed.

         {¶ 10} After a hearing on the matter, the trial court denied the City's motion. In its opinion, the court stated:

[T]he [City] filed the instant motion based upon the Supreme Court case of [Walker]. In that case, the Supreme Court addressed the issue of whether Ohio municipalities have "home-rule" authority to establish administrative proceedings in furtherance of so-called "photo-enforcement" ordinances that must be exhausted before an individual can pursue judicial remedy. The Walker Court answered in the affirmative.
In this case, the [City] argues that the [class] failed to exhaust the administrative remedy made available to them, and thus their claims should be dismissed. The [class] counter[s] that the administrative remedy available to them was not adequate.
The Court of Appeals of Ohio, Eighth District has held that "[w]here an administrative agency has no power to afford the relief sought or an administrative appeal would otherwise be futile, exhaustion of administrative remedies is not prerequisite to seeking judicial relief." San Allen, Inc. v. Buehrer, 8th Dist. Cuyahoga No. 99786, 2014-Ohio-2071, ¶ 64; citing [State ex rel Teamsters Local Union No. 436 v. Cuyahoga Cty. Bd. Of ...

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