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IN THE COURT OF COMMON PLEAS, DELAWARE COUNTY, OHIO
Ss
SUBURBAN NATURAL GAS = ge.
COMPANY, = Zbe
Case No.17CVH 100585 == _S23
Plaintiff, oO Flag
mines
wm OSS
Vs. = 355
EVERETT H. KRUEGER, JUDGE
COLUMBIA GAS OF OHIO INC, es
Defendant.
JUDGMENT ENTRY DENYING DEFENDANT’S MOTION FOR ATTORNEY FEES UNDER
R.C. 2323.51
This matter is before the Court on a Motion of Defendant Columbia Gas of Ohio, Inc.
(‘Columbia’), for an attorney fee award as a sanction for Plaintiff Suburban Natural Gas
Company (“Suburban”) having filed a frivolous action as described in R.C. 2323.51 and
prohibited by Civ.R. 11. For the reasons stated below, Defendant’s Motion is DENIED.
I. BACKGROUND
In October 2017, Suburban filed a declaratory judgment action in this Court seeking a
ruling that Columbia improperly refused to allow Suburban to install a pipeline that would
interconnect to Columbia’s Northern Loop pipeline. The complaint centered on an agreed
Stipulation that was jointly filed and incorporated into an order by the Public Utilities
Commission of Ohio (“PUCO”). In the Stipulation, the parties proposed tariff modifications,
agreed to exchange certain customers, and agreed to exchange ownership and/or access to
certain gas pipelines and associated facilities.
Count One of Suburban’s complaint asked this Court to declare the rights of the
parties, specifically declare that the Stipulation requires Columbia to allow Suburban to
interconnect to Columbia's Northern Loop pipeline, and apportion the costs that each party
may have to bear while developing Suburban’s access to the pipeline. Count Two of the{
complaint asked this Court to find Columbia in breach of the Stipulation and to either order
Columbia to specifically perform pursuant to the Stipulation or award $6.7 million in damages.
On February 5, 2018, this Court granted Columbia’s November 2017 Motion to
Dismiss for Lack of Subject Matter Jurisdiction. Citing R.C. 4903.12, the Court reasoned that,
because the PUCO has exclusive jurisdiction over various matters involving public utilities,
this Court was expressly prohibited from reviewing any PUCO order or interfering with the
PUCO’s performance of official duties.
In countering the motion to dismiss, Suburban argued that no PUCO expertise was
required because its claims were a matter of pure contract and merely require a basic
interpretation of specific phrases in the agreement. This Court disagreed, stating “An actual
resolution of the claims presented in Suburban’s complaint will require far more than the
Court's basic interpretation of ‘shall,’ ‘available,’ and other surrounding verbiage.” The Court
thus concluded that, in order to interpret and potentially enforce the terms of the contract, the
Court would need to consider statutes and regulations that are administered and enforced by
PUCO, and that the PUCO’s expertise is necessary to interpret the PUCO’s own order. Thus,
the case fell under PUCO’s jurisdiction, and this Court was required to dismiss it. ;
Columbia included a request for sanctions under Civ.R. 11 and R.C. 2323.51 in its
motion to dismiss, but this Court determined that request should be the subject of a separate
motion and memorandum, as well as a hearing. Thus, Columbia filed a separate motion, and
this Court heard the matter on June 21, 2018.
At the hearing, Columbia asserted that Suburban was aware of the need to file its
claim with the PUCO, and had done so in the past when seeking an interpretation of that
same Stipulation, but this time filed with the common pleas court, an action the statute did
not authorize it to do. Suburban’s counsel testified that previous cases involved different
claims and were seeking different remedies, while this case sought a declaratory judgmentand alleged breach of contract. Suburban’s counsel explained that PUCO is a statutory entity
with limited jurisdiction, and cannot determine contract liability. He continued that, as a
practical matter, he was concerned that PUCO would reject jurisdiction if he initiated the case
there, and that such a result would have delayed resolution of the dispute. In addition to the
timing issue, he explained that there were arguments that went both ways on whether to file
in common pleas court, and he anticipated that Columbia might move to dismiss if he filed a
claim in this Court. He said even if this Court granted a motion to dismiss, it was to his client’s
benefit because Suburban would have the benefit of certainty about where the claim should
be adjudicated.
Suburban’s counsel continued that, while the Stipulation had to be approved by the
PUCO to be enforceable, there is no support for the concept that the parties can only make
agreements via PUCO-approved stipulations. He explained Suburban’s position as being
that the right may have arisen by virtue of a PUCO action, but that it is a contract right
enforceable by a common pleas court because of the remedy Suburban was seeking. He
explained that, while he was aware of previous cases between these parties seeking
interpretations of the subject Stipulation, he did not make decisions based on what other
lawyers did in other cases with other facts. He added that the earlier cases were withdrawn
before the PUCO ruled on them.
I. LAW AND ANALYSIS
This Court has the discretion under R.C. 2323.51 to grant attorney fees to a party to
litigation who is adversely affected by frivolous conduct. State ex rel. Striker v. Cline, 130
Ohio St.3d 214, 2011-Ohio-5350, 957 N.E.2d 19, 11. Under R.C. 2323.51(A)(2)(a), the
term “frivolous conduct” includes conduct of a party or counsel in a civil action that constitutes
any of the following:(i) It obviously serves merely to harass or maliciously injure another party to
the civil action or appeal or is for another improper purpose, including, but not
limited to, causing unnecessary delay or a needless increase in the cost of
litigation.
(ii) It is not warranted under existing law, cannot be supported by a good faith
argument for an extension, modification, or reversal of existing law, or cannot
be supported by a good faith argument for the establishment of new law.
(iii) The conduct consists of allegations or other factual contentions that have
no evidentiary support or, if specifically so identified, are not likely to have
evidentiary support after a reasonable opportunity for further investigation or
discovery.
(iv) The conduct consists of denials or factual contentions that are not
warranted by the evidence or, if specifically so identified, are not reasonably
based on a lack of information or belief.
The burden is upon the moving party to establish that the actions of a party or his counsel fall
within one of these categories. Pisanick-Miller v. Roulette Pontiac-Cadillac GMC, Inc., 62
Ohio App. 3d 757, 577 N.E.2d 446 (11th Dist.1991).
While Columbia does not expressly state which of the four types of conduct Suburban
is alleged to have engaged in, the Court interprets Columbia's argument to be that Suburban
asserted a claim that is not warranted under existing law, cannot be supported by a good faith
argument for an extension, modification, or reversal of existing law, or cannot be supported
by a good faith argument for establishment of a new law.
The general standard for determining if a legal claim is frivolous is whether an
attorney's reasonable inquiry under the existing law would reveal the patent inadequacy of
the claim. Ron Scheiderer & Assoc. v. City of London, 81 Ohio St.3d 94, 97-98, 689 N.E.2d
552 (1998). A finding of frivolous conduct is not automatically warranted, however, simply
because a claim was unsuccessful. Weaver v. Pillar, 5th Dist. Tuscarawas No. 2012-CA-32,
2013-Ohio-1052, | 21. “R.C. 2323.51 was designed to chill egregious, overzealous,
unjustifiable and frivolous actions, not to chill legitimate claims or punish misjudgment or
tactical error.” /d.—
At the hearing, Suburban’s counsel established that he recognized there were
potential obstacles to initiating the case in common pleas court. However, he indicated he
weighed the risk of a common pleas court dismissal for lack of jurisdiction against the
possibility that the PUCO would find jurisdiction belonged in the common pleas court. He
determined that, by filing in common pleas court, Suburban would have a definitive answer
to the question of whether a declaratory judgment action seeking interpretation of a
contractual clause was subject to the exclusive jurisdiction of the PUCO.
In ruling on the Motion to Dismiss, this Court recognized that common pleas courts
retain limited subject matter jurisdiction over pure common law tort and certain contract
actions involving utilities regulated by the PUCO, further indicating that the test is whether the
PUCO’s administrative expertise is required to resolve the dispute and whether the act
complained of is a practice normally authorized by the utility. Al/state Ins. Co. v. Cleveland
Elec. Illum. Co., 119 Ohio St.3d 301, 2008-Ohio-3917, 893 N.E.2d 824, 12. Following the
Allstate test, the Court concluded that the PUCO’s expertise would be necessary to decide
the case, since only PUCO could interpret its own order in light of statutes that are exclusively
within its purview. The Court also focused on the fact that the acts complained of in
Suburban’s complaint involve Columbia’s failure to go through a specific process of
interconnection of gas pipelines as provided in an order of the PUCO, thus involving a practice
normally undertaken by a utility company. In short, the dismissal entry recognized there are
circumstances in which this Court might have subject matter jurisdiction over a case involving
a utility regulated by the PUCO, but this case is not one of them.
Considering all of the above, the question of subject matter jurisdiction in this case
was unresolved until this Court ruled on it. Suburban’s claim was supported by a good faith
argument for jurisdiction in this Court and so its counsel did not engage in frivolous conductaed
in seeking this ruling. Columbia has not met its burden to demonstrate it is entitled to
sanctions for Suburban’s filing its complaint in this Court.
Ill. => CONCLUSION
For the reasons stated above, Columbia’s motion for sanctions under R.C. 2323.51
and Civ.R. 11 is DENIED.
Dated: June 22, 2018
er
MS
EVERETT H. KRUEGER, JUDGE
The Clerk of this Court is hereby Ordered to serve a copy of this Judgment Entry upon the following by
wRegular Mail, a Mailbox at the Delaware County Courthouse, a Facsimile Transmission
STEPHEN D MARTIN, 50 NORTH SANDUSKY STREET, DELAWARE, OH 43015-1926
MARK AWHITT, KEYBANK BUILDING, 88 EAST BROAD STREET, SUITE 1590, COLUMBUS, OH 43215
ADAM C SMITH, 600 SUPERIOR AVE EASE, SUITE 2100, CLEVELAND, OH 44114
ANTHONY M HEALD, 125 NORTH SANDUSKY STREET, DELAWARE, OH 43015
This document sent to
a attomney/party by:
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IN THE COURT OF COMMON PLEAS, DELAWARE COUNTY, OHIO Ss SUBURBAN NATURAL GAS = ge. COMPANY, = Zbe Case No.17CVH 100585 == _S23 Plaintiff, oO Flag mines wm OSS Vs. = 355 EVERETT H. KRUEGER, JUDGE COLUMBIA GAS OF OHIO INC, es Defendant. JUDGMENT ENTRY DENYING DEFENDANT’S MOTION FOR ATTORNEY FEES UNDER R.C. 2323.51 This matter is before the Court on a Motion of Defendant Columbia Gas of Ohio, Inc. (‘Columbia’), for an attorney fee award as a sanction for Plaintiff Suburban Natural Gas Company (“Suburban”) having filed a frivolous action as described in R.C. 2323.51 and prohibited by Civ.R. 11. For the reasons stated below, Defendant’s Motion is DENIED. I. BACKGROUND In October 2017, Suburban filed a declaratory judgment action in this Court seeking a ruling that Columbia improperly refused to allow Suburban to install a pipeline that would interconnect to Columbia’s Northern Loop pipeline. The complaint centered on an agreed Stipulation that was jointly filed and incorporated into an order by the Public Utilities Commission of Ohio (“PUCO”). In the Stipulation, the parties proposed tariff modifications, agreed to exchange certain customers, and agreed to exchange ownership and/or access to certain gas pipelines and associated facilities. Count One of Suburban’s complaint asked this Court to declare the rights of the parties, specifically declare that the Stipulation requires Columbia to allow Suburban to interconnect to Columbia's Northern Loop pipeline, and apportion the costs that each party may have to bear while developing Suburban’s access to the pipeline. Count Two of the{ complaint asked this Court to find Columbia in breach of the Stipulation and to either order Columbia to specifically perform pursuant to the Stipulation or award $6.7 million in damages. On February 5, 2018, this Court granted Columbia’s November 2017 Motion to Dismiss for Lack of Subject Matter Jurisdiction. Citing R.C. 4903.12, the Court reasoned that, because the PUCO has exclusive jurisdiction over various matters involving public utilities, this Court was expressly prohibited from reviewing any PUCO order or interfering with the PUCO’s performance of official duties. In countering the motion to dismiss, Suburban argued that no PUCO expertise was required because its claims were a matter of pure contract and merely require a basic interpretation of specific phrases in the agreement. This Court disagreed, stating “An actual resolution of the claims presented in Suburban’s complaint will require far more than the Court's basic interpretation of ‘shall,’ ‘available,’ and other surrounding verbiage.” The Court thus concluded that, in order to interpret and potentially enforce the terms of the contract, the Court would need to consider statutes and regulations that are administered and enforced by PUCO, and that the PUCO’s expertise is necessary to interpret the PUCO’s own order. Thus, the case fell under PUCO’s jurisdiction, and this Court was required to dismiss it. ; Columbia included a request for sanctions under Civ.R. 11 and R.C. 2323.51 in its motion to dismiss, but this Court determined that request should be the subject of a separate motion and memorandum, as well as a hearing. Thus, Columbia filed a separate motion, and this Court heard the matter on June 21, 2018. At the hearing, Columbia asserted that Suburban was aware of the need to file its claim with the PUCO, and had done so in the past when seeking an interpretation of that same Stipulation, but this time filed with the common pleas court, an action the statute did not authorize it to do. Suburban’s counsel testified that previous cases involved different claims and were seeking different remedies, while this case sought a declaratory judgmentand alleged breach of contract. Suburban’s counsel explained that PUCO is a statutory entity with limited jurisdiction, and cannot determine contract liability. He continued that, as a practical matter, he was concerned that PUCO would reject jurisdiction if he initiated the case there, and that such a result would have delayed resolution of the dispute. In addition to the timing issue, he explained that there were arguments that went both ways on whether to file in common pleas court, and he anticipated that Columbia might move to dismiss if he filed a claim in this Court. He said even if this Court granted a motion to dismiss, it was to his client’s benefit because Suburban would have the benefit of certainty about where the claim should be adjudicated. Suburban’s counsel continued that, while the Stipulation had to be approved by the PUCO to be enforceable, there is no support for the concept that the parties can only make agreements via PUCO-approved stipulations. He explained Suburban’s position as being that the right may have arisen by virtue of a PUCO action, but that it is a contract right enforceable by a common pleas court because of the remedy Suburban was seeking. He explained that, while he was aware of previous cases between these parties seeking interpretations of the subject Stipulation, he did not make decisions based on what other lawyers did in other cases with other facts. He added that the earlier cases were withdrawn before the PUCO ruled on them. I. LAW AND ANALYSIS This Court has the discretion under R.C. 2323.51 to grant attorney fees to a party to litigation who is adversely affected by frivolous conduct. State ex rel. Striker v. Cline, 130 Ohio St.3d 214, 2011-Ohio-5350, 957 N.E.2d 19, 11. Under R.C. 2323.51(A)(2)(a), the term “frivolous conduct” includes conduct of a party or counsel in a civil action that constitutes any of the following:(i) It obviously serves merely to harass or maliciously injure another party to the civil action or appeal or is for another improper purpose, including, but not limited to, causing unnecessary delay or a needless increase in the cost of litigation. (ii) It is not warranted under existing law, cannot be supported by a good faith argument for an extension, modification, or reversal of existing law, or cannot be supported by a good faith argument for the establishment of new law. (iii) The conduct consists of allegations or other factual contentions that have no evidentiary support or, if specifically so identified, are not likely to have evidentiary support after a reasonable opportunity for further investigation or discovery. (iv) The conduct consists of denials or factual contentions that are not warranted by the evidence or, if specifically so identified, are not reasonably based on a lack of information or belief. The burden is upon the moving party to establish that the actions of a party or his counsel fall within one of these categories. Pisanick-Miller v. Roulette Pontiac-Cadillac GMC, Inc., 62 Ohio App. 3d 757, 577 N.E.2d 446 (11th Dist.1991). While Columbia does not expressly state which of the four types of conduct Suburban is alleged to have engaged in, the Court interprets Columbia's argument to be that Suburban asserted a claim that is not warranted under existing law, cannot be supported by a good faith argument for an extension, modification, or reversal of existing law, or cannot be supported by a good faith argument for establishment of a new law. The general standard for determining if a legal claim is frivolous is whether an attorney's reasonable inquiry under the existing law would reveal the patent inadequacy of the claim. Ron Scheiderer & Assoc. v. City of London, 81 Ohio St.3d 94, 97-98, 689 N.E.2d 552 (1998). A finding of frivolous conduct is not automatically warranted, however, simply because a claim was unsuccessful. Weaver v. Pillar, 5th Dist. Tuscarawas No. 2012-CA-32, 2013-Ohio-1052, | 21. “R.C. 2323.51 was designed to chill egregious, overzealous, unjustifiable and frivolous actions, not to chill legitimate claims or punish misjudgment or tactical error.” /d.— At the hearing, Suburban’s counsel established that he recognized there were potential obstacles to initiating the case in common pleas court. However, he indicated he weighed the risk of a common pleas court dismissal for lack of jurisdiction against the possibility that the PUCO would find jurisdiction belonged in the common pleas court. He determined that, by filing in common pleas court, Suburban would have a definitive answer to the question of whether a declaratory judgment action seeking interpretation of a contractual clause was subject to the exclusive jurisdiction of the PUCO. In ruling on the Motion to Dismiss, this Court recognized that common pleas courts retain limited subject matter jurisdiction over pure common law tort and certain contract actions involving utilities regulated by the PUCO, further indicating that the test is whether the PUCO’s administrative expertise is required to resolve the dispute and whether the act complained of is a practice normally authorized by the utility. Al/state Ins. Co. v. Cleveland Elec. Illum. Co., 119 Ohio St.3d 301, 2008-Ohio-3917, 893 N.E.2d 824, 12. Following the Allstate test, the Court concluded that the PUCO’s expertise would be necessary to decide the case, since only PUCO could interpret its own order in light of statutes that are exclusively within its purview. The Court also focused on the fact that the acts complained of in Suburban’s complaint involve Columbia’s failure to go through a specific process of interconnection of gas pipelines as provided in an order of the PUCO, thus involving a practice normally undertaken by a utility company. In short, the dismissal entry recognized there are circumstances in which this Court might have subject matter jurisdiction over a case involving a utility regulated by the PUCO, but this case is not one of them. Considering all of the above, the question of subject matter jurisdiction in this case was unresolved until this Court ruled on it. Suburban’s claim was supported by a good faith argument for jurisdiction in this Court and so its counsel did not engage in frivolous conductaed in seeking this ruling. Columbia has not met its burden to demonstrate it is entitled to sanctions for Suburban’s filing its complaint in this Court. Ill. => CONCLUSION For the reasons stated above, Columbia’s motion for sanctions under R.C. 2323.51 and Civ.R. 11 is DENIED. Dated: June 22, 2018 er MS EVERETT H. KRUEGER, JUDGE The Clerk of this Court is hereby Ordered to serve a copy of this Judgment Entry upon the following by wRegular Mail, a Mailbox at the Delaware County Courthouse, a Facsimile Transmission STEPHEN D MARTIN, 50 NORTH SANDUSKY STREET, DELAWARE, OH 43015-1926 MARK AWHITT, KEYBANK BUILDING, 88 EAST BROAD STREET, SUITE 1590, COLUMBUS, OH 43215 ADAM C SMITH, 600 SUPERIOR AVE EASE, SUITE 2100, CLEVELAND, OH 44114 ANTHONY M HEALD, 125 NORTH SANDUSKY STREET, DELAWARE, OH 43015 This document sent to a attomney/party by: ordinai il ah iry mai. ittorney mailbox cortified mail