Court Opinion

ID: 4453295
Source: CourtListenerOpinion
Date Created: 2019-11-06 15:10:42.54401+00
Date Added: 2024-06-11T14:53:29.093312
License: Public Domain

[Cite as Karvo Cos., Inc. v. Dept. of Transp., 2019-Ohio-4556.]

STATE OF OHIO                     )                          IN THE COURT OF APPEALS
                                  )ss:                       NINTH JUDICIAL DISTRICT
COUNTY OF SUMMIT                  )

KARVO COMPANIES, INC.                                        C.A. No.   29294

        Appellee

        v.                                                   APPEAL FROM JUDGMENT
                                                             ENTERED IN THE
OHIO DEPARTMENT OF                                           COURT OF COMMON PLEAS
TRANSPORTATION                                               COUNTY OF SUMMIT, OHIO
                                                             CASE No.   CV-2018-02-0664
        Appellant

                                  DECISION AND JOURNAL ENTRY

Dated: November 6, 2019

        CALLAHAN, Presiding Judge.

        {¶1}     Appellant, Ohio Department of Transportation, appeals from the order of the

Summit County Common Pleas Court denying its motion to dismiss for lack of subject-matter

jurisdiction. For the reasons set forth below, this Court affirms.

                                                       I.

        {¶2}     Karvo Companies, Inc. (“Karvo”) is a paving company located in Summit County

with its primary source of business being highway construction contracts with the Ohio

Department of Transportation (“ODOT”). In 2017, Karvo was in possession of a certificate of

qualification, which permitted it to submit bids to ODOT for construction contracts.

        {¶3}     On September 22, 2017, ODOT issued a letter to Karvo notifying it that its

certificate of qualification was revoked, that Karvo was subject to a proposed debarment, and

that Karvo could request a hearing on these issues. A hearing was held, wherein the hearing

officer concurred with ODOT’s initial decision. Karvo filed objections. On February 5, 2018,
                                                2

the Director of ODOT overruled those objections and ordered that Karvo’s certificate of

qualification be revoked for six months, nine days, and that Karvo be debarred for a period of

time served, with both periods being applied retroactively.

       {¶4}    Karvo filed an administrative appeal of the Director’s Order in both Summit

County and Franklin County.       ODOT moved to dismiss the administrative appeal filed in

Summit County for lack of subject-matter jurisdiction. The Summit County trial court denied

the motion to dismiss and proceeded to reverse and remand the Director’s February 5, 2018

Order on the merits. ODOT timely appeals the denial of the motion to dismiss.

                                                II.

                                  ASSIGNMENT OF ERROR

       THE SUMMIT COUNTY COMMON PLEAS COURT ERRED IN
       CONSTRUING AND INTERPRETING R.C. 119.12 TO FIND IT HAD
       SUBJECT-MATTER JURISDICTION OVER KARVO’S ADMINISTRATIVE
       APPEAL.

       {¶5}    ODOT contends that the trial court incorrectly interpreted the statutory definition

of license and applied the wrong section of R.C. 119.12 to determine that it had subject-matter

jurisdiction over this administrative appeal. This Court disagrees.

       {¶6}    A motion to dismiss an administrative appeal for lack of subject-matter

jurisdiction involves questions of law which this Court reviews de novo.          Apostolic Faith

Assembly, Inc. v. Coventry Twp., 9th Dist. Summit No. 23938, 2008-Ohio-2820, ¶ 3, 5, quoting

Crosby-Edwards v. Ohio Bd. of Embalmers & Funeral Dirs., 175 Ohio App. 3d 213, 2008-Ohio-

762, ¶ 21 (10th Dist.). Similarly, a trial court’s interpretation and application of a statute also

presents questions of law and is reviewed de novo. In re Adoption of K.E.M., 9th Dist. Summit

No. 26307, 2012-Ohio-5652, ¶ 11, quoting State v. Cruise, 185 Ohio App. 3d 230, 2009-Ohio-

6795, ¶ 5 (9th Dist.).
                                                3

       {¶7}    Subject-matter jurisdiction is the statutory or constitutional power of a court to

hear and decide the merits of a particular class of cases. Groveport Madison Loc. Schools Bd. of

Edn. v. Franklin Cty. Bd. of Revision, 137 Ohio St. 3d 266, 2013-Ohio-4627, ¶ 25, citing Pratts v.

Hurley, 102 Ohio St. 3d 81, 2004-Ohio-1980, ¶ 11; Bank of Am., N.A. v. Kuchta, 141 Ohio St. 3d
75, 2014-Ohio-4275, ¶ 19. The Ohio Constitution provides a common pleas court with the

authority to review proceedings of administrative officers and agencies as set forth in the law.

Abt v. Ohio Expositions Comm., 110 Ohio App. 3d 696, 699 (10th Dist.1996), quoting Article IV,

Section 4(B), Ohio Constitution. R.C. 119.12 and other specific statutes grant the common pleas

court jurisdiction to review an administrative agency’s actions. Abt at 699.

Type of Adjudication

       {¶8}    In relevant part, R.C. 119.12 provides where an appeal of an administrative

agency’s action is to be filed:

       (A)(1) Except as provided in division (A)(2) or (3) of this section, any party
       adversely affected by any order of an agency issued pursuant to an adjudication
       denying an applicant admission to an examination, or denying the issuance or
       renewal of a license or registration of a licensee, or revoking or suspending a
       license, or allowing the payment of a forfeiture under section 4301.252 of the
       Revised Code may appeal from the order of the agency to the court of common
       pleas of the county in which the place of business of the licensee is located or the
       county in which the licensee is a resident.

       ***

      (B) Any party adversely affected by any order of an agency issued pursuant to any
      other adjudication may appeal to the court of common pleas of Franklin [C]ounty,
      * * *.

R.C. 119.12(A)(1) and (B).

       {¶9}     “ODOT is a department with licensing authority.” Asphalt Specialist, Inc. v.

Ohio Dept. of Transp., 53 Ohio App. 3d 45, 47 (10th Dist.1988). Only when ODOT performs a

licensing function, such as “issuing, suspending, revoking, or canceling licenses[,]” is ODOT an
                                                4

agency issuing an order pursuant to a license adjudication. See R.C. 119.01(A)(1), (B), (D); R.C.

119.12(A)(1). See also Asphalt Specialist, Inc. at 47.

         {¶10} Both ODOT and Karvo agree that the Director’s Order is an adjudication as

defined by R.C. 119.01(D), but disagree as to the type of adjudication. ODOT contends that the

Director’s Order was of the nature of “any other adjudication” and subject-matter jurisdiction

exists in Franklin County. See R.C. 119.12(B). Karvo argues that the Director’s Order involved

a license adjudication and thus, the county where its business is located, Summit, has subject-

matter jurisdiction. See R.C. 119.12(A)(1).

         License

         {¶11} The first question in determining the nature of the adjudication issued by the

Director of ODOT is whether the certificate of qualification is a license as defined by R.C.

119.01(B). The Administrative Procedure Act defines “‘(l)icense’” as “any license, permit,

certificate, commission, or charter issued by any agency.” R.C. 119.01(B). “The object of a

license is to confer a right that does not exist without a license. It is a permission to do

something which without the license would not be allowed.” Bloomfield v. State, 86 Ohio St.
253, 260 (1912). In the context of an Ohio Revised Code Chapter 119 appeal, the Ohio Supreme

Court defined a “license” as “‘permission granted by some competent authority to do an act

which, without such permission, would be illegal.’” Home S. & L. Assn. v. Boesch, 41 Ohio

St.2d 115, 118 (1975), quoting State v. Hipp, 38 Ohio St. 199 (1882), paragraph two of the

syllabus. “[I]llegal” is generally defined as being “[f]orbidden by law; unlawful.” Black’s Law

Dictionary 763 (8th Ed.2004). See State v. Fischer, 128 Ohio St. 3d 92, 2010-Ohio-6238, ¶ 24,

fn. 1.
                                                 5

        {¶12} The Director’s Order concerns a certificate of qualification. ODOT concedes

that R.C. 119.01(B) includes the word “certificate” in the definition of a license, but argues that a

certificate of qualification is not a license because it does not confer the right “to operate a

business or perform construction work.” ODOT contends that because Karvo is able to bid and

complete non-ODOT projects without a license, the certificate of qualification issued by ODOT

does not give Karvo a right to do a type of work. ODOT also suggests that the certificate of

qualification is not a license because there is no criminal penalty for bidding without a

certificate.

        {¶13} As to ODOT’s first argument, whether Karvo is able to do construction work on

non-ODOT projects is irrelevant to whether ODOT’s certificate of qualification is a license. A

“certificate of qualification shall authorize its holder to bid on all work on which bids are taken

by the department of transportation during the period of time therein specified.” R.C. 5525.03.

“[T]he director of transportation shall not consider any bid filed with the director by any person

who has not been qualified to bid[]” and “[n]o contract shall be awarded to any bidder not

qualified to bid[.]” R.C. 5525.08. Any contracts that are “attempted to be awarded” to a non-

qualified bidder are void. R.C. 5525.02. Based upon the statutes, the certificate of qualification

confers a right and grants permission to do an act that would otherwise not be allowed.

        {¶14} As to ODOT’s second argument, its attempt to equate the Supreme Court’s use of

the word “‘illegal’” when defining license in Boesch with the requirement of a criminal penalty

is misplaced. Boesch, 41 Ohio St. 2d at 118, quoting Hipp, 38 Ohio St. 199 at paragraph two of

the syllabus. ODOT discounts Karvo’s reliance upon Total Office Prods. v. Dept. of Adm.

Servs., 10th Dist. Franklin No. 05AP-955, 2006-Ohio-3313, by latching onto the Tenth District’s

statement that “[w]ithout [an MBE] certification, it would be illegal for a business to participate
                                                 6

in any portion of that percentage of bidding setting aside by R.C. 125.081(A).” Id. at ¶ 19.

ODOT extrapolates that “illegal” requires a criminal penalty because R.C. 125.081(F) provides a

criminal penalty relative to an MBE certificate, whereas there is no criminal penalty relative to

ODOT’s certificate of qualification. ODOT’s position is wholly unsupported by Total Office

Products and R.C. 125.081(F).

       {¶15}    Total Office Products contained no reference to or analysis of the criminal

penalty set forth in R.C. 125.081(F). See id. That criminal penalty only arises when someone

misrepresents his status as an MBE in order to obtain the specially designated contracts. R.C.

125.081(F). R.C. 125.081(F), however, does not create a criminal penalty for participating in the

competitive bidding without an MBE certificate. See id.

       {¶16} R.C. 5525.09 is similar in that it prohibits an applicant for a certificate of

qualification from knowingly making false statements about the applicant’s financial worth and

references a “conviction” based upon such conduct. Id. However, R.C. 5525.09 does not

impose a criminal penalty for bidding without a certificate of qualification. Id. Accordingly,

ODOT’s argument is without merit.

       {¶17} Based upon the foregoing, we conclude that ODOT’s certificate of qualification is

a license within the meaning of R.C. 119.01(B). See generally Asphalt Specialist, Inc., 53 Ohio

App.3d at 47 (analyzing a certificate of qualification as a license); Total Office Prods. at ¶ 19-20

(recognizing an MBE certificate as a license).

       Revocation and Debarment

       {¶18} Having concluded that the certificate of qualification is a license, we must now

examine whether the Director’s Order revoking the certificate of qualification and debarring

Karvo involves a licensing function.
                                                 7

       {¶19} With respect to the revocation, ODOT’s argument focused on the certificate of

qualification not being a license. ODOT then separately argued that debarment only precludes

the contractor from participating in future contracts with ODOT and thus is not a revocation,

suspension, or denial.    ODOT argues that revocation and debarment are two separate and

independent adjudications. However, our review of Ohio Adm.Code 5501:2-3-09 and -10 and

R.C. 5525.03 does not support ODOT’s position as the terms “revocation” and “debarment” are

repeatedly used in conjunction with one another.

       {¶20} For instance, Ohio Adm.Code 5501:2-3-10, is titled “Revocation and debarment”

and sets forth the circumstances that allow the director to “revoke a certificate of qualification

and debar a certificate holder” and the procedures for “a revocation and debarment action,”

including sending “notice for revocation and debarment” to the certificate holder and the hearing

process. Id. Similarly, R.C. 5525.03 provides that when the director has a reasonable belief that

there are “grounds for revocation and debarment” then the director must provide the bidding

company “notice of proposed revocation and debarment” and a hearing upon request.                Id.

Additionally, Ohio Adm.Code 5501:2-3-09(B) prohibits the prequalification board from

reviewing “appeals for revocation of an application for qualification and the debarment of a

contractor or an individual.” Id.

       {¶21} Based upon the plain language cited above, revocation and debarment

contemplates a single proceeding with a single adjudication that exists in tandem. While there

may be a revocation of a certificate without debarment, there cannot be a debarment without a

revocation. See R.C. 5525.03. Nowhere in the rules or statutes is the director granted authority

to issue only an order of debarment. See Ohio Admin.Code 5501:2-3 et seq.; R.C. 5525.01 et

seq. Since revocation of the certificate of qualification is part and parcel to a debarment order, a
                                                  8

revocation and debarment adjudication falls under the licensing function of ODOT.

Accordingly, ODOT’s argument that a debarment adjudication does not involve a licensing

function is not well-taken.

          {¶22} Upon review of the language utilized in the Ohio Administrative Code and Ohio

Revised Code, we conclude that a revocation and debarment order from the Director of ODOT

regarding a certificate of qualification involves a licensing function under ODOT’s licensing

authority and is thereby a licensing adjudication. Accordingly, appeals from the director’s order

for revocation and debarment are to be filed in the common pleas court of the county in which

the aggrieved party is a resident or has its place of business. See R.C. 119.12(A)(1).

          {¶23} Karvo’s business is located in Summit County. Therefore, the trial court did not

err in determining that Summit County has subject-matter jurisdiction over this administrative

appeal.

ODOT’s Alternative Argument

          {¶24} In the event we conclude that this matter involves a license adjudication subject to

the home county rule in R.C. 119.12(A), ODOT alternatively contends that the Director’s Order

is not a final, appealable order and Summit County lacked subject-matter jurisdiction because the

Director’s Order notifying Karvo to file an appeal in Franklin County did not strictly comply

with the procedural requirements of R.C. 119.09. ODOT argues that it did not waive this

argument because subject-matter jurisdiction cannot be waived and it filed a motion to dismiss

challenging Summit County’s jurisdiction. Karvo responds that any “purported ‘defect’” in the

Director’s Order was “forfeited” by ODOT. This Court agrees with Karvo.

          {¶25} Relying upon Hughes v. Ohio Dept. of Commerce, 114 Ohio St. 3d 47, 2007-Ohio-

2877, ODOT asserts that “[f]or an adjudication order to be final and appealable under R.C.
                                                   9

Chapter 119, the issuing agency must strictly comply with R.C. 119.09’s procedural

requirements[]” and “[u]ntil the agency mails an R.C. 119.09-compliant order, a reviewing court

has no appellate jurisdiction.” ODOT’s interpretation of Hughes is faulty.

        {¶26} Hughes held that the 15-day appeal period set forth in R.C. 119.12 does not

commence until the administrative agency strictly complies with the R.C. 119.09 procedural

requirements relative to serving the final adjudication order upon the affected party. Id. at ¶ 19.

Contrary to ODOT’s position, there is no language in Hughes reflecting that the failure to strictly

comply with the R.C. 119.09 procedural requirements necessary to trigger the appeal period

results in the agency’s adjudication order being not final and appealable. Accordingly, ODOT’s

alternative argument that the Director’s Order is not final and appealable because it identified the

wrong method for perfecting the appeal is not well-taken.

        {¶27} Further, Hughes did not state that the common pleas court lacked subject-matter

jurisdiction because the agency’s adjudication order was not R.C. 119.09-compliant. Instead,

Hughes concluded that “[t]he common pleas court lack[ed] jurisdiction over this administrative

appeal because a certified copy of the final order was never served on Hughes.” (Emphasis

added.) Id. at ¶ 18.

        {¶28} In this matter, ODOT fails to appreciate the distinction between subject-matter

jurisdiction and “‘“[t]he third category of jurisdiction [i.e., jurisdiction over the particular case] *

* *.”’” (Alterations sic.) Pratts, 102 Ohio St. 3d 81, 2004-Ohio-1980, at ¶ 12, quoting State v.

Parker, 95 Ohio St. 3d 524, 2002-Ohio-2833, ¶ 22 (Cook, J., dissenting), quoting State v. Swiger,

125 Ohio App. 3d 456, 462 (9th Dist.1998).              The Ohio Supreme Court has consistently

recognized that “‘[t]here is a distinction between a court that lacks subject-matter jurisdiction

over a case and a court that improperly exercises that subject-matter jurisdiction once conferred
                                                 10

upon it.’” Ohio High School Athletic Assn. v. Ruehlman, Slip Opinion No. 2019-Ohio-2845, ¶

11, quoting Pratts at ¶ 10.

       {¶29} As discussed above, “[s]ubject-matter jurisdiction is the power of a court to

entertain and adjudicate a particular class of cases.” Kuchta, 141 Ohio St. 3d 75, 2014-Ohio-

4275, at ¶ 19. A decision by a court without subject-matter jurisdiction is void, and thus subject-

matter jurisdiction can never be waived and may be raised at any time. Pratts at ¶ 11.

       {¶30} On the other hand, “[a] court’s jurisdiction over a particular case refers to the

court’s authority to proceed or rule on a case that is within the court’s subject-matter

jurisdiction.” Kuchta at ¶ 19, citing Pratts at ¶ 12. The improper exercise of jurisdiction over a

particular case renders a judgment voidable. Pratts at ¶ 12, quoting Parker at ¶ 22 (Cook, J.,

dissenting), quoting Swiger at 462. “[T]his Court [has] recognized that ‘alleged errors in the trial

court’s exercise of its jurisdiction may be forfeited if not timely raised[.]’”1 In re T.D., 9th Dist.

Wayne No. 16AP0035, 2018-Ohio-204, ¶ 6, quoting Morris v. Mottern, 9th Dist. Medina No.

14CA0043-M, 2015-Ohio-4523, ¶ 24.

       {¶31} We have already concluded that Summit County has subject-matter jurisdiction

over this administrative appeal. Thus, ODOT’s alternative argument regarding compliance with

the procedural requirements of R.C. 119.09 is a challenge to the exercise of jurisdiction over this

particular case in the Summit County Common Pleas Court. Because we conclude that ODOT’s

alternative argument does not implicate subject-matter jurisdiction or the final and appealable

nature of the adjudication order, ODOT cannot avail itself of the non-waiver rule. Instead,

1
  A waiver occurs where a party affirmatively relinquishes or abandons a right, whereas a
forfeiture occurs where a party fails to preserve an objection before the trial court in a timely
fashion. See e.g. State v. Payne, 114 Ohio St. 3d 502, 2007-Ohio-4642, ¶ 23. Only in the
instance of a forfeiture is plain error available. See e.g. id.
                                                 11

ODOT’s argument regarding the procedural irregularities associated with R.C. 119.09 is subject

to forfeiture if it was not timely raised to the lower court. See Civ. Serv. Personnel Assn., Inc. v.

State of Ohio, State Emp. Relations Bd., 9th Dist. Summit No. 13035, 1987 WL 16983, *2 (Sept.

16, 1987) (refused to consider argument regarding R.C. 119.09 compliance that was raised for

the first time to this Court).     Accordingly, ODOT’s arguments regarding non-waiver are

misplaced.

       {¶32} ODOT filed a motion to dismiss for lack of subject-matter jurisdiction which

challenged the county in which the administrative appeal was filed. ODOT did not assert a

jurisdictional objection based upon its failure to comply with the R.C. 119.09 procedural

requirements.2 Instead, ODOT is asserting for the first time on appeal that the Director’s Order

failed to strictly comply with the procedural requirements of R.C. 119.09. Accordingly, ODOT

failed to preserve this error with the lower court and thus has forfeited all but plain error. See

Rickett v. Ohio Real Estate Appraiser Bd., 10th Dist. Franklin No. 07AP-667, 2008-Ohio-3169, ¶

15-16 (board precluded from raising for the first time to the Tenth District the issue of its

deficiency in the certification process); Strausbaugh v. Ohio Dept. of Commerce, Div. of Real

Estate and Professional Licensing, 10th Dist. Franklin No. 07AP-870, 2008-Ohio-2456, ¶ 8-9

(agency held to have forfeited argument that it failed to comply with R.C. 119.09 procedural

requirements). See also Civ. Serv. Personnel Assn., Inc. at *2. See generally Payne at ¶ 23.

ODOT has failed to present a plain error argument and we decline to construct a plain error

argument on its behalf. See Conti v. Spitzer Auto World Amherst, Inc., 9th Dist. Lorain No.

2
  Contrary to ODOT’s position, its motion to dismiss for lack of subject-matter jurisdiction does
not serve as a blanket objection for other jurisdictional grounds not argued. Instead, ODOT was
required to specifically raise the jurisdictional issue of compliance with R.C. 119.09 to the lower
court.
                                                12

07CA009121, 2008-Ohio-1320, ¶ 8. ODOT’s alternative jurisdictional argument is not well-

taken.

         {¶33} ODOT’s assignment of error is overruled.

                                                III.

         {¶34} The Ohio Department of Transportation’s assignment of error is overruled. The

judgment of the Summit County Common Pleas Court is affirmed.

                                                                              Judgment affirmed.

         There were reasonable grounds for this appeal.

         We order that a special mandate issue out of this Court, directing the Court of Common

Pleas, County of Summit, State of Ohio, to carry this judgment into execution. A certified copy

of this journal entry shall constitute the mandate, pursuant to App.R. 27.

         Immediately upon the filing hereof, this document shall constitute the journal entry of

judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the

period for review shall begin to run. App.R. 22(C). The Clerk of the Court of Appeals is

instructed to mail a notice of entry of this judgment to the parties and to make a notation of the

mailing in the docket, pursuant to App.R. 30.

         Costs taxed to Appellant.

                                                       LYNNE S. CALLAHAN
                                                       FOR THE COURT
                                                   13

CARR, J.
CONCURS.

HENSAL, J.
DISSENTING.

       {¶35} I respectfully dissent because I do not agree with the majority’s conclusion that a

certificate of qualification is a license for purposes of Revised Code Section 119.12(A)(1). I

would hold that it is not and, accordingly, that the trial court erred by denying ODOT’s motion to

dismiss for lack of subject-matter jurisdiction.

APPEARANCES:

DAVE YOST, Attorney General, and WILLIAM J. COLE, L. MARTIN CORDERO, and ERIC
M. HOPKINS, Assistant Attorneys General, for Appellant.

ANDREW J. NATALE, O. JUDSON SCHEAF, III, JEFFREY A. YEAGER, and ELISÉ K.
YARNELL, Attorneys at Law, for Appellee.