Court Opinion

ID: 4185552
Source: CourtListenerOpinion
Date Created: 2017-07-12 17:01:12.937837+00
Date Added: 2024-06-11T14:39:45.739505
License: Public Domain

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                           File Name: 17a0401n.06

                                        Case No. 16-4193

                          UNITED STATES COURT OF APPEALS
                               FOR THE SIXTH CIRCUIT

                                                                                      FILED
                                                                                 Jul 12, 2017
KEITH GOODWIN; KEITH HEATING AND                    )
                                                                            DEBORAH S. HUNT, Clerk
COOLING, INCORPORATED,                              )
                                                    )
       Plaintiffs-Appellants,                       )
                                                    )
v.                                                  )
                                                    )
SUMMIT COUNTY, OHIO; RUSSELL M.                     )
PRY, Executive, County of Summit, Ohio;             )
CHIEF BUILDING OFFICIAL JOHN M.                     )       ON APPEAL FROM THE UNITED
LABRIOLA; SUMMIT COUNTY, OH                         )       STATES DISTRICT COURT FOR
BUILDING STANDARDS DEPARTMENT;                      )       THE NORTHERN DISTRICT OF
CYNTHIA M. SICH, Former Director of                 )       OHIO
Office of Consumer Affairs; WILLIAM                 )
MILLER, Investigator for the Office of              )
Consumer Affairs; SUMMIT COUNTY, OH                 )
OFFICE OF CONSUMER AFFAIRS;                         )
COUNTY PROSECUTOR SHERRI BEVAN                      )
WALSH;     SUMMIT      COUNTY,     OH               )
PROSECUTOR OFFICE,                                  )
                                                    )
       Defendants-Appellees.                        )

       BEFORE: MOORE, GILMAN, and COOK, Circuit Judges.

       COOK, Circuit Judge. Summit County, Ohio, brought a civil enforcement action in

state court against an HVAC company and its owner, prompting them to sue the County and

several of its officials in federal district court. After the state court proceedings concluded, the
Case No. 16-4193, Goodwin, et al. v. Summit County, et al.

County moved to dismiss the federal case, and the company and its owner sought leave to amend

their original complaint. The district court granted the County’s motion to dismiss and denied

leave to amend. The company and its owner appeal. We AFFIRM.

                                        I. Background

       Keith Goodwin is the president of Keith Heating and Cooling, Inc., a heating, ventilation,

and air-conditioning company headquartered in Summit County, Ohio. In October 2012, the

County filed a civil enforcement action against Mr. Goodwin and his company (together,

“Goodwin”) in state court, alleging violations of municipal ordinances concerning building

permits and sales practices. They answered separately in December 2012, and filed a joint

amended answer in March 2013.        All three of the answers included numerous affirmative

defenses, but no counterclaims.

       In January 2014, with the state proceedings pending, Goodwin filed a 42 U.S.C. § 1983

action against the County, three County departments, and five County officials in federal court,

alleging violations of the Due Process Clause, Equal Protection Clause, and Takings Clause, as

well as state law claims for “civil abuse of process” and “vindictive enforcement and vindictive

prosecution.” Goodwin sought an injunction halting the state court proceedings; a declaration

that the County’s pertinent ordinances are unconstitutional; and compensatory and punitive

damages, costs, and fees.

       The County and other defendants moved to dismiss the federal action or, in the

alternative, to stay the case pending resolution of the state court proceedings. They argued that

the County was the only proper defendant—that the departments may not be sued as separate

legal entities because administrative units of local government lack the capacity to be sued, and

that the claims against the County officials similarly amounted to suits against the County

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Case No. 16-4193, Goodwin, et al. v. Summit County, et al.

because Goodwin sued them in their official capacity only. The district court agreed. In

September 2014, it dismissed the County departments and officials, and it stayed the case

pending the conclusion of the state court proceedings.

       Back in state court, Goodwin moved for summary judgment against the County, arguing

that it disregarded its own administrative procedures and selectively enforced its ordinances.

The state court denied the motion, finding that the County complied with its ordinances and that

Goodwin failed to establish selective enforcement. Following the ensuing bench trial, the state

court determined that the County failed to prove its claimed violations by a preponderance of the

evidence and entered judgment for Goodwin.

       Goodwin moved to reopen the federal case in April 2015, which the district court granted

after the state court resolved its pending post-trial motions. The County renewed its motion to

dismiss, arguing that the state court’s final judgment barred all of Goodwin’s claims under the

res judicata doctrine.

       In April 2016, Goodwin moved to amend the complaint. The key feature of the proposed

amended complaint (“PAC”) was a restyled caption that renamed as defendants the same County

officials previously dismissed by the district court—this time, in their individual and official

capacity. The PAC raised the same constitutional and state law claims raised in the original

complaint, plus a new state law claim for “malicious prosecution.” The County objected to the

consideration of the PAC, reasserting its res judicata argument and noting that the new

individual-capacity claims were time-barred and did not relate back to the original complaint.

Following a hearing, the district court denied Goodwin’s motion to amend and granted the

County’s motion to dismiss all of Goodwin’s claims. Goodwin timely appeals.

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Case No. 16-4193, Goodwin, et al. v. Summit County, et al.

                      II. Goodwin’s Claims Against the County Officials

       Goodwin contends that the district court erred twice in considering Goodwin’s claims

against the County officials. First, Goodwin criticizes the district court’s finding that Goodwin

originally sued the County officials in their official capacity only and, therefore, simply restated

its claims against the County. See, e.g., Doe v. Claiborne Cty., 103 F.3d 495, 509 (6th Cir.

1996). Second, Goodwin argues that the district court should have granted it leave to amend its

complaint to name the County officials in their individual capacity.           We find Goodwin’s

arguments unavailing.

           (i) Original Dismissal of the County Officials

       We review de novo the district court’s dismissal of Goodwin’s claims against the County

officials. Moore v. City of Harriman, 272 F.3d 769, 771 (6th Cir. 2001) (en banc). As this court

explained in Moore, “§ 1983 plaintiffs must clearly notify defendants of the potential for

individual liability.” Id. at 773. If “a § 1983 plaintiff fails to affirmatively plead capacity in the

complaint, we then look to the course of proceedings to determine whether” the defendants

received sufficient notice that they might be held individually liable. Id. (emphasis added).

       Goodwin argues that the district court dismissed the County officials without properly

considering Moore. In that case, the complaint’s caption listed the defendants’ names but “did

not specify whether the officers were named in their official or individual capacities.” Id. at 771

(emphasis added). Because the Moore plaintiff failed to plead capacity affirmatively, the court

looked to the “course of proceedings” to determine the defendants’ notice of their potential

individual liability, analyzing “factors [such] as the nature of the plaintiff’s claims, requests for

compensatory or punitive damages, and the nature of any defenses raised in response to the

complaint.” Id. at 772 n.1.

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Case No. 16-4193, Goodwin, et al. v. Summit County, et al.

       Because Goodwin affirmatively pleaded capacity in the original complaint, we need not

look to the course of proceedings to determine whether the County officials had sufficient notice

of their potential for individual liability. The original complaint’s caption could not be clearer—

it specifically included in italics that each County official was sued “In His Official Capacity” or

“In Her Official Capacity.”

       Even if there were any ambiguity notwithstanding the explicit “official capacity”

statements on the original complaint’s caption, Goodwin failed to press it when given the chance.

In Moore, the plaintiff’s “response to the officers’ motion to dismiss clarified any remaining

ambiguity” about capacity by specifying explicitly that the “individuals named are police officers

who are being sued in their individual capacities.” Id. at 774. Here, in their motion to dismiss

the original complaint, the County officials argued for dismissal because they were sued solely

in their official capacity. Goodwin’s opposition to the motion to dismiss, however, voiced no

objection to the County officials’ capacity argument. “Subsequent filings in a case may rectify

deficiencies in the initial pleadings,” id., but that did not happen here. The district court,

therefore, properly dismissed the County officials.

           (ii) Relation Back of the PAC’s Individual-Capacity Claims

       Goodwin next argues that the PAC’s individual-capacity claims survive an untimeliness

challenge because they relate back to the original complaint. We disagree.

       We review de novo a district court’s conclusion that an amended complaint cannot relate

back to the original complaint. United States ex rel. Bledsoe v. Cmty. Health Sys., Inc., 501 F.3d

493, 516 (6th Cir. 2007) (citing Miller v. Am. Heavy Lift Shipping, 231 F.3d 242, 247 (6th Cir.

2000)). Because the two-year statute of limitations on Goodwin’s § 1983 claims had already

expired when Goodwin sought leave to amend, the PAC is untimely unless it relates back to the

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Case No. 16-4193, Goodwin, et al. v. Summit County, et al.

date of the original complaint. See Shaw v. Pfeiffer, 295 F. App’x 735, 735 (6th Cir. 2008).

Under Federal Rule of Civil Procedure 15(c)(1)(C), a change of “party or the naming of [a] party

against whom a claim is asserted” relates back to the original complaint if the claim arose out of

the same conduct, transaction, or occurrence set out in the original complaint, and if, within the

Rule 4(m) period for serving the summons and complaint, “the party to be brought in by

amendment: (i) received such notice of the action that it will not be prejudiced in defending on

the merits; and (ii) knew or should have known that the action would have been brought against

it, but for a mistake concerning the proper party’s identity.” See also, e.g., Moore, 272 F.3d at

774 (explaining that we look to Rule 15(c)(3)—now, as amended, Rule 15(c)(1)(C)—when a

§ 1983 plaintiff seeks to alter capacity). There is no dispute that the claims in the PAC arise out

of the same conduct, transaction, or occurrence set out in the original complaint. What we must

decide is whether the original complaint presented the individual defendants with information

notifying them that Goodwin might pursue claims that could result in their personal liability.

       Put simply, the County officials received no notice from Goodwin’s original complaint of

their potential individual liability. Its caption specified five times that Goodwin sought recovery

from the County officials in their official capacity. See Shaw, 295 F. App’x at 735 (“The

amendment did not relate back because the original complaint expressly named the defendants in

their official capacities only, and therefore did not place them on notice of possible individual

liability.”). And although Goodwin highlights one use of the term “individual capacities” in that

original complaint, that single reference buried in a page-long paragraph was, in our view,

insufficient to provide notice. The only other action Goodwin took to place the individual

defendants on notice was inaction: it left unanswered the official-capacity arguments raised in

the County officials’ motion to dismiss.

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Case No. 16-4193, Goodwin, et al. v. Summit County, et al.

       Nor did other factual circumstances offer the County officials reason to suspect potential

individual liability. Rule 15(c)(1)(C)(ii) “asks what the prospective defendant knew or should

have known during the Rule 4(m) period, not what the plaintiff knew or should have known at

the time of filing her original complaint.” Krupski v. Costa Crociere S. p. A., 560 U.S. 538, 548

(2010). Given the original complaint’s caption and Goodwin’s failure to contest the County

officials’ argument that the claims were strictly official-capacity claims, it is unreasonable to

expect that the County officials knew, or should have known, that Goodwin intended to hold

them individually liable. See id. at 554 (“To the extent the plaintiff’s postfiling conduct informs

the prospective defendant’s understanding of whether the plaintiff initially made a mistake

concerning the proper party’s identity, a court may consider the conduct.” (internal quotation

marks omitted)); Lovelace v. O’Hara, 985 F.2d 847, 850–51 (6th Cir. 1993) (holding that the

amended complaint did not relate back to the original complaint because the latter “contain[ed]

an unequivocal statement that” the defendant acted within his official capacity, thereby giving

the defendant “no reason to believe that he was being sued in his personal capacity or that, but

for a mistake concerning identity, the suit would have been against him personally”). The

circumstances here foreclosed application of the relation-back doctrine.

                       III. Goodwin’s Claims Against Summit County

       In granting the County’s motion to dismiss (and denying Goodwin leave to amend), the

district court explained the “multiple reasons” for dismissing each cause of action, focusing on

res judicata as the primary basis for dismissing the constitutional, malicious-prosecution, and

vindictive-prosecution claims.    In its appeal, Goodwin addresses only the dismissal of its

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Case No. 16-4193, Goodwin, et al. v. Summit County, et al.

constitutional claims, arguing that the district court incorrectly applied res judicata.1 The County

disagrees, explaining that Goodwin should have litigated those claims as part of the state court

proceedings. We agree with the County and uphold the district court’s well-reasoned analysis.

       “We review de novo a district court’s application of the doctrine of res judicata.” Bragg

v. Flint Bd. of Educ., 570 F.3d 775, 776 (6th Cir. 2009) (citing Black v. Ryder/P.I.E. Nationwide,

Inc., 15 F.3d 573, 582 (6th Cir. 1994)). We also review de novo a district court’s denial of a

motion for leave to amend a complaint if, as occurred here, “the district court bases its decision

to deny leave to amend on a legal conclusion that amendment would be futile” because it could

not survive a motion to dismiss. Yuhasz v. Brush Wellman, Inc., 341 F.3d 559, 569 (6th Cir.

2003) (citing Inge v. Rock Fin. Corp., 281 F.3d 613, 625 (6th Cir. 2002)). We therefore look to

the allegations in the PAC, rather than the original complaint, to determine whether the district

court properly applied res judicata.

       Because the state court proceedings occurred in Ohio, Ohio law governs the preclusive

effect of the state court judgment. Hapgood v. City of Warren, 127 F.3d 490, 493 (6th Cir. 1997)

(citing Migra v. Warren City Sch. Dist. Bd. of Educ., 465 U.S. 75, 81 (1984)). “Under Ohio law,

the doctrine of res judicata consists of the two related concepts of claim preclusion, also known

as res judicata or estoppel by judgment, and issue preclusion, also known as collateral estoppel.”

Ohio ex rel. Boggs v. City of Cleveland, 655 F.3d 516, 519 (6th Cir. 2011) (internal quotation

marks and citations omitted).     These parties use the term “res judicata” to refer to claim

preclusion only.

       1
          The PAC alleges state law claims for civil abuse of process, vindictive enforcement and
prosecution, and malicious prosecution. Because Goodwin does not address their dismissal by
the district court, we consider those issues abandoned on appeal. Hih v. Lynch, 812 F.3d 551,
556 (6th Cir. 2016) (“An appellant abandons issues not raised and argued in his initial brief on
appeal.”).

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Case No. 16-4193, Goodwin, et al. v. Summit County, et al.

       Before addressing the proper application of that doctrine, we consider Goodwin’s

argument that the district court failed to follow the Restatement (Second) of Judgments in

applying res judicata. Goodwin cites language from Grava v. Parkman Township, 653 N.E.2d

226 (Ohio 1995), suggesting that the Ohio Supreme Court “expressly adopted” the entirety of the

Restatement (Second) of Judgments in defining Ohio’s res judicata principles. Goodwin then

identifies § 22 in arguing that the failure to bring counterclaims in a first action (here, the state

action) presents no bar to bringing its constitutional claims in federal court. But Goodwin

misreads Grava. There, the court adopted only Restatement (Second) of Judgments §§ 24 and

25—not § 22—and neither § 24 nor § 25 help Goodwin here. Grava, 653 N.E.2d at 229. And,

in any event, because Goodwin’s claims are compulsory counterclaims, see infra, § 22 does not

save them. Restatement (Second) of Judgments § 22 (explaining that a defendant who fails to

bring a counterclaim is precluded from maintaining an action on the claim if the counterclaim

was compulsory).

       As the district court correctly noted, a claim is precluded under Ohio law if each of the

following four elements are present:

       (1) a prior final, valid decision on the merits by a court of competent jurisdiction;
       (2) a second action involving the same parties, or their privies, as the first; (3) a
       second action raising claims that were or could have been litigated in the first
       action; and (4) a second action arising out of the transaction or occurrence that
       was the subject matter of the previous action.

United States ex rel. Sheldon v. Kettering Health Network, 816 F.3d 399, 415 (6th Cir. 2016)

(quoting Hapgood, 127 F.3d at 493); see also Grava, 653 N.E.2d at 229 (“[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.”).

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Case No. 16-4193, Goodwin, et al. v. Summit County, et al.

       This suit easily satisfies the first two elements. The County’s state court action against

Goodwin concluded after a bench trial on the merits, and both the federal and state court actions

involve the same parties. Although Goodwin argues what it views as a material distinction—that

it was a defendant in the state proceedings but a plaintiff in the federal case—this offers no

refuge. See Lisboa v. City of Cleveland Heights, 576 F. App’x 474, 474–75 (6th Cir. 2014);

Rettig Enters., Inc. v. Koehler, 626 N.E.2d 99, 102 (Ohio 1994) (“[Ohio Rule of Civil Procedure]

13(A) requires all existing claims between opposing parties that arise out of the same transaction

or occurrence to be litigated in a single lawsuit, regardless of which party initiates the lawsuit.”).

       The bulk of the dispute lies in the third and fourth elements.

           (i) Claims That Could Have Been Litigated in the First Action

       Turning to the third element of Ohio’s claim preclusion test, Goodwin argues that,

because it allegedly discovered new evidence after its answer was due in the state court action, it

could not have raised the constitutional claims there. The newly discovered evidence, Goodwin

admits, came to its attention by October 2014—nearly six months before the state court’s entry

of final judgment. Goodwin therefore could have sought leave to amend its pleadings in state

court, but it failed to do so. See Ohio R. Civ. P. 15(A) (“The court shall freely give leave [to

amend] when justice so requires.”).

       The fact is, Goodwin’s constitutional claims stem from acts and omissions that primarily

occurred before the state court proceedings began in October 2012. For example, the PAC

alleges due process and equal protection violations because the County did not provide a

“prompt, effective name-clearing hearing” before it initiated the state court case. In support of

those claims, the PAC identifies three Akron Beacon Journal news articles published at least

seven months before the state proceedings commenced that reported that Goodwin “engaged in

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Case No. 16-4193, Goodwin, et al. v. Summit County, et al.

unconscionable consumer sales practices and unfair and deceptive consumer sales practices,” as

supposedly relayed by County employees. Likewise, the PAC alleges a takings claim based, in

part, on these pre-October 2012 articles, and it also alleges a due process violation stemming

from facially unconstitutional County ordinances—a claim that is not tied to any particular date.

         At bottom, the PAC’s allegations show that Goodwin became aware of its constitutional

claims before filing the amended answer in March 2013. See Dubuc v. Green Oak Twp.,

312 F.3d 736, 749–50 (6th Cir. 2002) (explaining that additional supporting facts coming to light

does not obviate application of res judicata). Plus, in that amended answer (and even in the

separate answers Mr. Goodwin and his company filed initially), Goodwin raised as affirmative

defenses many of the same allegations raised in the PAC (i.e., “selective enforcement” and

“statutes [that] are, in whole or in part, unconstitutional”). Goodwin could have raised these

affirmative defenses as counterclaims during the state court proceedings—but, once again, it did

not. See, e.g., Rondigo, L.L.C. v. Twp. of Richmond, Mich., 522 F. App’x 283, 286 (6th Cir.

2013).

            (ii) The Same Transaction or Occurrence as the First Action

         Finally, the fourth prong of Ohio’s claim preclusion test is satisfied because Goodwin’s

constitutional claims arise out of the same transaction or occurrence as the subject matter of the

state proceedings. “[S]atisfaction of this element under Ohio law does not require that both cases

involve identical causes of action, proof of identical elements, or even the presentation of exactly

the same evidence.” Sheldon, 816 F.3d at 418. Rather, two sets of claims arise out of the same

transaction or occurrence if they share “a common nucleus of operative facts, or if, in the

language of everyday people, they are logically related.” Lisboa, 576 F. App’x at 476 (internal

quotation marks and citations omitted).        Under the logical-relation test, a “compulsory

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Case No. 16-4193, Goodwin, et al. v. Summit County, et al.

counterclaim is one which is logically related to the opposing party’s claim where separate trials

on each of their respective claims would involve a substantial duplication of effort and time by

the parties and the courts.” Rettig Enters., Inc., 626 N.E.2d at 103 (quotation marks and citation

omitted); see also Ohio R. Civ. P. 13(A) (“A pleading shall state as a counterclaim any claim

which at the time of serving the pleading the pleader has against any opposing party, if it arises

out of the transaction or occurrence that is the subject matter of the opposing party’s claim

. . . .”). Counterclaims are compulsory if they “involve many of the same factual issues, or the

same factual and legal issues, or where they are offshoots of the same basic controversy between

the parties.” Rettig Enters., Inc., 626 N.E.2d at 103 (quotation marks and citation omitted); see

also, e.g., Lisboa, 576 F. App’x at 475–76 (holding that nightclub owners’ constitutional claims

against the city were precluded because they could have pursued them as counterclaims in the

prior state court action brought by the city to enforce its noise ordinances).

       Goodwin’s federal court claims are logically related to the County’s state court claims;

all are offshoots of the controversy prompted by the state court proceedings. Before seeking

relief in state court, the County gathered and investigated permit records and consumer

complaints related to Mr. Goodwin and his company. Believing then that Goodwin violated

County consumer protection and building ordinances, the County initiated the state court

proceedings.    Goodwin’s constitutional claims arise out of the County’s investigation and

enforcement of its ordinances. The PAC alleges that the County violated the Due Process and

Equal Protection Clauses when it investigated the consumer complaints and referred the matter

to the county prosecutor without providing Goodwin notice of the complaints or any opportunity

to respond. The PAC further alleges that the County violated the Due Process and Equal

Protection Clauses because it did not provide Goodwin with a “prompt, effective name-clearing

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Case No. 16-4193, Goodwin, et al. v. Summit County, et al.

hearing” during the time the Akron Beacon Journal was publishing its articles about the

County’s investigation. The takings claim too emanates from the same allegations supporting

the due process and equal protection claims.

       Relying on Bauman v. Bank of America, N.A., 808 F.3d 1097 (6th Cir. 2015), Goodwin

argues it need not assert the constitutional claims in the state court action because they were not

compulsory counterclaims. Bauman addressed whether the servicer of a loan must bring a debt-

collection action as a counterclaim to a Fair Debt Collection Practices Act lawsuit, id. at 1099,

and labeled the counterclaim not compulsory, in part for policy reasons and in part due to

significant differences in the two actions’ facts, id. at 1102. By contrast, the PAC’s factual

allegations are thoroughly intertwined with the core facts that were at issue in the state

proceedings, and we discern no policy reasons compelling a different result.

       Goodwin also seeks support from Leatherworks Partnership v. Berk Realty, 247 F. App’x

676, 680–81 (6th Cir. 2007), where the court declined to apply res judicata principles to the bulk

of the plaintiff’s claims because they were based on events that occurred after entry of judgment

in the first action. Goodwin’s constitutional claims arose well before entry of final judgment in

the state court action, and Goodwin’s allegedly-discovered new evidence to support its claims

does not change the fact that the federal court and state court actions “involve many of the same

factual issues.” Rettig Enters., Inc., 626 N.E.2d at 103. Goodwin’s constitutional claims are

barred by res judicata, warranting dismissal.

                                         IV. Conclusion

       For these reasons, we AFFIRM.

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Case No. 16-4193, Goodwin, et al. v. Summit County, et al.

       KAREN NELSON MOORE, Circuit Judge, concurring in the judgment. I would

affirm simply on the grounds of Ohio principles of res judicata, and therefore I concur in the

judgment.

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