Court Opinion

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Date Created: 2015-09-22 16:47:13.080484+00
Date Added: 2024-06-11T09:33:44.484409
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                       UNITED STATES COURT OF APPEALS
                                        FOR THE SIXTH CIRCUIT
                                          _________________

                                                     X
                             Plaintiffs-Appellants, -
 BRIAN MIDKIFF; MONICA MIDKIFF,
                                                      -
                                                      -
                                                      -
                                                          No. 04-3508
          v.
                                                      ,
                                                       >
 ADAMS COUNTY REGIONAL WATER DISTRICT, et al., -
                            Defendants-Appellees. -
                                                     N
                      Appeal from the United States District Court
                     for the Southern District of Ohio at Cincinnati.
                     No. 02-00901—Susan J. Dlott, District Judge.
                                           Argued: April 19, 2005
                                    Decided and Filed: May 24, 2005
    Before: SUHRHEINRICH and GILMAN, Circuit Judges; ACKERMAN, District Judge.*
                                            _________________
                                                  COUNSEL
ARGUED: Kimberly M. Skaggs, EQUAL JUSTICE FOUNDATION, Columbus, Ohio, for
Appellants. John W. Hust, SCHROEDER, MAUNDRELL, BARBIERE & POWERS, Cincinnati,
Ohio, for Appellees. ON BRIEF: Kimberly M. Skaggs, EQUAL JUSTICE FOUNDATION,
Columbus, Ohio, Edward A. Icove, SMITH & CONDENI, Cleveland, Ohio, for Appellants. John
W. Hust, SCHROEDER, MAUNDRELL, BARBIERE & POWERS, Cincinnati, Ohio, for
Appellees.
                                            _________________
                                                OPINION
                                            _________________
       HAROLD A. ACKERMAN, District Judge. Plaintiffs Brian and Monica Midkiff
(“Midkiffs”) appeal from the District Court order that granted the motions to dismiss of Defendants
Adams County Regional Water District (“Water District”) and the Water District’s manager, Brian
Ast. The District Court also denied the Midkiffs’ motion for leave to file a Second Amended
Complaint. Following a dispute between the Midkiffs and their landlords, the Water District
terminated water service to the Midkiffs’ property pursuant to the request of the Midkiffs’ landlords.
The landlords were the customers of the Water District and held the account for water service to the
property. Plaintiffs filed a purported class action under 42 U.S.C. § 1983, attacking the Water

        *
          The Honorable Harold A. Ackerman, United States District Judge for the District of New Jersey, sitting by
designation.

                                                        1
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                      Water District, et al.

District’s policy that tenants and other non-property owners cannot establish water service accounts
in their own names because they are not property owners. The Midkiffs claimed that the
Defendants’ policy violated the Due Process and Equal Protection Clauses of the Fourteenth
Amendment. We hold that the Plaintiffs have not established a due process or equal protection
violation because they have not shown a legitimate claim of entitlement to water service and because
Defendants’ conduct does not shock the conscience. This Court also concludes that the Magistrate
Judge in this case did not err in denying the Midkiffs’ motion for leave to file a Second Amended
Complaint. We AFFIRM the judgments below in their entirety.
                                           I. Background
       Because this matter is before the Court on an appeal from a grant of a motion to dismiss, the
following facts are derived from the Midkiffs’ First Amended Complaint and construed in the light
most favorable to the Midkiffs.
         The Midkiffs leased a home at 2197 Bailey Road in Peebles (Adams County), Ohio from
their landlords, Defendants William and Phyllis Albrecht (“Albrechts”). The Midkiffs have four
young children, and at the time of the events that gave rise to this suit, Monica Midkiff was pregnant
and experiencing complications due to diabetes. The Water District is the exclusive supplier of
water services to residents of Adams County, and provided water service to the Midkiffs’ home
through an account maintained by the Albrechts, the owners of the property. The Water District
billed the Albrechts each month, and under the terms of the Midkiffs’ lease, the Albrechts presented
the water bill to the Midkiffs each month for payment. Following a dispute between the Midkiffs
and the Albrechts over the repair of a hot water heater, the Midkiffs allegedly failed to make a timely
rent payment in November 2002. Instead of initiating collection or eviction proceedings, the
Midkiffs allege that on November 26, 2002, the Albrechts requested that the Water District
terminate water services to the leased premises and close the account held by the Albrechts for that
address. The Water District immediately obliged, and terminated water services to the Midkiffs’
home without giving any notice to the Midkiffs.
        On November 26 and again on November 27, 2002, the Midkiffs contacted the Water District
and requested that they be allowed to establish an account in their own names and have water service
resumed. Representatives of the Water District informed the Midkiffs on both occasions that they
could open their own account only if they “produced a deed” to the premises or other proof of
ownership. First Am. Compl. ¶ 14. The representatives stated that Water District policy dictated
that only property owners, not lessees or tenants, could establish an account. On November 27, the
office manager of the Water District contacted the Midkiffs’ counsel and left a message stating that
she could do nothing about the Midkiffs’ situation because she was “following company rules.”
First Am. Compl. ¶ 15.
       The Water District allegedly restored service to the premises on December 2, 2002.
However, William Albrecht then allegedly trespassed onto the premises without the Midkiffs’
knowledge or consent and shut off the water supply. The Midkiffs allegedly lacked water service
until December 17, 2002, when they vacated the premises.
        The Midkiffs filed this purported class action suit against the Water District and its manager
Ast on November 29, 2002, just three days after the initial service termination. The purported class
consists of all tenant/lessee consumers who cannot establish water service accounts in their own
name because such consumers are not owners of the property for which water service is sought. The
Midkiffs brought claims under 42 U.S.C. § 1983 for violation of the Due Process and Equal
Protection Clauses of the Fourteenth Amendment, and sought declaratory and injunctive relief
against the Water District and Ast, as well as compensatory and punitive damages. The Midkiffs
No. 04-3508           Midkiff, et al. v. Adams County Regional                                Page 3
                      Water District, et al.

later amended their complaint to add a claim against the Albrechts under the Ohio Landlord-Tenant
Act (“LTA”), Ohio Rev. Code Ann. §§ 5321.01-5321.19.
        All Defendants filed motions to dismiss the complaint in January 2003. In conjunction with
their opposition, the Midkiffs moved for leave to file a Second Amended Complaint to add a claim
under the federal Equal Credit Opportunity Act (“ECOA”), 15 U.S.C. §§ 1691a-1691f , and to add
an allegation that the Water District acted as the agent of the Albrechts under the LTA. Without
objection, the District Court on February 12, 2003, stayed class certification proceedings pending
resolution of the motions to dismiss.
        On September 2, 2003, Magistrate Judge Timothy S. Hogan rendered a Report and
Recommendation (“R&R”) proposing that Defendants’ motions to dismiss be granted. With regard
to the due process claim, Magistrate Judge Hogan concluded that the Midkiffs had no property right
to continued water service and therefore no procedural due process violation existed. He also found
that the Water District did not violate substantive due process because the service termination did
not shock the conscience. The R&R rejected the equal protection claim because, under rational
basis scrutiny, the Water District’s policy was rationally related to legitimate government interests.
Because no constitutional violation existed, the R&R suggested that Ast be granted qualified
immunity and dismissed. The Magistrate Judge denied the Midkiffs’ motion to amend their
complaint, holding that such amendment would be futile because they could not state valid ECOA
claims and because, due to the recommended dismissal of all the federal claims, the agency
allegations could be better presented in a state-court complaint. Finally, the Magistrate Judge
suggested that the District Court decline to exercise jurisdiction over the Midkiffs’ pendant state
landlord-tenant claim because no viable federal cause of action remained in the case.
        The District Court adopted the Magistrate Judge’s R&R without elaboration and dismissed
the complaint against all Defendants on March 25, 2004. The Midkiffs timely appealed. The
District Court had subject matter jurisdiction over this matter pursuant to 28 U.S.C. §§ 1331,
1343(a)(4), and 2201, and had supplemental subject matter jurisdiction over Plaintiffs’ pendant
state-law claims pursuant to 28 U.S.C. § 1367. We have jurisdiction over the present appeal
pursuant to 28 U.S.C. § 1291.
                                            II. Analysis
A.     Due Process Claims
        This court reviews de novo a district court’s dismissal of a complaint under Federal Rule of
Civil Procedure 12(b)(6) for failure to state a claim. Fidel v. Farley, 392 F.3d 220, 226 (6th Cir.
2004). Dismissal of a claim is improper “unless it appears beyond doubt that the plaintiff can prove
no set of facts in support of his claim which would entitle him to relief.” Conley v. Gibson, 355 U.S.
41, 45-46 (1957). The court must accept the facts set forth in the complaint as true and construe the
complaint in the light most favorable to the plaintiff. Eubanks v. CBSK Fin. Group, Inc., 385 F.3d
894, 897 (6th Cir. 2004).
       1.      Procedural Due Process
         The Midkiffs claim that the Water District’s termination of water service constituted
deprivation of property without due process in violation of the Due Process Clause of the Fourteenth
Amendment. “This Court has analyzed section 1983 actions based on deprivations of due process
as falling into two categories: violations of procedural due process and violations of substantive due
process.” Mansfield Apartment Owners Ass’n v. City of Mansfield, 988 F.2d 1469, 1473-74 (6th Cir.
1993). For a procedural due process claim, a plaintiff must establish a constitutionally protected
No. 04-3508           Midkiff, et al. v. Adams County Regional                                  Page 4
                      Water District, et al.

liberty or property interest and show that such an interest was deprived without appropriate process.
Board of Regents v. Roth, 408 U.S. 564, 569-70 (1972); LRL Props. v. Portage Metro Hous. Auth.,
55 F.3d 1097, 1108 (6th Cir. 1995). This Court applies a two-part analysis to procedural due process
claims. “First, the court must determine whether the interest at stake is a protected liberty or
property right under the Fourteenth Amendment. Only after identifying such a right do we continue
to consider whether the deprivation of that interest contravened notions of due process.” Thomas
v. Cohen, 304 F.3d 563, 576 (6th Cir. 2002).
        To establish a protected property interest in a government service, a plaintiff must show a
“legitimate claim of entitlement” to that service; an “abstract need or desire” or a “unilateral
expectation” is insufficient. Roth, 408 U.S. at 577. As the Supreme Court stated in Roth, a
legitimate claim of entitlement must stem from some independent source of law:
               Property interests, of course, are not created by the Constitution.
               Rather they are created and their dimensions are defined by existing
               rules or understandings that stem from an independent source such as
               state law – rules or understandings that secure certain benefits and
               that support claims of entitlement to those benefits.
Id.
         The Midkiffs argue that they have a constitutionally protected property interest in continued
water service that was abridged by the Water District without adequate process because they
received no notice before termination and were denied in their personal efforts to restore service.
Where a valid independent source of law establishing a property right may be found, the Supreme
Court and the Sixth Circuit have indeed held that the Due Process Clause applies to termination of
utility services. See, e.g., Memphis Light, Gas & Water Div. v. Craft, 436 U.S. 1, 11 (1978) (holding
that Due Process Clause applied to termination of utility services because Tennessee law prohibited
public utility from terminating utility service at will); Mansfield, 988 F.2d at 1474 (declaring that
expectation of utility services by landlords rises to level of “legitimate claim of entitlement” in case
involving city-provided water services governed extensively by city ordinances and regulations);
cf. Palmer v. Columbia Gas of Ohio, Inc., 479 F.2d 153, 165 (6th Cir. 1973) (finding that Due
Process Clause applied to termination of gas service because gas companies in Ohio are subject to
comprehensive system of state regulatory authority).
        However, a panel of this Court recently declined to find a property interest in continued
water service and rejected several of the arguments advanced by the Midkiffs. In Golden v. City of
Columbus, 404 F.3d 950, 2005 WL 873321 (6th Cir. Apr. 18, 2005), the plaintiff was a tenant and
was therefore precluded from being a water service customer. The plaintiff in Golden, as the
Midkiffs do here, relied on Craft and Mansfield in attempting to establish a protected property
interest in continued water service. This Court in Golden distinguished Craft because Craft is
“plainly limited to utility customers.” Id. at *4. In addition, Craft expressly relied on Tennessee
law that prohibited a public utility from terminating utility service at will and provided specific
remedies for unlawful termination. Craft, 436 U.S. at 11. As this Court noted in Golden, Roth
requires that “the decision is completely determined by state law,” and therefore Craft is limited to
Tennessee law. Golden, 2005 WL 873321, at *4. The panel in Golden also rejected reliance on
Mansfield because plaintiffs in Mansfield were “property owners who had accounts with the City
of Mansfield’s utility department.” Id. at *5. Therefore, this Court’s reliance on Craft in its
Mansfield decision was proper because both cases involved established utility customers, whereas
in Golden the plaintiff had no contractual or customer relationship with the City of Columbus’s
Department of Public Utilities. Id. Furthermore, plaintiffs in Mansfield were landlords, and thus
their legitimate claim of entitlement to water service under the City of Mansfield’s municipal law
No. 04-3508               Midkiff, et al. v. Adams County Regional                                            Page 5
                          Water District, et al.

has no bearing on the legitimacy of a non-property owners’ entitlement to water services under
different relevant law here. The Midkiffs, as tenants and not property owners, were not customers
of the Water District and therefore Craft and Mansfield fail to support their claim.
       Craft and Mansfield also provide no help for the Midkiffs because of the particular status of
the Water District under Ohio law. The utility providers in Craft and Mansfield were public utilities.
Under Ohio state law, particularly Chapter 6119 of the Ohio Revised Code, regional water districts
such as the Adams County Regional Water District here are not public utilities, but are instead
independent political subdivisions exempt from Ohio Public Utility      Commission regulations and
with independent authority to adopt their own rules and practices.1 No provision in Chapter 6119
requires a water district to provide service to any particular individual or group. Thus, whereas in
cases such as Craft and Mansfield, independent sources of law expressly provided support for
finding a property right in continued water service, here no such explicit support exists.
        Faced with this obstacle, the Midkiffs essentially infer an entitlement from several asserted
independent sources of law, including the LTA, the Water District’s own rules and regulations, and
Ohio contract law regarding third-party beneficiaries. The Magistrate Judge correctly rejected each
of these bases in his R&R, and the District Court properly adopted the Magistrate Judge’s R&R.
        The Midkiffs first argue that two provisions of the LTA provide a basis for finding a property
right in continued water service. Ohio Rev. Code Ann. § 5321.04(A)(6) requires landlords to
“supply running water” and “reasonable amounts of hot water” to tenants, “except where the
building that includes the dwelling unit is not required by law to be equipped for that purpose.”
Ohio Rev. Code Ann. § 5321.15(A) provides that a landlord shall not “initiate any act, including
termination of utilities or services, . . . for the purpose of recovering possession of residential
premises, other than as provided in Chapters 1923., 5303., and 5321. of the Revised Code.” This
provision bars landlords from engaging in self-help actions and requires them to seek redress
through formal eviction proceedings. Based on these two sections of the LTA, the Midkiffs argue
that Ohio law provides a basis for finding a property right to continued water service.
        While these provisions could provide the Midkiffs with an action against their landlords, the
Albrechts, they simply cannot be inflated to provide a right to continued water service. In Golden,
this Court noted that “other circuits have held certain provisions common to landlord-tenant statutes
to be sufficient” to establish a legitimate claim of entitlement to water service. Golden, 2005 WL
873321, at *5. The Golden panel expressed no opinion on this issue because plaintiff in Golden did
not rely on any provisions of landlord-tenant law. Id. at *6. We must address this issue, and we
conclude that the cases from our sister circuits fail to assist the Midkiffs here in transforming their
rights under the LTA into a constitutional claim against the Water District.
        As this Court noted in Golden, the Eleventh Circuit has held that Florida’s Landlord and
Tenant Act provided a protectable interest in continued water service to tenants because Florida
landlord-tenant law “would not sanction the withdrawal of water services from . . . tenants by their
landlords because such action would constitute the failure to provide necessary facilities for
sustaining life or the constructive eviction of tenants contrary to statutory directives for such action.”

         1
           Chapter 6119 governs regional water districts and grants them unbridled discretion to set their own policies
and procedures. Regional and county water districts may adopt their own rules and regulations, levy and collect taxes
and special assessments, and set their own rates and terms of service. Ohio Rev. Code Ann. § 6119.06. Furthermore,
a regional water district’s charges and terms may not be reviewed by any agency of the state or another political
subdivision such as Ohio’s Public Utility Commission. Ohio Rev. Code Ann. § 6119.09; see also Ohio Rev. Code Ann.
§ 6119.08(A) & (C) (authorizing board of trustees of regional water district to prescribe the manner of use and
distribution of water services).
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                           Water District, et al.

DiMassimo v. City of Clearwater, 805 F.2d 1536, 1539-40 (11th Cir. 1986); cf. James v. City of St.
Petersburg, 33 F.3d 1304, 1306-07 (11th Cir. 1994) (en banc) (citing Florida landlord-tenant and
utility service law as possible bases for property interest, but holding that because neither landlord
or tenant complied with City’s requirements for initiating water service, plaintiff-tenant had no
legitimate claim of entitlement to water service under Florida law). The Ninth Circuit relied on
DiMassimo to find a protected interest under Oregon law in tenants’ right to seek injunctive relief
prior to the termination of water service. Turpen v. City of Corvallis, 26 F.3d 978, 979 (9th Cir.
1994).
        We decline to apply these cases from other circuits to the instant matter. DiMassimo
concerned Florida law and Turpen considered      Oregon law, whereas here we must look solely to
Ohio law to find a property interest.2 Notably, the Ninth Circuit in Turpen expressly declined to
find a property right in continued water service, as the Midkiffs claim here, but rather held that
notice to tenants of water service termination was required so that the tenant may preserve her
property interest in bringing a claim for injunctive relief against her landlord. Turpen, 26 F.3d at
978-79. Furthermore, both DiMassimo and Turpen involved suits against municipal utilities,
whereas here the Water District enjoys protected status under Ohio law as an independent political
subdivision. Because DiMassimo and Turpen applied inapplicable law under different factual
circumstances than the instant case, these cases and the theories they espouse fail to assist the
Midkiffs in establishing a protected property interest right in continued water service.
        The Midkiffs also cite Thomas as support for using landlord-tenant law as a basis for finding
tenants’ property rights. Thomas involved forcible eviction by police officers in Tennessee without
any hearing, judicial approval, or notice to the tenants. Thomas, 304 F.3d at 576-77. Forcible
eviction at the hands of the state, implicating a basic possessory interest in property against the
backdrop of a statutory scheme for judicially-approved eviction by government authorities, simply
cannot be compared to termination of water services by an independent political subdivision with
no obligation to provide water service to any individual. Furthermore, the LTA requires landlords
to make water service available but does not require landlords to pay for such service. Jenkins v.
Roger C. Perry & Co., 83 Ohio App. 3d 234, 236-37, 614 N.E.2d 850, 852 (1992) (“The question
of who pays for water used at a leasehold premise is a matter of contract between the landlord and
the tenant.”).
       Therefore, no legitimate entitlement to water service from the Water District may be inferred
from the LTA. Holding otherwise, as the Water District points out, would transform each of the
many landlord obligations detailed in the LTA into constitutionally protected property rights
enforceable against any involved state-related actor. The LTA cannot be construed to have so broad
a scope. As this Court stated in Golden, which involved termination of water services due to the
delinquency in payment of a prior tenant, “a landlord’s failure to uphold his end of the bargain, even
coupled with his failure to comply with a city’s code provision regarding the payment of water bills,
does not constitute a violation of the Due Process Clause by the city.” Golden, 2005 WL 873321,

         2
           In any event, Ohio’s LTA appears to be less expansive than the Florida and Oregon landlord-tenant laws at
issue in DiMassimo and Turpen. For example, Florida law, as discussed in DiMassimo, allows for a broad right of a
tenant to enforce her rights under Florida’s Landlord and Tenant Act in a civil action, including a suit to enjoin a landlord
from accomplishing a constructive eviction. Fla. Stat. Ann. § 83.54; DiMassimo, 805 F.2d at 1539-40. Oregon law,
which was applied in Turpen, also provides for injunctive relief for violations of the landlord’s statutory duties. Or. Rev.
Stat. § 90.360(2). Ohio’s LTA, on the other hand, provides a limited right to a tenant to bring an action against her
landlord where the landlord fails to fulfill certain obligations under the LTA. Ohio Rev. Code Ann. § 5321.07(B)(2).
The LTA also allows a tenant to bring a civil action for damages for violation of the LTA’s prohibitions against self-help
eviction measures. Ohio Rev. Code Ann. § 5321.15(C). This provision, however, does not expressly provide for broad
injunctive relief prior to such eviction measures. Therefore, Florida and Oregon law appear more expansive than Ohio
law, and DiMassimo and Turpen fail to support the Midkiffs’ claim here.
No. 04-3508           Midkiff, et al. v. Adams County Regional                                Page 7
                      Water District, et al.

at *5. Similarly here, the Albrecht’s apparent violation of the LTA cannot be transformed into a
violation of the Due Process Clause by the Water District. Especially in the context of the Water
District, which has the statutory, unreviewable authorization to set its own rules and policies, the
Midkiffs’ argument under the LTA lacks merit.
        The Midkiffs also sought leave to file a Second Amended Complaint (“Proposed
Complaint”) to add an agency theory. Under this theory, the Midkiffs posit that because the LTA
defines “landlord” to include an “agent,” Ohio Rev. Code Ann. § 5321.01(B), and because the Water
District complied with the Albrechts’ request to terminate service, the Water District acted as the
Albrechts’ agent under the LTA. Thus, the Midkiffs allege in their Proposed Complaint that the
Water District, as an agent of the Albrechts, violated the LTA, and that this agency relationship
further supports the notion that tenants such as the Midkiffs have a legitimate claim of entitlement
to continued water service from their landlord and the Water District.
        The Magistrate Judge denied the Midkiffs’ motion for leave to amend with respect to the
agency allegation because no federal claim survived Defendants’ motion to dismiss and the agency
theory could be presented in a complaint in Ohio state court. Such a ruling presupposes that the
Midkiffs sought to add an agency theory solely to create liability on the part of the Water District
under the LTA. Indeed, the agency allegation appears in the Proposed Complaint in the Midkiffs’
allegations for individual relief against all Defendants under the LTA, rather than in their due
process allegations. Proposed Compl. ¶ 54. However, on appeal the Midkiffs also argue that the
agency allegation bolsters their theory that the LTA provides a basis for finding a protected property
interest under the Due Process Clause. Under a liberal interpretation of the Proposed Complaint,
we will consider application of the proposed agency allegation to the Midkiffs’ due process claims.
        We find that amendment of the complaint to add an agency theory with regard to the due
process claims would have been futile. Federal Rule of Civil Procedure 15(e) allows a party to
amend its pleading after its initial amendment only by leave of the court, and “leave shall be freely
given when justice so requires.” A motion for leave to amend may be denied for futility “if the court
concludes that the pleading as amended could not withstand a motion to dismiss.” Martin v.
Associated Truck Lines, Inc., 801 F.2d 246, 249 (6th Cir. 1986). The Midkiffs’ argument expands
agency theory nearly to the breaking point by equating the contractual relationship between the
Water District and the customer/property owner with an agency relationship. Ohio law defines an
agency relationship as a “consensual fiduciary relationship between two persons where the agent
has the power to bind the principal by his actions, and the principal has the right to control the
actions of the agent.” Funk v. Hancock, 26 Ohio App. 3d 107, 110, 498 N.E.2d 490, 493-94 (1985).
While agency is a question of fact, none of these required elements were even alleged in the
Proposed Complaint. Rather, the Midkiffs seek to add a mere conclusory allegation of agency that
provides no additional support for their argument under the LTA. This is clearly insufficient as a
matter of law.
        The Midkiffs next point to the Rules and Regulations of the Water District (“Water District
Rules”), adopted pursuant to the authority granted to the Water District under Ohio Rev. Code Ann.
§ 6119.06(N). Under the heading “Service Application,” the Water District Rules provide that “any
owner of a single family dwelling, auto court, duplex, or multiple dwelling building, a person
holding property having reasonable accessibility to the source of, and who is in need of having water
supplied to this property, may be a customer of the District.” Joint Appendix (“J.A.”) at 201 (Water
District Rule II.A). The Midkiffs argue that “a person holding property” should be read to include
tenants under the common usage of “holding property.” However, the very language of the Rule
makes clear that the “person holding property” phrase does not constitute a separate category from
“any owner.” Rather, the “person holding property” language simply forms one of several
prerequisites to qualify as a customer of the Water District. A customer of the Water District thus
No. 04-3508           Midkiff, et al. v. Adams County Regional                                 Page 8
                      Water District, et al.

must be: (1) “any owner of a single family dwelling, auto court, duplex, or multiple dwelling
building”; (2) “a person holding property having reasonable accessibility to the source of” water;
and (3) “in need of having water supplied to” her property. Id. (emphasis added). The Midkiffs
simply misread the language of this Rule.
        Furthermore, the Water District highlights other provisions of the Water District Rules that
specifically refer to “owners,” such as the Rule that explicitly requires customers to provide written
proof of their legal title of ownership to the property in question. J.A. at 201 (Water District Rule
II.B); see also J.A. at 209 (Water District Rule IX) (rules regarding change of occupancy and the
requirements for “[n]ew owners”); J.A. at 211 (Water District Rule XI) (rules regarding suspension
of service and referring to “property owner”). The Midkiffs argue that these Rules, when read in
conjunction with Rule II.A, are ambiguous and contradictory. However, the Water District Rules
clearly and unambiguously contemplate that only property owners, and not tenants or lessees, shall
be customers of the Water District. As tenants and not property owners, the Midkiffs have no
legitimate claim of entitlement to service from the Water District under the Water District Rules.
        The Midkiffs finally cite Water District Rule IX.A, which requires that “[n]ot less than one
week’s notice must be given personally to the District to discontinue service or to change
occupancy.” J.A. at 209 (Water District Rule IX.A). Based on this Rule, the Midkiffs argue that
the Water District was required to provide notice before terminating the Midkiffs’ service. We fail
to see how a rule requiring that customers give one week’s notice to the Water District for their own
service termination could be interpreted to provide that the Water District itself must give anyone
– customer or non-customer – similar one-week notice. As suggested in the R&R and adopted by
the District Court, the Water District Rules provide no support for the Midkiffs’ theory.
        The Midkiffs also argue that they are third-party beneficiaries to the contract between the
Albrechts and the Water District and may enforce the rights of that contract, and therefore Ohio
contract law provides an independent basis for their legitimate entitlement to water service. The
Ohio Supreme Court has adopted the teachings of Restatement (Second) of Contracts § 302 (1981)
regarding third-party beneficiaries. Hill v. Sonitrol of Southwestern Ohio, Inc., 36 Ohio St. 36, 40,
521 N.E.2d 780, 784-85 (1988). The Hill court held, quoting the Restatement, that “‘[p]erformance
of a contract will often benefit a third person. But unless the third person is an intended beneficiary
as here defined, no duty to him is created.’” Id., 521 N.E.2d at 784 (quoting Restatement (Second)
of Contracts § 302 cmt. e). To be an intended beneficiary, as opposed to an incidental beneficiary,
either the performance of the promise must “satisfy an obligation of the promisee to pay money to
the beneficiary” or the circumstances must “indicate that the promisee intends to give the beneficiary
the benefit of the promised performance.” Id. (quoting Restatement (Second) of Contracts § 302).
        The Magistrate Judge found that the Midkiffs were merely incidental beneficiaries and they
did not establish a property right to water service based on contract law. The Midkiffs contend that
they were intended third-party beneficiaries because the Water District knew both that the Midkiffs
occupied the premises owned by the Albrechts and that the Midkiffs paid for the services indirectly.
They also again rely on their faulty reading of the Water District Rules to argue that those Rules
recognize a tenant’s interest in water service and therefore somehow create a third-party beneficiary
relationship between the Water District and any end-consumer.
        As the Magistrate Judge correctly found, the Midkiffs’ allegations are insufficient to
establish them as third-party beneficiaries. The Water District Rules themselves make clear that
only the property owner may contract with the Water District, and those Rules fail to recognize any
right of non-owners to seek service or to enforce the property owner’s rights under the Water
District-property owner contract. Further, the Midkiffs do not allege that the performance of the
Water District satisfies some obligation of the Albrechts to the Midkiffs. “‘If the promisee has no
No. 04-3508            Midkiff, et al. v. Adams County Regional                                   Page 9
                       Water District, et al.

intent to benefit a third party, then any third-party beneficiary to the contract is merely an ‘incidental
beneficiary,’ who has no enforceable rights under the contract.’” Id., 521 N.E.2d at 784-85 (quoting
Norfolk & W. Co. v. United States, 641 F.2d 1201, 1208 (6th Cir. 1980)). The Midkiffs are clearly
incidental beneficiaries at most, and have failed to provide any support for a property interest in
Ohio contract law.
        After a thorough review of the proffered bases for deriving a property interest in continued
water service, we conclude that the Midkiffs have not established such an interest. This Court in
Golden noted that “[w]hile there may be relevant ‘rules or understandings’ under Ohio law, Golden
does not point us to any.” Golden, 2005 WL 873321, at *7. Here, the Midkiffs pointed us to several
proposed rules or understandings under Ohio law, but none prove remotely sufficient. In an
unpublished opinion, this Court previously expressly refused to find a legitimate claim of
entitlement to water service under Ohio law and rejected reliance on Craft in the context of water
service in Ohio. Cadle v. City of Newton Falls, 961 F.2d 1576 (table), 1992 WL 88904, at *4 (6th
Cir. May 1, 1992). This Court in Cadle found, in the context of discussing the plaintiff’s substantive
due process claim, that “[t]here appear to be no obligations or remedies for the receipt of water
services in Ohio,” and therefore the plaintiff had no property interest in water service. Cadle, 1992
WL 88904, at *4. The Midkiffs have advanced several novel theories, but we agree with the
conclusion that this Court reached in Cadle.
       Because the Midkiffs have not established a legitimate claim of entitlement to continued
water service, we need not consider whether they have satisfactorily alleged the inadequacy of
available state remedies under the doctrine first established by the Supreme Court in Parratt v.
Taylor, 531 U.S. 527 (1981). We also need not determine what process might have been due under
the Fourteenth Amendment because no property interest has been established. See, e.g., Golden,
2005 WL 873321, at *7 n.6. We therefore affirm the dismissal of the Midkiffs’ procedural due
process claim.
        2.      Substantive Due Process
         Substantive due process claims involve allegations of “(1) deprivations of a particular
constitutional right and (2) actions that ‘shock the conscience.’” Mansfield, 988 F.2d at 1474
(quoting Braley v. City of Pontiac, 906 F.2d 220, 224-25 (6th Cir. 1990)). The Midkiffs assert
arguments under both prongs of substantive due process. They first attempt to bootstrap their
defective procedural due process arguments into a substantive due process claim by contending that
continued utility service amounts to a protected property right, and hence deprivation of that interest
equates to violation of a constitutional right. As discussed above, this argument fails. Second, they
argue that the Water District’s conduct in terminating water service without notice to the Midkiffs
“shocks the conscience.” Yet as the Magistrate Judge commented, terminating water service at the
request of a customer (the Albrechts) “is not remotely shocking.” J.A. at 153. While the Albrechts’
conduct here might have been unpleasant, or even perhaps unlawful under the LTA, their behavior
– shocking or not – may not be imputed to the Water District based on the Midkiffs’ allegations.
       Furthermore, even if the Water District’s conduct as alleged in the complaint somehow could
be viewed as shocking the conscience, substantive due process requires only that the Water District
show that its policy of allowing only property owners to be customers is rationally related to a
legitimate government interest. Mansfield, 988 F.2d at 1477. As analyzed below with regard to the
equal protection claim, the Water District’s policy possesses such a rational basis. We therefore
conclude that the District Court did not err in adopting the Magistrate Judge’s recommendation that
the Midkiffs’ procedural and substantive due process claims be dismissed.
No. 04-3508           Midkiff, et al. v. Adams County Regional                                  Page 10
                      Water District, et al.

B.      Equal Protection Claim
        The Midkiffs also allege that the Water District’s policy violates the Equal Protection Clause
of the Fourteenth Amendment because the policy discriminates between property owners and non-
property owners, and that no rational basis supports such a classification. “To state a claim under
the Equal Protection Clause, a § 1983 plaintiff must allege that a state actor intentionally
discriminated against the plaintiff because of membership in a protected class” or burdened a
fundamental right. Purisch v. Tenn. Tech. Univ., 76 F.3d 1414, 1424 (6th Cir. 1996) (citations
omitted). If a protected class or fundamental right is involved, this Court must apply strict scrutiny,
but where no suspect class or fundamental right is implicated, this Court must apply rational basis
review. Hadix v. Johnson, 230 F.3d 840, 843 (6th Cir. 2000). Under rational basis review, the
governmental policy at issue “will be afforded a strong presumption of validity and must be upheld
as long as ‘there is a rational relationship between the disparity of treatment and some legitimate
government purpose.’” Id. (quoting Heller v. Doe, 509 U.S. 312, 320 (1993)). Under rational basis
review, a plaintiff faces a severe burden and must “negate all possible rational justifications for the
distinction.” Gean v. Hattaway, 330 F.3d 758, 771 (6th Cir. 2003); see also Heller, 509 U.S. at 320-
21.
         The Midkiffs do not allege that strict scrutiny applies here. Rather, they allege that the Water
District’s policy, which discriminates between landlords and tenants, has no rational basis. The
Water District, however, asserts that its policy serves the governmental interest in protection of the
Water District’s financial stability because its policy “avoids problems with collections associated
with tenants whose connection with the property is more transitory than that of the owner.” Water
District Br. at 27. The Water District also argues that its policy serves the interest in water
conservation. As the Magistrate Judge noted, the policy challenged here encourages landlords to
rent to financially responsible tenants or to collect sufficient security in advance, and it also gives
property owners an incentive to not waste water and to maintain their plumbing systems because
they bear the responsibility for large water bills. J.A. at 154. These governmental interests are
rationally related to the disparate treatment of landlords and tenants under the Water District rules
and policies. The Midkiffs argue that the Water District presented no evidence to support the notion
that the Water District policy is rationally related to conservation of water, but under rational basis
review, a purported rational basis may be based on “rational speculation unsupported by evidence
or empirical data” and need not have a foundation in the record. Heller, 509 U.S. at 320-21.
        This Court recently held in Golden that the plaintiff sufficiently stated a claim under the
Equal Protection Clause regarding a city policy that discriminated between different classes of
tenants. Golden, 2005 WL 873321, at *7-*10. The Golden court stated:
                We read the complaint as alleging that the City treated two classes of
                tenants dissimilarly and two classes of residents, tenants and
                landlords, dissimilarly. We hold that, as to the former theory, Golden
                states a claim upon which relief can be granted under our case law.
Id. at *8 (emphasis added). The Golden court proceeded to analyze the equal protection claim solely
with regard to the city policy’s irrationally differential treatment of tenants whose landlords owed
the city for water service and other tenants whose landlords did not have such debt. This Court in
Golden expressed no opinion regarding the policy’s differential treatment of landlords and tenants.
In the instant case, the Water District’s policy makes no distinction between different classes of
tenants. Rather, it only distinguishes between landlords and tenants, or property owners and non-
property owners. While the different classes of tenants in Golden were similarly situated, landlords
and tenants are not so similarly situated. This Court’s equal protection holding in Golden is
therefore distinguishable in this case.
No. 04-3508            Midkiff, et al. v. Adams County Regional                                   Page 11
                       Water District, et al.

        The Midkiffs’ attempts to rebut the presumption of constitutionality of the Water District’s
policy fall short. The Water District’s policy, rationally distinguishing between landlords and
tenants, withstands equal protection scrutiny. Therefore, the District Court did not err in dismissing
the Midkiffs’ equal protection claim against the Water District.
C.      Qualified Immunity
        Under well-established qualified immunity doctrine, “government officials performing
discretionary functions generally are shielded from liability for civil damages insofar as their
conduct does not violate clearly established statutory or constitutional rights of which a reasonable
person would have known.” Harlow v. Fitzgerald, 457 U.S. 800, 818 (1982). The plaintiff bears
the burden of establishing that the defendant is not entitled to qualified immunity. Barrett v.
Steubenville City Schs., 388 F.3d 967, 970 (6th Cir. 2004).
        The Magistrate Judge recommended that defendant Brian Ast, manager of the Water District,
enjoys qualified immunity here because the Midkiffs have not sufficiently alleged a violation of a
clearly established statutory or constitutional right. The above analysis demonstrates that no
constitutional or statutory violation occurred, let alone one that was clearly established or one of
which a reasonable person should have known. The District Court did not err in dismissing Ast on
the basis of qualified immunity.
D.      Amendment of Complaint to Add ECOA Claim
        As previously discussed, the District Court did not err in denying the Midkiffs’ motion for
leave to amend their complaint to add an agency allegation. In their Proposed Complaint, the
Midkiffs also sought to add a claim against the Water District under the Equal Credit Opportunity
Act (“ECOA”). The ECOA bars discrimination by creditors against any credit applicant “with
respect to any aspect of a credit transaction . . . on the basis of race, color, religion, national origin,
sex or marital status.” 15 U.S.C. § 1691(a)(1); see also Mays v. Buckeye Rural Elec. Coop., Inc.,
277 F.3d 873, 876 (6th Cir. 2002). The ECOA’s purpose is to “‘eradicate credit discrimination
waged against women, especially married women whom creditors traditionally refused to consider
for individual credit.’” Mays, 277 F.3d at 876 (quoting Anderson v. United Fin. Co., 666 F.2d 1274,
1277 (9th Cir. 1982)). We have applied the Burdine/McDonnell Douglas burden-shifting framework
used in Title VII cases to ECOA claims. Id. at 876-77. Under the ECOA, a creditor is one who
grants a right “to defer payment of debt or to incur debts and defer its payment or to purchase
property or services and defer payment therefor.” 15 U.S.C. § 1691a(d).
         The Magistrate Judge denied the motion for leave to amend with regard to the ECOA claim
because addition of the ECOA claim would be an act of futility. Although this Court normally
reviews denial of a motion for leave to amend a pleading for abuse of discretion, denial on the basis
of futility is reviewed de novo. Dubuc v. Green Oak Twp., 312 F.3d 736, 743 (6th Cir. 2002).
Plaintiff in Golden also presented a claim under the ECOA. This Court in Golden assumed that the
plaintiff was an applicant, that the city was a creditor, and that a transaction for water service is a
credit transaction under the ECOA. Golden, 2005 WL 873321, at *11. Furthermore, this Court
assumed that disparate impact claims are permissible under the ECOA. Id. at *11 & n.11. We make
the same assumptions and need not resolve the complex statutory questions that these issues present
because the Midkiffs’ proposed ECOA claim contains a fundamental flaw that renders an
amendment to add this claim futile.
       The Proposed Complaint alleges that Mrs. Midkiff, as a married woman, is a member of a
protected class under the ECOA, and that both Mr. and Mrs. Midkiff applied for credit from the
Water District and both were denied because “she/he” did not own the property for which service
No. 04-3508           Midkiff, et al. v. Adams County Regional                               Page 12
                      Water District, et al.

was requested. Proposed Compl. ¶ 44. The Midkiffs claim that the Water District policy
discriminates against women and minorities because such protected groups form a disparately high
portion of those non-property owners rejected as customers by the Water District, and that no formal
notice of adverse action on a credit application was provided as required under 12 C.F.R. § 202.09,
part of the Federal Reserve Board’s Regulation B that implements the ECOA. Proposed Compl.
¶ 45.
       As noted, the Proposed Complaint states that Mr. and Mrs. Midkiff applied for credit.
Therefore, as the Magistrate Judge held, Mrs. Midkiff cannot allege that she and her husband were
denied credit because of her marital status or gender and thus cannot make out a prima facie case.
See Mays, 277 F.3d at 877 (holding that the first element of a prima facie case of credit
discrimination is “Plaintiff was a member of a protected class”). Indeed, the Proposed Complaint
does not allege discrimination against Mr. or Mrs. Midkiff on the basis of any protected class of
which either of them might be a member. Rather, the Proposed Complaint asserts that the policy
has a disparate impact on women and minorities generally, but states that Mr. and Mrs. Midkiff
themselves were denied credit because “she/he did not own property where she requested continued
water service.” Proposed Compl. ¶ 44. The Magistrate Judge correctly concluded, as alleged in the
Proposed Complaint, that the Water District denied credit to the Midkiffs not because of any
discrimination on the basis of marital status or gender, but because of the Midkiffs’ status as non-
property owners. Therefore, the Midkiffs cannot establish a prima facie case under the ECOA, and
amendment of their complaint to add an ECOA claim would have been futile.
        The Midkiffs, in asserting potential claims of women and minorities against the Water
District policy barring non-property owners as customers, claim in passing to be asserting a form
of third-party standing to bring a disparate impact ECOA claim. As support for this theory however,
the Midkiffs cite only a Supreme Court case addressing the limited scope of third-party standing for
constitutional claims. Midkiffs’ Br. at 25 n.52 (citing Barrows v. Jackson, 346 U.S. 249 (1953)).
The Midkiffs offer no other support for their conclusory assertion in a footnote to their brief that
they have third-party standing to challenge the Water District policy’s alleged discriminatory impact
against minorities. They provide no argument for the notion that third-party standing, usually found
in certain First Amendment cases, may be valid for ECOA claims.
        Finally, the Midkiffs argue that the Magistrate Judge ignored the fact that this case is a
putative class action and that instead of denying leave to amend, he should have allowed amendment
by intervention of a named plaintiff with proper standing to assert an ECOA claim. However, the
Midkiffs cite only to a Fourth Circuit case and a treatise discussing this case for this proposition.
Midkiffs’ Br. at 29 (citing Simmons v. Brown, 611 F.2d 65 (4th Cir. 1979), and Newberg and Conte
on Class Actions § 1609 (3d ed. 1992)). In Simmons, the Fourth Circuit concluded that the named
plaintiffs failed to show that they belonged to any potential class and affirmed the District Court’s
denial of class certification. The Fourth Circuit nonetheless instructed the District Court to retain
the case on the docket for a “reasonable time” to allow a proper plaintiff to come forward and
prosecute the class action. Simmons, 611 F.2d at 67. Here, the District Court stayed the Midkiffs’
motion for class certification pending resolution of Defendants’ motion to dismiss, the Midkiffs did
not oppose this stay of class certification, and the Magistrate Judge and the District Court correctly
held that the Midkiffs could not state a claim upon which relief could be granted. Simmons is
inapplicable here.
      Because any ECOA claims by Mr. or Mrs. Midkiff could not withstand a motion to dismiss,
the Magistrate Judge did not err in denying the Midkiffs’ motion to amend their complaint to add
No. 04-3508               Midkiff, et al. v. Adams County Regional                                             Page 13
                          Water District, et al.

ECOA claims. Furthermore, because no federal claims remained, the District Court correctly
declined to exercise supplemental jurisdiction over the Midkiffs’ pendant state law claims.3
                                                  III. Conclusion
       For the foregoing reasons, this Court AFFIRMS the District Court’s dismissal of the
Midkiffs’ complaint pursuant to Rule 12(b)(6) and AFFIRMS the Magistrate Judge’s denial of the
Midkiffs’ motion for leave to file a Second Amended Complaint.

         3
           The status of the Albrechts in this appeal is unclear. The Albrechts filed a motion to dismiss below. The
Magistrate Judge recommended that the District Court should deny jurisdiction over the pendant state LTA claims
against the Albrechts because no viable federal claims remained in the case, and that the District Court should therefore
deny the Albrecht’s motion to dismiss as moot. The District Court adopted this recommendation. We find that the
District Court did not err in effectively dismissing all claims against the Albrechts.