FIRST RESPONSE METERING, LLC v. City of Wilmington

Filing 19

ORDER denying Defendant's Motion to Dismiss (Doc. 15 ). Signed by Judge Timothy S. Black on 3/29/2021. (rrs)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
FIRST RESPONSE METERING, LLC.,
Plaintiff,
vs.
CITY OF WILMINGTON,
Defendant.

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Case No. 1:20-cv-329
Judge Timothy S. Black

ORDER DENYING DEFENDANT’S MOTION TO DISMISS (Doc. 15)
This civil case is before the Court on Defendant City of Wilmington’s motion to
dismiss for failure to state a claim and lack of jurisdiction (Doc. 15), and the parties’
responsive memoranda (Docs. 17, 18). 1
I. BACKGROUND
For purposes of this motion to dismiss, the Court must: (1) view the complaint in
the light most favorable to Plaintiff; and (2) take all well-pleaded factual allegations as
true. Bickerstaff v. Lucarelli, 830 F.3d 388, 396 (6th Cir. 2016).
Around December 20, 2018, the City of Wilmington (“Wilmington”) contracted
with Global Management, LLC d/b/a Fathom (“Fathom”) to replace its water metering
infrastructure (the “Project”). (Doc. 14 at ¶ 8). Fathom then contracted with Plaintiff
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The City of Wilmington first filed a motion to dismiss (Doc. 13) in response to First
Response’s original complaint (Doc. 4). First Response filed an amended complaint in response
to the motion to dismiss (Doc. 14), prompting Wilmington to file the instant motion to dismiss
the amended complaint (Doc. 15). The filing of an amended complaint generally moots a
pending motion to dismiss. Yates v. Applied Performance Techs., Inc., 205 F.R.D. 497, 499 (S.D.
Ohio 2002). Accordingly, Wilmington’s first-filed motion to dismiss (Doc. 13) is denied as
moot.

First Response Metering (“First Response”) to perform various tasks related to the
Project. (Id. at ¶ 11). First Response performed its work from October 2019 to
December 2019. (Id. at ¶ 12).
During First Response’s work on the Project, First Response learned that Fathom
was ending its business, including work on the Project. (Id. at ¶ 13). First Response
contends that, despite Fathom’s business termination, Wilmington encouraged First
Response to continue working. (Id. at ¶ 14). First Response states that representatives of
Wilmington indicated First Response would still be appropriately compensated for its
work on the Project. (Id. at ¶ 14).
According to First Response, Wilmington has never fully paid Fathom for work
performed during the time period First Response was working on the Project. (Id. at
¶¶ 15–16). First Response has not been paid for its work on the Project. (Id. at ¶ 14).
Pursuant to this Court’s diversity jurisdiction, First Response brings one cause of
action against Wilmington under Ohio Rev. Code § 1311.25, et seq. in order to enforce
an asserted lien claim against Wilmington. (Id. at ¶ 23). First Response argues that
Wilmington approved its work on the Project and that First Response is entitled to collect
amounts owed for its work on the Project from Wilmington. (Id. at ¶¶ 21–27).
Wilmington moves to dismiss First Response’s Amended Complaint, arguing that:
(1) First Response fails to state a claim because Ohio Rev. Code § 1311.32 and
§ 1311.311 mandate exclusive jurisdiction for First Response’s cause of action in state
court; and/or (2) this Court should abstain from exercising jurisdiction over this case.
(Doc. 15). Wilmington’s motion to dismiss is ripe for review.
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II. STANDARD OF REVIEW
A motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) operates to test the
sufficiency of the complaint and permits dismissal of a complaint for “failure to state a
claim upon which relief can be granted.” To show grounds for relief, Fed. R. Civ. P. 8(a)
requires that the complaint contain a “short and plain statement of the claim showing that
the pleader is entitled to relief.”
While Fed. R. Civ. P. 8 “does not require ‘detailed factual allegations,’...it
demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S.
544 (2007)). Pleadings offering mere “ ‘labels and conclusions’ or ‘a formulaic recitation
of the elements of a cause of action will not do.’” Id. (citing Twombly, 550 U.S. at 555).
In fact, in determining a motion to dismiss, “courts ‘are not bound to accept as true a
legal conclusion couched as a factual allegation[.]’” Twombly, 550 U.S. at 555 (citing
Papasan v. Allain, 478 U.S. 265 (1986)). Further, “[f]actual allegations must be enough
to raise a right to relief above the speculative level[.]” Id.
Accordingly, “[t]o survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its
face.’” Iqbal, 556 U.S. at 678. A claim is plausible where “plaintiff pleads factual
content that allows the court to draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Id. Plausibility “is not akin to a ‘probability requirement,’
but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id.
“[W]here the well-pleaded facts do not permit the court to infer more than the mere
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possibility of misconduct, the complaint has alleged—but it has not ‘show[n]’—‘that the
pleader is entitled to relief,’” and the case shall be dismissed. Id. (citing Fed. Rule Civ. P.
8(a)(2)).
III. ANALYSIS
Wilmington argues this case should be dismissed because: (1) this Court cannot
hear this case because state statute limits the jurisdiction of First Response’s claim to
state court; and/or (2) this Court should otherwise abstain for hearing the case. The Court
will take each argument in turn.
A.

Jurisdiction

Wilmington’s first argues First Response’s Amended Complaint should be
dismissed because this Court cannot exercise jurisdiction over the action. 2 (Doc. 15 at 5).
Wilmington contends that, under Ohio Rev. Code § 1311.32 and § 1311.311, First
Response is required to pursue its lien claim in a state court of common pleas.
Ohio Rev. Code § 1311.32 provides that a duty to pay claimants, such as First
Response, “may be enforced by an action in the court of common pleas or [First
Response] may, when the amounts are due, recover through the public in the court of
common pleas.” Id. (emphasis added). If a claimant brings such an action, the
claimant’s action “shall be brought in the county in which the public property involved is
situated.” Id. Moreover, if the public authority fails to make payments for public
improvements, “the principal contractor or subcontractor may file an action in the court

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The parties do not dispute that subject-matter jurisdiction exists pursuant to this Court’s
diversity jurisdiction.

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of common pleas of the county in which the property is located.” Id. at § 1311.311
(emphasis added).
Wilmington contends these sections divest this Court of its subject-matter
jurisdiction pursuant to 28 U.S.C. § 1332 (diversity). The Court disagrees.
As the Sixth Circuit explains:
The jurisdiction of federal courts is defined by Article III of
the United States Constitution and by acts of Congress. It is
generally true that the jurisdiction of the federal courts
“cannot be limited or taken away by state statutes.” 17A
Wright, et al., Fed. Practice & Procedure § 4211 (3d ed.
2012). Generally, the jurisdiction of a federal court will only
be limited by state statute under special circumstances, such
as when the federal court sits in diversity pursuant to 28
U.S.C. § 1332. Even in such circumstances, a state cannot
defeat federal jurisdiction over a matter by limiting
jurisdiction to a specialized state court. See Marshall v.
Marshall, 547 U.S. 293, 314, 126 S.Ct. 1735, 164 L.Ed.2d
480 (2006) (holding that “jurisdiction of the federal
courts…‘cannot be impaired by subsequent state legislation
creating courts of probate’ ”) (quoting McClellan v. Carland,
217 U.S. 268, 281, 30 S.Ct. 501, 54 L.Ed. 762 (1910)). This
rule applies even if the cause of action was created by state
statute. Id. (holding that “‘a State cannot create a transitory
cause of action and at the same time destroy the right to
sue…in any court having jurisdiction’”) (quoting Tennessee
Coal, Iron & R.R. Co. v. George, 233 U.S. 354, 360, 34 S.Ct.
587, 58 L.Ed. 997 (1914)).
Williams v. Duke Energy Int’l, Inc., 681 F.3d 788, 798 (6th Cir. 2012) (emphasis added).
For the purposes of jurisdiction, the crux of Wilmington’s argument is that
because the state statute outlines First Response’s possible rights and remedies, and the
state statute requires suits to be brought in a court of common pleas, First Response must
bring its action in the appropriate court of common pleas.

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The first issue with Wilmington’s argument is that is fails to read the plain
language of the statutes it cites. Both statutes indicate the claimant may bring its action
in a court of common pleas. The one clause of mandatory language requires that, if a
claimant brings an action in a court of common pleas, the claimant then shall bring the
action in the county in which the public property involved is situated. Thus, when
reading the language of the statute, First Response is not precluded from asserting the
action in an appropriate federal court. Moreover, this Court is not convinced that these
statutes are even intended to divest the Court of jurisdiction. See also In re Ohio
Execution Protocol Litig., 709 F. App’x 779, 785 (6th Cir. 2017) (“Ohio has not
attempted (by statute, court decision, or otherwise) to restrict the ability of federal courts
to hear certain types of cases.”); State of Ohio ex rel. Star Supply, Div. of Star Indus., Inc.
v. City of Greenfield, Ohio, 528 F. Supp. 955, 956 (S.D. Ohio 1981) (exercising
jurisdiction over removal action commenced under Ohio Rev. Code § 1311.32).
However, even if the language of the statutes were mandatory, and the statute is
seeking to limit federal jurisdiction, Wilmington’s reading of the statute is in direct
contradiction with Supreme Court and Sixth Circuit precedent recognizing that a state
cannot defeat federal diversity jurisdiction by limiting the matter to a certain state court –
in this instance, a court of common pleas. See Marshall, 547 U.S. at 314; Williams, 681
F.3d at 798. See also Superior Beverage Co. v. Schieffelin & Co., 448 F.3d 910, 917 (6th
Cir. 2006) (citing Railway Co. v. Whitton, 80 U.S. (13 Wall.) 270, 286 (1871)) (“A state
statute cannot divest a federal court of diversity jurisdiction.” ); West v. Kentucky Horse
Racing Comm’n, 425 F. Supp. 3d 793, 802 (E.D. Ky. 2019), aff'd, 972 F.3d 881 (6th Cir.
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2020) (quotation omitted) (citing cases) (“A state cannot confer rights upon private
parties and require that litigation between those parties must be confined to the courts of
the state itself.”).
Finally, it bears recognizing that allowing Wilmington to succeed on this argument
– that these statutes prohibit this Court from properly exercising its diversity jurisdiction
– defeats the purpose of diversity jurisdiction. “In order to provide a neutral forum for
what have come to be known as diversity cases, Congress also has granted district courts
original jurisdiction in civil actions between citizens of different States, between U.S.
citizens and foreign citizens, or by foreign states against U.S. citizens.” Exxon Mobil
Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 552 (2005) (citing 28 U.S.C. § 1332).
This Court is that neutral forum for First Response.
Accordingly, Wilmington’s argument that § 1311.32 and § 1311.311 divest this
Court of its diversity jurisdiction is not well-taken. 3
B.

Abstention

Wilmington also argues that this Court should abstain from exercising jurisdiction
over this action, citing various Supreme Court abstention cases, including Thibodaux,
Younger, Pullman, and Colorado River.

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Wilmington also seems to suggest that the action must be brought in a court of common pleas
in order for sovereign immunity to not apply. This argument is also unavailing. First Response
brings this action under § 13111.25, et seq. – a cause of action in which Wilmington states
sovereign immunity does not apply. And, as Wilmington states in its motion to dismiss, this
Court is capable of applying, and on a regular basis does apply, Ohio law. Accordingly, First
Response’s sovereign immunity argument does not divest this Court of jurisdiction or require the
Court to abstain.

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Abstention, in general, should only be applied in exceptional circumstances. See
Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 716 (1996). “[F]ederal courts have a
strict duty to exercise the jurisdiction that is conferred upon them by Congress.” Id.
However, “federal courts may decline to exercise their jurisdiction, in otherwise
exceptional circumstances, where denying a federal forum would clearly serve an
important countervailing interest.” Id. The various abstention doctrines, as explained by
the Supreme Court, provide:
We have thus held that federal courts have the power to
refrain from hearing cases that would interfere with a pending
state criminal proceeding, see Younger v. Harris, 401 U.S. 37,
91 S.Ct. 746, 27 L.Ed.2d 669 (1971), or with certain types of
state civil proceedings, see Huffman v. Pursue, Ltd., 420 U.S.
592, 95 S.Ct. 1200, 43 L.Ed.2d 482 (1975); Juidice v. Vail,
430 U.S. 327, 97 S.Ct. 1211, 51 L.Ed.2d 376 (1977); cases in
which the resolution of a federal constitutional question might
be obviated if the state courts were given the opportunity to
interpret ambiguous state law, see Railroad Comm’n of Tex.
v. Pullman Co., 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed. 971
(1941); cases raising issues “intimately involved with [the
States’] sovereign prerogative,” the proper adjudication of
which might be impaired by unsettled questions of state law,
see Louisiana Power & Light Co. v. City of Thibodaux, 360
U.S. 25, 28, 79 S.Ct. 1070, 1072–1073, 3 L.Ed.2d 1058
(1959); id., at 31, 79 S.Ct., at 1074 (Stewart, J., concurring);
cases whose resolution by a federal court might unnecessarily
interfere with a state system for the collection of taxes, see
Great Lakes Dredge & Dock Co. v. Huffman, 319 U.S. 293,
63 S.Ct. 1070, 87 L.Ed. 1407 (1943); and cases which are
duplicative of a pending state proceeding, see Colorado River
Water Conservation Dist. v. United States, 424 U.S. 800, 96
S.Ct. 1236, 47 L.Ed.2d 483 (1976); Pennsylvania v. Williams,
294 U.S. 176, 55 S.Ct. 380, 79 L.Ed. 841 (1935).
Id. (emphasis added).

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As recognized by Wilmington, Thibodaux is most applicable because there is no
underlying state proceeding or constitutional question at issue. Thus, under Thibodaux,
this Court must decide if it should abstain because the case raises issues “intimately
involved with [the States’] sovereign prerogative,” the proper adjudication of which
might be impaired by unsettled questions of state law. Thibodaux, 360 U.S. 25, 28.
This is not a case requiring Thibodaux abstention. “[Thibodaux] abstention has
only been used in cases involving uniquely state specific subject matter, such as water
rights and eminent domain cases.” Superior Beverage., 448 F.3d at 917. And, although
Wilmington tries to place this case in the category of water rights because the Project was
for water infrastructure, this case is more appropriately categorized as a mechanic’s lien
dispute. Mechanic’s liens are often considered by federal courts. See e.g., Fid. &
Deposit Co. of Maryland v. Ohio Dep’t of Transportation, 806 F. App’x 364, 367 (6th
Cir. 2020) (discussing Ohio Rev. Code §§ 1131.26, .28); Firefighter Sales & Serv. v.
Travelers Cas. & Sur. Co. of Am., No. 1:14CV2337, 2015 WL 5749627, at *3 (N.D.
Ohio Sept. 30, 2015), aff’d sub nom., 671 F. App’x 374 (6th Cir. 2016) (applying Ohio
Rev. Code. § 1131.25–.32).
Thus, the Court need not abstain from hearing this case. 4

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When discussing why this Court should abstain, Wilmington also argues the various factual
nuances it purports are part of this case. Wilmington contends these facts create significant
issues of unsettled state law on the validity of First Response’s lien and how the statutes apply to
this case. First, these purported facts are not part of the Amended Complaint, and cannot be
considered for the purposes of this motion to dismiss. Second, the Court’s decision today only
concerns whether the Court may exercise jurisdiction. It is not address an application of First
Response’s alleged lien, the lien’s validity, nor whether First Response can recover from
Wilmington under state law.

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IV. CONCLUSION
Based upon the foregoing, the City of Wilmington’s motion to dismiss for failure
to state a claim (Doc. 15) is DENIED. The first-filed motion to dismiss (Doc. 13) is
DENIED as moot.
IT IS SO ORDERED.
Date: 3/29/2021

s/ Timothy S. Black
Timothy S. Black
United States District Judge

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