Case: 1:20-cv-00817-TSB Doc #: 1 Filed: 10/19/20 Page: 1 of 9 PAGEID #: 1
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`IN THE UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF OHIO
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`SCIOTO WATER, INC.,
`4707 Gallia Pike
`Franklin Furnace, Ohio 45629
`
` Plaintiff,
`
` vs.
`
`CITY OF PORTSMOUTH,
`728 Second Street
`Portsmouth, Ohio 45662-4036
`
` Defendant.
`
`
` CASE NO.
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`
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`
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`
`
`
`
`VERIFIED COMPLAINT FOR DECLARATORY JUDGMENT
`AND PRELIMINARY AND PERMANENT INJUNCTION
`(JURY TRIAL DEMANDED)
`
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`Plaintiff Scioto Water, Inc. (hereinafter “SWI”) states for its Verified Complaint against
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`
`
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`Defendant City of Portsmouth (“Portsmouth”) as follows:
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`
`
`
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`PARTIES, NATURE OF THE ACTION,
`JURISDICTION AND VENUE
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`1.
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`SWI is a federally indebted nonprofit rural water association established in 1969
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`to provide safe and potable water to residents, communities, and businesses in portions of Scioto,
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`Jackson, Lawrence and Pike Counties.
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`2.
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`SWI’s principal place of business is located at 4707 Gallia Pike, Franklin
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`Furnace, Ohio, where it operates a water treatment plant that produces .64 million gallons of
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`water per day to serve thousands of customers.
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`3.
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`Defendant Portsmouth is an Ohio municipal corporation located in Scioto County,
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`Ohio.
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`
`
`IN THE UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF OHIO
`
`SCIOTO WATER, INC.,
`4707 Gallia Pike
`Franklin Furnace, Ohio 45629
`
` Plaintiff,
`
` vs.
`
`CITY OF PORTSMOUTH,
`728 Second Street
`Portsmouth, Ohio 45662-4036
`
` Defendant.
`
`
` CASE NO.
`
`
`
`
`
`
`
`
`
`
`
`
`VERIFIED COMPLAINT FOR DECLARATORY JUDGMENT
`AND PRELIMINARY AND PERMANENT INJUNCTION
`(JURY TRIAL DEMANDED)
`
`
`Plaintiff Scioto Water, Inc. (hereinafter “SWI”) states for its Verified Complaint against
`
`
`
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`Defendant City of Portsmouth (“Portsmouth”) as follows:
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`
`
`
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`PARTIES, NATURE OF THE ACTION,
`JURISDICTION AND VENUE
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`1.
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`SWI is a federally indebted nonprofit rural water association established in 1969
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`to provide safe and potable water to residents, communities, and businesses in portions of Scioto,
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`Jackson, Lawrence and Pike Counties.
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`2.
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`SWI’s principal place of business is located at 4707 Gallia Pike, Franklin
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`Furnace, Ohio, where it operates a water treatment plant that produces .64 million gallons of
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`water per day to serve thousands of customers.
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`3.
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`Defendant Portsmouth is an Ohio municipal corporation located in Scioto County,
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`Ohio.
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`
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`Case: 1:20-cv-00817-TSB Doc #: 1 Filed: 10/19/20 Page: 2 of 9 PAGEID #: 2
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`4.
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`This action arises from Portsmouth’s efforts to poach a current customer within
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`SWI’s service area and less than one mile from SWI’s headquarters in violation of 7 U.S.C. §
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`1926(b). This statute prohibits municipalities from curtailing or limiting water service provided
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`or made available by any rural water association indebted to the USDA during the term of such
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`indebtedness.
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`5.
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`This Court has jurisdiction pursuant to 28 U.S.C. § 1331 and the United States
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`Constitution. Jurisdiction is also vested pursuant to the Federal Declaratory Judgment Act, 28
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`U.S.C. §§ 2201 and 2202.
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`6.
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`Venue is proper pursuant to 27 U.S.C. § 1391(b) since Portsmouth is in this
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`judicial district and the disputed territory and related infrastructure is located here.
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`
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`FACTS COMMON TO ALL CLAIMS
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`7.
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`Since 1971, SWI has owned and operated a water distribution system to provide
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`water services to residents and businesses throughout its service territory.
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`8.
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`In furtherance of those services, SWI has been indebted to the FmHA/USDA
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`since 1971 and is a qualifying association under 7 U.S.C. § 1926(b) (hereinafter § 1926(b)).
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`9.
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`Title 7 U.S.C. § 1926(b) prohibits municipalities from exercising their powers to
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`provide competing water supply services, and from placing conditions or restrictions on the
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`service provided by § 1926(b) associations, when the exercise of that power would result in the
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`curtailment or limitation of the service provided or made available by SWI.
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`10.
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`Since the early 1970s, SWI has provided water to all Green Local School District
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`facilities.
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`11.
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`The current high school has received water service from SWI since it was
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`constructed in the late 1970s.
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`2
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`Case: 1:20-cv-00817-TSB Doc #: 1 Filed: 10/19/20 Page: 3 of 9 PAGEID #: 3
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`12.
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`Beginning in 2018, the School District began planning to construct a new
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`elementary and high school immediately adjacent to the current facility.
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`13.
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`14.
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`Construction is now scheduled to begin in 2021.
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`Despite SWI’s longstanding customer relationship with the School District and
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`the presence of ample waterlines surrounding the property, Portsmouth is now attempting to
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`provide competing potable water service to the new facility.
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`15.
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`Indeed, SWI has ample volume and pressure to serve the School District’s potable
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`water needs, including its planned sprinkler system.
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`16.
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`The School District also plans to construct one or more fire hydrants around the
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`exterior of the property; however, SWI does not presently provide hydrant service along Gallia
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`Pike.
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`17.
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`In prior instances where SWI does not provide hydrant service, Portsmouth and
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`SWI have worked cooperatively to ensure that SWI provides potable water while Portsmouth
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`supports fire hydrants.
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`18.
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`Nonetheless, Portsmouth advised the School District that it will not provide
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`hydrant service unless it also provides potable water to the buildings.
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`19.
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`Simply put, SWI has the exclusive right to provide potable water the School
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`District but does not object to Portsmouth providing solely hydrant service. Indeed, the
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`infrastructure for each entity to provide the respective service is already in place. Moreover, SWI
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`is not required to provide hydrant flows to establish protection under § 1926(b).
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`20.
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`SWI raised its objection to Portsmouth’s actions; however, Portsmouth continues
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`to persist and refuses to acknowledge the exclusive nature of SWI’s water service territory.
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`3
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`Case: 1:20-cv-00817-TSB Doc #: 1 Filed: 10/19/20 Page: 4 of 9 PAGEID #: 4
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`COUNT ONE
`Declaratory Judgment regarding SWI’s § 1926(b) Rights
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`SWI incorporates by reference each allegation stated above.
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`Portsmouth is unlawfully attempting to provide domestic water service to SWI’s
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`21.
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`22.
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`existing customer.
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`23.
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`Portsmouth’s actions violate 7 U.S.C. § 1926(b), which states:
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`The service provided or made available through any such
`association shall not be curtailed or limited by inclusion of the area
`served by such association within the boundaries of any municipal
`corporation or other public body, or by the granting of any private
`franchise for similar service within such area during the term of
`such loan; nor shall the happening of such event be the basis of
`requiring such association to secure the franchise, license, or
`permit as a condition to continuing to serve the area by the
`association at the time of the occurrence of such event.
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`24.
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`SWI is an “association” within the meaning of 7 U.S.C. §1926(b), is indebted to
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`FmHA/USDA, and, at all times material hereto, has provided, or made available, water service to
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`the School District.
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`25.
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`Accordingly, SWI is entitled to the rights, privileges and protections granted by 7
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`U.S.C. §1926(b).
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`26.
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`Portsmouth’s attempted water service to the School District within SWI’s service
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`area curtails and limits the water service provided, or made available, by SWI in violation of 7
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`U.S.C. §1926(b).
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`27.
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`As there exists a dispute and actual controversy between the parties that cannot be
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`resolved absent declaratory relief, SWI is entitled to a judgment pursuant to 28 U.S.C. §§ 2201
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`and 2202 declaring the rights and legal relations of the parties as follows:
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`a.
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`That SWI is an “association” within the meaning of 7 U.S.C. §
`1926(b), is currently indebted to the FmHA/USDA, and, at all
`times material, has provided or made available water service to the
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`4
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`Case: 1:20-cv-00817-TSB Doc #: 1 Filed: 10/19/20 Page: 5 of 9 PAGEID #: 5
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`subject territory;
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`b.
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`c.
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`That SWI is entitled to the rights, privileges and protections
`granted under 7 U.S.C. § 1926(b) during the term of the
`indebtedness; and
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`That the actions of Portsmouth and all those acting in concert with
`Portsmouth, in providing potable water service within SWI’s
`Service Territory will unlawfully curtail or limit SWI’s service in
`violation of 7 U.S.C. § 1926(b).
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`COUNT TWO
`Violation of 42 U.S.C. § 1983
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`SWI incorporates by reference each allegation stated above.
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`Portsmouth’s encroachment into SWI’s federally protected service territory
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`
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`28.
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`29.
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`constitutes a deprivation of SWI’s rights under color of state law.
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`30.
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`To establish a § 1983 violation, SWI must show (1) that Portsmouth has deprived
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`SWI of a federal constitutional or statutory right (here under 7 U.S.C. § 1926(b)) or threatens to
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`do so; and (2) that Portsmouth acted under color of state law when it deprived or threatened to
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`deprive SWI of its federal rights under § 1926(b).
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`31.
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`SWI has a federal right under § 1926(b) to be protected from any curtailment or
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`limitation of the water supply services that SWI has provided or made available.
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`32.
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`Portsmouth’s attempt to extend water service to SWI’s current customer
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`constitutes a deprivation of SWI’s § 1926(b) rights.
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`33.
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`Portsmouth’s actions are conducted under color of state law by virtue of
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`Portsmouth’s status as a municipality and its actions under state law to serve domestic water
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`within SWI’s service territory.
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`34.
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`SWI will suffer damages as a result of Portsmouth’s unlawful encroachment in an
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`amount yet to be determined.
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`5
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`Case: 1:20-cv-00817-TSB Doc #: 1 Filed: 10/19/20 Page: 6 of 9 PAGEID #: 6
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`COUNT THREE
`Preliminary and Permanent Injunction
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`SWI incorporates by reference each allegation stated above.
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`SWI has demonstrated a strong likelihood of success on the merits.
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`Should Portsmouth continue its unlawful actions in violation of 7 U.S.C. §
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`
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`35.
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`36.
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`37.
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`1926(b), SWI will suffer irreparable harm.
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`38.
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`SWI has no adequate remedy at law.
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`39.
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`The issuance of a preliminary and permanent injunction will not cause substantial
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`harm to Portsmouth or the School District.
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`40.
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`Absent injunctive relief, Congress’s purpose in enacting 7 U.S.C. § 1926(b) in the
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`public interest will be thwarted. Title 7 U.S.C. § 1926(b) was enacted: (a) to encourage rural
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`water development by expanding the number of potential users of such systems, thereby
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`decreasing per-user costs and (b) to safeguard the viability and financial security of these
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`associations and loans by protecting such associations from municipal encroachment.
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`41.
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`SWI is entitled to preliminary and permanent injunctive relief as follows:
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`a)
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`b)
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`c)
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`Enjoining Portsmouth from taking any further action to supply potable
`water to the School District; and
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`Enjoining Portsmouth from taking any further action which will serve to
`curtail or limit the water service made available by SWI to the School
`District in violation of 7 U.S.C. § 1926(b); and
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`Enjoining Portsmouth from taking any further action in violation of the
`declaratory judgment granted herein.
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`COUNT FOUR
`Constructive Trust – Customers in Dispute
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`SWI incorporates by reference each allegation stated above.
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`Any and all water lines, mains, meters, tanks, pump stations, valves, and other
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`42.
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`43.
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`6
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`Case: 1:20-cv-00817-TSB Doc #: 1 Filed: 10/19/20 Page: 7 of 9 PAGEID #: 7
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`facilities owned or later constructed by Portsmouth and used to serve the School District must be
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`declared to be held in constructive trust for the use and benefit of SWI, and conveyed to SWI as
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`part of the equitable remedies sought by SWI in this case.
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`JURY TRIAL DEMANDED
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`SWI demands a jury trial as to all issues triable by jury.
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`WHEREFORE, SWI requests the following relief:
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`1.
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`2.
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`follows:
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`3.
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`4.
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`5.
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`Judgment in favor of SWI on all claims for relief asserted herein;
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`Declaratory judgment in favor of SWI pursuant to 28 U.S.C. §§ 2201 and 2202 as
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`a.
`
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`b.
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`c.
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`That SWI is an “association” within the meaning of 7 U.S.C. §
`1926(b), is currently indebted to the FmHA/USDA, and, at all
`times material, has provided or made available water service to the
`School District;
`
`That SWI is entitled to the rights, privileges and protection granted
`under 7 U.S.C. § 1926(b) during the term of the indebtedness; and
`
`That the actions of Portsmouth, and all those acting in concert with
`Portsmouth, in attempting to provide water service to the School
`District will unlawfully curtail or limit SWI’s service in violation
`of 7 U.S.C. § 1926(b).
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`Preliminary and permanent injunctive relief in favor of SWI;
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`An award of damages in an amount to be determined at trial,
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`A judgment granting SWI the equitable remedy of forfeiture by Portsmouth
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`and/or any third-party owner of all water lines and other infrastructure built by Portsmouth
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`and/or a third-party to provide potable water service to the School District.
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`6.
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`7.
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`An award to SWI of its costs and attorney fees; and
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`Such other relief in law or in equity to which SWI may be entitled.
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`7
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`Case: 1:20-cv-00817-TSB Doc #: 1 Filed: 10/19/20 Page: 8 of 9 PAGEID #: 8
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`
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`Respectfully submitted,
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`O’TOOLE McLAUGHLIN DOOLEY &
`PECORA, CO., LPA
`
`
`/s/ Matthew A. Dooley
`Matthew A. Dooley (OH 0081482)
`Stephen M. Bosak, Jr. (OH 0092443)
`5455 Detroit Road
`Sheffield Village, Ohio 44054
`Telephone:
`(440) 930-4001
`Facsimile:
`(440) 934-7208
`Email:
`mdooley@omdplaw.com
`
`
`sbosak@omdplaw.com
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`Counsel for Plaintiff Scioto Water, Inc.
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`8
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`Case: 1:20-cv-00817-TSB Doc #: 1 Filed: 10/19/20 Page: 9 of 9 PAGEID #: 9
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`VERIFICATION
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`My name is Jeffrey D. Spradlin, and I am the general manager of Scioto Water, Inc. and
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`otherwise sui juris. I declare under penalty of perjury under the laws of the United States of
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`America that the statements contained in this Verified Complaint are true and correct to the best
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`of my knowledge.
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`Executed this “day of October 2020 in Scioto County Ohio.
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