Stumphauzer O'Toole is comprised of an enterprising team of attorneys with over 100 years of experience covering the many disciplines of the law. Ours is a General Civil Practice firm representing a broad spectrum of clients including individuals, estates, businesses, nonprofit organizations, governmental bodies, public schools, financial institutions, and multinational businesses.
In an increasingly complex and specialized legal world, Stumphauzer O'Toole’s integrity lies in our ability to consistently match our clients with an attorney whose experience meets their legal needs. Stumphauzer O'Toole consistently ensures that each client is properly represented at reasonable cost and expense while providing quality legal services with the highest ethical standards.
In rural southeast Ohio, a battle that significantly impacts every one of the 50,000-plus rural water associations in the United States has been waged – with Stumphauzer O’Toole playing a pivotal role.
Ross County Water Company, Inc. (RCWC) is a non-profit, user-member owned corporation, that provides quality residential and commercial water service to approximately 13,000 customers in areas of Ross, Pike, Pickaway, Vinton, Hocking, and Jackson Counties in Ohio. Covering a chunk of south central Ohio, the organization’s customers are approximately 95% residential and 5% commercial.
RCWC is primarily supported by water service fees collected from its customers. More than 90% of the organization’s total revenue typically comes from water service fees. Every person signing an application and agreement for the purchase of a water tap becomes a user-member upon payment of the required fees and installation of the water tap. RCWC has maintained a steady growth since its inception, with expansion continuing due to extensions of water mains and construction of homes in rural areas. Additionally, Ross County is providing the sale of bulk water to other water companies.
However, in 2008? WHAT MONTH? the city of Chillicothe, Ohio was attempting to extend its water lines to serve parcels that were served by RCWC. Chillicothe’s proposed lines would have been constructed parallel to and within 4 feet of RCWC’s existing lines, and at one point would physically cross perpendicular to other RCWC water mains.
RCWC sued Chillicothe to protect its service territory in an area outside the city limits. Judge Watson (U.S. District Court for the Southern District of Ohio) granted RCWC’s request for a preliminary injunction and the permanent injunction remains pending in his court.
In Ohio, water associations are either formed as nonprofit corporations (under the same laws as any other nonprofit) or by court order under Chapter 6119 of the Ohio Revised Code. One of the important distinctions between these two types of entities involves the definition of “service territory.” For a Chapter 6119 corporation, service territory is determined by court order, and usually states ‘X, Y, and Z townships” (and sometimes a small village or two depending on who signed on to the petition). But nonprofit associations do not have any real “defined” territory. Instead, these associations generally define territory based upon the location of existing infrastructure. And in Ohio, federal protection of service territory has historically been judged using court defined boundaries.
Historically, most Ohio water associations in the northern half of the state have been formed under Chapter 6119, while most in the southern half are nonprofits. RCWC is a nonprofit water company indebted to the United States by virtue of five loans through the United States Department of Agriculture/Rural Development totaling millions of dollars. This federal indebtedness triggers certain protections afforded to RCWC by federal law, which creates a government-sanctioned monopoly for the indebted entity. The rationale is simple – service territory (i.e. revenue) must be protected to secure the entity’s ability to repay the debt. As part of its loan agreement with USDA, RCWC (and every other borrower) pledges its existing and future revenue as collateral. This is really the only collateral that a water district has, as its infrastructure is worthless once it’s installed in the ground. It’s the ability to generate money from the infrastructure that makes the association valuable.
Until RCWC v. Chillicothe, no other Ohio case (or Sixth Circuit case) has involved the protection of a nonprofit association’s territory. Other circuit courts in the United States have weighed in on the issue, looking primarily at existing locations, which laid favorable ground for RCWC.
But in 2003, the Sixth Circuit decided an infamous case – Le-Ax Water Dist. v. City of Athens – where the court held that federal protection could not be used as a sword to reach beyond court-defined territory, even though the association had pipes in the ground in the disputed territory. This “sword vs. shield” clause has created an issue in this area of the law, as municipalities now overuse the phrase to allege that an association is attempting to use federal protection as a “sword” instead of a “shield.”
That’s exactly what Chillicothe claimed when RCWC filed suit. Garry Hunter, general counsel for the Ohio Municipal League and special counsel for Chillicothe, claimed that RCWC was attempting to use federal protection to extend its territory – an argument that not only holds no water, but defies common sense. In taking that position, Chillicothe ignored specific limiting language in the Le-Ax case, where the court expressly held that the decision only applied to associations with court-defined territory.
Chillicothe now seeks to have a district court expand the Sixth Circuit’s holding to nonprofit associations, and to further limit the nonprofit’s territory only to areas where the association is physically providing water service to a property. Many times, an association will extend lines down a rural road to serve several properties, but other properties abutting the line choose not to accept service. Chillicothe’s position would wreak havoc if customers can refuse service from the rural provider, and then later accept service from a municipal provider if land is annexed. Not to mention the havoc created with lenders who can no longer trust the associations’ pledge of future revenue since the revenue stream would be unpredictable.
Underlying the federal statutory claims, RCWC also proffered two contracts – one from 1971 and one from 2002 – both addressing RCWC’s right to serve all of unincorporated Ross County. Chillicothe claims that the 1971 agreement is void for lack of approval by city council, and further claims that the 2002 agreement is irrelevant because it addresses only a specific development, not the entire county. The contracts are clear and bolster RCWC’s claims to serve the disputed area.
Employment,Labor,Public Sector
Ashleigh is an associate practicing in the areas of General Litigation and Labor and Employment. Ashleigh focuses her practice on representing public sector clients with a particular emphasis on representing political subdivision in utility service disputes.
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Business,Employment,Labor,Municipal,Public School,Public Sector
Kenneth's practice areas include business law, public sector law, civil litigation, and business and corporate succession planning.
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Business,Domestic,Litigation,Municipal,Public Sector,Transportation
Anthony's practice areas include general litigation, public sector and family law. He is a member of the Ohio State Bar Association, the Lorain County Bar Association, and the Lorain County Bar Association Legal Ethics & Grievance Committee.
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Business,Litigation,Natural Resources,Personal Injury,Public Sector,Water
Dennis is a senior partner of the firm and has been a trial lawyer for 36 years. He has handled a wide variety of civil cases as part of a multi-state practice based in Northern Ohio, including serious personal injury and wrongful death cases. A substantial portion of Dennis’ practice involves the representation of public sector clients, where he handles a myriad of cases and legal issues facing public entities, including eminent domain cases.
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Litigation,Municipal,Public Sector,Workers Compensation
Margaret concentrates her practice in the areas of workers' compensation, municipal law, and litigation.
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Employment,Insurance,Litigation,Personal Injury,Public School
Kim has extensive experience in civil litigation, which includes jury trials, arbitration, mediation and Appellate litigation. He has concentrated his practice in the areas of insurance law, school law, municipal law, employment law, personal injury, wrongful death, business law, public record law and probate law.
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Business,Estate Planning Probate,Personal Injury
In addition to the general practice of law, Russ has served as Special Counsel for two Ohio attorneys general, assistant prosecutor in the Lorain Municipal Court, Magistrate for the Lorain Municipal Court, acting judge in the Avon Lake and Lorain Municipal Courts, Law Director for the City of Avon, Special Counsel for the cities of Avon and Elyria, and counsel to the Avon Charter Review Commission.
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Banking,Business,Nonprofit Organizations,Real Estate,Taxation
Heidi's practice focuses in the areas of business law, business sales and acquisitions, real estate transactions and nonprofit organizations. In her practice, Heidi has handled numerous business and real estate sales and acquisitions ranging in value from less than $100,000 to in excess of $15 million.
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Employment,Insurance,Labor,Litigation,Personal Injury,Public School,Public Sector
Partner, Co-Head, Litigation Dept. His areas of concentration are litigation, political subdivisions, personal injury, and school defense.
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Labor,Litigation,Municipal,Public School,Public Sector
In his first four years of practice as an Ohio Assistant Attorney General, he helped to establish Ohio's first Medicaid Fraud Unit. For the past 30 years Michael has been primarily practicing in the areas of labor, school, and municipal law.
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Banking,Municipal,Public Sector,Real Estate,Taxation
Abraham's practice is a general civil practice, with concentration in the following areas of real estate law, municipal law, business and corporate law, and civil litigation, representing and advising both private and public sector clients with respect to a wide variety of legal matters.
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Business,Litigation,Public Sector,Transportation,Water
Matthew concentrates his practice upon litigation matters stemming from business, health care, environmental, and governmental controversies.
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Larry's practice is focused on international business matters and civil litigation. He is licensed to practice law in the state of Ohio and North Carolina as well as all U.S. Federal Courts, including the Court of Claims and U.S. Supreme Court.
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Municipal,Public Sector,Real Estate
Jon practices in a variety of areas, including real estate, landlord/tenant, municipal law and general civil litigation. He presently serves as the solicitor and prosecutor for the Village of LaGrange.
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Estate Planning Probate,Litigation,Real Estate
Frank's areas of concentration are probate and estate planning, land use and real estate law, and civil litigation in these areas.
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Mr. Alderman's repertoire includes the administration of estates, preparation of wills and trusts, and the establishment of guardianships and adoptions. Emphasis is placed on the special needs of senior citizens.
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In rural southeast Ohio, a battle that significantly impacts every one of the 50,000-plus rural water associations in the United States has been waged – with Stumphauzer O’Toole playing a pivotal role.
Ross County Water Company, Inc. (RCWC) is a non-profit, user-member owned corporation, that provides quality residential and commercial water service to approximately 13,000 customers in areas of Ross, Pike, Pickaway, Vinton, Hocking, and Jackson Counties in Ohio. Covering a chunk of south central Ohio, the organization’s customers are approximately 95% residential and 5% commercial.
RCWC is primarily supported by water service fees collected from its customers. More than 90% of the organization’s total revenue typically comes from water service fees. Every person signing an application and agreement for the purchase of a water tap becomes a user-member upon payment of the required fees and installation of the water tap. RCWC has maintained a steady growth since its inception, with expansion continuing due to extensions of water mains and construction of homes in rural areas. Additionally, Ross County is providing the sale of bulk water to other water companies.
However, in 2008? WHAT MONTH? the city of Chillicothe, Ohio was attempting to extend its water lines to serve parcels that were served by RCWC. Chillicothe’s proposed lines would have been constructed parallel to and within 4 feet of RCWC’s existing lines, and at one point would physically cross perpendicular to other RCWC water mains.
RCWC sued Chillicothe to protect its service territory in an area outside the city limits. Judge Watson (U.S. District Court for the Southern District of Ohio) granted RCWC’s request for a preliminary injunction and the permanent injunction remains pending in his court.
In Ohio, water associations are either formed as nonprofit corporations (under the same laws as any other nonprofit) or by court order under Chapter 6119 of the Ohio Revised Code. One of the important distinctions between these two types of entities involves the definition of “service territory.” For a Chapter 6119 corporation, service territory is determined by court order, and usually states ‘X, Y, and Z townships” (and sometimes a small village or two depending on who signed on to the petition). But nonprofit associations do not have any real “defined” territory. Instead, these associations generally define territory based upon the location of existing infrastructure. And in Ohio, federal protection of service territory has historically been judged using court defined boundaries.
Historically, most Ohio water associations in the northern half of the state have been formed under Chapter 6119, while most in the southern half are nonprofits. RCWC is a nonprofit water company indebted to the United States by virtue of five loans through the United States Department of Agriculture/Rural Development totaling millions of dollars. This federal indebtedness triggers certain protections afforded to RCWC by federal law, which creates a government-sanctioned monopoly for the indebted entity. The rationale is simple – service territory (i.e. revenue) must be protected to secure the entity’s ability to repay the debt. As part of its loan agreement with USDA, RCWC (and every other borrower) pledges its existing and future revenue as collateral. This is really the only collateral that a water district has, as its infrastructure is worthless once it’s installed in the ground. It’s the ability to generate money from the infrastructure that makes the association valuable.
Until RCWC v. Chillicothe, no other Ohio case (or Sixth Circuit case) has involved the protection of a nonprofit association’s territory. Other circuit courts in the United States have weighed in on the issue, looking primarily at existing locations, which laid favorable ground for RCWC.
But in 2003, the Sixth Circuit decided an infamous case – Le-Ax Water Dist. v. City of Athens – where the court held that federal protection could not be used as a sword to reach beyond court-defined territory, even though the association had pipes in the ground in the disputed territory. This “sword vs. shield” clause has created an issue in this area of the law, as municipalities now overuse the phrase to allege that an association is attempting to use federal protection as a “sword” instead of a “shield.”
That’s exactly what Chillicothe claimed when RCWC filed suit. Garry Hunter, general counsel for the Ohio Municipal League and special counsel for Chillicothe, claimed that RCWC was attempting to use federal protection to extend its territory – an argument that not only holds no water, but defies common sense. In taking that position, Chillicothe ignored specific limiting language in the Le-Ax case, where the court expressly held that the decision only applied to associations with court-defined territory.
Chillicothe now seeks to have a district court expand the Sixth Circuit’s holding to nonprofit associations, and to further limit the nonprofit’s territory only to areas where the association is physically providing water service to a property. Many times, an association will extend lines down a rural road to serve several properties, but other properties abutting the line choose not to accept service. Chillicothe’s position would wreak havoc if customers can refuse service from the rural provider, and then later accept service from a municipal provider if land is annexed. Not to mention the havoc created with lenders who can no longer trust the associations’ pledge of future revenue since the revenue stream would be unpredictable.
Underlying the federal statutory claims, RCWC also proffered two contracts – one from 1971 and one from 2002 – both addressing RCWC’s right to serve all of unincorporated Ross County. Chillicothe claims that the 1971 agreement is void for lack of approval by city council, and further claims that the 2002 agreement is irrelevant because it addresses only a specific development, not the entire county. The contracts are clear and bolster RCWC’s claims to serve the disputed area.
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`+] `+] `+]A consortium of rural water industry leaders recently formed The Rural Water Alliance with the primary objective of helping rural water association general managers and board members protect their interests and maximize their effectiveness.
Ross County filed a motion for summary judgment, which has been countered by Chillicothe's brief in opposition, and followed by Ross’s reply (see filings).