Apple Grp. Ltd. v. Medina Cnty. Bd. of Revision

• Citation: 139 Ohio St.3d 434,12 N.E.3d 1188,2014 Ohio 2381
• Decision Date: 10 June 2014
• Docket Number: No. 2013–0149.,2013–0149.
• Parties: APPLE GROUP LTD., Appellant, v. MEDINA COUNTY BOARD OF REVISION et al., Appellees.
• Court: United States State Supreme Court of Ohio

139 Ohio St.3d 434

12 N.E.3d 1188

2014 Ohio 2381

APPLE GROUP LTD., Appellant,

v.MEDINA COUNTY BOARD OF REVISION et al., Appellees.

No. 2013–0149.

Supreme Court of Ohio.

Submitted Feb. 25, 2014.

Decided June 10, 2014.

Karen H. Bauernschmidt Co., L.P.A., Karen H. Bauernschmidt, Cleveland, Charles J. Bauernschmidt, and Stephen M. Nowak, for appellant.

Dean Holman, Medina County Prosecuting Attorney, and Nathan E. Carnes, Assistant Prosecuting Attorney, for appellees, Medina County Auditor and Medina County Board of Revision.

PER CURIAM.

{¶ 1} This real-property-valuation case concerns the proper valuation of unbuilt lots in a residential subdivision for tax year 2008. The Board of Tax Appeals ("BTA") rejected the comparable-sales appraisal submitted by the taxpayer, Apple Group Ltd., and because it concluded that the taxpayer had failed to discharge its burden of showing a different value, the BTA reverted to the county's valuation of the parcels. Contrary to the BTA's analysis, we conclude that Apple Group presented evidence that negated the auditor's determination of value and that triggered the BTA's duty to perform an independent valuation of the property for tax year 2008. The BTA then had the duty to determine whether to carry a new valuation for 2008 forward to tax year 2009. As for tax year 2010, the BTA properly decided that that tax year lay beyond the scope of inquiry in this case. We therefore affirm in part, reverse in part, and remand for further proceedings.

Facts

{¶ 2} At issue are 13 residential lots improved for building (road access, city water, natural gas, electric, and telephone service available to each lot), but without any houses built on them as of the lien dates at issue. The lots are part of a subdivision, called Trophy Club in Medina County, that includes lots not at issue.

{¶ 3} In Medina County, 2007 was a reappraisal year, but on the lien date for tax year 2007 (January 1, 2007), the lots at issue were part of a larger tract. According to the property record cards, that larger tract was subdivided into the current lots in June 2007. That created the need for the auditor to assign individual values to the 13 individual lots for the first time in the 2008 tax year. Based on comparable sales from the Trophy Club subdivision, the auditor set the value of each lot at $105,000. (Because the lots were unbuilt, there was of course no building value to assign.)

1. The BOR retained the auditor's valuation

{¶ 4} Apple Group filed a single complaint on March 31, 2009, challenging the valuation and proposing a reduced value of $65,000 for each of the 13 lots. As justification for the reduction, Apple cited "[m]arket data," "[d]ecline in values," and "[o]ther factors to be presented at the BOR hearing." At the BOR hearing, Apple's witness, Sandy Simich, testified that the Trophy Club development involved three phases, of which the first two phases included the more desirable wooded lots, while the properties at issue were less desirable grassland parcels constituting phase three. Also at the BOR hearing, the auditor's witness, Chris Szelag, presented the comparables that the auditor had relied on in determining the $105,000 valuation for the lots. Those comparables were primarily 2005 and 2006 sales that had occurred when the market was stronger.

{¶ 5} On August 6, 2009, the BOR voted to retain the auditor's valuation on the grounds that Apple failed to prove a different value. Apple appealed to the BTA.

2. The BTA rejected the appraisal evidence for a reduced valuation

{¶ 6} At the BTA hearing, Apple presented the appraisal report and testimony of Richard Racek, an expert appraiser. The appraisal relies exclusively on the sales-comparison approach. The comparable sales are 15 in number—eight from the Trophy Club subdivision and seven from other subdivisions in a neighboring township. Based on the comparables, Racek concluded that the lots were worth $85,000 for tax year 2008 and $75,000 for tax years 2009 and 2010.

{¶ 7} On December 28, 2012, the BTA issued its decision. The BTA observed that "[s]ince the lots in issue have not recently transferred, appellant * * * offered into evidence the testimony and written appraisal prepared by Racek" for 2008, 2009, and 2010. BTA No. 2009–K–2101, 2012 WL 6846167, *1 (Dec. 28, 2012). Noting that Apple as appellant bore the burden of showing its right to a reduced valuation, the BTA proceeded to consider the probative character of the appraisal.

{¶ 8} The BTA questioned the appraiser's conclusions. Although the appraiser testified regarding a downturn both in the construction of new homes from 2005 through 2008 and a general decline in the market for residential real estate, the BTA found that the "sales data suggests that sales within the subject subdivision did not begin to reflect lesser transfer amounts until third quarter 2009." Id ., *3. The BTA felt free to disregard the lower prices garnered from sales out of other subdivisions on the grounds that those lower prices "may speak to the strength of that particular residential community" as opposed to the Trophy Club subdivision at issue. Id.

{¶ 9} Finally, the BTA noted that the two earlier sales out of the Trophy Club subdivision itself—the 2007 sale for $105,000 and the August 2008 resale for $110,000—"are consistent with and supportive of the auditor's valuation of $105,000." Id ., *3. In a footnote, the BTA took note of Simich's testimony that the 2008 sale for $110,000 was in a nicer portion of the subdivision, but pointed out that the appraiser "highlighted no such distinction." Id ., fn. 2.

{¶ 10} The BTA concluded that Apple Group "has failed to meet its affirmative burden on appeal." Id . Citing case law, the BTA implicitly found that it did not have sufficient evidence before it to perform an independent valuation of the lots.

Id ., quoting Simmons v. Cuyahoga Cty. Bd. of Revision, 81 Ohio St.3d 47, 49, 689 N.E.2d 22 (1998) ("Where the BTA rejects the evidence presented to it as not being competent and probative, or not credible, and there is no evidence from which the BTA can independently determine value, it may approve the board of revision's valuation, without the board of revision's presenting any evidence").

{¶ 11} The BTA carried the 2008 valuation of the auditor over to tax year 2009, but it declined Apple Group's invitation to determine a value for tax year 2010. BTA No. 2009–K–2101, 2012 WL 6846167, *3, fn. 3.

Analysis

A. Apple's claim that the BTA should have valued three lots by using their sale prices is jurisdictionally barred

{¶ 12} Apple's first proposition of law states that the BTA decision is unreasonable and unlawful because the BTA "failed to recognize the recent, arm's-length sales of three sublots." Under this heading, Apple argues that the BTA ought to have adopted the sale prices of those three parcels as the values of those parcels. Apple originally offered those sales not as direct evidence of the value of those parcels, but rather as comparable sales among other comparable sales. Apple itself did not draw the BTA's attention to the fact that the comparable sales included sales of three of the lots at issue, nor did Apple advance any argument before the BTA that those sale prices directly indicated the value of the parcels at issue.

{¶ 13} Apple has failed to preserve this issue for appeal. In its notice of appeal to this court, Apple sets forth no fewer than 16 assignments of error. None of them come close to stating the issue that Apple raises through its first proposition of law. Accordingly, the court lacks jurisdiction to grant relief to Apple Group on that ground. See R.C. 5717.04 (fifth paragraph) ("A notice of appeal shall set forth the decision of the board [of tax appeals] appealed from and the errors therein complained of " [emphasis added] ); Newman v. Levin, 120 Ohio St.3d 127, 2008-Ohio-5202, 896 N.E.2d 995, ¶ 28 (the court "lack[ed] jurisdiction to consider" a claim of error on appeal because "none of the errors raised in the notice of appeal to this court identif[ied]" that claim); see also Global Knowledge Training, L.L.C. v. Levin, 127 Ohio St.3d 34, 2010-Ohio-4411, 936 N.E.2d 463, ¶ 23–24 ; Fogg–Akron Assocs., L.P. v. Summit Cty. Bd. of Revision, 124 Ohio St.3d 112, 2009-Ohio-6412, 919 N.E.2d 730, ¶ 12.

B. Racek's comparable-sales study negated the auditor's valuation and triggered the BTA's duty to perform an independent valuation

{¶ 14} Apple's second, third, and fourth propositions of law fault the BTA for failing to acknowledge and rely upon the expertise of its appraiser and the probative force of his comparable-sales analysis. But the BTA "is not required to adopt the valuation fixed by any expert or witness," because the BTA possesses "wide discretion in determining the weight to be given the evidence and the credibility of witnesses." Cardinal Fed. S. & L. Assn. v. Cuyahoga Cty. Bd. of Revision, 44 Ohio St.2d 13, 336 N.E.2d 433 (1975), paragraphs two and three of the syllabus. Given that discretion, the court has held that "[a]bsent a showing of an abuse of discretion, the BTA's determination as to the credibility of witnesses and the weight to be given to their testimony will not be reversed by this court." EOP–BP Tower, L.L.C. v. Cuyahoga Cty. Bd. of Revision, 106 Ohio St.3d 1, 2005-Ohio-3096, 829 N.E.2d 686, ¶ 14.

{¶ 15} But Apple's argument extends beyond the mere assertion that its appraisal ought to have been regarded as probative. Apple argues alternatively that "[i]f the BTA did not find Mr. Racek's sales comparison approach appropriate, the BTA should have utilized the market data provided by Mr. Racek to adjust his value conclusion or the BTA could have utilized the market data provided by the Property Owner at the BTA hearing. Therefore, the BTA had a duty to undertake an independent valuation of the property."

{¶ 16} This alternative argument invokes legal principles that the court has enunciated and enforced in the past. Those principles...