Columbus City Sch. Dist. Bd. of Educ. v. Franklin Cnty. Bd. of Revision

• Decision Date: 06 December 2012
• Docket Number: No. 2011–2096.,2011–2096.
• Citation: 983 N.E.2d 1285,134 Ohio St.3d 529
• Parties: COLUMBUS CITY SCHOOL DISTRICT BOARD OF EDUCATION, Appellant, v. FRANKLIN COUNTY BOARD OF REVISION et al., Appellees.
• Court: Ohio Supreme Court

134 Ohio St.3d 529

983 N.E.2d 1285

COLUMBUS CITY SCHOOL DISTRICT BOARD OF EDUCATION, Appellant,

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

No. 2011–2096.

Supreme Court of Ohio.

Submitted Oct. 23, 2012.

Decided Dec. 6, 2012.

Rich & Gillis Law Group, L.L.C., Mark H. Gillis, and Karol C. Fox, Dublin, for appellant.

PER CURIAM.

[Ohio St.3d 529]{¶ 1} In this appeal of a real-property-valuation case, the Columbus City School District Board of Education (“school board”) challenges a decision of the Board of Tax Appeals (“BTA”) that affirmed the Franklin County Board of Revision's (“BOR's”) adoption of a sale price as the value of the property at issue for tax year 2007. The school board argues that the BOR lacked jurisdiction because the valuation complaint had been signed and submitted by the property owner's spouse, who was not a lawyer. Even though R.C. 5715.19(A)(1) explicitly authorizes a spouse to file on behalf of the other spouse, the school board argues that the filing of the complaint did not invoke the BOR's jurisdiction. See Sharon Village Ltd. v. Licking Cty. Bd. of Revision, 78 Ohio St.3d 479, 678 N.E.2d 932 (1997). We disagree with the school board. The school board also argues that the BTA acted unreasonably and unlawfully in affirming the use of a sale price. It argues that the sale was a “short sale” and that duress in the sale prevented it from being an arm's-length transaction. SeeR.C. 5713.03. We conclude that the record furnishes a sufficient basis to support the BTA's finding. Accordingly, we affirm its decision.

Background

{¶ 2} On March 26, 2008, the owner of the property at issue, Susanne Novak, apparentlyacting through her husband, Kurt Novak, filed a complaint challenging the auditor's valuation of the property for tax year 2007. (Although no testimony or document directly establishes the marital relationship of Kurt and [Ohio St.3d 530]Susanne Novak, the record raises the strong inference that the two are married, and the school board does not contend otherwise.) The complaint asserted that the sale price of $179,000 should be adopted as the value of the property, rather than $295,100, the value as determined by the auditor. The school board filed a countercomplaint on May 21, 2008, asserting that the auditor's valuation should be retained.

{¶ 3} Susanne Novak purchased the property from Paul and Dianna Patterson in August 2007 for $179,000. Subsequently, the property was assigned by Susanne Novak to Parkland Investment Group, L.L.C., in May 2008 for no consideration.

{¶ 4} On August 21, 2008, the BOR held a hearing at which Kurt Novak testified that “we purchased [the property at issue] on a short sale” because the previous owners “were behind on their payments.” Novak presented listings and sale prices of allegedly similar properties in the same subdivision over the preceding six months. Novak's exhibit showed three sales over the period; the highest sale price was $48.82 per square foot, the lowest $16.49 per square foot, and the median was $30.33 per square foot. There were 14 listings; the average was $69 per square foot. Novak claimed that his exhibit showed that properties in the area were overvalued for assessment. His argument appeared to be that the price-per-square-foot numbers established the propriety of the sale price because that price was $58.80 per square foot. But Novak made no adjustments for differing features of the properties—in particular, there were no indications of, or adjustments for, the circumstances of sale of the alleged comparables.

{¶ 5} At the time of the BOR hearing, the property at issue was being rented for $2,200 per month, with an option to purchase for $230,000. Novak also testified that the property was in “good” condition when purchased, but stated that it “probably needs some work to get it retail sold at the high end” of $230,000. On cross-examination, Novak testified that the property had been acquired as part of a course of business in which Novak's company actively solicited owners who were “behind on their mortgage payments.” Novak admitted that “it was certainly a distress sale” from the owner-seller's standpoint. Novak asserted that the sale was at arm's length because there was no relationship between the seller and the buyer, and because the bank negotiated for the highest possible price in its own best interest.

{¶ 6} On December 5, 2008, the BOR issued a decision adopting the sale price of $179,000 as the value of the property. The school board appealed to the BTA, and the BTA held a hearing on April 13, 2011, at which the school board and the county appeared. The owner did not appear.

{¶ 7} The school board argued that the BOR lacked jurisdiction because the complaint was presented by someone who was not Susanne Novak herself or a [Ohio St.3d 531]lawyer. Additionally, the school board argued that the sale should not be considered an arm's-length transaction. On November 15, 2011, the BTA issued its decision. The BTA compared signatures in the record and found that “the signature on the complaint is consistent with the signature of Kurt Novak, not Susanne Novak.” Columbus City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision, BTA No. 2008–Q–2457, 2011 WL 5924473, *2 (Nov. 15, 2011). Drawing the inference from the entire record that Kurt and Susanne were married to each other, the BTA held that under Dayton Supply & Tool Co., Inc. v. Montgomery Cty. Bd. of Revision, 111 Ohio St.3d 367, 2006-Ohio-5852, 856 N.E.2d 926, “ ‘a complaint executed and signed by a non-attorney husband/wife when the property which is the subject of the complaint is owned by the spouse is executed with the requisite fiduciary interests.’ ” Id.

{¶ 8} Addressing the valuation issue, the BTA stated that in a short sale, the purchase price is less than the amount owed to the lender. The BTA characterized the school board's position as “ ‘constru[ing] the bank's consideration of the amount remaining on the mortgage as an indication of the “forced” or “involuntary” nature of the sale.’ ” Id., *3, quoting Cincinnati School Dist. Bd. of Edn. v. Hamilton Cty. Bd. of Revision, BTA No. 2008–A–1788 (July 12, 2011). In rejecting the school board's position, the BTA opined that “ ‘the only party that could have felt “forced” in the sale was the property owner, who had no role in the negotiation of the sale.’ ” Id., quoting Cincinnati School Dist. According to the BTA, the bank “ ‘acted freely in negotiating the ultimate sale price, basing its position on the amount of money it needed to get out of the sale, not unlike any other seller's typical motivation.’ ” Id., quoting Cincinnati School Dist. On this basis, the BTA concluded that “the best evidence of the subject's value as of the effective tax lien date [was] the amount for which it transferred in August 2007.” Id., *4.

{¶ 9} The school board appealed, and we now affirm.

Analysis

A. In authorizing an owner's spouse to file a complaint, R.C. 5715.19(A) does not substantially interfere with regulating the practice of law

{¶ 10} We first turn to an issue of the jurisdiction of the boards of revision. On the basis of Sharon Village, 78 Ohio St.3d 479, 678 N.E.2d 932, and its progeny, the school board asserts that the valuation complaint filed on behalf of Susanne Novak, the property owner, by her husband, Kurt Novak, is invalid because Kurt Novak was not a lawyer.

{¶ 11} Because the General Assembly, through a 1999 amendment to R.C. 5715.19(A), Sub.H.B. No. 694 (“H.B. 694”), 147 Ohio Laws, Part III, 5373, 5375, has specifically empowered a spouse to file a valuation complaint on behalf of the [Ohio St.3d 532]spouse who owns property, the school board's argument requires considering whether the legislative enactment can constitutionally be enforced in light of the duty to regulate the practice of law that the Ohio Constitution vests in this court. Ohio Constitution, Article II, Section 1, confers general legislative authority on the General Assembly, pursuant to which the legislature has acted in creating the boards of revision and defining their authority. Ohio Constitution, Article IV, Section 2(B)(1)(g) confers upon this court original jurisdiction regarding “[a]dmission to the practice of law, the discipline of persons so admitted, and all other matters relating to the practice of law.”

{¶ 12} “ ‘The practice of law is not limited to the conduct of cases in court. It embraces the preparation of pleadings and other papers incident to actions and special proceedings and the management of such actions and proceedings on behalf of clients before judges and courts * * *.’ ” Dayton Supply & Tool, 111 Ohio St.3d 367, 2006-Ohio-5852, 856 N.E.2d 926, ¶ 7, quoting Land Title Abstract & Trust Co. v. Dworken, 129 Ohio St. 23, 193 N.E. 650 (1934), paragraph one of the syllabus. Consistent with this general doctrine, preparing and submitting a valuation complainton behalf of a corporation or another natural person are understood to constitute the practice of law. Sharon Village, 78 Ohio St.3d at 481–482, 678 N.E.2d 932.

1. In Sharon Village, the pertinent statutes prohibited a nonattorney agent of the corporate property owner from filing a valuation complaint

{¶ 13} The school board relies on Sharon Village to support its argument that the valuation complaint filed by Kurt Novak on behalf of his wife, the property owner, is invalid. At the time Sharon Village was decided, R.C. 5715.19(A) provided that an owner of property in the county could file a valuation complaint, Am.Sub.H.B. No. 603, 142 Ohio Laws, Part III, 4583, 4589, and R.C. 5715.13 provided that either the owner itself or an “agent” could perform the filing, 1953 Am.H.B. No. 1. Also at that time, R.C. 4705.01 stated:

No person shall be permitted to practice as an attorney and counselor at law, or to commence, conduct, or defend any action or proceeding in which he is not a party concerned, either by suing or subscribing his own name, or the...