Harrison v. Montgomery Cnty.
| Decision Date | 28 August 2020 |
| Docket Number | Case No. 3:19-cv-288 |
| Citation | 482 F.Supp.3d 652 |
| Parties | Alana HARRISON, Plaintiff, v. MONTGOMERY COUNTY, OHIO, Defendant. |
| Court | U.S. District Court — Southern District of Ohio |
Andrew M. Engel, Centerville, OH, Brian Flick, DannLaw, Cincinnati, OH, Matthew C. De Re, Pro Hac Vice, Thomas A. Zimmerman, Jr., Pro Hac Vice, Zimmerman Law Offices, P.C., Chicago, IL, Michael A. Smith, Dann Law, Marc E. Dann, The Dann Law Firm Co. LPA, Cleveland, OH, for Plaintiff.
Anne Jagielski, Ward Coker Barrentine, Montgomery County Prosecutor's Office, Dayton, OH, Stephen W. Funk, Roetzel & Andress, Akron, OH, for Defendant.
ENTRY AND ORDER GRANTING MOTION TO DISMISS FOR LACK OF JURISDICTION AND FAILURE TO STATE A CLAIM BY DEFENDANT MONTGOMERY COUNTY OHIO, (ECF 17), GRANTING UNOPPOSED MOTION FOR LEAVE TO FILE REPLY TO PLAINTIFF'S 22-PAGE RESPONSE TO DEFENDANT'S NOTICE OF SUPPLEMENTAL AUTHORITY AND PLAINTIFF'S SUBMISSION OF ADDITIONAL SUPPLEMENTAL AUTHORITY BY DEFENDANT MONTGOMERY COUNTY OHIO, (ECF 23), AND GRANTING UNOPPOSED MOTION FOR LEAVE TO FILE RESPONSE TO PLAINTIFF'S NOTICE OF SUPPLEMENTAL AUTHORITY (ECF 24) BY DEFENDANT MONTGOMERY COUNTY OHIO, (ECF 25), AND TERMINATING CASE.
Pending before the Court are Motion to Dismiss for Lack of Jurisdiction and Failure to State a Claim by Defendant Montgomery County Ohio, (ECF 17), Unopposed Motion for Leave to File Reply to Plaintiff's 22-Page Response to Defendant's Notice of Supplemental Authority and Plaintiff's Submission of Additional Supplemental Authority by Defendant Montgomery County Ohio, (ECF 23), and Unopposed Motion for Leave to File Response to Plaintiff's Notice of Supplemental Authority (ECF 24) by Defendant Montgomery County Ohio. (ECF 25).
Plaintiffs are a putative class of individuals who failed to pay property tax in Ohio. The Montgomery County Treasurer prosecuted a tax foreclosure against the properties and then transferred the properties to a land reutilization corporation. Plaintiffs allege that the value of their property exceeded the taxes owed and that Defendant Montgomery County violated the federal and state Takings Clauses when the County transferred that property without providing compensation for the value that exceeded the tax liabilities. Defendant moved to dismiss, arguing that the Court does not have jurisdiction over the controversy and that Plaintiffs do not state valid claims and that the action is barred by res judicata.
Named Plaintiff Alana Harrison asserts a taking arising from Defendant Montgomery Treasurer's enforcement of an administrative tax foreclosure proceeding under Ohio Revised Code § 323.65 through 323.79. (Compl. ¶ 6-12 and ¶ 27). Ohio Rev. Code § 323.65, et seq. , was first adopted by the General Assembly in 2006 in order to expedite the tax foreclosure process for "abandoned" lands. (Amd. Compl. ¶ 6). Under this statutory procedure, if a tax delinquent property involves "abandoned" land, as defined by Ohio Revised Code § 323.65(A), the County Treasurer may initiate a foreclosure proceeding with the county Board of Revision, which upon any adjudication of foreclosure, may order disposition of the abandoned land by public auction or by other conveyance in the manner prescribed by sections 323.65 to 323.79 of the Revised Code. See Ohio Rev. Code § 323.66(A).
Under Ohio Rev. Code § 323.65(A), the administrative tax foreclosure procedures set forth in Ohio Rev. Code § 323.65 through Ohio Rev. Code § 323.79 only apply to tax delinquent lands "that are unoccupied and that first appeared on the [tax delinquent] list compiled under division (C) of section 323.67 of the Revised Code, or the delinquent tax list or delinquent vacant land tax list compiled under section 5721.03 of the Revised Code ... at any time after the county auditor makes the certification of the delinquent land list under section 5721.011 of the Revised Code." Id. Moreover, the subject property must be "unoccupied," which is defined by Ohio Rev. Code § 323.65(F) to mean: "(a) [n]o building, structure, land, or other improvement that is subject to taxation and that is located on the parcel is physically inhabited as a dwelling; (b) no trade or business is actively being conducted on the parcel by the owner, a tenant, or another party occupying the parcel pursuant to a lease or other legal authority, or in a building, structure, or other improvement that is subject to taxation and that is located on the parcel; [or] (c) [t]he parcel is uninhabited and there are no signs that it is undergoing a change in tenancy and remains legally habitable, or that it is undergoing improvements, as indicated by an application for a building permit or other facts indicating that the parcel is experiencing ongoing improvements." Id.
Traditional tax foreclosures in Ohio follow the same basic procedure as routine mortgage foreclosures. The county treasurer files a lawsuit in the common pleas court, a judgment of foreclosure is rendered, and the property is sold at public auction. See Ohio Rev. Code § 323.25. The sales proceeds are then distributed among the various interest holders, starting with the county treasurer who holds a first lien position for real estate taxes. See Ohio Rev. Code § 5721.10. In other words, the treasurer commences a traditional tax foreclosure as an effort to collect tax dollars and, by the end of the process, actually collects delinquent real estate taxes. In the process, the property is offered for sale at public auction where the property owner may, through the competitive bidding process, realize on the equity she possesses in the property. Ohio Rev. Code § 2329.44.
The statute's expedited tax foreclosure process is different. First, tax foreclosure cases may be prosecuted in the county's board of revision instead of the court of common pleas. Second, although an expedited foreclosure starts in the usual way, the process soon comes to a fork in the road. Before any final action is taken on the complaint, the county treasurer—as plaintiff—must make a choice whether to collect the delinquent taxes owed through a judicial sale or to invoke the alternative redemption period of Ohio Rev. Code § 323.78 and waive all taxes and assessments owed on the parcel. Indeed, Ohio Rev. Code § 323.78(B) provides that "after the expiration of the alternative redemption period[,] the parcel shall be transferred by deed directly to the ... county land reutilization corporation without appraisal and without a sale, free and clear of all impositions and any other liens on the property, which shall be deemed forever satisfied and discharged." Because Ohio Rev. Code § 323.78(A) gives the county treasurer the sole discretion to ask the board of revision to directly transfer the property to an electing subdivision instead of ordering a judicial sale and the treasurer's decision to invoke Ohio Rev. Code § 323.78, the county treasurer controls whether the statute's foreclosure process results in the collection of tax dollars or provides inventory for an electing subdivision's Land Reutilization Program. Finally, a property may be directly transferred pursuant to Ohio Rev. Code § 323.78 "regardless of whether the value of the taxes, assessments, penalties, interest, and other charges due on the parcel, and the costs of the action, exceed the fair market value of the parcel."
In creating this expedited foreclosure procedure for abandoned, tax delinquent lands, the General Assembly implemented a number of procedural safeguards to protect the rights of affected property owners who want to contest the foreclosure or pay their delinquent taxes. First, with respect to service of process, Ohio Rev. Code § 323.66(C) provides that "the clerk of court, in the same manner as in civil actions, shall provide summons and notice of hearings, maintain an official case file, docket all proceedings, and tax as costs all necessary actions in connection therewith in furtherance of the foreclosure of abandoned land" under sections 323.65 to 323.79. Id. Moreover, under Ohio Rev. Code § 323.69(B)(1), the Summons served by the clerk of courts must provide notice to "the addressee that delinquent taxes stand charged against the abandoned land," and that the subject property may be sold or transferred "in the manner prescribed in sections 323.65 to 323.79 of the Revised Code," and that the owner or other addressee may redeem the land by paying the total of the impositions against the land at any time before confirmation of sale or transfer of the parcel as prescribed in sections 323.65 to 323.79 of the Revised Code or before the expiration of the alternative redemption period, as may be applicable to the proceeding." Id.
Second, the relevant statutes provide that an affected property owner who wants to contest the tax foreclosure action shall have the right to obtain an automatic transfer of the proceeding to the court of common pleas. See Ohio Rev. Code § 323.691 and Ohio Rev. Code § 323.70. In particular, Ohio Rev. Code § 323.691 provides that a county board of revision may order that a tax foreclosure proceeding filed under § 323.69 be transferred to the court of common pleas or to a municipal court with jurisdiction over the property, upon a motion filed by the record owner of the parcel or the county prosecuting attorney, or upon its own motion. See Ohio Rev. Code § 323.691(A). Moreover, Ohio Rev. Code § 323.70(B) provides that "[i]f, on or before the fourteenth day after service of process is perfected under division (B) of section 323.69 of the Revised Code, a record owner files with the clerk of court a motion requesting that the county board of revision order the case be transferred to a court pursuant to § 323.691 of the Revised Code, the board shall, without conducting a hearing on the matter, promptly transfer the case for foreclosure of that land to a court pursuant to section 323.691 of the Revised Code to be conducted in...
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