Mason City Sch. Dist. Bd. of Educ. v. Warren Cnty. Bd. of Revision

• Citation: 4 N.E.3d 1027,138 Ohio St.3d 153
• Decision Date: 21 January 2014
• Docket Number: No. 2012–2107.,2012–2107.
• Parties: MASON CITY SCHOOL DISTRICT BOARD OF EDUCATION, Appellee, v. WARREN COUNTY BOARD OF REVISION et al., Appellees; Squire Hill Properties II, L.L.C., Appellant.
• Court: United States State Supreme Court of Ohio

138 Ohio St.3d 153

4 N.E.3d 1027

MASON CITY SCHOOL DISTRICT BOARD OF EDUCATION, Appellee,

v.WARREN COUNTY BOARD OF REVISION et al., Appellees; Squire Hill Properties II, L.L.C., Appellant.

No. 2012–2107.

Supreme Court of Ohio.

Submitted Oct. 8, 2013.

Decided Jan. 21, 2014.

David C. DiMuzio, Inc., and Jennifer B. Antaki, for appellee Mason City School District Board of Education.

David P. Fornshell, Warren County Prosecuting Attorney, and Michael Greer and Christopher A. Watkins, Assistant Prosecuting Attorneys, for appellees Warren County Board of Revision and Warren County Auditor.

Hemmer DeFrank, P.L.L.C., Scott R. Thomas, Cincinnati, and Carlo R. Wessels, for appellant.

KENNEDY, J.

{¶ 1} In this appeal from the Board of Tax Appeals (“BTA”), we consider the motion to dismiss filed by appellee Mason City School District Board of Education and the appeal filed by appellant, Squire Hill Properties II, L.L.C. Squire Hill advances four propositions of law:

1. The decision of the Board of Tax Appeals is a nullity because Squire Hill was denied due process in not being provided constitutionally required notice and an opportunity to be heard.

2. The decision of the Board of Tax Appeals must be reversed because the Board abused its discretion when it failed to continue the hearing after being informed that Wasserpach no longer owned the property.

3. The decision of the Board of Tax Appeals must be reversed because Mason failed to meet its burden of proof to overcome the record established at the Warren County Board of Revision.

4. The decision of the Board of Tax Appeals must be reversed because the Board lacked authority and had no evidence to support increasing the valuation of the property without notice to Squire Hill.

{¶ 2} Addressing the motion to dismiss first, for the reasons stated below, we conclude that the motion lacks merit, and it is denied. Turning to the issues Squire Hill raises on appeal, we reject the contention that under these circumstances, the BTA was required to give Squire Hill notice of the BTA hearing. We agree with Squire Hill, however, that the BTA erred by not properly considering the finding of the Warren County Board of Revision (“BOR”) that the 2006 sale was not recent in regard to the tax-lien date. We therefore vacate the BTA's decision and remand for further proceedings.

Proceedings

{¶ 3} The property at issue is a one-story, multitenant retail structure called the “Shops at Deerfield South” located in the Mason City School District. For tax-year 2008, the county auditor assigned a value of $5,035,790 to the property.

{¶ 4} On January 22, 2009, the former owner of the property, Wasserpach IV, L.L.C., filed a valuation complaint for tax-year 2008, seeking a reduction from the auditor's valuation to $3,000,000 (an amended complaint filed June 5, 2009, sought further reduction). The stated grounds for the reduction were “decreased profitability resulting from decreased market rents, large vacancies, lower rental income, and increased property expenses.” The school board filed a countercomplaint that pointed to the December 2006 sale price of $5,350,000, but it asked that the auditor's valuation, which was slightly lower than the sale price, be retained.

{¶ 5} The BOR held a hearing on August 12, 2009, and issued a decision that reduced the value to $3,353,900. That decision relied on a specific finding that the December 2006 sale was not recent, because of the sudden increase in vacated units—from fully leased to 57 percent vacant—between the sale date and the tax-lien date, an event that two members of the BOR, the county auditor and the county treasurer, believed to be linked to market conditions.

{¶ 6} The school board then appealed to the BTA, which held a hearing on April 18, 2012. At the hearing, the examiner noted that the county appellees had waived appearance. Counsel for the former property owner Wasserpach had also contacted the examiner and indicated that Wasserpach would not appear, because Wasserpach had surrendered title to the property in lieu of foreclosure. Counsel for the school board did appear and argued in favor of considering the December 2006 sale price and of reverting to the auditor's somewhat lower valuation.

{¶ 7} The BTA issued its decision on November 16, 2012. The BTA relied on case law to conclude that the December 2006 sale price, $5,350,000, was the value of the property as of January 1, 2008. The BTA stated that “[i]n the absence of evidence demonstrating why such sale should not be relied upon to establish the subject property's value for tax purposes, we will not engage in conjecture as to bases for its rejection.” Mason City School Dist. Bd. of Edn. v. Warren Cty. Bd. of Revision, BTA No. 2009–K–2364, 2012 WL 6026708, *2 (Nov. 16, 2012). The BTA decision makes no mention of the BOR's explicit findings regarding the recency issue. Instead, the BTA confined itself to the observation that the sale, having occurred a little less than 13 months before the lien date, was close enough in time to be regarded as recent. Id. at fn. 2.

{¶ 8} After the BTA issued its decision, Squire Hill appealed to this court. Because Squire Hill had acquired the property after the BTA hearing and before the BTA issued its decision, it had standing to appeal under the second paragraph of R.C. 5717.04, 2009 Sub.H.B. No. 1, which permits a current owner who was not a party before the BTA to appeal. The school board has filed a motion to dismiss on the grounds that Squire Hill failed to serve Wasserpach, the former owner that was identified as a party at the BTA. The school board has also filed an appellee brief opposing Squire Hill's propositions of law.

Motion to Dismiss

{¶ 9} We must first address the motion to dismiss filed by the school board. The school board asserts that the court lacks jurisdiction because Squire Hill failed to serve the notice of appeal on Wasserpach as an appellee according to the requirements of R.C. 5717.04. See Olympic Steel, Inc. v. Cuyahoga Cty. Bd. of Revision, 110 Ohio St.3d 1242, 2006-Ohio-4091, 852 N.E.2d 178.

A. Facts

{¶ 10} Wasserpach was a previous owner of the property, and Wasserpach filed the valuation complaint that initiated the proceedings at the BOR. As a result, Wasserpach became a party-appellee at the BTA when the school board appealed the BOR's decision. SeeR.C. 5717.01 (requiring the board of revision to give notice of an appeal to the BTA to “all persons * * * who were parties to the proceeding before” the board of revision); former Ohio Adm.Code 5717–1–03(B), 2004–2005 Ohio Monthly Record 6–1714, effective Jan. 14, 2005 (permitting “[a]ny party before the board of revision, who desires to participate in an appeal before the board of tax appeals as an appellee” to enter an appearance). Indeed, Wasserpach did enter a formal appearance through counsel at the BTA. Furthermore, the record indicates that Wasserpach surrendered title to the property to another entity some time before the BTA convened its evidentiary hearing. Squire Hill also asserts that Wasserpach dissolved in December 2010 and attaches documentation to that effect from the secretary of state's office.

{¶ 11} The school board and Squire Hill both assert—without any support in the record—that Wasserpach surrendered title to the property in June 2010, while the BTA proceeding was pending, to an entity called Viking Partners Deerfield, for no consideration. Viking Partners then transferred the property to Squire Hill for $3,200,000 in July 2012—after the BTA hearing but four months before a decision was issued.

B. Because Squire Hill prosecutes this appeal as the new owner, the failure to serve a former owner is not a jurisdictional defect

1. The Olympic Steel doctrine

{¶ 12} Relying on Olympic Steel, 110 Ohio St.3d 1242, 2006-Ohio-4091, 852 N.E.2d 178, the school board asserts that as a jurisdictional prerequisite to pursuing its appeal, Squire Hill ought to have joined and served Wasserpach as an appellee before this court.

{¶ 13} In Olympic Steel, the court held that service of the notice of appeal on the tax commissioner as an appellee, as prescribed by paragraph six of former R.C. 5717.04, 2009 Sub.H.B. No. 1, constitutes a jurisdictional prerequisite to pursuing the appeal from a BTA decision in a board-of-revision case to this court.

{¶ 14} The rationale of Olympic Steel is as follows. Paragraph six of former R.C. 5717.04 identifies those persons who “shall be made appellees”: “all persons to whom the decision of the board appealed from is required by [R.C. 5717.03] to be sent, other than the appellant.” The statute required that the notice of appeal must be served on those persons: “Unless waived, notice of the appeal shall be served upon all appellees by certified mail.”

{¶ 15} For its part, R.C. 5717.03(B) addresses the following question: When it issues a decision in an appeal from a board of revision, to what persons must the BTA send its decision? The statute says that the decision shall be sent to the following: “all persons who were parties to the appeal before the board, to the person in whose name the property is listed, or sought to be listed, if such person is not a party to the appeal, to the county auditor of the county in which the property involved in the appeal is located, and to the tax commissioner.”

{¶ 16} Reading R.C. 5717.03 with former R.C. 5717.04: an appellant must join as appellees and serve the appeal on (i) all parties to the BTA appeal (other than the appellant itself), (ii) the owner if the owner was not a party, (iii) the county auditor, and (iv) the tax commissioner.

{¶ 17} In Olympic Steel, we held that the “appellant's failure in this case to comply with its statutory obligation to serve the notice of appeal on the Tax Commissioner in the prescribed manner deprives this court of jurisdiction to consider the appeal.” After Olympic Steel, the court held that the service must be initiated within the time for...