Musial Offices, Ltd. v. Cnty. of Cuyahoga

• Court: Ohio Court of Appeals
• Writing for the Court: EILEEN T. GALLAGHER
• Citation: Musial Offices, Ltd. v. Cnty. of Cuyahoga, 8 N.E.3d 992 (Ohio App. 2014)
• Decision Date: 20 February 2014
• Docket Number: No. 99781.,99781.
• Parties: MUSIAL OFFICES, LTD., Plaintiff–Appellant and Cross–Appellee v. COUNTY OF CUYAHOGA, et al., Defendants–Appellees and Cross–Appellants.

8 N.E.3d 992

MUSIAL OFFICES, LTD., Plaintiff–Appellant and Cross–Appellee

v.COUNTY OF CUYAHOGA, et al., Defendants–Appellees and Cross–Appellants.

No. 99781.

Court of Appeals of Ohio, Eighth District, Cuyahoga County.

Feb. 20, 2014.

Patrick J. Perotti, James S. Timmerberg, Dworken & Bernstein Co., L.P.A., Painesville, OH, Thomas D. Robenalt, Mellino Robenalt, L.L.C., Rocky River, OH, for Plaintiff–Appellant and Cross–Appellee.

Timothy J. McGinty, Cuyahoga County Prosecutor by Brian R. Gutkoski, John F. Manley, David G. Lambert, Assistant Prosecuting Attorneys, Cleveland, OH, for Defendants–Appellees and Cross–Appellants.

Before: E.T. GALLAGHER, J., KEOUGH, P.J., and KILBANE, J.

EILEEN T. GALLAGHER, J.

{¶ 1} Plaintiff-appellant, Musial Offices, Ltd. (“Musial”), appeals the denial of its motion for class certification in its case against defendants-appellees, Cuyahoga County (“Cuyahoga County” or “the county”), to recoup overpaid property taxes. In a cross-appeal, Cuyahoga County challenges the trial court's determination that Musial established certain requirements for class certification. The county also asserts the trial court lacked jurisdiction to hear Musial's claims. We find the trial court had jurisdiction and reverse the trial court's judgment denying class certification.

{¶ 2} Musial is the owner of real property located at 2885 Center Ridge Road, Westlake, Ohio. In 2005, the county auditor assigned a tax valuation of $679,500 to Musial's property for the 2006, 2007, and 2008 tax years. In 2009, Musial filed a decrease complaint with the Cuyahoga County Board of Revision (“Board of Revision” or “Board”) for the 2008 tax year. The Westlake Board of Education filed a counterclaim seeking to retain the auditor's valuation. The Board of Revision did not hold a hearing on Musial's complaint until November 25, 2009.

{¶ 3} On December 14, 2009, Musial received a property tax bill for the first half of 2009.¹ The tax bill reflected a tax valuation of $679,500 and indicated that payment was due on January 20, 2010. On January 13, 2010, Musial received a letter of correction from Frank Russo (“Russo”),² who served as both the county auditor and secretary of the Board of Revision, stating that the valuation of Musial's Westlake property for the tax year 2008 had been reduced from $679,500 to $499,000. The letter further stated: “If no action is taken, the Board's decision will be reflected in your next tax bill.”

{¶ 4} Musial paid the December 2009 tax bill for the first half of 2009 without protest. In an affidavit, Mark Musial, Musial's principal, explained that because the correction letter indicated the correction would be reflected in Musial's next tax bill, he did not think any further action was necessary. However, in June 2010, Musial received a property tax bill for the second half of 2009 that reflected a tax valuation of $679,500 instead of the Board of Revision's reduced valuation. In response to the tax bill, Mark Musial sent a letter to Russo and the Board of Revision demanding correction of the 2009 valuation. Musial received no response. Mark Musial sent a second letter again demanding correction of the 2009 property valuation on August 31, 2010.

{¶ 5} Marty Murphy (“Murphy”), the acting administrator of the Board of Revision, called Mark Musial and informed him that “hundreds” of taxpayer were similarly overcharged and that the Board was consideringapplying its $499,000 valuation to Musial's property for the 2009 tax year. Murphy indicated that if the county made corrections, they would be made without any action from Musial. Murphy also admitted that the Board of Revision's $499,000 valuation for the 2008 tax year should have applied to the 2009 tax year. These statements were consistent with reports Mark Musial had read in the Plain Dealer of numerous property owners who were overcharged in their 2009 property tax bills.

{¶ 6} The corrections Musial sought were never made. Thus, Musial filed a complaint in the Cuyahoga County Common Pleas Court on January 24, 2011, alleging that the county erroneously applied 2007 property values to assess the class members' 2009 property taxes instead of the 2008 value ordered by the Board of Revision. Musial subsequently amended the complaint and asserted claims for disgorgement, unjust enrichment, violation of due process and equal protection, injunctive relief, and mandamus. The county filed a Civ.R. 12(B)(1) motion to dismiss the complaint for lack of subject matter jurisdiction, which the trial court converted to a motion for summary judgment and denied.

{¶ 7} It is undisputed that the county overcharged numerous property owners in real estate tax bills for the 2009 tax year. On June 28, 2012, Musial filed a motion for class certification asking the court to certify the following class:

Cuyahoga County property owners who filed a complaint against valuation for tax year 2008 that resulted in the Board of Revision reducing the value of the property, whose 2009 property value was taxed using a higher value.

Following a hearing, the trial court denied the motion for class certification. Musial now appeals, arguing the court should have granted class certification. In its cross-appeal, the county asserts four assignments of error challenging the trial court's jurisdiction and its determination that Musial established certain factors required by Civ.R. 23 for class certification. We discuss the county's fourth assignment of error first because without jurisdiction, the remaining assigned errors would be moot.

Jurisdiction

{¶ 8} In its fourth cross-assignment of error, the county argues the trial court lacked jurisdiction to hear Musial's complaints because Musial's recourse was through a statutorily prescribed administrative procedure, and there is no legal authority that confers original jurisdiction to the common pleas court for tax valuation complaints. The county contends Musial illegally attempted to circumvent a statutory scheme that requires it to exhaust its administrative remedies before invoking the court's jurisdiction.

{¶ 9} Although the trial court denied the county's motion for summary judgment, which is an interlocutory order, we are compelled to address the question of subject matter jurisdiction, which may be raised at anytime. State ex rel. Wilson–Simmons v. Lake Cty. Sheriff's Dept., 82 Ohio St.3d 37, 693 N.E.2d 789 (1998). Indeed, an appellate court may sua sponte consider subject matter jurisdiction even if it was not raised below. State ex rel. White v. Cuyahoga Metro. Hous. Auth., 79 Ohio St.3d 543, 544, 684 N.E.2d 72 (1997). Whether the trial court had jurisdiction is a question of law we review de novo. Cincinnati v. Beretta U.S.A. Corp., 95 Ohio St.3d 416, 2002-Ohio-2480, 768 N.E.2d 1136, ¶ 4–5.

{¶ 10} Failure to exhaust administrative remedies is not a jurisdictional defect per se. Nevertheless, Ohio law requires that the complainant must exhaust any administrative remedies before invoking the common pleas court's jurisdiction. Jones v. Chagrin Falls, 77 Ohio St.3d 456, 462, 674 N.E.2d 1388 (1997).³ As the United States Supreme Court has stated,

[e]xhaustion is generally required as a matter of preventing premature interference with agency processes, so that the agency may function efficiently and so that it may have an opportunity to correct its own errors, to afford the parties and the courts the benefit of its experience and expertise, and to compile a record which is adequate for judicial review.

Weinberger v. Salfi, 422 U.S. 749, 765, 95 S.Ct. 2457, 45 L.Ed.2d 522 (1975). The purpose of the doctrine “is to permit an administrative agency to apply its special expertise * * * and in developing a factual record without premature judicial intervention.” S. Ohio Coal Co. v. Donovan, 774 F.2d 693, 702 (6th Cir.1985). The judicial deference afforded administrative agencies is to “prepare the way, if the litigation should take its ultimate course, for a more informed and precise determination by the Court.” Ricci v. Chicago Mercantile Exchange, 409 U.S. 289, 306, 93 S.Ct. 573, 34 L.Ed.2d 525 (1973). See also Nemazee v. Mt. Sinai Med. Ctr., 56 Ohio St.3d 109, 111, 564 N.E.2d 477 (1990), quoting Weinberger v. Salfi, 422 U.S. 749, 765, 95 S.Ct. 2457 45 L.Ed.2d 522 (1975).

{¶ 11} The county argues Musial failed to comply with the procedures outlined in R.C. 5715.19 for contesting real property valuations for tax purposes. R.C. Chapter 5717 also sets forth a specific procedure for the appeal of decisions of a county board of revision to either the Board of Tax Appeals, R.C. 5717.01, or to the court of common pleas in which the property is located, R.C. 5717.05. Neither chapter authorizes the common pleas court to hear valuation disputes involving property valuations for tax purposes unless the matter is before the court on appeal. R.C. 5717.01. Thus, courts of common pleas do not have original jurisdiction to hear property tax valuation cases and have only appellate jurisdiction conferred on them by statute. See, e.g., Holm v. Clark Cty. Auditor, 168 Ohio App.3d 119, 2006-Ohio-3748, 858 N.E.2d 877 (2d Dist.) (Many courts have held that compliance with these statutes is jurisdictional and not merely procedural.).

{¶ 12} However, this case does not involve a valuation dispute. Musial, on behalf of the putative class, is not challenging the Board of Revision's valuation of its property. Musial seeks correction of a clerical error in the auditor's office that reinstated 2007 valuations for the 2009 tax year instead of applying the valuations determined by the Board of Revision. Rather than seek a new valuation for its property, Musial seeks a mandamus order compelling the county fiscal officer to correct the errors and issue refunds.

{¶ 13} The county asserts that Musial's claims nonetheless challenge the valuation of its property because the 2009 tax year was a triennial update year. Pursuant to R.C. 5715.33, the county...