Richman Props., L. L.C. v. Medina Cnty. Bd. of Revision, 2013–0386.

Decision Date11 June 2014
Docket NumberNo. 2013–0386.,2013–0386.
Citation139 Ohio St.3d 549,13 N.E.3d 1126,2014 Ohio 2439
Parties RICHMAN PROPERTIES, L.L.C., Appellee, v. MEDINA COUNTY BOARD OF REVISION et al., Appellants.
CourtOhio Supreme Court

Dean Holman, Medina County Prosecuting Attorney, and Nathan E. Carnes, Assistant Prosecuting Attorney, for appellants.

PER CURIAM.

{¶ 1} The Medina County auditor and the Medina County Board of Revision ("BOR") appeal from a decision of the Board of Tax Appeals ("BTA"), in which the BTA reversed the tax–year–2008 valuation adopted by the BOR for four parcels. The BTA held that the sale price from a June 2006 transaction, $135,000, was the best evidence of value of the four parcels on January 1, 2008, which was the tax-lien date for tax year 2008. The BTA did so in spite of the fact that the current four parcels had been two distinct parcels at the time of the sale. Although it determined that the sale price was indicative of value, the BTA remanded to the BOR for the allocation of that sale price to the four parcels.

{¶ 2} On appeal, the auditor and the BOR (collectively, "the county") raise two arguments. First, the county contends that the owner's nonlawyer representative engaged in the unauthorized practice of law at the BTA hearing and that the BTA erred in overruling a motion in limine and various objections to that conduct. We reject this basis for the county's appeal because the county has not shown that these rulings resulted in reversible error.

{¶ 3} Second, the county argues that the "purchase of these properties was not recent to the 2008 tax lien date because [Richman Properties, L.L.C.] changed the character of the property when it split the two improved parcels into four total parcels." We agree, and we therefore reverse the BTA's decision. We also remand with the instruction that the BTA reinstate the BOR's valuations, with one exception, which is noted below.

Facts

{¶ 4} Larry and Patrick Bush acquired the properties at issue in June 2006 through the purchase of what then constituted two parcels, parcel No. 04–09C–21–005 and parcel No. 04–09C–27–010. They paid $135,000. On one parcel was an unfinished brick house; on the other an unfinished frame house.

{¶ 5} For tax year 2006, the auditor apparently had valued the two parcels at a total of $328,910; however, based on complaints filed by the new property owner, Richman Properties, L.L.C. (a business entity of the Bushes), the aggregate valuation for the two parcels was reduced to $135,000.

{¶ 6} In Medina County, 2007 was a reappraisal year, and the auditor set an aggregate valuation for the two parcels at $141,740—a 5 percent increase in valuation for the reappraisal year over the sale-price value determined for tax year 2006. In December 2007, the two parcels were subdivided, so that the same land constituted four parcels for tax purposes in tax year 2008, given that the 2008 valuation determines value as of January 1, 2008. While testifying at the BTA hearing about dividing the two parcels into four, Patrick Bush stated that "dividing [the parcels] up we thought would make it worth more money; it didn't necessarily work out that way."

{¶ 7} The county auditor assigned an aggregate value of $468,470 to the four parcels for tax year 2008.1 That represented a significant increase over the aggregate valuation of the two ancestor parcels at $141,740 for tax year 2007. Richman Properties, through its member/president Patrick Bush, filed complaints for the four parcels, seeking reductions based on the 2006 sale—although the aggregate valuation sought after the requested reductions was $141,740 rather than $135,000, reflecting Bush's acceptance of the aggregate 2007 reappraisal result.

{¶ 8} The BOR held a hearing on August 25, 2009.2 The testimony of the auditor's witness was offered to support the auditor's revaluation by presenting 15 comparable sales of both improved properties and vacant lots, plus four land sales, to bolster the values assigned to the newly subdivided parcels. The summary sheet of the comparables associated particular comparables with particular subject parcels. In each case, the price per square foot or price per acre assigned by the auditor to the subject parcel fell well below the median and the mean for the data set. The comparable sales all occurred within the period of three years prior to the January 1, 2008 tax-lien date.

{¶ 9} At the BOR hearing, Patrick Bush appeared for the owner and argued among other things that the residences on the two improved parcels were not complete. A field check confirmed their unfinished status. The BOR ordered reductions for the two improved properties to account for the unfinished state of the buildings: for parcel No. 04–09C–21–024, the reduction was based on the building's being 55 percent complete; for parcel No. 04–09C–27–015, the reduction was based on the building's being 60 percent complete.3 As for the unbuilt lots, the auditor's values were retained. Based on the BOR's actions, the aggregate valuation of the four parcels changed from $468,470 to $383,180.

{¶ 10} Richman Properties appealed to the BTA, seeking to compel the county to allocate the 2006 sale price of $135,000 among the four parcels. At the BTA hearing, Patrick Bush again appeared as president and as a member of the limited-liability company, and he testified on its behalf.

{¶ 11} Before the BTA hearing, the county filed a motion in limine asking the BTA to "issue an order precluding Patrick Bush, an Agent–Officer of Richman Properties, L.L.C., but not an attorney, from making legal arguments, examining witnesses or undertaking any other tasks that can be [performed] only by an attorney." Also, at the BTA hearing, the county repeatedly objected to Bush's presenting legal arguments and cross-examining the county's witness. The BTA formally overruled the motion and objections in its decision.

{¶ 12} At the BTA hearing, Bush testified regarding the parcels, mostly in response to questions posed by the BTA examiner or on cross-examination by the county's attorney. In particular, Bush recited the history of acquiring the property in 2006 and of filing complaints to have the sale price of $135,000 used to set the value for tax year 2006. Bush did not know whether the 5 percent increase in valuation for tax year 2007 "made sense, but it seemed reasonable." But Bush objected to the aggregate valuation for the four parcels nearly tripling in tax year 2008.

{¶ 13} On cross-examination, Bush testified that he had seen a for-sale sign on the property before the 2006 purchase and that he thought that it had been listed for sale with the local multiple-listing service. Bush did not know of any relationship between his brother (and partner) Larry Bush and the realtor. Bush testified that although some work was done on the houses, they were not in a finished state. Bush further testified that the two unimproved lots were not buildable in 2008, but the county presented August 2008 real-estate listings indicating that the lots were buildable.

{¶ 14} The county's witness explained that the BOR had reduced the value of the improvements because a field check had shown that the houses were unfinished. The county's witness also referred to a 2006 real-estate-listing document in an attempt to establish that the properties at issue had not been listed for sale through the multiple-listing service. This evidence was meant to support the county's contention that the 2006 sale was not an arm's-length sale.

{¶ 15} Although Bush was permitted to cross-examine the county's witness, that colloquy often strayed into dueling comments.

{¶ 16} The county's attorney urged the BTA to find that the 2006 sale was not at arm's length, primarily because it was not an open-market sale. This argument was advanced in spite of the fact that the county had been willing to use the sale price to value the two parcels for tax year 2006 and had also used the sale price as a baseline to calculate the percentage increase for tax year 2007.

{¶ 17} The BTA issued its decision on February 7, 2013. The BTA noted that the burden was on Richman Properties as appellant to prove a decrease in value, and it cited cases establishing that a recent arm's-length sale is the best evidence of value. The BTA also noted the "rebuttable presumption" that a sale should be used to value the property and then, quoting Cummins Property Servs., L.L.C. v. Franklin Cty. Bd. of Revision, 117 Ohio St.3d 516, 2008-Ohio-1473, 885 N.E.2d 222, ¶ 13, examined whether the " ‘elements of recency and arm's-length character between a willing seller and a willing buyer’ " had been rebutted. BTA No. 2009–W–2607, 2013 WL 602518, *2–3. With respect to the arm's-length character of the sale, the BTA determined that the county "failed to come forward with competent and probative evidence" that would negate the arm's-length character of the 2006 transaction. Id . at *3. As for recency, the BTA noted that the issue is not determined solely in terms of temporal proximity of the sale to the lien date, and it concluded that the passage of time was not sufficient to make the sale too remote. Id . In the last paragraph of the opinion, the BTA noted that "because the character of the subject properties had changed since the [2006 transfer], i.e. the two parcels that were the subject of the transfer have since been subdivided into four parcels, we are unable to allocate the purchase price between the subject properties." Id . The BTA remanded the case to the BOR with the instruction that the allocation be performed.

{¶ 18} The county has appealed. No brief has been filed and no argument presented on behalf of the appellee property owner in this appeal.

Analysis

{¶ 19} The county advances two propositions of law. In the first, the county challenges the BTA's overruling its motion in limine and its objections at the hearing in relation to the unauthorized practice of law by the owner's nonlawyer representative,...

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