Scalise, Summit Cty. Fiscal Officer v. Johnston Invests., L.L.C. , 2021 Ohio 2916 ( 2021 )

[Cite as Scalise, Summit Cty. Fiscal Officer v. Johnston Invests., L.L.C., 2021-Ohio-2916.]
STATE OF OHIO ) IN THE COURT OF APPEALS
)ss: NINTH JUDICIAL DISTRICT
COUNTY OF SUMMIT )
KRISTEN SCALISE, as Fiscal Officer of C.A. No. 29383
Summit County, Ohio
Appellee
APPEAL FROM JUDGMENT
v. ENTERED IN THE
COURT OF COMMON PLEAS
JOHNSTON INVESTMENTS, LLC COUNTY OF SUMMIT, OHIO
CASE No. CV 2017-06-2726
Defendant
and
XE PROPERTIES, LLC, et al.
Appellants
DECISION AND JOURNAL ENTRY
Dated: August 25, 2021
CARR, Judge.
{¶1} Defendants-Appellants XE Properties, LLC and Gary Thomas appeal from the
judgments of the Summit County Court of Common Pleas. This Court reverses.
I.
{¶2} The matter before this Court began as a foreclosure for unpaid real property taxes
on property located on South Arlington Street and was initiated by Plaintiff-Appellee Kristen M.
Scalise, Fiscal Officer, Summit County Fiscal Office (“Fiscal Officer”). The record owner of the
property at the time of the foreclosure complaint was 627 S Arlington St LLC, an entity
incorporated by Mr. Thomas. A foreclosure order was issued, and a sheriff’s sale was held. XE
Properties, LLC placed the highest bid of $57,000 at the sale. Mr. Thomas was listed as the
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contact person for XE Properties, LLC. An order confirming the sale was issued September 4,
2018. An amended order confirming the sale was filed September 20, 2018.
{¶3} That order provided in part the following:
It is further Ordered that the Sheriff convey the premises so sold * * * to the
purchaser(s): XE Properties LLC., c/o Gary Thomas * * * by deed according to
law.
***
It is further Ordered that title to the parcel is incontestable in the purchase and
free of all liens and encumbrances as provided by law.
It is further Ordered that a writ of possession be and is hereby awarded to put said
purchaser in possession of said premises.
It is further Ordered that the Clerk of Court cause a memorandum of release of
mortgage or other lien on said premises to be entered on the record thereof in the
office of the Fiscal Officer of Summit County, Ohio.
And this cause coming on further to be heard upon the pleadings herein and upon
motion to distribute the proceeds of the sale, amounting to the sum of $57,000.00,
it is further Ordered that the Sheriff of Summit County, Ohio, pay:
FIRST: Pursuant to Local Rule 11.08, the purchaser(s) must provide a certificate
to the Summit County Sheriff that shows that all taxes were paid in full to the
Summit County Fiscal Officer and the Fiscal Officer shall distribute said funds as
provided by law. Total amount to be paid by purchaser to Fiscal Office:
$14,180.27[;]
SECOND: To the Clerk of Courts, for their costs in this action, the sum of
$2,359.93;
THIRD: To the Sheriff of Summit County, for their costs in this action, including
deed and poundage, the sum of $823.10[;]
FOURTH: To Equity Trust Company, Custodian FBO Maria Bush IRA # 93503,
the sum of $39,626.70[.]
{¶4} On October 23, 2018, Appellee Steve Barry, the Summit County Sheriff (“the
Sheriff”) moved the trial court for an order finding Mr. Thomas and XE Properties, LLC in
contempt pursuant to R.C. 2329.30 and Loc.R. 11 and 12 of the Court of Common Pleas of
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Summit County, General Division “for failing to pay the balance of the bid amount, including
but not limited to, the court costs and the rest of the bid amount, and to supply the necessary
document to complete this Sheriff sale * * * within 30 days of the filing of the Confirmation of
Sale.”
{¶5} XE Properties, LLC and Mr. Thomas responded in opposition. They argued that
XE Properties, LLC had paid all of the taxes due and that, on October 26, 2018, XE Properties,
LLC made a direct payment to the mortgage holder, Equity Trust Company, Custodian FBO,
Maria Bush IRA #93503 (“Equity Trust”). XE Properties, LLC indicated that it would pay the
remaining balance of costs when Mr. Thomas returned to Ohio. The docket contains a filing
dated October 26, 2018, reflecting that Equity Trust received payment of $39,626.70 from XE
Properties, LLC. On November 29, 2018, an amended docket receipt was filed. That document
stated that, “[t]o correct the record, Equity Trust [] received a new mortgage on another bank of
properties by XE Properties, LLC, not a direct payment, therefore the mortgage in the above
captioned case is satisfied and replaced by the new mortgage. Due to the new mortgage, Equity
Trust [] waives any interest in the available funds in this case in the amount of $39,626.70.”
{¶6} A hearing was held before a magistrate. On December 4, 2018, the magistrate
issued a decision finding Mr. Thomas and XE Properties, LLC in contempt of court. The
magistrate ordered the confirmation of sale order and the Sheriff’s sale vacated. In addition, the
magistrate concluded that, Mr. Thomas and XE Properties, LLC “or any other business entity of
Gary Thomas be, and hereby is, barred from bidding at a Summit County Sheriff sale, on any
real property that Gary Thomas or one of his business entities currently owns, or did own at the
time of the filing of the foreclosure action from which the Sheriff sale was ordered to sale.”
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{¶7} On December 10, 2018, the action involving South Arlington Street was
consolidated with several other tax foreclosure cases in which Mr. Thomas was the agent and/or
member of the entities involved. All of the cases were consolidated under the case captioned
Scalise, Fiscal Officer Summit County Fiscal Office v. Johnston Investments, LLC, et al. A
similar order was also filed on December 17, 2018.
{¶8} On December 17, 2018, XE Properties, LLC and Mr. Thomas filed objections to
the magistrate’s decision. Therein, they argued that “XE Properties has complied with the
requirements contemplated by the Order[.]” They further asserted that any non-compliance did
not result in prejudice. XE Properties, LLC and Mr. Thomas pointed out that XE Properties,
LLC had paid all of the taxes, had tried to pay the court costs but the Sheriff refused to allow
payment of the same, and that the trial court was informed that the existing mortgage on the
property was satisfied and a new mortgage “secured by another bank of properties by XE
Properties” was executed. XE Properties, LLC and Mr. Thomas argued that the latter was
tantamount to a payment of $39,626.70 as required.
{¶9} XE Properties, LLC and Mr. Thomas additionally objected on the grounds that it
was not XE Properties, LLC’s duty to supply additional documents, that Mr. Thomas was not a
purchaser and, under R.C. 1705.48, he was not personally liable for the amounts owed. Thus,
they argued that Mr. Thomas should not have been found in contempt. Finally, they asserted that
the punishment, which included a bar on who could bid on future sales, was unconstitutional.
{¶10} That same day, Equity Trust also filed objections to the magistrate’s decision.
Mr. Thomas and XE Properties, LLC later re-filed their objections under the consolidated case
number.
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{¶11} On March 29, 2019, the trial court overruled XE Properties, LLC and Mr.
Thomas’ objections. The trial court adopted the magistrate’s decision, including its findings and
conclusion. The trial court found Mr. Thomas and XE Properties, LLC in contempt for failing to
pay the balance due for over 30 days since the filing of the amended confirmation of sale. The
amended confirmation of sale and the Sheriff’s sale were vacated. Certain monies were ordered
returned to XE Properties, LLC. Mr. Thomas’ and XE Properties, LLC’s deposit was ordered
forfeited. Finally, Mr. Thomas and XE Properties, LLC, along with any other business entity of
Mr. Thomas, was barred from bidding at a Summit County Sheriff sale on any real property that
Mr. Thomas or any of his business entities then owned or did own at the time of the foreclosure
action. The entry included Civ.R. 54(B) language.
{¶12} On April 18, 2019, XE Properties, LLC and Mr. Thomas filed a motion for relief
from judgment pursuant to Civ.R. 60(B)(5). They again argued that Mr. Thomas was not
required to pay the purchase price and should not have been found in contempt. They also
maintained that the trial court lacked subject matter jurisdiction to hold Mr. Thomas in contempt
because he was not a purchaser and that the finding of contempt violated his right to due process.
An opposition to the motion was filed.
{¶13} On April 26, 2019, Mr. Thomas and XE Properties, LLC filed a notice of appeal,
appealing the March 29, 2019 entry of the trial court. Thereafter, Mr. Thomas and XE
Properties, LLC moved this Court to stay the appeal and remand the matter to the trial court to
rule on the pending Civ.R. 60(B) motion. This Court granted the motion. On July 24, 2019, the
trial court denied the Civ.R. 60(B) motion. On July 25, 2019, this Court issued an order
extending the remand following a request by Mr. Thomas and XE Properties, LLC.
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{¶14} On August 22, 2019, Mr. Thomas and XE Properties, LLC filed a second motion
for relief from judgment pursuant to Civ.R. 60(B)(5). Mr. Thomas and XE Properties, LLC
asserted that one of the other consolidated cases involving TXS Property Services, LLC
presented similar facts but there was no finding of contempt. They pointed out that, while TXS
Property Services, LLC made the required payments they did not do so in a timely manner.
Thus, XE Properties, LLC and Mr. Thomas maintained that the trial court was unreasonable
holding Mr. Thomas and XE Properties, LLC in contempt. The Sheriff filed a brief in
opposition. The Sheriff pointed out that, unlike in the instant matter, TXS Property Services,
LLC paid the full bid, that the Sheriff withdrew its motion to show cause in the TXS Property
Services, LLC case, and that the decision in this matter was issued before the decision in the
TXS Property Services, LLC matter. On September 11, 2019, the trial court denied the second
motion for relief from judgment. Mr. Thomas and XE Properties filed two amended notices of
appeal to include the July 24, 2019 and September 11, 2019 entries in their appeal. This Court
attempted to mediate this matter; however, it was unsuccessful.
{¶15} Mr. Thomas and XE Properties, LLC have raised four assignments of error for
our review.
II.
ASSIGNMENT OF ERROR I
THE TRIAL COURT’S ORDER, ENTERED MARCH 29, 2019 IS VOID FOR
FAILURE TO CONDUCT AN INDEPENDENT REVIEW OF THE
MAGISTRATE’S DECISION, IN VIOLATION OF RULE 53(D)(4)(D) OF THE
OHIO RULES OF CIVIL PROCEDURE; AS SUCH, IS NOT AN
APPEALABLE ORDER.
{¶16} Mr. Thomas and XE Properties, LLC argue in their first assignment of error that
the trial court in its March 29, 2019 entry failed to conduct an independent review of the
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magistrate’s decision in violation of Civ.R. 53(D)(4)(d) and assert that the order is not final and
appealable.
{¶17} “A magistrate’s decision is not effective unless adopted by the court.” Civ.R.
53(D)(4)(a). “Whether or not objections are timely filed, a court may adopt or reject a
magistrate’s decision in whole or in part, with or without modification.” Civ.R. 53(D)(4)(b). “If
no timely objections are filed, the court may adopt a magistrate’s decision, unless it determines
that there is an error of law or other defect evident on the face of the magistrate's decision.”
Civ.R. 53(D)(4)(c). “If one or more objections to a magistrate’s decision are timely filed, the
court shall rule on those objections. In ruling on objections, the court shall undertake an
independent review as to the objected matters to ascertain that the magistrate has properly
determined the factual issues and appropriately applied the law.” Civ.R. 53(D)(4)(d). “A court
that adopts, rejects, or modifies a magistrate’s decision shall also enter a judgment * * *.” Civ.R.
53(D)(4)(e). “Thus, for a trial court’s ruling on a magistrate’s decision to be final and
appealable, the trial court must independently enter judgment setting forth the outcome of the
dispute, indicating the remedy provided, and fully determining the action.” Figetakis v. My
Pillow, Inc., 9th Dist. Summit No. 29136, 2020-Ohio-3949, ¶ 10.
{¶18} Here, despite Mr. Thomas’ and XE Properties, LLC’s claim to the contrary, the
trial court’s order is final and appealable as the trial court did independently enter judgment. See
id.{¶19} Nonetheless, the foregoing does not foreclose the possibility that the trial court
failed to comply with Civ.R. 53(D)(4)(d) in entering judgment. “Appellate courts * * * presume
that a trial court conducted an independent analysis in reviewing a magistrate’s decision in
accordance with Civ.R. 53(D)(4)(d) * * *. Accordingly, a party asserting error bears the burden
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of affirmatively demonstrating the trial court’s failure to perform its * * * duty of independent
analysis. An affirmative duty requires more than a mere inference, it requires appellant to
provide the reviewing court with facts to rebut our general presumption.” (Internal quotations
and citations omitted.) Stowe v. Chuck’s Automotive Repair, LLC, 9th Dist. Summit No. 29017,
2019-Ohio-1158, ¶ 7.
{¶20} Here, as pointed out by Mr. Thomas and XE Properties, LLC, there are some
troubling features of the trial court’s entry. See Weber v. Devanney, 9th Dist. Summit Nos.
28876, 28938, 2018-Ohio-4012, ¶ 21 (noting that the trial court’s language in its judgment entry
can affirmatively demonstrate a failure to conduct the appropriate review). In the entry, the trial
court adopts the magistrate’s decision and enters judgment. However, that judgment essentially
reiterates the conclusions of the magistrate’s decision. It includes no independent analysis of the
objections nor does it reference portions of the record. See Stowe at ¶ 9 (concluding appellant
had not demonstrated the absence of an independent review when the trial court did not merely
adopt the magistrate’s decision, pointed to testimony not referenced by the magistrate, and struck
one of the magistrate’s findings).
{¶21} Notably, the trial court’s entry does not reference Civ.R. 53(D)(4)(d) in its
judgment entry. While the trial court began the entry by noting that the matter was before it for
independent review, it points to Civ.R. 53(D)(4)(c), the provision detailing the procedure when
there are no objections, as opposed to Civ.R. 53(D)(4)(d). The trial court then stated that,
“[u]pon consideration of the magistrate’s decision, and all of the associated briefing, the court
determines that there is no error of law or defect on the face of the magistrate’s decision.” This
language also comes from Civ.R. 53(D)(4)(c). The trial court next determined that “the
magistrate’s decision contains sufficient findings of fact and conclusions of law to allow this
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court to make its own independent analysis of the issues and to apply the appropriate rules of law
in making its final judgment entry in this matter.” While this is similar to language in Civ.R.
53(D)(4)(d), it misstates the duty of the trial court. Civ.R. 53(D)(4)(d) requires the trial court to
“undertake an independent review as to the objected matters to ascertain that the magistrate has
properly determined the factual issues and appropriately applied the law.” Civ.R. 53(D)(4)(d)
thus contemplates that the trial court conducts an independent review focused on the areas
objected to in order to determine if the magistrate’s findings and conclusions are correct. The
trial court’s language implies that it only examined the findings and conclusions and determined
that they were sufficient to allow the trial court to review the objections; it does not indicate that
the trial court conducted the appropriate independent review.
{¶22} Considering the entirety of the entry, and the arguments made on appeal, we agree
that the trial court failed to undertake the appropriate review contemplated by Civ.R.
53(D)(4)(d).
{¶23} Accordingly, we sustain Mr. Thomas’ and XE Properties, LLC’s first assignment
of error.
ASSIGNMENT OF ERROR II
THE TRIAL COURT ERRED IN ITS RULING ON THE OBJECTIONS,
WHEN IT FOUND GARY L. THOMAS IN CONTEMPT OF COURT FOR
THE FAILURE OF XE PROPERTIES LLC TO PAY THE PURCHASE PRICE
OF THE PROPERTY.
ASSIGNMENT OF ERROR III
THE TRIAL COURT ERRED AS A MATTER OF LAW IN OVERRULING XE
PROPERTIES LLC’S OBJECTION THAT PAYMENT OF THE BALANCE
DUE THAT WAS INTENDED FOR THE CREDITOR WAS NOT REQUIRED
UNDER THE CONFIRMATION OF SALE BECAUSE SAID CREDITOR
DISCLAIMED AND WAIVED ALL INTEREST IN THE PROCEEDS FROM
THE SALE OF THE PROPERTY.
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ASSIGNMENT OF ERROR IV
THE TRIAL COURT ABUSED ITS DISCRETION IN FAILING TO SUSTAIN
APPELLANTS’ MOTION FOR RELIEF FROM JUDGMENT OR ORDER,
FILED AUGUST 22, 2019, WHEN A DEBTOR IN A COMPANION CASE
FAILED TO PAY THE PURCHASE PRICE WITHIN 30 DAYS, AS
REQUIRED UNDER A CONFIRMATION OF SALE, WAS NOT FOUND IN
CONTEMPT FOR FAILURE TO DO AS SUCH.
{¶24} Mr. Thomas and XE Properties, LLC assert in their second assignment of error
that the trial court erred in finding Mr. Thomas in contempt. In their third assignment of error,
they argue that the trial court erred in finding XE Properties, LLC in contempt. In their fourth
assignment of error, they maintain that the trial court abused its discretion in failing to grant their
second motion for relief from judgment.
{¶25} In light of our disposition of the first assignment of error, these arguments are not
properly before this Court at this time, and we decline to address them.
III.
{¶26} Mr. Thomas’ and XE Properties, LLC’s first assignment of error is sustained.
The remaining assignments of error are not properly before us at this time. The judgment of the
Summit County Court of Common Pleas is reversed, and the matter is remanded for proceedings
consistent with this decision.
Judgment reversed,
and cause remanded.
There were reasonable grounds for this appeal.
We order that a special mandate issue out of this Court, directing the Court of Common
Pleas, County of Summit, State of Ohio, to carry this judgment into execution. A certified copy
of this journal entry shall constitute the mandate, pursuant to App.R. 27.
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Immediately upon the filing hereof, this document shall constitute the journal entry of
judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the
period for review shall begin to run. App.R. 22(C). The Clerk of the Court of Appeals is
instructed to mail a notice of entry of this judgment to the parties and to make a notation of the
mailing in the docket, pursuant to App.R. 30.
No costs are taxed.
DONNA J. CARR
FOR THE COURT
TEODOSIO, J.
CALLAHAN, J.
CONCUR.
APPEARANCES:
ROBERT C. MEEKER, Attorney at Law, for Appellant.
REGINA M. VANVOROUS, Assistant Prosecuting Attorney, for Appellee.