Musial Offices, Ltd. v. Cuyahoga Cty. , 2020 Ohio 3660 ( 2020 )

[Cite as Musial Offices, Ltd. v. Cuyahoga Cty., 2020-Ohio-3660.]
COURT OF APPEALS OF OHIO
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
MUSIAL OFFICES, LTD., :
Plaintiff-Appellee/ :
Cross-Appellant, No. 108478
:
v.
:
COUNTY OF CUYAHOGA, ET AL.,
:
Defendants-Appellants/
Cross-Appellees. :
JOURNAL ENTRY AND OPINION
JUDGMENT: AFFIRMED IN PART, REVERSED IN PART,
AND REMANDED
RELEASED AND JOURNALIZED: July 9, 2020
Civil Appeal from the Cuyahoga County Court of Common Pleas
Case No. CV-11-746704
Appearances:
Dworken & Bernstein Co., L.P.A., and Patrick J. Perotti,
Nicole T. Fiorelli, and James S. Timmerberg; Mellino
Robenalt L.L.C., and Thomas D. Robenalt, for
appellee/cross-appellant.
Michael C. O’Malley, Cuyahoga County Prosecuting
Attorney, and Charles E. Hannan, Brian R. Gutkoski, and
Kenneth M. Rock, Assistant Prosecuting Attorneys; Greg
G. Huth, Cuyahoga County Director of Law, and Joseph
W. Boatwright, IV, Assistant Director of Law, for
appellants/cross-appellees.
EILEEN T. GALLAGHER, A.J.:
Defendants-appellants, Cuyahoga County, Armond Budish, and the
Cuyahoga County Board of Revision (collectively “Cuyahoga County” or “the
county”), appeal a judgment rendered in favor of plaintiff-appellee, Musial Offices,
Ltd. (“Musial”), on behalf of a class of plaintiffs composed of Cuyahoga County
property owners (collectively referred to as “Musial” or “plaintiffs”). The county
claims the following five errors:
1. The trial court lacked subject matter jurisdiction to hear a case
challenging the valuation of real property that was filed in the court of
common pleas in an effort to bypass Ohio’s comprehensive statutory
administrative process that was established to adjudicate and resolve
such complaints.
2. The trial court erred by entering judgment against Cuyahoga
County, an Ohio political subdivision, on the basis of an alleged claim
founded upon unjust enrichment.
3. The trial court erred by denying the appellants’ motions to decertify
the class after material factual variations among the purported class
members emerged after the class was certified.
4. The trial court erred by awarding the plaintiff class prejudgment
interest.
5. The trial court erred by ordering the county to pay the judgment to
class counsel.
Musial filed a cross-appeal and claims the following two assignments
of error:
1. The trial court erred in denying Musial Offices’ equal protection
claim in its March 23, 2018 judgment entry.
2. The trial court erred in denying plaintiffs’ statutory claim for illegal
taxation in its March 23, 2018 judgment entry.
Finding some merit to the county’s appeal as well as Musial’s cross-
appeal, we affirm the trial court’s judgment in part, reverse it in part, and remand
the case to the trial court to enter judgment in favor of Musial and the plaintiff class
on its illegal taxation claim.
I. Facts and Procedural History
Musial brought this class action to recover the overpayment of real
property taxes on behalf of itself and members of a certified class of similarly
situated property owners. Musial is the owner of real property located in Westlake,
Ohio. In 2005, the Cuyahoga County auditor1 assigned a tax value of $679,500 to
Musial’s property for the 2006, 2007, and 2008 tax years. Following the start of the
Great Recession in December 2007, real estate values declined, and Musial filed a
decrease complaint with the Cuyahoga County Board of Revision for the 2008 tax
year. The Westlake Board of Education filed a counterclaim seeking to retain the
auditor’s valuation.
Real property tax is based on a percentage of the property’s taxable
value. Pursuant to R.C. 5713.01(B), the county auditor is required to determine the
taxable value of real property through periodic appraisals, known as sexennial and
triennial appraisals. R.C. 5713.01(B). The sexennial appraisal, which is conducted
every six years, requires the auditor to actually “view and appraise” the property.
R.C. 5713.01(B). A triennial appraisal, also referred to as a “statistical update,” is
1 On January 11, 2011, Cuyahoga County converted to a charter form of
government pursuant to Article X, Section 3, Ohio Constitution. The new Cuyahoga
County Charter created the position of a Fiscal Officer, who is appointed by the County
Executive, to replace the formerly elected auditor position.
conducted three years after the last sexennial appraisal and does not require the
auditor to view the property. (Tr. 304, 321.) The triennial appraisal is based on
statistical data, such as property sales and construction in the surrounding
community. (Tr. 306.) The statistical data is used to generate a “use factor” applied
to all properties in a particular area based on an estimation of the average
percentage of appreciation or depreciation in value of the properties since the last
appraisal. (Tr. 246-248.) By applying the use factor, all parcels within a specific
class are reappraised up, down, or without a change, by the same percentage
amount.
A property owner may challenge the auditor’s valuation for a current
tax year, regardless of whether the auditor reappraised the property that year, by
filing a decrease complaint with the county auditor by March 31st of the following
tax year. R.C. 5715.19(A)(1)(d). Because real property taxes are billed almost one
year behind, a taxpayer is billed in December for the first half of a tax year based on
the property’s value as of January 1st of that same year. A taxpayer challenging the
tax value of property for the 2008 tax year would have until March 31, 2009, to file
the complaint.
If a complaint is filed with the auditor, the auditor is required to
present it to the county’s board of revision to “hear complaints and revise
assessments of real property for taxation.” R.C. 5715.01(B). As part of the process,
the auditor must notify the local board of education of the taxpayer’s complaint
within 30 days of March 31, whereupon the board of education, the recipient of a
large percentage of the tax collected, may file a counterclaim against the value within
30 days, i.e., by April 30th. R.C. 5715.19(A)(1). Pursuant to R.C. 5715.19(C), the
board of revision “shall hear and render its decision on a complaint” within 90 days
of the date the property owner’s complaint was filed with the board, or, if the board
of education asserted its own challenge to the value, within 90 days of the board’s
counterclaim. Thus, the board of revision is statutorily required to render a decision
on a complaint with a counterclaim no later than 120 days after April 30th, i.e.,
before the end of August. The auditor records property values in a database called
Sigma. (Tr. 302.)
The Cuyahoga County auditor conducted a sexennial reappraisal of
properties within the county in 2006, and valued Musial’s property at $679,500.
When real property values declined in 2008 during the Great Recession, Musial filed
a complaint against the valuation of its property in January 2009, for the 2008 tax
year.2 Following the board of revision hearing, on January 13, 2010, Musial received
a letter of correction from Frank Russo (“Russo”), who served as both the county
auditor and secretary of the board of revision. The letter stated that the tax value of
Musial’s property was reduced to $499,000 for the 2008 tax year. The letter further
stated: “If no action is taken, the Board’s decision will be reflected in your next tax
bill.”
Musial paid the December 2009 tax bill for the first half of 2009
without protest even though the bill reflected the $679,500 valuation of the
2In a typical year, the Cuyahoga County auditor received between 2,000 and
3,000 complaints. The auditor might have received between 6,000 and 7,000 complaints
in an unusually busy year. The auditor received 25,000 decrease complaints for the 2008
tax year and another 20,000 complaints for the 2009 tax year. (Tr. 228.)
property. Mark Musial, Musial’s principal, testified at trial that he did not believe
any further action was necessary to correct the tax bill since the correction letter
indicated the correction would be reflected in Musial’s next tax bill. However, in
June 2010, Musial received a property tax bill for the second half of 2009 that
reflected a tax value of $679,500 instead of the board of revision’s reduced amount
of $499,000. By then, the deadline to appeal the 2009 tax value to the board of
revision had expired.
Meanwhile, the auditor conducted a statistical update for the
triennium beginning in 2009, and determined that the reappraised value of Musial’s
property would be the 2008 value, multiplied by a factor of one. (Tr. 324.) In other
words, the tax value of the property for the next triennium (2009, 2010, and 2011)
remained the same as the 2008 value. (Tr. 324-325.) However, the auditor did not
use the correct 2008 tax value of the property, i.e., $499,000, when he applied the
“use factor” for the triennial update because the auditor did not receive the board of
revision’s decision on Musial’s decrease complaint until January 2010, after the
triennial update had already been completed. After receiving the board of revision’s
decision, the auditor updated the correct value of $499,000 of Musial’s property for
the 2008 tax year in the Sigma database, but never corrected the value for the 2009
tax year, or any subsequent tax years in the triennium.
After receiving the tax bill for the second half of the 2009 tax year,
which still reflected a value of $679,500, Musial sent a letter to the auditor and the
board of revision asking them to correct the mistake. Martin Murphy (“Murphy”),
the acting administrator of the board of revision, informed Musial that the county
recognized there was a problem and was endeavoring to fix it. Meanwhile, the
Cleveland Plain Dealer reported stories that numerous property owners had been
overcharged in their 2009 property tax bills. When the county failed to correct
Musial’s tax bill and issue a refund of the amount of overpaid taxes, Musial filed a
class action complaint in the Cuyahoga County Common Pleas Court in January
2011. Musial twice amended its complaint and asserted claims for disgorgement,
unjust enrichment, due process and equal protection, injunctive relief, the
imposition of an illegal tax in violation of R.C. 2723.01, and extraordinary relief in
mandamus.
Musial later moved for class certification. Meanwhile, the county
moved to dismiss Musial’s second amended complaint, arguing the trial court lacked
jurisdiction because Musial failed to exhaust its administrative remedies by
appealing the board of revision’s decision to the board of tax appeals. The trial court
denied the county’s motion to dismiss and denied Musial’s motion for class
certification. Both Musial and the county appealed.
On appeal, this court found that the trial court had subject matter
jurisdiction to hear Musial’s case because Musial was not challenging the board of
revision’s valuation of its property; it was merely seeking to enforce its valuation,
and R.C. 2723.01 expressly confers jurisdiction on the common pleas court to hear
claims for the recovery of overpaid taxes. Musial Offices, Ltd. v. Cty. of Cuyahoga,
8th Dist. Cuyahoga No. 99781, 2014-Ohio-602, ¶ 16 (“Musial I”). This court also
reversed the trial court’s judgment denying class certification and ruled that
Musial’s claims were not barred by the one-year statute of limitations set forth in
R.C. 2723.01.
On remand, the trial court certified 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 taxable value of the property, whose 2009 value was taxed
using a higher value.
Thereafter, the county filed a third-party complaint against the Ohio
state tax commissioner and filed a motion for judgment on the pleadings, arguing,
among other things, that it was immune from liability for the plaintiffs’ claims
pursuant to sovereign immunity provided by R.C. Chapter 2744. The court partially
granted the county’s motion for judgment on the pleadings and dismissed the
plaintiffs’ claims for disgorgement and injunctive relief alleged in Counts 1 and 4 of
the second amended complaint. The court also dismissed the county’s third-party
complaint against the Ohio tax commissioner.
The county had also filed a motion to dismiss for lack of subject
matter jurisdiction and for Musial’s failure to join all taxing authorities within
Cuyahoga County as necessary and indispensable parties. The trial court denied the
county’s motion to dismiss and denied the county’s claim for sovereign immunity
under R.C. Chapter 2744 on grounds that none of Musial’s claims alleged
negligence.
A bench trial began in September 2015. The trial court empaneled an
advisory jury on its own motion pursuant to Civ.R. 39(C)(1). The advisory jury
returned a verdict in favor Musial on its claim for unjust enrichment. The trial court
declined to adopt the verdict at that time, but indicated the jury’s advisory verdict
would be taken into account when the court decided the merits of all of Musial’s
claims and the county’s defenses.
The court later heard arguments on the claims not tried to the jury
and rendered findings of fact and conclusions of law on March 23, 2018. The court
found in favor of the county on the plaintiffs’ due process and equal protection
claims alleged in Count 3 of the second amended complaint. The court also found
in favor of the county on the plaintiffs’ illegal taxation claim alleged in Count 5.
However, the trial court found in the plaintiffs’ favor on its unjust enrichment claim
alleged in Count 2 of the second amended complaint and ordered the county to make
restitution to the plaintiff class in the amount of $3,927,385.91. Having made an
award for unjust enrichment, the trial court determined the plaintiffs’ claim for
mandamus, alleged in Count 6, was moot because the unjust enrichment claim
afforded the plaintiffs an adequate remedy at law.
Thereafter, the plaintiffs moved for prejudgment interest pursuant to
R.C. 1343.03(A), for attorney fees equal to 50 percent of the $3,927,385.91
restitution award, and for a separate incentive compensation award to Musial in the
amount of $25,000. The county opposed the plaintiffs’ motions and filed a motion
for class decertification and set-off. The trial court denied the county’s motion to
decertify the class and entered final judgment in favor of the plaintiff class in the
amount of $3,927,385.91, plus prejudgment interest in the amount of $871,454.31,
plus interest at the statutory rate from February 28, 2018, on $3,927,385.91 until
paid, plus court costs. The court further awarded class counsel attorney fees equal
to 50 percent of the judgment, in the amount of $2,399,420.11, and granted Musial
an additional incentive compensation award of $25,000.00.
Both parties again appeal the trial court’s judgment. We discuss
Musial’s assigned errors and the errors assigned in the cross-appeal out of order
because they are interrelated.
II. Law and Analysis
A. Jurisdiction
In the first assignment of error, the county argues the trial court
lacked jurisdiction to hear Musial’s case because its claims constituted a challenge
to the valuation of its real property, and such claims must proceed through a
statutorily prescribed administrative process. The county contends that Musial and
members of the plaintiffs’ class illegally attempted to circumvent a statutory scheme
that requires them to exhaust their administrative remedies before invoking the
common pleas court’s jurisdiction.
However, the county previously raised this argument in Musial I. See
Musial Offices, Ltd., 8th Dist. Cuyahoga No. 99781, 2014-Ohio-602, ¶ 8-17. In
Musial I, we held that Musial was not required to exhaust its administrative
remedies before filing its complaint in the common pleas court because Musial was
not challenging the valuation of its property; it was seeking an order enforcing the
board of revision’s valuation of its property pursuant to R.C. 2723.01. Id. at ¶ 16.
Our previous determination that the trial court had jurisdiction to
hear Musial’s claims is the law of the case. Under the law of the case doctrine, “the
decision of a reviewing court in a case remains the law of that case on legal questions
involved for all subsequent proceedings in the case at both trial and reviewing
levels.” Nolan v. Nolan, 11 Ohio St.3d 1, 3, 462 N.E.2d 410 (1984); accord Rimmer
v. CitiFinancial Inc., 8th Dist. Cuyahoga No. 108081, 2020-Ohio-99, ¶ 43.
“The law of the case doctrine is rooted in principles of res judicata and
issue preclusion.” State v. Harding, 10th Dist. Franklin No. 10AP-370, 2011-Ohio-
557, ¶ 16, citing State v. Fischer, 128 Ohio St.3d 92, 2010-Ohio-6238, 942 N.E.2d
332, ¶ 35. It ensures consistency of results in a case, prevents endless litigation by
settling the issues, and preserves the structure of superior and inferior courts as
designed by the Ohio Constitution. Hubbard ex rel. Creed v. Sauline, 74 Ohio St.3d
402, 404, 659 N.E.2d 781 (1996).
Our prior decision in Musial I, that the trial court had jurisdiction to
hear Musial’s claims because Musial’s claims did not involve a valuation of real
property but rather sought recovery of overpaid taxes under R.C. 2723.01, is the law
of the case. Therefore, the county’s first assignment of error is overruled.
B. Unjust Enrichment
In the county’s second assignment of error, it argues the trial court
erred in entering judgment against it on Musial’s unjust enrichment claim.
Unjust enrichment occurs when a person “has and retains money or
benefits which in justice and equity belong to another[.]” Hummel v. Hummel, 133
Ohio St. 520, 528, 14 N.E.2d 923 (1938). Restitution is the remedy for unjust
enrichment “‘to prevent one from retaining property to which he is not justly
entitled.’” San Allen v. Buehrer, 8th Dist. Cuyahoga No. 99786, 2014-Ohio-2071,
¶ 114, quoting Keco Industries, Inc. v. Cincinnati & Suburban Bell Tel. Co., 166 Ohio
St. 254, 256, 141 N.E.2d 465 (1957).
To establish a claim for unjust enrichment, a plaintiff must prove, by
a preponderance of the evidence, that (1) the plaintiff conferred a benefit upon the
defendant, (2) the defendant had knowledge of such benefit, and (3) the defendant
retained that benefit under circumstances in which it would be unjust for him to
retain that benefit. Id.; Johnson v. Microsoft Corp., 106 Ohio St.3d 278, 2005-Ohio-
4985, 834 N.E.2d 791, ¶ 20.
The county contends the trial court erred in entering judgment
against it on the plaintiffs’ unjust enrichment claim because, as a blanket rule,
governmental entities cannot be held liable for unjust enrichment under Ohio law
under any circumstances. However, “Ohio courts have long recognized persons for
whom funds have been unlawfully collected and retained by the state may be entitled
to equitable restitution.” San Allen at ¶ 123, citing State ex rel. Zone Cab Corp. v.
Indus. Comm., 132 Ohio St. 437, 8 N.E.2d 438 (1937). See also Santos v. Ohio Bur.
of Workers’ Comp., 101 Ohio St.3d 74, 2004-Ohio-28, 801 N.E.2d 441 (Plaintiff
could bring an action against the Ohio Bureau of Workers’ Compensation in the
common pleas court for unjust enrichment.); Lycan v. Cleveland, 8th Dist.
Cuyahoga No. 94353, 2010-Ohio-6021, overruled on other grounds, Lycan v.
Cleveland, 146 Ohio St.3d 29, 2016-Ohio-422, 51 N.E.3d 593 (Plaintiffs may pursue
unjust enrichment claims against a city for improper collection of traffic fines.);
Barrow v. New Miami, 12th Dist. Butler No. CA2017-03-031, 2018-Ohio-217(Plaintiffs may pursue unjust enrichment claims against a city for improper
collection of traffic fines.).
Nevertheless, in support of its argument that governmental entities
cannot be held liable for unjust enrichment, the county cites several cases including
Kraft Constr. Co. v. Cuyahoga Cty. Bd. of Commrs., 128 Ohio App.3d 33, 713 N.E.2d
1075 (8th Dist.1998); Sylvester Summers, Jr. Co., L.P.A. v. E. Cleveland, 8th Dist.
Cuyahoga No. 98227, 2013-Ohio-1339, ¶ 26; and Alpha Plaza Invests., Ltd. v.
Cleveland, 2018-Ohio-486, 105 N.E.3d 680, ¶ 6 (8th Dist.).
In Kraft, this court stated, in relevant part:
It is a long-standing principle of Ohio law that “all governmental
liability ex contractu must be express and must be entered into in the
prescribed manner, and that a municipality or county is liable neither
on an implied contract nor upon a quantum meruit by reason of
benefits received.” 20 O.Jur.3d “Counties, Townships and Municipal
Corporations” § 278 at 241.
Kraft at 44.
However, the decisive term in the quotation is “ex contractu,” which
means “[a]rising from a contract.” Black’s Law Dictionary 608 (8th Ed.2004).
Regarding government contracts, the Kraft court explained:
“Whatever the rule may be elsewhere, in this state the public policy, as
indicated by our constitution, statutes and decided cases, is, that to
bind the state, a county or city for supplies of any kind, the purchase
must be substantially in conformity to the statute on that subject, and
that contracts made in violation or disregard of such statutes are void,
not merely voidable, and that courts will not lend their aid to enforce
such a contract directly or indirectly, but will leave the parties where
they have placed themselves. If the contract is executed, no action can
be maintained to enforce it, and if executed on one side, no recovery
can be had against the party of the other side.”
Id. at 44, quoting Buchanan Bridge Co. v. Campbell, 60 Ohio St. 406, 419-420, 54
N.E. 372 (1899).
The policy precluding ex contractu claims against governmental
entities is based on the principle that a “municipality cannot enter into a contract
* * * except by ordinance or resolution of its counsel.” Wellston v. Morgan, 65 Ohio
St. 219, 62 N.E. 127 (1901); see also Cooney v. Independence, 8th Dist. Cuyahoga
No. 66509, 1994 Ohio App. LEXIS 5290, *5 (Nov. 23, 1994) (“[M]unicipalities may
not be bound to a contract unless the agreement is formally ratified through proper
channels.”). The Wellston court explained, “it devolves upon those who deal with
public officers, to see for themselves that the statutes have been complied with.” Id.
at 229. If the statutes have not been complied with, the contract is void, and the
municipality or county cannot be held liable on claims for an implied contract or
quantum meruit even if the county or municipality received benefits from the
exchange. Kraft at 44. The rationale is that “if a party to a contract not complying
with the formalities required by law for municipal contracts could recover on an
implied contract, then the purposes of the General Assembly, in requiring such
formalities, would be circumvented.” Indian Hill v. Atkins, 153 Ohio St. 562, 570,
93 N.E.2d 22 (1950). It is, therefore, against public policy to permit a party, who
could have insisted on compliance with statutory formalities, to recover on an
equitable theory, such as unjust enrichment, for performance rendered under a void
municipal contract. Id.; see also Sylvester Summers, Jr. Co., L.P.A., 8th Dist.
Cuyahoga No. 98227, 2013-Ohio-1339 (Attorney could not recover fees for services
rendered to city on a theory of unjust enrichment where contract was unenforceable
due to failure to comply with statutory requirements.).
Despite the county’s argument to the contrary, we affirmed an award
of unjust enrichment against a municipality in Kraft, because the city unjustly
retained benefits conferred by Kraft, and there was no contract, bargain, or exchange
of goods or services between Kraft and the county. See Kraft at 45. Similarly, in San
Allen, 8th Dist. Cuyahoga No. 99786, 2014-Ohio-2071, this court held that
employers could recover the overpayment of workers’ compensation premiums
from the Ohio Bureau of Workers’ Compensation (“BWC”) because “where the state
collects and retains funds to which the state is not lawfully entitled, those funds must
be returned as the equities require.” Id. at ¶ 126. Indeed, the Restatement of the
Law of Restitution holds that “payment of a tax that is erroneously or illegally
assessed or collected, gives the taxpayer a claim in restitution against the taxing
authority as necessary to prevent unjust enrichment.” Restatement of the Law 3d,
Restitution and Unjust Enrichment, Section 19(1) (2011). Therefore, a plaintiff may
recover damages on an unjust enrichment claim against the government under
certain circumstances.
All of the cases cited by the county in support of its argument involve
ex contractu claims, except for Kraft, and Morton v. Murray, 8th Dist. Cuyahoga
No. 106759, 2018-Ohio-5178. As previously stated, in Kraft, we affirmed a
judgment on a claim for unjust enrichment against the county because the county
unjustly retained a benefit conferred on it by Kraft and the benefit did not result
from any form contract or quasi-contract. Thus, Kraft is consistent with the
precedent of this court and of the Ohio Supreme Court, which holds that although
governmental entities cannot be held liable for unjust enrichment arising ex
contractu, governmental entities may nevertheless be liable for unjust enrichment
in cases not involving bargained-for benefits where the government unjustly
“‘retains money or benefits which in justice and in equity belong to another.’” San
Allen, 8th Dist. Cuyahoga No. 99786, 2014-Ohio-2071, at ¶ 114, quoting Smith v.
Vaughn, 174 Ohio App.3d 473, 2007-Ohio-7061, 882 N.E.2d 941, ¶ 10 (1st
Dist.2007), quoting Johnson, 106 Ohio St.3d 278, 2005-Ohio-4985, 834 N.E.2d 791at ¶ 20.
In Morton, an attorney filed a complaint against the Cuyahoga
County treasurer to recover attorney fees incurred for his work before the board of
revision, which lead to a reduction of real estate taxes for his clients. The trial court
granted summary judgment to the treasurer because the treasurer could only credit
an overpayment of taxes to the person who overpaid them, and the lawyer stipulated
that he never paid any tax on the property. Id. at ¶ 2. In affirming summary
judgment in favor of the county treasurer, this court held that the treasurer was not
liable for unjust enrichment because the lawyer “had no right to any overpayment
of real estate taxes because the credit for overpayment belongs to the person who
made the payment.” Id. at ¶ 6. Nevertheless, this court further held that “a county,
like a municipality, cannot be held liable for unjust enrichment.” Id. at ¶ 5.
The county argues that pursuant to Morton, 8th Dist. Cuyahoga No.
106759, 2018-Ohio-5178, we must similarly hold that the county, as a government
entity, cannot be held liable for unjust enrichment under any circumstances.
However, the court in Morton did not address Ohio Supreme Court precedent
expressly holding that plaintiffs may maintain unjust enrichment claims against the
government. In Santos, 101 Ohio St.3d 74, 2004-Ohio-28, 801 N.E.2d 441, the Ohio
Supreme Court specifically held that an employee could bring an unjust enrichment
claim against the BWC in a court of common pleas to recover funds that were
wrongfully collected by the state. Id. at ¶ 17. Rather than citing Santos, the Morton
court relied on NaphCare, Inc. v. Cty. Council of Summit Cty., 9th Dist. Summit No.
24906, 2010-Ohio-4458.
In NaphCare, the plaintiff provided healthcare services to inmates at
the Summit County jail and sued the county for unpaid services. The county argued
the contract was void because the amount the plaintiff sought was not properly
certified under R.C. 5705.41(D)(1). Id. at ¶ 5. In affirming summary judgment in
favor of the county, the Ninth District held that anyone who enters into a contract
with the county bears the burden of ensuring that the contract “‘complies with the
Constitution, statutes, charters, and ordinances so far as they are applicable. If he
does not, he performs at his peril.’” Id. at ¶ 22, quoting The Lathrop Co. v. Toledo,
5 Ohio St.2d 165, 173, 214 N.E.2d 408 (1966). The NaphCare court held that
because the contract was not formed in the statutorily prescribed manner, the
contract was void, and the county could not be held liable for unjust enrichment. Id.
at ¶ 23. NaphCare is consistent with cases holding that governmental entities
cannot be held liable for unjust enrichment arising ex contractu.
However, unlike NaphCare, or any of the ex contractu cases, neither
Musial nor any member of the class, sought money for goods supplied or services
rendered. Nor did they attempt to evade rules pertaining to government contracts.
Musial and the plaintiffs were overcharged property taxes due to a clerical error. As
previously stated, “payment of a tax that is erroneously or illegally assessed or
collected, gives the taxpayer a claim in restitution against the taxing authority as
necessary to present unjust enrichment[.]” Restatement of the Law 3d, Restitution
and Unjust Enrichment 19(1) (2011). Comment a of the Restatement further states
that a taxpayer has “a prima facie claim in restitution to recover any payment of
taxes, fees, or other governmental charges in excess of the taxpayer’s true
obligation.” Therefore, despite this court’s holding in Morton, the Ohio Supreme
Court held in Santos that government entities may be held liable for unjust
enrichment and ordered to pay restitution of funds that were wrongfully collected
and retained by the government.
However, since the Ohio Supreme Court decided Santos, the Ohio
Supreme Court decided Cleveland v. Ohio Bur. of Workers’ Comp., Slip Opinion No.
2020-Ohio-337, which clarifies the limited circumstances under which a plaintiff
may prevail on an equitable claim for unjust enrichment. In Cleveland v. Ohio Bur.
of Workers’ Comp., the Ohio Supreme Court was asked to determine whether a
common pleas court had jurisdiction over an employer’s claim against the Ohio
Bureau of Workers’ Compensation for the reimbursement of alleged excessive
premiums paid by the employer. Common pleas courts have jurisdiction over
equitable claims against the state, but only the Ohio Court of Claims has jurisdiction
over legal claims for restitution. Id. at ¶ 10. To answer this jurisdictional question,
the court had to determine whether a claim to recover the overpayment of premiums
to the Bureau of Workers’ Compensation was an equitable claim or a legal claim.
The court held that a claim to recover overpayment of premiums is a
legal, rather than an equitable claim, “if there is not a specifically identifiable fund,
or traceable items on which the money from the fund was spent * * * .” Id. at ¶ 16.
In concluding that the overpayment of premiums is a legal rather than an equitable
claim, the court stated:
[T]he [United States Supreme] court explained that a claim sounded in
law if it sought to recover from a defendant’s general assets rather than
“specifically identified funds that remain in the defendant’s
possession.” Montanile v. Natl. Elevator Industry Health Benefit Plan
Bd. of Trustees, __ U.S. __ , 136 S.Ct. 651, 658, 193 L.Ed.2d 556 (2016).
The court further explained that “[e]quitable remedies ‘are, as a general
rule, directed against some specific thing; they give or enforce a right
to or over some particular thing * * * rather than a right to recover a
sum of money generally out of the defendant’s assets.’ 4 S. Symons,
Pomeroy’s Equity Jurisprudence § 1234, p. 694 (5th ed. 1941)
(Pomeroy).” (Ellipsis sic.) Montanile at , 136 S.Ct. at 658-659. The
court stated that if there is not a specifically identifiable fund, or
traceable items on which the money from the fund was spent, to seize,
“the plaintiff could not attach the defendant’s general assets instead.”
Id. at 659. In such a case, “[t]he plaintiff had ‘merely a personal claim
against the wrongdoer’—a quintessential action at law.” Id., quoting
Restatement of the Law, Restitution, Section 215(1), at 866 (1936).
Although the BWC kept track of the amount of Cleveland’s premium
payments, R.C. 4123.34(A), Cleveland’s premiums went into a general
insurance fund, R.C. 4123.30, i.e., they were not kept separate from
payments made by other public employers. Once Cleveland’s premium
payment was deposited into the fund, it became commingled with the
premium payments from other employers. And even if we considered
the state insurance fund itself to be a specific fund, Cleveland paid the
last funds it seeks to recover in 2009. It is inconceivable how money
belonging to Cleveland could “clearly be traced to particular funds or
property” in the BWC’s possession, see Great-West [Life & Annuity Ins.
Co. v. Knudson], 534 U.S. at 213, 122 S.Ct. 708, 151 L.Ed.2d 635(Historically, an equitable claim for restitution was one in which
“money or property identified as belonging in good conscience to the
plaintiff could clearly be traced to particular funds or property in the
defendant’s possession”). The BWC has paid that money out as
compensation to injured workers or refunds to covered employers. The
money allegedly overpaid is no longer in the BWC’s possession and
cannot be recovered by a suit in equity. Thus, Cleveland’s claim sounds
in law and must proceed through the Court of Claims, which has
exclusive jurisdiction over legal claims against the BWC.
Cleveland at ¶ 16-17.
The county asserts that it “serves principally as a conduit that passes
property taxes paid into the county treasury * * * onto other governmental entities,
such as tax-supported school districts, cities, parks, and libraries[.]” (Appellants’
brief at 28.) Indeed, the county treasurer is required by law to make semiannual
distributions of the proceeds of real property taxes to local municipal corporations.
R.C. 321.33; 2004 Ohio Atty Gen. Ops. No. 22, *5. Thus, the overpayment of taxes
made by Musial and the class of plaintiffs did not remain in the county’s general
fund where their payments could be easily traced. Nor were their payments kept
separate from payments made by other taxpayers; they were commingled with other
taxpayers’ payments and disbursed to various local municipalities. In short, the
plaintiffs’ overpayments in taxes are no longer in the county’s possession and cannot
be recovered by a suit in equity.
We, therefore, sustain the county’s second assignment of error.
C. Illegal Taxation Claim
We turn next to the second cross-assignment of error because it
concerns Musial’s statutory claim for illegal taxation, which represents an
alternative theory to the plaintiffs’ unjust enrichment claim. In this assigned error,
Musial argues the trial court erred in dismissing its illegal taxation claim.
Musial asserted its illegal taxation claim pursuant to R.C. 2723.01,
which states, in relevant part:
Courts of common pleas may enjoin the illegal levy or collection of taxes
and assessments and entertain actions to recover them when collected,
without regard to the amount thereof * * * .
In determining the taxable value of real property, R.C. 5713.03
requires the county auditor to determine the value of the property “from the best
source of information available.” Musial and the plaintiffs argue the county illegally
collected their property taxes in violation of R.C. 5713.03 because the auditor used
the inflated 2008 values when it calculated the 2009 statistical reappraisal and
carried the inflated figures over for the 2010 and 2011 tax years, instead of using “the
best source of information available,” i.e., the board of revision’s determination of
the 2008 values.
The county argues that although Musial successfully challenged the
2008 tax value of its property, a new value had to be determined by the county
auditor for the 2009 tax year in the course of a triennial update, and Musial did not
file a decrease complaint to challenge the 2009 tax value of its property by the March
31, 2010, deadline. The county further asserts that any determination made as to
the 2008 value of Musial’s property would not, under R.C. 5715.19(D),
“carryforward” or “carryover” to 2009.
Regarding the carryover of reduced property values, R.C. 5715.19(D)
provides, in relevant part:
The determination of any such complaint shall relate back to the date
when the lien for taxes or recoupment charges for the current year
attached or the date as of which liability for such year was determined.
Liability for taxes and recoupment charges for such year and each
succeeding year until the complaint is finally determined and for any
penalty and interest for nonpayment thereof within the time required
by law shall be based upon the determination, valuation, or assessment
as finally determined.
Interpreting R.C. 5715.19(D), the Ohio Supreme Court explained that
When a subject property’s value is reduced in the middle of a triennium
update, the reduced value carries forward until the end of that
triennium, and at the start of the next sexennial valuation, the auditor
must reappraise the property and determine a new value going
forward.
State ex rel. Mars Urban Sols., L.L.C. v. Cuyahoga Cty. Fiscal Officer, 155 Ohio
St.3d 316, 2018-Ohio-4668, 121 N.E.3d 311, ¶ 11. The county argues that because
the 2009 tax year was the start of a new triennial, the 2008 tax value of Musial’s
property did not “carryover” into 2009.
However, the 2008 value was the starting point for the triennial
statistical update, which became effective on January 1, 2009. James Hopkins
(“Hopkins”), who worked in the Cuyahoga County Auditor’s Office from 1986
through 2011 and currently serves as director of real estate appraisals in the
Cuyahoga County Fiscal Office, testified that in conducting the 2009 triennial
update, the auditor applied a factor of one to the 2008 value of Musial’s property,
which meant that the value of Musial’s property neither increased, nor decreased in
2009. Under the valuation for the new triennium beginning in 2009, the value of
Musial’s property remained the same as the 2008 tax value determined by the board
of revision. Yet, Musial paid taxes on a $679,500 valuation, when the property was
actually valued at $499,000 for the triennium beginning in 2009.
Hopkins testified that if the correct 2008 tax year value of $499,000
had been used for the 2009 triennial update, then the 2009 value of Musial’s
property would have been $499,000 instead of the $679,500 reflected in the tax bill.
Hopkins also stated that when the auditor received the board of revision’s decision,
the auditor changed the value of Musial’s property for the 2008 tax year to $499,000
in the Sigma database, but never corrected the value for the 2009 tax year, or any
subsequent years in the triennium. (Tr. 328.) Therefore, the county knew, or should
have known, that it collected an overpayment of taxes from Musial for the 2009 tax
year. Moreover, Musial notified the auditor of its mistake in writing, and the
auditor’s failure provide a refund of the overpayment prompted Musial to file the
initial complaint in this case.
As previously stated, R.C. 2723.01 creates a cause of action to recover
taxes that were collected illegally. The term “illegal” is defined as “not according to
or authorized by law.” Merriam-Webster.com Dictionary, “Illegal,” available at
Merriam-Webster, https://www.merriam-webster.comdictionary/illegal (accessed
June 3, 2020). The county is authorized to levy real estate taxes on real property
pursuant to R.C. 5705.03, and the county auditor is authorized to determine the
taxable value of the real property pursuant to R.C. 5713.03. However, the auditor
did not calculate the tax value of the plaintiffs’ properties “from the best source of
information available” as mandated by R.C. 5713.03. Therefore, the county collected
taxes in excess of the amounts owed by the plaintiffs in violation of R.C. 5713.03.
See Orange Cty. v. Bellsouth Telecommunications, 812 So.2d 475, 478 (Fla. 2002)
(“A tax based on a charger greater than the subscriber is actually required to pay is
illegal.”).
Any taxes levied against property in excess of the amount determined
by the auditor in accordance with applicable statutes is illegal because they were not
authorized by law. In Musial’s case, the difference between the amount of taxes paid
on the erroneous value of its property (i.e., $679,500) and the taxes that should have
been paid on the correct value of the property (i.e., $499,000) constitutes the
amount of illegal taxes collected from Musial because the excess amount was not
authorized by law. The same calculation may be made for members of the class who
overpaid taxes due to the erroneous overvaluation of their properties.
The trial court dismissed the plaintiffs’ illegal taxation claim on
grounds that the county treasurer did not know he overcharged the plaintiffs when
he sent their tax bills because the county auditor had not updated the correct
property values in the county database. However, R.C. 2723.01 does not require
proof of knowledge, intent, or any other mens rea. The statute simply provides that
common pleas courts may entertain actions to recover illegally collected taxes. See
R.C. 2723.01. The lack of a mens rea in the statute makes sense since the plaintiffs
cannot recover overpayment of taxes under an unjust enrichment theory, and
immunity would bar their recovery if the statute limited recovery to the negligent
over-collection of taxes. R.C. 2723.01 was enacted to address the very situation
presented in this case, i.e., to allow taxpayers to recover refunds for the overpayment
of taxes that have been collected and retained by the government in violation of the
law.
The second cross-assignment of error is sustained.
D. Decertification of the Class
In the county’s third assignment of error, it argues the trial court
erred in denying its motion to decertify the class. The county argues material fact
variations among class members emerged after the class was certified that
warranted class decertification.
Following this court’s mandate in Musial I, the trial court certified the
following plaintiff class:
Cuyahoga County property owners who filed a complaint against
valuation for tax year 2008 that resulted in the Board of Revision
reducing the taxable value of the property, whose 2009 value was taxed
using a higher value.
Class certification under Civ.R. 23 requires a plaintiff to establish that
(1) an identifiable and unambiguous class exists, (2) the named representative of the
class is a class member, (3) the class is so numerous that joinder of all members of
the class is impractical, (4) there are questions of law or fact that are common to the
class (“commonality”), (5) the claims or defenses of the representative plaintiff or
plaintiffs are typical of the claims and defenses of the members of the class
(“typicality”), (6) the representative parties fairly and adequately protect the
interests of the class (“adequacy”), and (7) one of the three requirements of Civ.R.
23(B) is satisfied. Stammco, L.L.C. v. United Tel. Co. of Ohio, 125 Ohio St.3d 91,
2010-Ohio-1042, 926 N.E.2d 292, ¶ 6.
After a class has been certified, Civ.R. 23(C)(1)(c) provides that an
order granting class certification “may be altered or amended before final
judgment.” The county argues the trial court should have decertified the class after
it became apparent that the commonality and predominance requirements were not
met because it was impossible to individually calculate the restitution damages for
each member of the plaintiffs’ class. The county further asserts that each property
owner’s case presented its own specific issues for determination that could only be
adjudicated through individual, fact-specific determinations.
However, the record shows that all members of the class had the 2008
tax value of their properties reduced by the board of revision. The record also shows
the auditor used the wrong 2008 tax value in conducting the triennial update for
members of the class because the board of revision’s decisions on their properties
were issued after the auditor had already submitted values for the 2009 triennial
update. Shelly Davis, administrator of the board of revision, stated in a sworn
affidavit that the “parcels and amounts provided in response to the class definition
were reflective of the people who filed a 2008 [tax year] complaint with the Board
of Revision but did not receive their hearing prior to the Auditor compiling the
values for the 2009 triennial update.” (Davis affidavit ¶ 5, attached to defendant’s
May 31, 2018 motion for hearing on set-off and on motion for decertification.) In
other words, the only class members identified by the county are those for whom the
auditor used an inflated value in calculating the triennial update.
Nevertheless, the county argues, citing Davis’s affidavit, that it was
virtually impossible to calculate restitution damages for each individual member of
the class due to a number of inconsistent variables. And the county asserts that
some class members were not harmed. However, individual determinations on
damages were not required because the parties stipulated to the plaintiffs’ damages
prior to trial. The stipulation, titled “Joint Damages Stipulation,” was submitted to
the trial court as Plaintiffs’ exhibit No. 29. The stipulation states, in relevant part:
“The parties stipulate that Exhibit A (which will be submitted in camera) accurately
reflects those persons constituting the class in this case, including the amount of
money each class member might be entitled to receive for [tax year] 2009, 2010, and
2011 if plaintiffs were to prevail on their claims in this matter.” Having stipulated to
the amount of restitution for each class member, there was no need to conduct
individual calculations of damages. Therefore, all the requirements of class
certification were maintained, and the trial court properly overruled the county’s
motion for decertification.
The county’s third assignment of error is overruled.
E. Prejudgment Interest
In the county’s fourth assignment of error, it argues the trial court
erred in awarding prejudgment interest to the plaintiffs pursuant to R.C. 1343.03,
which states, in relevant part:
[W]hen money becomes due and payable upon any bond, bill, note, or
other instrument of writing, upon any book account, upon any
settlement between parties, upon all verbal contracts entered into, and
upon all judgments, decrees, and orders of any judicial tribunal for the
payment of money arising out of tortious conduct or a contract or other
transaction, the creditor is entitled to interest at the rate per annum
determined pursuant to section 5703.47 of the Revised Code, unless a
written contract provides a different rate of interest in relation to the
money that becomes due and payable, in which case the creditor is
entitled to interest at the rate provided in that contract.
R.C. 1343.03(A).
The purpose of prejudgment interest is to promote settlement efforts
and to discourage defendants from frivolously prolonging suits for legitimate claims.
Royal Elec. Constr. Corp. v. Ohio State Univ., 73 Ohio St.3d 110, 116, 652 N.E.2d
687 (1995). Prejudgment interest does not punish the party responsible for the
underlying damages, but acts as compensation for the lapse of time between accrual
of the claim and judgment. Id.The county argues the trial court’s award of prejudgment interest
should be reversed because prejudgment interest cannot be awarded on an unjust
enrichment claim under R.C. 1343.03(A). However, because we have determined
that plaintiffs could not recover on their unjust enrichment claim, the county’s
argument that a court may not award prejudgment interest on an unjust enrichment
award is immaterial. Moreover, the Ohio Supreme Court’s decision in Royal Elec.,
73 Ohio St.3d 110, 116, 652 N.E.2d 687, suggests that an award of prejudgment
interest was appropriate in this case.
Prior to Royal Elec., appellate courts denied prejudgment interest in
certain actions, usually contract cases, if the damages were unliquidated and not
capable of ascertainment by reasonably certain calculation prior to judgment. Id. at
116. In Royal Elec., the court noted that the plain language of R.C. 1343.03(A) did
not differentiate between “liquidated” and “unliquidated” damages nor did the
statute require that a claim be “capable of ascertainment” for purposes of awarding
prejudgment interest. Id. Thus, the court stated that instead of focusing on whether
the claim can be classified as “liquidated,” “unliquidated” or “capable of
ascertainment,” the court should ask: “Has the aggrieved party been fully
compensated?” Id. at 116. The court reasoned that the purpose of awarding
prejudgment interest is to fully compensate the aggrieved party and return the party
to the position he or she would have been in now if the act that gave rise to the
plaintiff’s claim for damages had not occurred. Id. Musial contends the same logic
should apply to its claims in this case.
Although Royal Elec. involved a breach of contract claim, cases
decided after Royal Elec. have awarded prejudgment interest on noncontractual
claims. See, e.g., Desai v. Franklin, 177 Ohio App.3d 679, 2008-Ohio-3957, 895
N.E.2d 875 (9th Dist.) (Affirming award of prejudgment interest on claims of unjust
enrichment, fraud, and breach of fiduciary duty.); Magnum Steel & Trading L.L.C.
v. Mink, 9th Dist. Summit Nos. 26127 and 26231, 2013-Ohio-2431 (Affirming award
of prejudgment interest on promissory estoppel claim.); Euro Tyres Corp. v. SK
Mach. Corp., N.D. Ohio No. 5:08CV2953, 2010 U.S. Dist. LEXIS 7237 (Jan.28,
2010) (Awarding prejudgment interest on claims of conversion and unjust
enrichment.).
Evidence of the correct dollar amount of restitution for each member
of the class was presented at trial through a joint stipulation of damages, which was
admitted as plaintiff’s trial exhibit No. 29. The exhibit comprised an extensive
spreadsheet, identifying property owners and their parcel numbers, each owner’s
overpayments due to the auditor’s inflated assessments for the 2009 tax year and, if
applicable, the overpayments for the 2010 and 2011 tax years. These amounts were
readily ascertainable from the county records and could have been refunded years
ago.
An award of prejudgment interest is designed to ensure that a plaintiff
receives full compensation for his or her loss, including the lost time value of money,
i.e., time during which the money could have been invested. A sum of money
awarded today is not equal to the same amount that should have been paid years
ago. Unless interest is assessed on the judgment, the plaintiff is not fully
compensated, and the defendant is unjustly enriched. Fed. Deposit Ins. Corp. v.
British-Am. Corp., 755 F.Supp. 1314, 1328 (E.D.N.C. 1991) (“Awarding prejudgment
interest in this case does not penalize defendants, but rather puts each party in the
same position it would now be in had the fraudulent transfer never occurred.”);
Procter & Gamble Distrib. Co. v. Sherman, 2 F.2d 165, 166 (S.D.N.Y. 1924) (L.
Hand, J.) (“The present use of my money is itself a thing of value, and, if I get no
compensation for its loss, my remedy does not altogether right my wrong.”).
The county nevertheless argues that the trial court’s judgment
awarding prejudgment interest from 2010 is “demonstrably unfair” since the trial
occurred in September 2015, and the court did not return its verdict until March
2018. The county argues it was unfair for the trial court to charge the county interest
for the nearly three years it took the court to render a verdict and still another year
to enter final judgment. However, as previously stated, the county could have
readily ascertained the damages owed to each member of the plaintiffs’ class from
the county records. The refunds should have been paid as soon as the errors were
discovered, and there never should have been a lawsuit. The county could have
avoided years of litigation and prejudgment interest if it had simply refunded the
overpayment of taxes to each of the members of the class in a timely manner.
The county’s fourth assignment of error is overruled.
F. Payment to Class Counsel
In the county’s fifth assignment of error, it argues the trial court erred
by ordering the county to pay the judgment of $3,927,385.91, plus prejudgment
interest in the amount of $871,454.31 to class counsel. The county contends the
judgment is “ill-advised as a matter of practicality” because some class members
may not receive their refunds if they have died, sold their properties, or failed to
pursue their claims. The county further asserts it is unfair to allow plaintiffs’ counsel
to reap a windfall by retaining unclaimed funds.
However, unclaimed funds will not be distributed as a windfall to
plaintiffs’ counsel. The “determination of how the court disposes of the common
fund, or the unclaimed portion thereof, falls within the general equity powers of the
court.” 4 Conte & Newberg, Newberg on Class Actions, Section12:28 (5th ed.); Six
(6) Mexican Workers v. Arizona Citrus Growers 904 F.2d 1301, 1307 (9th Cir.
1990), citing Van Gemert v. Boeing Co., 739 F.2d 730, 737 (2d Cir. 1984) (“[C]ourts
have broad discretionary powers in shaping equitable decrees for distributing
unclaimed class action funds.”).
Both plaintiffs’ counsel and the trial court owe fiduciary duties to the
class members, including the absent members. Wyly v. Milberg Weiss Bershad &
Schulman, L.L.P., 12 N.Y.3d 400, 412, 908 N.E.2d 888 (2009) (Class counsel owe
fiduciary duty to the entire class, including absent class members.); Adame v. Law
Office of Allison & Huerta, Texas App. No. 13-04-670-CV, 2008 Tex. App. LEXIS
3912 (May 22, 2008) (“[C]lass counsel owes a fiduciary duty to protect the interests
of absent class members.”); Ballard v. Martin, 349 Ark. 564, 575, 79 S.W.3d 838(2002) (A trial court has “duty to act as a fiduciary who must serve as guardian of
the rights of absent class members.”).
The trial court’s judgment entry, dated April 16, 2019, states, in
relevant part, that “the court retains jurisdiction to administer the settlement and to
make a further order regarding the disposition of funds in the hands of class counsel
that remain unclaimed after diligent efforts to locate and remunerate all individual
class members.” Thus, the trial court has acknowledged its fiduciary duty to the
entire class and safeguarded against an unfair windfall to plaintiffs’ counsel.
Moreover, the county may participate in any matters involving unclaimed funds
and, therefore, has not been left “entirely out of the process.” (Appellant’s brief at
p. 40.)
Therefore, the county’s fifth assignment of error is overruled.
G. Equal Protection
In Musial’s first cross-assignment of error, it argues the trial court
erred in dismissing its equal protection claim. Musial contends the county
discriminated against property owners who filed complaints against the valuation
of their properties by using incorrect property values in calculating their property
taxes for 2009, 2010, and 2011, while it used the correct property values to calculate
the taxes on other properties.
The Equal Protection Clause of the Fourteenth Amendment to the
United States Constitution provides that “[n]o State shall * * * deny to any person
within its jurisdiction the equal protection of the laws.” Ohio’s Equal Protection
Clause, Article I, Section 2 of the Ohio Constitution, similarly states that “[a]ll
political power is inherent in the people. Government is instituted for their equal
protection and benefit.”
The guaranty of equal protection prevents the government from
treating people differently under its laws on an arbitrary basis. Harper v. Virginia
State Bd. of Elections, 383 U.S. 663, 681, 86 S.Ct. 1079, 16 L.Ed.2d 169 (1966)
(Harlan, J., dissenting.). The equal protection provisions of the Ohio and United
States Constitutions are functionally equivalent and are subject to the same analysis.
State v. Thompson, 95 Ohio St.3d 264, 2002-Ohio-2124, 767 N.E.2d 251, ¶ 11, citing
Am. Assn. of Univ. Professors, Cent. State Univ. Chapter v. Cent. State Univ., 87
Ohio St.3d 55, 59, 717 N.E.2d 286 (1999).
Musial argues the county arbitrarily treated the class members
differently from other property owners within the county because it used incorrect
values to overvalue their properties while it used the correct values to appraise the
value of other property owners’ properties. Musial asserts “[t]here was no evidence
at trial suggesting any legitimate purpose for the government overcharging Class
Members on their taxes, and neither the trial court nor the government (in its pre-
trial brief) articulated one.” (Appellee’s answer brief at p. 44.) Musial further
contends that “[b]y using the wrong value for Class Members, but using the correct
value for other taxpayers, the County violated Class Members’ equal protection
rights.” (Musial’s answer brief at p. 44.)
However, we find no evidence that there was any government-
established classification that separated Musial and members of the class from other
property owners, apart from the fact that the class members successfully challenged
the value of their properties for the 2008 tax year, and other property owners within
the county did not. Any supposed “distinction” between the plaintiffs’ class and
other county taxpayers occurred as a result of plaintiffs filing complaints against the
valuation of their properties for the 2008 tax year. As the trial court observed:
[T]he plaintiff class and the taxpayers not in the class are not similarly
situated. The members of the class all successfully contested their
2008 values; those taxpayers not within the plaintiff class did not. So
the initial sorting of taxpayers into classes was not done by government
fiat. Moreover, to the extent the plaintiff might argue that all of them
are real state tax payers [sic] and only those who successfully contested
their values are being discriminated against by the government, the
plaintiff has failed to show any intent to discriminate. There is no
evidence that the county government ignored Musial Office’s reduced
2008 value when calculating the basis for the 2009 triennial
reappraisal as a means of punishing the plaintiff for successfully
exercising its right to contest the value at the board of revision.
(Mar. 23, 2018 judgment entry p. 10.) There was no evidence that the county
treated members of the class differently from other property owners; only that the
class members sought a reduction in valuation of their properties, while other
property owners did not. Therefore, we find no basis for Musial’s equal protection
claim.
Musial’s first cross-assignment of error is overruled.
The trial court’s judgment is affirmed in part and reversed in part. We
remand the case to the trial court to enter the amount of previously determined
damages on the plaintiffs’ unlawful taxation claim along with previously determined
amount of prejudgment interest.
It is ordered that appellee recover from appellants costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate be sent to the common pleas court to carry
this judgment into execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27
of the Rules of Appellate Procedure.
EILEEN T. GALLAGHER, ADMINISTRATIVE JUDGE
PATRICIA ANN BLACKMON, J., and
ANITA LASTER MAYS, J., CONCUR