Hilliard City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision (Slip Opinion) , 154 Ohio St. 3d 449 ( 2018 )

[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as
Hilliard City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision, Slip Opinion No. 2018-Ohio-
2046.]
NOTICE
This slip opinion is subject to formal revision before it is published in an
advance sheet of the Ohio Official Reports. Readers are requested to
promptly notify the Reporter of Decisions, Supreme Court of Ohio, 65
South Front Street, Columbus, Ohio 43215, of any typographical or other
formal errors in the opinion, in order that corrections may be made before
the opinion is published.
SLIP OPINION NO. 2018-OHIO-2046
HILLIARD CITY SCHOOLS BOARD OF EDUCATION, APPELLEE, v. FRANKLIN
COUNTY BOARD OF REVISION ET AL., APPELLEES; UTSI FINANCE, INC.,
APPELLANT.
[Until this opinion appears in the Ohio Official Reports advance sheets, it
may be cited as Hilliard City Schools Bd. of Edn. v. Franklin Cty. Bd. of
Revision, Slip Opinion No. 2018-Ohio-2046.]
Real-property valuation—Property owner failed to negate presumption of recency
of sale—Date of sale is the date that real-property conveyance-fee
statement is filed in auditor’s office—Board of Tax Appeals’ decision
affirmed.
(No. 2015-1861—Submitted January 23, 2018—Decided May 31, 2018.)
APPEAL from the Board of Tax Appeals, Nos. 2014-3748 and 2014-3749.
_________________
Per Curiam.
{¶ 1} In this real-property-valuation case, appellant, UTSI Finance, Inc.
(“UTSI”), appeals a Board of Tax Appeals (“BTA”) decision that valued UTSI’s
property in accordance with a sale price. In assigning this value, the BTA
SUPREME COURT OF OHIO
determined that UTSI’s appraisal evidence did not negate the presumption that the
sale was characteristic of true value. Because we conclude that the BTA’s decision
is reasonable and lawful, we affirm it.
I. FACTS AND PROCEDURAL BACKGROUND
{¶ 2} The subject property consists of two parcels located on the west side
of Columbus. The first parcel consists of 3.160 acres of unimproved land. The
second parcel consists of 24.710 acres, part of which is improved with a 9,600-
square-foot industrial warehouse used for servicing semitrailers. For tax year 2011,
the Franklin County auditor valued the first parcel at $132,700 and the second
parcel at $1,717,300, for a total valuation of $1,850,000. Appellee Hilliard City
Schools Board of Education (“BOE”) and UTSI each filed original and
countercomplaints against these tax-year-2011 valuations, and the two cases were
consolidated for a hearing before the Franklin County Board of Revision (“BOR”).
A. BOR proceedings
{¶ 3} At the BOR hearing, the BOE presented a quitclaim deed
memorializing a transfer of the subject property from Lakeshore Ventures, L.L.C.,
to Universal Truckload Services, Inc. The deed was signed and notarized in
September 2002, but it bears a stamp from the auditor’s office dated March 2009.
The BOE also presented the conveyance-fee statement associated with this transfer,
showing that the subject property sold for $2,313,489. The statement was filed
with the auditor’s office in March 2009. Relying on these two documents, the BOE
argued that the subject property should be valued according to the sale price.
{¶ 4} As additional support, the BOE provided copies of the BOR’s
decision that assigned a value of $2,313,500 to the subject property for tax year
2009. The BOE asserted that during the tax-year-2009 proceedings, the BOR
determined that the sale was arm’s length in nature, and thus, it insisted, UTSI was
barred from contesting the arm’s-length nature of the transaction during the tax-
year-2011 proceedings.
2
January Term, 2018
{¶ 5} For its part, UTSI presented the testimony of Kelly Fried, a certified
appraiser whose qualifications were stipulated to by the BOE. Fried appraised only
the second parcel (the one improved with the industrial warehouse) as of the
January 1, 2011 tax-lien date, relying on both a sales-comparison and an income
approach to value to arrive at a reconciled valuation of $1,470,000.
{¶ 6} Fried commented on market trends, observing that “there appears to
be limited demand for similar [properties] at the time of value as there appears to
be an excess supply of space in this area.” More specifically, she wrote that
“demand for real property peaked around 2006 and then began to decline from late
2007 until leveling off in late 2011/early 2012 due to economic conditions.” During
this decline, she observed, vacancy rates started to trend upward.
{¶ 7} Fried’s appraisal report additionally noted:
The property last transferred in March 3, 2009 from
Lakeshore Ventures LLC to Universal Truckload for
$2.3 million in a sale that the owner reported to be
between related entities. The majority owner of
UTSI also owns Lakeshore Ventures. There was an
additional transfer in 2009 from Universal Truckload
to UTSI for no consideration in what was considered
to be a non-arm’s-length transfer.
Fried elaborated on this passage by testifying that the commonality between the
“related entities” was based on their relationship to “Crown Enterprises.” Fried
never identified the name of the “owner” who had reported to her that the sale was
between related entities, nor did this owner testify. The BOE raised a hearsay
objection to Fried’s reliance on her conversation with the owner, but the BOR
permitted her to testify on this topic.
3
SUPREME COURT OF OHIO
{¶ 8} Fried stated that the owner had told her that the March 2009 sale
included more than just realty. But Fried did not specify what the nonrealty items
may have been.
{¶ 9} The BOR assigned a total value to the subject property of $1,602,700
for tax years 2011, 2012, and 2013. For the first parcel, the BOR retained the
auditor’s valuation of $132,700. For the second parcel, it assigned Fried’s opined
value of $1,470,000. The BOR rejected the BOE’s argument that the March 2009
sale price established the subject property’s value, explaining that changes in
market conditions rendered the sale too remote.
B. BTA proceedings
{¶ 10} The BOE appealed to the BTA, which heard the case on the record
developed before the BOR and on briefs filed by the BOE and UTSI. The BTA
determined that the subject property’s value should be $2,313,490 for tax years
2011, 2012, and 2013. Although the BTA rejected the BOE’s argument that UTSI
was collaterally estopped from contesting the sale’s arm’s-length nature, the BTA
nevertheless found that the sale price presumptively established the subject
property’s value and that UTSI had failed to rebut that presumption by showing
that the sale was not a recent arm’s-length transaction. The BTA held that it could
not rely on Fried’s statement that the sale was between related parties, because in
its view, that statement was hearsay. The BTA rejected UTSI’s argument that the
sale took effect in September 2002, ruling instead that the sale took effect for real-
property-valuation purposes in March 2009, the date the conveyance-fee statement
was filed. And the BTA rejected Fried’s analysis of changed market conditions as
empirically unsupported. UTSI then filed this appeal.
II. STANDARD OF REVIEW
{¶ 11} We will affirm a BTA decision that is reasonable and lawful. Satullo
v. Wilkins, 111 Ohio St. 3d 399, 2006-Ohio-5856, 856 N.E.2d 954, ¶ 14. We review
de novo the BTA’s resolution of legal issues but will defer to the BTA’s findings
4
January Term, 2018
concerning the weight of the evidence if there is evidence in the record to support
them. Lunn v. Lorain Cty. Bd. of Revision, 149 Ohio St. 3d 137, 2016-Ohio-8075,
73 N.E.3d 486, ¶ 13.
III. DISCUSSION
{¶ 12} We begin with well-established principles. The price from a recent
arm’s-length sale presumptively establishes a property’s true value pursuant to
former R.C. 5713.03, Am.Sub.H.B. No. 260, 140 Ohio Laws, Part II, 2665, 2722.1
E.g., Utt v. Lorain Cty. Bd. of Revision, 150 Ohio St. 3d 119, 2016-Ohio-8402, 79
N.E.3d 536, ¶ 9. To benefit from this presumption, the proponent need only meet
a relatively light initial burden to show that the “sale on its face appears to be recent
and at arm’s length.” 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, ¶ 41. The
proponent can make this showing by furnishing “ ‘basic documentation of a
sale.’ ” Utt at ¶ 13, quoting FirstCal Indus. 2 Acquisitions, L.L.C. v. Franklin Cty.
Bd. of Revision, 125 Ohio St. 3d 485, 2010-Ohio-1921, 929 N.E.2d 426, ¶ 24.
When, for example, the proponent provides a deed and conveyance-fee statement,
this requirement is met and the presumption arises. See Dauch v. Erie Cty. Bd. of
Revision, 149 Ohio St. 3d 691, 2017-Ohio-1412, 77 N.E.3d 943, ¶ 17.
1
For tax years 2011 and 2012, R.C. 5713.03 provided that “the auditor shall consider the sale price”
in valuing the property for tax purposes. (Emphasis added.) Am.Sub.H.B. No. 260 (“H.B. 260”),
140 Ohio Laws, Part II, at 2722. For tax year 2013, however, R.C. 5713.03 provided that “the
auditor may consider the sale price” in valuing the property for tax purposes. (Emphasis added.)
2012 Am.Sub.H.B. No. 487 (“H.B. 487”); Terraza 8, L.L.C. v. Franklin Cty. Bd. of Revision, 150
Ohio St. 3d 527, 2017-Ohio-4415, 83 N.E.3d 916, ¶ 18 (holding that H.B. 487 applies to valuations
for tax year 2013). Here, the complaints were filed for tax year 2011 (a reappraisal year in Franklin
County) and both the BOR and the BTA applied their determinations of value to tax years 2011,
2012, and 2013. While the inclusion of tax year 2013 might suggest that the analysis should change
to account for the amendment to R.C. 5713.03, no party argues that the H.B. 487 version applies
here. And nothing in Terraza requires that R.C. 5713.03 be applied in a piecemeal fashion when a
complaint is filed for a tax year subject to H.B. 260 and the value for that tax year is carried forward
to a later tax year governed by H.B. 487. We accordingly apply the H.B. 260 version, with its
mandatory “shall,” to the issues raised herein.
5
SUPREME COURT OF OHIO
{¶ 13} After the presumption arises, the opponent may rebut it only by
showing that the sale was either not recent or not at arm’s length. Cummins at
¶ 13. An appraiser’s opinion of value is not enough on its own to overcome the
validity of a sale price. Columbus City Schools Bd. of Edn. v. Franklin Cty. Bd. of
Revision, 146 Ohio St. 3d 470, 2016-Ohio-757, 58 N.E.3d 1126, ¶ 20 (“Buckeye
Hospitality”). But an opponent is permitted to rebut the presumed recency and
arm’s-length nature of a sale by “rely[ing] on information contained in an appraisal
report and an appraiser’s testimony.” Id. at ¶ 19. With these principles in mind,
we now take up the parties’ contentions.
A. The BOE did not preserve its collateral-estoppel argument
{¶ 14} The BOE asserts as a threshold matter that collateral estoppel
precludes UTSI from contesting the arm’s-length nature of the sale because, the
BOE insists, the BOR previously determined in a tax-year-2009 proceeding that the
sale was at arm’s length. But the BTA rejected this argument below and the BOE,
as appellee herein, did not file a cross-appeal to preserve it. “[T]he case law
establishes that when the BTA has made an actual finding adverse to a party, ‘it [is]
imperative that that finding be affirmatively challenged as error’ through a cross
appeal in order to preserve jurisdiction over the issue.” (Second set of brackets sic.)
Columbus City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision, 151 Ohio St. 3d
100, 2017-Ohio-7578, 86 N.E.3d 301, ¶ 32, quoting Internatl. Paper Co. v. Testa,
150 Ohio St. 3d 348, 2016-Ohio-7454, 81 N.E.3d 1225, ¶ 31. Applying this
principle, we conclude that the BOE’s failure to file a cross-appeal deprives us of
jurisdiction to consider the collateral-estoppel issue.
B. UTSI bore the burden of proof before the BTA
{¶ 15} UTSI maintains that because it prevailed before the BOR, the burden
of proof shifted to the BOE to present competent and probative evidence to make
its case at the BTA. Because the BOE did not put on any new evidence to establish
that the transfer qualified as a recent arm’s-length sale, UTSI reasons, the BOE
6
January Term, 2018
failed to meet its burden and the BTA acted unreasonably and unlawfully in
concluding otherwise.
{¶ 16} The appellant at the BTA ordinarily bears the burden to prove a value
that differs from the one found by a board of revision. N. Royalton City School
Dist. Bd. of Edn. v. Cuyahoga Cty. Bd. of Revision, 129 Ohio St. 3d 172, 2011-Ohio-
3092, 950 N.E.2d 955, ¶ 15. But “when the issue is whether a proffered sale price
should be used to value the property, the burden at the BTA is usually on the same
party who bore that burden at the BOR: the opponent of using the sale price.” Id.
And “[t]hat burden does not shift at the BTA even if the BOR decided not to use
the sale price as the criterion of value.” Id. at ¶ 16.
{¶ 17} That precept defeats UTSI’s burden-shifting argument. The BOE’s
position here is that the deed and conveyance-fee statement established the sale
price as the true value of the subject property, and the BTA correctly found that this
evidence sufficed to meet the BOE’s relatively light initial burden of showing the
existence of a qualifying sale. See Dauch, 149 Ohio St. 3d 691, 2017-Ohio-1412,
77 N.E.3d 943, at ¶ 17. UTSI thus bore the burden at the BTA to negate the sale
price as the criterion of value by showing that the sale was either not recent or not
an arm’s-length transaction, issues to which we now turn.
C. UTSI did not negate the presumption of recency
{¶ 18} In its first proposition of law, UTSI makes a two-pronged argument
that the sale was not recent. First, it asserts that the sale was too remote from the
2011 tax-lien date, emphasizing the September 2002 signature and notarization on
the quitclaim deed that memorialized the subject property’s transfer from
Lakeshore Ventures to Universal Truckload Services. Second, it insists that Fried’s
appraisal report contains evidence of changed market conditions.
1. Temporal proximity
{¶ 19} Recency “encompasses all factors that would, by changing with the
passage of time, affect the value of the property.” Cummins, 117 Ohio St. 3d 516,
7
SUPREME COURT OF OHIO
2008-Ohio-1473, 885 N.E.2d 222, at ¶ 35. A proper factor to consider in the
analysis is temporal proximity—that is, the elapsed time between the sale date and
the tax-lien date. Worthington City Schools Bd. of Edn. v. Franklin Cty. Bd. of
Revision, 124 Ohio St. 3d 27, 2009-Ohio-5932, 918 N.E.2d 972, ¶ 32.
{¶ 20} To discern the amount of elapsed time, the effective date of the sale
must be known. In HIN, L.L.C. v. Cuyahoga Cty. Bd. of Revision, 124 Ohio St. 3d
481, 2010-Ohio-687, 923 N.E.2d 1144, we held that “[i]n determining the date a
sale of property occurs, only for purposes of establishing the true value of property
pursuant to R.C. 5713.03, the auditor should use the date that the real property
conveyance-fee statement is filed in the auditor’s office as the sale date of the
property.” Id. at paragraph two of the syllabus. It follows that in this case, the sale
took effect for tax purposes in March 2009 because that is when the conveyance-
fee statement was filed with the auditor’s office.
{¶ 21} UTSI’s contrary arguments that the sale took effect in September
2002 are not persuasive. First, UTSI’s citations to the websites of the Michigan
Secretary of State and the Ashtabula County Bar Association for their commentary
on the effects of a notarized document are inadequate to overcome HIN’s directive
because that commentary does not create binding rules of law that this court must
follow.
{¶ 22} Second, UTSI emphasizes that HIN dealt with two sales whereas this
case deals with one. That difference is immaterial. Whether a case involves one
sale or multiple sales, HIN’s rule still instructs that a particular sale’s effective date
is determined by the date of the filing of the conveyance-fee statement. An open-
ended standard that fixes the effective date of a sale based on the number of sales
at issue would undermine the certainty that HIN established.
{¶ 23} Third, UTSI’s reliance on Akron City School Dist. Bd. of Edn. v.
Summit Cty. Bd. of Revision, 139 Ohio St. 3d 92, 2014-Ohio-1588, 9 N.E.3d 1004,
is misplaced. Akron City School Dist. held that a “sale that occurred more than 24
8
January Term, 2018
months before the lien date and that is reflected in the property record maintained
by the county auditor or fiscal officer should not be presumed to be recent when a
different value has been determined for that lien date as part of the six-year
reappraisal.” Id. at ¶ 26. But here, the March 2009 sale does not predate the
January 1, 2011 tax-lien date by more than 24 months, and for that reason alone
Akron is inapposite.
2. Changed market conditions
{¶ 24} Another factor bearing on the recency inquiry is whether market
conditions have changed between the sale date and the tax-lien date. Olentangy
Local Schools Bd. of Edn. v. Delaware Cty. Bd. of Revision, 125 Ohio St. 3d 103,
2010-Ohio-1040, 926 N.E.2d 302, ¶ 12. Here, the BTA found that Fried provided
no empirical support “to show that the market in which the subject is located
underwent such significant decline as to render the March 2009 sale remote from
the tax lien date.” BTA Nos. 2014-3748 and 2014-3749, 2015 WL 10985314, at
*5 (Oct. 22, 2015). UTSI challenges that finding, claiming that it furnished ample
evidence of changed market conditions.
{¶ 25} In evaluating UTSI’s claims, “we do not sit as ‘a super BTA or a
trier of fact de novo.’ ” RNG Properties, Ltd. v. Summit Cty. Bd. of Revision, 140
Ohio St. 3d 455, 2014-Ohio-4036, 19 N.E.3d 906, ¶ 18, quoting EOP-BP Tower,
L.L.C. v. Cuyahoga Cty. Bd. of Revision, 106 Ohio St. 3d 1, 2005-Ohio-3096, 829
N.E.2d 686, ¶ 17. The BTA is given “wide discretion in determining the weight to
be given to the evidence and the credibility of the witnesses that come before it.”
EOP-BP Tower at ¶ 9. Absent an abuse of discretion, the BTA’s evidentiary
determinations will not be reversed. Musto v. Lorain Cty. Bd. of Revision, 148 Ohio
St.3d 456, 2016-Ohio-8058, 71 N.E.3d 279, ¶ 33.
{¶ 26} In arguing that it had offered sufficient evidence of changed market
conditions, UTSI first points to Fried’s testimony from the BOR hearing. Fried
noted that vacancy rates started to trend upward in early 2008 as a result of the
9
SUPREME COURT OF OHIO
recession. She added that market values were in decline “from about 2008” to “late
2011, early 2012.” But we do not find that the BTA abused its discretion in not
relying on this information in determining value, because these statements do not
specifically relate the conditions in March 2009 to conditions on the tax-lien date.
{¶ 27} UTSI next points to a list of sales that Fried accounted for in her
sales-comparison approach. Fried considered two types of sales: transfers of
unimproved properties that occurred in November 2007, December 2007, April
2008, and September 2010 and transfers of improved properties that occurred in
April 2010, February 2011, August 2011, November 2011, June 2012, and
December 2012. While Fried made adjustments to some of these sales to account
for inferior market conditions, none of the sales occurred on or around March 2009.
{¶ 28} UTSI also cites a real-estate survey included within Fried’s appraisal
report that shows the trend of overall capitalization rates from the fourth quarter of
2005 through the third quarter of 2012. The survey, however, reflects trends at the
national level and thus does not impugn the BTA’s conclusion that UTSI failed to
show that the subject property’s locale underwent a significant decline from the
sale date to the tax-lien date.
{¶ 29} Turning to the case law, UTSI relies on this court’s lead opinion in
Health Care REIT, Inc. v. Cuyahoga Cty. Bd. of Revision, 140 Ohio St. 30, 2014-
Ohio-2574, 14 N.E.3d 1009. That opinion deferred to the BTA’s finding that an
October 2004 sale was not recent in relation to the tax-lien date of January 1, 2007,
observing that “[u]nder [the] circumstances, it can hardly be said that the record
lacks support for the BTA’s conclusion, much less that there is a ‘total absence of
evidence’ to support its findings.” Id. at ¶ 27, quoting HealthSouth Corp. v. Testa,
132 Ohio St. 3d 55, 2012-Ohio-1871, 969 N.E.2d 232, ¶ 14. Though that opinion’s
recency analysis evaluated several factors, UTSI attaches significance to the
opinion’s remark that “the BTA’s finding is supported by record evidence of
general market changes following the October 2004 sale.” Id. at ¶ 25.
10
January Term, 2018
{¶ 30} The flaw with UTSI’s argument is that it mistakes a fact-bound
determination for a generally applicable rule of law. See Columbus City Schools
Bd. of Edn. v. Franklin Cty. Bd. of Revision, 144 Ohio St. 3d 324, 2015-Ohio-3633,
43 N.E.3d 387, ¶ 39 (“Sullivant Holdings”). What we said in Sullivant Holdings
about other precedent from this court applies here with regard to Health Care REIT:
the lead opinion in Health Care REIT does not say that the BTA was correct in
finding the sale remote; instead, it says that the BTA did not abuse its discretion in
so finding. Sullivant Holdings at ¶ 39. It follows that Health Care REIT does not
supply any legal precept to be applied in this case; instead, it simply illustrates the
“deference we are required to afford factual determinations of the BTA that are
supported by the record.” Buckeye Hospitality, 146 Ohio St. 3d 470, 2016-Ohio-
757, 58 N.E.3d 1126, at ¶ 27.
{¶ 31} To be sure, another fact-finder may have viewed the evidence
differently. But “whether we might have weighed the evidence differently from the
Board of Tax Appeals if we had been making the original determination” is
immaterial. Jewel Cos., Inc. v. Porterfield, 21 Ohio St. 2d 97, 99, 255 N.E.2d 630
(1970). Our task is not to “reevaluate the evidence considered by the BTA or [to]
‘substitute [our] judgment on factual issues for that of the Board of Tax Appeals.’ ”
(Second set of brackets sic.) Health Care REIT at ¶ 53 (lead opinion), quoting
Citizens Fin. Corp. v. Porterfield, 25 Ohio St. 2d 53, 57, 266 N.E.2d 828 (1971).
For the reasons given, UTSI has not shown that the BTA abused its discretion in
evaluating the evidence.
D. The BTA justifiably excluded Fried’s statements as hearsay
{¶ 32} In its second proposition of law UTSI asserts that the BTA erred in
applying the rules of hearsay to exclude Fried’s statements that the sale was
between related parties. These statements were based on Fried’s conversation with
11
SUPREME COURT OF OHIO
a person who never testified.2 Whether the sale was between related parties is
important because one characteristic of an arm’s-length transaction is that it occurs
between “parties act[ing] in their own self-interest.” Walters v. Knox Cty. Bd. of
Revision, 47 Ohio St. 3d 23, 546 N.E.2d 932 (1989), syllabus. “[T]he inquiry into
whether ‘the parties to a sale are related bears on whether they are self-interested
for purposes of R.C. 5713.03.’ ” Hilliard City Schools Bd. of Edn. v. Franklin Cty.
Bd. of Revision, 139 Ohio St. 3d 1, 2014-Ohio-853, 9 N.E.3d 920, ¶ 31, quoting N.
Royalton City School Dist., 129 Ohio St. 3d 172, 2011-Ohio-3092, 950 N.E.2d 955,
at ¶ 33.
{¶ 33} To counter the BTA’s hearsay ruling, UTSI makes an appeal to
practicality, arguing that the very nature of an expert appraiser’s job requires
reliance on hearsay evidence. Additionally, it cites Buckeye Hospitality, 146 Ohio
St.3d 470, 2016-Ohio-757, 58 N.E.3d 1126, at ¶ 20, for the proposition that specific
information in an appraisal report may be used to negate the presumptive arm’s-
length nature of a sale.
{¶ 34} “The rules of evidence, including the hearsay rule, do not control
administrative hearings,” HealthSouth Corp., 132 Ohio St. 3d 55, 2012-Ohio-1871,
969 N.E.2d 232, at ¶ 13; however, “an administrative tribunal such as the BOR or
the BTA is justified in consulting the rules for guidance,” Plain Local Schools Bd.
of Edn. v. Franklin Cty. Bd. of Revision, 130 Ohio St. 3d 230, 2011-Ohio-3362, 957
N.E.2d 268, ¶ 20.
{¶ 35} In Almondtree Apts. of Columbus, Ltd. v. Franklin Cty. Bd. of
Revision, 10th Dist. Franklin No. 87AP-1216, 1988 WL 70505 (June 28, 1988), the
court of appeals found that an appraiser’s testimony that a sale was not at arm’s
2
UTSI asserts that the passage of time from when the deed was signed and notarized in September
2002 to when it was recorded in March 2009 provides further evidence that the sale was a transaction
between related parties. We reject this argument because it is not supported with citations to
authority. See Richman Properties, L.L.C. v. Medina Cty. Bd of Revision, 139 Ohio St. 3d 549, 2014-
Ohio-2439, 13 N.E.3d 1126, ¶ 27.
12
January Term, 2018
length constituted the “rankest type of hearsay.” Id. at *3. The basis for the
appraiser’s testimony rested solely on conversations with the taxpayer’s employees
and a review of the sales contract and closing statement. No parties to the
transaction testified, and the sales documents were not in the record. A virtually
identical situation arose in New Winchester Gardens v. Franklin Cty. Bd. of
Revision, 10th Dist. Franklin Nos. 89AP-72 and 89AP-73, 1989 WL 112349 (Sept.
28, 1989). In that case, an appraiser asserted that a sale was not at arm’s length,
but this assertion was not supported in the record by any sales documents, and no
parties to the sale testified. Applying Almondtree, the court of appeals held that the
appraiser’s testimony was inadmissible hearsay. Id. at *2-3.
{¶ 36} Guided by this authority, we conclude that although the BTA was
not required to do so, the BTA was justified in excluding Fried’s statement that the
sale was between related parties. See Orange City School Dist. Bd. of Edn. v.
Cuyahoga Cty. Bd. of Revision, 74 Ohio St. 3d 415, 416, 659 N.E.2d 1223 (1996)
(“The BTA has discretion in admitting evidence”). The basis for Fried’s statement
rested solely on a conversation she had with an unnamed owner who did not testify
before the BOR or the BTA. Had UTSI presented the owner as a witness, it is likely
that this issue could have been avoided altogether. See Gahanna Jefferson Pub.
Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision, 10th Dist. Franklin No. 98AP-
460, 1999 WL 1161, *5 (Dec. 31, 1998) (distinguishing Almondtree). Indeed,
UTSI was on notice that this issue was looming given that the BOE raised its
hearsay objection during the BOR proceedings. But UTSI evidently decided not to
present the owner to testify during the BTA proceedings.
{¶ 37} This is not to deny as a general matter the force of UTSI’s logic that
an expert appraiser must at times rely on hearsay evidence to perform his or her
job.3 “Some hearsay evidence necessarily is always involved with expert
3
UTSI cites Evid.R. 803(6), which, it insists, provides an “expert exception” to the hearsay rule. A
more accurate description, however, is that Evid.R. 803(6) “recognizes a hearsay exception for
13
SUPREME COURT OF OHIO
testimony. To become an expert, one must read and learn from sources which are
necessarily outside the evidence at trial. It is this knowledge obtained from outside
sources which qualifies a witness as an expert.” Worthington City Schools v. ABCO
Insulation, 84 Ohio App. 3d 144, 152, 616 N.E.2d 550 (10th Dist.1992); see also 2
Gianelli, Evidence, Section 703.9, at 103-104 (3d Ed.2010) (“In one sense, most
expert testimony is based, in part, on hearsay”).
{¶ 38} But the BTA’s hearsay determination does not throw these practical
observations into doubt. The scope of its ruling applies to the narrow class of cases
in which an appraiser acts merely as a conduit of information concerning material
facts about the subject property itself, namely, whether the property’s sale was
between related parties. Whether the BTA would run afoul of the Rules of
Evidence in excluding on hearsay grounds, say, an appraiser’s reliance on market
data prepared by a third party is something that can be addressed in a proper case.
See Buckeye Hospitality, 146 Ohio St. 3d 470, 2016-Ohio-757, 58 N.E.3d 1126, at
¶ 10-11 (noting appraiser’s reliance on market data prepared by third parties).
{¶ 39} Lastly, UTSI’s portrayal of Buckeye Hospitality as standing for the
proposition that an appraisal report essentially enjoys a blanket exemption from the
hearsay rule is incorrect. The focal point in that case was on the probative value of
the appraisal report, not on whether it constituted hearsay.
E. The BOE’s motion to strike
{¶ 40} In its reply brief, UTSI adverts to a pair of Form 10-Ks for 2004 and
2009 to support its claim that the sale was between related parties. According to
UTSI, information contained in these filings establishes that Lakeshore Ventures
and Universal Truckload Services had common corporate officers. The filings were
records of regularly conducted business activities.” 2 Gianelli, Evidence, Section 803.27, at 256 (3d
Ed.2010). Dispositive here is the fact that UTSI does not develop an argument with citations to
authority showing how Evid.R. 803(6) applies under these facts. See Richman Properties, 139 Ohio
St.3d 549, 2014-Ohio-2439, 13 N.E.3d 1126, at ¶ 27. For similar reasons, UTSI’s reliance on
Evid.R. 703 in its reply brief is unavailing.
14
January Term, 2018
not presented below, thus UTSI requests that the court take judicial notice of the
filings. The BOE objects and urges us to strike those portions of UTSI’s reply brief
discussing the filings.
{¶ 41} We generally strike evidence submitted by a party to a case here on
appeal when the evidence was not submitted below. Orange City School Dist. Bd.
of Edn. v. Cuyahoga Cty. Bd. of Revision, 152 Ohio St. 3d 325, 2017-Ohio-8817, 96
N.E.3d 223, ¶ 11, fn. 3 (noting that we had granted a motion to strike evidence that
had been submitted for the first time as an attachment to an appellate brief filed in
this court). And we ordinarily do not regard judicial notice as furnishing an
exception to this rule. See AP Hotels of Illinois, Inc. v. Franklin Cty. Bd. of
Revision, 118 Ohio St. 3d 343, 2008-Ohio-2565, 889 N.E.2d 115, ¶ 8, fn. 1. We see
no reason to depart from these principles here, as UTSI has not identified a reason—
let alone a compelling one—for why this information was not presented below. We
accordingly grant the motion.4
IV. CONCLUSION
{¶ 42} For the foregoing reasons, we affirm the BTA’s decision and grant
the BOE’s motion to strike.
Decision affirmed.
O’CONNOR, C.J., and O’DONNELL and FISCHER, JJ., concur.
DEWINE, J., concurs in judgment only, with an opinion joined by KENNEDY
and FRENCH, JJ.
DEGENARO, J., not participating.
_________________
4
We reject the BOE’s contention that UTSI both waived and deprived this court of jurisdiction to
consider the related-party argument insofar as it relates to the Form 10-K filings. UTSI averred that
the sale was between related parties at the BOR, at the BTA, and in its notice of appeal to this court.
15
SUPREME COURT OF OHIO
DEWINE, J., concurring in judgment only.
{¶ 43} I concur only in the court’s judgment in this case. I diverge from the
lead opinion because of its reliance on HIN, L.L.C. v. Cuyahoga Cty. Bd. of
Revision, 124 Ohio St. 3d 481, 2010-Ohio-687, 923 N.E.2d 1144—rather than our
longstanding property-law jurisprudence—to determine when the sale of the
property at issue occurred for purposes of R.C. 5713.03. I believe we should
reexamine our holding in HIN.
{¶ 44} At the time pertinent to this case, R.C. 5713.03 read:
In determining the true value of any * * * parcel of real estate
under this section, if such * * * parcel has been the subject of an
arm’s length sale between a willing seller and a willing buyer within
a reasonable length of time, either before or after the tax lien date,
the auditor shall consider the sale price of such * * * parcel to be the
true value for taxation purposes.
(Emphasis added.) Am.Sub.H.B. No. 260, 140 Ohio Laws, Part II, 2665, 2722.
{¶ 45} A central issue in this case is whether the sale of the subject property
from Lakeshore Ventures, L.L.C. (“Lakeshore”), to Universal Truckload Services,
Inc., occurred “within a reasonable length of time” of the tax-lien date. This
necessarily requires a determination of when the sale occurred. In HIN, this court
held that “[i]n determining the date a sale of property occurs, only for purposes of
establishing the true value of property pursuant to R.C. 5713.03, the auditor should
use the date that the real property conveyance-fee statement is filed in the auditor’s
office as the sale date of the property.” Id. at paragraph two of the syllabus.
{¶ 46} That holding in HIN was not based on the plain language of R.C.
5713.03 or on property-law standards. Instead it was apparently created on the spot
to establish two easy-to-pinpoint dates. In HIN, one issue was which of two sales
16
January Term, 2018
of the subject property that occurred close to the tax-lien date—one prior to the date
and one after—should be used to determine value. This court held that the sale that
occurred closest in time to the tax-lien date should be used. The second issue in
HIN was which of the following dates should be considered the date of sale for
taxation purposes: “the date on the purchase agreement, the date the deed was
signed, the date of the closing, the date the real property conveyance-fee statement
is filed in the auditor’s office, or the date of recording the transfer of the property.”
Id., 124 Ohio St. 3d 481, 2010-Ohio-687, 923 N.E.2d 1144, at ¶ 2.
{¶ 47} Ultimately, the court decided that the date the conveyance-fee
statement is filed with the auditor should be used as the date of the sale. And
granted, that approach generated a date certain from which the proximity of the tax-
lien date could easily be determined in that case. But the filing of a conveyance-
fee statement doesn’t consummate a sale; it relates to the auditor the details of a
sale that has already happened. A sale is “[t]he transfer of property or title for a
price,” Black’s Law Dictionary 1537 (10th Ed.2014), and although a conveyance-
fee statement identifies the price, it does not establish when the transfer occurred.
Ohio’s property law does not use the filing date of a conveyance-fee statement to
determine when a transfer of real property is complete. Instead, “[i]n Ohio, a deed
does not have to be recorded to pass title. Whether or not recorded, a deed in Ohio
passes title upon its proper execution and delivery, so far as the grantor is able to
convey it.” Wayne Bldg. & Loan Co. of Wooster v. Yarborough, 11 Ohio St. 2d
195, 212, 228 N.E.2d 841 (1967). Thus, we should set the sale date as the date the
executed deed was delivered to the grantee.
{¶ 48} Justice Lundberg Stratton wrote a concurrence in HIN, in which she
correctly pointed to the lack of statutory support for using the conveyance-fee-
statement filing date as the date of a sale and noted that a reliance on that date could
obscure the true transfer date:
17
SUPREME COURT OF OHIO
The General Assembly did not establish the date of the
conveyance fee as the date of sale, and this court should not add such
language to the statute. The parties should be allowed to present
evidence at hearings before a board of revision and the Board of Tax
Appeals to establish that the true date of sale is a different point from
the date of the filing of the conveyance fee.
Id. at ¶ 32 (Lundberg Stratton, J., concurring).
{¶ 49} In contrast to the approach advocated by Justice Lundberg Stratton,
we have read HIN to create a bright-line rule. In cases in which the record is not
entirely clear about when the conveyance took place but the parties agree that the
filing of the conveyance-fee statement took place close in time to the conveyance,
HIN provides an easy-to-administer method for establishing a date of sale. We
have followed that bright-line rule as recently as this year, see Lone Star Steakhouse
& Saloon of Ohio, Inc. v. Franklin Cty. Bd. of Revision, __ Ohio St.3d __, 2018-
Ohio-1612, __ N.E.3d __, ¶ 11, an opinion that I joined. But upon reflection, it is
clear to me that this judge-made rule should not be allowed to trump the plain
language of the statute, which mentions a recent “sale,” not a recent conveyance-
fee-statement filing. At most, the rule established in HIN should be considered a
presumption that can be rebutted by evidence of a different sale date.
{¶ 50} It’s likely that in most cases, the conveyance-fee statement will be
filed a short time after the deed is executed and delivered to the grantee. But not
every transfer of real property gets recorded right away, and this case demonstrates
the potential problem with HIN’s court-created rule. Here, a quitclaim deed
transferring the subject property from Lakeshore to Universal Truckload was
executed on September 20, 2002, and was acknowledged by the grantor before a
notary three days later. But the conveyance-fee statement was not filed until March
2009. Appellant, UTSI Finance, Inc. (“UTSI”), should have been able to submit
18
January Term, 2018
evidence that the actual sale of the property occurred closer to the date of the
execution of the deed.
{¶ 51} It must be acknowledged that neither the board of revision nor the
Board of Tax Appeals prevented UTSI from submitting evidence about the date of
the sale. UTSI simply failed to submit evidence of when Universal Truckload
received delivery of the deed in question. The date the deed was delivered was
crucial in determining a sale date. “It is fundamental that, in order for a deed to be
operative as a transfer of ownership of land or an interest or any estate therein, there
must be a delivery of the instrument. It is the delivery that gives the instrument
force and effect.” Kniebbe v. Wade, 161 Ohio St. 294, 297, 118 N.E.2d 833 (1954).
UTSI did not show when Universal Truckload received the deed from Lakeshore
or explain why the seven-year gap occurred between the date UTSI alleges the sale
occurred and the date the conveyance-fee statement was filed. Only in its reply
brief before this court did UTSI point to records filed with the United States
Securities and Exchange Commission that it asserts show that Lakeshore and
Universal Truckload were related business entities with common ownership. Since
it is “the general rule that there is a presumption of delivery arising from the
possession of a deed by the named grantee,” Kniebbe at 297, UTSI argues that
common ownership of the companies should give rise to a presumption of
possession and thus delivery. But I agree with the court’s ruling striking that
portion of UTSI’s reply brief as a too-late attempt to submit evidence.
{¶ 52} Although UTSI failed to prove its assertion in this case, the facts
asserted by UTSI demonstrate that in some cases, the true date of a sale could be
far earlier—according to established property-law principles—than the date the
conveyance-fee statement was filed. Because the lead opinion ignores the plain
language of R.C. 5713.03 in favor of a court-written rule that can yield inaccurate
conclusions in some situations, I concur in judgment only.
KENNEDY and FRENCH, JJ., concur in the foregoing opinion.
19
SUPREME COURT OF OHIO
_________________
Rich & Gillis Law Group, L.L.C., Mark Gillis, and Kimberly G. Allison,
for appellee Hilliard City Schools Board of Education.
Vorys, Sater, Seymour & Pease, L.L.P., Karen H. Bauernschmidt, Nicholas
Ray, and Heather M. Lutz, for appellant.
___________________
20