Kahoe v. Cuyahoga Cty. Bd. of Revision

[Cite as Kahoe v. Cuyahoga Cty. Bd. of Revision, 2013-Ohio-2097.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 99188
E. MICHAEL KAHOE
PLAINTIFF-APPELLANT
vs.
CUYAHOGA COUNTY
BOARD OF REVISION, ET AL.
DEFENDANTS-APPELLEES
JUDGMENT:
AFFIRMED
Administrative Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-781461
BEFORE: S. Gallagher, J., Jones, P.J., and Rocco, J.
RELEASED AND JOURNALIZED: May 23, 2013
ATTORNEY FOR APPELLANT
Thomas S. Amato
3296 Columbia Road
Richfield, OH 44286
ATTORNEYS FOR APPELLEES
For Cuyahoga County Board of Revision, et al.
Timothy J. McGinty
Cuyahoga County Prosecutor
By: Reno J. Oradini, Jr.
Assistant Prosecuting Attorney
Justice Center - 8th Floor
1200 Ontario Street
Cleveland, OH 44113
For Maple Heights City School District Board of Education
Christian M. Williams
Pepple & Waggoner, Ltd.
Crown Centre Building
5005 Rockside Road, Suite 260
Cleveland, OH 44131
SEAN C. GALLAGHER, J.:
{¶1} This cause came to be heard upon the accelerated calendar pursuant to
App.R. 11.1 and Loc.R. 11.1. Appellant E. Michael Kahoe appeals the judgment of the
Cuyahoga County Court of Common Pleas that affirmed a Cuyahoga County Board of
Revision decision that determined tax values for three parcels of real property owned by
Kahoe. For the reasons stated herein, we affirm.
{¶2} Kahoe is the owner of the three parcels of real property at issue. The
properties are referred to herein as the Benhoff property, the Kennerdon property, and the
Summit property. The properties had been the subject of foreclosure proceedings and
were purchased by banks at sheriff’s sales. The banks then listed the properties for sale
on the open market. The properties were purchased in 2008 and 2009 by MKJES L.L.C.,
Kahoe’s predecessor in interest. MKJES L.L.C. quit-claimed the properties to Kahoe.
Kahoe made repairs to the properties to obtain certificates of occupancy and then leased
them as rental properties.
{¶3} Kahoe filed a complaint against the valuation of the properties for the tax
year 2010 with the Cuyahoga County Board of Revision (“BOR”). He sought a decrease
in the tax value, as amended at the hearing to the following figures: $56,250 for the
Benhoff property, $60,000 for the Kennerdon property, and $50,000 for the Summit
property, for a total combined value of $166,250. The Maple Heights Board of
Education filed a counter-complaint requesting that the BOR affirm the county auditor’s
valuation of the properties, which was a combined value of $233,700.
{¶4} Kahoe was unable to attend the BOR hearing because he was on a pre-paid
business trip and the BOR denied his request for a continuance. Kahoe was represented
by his attorney at the BOR hearing.
{¶5} The Benhoff property was purchased for $25,014 in October 2008, after
being listed for six months. While an appraisal report reflecting a value of $18,000 was
submitted by Kahoe, it was for tax year 2009 and had an effective date of January 1,
2009, as opposed to 2010. The appraisal report also indicated the home was a
two-bedroom home, though it was listed on the open market as a three-bedroom home
and the appraiser did not appear at the hearing. Also, while Kahoe’s attorney argued the
2008 sale of the property was an arm’s-length transaction, there was a mortgage note for
$45,000 on the property and Kahoe claimed a property value of $56,250. The property
had rental income of $898 per month. The board of education argued that the evidence
submitted by Kahoe did not suggest an arm’s-length transaction. In its decision, the
BOR recognized Kahoe’s opinion of value of $56,250, but also recognized the BOR’s
independent research of five comparable properties placed the fair market value at
$58,600.
{¶6} The Kennerdon property was purchased for $20,500 in August 2009, after
being listed for eight days. Kahoe’s attorney indicated that this property was a distressed
sale. Kahoe submitted evidence of an appraised value of $21,000, with an effective date
of January 1, 2009. While Kahoe’s attorney suggested there was a discrepancy with the
date, the appraiser was not available to discuss or authenticate the document. The
property had rental income of $1,000 per month. The board of education noted
inaccuracies with regard to the appraiser’s description of the property and claimed that the
comparables used were not indicative of a value for the January 1, 2010 tax lien date. It
also argued that the property was only on the market for eight days, which was not
indicative of an arm’s-length transaction. Kahoe’s attorney indicated that a comparable
property that sold for $62,000 was closer to the actual value of the Kennerdon property
and agreed to amend the complaint to $60,000. In its decision, the BOR recognized
Kahoe’s opinion of value of $60,000, and also found the BOR’s independent research
supported this value.
{¶7} The Summit property was purchased for $13,000 in October 2009, after being
listed for 77 days. The property had rental income of $608 per month. Kahoe’s attorney
represented an appropriate value was $50,000 for the property and amended the complaint
value to said amount. In its decision, the BOR recognized Kahoe’s opinion of value of
$50,000, but found the BOR’s independent research of 12 comparable properties placed
the value at $56,700.
{¶8} Thus, the BOR determined the respective fair market values to be $58,600,
$60,000, and $56,700, for a combined value of $175,300, which was only $9,050 more
than the combined amended amount Kahoe requested and was substantially less than the
county auditor’s valuation that the board of education sought to affirm.
{¶9} Kahoe appealed the decision in the Cuyahoga County Court of Common
Pleas. Kahoe argued that the BOR’s decision was unlawful because it failed to consider
Kahoe’s purchase price of the properties as the proper valuation in arm’s-length
transactions. The trial court found the appeal was not well taken and adopted the
decision of the BOR.
{¶10} Kahoe filed this appeal, raising one assignment of error that provides as
follows:
The Board of Revision erred by not considering the purchase price that
appellant paid for the parcel[s] in question as the true value of the property.
{¶11} Initially, Kahoe asserts that the trial court failed to conduct an appropriate
review in this matter. R.C. 5717.05 provides that “an appeal from the decision of a
county board of revision may be taken directly to the court of common pleas of the county
by the person in whose name the property is listed or sought to be listed for taxation.”
The statute further instructs as follows:
The court may hear the appeal on the record and the evidence thus
submitted, or it may hear and consider additional evidence. It shall
determine the taxable value of the property whose valuation or assessment
for taxation by the county board of revision is complained of * * *.
R.C. 5717.05.
{¶12} The record in this case reflects that the common pleas court heard the appeal
on the record and evidence submitted, as well as the briefs submitted for consideration by
the parties. The trial court determined that the appeal was not well taken and adopted the
determination of the BOR as to the taxable value for the property. There is nothing that
indicates that the trial court did not properly consider the record and evidence before it
and independently determine the taxable value of the property. Therefore, we will
presume the validity of the judgment as long as there is evidence in the record to support
it. Further, we will not disturb the judgment of the trial court absent an abuse of
discretion. See Mansbery v. Cuyahoga Cty. Fiscal Officer, 8th Dist. No. 98156,
2013-Ohio-932, ¶ 7.
{¶13} The true value of property for tax purposes is a question of fact that is
primarily within the province of the taxing authorities to determine and will not be
disturbed unless it affirmatively appears from the record that such decision is
unreasonable or unlawful. Columbus City School Dist. Bd. of Edn. v. Franklin Cty. Bd.
of Revision, 134 Ohio St.3d 529, 2012-Ohio-5680, 983 N.E.2d 1285, ¶ 27. Thus, there is
a presumption of validity accorded to a determination of value by the BOR and a taxpayer
challenging the decision of the BOR has the duty to prove his right to a reduction in
value. Cleveland Bd. of Edn. v. Cuyahoga Cty. Bd. of Revision, 68 Ohio St.3d 336, 337,
626 N.E.2d 933 (1994).
{¶14} Kahoe asserts that the BOR failed to consider the purchase price that he paid
for the parcels as the true value of the property since the sales involved arm’s-length
transactions. R.C. 5713.03 sets forth a general rule that when a “tract, lot, or 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 * * * to be the true value for taxation purposes.” The Ohio
Supreme Court has defined an “arm’s length sale” as being characterized by these
elements: “it is voluntary, i.e., without compulsion or duress; it generally takes place in an
open market; and the parties act in their own self-interest.” Walters v. Knox Cty. Bd. of
Revision, 47 Ohio St.3d 23, 25, 546 N.E.2d 932 (1989).
{¶15} Under some circumstances where a bank acquires a distressed property, the
bank’s subsequent sale of the property may be considered an arm’s-length transaction.
See Cattell v. Lake Cty. Bd. of Revision, 11th Dist. No. 2009-L-161, 2010-Ohio-4426(arm’s-length transaction found where properties were listed on the open market);
Columbus City School Dist. Bd. of Edn., 134 Ohio St.3d 529, 2012-Ohio-5680, 983
N.E.2d 1285 (arm’s-length transaction found where there was evidence that the bank
acted like a typically motivated seller). This is not to say that in every instance where
there is a subsequent sale of a foreclosed property by a bank, it will amount to a recent
arm’s-length transaction.
{¶16} In this case, the record reflects that the properties were purchased in 2008
and 2009; however, the tax lien date was January 1, 2010. While Kahoe submitted
appraisal reports, they had an effective date of January 1, 2009, contained discrepancies,
and the appraiser did not appear at the hearing. Significantly, the “true value” claimed
by Kahoe exceeded the purchase price of the properties. Thus, Kahoe essentially
conceded that the purchase value of each property was not reflective of the true value.
Under these circumstances, the BOR did not err in failing to consider the purchases as
recent arm’s-length transactions.
{¶17} While Kahoe’s attorney asserted at the hearing that the Benhoff property,
which was purchased in 2008, was an arm’s-length transaction, there was a mortgage note
for $45,000 on the property and Kahoe’s own opinion of value for the property was
$56,250. The BOR valued the property at $58,600, which was supported by its own
independent research of five comparable properties. Kahoe’s attorney conceded that the
Kennerdon property, which was purchased after being listed for only eight days, was a
distressed sale. Further, the BOR’s independent research supported Kahoe’s opinion of
value of $60,000, and the BOR valued the Kennerdon property at this amount. On the
Summit property, the BOR recognized Kahoe’s opinion of value of $50,000, but found
the BOR’s independent research of 12 comparable properties placed the value at $56,700.
It does not affirmatively appear that the BOR’s decision is unreasonable or unlawful.
{¶18} This case is distinguishable from Papadimoulis v. Cuyahoga Cty. Auditor,
8th Dist. No. 97023, 2012-Ohio-925, where there was significant evidence of a recent
arm’s-length transaction, the county auditor did not appear to rebut this evidence, and
there was “no evidence of any kind” to support the BOR’s decision. In this case, the
valuation of the properties is supported by the record, and we find no abuse of discretion
by the trial court. Accordingly, we overrule appellant’s sole assignment of error.
{¶19} Judgment affirmed.
It is ordered that appellees recover from appellant costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this court directing 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.
SEAN C. GALLAGHER, JUDGE
LARRY A. JONES, SR., P.J., and
KENNETH A. ROCCO, J., CONCUR