Cuyahoga Cty. Treasurer v. 440 High St., L.L.C.

[Cite as Cuyahoga Cty. Treasurer v. 440 High St., L.L.C., 2022-Ohio-1239.]
COURT OF APPEALS OF OHIO
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
TREASURER OF CUYAHOGA
COUNTY, OHIO, :
Plaintiff, :
No. 110786
v. :
440 HIGH STREET, LLC, ET AL., :
Defendants-Appellants, :
JOURNAL ENTRY AND OPINION
JUDGMENT: AFFIRMED
RELEASED AND JOURNALIZED: April 14, 2022
Civil Appeal from the Cuyahoga County Court of Common Pleas
Case No. CV-18-903729
Appearances:
Kehoe & Associates, LLC, Robert D. Kehoe, and Kevin P.
Shannon, for appellant.
Law Office of Val Schurowliew LLC and Val Schurowliew,
for appellee.
FRANK DANIEL CELEBREZZE, III, P.J.:
Defendant-appellant, 440 High Street, LLC (“440”), brings this appeal
challenging the trial court’s judgment denying 440’s motion to vacate the
confirmation of a foreclosure sale of the property at issue in this case and for a stay
of the confirmation. 440 argues that the trial court erred by denying its motion to
vacate the confirmation of the sale because 440 demonstrated it had a meritorious
defense to present if relief was granted under Civ.R. 60(B), and that the motion to
vacate was filed in a timely manner. After a thorough review of the record and law,
this court affirms.
I. Factual and Procedural History
The instant matter involves a property dispute between 440 and third-
party defendant-appellee, intervenor, Emmet, Inc. Emmet purchased the property,
an eight-unit, multi-family rental property, located at 2817 Noble Road, Cleveland
Heights, Ohio 44121, at a foreclosure sale in June 2021 for $241,200.
In 2018, 440 was the record titleholder of the property. As of May 2018,
440 was delinquent in the payment of taxes, assessments, and penalties for the
property. A delinquent land certificate, dated May 9, 2018, indicated that 440 had
not paid taxes for a period of one year and that the total amount of delinquent taxes,
assessments, and penalties was $17,785.23.
In 2018, the Cuyahoga County treasurer initiated a tax foreclosure
action. On September 14, 2018, the county filed a complaint against 440 “for
collection of delinquent taxes, assessments, penalties, and interest, foreclosure, and
equitable relief.” The county named the other parties that had an interest in the
property in its complaint.1 The county filed a delinquent land certificate and
1 “The Church in Cleveland, an Ohio corporation c/o James H. C. Yang, Statutory
Agent” and “Alliance Prime Associates, Inc. c/o Anne L. Meyers, Statutory Agent.”
preliminary judicial report with its complaint. Subsequently, on March 22, 2019,
the county filed a final judicial report and a city of Cleveland Heights land affidavit.
A magistrate held a tax hearing on July 17, 2019. On July 17, 2019, the
magistrate granted a decree of foreclosure in favor of the county. The magistrate
granted 440’s oral motion to stay circulation of the magistrate’s decision until
September 23, 2019.
The magistrate’s decision was issued on September 27, 2019. 440 did
not file any objections to the magistrate’s decision.
On October 18, 2019, the trial court adopted the magistrate’s decision.
The trial court entered judgment in favor of the county on its delinquent tax
foreclosure complaint and issued an order of foreclosure.
A sheriff’s sale was scheduled for April 6, 2020. However, this sale did
not take place.
A second sheriff’s sale was scheduled for June 9, 2021. During the
second sale, Emmet purchased the property for $241,200. On June 14, 2021, the
trial court issued an order of sale memorializing the terms of the sale to Emmet.
On June 29, 2021, the trial court issued a confirmation of sale. Two
weeks later, on July 13, 2021, 440 filed a motion (1) to vacate the trial court’s
confirmation order, and (2) requesting a 90-day stay of any further confirmation of
the sale “to permit 440 High to obtain the funding necessary to pay all outstanding
taxes, sheriffs fees, and court costs so that 440 High may retain the property.”
440 appeared to seek relief from the trial court’s June 29, 2021
judgment confirming the sale of the property pursuant to Civ.R. 60(B). In support
of its request to vacate the sale and stay further confirmation of the sale, 440
asserted that “the coronavirus pandemic has had a drastic effect on its tenants’
ability to pay rent and, by extension, [440’s] ability to pay the outstanding taxes
owed on the property.” Citing the pandemic-related eviction moratorium, and the
fact that the property’s tenants are “not wealthy individuals,” 440 maintained that
it had no legal recourse for tenants’ nonpayment of rent and that 440 and its
principal “have been good landlords” and have “attempted to be accommodating” to
tenants. 440 did not submit any evidence supporting its assertion, rather, it alleged
that “[i]f asked, each of 440 High’s tenants would tell the Court that 440 High and
its principal have been good landlords and they would wish to continue the
landlord/tenant relationship with 440 High.” Aside from the pandemic-related
circumstances, 440 asserted that (1) the 20 percent interest charged on the
outstanding taxes, and (2) the city of Cleveland Heights’ water and sewer charges
“greatly increased the amount owed” on the property.
Based on these pandemic-related circumstances, 440 argued that
“vacating the confirmation order and allowing a limited stay of confirmation is fair
and equitable.” 440 supplemented the motion to vacate on July 15, 2021. In the
notice of supplement, 440 asserted that it “has now obtained the necessary funding
to redeem its interest in the property if the Court grants its motion to vacate.” 440
supplemented its motion to vacate with an affidavit of 440’s acting manager, Gary
Harris, executed on July 15, 2021. Harris averred, in relevant part,
5. The coronavirus pandemic had a drastic effect on 440 High’s ability
to pay its outstanding taxes in order to redeem the Property.
6. 440 High had difficulty collecting rents during the pandemic and
was unable to evict tenants who were not paying due to the nationwide
foreclosure moratorium.
7. 440 High now has obtained a lender who is willing and able to pay
off all back taxes and fees immediately so that 440 High can remain as
owner of the Property and market it for sale.
8. 440 High certifies to the Court that if the confirmation order is
vacated, 440 High will pay all outstanding amounts due within five (5)
business days of the order vacating the confirmation of sale.
On July 20, 2021, third-party defendant Emmet filed a motion to
intervene, pursuant to Civ.R. 24, as the purchaser of the property. Emmet also filed
a proposed response to 440’s motion to vacate. The trial court granted Emmet’s
motion to intervene on July 27, 2021.
Emmet filed its response to 440’s motion to vacate on July 30, 2021.
Therein, Emmet argued that (1) 440 failed to argue or demonstrate any defect or
irregularity regarding the foreclosure proceedings or foreclosure sale, (2) 440 was
not entitled to relief under Civ.R. 60(B) based on the COVID-19 pandemic, and
(3) 440 failed to secure a lender in a timely manner.
On August 10, 2021, the trial court denied 440’s motion to vacate the
confirmation order and for a stay of the confirmation of the sale without holding a
hearing. It is from this judgment that 440 filed the instant appeal on August 27,
2021.
440 assigns one error for review:
I. The trial court erred in failing to vacate its order confirming the sale
of the [p]roperty where [440] demonstrated meritorious reasons for
granting the relief and the motion was filed within 14 days of the order.
II. Law and Analysis
In its sole assignment of error, 440 argues that the trial court erred in
denying 440’s motion to vacate the trial court’s judgment confirming the sale of the
property and for a stay of any further confirmation to the sale. As noted above, 440
appeared to request relief pursuant to Civ.R. 60(B).
Civ.R. 60(B), governing “relief from judgment or order,” provides:
On motion and upon such terms as are just, the court may relieve a
party or his legal representative from a final judgment, order or
proceeding for the following reasons (1) mistake, inadvertence,
surprise or excusable neglect; (2) newly discovered evidence which by
due diligence could not have been discovered in time to move for a new
trial under Rule 59(B); (3) fraud, misrepresentation or other
misconduct of an adverse party; (4) the judgment has been satisfied,
released or discharged, or a prior judgment upon which it is based has
been reversed or otherwise vacated, or it is no longer equitable that the
judgment should have prospective application; or (5) any other reason
justifying relief from the judgment.
Civ.R. 60(B) further provides that motions for relief from judgment “shall be made
within a reasonable time * * *.”
In order to prevail on a Civ.R. 60(B) motion for relief from judgment,
the moving party must demonstrate (1) a meritorious defense or claim to present if
relief is granted, (2) entitlement to relief under one of the grounds stated in Civ.R.
60(B)(1) through (B)(5), and (3) the timeliness of the motion. GTE Automatic Elec.,
Inc., v. Arc Industries, Inc., 47 Ohio St.2d 146, 150-151, 351 N.E.2d 113 (1976). These
three requirements are independent and written in the conjunctive. LOK Home v.
Robbins Co., 8th Dist. Cuyahoga No. 110544, 2022-Ohio-304, ¶ 17. Accordingly, all
three must be clearly established in order to be entitled to relief. Id., citing Rose
Chevrolet, Inc. v. Adams, 36 Ohio St.3d 17, 20, 520 N.E.2d 564 (1988).
This court reviews a trial court’s judgment denying a motion for relief
from judgment for an abuse of discretion. Rose Chevrolet at id. “A court abuses its
discretion when a legal rule entrusts a decision to a judge’s discretion and the judge’s
exercise of that discretion is outside of the legally permissible range of choices.”
State v. Hackett, 164 Ohio St.3d 74, 2020-Ohio-6699, 172 N.E.3d 75, ¶ 19. An abuse
of discretion may be found, for instance, when a trial court “applies the wrong legal
standard, misapplies the correct legal standard, or relies on clearly erroneous
findings of fact.” Thomas v. Cleveland, 176 Ohio App.3d 401, 2008-Ohio-1720, 892
N.E.2d 454, ¶ 15 (8th Dist.). When applying the abuse of discretion standard, this
court may not substitute its judgment for that of the trial court. Vannucci v.
Schneider, 2018-Ohio-1294, 110 N.E.3d 716, ¶ 22 (8th Dist.).
In the instant matter, regarding the third GTE prong, the record
reflects that 440’s motion to vacate was timely filed. 440 arguably sought relief
under Civ.R. 60(B)(1). Where a moving party seeks relief under Civ.R. 60(B)(1), (2),
or (3), the motion for relief from judgment must be filed not more than one year
after the judgment was entered. See S. Park Manor Condominiums Unit Owners’
Assn. v. Clarendon Group, Inc., 8th Dist. Cuyahoga No. 105672, 2017-Ohio-8491,
¶ 7, citing GTE at paragraph two of the syllabus. The trial court’s judgment
confirming the sale of the property was issued on June 29, 2021, and 440 moved to
vacate the trial court’s confirmation order two weeks later on July 13, 2021.
Regarding the first GTE prong, 440 did not explicitly argue in its
motion to vacate, much less demonstrate, that it had a meritorious defense or claim
to present if relief was granted. In its appellate brief, 440 asserts that the motion to
vacate “offered a meritorious defense to the [foreclosure] claim based on the
coronavirus.” Appellant’s brief at 5. It is unclear how the COVID-19 pandemic
would operate as a meritorious defense to the county’s foreclosure action for
purposes of satisfying the first GTE prong.
The trial court issued a decree of foreclosure in October 2019,
approximately five months before the declaration of the pandemic in March 2020.
440 does not explain how the state or federal eviction moratoriums would apply to
a decree of foreclosure that occurred prior to the enactment of the policies. See
HSBC Bank USA v. Rao, 10th Dist. Franklin No. 20AP-448, 2021-Ohio-3745, ¶ 21.
440 did not allege any defects or irregularities with respect to the
foreclosure proceedings or the sale of the property. For instance, 440 did not argue
that the county lacked standing to prosecute the foreclosure action, that the county
failed to comply with R.C. Chapter 2329, governing judicial foreclosure proceedings,
or that the county failed to comply with R.C. Chapter 5721, governing foreclosure
proceedings due to tax delinquency.
440 was delinquent on its taxes between September 2018, when the
county filed its foreclosure complaint, and July 2021, when the trial court confirmed
the sale of the property to Emmet. 440 made no payments during this time.
Furthermore, the documentary evidence submitted by Emmet demonstrates that
440 failed to make any tax payments in 2016, 2017, 2018, 2019, 2020, or 2021.
Based on 440’s failure to allege sufficient operative facts in its motion
to vacate that would provide 440 with a meritorious defense to the foreclosure
action, we cannot conclude that the trial court abused its discretion in denying 440’s
motion to vacate.
Regarding the second GTE prong, 440 did not specifically argue in its
motion to vacate that it was entitled to relief under one or more of the grounds stated
in Civ.R. 60(B)(1) through (5). 440 argued in the trial court that it would be fair and
equitable to vacate the confirmation order based on the circumstances associated
with the COVID-19 pandemic. Specifically, 440 alleged that both the property’s
tenants’ ability to pay rent, and 440’s corresponding ability to pay taxes on the
property, were drastically effected by the pandemic. Aside from the pandemic-
related circumstances, 440 asserted in its motion to vacate that (1) the 20 percent
interest charged on the outstanding taxes, and (2) the city of Cleveland Heights’
water and sewer charges “greatly increased the amount owed” on the property.
Based on 440’s arguments, we presume that 440 was seeking relief
based on excusable neglect under Civ.R. 60(B)(1), and the catchall provision under
Civ.R. 60(B)(5). After reviewing the record, we find that 440 did not demonstrate
that it was entitled to relief under Civ.R. 60(B)(1) or (5).
First, regarding Civ.R. 60(B)(1), 440 appeared to argue that its failure
to pay taxes on the property constituted excusable neglect based on the hardships
associated with the pandemic. As noted above, 440 failed to make any tax payments
in 2016, 2017, 2018, 2019, 2020, or 2021. Furthermore, the preliminary judicial
report and delinquent land certificate attached to the county’s complaint
demonstrated that 440 was delinquent on property taxes as of 2018 — long before
the pandemic.
440 also appeared to argue that its inability to secure funding to
redeem its interest in the property until after the confirmation of the sale to Emmet
constituted excusable neglect. 440 asserted in its motion to vacate that it had “been
discussing potential loans with lenders to enable it to pay off all outstanding
amounts owed.” 440 stated in its supplement to the motion to vacate that it had
“now obtained the necessary funding to redeem its interest in the property if the
[trial court] grants its motion to vacate.” 440 did not, however, explain the efforts
that had been made to secure funding between the commencement of foreclosure
proceedings in September 2018 and the confirmation of the sale to Emmet in June
2021.
440 argues, for the first time in its appellate brief, that the 20 percent
interest and water and sewer charges “greatly increased the amount owed and
hindered [440’s] ability to obtain funding to satisfy the outstanding obligation.”
Appellant’s brief at 2. 440 did not raise this argument in its motion to vacate, much
less present any supporting evidence demonstrating that the interest charges or
water and sewer charges hindered its ability to obtain financing. It is well-
established that a party cannot raise an argument for the first time on appeal. See,
e.g., Lycan v. Cleveland, 2019-Ohio-3510, 142 N.E.3d 210, ¶ 32 (8th Dist.)
(“arguments raised for the first time on appeal are generally barred and a reviewing
court will not consider issues that the appellant failed to raise in the trial court”).
Based on the foregoing, we find that 440 failed to adequately establish
that it was entitled to relief under Civ.R. 60(B)(1) based on excusable neglect.
Second, the catchall provision under Civ.R. 60(B)(5) recognizes a trial
court’s inherent power of a court to relieve a party from the unjust operation of a
judgment. See Volodkevich v. Volodkevich, 35 Ohio St.3d 152, 154, 518 N.E.2d 1208(1988), citing Caruso-Ciresi, Inc. v. Lohman, 5 Ohio St.3d 64, 448 N.E.2d 1365(1983). “[T]he grounds for invoking Civ.R. 60(B)(5) must be substantial, and the
provision is not to be used as a substitute for any of the more specific provisions of
Civ.R. 60(B).” In re I.L.J., 8th Dist. Cuyahoga No. 108251, 2019-Ohio-5241, ¶ 37,
citing Caruso-Ciresi at paragraphs one and two of the syllabus.
After reviewing the record, we find that 440 failed to demonstrate that
it was entitled to relief under Civ.R. 60(B)(5). 440 failed to demonstrate that it was
entitled to relief based on the specific provisions set forth under Civ.R. 60(B)(1)-(4).
Based on the certification of delinquency in 2018, and 440’s failure to pay taxes in
2016, 2017, 2018, and 2019 leading up to the pandemic, we cannot conclude that the
pandemic constitutes substantial grounds based upon which 440 is entitled to relief.
We emphasize that 440 failed to make any tax payments in 2016, 2017, 2018, 2019,
2020, or 2021. There is also no evidence that 440 attempted to negotiate a payment
plan with the county for the outstanding and delinquent tax debt.
Based on the foregoing, we find that 440 failed to adequately establish
that it was entitled to relief under the catchall provision of Civ.R. 60(B)(5).
Finally, 440 argues that the trial court’s denial of the motion to vacate
without holding a hearing constitutes “clear error.” The record reflects that 440 did
not request a hearing in its motion to vacate or supplement thereto.
Where a party sets forth sufficient operative facts demonstrating the
party has a valid claim or defense to a judgment, the trial court must hold a hearing.
Morana v. Foley, 2015-Ohio-5254, 54 N.E.3d 749, ¶ 22 (8th Dist.). However, on the
other hand, “when a motion for relief from judgment lacks allegations of operative
facts justifying relief from judgment, an evidentiary hearing is not required.” Blatt
v. Meridia Health Sys., 8th Dist. Cuyahoga No. 89074, 2008-Ohio-1818, ¶ 9, citing
Coleman v. Cleveland School Dist. Bd. of Edn., 8th Dist. Cuyahoga Nos. 84274 and
84505, 2004-Ohio-5854, ¶ 79, and Weiss, Inc. v. Pascal, 8th Dist. Cuyahoga No.
82565, 2003-Ohio-5824.
“‘Where the movant’s motion and accompanying materials fail to
provide the operative facts to support relief under Civ.R. 60(B), the trial court may
refuse to grant a hearing and summarily dismiss the motion for relief from judgment
* * *.’” Saponari v. Century Limousine Serv., Inc., 8th Dist. Cuyahoga No. 83018,
2003-Ohio-6501, ¶ 9, quoting Bates & Springer, Inc. v. Stallworth, 56 Ohio App.2d
223, 228, 382 N.E.2d 1179 (8th Dist.1978).
In the instant matter, as noted above, 440’s motion fails to allege
sufficient operative facts justifying relief from the confirmation of the sale to Emmet.
Accordingly, the trial court was not obligated to hold a hearing on 440’s motion to
vacate.
For all of the foregoing reasons, we find no basis upon which to
conclude that the trial court’s judgment denying 440’s motion to vacate the
confirmation of the sale of the property to Emmet was unreasonable, arbitrary, or
unconscionable. Accordingly, the trial court did not abuse its discretion in denying
440’s motion to vacate without holding a hearing.
440’s sole assignment of error is overruled.
Judgment affirmed.
It is ordered that appellee recover from appellant costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate be sent to said 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.
FRANK DANIEL CELEBREZZE, III, PRESIDING JUDGE
EILEEN A. GALLAGHER, J., and
EMANUELLA D. GROVES, J., CONCUR