REO Invests. L.L.C. v. Cuyahoga Cty. Bd. of Revision , 2022 Ohio 1171 ( 2022 )

[Cite as REO Invests. L.L.C. v. Cuyahoga Cty. Bd. of Revision, 2022-Ohio-1171.]
COURT OF APPEALS OF OHIO
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
REO INVESTMENTS LLC, :
Plaintiff-Appellant, :
No. 110711
v. :
CUYAHOGA COUNTY BOARD OF :
REVISION, ET AL.,
Defendants-Appellees. :
JOURNAL ENTRY AND OPINION
JUDGMENT: REVERSED AND REMANDED
RELEASED AND JOURNALIZED: April 7, 2022
Administrative Appeal from the Board of Tax Appeals
Case No. 2019-2715
Appearances:
Lynch & Lynch Law LLC and Scott Lynch, for appellant.
Michael C. O’Malley, Cuyahoga County Prosecuting
Attorney, and Saundra Curtis-Patrick, Assistant
Prosecuting Attorney, for appellee.
ANITA LASTER MAYS, P.J.:
Plaintiff-appellant REO Investments LLC (“REO”) appeals the Ohio
Board of Tax Appeals’ (“BTA”) decision to reset the valuations on two of REO’s
properties, valuations that were higher than the Cuyahoga County Board of
Revision’s (“BOR”) assigned valuations. REO requests that we reverse the BTA’S
decision and allow the BOR’s property valuations. We reverse the BTA’s decision.
I. Facts and Procedural History
REO’s business practices include the purchase and renovation of
distressed single-family homes. REO invested funds to bring the properties up to
code and commercially viable to ultimately rent to tenants. The renovations make
the properties commercially viable and compliant with local building codes. On
March 23, 2019, the BOR convened to hear and decide on REO’s six property
valuation cases. The BOR conducted two separate hearings and made property
valuations on all six properties; however, only two properties are subject to this
appeal.
In 2016 and 2017, REO purchased the two properties for $15,000,
parcel no. 643-31-039 (“Property A”) and $6,000, parcel no. 645-43-021 (“Property
B”), respectively. However, Cuyahoga County’s fiscal officer assessed Property A at
$74,800 and Property B at $52,700. Because the property assessments were
significantly more than the purchase prices, REO appealed the decision to the BOR.
At the hearings, the owner of REO testified that the company invested
approximately $9,000 in repairs and improvements to Property A and $8,000 to
Property B. After the hearings, the BOR lowered the property valuations to $23,000
and $12,000, respectively.
REO, unhappy with the BOR’s decision, appealed to the BTA. REO
argued that the purchase price of the properties were the most accurate indications
of valuations. However, the BTA decided that the recent sales price of the properties
were not accurate because of the improvements to the properties made by REO. The
BTA reset the valuations to the original assessments of $74,800 for Property A and
$52,700 for Property B.
REO filed this appeal assigning one error for our review:
The BTA erred when it required appellant to present an appraisal
when appellant presented a detailed owner-opinion and its
underlying rationale.
II. Property Valuations
A. Standard of Review
This court’s standard of review is set forth in R.C. 5717.04:
If upon hearing and consideration of such record and evidence the
court decides that the decision of the board appealed from is
reasonable and lawful it shall affirm the same, but if the court decides
that such decision of the board is unreasonable or unlawful, the court
shall reverse and vacate the decision or modify it and enter final
judgment in accordance with such modification.
“‘The fair market value of property for tax purposes is a question of
fact, the determination of which is primarily within the province of the taxing
authorities.’” Orange City School Bd. of Edn. v. Cuyahoga Cty. Bd. of Revision, 8th
Dist. Cuyahoga No. 107199, 2019-Ohio-634, ¶ 17, quoting Schutz v. Cuyahoga Cty.
Bd. of Revision, 153 Ohio St.3d 23, 2018-Ohio-1588, 100 N.E.3d 362, ¶ 6, quoting
Cuyahoga Cty. Bd. of Revision v. Fodor, 15 Ohio St.2d 52, 239 N.E.2d 25 (1968),
syllabus. “‘[T]his court will not disturb a decision of the [BTA] with respect to such
valuation unless it affirmatively appears from the record that such decision is
unreasonable or unlawful.’” Id., quoting Schutz at ¶ 6, quoting Fodor at syllabus.
Thus, this court must “affirm the BTA’s decision if it is ‘reasonable and lawful.’”
Cuyahoga Cty. Bd. of Revision at ¶ 18; R.C. 5717.04; Satullo v. Wilkins, 111 Ohio
St.3d 399, 2006-Ohio-5856, 856 N.E.2d 954, ¶ 14.” Id. at ¶ 18.
The legal standard of our review is de novo, but “we defer to the BTA’s
factual findings, including determinations of property value, as long as they are
supported by reliable and probative evidence in the record.” Id., citing Lunn v.
Lorain Cty. Bd. of Revision, 149 Ohio St.3d 137, 2016-Ohio-8075, 73 N.E.3d 486, ¶
13.
B. Law and Analysis
REO argues that the BTA’s decision to increase the two property
valuations was in error. In its decision, BTA stated,
In the absence of a qualifying sale, we are mindful of the Supreme
Court’s long-standing pronouncement holding that while a qualifying
sale typically provides the best method of determining value * * * such
information is not usually available, and such an appraisal becomes
necessary. State ex rel Park Investment C0. v. Board of Tax Appeals,
175 Ohio State 410 (1964). In the absence of qualifying sales, REO was
required, but failed, to provide a competent appraisal of the subject
property, attested to by a qualified expert, for the tax lien date in issue.
Accordingly, based upon our review of the record, we find that
appellant has failed to establish a reduced value for the subject
property.
BTA opinion, p. 5.
REO cites Worthington City Schools Bd. of Edn. v. Franklin Cty. Bd.
of Revision, 140 Ohio St.3d 248, 2014-Ohio-3620, 17 N.E.3d 537, to support its
contention that the BTA erred by not relying on the recent purchase prices of
Properties A and B. The Supreme Court, in Worthington, stated that although a
property’s value should be determined through opinion testimony of an expert,
there is an exception that allows the BTA to consider the owner of the property’s
testimony “‘concerning the value of his property without being qualified as an
expert, because he is presumed to be familiar with it from having purchased or dealt
with it.’” Id. at ¶ 18, quoting Tokles & Son, Inc. v. Midwestern Indemn. Co., 65 Ohio
St.3d 621, 605 N.E.2d 936 (1992), paragraph two of the syllabus. “The court has
recognized the validity of the owner-opinion rule in the context of valuing realty for
tax purposes.” Id. at ¶ 19, citing Amsdell v. Cuyahoga Cty. Bd. of Revision, 69 Ohio
St.3d 572, 574, 635 N.E.2d 11 (1994).
REO filed a motion at the BTA requesting to submit a written
argument in lieu of a hearing. The BTA granted the motion, and REO filed its
written argument, but did not submit any additional evidence. The BOR also
submitted a written argument in support of their position. In REO’s written
argument, it contended that the valuations of the properties should be the purchase
prices of the properties. The BTA is not required to simply grant REO’s request to
lower the valuations, but they can consider REO’s testimony about the valuation.
However, the court in Worthington stated,
[O]ur decision in Bedford Bd. of Edn., 115 Ohio St.3d 449, 2007-Ohio-
5237, 875 N.E.2d 913, prescribes a different rule under these
circumstances: when the board of revision has reduced the value of
the property based on the owner’s evidence, that value has been held
to eclipse the auditor’s original valuation.
Id. at ¶ 35. In this instant case, the BOR reduced the fiscal officer’s valuation to
$23,000 for Property A and $12,000 for Property B. Following the rule explained
in Worthington, the BOR’s valuation should be adopted. See, e.g, Columbus City
Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision, 10th Dist. Franklin Nos. 21AP-
86, 21AP-87, 21AP-88, 2022-Ohio-355, ¶ 10; Copley-Fairlawn City School Dist.
Bd. of Edn. v. Summit Cty. Bd. of Revision, 147 Ohio St.3d 503, 2016-Ohio-1485,
68 N.E.3d 723, ¶ 19; and Olentangy Local Schools Bd. of Edn. v. Delaware Cty.
Bd. of Revision, 148 Ohio St.3d 695, 2016-Ohio-8332, 72 N.E.3d 633, ¶ 15.
Therefore, REO’s assignment of error is sustained, and we reverse the
BTA’s decision to revert to the auditor’s valuation, with the result that the BOR’s
valuation of the property is reinstated. Worthington at ¶ 42.
Judgment reversed and case remanded for further proceedings
consistent with this opinion.
It is ordered that appellant recover from appellee 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 Ohio
Board of Tax Appeals 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.
__________________________________
ANITA LASTER MAYS, PRESIDING JUDGE
CORNELIUS J. O’SULLIVAN, JR., J., and
JAMES A. BROGAN, J.,* CONCUR
*(Sitting by assignment: James A. Brogan, J., retired, of the Second District Court
of Appeals.)