Davet v. Parks , 2013 Ohio 31 ( 2013 )

[Cite as Davet v. Parks, 2013-Ohio-31.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 98351
RICHARD F. DAVET
PLAINTIFF-APPELLANT
vs.
MARK A. PARKS, JR.,
AS TREASURER, ET AL.1
DEFENDANTS-APPELLEES
JUDGMENT:
REVERSED AND REMANDED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-738351
BEFORE: S. Gallagher, J., Blackmon, P.J., and Celebrezze, J.
RELEASED AND JOURNALIZED: January 10, 2013
1
The original caption of this case was James Rokakis, Treasurer, et al. In accordance with
App.R. 29(C), the court substitutes Mark A. Parks, Jr., the present Cuyahoga County Treasurer.
FOR APPELLANT
Richard F. Davet, pro se
P.O. Box 10092
Cleveland, OH 44110
ATTORNEYS FOR APPELLEES
For Cuyahoga County Treasurer
Timothy J. McGinty
Cuyahoga County Prosecutor
By: Anthony J. Giunta, Jr.
Adam D. Jutte
Michael A. Kenny, Jr.
Colleen Majeski
Judith Miles
Gregory B. Rowinski
Assistant Prosecuting Attorneys
The Justice Center, 9th Floor
1200 Ontario Street
Cleveland, OH 44113
For Collinwood & Nottingham Villages Development Corporation
David G. Weilbacher
12711 Gordon Street
North Royalton, OH 44133
For Lightning Demolition & Construction
Catana Deskins
8580 Pine Hollow Drive
Novelty, OH 44072
Joseph C. Patituce
Patituce & Scott, LLC
26777 Lorain Road
Suite 708
North Olmsted, OH 44070
SEAN C. GALLAGHER, J.:
{¶1} This appeal is a companion case arising out of similar events as contained in
Davet v. Sensenbrenner, 8th Dist. No. 98636.
{¶2} Plaintiff-appellant, Richard F. Davet, appeals from the trial court’s order
granting summary judgment in favor of defendants-appellees, the Cuyahoga County
treasurer (“Treasurer”), Collinwood & Nottingham Villages Development Corporation,
and Lightning Demolition & Construction (collectively, “appellees”). For the reasons set
forth below, we reverse the ruling and remand for further proceedings.
{¶3} Davet’s claims initially relate back to 1999 through 2002 when GLS Capital -
Cuyahoga, Inc. (“GLS Capital”) purchased six tax certificates from the Treasurer for
delinquent taxes owing on Davet’s property located at 793 E. 152nd Street, Cleveland,
Ohio:
Tax Certificate No. Purchase Date Amount Tax Year
11522042-98 05/28/1999 $4,882.00 1991-1997
11522042-99 09/09/1999 $1,034.08 1998
11522042-00 01/13/2000 $1,031.71 1999
11522042-01S 09/28/2001 $1,403.41 2000
11522042-98 04/18/2002 $4,882.00 1991-1997
11522042-99 09/04/2002 $1,034.08 1998
{¶4} GLS Capital filed a complaint on October 30, 2002, seeking foreclosure on
Davet’s property (“GLS Foreclosure”) in Cuyahoga C.P. No. CV-485248. As proof of
entitlement to foreclose, GLS Capital attached to its complaint copies of four of the six
tax certificates:
Tax Certificate No. Purchase Date Amount Tax Year
11522042-98 05/28/1999 $4,882.00 1991-1997
11522042-99 09/09/1999 $1,034.08 1998
11522042-00 01/13/2000 $1,031.71 1999
11522042-01S 09/28/2001 $1,403.41 2000
{¶5} GLS Capital subsequently dismissed its foreclosure complaint against
Davet’s property. All parties to the action were dismissed without prejudice at the latest
on May 16, 2006.
{¶6} Davet’s claims also relate back to May 5, 2006, when the Treasurer filed a tax
foreclosure action (“County Foreclosure”) in Cuyahoga C.P. No. CV-590884 for taxes
owing on the same property underlying the GLS Foreclosure. A magistrate held a
hearing on the County Foreclosure on October 19, 2007, and found delinquent taxes and
other charges due and payable upon the property. The magistrate also recommended an
order of foreclosure in favor of the Treasurer. The trial court adopted the magistrate’s
decision, and entered a decree of foreclosure (“Foreclosure Decree”) in favor of the
Treasurer on November 27, 2007.
{¶7} On December 19, 2007, the trial court ordered the property be offered at a
sheriff’s sale on February 11, 2008. The court set a second sheriff’s sale, if necessary,
for February 25, 2008.
{¶8} On March 20, 2008, after the unsuccessful sheriff’s sales, the property was
forfeited to the state of Ohio (“Forfeiture”) pursuant to R.C. 5723.01. As a result, the
Cuyahoga County Auditor, now known as the Cuyahoga County Fiscal Officer
(“Auditor”), became the custodian and agent of the property for the state of Ohio with the
statutory authority to sell it. See R.C. 5723.01(A)(1) and (2).
{¶9} The Auditor advertised the property for sale for two consecutive weeks.
With no success resulting from the advertisements, the Auditor held a forfeited land sale
(“Forfeited Land Sale”) on August 8, 2008. Appellee, Collinwood Nottingham Villages
Development Corporation (“Collinwood”), purchased the property for $1,600. On
September 30, 2008, an auditor’s deed was filed and recorded at the Cuyahoga County
Recorder’s Office to complete the transfer of the property’s title to Collinwood
(“Collinwood’s Deed”).
{¶10} Between August 25, 2009 and April 1, 2010, Davet filed the following
motions with the trial court in the County Foreclosure: (1) on August 25, 2009, a motion
to vacate judgment that the trial court denied on March 18, 2010; (2) on October 13,
2009, a motion to dismiss for lack of jurisdiction that the trial court denied on February
11, 2010; (3) on December 7, 2009, a renewed motion to dismiss for lack of standing ab
initio and lack of jurisdiction ab initio that the trial court denied on January 14, 2010; (4)
on December 22, 2009, a second renewed motion to dismiss for lack of standing ab initio
and lack of jurisdiction ab initio, and a request for ruling on standing, that the trial court
denied on March 18, 2010; and (5) on April 1, 2010, a motion for relief from judgment, a
motion for stay of execution of judgment, a motion to set aside magistrate’s decision, and
a motion to stay effectiveness of magistrate’s decision, which the trial court denied on
April 21, 2010.
{¶11} After appellee Lightning Demolition & Construction (“Lightning”) entered
into a contract with Collinwood on July 29, 2010, for demolition work on the property,
Davet filed his complaint in the present action on October 5, 2010, wherein he challenged
the County Foreclosure, Foreclosure Decree, Forfeiture, and Forfeited Land Sale,
Cuyahoga C.P. No. CV-738351 (“Quiet Title Action”). His claims were premised
primarily on his assertion that the Treasurer was not the owner of the relevant tax
certificates when the Treasurer filed the County Foreclosure. Because GLS Capital
purchased the certificates from the Treasurer on dates preceding the County Foreclosure,
Davet argued that the Treasurer lacked standing to proceed under the authority of Wells
Fargo Bank, N.A. v. Jordan, 8th Dist. No. 91675, 2009-Ohio-1092. He claims that the
trial court’s judgment in favor of appellees is, therefore, void. Davet’s Quiet Title
Action also included a trespass claim based on Lightning’s expected, but unlawful, entry
on the property for demolition work.
{¶12} Because Davet’s claims in the Quiet Title Action were each ruled on by the
trial court in the County Foreclosure in favor of appellees, Lightning filed a motion to
dismiss the Quiet Title Action. Davet opposed the motion by asserting “[n]o court has
specifically and affirmatively stated that the prior judgment in the foreclosure at issue in
this action was not void ab initio.” He further requested that the court conclude that his
legal title to the property “trumps all other claims.”
{¶13} The trial court denied Lightning’s motion to dismiss on January 25, 2011.
The parties subsequently filed cross-motions for summary judgment. The magistrate
ruled in favor of appellees in a decision dated February 14, 2012. Davet filed objections,
but the trial court overruled the objections, adopted the magistrate’s decision, and entered
final judgment in favor of appellees on April 12, 2012.
{¶14} The trial court concluded Davet did not have a possessory interest in the
property pursuant to R.C. 5303.01 as a result of the County Foreclosure. Davet lacked
standing, therefore, to bring the Quiet Title Action because he is not in possession of the
property and he does not have a remainder or reversionary interest because the filing of
Collinwood’s Deed extinguished all of Davet’s interest in the property. Davet also filed
his complaint beyond the one-year statutory limitation found in R.C. 5723.13. Finally,
Davet’s trespass claim failed because he did not have actual or constructive possession of
the property.
{¶15} Davet timely appealed and sets forth one assignment of error:
The trial court erred in granting summary judgment in favor of Defendants,
denying summary judgment against Plaintiff (docket, 12/20/2011), and
adopting the magistrate’s decision and overruling the Appellant’s objections
to the magistrate’s decision, findings of fact and conclusions of law dated
related [sic] to Plaintiff’s request for findings of fact and conclusions of law
on 2/14/2012 (Docket, 4/12/2012). The trial court also erred by failing to
take judicial notice of Defendant [Treasurer’s] sale of tax liens to GLS
(Docket, JE 10/6/2011).
{¶16} Prior to reviewing whether Davet has any interest in the property, we
consider the trial court’s conclusion that R.C. 5723.13 outright time-barred Davet’s
claims. R.C. 5723.13 states:
Whenever real property in this state is sold under sections 5721.01 to
5721.28, inclusive, or 5723.01 to 5723.19, inclusive, of the Revised Code,
no action shall be commenced, nor shall any defense be set up to question
the validity of the title of the purchasers at such sale for any irregularity,
informality, or omission in the proceedings relative to the foreclosure,
forfeiture, or sale, unless such action is commenced or defense set up within
one year after the deed to such property is filed for record. (Emphasis
added.)
{¶17} R.C. 5723.13 limits the time in which to commence actions relating to
irregularity, informality, or omissions in tax foreclosure proceedings and sales. Symons
v. Miller, 5th Dist. No. 05-CA-7, 2006-Ohio-137, ¶ 31. However, R.C. 5723.13 does
not apply to a void judgment. Id.; Weir v. Gillespie, 26 Ohio App.3d 48, 51, 498 N.E.2d
177 (3d Dist.1985); see also Rinehart v. Howard, 10 Dist. Nos. 84AP-1113 and
84AP-12114, 1985 Ohio App. LEXIS 8748 (Sept. 12, 1985). Moreover, res judicata
does not attach to a void judgment. Rite Rug Co., Inc. v. Wilson, 106 Ohio App.3d 59,
665 N.E.2d 260 (10th Dist.1995), citing Tari v. State, 117 Ohio St. 481, 159 N.E. 594(1927). See also State ex rel. Ballard v. O’Donnell, 50 Ohio St.3d 182, 553 N.E.2d 650(1990), paragraph one of the syllabus. If the Foreclosure Decree is void, R.C. 5723.13
does not bar Davet’s claims.
{¶18} Davet relies heavily on the case of Jordan, 8th Dist. No. 91675,
2009-Ohio-1092, in arguing that the Treasurer was not the proper party to bring the
County Foreclosure. In Jordan, this court held that if a bank acquires an interest in a
mortgage by an assignment made after the foreclosure complaint is filed, the bank lacks
standing to maintain the action. Id. at ¶ 24.
{¶19} The Ohio Supreme Court certified a conflict between Jordan and other Ohio
appellate court decisions on this issue in Fed. Home Loan Mtge. Corp. v. Schwartzwald,
129 Ohio St.3d 1487, 2011-Ohio-5129, 954 N.E.2d 661. In Fed. Home Loan Mtge.
Corp. v. Schwartzwald, Slip Opinion No. 2012-Ohio-5017, the court held that a party
commencing litigation must have standing to sue in order to present a justiciable
controversy and invoke the jurisdiction of the common pleas court. Lack of standing at
the outset of litigation cannot be cured, therefore, by receipt of an assignment of the claim
or by substitution of the real party in interest. Id. at ¶ 41. If the Treasurer lacked
standing at the outset of the County Foreclosure, any actions taken subsequently by him
cannot cure the deficiency.
{¶20} On October 6, 2011, Davet filed in the County Foreclosure a motion to take
judicial notice of the tax certificates sold by the Treasurer to GLS Capital in the GLS
Foreclosure:
5. I further request that the Court take judicial notice of the public facts
and records of this Court, namely that [the Treasurer] sold tax liens to GLS
in Case No. CV 02-485248 such that when [the Treasurer] filed Case No.
CV 06-590884, [the Treasurer] had no contractual standing to enforce those
tax liens.
{¶21} On October 17, 2011, Davet also filed in the County Foreclosure proof of
the tax certificates sold to GLS Capital in the GLS Foreclosure. Davet attached as proof
a copy of GLS Capital’s October 30, 2002 foreclosure complaint on four pieces of
property, including the subject property under Count 4.
{¶22} On December 6, 2011, the trial court denied Davet’s motion to take judicial
notice of the tax certificates sold by the Treasurer. The court stated in its journal entry
that Davet previously filed on October 17, 2011, proof of the tax certificates sold to GLS
Capital in the GLS Foreclosure.
{¶23} In response to Davet’s motion for summary judgment, appellees asserted
that the Treasurer voided four tax certificates sold to GLS Capital. Further, the
remaining two certificates were cancelled upon the issuance of replacement certificates
for 11522042-98 and 11522042-99:
[Cite as Davet v. Parks, 2013-Ohio-31.]
Purchase Delinquent
Tax Cert.No. Date Taxes Tax Year(s) Void Date
11522042-98 05/28/1999 $4,882.00 1991-1997 N/A
(cancelled)
N/A
11522042-99 09/09/1999 $1,034.08 1998 (cancelled)
11522042-00 01/13/2000 $1,031.71 1999 01/13/2006
11522042-01S 09/28/2001 $1,403.41 2000 01/13/2006
11522042-98 04/18/2002 $4,882.00 1991-1997 05/12/2005
11522042-99 09/04/2002 $1,034.08 1998 01/13/2006
{¶24} The record before the trial court is cloudy with regard to the tax certificates
issued to GLS Capital, and we refuse to infer from the record “as is” the actions taken by
the Treasurer in connection with them. If the Treasurer has a process to follow when
selling a tax certificate, and subsequently repurchasing, voiding, and/or cancelling the
same certificate, the Treasurer should follow that process.2 Substantial compliance with
the statutory requirements with respect to sales of land for delinquent taxes is essential in
order to effect a valid sale to enforce a tax lien. Rinehart v. Goberdhan, 8 Ohio App.3d
342, 457 N.E.2d 354 (10th Dist.1983), citing Rhodes v. Gunn, 35 Ohio St. 387 (1880);
Stanbaugh v. Carlin, 35 Ohio St. 209 (1878) (other citations omitted).
2
See, e.g., Section 4.2 of the sample tax certificate sale/purchase agreement available on the
Treasurer’s website (“At any time subsequent to the Closing Date, the Seller in its sole discretion may
cancel the transfer of a Tax Lien or otherwise reverse the transfer thereof (a ‘repurchase’), provided
the underlying tax claim has not been previously satisfied. Such repurchase may be made by Seller
by paying Purchaser an amount determined in accordance with O.R.C. Section 5721.34.”).
{¶25} After we listened to the parties’ arguments at oral hearing, appellees filed a
joint motion with this court on November 8, 2012, to correct the record on appeal.
Appellees seek through the affidavit of a Fiscal Officer 1 to correct the timing of the
Treasurer’s reacquisition of GLS Capital’s Tax Certificate Nos. 11522042-98,
11522042-99, 11522042-00, and 11522042-01S. According to the affidavit, these
certificates were voided and properly returned to the Treasurer prior to May 5, 2006. We
allowed appellees’ joint motion under App.R. 9(E) in order to supplement the record for
the trial court upon remand.
{¶26} Because of our ruling that the trial court, and not this court, should
determine the validity of the Foreclosure Decree, the joint motion does not alter our
opinion. The trial court failed to even consider whether the Treasurer could reclaim or
repurchase the tax certificates. A review of the magistrate’s decision reveals that she did
not consider the validity of the tax certificates underlying the Foreclosure Decree, and
thus bypassed the initial step of determining the validity of the Foreclosure Decree. The
magistrate, rather, accepted the validity of the Foreclosure Decree in her opinion, and
proceeded to assess Davet’s claims. The magistrate stated, “[t]he Magistrate finds that
on 11/27/2007 a final judgment was rendered in the tax foreclosure case of James
Rokakis, as Treasurer v. Richard F. Davet, et al., Case No. 06-590884.” In other words,
the magistrate, and thus the trial court in adopting the magistrate’s decision, did not
consider whether the Foreclosure Decree was null and void and, if necessary, the effect of
a bona fide purchaser for value. The issue of whether the Treasurer used valid tax
certificates as the basis for foreclosing on Davet’s property was not decided by a court of
competent jurisdiction, and Davet is not precluded from relitigating this issue. Compare
Ledyard v. Plymouth Park Tax Serv., LLC, 8th Dist. No. 97807, 2012-Ohio-3817.
{¶27} Without a determination of whether the Foreclosure Decree was valid, the
trial court’s remaining conclusions are all premature. Upon remand, the trial court must
examine the tax certificates at issue and determine whether the Treasurer was a valid
holder of any of the tax certificates at the time the County Foreclosure action was filed.
Moreover, the court must ascertain whether the Treasurer had standing to invoke the
court’s jurisdiction and the validity of the judgment rendered therein.
{¶28} Accordingly, Davet’s assignment of error is sustained.
{¶29} Judgment reversed and cause remanded to the trial court for a determination
of the validity of the Foreclosure Decree.
It is ordered that appellant recover from appellees 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
PATRICIA ANN BLACKMON, P.J., and
FRANK D. CELEBREZZE, JR., J., CONCUR