Lawnfield Properties v. Mentor , 115 N.E.3d 642 ( 2018 )

[Cite as Lawnfield Properties v. The City of Mentor, 2018-Ohio-2447.]
IN THE COURT OF APPEALS
ELEVENTH APPELLATE DISTRICT
LAKE COUNTY, OHIO
LAWNFIELD PROPERTIES, LLC, : OPINION
Plaintiff-Appellant, :
CASE NO. 2017-L-130
- vs - :
THE CITY OF MENTOR, :
Defendant-Appellee. :
Civil Appeal from the Lake County Court of Common Pleas, Case No. 2017 CV
000571.
Judgment: Affirmed.
James V. Aveni and Joshua T. Morrow, Ranallo & Aveni, L.L.C., 6685 Beta Drive,
Cleveland, OH 44143 (For Plaintiff-Appellant).
Richard A. Hennig, Hennig, Szeman & Klammer Co., L.P.A., 10 West Erie Street, Suite
106, Painesville, OH 44077 (For Defendant-Appellee).
CYNTHIA WESTCOTT RICE, J.
{¶1} Appellant, Lawnfield Properties, LLC, appeals the judgment of the Lake
County Court of Common Pleas granting appellee, the city of Mentor’s, Civ.R. 12(B)(6)
motion to dismiss appellant’s amended complaint for an injunction. This case involves
the taking by Mentor of a strip of appellant’s property for a road-widening project. The
main issue is whether the trial court erred in finding that the Lake County Probate Court,
rather than the trial court, has jurisdiction to adjudicate appellant’s entitlement to
residual damages. For the reasons that follow, we affirm.
{¶2} The statement of facts that follows is derived from appellant’s amended
complaint and its attachments. Appellant owns a hotel/restaurant on Mentor Ave. in
Mentor, Ohio. In early 2016, Mentor advised appellant that it intended to appropriate a
strip of frontage of its property along Mentor Ave. for the purpose of widening that road.
Shortly thereafter, appellant attended an on-site meeting with Dennis Keeney, Mentor’s
appraiser, during which appellant advised him of specific items of residual damage that
it expected as a result of the appropriation. These included the relocation of a sign, the
loss of parking spaces in its parking lot, the loss of one of its multiple curb cuts, and the
temporary loss of use of its outdoor patio and swimming pool during construction of the
project.
{¶3} Mr. Keeney, in his April 13, 2016 appraisal report, concluded the fair
market value of the property to be appropriated was $37,665. He further concluded that
the instant appropriation would not result in residual damage.
{¶4} On June 20, 2016, Mentor provided appellant with a copy of Mr. Keeney’s
appraisal and a formal offer to purchase the property for the amount determined by Mr.
Keeney to be the fair market value of the property.
{¶5} One month later, on July 22, 2016, appellant’s counsel sent a letter to
Mentor, rejecting its offer, citing Mr. Keeney’s failure to appraise the value of appellant’s
anticipated residual damage. In that letter, appellant’s counsel stated that appellant had
retained another appraiser, Tom Horner, to evaluate Mr. Keeney’s appraisal, and that
appellant would provide a settlement demand to Mentor once Mr. Horner completed his
2
review. However, appellant never provided Mentor with its own appraisal or with a
settlement demand. On October 11, 2016, appellant’s counsel sent Mentor a second
letter supplementing his first. In this letter, appellant’s counsel asserted that the city’s
reliance on Mr. Keeney’s appraisal was “unwarranted” and “unlawful” and accused
Mentor of not making a good faith offer. Contrary to appellant’s argument on appeal,
his counsel in these two letters never asked Mentor to obtain an amended appraisal to
value its residual damage or to present a new offer in accord with same; appellant
simply rejected Mentor’s offer.
{¶6} On October 24, 2016, Mentor initiated appropriation proceedings by
serving appellant with its Notice of Intent, which included Mr. Keeney’s appraisal and
Mentor’s “good faith offer” to purchase the property based on Mr. Keeney’s appraisal.
{¶7} Thereafter, on December 22, 2016, Mentor filed an appropriation action in
the Lake County Probate Court, Mentor v. Lawnfield Properties, LLC, Case No. 16-CV-
189, which remains pending. Appellant concedes that, because Mentor’s appropriation
action was a “quick take” for road construction purposes, appellant was statutorily
barred from seeking to enjoin Mentor from the actual taking of the property.
{¶8} Instead, on April 13, 2017, appellant filed a complaint for an injunction in
the trial court (general division), alleging that Mentor’s appropriation action was
procedurally defective because it failed to include a good faith offer that compensated
appellant for the alleged residual damage to its property. In its amended complaint,
appellant requested that the trial court enjoin Mentor from pursuing its appropriation
action until such time as Mentor obtains an amended appraisal that values appellant’s
residual damage and makes an offer based on such amended appraisal.
3
{¶9} On June 1, 2017, Mentor filed a Civ.R. 12(B)(6) motion to dismiss
appellant’s complaint for failure to state a claim. After considering the parties’ briefs, the
trial court granted Mentor’s motion to dismiss, finding that appellant’s challenge “should
be brought before the Lake County Probate Court in the pending appropriation case
where the issue of just compensation can be determined.” Appellant appeals the trial
court’s judgment, asserting two assignments of error. For its first, it alleges:
{¶10} “The trial court erred by holding that the Lake County Probate Court
maintains competent jurisdiction to rule upon Lawnfield’s request for injunctive relief.”
{¶11} I. THE PROBATE COURT RETAINS JURISDICTION TO PROCEED TO
JURY TRIAL ON THE ISSUE OF JUST COMPENSATION, INCLUDING
APPELLANT’S ALLEGED ENTITLEMENT TO RESIDUAL DAMAGES.
{¶12} “Whether a trial court has subject-matter jurisdiction is a question of law
that we review de novo.” Bank of N.Y. Mellon Trust Co. v. Shaffer, 11th Dist. Geauga
No. 2011-G-3051, 2013-Ohio-3205, ¶33. Two courts have potential subject-matter
jurisdiction in appropriation matters: the common pleas court and the probate court of
the county in which the property is located. R.C. 163.01(D). The United States and Ohio
Constitutions guarantee that private property shall not be taken for public use without
just compensation. State ex rel. Duncan v. Mentor City Council, 105 Ohio St. 3d 372,
2005-Ohio-2163, ¶11.
{¶13} Our decision in this matter requires a review of Ohio’s Eminent Domain
Act, at R.C. Chapter 163. Appellant does not argue that any section of the Act is
ambiguous or unclear. “‘Where the language of a statute is plain and unambiguous and
conveys a clear and definite meaning, there is no occasion for resorting to the rules of
4
statutory interpretation. To interpret what is already plain is not interpretation, but
legislation, which is not the function of the courts, but of the general assembly. * * * An
unambiguous statute is to be applied, not interpreted.’” Sears v. Weimer, 143 Ohio St.
312, 316 (1944), quoting 37 Ohio Jurisprudence, 514, Section 278.
{¶14} R.C. 163.04(B) requires that an appropriating agency provide a “good faith
offer” to purchase real property before filing its petition for appropriation. Further, an
agency may appropriate the property only after the agency obtains an appraisal of the
property and provides a copy of it to the owner. R.C. 163.04(C).
{¶15} R.C. 163.59(D) provides that the amount offered by the agency shall not
“be less than the agency’s approved appraisal of the fair market value of the property.”
An appraisal is defined as “a written statement independently and impartially prepared
by a qualified appraiser setting forth an opinion of defined value of * * * property * * *,
supported by the presentation and analysis of relevant market information.” (Emphasis
added.) OAC 5501:2-5-01(B)(3).
{¶16} R.C. 163.59(D) also requires the agency to state in its offer the just
compensation for (1) the property acquired and for (2) any residual damage to the
property after the taking. “Residual damage” is damage to the portion of property
remaining after the other portion is taken. Such damage is measured by the difference
between the pre- and post-appropriation fair market value of the residue. Hilliard v. First
Industrial., L.P., 158 Ohio App. 3d 792, 2004-Ohio-5836, ¶5 (10th Dist.). Upon receipt of
a good faith offer, the owner is permitted to present material that the owner believes is
relevant to determining the fair market value of the property and to suggest
5
modifications in the proposed terms of the acquisition. R.C. 163.59(D). However, the
agency is merely required to “consider” the landowner’s presentation. Id.
{¶17} Further, R.C. 163.08 establishes what issues the owner can contest in an
appropriation action. That statute provides, in pertinent part:
{¶18} Any owner may file an answer to such petition. * * * The agency’s
right to make the appropriation, the inability of the parties to agree,
and the necessity for the appropriation shall be resolved by the
court in favor of the agency unless such matters are specifically
denied in the answer * * *, provided, when taken * * * for the
purpose of making or repairing roads, which shall be open to the
public, * * * an answer may not deny the [agency’s] right to make
the appropriation, the inability of the parties to agree, or the
necessity for the appropriation. * * * (Emphasis added.)
{¶19} Appellant argues that R.C. 163.08 divests the appropriating court, here,
the probate court, of subject-matter jurisdiction to hear a landowner’s challenge to the
authority of the appropriating agency when the purpose of the take is to build a public
road. Appellant further argues that R.C. 163.08 permits a landowner to proceed in a
separate action in the general division to enjoin the appropriation proceedings and that
the general division has exclusive jurisdiction to determine the agency’s authority to
appropriate. In support, appellant cites Cleveland v. Brook Park, 103 Ohio App. 3d 275,
280-281 (8th Dist.1995).
{¶20} Specifically, appellant argues that, because Mentor’s offer was based on
an appraisal that did not include compensation for residual damage, the offer was not a
good faith offer. As such, appellant argues that Mentor lacks authority to pursue its
appropriation action and that the probate court lacks jurisdiction to adjudicate the action.
Thus, appellant argues it is entitled to an injunction to prevent Mentor from pursuing its
appropriation action in the probate court until Mentor: (1) obtains an amended appraisal
6
(that includes an amount for residual damage) and then (2) amends its offer to reflect
such amended appraisal.
{¶21} In contrast, Mentor argues that appellant is not challenging Mentor’s
authority to appropriate. Rather, Mentor argues that appellant’s residual-damage
argument is merely a challenge to the methodology employed by Mr. Keeney in
preparing his appraisal and to the amount of the appraisal and that, unlike a challenge
to the agency’s authority, this does not provide grounds for a separate injunction action.
Further, Mentor argues that, per R.C. 163.59, its offer was not required to include an
amount for residual damage (since its appraiser determined there was no such
damage), but that, even if it was, Mentor’s failure to include such amount would not
provide grounds to dismiss the appropriation case in probate court. In support, Mentor
relies on Wadsworth v. Yannerilla, 170 Ohio App. 3d 264, 2006-Ohio-6477 (9th Dist.).
{¶22} In Wadsworth, the Ninth District stated that “R.C. 163.59(D) requires that
an appropriating agency establish an amount it considers just compensation for the
property and that that amount be no less than the approved and appraised fair-market
value.” Wadsworth at ¶19. Thus, “if an agency presents a landowner with a fair-market
valuation, it has complied with R.C. 163.59.” Wadsworth, supra. “Further, and more
important, the requirement of R.C. 163.04 is satisfied by an appropriating agency’s offer
of a fair-market valuation on the property.” Wadsworth, supra. The court held that “an
offer of fair-market value constitutes a valid attempt to reach agreement with the
landowners” and that because “Wadsworth made such an offer,” it “negotiated in good
faith.” Id.
7
{¶23} Further, the Ninth District, in Wadsworth, considered an argument similar
to the one made by appellant here. The appellants in Wadsworth argued that the city
had failed to negotiate in good faith because it did not consider their concerns regarding
the effect of the appropriation on their private wells and farming operation. The Ninth
District rejected this argument, holding:
{¶24} Wadsworth was not required to provide the landowners with any
guarantees, nor was it required to respond to [their] concerns.
Wadsworth was required to tender an offer of fair-market value, to
give the landowners reasonable time to contemplate the offer, and
to consider the landowners’ presentations and suggestions. R.C.
163.59(D). The record indicates that Wadsworth complied with the
requirements of R.C. 163.59(D). (Emphasis added.) Wadsworth
at ¶20.
{¶25} In any event, the Ninth District, in Wadsworth, supra, held that, even if the
city failed to comply with any of the procedural requirements in R.C. 163.59, this would
not justify dismissal of the appropriation. Wadsworth at ¶23. The Ninth District noted
that R.C. 163.52(A) provides: “The failure of an acquiring agency to satisfy a
requirement of section 163.59 of the Revised Code does not affect the validity of any
property acquisition by * * * condemnation.” The Ninth District explained:
{¶26} [E]ven were we to find that Wadsworth did not comply with R.C.
163.59, that failure to comply would “not affect the validity of any
property acquisition by * * * condemnation.” R.C. 163.52(A).
Relying on R.C. 163.52(A), the [Eighth District, in Weir v. Kebe, 29
Ohio App. 3d 53, 55 (8th Dist.1985),] held that a violation of R.C.
163.59 by an appropriating agency could not serve as a basis for
dismissing the appropriation action. Therefore, based on Weir and
R.C. 163.52(A), this court concludes that a potential violation of
R.C. 163.59 would not serve as a basis for dismissing Wadsworth’s
appropriation petitions. Wadsworth at ¶23. (Emphasis added.)
{¶27} However, after holding that a potential violation of R.C. 163.59 would not
affect the validity of the taking, the Ninth District in Wadsworth was quick to point out:
8
{¶28} [A]lthough we have found that Wadsworth negotiated in good faith,
the landowners have not been foreclosed from raising concerns
about their land and water supply. The landowners have the right to
present their concerns and justifications for a greater valuation of
the [appropriated] easements before a jury. Under the law, a jury
will decide whether the easements will affect the landowners’ water
supply or, in [the case of one of the appellants], its ability to operate
as a business, and, if so, how much such an effect is worth. See,
generally, R.C. 163.09 and 163.14. Wadsworth, supra, at ¶24.
{¶29} Significantly, appellant does not attempt to distinguish or even mention
Wadsworth, the logic of which we find persuasive. Applying the principles set forth in
Wadsworth here, since Mentor offered appellant the fair market value of its property, as
determined by its appraiser, the offer was made in compliance with R.C. 163.04 and
163.59 and thus was made in good faith. Further, Mentor gave appellant reasonable
time, i.e., six months, to contemplate the offer, and Mr. Keeney considered appellant’s
presentation regarding residual damage, thus fully complying with R.C. 163.59(D). Mr.
Keeney, as a certified appraiser, exercised his independent judgment in arriving at the
fair market value of appellant’s property and then provided this amount to Mentor, which
the city then offered to appellant. While Mentor was required to “consider” appellant’s
information regarding residual damage, per R.C. 163.59(D), Mentor was not required to
act on it. However, even if Mentor was required by R.C. 163.59(D) to offer an amount
for appellant’s residual damage, Mentor’s failure to do so would not affect the validity of
the appropriation or justify its dismissal. R.C. 163.52(A).
{¶30} Further, since appellant’s argument concerns the amount of compensation
to which it claims to be entitled (which is within the probate court’s jurisdiction) rather
than Mentor’s authority to appropriate (which is not within that court’s jurisdiction), the
trial court did not err in concluding that the probate court has jurisdiction to proceed with
9
the compensation trial at which appellant will be free to present to the jury whatever
relevant evidence it wishes on the issue of just compensation, including its residual
damage.
{¶31} For its second and last assigned error, appellant contends:
{¶32} “The trial court erred in granting Mentor’s Motion to Dismiss Lawnfield’s
Complaint for its alleged failure to state a claim.”
{¶33} II. APPELLANT’S COMPLAINT FAILED TO STATE A CLAIM FOR BAD
FAITH AGAINST MENTOR.
{¶34} This court has held that “‘[a] motion to dismiss for failure to state a claim
upon which relief can be granted is procedural and tests the sufficiency of the
complaint.’” Manigault v. Chilson, 11th Dist. Trumbull No. 2015-T-0037, 2015-Ohio-
5223, ¶9, quoting State ex rel. Hanson v. Guernsey Cty. Bd. Of Commrs., 65 Ohio St. 3d
545, 548 (1992). In considering the propriety of the dismissal, “we accept all factual
allegations in the complaint as true and draw all reasonable inferences in the non-
moving party’s favor.” Transky v. Ohio Civil Rights Comm’n., 193 Ohio App. 3d 354,
2011-Ohio-1865, ¶11 (11th Dist.). If, after considering the complaint accordingly, there
is no set of facts consistent with appellant’s allegations that would permit recovery, the
judgment of dismissal will be affirmed. Id. A court of appeals reviews a trial court’s
judgment dismissing a complaint pursuant to Civ.R. 12(B)(6) using a de novo standard.
Goss v. Kmart Corp., 11th Dist. Trumbull No. 2006-T-0117, 2007-Ohio-3200, ¶17.
{¶35} The sole ground offered by appellant in opposition to Mentor’s motion to
dismiss is that appellant’s complaint stated a claim “for Mentor acting in bad faith” by not
providing a good faith offer. However, because we hold Mentor’s offer was made in
10
good faith, it follows that the complaint failed to state a claim. Our holding renders moot
appellant’s arguments under this alleged error. “However, courts are vested with the
jurisdiction to address moot issues when such issues are capable of repetition yet
evade review. * * * Courts are also vested with jurisdiction to address moot issues when
those issues concern an important public right or a matter of great public or general
interest.” Citizens Word v. Canfield Twp., 152 Ohio App. 3d 252, 2003-Ohio-1604, ¶18
(7th Dist.). While appellant’s arguments are largely moot, a few points are worth
mentioning.
{¶36} Appellant argues that Mr. Keeney failed to even consider the possibility of
residual damages, as evidenced by the following language in his appraisal:
{¶37} The purpose of this appraisal report is to estimate the
compensation for the land taken * * *. This report has been
developed in compliance with [the Uniform Standards of
Professional Appraisal Practice] and with Section 5501:2-5-06(C) of
the Ohio Administrative Code. This report is used when the
acquisition is a partial taking and it is apparent the taking creates a
simplistic valuation problem with no loss in market value of the
residue property (damages), and the estimated compensation is
$65,000 or less.
{¶38} However, this language does not support appellant’s bad-faith argument.
Rather, it shows Mr. Keeney complied with professional standards for appraisers in
concluding the taking would not result in residual damage.
{¶39} Contrary to appellant’s argument, appellant’s counsel never asked Mentor
to obtain an amended appraisal to compensate for residual damage and thus Mentor
never refused to comply with such request. While appellant argues that, per R.C.
163.59(D), Mentor was required to amend its appraisal to include compensation for
residual damage, nothing in that statute suggests that an appraiser is required to amend
11
his appraisal to include compensation for residual damage after previously concluding,
based on the information provided to him by the owner, that the property will not sustain
such damage.
{¶40} Further, in arguing that Mentor had the statutory obligation to obtain an
amended appraisal to compensate appellant for its alleged residual damage, appellant
misconstrues R.C. 163.59(E). That section provides, in pertinent part: “If information
presented by the [land]owner * * * indicates the need for new appraisal information, * * *
the head of the acquiring agency concerned shall have the appraisal updated or obtain
a new appraisal.” (Emphasis added.) However, since Mr. Keeney concluded appellant
would not sustain residual damage, Mentor reasonably concluded that appellant’s
information did not indicate the need for an amendment.
{¶41} Finally, the facts contained in the complaint and its attachments support a
finding that the complaint failed to state a claim for bad faith: (1) Mentor presented an
offer to appellant of fair market value as determined by its appraiser; (2) Although
appellant’s counsel advised Mentor that appellant had retained its own appraiser by July
2016, appellant never submitted an appraisal challenging Mr. Keeney’s appraisal; and
(3) the complaint does not challenge Mr. Keeney’s qualifications.
{¶42} Assuming the truth of the allegations in the amended complaint and
drawing all inferences to be drawn therefrom in favor of appellant, as we are required to
do, the trial court did not err in implicitly finding that appellant’s complaint failed to state
a claim against Mentor.
12
{¶43} For the reasons stated in this opinion, the assignments of error lack merit
and are overruled. It is the order and judgment of this court that the judgment of the
Lake County Court of Common Pleas is affirmed.
THOMAS R. WRIGHT, P.J., concurs,
COLLEEN MARY O’TOOLE, J., concurs in judgment only.
13