AMM Peric Property Invest., Inc. v. Cleveland , 2014 Ohio 821 ( 2014 )

[Cite as AMM Peric Property Invest., Inc. v. Cleveland, 2014-Ohio-821.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 99848
AMM PERIC PROPERTY
INVESTMENT, INC., ET AL.
PLAINTIFFS-APPELLANTS
vs.
CITY OF CLEVELAND
DEFENDANT-APPELLEE
JUDGMENT:
REVERSED AND REMANDED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-753463
BEFORE: Stewart, P.J., Celebrezze, J., and Keough, J.
RELEASED AND JOURNALIZED: March 6, 2014
ATTORNEYS FOR APPELLANTS
Scott H. Schooler
Helen Forbes Fields
Forbes, Fields & Associates
700 Rockefeller Building
614 W. Superior Avenue
Cleveland, OH 44113
ATTORNEYS FOR APPELLEE
Barbara A. Langhenry
City of Cleveland Law Director
BY: Susan M. Bungard
Assistant Law Director
City of Cleveland, Law Department
Cleveland City Hall
601 Lakeside Avenue, Room 106
Cleveland, OH 44106
MELODY J. STEWART, P.J.:
{¶1} Plaintiff-appellant AMM Peric Property Investment, Inc. and its principal,
Zvonimir J. Peric 1 (collectively “Peric”), owned an outbuilding located in the city of
Cleveland that suffered structural damage after being struck by a drunk driver. About
four months after the accident — months in which Peric had been in communication with
the city’s building department — the contractor Peric hired to make repairs to the
building applied for a building permit but was denied the permit because the city could
not determine whether the building was residential or commercial. Three days later, the
city demolished the building and an adjacent garage because it was an “emminent [sic]
danger and peril to human life.” After demolishing the structures, the city sent Peric
written notice of the condemnation and a bill for demolition services.
{¶2} Peric filed this action claiming that the city’s conduct deprived him of due
process and that it acted negligently by demolishing the buildings; the city counterclaimed
for the cost of demolition. The city sought summary judgment on several grounds,
among them the affirmative defense that Peric failed to exhaust administrative remedies
by appealing to the city’s Board of Building Standards and Building Appeals (the
“board”). Peric argued that an administrative appeal would have been futile because the
buildings had been demolished without prior notice. The court found that the city’s
administrative appeals process provided an adequate post-deprivation process and to
Peric is a retired building inspector for the city.
1
resort to that process would not have been a vain act even though the buildings were
demolished. The court also ordered Peric to pay the city’s demolition costs finding that
the city had no requirement to provide him notice of an emergency demolition.
I
{¶3} The affirmative defense of exhaustion of administrative remedies states that a
party seeking relief from an administrative decision must pursue available administrative
remedies before pursuing action in a court. Noernberg v. Brook Park, 63 Ohio St.2d 26,
29, 406 N.E.2d 1095 (1980), citing State ex rel. Lieux v. Westlake, 154 Ohio St. 412, 96
N.E.2d 414 (1951). The idea behind the defense is that administrative agencies have
developed “experience and expertise” and that the courts want to give agencies the
opportunity to correct their own errors and compile a record before the parties commence
judicial review. Dworning v. Euclid, 119 Ohio St.3d 83, 2008-Ohio-3318, 892 N.E.2d
420, ¶ 9.
{¶4} The rule that a party exhaust administrative remedies is not absolute: there is
no need to pursue administrative remedies if doing so would be a futile or a vain act.
Driscoll v. Austintown Assocs., 42 Ohio St.2d 263, 275, 328 N.E.2d 395 (1975). Futility
in this context means not that the administrative agency would not grant the requested
relief, but that the administrative agency lacks the authority or power to grant the relief
sought. State ex rel. Teamsters Local Union No. 436 v. Bd. of Cty. Commrs., 132 Ohio
St.3d 47, 2012-Ohio-1861, 969 N.E.2d 224, ¶ 24, citing Nemazee v. Mt. Sinai Med. Ctr.,
56 Ohio St.3d 109, 115, 564 N.E.2d 477 (1990).
II
{¶5} The city’s motion for summary judgment argued, without elaboration, that its
ordinances provided an administrative remedy for Peric by way of an appeal to the city’s
Board of Building Standards and Building Appeals. It cited Cleveland Codified
Ordinances 3103.20(e)(1), which states that “[a]n appeal may be made by any person
aggrieved, or by the head of any department or division of the City.” Its argument,
essentially, was that the city provided a right of appeal at which the board could have
reviewed the decision to condemn and demolish the buildings, Peric failed to file an
appeal after his buildings had been demolished, so he failed to exhaust his administrative
remedies.
{¶6} The difficulty with the city’s argument is that even if the board determined
that the demolition of Peric’s buildings was unjustified, Cleveland Codified Ordinances
3103.20(e)(1) does not provide the board with any ability to provide a post-deprivation
remedy under the circumstances. An administrative remedy may be inadequate “because
of some doubt as to whether the agency was empowered to grant effective relief.”
Gibson v. Berryhill, 411 U.S. 564, 575, 93 S.Ct. 1689, 36 L.Ed.2d 488 (1973), fn. 14.
An agency may be competent to adjudicate the issue presented, but still lack authority to
grant the type of relief requested. McNeese v. Bd. of Edn. for Community Unit School
Dist. 187, 373 U.S. 668, 675, 10 L.Ed.2d 622, 83 S.Ct. 1433 (1963).
{¶7} To say that the existence of an appeal constitutes an adequate remedy begs
the question of what type of remedy the board could grant under the circumstances.
Peric’s due process claim under 42 U.S.C. 1983 sought monetary relief. Nothing in the
city’s ordinances authorizes the board to grant monetary relief and the city does not argue,
nor did the court find, that the board had the ability to grant monetary relief. It is true
that Cleveland Codified Ordinances 3103.20(g)(2) states that if the board reverses any
decision made by an administrative officer, the administrative officer “shall take action
immediately in accordance with such decision.” But that section says nothing about the
board’s ability to award monetary damages, much less its ability to force the city to pay
such damages when it is not otherwise authorized by ordinance to grant them. The
dissenting opinion recognizes this problem when it says that Peric can file a mandamus
action to seek just compensation, but that very suggestion demonstrates why the
administrative appeal in this case is an inadequate remedy.
{¶8} The board’s seeming inability to award monetary damages if it were to decide
an appeal in Peric’s favor is why we find the court’s reliance on Collins v. Cleveland,
N.D.Ohio No. 1:11CV2221, 2010 U.S. Dist. LEXIS 153518 (Oct. 24, 2012), to be
misplaced. In Collins, the city demolished Collins’s house on an emergency basis,
without notice, after a house fire made it a hazard. Collins filed constitutional claims in
federal court, but the district judge found that he failed to exhaust his administrative
remedies because he did not appeal to the board. The district court judge did not
consider whether the appeal authorized by Cleveland Codified Ordinances 3103.20(e)
constituted an adequate remedy, so we do not consider that opinion persuasive.
{¶9} Apart from the court’s failure in Collins to address whether an appeal to the
board constituted an adequate remedy, is the factual distinction that the city’s demolition
of Peric’s property did not appear to have been made on an emergency basis as it was in
Collins. Cleveland Codified Ordinances 3103.09(j) permits its director of building and
housing to act on an emergency basis (i.e., without prior notice) to make safe or remove
any building or structure deemed to “involve immediate danger to human life or health.”
The city argues that this section gave it the right to demolish Peric’s buildings without
prior notice and that it did so on that basis. The undisputed facts show otherwise: the
city determined on April 9, 2009, that the outbuilding constituted an “emminent [sic]
danger and peril to human life,” but waited until April 24, 2009, to demolish it, and only
then after it knew that Peric’s contractor was applying for permits to commence repairs.
By waiting two weeks to demolish the building, the city did not appear to believe that the
building posed such an “immediate” danger to the public safety such that it could be
demolished without prior notice.
{¶10} The city’s argument that it demolished the building on an emergency basis
without notice contradicts another of the city’s arguments — that Peric had been given
prior notice of condemnation at the time his contractor applied for a building permit.
The city claims a clerk in the building department verbally informed Peric’s contractor
that the building had been condemned, so Peric had the opportunity to file an appeal, at
which point the board would have been forced to stay any demolition. See Cleveland
Codified Ordinances 3103.20(e)(3). Peric disputed whether he had been given prior
notice of condemnation, and argued in any event that verbal notification, if given, did not
comply with Cleveland Codified Ordinances 3103.09(e)(1) that requires the director to
give advance, written notice of condemnation.
{¶11} In addition to finding that the board lacked the ability to award monetary
damages, we likewise find nothing in the city’s ordinances that would suggest that the
board could assess attorney fees against the city consistent with Peric’s due process claim.
Certainly, a board of building standards would have no particular expertise in awarding
legal fees such that the courts would be expected to defer to it. So even if the board was
to determine that the director failed to comply with notice requirements or that an
emergency demolition was unwarranted under the circumstances, that finding would be
an incomplete remedy — akin to a finding of liability without the power to award
damages. Unlike situations where the board can address findings of building code
violations before a property is demolished, a post-deprivation review leaves the board
powerless to make the property owner whole if it was to find in favor of the property
owner.
{¶12} As with all affirmative defenses in civil cases, the defendant bears the
burden of proof. MatchMaker Internatl., Inc. v. Long, 100 Ohio App.3d 406, 408, 654
N.E.2d 161 (9th Dist.1995). And as the party seeking summary judgment, the city had
the initial burden of establishing the absence of any material facts and that it was entitled
to judgment as a matter of law. See Civ.R. 56(C); Dresher v. Burt, 75 Ohio St.3d 280,
293, 662 N.E.2d 264 (1996). It was thus required to show more than the availability of
an administrative appeal — it had to establish for purposes of summary judgment that the
administrative appeal provided by Cleveland Codified Ordinances 3103.20(e) constituted
an adequate remedy; that is, the appeals process could compensate Peric in the event the
city was found to have wrongfully taken Peric’s property. The city failed to carry its
burden of establishing its right to judgment as a matter of law on the affirmative defense
of exhaustion of administrative remedies, so the court erred by granting judgment on that
basis. Likewise, summary judgment in favor of the city for demolition costs must be
reversed.
{¶13} This cause is reversed and remanded to the trial court for further
proceedings consistent with this opinion.
It is ordered that appellants recover of appellee their 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 Cuyahoga
County Court of Common Pleas 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.
MELODY J. STEWART, PRESIDING JUDGE
FRANK D. CELEBREZZE, JR., J., CONCURS;
KATHLEEN ANN KEOUGH, J., DISSENTS
WITH SEPARATE OPINION
KATHLEEN ANN KEOUGH, J., DISSENTING:
{¶14} I respectfully dissent. I would affirm the trial court’s decision in its
entirety.
{¶15} Ohio law has established that where an administrative remedy is available, a
party must exhaust such administrative relief prior to seeking court action. Noernberg v.
Brook Park, 63 Ohio St.2d 26, 29, 406 N.E.2d 1095 (1980), citing State ex rel. Lieux v.
Westlake, 154 Ohio St. 412, 96 N.E.2d 414 (1951). The purpose of the exhaustion
doctrine is to afford the trial court with an adequate factual record upon which to make an
informed decision and to promote judicial economy through the resolution of these
disputes without the premature need for judicial intervention. See Nemazee v. Mt. Sinai
Med. Ctr., 56 Ohio St.3d 109, 564 N.E.2d 477 (1990). The majority finds that
exhaustion of the administrative remedy would have been futile or a vain act; thus,
summary judgment on this ground was improper. I disagree.
{¶16} In this case, the fact that the parties disagree whether the demolition of
Peric’s property was properly declared an emergency (the underlying issue) makes the
administrative appeal to the board anything but futile. Peric, a retired city of Cleveland
building inspector who presumably was aware of the policies and procedures of the
Cleveland Department of Building and Housing, could have appealed the condemnation
and demolition orders through an administrative post-deprivation hearing. Therefore, the
factual record could have been established before the board, and the board could have
made the determination whether the condemnation order and subsequent demolition was
proper and properly declared an emergency. The post-deprivation hearing affords
property owners due process to challenge the condemnation order and demolition of their
property when it is done so on an emergency basis. See generally Collins, N.D.Ohio No.
1:11CV221, 2012 U.S. Dist. LEXIS 153518, *15 (Oct. 24, 2012); Babandi v. Allstate
Indemn. Ins. Co., N.D. Ohio No. 1:07CV329, 2008 U.S. Dist. LEXIS 27222, *13-14
(Mar. 31, 2008).
{¶17} Accordingly, if it was determined at the administrative hearing that the
demolition was not an emergency, then Peric would have been entitled to a
pre-deprivation notice. If the record supports that Peric did not receive such notice, the
city would have violated his due process rights; thus, rendering the demolition an
unlawful taking. If it was found that it was an unlawful taking, Peric could have filed the
requisite mandamus action to seek just compensation. “In order to obtain compensation
for an unlawful taking, a mandamus action must be filed to compel public authorities to
conduct appropriation proceedings.” Palco v. Springfield, 2d Dist. Clark No. 2004 CA 80,
2005-Ohio-6838, ¶ 23, citing Florian v. Bd. of Cty. Commrs. of Hamilton Cty., 1st Dist.
Hamilton No. C-800843 (Aug. 5, 1981), unreported; Huelsmann v. State, 56 Ohio App.2d
100, 108, 381 N.E.2d 950 (10th Dist.1977); State ex rel. Levin v. Sheffield Lake, 70 Ohio
St.3d 104, 108, 1994-Ohio-385, 637 N.E.2d 319; see also Silver v. Franklin Twp., 966
F.2d 1031, 1035 (6th Cir.1992).
{¶18} All of these facts could have been established in an administrative appeal
and prior to judicial intervention. Accordingly, I would find that the trial court was
correct in granting summary judgment in favor of the city.