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Strongsville Board of Education et al. v. Cuyahoga County Board of Revision, Case no. 2005-1638
State Board of Tax Appeals
Morrow County Airport Authority v. Whetstone Flyers, Ltd., Case no. 2005-1802
5th District Court of Appeals (Morrow County)
Elston v. Howland Local Schools, Case nos. 2005-1993 and 2005-2032
11th District Court of Appeals (Trumbull County)
In Re: Brayden James, Case no. 2005-1994
1st District Court of Appeals (Hamilton County)
In Re: Walters and Wright v. Atheena Walters, Case nos. 2006-0613 and 2006-0614
5th District Court of Appeals (Fairfield County)
Strongsville Board of Education et al. v. Cuyahoga County Board of Revision, Case no. 2005-1638
State Board of Tax Appeals
ISSUE: Is the recent sale price of a commercial building and the surrounding land presumed to be the actual value of the property for tax purposes when the sale included a long-term contractual commitment by the seller to lease back the property from the buyer at a stated rent?
BACKGROUND: This case involves a challenge by the City of Strongsville and Strongsville Board of Education to the Cuyahoga County Auditor's 2000 and 2001 tax valuations of a 121,000 square foot office building constructed on a 21.5-acre parcel of land within that city.
At the beginning of the 2000 tax year the building was owned by Ceres Group Inc. In August 2001, Ceres sold the land and building to Royalton Investors, LLC and Big T Investments for $16 million. The sale contract included a commitment by Ceres to continue to occupy the property and pay rent under a 15-year lease plus option periods.
The Cuyahoga County Auditor valued the property at $8.3 million as of January 1, 2000. In March 2001 Strongsville filed a complaint with the Cuyahoga County Board of Revision (BOR) seeking a higher valuation. After the property was sold, the city and school district filed a second complaint in March 2002 asking the BOR to set the fair-market value of the land and building at the $16 million price Royalton Investors and Big T had paid to Ceres to acquire the property. The BOR set the actual value of the property for both the 2000 and 2001 tax years at $9.5 million.
The city and school board appealed the BOR ruling to the State Board of Tax Appeals (BTA). At its hearing to consider Strongsville's petition, the BTA rejected arguments that the recent sale price should be presumed to be the fair-market value of the property, and heard competing expert testimony from real estate appraisers retained by the school district and the property owners. The BTA concluded that the actual fair-market value of the disputed property was $9.5 million for the 2000 tax year and had declined slightly to $9.3 million as of Jan. 1, 2001.
The city and school district have exercised their right to appeal the BTA's ruling to the Supreme Court. They point to several recent Supreme Court decisions holding that taxing authorities should consider the price paid by a willing buyer to a willing seller for a piece of property in a recent “arms-length” sale as the presumptive fair market value of that property for tax purposes. In this case, they say, the BTA erred when it ignored the actual $16 million sale price agreed to by Ceres and the new owners in August 2001, and instead placed a significantly lower valuation on the property based on the contested opinion testimony of the property owners' expert witness.
The property owners argue that the BTA was correct when it found that the guaranteed 15-year leaseback provision included in the sale agreement between Ceres and the new owners of the property significantly increased the value of the deal to Royalton Investors and Big T because it provided them not only with ownership of the land and building, but also with a guaranteed long-term income stream from the property. The property owners point out that, at the time of the 2001 sale, Ceres needed an infusion of capital because it was facing a large “balloon” payment on its existing mortgage on the property that it could not meet from current business income. They assert that in its transaction with Royalton and Big T, Ceres was not a “willing seller” engaging in a market-based sale of property but was rather a financially endangered company that was both selling assets and taking on a significant additional financial commitment by means of the 15-year leaseback provision.
Contacts
Thomas A. Kondzer, 440.835.1200, for the
City of Strongsville & Strongsville Bd. of Education.
Richik Sarkar, 216.583.7000, for Ceres Group, Inc., Royalton Investors LLC, et al.
Morrow County Airport Authority v. Whetstone Flyers, Ltd., Case no. 2005-1802
5th District Court of Appeals (Morrow County)
ISSUE: Is an airport authority bound by the terms of a lease agreement it entered into with a private vendor when a member of the airport authority who signed the lease was also a partner in the vendor company, and therefore acted in violation of state ethics statutes?
BACKGROUND: In 1981 the Morrow County Airport Authority entered into a 20-year agreement to lease a 180-by-340 foot area of the county-owned airport to a private entity, Whetstone Flyers Ltd. The agreement granted Whetstone the right to erect and operate aircraft hangars on the leased portion of the property. The agreement required that, at the end of the original lease period, the airport authority would either purchase the hangars from Whetstone at a price to be determined through arbitration, or would enter into a new lease allowing Whetstone to continue operating the hangars on public land. One of the airport authority members who signed the lease on behalf of the county, Max Craven, was also one of several partners in Whetstone Flyers. The contract was later ratified by a vote of the county commissioners.
R.C. 2921.42 prohibits public officials from having a personal interest in a public contract, and provides criminal sanctions for violations. R.C. 308.04 bars members of an airport authority from having a personal interest in any contract with that airport authority.
When the original lease expired in 2001, the county sought a declaratory judgment that it was entitled to take possession of the hangars and was not legally bound to comply with its commitment to buy the hangars or re-lease the airport property to Whetstone. They asserted that Craven's interest in the 1981 lease was unlawful, and that this defect rendered the agreement void ab initio (from the moment it was created). The Morrow County Court of Common Pleas entered summary judgment in favor of Whetstone. On review, the 5th District Court of Appeals voted 2-1 to reverse the trial court's judgment, holding that: (1) Craven's interest in the 1981 lease was in violation of state law and therefore rendered the agreement void ab initio; and (2) The subsequent vote of the county commissioners ratifying the lease could not cure the fatal defect that the agreement was contrary to law.
Attorneys for Whetstone ask the Supreme Court to overrule the 5th District and order the airport authority to honor the terms of the lease agreement. They argue that the ethics statutes cited by the county regulate the conduct of public officials and set forth penalties for individuals who violate their requirements, but make no reference to voiding public contracts. They assert that, if the legislature had intended that any violation of these laws by a single participating public official would void a government contract, they would have included specific language in the body of the statutes stating that intention.
Even if Craven's participation in the approval and signing of the lease did render the validity of that agreement questionable, Whetstone points to prior court decisions holding that legislative enactment of an ordinance specifically ratifying an existing public contract despite potential flaws, as was done by the county commissioners in this case, is sufficient to render the disputed contract valid and enforceable.
Because the airport authority did not submit a written brief in support of its position within the time limit established by the Supreme Court's Rules of Practice, they will not participate in oral argument of the case before the Justices.
Contacts
Dennis L. Pergram, 740.363.1313, for
Whetstone Flyers, Ltd.
Tom C. Elkin, 419.946.7876, for the Morrow County Airport Authority.
Elston v. Howland Local Schools, Case nos. 2005-1993 and 2005-2032
11th District Court of Appeals (Trumbull County)
ISSUES:
BACKGROUND: Jeffrey Elston, a member of the freshman baseball team at Howland High School in Trumbull County, suffered head injuries requiring surgery when he was struck by a batted ball while pitching batting practice to a teammate. At the time he was injured, Elston was pitching from behind an “L-screen” designed to protect batting practice pitchers, but was “soft tossing” to the batter from only 30 feet away rather than throwing from the standard pitcher's mound distance of 60 feet, six inches. A hard-hit ball ricocheted off the framework of the L-screen and struck Elston, who was not required to wear a protective helmet while pitching from behind the L-screen under team rules set by head baseball coach Thomas Eschman.
Elston's parents filed suit against the Howland Local School District, alleging that, through Eschman, the district had been negligent in failing to instruct Elston and other team members in proper procedures for throwing soft-toss batting practice and in not requiring pitchers throwing soft-toss from closer than the standard pitcher's mound distance to wear a protective helmet. The Trumbull County Common Pleas Court granted summary judgment in favor of the school district. It held that, even if Eschman were shown to have been negligent, two provisions of Ohio's sovereign immunity statute rendered the district immune from civil liability for injury arising from Eschman's non-reckless acts or omissions when he was acting “within his discretion” as head baseball coach.
On review, the 11th District Court of Appeals reversed the grant of summary judgment and remanded the case to the trial court for further proceedings. The appellate panel ruled that the Elstons had raised material issues of fact regarding whether Eschman's acts or omissions in this case were covered by the sections of the sovereign immunity statute cited in the trial court's opinion.
Attorneys for the school district ask the Supreme Court to reinstate the trial court's summary judgment dismissing the Elstons' claim. They argue that the 11th District's ruling is in conflict with decisions by several other Ohio Court of Appeals districts which have held that:
(1) A head athletics coach performing his or her job duties qualifies for immunity under R.C. 2744.03(A)(3) as a school employee whose scope of discretion includes “policy-making, planning, or enforcement powers.”
(2) The immunity provided by R.C. 2744.03(A)(5) when an injury arises from “the exercise of judgment or discretion in determining … how to use equipment, supplies and personnel,” applies not only to injuries arising from the institutional policy decisions of a school board, but also to injuries that arise from the discretionary judgments of individual school employees who must interpret and apply general board policies to specific day-to-day situations that arise in operating a school.
Attorneys for the Elstons argue that the 11th District correctly applied the sovereign immunity statute when it held that:
(1) The school district did not meet its burden of proving that, under the specific facts of this case,
the actions and omissions by Eschman that resulted in injury to Jeffrey Elston involved the coach's exercise of discretion in the areas of “policy-making, planning or enforcement.”
(2) Unlike other sub-sections of R.C.2744.03, the language of Section 2744.03(A)(5) does not grant immunity for specified actions by a political subdivision or its employee, but limits the grant of immunity to situations where “the injury, death or loss … resulted from the exercise of judgment or discretion in determining whether to acquire, or how to use, equipment, supplies, etc.” In light of the specific reference to employees in other parts of the statute, they assert, the absence of such language in this sub-section must be read to limit immunity solely to the institutional decisions of a school board.
NOTE: Amicus curiae (friend of the court) briefs supporting the position of the school board have been entered by the Ohio Association of Public School Employees and AFSCME Local 4, and (jointly) by the Ohio School Boards Association, Buckeye Association of School Administrators, Ohio Association of School business Officials, Ohio Education Association and Ohio Federation of Teachers.
Contacts
Nick C. Tomino, 330.723.4656, for the
Howland Local School District.
Brian P. Kish, 330.746.8484, for Jeffrey Elston and family.
In Re: Brayden James, Case no. 2005-1994
1st District Court of Appeals (Hamilton County)
ISSUE: When a court has awarded legal custody of an abused or dependent child to a non-parent after adjudicating the natural parents to be unsuitable, does a statutory requirement that any modification of the custody order requires a prior finding that there has been a change in the child's circumstances with the nonparent violate the natural parents' “paramount” right to have custody and control of their child?
BACKGROUND: In December 1999, the Hamilton County Department of Job and Family Services removed 8-month-old Brayden James from the care of his natural parents, Damon and Jamie James, based on medical injuries suggesting physical abuse and other evidence of domestic violence. The Hamilton County Juvenile Court placed Brayden in the temporary custody of his maternal grandparents, Rick and Cynthia Hutchinson. The court subsequently found that Brayden was an abused and dependent child. In June 2000 the Jameses agreed to a reunification plan that included their completion of counseling, classes and chemical dependency assessment. When the Jameses had not complied with the terms of the reunification plan by May 2001, the court terminated the plan and awarded legal custody of Brayden to the Hutchinsons.
In February 2004, the Jameses applied to the juvenile court to modify its earlier order and return custody of Brayden to them. In reviewing their petition, the court did not require the Jameses to make a preliminary showing that there had been a material change in the circumstances of Brayden or of the Hutchinsons since the court had granted them legal custody, as required by R.C. 3109.04(E)(1)(a). Instead, the court applied a “best interest of the child” test and determined that Brayden's best interest would be served by him being returned to his natural parents. In July 2004, the Jameses assumed legal custody of their son.
The Hutchinsons appealed, arguing that the juvenile court erred by failing to require a preliminary showing of a “change in circumstances” in Brayden's life with them before considering any petition to modify the 2001 order that gave them legal custody. In an opinion affirming the trial court's decision, the 1st District Court of Appeals held that the “change in circumstances” test required by R.C. 3109.04(E)(1)(a) was unconstitutional as applied to petitions by natural parents to regain custody of their children, because such a test infringed on parents' “paramount right” to the custody and care of their children.
Attorneys for the Hutchinsons ask the Supreme Court to overrule the 1st District by ordering the juvenile court to reconsider the Jameses' custody petition, and to comply with R.C. 3109.04(E)(1)(a) by denying modification of the 2001 court order granting custody to the Hutchinsons unless the court makes a specific finding that there has been a material change in the quality or circumstances of Brayden's custodial situation with the Hutchinsons.
They argue that the juvenile court and 1st District were mistaken in holding that the Jameses retained a “paramount” constitutional right as natural parents to seek custody of Brayden after their son was adjudicated to be a dependent child and the juvenile court issued its 2001 order finding them unsuitable as parents. Under Ohio statutes and case law, they say, once a parent has been adjudicated unsuitable and legal custody has been granted to a non-parent, the natural parent no longer enjoys any presumption of a special or preemptive right to future custody. In this case, they assert, before considering the Jameses 2004 petition for modification of custody, the juvenile court was obliged to consider as a threshold question whether there had been any change in the circumstances of Brayden's custodial situation with the Hutchinsons. Absent a finding of such change, they say, the trial court was bound by R.C. 3109.04(E)(1)(a) to reject the Jameses petition and affirm the Hutchinsons' status as Brayden's permanent legal custodians.
Attorneys for Mr. and Mrs. James ask the Court to affirm the 1st District's holding that their paramount right as natural parents to custody of their son was not revoked in 2001 because the order issued by the juvenile court at that time granted “legal custody” but did not grant “permanent custody” to the Hutchinsons. They assert that the 2001 order was only temporary in its effect, and argue that the “change in circumstances” test is unconstitutional because it could permanently bar natural parents from regaining custody of their children even though an objective court would otherwise hold that the child's best interest would now be served by being reunited with its natural family.
Contacts
Stephen R. King, 513.793.2353, for
Rick and Cynthia Hutchinson.
Ross M. Evans, 513.721.5151, for Damon and Jamie James.
In Re: Walters and Wright v. Atheena Walters, Case nos. 2006-0613 and 2006-0614
5th District Court of Appeals (Fairfield County)
ISSUE: When a probate court gives notice to a natural parent regarding a hearing to consider terminating parental rights and approving the adoption of a child by a third party, does the court's failure to mention in its notice that the scheduled hearing will consider both parental consent and best-interest-of-the-child issues render the notice defective and therefore invalidate a subsequent adoption?
BACKGROUND: This case involves an effort to set aside as invalid the adoption of two minor children, Ashley and David Walters, by their stepfather, Robert Walters. The legal challenge is based on an alleged failure by the Fairfield County Probate Court to give proper notice of a hearing in the adoption proceedings to the children's natural father, William Wright.
Wright and the children's mother, Atheena Walters, who were then residents of Alabama, were divorced in 1997. In 1999, Mrs. Walters and the children moved to Lancaster, Ohio where she subsequently married Robert Walters. In July 2001, Mr. Walters filed a petition in Fairfield County Probate Court seeking to legally adopt Ashley and David. Mrs. Walters advised the court that the current residence of her ex-husband was unknown, and the court authorized the service of notice on William Wright by means of an advertisement published in the Lancaster Eagle Gazette that a hearing would be held to consider termination of his parental rights and the adoption of his children by Mr. Walters. The hearing notice published in the newspaper included language indicating that the court would consider the issue of parental consent to the adoption, but did not specifically state that at the same hearing the court would also determine whether adoption of the children by Mr. Walters was in the best interest of the children.
Wright did not appear at the scheduled hearing. Acting on the uncontested testimony of Mrs. Walters, the probate court determined that Wright's consent to the adoption was not legally required because he had failed to have any contact with the children or make any payment of child support during the preceding 12 months. At the same proceeding, the court went on to find that adoption of the children by Mr. Walters was in their best interest, and issued an order granting the adoption and thus permanently terminating Wright's parental rights.
In October 2003, Mr. Walters filed a complaint for divorce against Mrs. Walters. In connection with that action, Mr. Walters' attorney contacted Wright, who was still living in Bessemer, Alabama. Wright stated that he was still living in the house where he and his wife had lived together while they were married, and had not received notice until that day regarding the adoption of his children by Walters. Walters and Wright subsequently filed a motion seeking to have the adoption set aside on the basis that Wright had not received proper notice of the adoption hearing. The Fairfield County Probate Court denied the motion and affirmed the validity of its adoption order. On review, the 5th District Court of Appeals affirmed the probate court's decision, but certified that its holding on one issue raised by the appellants was in conflict with rulings by several other appellate districts in similar cases. The Supreme Court has agreed to hear arguments on that issue to resolve the conflict.
Mr. Walters and Wright argue that the newspaper notice employed by the probate court to notify Wright of its pre-adoption hearing was defective because the notice failed to specifically state that during its scheduled hearing the court would consider not only whether Wright's consent to the adoption was required, but also the issue of whether the termination of his parental rights and the adoption of his children by Mr. Walters was in the best interest of the children. They assert that, even in cases where the consent of a parent to an adoption is not required, R.C. 3107.11 still requires that a parent whose rights will be terminated by an adoption must be notified and given a chance to be heard on the separate issue of whether the best interest of the children would be served by granting the adoption.
Attorneys for Mrs. Walters respond that the language of the hearing notice published in the Eagle-Gazette was taken verbatim from state-approved probate forms, and was sufficient to meet the notice requirements of R.C. 3107.11. They contend that probate courts routinely conduct a single hearing in adoption proceedings at which both the issues of parental consent and the best interest of the children are reviewed, and argue that the remaining due process rights of a parent whose consent to an adoption is no long required based on his failure to communicate with or support his children for more than a year are satisfied by a properly-published notice stating the nature of the proceedings and advising him of the date, time and place of the hearing.
Contacts
Randy L. Happeney, 740.653.6464, for Robert Walters.
L. Jackson Henniger, 740.385.1078, for Atheena Walters.
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Parties interested in receiving additional information are encouraged to review the case file available in the Supreme Court Clerk's Office (614.387.9530), or to contact counsel of record.