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DaimlerChrysler Corporation v. William W. Wilkins [Richard A. Levin], Tax Commissioner of Ohio, Case no. 2006-1731
Board of Tax Appeals
State of Ohio v. Michael R. Sarkozy, Case no. 2006-1973
8th District Court of Appeals (Cuyahoga County)
Lucien Pruszynski et al. v. Sarah Reeves et al., Case no. 2006-2072
11th District Court of Appeals (Geauga County)
James G. Jackson v. City of Columbus et al., Case no. 2006-2096
10th District Court of Appeals (Franklin County)
DaimlerChrysler Corporation v. William W. Wilkins [Richard A. Levin], Tax Commissioner of Ohio, Case no. 2006-1731
Board of Tax Appeals
ISSUE: Is an auto manufacturer subject to Ohio use tax for payments made by the manufacturer to its Ohio dealerships to cover the costs of “goodwill” repairs made by the dealer to customers' vehicles?
BACKGROUND: In August 2006, the State Board of Tax Appeals (BTA) upheld an earlier ruling by the state tax commissioner holding that DaimlerChrysler Corporation (DCC) owed delinquent state use tax, penalties and interest on payments DCC had made to its Ohio dealerships to cover the dealer's cost of making goodwill repairs to customers' vehicles from the 1994 through 2000 tax years. Goodwill repairs are repairs that the manufacturer is not contractually obliged to make free of charge under a vehicle warranty agreement, but which the manufacturer agrees to pay for as a goodwill gesture when an out-of-warranty problem appears to be the result of a defect in material or workmanship rather than normal use or owner abuse of the vehicle.
Attorneys for DCC have exercised their right to appeal the BTA's ruling to the Supreme Court. They contend that in the transactions at issue in this case, the owner of a repaired vehicle, not DCC, is the “consumer” of the parts and services paid for. They assert that DCC's payments to its dealers to repair customers' vehicles cannot subject the manufacturer to use tax as a purchaser because DCC never obtains ownership or even momentary possession of the parts and labor it pays for. They also argue that the BTA wrongly applied a 2004 use tax decision, General Motors v. Wilkins, in deciding this case. They point out that in General Motors the payments made by GM to its dealers covered the cost of repairs the manufacturer was contractually obliged to pay for under its vehicle warranties. In this case, they note, DaimlerChrysler did not exercise a “right or power incidental to ownership” of the repaired vehicles because it had no legal or contractual obligation to cover the repairs, but merely did so as a goodwill gesture.
Attorneys for the state tax commissioner urge the Court to affirm the BTA's ruling that DaimlerChrysler's payments to its dealers to perform “goodwill” repairs are subject to Ohio use tax. They argue that the company's dealers do not and would not provide replacement parts and service to vehicle owners free of charge unless they were authorized to do so and guaranteed reimbursement by DCC. They also assert that the manufacturer's payments for these repairs are made to advance its own business purposes, which include fulfilling the company's Customer Satisfaction Assurance Program and attaining for DCC the benefit of increased customer satisfaction and loyalty.
Contacts
Charles M. Steines, 216.586.7211, for
DaimlerChrysler Corporation.
Barton Hubbard, 614.466.5967, for the Ohio Board of Tax Appeals.
State of Ohio v. Michael R. Sarkozy, Case no. 2006-1973
8th District Court of Appeals (Cuyahoga County)
ISSUE: During a judge's colloquy with a criminal defendant prior to accepting a plea of guilty, does the judge's failure to accurately advise the defendant of the term of post-release control that will be included in his sentence cause the guilty plea to be invalid?
BACKGROUND: Michael Sarkozy of Cleveland was indicted on 10 criminal counts and subsequently entered into a plea agreement in which he entered guilty pleas to three felonies: attempted murder with a firearm specification and Repeat Violent Offender specification, aggravated robbery and kidnapping. Prior to accepting his guilty pleas, the trial judge advised Sarkozy of the prison terms applicable to each of his offenses, but did not mention that he would also be subject to a term of post-release control of five years and could be returned to prison for up to half the length of his prison sentence for violating the terms of post-release control.
Sarkozy accepted the agreement and entered guilty pleas to all charges and specifications. Prior to sentencing, however, Sarkozy filed a motion asking the trial court to allow him to withdraw is guilty plea. He asserted that he had never had a gun and had only pleaded guilty to the firearm specification on the advice of counsel. He also indicated that his guilty plea had been based on representations by his attorney that the court was contemplating a 19-year sentence if he accepted the plea bargain. The trial court denied the motion to withdraw the guilty plea and sentenced Sarkozy to consecutive prison terms totaling 27 years, followed by a minimum of five years of post-release control.
Sarkozy appealed his convictions and sentence on various grounds, including a claim that his guilty plea was not entered knowingly and intelligently, and therefore must be vacated, because the trial judge failed to advise him that post-release control would be a part of his sentence. A three-judge panel of the 8th District Court of Appeals voted 2-1 to affirm the validity of Sarkozy's guilty plea and convictions, and remanded the case for resentencing based on a separate legal issue unrelated to this case. The dissenting member of the appellate panel indicated that he would vacate Sarkozy's convictions because the trial court's failure to accurately advise him of the period of post-release control to which he would be subject as a result of his guilty plea rendered that plea constitutionally infirm.
Sarkozy sought Supreme Court review of the 8th District's holding, and the Justices agreed to hear argument on the limited question of whether a judge's failure to advise a defendant about post-release control sanctions during a plea colloquy renders a subsequent guilty plea void on constitutional grounds.
Attorneys for Sarkozy cite state and federal court decisions holding that a criminal defendant's guilty plea is valid only if entered into “voluntarily, knowingly and intelligently,” and that those requirements are not met if the defendant is not fully informed about “the direct consequences of the plea.” They point particularly to a 2004 decision, State v. Windle, in which the 4th District Court of Appeals held that a defendant's sentence must be vacated because the judge falsely advised him during the plea colloquy that he would be subject to three years of community control when the charges he faced included a five-year post-release requirement. In this case, they point out, Sarkozy was never informed that his guilty plea would result in any term of post-release control. While the 8th District found that error non-reversible, noting that Sarkozy could have received a much longer prison sentence if he had refused to plead guilty and gone to trial, defense counsel contend that the issue is whether Sarkozy was fully aware of the consequences of his guilty plea before he entered it, and the facts establish that he was not.
Representing the state, attorneys for the Cuyahoga County prosecutor's office respond that in Watkins v. Collins (2006), a Supreme Court of Ohio case decided since Windle, this Court held that inaccurate notifications of a number of prisoners regarding the exact terms of post-release control to which they were subject did not invalidate their sentences. They note that Ohio courts of appeals have consistently applied a “substantial compliance” standard in evaluating whether a court's colloquy with a defendant was sufficient to render a guilty plea valid. They urge the court to affirm the 8th District's holding that, under the totality of circumstances in this case, the thorough colloquy conducted by the trial judge with Sarkozy substantially complied with the requirement that he understood the consequences of his plea – even though no express mention of post-release control was made.
Contacts
John T. Martin, 216.443.3675, for
Michael Sarkozy.
Kristen L. Sobieski, 216.698.2226, for the State of Ohio and Cuyahoga County prosecutor's office.
Lucien Pruszynski et al. v. Sarah Reeves et al., Case no. 2006-2072
11th District Court of Appeals (Geauga County)
ISSUE: In a tort lawsuit, when a trial court has denied a successful plaintiff's motion for an award of prejudgment interest without conducting an oral hearing, does a court of appeals reviewing the denial of interest have authority to determine without holding an oral hearing that the plaintiff is entitled to prejudgment interest, and to remand the case to the trial court solely to determine the amount of interest that is payable?
BACKGROUND: When a civil lawsuit results in an award of money damages to the plaintiff, R.C. 1343.03(C) authorizes trial courts to grant an additional award of interest to the plaintiff on the amount of the judgment from the date of the plaintiff's injury to the date the judgment is satisfied “if, upon the motion of any party... the court determines at a hearing held subsequent to the verdict... that the party required to pay the money failed to make a good faith effort to settle the case and that the party to whom the money is to be paid did not fail to make a good faith effort to settle the case.”
In this case, the parents of a child, Lucien Pruszynski, filed suit against several parties seeking damages for injuries Lucien suffered in a 2002 traffic accident when a car in which she was riding ran off the road into a ditch. The driver of the car, Sarah Reeves, testified that she swerved at the last second to avoid hitting two children on bicycles who were riding at the edge of the road after dusk without legally required lights or reflectors. The Pruszynskis sued Reeves and the parents of the bicyclists. Although the parties engaged in settlement negotiations, the case did not settle. In October 2004, a jury awarded the Pruszynskis damages totaling $231,540. They filed a post-verdict motion for an award of prejudgment interest calculated from the day of the accident, arguing that the bicyclists' parents and their insurers had not made a good faith effort to settle. Without holding a hearing, the trial court denied the motion for interest.
The Pruszynskis appealed. The 11th District Court of Appeals reversed, finding that the trial court had abused its discretion in denying an interest award and ruling that the evidence presented in the parties' written pleadings clearly established that the Pruszynskis were entitled to prejudgment interest on their damages. Accordingly, the court of appeals remanded the case to the trial court for the sole purpose of determining the amount of interest payable.
The defendants now ask the Supreme Court to vacate the 11th District's judgment. They argue that R.C. 1343.03(C) specifies that no court may make an award of prejudgment interest unless it has first conducted a hearing to establish whether the respective parties made good faith efforts to settle the case. They cite prior court decisions holding that a trial court may deny a motion for prejudgment interest without a hearing if the record shows no basis for such an award, but assert that in the absence of a hearing at the trial court level, the 11th District acted contrary to law when it granted the plaintiffs an award of prejudgment interest without either the trial or appellate court conducting a hearing at which the parties could be heard.
Attorneys for the Pruszynskis respond that the 11th District “heard from” the parties by means of the extensive written pleadings and exhibits they submitted, and its decision cited documentary evidence showing that the defendants' insurers had privately estimated Lucien's damages at from $175,000 to $250,000, but never made a settlement offer near that amount prior to trial.
They assert that nothing in the language of R.C. 1343.03(C) specifies that the “hearing” required to support an award of prejudgment interest must be an oral hearing, and point to a 2003 decision, Hooten v. Safe Auto Ins. Co., in which this Court held that the requirement of a “hearing” before a trial court may grant a motion for summary judgment under Ohio Civ.R. 56(C) does not mandate an oral hearing, but may also be satisfied by an informal, non-oral review by the court of briefs and evidentiary materials submitted by the parties. They urge the Court to hold that the 11th District's non-oral review of evidence in the record and conclusion from that evidence that the defendants failed to make a good faith effort to settle the case was sufficient to meet the “hearing” requirement of R.C. 1343.02(C) and support an award of prejudgment interest.Contacts
Shawn Schlesinger, 216.696.1433 and John C. Pfau, 330.702.9700, for the
appellants.
Stephen B Potter, 440.446.1100, for Lucien Pruszynski.
James G. Jackson v. City of Columbus et al., Case no. 2006-2096
10th District Court of Appeals (Franklin County)
ISSUE: Does the accurate publication in a governmental report of allegations of misconduct made by a third party against a public official constitute defamation by the publisher if the publisher was aware at the time of publication that there was a high probability the third party's allegations were false?
BACKGROUND: In June 1997, at the conclusion of an extended investigation of alleged improper conduct by Columbus Police Chief James Jackson and other members of the city's police department, City Safety Director Thomas Rice issued an official “Report to the Mayor” summarizing the details and findings of the investigation. Among other accusations that had been investigated, Rice's report recounted statements by Keith Lamar Jones, a then-incarcerated inmate who had previously provided information to the police, alleging that Jackson and other Columbus police officers had been involved in illegal and immoral conduct.
Jackson sued Rice and the city, claiming that they had defamed him by recounting in the mayoral report numerous false and unsubstantiated allegations made about him by unreliable sources during the course of the investigation. The Franklin County Court of Common Pleas granted summary judgment in favor of the city, dismissing all of Jackson's claims. Jackson appealed the portion of the trial court's judgment dismissing his defamation claim based on inclusion of the Jones allegations in the mayoral report. The 10th District Court of Appeals affirmed the trial court's decision. The appellate panel held that, even if Rice and the city strongly suspected that Jones' claims were false, they enjoyed a “public interest privilege” that exempted them from civil liability for defamation for accurately recounting in an official report accusations of illegal and immoral conduct that were reviewed in the course of an official investigation.
Attorneys for Jackson now ask the Supreme Court to reverse the 10th District and order the trial court to hear his defamation claim against Rice and the city based on their publication of the Jones allegations in the mayoral report. They cite the U.S. Supreme Court's holding in St. Amant v. Thompson (1968) that a publisher commits defamation by publishing the defamatory statements of a third party when the publisher has “a high degree of awareness of the probable falsity of those statements.” In this case, they assert, the city admitted in its report that Jones was regarded by investigators as an unreliable “scam artist” and a “liar” who manipulated and traded on information to his own advantage, yet despite that knowledge the city published Jones' unsubstantiated and scandalous accusations against Jackson.
Attorneys for the city and Rice urge the Court to affirm the rulings of the trial and appellate courts. They point to several prior decisions in which the Supreme Court of Ohio and Ohio courts of appeals have recognized a qualified “public interest” privilege of communications between government officials and agencies where potentially defamatory information is conveyed in the performance of a public duty in order to assist the recipient in the performance of a legitimate governmental function. In this case, they argue, Rice's report to the mayor was made pursuant to a city ordinance requiring the mayor to investigate allegations of misfeasance and malfeasance by public officials, even though some or all of the allegations might ultimately prove false. The city also points out that Jones' allegations against Jackson were specifically labeled in the report as unproven allegations rather than as facts, and that the report informed readers that the source of those allegations was a convict whose credibility was suspect.
Contacts
Charles E. Ticknor III, 614.221.8448, for
Police Chief James Jackson.
Bradd N. Siegel, 614.227.2238, for Thomas W. Rice.
Glenn B. Redick, 614.645.7385, for the City of Columbus.
These summaries are prepared by the Office of Public Information solely to help news reporters determine if they want to cover the arguments. The summaries are not part of the case record and are not considered by the Court at any point during its deliberations.
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.