Dauch v. Erie Cty. Bd. of Revision (Slip Opinion)

[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as

Dauch v. Erie Cty. Bd. of Revision, Slip Opinion No. 2017-Ohio-1412.]

NOTICE

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advance sheet of the Ohio Official Reports. Readers are requested to

promptly notify the Reporter of Decisions, Supreme Court of Ohio, 65

South Front Street, Columbus, Ohio 43215, of any typographical or other

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the opinion is published.

SLIP OPINION NO. 2017-OHIO-1412

DAUCH, TRUSTEE, APPELLEE, v. ERIE COUNTY BOARD OF REVISION ET AL.,

APPELLANTS; TESTA, TAX COMMISSIONER, APPELLEE.

DAUCH, APPELLEE, v. ERIE COUNTY BOARD OF REVISION ET AL.,

APPELLANTS; TESTA, TAX COMMISSIONER, APPELLEE. (TWO CASES.)

[Until this opinion appears in the Ohio Official Reports advance sheets, it

may be cited as Dauch v. Erie Cty. Bd. of Revision, Slip Opinion No.

2017-Ohio-1412.]

Taxation—Real-property valuation—County board of revision and county auditor

cannot complain about purported defects in the record they were

responsible for preparing and certifying—Board of Tax Appeals’ decisions

affirmed.

(Nos. 2014-2008, 2014-2009, and 2014-2010—Submitted February 7, 2017—

Decided April 19, 2017.)

APPEALS from the Board of Tax Appeals, Nos. 2014-1410, 2014-1412, and

2014-1413.

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SUPREME COURT OF OHIO

Per Curiam.

{¶ 1} In these three appeals, which we consolidated for oral argument and

we now consolidate for decision, we decide whether the Board of Tax Appeals

(“BTA”) acted reasonably and lawfully in valuing properties based on recent arm’s-

length-sale prices. The first case (case No. 2014-2008) involves a residential

property owned by appellee Gale A. Dauch, trustee. The others (case Nos. 2014-

2009 and 2014-2010) involve residential properties owned by Gale A. Dauch in his

personal capacity. In each case, Dauch challenged the Erie County auditor’s tax-

year-2013 valuation, alleging that his recent arm’s-length purchase established a

lower true value. The Erie County Board of Revision (“BOR”) retained the

valuations because Dauch did not appear at the BOR hearings. The BTA reversed

the BOR’s decisions and valued the properties according to the sale prices.

Appellants, the auditor and the BOR (collectively, “the county”), jointly appealed

each decision to this court.

{¶ 2} The county raises six identical propositions of law in each case.

Proposition of law Nos. 2 through 6 challenge the BTA’s findings that arm’s-length

sales occurred. These propositions of law involve questions about the initial burden

that is placed on a party who argues that a sale was arm’s length in nature. We

recently answered those questions in Lunn v. Lorain Cty. Bd. of Revision, ___ Ohio

St.3d ___, 2016-Ohio-8075, ___ N.E.3d ___. The facts in these three cases do not

materially differ from those on that issue in Lunn, and we hold, based on Lunn, that

the BTA’s findings that the sales were arm’s length in nature were reasonable and

lawful.

{¶ 3} The remaining issues, raised in the county’s first proposition of law,

concern whether recent amendments to R.C. 5713.03 apply to these tax-year-2013

valuations and if so, whether the changes affect the outcome in this case. The

county contends that the statutory changes permit taxing authorities to disregard a

recent arm’s-length-sale price. It is unnecessary for us to resolve those issues here,

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however, because the county presented no evidence in support of alternative

valuations. We therefore affirm the BTA’s decisions.

Facts and Procedural Histories

Case No. 2014-2008

{¶ 4} The auditor valued the property, located at 434 Camp Street in

Sandusky, at $41,460 for tax year 2013. Dauch complained to the BOR that the

property’s true value was $25,000—the price he paid for it in November 2011. The

BOR notified Dauch that it would hold a hearing on the complaint and “request[ed]

[his] attendance at the hearing to present facts and evidence supporting [his]

estimate of the market value of the property.” The BOR asked him to “provide the

Board with a copy of any exhibits [he] plan[ned] to present as evidence.”

{¶ 5} Before the hearing, Dauch notified the BOR that he “wish[ed] to

waive [his] appearance at the Board Hearing.” The waiver stated, “Please review

all evidence of my property tax challenge case without my attendance and notify

me of your decision.” He submitted data printouts from the auditor’s website and

the first two pages of a settlement statement related to his November 2011 purchase.

A conveyance-fee statement also appears in the record, but the county contends that

Dauch did not submit that document to the BOR. The documents show that Dauch

purchased the property in November 2011 for $25,000.

{¶ 6} Dauch did not attend the hearing, and no one appeared on his behalf.

At the hearing, the auditor acknowledged that Dauch provided documents showing

a sale but noted that “without being able to question the property owner or the

individual who generated the materials, it is very difficult to ascertain the conditions

regarding the sale.” The BOR retained the auditor’s valuation.

{¶ 7} Dauch appealed to the BTA, which reversed the BOR decision and

valued the property at $25,000. The BTA found that Dauch’s complaint, the

property-record card, the conveyance-fee statement, and the pages from the

settlement statement together constituted sufficient evidence that the November

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2011 sale was a recent arm’s-length transaction. The BTA stated that “absent an

affirmative demonstration that the subject sale is not a qualifying sale for tax

valuation purposes, we find the existing record demonstrates that the transaction

was recent, arm’s-length, and constitutes the best indication of the subject’s value

as of [the] tax lien date.” The county appealed to this court.

Case No. 2014-2009

{¶ 8} The auditor valued the property, located at 138 Taylor Street in

Sandusky, at $64,310 for tax year 2013, and Dauch complained to the BOR that it

should have been valued according to the price he paid for it in September 2012—

$53,900. As in case No. 2014-2008, the BOR notified Dauch of the scheduled

hearing, asked him to attend, and instructed him to present evidence supporting his

claim. Dauch again waived appearance at the hearing and asked the BOR to

consider the materials he provided. He submitted parcel data from the auditor’s

website and the first page of a purchase contract related to his September 2012

purchase. A conveyance-fee statement and related questionnaire also appear in the

record, but the county again contends that Dauch did not submit those documents.

The documents all support Dauch’s claim that he purchased the property at 138

Taylor Street in September 2012 for $53,900.

{¶ 9} The BOR retained the auditor’s valuation, and Dauch appealed to the

BTA, which reversed the BOR decision and valued the property at $53,900. The

BTA found that the documents before it sufficiently showed that the September

2012 sale was a recent arm’s-length transaction. The BTA explained that the

county had not “affirmative[ly] demonstrat[ed] that the subject sale is not a

qualifying sale for tax valuation purposes.” The county appealed to this court.

Case No. 2014-2010

{¶ 10} The facts of the third appeal are much the same: The auditor valued

the subject property, located at 817 Fulton Street in Sandusky, at $47,890 for tax

year 2013. Dauch complained to the BOR that the property should have been

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valued at $25,000, which is the price he paid for it in September 2013. After

receiving Dauch’s complaint, the BOR notified him that it had scheduled a hearing

and asked him to attend and present evidence supporting his claim. Dauch again

waived appearance and asked the BOR to consider the materials he provided. He

submitted parcel data from the auditor’s website and a buyer’s closing statement

related to his September 2013 purchase. A conveyance-fee statement and related

questionnaire are also in the record, but the county says that Dauch did not submit

those documents. The documents all show that Dauch purchased the subject

property in September 2013 for $25,000.

{¶ 11} The BOR retained the auditor’s valuation, and Dauch appealed to

the BTA, which reversed the BOR decision and valued the property at $25,000.

The BTA found that the evidence sufficiently showed that the September 2013 sale

was a recent arm’s-length transaction. As in the other cases, the BTA pointed out

that the county had not “affirmative[ly] demonstrat[ed] that the subject sale is not

a qualifying sale for tax valuation purposes.” The county appealed to this court.

Analysis

Standard of review

{¶ 12} We must affirm the BTA’s decisions if they were “reasonable and

lawful.” R.C. 5717.04. In making this determination, we must consider legal issues

de novo, Akron City School Dist. Bd. of Edn. v. Summit Cty. Bd. of Revision, 139

Ohio St.3d 92, 2014-Ohio-1588, 9 N.E.3d 1004, ¶ 10-11, and defer to findings

concerning the weight of evidence so long as they are supported by the record,

Olmsted Falls Bd. of Edn. v. Cuyahoga Cty. Bd. of Revision, 122 Ohio St.3d 134,

2009-Ohio-2461, 909 N.E.2d 597, ¶ 27.

The BTA properly considered the conveyance-fee statements

{¶ 13} In its second proposition of law in each case, the county argues that

the BTA improperly relied on the conveyance-fee statements showing Dauch’s

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purchases. The county contends that the BTA could not consider the statements,

because Dauch did not present them to the BOR and the BOR did not rely on them.

{¶ 14} In making its value determinations, the BTA had to “ ‘independently

weigh and evaluate all evidence properly before it.’ ” Columbus Bd. of Edn. v.

Franklin Cty. Bd. of Revision, 76 Ohio St.3d 13, 15, 665 N.E.2d 1098 (1996),

quoting Black v. Cuyahoga Cty. Bd. of Revision, 16 Ohio St.3d 11, 13-14, 475

N.E.2d 1264 (1985). The conveyance-fee statements were properly before the BTA

because, as the county concedes, they were included in the statutory transcripts

certified to the BTA under R.C. 5717.01. Although the BOR and the auditor now

argue that the statements were included in error, they cannot now complain about

purported defects in the records they were responsible for preparing and certifying.

See R.C. 5715.09 and 5717.01; Cannata v. Cuyahoga Cty. Bd. of Revision, 147

Ohio St.3d 129, 2016-Ohio-1094, 62 N.E.3d 144, ¶ 14. Moreover, they made no

effort to amend the statutory transcripts or to alert the BTA of the purported defects.

Under these circumstances, the county has not demonstrated that the BTA erred in

considering the conveyance-fee statements.

Dauch met his initial burden of showing arm’s-length sales

{¶ 15} Because he sought to decrease the valuation of his properties based

on the prices he paid for them, Dauch had the burden to show that his purchases

were recent to the tax-lien date and arm’s length in nature. Lunn, ___ Ohio St.3d

___, 2016-Ohio-8075, ___ N.E.3d ___, at ¶ 10. The county does not dispute that

Dauch’s purchases were recent; the issue is whether they were made at arm’s

length.

{¶ 16} The BTA reduced the valuations because the record in each case

included evidence that Dauch had purchased the property and no evidence showed

that the transaction was not made at arm’s length. The BTA, in effect, applied the

judicially created presumption that a submitted sale price “has met all the

requirements that characterize true value,” including that the sale was made at arm’s

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length, Cincinnati School Dist. Bd. of Edn. v. Hamilton Cty. Bd. of Revision, 78

Ohio St.3d 325, 327, 677 N.E.2d 1197 (1997). Under this rule, if the proponent of

a sale demonstrates that the sale occurred, and the sale on its face appears to have

been at arm’s length, then the opposing party has the burden of going forward with

rebuttal evidence. Id. at 327-328.

{¶ 17} “To benefit from this presumption, the proponent of a sale must

satisfy a relatively light initial burden and need not ‘definitive[ly] show[ ] * * * that

no evidence controvert[s] the * * * arm’s-length character of the sale.’ ” (Brackets

and ellipsis sic.) Lunn at ¶ 14, quoting Cummins Property Servs., L.L.C. v. Franklin

Cty. Bd. of Revision, 117 Ohio St.3d 516, 2008-Ohio-1473, 885 N.E.2d 222, ¶ 41.

In Lunn, we held that a taxpayer-complainant does not need to appear at the board-

of-revision hearing to satisfy his initial burden. Id. at ¶ 16. Instead of focusing on

the taxpayer’s attendance at the hearing, we have focused on whether the taxpayer

provided “ ‘basic documentation of a sale.’ ” Utt v. Lorain Cty. Bd. of Revision,

___ Ohio St.3d ___, 2016-Ohio-8402, ___ N.E.3d ___, ¶ 13, quoting FirstCal

Indus. 2 Acquisitions, L.L.C. v. Franklin Cty. Bd. of Revision, 125 Ohio St.3d 485,

2010-Ohio-1921, 929 N.E.2d 426, ¶ 24. A deed and conveyance-fee statement,

see, e.g., Worthington City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision,

124 Ohio St.3d 27, 2009-Ohio-5932, 918 N.E.2d 972, ¶ 28, or a deed and purchase

agreement, Cummins at ¶ 3, 7, 41, satisfy this requirement.

{¶ 18} But we have not held that these particular documents are required in

every case. Indeed, in Utt, we stated that the absence of a deed or purchase

agreement was not fatal, “because no party disputed the timing or price of the sale”

and the documents that were provided demonstrated a “ ‘sale [that] on its face

appear[ed] to be recent and at arm’s length.’ ” (Brackets sic.) Utt at ¶ 14, quoting

Cummins at ¶ 41. Thus, a proponent may satisfy his initial burden with less

documentary evidence if there is no real dispute about the basic facts of the sale.

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See id.; Mason City School Dist. Bd. of Edn. v. Warren Cty. Bd. of Revision, 138

Ohio St.3d 153, 2014-Ohio-104, 4 N.E.3d 1027, ¶ 31.

{¶ 19} In these cases, the BTA reasonably and lawfully concluded that there

was sufficient evidence in the records to satisfy Dauch’s initial burden. The BTA

properly considered the conveyance-fee statements, the property-record cards, and

other documents that show the timing and prices of Dauch’s purchases. And

significantly, the county concedes that the BTA had enough evidence to properly

find that the sales took place. The documents in the appellate records, along with

the lack of dispute over the fact of the sales, satisfied Dauch’s initial burden. The

BTA, therefore, correctly found that the county had to offer rebuttal evidence to

challenge the element of arm’s-length character concerning each sale. See

Cummins, 117 Ohio St.3d 516, 2008-Ohio-1473, 885 N.E.2d 222, at ¶ 13.

{¶ 20} The county’s arguments to the contrary, which are raised in

proposition of law Nos. 3 through 5, fail as a result of our holding in Lunn that a

taxpayer-complainant need not appear at the board-of-revision hearing to satisfy

his initial burden. See Lunn, ___ Ohio St.3d ___, 2016-Ohio-8075, ___ N.E.3d

___, at ¶ 16. Contrary to the county’s argument, this rule does not “effectively

shift[ ] the original burden of proof to the auditor and BOR.” Once Dauch met his

“light initial burden” to show facially qualifying sales, Lunn at ¶ 14, the county had

the burden of going forward with rebuttal evidence, Cincinnati School Dist., 78

Ohio St.3d at 327-328, 677 N.E.2d 1197. The ultimate burden of proof did not

shift. Id.

{¶ 21} Nor does the rule stated in Lunn preclude the county from rebutting

the presumption that the sales occurred at arm’s length. Although the county is

correct in stating that the property owner is most likely to possess information

regarding the sales, see FirstCal, 125 Ohio St.3d 485, 2010-Ohio-1921, 929 N.E.2d

426, at ¶ 25, the county was not powerless to obtain that information. R.C. 5715.10

empowers a board of revision to “call persons before it and examine them under

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oath as to their own or another’s real property.” And once Dauch appealed to the

BTA, the county could have obtained relevant documents through discovery and

ensured Dauch’s attendance at the hearings by issuing subpoenas. See R.C.

5703.03; Ohio Adm.Code 5717-1-14.

{¶ 22} In its sixth proposition of law, the county takes issue with the BTA’s

reliance on Mason, 138 Ohio St.3d 153, 2014-Ohio-104, 4 N.E.3d 1027, arguing

that the BTA improperly concluded that, under Mason, notations of the sales on the

auditor’s property-record cards triggered “a presumption of value.” This argument

lacks merit because the county overstates the BTA’s reliance on the property-record

cards. The BTA did not find that the notations on the property-record cards by

themselves triggered a presumption of the properties’ values. Rather, it identified

the property-record cards as one of “several documents” reflecting the sales. BTA

No. 2014-1410, 2014 WL 5605439, at *1 (Oct. 22, 2014); BTA No. 2014-1412,

2014 WL 5797913, at *1 (Oct. 30, 2014); BTA No. 2014-1413, 2014 WL 5797912,

at *1 (Oct. 30, 2014). The BTA cited Mason only to support its conclusion that

Dauch had met his initial burden.

The county offered no rebuttal evidence or alternative valuation

{¶ 23} Because Dauch met his initial burden, the county had to go forward

with evidence to disprove the arm’s-length nature of the sales. Cincinnati School

Dist., 78 Ohio St.3d at 327-328, 677 N.E.2d 1197. The county failed to do so.

Therefore, we must conclude that the BTA reasonably and lawfully found that the

sales occurred at arm’s length and that the sale prices represent the properties’ true

values.

{¶ 24} The county contends in its first proposition of law that our inquiry

cannot end here, because the General Assembly amended R.C. 5713.03 by

removing mandatory language (“the auditor shall consider the sale price * * * to be

the true value for taxation purposes” [emphasis added]) and replacing it with

permissive language (“the auditor may consider the sale price * * * to be the true

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value for taxation purposes” [emphasis added]). See Am.Sub.H.B. No. 260, 140

Ohio Laws, Part II, 2665, 2722; 2012 Am.Sub.H.B. No. 487 and 2012

Am.Sub.H.B. No. 510. The county argues that this change applies here and that it

gives the BOR and the BTA authority to disregard the sale prices. We need not

address these issues here, however, because the county presented no evidence in

support of alternative valuations. The BTA acted reasonably and lawfully because

the sale prices were the only evidence before it concerning the value of the subject

properties.

{¶ 25} We therefore reject the county’s propositions of law in each appeal

and affirm the decisions of the BTA.

Decisions affirmed.

O’CONNOR, C.J., and O’DONNELL, KENNEDY, FRENCH, O’NEILL, FISCHER,

and DEWINE, JJ., concur.

_________________

Rich & Gillis Law Group, L.L.C., Kelley A. Gorry, and James R. Gorry, for

appellants.

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