Lone Star Steakhouse & Saloon of Ohio, Inc. v. Franklin Cty. Bd. of Revision (Slip Opinion)

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

Star Steakhouse & Saloon of Ohio, Inc. v. Franklin Cty. Bd. of Revision, Slip Opinion No. 2018-

Ohio-1612.]

NOTICE

This slip opinion is subject to formal revision before it is published in an

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

formal errors in the opinion, in order that corrections may be made before

the opinion is published.

SLIP OPINION NO. 2018-OHIO-1612

LONE STAR STEAKHOUSE & SALOON OF OHIO, INC., APPELLANT, v. FRANKLIN

COUNTY BOARD OF REVISION ET AL., APPELLEES.

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

may be cited as Lone Star Steakhouse & Saloon of Ohio, Inc. v. Franklin Cty.

Bd. of Revision, Slip Opinion No. 2018-Ohio-1612.]

Taxation—Real-property valuation—A facially qualifying sale enjoys presumption

of recency even when it postdates tax-lien date by more than 24 months—

Board of Tax Appeals erred in finding that sale of property was too remote

from tax-lien date and in requiring property owner to present evidence

showing that either market conditions or character of property had

remained the same between sale date and tax-lien date—Decision reversed

and cause remanded.

(No. 2016-0145—Submitted January 23, 2018—Decided April 26, 2018.)

APPEAL from the Board of Tax Appeals, No. 2015-423.

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SUPREME COURT OF OHIO

Per Curiam.

{¶ 1} In this real-property-valuation case involving tax year 2012,

appellant, Lone Star Steakhouse & Saloon of Ohio, Inc. (“Lone Star”), sought a

reduction in the valuation of a property it once owned based on the property’s sale

price. Appellee Franklin County Board of Revision (“the BOR”) rejected the sale

price as the criterion of value and instead retained the county auditor’s valuation.

On appeal, the Board of Tax Appeals (“BTA”) adopted the BOR’s valuation,

finding that the sale was too remote in relation to the tax-lien date. We conclude

that the BTA misapplied our precedent in determining that the sale was too remote.

We accordingly reverse the BTA’s decision and remand the case with instructions

that the BTA use the sale price to value the property for tax year 2012.

FACTS AND PROCEDURAL BACKGROUND

{¶ 2} The subject property consists of a 5,344-square-foot restaurant

located on a 1.71-acre parcel. For tax year 2012, the Franklin County auditor

valued the property at $1,250,000. Lone Star filed a complaint seeking a reduction

of this valuation to $750,000, and appellee Board of Education of the South-

Western City School District (“the BOE”) responded with a countercomplaint

urging retention of the auditor’s valuation.

BOR proceedings

{¶ 3} At the BOR hearing, Lone Star’s counsel presented three documents

in support of the complaint. First, he presented a warranty deed memorializing a

transfer of the property from Lone Star to J.M. Mendez, Inc. The deed’s effective

date is listed as December 31, 2013, but stamps marked on the deed by the auditor’s

and recorder’s offices are dated January 21, 2014. Second, he presented a

conveyance-fee statement listing the consideration as $700,000. The statement was

signed on behalf of J.M. Mendez, Inc., on December 31, 2013, but it bears an

auditor’s stamp of January 21, 2014. Third, he presented an escrow-trust-

disbursement statement showing a purchase price of $700,000 and a disbursement

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date of December 31, 2013. After furnishing these three documents, Lone Star’s

counsel insisted that the property should be valued based on the sale price of

$700,000. Lone Star’s counsel did not call any witnesses to testify on its behalf.

{¶ 4} In response to questioning from the BOE, Lone Star’s counsel stated

that he did not represent Lone Star during the sale of the property and did not have

personal knowledge about how the property had been marketed or sold. The BOE

then argued that the BOR should not rely on the sale price, because no one with

personal knowledge about the sale had appeared to testify.

{¶ 5} The BOR retained the county auditor’s valuation of $1,250,000. The

BOR remarked during its deliberations that Lone Star’s evidence did not justify a

reduction, because no witness had appeared to testify about the sale.

BTA proceedings

{¶ 6} Lone Star appealed to the BTA but waived its appearance at the

hearing. The BOE appeared but did not present evidence; instead, it argued that

the BTA should disregard Lone Star’s evidence because no one with personal

knowledge of the sale had appeared before the BOR to testify. The BOE also

asserted that the sale was too remote in relation to the tax-lien date to justify a

finding of recency.

{¶ 7} The BTA regarded the sale as taking effect on January 21, 2014,

slightly more than 24 months after the January 1, 2012 tax-lien date, and it agreed

with the BOE that the sale price should not be used to value the property, because

the sale was too remote from the tax-lien date. Relying on 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, the BTA found dispositive Lone Star’s failure to present evidence

showing that either market conditions or the property’s character had remained the

same between the sale date and the tax-lien date. The BTA did not explicitly

address whether the sale was conducted at arm’s length.

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{¶ 8} The BTA ultimately adopted the BOR’s valuation of $1,250,000

because in its view, there was no other evidence that would allow an independent

valuation to be performed. Lone Star then filed this appeal.

STANDARD OF REVIEW

{¶ 9} We will affirm a BTA decision that is reasonable and lawful. Satullo

v. Wilkins, 111 Ohio St.3d 399, 2006-Ohio-5856, 856 N.E.2d 954, ¶ 14. We apply

de novo review to the BTA’s resolution of legal issues, but we will defer to the

BTA’s findings concerning the weight of the evidence if there is record support for

them. Lunn v. Lorain Cty. Bd. of Revision, 149 Ohio St.3d 137, 2016-Ohio-8075,

73 N.E.3d 486, ¶ 13.

DISCUSSION

The sale took effect more than 24 months after the tax-lien date

{¶ 10} We begin by addressing Lone Star’s third proposition of law, which

requires us to determine the effective date of the subject property’s sale for real-

property-valuation purposes. Relying on general property-law principles, Lone

Star maintains that the sale occurred on the effective date of the deed—December

31, 2013—which would make the sale slightly less than 24 months removed from

the January 1, 2012 tax-lien date. On the other hand, the BOE argues (and the BTA

found) that the sale became effective when the conveyance-fee statement was filed

in the county auditor’s office—January 21, 2014—which would make the sale

slightly more than 24 months removed from the tax-lien date.

{¶ 11} The guidepost for resolving this question is HIN, L.L.C. v. Cuyahoga

Cty. Bd. of Revision, 124 Ohio St.3d 481, 2010-Ohio-687, 923 N.E.2d 1144, in

which we held that the effective date of a sale for real-property-valuation purposes

is the date the conveyance-fee statement is filed in the county auditor’s office, id.

at ¶ 24. Applying that holding here, January 21, 2014, is the effective date of the

sale because that is when the conveyance-fee statement was filed in the auditor’s

office. Given our holding in HIN, there is no merit to Lone Star’s reliance on

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general property-law principles in asserting that the sale occurred on the deed’s

effective date.

The BTA erred in rejecting the sale as too remote

{¶ 12} In its first proposition of law, Lone Star asserts that because it

presented facially qualifying evidence of a sale, the BOE acquired the burden to

present rebuttal evidence showing that the sale should not be used as the criterion

of value. Because the BOE did not present such evidence, Lone Star reasons, the

BTA erred in concluding that the sale was too remote. Lone Star’s second

proposition of law contends that the BTA misread our decision in Akron, 139 Ohio

St.3d 92, 2014-Ohio-1588, 9 N.E.3d 1004, as requiring the proponent of a sale price

to provide additional evidence showing that the sale is recent when it postdates the

tax-lien date by more than 24 months. These two propositions interrelate and will

be addressed together.

{¶ 13} Because Lone Star’s appeal hinges on the use of a sale price to value

the property, a familiar set of principles comes into play. Under former R.C.

5713.03, Am.Sub.H.B. 260, 140 Ohio Laws, Part II, 2665, 2722, which applies to

tax year 2012, the proponent of a sale price must show that the sale was both “recent

to the tax-lien date and arm’s length in nature.” Utt v. Lorain Cty. Bd. of Revision,

150 Ohio St.3d 119, 2016-Ohio-8402, 79 N.E.3d 536, ¶ 9 (applying former R.C.

5717.03 to tax year 2012). This showing may be made by, for example, furnishing

a deed and a conveyance-fee statement. See Dauch v. Erie Cty. Bd. of Revision,

149 Ohio St.3d 691, 2017-Ohio-1412, 77 N.E.3d 943, ¶ 17, citing 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. After such a showing is made, a rebuttable

presumption arises that regards the sale as characteristic of true value. Id. at ¶ 16-

17. Thereafter, it falls to the opponent on rebuttal to show that the sale was either

not recent or not at arm’s length. 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, ¶ 13.

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{¶ 14} Here, Lone Star submitted certified copies of the deed, the

conveyance-fee statement, and the disbursement statement. Under the case law, we

would ordinarily conclude that this quantum of evidence triggered the rebuttable

presumption that Lone Star’s sale met all the requirements that characterize true

value. Dauch at ¶ 17.1 But our analysis cannot end here, because the BTA, in

reliance on Akron, viewed as fatal Lone Star’s failure to present evidence showing

that either market conditions or the character of the property had remained the same

between the sale date and the tax-lien date.

{¶ 15} Akron involved a sale that predated the tax-lien date of a reappraisal

year by 29 months. The property owners argued that the presumption of recency

did not apply on those facts, and we agreed:

We hold that a sale that occurred more than 24 months before the

lien date and that is reflected in the property record maintained by

the county auditor or fiscal officer should not be presumed to be

recent when a different value has been determined for that lien date

as part of the six-year reappraisal. Instead, the proponent of the sale

price as the value should come forward with evidence showing that

market conditions or the character of the property has not changed

between the sale date and lien date.

1

The BOE raises a familiar, and by now discredited, set of arguments urging us not to conclude that

Lone Star triggered the presumption that its sale occurred at arm’s length. It attacks Lone Star for

failing to present a witness to testify about the circumstances giving rise to the sale, and it avers that

because it lacks access to evidence that could prove whether a sale was transacted at arm’s length,

it was incumbent on Lone Star as a party to the sale to furnish a witness to describe the underlying

circumstances of the sale. But “a taxpayer-complainant does not need to appear at the board-of-

revision hearing to satisfy his initial burden.” Dauch, 149 Ohio St.3d 691, 2017-Ohio-1412, 77

N.E.3d 943, at ¶ 17. And the BOE is not “powerless” to rebut the presumption that a sale occurred

at arm’s length. Id. at ¶ 21 (noting discovery tools that a litigant may avail itself of in a real-property-

valuation proceeding). At bottom, then, it was the BOE’s burden to present rebuttal evidence to

disprove the arm’s-length nature of the sale. Id. at ¶ 23. The BOE furnished no such evidence, and

we therefore conclude that the presumption remains intact with respect to this element.

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January Term, 2018

139 Ohio St.3d 92, 2014-Ohio-1588, 9 N.E.3d 92, at ¶ 26. In the absence of such

a rule, we observed, “the fiscal officer’s duty to conduct an accurate reappraisal

every six years would be impaired by sales too remote to be relevant.” Id. at ¶ 27.

{¶ 16} In this case, the BTA began by correctly citing Cummins, 117 Ohio

St.3d 516, 2008-Ohio-1473, 885 N.E.2d 222, at ¶ 35, for the proposition that the

recency inquiry must account for more than just temporal proximity. But then the

BTA remarked: “Nevertheless, as a sale becomes more distant in time from a tax

lien date, ‘the proponent of the sale price as the value should come forward with

evidence showing that market conditions or the character of the property has not

changed between the sale date and lien date.’ ” BTA No. 2015-423, 2015 Ohio Tax

LEXIS 4411, *5-6 (Dec. 30, 2015), quoting Akron at ¶ 26. Following this remark,

the BTA tersely concluded that the sale of the subject property was too remote from

the tax-lien date. Both sides agree that the BTA’s ruling in effect establishes a per

se rule requiring the proponent of a sale price to prove recency by presenting

additional evidence whenever a sale postdates the tax-lien date by more than 24

months.

{¶ 17} The BTA’s analysis rests on a misreading of our holding in Akron.

Specifically, the BTA excised the holding’s first sentence, replaced it with general

language of its own, and then linked that general language with the holding’s

second sentence. The BTA thereby suggested that the presumption of recency does

not attach to a sale that postdates the tax-lien date by more than 24 months. But

that is not what we held in Akron. By its express terms, Akron applies when the

sale occurs more than 24 months before the tax-lien date of a reappraisal year and

is reflected in the property record. Akron at ¶ 26. When those facts are present and

the county auditor determines a different value in the reappraisal, the sale does not

enjoy a presumption of recency. Id. Here, in contrast, Lone Star’s sale occurred

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after the tax lien-date, and for that reason alone, Akron should not have controlled

the BTA’s analysis.

{¶ 18} It might be argued that Akron’s 24-month rule should be understood

to extend the 24-month period in each direction from the tax-lien date. But Justice

Kennedy’s concurring opinion in Akron suggests that it would be a mistake to apply

the decision that way. As she explained, Akron’s 24-month rule reflects that an

“earlier sale was already taken into account, but found not to be probative because

of a perceived change in the market.” 139 Ohio St.3d 92, 2014-Ohio-1588, 9

N.E.3d 92, at ¶ 43 (Kennedy, J., concurring). Continuing, she noted that when a

sale postdates the tax-lien date of a reappraisal year, the 24-month rule may not

apply because that sale could not have been accounted for by the reappraisal.

“Arguably, a later sale constitutes brand new evidence that might call for

reconsidering the question of value for the past year.” Id.

{¶ 19} Guided by that logic, we conclude that a facially qualifying sale, like

the one presented by Lone Star here, still enjoys a presumption of recency even

when it postdates the tax-lien date by more than 24 months. We thus reverse the

BTA’s contrary conclusion that Lone Star was required to present additional

evidence showing that either market conditions or the character of the property had

remained the same between the sale date and the tax-lien date. It follows that when

the proponent of a sale price furnishes facially qualifying evidence of the sale, as

Lone Star did here, it becomes the opponent’s burden on rebuttal to disprove the

sale’s presumptive recency. Here, the BOE presented no such rebuttal evidence,

and the presumption therefore remains intact.

A remand to consider additional evidence is unnecessary

{¶ 20} At oral argument, the BOE asserted for the first time in this case that

if this court does not endorse the BTA’s analysis, then the case should be remanded

to permit the BOE to present evidence showing that the sale was not characteristic

of true value. This argument rests on the premise that a departure from the BTA’s

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reasoning would mark a change in preexisting law. Given the argument’s belated

nature, we find that it has been forfeited. See State v. Roberts, 150 Ohio St.3d 47,

2017-Ohio-2998, 78 N.E.3d 851, ¶ 85.

{¶ 21} Were we to reach the BOE’s argument, we would not find it

persuasive. The bright-line rule that we articulated in Akron constitutes a limited

exception to the general rule that a facially qualifying sale enjoys a presumption of

recency. That Akron itself was a departure and a clarification is made evident by

our ordering a remand in that case for the presentation of additional evidence. 139

Ohio St.3d 92, 2014-Ohio-1588, 9 N.E.3d 92, at ¶ 28-29. Our decision today, in

contrast, adheres to rules of law that find expression in a burden-shifting framework

that by now has become commonplace. Moreover, the BOE’s implication that it

abstained from making an evidentiary presentation in reliance on BTA precedent

applying Akron, which at the time consisted of a single case with a roughly six-

month vintage, carries little weight.2

CONCLUSION

{¶ 22} For the foregoing reasons, we reverse the BTA’s decision and

remand the case with instructions that the BTA use the sale price to value the

property for tax year 2012.

Decision reversed

and cause remanded.

O’CONNOR, C.J., and O’DONNELL, KENNEDY, FISCHER, and DEWINE, JJ.,

concur.

FRENCH, J., concurs in judgment only.

2

The BTA issued Margaret Realty Co. v. Cuyahoga Cty. Bd. of Revision, BTA No. 2014-1251,

2015 WL 1966810, on April 28, 2015, and the BTA held its hearing in this case on November 4,

2015. The other two BTA decisions cited by the BOE were issued after that hearing. See 1033

Brentnell, L.L.C. v. Franklin Cty. Bd. of Revision, BTA No. 2015-667, 2016 WL 2933383 (Feb. 18,

2016); Columbus City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision, BTA No. 2014-3918,

2015 WL 10936019 (Dec. 3, 2015).

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DEGENARO, J., not participating.

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The Gibbs Firm, L.P.A., Ryan J. Gibbs, and Geoffrey N. Byrne, for

appellant.

Rich & Gillis Law Group, L.L.C., Mark H. Gillis, and Karol C. Fox, for

appellee Board of Education of the South-Western City School District.

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