Kohl's Illinois, Inc. v. Marion Cty. Bd. of Revision (Slip Opinion)

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

Kohl’s Illinois, Inc. v. Marion Cty. Bd. of Revision, Slip Opinion No. 2018-Ohio-4461.]

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-4461

KOHL’S ILLINOIS, INC., ET AL., APPELLEES, v. MARION COUNTY BOARD OF

REVISION ET AL., APPELLANTS.

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

may be cited as Kohl’s Illinois, Inc. v. Marion Cty. Bd. of Revision, Slip

Opinion No. 2018-Ohio-4461.]

Taxation—Real-property valuation—Collateral estoppel—Law of the case—BTA

properly applied collateral estoppel—Decision affirmed.

(No. 2017-0161—Submitted September 11, 2018—Decided November 6, 2018.)

APPEAL from the Board of Tax Appeals, No. 2016-138.

____________________

Per Curiam.

{¶ 1} This property-tax appeal brings the tax-year-2010 complaint filed by

appellee Kohl’s Illinois, Inc., before us for a second time. See Kohl’s Illinois, Inc. v.

Marion Cty. Bd. of Revision, 140 Ohio St.3d 522, 2014-Ohio-4353, 20 N.E.3d 711

(“Kohl’s I”). In this appeal, appellants Marion County Board of Revision (“BOR”)

and the River Valley Local School District Board of Education (“school board”)

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appeal a decision of the Board of Tax Appeals (“BTA”) that was issued after our

remand in Kohl’s I. They contend that the BTA should have enforced a recorded

covenant that purports to prohibit Kohl’s, the property owner, from contesting the

Marion County auditor’s valuations of the property.

{¶ 2} In the decision on appeal, the BTA held that it had already decided not

to enforce the covenant in an October 2015 decision that it issued after we remanded

the case in Kohl’s I. Because the October 2015 decision was not appealed, the BTA

concluded that the BOR and the school board were barred by res judicata and

collateral estoppel from seeking enforcement of the covenant. The BOR and the

school board argue that the BTA did not actually decide the covenant issue

previously.

{¶ 3} We disagree, and we therefore affirm the BTA’s decision.

I. Background

{¶ 4} In Kohl’s I, we reviewed a BTA decision affirming the BOR’s

dismissal of a valuation complaint filed by Kohl’s for tax year 2010. The BTA agreed

with the BOR that the complaint was jurisdictionally barred by the covenant. That

covenant, which originated in a tax-increment-financing (“TIF”) agreement, stated

that the property owner could not file a complaint against an increased valuation of

the property during the effective years of the TIF agreement. Kohl’s allegedly

became bound by the covenant when it acquired the property from an entity that was

a party to the TIF agreement. Kohl’s I, 140 Ohio St.3d 522, 2014-Ohio-4353, 20

N.E.3d 711, at ¶ 7.

{¶ 5} In Kohl’s I, we held that the covenant was not a jurisdictional bar but

might be a valid defense to the property owner’s valuation complaint. We then

vacated and remanded the case with instructions that the BTA afford the beneficiaries

of the covenant (the county commissioners and the school board) the opportunity to

establish the binding validity of the covenant as a defense against the complaint. Id.

at ¶ 32, 38.

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{¶ 6} After remand, the BTA consolidated the tax-year-2010 case with a later

appeal in which Kohl’s had challenged the property’s valuation for 2013. On

October 15, 2015, the BTA issued a decision addressing both the 2010 and 2013

valuation complaints. BTA Nos. 2011-2747 and 2014-3897, 2015 WL 10985205

(Oct. 15, 2015). In that decision, the BTA determined that no sufficient argument

for enforcing the covenant had been advanced. Id. at *5. The BTA then ordered two

separate dispositions for the two tax years at issue. As for tax year 2010, the BTA

remanded the matter to the BOR to determine value. Id. Regarding tax year 2013,

the BTA adopted an appraisal valuation that reduced the property’s value. Id. at *6.

No appeal was taken from the October 2015 decision.

{¶ 7} On remand at the BOR, Kohl’s introduced an appraisal report and

testimony in support of a reduced value of $3,925,000 for tax year 2010. When the

BOR retained the auditor’s valuation of $5,090,370, Kohl’s appealed to the BTA.

On January 5, 2017, the BTA held that the covenant issue was barred by res judicata

and collateral estoppel. The BTA then adopted the appraisal valuation of $3,925,000

for the property.

{¶ 8} The BOR and the school board have appealed to this court from the

BTA’s 2017 decision, asserting the covenant claim but not contesting the merits of

the valuation reduction for tax year 2010.

II. Analysis

{¶ 9} Citing Superior’s Brand Meats, Inc. v. Lindley, 62 Ohio St.2d 133,

403 N.E.2d 996 (1980), the BTA denied reconsideration of the covenant issue on

grounds of res judicata and collateral estoppel. As we stated in Superior’s Brand

Meats, the importance of finality in administrative proceedings justifies applying

collateral estoppel in the context of BTA decisions when the elements for doing so

have been satisfied. Id. at syllabus. In the BTA context, collateral estoppel bars

relitigation of an issue when “the parties have had an ample opportunity to litigate

the issues involved in the proceeding.” Id.

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{¶ 10} In challenging the BTA’s decision, the BOR and the school board do

not contend that the covenant issue is somehow not the same issue addressed in the

October 2015 decision, nor do they dispute that the identical parties were before

the BTA when it issued that decision. Instead, the appellants contend that the

covenant issue was not “actually determined” in the October 2015 decision. To

support this point, the county relies on the tentative language that was part of the

BTA’s discussion in the October 2015 decision: “Since the county appellees have

failed to provide this board with any pertinent legal authority, we are unable to make

a determination as to whether the no-contest covenant is binding and enforceable

upon Kohl’s.” 2015 WL 10985205 at *5.

{¶ 11} Although this statement, if taken in isolation, could be viewed as not

deciding whether the no-contest covenant was enforceable against Kohl’s, the

statement must be read in its context. The sentence is situated in the middle of the

following paragraph, which we quote in full:

Upon careful examination of the record before this board,

the county appellees have failed to satisfy their burden on remand

as set forth by the Supreme Court to show that the “no-contest

covenant is valid and binding under contract law or real-covenant

law.” Kohl’s [I, 140 Ohio St.3d 522, 2014-Ohio-4353, 20 N.E.3d

711,] at ¶ 29. Indeed, the county appellees failed to provide any

statutory basis for applying the covenant to Kohl’s and failed to

demonstrate that the no-contest covenant qualifies as a covenant that

runs with the land under pertinent case law. In fact, it bears noting

that the county appellees do not cite to any legal authority for

applying the no-contest covenant to Kohl’s or to prove the covenant

qualifies as one that runs with the land. Since the county appellees

have failed to provide this board with any pertinent legal authority,

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January Term, 2018

we are unable to make a determination as to whether the no-contest

covenant is binding and enforceable upon Kohl’s. Because the

Supreme Court’s [sic] found that “the TIF agreement is not a

jurisdictional restriction,” [id. at ¶ 1] and based upon the record

before this board, we hereby vacate the BOR’s dismissal of the

underlying tax year 2010 complaint and remand this matter to the

BOR with instructions to conduct further proceedings to determine

the value of the subject property for tax year 2010.

2015 WL 10985205 at *5.

{¶ 12} The context of the entire paragraph shows that the BTA made a

finding that the proponents of applying the covenant failed to prove that they were

entitled to its enforcement.

{¶ 13} The appellants additionally contend that because the BTA did not

actually decide the covenant issue, that issue was still an open question and

unappealable at that time. But as discussed above, the BTA did make a

determination and in doing so made its October 2015 decision final and appealable

on that point. That is so because the BTA’s refusal to enforce the covenant was an

order that “affect[ed] a substantial right,” R.C. 2505.02(B)(2), i.e., the alleged right

to enforce the covenant, which was irretrievably lost when the BTA ordered the

BOR to proceed to determine the property’s value for 2010 and the county did not

appeal. See Southside Community Dev. Corp. v. Levin, 116 Ohio St.3d 1209, 2007-

Ohio-6665, 878 N.E.2d 1048, ¶ 5.

{¶ 14} Despite this straightforward reasoning, the county asserts that the

BTA, through its October 2015 decision, “maintained jurisdiction to vacate or

modify its * * * decision.” Under this theory, the BTA’s remand of the case for a

determination of value for tax-year 2010 made the determination of the covenant

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issue interlocutory and unappealable as to that tax year, leaving open a later

resolution in a second appeal.

{¶ 15} But the October 2015 decision makes no statement about retaining

jurisdiction, and any such assertion by the BTA would be contrary to the general

proposition that a remand order constitutes a relinquishment of jurisdiction over the

case. See Columbus City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision, 144

Ohio St.3d 128, 2015-Ohio-4304, 41 N.E.3d 396, ¶ 31.

{¶ 16} Also significant is the fact that the BTA’s remand order did not call

for the BOR to reconsider whether to enforce the covenant. Instead, the BTA itself

decided the covenant issue against enforcement and instructed the BOR to

determine the property’s value. The BTA thereby merged its covenant

determination into the remand order, with the result that the October 2015 decision

barred the BOR from addressing the covenant issue again. Id. at ¶ 37 (law-of-the-

case doctrine jurisdictionally barred the lower tribunal from acting contrary to the

ruling of the superior tribunal). It follows that the BOR on remand had no option to

enforce the covenant and that during the second appeal to the BTA from the BOR,

there was no open issue regarding the covenant.

{¶ 17} Contrary to the assertions of the BOR and the school board, the BTA

in its January 2017 decision confronted an attempt to relitigate the BTA’s October

2015 decision against enforcement of the covenant. The BTA correctly applied

collateral estoppel to preclude that attempt.

III. Conclusion

{¶ 18} For the foregoing reasons, the BTA properly applied collateral

estoppel, and the appellants do not contest the reduced valuation on the merits. We

therefore affirm the decision of the BTA.

Decision affirmed.

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

and DEGENARO, JJ., concur.

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_________________

Vorys, Sater, Seymour & Pease, L.L.P., Karen H. Bauernschmidt, Nicholas

Ray, and Heather M. Lutz, for appellee Kohl’s Illinois, Inc.

Raymond A. Grogan Jr., Marion County Prosecuting Attorney, and Matt

Frericks and David Stamolis, Assistant Prosecuting Attorneys, for appellant

Marion County Board of Revision.

Mazanec, Raskin & Ryder Co., L.P.A., Stacy V. Pollock, Douglas P.

Holthus, and Frank H. Scialdone, for appellant River Valley Local School District

Board of Education.

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