Opinion

Gupta v. Lucas Cty. Bd. of Revision

2021 Ohio 332

Court: Ohio Court of Appeals
Filed: Feb 5, 2021
Status: Published
On the bench: Zmuda
Cited by: 0 cases
Authority: More cited than 14.9%

The opinion

[Cite as Gupta v. Lucas Cty. Bd. of Revision, 2021-Ohio-332.]

IN THE COURT OF APPEALS OF OHIO

SIXTH APPELLATE DISTRICT

LUCAS COUNTY

Umeshkumar Gupta Court of Appeals No. L-20-1106

Appellant Board of Tax Appeals No. 2019-905

Lucas County Board of Revision DECISION AND JUDGMENT

Appellee Decided: February 5, 2021

*****

Bertrand R. Puligandla, for appellant.

Julia R. Bates, Lucas County Prosecuting Attorney, John A.

Borell and Elaine B. Szuch, Assistant Prosecuting Attorneys,

for appellee.

*****

ZMUDA, P.J.

I. Introduction

{¶ 1} In this property tax appeal, appellant, Umeshkumar Gupta, appeals the

judgment of the Ohio Board of Tax Appeals, assessing a true value of $546,000 to

appellant’s real property. Finding no error in the proceedings below, we affirm.

A. Facts and Procedural Background

{¶ 2} On March 28, 2019, appellant filed a complaint with appellee, the Lucas

County Board of Revision, challenging the valuation of his real property located at 5661

Mallard Pointe Lane, Sylvania, Lucas County, Ohio (the “subject property”). At the time

the complaint was filed, the subject property was valued at $528,300. Appellant noted in

his complaint that he purchased the subject property on March 30, 2018, for a sale price

of $546,000. Based on his allegation that most of the comparable properties in Sylvania

Township were valued at 75 percent of their sale price, appellant requested a reduction in

the assessed value of the subject property to $425,000.

{¶ 3} A hearing on appellant’s complaint was held on June 4, 2019. The

following day, appellee issued its decision denying appellant’s request for a reduction in

the assessed value of the subject property. Thereafter, appellant filed a timely notice of

appeal with the Ohio Board of Tax Appeals (“BTA”), and a hearing on the appeal was

held on November 13, 2019. Appellant was the only witness to testify at the hearing.

{¶ 4} During his testimony, appellant acknowledged that he had purchased the

newly constructed subject property on March 30, 2018, at a cost of $546,000.

Nonetheless, appellant argued that the sale price should be disregarded for purposes of

property valuation, because he purchased the subject property while under duress. Rather

than look to the recent sale price to determine the subject property’s value, appellant

urged the BTA to consider his evidence of sales of comparable properties and to apply

the same ratio of true value to sales price that was applied to those comparable properties.

{¶ 5} During his testimony, appellant stated that he moved from Adrian,

Michigan, into a condominium located approximately two miles from the subject

property in September 2016. At the time, appellant only intended to live in the

condominium for three to six months. Meanwhile, appellant was “desperately looking

for a house,” and “had to make a quick decision as the school year was approaching.”

{¶ 6} Appellant hired the services of a real estate agent, and looked at several

properties over the ensuing months. In October 2017, appellant found a property that

suited him, and proceeded to make an offer to purchase the property, which was rejected

after another potential purchaser outbid appellant. According to appellant, “the family

was pretty upset about [being outbid]. As a matter of fact, I can remember that for at

least three or four weeks I was pretty lost because I had this pressure from the family.

* * * We wanted to provide a good house for our kids. So I was pretty devastated. To

me it was almost like the end of the world.”

{¶ 7} After being outbid in October 2017, appellant decided to place an offer on

the subject property, which was listed for sale at a price of $559,900 and out of his price

range. He originally offered to purchase the subject property for $520,000. Following

negotiations, appellant and the seller agreed to a purchase price of $555,000, and both

parties executed a purchase agreement reflecting that price, contingent upon appellant

securing conventional financing. The purchase agreement was admitted into evidence at

the BTA hearing.

{¶ 8} Under the terms of the purchase agreement, closing was to occur on or

before January 16, 2018. Appellant paid $3,000 in earnest money, plus a non-refundable

deposit of $35,000 to the seller in order to guarantee payment for additional work on the

basement of the subject property that was to be completed by seller prior to closing.

Appellant testified that the seller insisted upon the deposit because he “wanted us ‘knee

deep’ in the transaction so we did not walk away.”

{¶ 9} On December 13, 2017, First Federal Bank approved a loan to be used by

appellant to purchase the subject property. Six days later, an appraisal was performed in

connection with the loan. An excerpt of the appraisal report that was prepared by the

appraiser, which was entered into evidence at the BTA hearing, indicated the appraiser’s

determination that the subject property’s value was $540,000. During the appraisal, the

appraiser found that the square footage of the home was 300 square feet smaller than

advertised, which led to a valuation that was lower than the purchase price agreed upon

by appellant.

{¶ 10} After receiving the appraisal report, appellant contacted the seller and

requested a modification to the terms of the purchase agreement, namely a reduction in

the purchase price. Appellant and the seller ultimately orally agreed to change the

purchase price to $540,000, at which time appellant provided the seller with his $35,000

deposit.

{¶ 11} Within a few days of modifying the purchase price, the seller contacted

appellant and requested to close on the sale of the subject property on January 5, 2018,

eleven days prior to the date of closing set forth in the purchase agreement. Appellant

testified that the seller had not completed the remaining work on the basement at this

time. Appellant rejected the seller’s request to close early and, according to appellant,

the seller informed him that “the deal is ended.” Appellant stated that the seller “thought

[$540,000] was not economically feasible for him at that point in time.”

{¶ 12} Reportedly overwhelmed by the stress of the situation, appellant checked

into the emergency room on December 25, 2017, where he remained under observation

for four hours. One week later, appellant and seller resumed negotiations regarding the

sale of the subject property, which culminated in the execution of a second purchase

agreement on January 11, 2018. During the negotiations, appellant agreed to increase the

purchase price to $550,000 and forego some of the features that were supposed to be

added to the house under the original agreement. Appellant then decided to further

eliminate certain costs, which brought the purchase price down to $546,000.

{¶ 13} Regarding his negotiation and eventual execution of the second purchase

agreement, appellant testified that he “felt [he] had no choice because we were slowly

getting sucked into the deal deeper and deeper and deeper, and we were just not given

any choice.” Appellant went on to explain that he was afraid that the seller would

withdraw from the transaction and he would “lose the deal.” Therefore, appellant agreed

to move forward under the seller’s proposed terms. As to the effect these negotiations

had on his state of mind at the time, appellant stated that “it was emotionally very

tormenting trying to deal with a full-time job, kids at home, living in the condo the past

three to six months, all these breaches of the contract one after another, all the

compromises one after another. I had no choice.”

{¶ 14} Later in the hearing, appellant introduced a spreadsheet printout containing

12 properties, 6 of which appellant argued were comparable to the subject property. The

spreadsheet includes several pieces of information including the true values assigned to

each property by the Lucas County Auditor. Appellant testified that he assembled the

spreadsheet using information he retrieved from the Lucas County Auditor’s website.

The six properties identified by appellant as comparable were each within four miles of

the subject property, and four of them were sold in arm’s-length transactions within one

year of appellant’s purchase of the subject property.

{¶ 15} Appellant testified that the sale prices of the properties he alleged were

comparable to the subject property ranged from $506,282.70 to $520,528.75. Moreover,

appellant determined that the true values on the comparable properties averaged 79

percent of the sale prices. By contrast, appellant noted that the true value assigned to the

subject property was 97 percent of the sale price. Thus, appellant requested that the BTA

determine that the true value of the subject property should be reduced to 79 percent of

the purchase price, or $431,340.

{¶ 16} Following the BTA hearing, on May 28, 2020, the BTA issued its decision

on appellant’s request for a reduction in the true value of the subject property. The BTA

rejected appellant’s argument that his “pressing family obligations and difficulties”

amounted to compulsion or duress, and instead found that appellant voluntarily purchased

the subject property in an arm’s-length transaction that established the appropriate

measure of the property’s true value. Therefore, the BTA concluded that appellant’s

purchase price, $546,000, constitutes the true value of the subject property. Moreover,

the BTA rejected appellant’s argument of the subject property’s true value based upon

the comparable properties contained in appellant’s spreadsheet, after concluding that the

properties selected by appellant were not comparable because they varied “by age, date of

sale, and square footage, and number of bedrooms, bathrooms, and floors. No

adjustments were made to account for differences with the home sitused on the subject

property.”

{¶ 17} Following the BTA’s issuance of its decision, appellant filed his timely

notice of appeal with this court. The matter was placed on our accelerated calendar, and

is now decisional.

B. Assignments of Error

{¶ 18} On appeal, appellant assigns the following errors for our review:

I. The Board’s decision is unreasonable and/or unlawful because the

cases it relied upon to find no actual compulsion are inapplicable to this

case.

II. The Board’s decision is unreasonable and/or unlawful because it

does not analyze whether actual compulsion existed under the “distortion-

of-the-negotiation process” standard.

III. The facts of this case demonstrate that the normal operation of

the negotiation process was extremely distorted and caused actual

compulsion. Therefore, the Board’s decision is unreasonable and/or

unlawful.

IV. The Board’s ruling that Gupta’s comparable-sales data were

cherry-picked and unadjusted was unreasonable and/or unlawful.

{¶ 19} As appellant’s assignments of error are interrelated, we will address them

simultaneously.

II. Analysis

A. Standard of Review

{¶ 20} Appellant appealed appellee’s determination of the subject property’s value

to the BTA. Thus, it was appellant’s burden to prove that he was entitled to a decrease in

the value of the subject property that was determined by appellee. Shinkle v. Ashtabula

Cty. Bd. Of Revision, 135 Ohio St.3d 227, 2013-Ohio-397, 985 N.E.2d 1243, ¶ 24. In

meeting his burden, appellant is required to “‘come forward and demonstrate that the

value it advocates is a correct value.’” Id., quoting EOP-BP Tower, L.L.C. v. Cuyahoga

Cty. Bd. of Revision, 106 Ohio St.3d 1, 2005-Ohio-3096, 829 N.E.2d 686, ¶ 6. The BTA

has “wide discretion to determine the weight given to evidence and the credibility of

witnesses before it.” Witt Co. v. Hamilton Cty. Bd. of Revision, 61 Ohio St.3d 155, 573

N.E.2d 661 (1991).

{¶ 21} In reviewing decisions of the BTA that are appealed to this court, we are

guided by the following language set forth by the Ohio Supreme Court in its decision in

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 true value of property is a “question of fact, the determination of which

is primarily within the province of the taxing authorities,” and accordingly,

we “will not disturb a decision of the Board of Tax Appeals with respect to

such valuation unless it affirmatively appears from the record that such

decision is unreasonable or unlawful.” Cuyahoga Cty. Bd. of Revision v.

Fodor, 15 Ohio St.2d 52, 239 N.E.2d 25 (1968), syllabus.

Id. at ¶ 9.

B. The BTA’s valuation of the subject property

was not unreasonable or unlawful.

{¶ 22} In each of the four assignments of error in appellant’s brief to this court,

appellant argues that the BTA’s valuation of the subject property was unreasonable or

unlawful.

{¶ 23} Under the Ohio Constitution, “[l]and and improvements thereon shall be

taxed by uniform rule according to value.” Ohio Constitution, Article XII, Section 2.

Likewise, R.C. 5713.01(B) requires county auditors to appraise real property “at its true

value in money.”

{¶ 24} R.C. 5713.03 governs how the true value of real property is determined. In

relevant part, R.C. 5713.03 provides:

In determining the true value of any tract, lot, or parcel of real estate under

this section, if such tract, lot, or parcel has been the subject of an arm’s

length sale between a willing seller and a willing buyer within a reasonable

length of time, either before or after the tax lien date, the auditor may

consider the sale price of such tract, lot, or parcel to be the true value for

taxation purposes.

{¶ 25} Construing the foregoing statutory language, the Tenth District identified

“two rebuttable presumptions applied in valuation cases.” Gallick v. Franklin Cty. Bd. of

Revision, 2018-Ohio-818, 108 N.E.3d 237, ¶ 28. The first presumption is that the sales

price of a recent arm’s-length transaction “‘[meets] all the requirements that characterize

true value.’” Id., quoting Cincinnati Sch. Dist. Bd. of Edn. v. Hamilton Cty. Bd. of

Revision, 78 Ohio St.3d 325, 327, 677 N.E.2d 1197 (1997). Secondly, the Tenth District

indicated that the above-quoted statutory language creates a rebuttable presumption that

“‘[t]he best evidence of the “true value of money” of real property is an actual, recent

sale of the property in an arm’s-length transaction.’” Id., quoting Conalco, Inc. v.

Monroe Cty. Bd. of Revision, 50 Ohio St.2d 129, 363 N.E.2d 722 (1977), paragraph one

of the syllabus; accord Mann v. Cuyahoga Cty. Bd. of Revision, 152 Ohio St.3d 197,

2017-Ohio-8820, 94 N.E.3d 529, ¶ 12 (clarifying that “a price from a recent arm’s-length

10.

sale is not conclusive evidence of a property’s value but it nevertheless ‘constitute[s] the

best evidence of the property’s value’”).

{¶ 26} In its decision in Terraza 8, L.L.C. v. Franklin Cty. Bd. of Revision, 150

Ohio St.3d 527, 2017-Ohio-4415, 83 N.E.3d 916, the Ohio Supreme Court recognized the

two rebuttable presumptions set forth above, and indicated that “the proponent of a sale is

not required, as an initial matter, to affirmatively demonstrate with extrinsic evidence that

a sale price reflects the value of the unencumbered fee-simple estate.” Id. at ¶ 32.

Rather, once the proponent of the sale price valuation provides “basic documentation of

the sale,” the property owner has “the burden of going forward with rebuttal evidence

showing that the price [does] not, in fact, reflect the property’s true value.” Id., citing

Cincinnati School Dist. at 327-328. To satisfy this burden, the opposing party may

present evidence showing that the sale was not at arm’s length or not recent to the tax lien

date. Huber Heights City Schools Bd. of Edn. v. Montgomery Cty. Bd. of Revision, 152

Ohio St.3d 182, 2017-Ohio-8819, 94 N.E.3d 515, ¶ 11. Where the opposing party fails to

demonstrate a reason to disregard the sale price as an indicator of value, then the sale

price is the best evidence of the property’s true value. Lunn v. Lorain Cty. Bd. of

Revision, 149 Ohio St.3d 137, 2016-Ohio-8075, 73 N.E.3d 486, ¶ 18.

{¶ 27} During the proceedings that took place before appellee and the BTA in this

case, the purchase agreement evidencing appellant’s recent purchase of the subject

property for $546,000 was introduced into evidence without objection from appellant.

Thus, appellant had the burden of going forward with evidence to demonstrate that the

11.

sale was not at arm’s length or was not a recent sale. Because the parties do not dispute

that the sale was recent enough to trigger the rebuttable presumption that the sale price

constitutes the subject property’s true value, the issue in this appeal is whether appellant’s

evidence demonstrated that the sale was not at arm’s length.

{¶ 28} In Walters v. Knox Cty. Bd. of Revision, 47 Ohio St.3d 23, 546 N.E.2d 932

(1989), syllabus, the Ohio Supreme Court held that “[a]n arm’s-length sale is

characterized by these elements: it is voluntary, i.e., without compulsion or duress; it

generally takes place in an open market; and the parties act in their own self-interest.”

The parties to the transaction at issue here were acting in their own self-interest, and the

transaction took place in an open market. Appellant does not dispute those elements.

Instead, appellant contends that his purchase of the subject property was involuntary

because it was the result of compulsion or duress.

{¶ 29} During the BTA hearing, appellant testified that he felt like he had no

option other than purchasing the subject property once he entered into the first purchase

agreement. Appellant’s pressured situation was brought about by his family being upset

that they were outbid on the first property they attempted to purchase after moving to

Ohio from Adrian, Michigan. The situation was made worse by the fact that appellant’s

children were in high school and he did not want them to finish their high school

education while living in a condominium. Appellant testified that he was “pretty

devastated” by the situation, and indicated that he felt like it was “almost like the end of

the world.” Additionally, appellant testified that the seller intentionally applied pressure

12.

by forcing appellant to make a large nonrefundable deposit that would put appellant

“knee deep” in the transaction.

{¶ 30} In its decision, the BTA noted its consideration of appellant’s testimony

and documentary evidence on the issue of compulsion and duress, and concluded that

appellant was under “pressing family obligations and difficulties” during the negotiation

process. Nonetheless, the BTA determined that appellant failed to prove that his

purchase decision was the product of compulsion or duress sufficient to vitiate the

arm’s-length nature of the transaction.

{¶ 31} Having reviewed the record evidence in its entirety, we cannot

affirmatively conclude that the BTA’s decision is unreasonable or unlawful. While

appellant’s stress level was obviously high during the negotiations that led to his

purchase of the subject property, most of that stress was brought on by his own

circumstances, not by pressure from the seller. Moreover, appellant was in no way

compelled to agree to the terms proposed by the seller. Indeed, the seller even attempted

to terminate the agreement at one point, yet appellant persisted with negotiations that

culminated in the execution of the second purchase agreement at a lesser price than that

agreed upon in the initial purchase agreement. While it is true that seller required

appellant to make a sizable nonrefundable deposit before agreeing to appellant’s terms,

this requirement was reasonable in light of the additional work the seller was facing prior

to closing on the sale of the subject property, and appellant was free to walk away from

the deal if he viewed the deposit as oppressive. In short, the evidence presented by

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appellant supports the BTA’s determination that appellant’s purchase of the subject

property was voluntary, and not a result of compulsion or duress.

{¶ 32} In his assignments of error, appellant contends that the BTA erroneously

valued the subject property in accordance with the rebuttable presumption that his

purchase price represents the true value of the subject property. Appellant contends in

his first assignment of error that the BTA relied upon distinguishable cases to find that no

compulsion exists here. However, as noted above, the BTA did not rely upon cases in

order to find no compulsion. Rather, it looked to the evidence presented by appellant,

and determined that no compulsion existed based upon that evidence. Thus, there is no

merit to appellant’s argument, and we find his first assignment of error not well-taken.

{¶ 33} In his second assignment of error, appellant contends that the BTA’s

decision was unreasonable and/or unlawful because it failed to account for the seller’s

distortion of the negotiation process. Relatedly, in his third assignment of error, appellant

argues that the seller’s distortion of the negotiation process caused actual compulsion in

this case, thereby rebutting the presumption that the sale price of the subject property is

the property’s true value. While acknowledging that he was motivated to purchase the

subject property by his “urgent desire to obtain a home,” appellant asserts that it was

seller’s conduct during negotiations, not his sense of urgency brought about by family

pressures, that compelled him to purchase the subject property. According to appellant,

the BTA “failed to examine whether the normal operations of the negotiations process

were distorted, thereby causing actual compulsion.”

14.

{¶ 34} Our review of the BTA’s decision reveals that the BTA explicitly

considered appellant’s compulsion argument in light of the evidence presented at the

hearing. In its decision, the BTA found appellant’s “issues with the [seller] to be equally

unpersuasive” as it related to appellant’s compulsion argument. The BTA noted that the

purchase price of the subject property was modified several times to meet the parties’

requirements. The BTA also looked to email exchanges between appellant and the seller,

which were submitted by appellant at the hearing, and found that appellant presented as a

“capable negotiator and willing to reject the [seller’s] demands when he believed it was

appropriate.” We have reviewed these emails, and we too find that they belie appellant’s

assertion that he was a hostage to the transaction because of seller’s conduct.

{¶ 35} In light of the foregoing, it is clear that the BTA did, in fact, consider and

reject appellant’s argument that the seller’s conduct distorted the negotiation process and

compelled appellant to purchase the subject property. Therefore, we find no merit to

appellant’s contention, under his second assignment of error, that the issue was not

addressed by the BTA. Further, we find that the BTA’s rejection of appellant’s

compulsion argument was not unreasonable or unlawful, as the evidence on which it

relied to reach its conclusion supports the finding that appellant’s purchase of the subject

property was not compelled by the seller. Accordingly, we find appellant’s second and

third assignments of error not well-taken.

{¶ 36} In his fourth assignment of error, appellant argues that the BTA’s rejection

of the comparable sales data he introduced into evidence at the hearing was unreasonable

15.

and/or unlawful. In its decision, the BTA found that the comparable properties selected

by appellant varied from the subject property on a number of material characteristics

including age of the property, the date of sale, the properties’ square footage, and the

number of bedrooms, bathrooms, and floors. Because appellant failed to adjust for all of

these variables, opting instead to simply compare the properties by their price per square

foot, the BTA concluded that the comparable sales data provided by appellant did not

rebut the presumption that the sale price of the subject property was the best indicator of

its true value.

{¶ 37} Upon consideration of the sales comparison evidence submitted by

appellant, we cannot say that the BTA improperly rejected appellant’s proposed value for

the subject property under the sale comparison approach. As noted by the BTA, the sales

prices relied upon by appellant did not fully account for the differences between the

allegedly comparable properties and the subject property. Appellant insists that his price

per square foot figure adequately accounted for these differences, but we fail to see how

such a calculation fully accounts for variables such as age of property, date of sale,

number of bedrooms, number of bathrooms, or number of floors. At best, the price per

square foot adjustment may account for differences in the overall size of the properties.

Therefore, we do not find that the BTA’s rejection of the true value proposed by

appellant under the sales comparison approach was unreasonable or unlawful.

{¶ 38} Accordingly, appellant’s fourth assignment of error is not well-taken.

16.

III. Conclusion

{¶ 39} In light of the foregoing, the judgment of the Ohio Board of Tax Appeals is

affirmed. The costs of this appeal are assessed to appellant under App.R. 24.

Judgment affirmed.

A certified copy of this entry shall constitute the mandate pursuant to App.R. 27.