[Cite as Hersh v. Cuyahoga Cty. Bd. of Revision, 2020-Ohio-3596.]
COURT OF APPEALS OF OHIO
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
SHELBY HERSH, :
Plaintiff-Appellant, :
No. 109035
v. :
CUYAHOGA COUNTY BOARD OF :
REVISION, ET AL.,
:
Defendants-Appellees.
JOURNAL ENTRY AND OPINION
JUDGMENT: AFFIRMED
RELEASED AND JOURNALIZED: July 2, 2020
Administrative Appeal from the Board of Tax Appeals
Case No. 2018-1129
Appearances:
Sleggs, Danzinger & Gill Co., L.P.A., Steven R. Gill, and
Todd W. Sleggs, for appellant.
Michael C. O’Malley, Cuyahoga County Prosecuting
Attorney, and Reno J. Oradini, Jr., Assistant Prosecuting
Attorney, for appellees.
MICHELLE J. SHEEHAN, J.:
Plaintiff-appellant property owner Shelby Hersh (“Hersh”) appeals
from a decision of the Board of Tax Appeals (“BTA”) that affirmed the Cuyahoga
County Board of Revision’s (“BOR”) valuation of residential property for the 2017
tax year. Finding the BTA’s decision was reasonable and lawful, we affirm.
I. Procedural History and Substantive Facts
Hersh owns residential property located on Sheldon Road in
Lyndhurst, Ohio. He purchased the property from the secretary of the United
States Department of Housing and Urban Development (“HUD”) in March 2017.
The county’s fiscal officer valued Hersh’s property at $83,000 for the 2017 tax
year. Thereafter, Hersh filed a complaint against the valuation, seeking a
reduction of the property value to $70,400.
On July 25, 2018, the BOR held a hearing. Hersh did not appear.
Rather, his counsel argued on his behalf and presented the following information:
listing information, including a photo of the property; HUD settlement statement
showing the purchase price of $70,400; a conveyance fee statement showing the
purchase price of $70,400; and a sale verification questionnaire that included a
statement that the property was listed with a real estate agent. At the hearing,
Hersh’s counsel stated that “both the seller and the buyer had brokers * * * at the
property. The buyer was represented by Murwood Real Estate [and t]he seller,
JBS Realty.”
Thereafter, the BOR retained the fiscal officer’s valuation, finding as
follows:
Sale referenced in support of value was a HUD sale and not
considered arm’s length. No other evidence was provided to show
the sale price was indicative of value. BOR research indicates
current market value is supported by the market. No change.
Hersh then appealed the BOR’s decision to the BTA, and the BTA
affirmed the BOR. The BTA stated in its decision that it decided the case on the
notice of appeal, the fiscal officer’s statutory transcript, and the parties’ written
argument. In affirming the BOR’s decision, the BTA found that the sale at issue
was a HUD sale, a HUD sale is generally not an arm’s-length sale, and Hersh failed
to rebut the presumption that the HUD sale of his property was not an arm’s-
length transaction. The BTA additionally found “no conclusive evidence the
property was openly and systematically marketed” and Hersh failed to provide
“market data to show no higher price could be obtained.” And although the BTA
agreed with Hersh that the sale price was “not far from the fiscal officer’s value,” it
found this fact irrelevant to the question of whether Hersh rebutted the
presumption that HUD sales are not arm’s-length transactions.
Hersh now appeals the BTA’s decision in three interrelated
assignments of error, which we address together: (1) the BTA decision and order is
unreasonable and unlawful because it adds additional requirements to proving a
sale that does not exist in the statute and case law; (2) the BTA decision and order
is unreasonable and unlawful because the unrebutted evidence in the record
showed that the property was marketed by the seller prior to the sale and both
parties to the sale were represented by brokers; and (3) the BTA decision and order
applies a strict reading of Schwartz v. Cuyahoga Cty. Bd. of Revision, 143 Ohio
St.3d 496, 2015-Ohio-3431, 39 N.E.3d 1223, over the more recent decision in
Dauch v. Erie Cty. Bd. of Revision, 149 Ohio St.3d 691, 2017-Ohio-1412, 77 N.E.3d
943.
II. Law and Analysis
Hersh contends that the BTA’s decision was unreasonable and
unlawful because the evidence shows that the property had been marketed prior to
the sale and the BTA improperly imposed an additional requirement that the
property be marketed for a “significant period.” Hersh also seemingly argues that
the facts in Schwartz support his argument, yet the board should have applied the
reasoning provided in Dauch.
“‘A party seeking an increase or decrease in valuation bears the
burden of proof before a board of revision.’” Schwartz v. Cuyahoga Cty. Bd. of
Revision, 8th Dist. Cuyahoga No. 106659, 2018-Ohio-4712, ¶ 21, quoting Snavely
v. Erie Cty. Bd. of Revision, 78 Ohio St.3d 500, 503, 678 N.E.2d 1373 (1997).
Likewise, “[w]hen cases are appealed from a board of revision to the BTA, the
burden of proof is on the appellant * * * to prove its right to an increase [in] or
decrease from the value determined by the board of revision.” Columbus City
School Dist. Bd. of Edn. v. Franklin Cty. Bd. of Revision, 90 Ohio St.3d 564, 566,
740 N.E.2d 276 (2001). To meet that burden, the appellant “must present
competent and probative evidence to make its case.” Id. It is therefore not enough
to merely introduce evidence that calls the board of revision’s valuation into
question. Id.
We review BTA decisions only to determine whether they are
“reasonable and lawful.” R.C. 5717.04. In so doing, we defer to the BTA’s factual
findings, including determinations of property value, as long as they are supported
by reliable and probative evidence in the record. Satullo v. Wilkins, 111 Ohio St.3d
399, 2006-Ohio-5856, 856 N.E.2d 954, ¶ 14. But we review the BTA’s legal
determinations de novo. Crown Communication, Inc. v. Testa, 136 Ohio St.3d
209, 2013-Ohio-3126, 992 N.E.2d 1135, ¶ 16.
Hersh claims that the March 2017 sale of the Sheldon Road property
evidences the correct value of the property. A recent arm’s-length transaction
generally constitutes the best evidence of a property’s value. Terraza 8, L.L.C. v.
Franklin Cty. Bd. of Revision, 150 Ohio St.3d 527, 2017-Ohio-4415, 83 N.E.3d 916,
¶ 31-32. HUD sales, however, are presumed not to be arm’s length under
R.C. 5713.04. See Cincinnati School Dist. Bd. of Edn. v. Hamilton Cty. Bd. of
Revision, 127 Ohio St.3d 63, 2010-Ohio-4907, 936 N.E.2d 489, ¶ 21-26 (“Fenco”);
Olentangy Local Schools Bd. of Edn. v. Delaware Cty. Bd. of Revision, 141 Ohio
St.3d 243, 2014-Ohio-4723, 23 N.E.3d 1086, ¶ 2. “Under R.C. 5713.04, the price
from an auction or forced sale is presumptively not evidence of a property’s value,
absent proof that the transaction occurred at arm’s length between typically
motivated parties.” Schwartz, 143 Ohio St.3d 496, 2015-Ohio-3431, 39 N.E.3d
1223, at ¶ 27. And the Ohio Supreme Court considers HUD sales as “forced sales”
for purposes of R.C. 5713.04 “because they are generally not indicative of value.”
Id. at ¶ 28. A taxpayer can therefore rebut the presumption by providing evidence
that the transaction occurred at arm’s length between “typically motivated parties.”
Id. at ¶ 27.
Here, Hersh claims he rebutted the presumption that the sale was
not an arm’s-length transaction by providing the following: a statement that the
property was marketed by the seller and both parties were represented by brokers,
a copy of the listing, a copy of settlement statement, and a copy of the verification
questionnaire that shows there were no conditions of sale. In support, he cites to
the Ohio Supreme Court in Schwartz.
In Schwartz, the property owner appealed to the BTA, requesting a
reduction in the value of the property. Schwartz contended that the 2011 sale of
the property for $5,000 was a voluntary, arm’s-length transaction in that the
property was publicly advertised as part of HUD’s “inventory of foreclosed
properties,” Schwartz was the high bidder, and he did not have a special
relationship with HUD. Schwartz at ¶ 13. In support, he presented the testimony
of a representative, Vladimir Victor, for whom Schwartz held the property in trust.
Victor testified that he had learned that the property was for sale
while he was caring for an adjacent home on the same street as the property at
issue. The property was listed with a realty company, and a sale sign was posted in
the yard for three years. Victor testified that he made several attempts to purchase
the property, but his offers were not accepted. Later, according to Victor, the realty
company contacted Victor after a sale to another buyer fell through. Victor
testified that the realty company told Victor that if he did not buy it, the property
would be demolished. Schwartz, 143 Ohio St.3d 496, 2015-Ohio-3431, 39 N.E.3d
1223, at ¶ 8.
On appeal, the Ohio Supreme Court found that the property owner
rebutted the presumption that the HUD sale was not an arm’s-length transaction,
stating as follows:
[T]he record indicates that Schwartz successfully rebutted this
presumption with evidence that the 2011 sale was voluntary and at
arm’s length. The property was on the market for three years
(including one year after the property was transferred to HUD).
Victor testified that a for-sale sign was posted at the property and he
made several offers to buy it. The owner rejected Victor’s offers and,
indeed, was planning to sell to a different prospective buyer. When
that sale fell through, the owner contacted Victor and advised him
that the property would be razed unless he wanted to buy it.
Schwartz also cited other sales on [the same street as the subject
property] as proof that the market could not bear a higher sale price
at that time.
Id. at ¶ 30. The court therefore found under the above circumstances that the BTA
acted unreasonably when it found that the property’s 2011 sale price was not the
best evidence of its tax year 2011 value. Id. at ¶ 31.
Unlike in Schwartz, however, Hersh failed to provide any testimony
from a person with firsthand knowledge of the HUD sale in March 2017, which
may have rebutted the presumption that such sale was a forced sale. In Schwartz,
the property owner’s representative testified about the facts and circumstances of
the HUD sale and the condition of the property. Hersh did not testify at the BOR’s
hearing, nor did he provide the testimony of any individual possessing firsthand
knowledge of the sale. Rather, his counsel argued for a reduction in value and
presented documents that purportedly represented the property’s purchase price
of $70,400, including listing information and a settlement statement. The record
contains no evidence that counsel had firsthand knowledge of the sale or the
documents he presented. And statements of counsel are not evidence. See
Corporate Exchange Bldgs. IV & V, Ltd. Partnership v. Franklin Cty. Bd. of
Revision, 82 Ohio St.3d 297, 299, 695 N.E.2d 743 (1998). See also Hardy v.
Delaware Cty. Bd. of Revision, 106 Ohio St.3d 359, 2005-Ohio-5319, 835 N.E.2d
348, ¶ 14 (discussing adverse consequences that may result from a party’s failure to
present witness testimony before the board and electing instead to rely upon
documentary exhibits discussed by counsel).
Moreover, the Multiple Listing Service listing for the property from
the HUD sale is “unreliable hearsay.” See, e.g., Dellick v. Eaton Corp., 7th Dist
Mahoning No. 03-MA-246, 2005-Ohio-566, ¶ 25. And finally, unlike in Schwartz,
143 Ohio St.3d 496, 2015-Ohio-3431, 39 N.E.3d 1223, Hersh failed to provide
evidence or market data to show that no higher price could be obtained.
Hersh encourages this court to apply the Supreme Court’s reasoning
in Dauch, 149 Ohio St.3d 691, 2017-Ohio-1412, 77 N.E.3d 943. In Dauch, the
Supreme Court held that (1) the BTA properly considered conveyance fee
statements that were included in the statutory transcripts; and (2) the taxpayer,
who sought to decrease the valuation of the properties based on the prices he paid
for them, met his initial burden of showing that the purchases were made at arm’s
length through conveyance-fee statements, the property-record cards, and other
documents without having to appear at the BOR’s hearing. Id. at ¶ 19. Dauch,
however, did not concern a HUD sale. And as previously discussed, HUD sales are
forced sales, and unlike regular sales, they are presumptively not arm’s-length
transactions in which HUD “obtains the property ‘under duress, and obviously
seeks to divest itself of the property for at least the amount of its guarantee.’”
Fenco, 127 Ohio St.3d 63, 2010-Ohio-4907, 936 N.E.2d 489, at ¶ 29, quoting Matic
v. Mahoning Cty. Bd. of Revision, BTA No. 1990-H-1114, 1992 Ohio Tax LEXIS
1544, 4 (Dec. 11, 1992). Therefore, Dauch does not apply here.
Hersh also contends that the BTA improperly imposed an additional
requirement that a property owner demonstrate the property was marketed for a
“significant period.” In support, Hersh, taking the statement out of context, cites
to the BTA’s decision stating that “[Hersh] does not claim that this property was on
the market for any significant period.” We do not find the BTA was placing an
additional burden upon Hersh, but rather, the BTA was distinguishing the facts
presented in Schwartz in response to Hersh’s argument that his case can be
likened to the Schwartz case. In comparing the cases, the BTA stated that while
the property in Schwartz had been on the market for three years, Hersh does not
make the same claim.
In light of the above, we find Hersh failed to rebut the presumption
that the sale of the Sheldon Road property was not an arm’s-length transaction,
and the BTA did not improperly impose additional requirements that the property
be marketed for a significant period of time. We therefore find the BTA’s decision
was reasonable and lawful.
Hersh’s assignments of error are overruled.
Judgment affirmed.
It is ordered that appellees recover of appellant costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate be sent to said court to carry this
judgment into execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule
27 of the Rules of Appellate Procedure.
____________________________
MICHELLE J. SHEEHAN, JUDGE
KATHLEEN ANN KEOUGH, P.J., and
MARY EILEEN KILBANE, J., CONCUR