Archon Capital, L.P. v. Cuyahoga Cty. Bd. of Revision

[Cite as Archon Capital, L.P. v. Cuyahoga Cty. Bd. of Revision, 2023-Ohio-1750.]

COURT OF APPEALS OF OHIO

EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA

ARCHON CAPITAL L.P., ET AL., :

Plaintiffs-Appellants, :
No. 111885
v. :

CUYAHOGA COUNTY BOARD OF :
REVISION, ET AL.,

Defendants-Appellees. :

JOURNAL ENTRY AND OPINION

JUDGMENT: REVERSED AND REMANDED
RELEASED AND JOURNALIZED: May 25, 2023

Administrative Appeal from the Cuyahoga County Court of Common Pleas
Case Nos. CV-21-946777, CV-21-946780, CV-21-946782, and CV-21-946783

Appearances:

Jeffrey P. Posner, for appellants.

Michael C. O’Malley, Cuyahoga County Prosecuting
Attorney, and Reno J. Oradini, Jr., Assistant Prosecuting
Attorney, for appellee Cuyahoga County.

Frantz Ward LLP and John P. Desimone, for appellee
Orange City School District Board of Education.
KATHLEEN ANN KEOUGH, J.:

Appellants, Archon Capital, L.P., Archon Capital and Growth, L.P.,

and Archon Capital Growth and Income, L.P. (“appellants”), appeal from the trial

court’s judgments affirming the decisions of the Board of Revision (“BOR”)

regarding the taxable value of residential properties in four separate cases. Finding

some merit to appellants’ appeal, we reverse and remand.

I. Background

Appellants purchased the subject properties at foreclosure sales and

then brought property valuation complaints in the BOR seeking reductions of the

taxable value of the properties from that determined by the county fiscal officer for

tax year 2019. Prior to the hearing in each case, appellants asked the BOR to

subpoena the county appraisers who had appraised the subject properties prior to

the sheriff’s foreclosure sales so that appellants could examine them at the hearing

regarding the analyses the appraisers used to render their valuations. In each case,

the BOR denied appellants’ request, stating:

The Board of Revision received your request to have the Board exercise
subpoena power to call your witnesses for [each case].

The Board finds that the complainant bears the burden of proof to
establish their opinion of value, therefore your request has been
DENIED.

(Emphasis sic.)

All cases were heard by the BOR on the same day in April 2021. In

BOR Complaint No. 912-14-016-2019, regarding residential property on East

Juniper Lane in Moreland Hills, Ohio valued at $639,900 by the fiscal officer,
appellants sought a valuation of $503,003 based on a report from its independent

appraiser, Daniel Forrester. Forrester testified that in reaching his valuation, he had

considered three comparable residential sales in the area and viewed the interior of

the subject property one month prior to the hearing while the property was being

renovated at a cost, according to the owner, of $95,649. With respect to the

necessity and amount of the renovations, Forrester admitted that he had not viewed

the interior of the property at any time prior to the renovations and “had no idea” of

the condition of the property prior to renovation. He also conceded that he had not

verified any of the alleged comparable sales with the parties to those transactions

but had relied solely on the multiple listing service (“MLS”) and county records to

determine their alleged condition and value. Forrester admitted that he had not

submitted any pictures of the subject property nor the alleged comparable

properties with his report, even though he acknowledged that pictures would have

helped the reader of his report. Further, upon questioning by a board member,

Forrester conceded that the value he had assigned to one of the alleged comparable

properties was incorrect. After Forrester’s testimony, appellants’ counsel argued

that in addition to Forrester’s report, the BOR should consider as evidence of value

the county’s appraisal of the subject property at $525,000 for the sheriff’s

foreclosure sale.

After the hearing, the BOR rendered a “no change” decision, finding

that Forrester’s report was “unreliable evidence of value upon which [the BOR] may

rely to change value.” The Board found that Forrester had made “condition
adjustments” to the three alleged comparable properties in determining their value

but that there was no support in his report for the adjustments. Further, the Board

found that “there are no interior photographs of the subject [property] and the

comparables were not verified with a party to the transaction or broker.”

In BOR Complaint No. 213-19-065-2109, regarding residential

property on Radcliffe Drive in Westlake, Ohio valued at $220,200 by the fiscal

officer, appellants sought a reduction in value to $165,000 as of January 1, 2019,

based on an independent appraisal by Forrester. Forrester testified that in reaching

his valuation, he had compared the subject property to the sales of three comparable

properties and observed the interior and exterior of the subject property. Forrester

acknowledged, however, that he had not included any pictures of the subject

property or the alleged comparable properties with his report and did not have any

documentation of completed repairs to the subject property to support his valuation.

He also acknowledged that he had relied only upon the MLS with respect to the

comparable properties and had not verified the information contained therein with

any parties to the sales transactions. After Forrester’s testimony, appellants’ counsel

argued that the BOR should consider the county’s appraisal of the subject property

at $170,000 for the foreclosure sale as evidence of its value.

After the hearing, the BOR issued a “no change” decision, finding that

Forrester’s report was “unreliable evidence of value” upon which the Board could

not rely to change the value of the subject property. The BOR found that there was

no support in Forrester’s report for the condition adjustments he made for the
comparable properties, there were no pictures of the interior of the subject property

to support the adjustment in value, and the sales of the comparable properties were

not verified with any parties to those transactions.

In BOR Complaint No. 686-28-031-2019 regarding residential

property on Fairmount Blvd. in Cleveland Heights valued at $983,000 by the county

fiscal officer, appellants sought a reduction in value to $340,000 based on an

independent appraisal by Forrester. Forrester testified that in reaching his

valuation, he had compared the subject property to the sales of three comparable

properties in the area. He again acknowledged that although he made condition

adjustments for two of the three comparable properties, he relied solely upon the

MLS to determine the condition and value of those properties and did not verify any

of the information from the MLS with parties to those sales transactions. He further

acknowledged that he did not include pictures of the interior of the subject property

despite making condition adjustments in determining its value. He also

acknowledged upon questioning by a Board member that the square footage of

comparable property No. 2 as set forth in his report was incorrect.

After the hearing, the BOR issued a “no change” decision, finding that

Forrester’s report was “unreliable evidence of value” upon which the Board could

not rely to change value. The Board found that there were no pictures in the report

to support the condition adjustments Forrester made to determine value and that

the comparable sales were not verified with any party to the transaction or a broker.

In addition, the BOR found that Forrester’s report contained incorrect information.
 Finally, in BOR Complaint No. 364-13-027-2019 regarding the first

parcel for residential property on East Bridge Street in Berea, Ohio valued at

$220,700 by the county fiscal officer, appellants sought a reduction in value as of

January 1, 2019, to $130,000. The second parcel was valued at $24,900, and

appellants sought a reduction to $1. After Forrester testified at the hearing that he

had been unable to provide an independent appraisal for the subject property due

to recent medical issues, appellants’ counsel argued that the BOR should consider

the county’s appraisal of $130,000 for the foreclosure sale as evidence of value.

After the hearing, the BOR issued a “no change” decision, finding that

there was insufficient competent and probative evidence of value upon which the

Board could rely to change value for the subject property.

Appellants filed separate appeals of the BOR decisions to the common

pleas court and moved to consolidate the appeals, which the trial court granted. The

BOR record in each case was submitted to the trial court. After a case-management

conference on August 16, 2021, at which all parties participated, the court issued an

order that “the parties may file motion(s) to compel discovery on or before

November 30, 2021” and that all briefing in the case was to be completed by the

same date. The record does not reflect that appellants requested any discovery

during the pendency of its appeals, however, nor did they file a motion to compel

discovery.

All parties submitted briefs regarding the BOR’s valuations. In its

brief, appellants argued that in all four cases, the BOR had not given any
consideration to the sheriff’s-sale appraisals of the subject properties. Appellants

asserted that because the BOR had refused to issue the requested subpoenas for the

appraisers to testify at the hearings before the Board, the county’s appraisals for

purposes of the foreclosure sales should be the presumptive correct valuation of the

subject properties and the county should be estopped from denying their validity as

the true expression of value. Appellants argued further that because the BOR had

denied their subpoena requests, the trial court should hold an evidentiary hearing

at which the appraisers could be examined and where appellants could produce

evidence to supplement their independent appraiser’s reports that the BOR had

determined were defective.

The BOR, the county fiscal officer, and the Orange City School District

Board of Education, which was a party to BOR Complaint No. 912-14-016-2019, filed

briefs opposing appellants’ request for a hearing and asking the trial court to affirm

the BOR’s decisions on the existing record.

Subsequently, the trial court affirmed the BOR’s decisions, stating in

its journal entry in each case, “[a]fter a careful review of the briefing herein, the court

hereby affirms the decision of the Board of Revision.” This appeal followed.

II. Law and Analysis

An appeal of a county BOR decision may be taken to the court of

common pleas or to the Ohio Board of Tax Appeals (“BTA”). R.C. 5717.01 and

5717.05. Therefore, the common pleas court and the BTA fulfill the same function

when reviewing a decision of a board of revision, and BTA case law may be applied
to the common pleas court proceedings in such appeals. Beechwood II, L.P. v.

Clermont Cty. Bd. of Revision, 12th Dist. Clermont No. CA2011-04-033, 2011-Ohio-

5449, ¶ 13, fn. 1, citing Murray & Co. Marina v. Erie Cty. Bd. of Revision, 121 Ohio

App.3d 166, 172, 703 N.E.2d 846 (6th Dist.1997).

In an appeal to the common pleas court pursuant to R.C. 5717.05, the

court should consider the evidence heard by the BOR and any additional evidence

heard at the court’s discretion and apply its independent judgment to determine the

taxable value of the subject property. R.C. 5717.05 (“The court may hear the appeal

on the record and the evidence thus submitted, or it may hear and consider evidence

in addition thereto.”); Black v. Bd. of Revision of Cuyahoga Cty., 16 Ohio St.3d 11,

14, 475 N.E.2d 1264 (1985) (In an R.C. 5717.05 appeal, the court “should ensure that

its final determination is more than a mere rubber stamping of the board of

revision’s determination. * * * The court must consider anew all of the evidence and

may, in its discretion, admit additional evidence.”). Thus, R.C. 5717.05

contemplates a decision de novo but not a trial de novo. Black at id.

Upon further appeal to this court, our review is limited to whether the

court of common pleas abused its discretion in determining the matter. Kaiser v.

Franklin Cty. Auditor, 10th Dist. Franklin No. 10AP-909, 2012-Ohio-820, ¶ 9. See

also Black at id. (“The independent judgment of the trial court should not be

disturbed absent a showing of abuse of discretion.”).

The term “abuse of discretion” connotes “judgment exercised by a

court [that] does not comport with reason or the record.” State v. Underwood, 11th
Dist. Lake No. 2008-L-113, 2009-Ohio-2089, ¶ 30, citing State v. Ferranto, 112

Ohio St. 667, 676-678, 148 N.E. 362 (1925). Stated another way, an abuse of

discretion is the trial court’s “‘failure to exercise sound, reasonable, and legal

decision-making.’” State v. Beechler, 2d Dist. Clark No. 09-CA-54, 2010-Ohio-

1900, ¶ 62, quoting Black’s Law Dictionary 11 (8th Ed.Rev.2004).

A. Evidentiary Hearing

In their first assignment of error, appellants contend that the trial

court abused its discretion in not holding an evidentiary hearing before rendering

its decision.

R.C. 5715.19(G) provides that a litigant who has failed to present

evidence before the BOR may present it to a reviewing court if good cause is shown:

A complainant shall provide to the board of revision all information or
evidence within the complainant’s knowledge or possession that affects
the real property that is the subject of the complaint. A complainant
who fails to provide such information or evidence is precluded from
introducing it on appeal to the board of tax appeals or the court of
common pleas, except that the board of tax appeals or court may admit
and consider the evidence if the complainant shows good cause for the
complainant’s failure to provide the information or evidence to the
board of revision.

Appellants contend that the trial court should have held an

evidentiary hearing to allow them to examine the county’s appraisers who appraised

the subject properties for purposes of the sheriff’s foreclosure sales. They argue that

a hearing in the trial court was required because although they asked the BOR to

issue subpoenas to the county appraisers for the hearings, the BOR denied their

requests. Appellants refer us to R.C. 2506.03(A), applicable to administrative
appeals generally, which provides that a trial court may admit supplemental

evidence in an appeal of a decision by an administrative agency when the agency or

officer has subpoena power but refused the appellant’s requests to issues subpoenas

on its behalf. We find that the trial court did not abuse its discretion in not holding

an evidentiary hearing to admit additional evidence.

First, under the plain language of R.C. 5717.05, a common pleas court

may but is not required to admit additional evidence when reviewing a tax valuation

decision of a board of review. Black, 16 Ohio St.3d at 14, 475 N.E.2d 1264.

Furthermore, as the parties challenging the BOR’s decisions,

appellants had the burden to establish with competent and probative evidence their

proposed values as the correct values of the properties. Colonial Village, Ltd. v.

Washington Cty. Bd. of Revision, 123 Ohio St.3d 268, 2009-Ohio-4975, 915 N.E.2d

1196, ¶ 23; see also W. Industries, Inc. v. Hamilton Cty. Bd. of Revision, 170 Ohio

St. 340, 342, 164 N.E.2d 741 (1960) (“The burden is on the taxpayer to prove his

right to a deduction. He is not entitled to the deduction claimed merely because no

evidence is adduced contra his claim.”).

If appellants believed that the BOR had stymied their efforts to satisfy

their evidentiary burden, as allowed by the trial court’s discovery order, they could

have conducted discovery, deposed witnesses, and submitted additional evidence to

the trial court in support of their appeals. But the record does not reflect that

appellants sought any discovery, nor did they file a motion to compel discovery. It

cannot be said that the trial court abused its discretion in not holding an evidentiary
hearing where appellants never sought any discovery, despite the court’s order

allowing it to do so. See Archon Capital, L.P. v. Cuyahoga Cty. Bd. of Revision, BTA

No. 2019-2141, 2021 Ohio Tax LEXIS 566 (Mar. 16, 2021) (in a case involving one of

the same parties to this appeal and the same counsel, the BTA denied the property

owner’s requests to remand the matter to the BOR for reconvened hearings and to

order the BOR to subpoena the appraisers who compiled the sheriff-sale appraisal

where the property owner had an opportunity to address any evidentiary

deficiencies at the hearing before the BTA but did not avail itself of the opportunity).

The first assignment of error is overruled.

B. Adequacy of the Trial Court’s Review

In their second assignment of error, appellants contend that the trial

court abused its discretion in affirming the decisions of the BOR because it did not

adequately review the merits of each case. Appellants contend that the trial court’s

“short-shrift, identical” judgment entry in each case demonstrates that the trial

court’s review was nothing more than a “mere rubber stamping” of the BOR’s

decisions. Appellants also assert that the trial court’s statement in its journal entries

that it “affirmed” the decisions of the BOR was legally incorrect because the trial

court is required to independently review the record and then make an independent

“value finding” regarding the value of the subject property. In short, appellants

contend that the trial court’s journal entries fail to demonstrate that it independently

reviewed the evidence in each case and arrived at a decision de novo.
 In an appeal brought pursuant to R.C. 5715.05, “the common pleas

court has a duty on appeal to independently weigh and evaluate all evidence

properly before it.” Black, 16 Ohio St.3d at 13, 465 N.E.2d 1264. “The court is then

required to make an independent determination concerning the valuation of the

property at issue.” Id. “The court’s review of the evidence should be thorough and

comprehensive, and should ensure that its final determination is more than a mere

rubber stamping of the board of revision’s determination.” Id.

We agree with appellants that the trial court’s journal entries in each

case do not adequately demonstrate that the trial court thoroughly and

comprehensively reviewed the evidence in the record before rendering its decisions.

The journal entries in each case state, “After a careful review of the briefing herein,

the court hereby affirms the decision of the Board of Revision.” The entries seem to

indicate that the trial court reviewed only the parties’ briefs submitted on appeal

rather than the entire administrative record in each case. And, because the entries

do not indicate that the trial court weighed and evaluated the evidence in the record

before rendering its decisions, we cannot conclude in the absence of a specific

valuation of each property in the entries that the court made an independent

determination concerning the value of the properties. Finally, in light of the trial

court’s failure to review the entire record before rendering its decisions, appellees’

argument that the trial court’s journal entries are adequate because appellants

should have requested findings of fact and conclusions of law pursuant to Civ.R. 52

is without merit.
 Accordingly, we sustain the second assignment of error. We reverse

the trial court’s judgments and remand for the trial court to independently weigh

and consider the evidence in the record and then make an independent

determination concerning the valuation of the properties at issue.

In their third assignment of error, appellants contend that the trial

court abused its discretion by not finding that the manifest weight of the evidence

compelled a reduction in taxable value for each property. In their fourth assignment

of error, appellants contend that the trial court abused its discretion by not finding

that the sheriff’s-sale appraisals were the presumptive correct valuation of the

subject properties and that the county should be estopped from denying their

validity for tax valuation purposes.1 Because both of these assigned errors are

rendered moot by our judgment reversing and remanding the trial court’s decisions,

we need not consider them. App.R. 12(A)(1)(c).

Judgment reversed and remanded.

It is ordered that the parties share equally in the 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.

1 Contra Archon Capital, L.P. v. Cuyahoga Cty. Bd of Revision, BTA Nos. 2019-
2076, 2019-2078, 2019-2080, and 2019-2082, 2021 Ohio Tax LEXIS 525, 4, 7 (Mar. 16,
2021) (in a BTA appeal involving one of the same parties to this appeal and the same
counsel, the BTA found that estoppel does not lie against the state and sheriff-sale
appraisals “are not competent, credible, and probative evidence of the subject properties’
values”).
 A certified copy of this entry shall constitute the mandate pursuant to Rule 27

of the Rules of Appellate Procedure.

KATHLEEN ANN KEOUGH, JUDGE

FRANK DANIEL CELEBREZZE, III, P.J., and
LISA B. FORBES, J., CONCUR