Supreme Court hears arguments by two Cleveland-area school districts about the validity of their 1997 tax-sharing agreement.

Supreme Court hears arguments by two Cleveland-area school districts about the validity of their 1997 tax-sharing agreement.

In 1990, a vision was unveiled for a southeast corner of Cuyahoga County. Plans for 700 acres of commercial development, named Chagrin Highlands, would be the future home of a major corporation’s headquarters as well as offices for other businesses, shops, and even a hotel.

The city of Beachwood annexed 405 acres of the Highlands territory. Beachwood, Cleveland, and three other municipalities whose boundaries crossed over the Highlands quickly agreed to a tax-sharing plan to reap the benefits of the thousands of new jobs proposed for the area. Absent from the vision was residential development.

Beachwood City Schools petitioned the state Board of Education for the right to annex the portion of Highlands territory that was added to the city limits. Chagrin Highlands is in Warrensville Heights City School District territory. While the five municipalities reached a swift resolution on tax sharing, Beachwood and Warrensville Heights schools did not.

Almost 31 years after the creation of Chagrin Highlands, the two districts are before the Ohio Supreme Court, battling over whether Warrensville Heights has reneged on a deal signed in 1997 to share some of the property taxes from the valuable commercial area, which did not add a large amount of new students to the districts.

Territory Request Triggers Negotiation
As a result of Warrensville Heights’ objection, Warrensville Heights and Beachwood followed a process under R.C. 3311.06 and state school board rules to make a good faith effort to negotiate a settlement.

The boards couldn’t reach an agreement on their own and engaged retired federal district court Judge Robert Duncan to mediate the dispute. In 1997, Judge Duncan proposed a deal that the land would remain in the Warrensville Heights district, but once the Highlands property exceeded approximately $22 million in value, the boards would split the property tax revenues, with 70 percent for Warrensville Heights and 30 percent to Beachwood.

Both school boards approved the settlement. Beachwood sent a copy of the settlement to the state Board of Education, but it didn’t ask for board approval. Neither school board submitted the settlement to the state board for approval.

Twenty years after the Highlands vision was announced, a key component of the plan emerged. In 2010, industrial manufacturer Eaton Corp. announced it was moving out of its corporate headquarters in Cleveland to a new facility in the Highlands and, with that move, consolidating some of its other area facilities. By 2013, the value of the land exceeded the $22 million threshold outlined in the 1997 settlement.

Beachwood asked Warrensville Heights to transfer its share of tax revenues to the school district. Warrensville Heights refused, arguing there wasn’t an approved settlement.

In 2018, Beachwood sued Warrensville Heights in Cuyahoga County Common Pleas Court, claiming the school district breached the contract, and made other claims, including that Warrensville Heights schools committed fraud. The trial court sided with Warrensville Heights, finding that without the state board’s final approval, there was no valid contract.

Beachwood appealed to the Eighth District Court of Appeals. In a split decision, the Eighth District reversed the trial court, finding an agreement that doesn’t transfer physical territory from one district to another doesn’t need state board approval.

The Supreme Court will hear oral arguments in Warrensville Heights v. Beachwood along with six other cases when it meets in Columbus for a two-day session. The Court will hear three cases on Oct. 5 and four cases, including the school district standoff, on Oct. 6. Oral arguments begin each day at 9 a.m.

Oral Argument Details
The arguments will be streamed live online at sc.ohio.gov and broadcast live, and archived, on The Ohio Channel.

In addition to these highlights, the Court’s Office of Public Information released preview articles today about each case, available through the case-name links.

Tuesday, Oct. 5
A man was convicted in Cuyahoga County and sentenced to death for the kidnapping, rape, and murder of a 14-year-old girl in 2017. The girl took two buses to school, and she disappeared from the area where she switched buses. In State v. Whitaker, the offender’s automatic death-penalty appeal, the man raises 21 legal issues. Among them, he challenges whether the state had a right to force him to undergo a psychological evaluation by its own expert and whether the aggravated burglary charge was proven. Noting that during the trial’s guilt phase he acknowledged killing the girl, he argues the prosecutor presented graphic evidence about the murder only to “inflame” the jury.

In 2018, a company owning 141 acres in Belmont County sought to extinguish the oil and gas rights claims made by previous owners between 1925 and 1954. The trial court agreed with the company, but an appeals court ruled that only four of the five reservations of oil and gas rights made during that timeframe had been wiped away by the Ohio Marketable Title Act. The deed in the remaining right indicated the seller was retaining one-quarter of the oil and gas rights while granting three-quarters to the new landowner, even though the seller only owned three-eighths of the rights. In Senterra v. Winland, the Court will consider whether Ohio should apply a rule that if a seller grants away more rights than the seller owns, the reservation is abolished.

In State v. Leegrand, a driver for a pizza shop was shot and killed in 2015 as he left a Cleveland location where he was making a delivery. The man convicted was sentenced for multiple crimes, including “life in prison with the possibility of parole after 15 years” on the murder charge. The appellate court determined the sentence for murder was incorrect and ordered the trial court to resentence him to an indefinite term of 15 years to life, as mandated by statute. The Cuyahoga County prosecutor argues the sentences are equivalent. The offender contends that courts aren’t required to use a statute’s exact wording, but they must abide by the distinctions the General Assembly made in different sentences for crimes.

Wednesday, Oct. 6
In 2017, two Monroe County landowners sought to extinguish all prior claims to the oil and gas rights under their properties. More than 100 defendants objected, arguing they had ownership rights through inheritances. In Peppertree Farms v. Thonen, the landowners assert that the rights of the original oil and gas owners ended when they died because the deeds to the land didn’t use required wording that indicated they sought to pass the rights onto their heirs.

The Court will also hear a separate case involving the same parties in Peppertree Farms v. Thonen regarding another deed created by a different past owner of the oil and gas rights under two adjacent properties in Monroe County. In this case, the heirs not only claim their rights were preserved, even if the deed didn’t indicate an intention to pass the rights to the heirs, but also argue that the descendants preserved their rights through a will recorded in Monroe County.

The Avon Lake attorney in Lorain County Bar Association v. Nelson participated in a bar association referral program for individuals experiencing financial hardship. The attorney is accused of professional misconduct for failing to use the referral-program fee agreement with clients and for lying in legal paperwork about his awareness of a disciplinary investigation. The lawyer objects to the disciplinary panel’s findings and the proposed two-year suspension with one year stayed. He states that his legal assistant lost the referral-client fee agreements during the May 2020 racial-justice protests, and no clients were harmed. Noting that the attorney has been sanctioned twice before, the bar association responds that the attorney needs an actual timeout from practicing law.