The Supreme Court of Ohio today rejected a real estate developer’s request to block a magistrate's order aimed at collecting a $1.5 million judgment. The case concerns a contentious effort to redevelop a downtown Cincinnati property.

In a unanimous per curiam opinion, the Supreme Court denied a writ of prohibition requested by Ronald Goldschmidt, who claimed a Hamilton County Common Pleas Court magistrate exceeded his authority when ordering a probe into the finances of four businesses connected to Goldschmidt. The Court affirmed a decision by the First District Court of Appeals, which also denied Goldschmidt’s request for a writ.

Both the Supreme Court and the First District ruled that Goldschmidt must first have Hamilton County Common Pleas Judge Alan Triggs rule on the matter before pursuing any further appeals.

Lengthy Legal Dispute Followed Unpaid Loan
The dispute is associated with a 2016 civil lawsuit against Goldschmidt related to his attempts to redevelop the former Convention Place Mall, located at 435 Elm Street in Cincinnati. The city leased the property to Goldschmidt’s companies for development, and the effort was financed with a mortgage loan from U.S. Bank. Goldschmidt agreed to be personally liable for any debt payments to U.S. Bank.

In 2016, U.S. Bank sought to foreclose on the mortgage and pursued a judgment against Goldschmidt. As the case proceeded, the bank transferred all its rights in the loan to 435 Elm Investment LLC. Elm Investment then continued to pursue Goldschmidt to repay the loan. The court found Goldschmidt owed Elm Investment more than $1.5 million.

Elm Investment sought to collect the unpaid judgment through a “charging order.” Under R.C. 1706.342, a court can issue a charging order that allows funds to be collected from limited liability company owners, who are called members. The trial court issued the charging order, permitting Elm Investment to seek repayment from six companies that Elm Investment believed were associated with Goldschmidt.

Goldschmidt appealed the charging order to the First District, which reversed the trial court’s decision. The appeals court found that some of the companies were not limited liability companies and that Elm Investment did not provide evidence to prove that Goldschmidt was a member of any of the LLCs ordered to pay the judgment. The First District remanded the case to the trial court for further proceedings.

Developer Objects to Second Collection Attempt
In September 2023, Elm Investment asked the trial court for another charging order to collect funds that would go to Goldschmidt through his membership rights in four LLCs. A magistrate conducted a hearing on the matter. The magistrate granted an “order” for the charging order and found Elm Investment had the right to receive any distributions that the four LLCs were obligated to make to Goldschmidt.

Because the magistrate was unclear about how much money was being held in a trust for the benefit of Goldschmidt and his companies, and what percentage of ownership Goldschmidt had in the companies, the magistrate added requirements to his charging order. The magistrate required Goldschmidt to present an accounting of the funds held in trust for the companies and to document his membership interest in the companies.

Goldschmidt asked the magistrate to stay the charging order so he could challenge it, and he also requested that Judge Triggs stay the magistrate’s order.

Developer Appealed Court’s Order
While the motions to stay the order were pending in the trial court, Goldschmidt sought a writ of prohibition from the First District. Goldschmidt argued the magistrate exceeded his authority because a charging order requires judicial approval. He also maintained the order was illegal because R.C. 1706.342 does not allow the magistrate to order an accounting of the LLC assets.

The First District dismissed the case, and Goldschmidt appealed to the Supreme Court, which was required to hear the appeal.

Supreme Court Analyzed Prohibition Request
The Supreme Court’s opinion explained that central to Goldschmidt’s argument is the magistrate’s authority to issue the charging order without having received approval from Judge Triggs.

The Court explained that magistrates assist trial judges in cases in several ways, including issuing “magistrate orders” and “magistrate decisions.” Under the Ohio Rules of Civil Procedure, a magistrate can issue an order that is necessary to further the proceedings if the order is not “dispositive,” meaning it does not resolve a party's legal claim or eliminate a defense. When a magistrate seeks to make a ruling to resolve a claim or defense, the magistrate issues a magistrate’s decision. The decision takes effect only after a trial judge approves it.

The Supreme Court stated the trial court has jurisdiction to decide whether the charging order should have been made through a magistrate’s order or a magistrate’s decision.

To be entitled to a writ of prohibition, Goldschmidt had to prove he had no other adequate remedy to contest the magistrate’s order. The Court found Goldschmidt had an adequate remedy by contesting the magistrate’s order in Judge Triggs’ court. If the trial court rules against him, he can then appeal the decision to a higher court, the opinion concluded.

2023-1649. State ex rel. Goldschmidt v. Triggs, Slip Opinion No. 2024-Ohio-3225.

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