Tuesday, Feb. 24, 2015
Grace Cathedral, Inc. v. Joseph W. Testa, Tax Commissioner of Ohio, Case no. 2014-0373
Ohio Board of Tax Appeals
In re: J.T., Case no. 2014-0449
First District Court of Appeals (Hamilton County)
Farmers Insurance of Columbus, Inc. v. Jerry Dillon and Nancy Dillon, Case no. 2014-0451
Fifth District Court of Appeals (Coshocton County)
In re: Application of Byron L. Harper, Case no. 2014-1552
Board of Commissioners on Character and Fitness
Is Dormitory for Church Guests Exempt from Property Taxes?
Grace Cathedral, Inc. v. Joseph W. Testa, Tax Commissioner of Ohio, Case no. 2014-0373
Ohio Board of Tax Appeals
ISSUES:
- Does a dormitory providing temporary shelter for guests visiting a church qualify as a charitable purpose, which exempts the dormitory from property taxes?
- Is a dormitory used to facilitate attendance at live worship services a place of public worship, which is exempt from property taxes?
BACKGROUND:
Grace Cathedral, Inc., has two churches – one in Akron and another in Cuyahoga Falls. The Christian church is a North Carolina non-profit corporation founded by Ernest Angley that reaches its members in the United States and other countries through local services, televised broadcasts, and satellite transmissions.
Grace Cathedral owns three subsidiary corporations, including a for-profit television station, affiliated with the CW network, and a for-profit buffet restaurant in Cuyahoga Falls.
The Akron church building, which sits on 14 acres, is tax exempt. In 2008, the church built a study hall and a dormitory on the property. The two-story, 23-room dorm provides short-term accommodations for out-of-state and foreign visitors when they attend Grace Cathedral’s religious services.
The church states that visitors stay at the dorm at no charge. According to Ohio’s tax commissioner, however, testimony has shown that visitors are strongly encouraged to donate to Grace Cathedral in exchange for the lodging.
For tax year 2010, Grace Cathedral requested property-tax exemptions for the study hall and the dorm. In May 2011, the tax commission approved the exemption for the study hall but denied it for the residence.
The church appealed the denied dorm exemption to the Ohio Board of Tax Appeals, which affirmed the tax commissioner’s decision in 2014. Grace Cathedral filed an administrative appeal of the board’s ruling with the Ohio Supreme Court.
Is Dorm Used Exclusively for Charitable Purposes?
R.C. 5709.12(B) states that “[r]eal and tangible personal property belonging to institutions that is used exclusively for charitable purposes shall be exempt from taxation ….”
Attorneys for Grace Cathedral assert that the church uses the dorm exclusively for charitable purposes. They argue the church has the charitable purpose of “disseminat[ing] a message for the spiritual advancement and benefit of mankind.” If a charitable institution shows its property is used to further the organization’s charitable purpose, then the property meets the requirement for exemption, they maintain. They contend that the dorm is needed to deliver the church’s message in live worship services.
To distinguish the church’s claims from cases in which courts have ruled that private residences for clergy aren’t tax-exempt property, they describe the dorm as temporary lodging rather than a residence. And they state that the church receives no financial benefit and seeks no profit for providing housing for visitors.
The tax commissioner’s attorneys counter that real property used only to support public worship isn’t a qualified charitable exemption under the law.
“Because the activity of public worship is not, in itself, a charitable activity, real property is not ‘used exclusively for charitable purposes’ when it is used to facilitate the activity of public worship,” they write in the brief to the court.
They identify the two distinct exemptions – one for “houses of public worship” and the other for exclusively charitable uses. There would be no need for the separate house-of-public-worship tax exemption if such entities all qualified as exempt under the charitable purposes provision, they maintain.
Citing examples such as a church-run soup kitchen for the poor, they argue that religious organizations may receive charitable exemptions only when the activities in or on the property are charitable and open to the public. Because the dorm doesn’t benefit people in general or those with a particular need, it isn’t used exclusively for charitable purposes, but instead privately serves the church’s members, they conclude.
Is Dorm a Place of Public Worship?
Grace Cathedral’s attorneys argue that the dorm facilitates attendance at the church’s services so it’s a place of public worship, which is exempt from property taxes under R.C. 5709.07. The statute exempts “[h]ouses used exclusively for public worship, the books and furniture in them, and the ground attached to them that is not leased or otherwise used with a view to profit and that is necessary for their proper occupancy, use, and enjoyment.”
The dorm, they assert in the church’s brief, “directly and primarily provides for the proper occupancy, use, and enjoyment of the Grace Cathedral church for public worship” and “is an extension of the worship experience and is utilized in continuing fellowship, religious discussion and religious learning.”
Citing a 2009 Ohio Supreme Court decision, attorneys for the tax commissioner respond that the dorm isn’t a house of public worship because it only supports worship at the nearby church and it isn’t used in a “principal, primary, and essential way” to facilitate the worship. They argue that Ohio Supreme Court precedent during the past 150 years has never permitted private housing to be exempt from taxes as a house of public worship.
They point out that the state legislature added a property-tax exemption in 1988 for church camps, which would’ve been unnecessary if such temporary facilities qualified for exemption under the existing public worship house provision.
- Kathleen Maloney
Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.
Contacts
Representing Grace Cathedral, Inc.: William Chris, 330.434.3000
Representing the Ohio Tax Commissioner from the Ohio Attorney General’s Office: David Ebersole, 614.644.8909
Is an Inoperable Pistol a Deadly Weapon?
In re: J.T., Case no. 2014-0449
First District Court of Appeals (Hamilton County)
ISSUE: Does an inoperable pistol meet the definition of a deadly weapon per se under Ohio law?
BACKGROUND:
On March 17, 2013, a woman reported to police that a youth was showing a handgun to a group of juveniles on a Cincinnati street. Two Cincinnati police officers responded and stopped two of the youth. During their discussion, one officer noticed a bulge around the waistband of the juvenile identified by the initials J.T. The officer patted down J.T. and discovered a loaded 9 mm semiautomatic handgun.
While the gun was found to be inoperable, the Hamilton County Juvenile Court adjudicated the 14-year-old as a delinquent child for carrying a concealed weapon, a violation of R.C. 2923.12(A).
The youth appealed to the First District Court of Appeals, claiming that an inoperable pistol isn’t a “deadly weapon” based on the definition in the statute. In its judgment in February 2014, the appeals court affirmed the juvenile court’s ruling.
The juvenile appealed to the Ohio Supreme Court, which decided to hear the case.
Statutes
R.C. 2923.12(A) states, “No person shall knowingly carry or have, concealed on the person’s person or concealed ready at hand, any of the following: (1) A deadly weapon other than a handgun; (2) A handgun other than a dangerous ordnance; (3) A dangerous ordnance.” A “deadly weapon” is defined as “any instrument, device, or thing capable of inflicting death, and designed or specially adapted for use as a weapon, or possessed, carried, or used as a weapon.”
Juvenile’s Contentions
Attorneys for J.T. argue that the pistol may have been designed as a weapon, but because it no longer worked it had lost its function. Once an object loses the purpose for which it was designed, it should be considered a deadly weapon only if it can inflict death and is possessed, carried, or used as a weapon, they contend.
While J.T.’s gun could’ve been used as a bludgeon, his attorneys argue that he had to have used or threatened to use the nonworking gun as a bludgeon for it to be considered a deadly weapon. No evidence or testimony supports the use or threatened use of the gun as a bludgeon in the case, they note.
Because the state didn’t prove that the inoperable handgun was a deadly weapon, the case should be dismissed, they conclude.
State’s Position
Attorneys from the Hamilton County Prosecutor’s Office counter that the semiautomatic pistol is a deadly weapon even if it’s not working. They point to a 1980 decision from the Eighth District Court of Appeals, which stated that a gun’s operability is irrelevant, and argue that the Tenth District came to the same conclusion in State v. Marshall (1978).
They believe J.T. considered the gun to be a deadly weapon because it had a magazine containing bullets. He possessed and carried it as a weapon, they maintain. Taking these points together, they contend that the gun was a per se deadly weapon.
Alternatively, they assert that the inoperable pistol could still inflict death because it could’ve been used as a bludgeon. The statute doesn’t mandate the state to prove that a deadly weapon can cause harm in the way it was designed to do, they add.
- Kathleen Maloney
Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.
Contacts
Representing J.T.: Gordon Magella, 513.946.8256
Representing the State of Ohio from the Hamilton County Prosecutor’s Office: Rachel Curran, 513.946.3091
Did Insurer Violate Consumer Sales Practices Act in Repair Estimate That Included Non-Manufacturer Auto Parts?
Farmers Insurance of Columbus, Inc. v. Jerry Dillon and Nancy Dillon, Case no. 2014-0451
Fifth District Court of Appeals (Coshocton County)
ISSUES:
- In a dispute involving an estimate calling for the use of non-manufacturer auto parts for a repair, does an insurer engage in a “consumer transaction,” as defined in the Ohio Consumer Sales Practices Act?
- Is an insurer’s repair estimate using manufacturer and non-manufacturer auto parts an “unfair or deceptive act or practice,” according to the Ohio Consumer Sales Practices Act?
BACKGROUND:
Jerry and Nancy Dillon filed a claim with their auto insurance company, Farmers Insurance of Columbus, after hitting a deer. They took their damaged car to a repair shop they knew for an estimate.
The insurance company’s claims representative inspected the vehicle and prepared another estimate and gave it to the repair shop. The estimate included original equipment manufacturer (OEM) parts and non-OEM parts. Non-OEM parts are aftermarket replacement parts manufactured by third parties.
When Mr. Dillon discovered the repairs were to include non-OEM parts, he told Farmers he wanted the repairs made only with manufacturer parts, based on the estimate the repair shop had initially put together. Farmers declined to pay for the difference in cost between the two estimates.
Path Through Courts
The Dillons sued the insurance company, claiming state law requires insurers to disclose the recommended use of aftermarket parts to the insured in a written estimate and to obtain a signature from the insured approving the use of non-OEM parts in any repairs.
The trial court granted partial summary judgment to the Dillons and awarded actual damages ($1,521), treble damages ($4,563), legal fees ($20,540), and expenses ($3,989). Some state laws allow the tripling of actual damages, which is called treble damages.
Farmers appealed. The Fifth District Court of Appeals affirmed most of the trial court’s decision. However, the appeals court determined that the Dillons couldn’t be awarded both actual and treble damages and overturned the actual damage award.
The insurance company appealed to the Ohio Supreme Court, which agreed to hear the case.
“Consumer Transaction” Under CSPA
Attorneys for Farmers assert that insureds can’t file claims against insurers based on the Ohio Consumer Sales Practices Act (CSPA). Rather, Title 39 of the Revised Code regulates the insurance industry, and a number of cases from Ohio appeals courts and federal district courts have ruled that the CSPA doesn’t apply to insurance policy disputes, they contend.
In addition, they note that the CSPA requires a “supplier” and a “consumer transaction.” A
“consumer transaction” is defined as “a sale, lease, assignment, award by chance, or other transfer of an item of goods, a service, a franchise, or an intangible, to an individual for purposes that are primarily personal, family, or household, or solicitation to supply any of these things.”
Neither a supplier nor a consumer transaction exists in an insurance company’s estimate for a vehicle repair, they maintain. Instead they claim the CSPA applies to the auto body shop that sells and makes repairs, not to insurance contract issues between an insurer and insured. Farmers only defined the amount for repairs that was owed to the insured, they assert.
Attorneys for the Dillons respond that aftermarket parts are cheap copies of an automaker’s parts, made without the automaker’s permission; the parts aren’t subject to government crash-testing; and the government has limited ability to recall aftermarket parts if they’re defective.
While Farmers states the case is about the Dillons’ insurance policy provisions, the insureds’ attorneys assert that the case is actually about a consumer’s right to be informed about proposed repairs and to choose what types of parts are used in his or her vehicle.
While insurance companies are generally excluded from the CSPA, they aren’t exempted for activities outside the business of insurance, such as providing repair estimates, the Dillons’ attorneys add. Citing a U.S. Supreme Court decision, they assert that agreements insurers make to keep costs under control fall outside their core business.
Given that the legislature enacted R.C. 1345.81 in the Consumer Sales Practices chapter, it clearly showed that auto repair estimates involve a consumer transaction and makes insurers responsible for estimates proposing the use of aftermarket parts, they maintain. When an insurer issues a car repair estimate, it engages in a consumer transaction, they argue. The statute is designed to ensure that consumers are informed about the potential use of non-OEM parts in a repair and requires the consumer’s consent to make repairs with non-OEM parts, they note.
They contend that Farmers demanded the use of aftermarket parts, and some of the parts potentially impacted vehicle safety.
“Farmers strove to have specific non-OEM parts utilized in the Dillons’ vehicle repair (a consumer transaction), identified those preferred vendors from whom the parts could be purchased, and gave instructions to the collision repairer about needing to inspect and approve any repairs before they were permitted to be made,” they wrote in the brief to the court. “Clearly, by writing the collision repair estimate, Farmers both solicited goods to be sold in a consumer transaction and attempted to effect how repairs would actually [be] performed.”
“Unfair or Deceptive Act or Practice”
Farmers’ attorneys argue that R.C. 1345.81 requires a person requesting a repair to choose a written estimate, an oral estimate, or no estimate at all. Only after that selection is made do the obligations of the statute apply, they claim. They contend that the Dillons never chose what type of estimate to receive, so the statute is inapplicable.
They also maintain that the Dillons weren’t deceived by the insurance company’s repair estimate. They assert that Mr. Dillon was orally notified multiple times about the contents of the written estimate given to the repair shop. While Mr. Dillon knew Farmers’ policy about the use of non-OEM parts, he chose to have the repair shop use only manufacturer parts and therefore was responsible for the difference in cost.
The Dillons’ attorneys counter that an insurance company cannot provide a repair estimate before an insured chooses an estimate type as a way to circumvent the mandates of R.C. 1345.81.
They emphasize that the written estimate should have been given to the Dillons, not the repair shop, and Farmers never obtained the signature from the Dillons as the statute requires. By not getting the signature, there was no informed consent about the use of aftermarket parts, which is the statute’s purpose, they argue. That violation constitutes a per se unfair or deceptive act or practice, they conclude.
Friend-of-the-Court Briefs
An amicus curiae brief supporting Farmers Insurance of Columbus, Inc., has been submitted by the Ohio Association of Civil Trial Attorneys.
The following groups have filed amicus briefs in support of the Dillons:
- Alliance of Automobile Manufacturers
- Automotive Education Policy Institute and Choice Auto Body Repair Association
- Ohio Association for Justice
- Kathleen Maloney
Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.
Contacts
Representing Farmers Insurance of Columbus, Inc.: Thomas Glassman, 513.579.0080
Representing Jerry and Nancy Dillon: James Skelton, 740.622.2011
Does Akron Man Meet Character and Fitness Requirements to Retake Bar Exam?
In re: Application of Byron L. Harper, Case no. 2014-1552
Board of Commissioners on Character and Fitness
The Board of Commissioners on Character and Fitness recommends to the Ohio Supreme Court that Byron L. Harper be permanently barred from reapplying to take the bar exam.
On several occasions, Harper, who graduated from the University of Akron School of Law in 1999, has taken but failed the Ohio bar exam. In March 2010, Harper, who owns and runs an accounting and tax preparation business, pled guilty to federal charges that he prepared at least 57 false tax returns for 19 or more clients. He was sentenced to eight months in prison. In late 2010, he applied to sit for the exam in February 2011.
In its report to the Supreme Court, the board notes that Harper also applied to take the bar exam between July 2007 and November 2009, during a time when the IRS was investigating Harper’s tax filings. The board stated that Harper didn’t inform the Akron Bar Association about the pending IRS investigation. The board also concluded that he has minimized his wrongdoing related to the fraudulent returns.
The board further determined that Harper didn’t meet deadlines or comply with court orders in several personal bankruptcy filings and that he claimed he had no debts when his credit report showed he had several that were past due. The board also expressed concerns about Harper’s mental health, based on 2010 paperwork discharging his student debt because of total disability. Given his doctor’s diagnosis and description, the board concluded that Harper doesn’t meet some of the eligibility requirements for practicing law in Ohio.
Applicant’s Objections
Attorneys for Harper dispute the board’s findings. They argue that his mistakes and errors are behind him and that he should’ve been given the chance to respond in a second hearing to information found in his credit report and the student-loan discharge application. They also object to the board’s findings about the income-tax fraud and complying with court orders and deadlines. Only those who’ve committed egregious acts can be prevented permanently from taking the bar exam, they contend, and Harper’s actions don’t rise to that level. He has changed his business practices, addressed his financial issues, and complied with his doctor’s advice, they explain.
Bar Association’s Response
Counsel for the Akron Bar Association responded to Harper’s objections, countering his due process claims and reaffirming the bar association’s conclusion that Harper doesn’t have the required character and fitness to practice law in Ohio.
- Kathleen Maloney
Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.
Contacts
Representing Byron L. Harper: Daniel Wilt, 440.942.8886
Representing the Akron Bar Association: Michael Creveling, 330.665.1100
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