Tuesday, April 19, 2016
250 Shoup Mill, LLC v. Joseph W. Testa, Tax Commissioner of Ohio, Case no. 2015-0340
Ohio Board of Tax Appeals
Nathaniel Jackson v. State of Ohio, Case no. 2012-1644
Eleventh District Court of Appeals (Trumbull County)
Jessica Jacobson v. Ellen Kaforey et al., Case no. 2015-1340
Ninth District Court of Appeals (Summit County)
Is Company’s Lease of Property to Charter School Tax Exempt?
250 Shoup Mill, LLC v. Joseph W. Testa, Tax Commissioner of Ohio, Case no. 2015-0340
Ohio Board of Tax Appeals
ISSUES:
- Is an owner who uses property for the sole purpose of leasing engaged in a use that qualifies as exclusively charitable and therefore eligible for a tax exemption?
- Even if a leaseholder doesn’t intend to generate a profit by leasing a particular property, do leases inherently have a “view to profit” automatically disqualifying leaseholders from tax- exempt status?
BACKGROUND:
According to its articles of organization, Shoup Mill was organized in 2009 to “acquire, renovate, rehabilitate and construct a charter school facility at 250 Shoup Mill Road, Dayton … and to own, hold, lease mortgage, and pledge [that project] at the direction of, and for the benefit of, New Plan Learning, Inc.” Additionally, Shoup Mill is owned 100 percent by New Plan Learning (NPL).
Shoup Mill owns and leases property to Horizon Science Academy, a tuition-free, public charter school located in Dayton. In 2010, Shoup Mill applied for a property-tax exemption under R.C. 5709.121 and R.C. 5709.07(A)(1). The tax commissioner denied the exemption, and Shoup Mill appealed to the Ohio Board of Tax Appeals (BTA).
In early 2015, the BTA affirmed the tax commissioner’s determination that Shoup Mill wasn’t entitled to an exemption under the Ohio laws for several reasons. First, the BTA determined the lease between Shoup Mill and Horizon had “a view to profit.” Next, the BTA concluded Shoup Mill’s use of the property wasn’t charitable. And, finally, Shoup Mill itself was neither a charity nor a school, the BTA stated. Shoup Mill submitted an appeal to the Ohio Supreme Court. Because the appeal was made from the BTA, an administrative agency, the Court must accept it for review.
Shoup Mill’s Position
Shoup Mill concurs that if a lease is intended to generate profit for the owner, or if the tenant’s use of the property is intended to generate profit, the property doesn’t qualify for a tax exemption. However, the company argues because it didn’t intend to generate a profit for itself or NPL, and Horizon didn’t intend to generate a profit, it should qualify for a tax exemption.
Shoup Mill suggests the tax commissioner’s conclusion that “leasing is not a charitable use of property,” as stated in his brief to the Court, is overly broad. Shoup Mill argues that both it and NPL are “nothing but charitable, as their sole reason for existence as nonprofit entities is to assist charter schools, which are public schools and likewise nonprofit entities.”
Profiting from Lease or Breaking Even?
Shoup Mill claims it never intended to profit from the lease but to merely break even. At the BTA hearing, NPL’s president testified that the property owner intended to eliminate any profit and only cover its expenses.
NPL’s president explained that the rent charged under the lease was established at the minimum amount necessary and was meant to minimize cost for the school, which Shoup Mill argues doesn’t comport with Ohio’s definition of a “view to profit.”
What Is Charitable?
Refuting the commissioner’s claim that it isn’t a charitable institution, Shoup Mill cites Planned Parenthood Assn. of Columbus, Inc. v. Tax Commr. (1966), where this Court held that to determine charitable use of property, there must be “no hope or expectation of” profit. Shoup Mill counters that the full extent of its existence is to acquire and lease property to Horizon to operate a charter school — all for charitable purposes. And, because the lease payments between Shoup Mill and Horizon were set at an amount intended to only cover expenses, there is no profit motive.
Tax Commissioner’s Response
In its brief to the Court, the tax commissioner describes Shoup Mill’s core activity as “a real estate title holding company, formed for the exclusive purpose of holding title to property, collecting income from the property, and turning over income to its sole owner, NPL.” The commissioner further explains that because the terms of Horizon’s lease require substantial payments to Shoup Mill, which are used to make payments on a commercially acquired, market-driven investment or business loan, it was proper to conclude the company had a view to profit.
Nonexempt by all Accounts, Commission Maintains
The commissioner found that Shoup Mill doesn’t use the property in question in accordance with R.C. 5709.12, eliminating it as a charitable or educational organization. According to the commissioner, the relevant use of the subject property by its owner is how charitable or educational use is determined. In other words, it’s necessary to look at how Shoup Mill uses the property — not how Horizon uses it. Here, the property owner’s primary use of the property is leasing. Citing Dialysis Clinic, Inc. v. Levin (2010), another Supreme Court decision, the commissioner explains this Court has consistently found that leasing isn’t a charitable use of property.
The tax commissioner also determined Shoup Mill isn’t a charitable or educational organization because it relies on the tax-exempt status of Horizon rather than its own tax status. In First Baptist Church of Milford v. Wilkins (2006), this Court ruled that an “institution may not claim an exemption from real property taxation vicariously through the entities it supports ….” According to the commissioner, Shoup Mill can’t claim an exemption for providing charitable or educational services because it’s only use for the property is for leasing.
Additionally, the tax commissioner argues, Shoup Mill doesn’t qualify for an exemption under the former public schoolhouse provisions because it uses the property for leasing, and the lease has a view to profit, which is prohibited. The tax commissioner tries to bolster his argument by citing Anderson/Maltbie Partnership v. Levin (2010), where this Court provided “property cannot be exempted from taxation as a public schoolhouse when the owner leases the property to the school for profit.”
- Rachael S. Ingram
Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.
Contacts
Representing 250 Shoup Mill, LLC: M. Charles Collins, 419.241.6000
Representing Joseph W. Testa, Tax Commissioner of Ohio, from the Ohio Attorney General’s Office: Melissa Baldwin, 614.466.4526
Death Penalty
Nathaniel Jackson v. State of Ohio, Case no. 2012-1644
Eleventh District Court of Appeals (Trumbull County)
Nathaniel Jackson is contesting his death sentence in his second direct appeal to the Ohio Supreme Court. He received a new sentencing hearing in 2010 because the prosecutors had helped draft the trial court’s sentencing opinion for the judge in his case.
Jackson and Donna Roberts were romantically involved in 2001 while Roberts was living with her ex-husband, Robert Fingerhut. During that year, Jackson went to prison. While there, he and Roberts plotted to kill Fingerhut for $550,000 in insurance money. Fingerhut was shot to death in December 2001, and Roberts and Jackson were each convicted for aggravated murder and received death sentences.
The Ohio Supreme Court affirmed Jackson’s convictions and death sentence in 2006. Later that year, though, a unanimous Supreme Court sent Roberts’ death-penalty appeal back to the trial court for resentencing because Judge John M. Stuard had involved the prosecutor in writing Roberts’ sentencing opinion, and did so without the defense counsel’s knowledge. Judge Stuard presided over both trials, and was publicly reprimanded by the Court in 2009 for the actions in the Roberts case. The judge acknowledged he enlisted the prosecutor’s help in drafting Jackson’s sentencing opinion as well, and the Eleventh District Court of Appeals granted Jackson a new sentencing hearing in 2010.
The judge held the resentencing hearing on Aug. 14, 2012, and again imposed the death penalty. Jackson has raised 11 arguments in his brief to the Court challenging the death sentence imposed in that hearing.
Death-Row Inmate Questions Process at Hearing, Judge’s Impartiality
Among Jackson’s assertions:
- For the resentencing hearing, the Eleventh District ordered Judge Stuard to review and evaluate the appropriateness of the death penalty in Jackson’s case and to prepare an entirely new sentencing opinion as required by law. Jackson argues the judge didn’t consider the new mitigating circumstances presented at the 2012 resentencing, submitted nearly the same sentencing opinion as the one filed in 2002, and filed the 2012 order before the hearing took place. Because of these errors, Jackson contends the order wasn’t final and can’t be appealed, and the appeal should be returned again to the trial court.
- Jackson also discusses the performance of his counsel during the mitigation part of his trial in 2002, which he contends influenced the 2012 resentencing hearing. After the guilt phase of his trial, one of his two lawyers became ill before the sentencing phase began. The attorney who agreed to fill in hadn’t yet been certified by the Supreme Court to accept appointments in death-penalty cases, Jackson explains. However, when asked by the trial court whether they needed to delay the proceedings to prepare, Jackson’s attorneys declined. Jackson argues the witnesses his lawyers had testify didn’t accurately reflect his upbringing, and his expert psychologist’s faulty administering and scoring of his IQ test presented an inaccurate picture of his mental capabilities. The trial judge relied on this flawed evidence when he sentenced Jackson to death in the original trial and again after the resentencing hearing, Jackson maintains.
- Jackson also asserts that Judge Stuard wasn’t fair and impartial in part because the judge delayed ruling on a motion about a resentencing hearing and didn’t consider information provided in that proceeding before writing a new sentencing opinion. Jackson brings up his rejected requests to the Supreme Court to have the judge disqualified, and asks for another remand before an impartial and unbiased judge.
Prosecutor Counters Hearing Was Handled Properly, Judge Was Fair
On behalf of the state, the Trumbull County prosecutor responded with these arguments:
- In the prosecutor’s view, Judge Stuard wasn’t ordered to consider additional evidence during Jackson’s resentencing hearing. A trial court “is required to rewind the proceedings only to where the error occurred, not before,” in certain capital cases sent back to the court, the prosecutor writes in his brief. He references State v. Chinn, a 1999 Ohio Supreme Court decision. He maintains Jackson hasn’t identified evidence he was unable to present during his original sentencing and thus can’t add to the record now. According to the prosecutor, the judge’s early filing of the new opinion didn’t affect the outcome of Jackson’s resentencing. Plus, the prosecutor stresses that Jackson has waived his contention that the sentencing order wasn’t final and appealable by appealing the decision.
- The prosecutor also contends Jackson is improperly raising issues about his 2002 trial lawyers when this appeal involves only his 2012 resentencing hearing. The Court has already rejected Jackson’s claims of ineffective assistance by his lawyers in the 2006 decision, the prosecutor maintains, adding that the Court refused to consider claims Roberts made related to her 2003 mitigation hearing in her resentencing appeal. Nor, he emphasizes, can Jackson complain about a lack of investigation into his upbringing with facts that aren’t part of the record of the case.
- On the claims made against Judge Stuard, the prosecutor notes the Court concluded twice there were no grounds to disqualify the judge from handling the resentencing hearing. Given the Court’s rulings, the matter is settled and issue is improperly raised in this appeal, the prosecutor argues and adds Jackson also hasn’t proven bias or ill will by the judge. Further, no new evidence was permissible at the resentencing hearing, the prosecutor maintains.
- Kathleen Maloney
Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.
Contacts
Representing Nathaniel Jackson from the Ohio Public Defender’s Office: Randall Porter, 614.466.5394
Representing the State of Ohio from the Trumbull County Prosecutor’s Office: LuWayne Annos, 330.675.2426
Does Statute Allow Civil Lawsuits Against Criminal Acts?
Jessica Jacobson v. Ellen Kaforey et al., Case no. 2015-1340
Ninth District Court of Appeals (Summit County)
ISSUES:
- Does the current version of R.C. 2307.60 independently authorize a civil action for damages caused by criminal acts unless otherwise prohibited by law?
- Does R.C. 2307.60 clarify that a civil lawsuit based on a criminal act can be filed only if another statute specifically authorizes it and sets out what is required to recover damages?
BACKGROUND:
In 2001, Jessica Jacobson, then a minor, was hospitalized in Akron Children’s Hospital and Cleveland Clinic’s Children’s Hospital for Rehabilitation. At that time Ellen Kaforey was appointed by a probate court to serve as conservator for Jacobson’s mother and was involved in making decisions for Jacobson and her mother. The Summit County Children Services Board (CSB) obtained custody of Jacobson while she was hospitalized, and once discharged from the hospital, CSB arranged for the girl to move to Florida to live with her uncle. When she reached the age of majority, Jacobson returned to Ohio.
Almost 11 years after her removal, Jacobson, pro se, filed a four-count complaint against Kaforey, Akron Children’s, and Cleveland Clinic alleging Kaforey exceeded her authority and interfered with the rights of Jacobson and her mother. The first count alleged Kaforey violated R.C. 2307.50 by interfering with a parental or guardian interest while the other three charges were civil charges based on three criminal code violations: R.C. 2905.03 - unlawful restraint, R.C. 2905.01 - kidnapping, and R.C. 2905.05 - child enticement. Jacobson cited R.C. 2307.60 to argue the state allows for a civil action based on criminal acts regardless of whether Kaforey or the hospitals were ever charged or convicted of the crimes. None of the three were charged with any crime related to Jacobson’s case.
In April 2013, the trial court dismissed the first count of interfering with a relationship noting Jacobson lacked standing to bring the claim because the statute requires the claim be brought by a parent or guardian, not the child of the parent. The court then dismissed the three other counts, ruling that R.C. 2307.60 just clarifies that a court has jurisdiction to hear civil cases based on a criminal violations, but the law itself doesn’t authorize a civil action. The court found that some criminal statutes expressly include additional language that allow the victim to sue the offender for damages in civil suits, but that unlawful restraint, kidnapping, and child enticement are not among them.
Jacobson, who has been ruled incompetent by the Summit County Probate Court, appealed the decision through her stepfather Gary Kirsch to the Ninth District Court of Appeals. In June 2016, the Ninth District found in a 2-1 decision that the current version of R.C. 2307.60 permits a person to cite a crime as the basis for suing for civil damages.
The Ninth District noted its decision was in conflict with rulings by the Second, Third, Fifth, and Tenth District appeals courts, and the Supreme Court agreed to hear the case.
Claims of Crime Can’t Be Basis for Civil Lawsuit, Guardian and Hospitals Assert
Kaforey, Akron Children’s, and Cleveland Clinic filed separate briefs but similarly argue the Ninth District is out of step with other state and federal courts in Ohio by finding that R.C. 2307.60 permits a person to cite a crime as the basis for suing for civil damages.
“Absent an express provision creating a cause of action for, and setting for the damages scheme for recovery, there can be no civil recovery for a criminal act and R.C. 2307.60 was never intended to independently authorize action for damages caused by criminal acts,” Kaforey’s brief states.
Kaforey explains for some crimes, Ohio lawmakers have added certain language that indicates if a person is convicted of the crime, then the offender can be liable for civil damages in a separate lawsuit brought by the victim. One example is the 2014 passage of R.C. 2307.611 which allows a victim of identity fraud (R.C. 2913.49) to recover up to $5,000 or three times the amount of actual damage for each violation if an offender is convicted.
Another way of permitting a civil lawsuit related to a crime happens when there is a statute in the Revised Code that creates a civil law violation that mirrors a criminal offense, Kaforey notes. An example she offers is that a civil lawsuit can’t be based on the crime of murder, but R.C. 2125 permits a civil suit for wrongful death.
Kaforey argues if R.C. 2307.60 is interpreted to allow a victim of any crime to base a lawsuit on the criminal act, these laws specifying civil actions arising from the crime would be unnecessary and wouldn’t be on the books.
Akron Children’s in its brief also notes the potential pitfalls of scenarios allowing for civil actions based on criminal acts. The hospital questions if a victim can sue and recover for damages for wrongful death and then follow with a second lawsuit based on murder and litigate the case again. The hospital argues R.C. 2307.60 “merely confirms that an underlying criminal act may give rise to both a criminal prosecution and a civil cause of action.” It notes the sections of state law following R.C. 2307.60 set out specific types for crimes that can be the basis of a civil action, such as willful damage and theft, identity theft, and illegal use of cable television.
The majority of criminal laws weren’t structured in the same manner, including unlawful restraint, criminal kidnapping and criminal child enticement, the hospital notes. Further, in statutes such as theft or identity theft, the violator must be convicted of the crime before a civil recovery is permitted, and in this case neither Kaforey nor the hospitals were ever charged or convicted of crimes that would entitle Jacobson to seek damages, it concludes.
In its brief, Cleveland Clinic highlights that the Ninth District’s ruling could lead to extensive litigation and complicate the determination of the proper statute of limitations and damages allowed in a civil lawsuit. Those points were also made by Kaforey, Akron Children’s, and the dissenting judge on the Ninth District panel.
The clinic explains that individuals can pursue civil claims related to the criminal cases the government prosecutes. An example it cites is the civil claim for the crime of kidnapping is false imprisonment. The clinic notes the elements that must be proven for each claim are nearly identical. However, under Ohio law, the statute of limitations for a false imprisonment claim is one year while the time limit for kidnapping is six years. By interpreting R.C. 2307.60 to be the basis for a civil claim, a person could avoid the one-year deadline to initiate a false imprisonment lawsuit and take up to six years to file a case based on kidnapping, which the clinic states would create additional uncertainty in the system.
Along with potential problems associated with the differences in statutes of limitation, the Ninth District’s interpretation could override the caps on the financial damages a person can obtain in a civil lawsuit, the clinic maintains. For example, it notes the maximum recovery for non-economic damages for a false imprisonment finding is $250,000 or three times the actual damages. However, there are no caps on damages specified for crimes like kidnapping, so the victim could seek far more for non-economic damages.
Jacobson Asserts Law Clearly Allows Recovery
Jacobson argues that state lawmakers revised the statute to provide a “legislative guarantee” for crime victims where there was not a specific statute or common law theory allowing them to bring a civil suit based on injuries from a criminal act. She argues the plain meaning of the law doesn’t imply that another law or theory has to be invoked to sue, and counters that the “parade of horribles” suggested by Kaforey and the hospitals will not materialize because those suing still have to prove they were the victims of a crime and that they were injured by the offender.
Jacobson claims the Ninth District concluded R.C. 2307.60 independently authorizes a civil action because that’s what the statute authorizes when it states: “Anyone injured in person or property by a criminal act has, and may recover full damages in, a civil action unless specifically excepted by law,…”
She notes one key factor of the statute was that when it was revised in 1984 the word “has” was added. By including “has,” the statute went from a traditional statement that a civil suit based on a criminal act wasn’t barred, to one that authorizes a suit.
“The ‘has’ is unmistakable. It constitutes a guarantee, if you will, that an injured crime victim will have civil redress,” Jacobson’s brief states. “What can ‘has’ possibly mean except that R.C. 2307.60(A)(1) itself confers the civil right of action, that a crime victim need not look elsewhere for a statute or common-law claim?”
Jacobson counters the argument that because other sections of the law specifically state that a civil action is permitted based on a crime doesn’t limit the use of R.C. 2307.60. She notes other parts of the Revised Code refer to R.C. 2307.60 as creating a civil action. She explains that the statute indicates it doesn’t apply when “specifically excepted by law,” and there are specific exceptions such as R.C. 4399.18, which states that R.C. 2307.60 doesn’t authorize a civil lawsuit against a liquor permit holder if an intoxicated person causes a victim’s injury, death, or property damage.
Jacobson also discounts claims that the legislature hasn’t clarified the statute after more than 20 years of appellate court rulings that determined it only grants a court jurisdiction to consider civil lawsuits if another statute authorizes damages. She argues lawmakers often don’t change the law based on lower court rulings, and don’t look to revisit laws they think are clearly unambiguous.
“Ohio law criminalizes many more acts and behaviors than those for which it provides specific legal redress. For the many deserving victims of crimes that ‘fall through the cracks’ in this way, R.C. 2307.60 is a lifeline,” the brief states.
- Dan Trevas
Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.
Contacts
Representing Ellen Kaforey: Audrey Bentz, 440.838.7600
Representing Akron Children’s Hospital: Gregory Rossi, 330.670.7300
Representing Cleveland Clinic Children’s Hospital for Rehabilitation: Bret Perry, 216.875.2767
Representing Gary Kirsch, guardian for Jessica Jacobson: Subodh Chandra, 216.578.1700
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