Wednesday, May 3, 2017
Board of Education of Columbus City Schools et al. v. Franklin County Board of Revision et al., Case no. 2015-2105
Ohio Board of Tax Appeals
State of Ohio v. Shuaib A. Haji Mohamed, Case no. 2016-0672
Eighth District Court of Appeals (Cuyahoga County)
Disciplinary Counsel v. Andrew R. Schuman, Case no. 2016-1834
Wood County
Anthony Rush and Tammy Rush v. University of Cincinnati Physicians Inc. and Thomas J. Kunkel, M.D., and West Chester Medical Center et al., Case no. 2016-0636
First District Court of Appeals (Hamilton County)
Was 95 Percent Property-Value Increase After Sale-Leaseback Arrangement Proper?
Board of Education of Columbus City Schools et al. v. Franklin County Board of Revision et al., Case no. 2015-2105
Ohio Board of Tax Appeals
ISSUE:
Is a sale-leaseback transaction between two unrelated parties an arm’s length transaction that makes the sales price the key factor in determining a property’s tax valuation?
BACKGROUND:
State Farm Mutual Automobile Insurance Company’s regional headquarters in New Albany was assessed by the Franklin County Auditor at $18.5 million for tax years 2011 and 2012. State Farm believed the property should be valued at $14 million and filed a complaint with the Franklin County Board of Revision.
In 2013, State Farm packaged 23 properties, including the New Albany location, into a portfolio to sell to investor Lone Star. The purpose of the sale was to create a sale-leaseback arrangement, which the parties characterized as an “absolute net lease.” The lease required State Farm to retain significant obligations as if they still owned the property, including all maintenance, repairs, replacements, additions, taxes, and insurance. State Farm would be required to pay rent on the property through the entire lease term even if it no longer occupied the space.
The stated price of the sale for the New Albany property was $25 million. In early 2014, Lone Star sold the property to another investor for $26.1 million. At the board of revision, the Columbus City Schools Board of Education asked the board to consider the sale prices of the property in determining the value of the State Farm headquarters.
Officials from State Farm and Lone Star testified before the board that the price wasn’t related to value of the property. Lone Star indicated it was interested in the tenant, State Farm, and its solid credit rating. For that reason, the two parties assigned values to the package properties, but in reality, the transaction intended to provide cash to State Farm in exchange for long-term rental payments from a company with a solid credit rating, which Lone Star marketed as a wise investment. The board concluded the sale wasn’t an arm’s length transaction and found that State Farm’s $14 million valuation was correct. The school board appealed to the Ohio Board of Tax Appeals (BTA).
The BTA agreed with the $14 million value for 2011, but found the 2013 sale impacted the 2012 tax year value. It determined the $25 million sale was an arm’s length transaction and by law, it was required to use the sale to value the property. State Farm appealed the $25 million valuation by the BTA to the Ohio Supreme Court, which is required to hear appeals of BTA decisions.
Sale Price Isn’t Reflection of Value, State Farm Asserts
State Farm argues the BTA used the wrong standard in valuing the property, and that for tax year 2012 the most the value should have increased over 2011 is 3.6 percent. The company notes its appraiser found the $14 million value applied to the 29 acres State Farm owned that consisted of the 19-acre headquarters and 10 acres of surrounding excess land. The excess land wasn’t part of the sale to Lone Star, and the excess land was valued by the county auditor at $2.3 million. The 2011 valuation and the sale being less than the total parcel should’ve provided sufficient evidence that a 95 percent increase in value to $25 million wasn’t justified, the company maintains.
State Farm cites the Court’s 2014 Hilliard City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision decision, which found if the parties to the transaction are related, they may be pursuing a common goal rather than acting as typical buyers and sellers in the marketplace. While a typical seller is trying get the highest price for a property, the typical buyer is trying to get the lowest price. In this case, State Farm and Lone Star weren’t even considering property price in their negotiations, the company asserts. Rather, the premise of the deal was the more State Farm agreed to pay in rent, the greater the amount Lone Star would make in upfront payments.
If a sale isn’t the result of an arm’s length transaction, then other evidence can be used to determine the property’s value and State Farm argues its expert provided the best evidence that the value should be $14 million. The company asserts that in 2012 R.C. 5713.03 was amended to allow the auditor to consider other evidence rather than the sales prices for non-arm’s length transactions, and that the law applied to the 2013 sale. By disregarding the sales price, the other evidence points to a value closer to $14 million than $25 million, the company argues, and it advocates the Court send the case back to the BTA to re-value the property.
School Board Backs BTA’s Assessment
The Columbus school board argues that the BTA reasonably used the 2013 sale to determine State Farm’s tax value. The school board urges the Court to reject State Farm’s claim that the sale-leaseback arrangement was an unusual agreement that justified the auditor’s consideration of other information instead of the sale price. The board argues the arrangement was similar to others in Ohio where the value was established by the sale price.
The school board asserts that the parties weren’t “related” because State Farm failed to show the two parties colluded to act differently than typical motivated buyers and sellers. The school board points out both parties sought to maximize their own self-interests – State Farm wanted the most cash offered, and Lone Star wanted the most rent possible.
The board cites the Court’s 2008 AEI Net Lease Income & Growth Fund v. Erie Cty. Bd. of Revision decision where a similar sale-leaseback transaction was found to be an arm’s length transaction. The board notes the Court concluded that concerns with sale-leaseback transactions arise when the parties collude to lower the property tax value. In this case, State Farm and Lone Star didn’t collude on any matter and acted in their own interests, the board asserts.
The board also maintains the changes to R.C. 5713.03 don’t apply to the first sale of the property from State Farm to Lone Star. The law faced several amendments between the middle and end of 2012 as the legislature first attempted to phase in the law, but then became concerned about the constitutionality of that procedure. The board asserts the law didn’t take effect until March 2013 at the earliest, which was after the sale the BTA used to set the tax value.
Friend-of-the Court Brief
An amicus curiae brief supporting the State Farm’s position has been submitted by Institute for Professionals in Taxation.
Oral Arguments Limited
While named as parties in the dispute, the Ohio Tax Commissioner, the Franklin County Auditor, the Board of Revision and State Farm’s investments partners failed to file briefs, which would have entitled them to present oral arguments.
- Dan Trevas
Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.
Contacts
Representing State Farm Mutual Auto Insurance Co.: Edward Bernert, 614.228.1541
Representing Columbus City Schools Board of Education: Mark Gillis, 614.228.5822
Can Sexual Assault Victim Be Released “Unharmed” for Purposes of Kidnapping Statute?
State of Ohio v. Shuaib A. Haji Mohamed, Case no. 2016-0672
Eighth District Court of Appeals (Cuyahoga County)
ISSUE: When a victim is sexually assaulted while kidnapped, can the victim be “unharmed” under R.C. 2905.01(C)(1), which would require a reduction in the sentence for the kidnapping charge?
BACKGROUND:
In May 2014, a woman identified as J.K. and her friend went out for the evening to the bars in downtown Cleveland. When the bars closed, they couldn’t locate J.K.’s car, so they hailed a cab, which was driven by Shuaib Haji Mohamed.
When the cab reached their destination, J.K. swiped her credit card to pay the fare. She and her friend exited the cab, but Haji Mohamed stopped J.K., telling her that the credit card was declined.
J.K. had no other way to pay, so she asked Haji Mohamed take her to her apartment to retrieve a debit card that she could activate to pay the fare. When picking up the debit card, J.K. testified that she put on sweatpants over her shorts because Haji Mohamed had made inappropriate remarks about her appearance during the first ride. At a nearby ATM, J.K. activated the debit card to withdraw cash and paid Haji Mohamed.
Realizing that she had locked her keys in her apartment, she asked Haji Mohamed to drive her to her ex-boyfriend’s house. Along the way, Haji Mohamed touched and grabbed J.K. in a sexual manner. He also pulled the cab to the side of the interstate, exposed himself, and tried to force her to perform oral sex on him. She repeatedly refused, and he took her to her ex-boyfriend’s house where she yelled that Haji Mohamed had raped her. The cab driver drove away, and J.K.’s ex-boyfriend called the police. The credit card company later informed J.K. that her card had not been declined.
Taxi Driver Convicted, But Appeals Court Reverses
Following a trial, a jury found Haji Mohamed guilty of gross sexual imposition, attempted gross sexual imposition, attempted rape, and two counts of kidnapping. The court sentenced Haji Mohamed to 15 years in prison, of which 10 years was for kidnapping.
He appealed to the Eighth District Court of Appeals, which reversed the kidnapping conviction. The appeals court ruled that Haji Mohamed received ineffective legal counsel because his trial lawyer didn’t ask that the jury be instructed about part of the kidnapping sentencing law in R.C. 2905.01(C)(1), which states that a kidnapper can receive a lesser felony conviction if he “releases the victim in a safe place unharmed.” The Eighth District ordered a new trial for Haji Mohamed on the kidnapping charge.
The Cuyahoga County Prosecutor’s Office appealed the reversal to the Ohio Supreme Court, which accepted the case.
Prosecutor Maintains “Harm” Includes Psychological Harm
The prosecutor notes that Haji Mohamed received a 10-year prison sentence for first-degree felony kidnapping, which carries a possible sentence from three to 11 years. If a victim is released in a safe place and unharmed, the kidnapping conviction is lowered from a first- to a second-degree felony, which requires a range of sentences from two to eight years.
The statute uses the word “unharmed” without limiting the harm to a particular type, the prosecutor maintains. However, the prosecutor contends that the Eighth District improperly restricted the meaning of “harm” to only physical injury, even though the ordinary meaning of the word includes physical, psychological, and other types of harm. The legislature’s intent is clear given the plain language of the text, the prosecutor argues, adding that other provisions in state law do limit crimes to those causing physical harm by including the words “physical harm.”
The prosecutor points to multiple decisions from the state’s appellate courts that have ruled sex crimes that aren’t rape still harm victims. The citations included four from the Eighth District, including one from 2005 stating, “The record reveals that Dooley committed gross sexual imposition before he ‘released’ the victim. Under such circumstances, we cannot say that the victim was left in an unharmed condition.” The prosecutor also asserts that State v. Wright (2013) – a case from the Seventh District Court of Appeals that the Eighth District relied on in its decision in Haji Mohamed’s appeal – didn’t involve an allegation of sexual assault. Psychological harm shouldn’t be rejected as harm in kidnapping cases involving sexual crimes, the prosecutor argues.
Noting that J.K. said she has suffered nightmares, cries herself to sleep, and is fearful of Haji Mohamed, the prosecutor discusses published academic research that describes the psychological harm caused by sexual assaults. The prosecutor notes that Haji Mohamed’s crimes included gross sexual imposition and attempted rape, which are both violent offenses.
“It makes little sense to classify an offense as violent but not harmful,” the prosecutor wrote in the brief to the Court.
Taxi Driver Contends Jury Must Decide Harm Issue
Haji Mohamed responds that the Eighth District concluded not that the psychological harm caused by sexual assaults can’t be considered under the statute, but instead that the jury had to be given an instruction to evaluate whether his kidnapping conviction could be lowered to a second-degree felony based on the facts of the case. Noting that J.K. wasn’t raped, Haji Mohamed contends that the prosecutor “casually blurs the distinction between rape and the many kinds of sexual assault broadly defined under R.C. [Chapter] 2907.”
“Arguably, all crime victims suffer harm – but to categorically equate the harm suffered by someone who was improperly groped or grotesquely propositioned with what is experienced by someone who was raped, discounts the nature and character of rape as an offense,” Haji Mohamed’s brief states.
Haji Mohamed indicates that the Eighth District stated J.K. refused medical attention and no evidence of physical harm was presented at trial, though she was very emotional when she arrived at her ex-boyfriend’s home and during her trial testimony. However, the nature and extent of her psychological harm wasn’t examined at trial, he contends. According to the brief, Haji Mohamed allowed J.K. to use his cell phone throughout the incident, took her where she asked to go, and waited at her ex-boyfriend’s house until he answered the door.
The purpose of the statute’s provision lessening a kidnapping offense when a victim is released “in a safe place unharmed” is to encourage the safe release of victims, Haji Mohamed notes. In his view, J.K. was released unharmed and in a safe place. Without excusing his misconduct, Haji Mohamed is entitled to a new trial for kidnapping so that the jury can determine whether he is guilty of first- or second-degree kidnapping, the brief asserts.
Haji Mohamed argues that the prosecutor, however, wants the Supreme Court to create a blanket rule preventing juries from ever considering whether victims of alleged sex offenses are released unharmed, and that position contradicts the statute. Such an evaluation must be left to the jury, Haji Mohamed concludes.
- Kathleen Maloney
Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.
Contacts
Representing the State of Ohio from the Cuyahoga County Prosecutor’s Office: Anthony Miranda, 216.443.7416
Representing Shuaib A. Haji Mohamed from the Cuyahoga County Public Defender’s Office: Erika Cunliffe, 216.443.7580
Attorney Discipline
Disciplinary Counsel v. Andrew R. Schuman, Case no. 2016-1834
Wood County
The Board of Professional Conduct recommends a one-year suspension, with six months stayed, for Bowling Green attorney Andrew R. Schuman. The board determined that Schuman charged an excessive fee as a guardian ad litem, improperly started garnishment proceedings against one of the parents, altered documents submitted to the court, and misrepresented to the court the amount he was owed.
Lawyer Claims Parents Owe Thousands More Than Billed
Schuman, a solo practitioner and former prosecutor, was appointed in December 2010 as guardian ad litem in a Hancock County Juvenile Court case. Parents Heidi Walter and Derek Smith shared the cost of a $500 deposit. In July 2011, Schuman submitted a bill to the juvenile court at an $80-an-hour rate for a total of $3,416, which the court approved and divided between the parents with credit for the deposit.
By February 2013, the lawyer had received only $200 more in payment. He filed a complaint in Findlay Municipal Court demanding payment of $6,405; however, he was only owed a balance of $2,716. In a subsequent court filing, Schuman claimed his hourly rate was $150, and he altered a time record he provided to the court by deleting the earlier bill total of $3,416 and the reference to the juvenile court case name.
The municipal court ruled in Schuman’s favor, ordering payment of $6,405 plus interest and costs. About six months later, after receiving no payments, Schuman asked the court to garnish the wages of the parents. He was unable to garnish Walter’s wages because she no longer was working at her last known employer, but he was able to garnish Smith’s income. After paying for about a year, Smith requested a court hearing in January 2015 disputing the outstanding amount and said he had paid more than $7,000. Before the judge, Schuman didn’t correct the amount he was actually owed and continued to seek additional payment.
In November 2015, Smith filed a complaint of ethical misconduct against Schuman with the Office of Disciplinary Counsel. Once he received the grievance, Schuman hired a lawyer and refunded $2,989 to Smith and later refunded additional amounts to each of the parents.
Parties Seek Different Penalties
Schuman testified at the disciplinary hearing that he works too much, he was resentful when he wasn’t paid, and he acted out of greed and retaliation, but that his actions were out of character.
The disciplinary counsel and Schuman agreed to the facts of the case, that Schuman has paid Walter and Smith what they were overcharged, and that Schuman violated four professional conduct rules. The parties disagree, though, about the recommended sanction for Schuman’s misconduct. The disciplinary counsel recommended an actual six-month suspension to the Board of Professional Conduct, while Schuman argued for a suspension of any length, but fully stayed.
Noting that Schuman’s misconduct was an isolated incident in his nearly two-decade career and that he was remorseful at the disciplinary hearing, the board explained, however, that misrepresenting facts to a court is a serious offense. The board recommends a one-year suspension with six months stayed if Schuman meets certain conditions, including that he take two continuing legal education courses on law office management, take steps to ensure that the case against the parents is dismissed, and agree to be monitored for one year if he is reinstated to the legal profession.
Attorney Wants to Continue His Practice
Schuman contends that a stayed suspension would permit him to continue to provide much-needed and high-quality legal services in the Bowling Green area. His brief to the Court states that in his criminal practice he “by all accounts performs exemplary work for unpopular clients with unpopular cases.” He notes in his objections to the recommended sanction that the purpose of a disciplinary sanction is to protect the public rather than punish the attorney. This “public interest test” has support in Disciplinary Counsel v. Carroll, a 2005 Ohio Supreme Court decision, he asserts.
Pointing out that the board stated it believes he won’t commit this type of misconduct again, Schuman argues that an actual suspension then “serves no useful purpose.” In asking the Court for a stayed suspension, Schuman accepts the recommended conditions for his suspension and reinstatement.
Disciplinary Body Advocates Actual Suspension
The disciplinary counsel responds that the board found the mitigating factors in Schuman’s case didn’t overcome the presumption that this type of misconduct warrants an actual suspension from the practice of law. Contrary to the board’s description of Schuman’s misconduct as an isolated incident, the disciplinary counsel argues that he instead engaged in multiple dishonest acts during a two-year timeframe.
“It was a series of willful and deliberate actions committed over an extended period of time that were designed to exact retaliation and retribution on a vulnerable litigant,” the office’s brief states.
In supporting the board’s recommended suspension, the disciplinary counsel maintains that the sanction will convey to the state’s lawyers that such misconduct isn’t acceptable when responsibility is accepted only after a disciplinary grievance is filed.
- Kathleen Maloney
Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.
Contacts
Representing Andrew R. Schuman: Jeffrey Nunnari, 419.578.9246
Representing the Office of Disciplinary Counsel: Scott Drexel, 614.461.0256
If Negligent Professional Not Identified, Can Professional’s Employer Be Found Negligent?
Anthony Rush and Tammy Rush v. University of Cincinnati Physicians Inc. and Thomas J. Kunkel, M.D., and West Chester Medical Center et al., Case no. 2016-0636
First District Court of Appeals (Hamilton County)
ISSUE:
In a professional malpractice complaint, must an employee be added to the lawsuit to establish liability by the employer if the employer is properly named and served with notice of the lawsuit?
BACKGROUND:
In 2010, Anthony Rush, the owner of a painting business, fell off a 30-foot ladder during a painting job and was rushed to West Chester Hospital. He was diagnosed with several fractured ribs and was given a spinal epidural to relieve his pain. All of Rush’s anesthesia care was provided by anesthesiologists employed by University of Cincinnati Physicians Inc. U.C. Physicians employs about 40 anesthesiologists with about 10 working at West Chester Hospital. One of the anesthesiologists was Thomas Kunkel.
Patients receiving epidurals must be monitored for signs of a spinal epidural hematoma, a solid swelling of clotted blood that can cause spinal cord compression. If blood flow from the spinal cord is disrupted by a hematoma, permanent injuries can occur. Warning signs of a hematoma include numbness, weakness and urinary incontinence. Two days after the epidural was initiated, Rush complained of severe back pain and reported numbness and weakness in his legs. That night at 6:40 p.m., the nurse on duty contacted an anesthesiologist on call and indicated in her chart that she spoke to Kunkel. The physician ordered a decrease in the epidural rate, slowing the amount of painkiller entering his body.
Notes in Rush’s medical chart indicated Rush at times complained about numbness, pain, and incontinence, but also stated he felt better. When Kunkel saw Rush the next day, he ordered the epidural stopped. But by the time Kunkel appeared, the spinal cord no longer was functioning properly and Rush permanently lost the use of his legs.
Rush sued the hospital, Kunkel, U.C. Physicians, and numerous others. He charged the cause of his injury was a spinal epidural hematoma. He argued that had the physician who received the 6:40 p.m. call from the nurse ordered a doctor to examine Rush within two hours, the hematoma could have been detected and the damage averted.
Kunkel Claims Misidentification
During a deposition and at the trial, Kunkel claimed he wasn’t the physician the nurse spoke with at 6:40 p.m. and that if he had taken the call, he would have directed a doctor talk to or see Rush within two hours. Kunkel said he wasn’t on call that night, but was on second call, meaning he was to be called only after another anesthesiologist was called. He stated that the nurse may have confused him with a colleague on call, Dr. Ahmed Khalil. The order in the chart had Kunkel’s electronic signature approving the epidural change. Kunkel still denied it was him, noting that as a professional courtesy, the anesthesiologists were signing off on each other’s orders, sometimes without reading them.
At the trial, U.C. Physicians and Kunkel asked the judge for a directed verdict, citing the Ohio Supreme Court’s 2009 National Union Fire Ins. Co. of Pittsburgh, PA v. Wuerth decision. In Wuerth, the client named only the lead attorney as a defendant in the lawsuit and didn’t name the attorney the client believed committed malpractice until after the statute of limitations expired. The Court ruled in Wuerth that a law firm can only be liable for malpractice if one of its attorneys was liable for malpractice. The trial court granted a verdict for U.C. Physicians, finding it can’t be held liable for the work of an anesthesiologist not specifically named. The judge also instructed the jury that Rush had to prove by a preponderance of evidence that Kunkel was negligent in order to rule against U.C. Physicians.
The jury sided with Kunkel, and Rush appealed to the First District Court of Appeals, which in 2016 affirmed the decision based on Wuerth. The First District also noted its decision conflicted with a 2010 Seventh District Court of Appeals decision (Taylor v. Belmont Community Hosp.) Rush appealed the decision to the Ohio Supreme Court, which didn’t find merit in the argument that the First District’s ruling was in conflict with Taylor, but did agree to hear the merits of Rush’s claim that the Wuerth decision doesn’t apply to his case.
Wuerth Doesn’t Apply, Rush Argues
Rush argues that Wuerth applies to a limited number of cases where there is a question of whether the employer actually employed the professional alleged to have committed malpractice. In this case, the Court ought to apply the long-standing principle of respondeat superior, where the employer can be held legally responsible for the actions of its employee. Rush notes that even if it wasn’t Kunkel who acted improperly, it was undisputed that a U.C. Physicians-employed anesthesiologist gave the fateful order to turn down the medication without taking the additional important step of notifying a physician to check on Rush.
Rush maintains that the law doesn’t require any individual be named as long as it is certain the responsible employer is named in the lawsuit and served with notice before the statute of limitations expires. He argues that allowing the physicians to argue at the last minute that it wasn’t actually them who were at fault, but others, allows for employer groups to escape responsibility for negligence committed by its unidentified members.
Rush cites a number of state court decisions from New Jersey to Hawaii in which a professional corporation has been held liable for the negligence of an employee. He notes the Ohio Seventh District’s Taylor decision illustrates that a hospital can be sued for the negligence of the doctors and nurses who work there without the patient also having to include those medical practitioners in the suit.
Doctor’s Action Didn’t Cause Injuries, U.C. Physicians Argue
U.C. Physicians notes that at the trial, the firm presented evidence by two experts that concluded Rush didn’t suffer from a hematoma, but rather the cause of his paralysis was linked to his original injuries from falling off the ladder. Further, they argue Wuerth does apply, claiming that in order for the group to be liable, the jury must also find that Kunkel was liable.
U.C. Physicians argues Rush undercut his own case by not following procedures that could have ensured other doctors whose names were unknown to them were made part of the case. The group maintains that Rush could have named “John Doe” to the lawsuit and later determined the true identity of the doctor on call that night in dispute. The opposition could have also requested an exemption to the statute of limitations if it had been determined late in the process which physician took the call, they added.
The group also notes that Khalil was an obvious suspect to name in the case because he was the physician on call, and Rush’s attorneys didn’t depose Khalil or call him to testify at the trial.
Friend-of-the-Court Brief
An amicus curiae brief supporting Rush’s position has been submitted by Ohio Association for Justice.
- Dan Trevas
Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.
Contacts
Representing Anthony and Tammy Rush: Paul Flowers, 216.344.9393
Representing University of Cincinnati Physicians et al.: Mark McDonald, 513.721.1311
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