Thursday, Jan. 25, 2018
Bronx Park South III Lancaster LLC and Fairmont Lancaster LLC v. Fairfield County Board of Revision et al., Case no. 2016-1468
Ohio Board of Tax Appeals
David Kane Smith et al. v. Kristen Elliott-Thomas, Case no. 2017-0693
Eleventh District Court of Appeals (Trumbull County)
Columbus Bar Association v. John. J. Okuley, Case no. 2017-1417
Franklin County [Disciplinary cases]
Did $5.61 Million Sale Price of Lancaster Property Reflect its True Value for Tax Purposes?
Bronx Park South III Lancaster LLC and Fairmont Lancaster LLC v. Fairfield County Board of Revision et al., Case no. 2016-1468
Ohio Board of Tax Appeals
ISSUES:
- Does R.C. 5713.03 prohibit the use of a recorded sale price to establish the value of real property for taxation when competent and probative evidence establishes that the sale price isn’t representative of the true value of the property?
- Is the presumption favoring the use of a sale price for taxation rebutted when competent and probative evidence establishes that the sale price isn’t representative of the true value of the property as described in R.C. 5713.03?
- Is the failure to apply R.C. 5713.03 in a uniform manner a violation of the Ohio Constitution, Article XII, Section 2?
BACKGROUND:
For tax year 2014, the Fairfield County auditor valued a retail building operating as a Walgreens drugstore in Lancaster at $1.08 million. In July 2014, Bronx Park South III Lancaster and Fairmont Lancaster bought the property for $5.64 million.
The Lancaster City Schools Board of Education filed a complaint with the Fairfield County Board of Revision, arguing that the property should be valued and taxed for 2014 based on the sale price. The board of revision agreed and increased the property’s taxable value to $5.64 million.
The property owners appealed the decision to the Board of Tax Appeals (BTA), but the BTA also adopted the 2014 sale price as the property’s value. The property owners filed an appeal in October 2016 with the Ohio Supreme Court, which was required at that time to accept all appeals from the BTA for review.
General Assembly Amends Law in 2012
In 2012, a state law (R.C. 5313.03) governing how county auditors must value real property for tax purposes was amended. The revised law states that the auditor shall determine the value of “the fee simple estate, as if unencumbered …” and may consider the sale price.
Property Owners Assert Factors Besides Sale Price Must Be Considered
The bill analysis explained that the legislation authorized county auditors to consider factors other than a sale price when determining a property’s “true value” for taxation. The property owners add that an Ohio Department of Taxation memorandum about the legislative changes stated that “the law is intended to allow the auditor to look at the totality of the circumstances surrounding the sale and to determine whether the sale is affected by non-market forces.”
A sale price is presumed to represent the property’s value, but the property owners assert that the law’s changes clarify that the presumption can be rebutted by showing the sale price doesn’t represent the property value as defined by the statute (or, the “fee simple estate, as if unencumbered”).
The price the property owners were willing to pay was based on the tenant’s creditworthiness and above-market lease duration and terms, the property owners state. But they maintain that these factors were unrelated to how the tax value must be determined based on the statute.
In their view, the BTA should have considered evidence presented by the appraiser. The appraiser looked at various factors, such as an analysis of the neighborhood retail properties, a description of the site and improvements, and comparable sales. The appraiser calculated the property’s value at $1.66 million, determining that the $5.64 million sale price included the value of other items that aren’t taxable as real estate.
With this “reliable and probative evidence,” the property owners argue they showed that the sale price didn’t reflect the property’s true value.
By not valuing the property according to the statute, it was valued differently than other similar properties, which violates the provision in the Ohio Constitution that all real property must be valued in a uniform manner, the property owners add.
School Board Maintains that Sale Price Is Best Indicator of Value
The school board contends that the legislative change requiring that real property be valued at its “fee simple estate, as if unencumbered” reflects what has been the law in Ohio for more than 65 years. R.C. 5313.03 simply codified existing case law, the school board argues.
The Ohio Supreme Court has determined that an arm’s-length sale price is presumed to be the best evidence of a property’s true value for taxation as required by the state’s constitution, the school board maintains.
According to the board, there are only two measures available to contest a sale price as a property’s true value: The arm’s length nature of the transaction can be challenged, or the recency of the sale can be disputed. The school board reasons that the lease on the Lancaster property didn’t affect either of these criteria. The lease instead reflected a market-rate lease and couldn’t be used to lower the property’s value for taxes, the school board asserts. In addition, the school board argues that the appraiser didn’t use comparable properties when comparing values with the Walgreens, so the appraisal was subjective and undervalued.
Because the 2014 sale was recent and arm’s length, the $5.64 million sale price should be used as the property’s value for tax purposes, the school board concludes.
It adds that the rule that a sale price represents the a property’s true value is based on the Ohio Supreme Court’s interpretation of the state constitution’s requirement that all real property must be valued in a uniform manner, not on the statute’s meaning. The Court previously has rejected the property owners’ argument that using a sale price to determine a property’s value violates the uniformity requirement of the state constitution, the school board states.
Tax Offices Cannot Argue Case
Because the Fairfield County Auditor, the Fairfield County Board of Revision, and the Ohio Department of Taxation, parties to this case, didn’t submit briefs, they will not be permitted to participate in oral argument.
- Kathleen Maloney
Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.
Contacts
Representing Bronx Park South III Lancaster LLC and Fairmont Lancaster LLC: Victor Anselmo, 216.763.1004
Representing Lancaster City School District Board of Education: Mark Gillis, 614.228.5822
Does Concealment or Delayed Production of Evidence Constitute ‘Spoliation of Evidence’ in Ohio Tort Law?
David Kane Smith et al. v. Kristen Elliott-Thomas, Case no. 2017-0693
Eleventh District Court of Appeals (Trumbull County)
ISSUES:
- Does the tort of intentional interference with or destruction of evidence include interference with or concealment of evidence that disrupts a plaintiff’s case?
- Is the tort of intentional interference with or destruction of evidence, also known as spoliation of evidence, limited to the physical alteration or destruction of evidence?
BACKGROUND:
In August 2012, Kirsten Elliott-Thomas (formerly Kirsten Lewis) filed a wrongful termination lawsuit against the Warren City School District and all five of its board of education members. Attorneys David Smith and David Hirt represented the district and the board in the dispute. As the case proceeded through the discovery phase, the attorney for Elliott-Thomas claimed that Smith and Hirt didn’t cooperate in the production of discovery materials or delayed the production. However, Elliott-Thomas didn’t file any motions or raise any issue with the trial court to compel Smith and Hirt to produce discovery materials. Instead, Elliott-Thomas filed a separate civil lawsuit against the two school attorneys, school board president Regina Patterson, and board member Rhonda Baldwin-Amorganos, claiming spoliation of the evidence.
Elliott-Thomas ultimately settled her wrongful termination lawsuit against the district in February 2016. In the civil lawsuit Elliott-Thomas alleged the attorneys:
- Instructed Angela Desai, the school’s human resources director, to ignore a subpoena, to not appear for a deposition, and to flee the court’s jurisdiction
- Withheld, altered, or destroyed the district’s executive cabinet meeting minutes and other materials
- Withheld, altered, or destroyed documents and information provided by Patterson, including job descriptions, emails with Superintendent Bruce Thomas, and emails and text messages between Patterson and Baldwin-Amorganos
- Instructed another board member not answer questions at a deposition about conversations he had with Patterson
- Withheld, altered, or destroyed documents and information provided by Baldwin-Amorganos including emails between Superintendent Thomas and Patterson.
Attorneys Seek Case Dismissal
Smith and Hirt sought summary judgment from the trial court, arguing that Elliott-Thomas’ claims should fail for a number of reasons, including that the definition of “spoliation” under Ohio law is limited to the willful destruction of physical evidence, and that Elliott-Thomas doesn’t allege the lawyers willfully destroyed physical evidence. They also argued that interfering with the oral testimony of a witness didn’t constitute spoliation and that all of the documentation Elliot-Thomas sought was eventually produced.
Elliott-Thomas countered that the board attorneys interfered with the testimony of witnesses and were delinquent in the production of documents during discovery, which harmed her case, and constituted the spoliation of evidence, which also is known as the tort of intentional interference with or destruction of evidence.
In January 2015, the trial court granted summary judgment to the board attorneys and concluded the delayed production of evidence didn’t constitute spoliation, which required proof that evidence was destroyed. The trial court characterized her complaint as a discovery dispute, and stated that she should have raised her objections to the attorneys’ actions in her wrongful termination lawsuit.
Appeals Court Sides With School Employee
Elliott-Thomas appealed the decision to the Eleventh District Court of Appeals, which reversed the trial court and found that spoliation can include “intentional concealment, interference with, or misrepresentation of evidence” without the requirement that physical evidence actually be destroyed or altered. The appellate court found that the attorneys’ instructions for the human resources director not to appear for a deposition, and the delayed production of documents that were willfully withheld, can be the basis for a spoliation lawsuit.
The Eleventh District acknowledged its decision was in conflict with other Ohio courts of appeals that require the destruction or alteration of physical evidence to succeed in a spoliation lawsuit. The Ohio Supreme Court agreed to consider the conflict.
Delayed Production Not Spoliation, Attorneys Argue
Smith and Hirt note there are five elements to the tort of spoliation of evidence:
- There is pending or probable litigation involving the plaintiff
- The defendant knows the litigation exists or is probable
- There is willful destruction of evidence by the defendant, which is designed to disrupt the plaintiff’s case
- The plaintiff’s case is disrupted
- The plaintiff suffers damages because of the defendant’s willful destruction of evidence
The attorneys state that the Ohio Supreme Court set out these elements in its 1991 Smith v. Howard Johnson Co. Inc. decision, and charge that Elliott-Thomas is trying to expand the element of “destruction of evidence” to include delays in producing documents during discovery. They argue four appeals courts have already rejected similar requests to expand the scope of spoliation, and many courts across the nation have also rejected the expansion.
Smith and Hirt note that the spoliation tort is relatively new, emanating from California in 1984, and that many jurisdictions have chosen to use other existing means for dealing with concealed or delayed evidence rather than permit a separate lawsuit against the alleged “spoliator.” They argue that the tort does cover missing evidence, but requires more than a claim that someone failed to produce the evidence. The tort requires the active conduct of physically altering or destroying evidence, and expanding the tort to include failure to produce a document would have a negative effect on litigation and would be hard for courts to manage, the attorneys maintain.
The attorneys write in their brief that the Eleventh District’s own inconsistent logic provides an example of the challenges to recognize spoliation as an independent tort. The brief notes that Eleventh District found the attorney’s advice that human resources director not testify met the definition of a spoliation claim, while their advice to a school board member not to answer questions at the deposition didn’t meet the claim. The lawyers also note the documents Elliott-Thomas sought establishes that the board produced the documents during discovery, and that Elliott-Thomas had to abandon her claims that the documents were altered or destroyed. The Eleventh District relied on a cases where documents were altered, and in which concealment of records were discussed, to support its position. Those cases never resulted in a successful claim of spoliation based only on concealment, they note.
“Ms. Elliott-Thomas’s alleged discovery violations with respect to the timing of production of documents do not give rise to a claim for spoliation. It would be imprudent and untenable to expand the tort to encompass discovery disputes like the one at issue in this case,” the attorneys’ brief states.
Other Options Exists to Punish Concealment and Delay, Attorneys Assert
Smith and Hirt argue most courts have not adopted the spoliation tort because there are other options available especially when there is a dispute during discovery. The attorneys note that Elliott-Thomas never raised an issue with the trial court in her wrongful termination case regarding discovery delays. Trial courts have rules that penalize the party that delays or conceals evidence, including sanctioning the party or the party’s attorney for spoiling the evidence and even disciplining the attorney. Parties also face the threat of a criminal tampering with the evidence charge. For these reasons, the separate lawsuit regarding spoliation should be reserved only for the willful physical destruction of evidence, they conclude.
Interference with Case Is Part of Spoliation, Elliott-Thomas Argues
Elliott-Thomas argues the case is far more than a “discovery dispute” as the trial court concluded, but about intentional acts by Smith and Hirt to disrupt and sabotage their opponent’s lawsuit against the school district and the board. She argues the actual destruction or alteration of evidence isn’t mandatory for a viable spoliation case. The point of the tort is to address the unavailability of the evidence to a person entitled to it, and she charges Smith and Hirt engaged in two years of withholding, hiding, mispresenting, and obstructing the production of evidence.
Elliott-Thomas dismissed board members Patterson and Baldwin-Amorganos from the spoliation lawsuit and continued to press the case against Smith and Hirt. She argues that while the Court’s Smith decision establishes the elements of tort of intentional interference with or destruction of evidence, the opinion didn’t limit its application to cases involving physical destruction of evidence. She notes the name of the tort itself includes the words “interference with” and that subsequent cases note that the willful concealment of evidence meets the standard needed to prove her case.
Friends-of-the-Court Briefs Support Elliott-Thomas
Two amicus curiae briefs supporting Elliott-Thomas’ position have been submitted by the Ohio Association for Justice and the Ohio Employment Lawyers Association.
The Association for Justice maintains that the Smith ruling rejected the argument that spoliation is limited only to physical evidence, and that the separate tort is needed, especially to address spoliation by parties who are not involved in the lawsuit. A trial court can’t sanction those not directly involved, and punishing an attorney through the disciplinary process might do little to help the party whose case was sabotaged by an attorney who concealed evidence or delayed production to the point where it was difficult for the plaintiff to proceed.
The association notes that the Alaska Supreme Court dealt with an outside party’s concealment of the evidence as spoliation in Hibbits v. Sides (2001). In that case, a police officer impacted a case by hiding a witness who was impaired by marijuana. The officer kept the person hidden until the impaired state passed so that the impairment couldn’t be discovered and documented. The Alaska court found the police officer’s actions concealing the witness were enough to lead to a claim of spoliation. Confining the tort to physical destruction or alteration would invite “endless gamesmanship,” the association argues.
“The parties and the Court can imagine any number of scenarios where an unscrupulous offender renders critical evidence unavailable through any manner of shenanigans, but ultimately does not physically destroy or alter the evidence,” the association’s 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 David Kane Smith et al.: Martin Galvin, 216.687.1311
Attorney Discipline
Columbus Bar Association v. John. J. Okuley, Case no. 2017-1417
Franklin County [Disciplinary cases]
The Board of Professional Conduct is recommending that Columbus John J. Okuley be suspended for two years, with one year stayed, based on the lawyer’s criminal conviction that stemmed from a physical confrontation with a bicyclist and physician, who witnessed the bike accident.
The board concluded that Okuley violated several rules governing the conduct of Ohio attorneys for his behavior during what the board labeled “the bicycle incident,” and Okuley’s subsequent behavior when the Columbus Bar Association investigated the matter.
Accident with Bicyclist Leads to Criminal Conviction
In April 2015, Okuley was driving on a Columbus residential road near a lengthy bike trail. Parts of the trail were connected through portions of residential streets. Bicyclist Eric Hansen was behind Okuley’s vehicle on a narrow street where part of the road was blocked by a delivery truck on one side and a garbage truck on the other. Hansen rode his bike between the delivery truck and Okuley’s car, passing it on the passenger side.
According to various versions of the incident given by Okuley, Hansen either smacked the side of Okuley’s car while passing, hit it with the bike pedal, or hit the car with the bike. Okuley claimed that Hansen intentionally struck his car. Hansen countered that he never made contact with the vehicle as he passed and that Okuley turned his car wheels to the right and moved in Hansen’s direction as he was passing.
Okuley then began following Hansen from one street to another. Hansen indicated that, at times, Okuley’s car was just inches from his rear wheel and that he was racing his engine. Okuley then passed Hansen and suddenly slammed on his brakes. Hansen testified that it was impossible for him to avoid colliding with the vehicle, and the bike hit the rear of the lawyer’s car. The collision knocked Hansen to the ground, bent the handlebars of his bike, and damaged his front brakes.
The incident was observed by John Bahling, a medical doctor, who was driving and stopped for traffic. He testified that it appeared that Okuley was trying to run Hansen off the road, and that he appeared very angry, revved his engine, leaned forward on the steering wheel, and yelled and gestured at Hansen when he passed. He said Okuley slammed the brakes, and it prompted Hansen to smash into the rear of the car. Bahling said Okuley got out of the car, got close to Hansen’s face, and began yelling and accusing Hansen of hitting his car on purpose.
Bahling parked with the intent on checking on Hansen. He began video recording Okuley with his cell phone with the hope it would defuse the situation, but when Okuley noticed Bahling was recording, he turned away from Hansen, struck Bahling, and attempted to grab his phone. Okuley got in his car, drove a short distance, and stopped, and Bahling recorded it. Okuley returned on foot, where Hansen was speaking to a 911 dispatcher when Okuley demanded Bahling give him his phone “for evidence.” He tried to grab the phone as Bahling tried to record the encounter.
A second witness, Daniel Walker, arrived and watched the encounter escalate. Walker tried to separate Okuley and Bahling and, during the scuffle, the phone fell on the street. Okuley walked over the phone and stomped on it. He grabbed the phone and walked up to a porch of a nearby home and yelled to Bahling that he didn’t have any evidence. The second recording, which included the attempt to grab the phone, was destroyed.
Two police officers interviewed the four men. Okuley’s report of the incident to the officers was significantly different than the others involved. He claimed Hansen purposely ran into the back of the car and that Bahling’s phone was damaged when it fell to the ground. In subsequent proceedings, Okuley characterized Bahling as the aggressor and said he was attacked from behind by the doctor without any provocation.
Charges Filed Against Okuley
A week later, the city of Columbus charged Okuley with criminal damaging, a second degree misdemeanor. After scheduling errors and requests for continuances, a trial date was set. Okuley appeared for the trial, but when it didn’t go forward at the scheduled time, he left the courthouse. The prosecuting attorney assumed Okuley left to wait for his attorney to arrive, and the prosecutor stated that witnesses were present and the city was prepared to try the case that day. The judge issued a warrant for Okuley’s arrest the next day, and Okuley was arrested on Oct. 9. Okuley then filed a motion to have the charges dismissed on the grounds that the city failed to timely try the case.
A second trial date was set, and Okuley asked for a continuance, which was granted. He then pleaded no contest and was found guilty of criminal damaging. He was sentenced to 90 days in jail, which was suspended, order to make restitution of $950 to Bahling for damaging his phone, fined $100, and placed in community control.
Two months later, Bahling filed a civil lawsuit against Okuley, and Okuley filed a counterclaim against Bahling. The two settled the case, with Okuley’s insurance company paying Bahling $5,000.
Bar Association Investigates
The Columbus Bar Association mailed Okuley a letter in March 2106 asking him to provide information regarding his February conviction, and Okuley didn’t respond. He testified later that he didn’t recall seeing the letter and may have thrown it out. He received a second letter by certified mail later that month, and sent a delayed response, indicating he was in a severe car accident and couldn’t work full-time. He eventually agreed to a deposition in August, where again he accused Hansen of intentionally hitting his car and Bahling of attacking him.
The hearing panel found his allegations against the others were untruthful. The panel concluded that Okuley violated several conduct rules, including engaging in conduct that reflects adversely on a his fitness to practice law; obstructing a party’s access to evidence; disobeying obligations of a court; knowingly making false statements in a legal proceeding; and offering evidence he knows to be false.
Board Considers Sanction
The board noted that Okuley entered a three-year contact with the Ohio Lawyer’s Assistance Program (OLAP) in July 2017 where he agreed to continue treatment for depression, stress, and adjusting to his injuries from his auto accident. The board didn’t give his treatment any weight as a mitigating factor because it found no evidence that any disorder Okuley suffered contributed to the bicycle incident or his subsequent behavior. Although the three-member panel recommended a one year suspension, with six months stayed, the board concluded that Okuley’s actions merited a greater sanction. The board recommended the Court suspend Okuley for two years, and that one year be stayed if he maintains compliant with his OLAP contract and doesn’t commit anymore misconduct.
Okuley Challenges Sanction
Okuley argues for the lower penalty recommended by the panel, and notes that his violations don’t involve any attorney-client relationships.
Okuley also argues the board doesn’t believe he took accountability for his actions because his version of the events differs than those from Hansen and Bahling. He counters that his testimony was “likely influenced by the criminal and civil proceedings.” He notes his comments were made in defense of the charges against him and that, once he heard Walker testify to stomping on the phone, he didn’t object to Walker’s version of the events. He argues that the board should have given more weight to him adopting Walker’s version as an acknowledgment of his wrongdoing. The combination of the lack of harm to a client and his adoption of Walker’s testimony warrant the lower sanction, he maintains.
Bar Association Agrees with Board
The bar association argues that Okuley faced no criminal charges when lied to bar investigators about the incident and that he refuted Bahling’s charges when he filed a counterclaim in the civil lawsuit. Those matters weren’t active cases when the he continued to lie during the disciplinary hearings, and he shouldn’t get credit for his behavior, the board argues.
The association also maintains that Okuley’s statement that he didn’t “have reason to disbelieve” Walker was not “remotely close to accepting responsibility for smashing Dr. Bahling’s telephone and for lying about it for years.” It argues the board gave the proper weight to all the factors in the case, and supports the two-year suspension with one year stayed.
– Dan Trevas
Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.
Contacts
Representing the Columbus Bar Association: Joanne Beasy, 614.221.2121
Representing John J. Okuley: Alvin Mathews, 614.460.1600
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