Treasurer of Cuyahoga Cnty. v. Durham Constr. Trade Inst.

2021 Ohio 1960

TREASURER OF CUYAHOGA COUNTY, OHIO, Plaintiff-Appellee, v. DURHAM CONSTRUCTION TRADE INSTITUTE, ET AL., Defendants-Appellants.

No. 108240

COURT OF APPEALS OF OHIO EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA

June 10, 2021

JOURNAL ENTRY AND OPINION

JUDGMENT: AFFIRMED

Civil Appeal from the Cuyahoga County Court of Common Pleas

Case No. CV-17-886043

Appearances:

Michael C. O'Malley, Cuyahoga County Prosecuting Attorney, and Hannah Singerman, Assistant Prosecuting Attorney, for appellee.

James Alexander, Jr., Esq., L.L.C., and James Alexander, Jr., for appellant.

EILEEN A. GALLAGHER, P.J.:

{¶ 1} Defendant-appellant Durham Construction Trade Institute ("Durham Construction") appeals from the trial court's judgment in favor of plaintiff-appellee the treasurer of Cuyahoga County (the "treasurer") for foreclosure on its lien for delinquent taxes. Durham Construction contends that (1) the trial court erred because it failed to make a determination of the amount of taxes owed on its property, (2) the trial court erred in finding any tax delinquency because Durham Construction was tax exempt and did not receive notice that its property would be taxed and (3) it was denied due process because it was not given notice of the tax hearing. For the reasons that follow, we affirm.

Procedural and Factual Background

{¶ 2} On September 18, 2017, the treasurer filed a complaint for "collection of delinquent taxes, assessments, penalties and interest, foreclosure and equitable relief" pursuant to R.C. 323.25 and/or 5721.18(A). The complaint alleged that a delinquent land certificate (the "delinquent land certificate") had been certified by the Office of the Fiscal Officer and filed with the treasurer with respect to property located at 7100 Kinsman Road in Cleveland (the "property"), which was owned by Durham Construction. A copy of the delinquent land tax certificate, dated October 26, 2015, was attached to the complaint and indicated that taxes had not been paid on the property for a period of one year and that the unpaid taxes, penalties and assessments on the property then totaled $28,561.42. The complaint further alleged that the county's lien for delinquent taxes constituted a "good and valid first lien on the property" and that Durham Construction, the Ohio Bureau of Workers' Compensation, the Ohio Department of Job and Family Services, the United States of America, the Ohio Department of Taxation and The IlluminatingCompany had or claimed to have some interest in or lien on the property but that those interests or liens were "inferior and subsequent" to the county's lien.

{¶ 3} The Ohio Bureau of Workers' Compensation, the Ohio Department of Job and Family Services, the United States of America, the Ohio Department of Taxation and The Illuminating Company all filed answers to the complaint setting forth their interests in the property. Durham Construction did not file an answer to the complaint.

{¶ 4} A tax hearing was held before a magistrate on November 16, 2018.¹ The notice scheduling the hearing, issued on October 30, 2018, stated that "[f]ailure to appear may result in dismissal of the claims or an entry of judgment." Durham Construction did not appear for the hearing.

{¶ 5} At the conclusion of the hearing, the magistrate issued a journal entry stating: "Based on the evidence presented, including the delinquent land certificate attached to the complaint, plaintiff is entitled to a decree of foreclosure. A magistrate's decision setting forth findings of fact and conclusions of law will issue forthwith."

{¶ 6} On December 28, 2018, the magistrate issued a written decision. The magistrate found that all necessary parties had been properly served, that the proceedings complied with R.C. Chapter 5721 and that the treasurer was due $28,561.42 as set forth in the delinquent land tax certificate, plus all taxes,assessments, penalties and interest accruing between the date of the delinquent land certificate and the date of confirmation of the sheriff's sale, and the costs of the proceeding. The magistrate also recommended foreclosure of the property. The magistrate found that the Ohio Bureau of Workers' Compensation, the Ohio Department of Job and Family Services, the United States of America, the Ohio Department of Taxation and The Illuminating Company all claimed some right, title, interest, claim or lien on the property, that any such right, title, interest, claim or lien was inferior and subsequent to the county's lien and that such rights, title, interests, claims or liens would be transferred to the proceeds derived from the sale of the property after payment of the costs of the action and the amount due the treasurer. No objections were filed to the magistrate's decision.

{¶ 7} On January 25, 2019, the trial court adopted the magistrate's decision and entered a decree of foreclosure in favor of the treasurer.

{¶ 8} On February 25, 2019, Durham Construction (1) appealed the trial court's judgment and (2) filed a motion for relief from judgment pursuant to Civ.R. 60(B).

{¶ 9} In its Civ.R. 60(B) motion, Durham argued that it was entitled to relief from judgment under Civ.R. 60(B)(1), (4) and (5) because (1) its motion was timely filed, (2) it had a meritorious defense, i.e., as a registered 501(c)(3) nonprofit organization it was tax exempt and owed no property taxes, and (3) it would have brought the "mistake" to the county and the trial court's attention and responded to the lawsuit were it not for its "financial and procedural burdens which reasonablygave rise to not learning of the filing until the very last minute." In support of its motion, Durham Construction submitted an unnotarized affidavit from its president, Quinton Durham ("Durham"). In his affidavit, Durham averred that Durham Construction was a nonprofit, tax-exempt, charitable 501(c)(3) organization, that when Durham Construction acquired the property in 2012 from the Garden Valley Neighborhood Center, the property's tax-exempt use was recognized and the property taxes were $0 and that after Durham Construction acquired the property, it maintained many of the programs that had been operated by the property's prior owner. Durham further averred that in 2013, taxes were "mistake[nly]" and "incorrect[ly]" assessed against the property "without any notice or explanation for the change," that the tax delinquency upon which the foreclosure action was based was "entirely a mistake and misunderstanding" and that "the organization has been beleaguered with keeping its doors open to such an extent that it missed the existence of this proceeding only out of excusable neglect."

{¶ 10} In March 2019, the trial court issued an order that the property be sold at a sheriff's sale on April 1, 2019. The court set a second sheriff's sale, if necessary, for April 15, 2019.

{¶ 11} Durham Construction filed for bankruptcy. The order of sale was returned without execution and the appeal was stayed during the pendency of the bankruptcy proceedings. On January 6, 2020, Durham Construction filed a notice of termination of bankruptcy with this court, and the stay was lifted.

{¶ 12} On January 30, 2020, this court, sua sponte, upon agreement of the parties, remanded the matter to the trial court for a ruling on Durham Construction's motion for relief from judgment. On remand, the trial court denied the motion. The trial court found that Durham Construction had failed to establish that it had a meritorious defense because it was on notice that the property was being taxed, yet took "no action to remedy or to restore" the property's tax-exempt status and, instead, "merely permitted the unpaid taxes to accrue." The trial court further found that even if Durham Construction could establish a meritorious defense, it had not shown that it was entitled to relief under Civ.R. 60(B)(1), (4) or (5). The trial court noted that although Durham Construction claimed it was not aware the lawsuit had been filed, the docket showed that Durham Construction had been served with the complaint on December 7, 2017, that it had been served with copies of the treasurer's filings throughout the case and that it had been sent a copy of the magistrate's decision. Accordingly, the trial court found no "excusable neglect" under Civ.R. 60(B)(1). The trial court further found that Durham Construction had presented no evidence that "the judgment has been satisfied, released or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application" as required for relief under Civ.R. 60(B)(4) and that it had failed to demonstrate "any substantial grounds" that would entitle it to relief under the catchall, Civ.R. 60(B)(5). The trial court also noted that the affidavit submitted with Durham Construction's motion was not notarized and, therefore, had "no evidentiary value."

{¶ 13} Durham Construction did not appeal the trial court's denial of its motion for relief from judgment.

{¶ 14} On April 13, 2020, pursuant to an administrative order of this court, all foreclosure cases were stayed through May 31, 2020. In June 2020, the stay was lifted, and the appeal proceeded.

{¶ 15} Durham raises the following four assignments of error for review:

Assignment of Error I: The trial court erred as a matter of law by failing to determine the amount of the delinquent tax pursuant to ORC § 5721.25.

Assignment of Error II: The trial court erred as a matter of law by finding a tax delinquency in violation of ORC § 5715.12.

Assignment of Error III: The trial court erred as a matter of law by finding a tax delinquency on a property exempt from property tax pursuant to ORC 5709.12(B).

Assignment of Error IV: The trial court erred in depriving appellant of due process.

Law and Analysis

{¶ 16} In its first assignment of error, Durham Construction contends that the trial court's judgment entry was deficient under R.C. 5721.25 bec...