Case Title: Ohio Bell Tel. Co. v. Levin

Citation: 2009-Ohio-6189

Docket Number: 20071807

State: ohio

Court: Ohio Supreme Court

Date: 2009-12-03T00:00:00Z

Document:
[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as 
Ohio Bell Tel. Co. v. Levin, Slip Opinion No. 2009-Ohio-6189.] 
 
NOTICE 
This slip opinion is subject to formal revision before it is published in 
an advance sheet of the Ohio Official Reports.  Readers are requested 
to promptly notify the Reporter of Decisions, Supreme Court of Ohio, 
65 South Front Street, Columbus, Ohio 43215, of any typographical or 
other formal errors in the opinion, in order that corrections may be 
made before the opinion is published. 
 
SLIP OPINION NO. 2009-OHIO-6189 
OHIO BELL TELEPHONE COMPANY, APPELLEE, v. LEVIN, TAX COMMR., 
APPELLANT. 
[Until this opinion appears in the Ohio Official Reports advance sheets, it 
may be cited as Ohio Bell Tel. Co. v. Levin,  
Slip Opinion No. 2009-Ohio-6189.] 
Public utilities — Taxation — R.C. 5727.11 — Notice of appeal to Board of Tax 
Appeals — Notice of appeal must specify errors complained of in Tax 
Commissioner’s final determination — General statements not specifying 
exact nature of error complained of does not confer jurisdiction on Board 
of Tax Appeals — Decision reversed. 
(No. 2007-1807 — Submitted July 14, 2009 — Decided December 3, 2009.) 
APPEAL from the Board of Tax Appeals, No. 2005-K-202. 
__________________ 
CUPP, J. 
{¶ 1} The Tax Commissioner contends that the Board of Tax Appeals 
(“BTA”) lacked jurisdiction to reduce his valuation of certain personal property of 
The Ohio Bell Telephone Company (“Ohio Bell”).  In modifying the 
commissioner’s valuation, the BTA relied on a theory of error that was not 
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specified in Ohio Bell’s notice of appeal to the BTA.  Therefore, we agree that the 
BTA lacked jurisdiction, and we reverse the decision of the BTA and reinstate the 
determination of the commissioner. 
I. 
{¶ 2} Pursuant to statute, public utilities must pay property tax.  The 
property tax is an ad valorem tax; the tax rate is applied to the taxable percentage 
of the true value of the utility’s personal property.  R.C. 5727.06, 5727.10, 
5727.11, and 5727.111.  To impose the tax, the commissioner must first 
determine the value of the utility’s property. R.C. 5727.10. That value forms the 
base for the ultimate determination of the amount of the tax.1  R.C. 5727.111. 
This case involves a dispute over true value. 
{¶ 3} In spring 2003, Ohio Bell submitted its annual public-utility 
property report for the 2003 tax year.  That fall, the commissioner issued his 
preliminary assessment. Using the method required by R.C. 5727.11(A), which 
takes historical cost as the starting point and then subtracts industry-specific 
depreciation allowances developed by the commissioner, the commissioner 
determined that the true value of Ohio Bell’s property was $2,466,085,652. 
{¶ 4} Believing that this valuation was too high, Ohio Bell filed a 
petition for reassessment under R.C. 5727.47.  The petition contained two 
objections, but only one is pertinent here:  
{¶ 5} “The Tax Commissioner’s determination of the true value of all 
taxable property of [Ohio Bell] does not reflect its true value in money as required 
by Ohio law.  The Tax Commissioner’s determination is erroneous, unjust and 
unreasonable because, inter alia, it overstates both costs and service lives and 
                                                 
1.  After the determination of true value, which is usually the critical issue in property tax cases, 
the assessment also computes the taxable portion of true value using percentages supplied by R.C. 
5727.111.  Then, under R.C. 5727.15, the taxable value is apportioned to those taxing districts in 
which the utility’s property is located.  Once the assessment becomes final, R.C. 5727.23 requires 
each county’s auditor to list the apportioned taxable value for collection using the applicable local 
rate. 
January Term, 2009 
3 
 
utilizes a method that does not reasonably reflect true value.  Correction of the 
Tax Commissioner’s errors results in a total reduction in true value of 
$919,726,091 and a reduction in taxable value of $351,611,285.” 
{¶ 6} In support of its petition for reassessment, Ohio Bell submitted a 
“Depreciated Replacement Cost Study.”  This study—consistent with Ohio Bell’s 
objection that the commissioner had “overstate[d] both costs and service lives”—
sought to establish a new cost figure (using “replacement cost new”) and new 
depreciation figures (using service lives that “better reflect[] the true loss of 
service value in the company’s assets”). The commissioner denied the petition, 
finding that Ohio Bell had not established “a more accurate gauge of the true 
value of [its] property than the assessed value.” 
{¶ 7} Ohio Bell filed a notice of appeal with the BTA.  The notice, like 
the petition, contained two specifications of error, but only the second is pertinent 
here: 
{¶ 8} “[T]he cost less depreciation method utilized by the Tax 
Commissioner does not reflect the true value in money of [Ohio Bell’s] taxable 
property as required by Ohio law.  The Tax Commissioner’s determination is 
erroneous, unjust and unreasonable because, inter alia, it overstates both costs and 
service lives and utilizes a method that does not reasonably reflect true value.” 
{¶ 9} In support, Ohio Bell submitted the same valuation study it had 
presented to the commissioner. After Ohio Bell filed its notice of appeal but 
before its BTA hearing, the BTA decided another case involving a different 
telephone company (Cincinnati Bell), in which it rejected a valuation study 
similar to the one Ohio Bell had prepared in its case.  See Cincinnati Bell Tel. Co. 
v. Zaino (June 10, 2005), BTA Nos. 2003-K-765 and 2003-K-1612. In that 
decision, the BTA observed that the valuation study was not an acceptable 
alternative valuation method within the meaning of R.C. 5727.11(A), which 
permits the use of “another method of valuation” if the statutory method “will not 
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result in the determination of true value.” The BTA concluded that the valuation 
study was not acceptable because it was not in fact a valuation. The BTA 
contrasted Cincinnati Bell’s study with the unit appraisal presented in Texas E. 
Transm. Corp. v. Tracy (1997), 78 Ohio St.3d 83, 676 N.E.2d 523.  In a unit 
appraisal, a professional appraiser determines the “unit” to be appraised (such as 
the public utility’s operating properties), estimates the market value of that unit, 
and allocates an appropriate portion of the unit to the taxing jurisdiction.  See id. 
at 83–84, 676 N.E.2d 523.  Because Cincinnati Bell had not presented an 
acceptable alternative valuation method, the BTA proceeded to address whether 
Cincinnati Bell had demonstrated “through competent and probative evidence 
[that] the application of the commissioner’s prescribed rates creates an unjust or 
unreasonable result, [and that] reliance upon the statutory method is 
inappropriate.” Concluding that Cincinnati Bell had failed to make such a 
showing, the BTA affirmed the final determination of the Tax Commissioner. 
{¶ 10} After the BTA rejected Cincinnati Bell’s valuation study, Ohio 
Bell abandoned its own.  Instead of presenting the replacement-cost and service-
life studies that Ohio Bell had presented to the commissioner, it filed a motion for 
a continuance.  The motion itself is not contained in the record, but according to a 
BTA interim order, Ohio Bell “indicated that in light of [the BTA’s] decision in 
Cincinnati Bell Tel. Co. v. Zaino * * *, which rejected a valuation study similar to 
that upon which [Ohio Bell] apparently * * * intended to rely,” the company had 
engaged an appraiser “to prepare an appraisal of its public utility personal 
property.” 
{¶ 11} The commissioner filed a motion to exclude the proposed 
appraisal, arguing that the BTA’s jurisdiction extended only to “matters decided 
by the Commissioner that have been specified as error by the taxpayer” and that 
neither condition was satisfied by Ohio Bell. The BTA denied the motion and 
allowed the testimony.  It held that Ohio Bell’s petition for reassessment and 
January Term, 2009 
5 
 
notice of appeal contained an adequate specification of error, as “the 
commissioner and this board were clearly put on notice that appellant was 
objecting to the application of the cost less depreciation method typically 
employed by the commissioner in valuing its public utility property.” The notice 
pleadings, according to the BTA, are required to provide notice of claimed error, 
but did not need to provide “all of the evidence” in support of that claim.  
(Emphasis sic.)   
{¶ 12} Accordingly, at the BTA hearing, Ohio Bell presented the unit 
appraisal and the testimony of the appraiser who had prepared it.  In his report, 
the appraiser explained that he had employed “three indicators or approaches to 
value”—based on cost, income, and comparable sales—to “make a judgment 
determination of the market value” of Ohio Bell’s public-utility property. Giving 
the most weight and emphasis to the income approach, the appraiser concluded 
that the true value of Ohio Bell’s property was $1,672,518,399, over $790 million 
less than the commissioner’s original valuation of $2,466,085,652. 
{¶ 13} The BTA agreed with the appraiser.  After making adjustments to 
reflect Ohio Bell’s eventual abandonment of a separate issue, the BTA set the true 
value of Ohio Bell’s public-utility property at $1,702,157,675, over $760 million 
less than the commissioner’s original valuation. 
{¶ 14} The commissioner appealed, and we now reverse. 
II. 
{¶ 15} The commissioner raises a number of arguments assailing the 
BTA’s decision; among them, he asserts that “Ohio Bell failed to confer 
jurisdiction on the BTA to consider its appraisal-based challenge because Ohio 
Bell’s notice of appeal failed to specify any error in the Commissioner’s final 
determination relating to that appraisal challenge.”  We agree.  Because of our 
disposition of this issue, it is unnecessary to address the commissioner’s other 
challenges. 
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A. 
{¶ 16} For an appeal to the BTA from a final determination of the tax 
commissioner, R.C. 5717.02 requires the notice of appeal to “specify the errors 
therein complained of.” This requirement is jurisdictional.  E.g., Newman v. 
Levin, 120 Ohio St.3d 127, 2008-Ohio-5202, 896 N.E.2d 995, ¶ 27 (the notice of 
appeal “never identified the issue * * * in his specifications of error to the BTA, 
and therefore the BTA lacked jurisdiction to consider that issue.  As a result, we 
are without jurisdiction to consider it”).  The specificity requirement is also 
“stringent.”  Brown v. Levin, 119 Ohio St.3d 335, 2008-Ohio-4081, 894 N.E.2d 
35, ¶ 18.  Thus, a notice of appeal “ ‘must explicitly and precisely recite the errors 
contained in the Tax Commissioner’s final determination.’ ”  Newman at ¶ 26, 
quoting Cousino Constr. Co. v. Wilkins, 108 Ohio St.3d 90, 2006-Ohio-162, 840 
N.E.2d 1065, ¶ 41. 
{¶ 17} We have made clear that a specification of error must not be so 
generic that it fails to set the case apart from any other case involving the same 
tax.  Brown at ¶ 22 (holding that the notice was fatally defective when the claimed 
error “might * * * have been raised in any income tax case in Ohio” (emphasis 
sic)); Castle Aviation, Inc. v. Wilkins, 109 Ohio St.3d 290, 2006-Ohio-2420, 847 
N.E.2d 420, ¶ 41 (“The wording of Castle’s constitutional claim is so general that 
it could be used in almost every use tax case”); Queen City Valves, Inc. v. Peck 
(1954), 161 Ohio St. 579, 583, 5 O.O. 430, 120 N.E.2d 310 (an assertion that 
“might be advanced in nearly any case” is not specific under R.C. 5717.02). 
{¶ 18} Applying these standards, the BTA lacked jurisdiction to modify 
the commissioner’s valuation of Ohio Bell’s property on the basis of a unit 
appraisal. 
B. 
{¶ 19} As pointed out earlier, Ohio Bell’s notice of appeal to the BTA 
contained one specification of error pertinent here: 
January Term, 2009 
7 
 
{¶ 20} “[T]he cost less depreciation method utilized by the Tax 
Commissioner does not reflect the true value in money of [Ohio Bell’s] taxable 
property as required by Ohio law.  The Tax Commissioner’s determination is 
erroneous, unjust and unreasonable because, inter alia, it overstates both costs and 
service lives and utilizes a method that does not reasonably reflect true value.” 
{¶ 21} This paragraph could be read as stating two errors: one is that the 
determination “overstates both costs and service lives”; the other is that the 
“method” used by the commissioner did “not reasonably reflect true value.” 
 
1. 
{¶ 22} The statement that the commissioner’s determination “overstates 
both costs and service lives” did not preserve the theory that a unit appraisal 
establishes true value, and Ohio Bell does not contend otherwise. This statement 
basically describes the theory that Ohio Bell presented to the commissioner but 
not to the BTA: namely, the theory that certain variables in the statutory method 
(that is, cost and service lives) had been set too high.  This language would have 
put the commissioner on notice that Ohio Bell intended to present the same theory 
to the BTA. 
{¶ 23} But this language gave no hint that the commissioner erred by not 
using a unit appraisal to establish true value.  Nor did this language mention any 
of the concepts on which the appraisal’s reduction in value was premised: the 
appraiser’s judgment determination of the market value of the property or the 
income produced by the property.  Notably, the appraiser considered but did not 
place much weight on the “cost approach”—the one valuation method arguably 
foreshadowed in the notice of appeal to the BTA—but “gave most weight, by far, 
to the income approach.” This shows the fundamental dissimilarity between the 
valuation theory presented to the commissioner (which was focused on revising 
the cost and depreciation variables) and the one presented to the BTA (which was 
focused on an expert appraiser’s professional opinion of the market value of Ohio 
SUPREME COURT OF OHIO 
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Bell’s operating properties).  See Texas E. Transm. Corp., 78 Ohio St.3d at 86-87, 
676 N.E.2d 523 (upholding the BTA’s acceptance of a “unit appraisal” as an 
alternate valuation method to the cost-based statutory method of valuation). 
{¶ 24} In short, the assertion that the commissioner “overstate[d] both 
costs and service lives” did not cover the unit-appraisal issue. 
 
2. 
{¶ 25} This leaves only the assertions that the method used by the 
commissioner “does not reflect the true value in money of [Ohio Bell’s] taxable 
property” and “does not reasonably reflect true value.”  Whereas the previous 
statement was too narrow to specify the need for a unit appraisal, these are too 
broad, and they do not specify any error for purposes of R.C. 5717.02. 
{¶ 26} It must be kept in mind that the standard against which valuation 
decisions are measured is “true value.”  The statute under which this case was 
litigated requires the commissioner to find “the true value of all taxable property.”  
R.C. 5727.11(A).  We have observed that the “ultimate goal” in a case of this sort 
is “true value.”  See Texas E. Transm. Corp., 78 Ohio St.3d at 85, 676 N.E.2d 523 
(public-utility property-tax case).  Accordingly, in making his final determination, 
the commissioner attempted to establish “the true value” of Ohio Bell’s property. 
{¶ 27} Thus, when Ohio Bell stated in its notice of appeal that the 
commissioner’s method did “not reasonably reflect true value,” it essentially 
claimed that the commissioner’s valuation failed to meet the standard without 
specifying how it fell short. Indeed, Ohio Bell simply restated the ultimate 
standard and added the word “not.” Such a “specification” is so broad that it 
specifies nothing at all.  Innumerable alternate theories of “true value” could have 
been presented, just as innumerable claims of error could have been raised against 
the commissioner’s determination.  While Ohio Bell’s specification is broad 
enough to encompass any one of these theories or faults (including the theory 
actually presented to the BTA), it did not narrow the issues in this case in any 
January Term, 2009 
9 
 
way.  These statements simply register Ohio Bell’s general disagreement with the 
final determination of value—which is little more than what is already evidenced 
by the existence of the notice of appeal. 
{¶ 28} This is not enough to meet the requirements of the statute.  
Specifications of error must be explicit and precise, Newman, 120 Ohio St.3d 127, 
2008-Ohio-5202, 896 N.E.2d 995, ¶ 26, but the wording of error in this notice is 
so general that it “might have been raised in any [property] tax case,” (emphasis 
omitted) see Brown, 119 Ohio St.3d 335, 2008-Ohio-4081, 894 N.E.2d 35, ¶ 22.  
These statements in no way “tie the facts of the case” to the alleged error by 
explaining “how” the commissioner erred in valuing its property.  See Castle 
Aviation, 109 Ohio St.3d 290, 2006-Ohio-2420, 847 N.E.2d 420, ¶ 41.  And we 
have rejected notices that did no more than state some general standard was 
violated or not satisfied.  See id. (notice of appeal that merely stated that the 
imposition of a tax “violates the Equal Protection Clause” failed the specificity 
requirement); Brown, 119 Ohio St.3d 335, 2008-Ohio-4081, 894 N.E.2d 35, ¶ 21–
22 (notice of appeal that merely stated “the assessment is not supported by a 
proper application” of the general income-tax statute failed specificity 
requirement).  That is all this portion of Ohio Bell’s notice of appeal does; for 
purposes of R.C. 5717.02, then, it specifies no error at all. 
 
3. 
{¶ 29} Ohio Bell’s only argument in response is that a taxpayer need not 
provide notice of “the evidence used by the taxpayer in support of [its] claim” 
(emphasis sic), and according to Ohio Bell, that claim was that the statutory 
method failed to result in true value. 
{¶ 30} While it is true that an appellant need not specify the evidence on 
which it intends to rely, that is irrelevant here—the dispositive issue is whether 
the error charged to the commissioner and argued before the BTA was specified 
in the notice of appeal.  As discussed above, it was not. 
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4. 
{¶ 31} Because no statement in the notice of appeal can be reasonably 
construed as specifying the error on which the BTA relied in modifying the value 
of Ohio Bell’s property, the BTA lacked jurisdiction to do so.  Because the unit 
appraisal constituted the only factual basis presented to the BTA (Ohio Bell 
abandoned its earlier valuation study), we reverse the decision of the BTA that it 
had jurisdiction to consider the unit-appraisal issue.  As stated, our disposition of 
this issue makes it unnecessary to reach the commissioner’s other arguments. 
C. 
{¶ 32} While we have focused on the failings of Ohio Bell’s notice of 
appeal to the BTA, we would briefly note that the flaws in that notice are not 
merely technical.  Ohio Bell’s notice did not mention any appraisal-related error 
because Ohio Bell had not devised any appraisal-related theory at the time it 
drafted its notice.  The jurisdictional issue here, then, stems from Ohio Bell’s 
failure to present a case based on a unit appraisal to the commissioner, not from 
an unfortunate choice of words. 
{¶ 33} Our cases suggest that such a failure to present an issue to the 
commissioner precludes the BTA from taking jurisdiction over that issue—even if 
the issue is specified in the notice of appeal.  See, e.g., CNG Dev. Co. v. Limbach 
(1992), 63 Ohio St.3d 28, 32, 584 N.E.2d 1180; see also DeWeese v. Zaino, 100 
Ohio St.3d 324, 2003-Ohio-6502, 800 N.E.2d 1, ¶ 19–22.  We need not decide, 
however, whether Ohio Bell could have presented a unit-appraisal theory to the 
BTA if it had specified that theory in all applicable notice pleadings but had not 
presented a unit appraisal to the commissioner.  The notice of appeal, as 
discussed, did not specify that particular error, and that ground alone requires 
reversal. 
III. 
January Term, 2009 
11 
 
{¶ 34} For the foregoing reasons, we reverse the decision of the BTA and 
reinstate the determination of the commissioner. 
Judgment reversed 
and Tax Commissioner determination reinstated. 
 
MOYER, C.J., and PFEIFER, O’CONNOR, O’DONNELL, and LANZINGER, JJ., 
concur. 
 
LUNDBERG STRATTON, J., dissents. 
__________________ 
 
LUNDBERG STRATTON, J., dissenting. 
{¶ 35} I believe that a remand to the Tax Commissioner is appropriate in 
light of the intervening case of Cincinnati Bell Tel. v. Zaino (June 10, 2005), BTA 
Nos. 2003-K-765 and 2003-K-1612, which had rejected a valuation study similar 
to that upon which Ohio Bell had relied, instead allowing an appraisal of unit 
value. 
{¶ 36} I also believe that Ohio Bell’s appeal provided sufficient notice of 
the claimed errors to establish jurisdiction and that the valuation study and 
appraisal went to the method of proof and the evidence presented, not to 
jurisdiction.  The BTA, as the trier of fact, accepted the evidence, pursuant to the 
method it had already determined acceptable in Cincinnati Bell. 
{¶ 37} Therefore, I would defer to the expertise of the BTA and would 
affirm its judgment of the value of Ohio Bell’s personal property as 
$1,702,157,675. 
__________________ 
Calfee, Halter & Griswold, L.L.P., James F. Lang, Peter A. Rosato, and 
Jeffrey J. Lauderdale, for appellee. 
Richard Cordray, Attorney General, and Barton A. Hubbard, Assistant 
Attorney General, for appellant. 
______________________