Opinion ID: 3165520
Heading Depth: 2
Heading Rank: 1

Heading: issues presented by lmes’s appeal

Text: 1. The BTA did not address LMES’s claims that the auditor engaged in frivolous conduct and acted in bad faith a. LMES was aggrieved by the BTA’s failure to address its claims {¶ 25} The auditor, as he did in the motion to dismiss that we denied, contends that LMES lacks standing as an aggrieved party to file an appeal to this court. We disagree. {¶ 26} A party must be aggrieved by a decision of the BTA in order to appeal to this court. See Newman v. Levin, 116 Ohio St.3d 1205, 2007-Ohio- 9 SUPREME COURT OF OHIO 5507, 876 N.E.2d 960, ¶ 3 (dismissing the tax commissioner’s attempted appeal from a BTA decision affirming the commissioner’s own determination because “none of the persons named by [R.C. 5717.04] has standing to appeal unless that person has been aggrieved by the decision of the BTA from which appeal is taken”). LMES’s notice of appeal filed in this court explicitly concedes that it “does not contest the BTA’s decision with respect to any of its stated reasons for affirming the Commissioner.” That notice of appeal goes on to state that LMES “raised before the BTA numerous dispositive legal and jurisdictional issues that should have been part of the BTA’s Decision.” {¶ 27} LMES’s first three claims of error in its notice of appeal in this court address the BTA’s failure to make findings of bad faith and frivolous conduct by the auditor and its failure to award sanctions for that conduct—claims that LMES clearly asserted before the BTA. “Aggrieved means deprived of legal rights or claims.” Cononi v. Mikhail, 2d Dist. Montgomery No. 8161, 1984 WL 5419,  (Jan. 10, 1984), citing In re Annexation in Mad River Twp., Montgomery Cty., 25 Ohio Misc. 175, 176, 266 N.E.2d 864 (C.P.1970); see also Black’s Law Dictionary 80 (10th Ed.2014) (defining “aggrieved” as “having legal rights that are adversely affected”). LMES asserted a legal right to findings of bad faith and frivolous conduct from the BTA, and the BTA did not make those findings. By appealing the BTA’s failure to do so, LMES plainly asserts the deprivation of a legal right, and LMES therefore establishes its standing to appeal.3 Accordingly, we again decline to dismiss LMES’s appeal. 3 It is unnecessary to evaluate LMES’s standing under any of the other asserted grounds for relief set forth in the notice of appeal, because the notice “advances at least one cognizable claim,” and the appeal is therefore not subject to dismissal. Ohio Apt. Assn. v. Levin, 122 Ohio St.3d 1231, 2009-Ohio-3477, 911 N.E.2d 906, ¶ 6. 10 January Term, 2015 b. The auditor has not shown that the BTA’s dismissal of LMES’s cross-appeal affects our jurisdiction {¶ 28} At oral argument, the auditor’s counsel suggested that our jurisdiction is limited because the BTA dismissed the cross-appeal that LMES had filed in the BTA from the tax commissioner’s determination. This undeveloped argument refers to the order issued by the BTA on March 28, 2013, in which it granted the auditor’s motion to dismiss LMES’s cross-appeal and denied a motion filed by LMES to dismiss the auditor’s appeal. BTA Nos. 2012-A-2043 and 2012-A-2323, 2013 WL 1560492 (Mar. 28, 2013). In dismissing LMES’s crossappeal, the BTA explained that LMES had raised numerous claims of error that merely asserted additional reasons why the tax commissioner should have canceled the assessment, id. at , and it pointed out in a footnote that the dismissal of the entire cross-appeal rendered “the auditor’s motion to dismiss specifications of error nos. 19-21 moot,” id. at , fn. 1. Those specifications of error were the ones in which LMES asserted that the auditor had acted in bad faith and engaged in frivolous conduct by issuing the assessment. By implication, the auditor’s counsel’s argument, if accepted, might preclude our exercise of jurisdiction over any of the issues raised by LMES before the BTA as alternative grounds for affirming the cancellation of the assessment. {¶ 29} But the auditor has not established that the BTA’s dismissal order has any effect on our jurisdiction. The auditor cites no authority for the proposition that LMES’s cross-appeal to the BTA was necessary to preserve the issues LMES advanced before the BTA, and the BTA clearly regarded the crossappeal as jurisdictionally insignificant: the BTA proceeded to consider alternative grounds to those relied on by the tax commissioner for canceling the assessment, and those alternative grounds were raised in the cross-appeal that the BTA had dismissed. 11 SUPREME COURT OF OHIO {¶ 30} Although a party that appeals from a final determination of the tax commissioner must identify its claims of error, neither the former nor current version of R.C. 5717.02 requires an appellee to file a notice of appeal to raise issues before the BTA. Moreover, the BTA’s review of final determinations is de novo. See Key Servs. Corp. v. Zaino, 95 Ohio St.3d 11, 16, 764 N.E.2d 1015 (2002) (holding that “[t]he BTA hearing is de novo,” that the BTA is “statutorily authorized to conduct full administrative appeals in which the parties are entitled to produce evidence in addition to that considered by the Tax Commissioner,” and that the BTA has authority to “ascertain further facts and make its own findings independent of those of the Tax Commissioner”); see also MacDonald v. Shaker Hts. Bd. of Income Tax Rev., ___ Ohio St.3d ___, 2015-Ohio-3290, ___ N.E.3d ___, ¶ 21. {¶ 31} The auditor has not met his burden to present a full argument on this point, and “it is not generally the proper role of this court to develop a party’s arguments.” In re Application of Columbus S. Power Co., 129 Ohio St.3d 271, 2011-Ohio-2638, 951 N.E.2d 751, ¶ 19. We therefore follow the BTA’s lead and regard the BTA’s dismissal of LMES’s cross-appeal as jurisdictionally insignificant. c. The BTA lacked statutory authority to address claims that the assessment under review was issued frivolously and in bad faith {¶ 32} LMES cites three cases in support of its contention that the BTA should have made a finding of frivolous conduct and bad faith on the auditor’s part: Oberlin Manor, Ltd. v. Lorain Cty. Bd. of Revision, 69 Ohio St.3d 1, 629 N.E.2d 1361 (1994), Health Care REIT, Inc. v. Cuyahoga Cty. Bd. of Revision, 140 Ohio St.3d 30, 2014-Ohio-2574, 14 N.E.3d 1009, and Salem Med. Arts & Dev. Corp. v. Columbiana Cty. Bd. of Revision, 82 Ohio St.3d 193, 694 N.E.2d 1324 (1998). None of these decisions establishes a right to the kind of relief sought here. Oberlin Manor involved no request to the BTA for sanctions, but a 12 January Term, 2015 request only to this court—and we denied the request. Id. at 3-4. Health Care REIT likewise involved a request for sanctions made to this court—for the filing of an allegedly frivolous appeal here—and the request was denied. Id. at ¶ 72-75. Salem Med. Arts involved a claim for sanctions for discovery violations; this court ordered the BTA to consider on remand whether sanctions should be imposed. Id. at 195-197. {¶ 33} To be sure, our decision in Salem Med. Arts does recognize the authority of the BTA to make a finding of bad faith and award sanctions in the context of discovery during proceedings that occur before the BTA. But something completely different is being requested here: LMES argues that the BTA should have found frivolous conduct and bad faith not in the conduct of a litigant before the BTA but in the auditor’s issuance of the assessment. {¶ 34} We have often pointed out that the BTA is a creature of statute whose powers are limited to those conferred by statute. See, e.g., Steward v. Evatt, 143 Ohio St. 547, 56 N.E.2d 159 (1944), paragraph one of the syllabus; Delaney v. Testa, 128 Ohio St.3d 248, 2011-Ohio-550, 943 N.E.2d 546, ¶ 20. It is one thing to postulate that an administrative tribunal has an inherent authority to control the conduct of litigation before it; it is quite another to ask this court to accord to the BTA a power that is not set forth in the enabling statutes. {¶ 35} R.C. 5717.03(F) confers upon the BTA the authority to “affirm, reverse, vacate, modify, or remand the tax assessments, valuations, determinations, findings, computations, or orders complained of in the appeals determined by the board.” No statute confers upon the BTA the authority to find bad faith or frivolous conduct nor does any statute confer the power to impose sanctions on the party whose decision is under review based on the nature of the decision appealed from. Moreover, the tax commissioner’s reassessment authority pursuant to R.C. 5711.31 encompasses “mak[ing] corrections to the 13 SUPREME COURT OF OHIO assessment, as the commissioner finds proper” but that statute makes no mention of finding bad faith or imposing sanctions. {¶ 36} As an alternative, LMES requests that this court itself make a finding that the county auditor’s assessment was frivolous and issued in bad faith. However, having just held that the BTA could not properly entertain the claims of frivolous conduct and bad faith, we are reluctant to exercise our revisory jurisdiction under Article IV, Section 2(B)(2)(d) of the Ohio Constitution in such an expansive manner, and we decline to do so. We note that our own rule regarding frivolous actions focuses on conduct in connection with litigating the appeal, see S.Ct.Prac.R. 4.03(A), and prudence counsels that we refrain from resolving issues that might more properly be addressed in another forum in a different proceeding. We therefore decline to consider whether the auditor issued the assessment frivolously and in bad faith. B. ISSUES PRESENTED BY THE AUDITOR’S CROSS-APPEAL 1. R.C. 5711.31 conferred authority on the tax commissioner to modify the auditor’s assessment by finding it unlawful and canceling it entirely {¶ 37} Turning to the auditor’s cross-appeal, the auditor has consistently argued throughout this litigation that the tax commissioner’s authority upon the filing of a petition for reassessment under R.C. 5711.31 is limited to modifying the assessed value or making other factual adjustments and does not extend to cancellation of the assessment in its entirety. We disagree. R.C. 5711.31 explicitly confers authority to “make corrections to the assessment, as the commissioner finds proper,” and the power to cancel an improper assessment constitutes a type of correction. Nothing in the statute limits the authority to “make corrections” in a way that prevents the commissioner from finding that the assessment was unlawful; instead, the statute’s phrasing implies that power. It follows that the tax commissioner’s authority on reassessment encompasses canceling the assessment on the ground that it was not lawfully issued. The 14 January Term, 2015 reassessment procedure is remedial, and a remedial statute is to be construed broadly to effectuate its purpose. See Sheldon Rd. Assocs., L.L.C. v. Cuyahoga Cty. Bd. of Revision, 131 Ohio St.3d 201, 2012-Ohio-581, 963 N.E.2d 794, ¶ 27, quoting Stephan v. Daniels, 27 Ohio St. 527, 536 (1875) (“a provision passed for the purpose of ‘protecting the citizen from illegal exactions’ was ‘remedial in its character’ and ‘should receive that construction, if the words will reasonably admit, that will effect the manifest intention of the legislature, and remedy the evil’ ”). 2. Because LMES does not qualify as a “taxpayer” under R.C. 5711.01(B), the assessment was unlawful a. The auditor erroneously argues that LMES qualified as a “manufacturer” and that it did not need to separately qualify as a “taxpayer” {¶ 38} The BTA made the separate findings that LMES qualified neither as a “taxpayer” under R.C. 5711.01(B) nor as a “manufacturer” under R.C. 5711.16. The auditor’s notice of cross-appeal challenges the latter finding but not the former. The auditor advances an interpretation of the statutes that would make it unnecessary for LMES to have qualified as a “taxpayer” in order to be liable to pay personal property tax if it separately qualified as a “manufacturer.” LMES, however, defends the BTA’s decision in part by relying on the impact of the BTA’s finding that it did not qualify as a “taxpayer” under R.C. 5711.01(B). We decide the merits of the cross-appeal based upon our resolution of these conflicting assertions. {¶ 39} Our review of the statutes persuades us that the auditor is mistaken. The personal-property-tax statutes clearly provide that an entity incurs the obligation to file returns and thereby pay tax based only upon its status as a “taxpayer” as that word is defined in R.C. 5711.01(B). {¶ 40} R.C. 5711.01(B) defines “[t]axpayer” as 15 SUPREME COURT OF OHIO any owner of taxable property, including property exempt under division (C) of section 5709.01 of the Revised Code, and includes every person residing in, or incorporated or organized by or under the laws of this state, or doing business in this state, or owning or having a beneficial interest in taxable personal property in this state and every fiduciary required by sections 5711.01 to 5711.36 of the Revised Code, to make a return for or on behalf of another. (Emphasis added.) {¶ 41} Under the personal-property-listing statutes, the obligation to make returns that report personal property for taxation, along with the obligation to pay the taxes, arises from one’s status as a “taxpayer,” as indicated by the following examples:  R.C. 5711.02 (requirement to “make a return” imposed on “each taxpayer having taxable personal property with an aggregate value in excess of ten thousand dollars”) (emphasis added);  R.C. 5711.04(A) (authorizing a county auditor to extend the time to make a return “[u]pon verified application of any taxpayer”) (emphasis added);  R.C. 5711.24 (the action of assessing personal property for taxation “shall be taken as to taxable property required to be listed in a return, whether listed or not, and whether such return has been made or not,” thereby tying the assessment of the property to the requirement to file a return which, as noted above regarding R.C. 5711.02, is incumbent upon a “taxpayer”) (emphasis added); 16 January Term, 2015  R.C. 5711.27 (prohibiting a “taxpayer” from failing to make a required return and authorizing a penalty to be imposed on a “taxpayer” who fails to make a timely return or fails to list a required item on a return);  R.C. 5711.33(A) (requiring a county treasurer, upon receiving a certificate of a deficiency assessment from a county auditor, to “prepare and mail a tax bill to the taxpayer owing such tax,” and imposing deadlines for the payment of the tax) (emphasis added);  R.C. 5719.02 (requiring payment by stated deadlines by “[e]ach person presenting a return for filing for taxation with a county auditor pursuant to sections 5711.01 to 5711.36 of the Revised Code,” with the only persons required to present a return being those who qualify as taxpayers). {¶ 42} We conclude that the obligation to file returns and pay personal property tax is incurred only by those persons who qualify as “taxpayers” pursuant to R.C. 5711.01(B). Thus, the threshold dispositive finding of the BTA is its finding that LMES did not qualify as a taxpayer, a finding to which we now turn. b. LMES was not shown to qualify as a “taxpayer” here {¶ 43} The record establishes that LMES in 1993 did not own any property used in business that would have been subject to the Ohio personal property tax. The contract between the DOE and LMES and the testimony presented at the hearing definitively indicated that the federal government, not LMES, owned all tangible personal property at the Piketon plant, including even the pens, pencils, and paperclips. Moreover, pursuant to its special arrangement with the DOE, LMES was a separate entity formed for the sole purpose of carrying out the contract and existed at arm’s length from its parent corporation, without assets of its own. 17 SUPREME COURT OF OHIO {¶ 44} Most significantly, the assessment issued by the auditor relates to personal property that even the auditor concedes was owned by the federal government, not by LMES. Thus, no property owned by LMES appears on the assessment.4 When an assessment is not based on any property owned by the assessed entity, the assessed entity cannot as a matter of law qualify as a “taxpayer” under the plain wording of R.C. 5711.01(B). It follows that the assessment was unlawful and that cancellation of it was proper. 3. The remaining cross-appeal issues need not be addressed {¶ 45} Because we resolve the key issue in this case by holding that LMES did not qualify as a “taxpayer” for purposes of Ohio personal-property-tax law, there is no need for us to address the other issues presented in the auditor’s cross-appeal. In particular, we decline to address the BTA’s finding that LMES did not qualify as a “manufacturer” with respect to the property at issue. Because LMES owned no taxable property, it incurred no personal-property-tax obligations.