Sapina v. Cuyahoga County Board of Revision
136 Ohio St. 3d 188
Ohio2013Background
- Ivica and Katarina Sapina purchased a two-story mixed-use building and an operating carryout restaurant in Feb. 2006 under a single asset-purchase agreement for $325,000 that included listed personal property and a covenant not to compete; no allocation of the lump sum was in the signed contract.
- The county auditor used the full $325,000 as real-property value for tax year 2007; prior 2006 value had been $116,700.
- Sapinas sought a reduction and provided evidence including a February 2006 mortgage showing $160,000 secured by the real property, an owner’s workup valuing tangible personalty at ~ $38,173, and appraisals ($120,000 as of 2009; $100,000 as of Jan. 1, 2007).
- The Cuyahoga County Board of Revision (BOR) reduced assessed value to $175,000 but did not explain its method; the Board of Tax Appeals (BTA) reinstated the full $325,000, finding the record insufficient to allocate any portion to personal property.
- The Ohio Supreme Court reviewed whether the BTA lawfully and reasonably adopted the full sale price as realty value and whether an allocation was supported by corroborating evidence.
Issues
| Issue | Sapina's Argument | School Board / Auditor's Argument | Held |
|---|---|---|---|
| Whether a lump-sum (bulk) sale that included personal property may be allocated so that only part of the purchase price is used to value realty | The sale included personal property; record contains corroborating indicia (mortgage, conveyance statement, owner workup) supporting allocation to realty of $160,000 | The $325,000 arm’s-length sale price is recent and should be used as the true value of the realty absent unequivocal proof allocation is proper | Court: BTA erred by reverting to full $325,000; allocation may be based on corroborating indicia and $160,000 (mortgage amount) is supported and ordered as value for 2007 |
| Proper standard for evaluating an allocation claim on appeal to the BTA | Allocation was timely and continuously urged; BTA should apply the corroborating-indicia / best-available-evidence standard | BTA applied an "unequivocal" standard borrowed from a plain-error context | Court: BTA applied the wrong (too strict) standard; correct standard is corroborating indicia / best available evidence |
| Whether the taxpayer’s appraisals (showing $100k–$120k) should control over sale price evidence | Appraisals show lower value of realty and support allocation to personal property | Recent arm’s-length sale generally controls; appraisal cannot substitute for allocation of lump-sum price unless sale is negated or allocation is corroborated | Court: BTA properly rejected the $100k appraisal as sole basis; appraisal too low relative to other record evidence and sale included personalty, so independent allocation was required |
| Whether the BTA must independently weigh evidence and may modify value on appeal | SAPINA: BTA should perform independent valuation when record negates auditor’s valuation and contains sufficient evidence | School Board: rely on sale price; BOR’s unexplained reduction should be respected | Court: BTA must independently weigh evidence; because record negated using full sale price and contained corroborating indicia (mortgage and conveyance statement), the court modified value to $160,000 under R.C. 5717.04 |
Key Cases Cited
- St. Bernard Self-Storage, L.L.C. v. Hamilton Cty. Bd. of Revision, 115 Ohio St.3d 365 (2007) (use corroborating indicia to allocate lump-sum purchase price)
- Hilliard City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision, 128 Ohio St.3d 565 (2011) (use best-available evidence such as contemporaneous bank appraisal to allocate purchase price)
- FirstCal Indus. Acquisitions, L.L.C. v. Franklin Cty. Bd. of Revision, 125 Ohio St.3d 485 (2010) (two overarching principles for bulk-sale cases: preferred allocation of lump-sum price and BTA need not accept every allocation)
- Olentangy Local Schools Bd. of Edn. v. Delaware Cty. Bd. of Revision, 125 Ohio St.3d 103 (2010) (plain-error context when allocation argument is waived before the BTA)
- Consol. Aluminum Corp. v. Monroe Cty. Bd. of Revision, 66 Ohio St.2d 410 (1979) (BTA may disregard lump-sum allocation when allocation cannot be made due to sale complexities)
- Vandalia-Butler City Schools Bd. of Edn. v. Montgomery Cty. Bd. of Revision, 130 Ohio St.3d 291 (2011) (BTA must independently weigh and evaluate all evidence on appeal)