Snodgrass v. Testa (Slip Opinion), 50 N.E.3d 475

Background

The Pike County auditor issued a December 23, 2010 personal-property assessment for tax year 1993 against LMES (Lockheed Martin Energy Systems), part of 45 assessments for 1955–1999.
The Portsmouth Gaseous Diffusion Plant (Piketon) was federally owned; DOE held title to all tangible property while LMES, a DOE contractor, had custody/possession and operated the site under a contract.
DOE contract documents required government ownership, restricted LMES’s use of property, reimbursed property purchases to DOE, and indemnified contractors for state/local tax claims; DOE entered a 1998 PILOT covering 1992–1997 that mentioned contractors and purported to satisfy County tax claims.
The auditor based the assessment on DOE documents (not LMES records) and assessed $158,512,000 in amended value for 1993, producing $23,244,789 in claimed delinquency.
LMES petitioned for reassessment; the tax commissioner canceled the assessment (PILOT grounds and methodological defects). Auditor appealed to the BTA; BTA affirmed cancellation, finding LMES was not a statutory "taxpayer" or manufacturer. LMES appealed to the Ohio Supreme Court, contesting the BTA’s refusal to find the auditor’s conduct frivolous/bad faith. Auditor cross-appealed.

Issues

Issue	LMES's Argument	Auditor's Argument	Held
Standing to appeal to Ohio Supreme Court from BTA decision	LMES was aggrieved because BTA failed to decide its claims that the auditor acted frivolously/bad faith	LMES lacked standing because it was not aggrieved by BTA’s decision	LMES had standing: denial of requested findings deprived it of a legal right, so appeal permitted
Whether BTA may find auditor issued assessment frivolously or in bad faith and impose sanctions	BTA should have found bad faith/frivolous conduct and awarded sanctions	BTA had no statutory authority to make such findings or impose sanctions on the original assessment action	BTA lacked statutory authority to adjudicate or sanction the auditor for issuing the assessment; Ohio Supreme Court declines to make such a factual/bad-faith finding itself
Whether Tax Commissioner had authority under R.C. 5711.31 to cancel the auditor’s assessment	LMES (and tax commissioner) treated cancellation as proper correction under reassessment statute	Auditor contended commissioner could only adjust valuations, not cancel assessment entirely	Tax commissioner properly has authority to "make corrections" on reassessment, including canceling an unlawful assessment; BTA correctly affirmed cancellation
Whether LMES qualified as a statutory “taxpayer” (and/or as a "manufacturer") liable for personal property tax	Auditor contended LMES was a "manufacturer" and thus liable regardless of taxpayer status	LMES argued it did not own the property (DOE did) and thus was not a "taxpayer" required to file/pay	LMES was not shown to be a "taxpayer" under R.C. 5711.01(B) because it owned no taxable personal property; assessment unlawful and properly canceled. Court did not need to decide manufacturer issue

Key Cases Cited

Oberlin Manor, Ltd. v. Lorain Cty. Bd. of Revision, 69 Ohio St.3d 1 (recognition that request for sanctions may be raised to appellate court)
Salem Med. Arts & Dev. Corp. v. Columbiana Cty. Bd. of Revision, 82 Ohio St.3d 193 (BTA authority to consider bad faith/sanctions in discovery context)
Health Care REIT, Inc. v. Cuyahoga Cty. Bd. of Revision, 140 Ohio St.3d 30 (discussion of frivolous appeals and sanctions practice)
Refreshment Serv. Co. v. Lindley, 67 Ohio St.2d 400 (statutory interpretation of taxpayer definition used by BTA)
Key Servs. Corp. v. Zaino, 95 Ohio St.3d 11 (BTA hearing is de novo)
Sheldon Rd. Assocs., L.L.C. v. Cuyahoga Cty. Bd. of Revision, 131 Ohio St.3d 201 (remedial statutes construed broadly; reassessment context)